UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October 31, 2018~~September 30, 2019

☐ ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-35624

INVESTORS REAL ESTATE TRUST

(Exact name of registrant as specified in its charter)



	North Dakota				45-0311232
	(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

1400 31st31st Avenue SW	Suite 60	Post Office Box 1988	Minot	ND	58702-1988
(Address of principal executive offices) ~~(Zip~~					(Zip code)

~~(701)~~ (701) 837-4738

(Registrant’s telephone number, including area code)

~~N/A~~

~~(Former name, former address, and former fiscal year, if changed since last report.)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.



Yesþ	☑	No	☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



Yesþ	☑	No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated ~~filer”,~~filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filerþ	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller Reporting Company	☐	Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes	☐	No	☑

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

No þ



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

The number of common shares of beneficial interest outstanding as of ~~December 3, 2018,~~October 29, 2019, was ~~119,709,471.~~11,625,141.

Table of Contents

TABLE OF CONTENTS



	Page
Part I. Financial Information
Item 1. Financial Statements - ~~Second~~Third Quarter - ~~Fiscal~~ 2019:	3
Condensed Consolidated Balance Sheets (unaudited) ~~October~~September 30, 2019, and December 31, 2018 ~~and April 30, 2018~~	3
Condensed Consolidated Statements of Operations (unaudited) For the Three and ~~Six~~Nine Months ended ~~October 31,~~September 30, 2019 and 2018 ~~and 2017~~	4
Condensed Consolidated Statements of Comprehensive Income (unaudited) ~~for~~For the Three and ~~Six~~Nine Months ended ~~October 31,~~September 30, 2019 and 2018 ~~and 2017~~	5
Condensed Consolidated Statements of Equity (unaudited) For the ~~Six~~Three and Nine Months ended ~~October 31,~~September 30, 2019 and 2018 ~~and 2017~~	6
Condensed Consolidated Statements of Cash Flows (unaudited) For the ~~Six~~Nine Months ended ~~October 31,~~September 30, 2019 and 2018 ~~and 2017~~	78
Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2726
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3736
Item 4. Controls and Procedures	3837

Part II. Other Information
Item 1. Legal Proceedings	3938
Item 1A. Risk Factors	3938
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3. Defaults Upon Senior Securities	38
Item 4. Mine Safety Disclosures	38
Item 5. Other Information	38
Item 6. Exhibits	39
~~Item 3. Defaults Upon Senior Securities~~	39
~~Item 4. Mine Safety Disclosures~~	39
~~Item 5. Other Information~~	39
~~Item 6. Exhibits~~ Signatures	40

~~Signatures~~

Table of Contents

PART I

~~ITEM~~Item 1. ~~FINANCIAL STATEMENTS - SECOND QUARTER - FISCAL 2019~~Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except per share data)
October 31, 2018 April 30, 2018
ASSETS
Real estate investments
Property owned $ 1,638,072
$ 1,669,764
Less accumulated depreciation (345,015 ) (311,324 )
1,293,057
1,358,440
Unimproved land 6,522
11,476
Mortgage loans receivable 10,530
10,329
Total real estate investments 1,310,109
1,380,245
Cash and cash equivalents 12,777
11,891
Restricted cash 5,085
4,225
Other assets 29,769
30,297
TOTAL ASSETS $ 1,357,740
$ 1,426,658
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses 27,920
29,018
Revolving line of credit 69,500
124,000
Term loans, net of unamortized loan costs of $1,044 and $486, respectively
143,956
69,514
Mortgages payable, net of unamortized loan costs of $1,865 and $2,221, respectively
447,549
509,919
TOTAL LIABILITIES $ 688,925
$ 732,451
COMMITMENTS AND CONTINGENCIES (NOTE 6)

REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES 6,078
6,644
EQUITY
Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $25 per share liquidation preference, 4,118 shares issued and outstanding at October 31, 2018 and April 30, 2018, aggregate liquidation preference of $102,971)
99,456
99,456
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 119,727 shares issued and outstanding at October 31, 2018 and 119,526 shares issued and outstanding at April 30, 2018)
900,526
900,097
Accumulated distributions in excess of net income (416,819 ) (395,669 )
Accumulated other comprehensive income $ 3,321
$ 1,779
Total shareholders’ equity 586,484
605,663
Noncontrolling interests – Operating Partnership (13,678 units at October 31, 2018 and 14,099 units at April 30, 2018)
69,334
�� 73,012
Noncontrolling interests – consolidated real estate entities 6,919
8,888
Total equity $ 662,737
$ 687,563
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY $ 1,357,740
$ 1,426,658

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

~~INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)~~

(in thousands, except per share data)
Three Months Ended October 31, Six Months Ended October 31,
2018 2017 2018 2017
REVENUE $ 45,638
$ 41,866
$ 91,584
$ 82,844
EXPENSES
Property operating expenses, excluding real estate taxes 14,247
14,108
28,706
26,982
Real estate taxes 5,089
4,610
10,159
9,263
Property management expense 1,319
1,372
2,686
2,728
Casualty loss 225
115
450
600
Depreciation and amortization 19,191
17,270
37,803
42,608
Impairment of real estate investments —
—
—
256
General and administrative expenses 3,374
3,118
7,244
7,120
TOTAL EXPENSES $ 43,445
$ 40,593
$ 87,048
$ 89,557
Operating income (loss) 2,193
1,273
4,536
(6,713 )
Interest expense (7,997 ) (8,509 ) (16,382 ) (16,640 )
Loss on extinguishment of debt (4 ) (334 ) (556 ) (533 )
Interest income 410
199
891
220
Other income 19
56
54
263
Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations (5,379 ) (7,315 ) (11,457 ) (23,403 )
Gain (loss) on sale of real estate and other investments (232 ) 5,324
8,992
5,448
Income (loss) from continuing operations (5,611 ) (1,991 ) (2,465 ) (17,955 )
Income (loss) from discontinued operations —
15,130
570
17,815
NET INCOME (LOSS) $ (5,611 ) $ 13,139
$ (1,895 ) $ (140 )
Net (income) loss attributable to noncontrolling interests – Operating Partnership 722
(773 ) 587
871
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities 331
455
(334 ) 826
Net income (loss) attributable to controlling interests (4,558 ) 12,821
(1,642 ) 1,557
Dividends to preferred shareholders (1,706 ) (2,812 ) (3,411 ) (5,098 )
Redemption of preferred shares —
(3,649 ) —
(3,649 )
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ (6,264 ) $ 6,360
$ (5,053 ) $ (7,190 )
Earnings (loss) per common share from continuing operations – basic and diluted $ (0.05 ) $ (0.06 ) $ (0.04 ) $ (0.19 )
Earnings (loss) per common share from discontinued operations – basic and diluted —
$ 0.11
—
0.13
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC & DILUTED $ (0.05 ) $ 0.05
$ (0.04 ) $ (0.06 )
DIVIDENDS PER COMMON SHARE $ 0.07
$ 0.07
$ 0.14
$ 0.14

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

~~INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(unaudited)~~

(in thousands)
Three Months Ended October 31, Six Months Ended October 31,
2018 2017 2018 2017
Net income (loss) $ (5,611 ) $ 13,139
$ (1,895 ) $ (140 )
Other comprehensive income:
Unrealized gain (loss) from derivative instrument 1,333
—
1,542
—
(Gain) loss on derivative instrument reclassified into earnings 90
—
119
—
Total comprehensive income (loss) $ (4,188 ) $ 13,139
$ (234 ) $ (140 )
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership 585
(733 ) 428
871
Net comprehensive (income) loss attributable to noncontrolling interests – consolidated real estate entities 331
455
(334 ) 826
Comprehensive income (loss) attributable to controlling interests $ (3,272 ) $ 12,861
$ (140 ) $ 1,557



	(in thousands, except per share data)
	September 30, 2019			December 31, 2018
ASSETS
Real estate investments
Property owned	$	1,720,352		$	1,627,636
Less accumulated depreciation	(370,492		)	(353,871		)
	1,349,860			1,273,765
Unimproved land	1,376			5,301
Mortgage loans receivable	10,140			10,410
Total real estate investments	1,361,376			1,289,476
Cash and cash equivalents	8,500			13,792
Restricted cash	3,339			5,464
Other assets	30,589			27,265
TOTAL ASSETS	$	1,403,804		$	1,335,997
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses	$	40,546		$	40,892
Revolving lines of credit	103,143			57,500
Notes payable, net of unamortized loan costs of $994 and $1,009, respectively	269,006			143,991
Mortgages payable, net of unamortized loan costs of $1,845 and $1,777, respectively	360,886			444,197
TOTAL LIABILITIES	$	773,581		$	686,580
COMMITMENTS AND CONTINGENCIES (NOTE 6)
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES	$	—		$	5,968
SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $100 par value, 166 units issued and outstanding at September 30, 2019 and no units issued and outstanding at December 31, 2018, aggregate liquidation preference of $16,560)	16,560			—
EQUITY
Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $25 per share liquidation preference, 4,118 shares issued and outstanding at September 30, 2019 and December 31, 2018, aggregate liquidation preference of $102,971)	99,456			99,456
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 11,625 shares issued and outstanding at September 30, 2019 and 11,942 shares issued and outstanding at December 31, 2018)	886,598			899,234
Accumulated distributions in excess of net income	(428,680		)	(429,048		)
Accumulated other comprehensive income (loss)	(9,793		)	(856		)
Total shareholders’ equity	$	547,581		$	568,786
Noncontrolling interests – Operating Partnership (1,223 units at September 30, 2019 and 1,368 units at December 31, 2018)	60,169			67,916
Noncontrolling interests – consolidated real estate entities	5,913			6,747
Total equity	$	613,663		$	643,449
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY	$	1,403,804		$	1,335,997

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~EQUITY~~OPERATIONS(unaudited)

PREFERRED
SHARES
NUMBER
OF
COMMON
SHARES

COMMON
SHARES

ACCUMULATED
DISTRIBUTIONS
IN EXCESS OF
NET INCOME
ACCUMULATED OTHER COMPREHENSIVE INCOME
NONREDEEMABLE
NONCONTROLLING
INTERESTS

TOTAL
EQUITY
Balance April 30, 2017 $ 111,357
121,199
$ 908,905
$ (466,541 ) —
$ 82,437
$ 636,158
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests 1,557
(1,328 ) 229
Distributions – common shares and units (16,881 ) (2,089 ) (18,970 )
Distributions – Series B preferred shares (4,571 ) (4,571 )
Distributions – Series C preferred shares (527 ) (527 )
Shares issued and share-based compensation
75
844
844
Series C preferred shares issued 99,467
99,467
Redemption of units for cash

(5,982 ) (5,982 )
Shares repurchased (111,357 ) (1,080 ) (6,253 ) (3,649 ) (121,259 )
Contributions from nonredeemable noncontrolling interests – consolidated real estate entities 239
239
Distributions to nonredeemable noncontrolling interests – consolidated real estate entities (41 ) (41 )
Other (5 ) (29 )

(29 )
Balance October 31, 2017 $ 99,467
120,189
$ 903,467
$ (490,612 ) —
$ 73,236
$ 585,558

Balance April 30, 2018 $ 99,456
119,526
$ 900,097
$ (395,669 ) $ 1,779
$ 81,900
$ 687,563
Cumulative adjustment upon adoption of ASC 606 and ASC 610-20 627
627
Balance on May 1, 2018 $ 99,456
119,526
$ 900,097
$ (395,042 ) $ 1,779
$ 81,900
$ 688,190
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests (1,642 ) 79
(1,563 )
Other comprehensive income - derivative instrument 1,542
1,542
Distributions – common shares and units (16,724 ) (1,960 ) (18,684 )
Distributions – Series C preferred shares (3,411 ) (3,411 )
Shares issued and share-based compensation
27
777
777
Redemption of units for common shares

331
649
(649 ) —
Redemption of units for cash

(482 ) (482 )
Shares repurchased

(119 ) (615 )
(615 )
Distributions to nonredeemable noncontrolling interests – consolidated real estate entities (2,374 ) (2,374 )
Other
(38 ) (382 ) (261 ) (643 )
Balance October 31, 2018 $ 99,456
119,727
$ 900,526
$ (416,819 ) $ 3,321
$ 76,253
$ 662,737



	(in thousands, except per share data)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
REVENUE	$	47,436		$	45,406		$	139,978		$	134,638
EXPENSES
Property operating expenses, excluding real estate taxes	14,485			14,438			43,231			42,618
Real estate taxes	5,425			5,049			16,231			15,073
Property management expense	1,553			1,269			4,552			4,090
Casualty loss	178			225			911			275
Depreciation and amortization	18,751			19,164			55,299			58,812
Impairment of real estate investments	—			—			—			17,809
General and administrative expenses	3,448			3,147			10,803			11,114
TOTAL EXPENSES	$	43,840		$	43,292		$	131,027		$	149,791
Operating income (loss)	3,596			2,114			8,951			(15,153		)
Interest expense	(7,694		)	(8,193		)	(23,180		)	(25,051		)
Loss on extinguishment of debt	(1,087		)	(540		)	(1,496		)	(673		)
Interest and other income	498			395			1,390			1,544
Income (loss) before gain (loss) on sale of real estate and other investments, gain (loss) on litigation settlement, and income (loss) from discontinued operations	(4,687		)	(6,224		)	(14,335		)	(39,333		)
Gain (loss) on sale of real estate and other investments	39,105			9,095			39,774			11,399
Gain (loss) on litigation settlement	300			—			6,586			—
Income (loss) from continuing operations	34,718			2,871			32,025			(27,934		)
Income (loss) from discontinued operations	—			570			—			14,690
NET INCOME (LOSS)	$	34,718		$	3,441		$	32,025		$	(13,244	)
Dividends to preferred unitholders	(160		)	—			(377		)	—
Net (income) loss attributable to noncontrolling interests – Operating Partnership	(3,145		)	(112		)	(2,550		)	1,888
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	183			(676		)	913			439
Net income (loss) attributable to controlling interests	31,596			2,653			30,011			(10,917		)
Dividends to preferred shareholders	(1,705		)	(1,705		)	(5,116		)	(5,116		)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	29,891		$	948		$	24,895		$	(16,033	)

BASIC
Earnings (loss) per common share from continuing operations – basic	$	2.57		$	0.04		$	2.11		$	(2.44	)
Earnings (loss) per common share from discontinued operations – basic	—			0.04			—			1.10
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC	$	2.57		$	0.08		$	2.11		$	(1.34	)

DILUTED
Earnings (loss) per common share from continuing operations – diluted	$	2.54		$	0.04		$	2.11		$	(2.44	)
Earnings (loss) per common share from discontinued operations – diluted	—			0.04			—			1.10
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED	$	2.54		$	0.08		$	2.11		$	(1.34	)

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~COMPREHENSIVE INCOME(unaudited)

(in thousands)
Six Months Ended
October 31,
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) $ (1,895 ) $ (140 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization, including amortization of capitalized loan costs 38,522
43,176
Depreciation and amortization from discontinued operations, including amortization of capitalized loan costs —
7,077
(Gain) loss on sale of real estate, land, other investments and discontinued operations (9,562 ) (17,686 )
Share-based compensation expense 580
751
Other, net 956
1,164
Changes in other assets and liabilities:

Other assets (725 ) (1,853 )
Accounts payable and accrued expenses (662 ) (4,756 )
Net cash provided by operating activities $ 27,214
$ 27,733
CASH FLOWS FROM INVESTING ACTIVITIES

Principal proceeds on mortgage loans receivable 425
—
Increase in notes receivable (736 ) (6,126 )
Proceeds from sale of discontinued operations —
35,775
Proceeds from sale of real estate and other investments 52,156
18,039
Insurance proceeds received 1,266
530
Payments for acquisitions of real estate assets (837 ) (154,122 )
Payments for development and re-development of real estate assets —
(2,817 )
Payments for improvements of real estate assets (8,547 ) (10,178 )
Payments for improvements of real estate assets from discontinued operations —
(803 )
Net cash provided by (used by) investing activities $ 43,727
$ (119,702 )
CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments on mortgages payable, including prepayment penalties (63,481 ) (52,143 )
Proceeds from revolving lines of credit 53,017
293,350
Principal payments on revolving lines of credit (107,517 ) (102,900 )
Proceeds from term loan 74,352
—
Proceeds from construction debt —
3,124
Payment on financing liability —
(7,900 )
Repurchase of common shares (615 ) (6,253 )
Proceeds from issuance of Series C preferred shares, net of issue costs —
99,467
Repurchase of Series B preferred shares —
(115,005 )
Repurchase of partnership units (482 ) (5,982 )
Distributions paid to common shareholders (16,724 ) (16,881 )
Distributions paid to preferred shareholders (3,411 ) (5,333 )
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership (1,960 ) (2,089 )
Distributions paid to noncontrolling interests – consolidated real estate entities (2,374 ) (40 )
Net cash provided by (used by) financing activities $ (69,195 ) $ 81,415
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 1,746
(10,554 )
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 16,116
56,800
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 17,862
$ 46,246



	(in thousands)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	34,718		$	3,441		$	32,025		$	(13,244	)
Other comprehensive income:
Unrealized gain (loss) from derivative instrument	(2,251		)	948			(9,819		)	3,106
(Gain) loss on derivative instrument reclassified into earnings	56			64			26			193
Total comprehensive income (loss)	$	32,523		$	4,453		$	22,232		$	(9,945	)
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership	(2,935		)	(217		)	(1,680		)	1,542
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	183			(676		)	913			439
Comprehensive income (loss) attributable to controlling interests	$	29,771		$	3,560		$	21,465		$	(7,964	)

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY(unaudited)



	(in thousands, except per share data)
	PREFERRED SHARES		NUMBER OF COMMON SHARES		COMMON SHARES			ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			NONREDEEMABLE NONCONTROLLING INTERESTS			TOTAL EQUITY
Balance December 31, 2017	$	99,456	12,004		$	902,305		$	(374,365	)	$	(539	)	$	87,186		$	714,043
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests								(10,917		)				(1,764		)	(12,681		)
Change in fair value of derivatives											3,299						3,299
Distributions - common shares and units ($2.10 per share and unit)								(25,129		)				(2,949		)	(28,078		)
Distributions – Series C preferred shares ($1.2421875 per Series C share)								(5,116		)							(5,116		)
Shares issued and share-based compensation			6		1,032												1,032
Redemption of units for common shares			24		658									(658		)	—
Redemption of units for cash														(2,751		)	(2,751		)
Shares repurchased			(67	)	(3,415		)										(3,415		)
Distributions to nonredeemable noncontrolling interests – consolidated real estate entities														(2,428		)	(2,428		)
Cumulative adjustment upon adoption of ASC 606 and ASC 610-20								627									627
Other			(6	)	(212		)							(145		)	(357		)
Balance September 30, 2018	$	99,456	11,961		$	900,368		$	(414,900	)	$	2,760		$	76,491		$	664,175


Balance December 31, 2018	$	99,456	11,942		$	899,234		$	(429,048	)	$	(856	)	$	74,663		$	643,449
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests								30,011						1,811			31,822
Change in fair value of derivatives											(8,937		)				(8,937		)
Distributions - common shares and units ($2.10 per share and unit)								(24,527		)				(2,673		)	(27,200		)
Distributions – Series C preferred shares ($1.2421875 per Series C share)								(5,116		)							(5,116		)
Shares issued and share-based compensation			11		1,452												1,452
Redemption of units for common shares			8		(511		)							511			—
Redemption of units for cash														(8,135		)	(8,135		)
Shares repurchased			(329	)	(18,023		)										(18,023		)
Acquisition of redeemable noncontrolling interests					4,529												4,529
Other			(7	)	(83		)							(95		)	(178		)
Balance September 30, 2019	$	99,456	11,625		$	886,598		$	(428,680	)	$	(9,793	)	$	66,082		$	613,663

See accompanying Notes to Condensed Consolidated Financial Statements.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS(unaudited, continued)~~EQUITY(unaudited)

(in thousands)
Six Months Ended
October 31,
2018 2017
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Operating partnership units converted to shares $ 649
$ —
Decrease to accounts payable included within real estate investments (329 ) (2,106 )
Notes and accounts receivable converted to equity 670
—
Construction debt reclassified to mortgages payable —
23,300

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest $ 17,059
$ 17,122



	(in thousands, except per share data)
	PREFERRED SHARES		NUMBER OF COMMON SHARES		COMMON SHARES			ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			NONREDEEMABLE NONCONTROLLING INTERESTS			TOTAL EQUITY
Balance June 30, 2018	$	99,456	11,939		$	899,480		$	(407,482	)	$	1,748		$	79,181		$	672,383
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests								2,653						964			3,617
Change in fair value of derivatives											1,012						1,012
Distributions - common shares and units ($0.70 per share and unit)								(8,366		)				(972		)	(9,338		)
Distributions – Series C preferred shares ($0.4140625 per Series C share)								(1,705		)							(1,705		)
Shares issued and share-based compensation			1		421												421
Redemption of units for common shares			21		624									(624		)	—
Redemption of units for cash														(4		)	(4		)
Distributions to nonredeemable noncontrolling interests – consolidated real estate entities														(2,185		)	(2,185		)
Other			—		(157		)							131			(26		)
Balance September 30, 2018	$	99,456	11,961		$	900,368		$	(414,900	)	$	2,760		$	76,491		$	664,175


Balance June 30, 2019	$	99,456	11,656		$	888,541		$	(450,433	)	$	(7,598	)	$	64,034		$	594,000
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests								31,596						2,962			34,558
Change in fair value of derivatives											(2,195		)				(2,195		)
Distributions – common shares and units ($0.70 per share and unit)								(8,138		)				(857		)	(8,995		)
Distributions – Series C preferred shares ($0.4140625 per Series C share)								(1,705		)							(1,705		)
Shares issued and share-based compensation			8		472												472
Redemption of units for common shares			—		10									(10		)	—
Redemption of units for cash														(11		)	(11		)
Shares repurchased			(39	)	(2,346		)										(2,346		)
Other			—		(79		)							(36		)	(115		)
Balance September 30, 2019	$	99,456	11,625		$	886,598		$	(428,680	)	$	(9,793	)	$	66,082		$	613,663

See accompanying Notes to Condensed Consolidated Financial Statements.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)



	(in thousands)
	Nine Months Ended September 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	32,025		$	(13,244	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization, including amortization of capitalized loan costs	56,169			59,895
(Gain) loss on sale of real estate, other investments, and discontinued operations	(39,774		)	(25,799		)
(Gain) loss on litigation settlement	(1,349		)	—
Share-based compensation expense	1,452			1,032
Impairment of real estate investments	—			17,809
Other, net	2,476			1,911
Changes in other assets and liabilities:
Other assets	(705		)	4,433
Accounts payable and accrued expenses	1,348			(2,855		)
Net cash provided by (used by) operating activities	$	51,642		$	43,182
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in notes receivable	(159		)	(7,509		)
Proceeds from sale of real estate and other investments	93,804			85,384
Payments for acquisitions of real estate assets	(156,650		)	(130,144		)
Payments for improvements of real estate assets	(11,860		)	(11,386		)
Other investing activities	247			1,488
Net cash provided by (used by) investing activities	$	(74,618	)	$	(62,167	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages payable	59,900			—
Principal payments on mortgages payable	(145,279		)	(92,577		)
Proceeds from revolving lines of credit	223,643			125,017
Principal payments on revolving lines of credit	(178,000		)	(269,517		)
Proceeds from notes payable	124,878			74,352
Principal payments on construction debt	—			(21,149		)
Payments for acquisition of noncontrolling interests – consolidated real estate entities	(1,260		)	—
Repurchase of common shares	(18,023		)	(3,415		)
Repurchase of partnership units	(8,135		)	(2,751		)
Distributions paid to common shareholders	(32,925		)	(25,129		)
Distributions paid to preferred shareholders	(5,116		)	(5,116		)
Distributions paid to preferred unitholders	(377		)	—
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership	(3,630		)	(2,949		)
Distributions paid to noncontrolling interests – consolidated real estate entities	(95		)	(2,428		)
Other financing activities	(22		)	—
Net cash provided by (used by) financing activities	$	15,559		$	(225,662	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(7,417		)	(244,647		)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	19,256			286,226
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	11,839		$	41,579



SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures	$	9	$	(1,200	)
Distributions declared but not paid to common shareholders	—		9,339
Distributions declared but not paid to preferred shareholders	—		1,705
Gain on litigation settlement	1,349		—
Property acquired through issuance of Series D preferred units	16,560		—

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	22,746	$	24,139

See accompanying Notes to Condensed Consolidated Financial Statements.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited)

for the ~~six~~nine months ended ~~October 31,~~September 30, 2019 and 2018 ~~and 2017~~

NOTE 1 • ORGANIZATION

Investors Real Estate Trust, collectively with our consolidated subsidiaries (“IRET,” “we,” “us,” or “our”), is a real estate investment trust (“REIT”) focused on the ownership, management, acquisition, redevelopment, and development of apartment ~~communities.~~communities, primarily in Midwest markets. As of ~~October 31, 2018,~~September 30, 2019, we owned interests in 8784 apartment communities consisting of ~~13,702~~13,336 apartment homes.

