Sterling Real Estate Trust 10-Q 2011 Q1 Quarterly report

Exhibit 99.1

INREITInvestorUpdate 1st Quarter 2011

INREIT

First Quarter 2011 Highlights

Assets

During the First Quarter of 2011, INREIT Real Estate Investment Trust’s total assets grew by $7.24 million to $351.22 million. This increase resulted most notably from the addition of two properties to the Trust portfolio, Sierra Ridge Apartment Complex located in Bismarck, ND (65.44% interest) and Applebee’s located in Apple Valley, MN (pictured above).

As a result of this growth in the Trust’s total assets and net income from operations, shareholder equity also increased by $1.79 million to $141.45 million. As a percentage of total assets INREIT’s shareholders equity decreased from 40.60% to 40.27% during the three month period ending March 31, 2011, due primarily to the payment of 1st quarter dividends.

Earnings

First Quarter revenues were 3.66% higher than the prior three month period, exceeding $11.95 million. First Quarter expenses were also 3% higher than the prior three month period, due to higher acquisition, disposition, legal, depreciation and amortization expenses.

Net Earnings for the period topped $1.32 million, a 42% decrease over the prior three month period; and a 6.9% increase over the 2010’s first quarter. Funds from Operations as well topped $3.76 million, an 8% increase over the prior three month period; and a 17% increase over the 2010’s first quarter.

On a weighted average, Funds from Operations were at $.26 per share, compared to $.25 per share during the First Quarter of 2010.

FFO & MFFO vs Dividends Paid
2008 to 2011 (In Millions)

Dividends

During the First Quarter of 2011 the number of share outstanding grew 3.54% from 3.60 million to 3.73 million and the number of outstanding operating partnership units increased 4.20% from 10.08 million to 10.50 million. Likewise, total dividends paid increased from $2.61 million in the Fourth Quarter of 2010 to $2.80 million in the First Quarter of 2011.

Dividend coverage reflects the extent to which a company’s Funds from Operations support or “cover” the dividends paid to investors. In the First Quarter of 2011, dividend coverage increased from 134.10% to 134.20%, primarily due to increased FFO caused by higher earnings during the quarter.

Total Weighted Shares

INREIT Real Estate Investment Trust
Consolidated Statement of Income
Unaudited

				First Quarter								Year to Date
	3/31/11			3/31/10			% Change		3/31/11			3/31/10			% Change
Operating Revenues
Multi-Family	$	7,156,767		$	6,045,279			18.4	$	7,156,767		$	6,045,279			18.4
Office	$	2,240,440		$	2,247,488			-0.3	$	2,240,440		$	2,247,488			-0.3
Retail	$	1,277,831		$	844,782			51.3	$	1,277,831		$	844,782			51.3
Senior Living	$	675,020		$	852,531			-20.8	$	675,020		$	852,531			-20.8
Medical	$	668,462		$	703,537			-5.0	$	668,462		$	703,537			-5.0
Land	$	—		$	—			0.0	$	—		$	—			0.0
Total Operating Revenue	$	12,018,520		$	10,693,618			12.4	$	12,018,520		$	10,693,618			12.4
Operating Expenses
Real Estate Expenses	$	4,767,815		$	4,159,200			14.6	$	4,767,815		$	4,159,200			14.6
Interest Expense	$	2,954,510		$	2,929,064			0.9	$	2,954,510		$	2,929,064			0.9
Depreciation & Amortization	$	2,437,584		$	2,214,340			10.1	$	2,437,584		$	2,214,340			10.1
General & Administrative	$	599,175		$	436,940			37.1	$	599,175		$	436,940			37.1
Total Operating Expense	$	10,759,084		$	9,739,545			10.5	$	10,759,084		$	9,739,545			10.5
Net Consolidated Earnings
Total Operating Revenue	$	12,018,520		$	10,693,618			12.4	$	12,018,520		$	10,693,618			12.4
Total Operating Expense	$	(10,759,084	)	$	(9,739,545	)		10.5	$	(10,759,084	)	$	(9,739,545	)		10.5
Other Income (Expense) — Net	$	64,546		$	284,183			-77.3	$	64,546		$	284,183			-77.3
Net Consolidated Earnings	$	1,323,982		$	1,238,256			6.9	$	1,323,982		$	1,238,256			6.9
Earnings Per Share/Unit
Shares/Units Outstanding		14,245,713			12,845,348			10.9		14,245,713			12,845,348			10.9
Net Consolidated Earnings	$	1,323,982		$	1,238,256			6.9	$	1,323,982		$	1,238,256			6.9
Earnings Per Share/Unit	$	0.09		$	0.10			-3.6	$	0.09		$	0.10			-3.6
Dividends Per Share/Unit
Shares/Units Outstanding		14,245,713			12,845,348			10.9		14,245,713			12,845,348			10.9
Total Dividends Paid	$	2,802,886		$	2,477,241			13.1	$	2,802,886		$	2,477,241			13.1
Dividends Per Share/Unit	$	0.20		$	0.19			2.0	$	0.20		$	0.19			2.0
Funds From Operations* Per Share/Unit
Shares/Units Outstanding		14,245,713			12,845,348			10.9		14,245,713			12,845,348			10.9
Funds from Operations*	$	3,761,566		$	3,224,323			16.7	$	3,761,566		$	3,224,323			16.7
FFO Per Share/Unit	$	0.26		$	0.25			5.2	$	0.26		$	0.25			5.2
Dividend Coverage
Funds From Operations*	$	3,761,566		$	3,224,323			16.7	$	3,761,566		$	3,224,323			16.7
Total Dividends Paid	$	2,802,886		$	2,477,241			13.1	$	2,802,886		$	2,477,241			13.1
Dividend Coverage**		134.2	%		130.2	%		3.1		134.2	%		130.2	%		3.1

*	The term “Funds from Operations” or “FFO” is used by real estate investment trusts (REITS) to define the cash flow from their operations. “Funds from Operations” is calculated by adding Depreciation and Amortization to Net Earnings. Gains or losses from sales of real estate are not included in the calculation of FFO.
**	Dividend coverage reflects the extent to which an company’s Funds from Operations support or “cover” the dividends paid to investors. Strong coverage (i.e. greater Funds from Operations than than dividends paid out) improves a company’s ability to increase, maintain or even pay dividends in then event FFO declines.

	Second Quarter 2011 InvestorUpdate: Expected to be available on or about August 15, 2011 The next INREIT Real Estate Investment Trust’s InvestorUpdate is expected to be available on the INREIT website at www.inreit.com on or about August 15, 2011. Hardcopies of the INREIT InvestorUpdate are available upon request at the company’s offices in Fargo and Minot, North Dakota.	INREIT InvestorUpdate The INREIT Real Estate Investment Trust InvestorUpdate is published by Investor Relations staff of INREIT Management LLC. Requests for further information may be directed to the Trust’s Corporate Secretary at 701-837-1031. Correspondence should be sent to: Investor Relations INREIT Real Estate Investment Trust 216 South Broadway, Suite 202 Minot, North Dakota 58701 Email Address:information@inreit.com
	Cautionary Language Concerning Forward-Looking Statements Information set forth in this InvestorUpdate contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. INREIT Real Estate Investment Trust disclaims any obligation to update or revise statements contained in this InvestorUpdate based upon new information or otherwise. This InvestorUpdate may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are made in the Trust’s financial statements.