Exhibit 99.1
Earnings Release
INVESTORS REAL ESTATE TRUST
ANNOUNCES
FINANCIAL AND OPERATING RESULTS
FOR THE QUARTER AND YEAR-TO-DATE ENDED OCTOBER 31, 2012
Minot, ND – December 10, 2012 – Investors Real Estate Trust (NASDAQ: IRET) reported financial and operating results today for the quarter and year-to-date ended October 31, 2012.
During the three month period ended October 31, 2012, IRET's revenues increased from the year-earlier period. Funds From Operations (FFO)1 overall and on a per share and unit basis increased for the three month period ended October 31, 2012 compared to the same period of the prior fiscal year. Net income increased from the year-earlier period.
For the three month period ended October 31, 2012, as compared to the same period of the prior fiscal year:
| · | Revenues increased to $64.9 million from $60.2 million. |
| · | Total expenses increased by approximately $544,000, or 1.3%, in the three months ended October 31, 2012 compared to the three months ended October 31, 2011, from $43.3 million to $43.9 million. |
| · | FFO increased to $20.7 million on approximately 113,690,000 weighted average shares and units outstanding, from $15.2 million on approximately 101,669,000 weighted average shares and units outstanding ($.18 per share and unit compared to $.15 per share and unit). |
| · | Net Income Available to Common Shareholders, as computed under generally accepted accounting principles, was approximately $5.6 million compared to $692,000 in the same period of the prior fiscal year. |
During the six month period ended October 31, 2012, IRET's revenues increased from the year-earlier period. Funds From Operations (FFO)1 overall and on a per share and unit basis increased for the six month period ended October 31, 2012 compared to the same period of the prior fiscal year. Net income increased from the year-earlier period.
For the six month period ended October 31, 2012, as compared to the same period of the prior fiscal year:
| · | Revenues increased to $126.9 million from $119.4 million. |
| · | Total expenses increased by $2.3 million, or 2.7%, in the six months ended October 31, 2012 compared to the six months ended October 31, 2011, from $85.3 million to $87.6 million. |
| · | FFO increased to $32.3 million on approximately 112,458,000 weighted average shares and units outstanding, from $31.0 million on approximately 101,286,000 weighted average shares and units outstanding ($.34 per share and unit compared to $.31 per share and unit). |
| · | Net Income Available to Common Shareholders, as computed under generally accepted accounting principles, was approximately $6.7 million compared to $1.5 million in the same period of the prior fiscal year. |
Significant Events and Transactions during the second quarter of fiscal year 2013:
| · | the acquisition of a multi-family residential property in Sartell, Minnnesota, for approximately $5.0 million. |
| · | the acquisition of two parcels of vacant land for possible future development, in Williston, North Dakota and St. Cloud, Minnesota, respectively. |
| · | the commencement of construction of the Company's 146-unit River Ridge Apartments project in Bismarck, North Dakota. |
| · | the commencement of construction of the 132-unit Cypress Court Apartment Homes project in St. Cloud, Minnesota, of which the Company owns approximately 79%, with the remaining 21% owned by the Company's joint venture partner. |
| · | the sale of two condominium units in Grand Chute, Wisconsin, and the sale of two multi-family residential properties in Fargo, North Dakota and Moorhead, Minnesota, respectively, for a total sales price of $7.3 million. |
| · | the completion of a public offering of 4.6 million Series B preferred shares, for net proceeds of approximately $111.2 million, after underwriting discounts and estimated offering expenses. As of October 31, 2012, approximately $79.0 million of the proceeds of the public offering had been applied to debt repayment. The remaining proceeds will be applied to debt repayment, acquisitions and construction costs at the Company's development projects. |
IRET's President and Chief Executive Officer, Timothy Mihalick, commented, "IRET continues to make progress in the execution of its previously-announced strategic plan by acquiring and developing properties in our core markets as well as disposing of non-core properties. We acquired the 58-unit Ponds Apartment complex in Sartell, MN; began a new 132-unit development in St. Cloud, MN, and exited the Fargo, ND multifamily market by disposing of all 267 apartment units IRET owned in that market. In addition, the completion of a public offering of preferred shares in August of 2012, which provided net proceeds of approximately $111.2 million, has allowed IRET to meet its goal of reducing leverage by applying $79.0 million to immediate debt reduction, with the remaining proceeds to be applied for additional debt pay down, to fund acquisitions in our core markets, and to focus IRET's efforts on development projects, particularly in our home market of North Dakota, where the Bakken energy field is still providing opportunity for solid returns for our shareholders."
