EX-99.2 3 ex99_2.htm EXHIBIT 99.2
Exhibit 99.2

 
Second Quarter Fiscal 2016
Supplemental Operating and Financial Data
for the Quarter Ended October 31, 2015
 
CONTACT:
Cindy Bradehoft
Director of Investor Relations
Direct Dial: 952-401-4835
E-Mail: cbradehoft@iret.com
  
1400 31st Avenue SW, Suite 60
Minot, ND 58701
Tel: 701.837.4738
Fax: 701.838.7785
www.iret.com
 
Supplemental Financial and Operating Data
Table of Contents
October 31, 2015
 
 
Page
   
Company Background
2
   
Property Cost by Segment and by State
4
   
Key Financial Data
  
Condensed Consolidated Balance Sheets
5
Condensed Consolidated Statements of Operations
6
Funds From Operations
7
Adjusted EBITDA
8
   
Capital Analysis
  
Long-Term Mortgage Debt Analysis
9
Long-Term Mortgage Debt Detail
10-11
Capital Analysis
12
   
Portfolio Analysis
  
Same-Store Properties Net Operating Income Summary
13
Net Operating Income Detail
14-17
Same-Store Properties and All Properties Occupancy Levels by Segment
18
   
Tenant Analysis
  
Multifamily Summary
19
Commercial Leasing Summary
20-22
10 Largest Commercial Tenants - Based on Annualized Base Rent
23
Commercial Lease Expirations
24
   
Growth and Strategy
  
Acquisitions and Development Summary
25
Acquisitions and Development Liquidity Profile
26
   
Definitions
27
 
1
Company Background
Second Quarter Fiscal 2016
 
We are a self-administered, equity real estate investment trust (REIT) investing in a portfolio of income-producing properties located primarily in the upper Midwest.  Our portfolio consists of multifamily; healthcare, including senior housing, and industrial segments.
 
As of October 31, 2015, we hold for investment a portfolio of 177 properties consisting of 94 multifamily properties, 66 healthcare properties (including senior housing), 7 industrial properties and 10 other commercial properties.   Our common shares, Series A preferred shares and Series B preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: IRET, IRETPR and IRETPRB, respectively).
 
Company Snapshot
(as of October 31, 2015)
 
Company Headquarters
Minot, North Dakota
Fiscal Year-End
April 30
Reportable Segments
Multifamily, Healthcare, Industrial
Total Properties Held for Investment
177
Total Units Held for Investment (multifamily properties)
12,269
Total Square Feet Held for Investment (commercial properties)
4.5 million
Common Shares Outstanding (thousands)
122,798
Limited Partnership Units Outstanding (thousands)
13,890
Common Share Distribution - Quarter/Annualized
$0.13/$0.52
Dividend Yield
6.4%
Total Capitalization (see p.12 for detail)
$2.3 billion
 
Investor Information
(as of October 31, 2015)
 
Board of Trustees
 
Jeffrey L. Miller
Trustee and Chairman
John D. Stewart
Trustee, Vice Chairman, and Chair of Nominating and Governance Committee
Jeffrey K. Woodbury
Trustee, Chair of Audit Committee
Linda J. Hall
Trustee, Chair of Compensation Committee
Jeffrey P. Caira
Trustee
Terrance P. Maxwell
Trustee
Pamela J. Moret
Trustee
Stephen L. Stenehjem
Trustee
Timothy P. Mihalick
Trustee, President and Chief Executive Officer

Management
 
Timothy P. Mihalick
President and Chief Executive Officer; Trustee
Diane K. Bryantt
Executive Vice President and Chief Operating Officer
Ted E. Holmes
Executive Vice President and Chief Financial Officer
Michael A. Bosh
Executive Vice President, General Counsel and Assistant Secretary
Mark Reiling
Executive Vice President and Chief Investment Officer
Andrew Martin
Senior Vice President, Residential Property Management
Charles A. Greenberg
Senior Vice President, Commercial and Senior Housing Asset Management

Corporate Headquarters:
1400 31st Avenue SW, Suite 60
Post Office Box 1988
Minot, North Dakota 58702-1988
 
Trading Symbol for Common Shares:  IRET
Stock Exchange Listing:  NYSE
 
Investor Relations Contact:
Cindy Bradehoft
cbradehoft@iret.com
 
2
Common Share Data (NYSE: IRET)
 
   
2nd Quarter
Fiscal Year 2016
    
1st Quarter
Fiscal Year 2016
    
4th Quarter
Fiscal Year 2015
    
3rd Quarter
Fiscal Year 2015
    
2nd Quarter
Fiscal Year 2015
  
High Closing Price
  
$
8.16
    
$
7.44
    
$
8.31
    
$
8.60
    
$
8.59
  
Low Closing Price
  
$
6.51
    
$
6.93
    
$
7.09
    
$
8.05
    
$
7.49
  
Average Closing Price
  
$
7.39
    
$
7.22
    
$
7.52
    
$
8.35
    
$
8.11
  
Closing Price at end of quarter
  
$
8.12
    
$
7.21
    
$
7.17
    
$
8.25
    
$
8.40
  
Common Share Distributions—annualized
  
$
0.520
    
$
0.520
    
$
0.520
    
$
0.520
    
$
0.520
  
Closing Dividend Yield - annualized
    
6.4
%
    
7.2
%
    
7.3
%
    
6.3
%
    
6.2
%
Closing common shares outstanding (thousands)
    
122,798
      
125,520
      
124,456
      
122,134
      
119,809
  
Closing limited partnership units outstanding (thousands)
    
13,890
      
13,921
      
14,000
      
14,398
      
14,731
  
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)
  
$
1,109,907
    
$
1,005,370
    
$
992,729
    
$
1,126,389
    
$
1,130,136
  

Certain statements in these supplemental disclosures are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from projected results. Such risks, uncertainties and other factors include, but are not limited to: intentions and expectations regarding future distributions on our common shares and units, fluctuations in interest rates, the effect of government regulation, the availability of capital, changes in general and local economic and real estate market conditions, competition, our ability to attract and retain skilled personnel, and those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our Form 10-K for fiscal year 2015. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
 
Second Quarter Fiscal 2016 Acquisition and Development
 
   
   
GrandeVille at Cascade Lake
Rochester, MN
Deer Ridge
Jamestown, ND
 
3
Second Quarter Fiscal 2016
 
 
 
 
Percentage of Total Property Cost by State for Properties Held for Investment

 
4
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
 
   
10/31/2015
    
7/31/2015
    
4/30/2015
    
1/31/2015
    
10/31/2014
  
ASSETS
                    
Real estate investments
                    
Property owned
  
$
1,763,150
    
$
1,618,948
    
$
1,546,367
    
$
2,093,148
    
$
2,013,770
  
Less accumulated depreciation
    
(333,570
)
    
(325,536
)
    
(313,308
)
    
(439,153
)
    
(426,545
)
     
1,429,580
      
1,293,412
      
1,233,059
      
1,653,995
      
1,587,225
  
Development in progress
    
89,843
      
133,794
      
153,994
      
114,005
      
146,390
  
Unimproved land
    
22,485
      
24,542
      
25,827
      
27,675
      
24,947
  
Total real estate investments
    
1,541,908
      
1,451,748
      
1,412,880
      
1,795,675
      
1,758,562
  
Assets held for sale
    
115,428
      
453,217
      
463,103
      
44,259
      
41,183
  
Cash and cash equivalents
    
55,133
      
44,770
      
48,970
      
52,148
      
52,999
  
Other investments
    
329
      
329
      
329
      
329
      
329
  
Receivable arising from straight-lining of rents, net of allowance
    
16,097
      
15,612
      
15,617
      
27,169
      
27,425
  
Accounts receivable, net of allowance
    
4,023
      
3,650
      
2,865
      
5,574
      
3,719
  
Real estate deposits
    
444
      
6,614
      
2,489
      
7,494
      
4,924
  
Prepaid and other assets
    
3,289
      
2,224
      
3,174
      
5,580
      
2,263
  
Intangible assets, net of accumulated amortization
    
25,288
      
25,179
      
26,213
      
28,475
      
29,745
  
Tax, insurance, and other escrow
    
7,440
      
8,858
      
10,073
      
11,277
      
16,338
  
Property and equipment, net of accumulated depreciation
    
1,408
      
1,464
      
1,542
      
1,619
      
1,598
  
Goodwill
    
1,715
      
1,718
      
1,718
      
1,940
      
1,940
  
Deferred charges and leasing costs, net of accumulated amortization
    
9,451
      
9,290
      
8,864
      
19,803
      
20,445
  
TOTAL ASSETS
  
$
1,781,953
    
$
2,024,673
    
$
1,997,837
    
$
2,001,342
    
$
1,961,470
  
                                         
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
                                        
LIABILITIES
                                        
Liabilities held for sale
  
$
145,565
    
$
308,812
    
$
321,393
    
$
0
    
$
0
  
Accounts payable and accrued expenses
    
55,460
      
60,506
      
56,399
      
69,901
      
67,037
  
Revolving line of credit
    
17,500
      
83,500
      
60,500
      
50,500
      
40,500
  
Mortgages payable
    
728,973
      
669,734
      
668,112
      
1,006,179
      
1,013,161
  
Construction debt and other
    
128,477
      
165,873
      
144,111
      
132,210
      
107,731
  
TOTAL LIABILITIES
    
1,075,975
      
1,288,425
      
1,250,515
      
1,258,790
      
1,228,429
  
                                         
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES
    
7,105
      
6,361
      
6,368
      
6,340
      
6,373
  
EQUITY
                                        
Investors Real Estate Trust shareholders’ equity
                                        
Series A Preferred Shares of Beneficial Interest
    
27,317
      
27,317
      
27,317
      
27,317
      
27,317
  
Series B Preferred Shares of Beneficial Interest
    
111,357
      
111,357
      
111,357
      
111,357
      
111,357
  
Common Shares of Beneficial Interest
936,893
957,707
951,868
935,287
918,221
Accumulated distributions in excess of net income
    
(455,508
)
    
(452,971
)
    
(438,432
)
    
(430,282
)
    
