Investors Real Estate Trust Announces Financial And Operating Results For The Quarter And Year-To-Date Ended January 31, 2016

-Reports Funds From Operations of $0.40 and $0.61 per Share/Unit for Third Quarter and Year to Date 2016-

- Increases Total Revenue by 5.4% and 3.7% Year over Year for Third Quarter and Year to Date 2016-

Mar 10, 2016, 16:05 ET from Investors Real Estate Trust

MINOT, N.D., March 10, 2016 /PRNewswire/ -- Investors Real Estate Trust (NYSE: IRET) (NYSE: IRETPR) (NYSE: IRETPRB), a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest, today reported its financial and operating results for the quarter and year to date ended January 31, 2016.

Third Quarter Highlights

  • Reported Funds from Operations ("FFO") of $54.5 million or $0.40 per share/unit
  • Total revenue for the Company increased by $2.8 million, or 5.4%
  • Net Operating Income ("NOI") from all properties increased by $1.6 million, or 4.8%, and Same-Store NOI decreased by approximately $85,000, or 0.3%
  • Executed new and renewal commercial leases for same-store rental properties on 57,206 square feet
  • Disposed of three retail properties for sales prices totaling $3.5 million and nine office properties that secured a $122.6 million non-recourse mortgage loan

Year to Date Highlights

  • Reported FFO of $84.7 million or $0.61 per share/unit
  • Total revenues for the Company increased by $5.7 million, or 3.7%
  • NOI from all properties increased by $1.6 million, or 1.7%, and Same-Store NOI decreased by $1.3 million, or 1.5%
  • Executed new and renewal commercial leases for same-store rental properties on 376,605 square feet
  • Placed into service five development projects totaling $137.8 million

President and Chief Executive Officer Tim Mihalick commented, "We are pleased with our quarterly and year to date results, which demonstrated strong topline growth with revenues increasing by 5.4% and 3.7% for the third quarter and year to date, as well as continued progress in our portfolio repositioning efforts. Within our Same-Store multifamily portfolio, our operating margins were impacted by current market conditions in western North Dakota as well as seasonally low leasing volumes in the winter months, but we expect that we will be able to drive revenues upward as we enter the busier spring and summer leasing seasons. Additionally during the third quarter, we disposed of three retail properties and nine office properties, and have now largely completed our previously announced office and retail disposition program.  As we have previously discussed, this process has resulted in meaningful disruptive FFO performance; however, we believe this capital recycling and portfolio repositioning program will result in a stronger operating platform with a more predictable net income stream."

Mr. Mihalick continued, "Looking ahead, our efforts in the coming quarters will be centered on driving revenue growth and reducing expenses in our market leading segments, as well as enhancing our balance sheet, given our manageable near term debt maturities. We continue to believe in our unique focus in the upper Midwest, which allows us to utilize our local market relationships, development platform and access to institutional capital, providing a meaningful competitive advantage to drive outsized returns over the long term."

Financial Results for the Three and Nine Months Ended January 31, 2016 Compared to the Prior Year Period

Net Income Attributable to Common Shareholders for the quarter ended January 31, 2016 was $36.9 million compared to $5.5 million for the same period of the prior fiscal year.  Net Income Attributable to Common Shareholders for the nine month period ending January 31, 2016 was $52.4 million compared to $4.7 million for the same period of the prior fiscal year. The increase in Net Income Attributable to Common Shareholders was primarily due to gain on extinguishment of debt of $36.5 million recognized in the three and nine months ended January 31, 2016.

Funds from Operations ("FFO") for the quarter ending January 31, 2016 was $54.5 million or $0.40 per share/unit.  FFO for the nine months ending January 31, 2016 was $84.7 million or $0.61 per share/unit. The increase in FFO was primarily due to gain on extinguishment of debt of $36.5 million recognized in the three and nine months ended January 31, 2016. Excluding gain or loss on extinguishment of debt and default interest, FFO would have been $0.14 and $0.44 for the three and nine months ended January 31, 2016, respectively.

