8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2019

INVESTORS REAL ESTATE TRUST

(Exact name of Registrant as specified in its charter)

North Dakota	001-35624	45-0311232
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

1400 31st Avenue SW, Suite 60, Post Office Box 1988, Minot, ND 58702-1988

(Address of principal executive offices) (Zip code)

(701) 837-4738

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed from last report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest, no par value	IRET	New York Stock Exchange
Series C Cumulative Redeemable Preferred Shares	IRET-C	New York Stock Exchange

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

Investors Real Estate Trust (the “Company”) issued an earnings release on November 6, 2019, announcing certain financial and operational results for the three and nine months ended September 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1.

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 furnished pursuant to Item 9.01, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities under that Section. Furthermore, the information in this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933.

Item 7.01. Regulation FD Disclosure.

Certain supplemental operating and financial data regarding the Company not included in the earnings release is attached as Exhibit 99.1. The foregoing information is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in filings under the Securities Act of 1933.

ITEM 9.01    Financial Statements and Exhibits

Exhibits

Exhibit
Number	Description
99.1*	Earnings Release and Supplemental Operating and Financial Data, dated November 6, 2019.
101	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL Document.

* Filed herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	INVESTORS REAL ESTATE TRUST
	By	/s/ Mark O. Decker, Jr.
		Mark O. Decker, Jr.
Date: November 6, 2019		President and Chief Executive Officer

EX-99.1

Exhibit 99.1

Earnings Release

IRET Reports Third Quarter 2019 Financial Results and Updates 2019 Guidance

MINOT, ND, November 6, 2019 – IRET (NYSE: IRET) announced today its third quarter 2019 financial and operating results. The tables below show Net Income (Loss), Funds from Operations (“FFO”) and Core FFO per share for the three and nine months ended September 30, 2019; same-store revenues, expenses, and net operating income ("NOI") over comparable periods; and same-store weighted-average occupancy for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018.

	Three Months Ended September 30,				Nine Months Ended September 30,
Per Share	2019		2018		2019		2018
Net Income (Loss) - diluted	$	2.54	$	0.08	$	2.11	$	(1.34	)
FFO - diluted	$	0.93	$	0.82	$	3.15	$	2.38
Core FFO - diluted	$	0.99	$	0.86	$	2.76	$	2.49

	Year-Over-Year Comparison		Sequential Comparison		YTD Comparison
Same-Store Results	3Q19 vs. 3Q18		3Q19 vs. 2Q19		CY19 vs. CY18
Revenues	4.0	%	0.6	%	3.7	%
Expenses	2.2	%	2.5	%	2.8	%
NOI	5.3	%	(0.8	)%	4.4	%

	Three months ended
Same-Store Results	September 30, 2019		June 30, 2019		September 30, 2018
Weighted Average Occupancy	93.3	%	94.3	%	91.9	%

Third Quarter 2019 Highlights

• We reported Net Income of $2.54 per diluted share for the third quarter of 2019, compared to Net Income of $0.08 per share for the same quarter in 2018;

• Core FFO grew by 15.1%, increasing to $0.99 per diluted share for the third quarter of 2019, compared to $0.86 per share for the same quarter in 2018;

• Same-store revenue increased year-over-year by 4.0% driven by 2.6% growth in rental revenue and 1.4% growth in occupancy, while same-store operating expenses grew 2.2% year-over-year, primarily due to real estate taxes. The combination of 4.0% revenue growth and expense control initiatives that reduced same-store controllable expenses by 2.1% over the same period in 2018, led to same-store NOI growth of 5.3%, our eighth consecutive quarter of year-over-year NOI growth;

• We entered into a $59.9 million mortgage loan and a $150.0 million private shelf agreement. Of the $150.0 million available under the private shelf agreement, we funded $75.0 million of Series A unsecured senior notes and $50.0 million of Series B unsecured senior notes;

• We updated earnings guidance with respect to projected same-store growth for calendar year 2019 as follows:

◦ raised the midpoint of full-year net income per diluted share guidance from net loss of $(1.22) to net income of $2.77. This increase was due to gains from the sale of real estate assets;

◦ increased the range of full-year Core FFO per diluted share from $3.68 to $3.78, which increased the midpoint from $3.67 to $3.73. This increase is due to better operating results, disposition and redeployment execution, and interest savings from favorable debt refinancing;

◦ raised the midpoint of full-year NOI to 3.75% from 3.50% by narrowing the range from 3.00%-4.00% to 3.50%-4.00%;

◦ narrowed the range of revenue growth from 3.00%-4.00% to 3.25%-3.75%, which left the midpoint unchanged; and

◦ narrowed the range for expenses from 2.75%-3.75% to 3.00%-3.50% and reaffirmed the midpoint of 3.25%.

• We repurchased approximately 39,000 common shares for an aggregate total cost of $2.3 million, representing an average price of $59.57 per common share.

1

Acquisitions and Dispositions

During the third quarter, we acquired FreightYard Townhomes and Flats, a 96-home apartment community in Minneapolis, Minnesota, and Lugano at Cherry Creek, a 328-home apartment community in Denver, Colorado, for an aggregate purchase price of $125.3 million. During the third quarter, we sold one apartment community in Billings, Montana and our entire portfolio in Topeka, Kansas for an aggregate sale price of $84.4 million. We also sold one parcel of unimproved land for $600,000.

Balance Sheet

At the end of the third quarter, we had $155.4 million of total liquidity on our balance sheet, including $146.9 million available under our corporate revolver.

2019 Financial Overview

We are raising our earnings guidance for calendar year 2019 based on actual results through September 30, 2019 and expected results through the remainder of the calendar year as specified below.

	2019 Revised	2019 Guidance
	Range	Current Midpoint	Prior Midpoint	Change
Net income (loss) per share - diluted	$2.72 to $2.82	$2.77	$(1.22)	$3.99
Core FFO per share and Unit- diluted	$3.68 to $3.78	$3.73	$3.67	$0.06
Same-Store Growth
Revenue	3.25% to 3.75%	3.50%	3.50%	—
Expenses	3.00% to 3.50%	3.25%	3.25%	—
NOI	3.50% to 4.00%	3.75%	3.50%	0.25%

Recent Developments

On October 29, 2019, we sold five apartment communities containing 414 apartment homes in Bismarck, North Dakota for a sale price of $24.0 million. These properties included Crestview, Kirkwood Manor, North Pointe, Pebble Springs, and Westwood Park. The sale of these properties enabled us to retire $11.3 million of mortgage debt.

On November 1, 2019, we sold a commercial property in Woodbury, Minnesota for a sale price of $5.8 million.