(420,036
)
Total Investors Real Estate Trust shareholders’ equity
    
620,059
      
643,410
      
652,110
      
643,679
      
636,859
  
Noncontrolling interests – Operating Partnership
    
55,957
      
56,120
      
58,325
      
61,177
      
63,207
  
Noncontrolling interests – consolidated real estate entities
    
22,857
      
30,357
      
30,519
      
31,356
      
26,602
  
Total equity
    
698,873
      
729,887
      
740,954
      
736,212
      
726,668
  
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
  
$
1,781,953
    
$
2,024,673
    
$
1,997,837
    
$
2,001,342
    
$
1,961,470
  
 
5
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
 
   
Six Months Ended
    
Three Months Ended
  
OPERATING RESULTS
  
10/31/2015
    
10/31/2014
    
10/31/2015
    
7/31/2015
    
4/30/2015
    
1/31/2015
    
10/31/2014
  
Real estate revenue
  
$
101,223
    
$
98,767
    
$
51,305
    
$
49,918
    
$
50,252
    
$
51,976
    
$
50,346
  
Real estate expenses
    
38,432
      
36,016
      
20,032
      
18,400
      
18,699
      
19,118
      
17,764
  
Net operating income
    
62,791
      
62,751
      
31,273
      
31,518
      
31,553
      
32,858
      
32,582
  
TRS senior housing revenue
    
2,003
      
1,636
      
965
      
1,038
      
921
      
963
      
843
  
TRS senior housing expenses
    
(1,581
)
    
(1,418
)
    
(812
)
    
(769
)
    
(754
)
    
(825
)
    
(725
)
Depreciation/amortization
    
(28,073
)
    
(25,510
)
    
(14,630
)
    
(13,443
)
    
(13,428
)
    
(12,837
)
    
(13,075
)
Administrative expenses
    
(5,387
)
    
(6,554
)
    
(2,933
)
    
(2,454
)
    
(2,516
)
    
(2,754
)
    
(2,890
)
Other expenses
    
(1,628
)
    
(1,190
)
    
(1,204
)
    
(424
)
    
(332
)
    
(488
)
    
(578
)
Impairment of real estate investments
    
(3,158
)
    
(4,123
)
    
(1,873
)
    
(1,285
)
    
0
      
(540
)
    
(1,803
)
Interest expense
    
(19,327
)
    
(19,701
)
    
(10,131
)
    
(9,196
)
    
(10,361
)
    
(10,009
)
    
(9,954
)
Loss on extinguishment of debt
    
(106
)
    
0
      
(106
)
                                
Interest and other income
    
1,272
      
1,382
      
665
      
607
      
904
      
670
      
696
  
Income before (loss) income on sale of real estate and other investments and income (loss) from discontinued operations
    
6,806
      
7,273
      
1,214
      
5,592
      
5,987
      
7,038
      
5,096
  
(Loss) income on sale of real estate and other investments
    
(175
)
    
(1,762
)
    
0
      
(175
)
    
6,904
      
951
      
1,231
  
Income from continuing operations
    
6,631
      
5,511
      
1,214
      
5,417
      
12,891
      
7,989
      
6,327
  
Income (loss) from discontinued operations
    
14,773
      
160
      
15,463
      
(690
)
    
971
      
1,162
      
(457
)
Net income
  
$
21,404
    
$
5,671
    
$
16,677
    
$
4,727
    
$
13,862
    
$
9,151
    
$
5,870
  
                                                         
Net (income) loss attributable to noncontrolling interest – Operating Partnership
    
(1,713
)
    
39
      
(1,527
)
    
(186
)
    
(908
)
    
(657
)
    
(363
)
Net loss (income) attributable to noncontrolling interests – consolidated real estate entities
    
1,515
      
(747
)
    
1,516
      
(1
)
    
(2,201
)
    
(123
)
    
(393
)
Net income attributable to Investors Real Estate Trust
    
21,206
      
4,963
      
16,666
      
4,540
      
10,753
      
8,371
      
5,114
  
Dividends to preferred shareholders
    
(5,757
)
    
(5,757
)
    
(2,878
)
    
(2,879
)
    
(2,878
)
    
(2,879
)
    
(2,878
)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
  
$
15,449
    
$
(794
)
  
$
13,788
    
$
1,661
    
$
7,875
    
$
5,492
    
$
2,236
  
                                                         
Per Share Data
                                                        
Earnings (loss) per common share from continuing operations – Investors Real Estate Trust – basic & diluted
  
$
.02
    
$
(.01
)
  
$
.00
    
$
.02
    
$
.06
    
$
.04
    
$
.02
  
Earnings (loss) per common share from discontinued operations – Investors Real Estate Trust – basic & diluted
    
.10
      
.00
      
.11
      
(.01
)
    
.01
      
.01
      
.00
  
Net income (loss) per common share – basic & diluted
  
$
.12
    
$
(.01
)
  
$
.11
    
$
.01
    
$
.07
    
$
.05
    
$
.02
  
                                                         
Percentage of Revenues
                                                        
Real estate expenses
    
38.0
%
    
36.5
%
    
39.0
%
    
36.9
%
    
37.2
%
    
36.8
%
    
35.3
%
Depreciation/amortization
    
27.7
%
    
25.8
%
    
28.5
%
    
26.9
%
    
26.7
%
    
24.7
%
    
26.0
%
Administrative expenses
    
5.3
%
    
6.6
%
    
5.7
%
    
4.9
%
    
5.0
%
    
5.3
%
    
5.7
%
Interest
    
19.1
%
    
19.9
%
    
19.7
%
    
18.4
%
    
20.6
%
    
19.3
%
    
19.8
%
Income (loss) from discontinued operations
    
14.6
%
    
0.2
%
    
30.1
%
    
(1.4
%)
    
1.9
%
    
2.2
%
    
(0.9
%)
Net income
    
21.1
%
    
5.7
%
    
32.5
%
    
9.5
%
    
27.6
%
    
17.6
%
    
11.7
%
                                                         
Ratios
                                                        
Adjusted EBITDA(1)/Interest expense
    
2.19
x
    
2.39
x
    
2.08
x
    
2.28
x
    
2.41
x
    
2.53
x
    
2.48
x
Adjusted EBITDA(1)/Interest expense plus preferred distributions
    
1.85
x
    
2.02
x
    
1.74
x
    
1.95
x
    
2.05
x
    
2.14
x
    
2.10
x
 
(1) See Definitions on page 27.  Adjusted EBITDA is a non-GAAP measure; see page 8 for a reconciliation of Adjusted EBITDA to net income.
 
6
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FUNDS FROM OPERATIONS (unaudited)
(in thousands, except per share and unit data)
 
   
Six Months Ended
    
Three Months Ended
  
   
10/31/2015
    
10/31/2014
    
10/31/2015
    
7/31/2015
    
4/30/2015
    
1/31/2015
    
10/31/2014
  
Funds From Operations(1)
                            
Net income attributable to Investors Real Estate Trust
  
$
21,206
    
$
4,963
    
$
16,666
    
$
4,540
    
$
10,753
    
$
8,371
    
$
5,114
  
Less dividends to preferred shareholders
    
(5,757
)
    
(5,757
)
    
(2,878
)
    
(2,879
)
    
(2,878
)
    
(2,879
)
    
(2,878
)
Net income (loss) available to common shareholders
    
15,449
      
(794
)
    
13,788
      
1,661
      
7,875
      
5,492
      
2,236
  
Adjustments:
                                                        
Noncontrolling interests – Operating Partnership
    
1,713
      
(39
)
    
1,527
      
186
      
908
      
657
      
363
  
Depreciation and amortization of real properyty
    
33,119
      
34,661
      
14,860
      
18,259
      
18,083
      
17,706
      
17,624
  
Impairment of real estate investments
    
3,598
      
5,565
      
1,873
      
1,725
      
0
      
540
      
3,245
  
(Gain) loss on depreciable property sales
  
$
(23,733
)
  
$
1,762
      
(23,909
)
    
175
      
(4,890
)
    
(951
)
    
(1,231
)
FFO applicable to common shares and Units(2)
    
30,146
      
41,155
    
$
8,139
    
$
22,006
    
$
21,976
    
$
23,444
    
$
22,237
  
                                                         
FFO per share and unit - basic and diluted
  
$
0.22
    
$
0.31
    
$
0.06
    
$
0.16
    
$
0.16
    
$
0.17
    
$
0.17
  
                                                         
Adjusted funds from operations(1)
                                                        
FFO applicable to common shares and Units
  
$
30,146
    
$
41,155
    
$
8,139
    
$
22,006
    
$
21,976
    
$
23,444
    
$
22,237
  
Adjustments:
                                                        
Tenant improvements at same-store(3) properties
    
(348
)
    
(2,665
)
    
(157
)
    
(191
)
    
(2,939
)
    
(1,984
)
    
(542
)
Leasing costs at same-store properties(3)
    
(395
)
    
(1,247
)
    
(59
)
    
(336
)
    
(684
)
    
(358
)
    
(699
)
Recurring capital expenditures(1)(3)
    
(3,330
)
    
(2,929
)
    
(1,713
)
    
(1,636
)
    
(1,342
)
    
(1,865
)
    
(1,567
)
Straight-line rents
    
(66
)
    
(371
)
    
(309
)
    
242
      
198
      
184
      
(103
)
Non-real estate depreciation
    
180
      
194
      
80
      
101
      
100
      
94
      
96
  
Acquisition costs(4)
    
153
      
104
      
153
      
0
      
112
      
0
      
30
  
Default interest
    
3,116
      
0
      
1,567
      
1,550
      
528
      
0
      
0
  
Loss on extinguishment of debt
    
7,226
      
0
      
7,226
      
0
      
0
      
0
      
0
  
Share-based compensation expense
    
605
      
1,675
      
539
      
66
      
280
      
260
      
601
  
AFFO applicable to common shares and Units
  
$
37,287
    
$
35,916
    
$
15,466
    
$
21,802
    
$
18,229
    
$
19,775
    
$
20,053
  
                                                         
AFFO per share and unit - basic and diluted
  
$
0.27
    
$
0.27
    
$
0.11
    
$
0.16
    
$
0.13
    
$
0.15
    
$
0.15
  
                                                         
Weighted average shares and units
    
138,686
      
132,598
      
138,565
      
138,806
      
137,412
      
135,315
      
133,295
  
 
(1) See Definitions on page 27.
(2) Excluding loss on extinguishment of debt and default interest, FFO would have been $16.9 million and $0.12 per share and unit for the three months ended October 31, 2015 and $40.5 million and $0.29 per share and unit for the six months ended October 31, 2015.
(3) Quarterly information is for properties in the same-store pool at that point in time; consequently, quarterly numbers may not total to year-to-date numbers
(4) Six months ended 10/31/14 and three months ended 7/31/15, 4/30/15, 1/31/15 and 10/31/14 revised to include acquisition costs.
 