The table below highlights the FFO and Adjusted Funds from Operations ("AFFO") results by quarter for the first nine months of fiscal year 2016.  


Fiscal Year To Date,
Nine months

Q3 ending
January 31, 2016

Q2 ending
October 31, 2015

Q1 ending
July 31, 2015

FFO per share

$

.61

$

.40

$

.06

$

.16

AFFO per share

$

.40

$

.13

$

.11

$

.16

 

Operating Results for the Three Months Ended January 31, 2016 Compared to the Prior Year Period

Total revenue for the Company increased by $2.8 million, or 5.4%, in the three months ended January 31, 2016 compared to same period one year ago. 

Total expenses for the Company increased by $2.8 million, or 7.6%, in the three months ended January 31, 2016 compared to same period one year ago. This increase is primarily due to an increase in depreciation expense at new acquisitions and developments placed in service. 

Net Operating Income (NOI) from all properties increased by $1.6 million, or 4.8% for the quarter ending January 31, 2016 compared to the same period one year ago. Non-Same-Store properties, primarily the Company's multifamily developments, provided for an increase in NOI of $1.7 million while Same-Store NOI decreased by approximately $85,000 for the quarter ending January 31, 2016 compared to the same period one year ago. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota and shifting costs across the balance of the Company's portfolio, which had been impacted by the execution of its strategic plan to sell the commercial office and retail segments.

Operating Results for the Nine Months Ended January 31, 2016 Compared to the Prior Year Period

Total revenues for the Company increased by $5.7 million, or 3.7%, in the nine months ended January 31, 2016 compared to same period one year ago. 

Total expenses for the Company increased by $6.2 million, or 5.6%, in the nine months ended January 31, 2016 compared to same period one year ago. This increase is primarily due to an increase in depreciation expense and property management expense at new acquisitions and developments placed in service.

NOI from all properties increased by $1.6 million, or 1.7% for the nine month period ending January 31, 2016 compared to the same period one year ago.  Non-Same-Store properties, primarily the Company's multifamily developments, provided for an increase in NOI of $2.9 million while Same-Store NOI decreased by $1.3 million.  The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota and shifting costs across the balance of the Company's portfolio, which had been impacted by the execution of its strategic plan to sell the commercial office and retail segments.

Multifamily Results for the Three Months Ended January 31, 2016 Compared to the Prior Year Period

Multifamily (including non-same-store) NOI increased by approximately $898,000 or 5.3% for the quarter ending January 31, 2016 compared to the same period one year ago. Continued completion and lease up of our development projects is having a positive effect on total operations.

Multifamily Results for the Nine Months Ended January 31, 2016 Compared to the Prior Year Period

Multifamily (including non-same store) NOI increased by approximately $2.3 million or 4.6% for nine month period ending January 31, 2016 compared to the same period one year ago. Continued completion and lease up of our development projects and accretive acquisitions in the period are having a positive effect on total operations.

Same-Store Multifamily Results for the Three Months Ended January 31, 2016 Compared to the Prior Year Period

Same-Store Multifamily NOI decreased by approximately $725,000 for the quarter ending January 31, 2016 compared to the same period one year ago. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota and shifting costs across the balance of the Company's portfolio, which had been impacted by the execution of its strategic plan to sell the commercial office and retail segments.

The Company's operating margins of Same-Store Multifamily NOI to Gross Revenues improved by 60 basis points quarter over quarter to 53.3% for the third quarter of fiscal year 2016, as compared to the second quarter of fiscal year 2016.

The table below represents Same-Store Multifamily performance for the third quarter ending January 31, 2016 compared to the same period one year ago. Excluding the highly impacted energy markets of Minot and Williston, North Dakota, the balance of the same-store portfolio showed improving NOI results year over year.