______________________________
1 The National Association of Real Estate Investment Trusts, Inc. (NAREIT) defines FFO as "net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of property, plus real estate depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis." In addition, in October 2011 NAREIT clarified its computation of FFO to exclude impairment charges for all periods presented. FFO is a non-GAAP measure. We consider FFO, which is a standard supplemental measure for equity real estate investment trusts, helpful to investors because it facilitates an understanding of the operating performance of properties without giving effect to impairment write-downs and to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead historically rise or fall with market conditions, we believe that FFO provides investors and management with a more accurate indication of our financial and operating results. See table below for a reconciliation of Net Income to FFO.
Operating Results
Net Operating Income (NOI)2 from all properties increased by $7.7 million, or 22.3%, during the three month period ended October 31, 2012, compared to the same period one year ago. Non-stabilized properties accounted for $5.8 million of the increase, of which $3.5 million was due to acquisitions and developments and $2.3 million was gain on involuntary conversion resulting from a fire loss. Stabilized properties provided $1.9 million of the overall increase.
Of the total increase in NOI from stabilized properties, the multi-family residential segment accounted for $1.6 million. This segment continues to experience consistent, high occupancy rates which provides an opportunity to increase rents at certain properties. NOI from stabilized combined commercial segments accounted for $300,000 of the NOI increase, primarily as a result of lower expenses, as there has been no significant change in occupancy in these segments as compared to the same period one year ago.
NOI from all properties increased by $10.3 million, or 15.0%, during the six month period ended October 31, 2012, compared to the same period one year ago. Non-stabilized properties accounted for $8.7 million of the increase, with $6.4 million of increased NOI due to acquisitions and developments, and $2.3 million due to gain on involuntary conversion resulting from a fire loss. Stabilized properties provided $1.6 million of the increase.
Of the total increase in NOI from stabilized properties in the six-month period ended October 31, 2012, the multi-family residential segment accounted for $2.5 million. As noted above, this segment continues to experience consistent, high occupancy rates, allowing the Company to increase rents at certain properties. Additionally, in-house management has resulted in some expense reduction. NOI from the stabilized commercial medical segment was $969,000 less than the same period in the previous year, primarily due to decreased occupancy. All other commercial segments provided an NOI increase of approximately $68,000; there has been no significant change in occupancy in these segments in the six months ended October 31, 2012 compared to the six months ended October 31, 2011. Detail on NOI by segment is provided in the Company's Quarterly Report on Form 10-Q for the quarter ended October 31, 2012.
Physical occupancy as of October 31, 2012 compared to October 31, 2011 increased in two of our five reportable segments, decreasing slightly in our multi-family residential, commercial medical and commercial industrial segments, on a stabilized basis and an all-property basis.
