Exhibit 99.2
![](https://capedge.com/proxy/8-K/0000798359-14-000016/image0.jpg)
Third Quarter Fiscal 2014
Supplemental Operating and Financial Data
for the Quarter Ended January 31, 2014
CONTACT: Lindsey Knoop-Anderson Director of Investor Relations Direct Dial: 701-837-4738 E-Mail: landerson@iret.com | 1400 31st Avenue SW, Suite 60 Minot, ND 58701 Tel: 701.837.4738 Fax: 701.838.7785 www.iret.com |
Supplemental Financial and Operating Data
January 31, 2014
Page | |
Company Background and Highlights | 2 |
Property Cost by Segment | 5 |
Key Financial Data | |
Condensed Consolidated Balance Sheets | 6 |
Condensed Consolidated Statements of Operations | 7 |
Funds From Operations | 8 |
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) | 9 |
Capital Analysis | |
Long-Term Mortgage Debt Analysis | 10 |
Long-Term Mortgage Debt Detail | 11-13 |
Capital Analysis | 14 |
Portfolio Analysis | |
Stabilized Properties Net Operating Income Summary | 15 |
Net Operating Income Detail | 16-19 |
Stabilized Properties and Overall Physical Occupancy Levels by Segment | 20 |
Tenant Analysis | |
Multi-Family Residential Summary | 21 |
Commercial Leasing Summary | 22-25 |
10 Largest Commercial Tenants - Based on Annualized Base Rent | 26 |
Commercial Lease Expirations | 27 |
Growth and Strategy | |
Acquisition Summary | 28 |
Development Summary | 29 |
Definitions | 30 |
Company Background and Highlights
Third Quarter Fiscal 2014
Investors Real Estate Trust is a self-administered, equity real estate investment trust (REIT) investing in a portfolio of income-producing properties located primarily in the upper Midwest. IRET's portfolio is diversified among multi-family residential; commercial office; commercial healthcare, including senior housing; commercial industrial and commercial retail segments.
During the third quarter of fiscal year 2014, the Company closed on its acquisition of:
· | an approximately 3.4-acre parcel of vacant land in Fruitland, Idaho, acquired for possible future development, for a purchase price of $335,000, paid in cash. |
During the third quarter of fiscal year 2014, the Company placed in service the 132-unit Cypress Court multi-family residential property in St. Cloud, Minnesota, owned by a joint venture entity in which the Company has an approximately 86% interest and the 146-unit River Ridge multi-family residential property in Bismarck, North Dakota. During the third quarter of fiscal year 2014, the Company sold two multi-family residential properties, three commercial industrial properties and two commercial retail properties for a total sales price of $11.7 million.
During the third quarter of fiscal year 2014, the Company's commercial office segment, mostly concentrated in Minnesota, continued to be pressured by a number of adverse macro conditions, including weak job and wage growth. Although overall employment levels in the office sector remain slightly above pre-recession levels in most of the Company's markets, businesses appear to be maintaining their goal of increasing the density of their work spaces by placing more employees in less total square footage, and downsizing upon lease renewals. As a result, even though the Company has experienced some modest growth in occupancy levels during the third quarter of fiscal year 2014 compared to the third quarter of fiscal year 2013, the Company continues to expect a slow and uneven recovery in its office segment.
Continued high occupancy in the Company's multi-family residential portfolio provided the ability to raise rents during the third quarter of fiscal year 2014, and real estate revenue from stabilized properties in the multi-family residential segment increased in the three months ended January 31, 2014 compared to the same period in the prior fiscal year. Occupancy levels decreased slightly on a stabilized and an all-property basis compared to the same period of the prior fiscal year. The 132-unit Cypress Court apartments in St. Cloud, Minnesota (owned by a joint venture entity in which the Company has an approximately 86% interest) and the Company's 146-unit River Ridge apartment property in Bismarck, North Dakota, were placed in service during the quarter, with both projects experiencing strong demand; Cypress Court was 66.7% occupied and River Ridge was 81.5% occupied as of January 31, 2014. However, the Company continues to observe considerable multi-family residential development activity in its markets, and as this new construction is completed and leased, the Company will experience increased competition for tenants.
The Company's senior housing assets continue to benefit from a recovery in the housing market, as occupancy trends are closely aligned with the ability of seniors to sell their homes in anticipation of moving to a senior care facility. Results in the Company's healthcare segment remain stable with modest increases in both occupancy and rents.