 3rd Quarter Increase (Decrease) From Prior Year's 3rd Quarter

Regions

Rentable
Units

Occupancy
1/31/2016

FY16Q3
Weighted
Average
Occupancy(1)

FY16Q3
% of
Actual
NOI

FY16Q3
Average
Rental
Rate(2)

Revenues

Expenses

Net
Operating
Income

Average
Rental
Rate

Weighted
Average
Occupancy

Billings, MT

770

91.9%

91.7%

7.6%

$

887

(3.7%)

11.6%

(13.5%)

2.0%

(5.6%)

Bismarck, ND

909

92.1%

92.1%

12.0%

$

1,061

0.9%

8.9%

(3.6%)

4.8%

(3.9%)

Grand Forks, ND

1,230

93.3%

93.2%

13.5%

$

915

(2.7%)

(15.3%)

8.8%

0.4%

(3.1%)

Minneapolis, MN

319

99.7%

99.0%

3.2%

$

882

8.9%

1.8%

16.5%

3.3%

5.6%

Omaha, NE

1,370

97.4%

96.2%

11.6%

$

858

6.1%

22.4%

(8.0%)

0.7%

5.5%

Rapid City, SD

270

97.8%

96.7%

2.6%

$

830

3.2%

(13.8%)

24.0%

2.5%

0.6%

Rochester, MN

1,104

96.3%

96.7%

15.3%

$

1,065

5.6%

(1.1%)

10.3%

4.4%

1.2%

Sioux Falls, SD

969

99.2%

97.9%

7.6%

$

804

5.5%

12.3%

(1.6%)

3.7%

1.8%

St. Cloud, MN

1,015

96.3%

95.6%

7.9%

$

846

4.4%

3.5%

5.5%

2.9%

1.4%

Topeka, KS

1,042

97.8%

96.8%

9.9%

$

762

7.2%

(5.8%)

18.9%

3.3%

3.9%

Same Store Subtotals

8,998

95.9%

95.2%

91.2%

$

896

3.2%

3.3%

3.1%

2.7%

0.5%

Minot, ND(3)

734

86.8%

88.7%

7.0%

$

1,008

(17.4%)

3.4%

(31.9%)

(10.6%)

(6.8%)

Williston, ND(3)

145

75.2%

69.4%

1.8%

$

1,706

(54.9%)

7.3%

(73.0%)

(39.1%)

(15.9%)

Same Store Property Totals

9,877

94.9%

94.0%

100.0%

$

916

(1.3%)

3.4%

(5.1%)

(0.4%)

(0.9%)


















(1)

Weighted average occupancy is defined as gross potential rent less vacancy losses divided by gross potential rent for the period.

(2)

Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.

(3)

Denotes markets with high exposure to energy-related industries.

 

Same-Store Multifamily Results for the Nine Months Ended January 31, 2016 Compared to the Prior Year Period

Same-Store Multifamily NOI decreased by $2.4 million for the nine months ending January 31, 2016 compared to the same period one year ago. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota and shifting costs across the balance of the Company's portfolio, which had been impacted by the execution of its strategic plan to sell the commercial office and retail segments.

The Company's operating margins of Same-Store Multifamily NOI to Gross Revenues decreased by 290 basis points year over year to 53.9% for the nine months ended January 31, 2016.

The table below represents Same-Store Multifamily performance for the nine months ending January 31, 2016 compared to the same period one year ago. Excluding the highly impacted energy markets of Minot and Williston, North Dakota, the balance of the same-store portfolio showed improving NOI results year over year.






 YTD Increase (Decrease) From Prior Year's YTD

Regions

Rentable
Units

Occupancy
1/31/2016

FY16Q3
Weighted
Average
Occupancy(1)

FY16Q3
% of
Actual
NOI

FY16Q3
Average
Rental
Rate(2)

Revenues

Expenses

Net
Operating
Income

Average
Rental
Rate

Weighted
Average
Occupancy

Billings, MT

770

91.9%

93.1%

7.8%

$

893

(2.0%)

7.4%

(8.2%)

2.0%

(4.1%)

Bismarck, ND

909

92.1%

93.3%

11.8%

$

1,063

(0.5%)

12.7%

(7.4%)

4.0%

(4.5%)

Grand Forks, ND

1,230

93.3%

94.5%

13.1%

$

919

(2.0%)

1.1%

(4.2%)

1.4%

(3.3%)