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

We conduct a majority of our business activities through our consolidated operating partnership, IRET Properties, A North Dakota Limited Partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities. The accompanying condensed consolidated financial statements include our accounts and the accounts of all our subsidiaries in which we maintain a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation. ~~Our fiscal year currently ends on April 30.~~ On September 20, 2018, our Board of Trustees approved a change in our fiscal year-end ~~beginning January 1, 2019,~~ from April 30 to December ~~31.~~31, beginning on January 1, 2019. We ~~will file~~filed a transition report on Form ~~10-K~~10-KT for the transition period ended December 31, 2018, in accordance with SEC rules and ~~regulations, and~~regulations. Beginning on January 1, 2019, all ~~subsequent~~ fiscal years ~~beginning in 2019, will be~~are from January 1 to December 31. ~~Our Sixth Restated Trustee's Regulations (Bylaws) reflecting this change in fiscal year-end is attached hereto~~

On December 14, 2018, the Board approved a reverse stock split of our outstanding common shares, no par value per share, and limited partnership units ("Units") at a ratio of 1-for-10. The reverse stock split was effective as ~~Exhibit 3.3.~~of the close of trading on December 27, 2018, with trade commencing on a split-adjusted basis on December 28, 2018. We have adjusted all shares and Units and per share and Unit data for all periods presented.

The condensed consolidated financial statements also reflect the Operating Partnership's ownership of certain joint venture entities in which the Operating Partnership has a general partner or controlling interest. These entities are consolidated into our operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses.

~~PRIOR PERIOD FINANCIAL STATEMENT CORRECTION OF AN IMMATERIAL MISSTATEMENT~~

During the first quarter of fiscal year 2019, we identified certain adjustments required to correct balances within total equity related to noncontrolling interests in our joint venture entities. Related to our acquisition of additional ownership interest in the joint venture entities, noncontrolling interest - consolidated real estate entities was understated and common shares of beneficial interest was overstated beginning in fiscal year 2017. The adjustments did not impact total assets, total liabilities, revenue, net income, net income available to common shareholders, number of common shares, or earnings per share.

Based on an analysis of Accounting Standards Codification (“ASC”) 250 - “Accounting Changes and Error Corrections” (“ASC 250”), Staff Accounting Bulletin 99 - “Materiality” (“SAB 99”) and Staff Accounting Bulletin 108 - "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" (“SAB 108”), we determined that these errors were immaterial to the previously-issued financial statements. The misstatement was corrected in the condensed consolidated balance sheets as of April 30, 2018 and the condensed consolidated statements of equity as of April 30, 2017, October 31, 2017 and April 30, 2018.

~~The effect of these revisions on our condensed consolidated balance sheet is as follows:~~

(in thousands)
As previously reported at April 30, 2018 Adjustment As revised at April 30, 2018
Common shares of beneficial interest $ 907,843
$ (7,746 ) $ 900,097
Noncontrolling interests - consolidated real estate entities 1,078
7,810
8,888
Redeemable noncontrolling interests - consolidated real estate entities 6,708
(64 ) 6,644

~~The effect of these revisions on our condensed consolidated statements of equity is as follows:~~

(in thousands)
As previously reported at April 30, 2017 Adjustment As revised at April 30, 2017
Common shares of beneficial interest $ 916,121
$ (7,216 ) $ 908,905
Nonredeemable noncontrolling interests 75,157
7,280
82,437

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(in thousands)
As previously reported at October 31, 2017 Adjustment As revised at October 31, 2017
Common shares of beneficial interest $ 910,683
$ (7,216 ) $ 903,467
Nonredeemable noncontrolling interests 65,956
7,280
73,236

(in thousands)
As previously reported at April 30, 2018 Adjustment As revised at April 30, 2018
Common shares of beneficial interest $ 907,843
$ (7,746 ) $ 900,097
Nonredeemable noncontrolling interests 74,090
7,810
81,900

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Our interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“~~U.S.~~ GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with ~~U.S.~~ GAAP are omitted. The year-end balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by ~~U.S.~~ GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows for the interim periods, have been included.

The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim condensed consolidated financial statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in our ~~Annual~~Transition Report on Form ~~10-K~~10-KT for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018, as filed with the SEC on ~~June 28, 2018.~~February 27, 2019.

USE OF ESTIMATES

The preparation of financial statements in conformity with ~~U.S.~~ GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~TAX CUTS AND JOBS ACT OF 2017~~

The Tax Cuts and Jobs Act of 2017 was passed on December 22, 2017. This Act includes a number of changes to the corporate income tax system, including (1) a reduction in the statutory federal corporate income tax rate from 35% to 21% for non-REIT “C” corporations, (2) changes to deductions for certain pass-through business income, and (3) potential limitations on interest expense, depreciation, and the deductibility of executive compensation. As a REIT, we generally will not be subject to federal income tax on our taxable income at the corporate level and do not believe that any of the changes from the 2017 Tax Cut and Jobs Act of 2007 will have a material impact on our consolidated financial statements. However, the impact of this Act is not yet fully known, and there can be no assurance that it will not have an adverse impact on our results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

The following table provides a brief description of recent accounting standards updates (“ASUs”).

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Standard	Description	Date of Adoption	Effect on the Financial Statements or Other Significant Matters
ASU ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments; ASU 2018-19, Codification Improvements to Topic 326; ASU 2019-05, Financial Instruments - Credit Losses - Targeted Transition Relief	~~This~~These ASUs require entities to estimate a lifetime expected credit loss for most financial assets, such as loans and other financial instruments, and to present the net amount expected to be collected. In 2018, another ASU ~~will eliminate~~was issued to amend ASU 2016-13, which clarifies that it does not apply to operating lease receivables. In 2019, an additional ASU was issued to provide transition relief in which an entity is allowed to elect the ~~transaction- and industry-specific revenue recognition guidance under current GAAP and replace it with a principle-based approach~~fair value option on an instrument-by-instrument basis for ~~determining revenue recognition. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a contract~~eligible instruments, upon adoption of Topic 326.	These ASUs are ~~satisfied.~~	~~This ASU is~~ effective for annual reporting periods beginning after December 15, ~~2017, as a result of a deferral of the effective date arising from the issuance of ASU 2015-14,~~ ~~Revenue from Contracts with Customers - Deferral of the Effective Date. We adopted the~~2019. Early adoption is permitted.	The new standard ~~effective May 1, 2018 using the modified retrospective approach.~~	~~The majority of our revenue~~ is ~~derived from rental income, which is scoped out from this standard and will be accounted for under ASC 840,~~ ~~Leases.~~ ~~Our other revenue streams, which were evaluated under this ASU, include but are~~ not ~~limited~~expected to ~~other income from residents determined not to be within the scope of ASC 840 and gains and losses from real estate dispositions. Refer to the Revenues section below for information regarding the~~have a material impact ~~of adopting the standard~~ on our condensed consolidated financial ~~statements.~~statements but will require additional disclosures.
~~ASU 2016-02,~~ ~~Leases~~	~~This ASU amends existing accounting standards for lease accounting, including by requiring lessees to recognize most leases on the balance sheet and making certain changes to lessor accounting.~~	~~This ASU is effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted.~~	We expect our residential leases, where we are the lessor, will continue to be accounted for as operating leases under the new standard. As a result, we do not expect significant changes in the accounting for lease revenue. For leases where we are the lessee, we will recognize a right of use asset and related lease liability on our consolidated balance sheets upon adoption. We are continuing to evaluate the impact the new standard may have on our consolidated financial statements.
~~ASU 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments~~	This ASU addresses eight specific cash flow issues with the objective of reducing diversity in practice. The cash flow issues include debt prepayment or debt extinguishment costs and proceeds from the settlement of insurance claims.	~~This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We adopted the new standard effective May 1, 2018.~~	The standard requires we present combined inflows and outflows of cash, cash equivalents, and restricted cash in the consolidated statement of cash flows. See additional disclosures regarding the required change below.
~~ASU 2017-05,~~ Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets	This ASU clarifies the definition of an in-substance nonfinancial asset and changes the accounting for partial sales of nonfinancial assets to be more consistent with the accounting for a sale of a business pursuant to ASU 2017-01. This ASU allows for either a retrospective or modified retrospective approach.	This ASU is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. We adopted the new standard effective May 1, 2018 using the modified retrospective approach.	~~Refer to the Revenues section below for information regarding the impact of adopting the standard on our condensed consolidated financial statements.~~
~~ASU 2018-10,~~ ~~Codification Improvements to Topic 842, Leases~~	~~This ASU was issued to increase shareholders' awareness of narrow aspects of the guidance issued in the amendments and to expedite the improvements under ASU 2016-02.~~	~~This ASU is effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted.~~	~~We are currently evaluating the impact the new standard may have on our consolidated financial statements.~~
~~ASU 2018-11,~~ ~~Leases: Targeted Improvements~~	This ASU allows lessors to account for lease and non-lease components, by class of underlying assets, as a single lease component if certain criteria are met. The new standard also indicates that companies are permitted to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption in lieu of the modified retrospective approach and provides other practical expedients.	~~This ASU is effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted.~~	~~We are currently evaluating the impact the new standard may have on our consolidated financial statements.~~

~~Table of Contents~~



~~Standard~~	~~Description~~	~~Date of Adoption~~	~~Effect on the Financial Statements or Other Significant Matters~~
ASU 2018-13, Fair Value Measurements (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurements	This ASU eliminates certain disclosure requirements affecting all levels of measurement, and modifies and adds new disclosure requirements for Level 3 measurements.	This ASU is effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted.	~~We are currently evaluating the impact the~~The new standard ~~may~~is not expected to have a material impact on our ~~disclosures.~~condensed consolidated financial statements.
ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract	This ASU reduces the complexity for the accounting for costs of implementing a cloud computing service arrangement. The standard aligns various requirements for capitalizing implementation costs.	This ASU is effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted.	~~We are currently evaluating the impact the~~The new standard ~~may~~is not expected to have a material impact on our condensed consolidated financial statements.
ASU 2019-01, Leases (Topic 842) - Codification Improvements	This ASU provides clarification on various lease related issues and provides for reduced transition disclosure requirements.	This ASU has two effective dates. The various lease issues are effective for annual reporting periods beginning after December 15, 2019. The transition disclosures are effective with the ASU 2016-02, Leases. We adopted this standard using the modified retrospective approach effective January 1, 2019.	The adoption of the standard did not have a material impact on our condensed consolidated financial statements. Refer to the "Leases" section below for transition disclosures.
ASU 2019-07, Codification Updates to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates	This ASU clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC's regulations, thereby eliminating redundancies and making the codification easier to apply.	This ASU was effective upon issuance.	The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and the related disclosures.

~~RECLASSIFICATIONS~~

Certain previously reported amounts have been reclassified to conform to the current financial statement presentation. These reclassifications had no impact on net income as reported in the condensed consolidated statement

Table of operations, total assets, liabilities, or equity as reported in the condensed consolidated balance sheets and total shareholders' equity. We report in discontinued operations the results of operations and the related gains or losses of properties that have either been disposed or classified as held for sale and for which the disposition represents a strategic shift that has or will have a major effect on our operations and financial results.Contents

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

~~Effective May 1, 2018, we adopted ASU 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments~~ which affects the presentation and disclosure of the statements of cash flows. Previously our consolidated statements of cash flows presented transfers between restricted cash and unrestricted cash as operating, financing, and investing cash activities based upon the required or intended purpose for the restricted cash. We revised our condensed consolidated statements of cash flows for the six months ended October 31, 2017 to conform to this presentation, and the effect of the revisions to net cash flows from operating and investing activities as previously reported for the six months ended October 31, 2017 are summarized in the following table:



	(in thousands)
Balance sheet description	September 30, 2019		September 30, 2018
Cash and cash equivalents	$	8,500	$	36,910
Restricted cash	3,339		4,669
Total cash, cash equivalents and restricted cash	$	11,839	$	41,579

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(in thousands)
As previously reported Impact of ASU As adjusted and currently reported
October 31, 2017 2016-15 October 31, 2017
Net cash provided by operating activities $ 26,932
$ 801
$ 27,733
Net cash provided by (used by) investing activities (95,112 ) (24,590 ) (119,702 )
Net cash provided by (used by) financing activities 81,825
(410 ) 81,415

Net increase (decrease) in cash, cash equivalents 13,645
(13,645 ) —
Net increase (decrease) in cash, cash equivalents, and restricted cash —
(10,554 ) (10,554 )

Cash and cash equivalents at beginning of period 28,819
(28,819 ) —
Cash, cash equivalents, and restricted cash at beginning of period —
56,800
56,800
Cash and cash equivalents at end of period $ 42,464

Cash, cash equivalents, and restricted cash at end of period $ 3,782
$ 46,246

(in thousands)
Balance sheet description October 31, 2018 October 31, 2017
Cash and cash equivalents 12,777
42,464
Restricted cash 5,085
3,782
Total cash, cash equivalents and restricted cash 17,862
46,246

As of ~~October 31, 2018,~~September 30, 2019, restricted cash consisted ~~of $5.1 million~~primarily of escrows held by lenders for real estate taxes, insurance, and capital additions.

LEASES

Effective January 1, 2019, we adopted ASUs 2016-02, 2018-10, 2018-11, 2018-20, and 2019-01 related to leases using the modified retrospective approach. We elected to adopt the package of practical expedients permitted under the transition guidance, which permits us to not reassess prior conclusions about lease identification, classification, and initial direct costs under the new standard, and the practical expedient related to land easements, which allows us to not evaluate existing or expired land easements that were not previously accounted for under ASC 840. We made an accounting policy election to exclude leases in which we are a lessee with a term of 12 months or less from the balance sheet.

As a lessor, we primarily lease multifamily apartment homes which qualify as operating leases with terms that are generally one year or less. Rental revenues are recognized in accordance with ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 98.0% of our total revenues and includes gross market rent less adjustments for concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 2.0% of our total revenues and are primarily driven by other fee income, which is typically recognized at a point in time.

Some of our apartment communities have commercial spaces available for lease. Lease terms for these spaces typically range from three to fifteen years. The leases for commercial spaces generally include options to extend the lease for additional terms.

Many of our leases contain non-lease components for utility reimbursement from our residents and common area maintenance from our commercial tenants. We have elected the practical expedient to combine lease and non-lease components for all asset classes. The combined components are included in lease income and are accounted for under ASC 842.

The aggregate amount of future scheduled lease income on our operating leases for commercial spaces, excluding any variable lease income and non-lease components, as of September 30, 2019, was as follows:



	(in thousands)
2019 (remainder)	$	862
2020	3,488
2021	3,525
2022	3,541
2023	3,378
Thereafter	8,842
Total scheduled lease income - operating leases	$	23,636

REVENUES

We adopted ASU 2014-09, Revenue from Contracts with Customers, as of May 1, ~~2018.~~2018, using the modified retrospective approach. We elected to apply the new standard to contracts that ~~are~~were not complete as of May 1, 2018. We also elected to omit disclosing the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Under the new standard, revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration to which the company expects to be entitled for those goods and services.

~~We primarily lease multifamily apartments under operating leases generally with terms of one year or less. Rental revenues are recognized in accordance with ASC 840,~~ ~~Leases~~, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 94.3% of our total revenues and includes gross market rent less adjustments for concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 5.7% of our total revenue and are primarily driven by utility reimbursement from our residents and other fee income, which is typically recognized at a point in time.

Revenue streams that are included in ASU 2014-09 include:

Other property revenues: We recognize revenue for rental related income not included as a component of a lease, such as utility reimbursement and application fees, as earned, and have concluded that this is appropriate under the new standard.


•	Other property revenues: We recognize revenue for rental related income not included as a component of a lease, such as application fees, as earned, and have concluded that this is appropriate under the new standard.

Gains or losses on sales of real estate: Subsequent to the adoption of the new standard, a gain or loss is recognized when the criteria for derecognition of an asset are met, including when (1) a contract exists and (2) the buyer obtained

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control of the nonfinancial asset that was sold. As a result, we may recognize a gain on real estate disposition transactions that previously did not qualify as a sale or for full profit recognition under the previous accounting standard.

We concluded that the adoption of the new standard required a cumulative adjustment of $627,000 to the opening balance of retained earnings as of May 1, 2018, due to the sale of a group of properties in the prior fiscal year. The sale of properties was

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previously accounted for using the installment method. Under the installment method, we recorded a mortgage receivable net of the deferred gain on sale, which was to be recognized as payments were received. The gain on sale under the new revenue standard is recognized when control of the assets is transferred to the buyer. As a result of our adoption of the new standard, we recorded a cumulative adjustment to retained earnings and increased the mortgage receivable by $627,000 to recognize the previously deferred gain on sale.

The following table presents the disaggregation of revenue streams ~~of our rental income~~ for the ~~six~~three and nine months ended ~~October 31, 2018:~~September 30, 2019:



		(in thousands)
		Three Months Ended September 30,				Nine Months Ended September 30,
Revenue Stream	Applicable Standard	2019		2018		2019		2018
Fixed lease income - operating leases	Leases	$	45,164	$	42,311	$	133,248	$	125,624
Variable lease income - operating leases	Leases	1,367		—		3,999		—
Non-lease components	Revenue from contracts with customers	—		1,243		—		3,790
Other property revenue	Revenue from contracts with customers	905		1,852		2,731		5,224
Total revenue		$	47,436	$	45,406	$	139,978	$	134,638

(in thousands, except percentages)
Six Months Ended October 31, 2018
Revenue Stream Applicable Standard Amount of Revenue Percent of Revenue
Rental revenue Leases 86,394
94.3 %
Other property revenue Revenue Recognition 5,190
5.7 %
91,584
100.0 %

IMPAIRMENT OF LONG-LIVED ASSETS

We periodically evaluate our long-lived assets, including investments in real estate, for impairment indicators. The impairment evaluation is performed on assets by property such that assets for a property form an asset group. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group, and legal and environmental concerns. If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset group. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset group, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. If our anticipated holding period for properties, the estimated fair value of properties, or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates, and capital requirements that could differ materially from actual results. Reducing planned property holding periods may increase the likelihood of recording impairment losses.

During the ~~six~~nine months ended ~~October 31, 2018,~~September 30, 2019, we recorded no0 impairment charges.