7
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (ADJUSTED EBITDA) (unaudited)
(in thousands)
 
   
Six Months Ended
    
Three Months Ended
  
   
10/31/2015
    
10/31/2014
    
10/31/2015
    
7/31/2015
    
4/30/2015
    
1/31/2015
    
10/31/2014
  
Adjusted EBITDA(1)
                            
Net income attributable to Investors Real Estate Trust
  
$
21,206
    
$
4,963
    
$
16,666
    
$
4,540
    
$
10,753
    
$
8,371
    
$
5,114
  
Adjustments:
                                                        
Noncontrolling interests – Operating Partnership
    
1,713
      
(39
)
    
1,527
      
186
      
908
      
657
      
363
  
Income before noncontrolling interests – Operating Partnership
    
22,919
      
4,924
      
18,193
      
4,726
      
11,661
      
9,028
      
5,477
  
Add:
                                                        
Interest expense
    
28,723
      
29,263
      
13,762
      
14,961
      
15,162
      
14,595
      
14,599
  
Loss on extinguishment of debt
    
7,226
      
0
      
7,226
      
0
      
0
      
0
      
0
  
Depreciation/amortization related to real estate investments
    
31,972
      
33,012
      
14,461
      
17,511
      
17,266
      
16,834
      
16,814
  
Amortization related to non-real estate investments
    
1,237
      
1,712
      
442
      
795
      
867
      
916
      
840
  
Amortization related to real estate revenues(2)
    
92
      
131
      
38
      
54
      
50
      
50
      
66
  
Impairment of real estate investments
    
3,598
      
5,565
      
1,873
      
1,725
      
0
      
540
      
3,245
  
Less:
                                                        
Interest income
    
(1,121
)
    
(1,120
)
    
(565
)
    
(556
)
    
(557
)
    
(561
)
    
(560
)
(Gain) loss on sale of real estate and other investments
    
(24,505
)
    
1,762
      
(24,680
)
    
175
      
(4,890
)
    
(951
)
    
(1,231
)
Adjusted EBITDA
  
$
70,141
    
$
75,249
      
30,750
      
39,391
      
39,559
      
40,451
      
39,250
  
 
(1) See Definitions on page 27.
(2) Included in real estate revenue in the Statement of Operations.
 
8
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* ANALYSIS
(in thousands)
 
Debt Maturity Schedule
Annual Expirations
 
Total Mortgage Debt*
 
 
 
  
Future Maturities of Mortgage Debt
  
Fiscal Year
    
Fixed Debt
    
Variable Debt
    
Total Debt
    
Weighted
Average(1)
    
% of
Total Debt
  
2016 (remainder)
    
$
48,580
    
$
0
    
$
48,580
      
3.32
%
    
6.7
%
2017      
17,699
      
7,500
      
25,199
      
4.92
%
    
3.5
%
2018      
17,954
      
13,000
      
30,954
      
4.32
%
    
4.2
%
2019      
35,607
      
15,210
      
50,817
      
5.14
%
    
7.0
%
2020      
111,090
      
54,116
      
165,206
      
5.44
%
    
22.7
%
2021      
119,936
      
0
      
119,936
      
5.08
%
    
16.4
%
2022      
110,098
      
0
      
110,098
      
5.59
%
    
15.1
%
2023      
41,116
      
0
      
41,116
      
4.25
%
    
5.6
%
2024      
65,232
      
0
      
65,232
      
4.28
%
    
9.0
%
2025      
19,607
      
0
      
19,607
      
4.04
%
    
2.7
%
Thereafter
      
52,228
      
0
      
52,228
      
4.13
%
    
7.1
%
Total maturities
    
$
639,147
    
$
89,826
    
$
728,973
      
4.87
%
    
100.0
%
 
(1) Weighted average interest rate of debt that matures in fiscal year.
 
   
10/31/2015
    
7/31/2015
    
4/30/2015
    
1/31/2015(1)
    
10/31/2014(1)
  
Balances Outstanding
                    
Mortgage
                    
Fixed rate
  
$
639,147
    
$
619,166
    
$
629,770
    
$
927,724
    
$
949,002
  
Variable rate
    
89,826
      
50,568
      
38,342
      
78,455
      
64,159
  
Mortgage total
  
$
728,973
    
$
669,734
    
$
668,112
    
$
1,006,179
    
$
1,013,161
  
                                         
Weighted Average Interest Rates Secured
    
4.87
%
    
4.89
%
    
4.95
%
    
5.17
%
    
5.26
%

(1) Periods have not been restated to exclude mortgages held for sale.
 

9
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF OCTOBER 31, 2015
(in thousands)
 
Property
Maturity Date
  
Fiscal 2016
    
Fiscal 2017
    
Fiscal 2018
    
Fiscal 2019
    
Thereafter
    
Total(1)
  
                           
Multifamily
                          
Regency Park Estates - St Cloud, MN
1/1/2016
    
6,604
      
0
      
0
      
0
      
0
      
6,604
  
Pebble Springs – Bismarck, ND
7/1/2016
    
0
      
748
      
0
      
0
      
0
      
748
  
Southview – Minot, ND
7/1/2016
    
0
      
1,023
      
0
      
0
      
0
      
1,023
  
Homestead Gardens I – Rapid City, SD
7/11/2016
    
0
      
6,556
      
0
      
0
      
0
      
6,556
  
River Ridge – Bismarck, ND
6/30/2017
    
0
      
0
      
13,000
      
0
      
0
      
13,000
  
Evergreen II – Isanti, MN
11/1/2017
    
0
      
0
      
2,044
      
0
      
0
      
2,044
  
Ponds – Sartell, MN
11/1/2017
    
0
      
0
      
3,801
      
0
      
0
      
3,801
  
Homestead Gardens II - Rapid City, SD
6/1/2018
    
0
  
0
  
0
  
3,118
  
0
  
3,118
Plaza - Minot, ND
8/1/2018
    
0
      
0
      
0
      
5,281
      
0
      
5,281
  
Greenfield - Omaha, NE
2/1/2019
    
0
      
0
      
0
      
3,528
      
0
      
3,528
  
Brooklyn Heights - Minot, ND
4/1/2019
    
0
      
0
      
0
      
665
      
0
      
665
  
Colton Heights - Minot, ND
4/1/2019
    
0
      
0
      
0
      
374
      
0
      
374
  
Pines - Minot, ND
4/1/2019
    
0
      
0
      
0
      
107
      
0
      
107
  
Summit Park - Minot, ND
4/1/2019
    
0
      
0
      
0
      
923
      
0
      
923
  
Terrace Heights - Minot, ND
4/1/2019
    
0
      
0
      
0
      
154
      
0
      
154
  
Summary of Debt due after Fiscal 2019
      
0
      
0
      
0
      
0
      
427,121
      
427,121
  
Sub-Total Multifamily
    
$
6,604
    
$
8,327
    
$
18,845
    
$
14,150
    
$
427,121
    
$
475,047
  
                                                   
Healthcare
                                                  
Edgewood Vista – Fargo, ND
2/25/2016
    
11,555
      
0
      
0
      
0
      
0
      
11,555
  
Edgewood Vista – Fremont, NE
2/25/2016
    
539
      
0
      
0
      
0
      
0
      
539
  
Edgewood Vista – Hastings, NE
2/25/2016
    
555
      
0
      
0
      
0
      
0
      
555
  
Edgewood Vista – Hermantown I, MN
2/25/2016
    
14,877
      
0
      
0
      
0
      
0
      
14,877
  
Edgewood Vista – Kalispell, MT
2/25/2016
    
556
      
0
      
0
      
0
      
0
      
556
  
Edgewood Vista – Missoula, MT
2/25/2016
    
790
      
0
      
0
      
0
      
0
      
790
  
Edgewood Vista – Omaha, NE
2/25/2016
    
352
      
0
      
0
      
0
      
0
      
352
  
Edgewood Vista – Virginia, MN
2/25/2016
    
12,655
      
0
      
0
      
0
      
0
      
12,655
  
Airport Medical – Bloomington, MN
6/1/2016
    
0
      
251
      
0
      
0
      
0
      
251
  
Park Dental – Brooklyn Center, MN
6/1/2016
    
0
      
144
      
0
      
0
      
0
      
144
  
Sartell 2000 23rd St S – Sartell, MN
12/1/2016
    
0
      
1,136
      
0
      
0
      
0
      
1,136
  
Billings 2300 Grant Road – Billings, MT
12/31/2016
    
0
      
1,106
      
0
      
0
      
0
      
1,106
  
Missoula 3050 Great Northern Ave – Missoula, MT
12/31/2016
    
0
      
1,136
      
0
      
0
      
0
      
1,136
  
High Pointe Health Campus – Lake Elmo, MN
4/1/2017
    
0
      
7,500
      
0
      
0
      
0
      
7,500
  
Edgewood Vista – Billings, MT
4/10/2017
    
0
      
1,754
      
0
      
0
      
0
      
1,754
  
Edgewood Vista – East Grand Forks, MN
4/10/2017
    
0
      
2,671
      
0
      
0
      
0
      
2,671
  
Edgewood Vista – Sioux Falls, SD
4/10/2017
    
0
      
1,005
      
0
      
0
      
0
      
1,005
  
St Michael Clinic – St. Michael, MN
4/1/2018
    
0
      
0
      
1,766
      
0
      
0
      
1,766
  
Garden View Medical – St. Paul, MN
6/30/2018
    
0
      
0
      
0
      
6,890
      
0
      
6,890
  
Ritchie Medical Plaza – St. Paul, MN
6/30/2018
    
0
      
0
      
0
      
8,320
      
0
      
8,320
  
Spring Creek - American Falls - American Falls, ID
9/1/2018
    
0
      
0
      
0
      
2,022
      
0
      
2,022
  
Spring Creek - Eagle - Eagle, ID
9/1/2018
    
0
      
0
      
0
      
1,860
      
0
      
1,860
  
Spring Creek - Meridian - Meridian, ID
9/1/2018
    
0
      
0
      
0
      
3,073
      
0
      
3,073
  
Spring Creek - Soda Springs - Soda Springs, ID
9/1/2018
    
0
      
0
      
0
      
728
      
0
      
728
  
 
10
 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF APRIL 30, 2015 (continued)
(in thousands)
 