Minneapolis, MN

319

99.7%

98.0%

3.1%

$

876

6.2%

3.2%

9.1%

3.6%

2.6%

Omaha, NE

1,370

97.4%

96.3%

12.6%

$

864

6.9%

10.9%

3.4%

1.8%

5.1%

Rapid City, SD

270

97.8%

97.2%

2.4%

$

823

1.3%

0.6%

2.0%

1.6%

(0.3%)

Rochester, MN

1,104

96.3%

96.3%

14.6%

$

1,056

6.2%

1.1%

9.9%

3.9%

2.3%

Sioux Falls, SD

969

99.2%

97.4%

7.4%

$

800

4.5%

8.5%

0.1%

3.6%

0.9%

St. Cloud, MN

1,015

96.3%

94.3%

7.0%

$

834

2.9%

8.6%

(4.4%)

2.7%

0.3%

Topeka, KS

1,042

97.8%

95.8%

8.7%

$

753

4.7%

0.1%

9.1%

2.0%

2.8%

Same Store Subtotals

8,998

95.9%

95.3%

88.5%

$

892

2.8%

5.9%

0.3%

2.6%

0.1%

Minot, ND(3)

734

86.8%

90.9%

8.5%

$

1,070

(11.1%)

12.4%

(23.8%)

(4.9%)

(6.2%)

Williston, ND(3)

145

75.2%

74.0%

3.0%

$

2,181

(38.7%)

8.2%

(52.7%)

(22.7%)

(16.0%)

Same Store Property Totals

9,877

94.9%

94.3%

100.0%

$

923

(0.3%)

6.4%

(5.5%)

0.8%

(1.2%)


















(1)

Weighted average occupancy is defined as gross potential rent less vacancy losses divided by gross potential rent for the period.

(2)

Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.

(3)

Denotes markets with high exposure to energy-related industries.

 

In addition to our initiatives to grow our multifamily portfolio through acquisitions and development, we have launched a value add program whereby we will be committing an estimated $3.5 million per quarter to rehab 4,000 units.  Apartments will be remodeled as the leases expire and upgrades will include a variety of new appliances, flooring, lighting, kitchen cabinets, and bathroom upgrades. Management expects these upgrades to range from $10,000 to $13,000 per unit and result in a return on investment of approximately 8% to 10% per year per unit.

Occupancy Levels on a Same-Store Property and All Property Basis

Segments

Same-Store as of
January 31, 2016

Same-Store as of
January 31, 2015

All Properties as of
January 31, 2016

All Properties as of
January 31, 2015

Multifamily

94.9%

94.5%

91.1%

91.3%

Healthcare

95.8%

95.8%

94.7%

95.9%

Industrial

100.0%

100.0%

85.3%

100.0%

 

Development Projects in Progress

As of January 31, 2016, the following projects are being developed:

  • Deer Ridge, a 163 unit, $24.9 million Multifamily development in Jamestown, ND
  • Cardinal Point, a 251 unit $48.2 million Multifamily development in Grand Forks, ND
  • 71 France, a 241 unit, $73.3 million Multifamily development in Edina, MN
  • Monticello Crossings, a 202 unit, $31.8 million Multifamily development in Monticello, MN

Development Projects Placed in Service

During the three months ended January 31, 2016 no development projects were placed in service. During the nine months ended January 31, 2016, development projects totaling $136.8 million were placed in service.

The following table reflects the projects placed into service during the nine months ending January 31, 2016:

Project Name and Location

Segment

Rentable Sq Ft or
Number of Units

Percentage
Leased or
Committed

Development Cost
Incurred

Anticipated
Same Store Date


Chateau II-Minot, ND

Multifamily

72 units

79.2%

$

14,641

1Q 2019

Edina 6565 France SMC III-Edina, MN

Healthcare

57,624 sq ft

24.5%

$

32,725

1Q 2019

Renaissance Heights-Williston, ND

Multifamily

288 units

46.2%

$

62,451

1Q 2019

Minot Southgate Retail-Minot, ND

Other

7,963 sq ft

0%

$

2,623

1Q 2019

PrairieCare Medical-Brooklyn Park, MN

Healthcare

70,756 sq ft

100.0%

$

24,358

1Q 2018





$

136,798












 

Disposition Activity

During the three months ended January 31, 2016, the Company disposed of the following properties:

  • Three retail properties for sales prices totaling $3.5 million, which sales are part of the implementation of the Company's strategic plan to sell its commercial office and retail properties.
  • Nine office properties that secured a $122.6 million non-recourse mortgage loan. Ownership in these properties was transferred to the mortgage lender and the Company removed the debt obligation and accrued interest from its balance sheet.