During the ~~six~~nine months ended ~~October 31, 2017,~~September 30, 2018, we recognized $17.8 million of impairment charges on one apartment community, three commercial properties, and three parcels of ~~$256,000~~land. We recognized impairments of $12.2 million on one apartment community in Grand Forks, North Dakota; $1.4 million on an industrial property in Bloomington, Minnesota; $922,000 on an industrial property in Woodbury, Minnesota; and $630,000 on a ~~parcel of land~~retail property in ~~Bismarck, ND. This property was written down~~Minot, North Dakota. These properties were written-down to estimated fair value ~~during~~based on independent appraisals and market data or, in the ~~first quarter~~case of ~~fiscal year 2018 based on~~the retail property, receipt of a market offer to purchase and our intent to dispose of the property. We ~~disposed~~recognized impairments of ~~the property during the second quarter~~$428,000 on a parcel of ~~fiscal year 2018.~~

~~CHANGE IN DEPRECIABLE LIVES OF REAL ESTATE ASSETS~~

~~We review the~~land in Williston, North Dakota; $1.5 million on a parcel of land in Grand Forks, North Dakota; and $709,000 on a parcel of land in Bismarck, North Dakota. These parcels were written down to estimated ~~useful lives of our real estate assets~~fair value based on ~~an ongoing basis. Prior to our strategic shift to become a multifamily-focused REIT, which began in fiscal year 2016, we operated in five segments (office, retail, industrial, healthcare~~independent appraisals and ~~multifamily). Accordingly, our estimated useful lives represented a blend of these segments.~~

During fiscal years 2016, 2017, and 2018, we disposed of the bulk of our office, retail, industrial, and healthcare portfolios. In the first quarter of fiscal year 2018, we determined it was appropriate to review and adjust our estimated useful lives to be specific to our remaining asset portfolio. Effective May 1, 2017, we changed the estimated useful lives of our real estate assets to better reflect the estimated periods during which they will be of economic benefit. Generally, the estimated lives of buildings and improvements that previously were 20-40 years have been decreased to 10-37 years, while those that were previously nine years were changed to 5-10 years. The effect of this change in estimate for the six months ended October 31, 2017, was to increase depreciation expense by approximately $20.3 million, decrease net income by $20.3 million, and decrease earnings per share by $0.15. Of the expense increase, $9.0 million, or $0.07 per share, represented depreciation on assets that were fully depreciated under the new estimated useful lives in the first quarter of fiscal year 2018.market data.

MORTGAGE RECEIVABLE AND NOTES RECEIVABLE

In August 2017, we sold 13 multifamily ~~properties~~communities in exchange for cash and aan $11.0 million note secured by a mortgage on the assets. As of ~~October 31, 2018,~~September 30, 2019, the balance of the note was $10.1 million, with 12 communities remaining ~~balance on~~in the ~~mortgage was $10.5 million.~~pool of assets used to secure the mortgage. The note bears an interest rate of 5.5% and matures in August 2020. Monthly payments are interest-only, with the principal balance payable at maturity. During the ~~six~~

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nine months ended ~~October 31,~~September 30, 2019 and 2018, ~~and 2017,~~ we received and recognized approximately ~~$350,000~~$428,000 and ~~$119,000~~$455,000 of interest income, respectively. During the six months ended October 31, 2018, we received a payment of $425,000 to pay down the balance of the mortgage receivable and released one of the 13 properties from the assets used to secure the mortgage.

In July 2017, we originated a $16.2 million loan in a multifamily development located in New Hope, MN, a Minneapolis suburb. ~~As of July 31, 2018, we had~~We funded ~~the full initial loan balance, which appears in other assets on our Condensed Consolidated Balance Sheets; however, we may fund~~an additional ~~amounts~~$341,000 upon satisfaction of certain conditions set forth in the loan agreement. The note bears an interest rate of 6%6.0%, matures in July 2023, and provides us an option to purchase the development prior to the loan maturity date. Interest payments are due when the note matures. As of September 30, 2019, the balance of the note, including accrued interest, was $17.3 million which appears in other assets on our Condensed Consolidated Balance Sheets.

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VARIABLE INTEREST ENTITIES

We have determined that our Operating Partnership and each of our less-than-wholly owned real estate partnerships is a variable interest entity (“VIE”), as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights. We are the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on our balance sheet because we have a controlling financial interest in the VIEs and have both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because our Operating Partnership is a VIE, all of our assets and liabilities are held through a VIE.

GAIN ON LITIGATION SETTLEMENT

During the three and nine months ended September 30, 2019, we recorded a gain on litigation settlement of $300,000 and $6.6 million, respectively, from the settlement on a construction defect claim. The gain consisted of $5.2 million of cash received and $1.4 million of liabilities waived under the terms of the settlement.

NOTE 3 • EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of our common shares of beneficial interest (“~~Common Shares”~~common shares”) outstanding during the period. We have issued restricted stock units (“RSUs”) under our 2015 Incentive Plan and Series D Convertible Preferred Units ("Series D preferred units"), which could have a dilutive effect on our earnings per share upon exercise of the ~~RSUs.~~RSUs or upon conversion of the Series D preferred units (refer to Note 4 for further discussion of the Series D preferred units). Other than the issuance of RSUs and Series D preferred units, we have no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their limited partnership units (“Units”) any time following the first anniversary of the date they acquired such Units (“Exchange Right”). Upon the exercise of Exchange Rights, and in our sole discretion, we may issue ~~Common Shares~~common shares in exchange for Units on a ~~one-for-one~~1-for-one basis. The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements for the three and six months ended October 31, 2018 and 2017:

(in thousands, except per share data)
Three Months Ended
October 31, Six Months Ended October 31,
2018 2017 2018 2017
NUMERATOR

Income (loss) from continuing operations – controlling interests $ (4,558 ) $ (679 ) $ (2,153 ) $ (14,330 )
Income (loss) from discontinued operations – controlling interests —
13,500
511
15,887
Net income (loss) attributable to controlling interests (4,558 ) 12,821
(1,642 ) 1,557
Dividends to preferred shareholders (1,706 ) (2,812 ) (3,411 ) (5,098 )
Redemption of preferred shares —
(3,649 ) —
(3,649 )
Numerator for basic earnings (loss) per share – net income available to common shareholders (6,264 ) 6,360
(5,053 ) (7,190 )
Noncontrolling interests – Operating Partnership (722 ) 773
(587 ) (871 )
Numerator for diluted earnings (loss) per share $ (6,986 ) $ 7,133
$ (5,640 ) $ (8,061 )
DENOMINATOR

Denominator for basic earnings per share weighted average shares 119,396
120,144
119,320
120,282
Effect of redeemable operating partnership units 13,789
14,623
13,924
14,912
Denominator for diluted earnings per share 133,185
134,767
133,244
135,194
Earnings (loss) per common share from continuing operations – basic and diluted $ (0.05 ) $ (0.06 ) $ (0.04 ) $ (0.19 )
Earnings (loss) per common share from discontinued operations – basic and diluted —
0.11
—
0.13
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC & DILUTED $ (0.05 ) $ 0.05
$ (0.04 ) $ (0.06 )

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Performance-based restricted stock awards and RSUs of ~~253,000~~37,822 and ~~115,000~~24,844 for the three months ended ~~October 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively, and ~~253,000~~37,822 and ~~115,000~~24,844, respectively, for the ~~six~~nine months ended ~~October 31,~~September 30, 2019 and 2018 ~~and 2017, respectively,~~ were excluded from the calculation of diluted earnings per share because the assumed proceeds per share plus the average unearned compensation were greater than the average market price of the common stock for the periods presented and, therefore, were anti-dilutive. ~~Refer to Note 13 - Share-Based Compensation for discussion~~

The following table presents a reconciliation of the ~~terms~~numerator and denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements for ~~these awards.~~the three and nine months ended September 30, 2019 and 2018:

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	(in thousands, except per share data)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
NUMERATOR
Income (loss) from continuing operations – controlling interests	$	31,596		$	2,142		$	30,011		$	(24,058	)
Income (loss) from discontinued operations – controlling interests	—			511			—			13,141
Net income (loss) attributable to controlling interests	31,596			2,653			30,011			(10,917		)
Dividends to preferred shareholders	(1,705		)	(1,705		)	(5,116		)	(5,116		)
Numerator for basic earnings (loss) per share – net income available to common shareholders	29,891			948			24,895			(16,033		)
Noncontrolling interests – Operating Partnership	3,145			112			2,550			(1,888		)
Dividends to preferred unitholders	160			—			377			—
Numerator for diluted earnings (loss) per share	$	33,196		$	1,060		$	27,822		$	(17,921	)
DENOMINATOR
Denominator for basic earnings per share weighted average shares	11,625			11,932			11,705			11,944
Effect of redeemable operating partnership units	1,223			1,386			1,282			1,407
Effect of Series D preferred units	228			—			181			—
Effect of dilutive restricted stock awards and restricted stock units	11			—			6			—
Denominator for diluted earnings per share	13,087			13,318			13,174			13,351

Earnings (loss) per common share from continuing operations – basic	$	2.57		$	0.04		$	2.11		$	(2.44	)
Earnings (loss) per common share from discontinued operations – basic	—			0.04			—			1.10
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC	$	2.57		$	0.08		$	2.11		$	(1.34	)

Earnings (loss) per common share from continuing operations – diluted	$	2.54		$	0.04		$	2.11		$	(2.44	)
Earnings (loss) per common share from discontinued operations – diluted	—			0.04			—			1.10
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED	$	2.54		$	0.08		$	2.11		$	(1.34	)

NOTE 4 • EQUITYAND MEZZANINE EQUITY

Operating Partnership Units. ~~Outstanding Units in the~~ The Operating Partnership ~~were 13.7~~had 1.2 million and 1.4 million outstanding Units at ~~October~~September 30, 2019 and December 31, 2018, ~~and 14.1 million Units at April 30, 2018.~~respectively.

Common Shares and Equity Awards. Common ~~Shares~~shares outstanding on ~~October~~September 30, 2019 and December 31, 2018, ~~and April 30, 2018,~~ totaled ~~119.7~~11.6 million and ~~119.5~~11.9 million, respectively. There were ~~13,000~~8,662 shares issued upon the vesting of equity awards under our 2015 Incentive ~~Award~~ Plan during the three months ended ~~October 31, 2018,~~September 30, 2019, with a total grant-date fair value of ~~$83,000.~~$473,000. During the ~~six~~nine months ended ~~October 31, 2018,~~September 30, 2019, we issued ~~56,000 restricted common~~15,380 shares, with a total ~~grant date~~grant-date fair value ~~of $347,000.~~$930,000. During ~~fiscal year 2018, there were no shares issued during~~ the three and nine months ended ~~October 31, 2017. During the six months ended October 31, 2017,~~September 30, 2018, we issued ~~75,000 restricted Common Shares,~~1,022 shares, with a total grant-date fair value of ~~$445,000. These~~$67,000 and 7,248 shares, ~~are issued~~with a total grant-date fair value of $479,000, respectively, under our 2015 Incentive ~~Award Plan for executive officer and trustee share-based compensation.~~Plan. These shares vest based on performance and service criteria.

Exchange Rights. Pursuant to the exercise of Exchange Rights, ~~during the six months ended October 31, 2018,~~ we redeemed ~~91,000~~ Units for an aggregate cost of $482,000, at an average price per Unit of $5.30. During the six months ended October 31, 2017, we redeemed 999,500 Units for an aggregate cost of $6.0 million, at an average price per Unit of $5.98. Duringduring the three and ~~six~~nine months ended ~~October 31,~~September 30, 2019 and 2018 weas detailed in the table below.



	(in thousands, except per Unit amounts)
Three Months Ended September 30,	Number of Units	Aggregate Cost⁽¹⁾		Average Price Per Unit
2019	—	$	11	$	62.10
2018	—	$	4	$	54.70

Nine Months Ended September 30,
2019	136	$	8,135	$	59.99
2018	49	$	2,751	$	55.84


(1)	The redemption price is determined using the volume weighted average price for the ten trading days prior to the date a unitholder provides notification of their intent to redeem units.

We also redeemed ~~217,000 and 331,000~~ Units ~~respectively,~~ in exchange for common shares in connection with Unitholders exercising their Exchange Rights ~~with a total book value of $358,000 and $649,000, respectively. During~~during the three and ~~six~~nine months ended ~~October 31, 2017, we redeemed no Units~~September 30, 2019 and 2018 as detailed in ~~exchange for common shares.~~the table below.

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	(in thousands)
Three Months Ended September 30,	Number of Units	Total Book Value
2019	—	$	10
2018	21	$	624

Nine Months Ended September 30,
2019	8	$	511
2018	24	$	658

Share Repurchase Program. On December ~~7, 2016, our Board of Directors authorized a share repurchase program to repurchase up to $50 million of our Common Shares over a one-year period. On December 5, 2017,~~14, 2018, our Board of Trustees reauthorized ~~this~~our $50 million share repurchase program for an additional one-year period. ~~See Note 15 - Subsequent Events for additional information regarding our recent reauthorization of the share repurchase program.~~ Under this program, we may repurchase ~~Common Shares~~common shares in open-market purchases, including pursuant to Rule 10b5-1 and Rule 10b-18 plans, as determined by management and in accordance with the requirements of the SEC. The extent to which we repurchase our shares, and the timing of repurchases, will depend on a variety of factors, including market conditions, regulatory requirements, and other corporate considerations, as determined by the executive management team. This program may be suspended or discontinued at any time. During the six months ended October 31, 2018, we repurchased and retired 118,000 common shares for an aggregate cost of $615,000, including commissions, at an average price per share of $5.20. During the six months ended October 31, 2017, we repurchased and retired 1.1 million common shares for an aggregate cost of $6.3 million, including commissions, at an average price per share of $5.79. As of ~~October 31, 2018, $34.9~~September 30, 2019, $15.4 million remained available under ~~the~~our $50 million authorized share repurchase program. Common shares repurchased during the three and nine months ended September 30, 2019 and 2018 are detailed in the table below.



	(in thousands, except per share amounts)
Three Months Ended September 30,	Number of Shares	Aggregate Cost⁽¹⁾		Average Price Per Share⁽¹⁾
2019	39	$	2,346	$	59.57
2018	—	—		—

Nine Months Ended September 30,
2019	329	$	18,023	$	54.69
2018	67	$	3,415	$	51.26


(1)	Amount includes commissions.

Series C Preferred Shares. Series C preferred shares outstanding were 4.1 million shares at September 30, 2019 and December 31, 2018. The Series C preferred shares are nonvoting and redeemable for cash at $25.00 per share at our option after October 2, 2022. Holders of these shares are entitled to cumulative distributions, payable quarterly (as and if declared by the Board of Trustees). Distributions accrue at an annual rate of $1.65625 per share, which is equal to 6.625% of the $25.00 per share liquidation preference ($103.0 million liquidation preference in the aggregate).

Series D Preferred Units (Mezzanine Equity). On February 26, 2019, we issued 165,600 newly created Series D preferred units at an issuance price of $100 per preferred unit as partial consideration for the acquisition of SouthFork Townhomes. The Series D preferred unit holders receive a preferred distribution at the rate of 3.862% per year. The Series D preferred units have a put option which allows the holder to redeem any or all of the Series D preferred units for cash equal to the issue price. Each Series D preferred unit is convertible, at the holder's option, into 1.37931 Units, representing a conversion exchange rate of $72.50 per unit. The holders of the Series D preferred units do not have any voting rights.

Redeemable Noncontrolling Interests (Mezzanine Equity). Redeemable noncontrolling interests on our Condensed Consolidated Balance Sheets represent the noncontrolling interest in joint ventures in which our unaffiliated partner, at its election, could require us to buy its interest at a purchase price to be determined by an appraisal conducted in accordance with the terms of the agreement, or at a negotiated price. During the nine months ended September 30, 2019, we acquired the remaining 34.5% noncontrolling interests in the real estate partnership that owns Commons and Landing at Southgate for $1.3 million. Below is a table reflecting the activity of the redeemable noncontrolling interests for the nine months ended September 30, 2019.



	(in thousands)
Balance at December 31, 2018	$	5,968
Net income	(174		)
Acquisition of redeemable noncontrolling interests	(5,794		)
Balance at September 30, 2019	$	—

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NOTE 5 • SEGMENT REPORTING

We operate in a single reportable segment which includes the ownership, management, development, redevelopment, and acquisition of apartment communities. Each of our operating properties is considered a separate operating segment because each property earns revenues, incurs expenses, and has discrete financial information. Our chief operating decision-makers evaluate each property's operating results to make decisions about resources to be allocated and to assess performance. We do not group our operations based on geography, size, or type. Our apartment communities have similar long-term economic characteristics and provide similar products and services to our residents. No apartment community comprises more than 10% of consolidated revenues, profits, or assets. Accordingly, our apartment communities are aggregated into a single reportable segment.

Prior to the third quarter of fiscal year 2018, we reported our results in two reportable segments: multifamily and healthcare. We sold substantially all of our healthcare portfolio during the third quarter of fiscal year 2018 and classified it as discontinued operations (see Note 7 for additional information). Healthcare no longer meets the quantitative thresholds for reporting as a separate reportable segment and therefore is included in “all other” with other non-multifamily properties. As of July 31, 2018, we no longer owned any healthcare properties.

Our executive management team comprises our chief operating decision-makers. This team measures the performance of our reportable segment based on net operating income (“NOI”), which we define as total real estate revenues less ~~real estate~~

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~~expenses. Real estate expenses consist of~~ property operating expenses, ~~and~~including real estate ~~tax expense and do not include property management expense.~~taxes. 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 operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative ~~expenses.~~expense. NOI does not represent cash generated by operating activities in accordance with ~~U.S.~~ 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.

The ~~revenues and~~following tables present NOI ~~for the multifamily reportable segment are summarized as follows~~ for the three and ~~six month periods~~nine months ended ~~October 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively, along with reconciliations to net income in the condensed consolidated financial statements. Segment assets are also reconciled to total assets as reported in the condensed consolidated financial statements.


	(in thousands)							(in thousands)
Three Months Ended October 31, 2018	Multifamily		All Other		Total
Real estate revenue	$	43,874	$	1,764	$	45,638
Real estate expenses	18,768		568		19,336
Three Months Ended September 30, 2019								Multifamily		All Other		Total
Revenue								$	43,916	$	3,520	$	47,436
Property operating expenses, including real estate taxes								18,455		1,455		19,910
Net operating income	$	25,106	$	1,196	$	26,302		$	25,461	$	2,065	$	27,526
Property management expenses					(1,319		)
Casualty loss					(225		)
Property management												(1,553		)
Casualty gain (loss)												(178		)
Depreciation and amortization					(19,191		)					(18,751		)
General and administrative expenses					(3,374		)					(3,448		)
Interest expense					(7,997		)					(7,694		)
Loss on debt extinguishment					(4		)					(1,087		)
Interest and other income					429							498
Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations					(5,379		)
Income (loss) before gain (loss) on sale of real estate and other investments and gain (loss) on litigation settlement												(4,687		)
Gain (loss) on sale of real estate and other investments					(232		)					39,105
Income (loss) from continuing operations					(5,611		)
Income (loss) from discontinued operations					—
Gain (loss) on litigation settlement												300
Net income (loss)					$	(5,611	)					$	34,718

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	(in thousands)							(in thousands)
Three Months Ended October 31, 2017	Multifamily		All Other		Total
Real estate revenue	$	37,457	$	4,409	$	41,866
Real estate expenses	17,201		1,517		18,718
Three Months Ended September 30, 2018								Multifamily		All Other		Total
Revenue								$	40,885	$	4,521	$	45,406
Property operating expenses, including real estate taxes								17,491		1,996		19,487
Net operating income	$	20,256	$	2,892	$	23,148		$	23,394	$	2,525	$	25,919
Property management expenses					(1,372		)
Casualty loss					(115		)
Property management												(1,269		)
Casualty gain (loss)												(225		)
Depreciation and amortization					(17,270		)					(19,164		)
General and administrative expenses					(3,118		)					(3,147		)
Interest expense					(8,509		)					(8,193		)
Loss on debt extinguishment					(334		)					(540		)
Interest and other income					255							395
Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations					(7,315		)
Income (loss) before gain (loss) on sale of real estate and other investments and income (loss) from discontinued operations												(6,224		)
Gain (loss) on sale of real estate and other investments					5,324							9,095
Income (loss) from continuing operations					(1,991		)					2,871
Income (loss) from discontinued operations					15,130							570
Net income (loss)					$	13,139						$	3,441



	(in thousands)
Nine Months Ended September 30, 2019	Multifamily		All Other		Total
Real estate revenue	$	129,457	$	10,521	$	139,978
Real estate expenses	54,888		4,574		59,462
Net operating income	$	74,569	$	5,947	$	80,516
Property management expenses					(4,552		)
Casualty gain (loss)					(911		)
Depreciation and amortization					(55,299		)
General and administrative expenses					(10,803		)
Interest expense					(23,180		)
Loss on debt extinguishment					(1,496		)
Interest and other income					1,390
Income (loss) before gain (loss) on sale of real estate and other investments and gain (loss) on litigation settlement					(14,335		)
Gain (loss) on sale of real estate and other investments					39,774
Gain (loss) on litigation settlement					6,586
Net income (loss)					$	32,025

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	(in thousands)
Nine Months Ended September 30, 2018	Multifamily		All Other		Total
Real estate revenue	$	119,069	$	15,569	$	134,638
Real estate expenses	51,342		6,349		57,691
Net operating income	$	67,727	$	9,220	$	76,947
Property management expenses					(4,090		)
Casualty gain (loss)					(275		)
Depreciation and amortization					(58,812		)
Impairment of real estate investments					(17,809		)
General and administrative expenses					(11,114		)
Interest expense					(25,051		)
Loss on debt extinguishment					(673		)
Interest and other income					1,544
Income (loss) before gain (loss) on sale of real estate and other investments and income (loss) from discontinued operations					(39,333		)
Gain (loss) on sale of real estate and other investments					11,399
Income (loss) from continuing operations					(27,934		)
Income (loss) from discontinued operations					14,690
Net income (loss)					$	(13,244	)

(in thousands)
Six Months Ended October 31, 2018 Multifamily
All Other
Total
Real estate revenue $ 86,963
$ 4,621
$ 91,584
Real estate expenses 37,254
1,611
38,865
Net operating income $ 49,709
$ 3,010
$ 52,719
Property management expenses (2,686 )
Casualty loss (450 )
Depreciation and amortization (37,803 )
Impairment of real estate investments —
General and administrative expenses (7,244 )
Interest expense (16,382 )
Loss on debt extinguishment (556 )
Interest and other income 945
Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations (11,457 )
Gain (loss) on sale of real estate and other investments 8,992
Income (loss) from continuing operations (2,465 )
Income (loss) from discontinued operations 570
Net income (loss) $ (1,895 )