Upcoming Events

IRET is scheduled to participate in the upcoming National Association of Real Estate Investment Trusts ("Nareit") REITworld: 2019 Annual Conference in Los Angeles, California, from November 12-14, 2019.

Quarterly Distributions

Effective September 5, 2019, IRET’s Board of Trustees declared a regular quarterly distribution of $0.70 per share/unit payable on September 30, 2019, to common shareholders and unitholders of record on September 16, 2019. IRET has paid cash dividends to common shareholders and unitholders every quarter since its initial dividend payment in 1971.

Effective September 5, 2019, IRET's Board of Trustees also declared a distribution of $0.4140625 per share on the 6.625% Series C Cumulative Redeemable Preferred Shares (NYSE: IRET PRC) payable on September 30, 2019, to holders of record on September 16, 2019. Series C preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.65625 per share.

2

Earnings Call

Live webcast and replay:  http://ir.iretapartments.com
Live Conference Call		Conference Call Replay
Thursday, November 7, 2019, at 10:00 AM ET		Replay available until November 21, 2019
USA Toll Free Number	1-877-509-9785	USA Toll Free Number	1-877-344-7529
International Toll Free Number	1-412-902-4132	International Toll Free Number	1-412-317-0088
Canada Toll Free Number	1-855-669-9657	Canada Toll Free Number	1-855-669-9658
		Conference Number	10135927

Supplemental Information

Supplemental Operating and Financial Data for the quarter ended September 30, 2019 included herein (“Supplemental Information”), is available in the Investors section on IRET’s website at www.iretapartments.com or by calling Investor Relations at 701-837-7104.  FFO, Core FFO, NOI, and Adjusted EBITDA are non-GAAP financial measures. These measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Information that accompanies this earnings release.

About IRET

IRET is a real estate company focused on the ownership, management, acquisition, redevelopment, and development of apartment communities.  As of September 30, 2019, we owned interests in 84 apartment communities consisting of 13,336 apartment homes.  IRET's common shares and Series C preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: "IRET" and "IRET PRC," respectively).

Forward-Looking Statements

Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on our current expectations and assumptions, and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved. Such risks, uncertainties, and other factors that might cause such differences include, but are not limited to those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our Transition Report on Form 10-KT for the transition period ended December 31, 2018, in our subsequent quarterly reports on Form 10-Q, and in other public reports. We assume no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

Investor Relations Contact Information

Jonathan Bishop

Vice President - Finance

Phone: 701-837-7104

E-mail: IR@iret.com

3

Supplemental Financial and Operating Data

Table of Contents

September 30, 2019

	Page
Common Share Data	S-1
Key Financial Data
Condensed Consolidated Statements of Operations	S-2
Condensed Consolidated Balance Sheets	S-3
Non-GAAP Financial Measures and Reconciliations
Net Operating Income	S-4
Funds From Operations	S-5
Adjusted EBITDA	S-7
Debt and Capital Analysis
Debt Analysis	S-8
Capital Analysis	S-9
Portfolio Analysis
Same-Store Comparison	S-10
Portfolio Summary	S-13
Same-Store Capital Expenditures	S-14
Financial Outlook	S-15

Common Share Data (NYSE: IRET)

	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	Calendar Year 2019			Calendar Year 2019			Calendar Year 2019			Calendar Year 2018			Calendar Year 2018
High closing price	$	74.67		$	61.28		$	61.50		$	59.10		$	59.80
Low closing price	$	59.22		$	57.19		$	49.92		$	47.00		$	53.30
Average closing price	$	66.83		$	59.54		$	58.11		$	53.40		$	54.99
Closing price at end of quarter	$	74.67		$	58.67		$	59.91		$	49.07		$	59.80
Common share distributions – annualized	$	2.80		$	2.80		$	2.80		$	2.80		$	2.80
Closing dividend yield – annualized	3.8		%	4.8		%	4.7		%	5.7		%	4.7		%
Closing common shares outstanding (thousands)	11,625			11,656			11,768			11,942			11,961
Closing limited partnership units outstanding (thousands)	1,223			1,224			1,365			1,368			1,379
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)	$	959,360		$	755,670		$	786,798		$	653,122		$	797,732

S-1

IRET

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands)

	Three Months Ended															Nine months ended
	9/30/2019			6/30/2019			3/31/2019			12/31/2018			9/30/2018			9/30/2019			9/30/2018
REVENUE	$	47,436		$	46,934		$	45,608		$	45,730		$	45,406		$	139,978		$	134,638
EXPENSES
Property operating expenses, excluding real estate taxes	14,485			13,942			14,804			13,292			14,438			43,231			42,618
Real estate taxes	5,425			5,574			5,232			5,098			5,049			16,231			15,073
Property management expense	1,553			1,445			1,554			1,447			1,269			4,552			4,090
Casualty loss	178			92			641			540			225			911			275
Depreciation/amortization	18,751			18,437			18,111			18,812			19,164			55,299			58,812
Impairment of real estate investments	—			—			—			1,221			—			—			17,809
General and administrative expenses	3,448			3,549			3,806			3,769			3,147			10,803			11,114
TOTAL EXPENSES	$	43,840		$	43,039		$	44,148		$	44,179		$	43,292		$	131,027		$	149,791
Operating income (loss)	3,596			3,895			1,460			1,551			2,114			8,951			(15,153		)
Interest expense	(7,694		)	(7,590		)	(7,896		)	(7,682		)	(8,193		)	(23,180		)	(25,051		)
Loss on extinguishment of debt	(1,087		)	(407		)	(2		)	(5		)	(540		)	(1,496		)	(673		)
Interest and other income	498			468			424			483			395			1,390			1,544
Income (loss) before gain (loss) on sale of real estate and other investments, gain (loss) on litigation settlement, and income (loss) from discontinued operations	(4,687		)	(3,634		)	(6,014		)	(5,653		)	(6,224		)	(14,335		)	(39,333		)
Gain (loss) on sale of real estate and other investments	39,105			615			54			612			9,095			39,774			11,399
Gain (loss) on litigation settlement	300			6,286			—			—			—			6,586			—
Income (loss) from continuing operations	34,718			3,267			(5,960		)	(5,041		)	2,871			32,025			(27,934		)
Income (loss) from discontinued operations	—			—			—			—			570			—			14,690
Net income (loss)	$	34,718		$	3,267		$	(5,960	)	$	(5,041	)	$	3,441		$	32,025		$	(13,244	)
Dividends to preferred unitholders	(160		)	(160		)	(57		)	—			—			(377		)	—
Net (income) loss attributable to noncontrolling interest – Operating Partnership	(3,145		)	(148		)	743			665			(112		)	(2,550		)	1,888
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	183			154			576			270			(676		)	913			439
Net income (loss) attributable to controlling interests	31,596			3,113			(4,698		)	(4,106		)	2,653			30,011			(10,917		)
Dividends to preferred shareholders	(1,705		)	(1,706		)	(1,705		)	(1,705		)	(1,705		)	(5,116		)	(5,116		)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	29,891		$	1,407		$	(6,403	)	$	(5,811	)	$	948		$	24,895		$	(16,033	)
Per Share Data - Basic
Earnings (loss) per common share from continuing operations – basic	$	2.57		$	0.11		$	(0.54	)	$	(0.49	)	$	0.04		$	2.11		$	(2.44	)
Earnings (loss) per common share from discontinued operations – basic	—			—			—			—			0.04			—			1.10
Net earnings (loss) per common share – basic	$	2.57		$	0.11		$	(0.54	)	$	(0.49	)	$	0.08		$	2.11		$	(1.34	)
Per Share Data - Diluted
Earnings (loss) per common share from continuing operations – diluted	$	2.54		$	0.11		$	(0.54	)	$	(0.49	)	$	0.04		$	2.11		$	(2.44	)
Earnings per common share from discontinued operations – diluted	—			—			—			—			$	0.04		—			$	1.10
Net earnings (loss) per common share – diluted	$	2.54		$	0.11		$	(0.54	)	$	(0.49	)	$	0.08		$	2.11		$	(1.34	)
Percentage of Revenue
Property operating expenses, excluding real estate taxes	30.5		%	29.7		%	32.5		%	29.1		%	31.8		%	30.9		%	31.7		%
General and administrative expenses	7.3		%	7.6		%	8.3		%	8.2		%	6.9		%	7.7		%	8.3		%
Interest	16.2		%	16.2		%	17.3		%	16.8		%	18.0		%	16.6		%	18.6		%
Income (loss) from discontinued operations	—			—			—			—			1.3		%	—			10.9		%
Net income (loss)	73.2		%	7.0		%	(13.1		)%	(11.0		)%	7.6		%	22.9		%	(9.8		)%