Property
Maturity Date
  
Fiscal 2016
    
Fiscal 2017
    
Fiscal 2018
    
Fiscal 2019
    
Thereafter
    
Total(1)
  
                           
Healthcare - continued
                          
Health East St John & Woodwinds - Maplewood & Woodbury, MN
2/1/2019
  
$
0
    
$
0
    
$
0
    
$
6,527
    
$
0
    
$
6,527
  
Summary of Debt due after Fiscal 2019
      
0
      
0
      
0
      
0
      
141,017
      
141,017
  
Sub-Total Healthcare
    
$
41,879
    
$
16,703
    
$
1,766
    
$
29,420
    
$
141,017
    
$
230,785
  
 
Industrial
                          
Stone Container - Fargo, ND
12/1/2015
    
44
      
0
      
0
      
0
      
0
      
44
  
Stone Container - Fargo, ND
12/1/2015
    
53
      
0
      
0
      
0
      
0
      
53
  
Urbandale 3900 106th Street – Urbandale, IA
7/5/2017
    
0
      
0
      
10,343
      
0
      
0
      
10,343
  
Summary of Debt due after Fiscal 2019
      
0
      
0
      
0
      
0
      
1,555
      
1,555
  
Sub-Total Industrial
    
$
97
    
$
0
    
$
10,343
    
$
0
    
$
1,555
    
$
11,995
  
                                                   
All Other
                                                  
Plaza 16 -  Minot, ND
8/1/2018
    
0
      
0
      
0
      
7,008
      
0
      
7,008
  
Summary of Debt due after Fiscal 2019
      
0
      
0
      
0
      
0
      
3,730
      
3,730
  
Sub-Total All Other
    
$
0
    
$
0
    
$
0
    
$
7,008
    
$
3,730
    
$
10,738
  
                                                   
Total
    
$
48,580
    
$
25,030
    
$
30,954
    
$
50,578
    
$
573,423
    
$
728,565
  
 
* Mortgage debt does not include our multi-bank line of credit or construction loans. The line of credit has a maturity date of September 1, 2017. As of October 31, 2015, we had borrowings of $17.5 million outstanding under this line. Construction loans and other debt totaled $128.4 million as of October 31, 2015.
(1) Totals are principal balances as of October 31, 2015.
 
11
 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CAPITAL ANALYSIS
(in thousands, except per share and unit amounts)
 
   
Three Months Ended
  
   
10/31/2015
    
7/31/2015
    
4/30/2015
    
1/31/2015
    
10/31/2014
  
Equity Capitalization
                    
Common shares outstanding
    
122,798
      
125,520
      
124,456
      
122,134
      
119,809
  
Operating partnership (OP) units outstanding
    
13,890
      
13,921
      
14,000
      
14,398
      
14,731
  
Total common shares and OP units outstanding
    
136,688
      
139,441
      
138,456
      
136,532
      
134,540
  
Market price per common share (closing price at end of period)
  
$
8.12
    
$
7.21
    
$
7.17
    
$
8.25
    
$
8.40
  
Equity capitalization-common shares and OP units
  
$
1,109,907
    
$
1,005,370
    
$
992,730
    
$
1,126,389
    
$
1,130,136
  
Recorded book value of preferred shares
  
$
138,674
    
$
138,674
    
$
138,674
    
$
138,674
    
$
138,674
  
Total equity capitalization
  
$
1,248,581
    
$
1,144,044
    
$
1,131,404
    
$
1,265,063
    
$
1,268,810
  
                                         
Debt Capitalization
                                        
Total debt
  
$
1,007,825
    
$
1,211,621
    
$
1,178,851
    
$
1,188,218
    
$
1,160,628
  
Total capitalization
  
$
2,256,406
    
$
2,355,665
    
$
2,310,255
    
$
2,453,281
    
$
2,429,438
  
                                         
Total debt to total capitalization
  
0.45:1
    
0.51:1
    
0.51:1
    
0.48:1
    
0.48:1
  

   
Six Months Ended
    
Three Months Ended
  
   
10/31/2015
    
10/31/2014
    
10/31/2015
    
7/31/2015
    
4/30/2015
    
1/31/2015
    
10/31/2014
  
Earnings to fixed charges(1)
    
1.15
x
    
1.09
x
    
1.12
x
    
1.18
x
    
1.57
x
    
1.41
x
    
1.30
x
Earnings to combined fixed charges and preferred distributions(1)
    
(2
)
    
(3
)
    
(4
)
    
1.01
x
    
1.34
x
    
1.19
x
    
1.10
x
Debt service coverage ratio(1)
    
1.56
x
    
1.64
x
    
1.49
x
    
1.63
x
    
1.64
x
    
1.70
x
    
1.71
x
                                                         
Distribution Data
                                                        
Common shares and units outstanding at record date
    
139,540
      
133,527
      
139,540
      
138,576
      
137,596
      
135,490
      
133,527
  
Total common distribution paid
  
$
36,151
    
$
34,362
    
$
18,136
    
$
18,015
    
$
17,879
    
$
17,613
    
$
17,358
  
Common distribution per share and unit
  
$
.2600
    
$
.2600
    
$
.1300
    
$
.1300
    
$
.1300
    
$
.1300
    
$
.1300
  
Payout ratio (FFO per share and unit basis)(1)
    
118.2
%
    
83.9
%
    
216.7
%
    
81.3
%
    
81.3
%
    
76.5
%
    
76.5
%
Payout ratio (AFFO per share and unit basis)(1)
    
96.3
%
    
96.3
%
    
118.2
%
    
81.3
%
    
100.0
%
    
86.7
%
    
86.7
%
 
(1) See Definitions on page 27.
(2) Due to non-cash asset impairment and loss on sale charges of $3.3 million in the six months ended October 31, 2015, earnings were inadequate to cover combined fixed charges and preferred distributions by approximately $865,000. Excluding the asset impairment and loss on sale charges, the ratio of earnings to combined fixed charges and preferred distributions would have been 1.07 for the six months ended October 31, 2015.
(3) Due to non-cash asset impairment and loss on sale charges of $7.3 million in the six months ended October 31, 2014, earnings were inadequate to cover combined fixed charges and preferred distributions by $3.0 million. Excluding the asset impairment and loss on sale charges, the ratio of earnings to combined fixed charges and preferred distributions would have been 1.12 for the six months ended October 31, 2014.
 (4) Due to non-cash asset impairment and loss on sale charges of $1.9 million in the three months ended October 31, 2015, earnings were inadequate to cover combined fixed charges and preferred distributions by $1.1 million. Excluding the asset impairment and loss on sale charges, the ratio of earnings to combined fixed charges and preferred distributions would have been 1.04 for the three months ended October 31, 2015.


12
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
SAME-STORE PROPERTIES NET OPERATING INCOME SUMMARY
(in thousands)
 
   
Same-Store Properties(1)
    
Same-Store Properties(1)
  
   
Three Months Ended
October 31
    
Six Months Ended
October 31
  
Segment
  
2015
    
2014
    
%
Change
    
2015
    
2014
    
%
Change
  
Multi-Family Residential
  
$
13,676
    
$
15,324
      
(10.8
)%
  
$
28,091
    
$
29,775
      
(5.7
)%
Healthcare
    
11,423
      
11,538
      
(1.0
)%
    
22,801
      
22,698
      
0.5
%
Industrial
    
1,293
      
1,253
      
3.2
%
    
2,552
      
2,406
      
6.1
%
All Other
    
722
      
626
      
15.3
%
    
1,574
      
1,327
      
18.6
%
   
$
27,114
    
$
28,741
      
(5.7
)%
  
$
55,018
    
$
56,206
      
(2.1
)%
 
(1) See list of properties excluded from same-store properties on page ii.
 