(in thousands)
Six Months Ended October 31, 2017 Multifamily
All Other
Total
Real estate revenue $ 73,455
$ 9,389
$ 82,844
Real estate expenses 32,934
3,311
36,245
Net operating income $ 40,521
$ 6,078
$ 46,599
Property management expenses (2,728 )
Casualty loss (600 )
Depreciation and amortization (42,608 )
Impairment of real estate investments (256 )
General and administrative expenses (7,120 )
Interest expense (16,640 )
Loss on debt extinguishment (533 )
Interest and other income 483
Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations (23,403 )
Gain (loss) on sale of real estate and other investments 5,448
Income (loss) from continuing operations (17,955 )
Income (loss) from discontinued operations 17,815
Net income (loss) $ (140 )

Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of ~~October~~September 30, 2019, and December 31, ~~2018, and April 30,~~ 2018, respectively, along with reconciliations to the condensed consolidated financial statements:



	(in thousands)
As of September 30, 2019	Multifamily			All Other			Total
Segment assets
Property owned	$	1,684,943		$	35,409		$	1,720,352
Less accumulated depreciation	(360,955		)	(9,537		)	(370,492		)
Total property owned	$	1,323,988		$	25,872		$	1,349,860
Cash and cash equivalents							8,500
Restricted cash							3,339
Other assets							30,589
Unimproved land							1,376
Mortgage loans receivable							10,140
Total Assets							$	1,403,804

~~Table of Contents~~



	(in thousands)
As of December 31, 2018	Multifamily			All Other			Total
Segment assets
Property owned	$	1,582,917		$	44,719		$	1,627,636
Less accumulated depreciation	(340,081		)	(13,790		)	(353,871		)
Total property owned	$	1,242,836		$	30,929		$	1,273,765
Cash and cash equivalents							13,792
Restricted cash							5,464
Other assets							27,265
Unimproved land							5,301
Mortgage loans receivable							10,410
Total Assets							$	1,335,997

(in thousands)
As of October 31, 2018 Multifamily
All Other
Total
Segment assets

Property owned $ 1,580,260
$ 57,812
$ 1,638,072
Less accumulated depreciation (328,075 ) (16,940 ) (345,015 )
Total property owned $ 1,252,185
$ 40,872
$ 1,293,057
Cash and cash equivalents 12,777
Restricted cash 5,085
Other assets 29,769
Unimproved land 6,522
Mortgage loans receivable 10,530
Total Assets $ 1,357,740

(in thousands)
As of April 30, 2018 Multifamily
All Other
Total
Segment assets

Property owned $ 1,606,421
$ 63,343
$ 1,669,764
Less accumulated depreciation (294,477 ) (16,847 ) (311,324 )
Total property owned $ 1,311,944
$ 46,496
$ 1,358,440
Cash and cash equivalents 11,891
Restricted cash 4,225
Other assets 30,297
Unimproved land 11,476
Mortgage loans receivable 10,329
Total Assets $ 1,426,658

NOTE 6 • COMMITMENTS AND CONTINGENCIES

Litigation. ~~We are subject to a variety of legal actions for personal injury or property damage arising in~~In the ordinary course of our ~~business, most~~operations, we become involved in litigation. At this time, we know of which are covered by liability insurance. Various resident claims are also brought periodically, most of which are covered by insurance. While resolution of these matters cannot be predicted with certainty, management believes that the final outcome of these claims andno material pending or threatened legal proceedings, ~~will not~~or other proceedings contemplated by governmental authorities, that would have a material ~~effect~~impact on ~~our liquidity, financial position, cash flows, or results~~us.

Table of ~~operations.~~Contents

Environmental Matters. Under various federal, state, and local laws, ordinances, and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around, or under the property. While we currently have no knowledge of any material violation of environmental laws, ordinances, or regulations at any of our properties, there can be no assurance that areas of contamination will not be identified at any of our properties or that changes in environmental laws, regulations, or cleanup requirements would not result in material costs to us.

Restrictions on Taxable Dispositions. ~~Twenty-four~~NaN of our properties, consisting of ~~4,099~~4,180 apartment ~~units,~~homes, are subject to restrictions on ~~our ability to resell in~~ taxable ~~transactions. These restrictions are contained in~~dispositions under agreements we entered into with some of the sellers or contributors of the properties and are effective for varying periods. ~~The real estate investment amount of these properties (net of accumulated depreciation) was $536.9 million at October 31, 2018.~~ We do not believe that ~~these~~the agreements materially affect the conduct of our business or our decisions whether to dispose of restricted properties during the restriction period because we generally hold these and our other properties for investment purposes rather than for sale. In addition, where we deem it to be in our shareholders' best interests to dispose of such properties, we generally seek to structure ~~sale~~sales of such properties as tax deferred transactions under Section 1031 of the Internal Revenue Code (the "Code").

~~If we decide to sell one or more of these properties and are unable to structure sales of such properties as tax deferred transactions under Section 1031 of the Code,~~ Otherwise, we may be required to provide tax indemnification payments to the parties to these agreements.

~~Table of Contents~~

NOTE 7 • DISCONTINUED OPERATIONS

We report in discontinued operations the results of operations and the related gains or losses on the sales of properties that have either been disposed of or classified as held for sale and meet the classification of a discontinued operation as described in ASC 205, "Presentation of Financial Statements," and ASC 360, "Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." Under this standard, a disposal (or classification as held for sale) of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.

We classified no0 new dispositions or properties held for sale as discontinued operations during the three and ~~six~~nine months ended ~~October 31, 2018~~September 30, 2019 and ~~2017.~~2018.

The following information shows the effect on net income and the gains or losses from the sales of properties classified as discontinued operations for the three and ~~six~~nine months ended ~~October 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively:



	(in thousands)
	Three Months Ended September 30,			Nine Months Ended September 30,
	2019	2018		2019	2018
REVENUE	—	—		—	$	353
EXPENSES
Property operating expenses, excluding real estate taxes	—	—		—	25
Real estate taxes	—	—		—	35
Depreciation and amortization	—	—		—	2
General and administrative	—	—		—	14
TOTAL EXPENSES	—	—		—	$	76
Operating income (loss)	—	—		—	277
Interest expense	—	—		—	(1		)
Other income	—	—		—	14
Income (loss) from discontinued operations before gain (loss) on sale of discontinued operations	—	—		—	290
Gain (loss) on sale of discontinued operations	—	$	570	—	14,400
INCOME (LOSS) FROM DISCONTINUED OPERATIONS	—	$	570	—	$	14,690

(in thousands)
Three Months Ended October 31, Six Months Ended October 31,
2018 2017 2018 2017
REVENUE $ —
$ 12,047
$ —
$ 24,002
EXPENSES

Property operating expenses, excluding real estate taxes —
2,387
—
4,644
Real estate taxes —
1,946
—
3,907
Property management —
68
—
140
Depreciation and amortization —
3,424
—
7,013
General and administrative —
15
—
15
TOTAL EXPENSES $ —
$ 7,840
$ —
$ 15,719
Operating income (loss) —
4,207
—
8,283
Interest expense —
(1,436 ) —
(3,421 )
Loss on extinguishment of debt —
(6 ) —
(6 )
Interest income —
117
—
661
Other income —
10
—
60
Income (loss) from discontinued operations before gain (loss) on sale —
2,892
—
5,577
Gain (loss) on sale of discontinued operations —
12,238
570
12,238
INCOME (LOSS) FROM DISCONTINUED OPERATIONS $ —
$ 15,130
$ 570
$ 17,815

~~As of October 31, 2018 and April 30, 2018, we had no assets or liabilities classified as held for sale.~~

NOTE 8 • ACQUISITIONS AND DISPOSITIONS

~~PROPERTY~~ ACQUISITIONS

We ~~added no~~acquired $125.3 million of new real estate ~~to our portfolio through property acquisitions~~ during the three ~~and six~~ months ended ~~October 31, 2018,~~September 30, 2019, compared to ~~$153.8 million~~0 acquisitions in the ~~six~~three months ended ~~October 31, 2017.~~September 30, 2018. Our acquisitions during the ~~six~~nine months ended ~~October 31, 2017~~September 30, 2019 and 2018 are detailed below.

Table of Contents

~~Six~~Nine Months Ended ~~October 31, 2017~~

September 30, 2019

Date
Acquired
(in thousands)

Total
Acquisition
Cost

Investment Allocation
Acquisitions Land
Building

Intangible
Assets

Multifamily
191 unit - Oxbo - St. Paul, MN⁽¹⁾
May 26, 2017 $ 61,500
$ 5,809
$ 54,910
$ 781
500 unit - Park Place - Plymouth, MN September 13, 2017 92,250
10,609
80,711
930

Total Property Acquisitions $ 153,750
$ 16,418
$ 135,621
$ 1,711



	Date Acquired	(in thousands)
		Total Acquisition Cost		Form of Consideration				Investment Allocation
Acquisitions		Total Acquisition Cost		Cash		Units⁽¹⁾		Land		Building		Intangible Assets
Multifamily
272 homes - SouthFork Townhomes - Lakeville, MN	February 26, 2019	$	44,000	$	27,440	$	16,560	$	3,502	$	39,950	$	548
96 homes - FreightYard Townhomes and Flats - Minneapolis, MN	September 6, 2019	26,000		26,000		—		1,889		23,615		496
328 homes - Lugano at Cherry Creek - Denver, CO⁽³⁾	September 25, 2019	99,250		99,250		—		7,679		89,365		1,781
		$	169,250	$	152,690	$	16,560	$	13,070	$	152,930	$	2,825

Other
Minot 3100 10th St SW - Minot, ND⁽²⁾	May 23, 2019	$	2,112	$	2,112	—		$	246	$	1,866	—

Total Acquisitions		$	171,362	$	154,802	$	16,560	$	13,316	$	154,796	$	2,825


(1)	~~Property includes 11,477 square feet~~Value of Series D preferred units at the acquisition date.


(2)	Acquired for use as our Minot corporate office building after renovations have been completed.


(3)	Investment allocation excludes a $425,000 acquisition credit related to retail ~~space.~~space lease-up.

~~PROPERTY~~ Nine Months Ended September 30, 2018



	Date Acquired	(in thousands)
		Total Acquisition Cost⁽¹⁾		Investment Allocation
Acquisitions		Total Acquisition Cost⁽¹⁾		Land		Building		Intangible Assets
390 homes - Westend - Denver, CO	March 28, 2018	$	128,700	$	25,525	$	102,101	$	1,074

Total Acquisitions		$	128,700	$	25,525	$	102,101	$	1,074


(1)	Acquisition cost was paid in cash.

DISPOSITIONS

During the three months ended ~~October 31, 2018,~~September 30, 2019, we sold ~~one commercial property and one~~1 parcel of unimproved land and 6 apartment communities for ~~a total~~an aggregate sale price of ~~$3.1~~$85.0 million. After deductions for closing costs and other costs associated with the dispositions, we recognized a $38.9 million aggregate gain on sale. During the three months ended ~~October 31, 2017,~~September 30, 2018, we sold 133 apartment communities, ~~three healthcare~~2 commercial properties, ~~one industrial property,~~ and ~~one parcel~~3 parcels of unimproved ~~land for a total sale price of $63.4 million.~~land. The following ~~table details~~tables detail our dispositions for the ~~six~~nine months ended ~~October 31, 2018~~September 30, 2019 and ~~2017:~~2018:

~~Six~~

Table of Contents

Nine Months Ended ~~October 31, 2018~~September 30, 2019

(in thousands)
Dispositions Date
Disposed Sales Price
Book Value
and Sale Cost
Gain/(Loss)
Multifamily
44 unit - Dakota Commons - Williston, ND July 26, 2018 $ 4,420
$ 3,878
$ 542

145 unit - Williston Garden - Williston, ND⁽¹⁾
July 26, 2018 12,310
11,313
997

288 unit - Renaissance Heights - Williston, ND⁽²⁾
July 26, 2018 24,770
17,856
6,914

41,500
33,047
8,453

Other
7,849 sq ft Minot Southgate Retail - Minot, ND July 12, 2018 1,925
2,056
(131 )
9,052 sq ft Fresenius - Duluth, MN July 27, 2018 1,900
1,078
822

15,000 sq ft Minot 2505 16th St SW - Minot, ND October 12, 2018 1,710
1,814
(104 )
5,535
4,948
587

Unimproved Land
Grand Forks - Grand Forks, ND July 16, 2018 3,000
2,986
14

Renaissance Heights - Williston, ND⁽³⁾
July 26, 2018 750
684
66

Badger Hills Unimproved - Rochester, MN August 29, 2018 1,400
1,528
(128 )
5,150
5,198
(48 )

Total Property Dispositions $ 52,185
$ 43,193
$ 8,992



		(in thousands)
Dispositions	Date Disposed	Sale Price		Book Value and Sale Cost		Gain/(Loss)
Multifamily
21 homes - Pinehurst - Billings, MT	July 26, 2019	$	1,675	$	961	$	714
160 homes - Brookfield Village - Topeka, KS	September 24, 2019	10,350		5,853		4,497
220 homes - Crown Colony - Topeka, KS	September 24, 2019	17,200		7,876		9,324
54 homes - Mariposa - Topeka, KS	September 24, 2019	6,100		4,290		1,810
300 homes - Sherwood - Topeka, KS	September 24, 2019	26,150		11,536		14,614
308 homes - Villa West - Topeka, KS	September 24, 2019	22,950		15,165		7,785
		$	84,425	$	45,681	$	38,744

Other
Minot 1400 31st Ave SW - Minot, ND⁽¹⁾	May 23, 2019	$	6,530	$	6,048	$	482

Unimproved Land
Creekside Crossing - Bismarck, ND	March 1, 2019	$	3,049	$	3,205	$	(156	)
Minot 1525 24th Ave SW - Minot, ND	April 3, 2019	725		593		132
Weston - Weston, WI	July 31, 2019	600		427		173
		$	4,374	$	4,225	$	149

Total Dispositions		$	95,329	$	55,954	$	39,375


(1)	This property currently houses our Minot corporate office. During the second quarter of 2019, we purchased an office building which will become our Minot corporate office after renovations are completed. We will lease space in the Minot 1400 31st Ave SW building until the new office is placed in service.

Nine Months Ended September 30, 2018



		(in thousands)
Dispositions	Date Disposed	Sale Price		Book Value and Sale Cost		Gain/(Loss)
Multifamily
44 homes - Dakota Commons - Williston, ND	July 26, 2018	$	4,420	$	3,878	$	542
145 homes - Williston Garden - Williston, ND⁽¹⁾	July 26, 2018	12,310		11,313		997
288 homes - Renaissance Heights - Williston, ND⁽²⁾	July 26, 2018	24,770		17,856		6,914
		$	41,500	$	33,047	$	8,453

Other
43,404 sq ft Garden View - St. Paul, MN	January 19, 2018	$	14,000	$	6,191	$	7,809
52,116 sq ft Ritchie Medical - St. Paul, MN	January 19, 2018	16,500		10,419		6,081
22,187 sq ft Bismarck 715 East Broadway - Bismarck, ND	March 7, 2018	5,500		3,215		2,285
7,849 sq ft Minot Southgate Retail - Minot, ND	July 12, 2018	1,925		2,056		(131		)
9,052 sq ft Fresenius - Duluth, MN	July 27, 2018	1,900		1,078		822
		$	39,825	$	22,959	$	16,866

Unimproved Land
Grand Forks - Grand Forks, ND	July 16, 2018	$	3,000	$	2,986	$	14
Renaissance Heights - Williston, ND⁽³⁾	July 26, 2018	750		684		66
Badger Hills Unimproved - Rochester, MN	August 29, 2018	1,400		1,528		(128		)
		$	5,150	$	5,198	$	(48	)

Total Dispositions		$	86,475	$	61,204	$	25,271


(1)	This apartment community was owned by a joint venture entity in which we had an interest of approximately 74.11%. ~~The joint venture was consolidated in our financial statements at October 31, 2018.~~


(2)	This apartment community was owned by a joint venture entity in which we had an interest of approximately 87.14%. ~~The joint venture was consolidated in our financial statements at October 31, 2018.~~


(3)	This parcel of land was owned by a joint venture entity in which we had an interest of approximately 70.00%. ~~The joint venture was consolidated in our financial statements at October 31, 2018.~~

~~Table of Contents~~

~~Six Months Ended October 31, 2017~~

(in thousands)
Dispositions
Date
Disposed
Sale Price
Book Value
and Sale Cost
Gain/(Loss)
Multifamily
327 unit - 13 Multifamily properties - Minot, ND⁽¹⁾
August 22, 2017 $ 12,263
$ 11,562
$ 701

Other
4,998 sq ft Minot Southgate Wells Fargo Bank - Minot, ND May 15, 2017 3,440
3,332
108

90,260 sq ft Lexington Commerce Center - Eagan, MN August 22, 2017 9,000
3,963
5,037

17,640 sq ft 1440 Duckwood Medical - Eagan, MN August 24, 2017 2,100
1,886
214

279,834 sq ft Edgewood Vista Hermantown I & II - Hermantown, MN October 19, 2017 36,884
24,697
12,187

51,424
33,878
17,546

Unimproved Land
Bismarck 4916 Unimproved Land - Bismarck, ND August 8, 2017 3,175
3,188
(13 )

Total Property Dispositions $ 66,862
$ 48,628
$ 18,234


~~(1)~~	These properties include: 4th Street 4 Plex, 11th Street 3 Plex, Apartments on Main, Brooklyn Heights, Colton Heights, Fairmont, First Avenue (Apartments and Office), Pines, Southview, Summit Park, Temple (including 17 South Main Retail), Terrace Heights and Westridge.

Table of Contents

NOTE 9 • DEBT

As of ~~October 31, 2018,~~September 30, 2019, we owned ~~93 properties,~~84 apartment communities, of which ~~52 multifamily and other properties~~35 served as collateral for mortgage loans. ~~The majority~~All of these mortgage loans were non-recourse to us other than for standard carve-out obligations.As of ~~October 31, 2018,~~September 30, 2019, we believe that there are no0 material defaults or ~~compliance issues with respect~~instances of noncompliance in regards to any of these mortgages payable.

~~The aggregate amount~~During the three months ended September 30, 2019, we closed a $59.9 million mortgage loan. This mortgage loan is secured by four apartment communities and is priced at a fixed rate of ~~required future principal payments on mortgages payable as~~3.88% for the full twelve-year term of ~~October 31, 2018, was as follows:~~

the loan. Proceeds from this loan were used to pay down balances under our line of credit.

(in thousands)
Year Ended April 30, Mortgage Loans
2019 $ 4,870
2020 71,833
2021 92,177
2022 70,506
2023 27,494
Thereafter 182,534
Total payments $ 449,414
During the three months ended September 30, 2019, we entered into a private shelf agreement for the issuance of up to $150.0 million of unsecured senior promissory notes ("unsecured senior notes"). Under this agreement, we issued $75.0 million of Series A notes due September 13, 2029 bearing interest at a rate of 3.84% annually and $50.0 million of Series B notes due September 30, 2028 bearing interest at a rate of 3.69% annually.

As ~~noted above, as~~ of ~~October 31, 2018,~~September 30, 2019, we owned ~~41 multifamily and other properties~~49 apartment communities that were not encumbered by mortgages, with 3244 of those properties providing credit support for our unsecured borrowings. Our primary unsecured credit facility ("unsecured credit facility") is a revolving, multi-bank line of credit, with the Bank of Montreal serving as administrative agent. Our line of credit has total commitments of $250.0 million, with borrowing capacity based on the value of properties contained in the unencumbered asset pool ("UAP"). ~~The~~As of September 30, 2019, the UAP ~~currently provides~~provided for a borrowing capacity of ~~$246.0~~$250.0 million, ~~providing~~with additional borrowing availability of ~~$176.5~~$146.9 million beyond the ~~$69.5~~$103.1 million drawn, asincluding the balance on our operating line of ~~October 31, 2018. This~~credit (discussed below). The unsecured credit facility matures on August 31, 2022, , with ~~one~~1 twelve-month option to extend the maturity date at our election.

~~During the three months ended October 31, 2018, we amended~~Under our ~~primary~~ unsecured credit ~~facility. We extended the maturity date on our existing~~facility, we also have unsecured term loans of $70.0 million ~~unsecured term loan,~~and $75.0 million, included within notes payable on the condensed consolidated balance sheets, which ~~now matures~~mature on January 15, ~~2024. We also added a new $75.0 million, seven-year term loan which matures~~2024 and on August 31, ~~2025.~~

~~Table of Contents~~

2025, respectively.

The interest rates on the line of credit and term loans are based, at our option, on either the lender's base rate plus a margin, ranging from 35-85 basis points, or the London Interbank Offered Rate ("LIBOR"), plus a margin that ranges from 135-190 basis points based on our consolidated leverage. Our ~~line of~~unsecured credit facility and ~~term loan~~unsecured senior notes are subject to customary financial covenants and limitations. We believe that we are in compliance with all such financial covenants and limitations as of ~~October 31, 2018.~~September 30, 2019.

We also have a $6.0 million operating line of credit. This operating line of credit is ~~designated~~designed to enhance treasury management activities and more effectively manage cash balances. This operating line has a one-year term, with pricing based on a market spread plus the one-month LIBOR index rate. As of ~~October 31, 2018 and April~~September 30, ~~2018,~~2019, we ~~have no~~had $293,000 outstanding ~~balance~~ on this operating ~~line.~~line compared to 0 outstanding balance as of December 31, 2018.