S-2

IRET

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands)

	9/30/2019			6/30/2019			3/31/2019			12/31/2018			9/30/2018
ASSETS
Real estate investments
Property owned	$	1,720,352		$	1,663,539		$	1,673,158		$	1,627,636		$	1,638,909
Less accumulated depreciation	(370,492		)	(380,321		)	(371,672		)	(353,871		)	(339,515		)
	1,349,860			1,283,218			1,301,486			1,273,765			1,299,394
Unimproved land	1,376			1,746			2,252			5,301			6,522
Mortgage loans receivable	10,140			10,140			10,260			10,410			10,530
Total real estate investments	1,361,376			1,295,104			1,313,998			1,289,476			1,316,446
Cash and cash equivalents	8,500			17,406			23,329			13,792			36,910
Restricted cash	3,339			4,672			4,819			5,464			4,669
Other assets	30,589			30,626			29,166			27,265			28,472
TOTAL ASSETS	$	1,403,804		$	1,347,808		$	1,371,312		$	1,335,997		$	1,386,497
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses	$	40,546		$	44,766		$	40,697		$	40,892		$	38,203
Revolving line of credit	103,143			177,939			118,677			57,500			71,000
Notes payable, net of loan costs	269,006			144,082			144,036			143,991			143,937
Mortgages payable, net of loan costs	360,886			370,461			430,950			444,197			463,052
TOTAL LIABILITIES	$	773,581		$	737,248		$	734,360		$	686,580		$	716,192
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES	—			—			—			$	5,968		$	6,130
SERIES D PREFERRED UNITS	$	16,560		$	16,560		$	16,560		—			—
EQUITY
Series C Preferred Shares of Beneficial Interest	99,456			99,456			99,456			99,456			99,456
Common Shares of Beneficial Interest	886,598			888,541			895,381			899,234			900,368
Accumulated distributions in excess of net income	(428,680		)	(450,433		)	(443,661		)	(429,048		)	(414,900		)
Accumulated other comprehensive income (loss)	(9,793		)	(7,598		)	(3,139		)	(856		)	2,760
Total shareholders’ equity	$	547,581		$	529,966		$	548,037		$	568,786		$	587,684
Noncontrolling interests – Operating Partnership	60,169			57,902			66,060			67,916			69,578
Noncontrolling interests – consolidated real estate entities	5,913			6,132			6,295			6,747			6,913
Total equity	$	613,663		$	594,000		$	620,392		$	643,449		$	664,175
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY	$	1,403,804		$	1,347,808		$	1,371,312		$	1,335,997		$	1,386,497

S-3

IRET

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)

This release contains certain non-GAAP financial measures. The non-GAAP measures should not be considered a substitute for operating results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The definitions and calculations of these non-GAAP measures, as calculated by us, may not be comparable to non-GAAP measures reported by other REITs that do not define each of the non-GAAP measures exactly as we do.

We provide certain information on a same-store and non-same-store basis. Same-store apartment communities are owned or in service for the entirety of the periods being compared, and, in the case of development properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, we determine the composition of our same-store pool for that year as well as adjust the previous year, which allows us to evaluate full period-over-period operating comparisons for existing apartment communities and their contribution to net income. We believe that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of our communities are performing year-over-year. We use this measure to assess whether or not we have been successful in increasing NOI, renewing the leases on existing residents, controlling operating costs, and making prudent capital improvements.

Reconciliation of Operating Income (Loss) to Net Operating Income

Net operating income, or NOI, is a non-GAAP measure which we define as total real estate revenues less property operating expenses, including real estate taxes. We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.