13
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
   
Three Months Ended October 31, 2015
  
   
Reporting Segments
      
   
Multifamily
    
Healthcare
    
Industrial
    
All Other
    
Corporate and
Other
    
Total
  
Real estate rental revenue
                        
Same-store(1)
  
$
25,973
    
$
15,323
    
$
1,580
    
$
1,065
    
$
0
    
$
43,941
  
Non-same-store
    
6,134
      
1,056
      
60
      
114
      
0
      
7,364
  
Total
    
32,107
      
16,379
      
1,640
      
1,179
      
0
      
51,305
  
                                                 
Real estate expenses
                                                
Same-store(1)
    
12,297
      
3,900
      
287
      
343
      
0
      
16,827
  
Non-same-store
    
2,921
      
263
      
2
      
19
      
0
      
3,205
  
Total
    
15,218
      
4,163
      
289
      
362
      
0
      
20,032
  
                                                 
Net operating income (NOI)
                                                
Same-store(1)
    
13,676
      
11,423
      
1,293
      
722
      
0
      
27,114
  
Non-same-store
    
3,213
      
793
      
58
      
95
      
0
      
4,159
  
Net operating income
  
$
16,889
    
$
12,216
    
$
1,351
    
$
817
    
$
0
    
$
31,273
  
                                                 
Reconciliation of NOI to net (loss) income available to common shareholders
                                                
TRS senior housing revenue, net of expenses
  
$
0
    
$
0
    
$
0
    
$
0
    
$
153
    
$
153
  
Depreciation/amortization
    
(8,568
)
    
(5,074
)
    
(447
)
    
(461
)
    
(80
)
    
(14,630
)
Administrative expenses
    
0
      
0
      
0
      
0
      
(2,933
)
    
(2,933
)
Other expenses
    
0
      
0
      
0
      
0
      
(1,204
)
    
(1,204
)
Impairment of real estate investments
    
(1,873
)
    
0
      
0
      
0
      
0
      
(1,873
)
Interest expense
    
(6,594
)
    
(3,540
)
    
(233
)
    
(163
)
    
399
      
(10,131
)
Loss on extinguishment of debt
    
(93
)
    
0
      
0
      
(13
)
    
0
      
(106
)
Interest and other income
    
0
      
0
      
0
      
0
      
665
      
665
  
(Loss) income from continuing operations
    
(239
)
    
3,602
      
671
      
180
      
(3,000
)
    
1,214
  
(Loss) income from discontinued operations
    
0
      
(1,060
)
    
0
      
16,523
      
0
      
15,463
  
Net (loss) income
    
(239
)
    
2,542
      
671
      
16,703
      
(3,000
)
    
16,677
  
Net income attributable to noncontrolling interests – Operating Partnership
    
0
      
0
      
0
      
0
      
(1,527
)
    
(1,527
)
Net loss attributable to noncontrolling interests – consolidated real estate entities
    
0
      
0
      
0
      
0
      
1,516
      
1,516
  
Net (loss) income attributable to Investors Real Estate Trust
    
(239
)
    
2,542
      
671
      
16,703
      
(3,011
)
    
16,666
  
Dividends to preferred shareholders
    
0
      
0
      
0
      
0
      
(2,878
)
    
(2,878
)
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS
  
$
(239
)
  
$
2,542
    
$
671
    
$
16,703
    
$
(5,889
)
  
$
13,788
  
 
(1) See list of properties excluded from same-store properties on page ii.
 
14
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
   
Three Months Ended October 31, 2014
  
   
Reporting Segments
      
   
Multifamily
    
Healthcare
    
Industrial
    
All Other
    
Corporate and
Other
    
Total
  
Real estate rental revenue
                        
Same-store(1)
  
$
26,161
    
$
15,507
    
$
1,556
    
$
1,030
    
$
0
    
$
44,254
  
Non-same-store
    
3,433
      
824
      
37
      
1,798
      
0
      
6,092
  
Total
    
29,594
      
16,331
      
1,593
      
2,828
      
0
      
50,346
  
                                                 
Real estate expenses
                                                
Same-store(1)
    
10,837
      
3,969
      
303
      
404
      
0
      
15,513
  
Non-same-store
    
1,327
      
142
      
(31
)
    
813
      
0
      
2,251
  
Total
    
12,164
      
4,111
      
272
      
1,217
      
0
      
17,764
  
                                                 
Net operating income (NOI)
                                                
Same-store(1)
    
15,324
      
11,538
      
1,253
      
626
      
0
      
28,741
  
Non-same-store
    
2,106
      
682
      
68
      
985
      
0
      
3,841
  
Net operating income
  
$
17,430
    
$
12,220
    
$
1,321
    
$
1,611
    
$
0
    
$
32,582
  
                                                 
Reconciliation of NOI to net income (loss) available to common shareholders
                                                
TRS senior housing revenue, net of expenses
  
$
0
    
$
0
    
$
0
    
$
0
    
$
118
    
$
118
  
Depreciation/amortization
    
(6,293
)
    
(4,968
)
    
(390
)
    
(1,314
)
    
(110
)
    
(13,075
)
Administrative expenses
    
0
      
0
      
0
      
0
      
(2,890
)
    
(2,890
)
Other expenses
    
0
      
0
      
0
      
0
      
(578
)
    
(578
)
Impairment of real estate investments
    
0
      
0
      
0
      
(1,803
)
    
0
      
(1,803
)
Interest expense
    
(5,621
)
    
(3,691
)
    
(202
)
    
(521
)
    
81
      
(9,954
)
Interest and other income
    
0
      
0
      
0
      
0
      
696
      
696
  
Income (loss) before gain (loss) on sale of real estate and other investments and loss from discontinued operations
    
5,516
      
3,561
      
729
      
(2,027
)
    
(2,683
)
    
5,096
  
Gain (loss) on sale of real estate and other investments
    
1,418
      
0
      
0
      
(169
)
    
(18
)
    
1,231
  
Income (loss) from continuing operations
    
6,934
      
3,561
      
729
      
(2,196
)
    
(2,701
)
    
6,327
  
Loss from discontinued operations
    
0
      
(10
)
    
0
      
(447
)
    
0
      
(457
)
Net income (loss)
    
6,934
      
3,551
      
729
      
(2,643
)
    
(2,701
)
    
5,870
  
Net income attributable to noncontrolling interests – Operating Partnership
    
0
      
0
      
0
      
0
      
(363
)
    
(363
)
Net income attributable to noncontrolling interests – consolidated real estate entities
    
0
      
0
      
0
      
0
      
(393
)
    
(393
)
Net income (loss) attributable to Investors Real Estate Trust
    
6,934
      
3,551
      
729
      
(2,643
)
    
(3,457
)
    
5,114
  
Dividends to preferred shareholders
    
0
      
0
      
0
      
0
      
(2,878
)
    
(2,878
)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
  
$
6,934
    
$
3,551
    
$
729
    
$
(2,643
)
  
$
(6,335
)
  
$
2,236
  
 
(1) See list of properties excluded from same-store properties on page ii.
 
15
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
   
Six Months Ended October 31, 2015
  
   
Reporting Segments
      
   
Multifamily
    
Healthcare
    
Industrial
    
All Other
    
Corporate and
Other
    
Total
  
Real estate rental revenue
                        
Same-store(1)
  
$
51,889
    
$
30,430
    
$
3,152
    
$
2,136
    
$
0
    
$
87,607
  
Non-same-store
    
11,598
      
1,655
      
110
      
253
      
0
      
13,616
  
Total
    
63,487
      
32,085
      
3,262
      
2,389
      
0
      
101,223
  
                                                 
Real estate expenses
                                                
Same-store(1)
    
23,798
      
7,629
      
600
      
562
      
0
      
32,589
  
Non-same-store
    
5,344
      
366
      
83
      
50
      
0
      
5,843
  
Total
    
29,142
      
7,995
      
683
      
612
      
0
      
38,432
  
                                                 
Net operating income (NOI)
                                                
Same-store(1)
    
28,091
      
22,801
      
2,552
      
1,574
      
0
      
55,018
  
Non-same-store
    
6,254
      
1,289
      
27
      
203
      
0
      
7,773
  
Net operating income
  
$
34,345
    
$
24,090
    
$
2,579
    
$
1,777
    
$
0
    
$
62,791
  
                                                 
Reconciliation of NOI to net income (loss) available to common shareholders
                                                
TRS senior housing revenue, net of expenses
  
$
0
    
$
0
    
$
0
    
$
0
    
$
422
    
$
422
  
Depreciation/amortization
    
(16,161
)
    
(9,903
)
    
(907
)
    
(921
)
    
(181
)
    
(28,073
)
Administrative expenses
    
0
      
0
      
0
      
0
      
(5,387
)
    
(5,387
)
Other expenses
    
0
      
0
      
0
      
0
      
(1,628
)
    
(1,628
)
Impairment of real estate investments
    
(1,873
)
    
0
      
0
      
0
      
(1,285
)
    
(3,158
)
Interest expense
    
(12,517
)
    
(7,049
)
    
(466
)
    
(324
)
    
1,029
      
(19,327
)
Loss on extinguishment of debt
    
(93
)
    
0
      
0
      
(13
)
    
0
      
(106
)
Interest and other income
    
0
      
0
      
0
      
0
      
1,272
      
1,272
  
Income (loss) before loss on sale of real estate and other investments and (loss) income from discontinued operations
    
3,701
      
7,138
      
1,206
      
519
      
(5,758
)
    
6,806
  
Loss on sale of real estate and other investments
    
0
      
0
      
0
      
(175
)
    
0
      
(175
)
Income (loss) from continuing operations
    
3,701
      
7,138
      
1,206
      
344
      
(5,758
)
    
6,631
  
(Loss) income from discontinued operations
    
0
      
(1,072
)
    
0
      
15,845
      
0
      
14,773
  
Net income (loss)
    
3,701
      
6,066
      
1,206
      
16,189
      
(5,758
)
    
21,404
  
Net income attributable to noncontrolling interests – Operating Partnership
    
0
      
0
      
0
      
0
      
(1,713
)
    
(1,713
)
Net loss attributable to noncontrolling interests – consolidated real estate entities
    
0
      
0
      
0
      
0
      
1,515
      
1,515
  
Net income (loss) attributable to Investors Real Estate Trust
    
3,701
      
6,066
      
1,206
      
16,189
      
(5,956
)
    
21,206
  
Dividends to preferred shareholders
    
0
      
0
      
0
      
0
      
(5,757
)
    
(5,757
)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
  
$
3,701
    
$
6,066
    
$
1,206
    
$
16,189
    
$
(11,713
)
  
$
15,449
  
 
(2) See list of properties excluded from same-store properties on page ii.
 