The following table summarizes our indebtedness at ~~October 31, 2018:~~September 30, 2019:



	(in thousands)
	September 30, 2019			December 31, 2018			Weighted Average Maturity in Years at September 30, 2019
Lines of credit	$	103,143		$	57,500		2.9
Term loans	145,000			145,000			5.1
Unsecured senior notes	125,000			—			9.6
Unsecured debt	373,143			202,500			6.0
Mortgages payable - fixed	362,731			445,974			5.7
Total debt	$	735,874		$	648,474		5.9
Weighted average interest rate on lines of credit (rate with swap)	3.73		%	3.72		%
Weighted average interest rate on term loans (rate with swap)	4.14		%	4.01		%
Weighted average interest rate on unsecured senior notes	3.78		%	—
Weighted average interest rate on mortgages payable	4.15		%	4.58		%

Table of Contents

(in thousands)
October 31, 2018 April 30, 2018 Weighted Average Maturity in Years at October 31, 2018
Unsecured line of credit $ 69,500
$ 124,000
3.8
Term loan A 70,000
70,000
5.2
Term loan B 75,000
—
6.8
Unsecured debt 214,500
194,000

Mortgages payable - fixed 449,414
489,401
4.5
Mortgages payable - variable —
22,739

Total debt $ 663,914
$ 706,140
4.8
Weighted average interest rate on unsecured line of credit 3.72 % 3.35 %
Weighted average interest rate on term loan A (rate with swap) 3.75 % 3.86 %
Weighted average interest rate on term loan B (rate with swap) 4.60 %

Weighted average interest rate on mortgages payable 4.59 % 4.69 %

The aggregate amount of required future principal payments on mortgages payable, term loans, and senior notes as of September 30, 2019, was as follows:



	(in thousands)
2019 (remainder)	$	1,599
2020	23,531
2021	55,877
2022	40,740
2023	48,359
Thereafter	462,625
Total payments	$	632,731

NOTE 10 • DERIVATIVE INSTRUMENTS

Our objective in using interest rate derivatives is to add stability to interest expense and to manage our exposure to interest rate fluctuations. To accomplish this objective, we primarily use interest rate swap contracts to fix the variable interest rate on our term ~~loans.~~loans and a portion of our revolving line of credit. The interest rate swap contracts qualify as cash flow hedges.

Under ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, ~~which we adopted on November 1, 2017,~~ the ineffective portion of a hedging instrument is ~~no longer~~not required to be recognized currently in earnings or disclosed. Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for our interest rate swap will be reclassified to interest expense as interest expense is incurred on our term loans. During the next twelve months, we estimate an additional ~~$320,000~~$1.4 million will be reclassified as ~~a decrease~~an increase to interest expense.

During the nine months ended September 30, 2019, we entered into a $50.0 million interest rate swap to fix the interest rate on a portion of our primary line of credit.

At ~~October 31, 2018,~~September 30, 2019, we had ~~two~~3 interest rate swap contracts in effect with a notional amount of ~~$145.0~~$195.0 million and ~~one~~1 additional interest rate swap that becomes effective on January 31, 2023, with a notional amount of $70.0 million.

The table below presents the fair value of our derivative financial instruments as well as their classification on our Condensed Consolidated Balance Sheets as of ~~October~~September 30, 2019 and December 31, 2018 ~~and~~ ~~April 30, 2018~~.

(in thousands)

September 30, 2019

December 31, 2018

September 30, 2019

December 31, 2018

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Total derivative instruments designated as hedging instruments - interest rate swaps

Other Assets

—

818

Accounts Payable and Accrued Expenses

9,793

1,675

(in thousands)
October 31, 2018 April 30, 2018
Balance Sheet Location Fair Value Fair Value
Derivative instruments - interest rate swaps Other Assets $ 3,321
$ 1,779

Total derivatives designated as hedging instruments $ 3,321
$ 1,779

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The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of ~~October 31, 2018~~September 30, 2019 and ~~2017.~~2018.



	(in thousands)
	Gain (Loss) Recognized in OCI					Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Gain (Loss) Reclassified from Accumulated OCI into Income
Three months ended September 30,	2019			2018			2019		2018
Total derivatives in cash flow hedging relationships - Interest rate contracts	$	(2,251	)	$	948	Interest expense	$	56	$	64

Nine months ended September 30,
Total derivatives in cash flow hedging relationships - Interest rate contracts	$	(9,819	)	$	3,106	Interest expense	$	26	$	193

(in thousands)
Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from Accumulated OCI into Income Gain (Loss) Reclassified from Accumulated OCI into Income
2018 2017 2018 2017
Three months ended October 31,
Interest rate contracts $ 1,247
—
Interest expense $ 90
—

Total derivatives in cash flow hedging relationships $ 1,247
—
$ 90
—

Six months ended October 31,
Interest rate contracts $ 1,455
—
Interest expense $ 119
—

Total derivatives in cash flow hedging relationships $ 1,455
—
$ 119
—

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NOTE 11 • FAIR VALUE MEASUREMENTS

Cash and cash equivalents, restricted cash, accounts payable, accrued expenses, and other liabilities are carried at amounts that reasonably approximate their fair value due to their short-term nature. For variable rate line of credit debt that re-prices frequently, fair values are based on carrying values. ~~The fair values of our financial instruments approximate their carrying amount in the consolidated financial statements except for fixed rate debt.~~

In determining the fair value of other financial instruments, we apply FASB ASC 820, "Fair Value Measurement and ~~Disclosures~~,Disclosures." ~~or ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.~~ Fair value hierarchy under ASC 820 distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting entity’s own assumptions about market participant assumptions (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

Fair Value Measurements on a Recurring Basis

The fair value of our interest rate swaps ~~are~~is determined using the market standard methodology of netting discounted expected variable cash payments and receipts. The variable cash payments and receipts are based on an expectation of future interest rates (a forward curve) derived from observable market interest rate curves. We also consider both our own nonperformance risk and the counterparty's nonperformance risk in the fair value ~~measurement.~~measurement (Level 3).

Fair Value Measurements on a Nonrecurring Basis

There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at ~~October 31, 2018.~~September 30, 2019. Non-financial assets measured at fair value on a nonrecurring basis at ~~April 30,~~December 31, 2018, consisted of real estate investments that were written-down to estimated fair value during ~~fiscal year 2018. See Note 2 for additional information on impairment losses recognized during fiscal year~~the transition period ended December 31, 2018. The aggregate fair value of these assets by their levels in the fair value hierarchy is as follows:



	(in thousands)
	Total		Level 1	Level 2	Level 3
December 31, 2018
Real estate investments valued at fair value	$	3,049	—	—	$	3,049

(in thousands)
Total
Level 1
Level 2
Level 3
April 30, 2018

Real estate investments $ 52,145
—
—
$ 52,145

As of ~~April 30,~~December 31, 2018, we estimated the fair value of our real estate investments using ~~appraisals,~~ a market offer to ~~purchase, market comparisons, and other market data.~~purchase.

Financial Assets and Liabilities Not Measured at Fair Value

~~For mortgages payable, the~~The fair value of ~~fixed rate loans is~~mortgages payable and mortgage and notes receivable are estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates (Level 3).

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The estimated fair values of our financial instruments as of ~~October~~September 30, 2019, and December 31, ~~2018, and April 30,~~ 2018, respectively, are as follows:


	(in thousands)								(in thousands)
	October 31, 2018				April 30, 2018				September 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	12,777	$	12,777	$	11,891	$	11,891	$	8,500	$	8,500	$	13,792	$	13,792
Mortgage and note receivable									$	26,697	$	26,697	$	26,809	$	26,809
FINANCIAL LIABILITIES
Revolving line of credit	$	69,500	$	69,500	$	124,000	$	124,000
Term loan A⁽¹⁾	$	70,000	$	70,000	$	70,000	$	70,000
Term loan B⁽¹⁾	$	75,000	$	75,000	$	—	$	—
Revolving lines of credit⁽¹⁾									$	103,143	$	103,143	$	57,500	$	57,500
Notes payable⁽¹⁾									$	270,000	$	270,000	$	145,000	$	145,000
Mortgages payable	$	449,414	$	446,360	$	509,919	$	510,803	$	362,731	$	366,144	$	445,974	$	444,241


(1)	Excluding the effect of ~~the~~ interest rate swap ~~agreement.~~agreements.

NOTE 12 ~~• REDEEMABLE NONCONTROLLING INTERESTS~~

Redeemable noncontrolling interests on our Condensed Consolidated Balance Sheets represent the noncontrolling interest in joint ventures in which our unaffiliated partner, at its election, could require us to buy its interest at a purchase price to be determined by an appraisal conducted in accordance with the terms of the agreement, or at a negotiated price. Below is a table reflecting the activity of the redeemable noncontrolling interests.

(in thousands)
Balance at April 30, 2018 $ 6,644
Net income (566 )
Balance at October 31, 2018 $ 6,078

~~NOTE 13~~ • SHARE-BASED COMPENSATION

Share-based awards are provided to officers, non-officer employees, and trustees under our 2015 Incentive Plan approved by shareholders on September 15, 2015, which allows for awards in the form of cash, unrestricted and restricted common shares, and restricted stock units ("RSUs") up to an aggregate of ~~4,250,000~~425,000 shares over the ten-year period in which the plan ~~will be~~is in effect. Under our 2015 Incentive Plan, officers and non-officer employees may earn share awards under a ~~revised~~ long-term incentive plan,

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which is a forward-looking program that measures long-term performance over the stated performance period. These awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year.

~~Fiscal Year~~ 2019 LTIP Awards

Awards granted to ~~trustees~~officers on ~~July 20, 2018, consist of 64,972 time-based RSU awards. All of these awards are classified as equity awards. The time-based RSUs vest on July 20, 2019.~~

~~Awards granted to management on July 20, 2018,~~March 8, 2019, consist of time-based RSU awards for ~~74,920~~6,391 shares and ~~performance~~performance-based RSU awards based on relative total shareholder return (“TSR”), for ~~149,846~~12,781 shares. All of these awards are classified as equity awards. The time-based RSU awards vest as to one-third of the shares on each of ~~July 20,~~March 8, 2020, March 8, 2021, and March 8, 2022.

Awards granted on June 15, 2019, ~~April 30, 2020, and April 30, 2021.~~

consist of 169 time-based RSUs that vest on June 15, 2020. Awards granted on August 10, ~~2018,~~2019, consist of ~~2,368~~100 time-based ~~RSU awards~~RSUs that vest on August 10, 2020. Awards granted on August 29, 2019, consist of 444 time-based RSUs that vest as to one-third on each of August ~~10, 2019, April 30,~~29, 2020, August 29, 2021, and ~~April 30, 2021; 4,736 performance RSU awards based on TSR; and 5,535~~August 29, 2022; 98 time-based ~~RSU awards~~RSUs that vest as to one-third on ~~each of August 10, 2019, August 10,~~March 8, 2020, March 8, 2021, and ~~August 10, 2021. All of these awards are classified as equity awards.~~March 8, 2022; and 197 performance RSUs based on TSR.

The ~~TSR performance~~performance-based RSU awards are earned based on our TSR as compared to the MSCI U.S. REIT Index over a forward-looking three-year period. The maximum number of RSUs eligible to be earned under this ~~performance based~~performance-based award is ~~299,692~~25,562 RSUs, which is 200% of the RSUs granted. Earned awards (if any) will fully vest as of the last day of the measurement period. These awards have market conditions in addition to service conditions that must be met for the awards to vest. We recognize compensation expense ratably based on the grant date fair value, as determined using the Monte Carlo valuation model, regardless of whether the market conditions are achieved and the awards ultimately vest. Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved. We based the expected volatility

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on the historical volatility of our daily closing share price, the risk-free interest rate on the interest rates on U.S. treasury bonds with a maturity equal to the remaining performance period of the award, and the expected term on the performance period of the award. The assumptions used to value the performance RSU awards were an expected volatility of ~~28.6%~~25.5%, a risk-free interest rate of ~~2.66%~~2.43%, and an expected life of ~~2.78~~2.82 years. The share price at the grant date, ~~July 20, 2018,~~March 8, 2019, was ~~$5.36~~$58.06 per share.

~~Total~~Awards granted to trustees on May 17, 2019, consist of 812 RSUs which vested immediately and awards granted on June 13, 2019 consist of 7,521 time-based RSU awards which vest on June 13, 2020. All of these awards are classified as equity awards.

Share-Based Compensation Expense

Share-based compensation expense recognized in the consolidated financial statements for all outstanding share-based awards was ~~$579,811~~$1.5 million and ~~$751,000~~$1.0 million for the ~~six~~nine months ended ~~October 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively.

~~NOTE 14 • RELATED PARTY TRANSACTIONS~~

~~Transactions with BMO Capital Markets~~

~~We have an historical and ongoing relationship with BMO Capital Markets (“BMO”). On July 17, 2017, we engaged BMO~~ The increase in expense was primarily due to ~~provide financial advisory services~~the timing of award grants in connection with the ~~proposed disposition of~~change in our ~~healthcare property portfolio. A family member of Mark O. Decker, Jr., our President~~fiscal year end, additional officers included in award grants, and ~~Chief Executive Officer, is an employee of BMO and could have an indirect material interest~~a decrease in ~~any such engagement and related transaction(s). The Board pre-approved~~forfeitures in the ~~engagement of BMO. During~~current period compared to the ~~quarter ended January 31, 2018, we completed the disposition of 27 healthcare properties and paid BMO a transaction fee of $1.8 million in connection with this engagement.~~prior period.

NOTE 1513 • SUBSEQUENT EVENTS

~~Completed Disposition.~~On October 29, 2019, we sold 5 apartment communities containing 414 apartment homes in Bismarck, North Dakota for a sale price of $24.0 million. These properties included Crestview, Kirkwood Manor, North Pointe, Pebble Springs, and Westwood Park.

On November ~~30, 2018~~1, 2019, we sold a commercial property in ~~Minot, ND~~Woodbury, Minnesota for a sale price of ~~$6.6~~$5.8 million.

~~Share Repurchase Program.~~ ~~On December 5, 2018, our Board of Trustees reauthorized our common share repurchase program for an additional one-year period.~~

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~~ITEM~~Item 2. ~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Management's Discussion and Analysis of Financial Conditions and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements included in this report, our audited financial statements for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018, which are included in our Form ~~10-K~~10-KT filed with the SEC on ~~June 28, 2018,~~February 27, 2019, and the risk factors in Item 1A., “Risk Factors,” of our Form ~~10-K~~10-KT for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018.

We consider this and other sections of this Report to contain 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 (the “Exchange Act”), with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of those words and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance.

The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:

economic conditions in the markets where we own properties or markets in which we may invest in the future;

rental conditions in our markets, including occupancy levels and rental rates, our potential inability to renew residents or obtain new residents upon expiration of existing leases, changes in tax and housing laws, or other factors;

adverse changes in real estate markets, including future demand for apartment homes in our significant markets, barriers of entry into new markets, limitations on our ability to increase rental rates, our ability to identify and consummate attractive acquisitions and dispositions on favorable terms, our ability to reinvest sales proceeds successfully, and our inability to accommodate any significant decline in the market value of real estate serving as collateral for our mortgage obligations;

reliance on a single asset class (multifamily) and certain geographic areas (Midwest and West regions) of the U.S.;

inability to succeed in any new markets we enter;

failure of new acquisitions to achieve anticipated results or be efficiently integrated;

inability to complete lease-up of our projects on schedule and on budget;

inability to sell our non-core properties on terms that are acceptable;

failure to reinvest proceeds from sales of properties into tax-deferred exchanges, which could necessitate special dividend and tax protection payments;

inability to fund capital expenditures out of cash flow;

inability to pay, or need to reduce, dividends on our common shares;

inability to raise additional equity capital;

financing risks, including our potential inability to obtain debt or equity financing on favorable terms, or at all;

level and volatility of interest or capitalization rates or capital market conditions;

changes in operating costs, including real estate taxes, utilities, and insurance costs;

~~the~~ availability and cost of casualty insurance for losses;

inability to continue to satisfy complex rules in order to maintain our status as a REIT for federal income tax purposes, inability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal income tax purposes, and the risk of changes in laws affecting REITs;

inability to attract and retain qualified personnel;

cyber liability or potential liability for breaches of our privacy or information security systems;

inability to address catastrophic weather, natural events, and climate change;

inability to comply with environmental laws and regulations; and

other risks identified in this Report, in other SEC reports, or in other documents that we publicly disseminate.

New factors may also arise from time to time that could have a material adverse effect on our business and results of operations. Except as otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements to reflect events, circumstances, or changes in expectations after the date on which this Report is filed. Readers also should review the risks and uncertainties detailed from time to time in our filings with the SEC, including the “Management’s

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Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our ~~Annual~~Transition Report on Form ~~10-K~~10-KT for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018.

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Executive Summary

We own, manage, acquire, redevelop, and develop apartment communities. We primarily focus on investing in markets characterized by stable and growing economic conditions, strong employment, and an attractive quality of life that we believe, in combination, lead to higher demand for our apartment homes and retention of our residents. As of ~~October 31, 2018,~~September 30, 2019, we owned interests in 8784 apartment communities consisting of ~~13,702~~13,336 apartment homes. Property owned, as presented in the condensed consolidated balance sheets, was $1.7 billion at September 30, 2019, compared to $1.6 billion at ~~October~~December 31, ~~2018, compared to $1.7 billion at April 30,~~ 2018.

Renting apartment homes is our primary source of revenue, and our business objective is to provide great homes for our residents. We strive to maximize resident satisfaction and retention by investing in high-quality assets in desirable locations and creating vibrant apartment communities through service-oriented operations. We believe that delivering superior resident experiences will enhance resident satisfaction while also driving profitability for our business and our shareholders. We have paid quarterly distributions continuously since our first distribution in 1971.

Overview of the Three Months Ended ~~October 31, 2018~~September 30, 2019

For the three months ended ~~October 31, 2018, revenues~~September 30, 2019, revenue increased by ~~$3.7~~$2.0 million to ~~$45.6~~$47.4 million, compared to ~~$41.9~~$45.4 million for the three months ended ~~October 31, 2017. Expenses~~September 30, 2018. Total expenses increased by ~~$2.8 million~~$548,000 to ~~$43.4~~$43.8 million for the three months ended ~~October 31, 2018,~~September 30, 2019, compared to ~~$40.6~~$43.3 million for the three months ended ~~October 31, 2017.~~September 30, 2018. Funds from Operations ("FFO") applicable to common shares and Units for the three months ended September 30, 2019 increased to $12.2 million compared to $11.0 million for the comparable period ended September 30, 2018, primarily due to higher NOI from apartment communities. The drivers of these changes are discussed in more detail in the “Results of Operations” section below.

~~Summarized below are significant~~In our ongoing efforts to improve the quality of our portfolio and balance sheet, we completed the following transactions ~~that occurred~~ during the ~~second~~third quarter of ~~our fiscal year~~ 2019:

~~On August 31, 2018, we amended our credit agreement to:~~


◦	increase the overall unsecured facility from $370 million to $395 million, reallocating the commitment for the revolving line of credit to $250 million and the remaining $145 million between two term loans;


◦	~~extend the maturity of the revolving line of credit to August 2022;~~


◦	~~extend the existing $70 million unsecured term loan maturity to January 2024; and~~


◦	~~add a new $75 million, 7-year unsecured term loan maturing in August 2025.~~

~~Under the amendment, the interest rate on our existing facilities decreased by 25-35 basis points (depending on our overall leverage).~~ We ~~also entered into~~acquired FreightYard Townhomes and Flats, a ~~swap agreement~~96-home apartment community located in Minneapolis, Minnesota, and Lugano at Cherry Creek, a 328-home apartment community located in Denver, Colorado, for ~~the entire $75 million and full term~~an aggregate purchase price of ~~the new unsecured 7-year term loan in our ongoing effort to reduce floating interest rate exposure.~~

On September 10, 2018, we entered into a swap agreement covering the extension of the $70 million term loan from January 2023 to January 2024, resulting in both term loans being covered by swap agreements for the duration of the terms.$125.3 million.

We sold one ~~commercial property~~apartment community in Billings, Montana and our entire portfolio of five properties in Topeka, Kansas for an aggregate sale price of $84.4 million. We also sold one parcel of unimproved land for ~~a total sale~~$600,000.

We repurchased approximately 39,000 common shares for an aggregate purchase price of ~~$3.1 million.~~$2.3 million, including commissions, representing an average price of $59.57 per common share.

~~Subsequent~~We entered into a $59.9 million mortgage loan. This mortgage loan is secured by four apartment communities and is priced at a fixed rate of 3.88% for the full twelve-year term of the loan.

We entered into a private shelf agreement for the issuance of up to ~~quarter-end,~~$150.0 million of senior unsecured promissory notes. In September 2019, we ~~engaged~~issued $75.0 million of Series A notes due September 13, 2029, bearing interest at a rate of 3.84% annually, and $50.0 million of Series B notes due September 30, 2028, bearing interest at a rate of 3.69% annually, under this facility.

See Note 8 of the Notes to Condensed Consolidated Financial Statements in ~~the following transaction:~~

~~On December 5, 2018, we reauthorized our common share repurchase program for an additional one-year period.~~

~~On November 30, 2018, we sold a commercial property in Minot, North Dakota~~this Report for a ~~sale price of $6.6 million.~~table detailing our acquisitions and dispositions during the three-month periods ended September 30, 2019 and 2018.

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~~RESULTS OF OPERATIONS~~

~~Consolidated~~ Results of Operations ~~for the Three and Six Months Ended October 31, 2018 and 2017~~

The discussion that follows is based on our consolidated results of operations for the three and ~~six~~nine months ended ~~October 31,~~September 30, 2019 and 2018.