Subsequent to the end of the third quarter of fiscal year 2014, Company management presented to the Company's Board of Trustees a strategic plan which the Company expects will drive changes in three main areas. First, the Company plans to continue its focus on identifying for disposition properties whose location, age, or need for significant tenant improvements or capital expenditures suggest that the Company's investment may be better deployed elsewhere. In particular, over the next twelve to eighteen months, the Company expects to identify properties in its commercial segments as candidates for disposition. The Company expects to focus any future commercial office property acquisitions in the Minneapolis/St. Paul market. Second, the Company plans to direct new investments primarily toward its healthcare (in particular, senior housing) and multi-family residential segments, which it believes will provide the best opportunities for growth. Within its healthcare segment, the Company also plans to target on-campus medical office properties in larger markets in the Great Plains region, and to pursue relationship-driven build-to-suit opportunities. Within the multi-family residential segment, the Company plans to target tertiary markets within the Great Plains region that offer the Company operating efficiencies and a critical mass for brand presence. Third, management plans to further de-emphasize its retail segment, with the goal of identifying for sale assets within this portfolio by fiscal year 2016. In addition to these three major areas of focus, the Company will continue to work to enhance portfolio operational efficiencies. The Company believes that this strategic plan will help it create a strong foundation for growth in the long term.
In the third quarter of fiscal year 2014, IRET paid its 171st consecutive quarterly distribution. The $0.1300 per share/unit distribution was payable on January 15, 2014. Subsequent to the end of the third quarter of fiscal year 2014, on March 4, 2014, 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 April 1, 2014 to common shareholders and unitholders of record on March 17, 2014. Also on March 4, 2014, 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 March 31, 2014 to Series A preferred shareholders of record on March 17, 2014, and declared a distribution of $0.4968 per share on the Company's Series B preferred shares of beneficial interest, payable March 31, 2014 to Series B preferred shareholders of record on March 17, 2014.
As of January 31, 2014, IRET owns a diversified portfolio of 257 properties consisting of 92 multi-family residential properties, 65 commercial office properties, 66 commercial healthcare properties (including senior housing), 8 commercial industrial properties and 26 commercial retail properties. IRET's common shares are publicly traded on the New York Stock Exchange (NYSE: IRET).
Company Snapshot
(as of January 31, 2014)
Company Headquarters | Minot, North Dakota |
Fiscal Year-End | April 30 |
Reportable Segments | Multi-Family Residential, Commercial Office, Commercial Healthcare, Commercial Industrial, Commercial Retail |
Total Properties | 257 |
Total Square Feet | |
(commercial properties) | 10.4 million |
Total Units | |
(multi-family residential properties) | 10,725 |
Common Shares Outstanding (thousands) | 106,937 |
Limited Partnership Units Outstanding (thousands) | 21,799 |
Common Share Distribution - Quarter/Annualized | $0.13/$0.52 |
Dividend Yield | 6.0% |