Physical Occupancy Levels on a Stabilized Property and All Property Basis:
| Stabilized Properties(a) | | All Properties |
| As of October 31, | | As of October 31, |
| Segments | Fiscal 2013 | Fiscal 2012 | | Fiscal 2013 | Fiscal 2012 |
| Multi-Family Residential | 94.8% | 95.2% | | 94.6% | 94.7% |
| Commercial Office | 78.4% | 78.0% | | 78.4% | 78.0% |
| Commercial Medical | 94.9% | 96.0% | | 95.2% | 96.2% |
| Commercial Industrial | 90.7% | 92.3% | | 90.7% | 92.3% |
| Commercial Retail | 88.3% | 87.0% | | 88.3% | 87.0% |
| a. | As of October 31, 2012, stabilized properties excluded: | |
| Multi-Family Residential - | Ashland, Grand Forks, ND; Chateau, Minot, ND; Colony, Lincoln, NE; Cottage West Twin Homes, Sioux Falls, SD; Evergreen II, Isanti, MN; Gables Townhomes, Sioux Falls, SD; Grand Gateway, St Cloud, MN; Lakeside Village, Lincoln, NE; Quarry Ridge II, Rochester, MN; Regency Park Estates, St Cloud, MN; The Ponds at Heritage Place, Sartell, MN; Villa West, Topeka, KS and Williston Garden, Williston, ND. Total number of units, 1,601. |
| | |
| Commercial Medical - | Edina 6525 Drew Avenue, Edina, MN; Spring Creek American Falls, American Falls, ID; Spring Creek Soda Springs, Soda Springs, ID; Spring Creek Eagle, Eagle, ID; Spring Creek Meridian, Meridian, ID; Spring Creek Overland, Boise, ID; Spring Creek Boise, Boise, ID; Spring Creek Ustick, Meridian, ID and Trinity at Plaza 16, Minot, ND. Total rentable square footage, 177,970. |
| | |
| As of October 31, 2011, stabilized properties excluded: | |
| Multi-Family Residential - | Chateau, Minot, ND; Cottage West Twin Homes, Sioux Falls, SD; Gables Townhomes, Sioux Falls, SD; Regency Park Estates, St Cloud, MN. Total number of units, 285. |
| | |
| Commercial Medical - | Edina 6525 Drew Avenue, Edina, MN; Spring Creek American Falls, American Falls, ID; Spring Creek Soda Springs, Soda Springs, ID; Spring Creek Eagle, Eagle, ID; Spring Creek Meridian, Meridian, ID; Spring Creek Overland, Boise, ID; Spring Creek Boise, Boise, ID; Spring Creek Ustick, Meridian, ID and Trinity at Plaza 16, Minot, ND. Total rentable square footage, 177,719. |
______________________________
| 2 | We measure the performance of our segments based on NOI, which we define as total real estate revenues less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance and property management expenses). We believe that NOI is an important supplemental measure of operating performance for a real estate investment trust's operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. NOI 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. See tables below for a reconciliation of NOI to the condensed consolidated financial statements. |
| 3 | Stabilized properties are properties owned and in operation for the entirety of the periods being compared (including properties that were redeveloped or expanded during the periods being compared, with properties purchased or sold during the periods being compared excluded from the stabilized property category), and, in the case of development or re-development properties, which have achieved a target level of occupancy. |
Acquisitions and Dispositions
During the second quarter of fiscal year 2013, the Company closed on its acquisitions of:
| · | a 58-unit multi-family residential property in Sartell, Minnesota (The Ponds at Heritage Place), on approximately 6.5 acres of land, for a purchase price of approximately $5.0 million, of which $3.3 million was paid in cash and the remainder in limited partnership units of the Operating Partnership valued at $1.7 million; |
| · | an approximately 2.6 acre parcel of vacant land in Williston, North Dakota, acquired for possible future development, for a purchase price of approximately $822,500, paid in cash; and |
| · | an approximately 3.8 acre parcel of vacant land in St. Cloud, Minnesota, acquired for possible future development for a purchase price of approximately $447,000, paid in cash. |
During the second quarter of fiscal year 2013, the Company sold two condominium units and two-multi-family residential properties for a total sales price of approximately $7.3 million.
Shareholder Equity, Distributions and Capital Structure
As of October 31, 2012, IRET had a total capitalization of $2.2 billion. Total capitalization is defined as the market value (closing price at end of period) of the Company's outstanding common shares and the imputed market value of the outstanding limited partnership units of IRET Properties (which are convertible, at the expiration of a specified holding period, into cash or, at the Company's sole discretion, into common shares of the Company on a one-to-one basis), plus the book value of the Company's preferred shares and the outstanding principal balance of the consolidated debt of the Company.
On October 1, 2012, IRET paid a quarterly distribution of $0.1300 per share and unit on its common shares and limited partnership units of IRET Properties. This was IRET's 166th consecutive distribution. IRET also paid, on October 1, 2012, a quarterly distribution of $0.5156 per share on its Series A preferred shares and an initial prorated quarterly distribution of $0.3312 per share on its Series B preferred shares.