Consolidated Results of Operations for the Three and Nine Months Ended September 30, 2019 and 2018 ~~and 2017. Information about our same-store property results is contained in the Net Operating Income section below.~~



	(in thousands, except percentages)
	Three Months Ended											Nine Months Ended
	September 30,						2019 vs. 2018					September 30,						2019 vs. 2018
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Revenue
Same-store	$	37,633		$	36,198		$	1,435		4.0	%	$	112,052		$	108,031		$	4,021		3.7	%
Non-same-store	6,283			4,687			1,596			34.1	%	17,405			11,038			6,367			57.7	%
Other properties and dispositions	3,520			4,521			(1,001		)	(22.1	)%	10,521			15,569			(5,048		)	(32.4	)%
Total	47,436			45,406			2,030			4.5	%	139,978			134,638			5,340			4.0	%
Property operating expenses, including real estate taxes
Same-store	16,147			15,795			352			2.2	%	48,561			47,227			1,334			2.8	%
Non-same-store	2,308			1,696			612			36.1	%	6,327			4,115			2,212			53.8	%
Other properties and dispositions	1,455			1,996			(541		)	(27.1	)%	4,574			6,349			(1,775		)	(28.0	)%
Total	19,910			19,487			423			2.2	%	59,462			57,691			1,771			3.1	%
Net operating income
Same-store	21,486			20,403			1,083			5.3	%	63,491			60,804			2,687			4.4	%
Non-same-store	3,975			2,991			984			32.9	%	11,078			6,923			4,155			60.0	%
Other properties and dispositions	2,065			2,525			(460		)	(18.2	)%	5,947			9,220			(3,273		)	(35.5	)%
Total	$	27,526		$	25,919		$	1,607		6.2	%	$	80,516		$	76,947		$	3,569		4.6	%
Property management expenses	(1,553		)	(1,269		)	284			22.4	%	(4,552		)	(4,090		)	462			11.3	%
Casualty gain (loss)	(178		)	(225		)	(47		)	(20.9	)%	(911		)	(275		)	636			231.3	%
Depreciation and amortization	(18,751		)	(19,164		)	(413		)	(2.2	)%	(55,299		)	(58,812		)	(3,513		)	(6.0	)%
Impairment of real estate investments	—			—			—			—		—			(17,809		)	(17,809		)	(100.0	)%
General and administrative expenses	(3,448		)	(3,147		)	301			9.6	%	(10,803		)	(11,114		)	(311		)	(2.8	)%
Interest expense	(7,694		)	(8,193		)	(499		)	(6.1	)%	(23,180		)	(25,051		)	(1,871		)	(7.5	)%
Loss on extinguishment of debt	(1,087		)	(540		)	547			101.3	%	(1,496		)	(673		)	823			122.3	%
Interest and other income	498			395			103			26.1	%	1,390			1,544			(154		)	(10.0	)%
Income (loss) before gain (loss) on sale of real estate and other investments, gain (loss) on litigation settlement, and income (loss) from discontinued operations	(4,687		)	(6,224		)	1,537			24.7	%	(14,335		)	(39,333		)	24,998			63.6	%
Gain (loss) on sale of real estate and other investments	39,105			9,095			30,010			(330.0	)%	39,774			11,399			28,375			248.9	%
Gain (loss) on litigation settlement	300			—			300			100.0	%	6,586			—			6,586			100.0	%
Income (loss) from continuing operations	34,718			2,871			31,847			1,109.3	%	32,025			(27,934		)	59,959			(214.6	)%
Income (loss) from discontinued operations	—			570			(570		)	(100.0	)%	—			14,690			(14,690		)	(100.0	)%
NET INCOME (LOSS)	$	34,718		$	3,441		$	31,277		909.0	%	$	32,025		$	(13,244	)	$	45,269		(341.8	)%
Dividends to preferred unitholders	(160		)	—			160			100.0	%	(377		)	—			377			100.0	%
Net (income) loss attributable to noncontrolling interests – Operating Partnership	(3,145		)	(112		)	(3,033		)	2,708.0	%	(2,550		)	1,888			(4,438		)	(235.1	)%
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	183			(676		)	859			(127.1	)%	913			439			474			108.0	%
Net income (loss) attributable to controlling interests	31,596			2,653			28,943			1,091.0	%	30,011			(10,917		)	40,928			(374.9	)%
Dividends to preferred shareholders	(1,705		)	(1,705		)	—			—		(5,116		)	(5,116		)	—			—
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	29,891		$	948		$	28,943		3,053.1	%	$	24,895		$	(16,033	)	$	40,928		(255.3	)%

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(in thousands, except percentages)
Three Months Ended Six Months Ended October 31,
October 31, 2018 vs. 2017 October 31, 2018 vs. 2017
2018 2017 $ Change % Change 2018 2017 $ Change % Change
REVENUE $ 45,638
$ 41,866
$ 3,772
9.0 % $ 91,584
$ 82,844
$ 8,740
10.5 %
Property operating expenses, excluding real estate taxes 14,247
14,108
139
1.0 % 28,706
26,982
1,724
6.4 %
Real estate taxes 5,089
4,610
479
10.4 % 10,159
9,263
896
9.7 %
Property management expenses 1,319
1,372
(53 ) (3.9 )% 2,686
2,728
(42 ) (1.5 )%
Casualty loss 225
115
110
95.7 % 450
600
(150 ) (25.0 )%
Depreciation and amortization 19,191
17,270
1,921
11.1 % 37,803
42,608
(4,805 ) (11.3 )%
Impairment of real estate investments —
—
—
n/a
—
256
(256 ) n/a
General and administrative expenses 3,374
3,118
256
8.2 % 7,244
7,120
124
1.7 %
TOTAL EXPENSES $ 43,445
$ 40,593
$ 2,852
7.0 % $ 87,048
$ 89,557
$ (2,509 ) (2.8 )%
Operating income (loss) 2,193
1,273
920
72.3 % 4,536
(6,713 ) 11,249
(167.6 )%
Interest expense (7,997 ) (8,509 ) 512
(6.0 )% (16,382 ) (16,640 ) 258
(1.6 )%
Loss on extinguishment of debt (4 ) (334 ) 330
(98.8 )% (556 ) (533 ) (23 ) 4.3 %
Interest income 410
199
211
106.0 % 891
220
671
305.0 %
Other income 19
56
(37 ) (66.1 )% 54
263
(209 ) (79.5 )%
Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations (5,379 ) (7,315 ) 1,936
(26.5 )% (11,457 ) (23,403 ) 11,946
(51.0 )%
Gain (loss) on sale of real estate and other investments (232 ) 5,324
(5,556 ) (104.4 )% 8,992
5,448
3,544
65.1 %
Income (loss) from continuing operations (5,611 ) (1,991 ) (3,620 ) 181.8 % (2,465 ) (17,955 ) 15,490
(86.3 )%
Income (loss) from discontinued operations —
15,130
(15,130 ) (100.0 )% 570
17,815
(17,245 ) (96.8 )%
NET INCOME (LOSS) $ (5,611 ) $ 13,139
$ (18,750 ) (142.7 )% $ (1,895 ) $ (140 ) $ (1,755 ) 1,253.6 %
Net (income) loss attributable to noncontrolling interests – Operating Partnership 722
(773 ) 1,495
(193.4 )% 587
871
(284 ) (32.6 )%
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities 331
455
(124 ) (27.3 )% (334 ) 826
(1,160 ) (140.4 )%
Net income (loss) attributable to controlling interests (4,558 ) 12,821
(17,379 ) (135.6 )% (1,642 ) 1,557
(3,199 ) (205.5 )%
Dividends to preferred shareholders (1,706 ) (2,812 ) 1,106
(39.3 )% (3,411 ) (5,098 ) 1,687
(33.1 )%
Redemption of Preferred Shares —
(3,649 ) 3,649
(100.0 )% —
(3,649 ) 3,649
(100.0 )%
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ (6,264 ) $ 6,360
$ (12,624 ) (198.5 )% $ (5,053 ) $ (7,190 ) $ 2,137
(29.7 )%



	Three Months Ended September 30,				Nine Months Ended September 30,
Weighted Average Occupancy⁽¹⁾	2019		2018		2019		2018
Same-store	93.3	%	91.9	%	94.3	%	93.4	%
Non-same-store	94.2	%	93.4	%	94.6	%	87.1	%
Total	93.4	%	92.2	%	94.4	%	92.8	%

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~~Revenues.~~ Revenues for the three months ended October 31, 2018, were $45.6 million, compared to $41.9 million in the three months ended October 31, 2017, an increase of $3.8 million or 9.0%. The increase in revenue for the three months ended October 31, 2018, resulted primarily from properties acquired in fiscal year 2018 and same-store properties, as shown in the table below.

(1)

Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rental revenue. Scheduled rental revenue represents the value of all apartment homes, with occupied homes valued at contractual rental rates pursuant to leases and vacant homes valued at estimated market rents. When calculating actual rents for occupied homes and market rents for vacant homes, delinquencies, and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes. We believe that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and our calculation of weighted average occupancy may not be comparable to that disclosed by other REITs.

(in thousands)
Increase in Total Revenue Three Months Ended
October 31, 2018
Increase in revenue from non-same-store apartment communities $ 5,119
Increase in revenue from same-store apartment communities 1,298
Decrease in revenue from other properties and dispositions (2,645 )
Net increase in total revenue $ 3,772

Revenues for the six months ended October 31, 2018, were $91.6 million, compared to $82.8 million in the six months ended October 31, 2017, an increase of $8.7 million or 10.5%. The increase in revenue for the six months ended October 31, 2018, resulted primarily from properties acquired in fiscal year 2018 and same-store properties, as shown in the table below.

(in thousands)
Increase in Total Revenue Six Months Ended October 31, 2018
Increase in revenue from non-same-store apartment communities $ 11,140
Increase in revenue from same-store apartment communities 2,368
Decrease in revenue from other properties and dispositions (4,768 )
Net increase in total revenue $ 8,740

~~Property Operating Expenses, Excluding Real Estate Taxes~~. Property operating expenses, excluding real estate taxes, increased by 1.0% to $14.2 million in the three months ended October 31, 2018, compared to $14.1 million in the same period of the prior fiscal year. An increase of $1.4 million at non-same-store properties was offset by decreases of $517,000 at same-store properties and $769,000 from sold properties.

~~Property operating expenses, excluding real estate taxes, increased by 6.4% to $28.7 million in the~~ six months ended October 31, 2018, compared to $27.0 million in the same period of the prior fiscal year. An increase of $3.0 million at non-same-store properties was partially offset by decreases of $188,000 at same-store properties and $1.1 million from sold properties.

~~Real Estate Taxes.~~ Real estate taxes increased by 10.4% to $5.1 million in the three months ended October 31, 2018, compared to $4.6 million in the same period of the prior fiscal year. An increase of $584,000 at non-same-store properties and $123,000 at same-store properties was partially offset by a decrease of $228,000 from sold and other properties.

Real estate taxes increased by 9.7% to $10.2 million in the six months ended October 31, 2018, compared to $9.3 million in the same period of the prior fiscal year. An increase of $1.2 million at non-same-store properties and $309,000 at same-store properties was partially offset by a decrease of $794,000 from sold properties.

~~Property Management Expenses. Property management expense decreased by 3.9% to $1.3 million in the three months ended October 31, 2018, compared to $1.4 million in the same period of the prior fiscal year. Property management expense was $2.7 million in each of the~~ ~~six months ended October 31, 2018 and 2017.~~

~~Depreciation and Amortization.~~ Depreciation and amortization increased by 11.1% to $19.2 million in the three months ended October 31, 2018, compared to $17.3 million in the same period of the prior fiscal year, primarily attributable to non-same-store properties.

Depreciation and amortization decreased by 11.3% to $37.8 million in the six months ended October 31, 2018, compared to $42.6 million in the same period of the prior fiscal year. This decrease was primarily due to a change in the estimated useful lives of our assets in the prior fiscal year, offset by increased depreciation from non-same-store properties.. In the six months ended October 31, 2017, we recognized an additional $9.0 million in depreciation expense due to a one-time adjustment for

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~~assets that were fully depreciated under the new estimated useful lives. See Note 2 of the Notes to the Condensed Consolidated Financial Statements in this report for additional information.~~

~~Impairment of Real Estate Investments.~~ We recognized no impairment in the six months ended October 31, 2018, compared to $256,000 in the same period of the prior fiscal year. See Note 2 of the Notes to the Condensed Consolidated Financial Statements in this report for additional information.

~~General and Administrative Expenses.~~ General and administrative expenses increased by 8.2% to $3.4 million in the three months ended October 31, 2018, compared to $3.1 million in the same period of the prior fiscal year, due primarily to higher estimated incentive compensation related to the expected achievement of certain financial metric targets. General and administrative expenses increased by 1.7% to $7.2 million in the six months ended October 31, 2018, compared to $7.1 million in the same period of the prior fiscal year.

~~Interest Expense.~~ Interest expense decreased by 6.0% to $8.0 million in the three months ended October 31, 2018, compared to $8.5 million in the same period of the prior fiscal year, due primarily to a decrease in average debt outstanding. Interest expense decreased by 1.6% to $16.4 million in the six months ended October 31, 2018, compared to $16.6 million in the same period of the prior fiscal year, due primarily to a decrease in debt outstanding.

~~Gain (loss) on Sale of Real Estate and Other Investments.~~ We recorded a net loss of $232,000 and a net gain of $5.3 million in continuing operations in the three months ended October 31, 2018 and 2017, respectively. We recorded net gains of $9.0 million and $5.4 million in continuing operations in the six months ended October 31, 2018 and 2017, respectively. Properties sold in the three and six months ended October 31, 2018 and 2017, are detailed below in the section captioned “Property Acquisitions and Dispositions.”

~~Income from Discontinued Operations.~~ We recorded no income from discontinued operations in the three months ended October 31, 2018, compared to $15.1 million in the same period of the prior fiscal year. We recorded income from discontinued operations of $570,000 and $17.8 million , respectively, in the six months ended October 31, 2018 and 2017. See Note 7 of the Notes to the Condensed Consolidated Financial Statements in this report for further information on discontinued operations.

~~Net Operating Income~~



Number of Apartment Homes	September 30, 2019	September 30, 2018
Same-store	11,785	12,847
Non-same-store	1,551	855
Total	13,336	13,702

Net Operating Income, ~~(“NOI”)~~or NOI, is a ~~non-U.S. GAAP~~non-GAAP measure, which we define as total real estate revenues less ~~real estate expenses. Real estate expenses consist of~~ property operating expenses, ~~and~~including real estate ~~tax expense and do not include property management expense.~~taxes. 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 operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with ~~U.S.~~ 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.

The following table shows real estate revenue, real estate operating expenses, and NOI for the three and six months ended October 31, 2018 and 2017, respectively, for our multifamily and other properties. For a reconciliation of NOI to net income as reported, see Note 5 of the Notes to the Condensed Consolidated Financial Statements in this report.

~~The table also shows multifamily NOI~~We have provided certain information on a same-store and non-same-store ~~properties~~ basis. Same-store ~~properties~~apartment communities are ~~properties~~ owned or in service for the entirety of the periods being compared, and, in the case of development ~~or re-development~~ properties, ~~those that~~ have achieved a target level of physical occupancy of 90%. ~~For comparison~~On the first day of each calendar year, we determine the ~~six months ended October 31, 2018 and 2017, four apartment communities were categorized~~composition of our same-store pool for that year as ~~non-same-store.~~

~~This comparison~~well as adjust the previous year, which allows us to evaluate ~~the performance of~~full period-over-period operating comparisons for existing ~~properties~~apartment communities and their contribution to net income. ~~Management believes~~We believe that measuring performance on a same-store ~~property~~ basis is useful to investors because it enables evaluation of how a fixed pool of our ~~properties~~communities are performing year-over-year. ~~Management uses~~We use this measure to assess whether or not ~~it has~~we have been successful in increasing NOI, ~~and~~renewing the leases on existing residents, controlling operating ~~costs.~~costs, and making prudent capital improvements. The discussion below focuses on the main factors affecting real estate revenue and ~~real estate~~ expenses from same-store ~~properties.~~apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store apartment communities are generally due to the addition of those properties to our real estate portfolio, and accordingly provide less useful information for evaluating ongoing operational performance of our real estate portfolio.

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(in thousands, except percentages)
Three Months Ended October 31, Six Months Ended October 31,
2018 2017 $ Change % Change 2018 2017 $ Change % Change

Real estate revenue
Same-store $ 37,208
$ 35,910
$ 1,298
3.6 % $ 73,946
$ 71,578
$ 2,368
3.3 %
Non-same-store 6,666
1,547
5,119
330.9 % 13,017
1,877
11,140
593.5 %
Other properties and dispositions 1,764
4,409
(2,645 ) (60.0 )% 4,621
9,389
(4,768 ) (50.8 )%
Total $ 45,638
$ 41,866
$ 3,772
9.0 % $ 91,584
$ 82,844
$ 8,740
10.5 %

Real estate expenses
Same-store $ 16,079
$ 16,473
$ (394 ) (2.4 )% $ 32,172
$ 32,051
$ 121
0.4 %
Non-same-store 2,689
728
1,961
269.4 % 5,082
883
4,199
475.5 %
Other properties and dispositions 568
1,517
(949 ) (62.6 )% 1,611
3,311
(1,700 ) (51.3 )%
Total $ 19,336
$ 18,718
$ 618
3.3 % $ 38,865
$ 36,245
$ 2,620
7.2 %

Net operating income
Same-store $ 21,129
$ 19,437
$ 1,692
8.7 % $ 41,774
$ 39,527
$ 2,247
5.7 %
Non-same-store 3,977
819
3,158
385.6 % 7,935
994
6,941
698.3 %
Other properties and dispositions 1,196
2,892
(1,696 ) (58.6 )% 3,010
6,078
(3,068 ) (50.5 )%
Total $ 26,302
$ 23,148
$ 3,154
13.6 % $ 52,719
$ 46,599
$ 6,120
13.1 %

Reconciliation of NOI to net income (loss) available to common shareholders
Property management $ (1,319 ) $ (1,372 ) $ (2,686 ) $ (2,728 )
Casualty loss (225 ) (115 ) (450 ) (600 )
Depreciation/amortization (19,191 ) (17,270 ) (37,803 ) (42,608 )
Impairment of real estate investments —
—
—
(256 )
General and administrative expenses (3,374 ) (3,118 ) (7,244 ) (7,120 )
Interest expense (7,997 ) (8,509 ) (16,382 ) (16,640 )
Loss on debt extinguishment (4 ) (334 ) (556 ) (533 )
Interest and other income 429
255
945
483

Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations (5,379 ) (7,315 ) (11,457 ) (23,403 )
Gain (loss) on sale of real estate and other investments (232 ) 5,324
8,992
5,448

Income (loss) from continuing operations (5,611 ) (1,991 ) (2,465 ) (17,955 )
Income (loss) from discontinued operations —
15,130
570
17,815

Net income (loss) $ (5,611 ) $ 13,139
$ (1,895 ) $ (140 )

Occupancy⁽¹⁾
October 31, 2018 October 31, 2017
Same-store 95.4 % 95.2 %
Non-same-store 92.7 % 92.4 %
Total 95.1 % 94.8 %

~~(1) Occupancy represents~~For the ~~actual number of units leased divided by the total number of units at the end~~comparison of the ~~period.~~nine months ended September 30, 2019 and 2018, six apartment communities were non-same-store. Sold communities are included in "Other," which also includes non-multifamily properties and the non-multifamily components of mixed-use properties.

Number of Units October 31, 2018 October 31, 2017
Same-store 12,347
11,384

Non-same-store 1,355
2,192

Total 13,702
13,576

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~~Real estate revenue from same-store properties~~Revenues. Revenue increased by ~~3.6% or $1.3~~4.5% to $47.4 million for the three months ended September 30, 2019, compared to $45.4 million in the three months ended ~~October 31, 2018,~~September 30, 2018. Non-same-store communities contributed $1.6 million to the increase, offset by a $1.0 million decrease from dispositions and other properties. Revenue from same-store communities increased 4.0% or $1.4 million in the three months ended September 30, 2019, compared to the same period in the prior ~~fiscal year, due~~year. The increase was attributable to 2.6% growth in average rental ~~revenue.~~revenue and 1.4% growth in occupancy as weighted average occupancy increased to 93.3% from 91.9% for the three months ended September 30, 2019 and 2018, respectively.

~~Real estate revenue from same-store properties~~Revenue increased by ~~3.3% or $2.4~~4.0% to $140.0 million for the nine months ended September 30, 2019, compared to $134.6 million in the ~~six~~nine months ended ~~October 31, 2018,~~September 30, 2018. Non-same-store communities contributed $6.4 million to the increase, offset by a $5.0 million decrease from dispositions and other properties. Revenue from same-store communities increased 3.7% or $4.0 million in the nine months ended September 30, 2019, compared to the same period in the prior ~~fiscal~~ year. ~~Approximately 3.0% of the~~The increase was attributable to 2.8% growth in average rental revenue and ~~0.3%~~0.9% growth in occupancy as weighted average occupancy increased to 94.3% from 93.4% for the nine months ended September 30, 2019 and 2018, respectively.

Table of ~~the increase was attributable~~Contents

Property operating expenses, including real estate taxes. Property operating expenses, including real estate taxes, increased by 2.2% to ~~higher average occupancy.~~

~~Real estate expenses at same-store properties decreased by 2.4% or $394,000~~$19.9 million in the three months ended ~~October 31, 2018,~~September 30, 2019, compared to $19.5 million in the same period of the prior year. An increase of $612,000 at non-same-store communities was offset by a decrease of $541,000 from other properties and dispositions. Property operating expenses, including real estate taxes, at same-store communities increased by 2.2% or $352,000 in the three months ended September 30, 2019, compared to the same period in the prior ~~fiscal~~ year. The decrease was primarily attributable to lower property operating expenses due to cost containment initiatives implemented at the end of the first quarter of fiscal year 2019 and lower insurance costs due to favorable loss experience, partially offset by an increase inAt same-store communities, real estate taxes increased by $200,000, of which $130,000 was due to ~~increases~~an adjustment in ~~levy rates in select markets.~~

~~Real estate expenses~~the prior comparable period. Insurance expense at same-store properties increased by ~~0.4% or $121,000~~$383,000, of which $304,000 was due to higher deductible costs with the remainder due to an increase in premiums. These same-store increases were partially offset by a decrease in controllable operating expenses (which exclude insurance and real estate taxes) of $232,000, primarily due to lower maintenance costs.

Property operating expenses, including real estate taxes, increased by 3.1% to $59.5 million in the ~~six~~nine months ended ~~October 31, 2018,~~September 30, 2019, compared to $57.7 million in the same period of the prior year. An increase of $2.2 million at non-same-store communities was offset by a decrease of $1.8 million from other properties and dispositions. Property operating expenses, including real estate taxes, at same-store communities increased by 2.8% or $1.3 million in the nine months ended September 30, 2019, compared to the same period in the prior ~~fiscal~~ year. ~~Increases occurred in utilities and in~~At same-store communities, real estate taxes increased by $474,000, of which $130,000 was due to an adjustment in the prior year comparable period from the reallocation of cost at a mixed use property. Insurance expense at same-store properties increased by $969,000, of which $324,000 was due to an adjustment in the prior comparable period from the favorable resolution of insurance claims and $383,000 was due to higher deductible costs, with the remainder due to an increase in premiums. Controllable expenses decreased by $109,000, which was primarily due to lower compensation costs as a result of a reduction in employee headcount but was partially offset by higher snow removal costs as a result of historically high levels of snowfall during the winter as well as landscaping and other maintenance costs.