	(in thousands, except percentages)
	Three Months Ended September 30,									Nine Months Ended September 30,
	2019		2018		$ Change			% Change		2019		2018			$ Change			% Change
Operating income (loss)	$	3,596	$	2,114	$	1,482		70.1	%	$	8,951	$	(15,153	)	$	24,104		(159.1	)%
Adjustments:
Property management expenses	1,553		1,269		284			22.4	%	4,552		4,090			462			11.3	%
Casualty loss	178		225		(47		)	(20.9	)%	911		275			636			231.3	%
Depreciation and amortization	18,751		19,164		(413		)	(2.2	)%	55,299		58,812			(3,513		)	(6.0	)%
Impairment	—		—		—			—		—		17,809			(17,809		)	(100.0	)%
General and administrative expenses	3,448		3,147		301			9.6	%	10,803		11,114			(311		)	(2.8	)%
Net operating income	$	27,526	$	25,919	$	1,607		6.2	%	$	80,516	$	76,947		$	3,569		4.6	%
Revenue
Same-store	$	37,633	$	36,198	$	1,435		4.0	%	$	112,052	$	108,031		$	4,021		3.7	%
Non-same-store	6,283		4,687		1,596			34.1	%	17,405		11,038			6,367			57.7	%
Other properties and dispositions	3,520		4,521		(1,001		)	(22.1	)%	10,521		15,569			(5,048		)	(32.4	)%
Total	47,436		45,406		2,030			4.5	%	139,978		134,638			5,340			4.0	%
Property operating expenses, including real estate taxes
Same-store	16,147		15,795		352			2.2	%	48,561		47,227			1,334			2.8	%
Non-same-store	2,308		1,696		612			36.1	%	6,327		4,115			2,212			53.8	%
Other properties and dispositions	1,455		1,996		(541		)	(27.1	)%	4,574		6,349			(1,775		)	(28.0	)%
Total	19,910		19,487		423			2.2	%	59,462		57,691			1,771			3.1	%
Net operating income
Same-store	21,486		20,403		1,083			5.3	%	63,491		60,804			2,687			4.4	%
Non-same-store	3,975		2,991		984			32.9	%	11,078		6,923			4,155			60.0	%
Other properties and dispositions	2,065		2,525		(460		)	(18.2	)%	5,947		9,220			(3,273		)	(35.5	)%
Total	$	27,526	$	25,919	$	1,607		6.2	%	$	80,516	$	76,947		$	3,569		4.6	%

S-4

Same-Store Property Operating Expense Comparison

	(in thousands, except percentages)
	Three Months Ended September 30,									Nine Months Ended September 30,
	2019		2018		$ Change			% Change		2019		2018		$ Change			% Change
Controllable expenses
Compensation	$	4,368	$	4,362	$	6		0.1	%	$	12,889	$	13,520	$	(631	)	(4.7	)%
Repairs and maintenance	3,078		3,277		(199		)	(6.1	)%	9,296		8,987		309			3.4	%
Utilities	2,608		2,614		(6		)	(0.2	)%	8,388		8,304		84			1.0	%
Administrative and marketing	778		810		(32		)	(4.0	)%	2,530		2,401		129			5.4	%
Total	$	10,832	$	11,063	$	(231	)	(2.1	)%	$	33,103	$	33,212	$	(109	)	(0.3	)%
Non-controllable expenses
Real estate taxes	$	4,173	$	3,973	$	200		5.0	%	$	12,506	$	12,032	$	474		3.9	%
Insurance	1,142		759		383			50.5	%	2,952		1,983		969			48.9	%
Total	$	5,315	$	4,732	$	583		12.3	%	$	15,458	$	14,015	$	1,443		10.3	%
Total	$	16,147	$	15,795	$	352		2.2	%	$	48,561	$	47,227	$	1,334		2.8	%

Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds From Operations and Core Funds From Operations

We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding:

• depreciation and amortization related to real estate;

• gains and losses from the sale of certain real estate assets; and

• impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

Due to the limitations of the Nareit FFO definition, we have made certain interpretations in applying this definition. We believe that all such interpretations not specifically identified in the Nareit definition are consistent with this definition. Nareit's FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT's main business are excluded from FFO and a REIT has the option to exclude impairment write-downs of assets that are incidental to its main business.

We believe that FFO, which is a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, thereby providing an additional perspective on our operating results. We believe that GAAP historical cost depreciation of real estate assets is not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. The exclusion in Nareit’s definition of FFO of impairment write-downs and gains and losses from the sale of real estate assets helps to identify the operating results of the long-term assets that form the base of our investments, and assists management and investors in comparing those operating results between periods.

While FFO is widely used by us as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO in the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of sufficient cash flow to fund all of our needs or our ability to service indebtedness or make distributions.

Core Funds from Operations ("Core FFO") is FFO as adjusted for non-routine items or items not considered core to our business operations. By further adjusting for items that are not considered part of our core business operations, we believe that Core FFO provides investors with additional information to compare our core operating and financial performance between periods. Core FFO should not be considered as an alternative to net income as an indication of financial performance, or as an alternative to cash flows from operations as a measure of liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions to shareholders. Core FFO is a non-GAAP and non-standardized measure that may be calculated differently by other REITs and should not be considered a substitute for operating results determined in accordance with GAAP.

S-5

	(in thousands, except per share amounts)
	Three Months Ended															Nine Months Ended
	9/30/2019			6/30/2019			3/31/2019			12/31/2018			9/30/2018			9/30/2019			9/30/2018
Funds From Operations
Net income (loss) available to common shareholders	$	29,891		$	1,407		$	(6,403	)	$	(5,811	)	$	948		$	24,895		$	(16,033	)
Adjustments:
Noncontrolling interests – Operating Partnership	3,145			148			(743		)	(665		)	112			2,550			(1,888		)
Depreciation and amortization	18,751			18,437			18,111			18,812			19,164			55,299			58,814
Less depreciation – non real estate	(71		)	(79		)	(85		)	(76		)	(76		)	(235		)	(231		)
Less depreciation – partially owned entities	(452		)	(474		)	(678		)	(680		)	(673		)	(1,604		)	(2,115		)
Impairment of real estate	—			—			—			1,221			—			—			17,809
(Gain) loss on sale of real estate	(39,105		)	(615		)	(54		)	(612		)	(8,499		)	(39,774		)	(24,633		)
FFO applicable to common shares and Units	$	12,159		$	18,824		$	10,148		$	12,189		$	10,976		$	41,131		$	31,723
Adjustments to Core FFO:
Casualty loss write off	—			—			—			43			—			—			—
Loss on extinguishment of debt	1,087			407			2			5			540			1,496			673
Gain on litigation settlement	(300		)	(6,286		)	—			—			—			(6,586		)	—
Severance and transition costs	—			—			—			—			—			—			811
Core FFO applicable to common shares and Units	$	12,946		$	12,945		$	10,150		$	12,237		$	11,516		$	36,041		$	33,207
Funds from operations applicable to common shares and Units	$	12,159		$	18,824		$	10,148		$	12,189		$	10,976		$	41,131		$	31,723
Dividends to preferred unitholders	160			160			57			—			—			377			—
Funds from operations applicable to common shares and Units - diluted	$	12,319		$	18,984		$	10,205		$	12,189		$	10,976		$	41,508		$	31,723
Core funds from operations applicable to common shares and Units	$	12,946		$	12,945		$	10,150		$	12,237		$	11,516		$	36,041		$	33,207
Dividends to preferred unitholders	160			160			57			—			—			377			—
Core funds from operations applicable to common shares and Units - diluted	$	13,106		$	13,105		$	10,207		$	12,237		$	11,516		$	36,418		$	33,207
Per Share Data
Earnings (loss) per share and Unit - diluted	$	2.54		$	0.12		$	(0.54	)	$	(0.49	)	$	0.08		$	2.11		$	(1.34	)
FFO per share and Unit - diluted	$	0.93		$	1.45		$	0.77		$	0.92		$	0.82		$	3.15		$	2.38
Core FFO per share and Unit - diluted	$	0.99		$	1.00		$	0.77		$	0.92		$	0.86		$	2.76		$	2.49
Weighted average shares and Units - diluted	13,087			13,197			13,230			13,317			13,318			13,174			13,351

S-6

Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA

Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of real estate investments, gain/loss on extinguishment of debt, gain on litigation settlement, and gain/loss from involuntary conversion. We consider Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, the cost of debt, or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP. Adjusted EBITDA as calculated by us may not be comparable to Adjusted EBITDA reported by other REITs that do not define Adjusted EBITDA exactly as we do.