Distribution Declared. Subsequent to the end of the second quarter of fiscal year 2013, on December 5, 2012, the Company's Board of Trustees declared a regular quarterly distribution of $0.1300 per share and unit on the Company's common shares of beneficial interest and the limited partnership units of IRET Properties, payable January 15, 2013 to common shareholders and unitholders of record on January 2, 2013. Also on December 5, 2012, the Company's Board of Trustees' declared a distribution of $0.5156 per share on the Company's Series A preferred shares of beneficial interest, payable December 31, 2012 to Series A preferred shareholders of record on December 17, 2012, and declared a distribution of $0.4968 per share on the Company's Series B preferred shares of beneficial interest, payable December 31, 2012 to Series B preferred shareholders of record on December 17, 2012.
Conference Call Information
The Conference Call for 2nd Quarter Earnings is scheduled for Tuesday, December 11, 2012 at 9:00 A.M. Central Standard Time. The call will be limited to one hour, including questions and answers. Conference call access information is as follows:
USA Toll Free Number: 1-877-317-6789
International Toll Free Number: 1-412-317-6789
Canada Toll Free Number: 1-866-605-3852
A webcast and transcript of the call will be archived on the "Investors/ Presentations & Events/Presentations" page of IRET's website, http://www.iret.com, for one year. Questions regarding the conference call should be directed to IRET Investor Relations at landerson@iret.com.
About IRET
IRET is a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest. IRET owns a diversified portfolio of properties consisting of 85 multi-family residential properties with 9,934 apartment units; and 68 commercial office properties, 65 commercial medical properties (including senior housing), 19 commercial industrial properties and 30 commercial retail properties with a total of approximately 12.3 million square feet of leasable space. IRET common and Series A preferred shares are publicly traded on the NASDAQ Global Select Market (symbols: IRET and IRETP) and IRET Series B preferred shares are publicly traded on the New York Stock Exchange (symbol: IRET PRB). IRET's press releases and supplemental information are available on the Company website at www.iret.com or by contacting Investor Relations at 701-837-4738.
Certain statements in this earnings release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from projected results. Such risks, uncertainties and other factors include, but are not limited to: intentions and expectations regarding future distributions on our common shares and units, fluctuations in interest rates, the effect of government regulation, the availability of capital, changes in general and local economic and real estate market conditions, competition, our ability to attract and retain skilled personnel, and those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our 2012 Form 10-K. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
| | (in thousands, except share data) | |
| | October 31, 2012 | | | April 30, 2012 | |
| ASSETS | | | | | | |
| Real estate investments | | | | | | |
| Property owned | | $ | 1,983,978 | | | $ | 1,892,009 | |
| Less accumulated depreciation | | | (394,256 | ) | | | (373,490 | ) |
| | | 1,589,722 | | | | 1,518,519 | |
| Development in progress | | | 23,218 | | | | 27,599 | |
| Unimproved land | | | 11,670 | | | | 10,990 | |
| Total real estate investments | | | 1,624,610 | | | | 1,557,108 | |
| Real estate held for sale | | | 1,844 | | | | 2,067 | |
| Cash and cash equivalents | | | 84,258 | | | | 39,989 | |
| Other investments | | | 637 | | | | 634 | |