Total Capitalization (see p.14 for detail) | $2.3 billion |
Investor Information
(as of January 31, 2014)
Board of Trustees
Jeffrey L. Miller | Trustee and Chairman |
John D. Stewart | Trustee, Vice Chairman, and Chair of Nominating and Governance Committee |
Jeffrey K. Woodbury | Trustee, Chair of Audit Committee |
Linda J. Hall | Trustee, Chair of Compensation Committee |
Terrance P. Maxwell | Trustee |
Stephen L. Stenehjem | Trustee |
Timothy P. Mihalick | Trustee, President and Chief Executive Officer |
Thomas A. Wentz, Jr. | Trustee, Executive Vice President and Chief Operating Officer |
Management
Timothy P. Mihalick | President and Chief Executive Officer; Trustee |
Thomas A. Wentz, Jr | Executive Vice President and Chief Operating Officer; Trustee |
Diane K. Bryantt | Executive Vice President and Chief Financial Officer |
Michael A. Bosh | Executive Vice President, General Counsel and Assistant Secretary |
Mark Reiling | Executive Vice President of Asset Management |
Charles A. Greenberg | Senior Vice President, Commercial Asset Management |
Ted E. Holmes | Senior Vice President, Finance |
Andrew Martin | Senior Vice President, Residential Property Management |
Corporate Headquarters:
1400 31st Avenue SW, Suite 60
Post Office Box 1988
Minot, North Dakota 58702-1988
Trading Symbol: IRET
Stock Exchange Listing: NYSE
Investor Relations:
Lindsey Knoop-Anderson
landerson@iret.com
Common Share Data (NYSE: IRET)*
3rd Quarter Fiscal Year 2014 | 2nd Quarter Fiscal Year 2014 | 1st Quarter Fiscal Year 2014 | 4th Quarter Fiscal Year 2013 | 3rd Quarter Fiscal Year 2013 | ||||||
High Closing Price | $ | 8.94 | $ | 9.03 | $ | 9.77 | $ | 10.00 | $ | 9.40 |
Low Closing Price | $ | 8.24 | $ | 8.05 | $ | 8.09 | $ | 9.20 | $ | 7.73 |
Average Closing Price | $ | 8.58 | $ | 8.41 | $ | 9.03 | $ | 9.59 | $ | 8.70 |
Closing Price at end of quarter | $ | 8.69 | $ | 8.62 | $ | 8.64 | $ | 9.73 | $ | 9.36 |
Common Share Distributions—annualized | $ | 0.520 | $ | 0.520 | $ | 0.520 | $ | 0.520 | $ | 0.520 |
Closing Dividend Yield - annualized | 6.0% | 6.0% | 6.0% | 5.3% | 5.6% | |||||
Closing common shares outstanding (thousands) | 106,937 | 105,554 | 104,226 | 101,488 | 94,386 | |||||
Closing limited partnership units outstanding (thousands) | 21,799 | 21,836 | 21,849 | 21,635 | 21,489 | |||||
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands) | $ | 1,118,716 | $ | 1,098,102 | $ | 1,089,288 | $ | 1,197,987 | $ | 1,084,590 |
* | Effective December 18, 2012, IRET transferred the listing of its common shares and Series A preferred shares to the New York Stock Exchange from the NASDAQ Global Select Market. |
Certain statements in these supplemental disclosures are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from projected results. Such risks, uncertainties and other factors include, but are not limited to: intentions and expectations regarding future distributions on our common shares and units, fluctuations in interest rates, the effect of government regulation, the availability of capital, changes in general and local economic and real estate market conditions, competition, our ability to attract and retain skilled personnel, and those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our 2013 Form 10-K. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Third Quarter Fiscal 2014 Developments Placed in Service
![]() | ![]() |
Cypress Court (interior) 906 Cypress Road St. Cloud, MN 56303 | River Ridge Apartments (interior) 2130 S. 12th Street Bismarck, ND 58504 |