Liquidity

At January 31, 2016, the Company had $47.1 million cash on hand and $82.5 million available on its line of credit, which matures September 1, 2017.

Shareholder Equity and Capital Structure

Under the Company's share repurchase program, during the three months ended January 31, 2016, the Company repurchased 1.8 million shares at an average price of $7.30 per share.

As of January 31, 2016, the Company's total capitalization was $2.0 billion. Total capitalization is defined as the market value (closing price at end of period) of IRET's outstanding common shares and the imputed market value of the outstanding limited partnership units of its operating partnership IRET Properties (which may be exchanged, at the expiration of a specified holding period, for either cash or its common shares, in the Company's sole discretion, on a one-for-one basis), plus the book value of preferred shares and the outstanding principal balance of the Company's consolidated debt.

Quarterly Distribution

On January 15, 2016, the Company paid a quarterly distribution of $0.1300 per common share and unit of IRET Properties. This was the Company's 179th consecutive distribution. The Company also paid, on December 31, 2015, a quarterly distribution of $0.5156 per share on its Series A preferred shares and a quarterly distribution of $0.4968 per share on its Series B preferred shares.

Subsequent to the end of the third quarter of fiscal year 2016, on March 8, 2016, the Board of Trustees declared a regular quarterly distribution of $0.1300 per common share and unit, payable April 1, 2016 to common shareholders and unitholders of record on March 21, 2016.

Also on March 8, 2016, the Board declared a distribution of $0.5156 per share on the Company's Series A preferred shares, payable March 31, 2016 to Series A preferred shareholders of record on March 21, 2016, and declared a distribution of $0.4968 per share on the Company's Series B preferred shares, payable March 31, 2016 to Series B preferred shareholders of record on March 21, 2016.

Conference Call Information

The Conference Call for 3rd Quarter Earnings is scheduled for Friday, March 11, 2016 at 10:00 A.M. Eastern Time. Conference call access information is as follows:

USA Toll Free Number: 1-877-509-9785

International Toll Free Number: 1-412-902-4132

Canada Toll Free Number: 1-855-669-9657

A webcast of the call will be archived on the "Investor Info/ Presentations & Events/Presentations" page of IRET's website, http://www.iret.com, for one year.  Questions regarding the conference call should be directed to IR@iret.com.

About IRET

We are a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest. 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 with a total of 4.5 million square feet of leasable space.  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). Our press releases and supplemental information are available on our website at www.iret.com or by contacting Investor Relations at 203-682-8377.

Supplemental Information

The Company produced the Supplemental Operating and Financial Data for the Quarter Ended January 31, 2016 ("Supplemental Information") that provides detailed information regarding operating, capital, portfolio and tenant analyses and development and acquisition activity. This Supplemental Information is considered part of this earnings release.

Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined under the section titled "Definitions" in the Supplemental Information.

Forward-Looking Statements

This earnings release, including the Supplemental Information, contains 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, which may be identified by the use of words such as "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "outlook" and similar expressions that do not relate to historical matters, specifically including the Company's future plans, anticipated operating results, anticipated timing of development projects being placed into service, anticipated implementation and results of its value add program, and anticipated timing of properties becoming same-store properties, are based on the Company's expectations, forecasts and assumptions at the time of this earnings release. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in such forward-looking statements.