16
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
   
Six Months Ended October 31, 2014
  
   
Reporting Segments
      
   
Multifamily
    
Healthcare
    
Industrial
    
All Other
    
Corporate and
Other
    
Total
  
Real estate rental revenue
                        
Same-store(1)
  
$
51,811
    
$
30,880
    
$
3,053
    
$
2,124
    
$
0
    
$
87,868
  
Non-same-store
    
5,510
      
1,653
      
110
      
3,626
      
0
      
10,899
  
Total
    
57,321
      
32,533
      
3,163
      
5,750
      
0
      
98,767
  
                                                 
Real estate expenses
                                                
Same-store(1)
    
22,036
      
8,182
      
647
      
797
      
0
      
31,662
  
Non-same-store
    
2,346
      
287
      
74
      
1,647
      
0
      
4,354
  
Total
    
24,382
      
8,469
      
721
      
2,444
      
0
      
36,016
  
                                                 
Net operating income (NOI)
                                                
Same-store(1)
    
29,775
      
22,698
      
2,406
      
1,327
      
0
      
56,206
  
Non-same-store
    
3,164
      
1,366
      
36
      
1,979
      
0
      
6,545
  
Net operating income
  
$
32,939
    
$
24,064
    
$
2,442
    
$
3,306
    
$
0
    
$
62,751
  
                                                 
Reconciliation of NOI to net income (loss) available to common shareholders
                                                
TRS senior housing revenue, net of expenses
  
$
0
    
$
0
    
$
0
    
$
0
    
$
218
    
$
218
  
Depreciation/amortization
    
(12,218
)
    
(9,978
)
    
(781
)
    
(2,338
)
    
(195
)
    
(25,510
)
Administrative expenses
    
0
      
0
      
0
      
0
      
(6,554
)
    
(6,554
)
Other expenses
    
0
      
0
      
0
      
0
      
(1,190
)
    
(1,190
)
Impairment of real estate investments
    
0
      
0
      
0
      
(3,369
)
    
(754
)
    
(4,123
)
Interest expense
    
(11,066
)
    
(7,359
)
    
(405
)
    
(1,055
)
    
184
      
(19,701
)
Interest and other income
    
0
      
0
      
0
      
0
      
1,382
      
1,382
  
Income (loss) before gain (loss) on sale of real estate and other investments and (loss) income from discontinued operations
    
9,655
      
6,727
      
1,256
      
(3,456
)
    
(6,909
)
    
7,273
  
Gain (loss) on sale of real estate and other investments
    
1,418
      
0
      
(1,793
)
    
(1,369
)
    
(18
)
    
(1,762
)
Income (loss) from continuing operations
    
11,073
      
6,727
      
(537
)
    
(4,825
)
    
(6,927
)
    
5,511
  
(Loss) income from discontinued operations
    
0
      
(29
)
    
0
      
189
      
0
      
160
  
Net income (loss)
    
11,073
      
6,698
      
(537
)
    
(4,636
)
    
(6,927
)
    
5,671
  
Net loss attributable to noncontrolling interests – Operating Partnership
    
0
      
0
      
0
      
0
      
39
      
39
  
Net income attributable to noncontrolling interests – consolidated real estate entities
    
0
      
0
      
0
      
0
      
(747
)
    
(747
)
Net income (loss) attributable to Investors Real Estate Trust
    
11,073
      
6,698
      
(537
)
    
(4,636
)
    
(7,635
)
    
4,963
  
Dividends to preferred shareholders
    
0
      
0
      
0
      
0
      
(5,757
)
    
(5,757
)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
  
$
11,073
    
$
6,698
    
$
(537
)
  
$
(4,636
)
  
$
(13,392
)
  
$
(794
)
 
(1) See list of properties excluded from same-store properties on page ii.
 
17
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
SAME-STORE PROPERTIES AND ALL PROPERTIES OCCUPANCY LEVELS BY SEGMENT
October 31, 2015 vs. October 31, 2014
 
Segments
  
Same-Store Properties
    
All Properties
  
   
October 31, 2015
    
October 31, 2014
    
October 31, 2015
    
October 31, 2014
  
Multifamily
    
95.4
%
    
96.0
%
    
91.9
%
    
94.6
%
Healthcare
    
96.0
%
    
96.1
%
    
94.9
%
    
96.1
%
Industrial
    
100.0
%
    
100.0
%
    
84.3
%
    
100.0
%

 

18
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
MULTIFAMILY SUMMARY(1)
   
Three Months Ended
  
   
10/31/15
    
07/31/15
    
04/30/15
    
01/31/15
    
10/31/14
  
Number of Units
                    
Same-Store
    
9,877
      
10,268
      
9,895
      
9,895
      
9,895
  
Non-Same-Store
    
2,783
      
1,759
      
1,949
      
1,870
      
1,397
  
All Properties
    
12,660
      
12,027
      
11,844
      
11,765
      
11,292
  
                                         
Average Investment Per Unit
                                        
Same-Store
  
$
72,308
    
$
69,992
    
$
66,741
    
$
66,466
    
$
66,233
  
Non-Same-Store
    
134,136
      
149,281
      
146,337
      
143,999
      
133,763
  
All Properties
  
$
84,701
    
$
81,180
    
$
79,617
    
$
77,723
    
$
74,190
  
                                         
Average Scheduled Rent(2) per Unit
                                        
Same-Store
  
$
885
    
$
861
    
$
843
    
$
841
    
$
835
  
Non-Same-Store
    
1,218
      
1,445
      
1,452
      
1,390
      
1,320
  
All Properties
  
$
952
    
$
944
    
$
942
    
$
920
    
$
892
  
                                         
Total Receipts per Unit(3)
                                        
Same-Store
  
$
877
    
$
848
    
$
838
    
$
835
    
$
844
  
Non-Same-Store
    
826
      
1,037
      
1,062
      
1,087
      
1,121
  
All Properties
  
$
866
    
$
875
    
$
874
    
$
871
    
$
877
  
                                         
Total Recurring Capital Expenditures(2) per Unit
  
$
173
    
$
159
    
$
136
    
$
119
    
$
158
  
                                         
Occupancy
                                        
Same-Store
    
95.4
%
    
93.5
%
    
94.7
%
    
94.0
%
    
95.6
%
Non-Same-Store
    
79.5
%
    
77.7
%
    
78.6
%
    
77.1
%
    
87.6
%
All Properties
    
91.9
%
    
91.2
%
    
92.0
%
    
91.3
%
    
94.6
%
                                         
Operating Expenses as a % of Scheduled Rent
                                        
Same-Store
    
47.1
%
    
44.4
%
    
44.2
%
    
46.0
%
    
43.7
%
Non-Same-Store
    
39.9
%
    
31.9
%
    
30.0
%
    
27.0
%
    
28.8
%
All Properties
    
45.2
%
    
41.7
%
    
40.7
%
    
41.8
%
    
41.1
%
 
(1) Previously reported amounts are not revised for discontinued operations or changes in the composition of the same-store properties pool.
(2) See Definitions on page 27.
(3) Includes vacant units.
 
19
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Same-Store Properties)
 
Commercial Leasing Activity
 
During fiscal year 2016, we have executed new and renewal commercial leases for our same-store rental properties on 258,027 square feet for the three months ended October 31, 2015 and 319,399 square feet for the six months ended October 31, 2015.  Due to our leasing efforts, occupancy in our same-store healthcare and industrial portfolios has remained strong at 97.1% as of October 31, 2015, compared to 97.1% as of October 31, 2014.
 
The total leasing activity for our same-store healthcare and industrial properties, expressed in square feet of leases signed during the period, and the resulting occupancy levels, are as follows:
 
Three Months Ended October 31, 2015 and 2014
 
   
Square Feet of
New Leases(1)
    
Square Feet of
Leases Renewed(1)
    
Total
Square Feet of
Leases Executed(1)
    
Occupancy
  
Segments
  
2015
    
2014
    
2015
    
2014
    
2015
    
2014
    
2015
    
2014
  
Healthcare
    
2,831
      
2,632
      
60,121
      
61,672
      
62,952
      
64,304
      
96.0
%
    
96.1
%
Industrial
    
0
      
0
      
195,075
      
0
      
195,075
      
0
      
100.0
%
    
100.0
%
Total
    
2,831
      
2,632
      
255,196
      
61,672
      
258,027
      
64,304
      
97.1
%
    
97.1
%
 
(1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period.
 
Six Months Ended October 31, 2015 and 2014
 
   
Square Feet of
New Leases(1)
    
Square Feet of
Leases Renewed(1)
    
Total
Square Feet of
Leases Executed(1)
    
Occupancy
  
Segments
  
2015
    
2014
    
2015
    
2014
    
2015
    
2014
    
2015
    
2014
  
Healthcare
    
4,455
      
11,579
      
106,543
      
100,688
      
110,998
      
112,267
      
96.0
%
    
96.1
%
Industrial
    
0
      
0
      
208,401
      
0
      
208,401
      
0
      
100.0
%
    
100.0
%
Total
    
4,455
      
11,579
      
314,944
      
100,688
      
319,399
      
112,267
      
97.1
%
    
97.1
%
 
(1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period.
 
New Leases
 
The following table sets forth the average effective rents and the estimated costs of tenant improvements and leasing commissions, on a per square foot basis, that we are obligated to fulfill under the new leases signed for our same-store healthcare and industrial properties:
 
Three Months Ended October 31, 2015 and 2014
 
   
Square Feet of
New Leases(1)
    
Average Term
in Years
    
Average
Effective Rent(2)
    
Estimated Tenant Improvement Cost per Square Foot(1)
    
Leasing
Commissions per Square Foot(1)
  
   
2015
    
2014
    
2015
    
2014
    
2015
    
2014
    
2015
    
2014
    
2015
    
2014
  
Healthcare
    
2,831
      
2,632
      
2.5
      
3.4
      
19.52
      
19.89
      
24.15
      
9.25
      
2.01
      
0
  
Industrial
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total
    
2,831
      
2,632
      
2.5
      
3.4
    
$
19.52
    
$
19.89
    
$
24.15
    
$
9.25
    
$
2.01
    
$
0
  
 
(1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period.
 