Property Cost by Segment – Third Quarter Fiscal 2014
With investments in the multi-family residential and commercial office, commercial healthcare, commercial industrial and commercial retail segments, IRET's diversified portfolio helps to provide stability during market fluctuations in returns from specific property types.
![](https://capedge.com/proxy/8-K/0000798359-14-000016/image3.jpg)
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
1/31/2014 | 10/31/2013 | 7/31/2013 | 4/30/2013 | 1/31/2013 | ||||||
ASSETS | ||||||||||
Real estate investments | ||||||||||
Property owned | $ | 2,042,290 | $ | 2,032,747 | $ | 2,016,523 | $ | 2,032,970 | $ | 2,007,832 |
Less accumulated depreciation | (439,233) | (431,318) | (429,376) | (420,421) | (408,400) | |||||
1,603,057 | 1,601,429 | 1,587,147 | 1,612,549 | 1,599,432 | ||||||
Development in progress | 89,086 | 90,052 | 77,396 | 46,782 | 20,127 | |||||
Unimproved land | 21,498 | 21,619 | 20,774 | 21,503 | 18,879 | |||||
Total real estate investments | 1,713,641 | 1,713,100 | 1,685,317 | 1,680,834 | 1,638,438 | |||||
Real estate held for sale | 0 | 2,620 | 3,969 | 0 | 733 | |||||
Cash and cash equivalents | 53,494 | 68,727 | 93,193 | 94,133 | 62,302 | |||||
Other investments | 643 | 642 | 640 | 639 | 638 | |||||
Receivable arising from straight-lining of rents, net of allowance | 27,026 | 26,336 | 26,671 | 26,354 | 25,471 | |||||
Accounts receivable, net of allowance | 15,540 | 6,541 | 8,370 | 4,534 | 3,560 | |||||
Real estate deposits | 3,502 | 230 | 489 | 196 | 165 | |||||
Prepaid and other assets | 8,197 | 7,605 | 4,741 | 5,124 | 5,545 | |||||
Intangible assets, net of accumulated amortization | 34,008 | 35,625 | 36,989 | 40,457 | 41,009 | |||||
Tax, insurance, and other escrow | 24,550 | 11,864 | 12,344 | 12,569 | 13,306 | |||||
Property and equipment, net of accumulated depreciation | 1,719 | 1,191 | 1,217 | 1,221 | 1,288 | |||||
Goodwill | 1,100 | 1,100 | 1,100 | 1,106 | 1,106 | |||||
Deferred charges and leasing costs, net of accumulated amortization | 21,138 | 20,666 | 21,602 | 22,387 | 22,513 | |||||
TOTAL ASSETS | $ | 1,904,558 | $ | 1,896,247 | $ | 1,896,642 | $ | 1,889,554 | $ | 1,816,074 |
LIABILITIES AND EQUITY | ||||||||||
LIABILITIES | ||||||||||
Accounts payable and accrued expenses | $ | 54,337 | $ | 57,453 | $ | 52,563 | $ | 50,797 | $ | 44,540 |
Revolving line of credit | 22,500 | 10,000 | 10,000 | 10,000 | 10,000 | |||||
Mortgages payable | 1,008,524 | 1,021,170 | 1,030,407 | 1,049,206 | 1,041,623 | |||||
Other | 47,767 | 31,689 | 32,366 | 18,170 | 21,632 | |||||
TOTAL LIABILITIES | 1,133,128 | 1,120,312 | 1,125,336 | 1,128,173 | 1,117,795 | |||||
EQUITY | ||||||||||
Investors Real Estate Trust shareholders' equity | ||||||||||
Series A Preferred Shares of Beneficial Interest | 27,317 | 27,317 | 27,317 | 27,317 | 27,317 | |||||
Series B Preferred Shares of Beneficial Interest | 111,357 | 111,357 | 111,357 | 111,357 | 111,357 | |||||
Common Shares of Beneficial Interest | 829,816 | 818,516 | 807,928 | 784,454 | 721,742 | |||||
Accumulated distributions in excess of net income | (344,294) | (331,116) | (323,406) | (310,341) | (305,145) | |||||
Total Investors Real Estate Trust shareholders' equity | 624,196 | 626,074 | 623,196 | 612,787 | 555,271 | |||||
Noncontrolling interests – Operating Partnership | 117,803 | 120,678 | 122,334 | 122,539 | 121,940 | |||||
Noncontrolling interests – consolidated real estate entities | 29,431 | 29,183 | 25,776 | 26,055 | 21,068 | |||||