Property management expenses. Property management expense, consisting of property management overhead and property management fees paid to third parties, was $1.6 million in the three months ended September 30, 2019 compared to 1.3 million in the same period of the prior year. The increase was primarily driven by technology initiatives and compensation costs.

Property management expense increased by 11.3% to $4.6 million in the nine months ended September 30, 2019, compared to $4.1 million in the same period of the prior year. The increase in property management expense was primarily due to technology initiatives and compensation costs, including severance.

Casualty gain (loss). Casualty loss was $178,000 in the three months ended September 30, 2019, compared to $225,000 in the same period of the prior year.

Casualty loss was $911,000 in the nine months ended September 30, 2019, an increase of $636,000 from the same period of the prior year. During the nine months ended September 30, 2019, many of our markets were impacted by a series of adverse weather-related events. These events included extreme cold and record-setting snowfall, which caused excess ice and snow accumulation, resulting in water damage to some of our apartment communities. We believe that the damages will be covered by insurance and have recorded casualty losses of $641,000 during the period, representing the aggregate annual stop loss under our insurance coverage. The remaining increase is a result of uninsured water intrusion damage at one apartment community and uninsured water damage due to mechanical failure at another apartment community. In the same period of the prior year, we recorded only $50,000 in aggregate annual stop loss under our insurance coverage as a result of favorable claims experience.

Depreciation and amortization. Depreciation and amortization decreased by 2.2% to $18.8 million in the three months ended September 30, 2019, compared to $19.2 million in the same period of the prior year, primarily due to sold properties.

Depreciation and amortization decreased by 6.0% to $55.3 million in the nine months ended September 30, 2019, compared to $58.8 million in the same period of the prior year, primarily attributable to sold properties, certain intangible assets becoming fully amortized, and an adjustment in the prior comparable period due to shortening the estimated useful life of a non-multifamily property, which elevated depreciation expense in the nine months ended September 30, 2018.

General and administrative expenses. General and administrative expenses increased by 9.6% to $3.4 million in the three months ended September 30, 2019, compared to $3.1 million in the same period of the prior year, primarily attributable to increases in ~~levy rates~~consulting fees and compensation costs as a result of a decrease in ~~select markets,~~open positions. These increases were partially offset by ~~lower insurance~~a decrease in legal fees related to our pursuit of recovery on a construction defect claim.

General and administrative expenses decreased by 2.8% to $10.8 million in the nine months ended September 30, 2019, compared to $11.1 million in the same period of the prior year, primarily attributable to decreases of $476,000 in legal fees related to our pursuit of recovery on a construction defect claim, $707,000 in severance-related costs, and $241,000 in real

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estate tax on sold parcels of land. These decreases were partially offset by an increase of $927,000 in compensation costs as a result of a decrease in open positions and higher incentive compensation related to expanding the participant pool in the long-term incentive plan.

Interest expense. Interest expense decreased by 6.1% to $7.7 million in the three months ended September 30, 2019, compared to $8.2 million in the same period of the prior year, primarily due to ~~favorable~~the replacement of maturing debt with lower rate debt.

Interest expense decreased by 7.5% to $23.2 million in the nine months ended September 30, 2019, compared to $25.1 million in the same period of the prior year, primarily due to a decrease in the average balance of our outstanding indebtedness and the replacement of maturing debt with lower rate debt.

Loss on extinguishment of debt. We recorded a loss ~~experience.~~on extinguishment of debt in the three month ended September 30, 2019 and 2018 of $1.1 million and $540,000, respectively. We recorded a loss on extinguishment of debt in the nine months ended September 30, 2019 and 2018 of $1.5 million and $673,000, respectively.

Interest and other income. We recorded interest and other income in the three months ended September 30, 2019 and 2018 of $498,000 and $395,000, respectively. We recorded interest and other income in the nine months ended September 30, 2019 and 2018 of $1.4 million and $1.5 million, respectively.

~~PROPERTY ACQUISITIONS AND DISPOSITIONS~~Gain (loss) on sale of real estate and other investments. We recorded net gains of $39.1 million in continuing operations in the three months ended September 30, 2019, compared to $9.1 million in the same period of the prior year. We recorded net gains of $39.8 million and $11.4 million in the nine months ended September 30, 2019 and 2018, respectively.

~~During~~Gain (loss) on litigation settlement. We recorded a gain on litigation settlement of $300,000 and $6.6 million in the ~~second quarter~~three and nine months ended September 30, 2019, respectively, from the settlement of ~~fiscal year~~a construction defect claim.

Income from discontinued operations. We recorded no income from discontinued operations in the three months ended September 30, 2019, ~~we sold one commercial property and one parcel~~compared to $570,000 in the same period of ~~unimproved land for a total sale price~~the prior year. We recorded no income from discontinued operations in the nine months ended September 30, 2019, compared to $14.7 million in the same period of ~~$3.1 million. During~~ the ~~second quarter of fiscal year 2019, we had no acquisitions of properties.~~prior year. See Note 87 of the Notes to the Condensed Consolidated Financial Statements in this report for ~~a table detailing our acquisitions~~further information on discontinued operations.

Net income (loss) available to common shareholders. Net income available to common shareholders was $29.9 million for the three months ended September 30, 2019, compared to net income of $948,000 in the three months ended September 30, 2018. The increase in net income available to common shareholders was driven by increases in gain on sale of properties and ~~dispositions during~~revenue.

Net income (loss) available to common shareholders was $24.9 million for the ~~six-month periods~~nine months ended ~~October 31, 2018~~September 30, 2019, compared to net loss of $16.0 million in the nine months ended September 30, 2018. The change in net income (loss) available to common shareholders was driven by increases in gain on sale of properties, gain on litigation settlement, and ~~2017.~~revenue and decreases in impairment charges and depreciation expense.

~~FUNDS FROM OPERATIONS~~

~~We consider~~ Funds from Operations ~~(“FFO”) to be a useful measure of performance for an equity REIT.~~ .

We use the definition of ~~FFO~~Funds from Operations ("FFO") adopted by the National Association of Real Estate Investment Trusts, Inc. (“~~NAREIT”~~Nareit”). ~~NAREIT currently~~Nareit defines FFO as net income or loss ~~attributable to common shareholders computed~~calculated in accordance with GAAP, ~~adjusted for:~~excluding:

depreciation and amortization related to real estate;

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

~~gains and losses from change in control;~~ and

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

Due to limitations of the Nareit FFO definition, ~~adopted by NAREIT,~~ we have made certain interpretations in applying ~~the~~this definition. We believe that all such interpretations not specifically provided for in the ~~NAREIT~~Nareit definition are consistent with this definition. Nareit's FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT's main business are excluded from FFO and a REIT has the ~~definition. Effective for the third quarter~~option to exclude impairment write-downs of ~~fiscal year 2018, we included impairment charges in FFO for~~ assets that are incidental to ~~our~~the main business.

We believe that FFO, which is a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, thereby providing an additional perspective on our operating results. We believe that GAAP historical cost depreciation of real estate assets ~~generally~~ is not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. The exclusion in ~~NAREIT’s~~Nareit’s definition of FFO of impairment ~~write-downs~~write-

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downs and gains and losses from the sale of ~~previously depreciated operating~~ real estate assets helps to identify the operating results of the long-term assets that form the base of our investments, and assists management and investors in comparing those operating results between periods. ~~FFO is also used by our management and investors to identify trends in occupancy rates, rental rates, and operating costs.~~

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

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FFO applicable to ~~Common Shares~~common shares and Units for the three months ended ~~October 31, 2018,~~September 30, 2019, increased to ~~$11.7~~$12.2 million compared to ~~$9.5~~$11.0 million for the comparable period ended ~~October 31, 2017,~~September 30, 2018, an increase of ~~23.5%~~10.8%. This increase was primarily due to higher ~~net operating income~~NOI at same-store and ~~non-same-store properties, reduction~~non-same store communities, reductions in ~~preferred dividends,~~interest expense, and ~~costs incurred in the prior comparable period for the redemption of preferred shares.~~a gain on litigation settlement. The increase was partially offset by ~~the reduction~~a decrease in ~~net operating income~~NOI from ~~dispositions.~~sold properties and increases in loss on debt extinguishment, property management expense, and general and administrative expense. FFO applicable to ~~Common Shares~~common shares and Units for the ~~six~~nine months ended ~~October 31, 2018, decreased~~September 30, 2019, increased to ~~$22.2~~$41.1 million, compared to ~~$22.5~~$31.7 million for the comparable period ended ~~October 31, 2017,~~September 30, 2018, an increase of 29.7%. This increase was primarily due to a ~~reduction~~$6.6 million gain on litigation settlement, as well as higher NOI at same-store and non-same-store communities and reductions in interest expense and general and administrative expenses. The increase in FFO was partially offset by decreases in NOI from sold properties and increases in weather-related casualty loss, loss on debt extinguishment, and property management expenses.

Reconciliation of ~~1.2%.~~

~~RECONCILIATION OF NET INCOME ATTRIBUTABLE TO~~

~~CONTROLLING INTERESTS TO FUNDS FROM OPERATIONS~~Net Income Available to Common Shareholders to Funds from Operations

(in thousands, except per share and unit amounts)
Three Months Ended October 31, 2018 2017
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 (loss) attributable to controlling interests $ (4,558 )

$ 12,821

Less dividends to preferred shareholders (1,706 )
(2,812 )

Less redemption of preferred shares —

(3,649 )

Net income (loss) available to common shareholders (6,264 ) 119,396
$ (0.05 ) 6,360
120,144
$ 0.05
Adjustments:

Noncontrolling interests – Operating Partnership (722 ) 13,789
773
14,623

Depreciation and amortization 18,446

19,894

Impairment of real estate attributable to controlling interests —
—

Gains on depreciable property sales attributable to controlling interests 232

(17,562 )

Funds from operations applicable to common shares and Units $ 11,692
133,185
$ 0.09
$ 9,465
134,767
$ 0.07



	(in thousands, except per share and unit amounts)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss) available to common shareholders	$	29,891		$	948		$	24,895		$	(16,033	)
Adjustments:
Noncontrolling interests – Operating Partnership	3,145			112			2,550			(1,888		)
Depreciation and amortization	18,751			19,164			55,299			58,814
Less depreciation – non real estate	(71		)	(76		)	(235		)	(231		)
Less depreciation – partially owned entities	(452		)	(673		)	(1,604		)	(2,115		)
Impairment of real estate	—			—			—			17,809
(Gain) loss on sale of real estate	(39,105		)	(8,499		)	(39,774		)	(24,633		)
Funds from operations applicable to common shares and Units	$	12,159		$	10,976		$	41,131		$	31,723

Funds from operations applicable to common shares and Units	$	12,159		$	10,976		$	41,131		$	31,723
Dividends to preferred unitholders	160			—			377			—
Funds from operations applicable to common shares and Units - diluted	$	12,319		$	10,976		$	41,508		$	31,723

Per Share Data
Earnings (loss) per common share - diluted	$	2.54		$	0.08		$	2.11		$	(1.34	)
FFO per share and Unit - diluted	$	0.93		$	0.82		$	3.15		$	2.38

Weighted average shares and Units - diluted	13,087			13,318			13,174			13,351

(in thousands, except per share and unit amounts)
Six Months Ended October 31, 2018 2017
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 controlling interests (1,642 )
1,557

Less dividends to preferred shareholders (3,411 )
(5,098 )

Less redemption of preferred shares —

(3,649 )

Net income available to common shareholders (5,053 ) 119,320
(0.04 ) (7,190 ) 120,282
(0.06 )
Adjustments:

Noncontrolling interests – Operating Partnership (587 ) 13,924
(871 ) 14,912

Depreciation and amortization 36,282

48,013

Impairment of real estate attributable to controlling interests —

256

Gains on depreciable property sales attributable to controlling interests (8,395 )
(17,686 )

Funds from operations applicable to common shares and Units $ 22,247
133,244
$ 0.17
$ 22,522
135,194
$ 0.17
Acquisitions and Dispositions

~~(1) Upon~~During the ~~exercise~~third quarter of ~~Exchange Rights, Units~~2019, we acquired a 96-home apartment community in Minneapolis, Minnesota, and a 328-home apartment community in Denver, Colorado, for an aggregate purchase price of $125.3 million, compared to no acquisitions in the same period of the ~~Operating Partnership are exchangeable~~prior year. During the third quarter of 2019, we sold one parcel of unimproved land and six apartment communities for ~~cash or, at~~an aggregate sale price of $85.0 million, compared to eight dispositions in the third quarter of 2018. See Note 8 of the Notes to Condensed Consolidated Financial Statements in this report for a table detailing 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.~~

acquisitions and dispositions during the nine-month periods ended September 30, 2019 and 2018.

~~DISTRIBUTIONS~~Distributions Declared

Distributions of ~~$0.07~~$0.70 and ~~$0.14~~$2.10 per ~~Common Share~~common share and Unit were ~~paid, respectively,~~declared during the three and ~~six~~nine months ended ~~October 31,~~September 30, 2019 and 2018, respectively. Distributions of $0.4140625 and ~~2017.~~$1.2421875 per Series C preferred share were

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~~LIQUIDITY AND CAPITAL RESOURCES~~declared during the three and nine months ended September 30, 2019 and 2018, respectively. Distributions of $0.9655 and $2.2743 per Series D preferred unit were declared during the three and nine months ended September 30, 2019, respectively.

Liquidity and Capital Resources

Liquidity and Financial Condition

We desire to create and maintain a strong balance sheet that offers financial flexibility and enables us to pursue and acquire ~~properties~~apartment communities that enhance our portfolio composition, operating metrics, and cash flow growth prospects. We intend to strengthen our capital and liquidity positions by continuing to focus on improving our core fundamentals, which include generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.

Our primary sources of liquidity are cash and cash equivalents on hand, our unsecured credit facility, and cash flows generated from operations. Other sources include availability under our unsecured lines of credit, proceeds from property dispositions, offerings of preferred and common stock under our shelf registration statement, offerings of preferred and common units under our limited partnership agreement, and unsecured ~~term loans~~debt or long-term secured mortgages.

Our primary liquidity demands are normally-recurring operating and overhead expenses, debt service and repayments, capital improvements to our ~~properties,~~communities, distributions to the holders of our preferred shares, ~~Common Shares,~~common shares, and Units, value-add redevelopment, common share buybacks and ~~acquisition~~Unit redemptions, and acquisitions of additional ~~properties.~~communities.

We believe that our financial condition and liquidity are sufficient to meet our reasonably anticipated liquidity demands during 2019 and 2020. Factors that could increase or decrease our future liquidity include, but are not limited to, volatility in capital and credit markets, our ability to access capital and credit markets, the minimum REIT dividend requirements, and our ability to complete asset purchases, sales, or developments.

Capital Resources and Cash Flows

As of ~~October~~September 30, 2019, we had total liquidity of approximately $155.4 million, which included $146.9 million available on our line of credit and $8.5 million of cash and cash equivalents. As of December 31, 2018, we had total liquidity of approximately $195.3 million, which includes $176.5 million available on our line of credit, $12.8 million of cash and cash equivalents, and $6.0 million under an operating line of credit described below. As of April 30, 2018, we had total liquidity of approximately $193.9$188.8 million, which included ~~$176.0~~$175.0 million on our line of credit ~~$11.9~~and $13.8 million of cash and cash ~~equivalents, and $6.0 million under an operating line of credit.~~equivalents.

~~As of October 31, 2018, we~~We also had restricted cash of $3.3 million and $5.5 million as of September 30, 2019 and December 31, 2018, respectively, consisting primarily of ~~$5.1 million of escrows held by lenders for real estate taxes, insurance,~~loan application deposits and ~~capital additions. As of April 30, 2018, we had restricted cash consisting of $4.2 million of~~ escrows held by lenders for real estate taxes, insurance, and capital additions.

~~During the three months ended October 31, 2018, we amended our primary~~We have an unsecured credit ~~facility. We increased our overall unsecured~~ facility ~~from $370.0 million to~~for $395.0 million, ~~reallocating~~with the commitment ~~for the~~allocated to a revolving line of credit ~~from $300.0 million to~~for $250.0 million and ~~reallocating~~ the remaining $145.0 million allocated between two term loans: a $70.0 million unsecured term loan that matures on January 15, 2024 and a $75.0 million unsecured term loan that matures on August 31, 2025.

As of ~~October 31, 2018,~~September 30, 2019, our line of credit had total commitments of $250.0 million, with borrowing capacity based on the value of properties contained in an unencumbered asset pool ~~(UAP)~~("UAP"). The UAP provided for a borrowing capacity of approximately ~~$246.0~~$250.0 million at quarter-end, offering additional borrowing availability of ~~$176.5~~$146.9 million beyond the ~~$69.5~~$103.1 million drawn, including the balance on our operating line of credit, as of ~~October~~September 30, 2019. At December 31, ~~2018. At April 30,~~ 2018, the line of credit borrowing capacity was ~~$300.0~~$232.5 million based on the UAP, of which ~~$124.0~~$57.5 million was drawn on the line. This credit facility matures on August 31, 2022, with one twelve-month option to extend the maturity date at our election.

During the ~~year~~three months ended ~~April~~September 30, ~~2018,~~2019, we closed on a $59.9 million mortgage loan. This mortgage loan is secured by four apartment communities and is priced at a fixed rate of 3.88% for the full twelve-year term of the loan. Proceeds from this loan were used to pay down balances on our line of credit under our revolving credit facility.

During the three months ended September 30, 2019, we entered into a private shelf agreement for the issuance of up to $150.0 million of unsecured senior promissory notes. In September 2019, we issued $75.0 million of Series A notes due September 13, 2029, bearing interest at a rate of 3.84% annually, and $50.0 million of Series B notes due September 30, 2028, bearing interest at a rate of 3.69% annually, under this facility. An additional $25.0 million remains available under this agreement.

As of September 30, 2019, we had 49 unencumbered apartment communities representing 56.0% of third quarter 2019 multifamily NOI.

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We also have a $6.0 million operating line of credit. This operating line of credit is designed to enhance treasury management activities and more effectively manage cash balances. This operating line has a one-year term, with pricing based on a market spread plus the one-month LIBOR index rate.

For information regarding our cash flows for the ~~six~~nine months ended ~~October 31,~~September 30, 2019 and 2018, ~~and 2017,~~ see the Condensed Consolidated Statements of Cash Flows in Part I, Item 1 above.

In addition to cash flow from operations, during the ~~six~~nine months ended ~~October 31, 2018,~~September 30, 2019, we generated ~~cash~~capital from various activities, including:

The disposition of three ~~apartment communities, three commercial properties, and three~~ parcels of land, one commercial property, and six apartment communities, for a total sale price of ~~$52.2 million.~~ $95.3 million; and

The ~~net proceeds~~receipt of ~~these transactions was $21.6~~$5.2 million ~~after pay down~~from the settlement of ~~debt,~~our pursuit of a recovery on a construction defect claim.

The receipt of $59.9 million from a mortgage secured by four apartment communities and ~~we distributed $1.9~~$125.0 million ~~of the net proceeds to our joint venture partners in those transactions.~~from a private shelf agreement.

During the ~~six~~nine months ended ~~October 31, 2018,~~September 30, 2019, we used ~~cash~~capital for various activities, including:

Acquiring SouthFork Townhomes, a 272-home residential apartment community located in Lakeville, Minnesota, for a total purchase price of $44.0 million, with $27.4 million paid in cash and $16.6 million paid through the issuance of Series D preferred units;

Repaying ~~$62.7~~$143.1 million of mortgage principal;

Repurchasing 329,369 common shares for an aggregate total cost of approximately $18.0 million and 135,596 Units for a total cost of $8.1 million;

Acquiring an office building for $2.1 million, which will become our Minot, North Dakota corporate office building after renovations have been completed;

Acquiring the remaining 34.5% noncontrolling interests in the real estate partnership that owns Commons and Landing at Southgate, located in Minot, North Dakota, for $1.3 million;

Acquiring FreightYard Townhomes & Flats, a 96-home residential apartment community located in Minneapolis, Minnesota, and Lugano at Cherry Creek, a 328-home residential apartment community located in Denver, Colorado, for an aggregate purchase price of $125.3 million; and

Funding capital ~~expenditures~~improvements for apartment communities of approximately ~~$6.8~~$11.9 million.

Contractual Obligations and Other Commitments

~~Table~~During the three months ended September 30, 2019, we entered into a private shelf agreement for the issuance of ~~Contents~~

up to $150.0 million of unsecured senior promissory notes. In September 2019, we issued $75.0 million of Series A notes due September 13, 2029 bearing interest at a rate of 3.84% annually and $50.0 million of Series B notes due September 30, 2028 bearing interest at a rate of 3.69% annually under this facility.

Contractual obligations and other commitments were disclosed in our Form 10-KT for the transition period ended December 31, 2018. Other than the unsecured senior notes, there have been no material changes to our contractual obligations and other commitments since that report was filed.

~~CRITICAL ACCOUNTING POLICIES~~Off-Balance Sheet Arrangements

As of September 30, 2019, we had no significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Critical Accounting Policies

In preparing the condensed consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. A summary of our critical accounting policies is included in our Form ~~10-K~~10-KT for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018, filed with the SEC on ~~June 28, 2018~~February 27, 2019 under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Effective ~~May~~January 1, ~~2018,~~2019, we adopted ASU ~~2014-09,~~2016-02, "~~Revenue from Contracts With Customers,~~Leases" which ~~eliminates~~required lessees to recognize most leases on the ~~transaction-~~balance sheet through right of use assets and ~~industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition~~lease liabilities. It also made

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certain changes to lessor accounting. Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements in this report for additional information. There have been no other significant changes to our critical accounting policies during the ~~six~~nine months ended ~~October 31, 2018.~~September 30, 2019.