	(in thousands)
	Three Months Ended															Nine Months Ended
	9/30/2019			6/30/2019			3/31/2019			12/31/2018			9/30/2018			9/30/2019			9/30/2018
Adjusted EBITDA
Net income (loss) available to common shareholders	$	31,596		$	3,113		$	(4,698	)	$	(4,106	)	$	2,653		$	30,011		$	(10,917	)
Adjustments:
Dividends to preferred unitholders	160			160			57			—			—			377			—
Noncontrolling interests – Operating Partnership	3,145			148			(743		)	(665		)	112			2,550			(1,888		)
Income (loss) before noncontrolling interests – Operating Partnership	$	34,901		$	3,421		$	(5,384	)	$	(4,771	)	$	2,765		$	32,938		$	(12,805	)
Adjustments:
Interest expense	7,448			7,343			7,558			7,336			7,828			22,349			23,857
Loss on extinguishment of debt	1,087			407			2			4			541			1,496			673
Depreciation/amortization related to real estate investments	18,299			17,963			17,433			18,133			18,491			53,695			56,699
Impairment of real estate investments	—			—			—			1,221			—			—			17,809
Interest income	(402		)	(402		)	(407		)	(465		)	(366		)	(1,211		)	(1,468		)
(Gain) loss on sale of real estate and other investments	(39,105		)	(615		)	(54		)	(611		)	(8,499		)	(39,774		)	(24,633		)
Gain on litigation settlement	(300		)	(6,286		)	—			—			—			(6,586		)	—
Adjusted EBITDA	$	21,928		$	21,831		$	19,148		$	20,847		$	20,760		$	62,907		$	60,132

S-7

IRET

DEBT ANALYSIS

(in thousands)

Debt Maturity Schedule

Annual Expirations

	Future Maturities of Debt
	Secured Fixed Debt		Unsecured Fixed Debt(1)		Unsecured Variable Debt		Total Debt		% of Total Debt		Weighted Average Interest Rate(2)
2019 (remainder)	—		—		—		—		—		—
2020	$	17,550	$	—	$	293	$	17,843	2.4	%	5.31	%
2021	51,876		—		—		51,876		7.0	%	5.42	%
2022	38,093		50,000		52,850		140,943		19.2	%	3.84	%
2023	48,520		—		—		48,520		6.6	%	4.02	%
Thereafter	206,692		270,000		—		476,692		64.8	%	3.87	%
Total debt	$	362,731	$	320,000	$	53,143	$	735,874	100.0	%	4.02	%

(1) Term loans have variable interest rates that are fixed with interest rate swaps and $50.0 million of our variable interest, primary line of credit is fixed with an interest rate swap.

(2) Weighted average interest rate of debt that matures during the year, including the effect of interest rate swaps on the term loans and line of credit.

	9/30/2019			6/30/2019			3/31/2019			12/31/2018			9/30/2018
Debt Balances Outstanding(1)
Secured fixed rate	$	362,731		$	371,951		$	432,588		$	445,974		$	464,964
Unsecured fixed rate line of credit(2)	50,000			50,000			—			—			—
Secured line of credit(3)	—			15,000			15,000			—			—
Unsecured variable rate line of credit	53,143			112,939			103,677			57,500			71,000
Unsecured term loans	145,000			145,000			145,000			145,000			145,000
Unsecured senior notes	125,000			—			—			—			—
Debt total	$	735,874		$	694,890		$	696,265		$	648,474		$	680,964
Mortgage debt weighted average interest rate	4.15		%	4.37		%	4.54		%	4.58		%	4.65		%
Lines of credit rate (rate with swap)	3.73		%	3.91		%	3.89		%	3.72		%	3.67		%
Term loan rate (rate with swap)	4.14		%	4.14		%	3.99		%	4.01		%	3.97		%
Senior notes rate	3.78		%	—			—			—			—

(1) Includes mortgages on properties held for sale.

(2) A portion of our primary line of credit is fixed through an interest rate swap.

(3) Our revolving line of credit consists primarily of unsecured borrowings. A portion of the line was secured in connection with our acquisition of SouthFork Townhomes, under an agreement which allowed us to offer the seller tax protection upon purchase.

S-8

IRET 

CAPITAL ANALYSIS 

(in thousands, except per share and unit amounts)

	Three Months Ended
	9/30/2019		6/30/2019		3/31/2019		12/31/2018		9/30/2018
Equity Capitalization
Common shares outstanding	11,625		11,656		11,768		11,942		11,961
Operating partnership units outstanding	1,223		1,224		1,365		1,368		1,379
Total common shares and units outstanding	12,848		12,880		13,133		13,310		13,340
Market price per common share (closing price at end of period)	$	74.67	$	58.67	$	59.91	$	49.07	$	59.80
Equity capitalization-common shares and units	$	959,360	$	755,670	$	786,798	$	653,122	$	797,732
Recorded book value of preferred shares	$	99,456	$	99,456	$	99,456	$	99,456	$	99,456
Total equity capitalization	$	1,058,816	$	855,126	$	886,254	$	752,578	$	897,188
Series D Preferred Units	$	16,560	$	16,560	16,560		—		—
Debt Capitalization
Total debt	$	735,874	$	694,889	$	696,265	$	648,474	$	680,964
Total capitalization	$	1,811,250	$	1,566,575	$	1,599,079	$	1,401,052	$	1,578,152
Total debt to total capitalization(1)	40.6%		44.4%		43.5%		46.3%		43.2%

(1) Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet, plus the market value of common shares, operating partnership units, Series C preferred shares, and Series D preferred units outstanding at the end of the period.