Such risks, uncertainties and other factors that might cause such differences include, but are not limited to: intentions and expectations regarding future distributions on common shares and units; fluctuations in interest rates; adverse capital and credit market conditions that might affect the Company's access to various sources of capital and cost of capital; adequate insurance coverage; the effect of government regulation; delays or inability to obtain necessary governmental permits and authorizations; changes in general and local economic and real estate market conditions; changes in demand for Company properties that may result in lower than expected occupancy and/or rental rates; ability to acquire quality properties in the Company's targeted markets; ability to successfully dispose of certain assets; competition for tenants from similar competing properties; the Company's ability to attract and retain skilled personnel; cyber-intrusion; abandonment of development or redevelopment opportunities for which the Company has already incurred costs; delays in completing development, redevelopment and/or lease up of properties and increased costs; and those risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K for the fiscal year ended April 30, 2015 and subsequent quarterly reports on Form 10-Q.

The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)



(in thousands, except share data)


January 31, 2016

April 30, 2015

ASSETS





Real estate investments





Property owned

$

1,801,019

$

1,546,367

Less accumulated depreciation


(346,895)


(313,308)



1,454,124


1,233,059

Development in progress


78,341


153,994

Unimproved land


22,304


25,827

Total real estate investments


1,554,769


1,412,880

Assets held for sale


22,064


463,103

Cash and cash equivalents


47,117


48,970

Other investments


50


329

Receivable arising from straight-lining of rents, net of allowance of $766 and $718, respectively


16,778


15,617

Accounts receivable, net of allowance of $163 and $438, respectively


5,118


2,865

Real estate deposits


1,250


2,489

Prepaid and other assets


3,943


3,174

Intangible assets, net of accumulated amortization of $21,214 and $19,610, respectively


23,913


26,213

Tax, insurance, and other escrow


7,834


10,073

Property and equipment, net of accumulated depreciation of $1,116 and $1,464, respectively


1,442


1,542

Goodwill


1,715


1,718

Deferred charges and leasing costs, net of accumulated amortization of $9,078 and $8,077, respectively


9,816


8,864

TOTAL ASSETS

$

1,695,809

$

1,997,837

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY





LIABILITIES





Liabilities held for sale

$

11,449

$

321,393

Accounts payable and accrued expenses


48,778


56,399

Revolving line of credit


17,500


60,500

Mortgages payable


761,645


668,112

Construction debt and other


140,264


144,111

TOTAL LIABILITIES


979,636


1,250,515

COMMITMENTS AND CONTINGENCIES





REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES


7,244


 

6,368

EQUITY





Investors Real Estate Trust shareholders' equity





Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at January 31, 2016 and April 30, 2015, aggregate liquidation preference of $28,750,000)


27,317


 

27,317

Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 shares issued and outstanding at January 31, 2016 and April 30, 2015, aggregate liquidation preference of $115,000,000)


111,357


 

111,357

Common Shares of Beneficial Interest (Unlimited authorization, no par value, 121,033,647 shares issued and outstanding at January 31, 2016, and 124,455,624 shares issued and outstanding at April 30, 2015)


924,658


 

951,868

Accumulated distributions in excess of net income


(434,388)


(438,432)

Total Investors Real Estate Trust shareholders' equity


628,944


652,110

Noncontrolling interests – Operating Partnership (13,863,575 units at January 31, 2016 and 13,999,725 units at April 30, 2015)


58,254


 

58,325

Noncontrolling interests – consolidated real estate entities


21,731


30,519

Total equity


708,929


740,954

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

$

1,695,809

$

1,997,837

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

for the three and nine months ended January 31, 2016 and 2015



(in thousands, except per share data)


Three Months Ended
January 31

Nine Months Ended
January 31



2016


2015


2016


2015

REVENUE









Real estate rentals

$

50,277

$

46,753

$

142,526

$

135,621

Tenant reimbursement


4,492


5,223


13,466


15,122

TRS senior housing revenue


1,003


963


3,006


2,599

TOTAL REVENUE


55,772


52,939


158,998


153,342

EXPENSES









Depreciation/amortization related to real estate investments


14,789


12,627


42,522


37,700

Utilities


3,427


3,564


9,757


9,533

Maintenance


5,821


5,033


16,979


15,081

Real estate taxes


5,029


5,284


14,948


15,052

Insurance


1,214


1,215


3,558


3,745

Property management expenses


4,676


3,825


13,182


10,970

Other property expenses


169


197


344


753

TRS senior housing expenses


912


825


2,493


2,243

Administrative expenses


2,929


2,754


8,316


9,308

Other expenses


86


488


1,714


1,678

Amortization related to non-real estate investments


130


210


470


647

Impairment of real estate investments


162


540


3,320


4,663

TOTAL EXPENSES


39,344


36,562


117,603


111,373

Operating income


16,428


16,377


41,395


41,969

Interest expense


(10,540)