(2) Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
 
20
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Same-Store Properties)
 
Six Months Ended October 31, 2015 and 2014
 
   
Square Feet of
New Leases(1)
    
Average Term
in Years
    
Average
Effective Rent(2)
    
Estimated Tenant Improvement Cost per Square Foot(1)
    
Leasing
Commissions per Square Foot(1)
  
   
2015
    
2014
    
2015
    
2014
    
2015
    
2014
    
2015
    
2014
    
2015
    
2014
  
Healthcare
    
4,455
      
11,579
      
7.2
      
5.5
      
21.02
      
20.82
      
28.11
      
25.05
      
4.92
      
7.03
  
Industrial
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total
    
4,455
      
11,579
      
7.2
      
5.5
    
$
21.02
    
$
20.82
    
$
28.11
    
$
25.05
    
$
4.92
    
$
7.03
  
 
(1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period.
(2) Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
 
Lease Renewals
 
The following table summarizes our lease renewal activity within our same-store healthcare and industrial segments (square feet data in thousands):
 
Three Months Ended October 31, 2015 and 2014
 
     
Square Feet of Leases Renewe(1)
      
Percent of Expiring Leases Renewed(2)
      
Average Term
in Years 
      
Weighted Average Growth (Decline)
in Effective Rents(3)
      
Estimated
Tenant Improvement
Cost per Square Foot(1)
      
Leasing Commissions per Square Foot(1)
  
     
2015
      
2014
      
2015
      
2014
      
2015
      
2014
      
2015
      
2014
      
2015
      
2014
      
2015
      
2014
  
Healthcare
    
60,121
      
61,672
      
86.3
%
    
38.0
%
    
3.7
      
5.6
      
(2.1
%)
    
(8.5
%)
    
7.05
      
11.77
      
0.95
      
0.46
  
Industrial
    
195,075
      
0
      
100.0
%
    
0
%
    
5.0
      
0
      
19.2
%
    
0
%
    
0.56
      
0
      
0
      
0
  
Total
    
255,196
      
61,672
      
94.6
%
    
38.0
%
    
3.9
      
5.6
      
8.1
%
    
(8.5
%)
  
$
2.09
    
$
11.77
    
$
0.22
    
$
0.46
  
 
(1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period.
(2) Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. The category of renewed leases does not include leases that have become month-to-month leases, as the month-to-month leases are considered lease amendments.
(3) Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
 
Six Months Ended October 31, 2015 and 2014
 
     
Square Feet of Leases Renewed(1)
      
Percent of Expiring Leases Renewed(2)
      
Average Term
in Years
      
Weighted Average Growth (Decline)
in Effective Rents(3)
      
Estimated
Tenant Improvement
Cost per Square Foot(1)
      
Leasing Commissions per Square Foot(1)
  
     
2015
      
2014
      
2015
      
2014
      
2015
      
2014
      
2015
      
2014
      
2015
      
2014
      
2015
      
2014
  
Healthcare
    
106,543
      
100,688
      
86.4
%
    
61.3
%
    
5.4
      
5.6
      
6.0
%
    
(3.9
%)
    
10.62
      
9.16
      
3.28
      
1.06
  
Industrial
    
208,401
      
0
      
100.0
%
    
0
%
    
5.0
      
0
      
18.1
%
    
0
%
    
0.59
      
0
      
0.07
      
0
  
Total
    
314,399
      
100,688
      
93.3
%
    
61.3
%
    
5.3
      
5.6
      
10.2
%
    
(3.9
%)
  
$
3.98
    
$
9.16
    
$
1.21
    
$
1.06
  
 
(1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period.
(2) Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. The category of renewed leases does not include leases that have become month-to-month leases, as the month-to-month leases are considered lease amendments.
(3) Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
 
Our ability to maintain or increase occupancy rates is a principal driver of maintaining and increasing the average effective rents in our commercial segments.  The increase in the average growth in effective rents for the industrial segment for the three months ended October 31, 2015 and the six months ended October 31, 2015 when compared to the same periods in the prior fiscal year is due to a 195,075 square foot lease renewal executed at our Stone Container property in Fargo, North Dakota.  This lease was renewed at a 19.2% increase in effective rent primarily due to improved market conditions in the property location.
 
21
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Same-Store Properties)
 
Lease Expirations
 
Our ability to maintain and improve occupancy rates, and base rents, primarily depends upon our continuing ability to re-lease expiring space. The following table reflects the in-service portfolio lease expiration schedule of our consolidated healthcare and industrial properties, including square footage and annualized base rent for expiring leases, as of October 31, 2015.
 
Fiscal Year of Lease Expiration
  
# of Leases
    
Square Footage of
Expiring Leases(2)
    
Percentage of Total
Commercial Segments
Leased Square Footage
    
Annualized Base
Rent of Expiring
Leases at Expiration(3)
    
Percentage of Total
Commercial Segments
Annualized Base Rent
  
2016 (remainder)(1)
    
37
      
593,167
      
15.0
%
  
$
6,295,188
      
11.3
%
2017
    
30
      
201,842
      
5.1
%
    
3,069,721
      
5.5
%
2018
    
20
      
177,701
      
4.5
%
    
4,207,706
      
7.6
%
2019
    
23
      
363,803
      
9.2
%
    
5,004,303
      
9.0
%
2020
    
13
      
166,159
      
4.2
%
    
1,933,197
      
3.5
%
2021
    
19
      
104,879
      
2.7
%
    
2,023,510
      
3.6
%
2022
    
39
      
1,296,621
      
32.7
%
    
17,010,303
      
30.7
%
2023
    
12
      
480,309
      
12.1
%
    
2,312,762
      
4.2
%
2024
    
25
      
194,209
      
4.9
%
    
3,982,194
      
7.2
%
2025
    
5
      
76,691
      
1.9
%
    
1,636,358
      
3.0
%
Thereafter
    
18
      
304,965
      
7.7
%
    
7,994,627
      
14.4
%
Totals
    
241
      
3,960,346
      
100.0
%
  
$
55,469,869
      
100.0
%
 
(1) Includes month-to-month leases. As of October 31, 2015, month-to-month leases accounted for 309,255 square feet of which 286,854 square feet were located in five senior housing facilities in Wyoming.
(2) Assuming that none of the tenants exercise renewal or termination options, and including leases renewed prior to expiration. Also excludes 99,535 square feet of space occupied by us.
(3) Annualized Base Rent is monthly scheduled rent as of October 1, 2015, multiplied by 12.
 

22
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
10 LARGEST COMMERCIAL TENANTS – BASED ON ANNUALIZED BASE RENT(1)
as of October 31, 2015
 
Tenant
  
Number of
Properties
    
Average
Remaining
Lease Term
in Months
    
% of Total
Commercial
Segments’
Minimum
Rents
    
Aggregate
Rentable
Square Feet
    
% of Aggregate
Occupied
Square
Feet
  
Affiliates of Edgewood Vista
    
33
      
59
      
23.5
%(2)
    
1,521,147
      
38.4
%
Fairview Health Services
    
9
      
33
      
6.4
%
    
261,411
      
6.6
%
St. Luke’s Hospital of Duluth, Inc.
    
6
      
45
      
5.6
%
    
198,775
      
5.0
%
Applied Underwriters
    
3
      
16
      
4.0
%
    
141,724
      
3.6
%
PrairieCare Medical LLC
    
2
      
156
      
3.6
%
    
100,292
      
2.5
%
HealthEast Care System
    
1
      
40
      
2.8
%
    
114,316
      
2.9
%
Nebraska Orthopaedic Hospital(3)
    
1
      
161
      
2.2
%
    
61,758
      
1.6
%
Affiliates of Siemens USA (NYSE: SI)
    
1
      
12
      
1.8
%
    
78,360
      
2.0
%
Quality Manufacturing Corp
    
1
      
87
      
1.6
%
    
427,798
      
10.8
%
Ascension Healt
    
1
      
92
      
1.4
%
    
61,820
      
1.6
%
Total/Weighted Average
            
50
      
52.9
%
    
2,967,401
      
75.0
%
 
(1) See Definitions on page 32.
(2) If held for sale properties were excluded, Affiliates of Edgewood Vista percentage of total commercial segments’ minimum rents as of October 1, 2015 would be 29.0%.
(3) The tenant in the Nebraska Orthopaedic Hospital property has exercised its option to purchase the property. However, we can give no assurance if or when the sale of the property will be completed.
 
23
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASE EXPIRATIONS
 as of October 31, 2015
 
   
(dollars in thousands except average rental rates)
  
Fiscal Year
  
Number of
Leases
    
Rentable
Square Feet(1)
    
% of Rentable
Square Feet
    
Annualized
Rent(2)
    
Average
Rental
Rate
    
% of
Annualized
Base Rent
  
Healthcare
                        
2016(remainder)(3)
    
36
      
398,092
      
13.6
%
  
$
5,244
    
$
13.17
      
10.4
%
2017
    
29
      
132,242
      
4.5
%
    
2,696
      
20.39
      
5.4
%
2018
    
19
      
167,999
      
5.7
%
    
4,152
      
24.71
      
8.2
%
2019
    
17
      
206,208
      
7.0
%
    
4,212
      
20.43
      
8.4
%
2020
    
12
      
64,592
      
2.3
%
    
1,336
      
20.68
      
2.7
%
2021 and thereafter
    
112
      
1,960,375
      
66.9
%
    
32,739
      
16.70
      
64.9
%
     
225
      
2,929,508
      
100.0
%
  
$
50,379
    
$
17.20
      
100.0
%
                                                 
Industrial
                                                
2016(remainder)(4)
    
1
      
195,075
      
18.9
%
  
$
1,051
    
$
5.39
      
20.6
%
2017
    
1
      
69,600
      
6.8
%
    
374
      
5.37
      
7.4
%
2018
    
1
      
9,702
      
0.9
%
    
56
      
5.77
      
1.1
%
2019
    
6
      
157,595
      
15.3
%
    
792
      
5.03
      
15.6
%
2020
    
1
      
101,567
      
9.9
%
    
597
      
5.88
      
11.7
%
2021 and thereafter
    
6
      
497,299
      
48.2
%
    
2,221
      
4.47
      
43.6
%
     
16
      
1,030,838
      
100.0
%
  
$
5,091
    
$
4.94
      
100.0
%
                                                 
Total
                                                
2016(remainder)(5)
    
37
      
593,167
      
15.0
%
  
$
6,295
    
$
10.61
      
11.3
%
2017
    
30
      
201,842
      
5.0
%
    
3,070
      
15.21
      
5.5
%
2018
    
20
      
177,701
      
4.5
%
    
4,208
      
23.68
      
7.7
%
2019
    
23
      
363,803
      
9.2
%
    
5,004
      
13.75
      
9.0
%
20120
    
13
      
166,159
      
4.2
%
    
1,933
      
11.63
      
3.5
%
2021 and thereafter
    
118
      
2,457,674
      
62.1
%
    
34,960
      
14.22
      
63.0
%
     
241
      
3,960,346
      
100.0
%
  
$
55,470
    
$
14.01
      
100.0
%
 
(1) Excludes 99,535 square feet of space occupied by us, of which 98,174 square feet is income producing real estate operated within a Taxable REIT Subsidiary.
(2) Annualized Base Rent is monthly scheduled rent as of October 1, 2015 (cash basis), multiplied by 12.
(3) Includes month-to-month leases.  As of October 31, 2015 month-to-month leases accounted for 309,255 square feet.
(4) The industrial segment has no month-to-month leases in place as of October 31, 2015.
(5) Includes month-to-month leases.  As of October 31, 2015 month-to-month leases accounted for 309,255 square feet.
 