Total equity | 771,430 | 775,935 | 771,306 | 761,381 | 698,279 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 1,904,558 | $ | 1,896,247 | $ | 1,896,642 | $ | 1,889,554 | $ | 1,816,074 |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
Nine Months Ended | Three Months Ended | |||||||||||||
OPERATING RESULTS | 1/31/2014 | 1/31/2013 | 1/31/2014 | 10/31/2013 | 7/31/2013 | 4/30/2013 | 1/31/2013 | |||||||
Real estate revenue | $ | 198,499 | $ | 183,874 | $ | 67,629 | $ | 65,772 | $ | 65,098 | $ | 64,184 | $ | 63,080 |
Real estate expenses | 78,898 | 73,102 | 25,927 | 26,331 | 26,640 | 25,957 | 25,348 | |||||||
Gain on involuntary conversion | 2,480 | 2,263 | 1,514 | 0 | 966 | 2,821 | 0 | |||||||
Net operating income | 122,081 | 113,035 | 43,216 | 39,441 | 39,424 | 41,048 | 37,732 | |||||||
Depreciation/amortization | (53,656) | (46,505) | (17,489) | (17,167) | (19,000) | (15,828) | (15,493) | |||||||
Administrative expenses, advisory and trustee services | (7,942) | (6,402) | (2,662) | (2,527) | (2,753) | (2,092) | (2,245) | |||||||
Other expenses | (1,630) | (1,496) | (273) | (678) | (679) | (677) | (464) | |||||||
Impairment of real estate investments | (4,798) | 0 | (4,798) | 0 | 0 | 0 | 0 | |||||||
Interest expense | (44,525) | (46,554) | (15,130) | (14,799) | (14,596) | (14,600) | (15,197) | |||||||
Interest and other income | 1,602 | 600 | 740 | 652 | 210 | 148 | 255 | |||||||
Income from continuing operations | 11,132 | 12,678 | 3,604 | 4,922 | 2,606 | 7,999 | 4,588 | |||||||
Income from discontinued operations | 6,450 | 5,481 | 465 | 5,375 | 610 | 3,814 | 1,565 | |||||||
Net income | $ | 17,582 | $ | 18,159 | $ | 4,069 | $ | 10,297 | $ | 3,216 | $ | 11,813 | $ | 6,153 |
Net income attributable to noncontrolling interest – Operating Partnership | (1,406) | (2,097) | (130) | (1,226) | (50) | (1,536) | (556) | |||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | (808) | (547) | (436) | (284) | (88) | (262) | (273) | |||||||
Net income attributable to Investors Real Estate Trust | 15,368 | 15,515 | 3,503 | 8,787 | 3,078 | 10,015 | 5,324 | |||||||
Dividends to preferred shareholders | (8,636) | (6,350) | (2,879) | (2,878) | (2,879) | (2,879) | (2,879) | |||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 6,732 | $ | 9,165 | $ | 624 | $ | 5,909 | $ | 199 | $ | 7,136 | $ | 2,445 |
Per Share Data | ||||||||||||||
Earnings (loss) per common share from continuing operations – Investors Real Estate Trust – basic & diluted | $ | .01 | $ | .05 | $ | .00 | $ | .01 | $ | .00 | $ | .04 | $ | .01 |
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic & diluted | .05 | .05 | .00 | .05 | .00 | .03 | .02 | |||||||
Net income per common share – basic & diluted | $ | .06 | $ | .10 | $ | .00 | $ | .06 | $ | .00 | $ | .07 | $ | .03 |
Percentage of Revenues | ||||||||||||||
Real estate expenses | 39.7% | 39.8% | 38.3% | 40.0% | 40.9% | 40.4% | 40.2% | |||||||
Depreciation/amortization | 27.0% | 25.3% | 25.9% | 26.1% | 29.2% | 24.7% | 24.6% | |||||||
General and administrative | 4.0% | 3.5% | 3.9% | 3.8% | 4.2% | 3.3% | 3.6% | |||||||
Interest | 22.4% | 25.3% | 22.4% | 22.5% | 22.4% | 22.7% | 24.1% | |||||||
Income from discontinued operations | 3.2% | 3.0% | 0.7% | 8.2% | 0.9% | 5.9% | 2.5% | |||||||
Net income | 8.9% | 9.9% | 6.0% | 15.7% | 4.9% | 18.4% | 9.8% | |||||||
Ratios | ||||||||||||||
EBITDA(1)/Interest expense | 2.25x | 2.23x | 2.13x | 2.37x | 2.23x | 2.41x | 2.34x | |||||||
EBITDA(1)/Interest expense plus preferred distributions | 1.90x | 1.98x | 1.81x | 2.00x | 1.88x | 2.03x | 1.98x |