(10,009)


(29,867)


(29,710)

Loss on extinguishment of debt


0


0


(106)


0

Interest income


566


561


1,687


1,681

Other income


135


109


286


371

Income before gain (loss) on sale of real estate and other investments and income from discontinued operations


6,589


7,038


13,395


14,311

Gain (loss) on sale of real estate and other investments


1,446


951


1,271


(811)

Income from continuing operations


8,035


7,989


14,666


13,500

Income from discontinued operations


35,408


1,162


50,181


1,322

NET INCOME


43,443


9,151


64,847


14,822

Net income attributable to noncontrolling interests – Operating Partnership


(4,227)


(657)


(5,940)


(618)

Net loss (income) attributable to noncontrolling interests – consolidated real estate entities


581


(123)


2,096


(870)

Net income attributable to Investors Real Estate Trust


39,797


8,371


61,003


13,334

Dividends to preferred shareholders


(2,879)


(2,879)


(8,636)


(8,636)

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

$

36,918

$

5,492

$

52,367

$

4,698

Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted

$

.04

$

.04

$

.06

$

.03

Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted


.26


.01


.36


.01

NET INCOME PER COMMON SHARE – BASIC AND DILUTED

$

.30

$

.05

$

.42

$

.04

DIVIDENDS PER COMMON SHARE

$

.13

$

.13

$

.39

$

.39

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO

INVESTORS REAL ESTATE TRUST TO FUNDS FROM OPERATIONS

for the three and nine months ended January 31, 2016 and 2015


Three Months Ended January 31,

(in thousands, except per share amounts)

2016

2015


Amount

Weighted
Avg Shares
and Units(1)

Per
Share
And
Unit(2)

Amount

Weighted
Avg Shares
and Units(1)

Per
Share
And
Unit(2)

Net income attributable to Investors Real Estate Trust

$

39,797




$

8,371




Less dividends to preferred shareholders


(2,879)





(2,879)




Net income available to common shareholders


36,918

121,864

$

0.30


5,492

120,855

$

0.05

Adjustments:











Noncontrolling interest – Operating Partnership


4,227

13,877




657

14,461



Depreciation and amortization of real property


14,975





17,706




Impairment of real estate investments


162





540




Gain on depreciable property sales


(1,777)





(951)




FFO applicable to Common Shares
and Units(1)(3)

$

54,505

135,741

$

0.40

$

23,444

135,316

$

0.17

 

Nine Months Ended January 31,

(in thousands, except per share amounts)

2016

2015


Amount

Weighted
Avg Shares
and Units(1)

Per
Share
And
Unit(2)

Amount

Weighted
Avg Shares
and Units(1)

Per
Share
And
Unit(2)

Net income attributable to Investors Real Estate Trust

$

61,003




$

13,334




Less dividends to preferred shareholders


(8,636)





(8,636)




Net income available to common shareholders


52,367

123,793

$

0.42


4,698

116,303

$

0.04

Adjustments:











Noncontrolling interest – Operating Partnership


5,940

13,913




618

17,334



Depreciation and amortization of real property


48,095





52,367




Impairment of real estate investments


3,760





6,105




(Gain) loss on depreciable property sales


(25,512)





811




FFO applicable to Common Shares
and Units(1)(3)

$

84,650

137,706

$

0.61

$

64,599

133,637

$

0.48



(1)

Units of the Operating Partnership are exchangeable for cash, or, at our discretion, for Common Shares on a one-for-one basis.