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~~ITEM~~Item 3. ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk is primarily related to fluctuations in the general level of interest rates on our current and future fixed and variable rate debt obligations. We currently use interest rate swaps to offset the impact of interest rate fluctuations on our ~~$70.0 million and $75.0 million~~ variable-rate term loans. The swap on our $70.0 million term loan has a notional amount of $70.0 million and an average pay rate of 2.16%. The swap on our $75.0 million term loan has a notional amount of $75.0 million and an average pay rate of 2.81%. The fair value of our interest rate swap contracts is $3.3 million. We do not enter into derivative instruments for trading or speculative purposes. The interest rate ~~swap exposes~~swaps expose us to credit risk in the event of non-performance by the ~~counterparty~~counterparties under the terms of the ~~agreement.~~agreements.

AsDuring the three months ended September 30, 2019, we entered into a private shelf agreement for the issuance of ~~October 31, 2018, we had no variable-rate mortgage debt outstanding and $214.5~~up to $150.0 million of ~~variable-rate borrowings under our line of credit and term loans, of which, $145.0 million is fixed through interest rate swaps. We estimate that an increase in 30-day LIBOR of 100 basis points~~unsecured senior promissory notes with constant risk spreads would result in our net income being reduced by approximately $695,000 on an annual basis. We estimate that a decrease in 30-day LIBOR of 100 basis points would increase the amount of net income by a similar amount.

Mortgage loan indebtedness decreased by $62.7 million as of October 31, 2018, compared to April 30, 2018, due to loan payoffs and property dispositions. As of October 31, 2018, 100% of our $449.4 million of mortgage debt was at fixed rates ~~of interest, with staggered maturities, compared to 95.6% as of April 30, 2018. As of October 31, 2018, the weighted average rate of interest on~~that reduce our ~~mortgage debt was 4.59%, compared to 4.69% on April 30, 2018. Our goal is to minimize~~ exposure to interest rate ~~risk; however,~~fluctuation. In September 2019, we ~~may become vulnerable~~issued $75.0 million of Series A notes due September 13, 2029 bearing interest at a rate of 3.84% annually and $50.0 million of Series B notes due September 30, 2028 bearing interest at a rate of 3.69% annually under this facility. The proceeds from this facility were used to ~~significant fluctuations in interest rates on any future repricing or refinancing of~~repay outstanding amounts under our ~~fixed or variable rate~~credit facility and retire mortgage debt and ~~on future debt.~~

~~The following table provides information about~~partially fund the acquisition of Lugano at Cherry Creek. As a result of entering into this facility, we have been able to eliminate the 2019 maturities, lengthen the average debt maturity duration, and lower our ~~financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related~~ weighted average interest ~~rates by expected maturity dates. Average variable rates are based~~rate of debt.

See our Transition Report on ~~rates in effect at~~Form 10-KT for the ~~reporting date.~~eight months ended December 31, 2018 under the heading "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" for a more complete discussion of our interest rate sensitivity. As of September 30, 2019, our exposure to market risk has not changed materially since our Transition Report on Form 10-KT for the eight months ended December 31, 2018.

(in thousands, except for interest rates)

Remaining
Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 Thereafter Total Fair Value
Debt
Fixed Rate $ 4,870
$ 71,833
$ 92,177
$ 70,506
$ 27,494
$ 182,534
$ 449,414
$ 446,360
Average Interest Rate⁽¹⁾
4.60 % 5.28 % 5.03 % 4.51 % 4.12 %

Variable Rate⁽²⁾
—
—
—
—
$ 69,500
$ 145,000
$ 214,500
$ 214,500
Average Interest Rate⁽¹⁾
—
—
—
—
3.72 %


~~(1)~~	~~Interest rate is annualized.~~


~~(2)~~	~~Excludes the effect of the interest rate swap agreement.~~

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~~ITEM~~Item 4. ~~CONTROLS AND PROCEDURES~~Controls and Procedures

Disclosure Controls and Procedures:

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~October 31, 2018,~~September 30, 2019, such disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting:

AsIn connection with the evaluation required by Rule 13a-15(d), management, with the participation of ~~May 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers. There were~~the Chief Executive Officer and Chief Financial Officer, has identified no ~~significant~~ changes ~~to the~~in our internal ~~control~~controls over financial reporting (as ~~such term is~~ defined in Rule 13a-15(f) under the Exchange Act) ~~due~~that occurred during that quarter ended September 30, 2019 and that have materially affected, or are reasonably likely to ~~the adoption of this new standard.~~materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

~~None~~In the ordinary course of our operations, we become involved in litigation. At this time, we know of no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries is a party or of which any of our property is the subject.

Item 1A. Risk Factors

There have been no material changes to the Risk Factors previously disclosed in Item 1A in our ~~Annual~~Transition Report on Form ~~10-K~~10-KT for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Sales of Securities

During the ~~second~~third quarter of ~~fiscal year~~ 2019, we issued ~~124,000~~no unregistered Common Shares to limited partners of the Operating Partnership ~~upon exercise of~~in exchange for their ~~exchange rights regarding an equal number of Units. All such issuances of Common Shares were exempt from registration as~~Units, in reliance on the private ~~placements~~offering exemption under Section ~~4(2)~~4(a)(2) of the ~~Securities~~Securites Act ~~including Regulation D promulgated thereunder.~~ of 1933, as amended.

Issuer Purchases of Equity Securities



					Maximum Dollar
				Total Number of Shares	Amount of Shares That
	Total Number of	Average Price		Purchased as Part of	May Yet Be Purchased
	Shares and Units	Paid per		Publicly Announced	Under the Plans or
Period	Purchased ⁽¹⁾	Share and Unit⁽²⁾		Plans or Programs	Programs⁽³⁾
July 1 - 31, 2019	39,441	$	59.57	39,381	$	15,378,896
August 1 - 31, 2019	30	60.40		—	15,378,896
September 1 - 30, 2019	92	64.68		—	15,378,896
Total	39,563	$	59.58	39,381


(1)	Includes a total of 182 Units redeemed for cash pursuant to the exercise of exchange rights.


(2)	Amount includes commissions paid.


(3)	Represents amounts outstanding under our $50 million share repurchase program, which was reauthorized by our Board of Trustees on December 14, 2018 for an additional one-year period.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

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Item 6. Exhibits

The following exhibits are filed as part of this Report.

EXHIBIT INDEX



Exhibit No.	Description
~~1.1~~ 4.1	~~Underwriting~~Note Purchase and Private Shelf Agreement, dated as of September ~~26, 2017,~~13, 2019, by and among IRET Properties, a North Dakota Limited Partnership, as the Issuer, Investors Real Estate Trust, as the Parent, IRET, ~~Properties, A North Dakota Limited Partnership,~~Inc., as the General Partner, certain subsidiaries of the Parent, PGIM, Inc., an affiliate of Prudential Financial, Inc., certain affiliates of PGIM, Inc., and the ~~several Underwriters listed on Schedule I attached thereto, for whom BMO Capital Markets Corp. and Raymond James & Associates, Inc. are acting as representatives~~Purchasers of the Series A Notes (incorporated by reference to Exhibit ~~1.1~~4.1 to the ~~Registrant’s~~Company’s Current Report on Form 8-K ~~filed on October 2, 2017)~~dated September 16, 2019).
~~3.1~~ 4.2	~~Articles Supplementary to~~Form of Series A Senior Note under the ~~Registrant’s Articles of Amendment and Third Restated Declaration of Trust designating the Registrant’s 6.625% Series C Cumulative Redeemable Preferred Shares, no par value per share~~Note Agreement (incorporated by reference to Exhibit ~~3.2~~4.2 to the ~~Registrant’s Registration Statement~~Company’s Current Report on Form ~~8-A filed on~~8-K dated September ~~28, 2017)~~16, 2019).
~~3.2~~ 4.3	~~Third Amendment to~~Form of Series B Notes under the Note Agreement ~~of Limited Partnership of IRET Properties, A North Dakota Limited Partnership~~ (incorporated by reference to Exhibit ~~3.2~~4.3 to the ~~Registrant’s~~Company's Current Report on Form 8-K ~~filed~~dated October 1, 2019).
4.4	Form of Guaranty Agreement under the Note Agreement (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on ~~October 2, 2017)~~Form 8-K dated September 16, 2019).
3.3* 4.5	~~Sixth Restated Trustee's Regulations (Bylaws) of Investors Real Estate Trust, adopted on September 20, 2018.~~
~~10.1~~	Second Amendment to Second Amended and Restated Credit Agreement ~~dated as of August 31, 2018,~~and related Annex I attached thereto, by and among IRET Properties, Aa North Dakota Limited Partnership, as the Borrower, the Guarantors ~~from time to time~~ party thereto, the ~~Lenders from time to time~~several financial institutions party thereto, ~~KeyBank, National Association~~as Lenders, and ~~PNC Bank, National Association, as Syndication Agents, and~~the Bank of Montreal, as Administrative Agent (incorporated by reference to Exhibit ~~10.1~~4.4 to the ~~Registrant's~~Company’s Current Report on Form 8-K ~~filed on~~dated September ~~6, 2018)~~16, 2019).
31.1* 31.1*	Section 302 Certification of Chief Executive Officer
31.2* 31.2*	Section 302 Certification of Executive Vice President and Chief Financial Officer
32.1* 32.1*	Section 906 Certifications of Chief Executive Officer
32.2* 32.2*	Section 906 Certifications of Executive Vice President and Chief Financial Officer
99.1	Press Release announcing Note Agreement and Credit Agreement Amendment (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K dated September 16, 2019).
99.2	Investor Presentation (incorporated by reference to Exhibit 99.2 to the Company's Current Report on Form 8-K dated September 16, 2019).
101 INS**	INSTANCE DOCUMENT
101 SCH**	SCHEMA DOCUMENT
101 CAL**	CALCULATION LINKBASE DOCUMENT
101 LAB**	LABELS LINKBASE DOCUMENT
101 PRE**	PRESENTATION LINKBASE DOCUMENT
101 DEF**	DEFINITION LINKBASE DOCUMENT
104**	COVER PAGE


*	Filed herewith

Submitted electronically herewith. Attached as Exhibit 101 are the following materials from our Quarterly Report on Form 10-Q for the quarter ended ~~October 31, 2018,~~September 30, 2019, formatted in Inline eXtensible Business Reporting Language (“~~XBRL”~~iXBRL”): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Statements of Equity; (iv) the Condensed Consolidated Statements of Cash Flows; ~~and~~ (v) notes to these condensed consolidated financial ~~statements.~~statements; and (vi) the Cover Page to our Quarterly Report on Form 10-Q.

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SIGNATURES

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

INVESTORS REAL ESTATE TRUST

(Registrant)



/s/ Mark O. Decker, Jr.
Mark O. Decker, Jr.
President and Chief Executive Officer

/s/ John A. Kirchmann
John A. Kirchmann
Executive Vice President and Chief Financial Officer

Date: ~~December 10, 2018~~November 6, 2019

4140



	(in thousands, except per share data)
	Three Months Ended October 31,						Six Months Ended October 31,
	2018			2017			2018			2017
REVENUE	$	45,638		$	41,866		$	91,584		$	82,844
EXPENSES
Property operating expenses, excluding real estate taxes	14,247			14,108			28,706			26,982
Real estate taxes	5,089			4,610			10,159			9,263
Property management expense	1,319			1,372			2,686			2,728
Casualty loss	225			115			450			600
Depreciation and amortization	19,191			17,270			37,803			42,608
Impairment of real estate investments	—			—			—			256
General and administrative expenses	3,374			3,118			7,244			7,120
TOTAL EXPENSES	$	43,445		$	40,593		$	87,048		$	89,557
Operating income (loss)	2,193			1,273			4,536			(6,713		)
Interest expense	(7,997		)	(8,509		)	(16,382		)	(16,640		)
Loss on extinguishment of debt	(4		)	(334		)	(556		)	(533		)
Interest income	410			199			891			220
Other income	19			56			54			263
Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations	(5,379		)	(7,315		)	(11,457		)	(23,403		)
Gain (loss) on sale of real estate and other investments	(232		)	5,324			8,992			5,448
Income (loss) from continuing operations	(5,611		)	(1,991		)	(2,465		)	(17,955		)
Income (loss) from discontinued operations	—			15,130			570			17,815
NET INCOME (LOSS)	$	(5,611	)	$	13,139		$	(1,895	)	$	(140	)
Net (income) loss attributable to noncontrolling interests – Operating Partnership	722			(773		)	587			871
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	331			455			(334		)	826
Net income (loss) attributable to controlling interests	(4,558		)	12,821			(1,642		)	1,557
Dividends to preferred shareholders	(1,706		)	(2,812		)	(3,411		)	(5,098		)
Redemption of preferred shares	—			(3,649		)	—			(3,649		)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	(6,264	)	$	6,360		$	(5,053	)	$	(7,190	)
Earnings (loss) per common share from continuing operations – basic and diluted	$	(0.05	)	$	(0.06	)	$	(0.04	)	$	(0.19	)
Earnings (loss) per common share from discontinued operations – basic and diluted	—			$	0.11		—			0.13
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	(0.05	)	$	0.05		$	(0.04	)	$	(0.06	)
DIVIDENDS PER COMMON SHARE	$	0.07		$	0.07		$	0.14		$	0.14



	(in thousands)
	Six Months Ended October 31,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(1,895	)	$	(140	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization, including amortization of capitalized loan costs	38,522			43,176
Depreciation and amortization from discontinued operations, including amortization of capitalized loan costs	—			7,077
(Gain) loss on sale of real estate, land, other investments and discontinued operations	(9,562		)	(17,686		)
Share-based compensation expense	580			751
Other, net	956			1,164
Changes in other assets and liabilities:
Other assets	(725		)	(1,853		)
Accounts payable and accrued expenses	(662		)	(4,756		)
Net cash provided by operating activities	$	27,214		$	27,733
CASH FLOWS FROM INVESTING ACTIVITIES
Principal proceeds on mortgage loans receivable	425			—
Increase in notes receivable	(736		)	(6,126		)
Proceeds from sale of discontinued operations	—			35,775
Proceeds from sale of real estate and other investments	52,156			18,039
Insurance proceeds received	1,266			530
Payments for acquisitions of real estate assets	(837		)	(154,122		)
Payments for development and re-development of real estate assets	—			(2,817		)
Payments for improvements of real estate assets	(8,547		)	(10,178		)
Payments for improvements of real estate assets from discontinued operations	—			(803		)
Net cash provided by (used by) investing activities	$	43,727		$	(119,702	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages payable, including prepayment penalties	(63,481		)	(52,143		)
Proceeds from revolving lines of credit	53,017			293,350
Principal payments on revolving lines of credit	(107,517		)	(102,900		)
Proceeds from term loan	74,352			—
Proceeds from construction debt	—			3,124
Payment on financing liability	—			(7,900		)
Repurchase of common shares	(615		)	(6,253		)
Proceeds from issuance of Series C preferred shares, net of issue costs	—			99,467
Repurchase of Series B preferred shares	—			(115,005		)
Repurchase of partnership units	(482		)	(5,982		)
Distributions paid to common shareholders	(16,724		)	(16,881		)
Distributions paid to preferred shareholders	(3,411		)	(5,333		)
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership	(1,960		)	(2,089		)
Distributions paid to noncontrolling interests – consolidated real estate entities	(2,374		)	(40		)
Net cash provided by (used by) financing activities	$	(69,195	)	$	81,415
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	1,746			(10,554		)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	16,116			56,800
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	17,862		$	46,246



	(in thousands)
	As previously reported at April 30, 2018		Adjustment			As revised at April 30, 2018
Common shares of beneficial interest	$	907,843	$	(7,746	)	$	900,097
Noncontrolling interests - consolidated real estate entities	1,078		7,810			8,888
Redeemable noncontrolling interests - consolidated real estate entities	6,708		(64		)	6,644



	(in thousands)
	As previously reported at April 30, 2017		Adjustment			As revised at April 30, 2017
Common shares of beneficial interest	$	916,121	$	(7,216	)	$	908,905
Nonredeemable noncontrolling interests	75,157		7,280			82,437



	(in thousands)
	As previously reported at October 31, 2017		Adjustment			As revised at October 31, 2017
Common shares of beneficial interest	$	910,683	$	(7,216	)	$	903,467
Nonredeemable noncontrolling interests	65,956		7,280			73,236



	(in thousands)
	As previously reported			Impact of ASU			As adjusted and currently reported
	October 31, 2017			2016-15			October 31, 2017
Net cash provided by operating activities	$	26,932		$	801		$	27,733
Net cash provided by (used by) investing activities	(95,112		)	(24,590		)	(119,702		)
Net cash provided by (used by) financing activities	81,825			(410		)	81,415

Net increase (decrease) in cash, cash equivalents	13,645			(13,645		)	—
Net increase (decrease) in cash, cash equivalents, and restricted cash	—			(10,554		)	(10,554		)

Cash and cash equivalents at beginning of period	28,819			(28,819		)	—
Cash, cash equivalents, and restricted cash at beginning of period	—			56,800			56,800
Cash and cash equivalents at end of period	$	42,464
Cash, cash equivalents, and restricted cash at end of period				$	3,782		$	46,246



		(in thousands, except percentages)
		Six Months Ended October 31, 2018
Revenue Stream	Applicable Standard	Amount of Revenue	Percent of Revenue
Rental revenue	Leases	86,394	94.3	%
Other property revenue	Revenue Recognition	5,190	5.7	%
		91,584	100.0	%



	(in thousands, except per share data)
	Three Months Ended October 31,						Six Months Ended October 31,
	2018			2017			2018			2017
NUMERATOR
Income (loss) from continuing operations – controlling interests	$	(4,558	)	$	(679	)	$	(2,153	)	$	(14,330	)
Income (loss) from discontinued operations – controlling interests	—			13,500			511			15,887
Net income (loss) attributable to controlling interests	(4,558		)	12,821			(1,642		)	1,557
Dividends to preferred shareholders	(1,706		)	(2,812		)	(3,411		)	(5,098		)
Redemption of preferred shares	—			(3,649		)	—			(3,649		)
Numerator for basic earnings (loss) per share – net income available to common shareholders	(6,264		)	6,360			(5,053		)	(7,190		)
Noncontrolling interests – Operating Partnership	(722		)	773			(587		)	(871		)
Numerator for diluted earnings (loss) per share	$	(6,986	)	$	7,133		$	(5,640	)	$	(8,061	)
DENOMINATOR
Denominator for basic earnings per share weighted average shares	119,396			120,144			119,320			120,282
Effect of redeemable operating partnership units	13,789			14,623			13,924			14,912
Denominator for diluted earnings per share	133,185			134,767			133,244			135,194
Earnings (loss) per common share from continuing operations – basic and diluted	$	(0.05	)	$	(0.06	)	$	(0.04	)	$	(0.19	)
Earnings (loss) per common share from discontinued operations – basic and diluted	—			0.11			—			0.13
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	(0.05	)	$	0.05		$	(0.04	)	$	(0.06	)



	(in thousands)
Six Months Ended October 31, 2017	Multifamily		All Other		Total
Real estate revenue	$	73,455	$	9,389	$	82,844
Real estate expenses	32,934		3,311		36,245
Net operating income	$	40,521	$	6,078	$	46,599
Property management expenses					(2,728		)
Casualty loss					(600		)
Depreciation and amortization					(42,608		)
Impairment of real estate investments					(256		)
General and administrative expenses					(7,120		)
Interest expense					(16,640		)
Loss on debt extinguishment					(533		)
Interest and other income					483
Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations					(23,403		)
Gain (loss) on sale of real estate and other investments					5,448
Income (loss) from continuing operations					(17,955		)
Income (loss) from discontinued operations					17,815
Net income (loss)					$	(140	)



	(in thousands)
As of October 31, 2018	Multifamily			All Other			Total
Segment assets
Property owned	$	1,580,260		$	57,812		$	1,638,072
Less accumulated depreciation	(328,075		)	(16,940		)	(345,015		)
Total property owned	$	1,252,185		$	40,872		$	1,293,057
Cash and cash equivalents							12,777
Restricted cash							5,085
Other assets							29,769
Unimproved land							6,522
Mortgage loans receivable							10,530
Total Assets							$	1,357,740



	(in thousands)
As of April 30, 2018	Multifamily			All Other			Total
Segment assets
Property owned	$	1,606,421		$	63,343		$	1,669,764
Less accumulated depreciation	(294,477		)	(16,847		)	(311,324		)
Total property owned	$	1,311,944		$	46,496		$	1,358,440
Cash and cash equivalents							11,891
Restricted cash							4,225
Other assets							30,297
Unimproved land							11,476
Mortgage loans receivable							10,329
Total Assets							$	1,426,658



	(in thousands)
Year Ended April 30,	Mortgage Loans
2019	$	4,870
2020	71,833
2021	92,177
2022	70,506
2023	27,494
Thereafter	182,534
Total payments	$	449,414



	(in thousands)
Balance at April 30, 2018	$	6,644
Net income	(566		)
Balance at October 31, 2018	$	6,078



	(in thousands)
Increase in Total Revenue	Three Months Ended October 31, 2018
Increase in revenue from non-same-store apartment communities	$	5,119
Increase in revenue from same-store apartment communities	1,298
Decrease in revenue from other properties and dispositions	(2,645		)
Net increase in total revenue	$	3,772



Occupancy⁽¹⁾	October 31, 2018		October 31, 2017
Same-store	95.4	%	95.2	%
Non-same-store	92.7	%	92.4	%
Total	95.1	%	94.8	%



	(in thousands, except for interest rates)
	Remaining Fiscal 2019			Fiscal 2020			Fiscal 2021			Fiscal 2022			Fiscal 2023			Thereafter		Total		Fair Value
Debt
Fixed Rate	$	4,870		$	71,833		$	92,177		$	70,506		$	27,494		$	182,534	$	449,414	$	446,360
Average Interest Rate⁽¹⁾	4.60		%	5.28		%	5.03		%	4.51		%	4.12		%
Variable Rate⁽²⁾	—			—			—			—			$	69,500		$	145,000	$	214,500	$	214,500
Average Interest Rate⁽¹⁾	—			—			—			—			3.72		%