24
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2015 ACQUISITIONS AND DEVELOPMENT SUMMARY
as of October 31, 2015
(dollars in thousands)
 
Acquisitions
 
Property
Location
Segment
Acquisition
Date
  
Square
Feet/Units
    
Occupancy
At
Acquisition
    
October 31,
2015 Occupancy
    
Acquisition
Cost
  
Lakeside Medical Plaza
Omaha, NE
Healthcare
August 20, 2015
    
27,819
      
100
%
    
100
%
  
$
6,500
  
Gardens
Grand Forks, ND
Multifamily
September 10, 2015
    
74
      
36.5
%
    
58.1
%
    
9,250
  
GrandeVille at Cascade Lake
Rochester, MN
Multifamily
October 29, 2015
    
276
      
100
%
    
100
%
    
56,000
  
Total Square Feet
    
27,819
                
$
71,750
  
Total Units
    
350
                    
 
Developments Placed in Service
 
Property(1)
Location
Segment
Date Placed in
Service
  
Rentable Square
Feet/Units
    
Occupancy
At
Date Placed in Service
    
October 31,
2015 Occupancy
    
Development
Cost
  
Chateau II
Minot, ND
Multifamily
June 1, 2015
    
72
      
27.8
%
    
77.8
%
  
$
14,641
  
Edina 6565 France SMC III(2)
Edina, MN
Healthcare
June 1, 2015
    
57,624
      
24.5
%
    
24.5
%
    
32,495
  
Renaissance Heights(3)
Williston, ND
Multifamily
July 27, 2015
    
288
      
42.4
%
    
40.3
%
    
62,520
  
PrairieCare Medical
Brooklyn Park, MN
Healthcare
September 8, 2015
    
70,756
      
100
%
    
100
%
    
24,709
  
Minot Southgate Retail
Minot, ND
Other
October 1, 2015
    
7,963
      
0
%
    
0
%
    
2,622
  
Total Square Feet
    
136,343
                
$
136,987
  
Total Units
    
360
                    
 
(1) Development projects that are placed in service in phases are excluded from this table until the entire project has been placed in service. See Development In Progress Summary for additional information on the Deer Ridge, 71 France and Cardinal Point projects, which were partially placed in service during the three months ended October 31, 2015.
(2) Anticipated total cost includes estimated tenant improvement costs that have not been incurred as of October 31, 2015.
(3) We are currently an approximately 70.0% partner in the joint venture entity constructing this project; the anticipated total cost amount given is the total cost to the joint venture entity.
 
Developments in Progress
 
                 
(in thousands)
    
(in fiscal years)
  
Project Name and Location
Location
  
Planned Segment
    
Rentable
Square Feet
or Number of Units
    
Percentage
Leased
or Committed
    
Anticipated
Total Cost(3)
    
Costs as of
October 31, 2015
    
Anticipated Construction Completion
  
Deer Ridge
Jamestown, ND
  
Multifamily
    
163 units
      
17.8
%
  
$
24,519
    
$
23,830
    
3Q 2016
  
Cardinal Point(4)
Grand Forks, ND
  
Multifamily
    
251 units
      
19.1
%
    
44,402
      
40,361
    
4Q 2016
  
71 France(5)
Edina, MN
  
Multifamily
    
241 units
      
20.8
%
    
73,290
      
64,006
    
1Q 2017
  
Monticello Crossings
Monticello, MN
  
Multifamily
    
202 units
      
0
%
    
31,784
      
5,305
    
2Q 2017
  
Other
      
n/a
 
    
n/a
    
n/a
 
    
n/a
 
    
3,095
      
n/a
                             
$
173,995
    
$
136,597
          
 
(4) Includes costs related to development projects that are placed in service in phases (Deer Ridge - $14.3 million, 71 France - $21.3 million, Cardinal Point - $11.1 million).
(5) Anticipated total cost as of October 31, 2015 includes incremental cost increase due to the replacement of the project’s original general contractor.
(6) The project will be constructed in three phases by a joint venture entity in which we have an approximately 52.6% interest. The anticipated total cost amount given is the total cost to the joint venture entity. The anticipated total cost includes approximately 21,772 square feet of retail space.
 

25
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
ACQUISITIONS AND DEVELOPMENT LIQUIDITY PROFILE
as of October 31, 2015
(in millions)
 
Sources of Liquidity
  
Liquidity Needs
  
Liquidity Source
  
Amount
  
Liquidity Need
  
Amount
  
Cash on balance sheet as of 10/31/15(1)
  
$
55
  
Development
  
$
54
  
Line of credit availability(2)
  
$
82
            
Disposition proceeds(3)
  
$
3
            
Construction loan proceeds
  
$
70
            
Total Potential Liquidity
  
$
210
  
Total Liquidity Needs
  
$
54
  
Excess Liquidity / (Need)
  
$
156
            
                   
Capital Sources
  
Six Months Ended 10/31/15
  
FY2015
  
Capital Source
  
Proceeds
Generated
  
Capital Source
  
Proceeds Generated
  
Sale of common shares under dividend
  reinvestment and share purchase plan
  
$
1
  
Sale of common shares under dividend
reinvestment and share purchase plan
  
$
49
  
Proceeds from sales of real estate and
discontinued operations
  
$
371
  
Proceeds from sales of real estate and
discontinued operations
  
$
74
  
Total Capital Generated
  
$
372
  
Total Capital Generated
  
$
123
  
 
(1)
Includes compensating balances of $14 million.
(2)
Line of credit of $100 million less $18 million drawn as of 10/31/15.
(3)
Disposition proceeds consists of $3 million of estimated gross proceeds, less estimated outstanding debt and estimated closing costs of $0  from closed and pending sales for the period from 10/31/15 through 12/10/15. No assurances can be given that pending transactions will be completed on terms currently proposed, or at all.
 
26
Definitions
October 31, 2015
 
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 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. Adjusted EBITDA as calculated by us is not comparable to Adjusted EBITDA reported by other REITs that do not define Adjusted EBITDA exactly as we do.
 
Adjusted funds from operations (AFFO) is calculated by subtracting from Funds from operations (FFO) (1) tenant improvements and leasing costs at same-store properties, and recurring capital expenditures that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding (3) non-real estate depreciation and amortization and (4) share-based compensation expense. We may also adjust FFO for certain unusual non-recurring items that do not produce cash available for distribution to shareholders or are otherwise not representative of our ongoing operating performance. Our calculation subtracts from FFO leasing commissions and tenant improvements at same-store properties only, since we consider tenant improvement and leasing cost levels at non-same-store properties unrepresentative of expected levels at same-store properties. Previously-reported AFFO amounts are not revised for changes in the composition of the same-store properties pool. AFFO is included herein because we consider it to be a measure of a REIT's ability to incur and service debt and to pay distributions to its shareholders. AFFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.
 
Annualized base rent (ABR) is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.
 
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 shares outstanding at the end of the period.
 
Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization.
 
Funds from operations (FFO) - The National Association of Real Estate Investment Trusts, Inc. (NAREIT) defines FFO as “net income (computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.” In addition, in October 2011 NAREIT clarified its computation of FFO to exclude impairment charges for all periods presented. FFO is a non-GAAP measure.  We consider FFO, which is a standard supplemental measure for equity real estate investment trusts, helpful to investors because it facilitates an understanding of the operating performance of properties without giving effect to impairment write-downs and to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time.  Since real estate values instead historically rise or fall with market conditions, we believe that FFO provides investors and management with a more accurate indication of our financial and operating results.
 
Net Operating Income (NOI) is total real estate revenues and gain on involuntary conversion less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance and property management expenses).  We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. 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.
 
Payout ratio (FFO per share and unit basis) - 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.
 
Ratio of earnings to fixed charges - The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Fixed charges consist of mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest.
 
Ratio of earnings to combined fixed charges and preferred distributions - The ratio of earnings to combined fixed charges and preferred distributions is computed by dividing earnings by combined fixed charges and preferred distributions. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Combined fixed charges and preferred distributions consist of fixed charges (mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest) and preferred distributions.
 
Recurring capital expenditures are expenditures (excluding capital expenditures recoverable from tenants and capital expenditures at properties sold during the period) made on a regular or recurring basis to maintain a property’s competitive position within its market, generally with a depreciable life of 5 to 12 years, but excluding (a) capital expenditures made in the year of acquisition and in subsequent periods until the property is classified as same-store (i.e., excluding capital expenditures on non-same-store properties), (b) improvements associated with the expansion or re-development of a building, (c) renovations to a building which change the underlying classification of the building (for example, from industrial to office or Class C office to Class A office) or (d) capital improvements that represent the addition of something new to a property, rather than the replacement of an existing item.
 
Scheduled rent revenue is the total possible revenue from all leasable units and square footage, with occupied space valued at contract rates pursuant to leases and vacant units or square footage at market rates.
 
Same-store properties are properties owned or in service for the entirety of the periods being compared (except for properties for which significant redevelopment or expansion occurred during either of the periods being compared, and properties sold or classified as held for sale), and, in the case of development or re-development properties, which have achieved a target level of occupancy of 90% for multifamily properties and 85% for office, healthcare, industrial and retail properties.
 
US GAAP – Accounting principles generally accepted in the United States of America.
 
 
27