(2)

Net income attributable to Investors Real Estate Trust is calculated on a per Common Share basis. FFO is calculated on a per Common Share and Unit basis.

(3)

Excluding gain or loss on extinguishment of debt and default interest, FFO would have been $19.6 million and $0.14 per Common Share and Unit for the three months ended January 31, 2016 and $60.1 million and $0.44 per Common Share and Unit for the nine months ended January 31, 2016.

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

RECONCILIATION OF NET OPERATING INCOME TO THE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

for the three months ended January 31, 2016 and 2015


Three Months Ended January 31, 2016

(in thousands)

Multifamily

Healthcare

Industrial

All Other

Total

Real estate revenue

$

33,296

$

18,350

$

1,650

$

1,473

$

54,769

Real estate expenses


15,460


4,208


453


215


20,336

Net operating income

$

17,836

$

14,142

$

1,197

$

1,258


34,433

TRS senior housing revenue, net of expenses










91

Depreciation/amortization










(14,919)

Administrative expenses










(2,929)

Other expenses










(86)

Impairment of real estate investments










(162)

Interest expense










(10,540)

Interest and other income










701

Income before gain on sale of real estate and other investments and income from discontinued operations


6,589

Gain on sale of real estate and other investments


1,446

Income from continuing operations


8,035

Income from discontinued operations


35,408

Net income

$

43,443

 

Three Months Ended January 31, 2015

(in thousands)

Multifamily

Healthcare

Industrial

All Other

Total

Real estate revenue

$

30,256

$

17,491

$

1,741

$

2,488

$

51,976

Real estate expenses


13,318


4,260


501


1,039


19,118

Net operating income

$

16,938

$

13,231

$

1,240

$

1,449


32,858

TRS senior housing revenue, net of expenses










138

Depreciation/amortization










(12,837)

Administrative expenses










(2,754)

Other expenses










(488)

Impairment of real estate investments










(540)

Interest expense










(10,009)

Interest and other income










670

Income before gain on sale of real estate and other investments and income from discontinued operations


7,038

Gain on sale of real estate and other investments


951

Income from continuing operations


7,989

Income from discontinued operations


1,162

Net income

$

9,151

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

RECONCILIATION OF NET OPERATING INCOME TO THE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

for the nine months ended January 31, 2016 and 2015


Nine Months Ended January 31, 2016

(in thousands)

Multifamily

Healthcare

Industrial

All Other

Total

Real estate revenue

$

96,782

$

50,435

$

4,913

$

3,862

$

155,992

Real estate expenses


44,602


12,202


1,138


826


58,768

Net operating income

$

52,180

$

38,233

$

3,775

$

3,036


97,224

TRS senior housing revenue, net of expenses










513

Depreciation/amortization










(42,992)

Administrative expenses










(8,316)

Other expenses










(1,714)

Impairment of real estate investments










(3,320)

Interest expense










(29,867)

Loss on extinguishment of debt










(106)

Interest and other income










1,973

Income before gain on sale of real estate and other investments and income from discontinued operations


13,395

Gain on sale of real estate and other investments


1,271

Income from continuing operations


14,666

Income from discontinued operations


50,181

Net income

$

64,847

 

Nine Months Ended January 31, 2015

(in thousands)

Multifamily

Healthcare

Industrial

All Other

Total

Real estate revenue

$

87,576

$

50,024

$

4,904

$

8,239

$

150,743

Real estate expenses


37,700


12,726


1,223


3,485


55,134

Net operating income

$

49,876

$

37,298

$

3,681

$

4,754


95,609

TRS senior housing revenue, net of expenses










356

Depreciation/amortization










(38,347)

Administrative expenses










(9,308)

Other expenses










(1,678)

Impairment of real estate investments










(4,663)

Interest expense










(29,710)

Interest and other income










2,052

Income before loss on sale of real estate and other investments and income from discontinued operations


14,311

Loss on sale of real estate and other investments


(811)

Income from continuing operations


13,500

Income from discontinued operations


1,322

Net income

$

14,822

 

SOURCE Investors Real Estate Trust



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