	Three Months Ended															Nine Months Ended
	9/30/2019			6/30/2019			3/31/2019			12/31/2018			9/30/2018			9/30/2019			9/30/2018
Debt service coverage ratio(1)	2.26		x	2.24		x	1.86		x	2.07		x	1.96		x	2.11		x	1.69		x
Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization	1.90		x	1.88		x	1.58		x	1.77		x	1.69		x	1.78		x	1.59		x
Distribution Data
Common shares and Units outstanding at record date	12,848			12,914			13,135			13,276			13,340			12,848			13,340
Total common distribution declared	$	8,994		$	9,039		$	9,195		$	9,293		$	9,339		$	27,228		$	28,079
Common distribution per share and Unit	$	0.70		$	0.70		$	0.70		$	0.70		$	0.70		$	2.10		$	2.10
Payout ratio (FFO per share and Unit basis)(2)	75.3		%	48.3		%	90.9		%	76.1		%	85.4		%	66.7		%	88.2		%
Payout ratio (Core FFO per share and Unit basis)(3)	70.7		%	70.0		%	90.9		%	76.1		%	81.4		%	76.1		%	84.3		%

(1) Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization

(2) Payout ratio (FFO per share and unit basis) is the ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual FFO per share and unit. This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP.

(3) Payout ratio (Core FFO per share and unit basis) is the ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual Core FFO per share and unit. This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP.

S-9

IRET

SAME-STORE THIRD QUARTER COMPARISONS

(in thousands, except property data amounts and percentages)

	Apartment Homes Included	Revenues						Expenses						NOI
Regions		CY19Q3		CY18Q3		% Change		CY19Q3		CY18Q3		% Change		CY19Q3		CY18Q3		% Change
Minneapolis, MN	1,796	$	7,774	$	7,414	4.9	%	$	3,360	$	3,063	9.7	%	$	4,414	$	4,351	1.4	%
Rochester, MN	1,711	6,446		6,031		6.9	%	2,386		2,477		(3.7	)%	4,060		3,554		14.2	%
Omaha, NE	1,370	3,738		3,697		1.1	%	1,740		1,686		3.2	%	1,998		2,011		(0.6	)%
Grand Forks, ND	1,555	4,287		4,149		3.3	%	1,882		1,890		(0.4	)%	2,405		2,259		6.5	%
Bismarck, ND	1,259	3,654		3,572		2.3	%	1,503		1,471		2.2	%	2,151		2,101		2.4	%
St. Cloud, MN	1,190	3,517		3,389		3.8	%	1,557		1,570		(0.8	)%	1,960		1,819		7.8	%
Sioux Falls, SD	969	2,532		2,505		1.1	%	1,228		1,227		0.1	%	1,304		1,278		2.0	%
Billings, MT	749	2,144		2,040		5.1	%	882		880		0.2	%	1,262		1,160		8.8	%
Minot, ND	712	2,117		2,051		3.2	%	1,035		960		7.8	%	1,082		1,091		(0.8	)%
Rapid City, SD	474	1,424		1,350		5.5	%	574		571		0.5	%	850		779		9.1	%
Same-Store Total	11,785	$	37,633	$	36,198	4.0	%	$	16,147	$	15,795	2.2	%	$	21,486	$	20,403	5.3	%

	% of NOI Contribution		Weighted Average Occupancy (1)						Weighted Average Monthly Rental Rate (2)						Weighted Average Monthly Revenue per Occupied Home (3)
Regions			CY19Q3		CY18Q3		Growth		CY19Q3		CY18Q3		% Change		CY19Q3		CY18Q3		% Change
Minneapolis, MN	20.5	%	90.8	%	90.3	%	0.5	%	$	1,478	$	1,428	3.5	%	$	1,590	$	1,523	4.3	%
Rochester, MN	18.9	%	94.6	%	91.3	%	3.3	%	1,257		1,229		2.3	%	1,327		1,287		3.6	%
Omaha, NE	9.3	%	93.0	%	93.4	%	(0.4	)%	900		879		2.4	%	977		963		1.5	%
Grand Forks, ND	11.2	%	94.1	%	91.3	%	2.8	%	908		922		(1.5	)%	977		975		0.5	%
Bismarck, ND	10.0	%	93.9	%	94.1	%	(0.2	)%	957		961		(0.4	)%	1,031		1,005		2.5	%
St. Cloud, MN	9.1	%	93.8	%	92.4	%	1.4	%	959		950		0.9	%	1,050		1,027		2.4	%
Sioux Falls, SD	6.1	%	92.2	%	92.3	%	(0.1	)%	867		851		1.9	%	945		934		1.2	%
Billings, MT	5.9	%	95.0	%	92.5	%	2.5	%	941		923		2.0	%	1,004		981		2.6	%
Minot, ND	5.0	%	93.9	%	91.6	%	2.3	%	999		1,014		(1.5	)%	1,055		1,048		0.9	%
Rapid City, SD	4.0	%	96.1	%	93.5	%	2.6	%	963		939		2.6	%	1,042		1,016		2.9	%
Same-Store Total	100.0	%	93.3	%	91.9	%	1.4	%	$	1,062	$	1,046	1.5	%	$	1,141	$	1,114	2.6	%

(1) Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rent.

(2) Weighted average monthly rental rate is scheduled rental revenue divided by the total number of apartment homes. Scheduled rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.

(3) Weighted average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment units for the period.

S-10

IRET

SAME-STORE SEQUENTIAL QUARTER COMPARISONS

(in thousands, except property data amounts and percentages)

	Apartment Homes Included	Revenues						Expenses						NOI
Regions		CY19Q3		CY19Q2		% Change		CY19Q3		CY19Q2		% Change		CY19Q3		CY19Q2		% Change
Minneapolis, MN	1,796	$	7,774	$	7,836	(0.8	)%	$	3,360	$	3,172	5.9	%	$	4,414	$	4,664	(5.4	)%
Rochester, MN	1,711	6,446		6,291		2.5	%	2,386		2,450		(2.6	)%	4,060		3,841		5.7	%
Omaha, NE	1,370	3,738		3,705		0.9	%	1,740		1,635		6.4	%	1,998		2,070		(3.5	)%
Grand Forks, ND	1,555	4,287		4,218		1.6	%	1,882		1,909		(1.4	)%	2,405		2,309		4.2	%
Bismarck, ND	1,259	3,654		3,595		1.6	%	1,503		1,491		0.8	%	2,151		2,104		2.2	%
St. Cloud, MN	1,190	3,517		3,585		(1.9	)%	1,557		1,525		2.1	%	1,960		2,060		(4.9	)%
Sioux Falls, SD	969	2,532		2,544		(0.5	)%	1,228		1,222		0.5	%	1,304		1,322		(1.4	)%
Billings, MT	749	2,144		2,125		0.9	%	882		752		17.3	%	1,262		1,373		(8.1	)%
Minot, ND	712	2,117		2,145		(1.3	)%	1,035		1,036		(0.1	)%	1,082		1,109		(2.4	)%
Rapid City, SD	474	1,424		1,371		3.9	%	574		557		3.1	%	850		814		4.4	%
Same-Store Total	11,785	$	37,633	$	37,415	0.6	%	$	16,147	$	15,749	2.5	%	$	21,486	$	21,666	(0.8	)%