(1) | See Definitions on page 30. EBITDA is a non-GAAP measure; see page 9 for a reconciliation of EBITDA to net income. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FUNDS FROM OPERATIONS (unaudited)
(in thousands, except per share and unit data)
Nine Months Ended | Three Months Ended | |||||||||||||
1/31/2014 | 1/31/2013 | 1/31/2014 | 10/31/2013 | 7/31/2013 | 4/30/2013 | 1/31/2013 | ||||||||
Funds From Operations(1) | ||||||||||||||
Net income attributable to Investors Real Estate Trust | $ | 15,368 | $ | 15,515 | $ | 3,503 | $ | 8,787 | $ | 3,078 | $ | 10,015 | $ | 5,324 |
Less dividends to preferred shareholders | (8,636) | (6,350) | (2,879) | (2,878) | (2,879) | (2,879) | (2,879) | |||||||
Net income available to common shareholders | 6,732 | 9,165 | 624 | 5,909 | 199 | 7,136 | 2,445 | |||||||
Adjustments: | ||||||||||||||
Noncontrolling interests – Operating Partnership | 1,406 | 2,097 | 130 | 1,226 | 50 | 1,536 | 556 | |||||||
Depreciation and amortization | 54,591 | 48,971 | 17,546 | 17,490 | 19,555 | 16,572 | 16,263 | |||||||
Impairment of real estate investments | 6,658 | 0 | 4,798 | 57 | 1,803 | 305 | 0 | |||||||
Gain on depreciable property sales | $ | (6,999) | $ | (3,452) | (358) | (4,698) | (1,943) | (3,433) | (772) | |||||
Funds from operations applicable to common shares and Units | 62,388 | 56,781 | $ | 22,740 | $ | 19,984 | $ | 19,664 | $ | 22,116 | $ | 18,492 | ||
FFO per share and unit - basic and diluted | $ | 0.49 | $ | 0.50 | $ | 0.17 | $ | 0.16 | $ | 0.16 | $ | 0.19 | $ | 0.16 |
Adjusted funds from operations(1) | ||||||||||||||
Funds from operations applicable to common shares and Units | $ | 62,388 | $ | 56,781 | $ | 22,740 | $ | 19,984 | $ | 19,664 | $ | 22,116 | $ | 18,492 |
Adjustments: | ||||||||||||||
Tenant improvements at stabilized properties | (8,389) | (6,747) | (4,205) | (1,841) | (2,343) | (3,092) | (3,156) | |||||||
Leasing costs at stabilized properties | (2,870) | (4,517) | (1,219) | (735) | (916) | (610) | (2,231) | |||||||
Recurring capital expenditures(1) | (3,858) | (5,303) | (1,093) | (1,364) | (1,401) | (687) | (1,614) | |||||||
Straight-line rents | (2,136) | (2,208) | (818) | (666) | (652) | (883) | (576) | |||||||
Non-real estate depreciation | 266 | 299 | 99 | 82 | 85 | 82 | 80 | |||||||
Gain on involuntary conversion | (2,480) | (2,263) | (1,514) | 0 | (966) | (2,821) | 0 | |||||||
Adjusted funds from operations applicable to common shares and Units | $ | 42,921 | $ | 36,042 | $ | 13,990 | $ | 15,460 | $ | 13,471 | $ | 14,105 | $ | 10,995 |
AFFO per share and unit - basic and diluted | $ | 0.34 | $ | 0.32 | $ | 0.11 | $ | 0.12 | $ | 0.11 | $ | 0.12 | $ | 0.10 |
Weighted average shares and units | 126,302 | 113,358 | 128,027 | 126,713 | 124,179 | 118,192 | 115,207 |
(1) | See Definitions on page 30. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) (unaudited)
(in thousands)
Nine Months Ended | Three Months Ended | |||||||||||||
1/31/2014 | 1/31/2013 | 1/31/2014 | 10/31/2013 | 07/31/2013 | 04/30/2013 | 01/31/2013 | ||||||||
EBITDA(1) | ||||||||||||||
Net income attributable to Investors Real Estate Trust | $ | 15,368 | $ | 15,515 | $ | 3,503 | $ | 8,787 | $ | 3,078 | $ | 10,015 | $ | 5,324 |
Adjustments: | ||||||||||||||
Noncontrolling interests – Operating Partnership | 1,406 | 2,097 | 130 | 1,226 | 50 | 1,536 | 556 | |||||||
Income before noncontrolling interests – Operating Partnership | 16,774 | 17,612 | 3,633 | 10,013 | 3,128 | 11,551 | 5,880 | |||||||