Receivable arising from straight-lining of rents, net of allowance of $1,310 and $1,209, respectively | | | 24,895 | | | | 23,273 | |
Accounts receivable, net of allowance of $410 and $154, respectively | | | 2,854 | | | | 7,052 | |
| Real estate deposits | | | 55 | | | | 263 | |
| Prepaid and other assets | | | 2,101 | | | | 3,703 | |
Intangible assets, net of accumulated amortization of $25,579 and $47,813, respectively | | | 42,281 | | | | 44,588 | |
| Tax, insurance, and other escrow | | | 12,177 | | | | 11,669 | |
Property and equipment, net of accumulated depreciation of $1,518 and $1,423, respectively | | | 1,351 | | | | 1,454 | |
| Goodwill | | | 1,110 | | | | 1,120 | |
Deferred charges and leasing costs, net of accumulated amortization of $16,484 and $16,244, respectively | | | 21,164 | | | | 21,447 | |
| TOTAL ASSETS | | $ | 1,819,337 | | | $ | 1,714,367 | |
| | | | | | | | |
| LIABILITIES AND EQUITY | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 38,762 | | | $ | 47,403 | |
| Revolving line of credit | | | 10,000 | | | | 39,000 | |
| Mortgages payable | | | 1,045,197 | | | | 1,048,689 | |
| Other | | | 32,889 | | | | 14,012 | |
| TOTAL LIABILITIES | | | 1,126,848 | | | | 1,149,104 | |
| COMMITMENTS AND CONTINGENCIES | | | | | | | | |
| EQUITY | | | | | | | | |
| Investors Real Estate Trust shareholders' equity | | | | | | | | |
Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at October 31, 2012 and April 30, 2012, aggregate liquidation preference of $28,750,000) | | | 27,317 | | | | 27,317 | |
Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 and 0 shares issued and outstanding at October 31, 2012 and April 30, 2012, respectively, aggregate liquidation preference of $115,000,000) | | | 111,357 | | | | 0 | |
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 93,161,087 shares issued and outstanding at October 31, 2012, and 89,473,838 shares issued and outstanding at April 30, 2012) | | | 711,880 | | | | 684,049 | |
| Accumulated distributions in excess of net income | | | (295,396 | ) | | | (278,377 | ) |
| Total Investors Real Estate Trust shareholders' equity | | | 555,158 | | | | 432,989 | |
Noncontrolling interests – Operating Partnership (21,336,222 units at October 31, 2012 and 20,332,415 units at April 30, 2012) | | | 122,357 | | | | 118,710 | |
| Noncontrolling interests – consolidated real estate entities | | | 14,974 | | | | 13,564 | |
| Total equity | | | 692,489 | | | | 565,263 | |
| TOTAL LIABILITIES AND EQUITY | | $ | 1,819,337 | | | $ | 1,714,367 | |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
for the three and six months ended October 31, 2012 and 2011
| | (in thousands, except per share data) | |
| | Three Months Ended October 31 | | | Six Months Ended October 31 | |
| | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| REVENUE | | | | | | | | | | | | |
| Real estate rentals | | $ | 53,389 | | | $ | 49,371 | | | $ | 104,719 | | | $ | 97,804 | |
| Tenant reimbursement | | | 11,554 | | | | 10,829 | | | | 22,210 | | | | 21,560 | |
| TOTAL REVENUE | | | 64,943 | | | | 60,200 | | | | 126,929 | | | | 119,364 | |
| EXPENSES | | | | | | | | | | | | | | | | |
| Depreciation/amortization related to real estate investments | | | 15,707 | | | | 14,116 | | | | 31,096 | | | | 28,190 | |
| Utilities | | | 4,859 | | | | 4,848 | | | | 9,057 | | | | 8,792 | |
| Maintenance | | | 6,511 | | | | 6,888 | | | | 13,853 | | | | 13,653 | |
| Real estate taxes | | | 8,281 | | | | 7,624 | | | | 16,628 | | | | 15,381 | |
| Insurance | | | 954 | | | | 773 | | | | 1,862 | | | | 1,638 | |
| Property management expenses | | | 4,199 | | | | 5,394 | | | | 8,245 | | | | 10,705 | |