	% of NOI Contribution		Weighted Average Occupancy						Weighted Average Monthly Rental Rate						Weighted Average Monthly Revenue per Occupied Home
Regions			CY19Q3		CY19Q2		Growth		CY19Q3		CY19Q2		% Change		CY19Q3		CY19Q2		% Change
Minneapolis, MN	20.5	%	90.8	%	93.4	%	(2.6	)%	$	1,478	$	1,439	2.7	%	$	1,590	$	1,557	1.8	%
Rochester, MN	18.9	%	94.6	%	95.4	%	(0.8	)%	1,257		1,233		1.9	%	1,327		1,285		3.3	%
Omaha, NE	9.3	%	93.0	%	93.3	%	(0.3	)%	900		884		1.8	%	977		966		1.2	%
Grand Forks, ND	11.2	%	94.1	%	93.5	%	0.6	%	908		912		(0.4	)%	977		967		1.0	%
Bismarck, ND	10.0	%	93.9	%	92.8	%	1.1	%	957		953		0.4	%	1,031		1,026		0.5	%
St. Cloud, MN	9.1	%	93.8	%	95.4	%	(1.6	)%	959		951		0.8	%	1,050		1,053		(0.3	)%
Sioux Falls, SD	6.1	%	92.2	%	94.4	%	(2.2	)%	867		858		1.0	%	945		927		1.7	%
Billings, MT	5.9	%	95.0	%	95.6	%	(0.6	)%	941		924		1.8	%	1,004		989		1.5	%
Minot, ND	5.0	%	93.9	%	95.0	%	(1.1	)%	999		1,000		(0.1	)%	1,055		1,057		(0.2	)%
Rapid City, SD	4.0	%	96.1	%	95.0	%	1.1	%	963		945		1.9	%	1,042		1,015		2.8	%
Same-Store Total	100.0	%	93.3	%	94.2	%	(0.9	)%	$	1,062	$	1,047	1.4	%	$	1,141	$	1,123	1.5	%

S-11

IRET

SAME-STORE YEAR-TO-DATE COMPARISONS

(in thousands, except property data amounts and percentages)

	Apartment Homes Included	Revenues						Expenses						NOI
Regions		CY19		CY18		% Change		CY19		CY18		% Change		CY19		CY18		% Change
Minneapolis, MN	1,796	$	23,298	$	21,884	6.5	%	$	9,680	$	8,983	7.8	%	$	13,618	$	12,901	5.6	%
Rochester, MN	1,711	18,962		18,155		4.4	%	7,290		7,318		(0.4	)%	11,672		10,837		7.7	%
Omaha, NE	1,370	11,197		11,029		1.5	%	5,149		4,918		4.7	%	6,048		6,111		(1.0	)%
Grand Forks, ND	1,555	12,646		12,566		0.6	%	5,957		5,843		2.0	%	6,689		6,723		(0.5	)%
Bismarck, ND	1,259	10,852		10,662		1.8	%	4,710		4,635		1.6	%	6,142		6,027		1.9	%
St. Cloud, MN	1,190	10,577		10,090		4.8	%	4,890		4,836		1.1	%	5,687		5,254		8.2	%
Sioux Falls, SD	969	7,605		7,417		2.5	%	3,643		3,551		2.6	%	3,962		3,866		2.5	%
Billings, MT	749	6,373		6,010		6.0	%	2,457		2,241		9.6	%	3,916		3,769		3.9	%
Minot, ND	712	6,380		6,212		2.7	%	3,078		3,178		(3.1	)%	3,302		3,034		8.8	%
Rapid City, SD	474	4,162		4,006		3.9	%	1,707		1,724		(1.0	)%	2,455		2,282		7.6	%
Same-Store Total	11,785	$	112,052	$	108,031	3.7	%	$	48,561	$	47,227	2.8	%	$	63,491	$	60,804	4.4	%

	% of NOI Contribution		Weighted Average Occupancy						Weighted Average Monthly Rental Rate						Weighted Average Monthly Revenue per Occupied Home
Regions			CY19		CY18		Growth		CY19		CY18		% Change		CY19		CY18		% Change
Minneapolis, MN	21.4	%	93.0	%	91.5	%	1.5	%	$	1,442	$	1,396	3.3	%	$	1,550	$	1,480	5.0	%
Rochester, MN	18.4	%	95.5	%	93.5	%	2.0	%	1,232		1,219		1.1	%	1,289		1,261		2.4	%
Omaha, NE	9.5	%	93.9	%	94.8	%	(0.9	)%	886		868		2.1	%	968		944		2.4	%
Grand Forks, ND	10.5	%	93.8	%	93.4	%	0.4	%	908		915		(0.8	)%	963		961		0.2	%
Bismarck, ND	9.7	%	94.3	%	94.0	%	0.3	%	951		958		(0.7	)%	1,015		1,001		1.5	%
St. Cloud, MN	9.0	%	95.0	%	94.2	%	0.8	%	950		924		2.8	%	1,040		1,000		4.0	%
Sioux Falls, SD	6.2	%	93.9	%	94.0	%	(0.1	)%	858		833		3.0	%	928		904		2.6	%
Billings, MT	6.2	%	95.7	%	92.2	%	3.5	%	923		913		1.1	%	988		967		2.5	%
Minot, ND	5.2	%	94.9	%	94.4	%	0.5	%	997		1,003		(0.6	)%	1,049		1,027		2.2	%
Rapid City, SD	3.9	%	96.0	%	95.3	%	0.7	%	946		919		2.9	%	1,016		986		3.2	%
Same-Store Total	100.0	%	94.3	%	93.4	%	0.9	%	$	1,046	$	1,031	1.5	%	$	1,120	$	1,091	2.8	%