| Administrative expenses | | | 1,918 | | | | 1,911 | | | | 3,878 | | | | 3,863 | |
| Advisory and trustee services | | | 143 | | | | 193 | | | | 279 | | | | 422 | |
| Other expenses | | | 513 | | | | 835 | | | | 1,032 | | | | 1,150 | |
| Amortization related to non-real estate investments | | | 799 | | | | 758 | | | | 1,632 | | | | 1,492 | |
| TOTAL EXPENSES | | | 43,884 | | | | 43,340 | | | | 87,562 | | | | 85,286 | |
| Gain on involuntary conversion | | | 2,263 | | | | 0 | | | | 2,263 | | | | 0 | |
| Interest expense | | | (16,300 | ) | | | (16,193 | ) | | | (32,723 | ) | | | (31,978 | ) |
| Interest income | | | 88 | | | | 37 | | | | 106 | | | | 90 | |
| Other income | | | 115 | | | | 176 | | | | 239 | | | | 276 | |
| Income from continuing operations | | | 7,225 | | | | 880 | | | | 9,252 | | | | 2,466 | |
| Income from discontinued operations | | | 2,785 | | | | 611 | | | | 2,754 | | | | 598 | |
| NET INCOME | | | 10,010 | | | | 1,491 | | | | 12,006 | | | | 3,064 | |
| Net income attributable to noncontrolling interests – Operating Partnership | | | (1,290 | ) | | | (194 | ) | | | (1,541 | ) | | | (372 | ) |
| Net (income) loss attributable to noncontrolling interests – consolidated real estate entities | | | (208 | ) | | | (12 | ) | | | (274 | ) | | | 14 | |
| Net income attributable to Investors Real Estate Trust | | | 8,512 | | | | 1,285 | | | | 10,191 | | | | 2,706 | |
| Dividends to preferred shareholders | | | (2,878 | ) | | | (593 | ) | | | (3,471 | ) | | | (1,186 | ) |
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | | $ | 5,634 | | | $ | 692 | | | $ | 6,720 | | | $ | 1,520 | |
| Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted | | | .04 | | | | .00 | | | | .05 | | | | .01 | |
| Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted | | | .02 | | | | .01 | | | | .02 | | | | .01 | |
| NET INCOME PER COMMON SHARE – BASIC AND DILUTED | | $ | .06 | | | $ | .01 | | | $ | .07 | | | $ | .02 | |
| DIVIDENDS PER COMMON SHARE | | $ | .1300 | | | $ | .1300 | | | $ | .2600 | | | $ | .3015 | |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO
INVESTORS REAL ESTATE TRUST TO FUNDS FROM OPERATIONS
for the three and six months ended October 31, 2012 and 2011
| | (in thousands, except per share amounts) | |
| Three Months Ended October 31, | | 2012 | | | 2011 | |
| | Amount | | | Weighted Avg Shares and Units(2) | | | Per Share and Unit(3) | | | Amount | | | Weighted Avg Shares and Units(2) | | | Per Share And Unit(3) | |
| Net income attributable to Investors Real Estate Trust | | $ | 8,512 | | | | | | | | | $ | 1,285 | | | | | | | |
| Less dividends to preferred shareholders | | | (2,878 | ) | | | | | | | | | (593 | ) | | | | | | |
| Net income available to common shareholders | | | 5,634 | | | | 92,475 | | | $ | 0.06 | | | | 692 | | | | 82,078 | | | $ | 0.01 | |
| Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | |
| Noncontrolling interest – Operating Partnership | | | 1,290 | | | | 21,215 | | | | | | | | 194 | | | | 15,591 | | | | | |
Depreciation and amortization(1) | | | 16,520 | | | | | | | | | | | | 14,890 | | | | | | | | | |
| Gain on depreciable property sales | | | (2,753 | ) | | | | | | | | | | | (589 | ) | | | | | | | | |
Funds from operations applicable to common shares
and Units | | $ | 20,691 | | | | 113,690 | | | $ | 0.18 | | | $ | 15,187 | | | | 101,669 | | | $ | 0.15 | |
| | (in thousands, except per share amounts) | |
| Six Months Ended October 31, | | 2012 | | | 2011 | |
| | Amount | | | Weighted Avg Shares and Units(2) | | | Per Share and Unit(3) | | | Amount | | | Weighted Avg Shares and Units(5) | | | Per Share And Unit(6) | |
| Net income attributable to Investors Real Estate Trust | | $ | 10,191 | | | | | | | | | $ | 2,706 | | | | | | | |
| Less dividends to preferred shareholders | | | (3,471 | ) | | | | | | | | | (1,186 | ) | | | | | | |
| Net income available to common shareholders | | | 6,720 | | | | 91,495 | | | $ | 0.07 | | | | 1,520 | | | | 81,467 | | | $ | 0.02 | |
| Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | |
| Noncontrolling interest – Operating Partnership | | | 1,541 | | | | 20,963 | | | | | | | | 372 | | | | 19,819 | | | | | |
Depreciation and amortization(4) | | | 32,707 | | | | | | | | | | | | 29,713 | | | | | | | | | |
| Gain on depreciable property sales | | | (2,680 | ) | | | | | | | | | | | (589 | ) | | | | | | | | |
Funds from operations applicable to common shares
and Units | | $ | 38,288 | | | | 112,458 | | | $ | 0.34 | | | $ | 31,016 | | | | 101,286 | | | $ | 0.31 | |
| (1) | Real estate depreciation and amortization consists of the sum of depreciation/amortization related to real estate investments and amortization related to non-real estate investments from the Condensed Consolidated Statements of Operations, totaling $16,506 and $14,874, and depreciation/amortization from Discontinued Operations of $50 and $77, less corporate-related depreciation and amortization on office equipment and other assets of $36 and $61, for the three months ended October 31, 2012 and 2011, respectively. |
| (2) | UPREIT Units of the Operating Partnership are exchangeable for cash, or, at the Company's discretion, for common shares of beneficial interest on a one-for-one basis. |
| (3) | Net income attributable to Investors Real Estate Trust is calculated on a per share basis. FFO is calculated on a per share and unit basis. |
| (4) | Real estate depreciation and amortization consists of the sum of depreciation/amortization related to real estate investments and amortization related to non-real estate investments from the Condensed Consolidated Statements of Operations, totaling $32,728 and $29,682, and depreciation/amortization from Discontinued Operations of $114 and $169, less corporate-related depreciation and amortization on office equipment and other assets of $135 and $138, for the six months ended October 31, 2012 and 2011, respectively. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
RECONCILATION OF NET OPERATING INCOME TO THE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and six months ended October 31, 2012 and 2011
| | (in thousands) | |
| Three Months Ended October 31, 2012 | | Multi-Family
Residential | | | Commercial-
Office | | | Commercial-
Medical | | | Commercial-
Industrial | | | Commercial-
Retail | | | Total | |
| | | | | | | | | | | | | | | | | | |
| Real estate revenue | | $ | 23,105 | | | $ | 19,128 | | | $ | 15,517 | | | $ | 3,577 | | | $ | 3,616 | | | $ | 64,943 | |
| Real estate expenses | | | 9,008 | | | | 9,392 | | | | 4,183 | | | | 935 | | | | 1,286 | | | | 24,804 | |
| Gain on involuntary conversion | | | 2,263 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 2,263 | |
| Net operating income | | $ | 16,360 | | | $ | 9,736 | | | $ | 11,334 | | | $ | 2,642 | | | $ | 2,330 | | | | 42,402 | |
| Depreciation/amortization | | | | | | | | | | | | | | | | | | | | | | | (16,506 | ) |
| Administrative, advisory and trustee services | | | | | | | | | | | | | | | | | | | | | | | (2,061 | ) |
| Other expenses | | | | | | | | | | | | | | | | | | | | (513 | ) |
| Interest expense | | | | | | | | | | | | | | | | | | | | | | | (16,300 | ) |
| Interest and other income | | | | | | | | | | | | | | | | | | | | | | | 203 | |
| Income from continuing operations | | | | 7,225 | |
| Income from discontinued operations | | | | 2,785 | |
| Net income | | | $ | 10,010 | |
| | (in thousands) | |
| Three Months Ended October 31, 2011 | | Multi-Family