S-12

IRET

PORTFOLIO SUMMARY⁽¹⁾ 

	Three Months Ended
	9/30/2019			6/30/2019			3/31/2019			12/31/2018			9/30/2018
Number of Apartment Homes
Same-Store	11,785			12,848			12,848			12,847			12,847
Non-Same-Store	1,551			1,127			1,127			855			855
All Communities	13,336			13,975			13,975			13,702			13,702
Average Scheduled Rent(2) per Apartment Home
Same-Store	$	1,062		$	1,028		$	1,013		$	1,018		$	1,027
Non-Same-Store	1,742			1,692			1,772			1,797			1,796
All Communities	$	1,123		$	1,081		$	1,064		$	1,066		$	1,075
Average Revenue per Occupied Apartment Home(3)
Same-Store	$	1,141		$	1,101		$	1,075		$	1,082		$	1,092
Non-Same-Store	1,887			1,848			1,943			1,939			1,956
All Communities	$	1,210		$	1,161		$	1,134		$	1,136		$	1,146
Weighted Average Occupancy(4)
Same-Store	93.3		%	94.3		%	95.6		%	94.4		%	91.9		%
Non-Same-Store	94.2		%	94.8		%	94.9		%	92.7		%	93.4		%
All Communities	93.4		%	94.4		%	95.5		%	94.2		%	92.2		%
Operating Expenses as a % of Scheduled Rent
Same-Store	43.0		%	42.8		%	45.6		%	42.4		%	42.9		%
Non-Same-Store	38.1		%	37.4		%	37.6		%	30.5		%	36.8		%
All Communities	42.3		%	42.2		%	44.7		%	41.1		%	42.3		%
Capital Expenditures
Total Capital Expenditures per Apartment Home – Same-Store	$	178		$	192		$	80		$	254		$	274

(1) Previously reported amounts are not revised for changes in the composition of the same-store properties pool.

(2) Scheduled rent represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes. Average scheduled rent is scheduled rent divided by the total number of apartment homes.

(3) Total revenues divided by the weighted average occupied apartment homes for the period.

(4) Weighted average occupancy is the percentage resulting from dividing actual rental revenue by scheduled rent. We believe that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy and our calculation of weighted average occupancy may not be comparable to that disclosed by other REITs.

S-13

IRET

SAME-STORE CAPITAL EXPENDITURES

($ in thousands, except per home amounts)

	Three Months Ended
	9/30/2019		9/30/2018
Total Same-Store Apartment Homes	11,785		11,785
Turnover	$	1,034	$	1,331
Furniture & Equipment	38		79
Building – Interior	28		130
Building – Exterior	553		1,055
Landscaping & Grounds	446		525
Capital Expenditures	$	2,099	$	3,120
Capital Expenditures per Apartment Home	$	178	$	265

	Nine Months Ended
	9/30/2019		9/30/2018
Total Same-Store Apartment Homes	11,785		11,785
Turnover	$	2,641	$	3,078
Furniture & Equipment	205		207
Building - Interior	182		333
Building - Exterior	1,196		2,324
Landscaping & Grounds	1,001		856
Capital Expenditures	$	5,225	$	6,798
Capital Expenditures per Apartment Home	$	443	$	577

S-14

IRET

2019 Calendar Year Financial Outlook

(in thousands, except per share amounts)

The table below provides revised 2019 calendar year guidance for Net income (loss) available to shareholders, EPS, same-store performance, Core FFO, and Core FFO per share. Our 2019 calendar year revised guidance, along with our actual results for the nine months ended September 30, 2019, is described in the table below. Please note that FFO, Core FFO, and NOI are non-GAAP measures. Refer to Non-GAAP Financial Measures and Reconciliations in this release for additional information on the use and presentation of these non-GAAP measures and for reconciliation to the most directly comparable GAAP measures.

		Range for 12 Months Ended December 31, 2019
	Nine Months Ended September 30, 2019	Full Year Revised Guidance	Prior Guidance	Change from Prior Midpoint
	Actual Results	Amount	Amount	Amount
Net income (loss) available to common shareholders	$24,895	$32,100 to $33,400	$(15,100) to $(13,800)	$47,127
Net income (loss) per share - diluted(1)	$2.11	$2.72 to $2.82	$(1.27) to $(1.17)	$3.99
Same-store growth
Revenue	3.72%	3.25% to 3.75%	3.00% to 4.00%	—
Expenses	2.82%	3.00% to 3.50%	2.75% to 3.75%	—
NOI	4.42%	3.50% to 4.00%	3.00% to 4.00%	0.25%
Core FFO	$36,041	$48,400 to $49,700	$46,800 to $48,100	$1,560
Core FFO per share and Unit - diluted	$2.76	$3.68 to $3.78	$3.62 to $3.72	$0.06
Weighted average shares and Units	13,174	13,144	12,933	211

(1) Earnings per share excludes net income attributable to noncontrolling interests.

Reconciliation of Net Income Available to Common Shareholders to Funds From Operations and Core Funds From Operations

The following table presents reconciliations of Net income (loss) available to common shareholders to FFO and Core FFO. FFO and Core FFO are non-GAAP measures. FFO and Core FFO should not be considered as alternatives to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, and is not necessarily indicative of sufficient cash flow to fund all of our needs or our ability to service indebtedness or make distributions. The outlook and projections provided below are based on current expectations and are forward-looking.

						Revised Midpoint of Outlook for
	Nine Months Ended					12 Months Ended
	September 30, 2019					December 31, 2019
	Amount			Per Share - Diluted		Amount			Per Share - Diluted
Net income (loss) available to common shareholders	$	24,895		$	2.11	$	32,715		$	2.77
Noncontrolling interests - Operating Partnership	2,550					3,749
Depreciation and amortization	55,299					74,522
Less depreciation-non real estate	(235		)			(296		)
Less depreciation-partially owned entities	(1,604		)			(2,053		)
Gain on sale of real estate	(39,774		)			(54,775		)
FFO applicable to common shares and Units	$	41,131		$	3.15	$	53,862		$	4.10
Adjustments to Core FFO:
Loss on extinguishment of debt	1,496					1,749
Gain on litigation settlement	(6,586		)			(6,586		)
Core FFO applicable to common shares and Units	$	36,041		$	2.76	$	49,025		$	3.73

S-15

XML

Cover Page Cover Page	Nov. 06, 2019
Entity Information [Line Items]
Document Type	8-K
Document Period End Date	Nov. 06, 2019
Entity Registrant Name	INVESTORS REAL ESTATE TRUST
Entity Incorporation, State or Country Code	ND
Entity File Number	001-35624
Entity Tax Identification Number	45-0311232
Entity Address, Address Line One	1400 31st Avenue SW
Entity Address, Address Line Two	Suite 60
Entity Address, Address Line Three	Post Office Box 1988
Entity Address, City or Town	Minot
Entity Address, State or Province	ND
Entity Address, Postal Zip Code	58702
City Area Code	701
Local Phone Number	837-4738
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000798359
Amendment Flag	false
Common Shares
Entity Information [Line Items]
Title of 12(b) Security	Common Shares of Beneficial Interest, no par value
Trading Symbol	IRET
Security Exchange Name	NYSE
Series C Cumulative Redeemable Preferred Shares
Entity Information [Line Items]
Title of 12(b) Security	Series C Cumulative Redeemable Preferred Shares
Trading Symbol	IRET-C
Security Exchange Name	NYSE