Residential | | | Commercial-
Office | | | Commercial-
Medical | | | Commercial-
Industrial | | | Commercial-
Retail | | | Total | |
| | | | | | | | | | | | | | | | | | |
| Real estate revenue | | $ | 17,952 | | | $ | 18,367 | | | $ | 17,073 | | | $ | 3,566 | | | $ | 3,242 | | | $ | 60,200 | |
| Real estate expenses | | | 8,251 | | | | 8,813 | | | | 5,971 | | | | 1,135 | | | | 1,087 | | | | 25,527 | |
| Net operating income | | $ | 9,431 | | | $ | 9,554 | | | $ | 11,102 | | | $ | 2,431 | | | $ | 2,155 | | | | 34,673 | |
| Depreciation/amortization | | | | | | | | | | | | | | | | | | | | | | | (14,874 | ) |
| Administrative, advisory and trustee services | | | | | | | | | | | | | | | | | | | | (2,104 | ) |
| Other expenses | | | | | | | | | | | | | | | | | | | | | | | (835 | ) |
| Interest expense | | | | | | | | | | | | | | | | | | | | | | | (16,193 | ) |
| Interest and other income | | | | | | | | | | | | | | | | | | | | | | | 213 | |
| Income from continuing operations | | | | | | | | | | | | | | | | | | | | | | | 880 | |
| Income from discontinued operations | | | | | | | | | | | | | | | | | | | | | | | 611 | |
| Net income | | | $ | 1,491 | |
| | (in thousands) | |
| Six Months Ended October 31, 2012 | | Multi-Family
Residential | | | Commercial-
Office | | | Commercial-
Medical | | | Commercial-
Industrial | | | Commercial-
Retail | | | Total | |
| | | | | | | | | | | | | | | | | | |
| Real estate revenue | | $ | 44,314 | | | $ | 37,767 | | | $ | 30,844 | | | $ | 7,037 | | | $ | 6,967 | | | $ | 126,929 | |
| Real estate expenses | | | 18,301 | | | | 18,682 | | | | 8,266 | | | | 1,955 | | | | 2,441 | | | | 49,645 | |
| Gain on involuntary conversion | | | 2,263 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 2,263 | |
| Net operating income | | $ | 28,276 | | | $ | 19,085 | | | $ | 22,578 | | | $ | 5,082 | | | $ | 4,526 | | | | 79,547 | |
| Depreciation/amortization | | | | | | | | | | | | | | | | | | | | | | | (32,728 | ) |
| Administrative, advisory and trustee services | | | | | | | | | | | | | | | | | | | | | | | (4,157 | ) |
| Other expenses | | | | | | | | | | | | | | | | | | | | (1,032 | ) |
| Interest expense | | | | | | | | | | | | | | | | | | | | | | | (32,723 | ) |
| Interest and other income | | | | | | | | | | | | | | | | | | | | | | | 345 | |
| Income from continuing operations | | | | 9,252 | |
| Income from discontinued operations | | | | 2,754 | |
| Net income | | | $ | 12,006 | |
| | (in thousands) | |
| Six Months Ended October 31, 2011 | | Multi-Family
Residential | | | Commercial-
Office | | | Commercial-
Medical | | | Commercial-
Industrial | | | Commercial-
Retail | | | Total | |
| | | | | | | | | | | | | | | | | | |
| Real estate revenue | | $ | 35,041 | | | $ | 37,182 | | | $ | 33,690 | | | $ | 7,001 | | | $ | 6,450 | | | $ | 119,364 | |
| Real estate expenses | | | 16,672 | | | | 17,756 | | | | 11,489 | | | | 2,101 | | | | 2,151 | | | | 50,169 | |
| Net operating income | | $ | 18,369 | | | $ | 19,426 | | | $ | 22,201 | | | $ | 4,900 | | | $ | 4,299 | | | | 69,195 | |
| Depreciation/amortization | | | | | | | | | | | | | | | | | | | | | | | (29,682 | ) |
| Administrative, advisory and trustee services | | | | | | | | | | | | | | | | | | | | (4,285 | ) |
| Other expenses | | | | | | | | | | | | | | | | | | | | | | | (1,150 | ) |
| Interest expense | | | | | | | | | | | | | | | | | | | | | | | (31,978 | ) |
| Interest and other income | | | | | | | | | | | | | | | | | | | | | | | 366 | |
| Income from continuing operations | | | | | | | | | | | | | | | | | | | | | | | 2,466 | |
| Income from discontinued operations | | | | | | | | | | | | | | | | | | | | | | | 598 | |
| Net income | | | $ | 3,064 | |