Add: | ||||||||||||||
Interest expense | 44,946 | 48,617 | 15,159 | 14,904 | 14,883 | 15,069 | 15,731 | |||||||
Depreciation/amortization related to real estate investments | 52,093 | 46,716 | 16,825 | 16,675 | 18,593 | 15,759 | 15,506 | |||||||
Amortization related to non-real estate investments | 2,590 | 2,426 | 758 | 839 | 993 | 848 | 794 | |||||||
Amortization related to real estate revenues(2) | 175 | 126 | 62 | 59 | 54 | 49 | 43 | |||||||
Less: | ||||||||||||||
Interest income | (1,346) | (176) | (573) | (585) | (188) | (46) | (70) | |||||||
Gain on sale of real estate, land and other investments | (6,999) | (3,452) | (358) | (4,698) | (1,943) | (3,433) | (772) | |||||||
Gain on involuntary conversion | (2,480) | (2,263) | (1,514) | 0 | (966) | (2,821) | 0 | |||||||
EBITDA | $ | 105,753 | $ | 109,606 | $ | 33,992 | $ | 37,207 | $ | 34,554 | $ | 36,976 | $ | 37,112 |
(1) | Definitions on page 30. |
(2) | Included in real estate revenue in the Statement of Operations. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* ANALYSIS
(in thousands)
Debt Maturity Schedule
Annual Expirations
Total Mortgage Debt*
![](https://capedge.com/proxy/8-K/0000798359-14-000016/image7.jpg)
Future Maturities of Mortgage Debt | ||||||||
Fiscal Year | Fixed Debt | Variable Debt | Total Debt | Weighted Average(1) | % of Total Debt | |||
2014 | $ | 12,798 | $ | 2,807 | $ | 15,605 | 4.64% | 1.6% |
2015 | 66,537 | 0 | 66,537 | 5.56% | 6.6% | |||
2016 | 73,185 | 0 | 73,185 | 5.50% | 7.3% | |||
2017 | 171,689 | 0 | 171,689 | 6.12% | 17.0% | |||
2018 | 76,265 | 0 | 76,265 | 5.03% | 7.5% | |||
2019 | 91,574 | 5,495 | 97,069 | 5.86% | 9.6% | |||
2020 | 111,908 | 0 | 111,908 | 5.87% | 11.1% | |||
2021 | 131,909 | 0 | 131,909 | 5.30% | 13.1% | |||
2022 | 130,959 | 0 | 130,959 | 5.61% | 13.0% | |||
2023 | 38,114 | 0 | 38,114 | 4.25% | 3.8% | |||
Thereafter | 95,284 | 0 | 95,284 | 4.48% | 9.4% | |||
Total maturities | $ | 1,000,222 | $ | 8,302 | $ | 1,008,524 | 5.48% | 100.0% |
(1) | Weighted average interest rate of debt that matures in fiscal year. |
1/31/2014 | 10/31/2013 | 7/31/2013 | 4/30/2013 | 1/31/2013 | ||||||
Balances Outstanding | ||||||||||
Mortgage | ||||||||||
Fixed rate | $ | 1,000,222 | $ | 1,012,813 | $ | 1,014,632 | $ | 1,022,990 | $ | 1,004,567 |
Variable rate | 8,302 | 8,357 | 15,775 | 26,216 | 37,056 | |||||
Mortgage total | $ | 1,008,524 | $ | 1,021,170 | $ | 1,030,407 | $ | 1,049,206 | $ | 1,041,623 |
Weighted Average Interest Rates | ||||||||||
Secured | 5.48% | 5.50% | 5.54% | 5.55% | 5.65% |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF JANUARY 31, 2014
(in thousands)
(in thousands)
Property | Maturity Date | Fiscal 2014 | Fiscal 2015 | Fiscal 2016 | Fiscal 2017 | Thereafter | Total(1) | |||||||
Multi-Family Residential | ||||||||||||||
Monticello Village - Monticello, MN (2) | 3/1/2014 | $ | 2,808 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 2,808 | |
Evergreen II - Isanti, MN | 11/1/2014 | 0 | 2,119 | 0 | 0 | 0 | 2,119 | |||||||
Campus Center - St Cloud, MN | 6/1/2015 | 0 | 0 | 1,225 | 0 | 0 | 1,225 | |||||||
Campus Knoll - St Cloud, MN | 6/1/2015 | 0 | 0 | 817 | 0 | 0 | 817 | |||||||
Landmark - Grand Forks, ND | 8/24/2015 | 0 | 0 | 1,654 | 0 | 0 | 1,654 | |||||||
Regency Park Estates - St Cloud, MN | 1/1/2016 | 0 | 0 | 6,864 | 0 | 0 | 6,864 | |||||||
Pebble Springs – Bismarck, ND | 7/1/2016 | 0 | 0 | 0 | 779 | 0 | 779 | |||||||
Southview – Minot, ND | 7/1/2016 | 0 | 0 | 0 | 1,065 | 0 | 1,065 | |||||||
Summary of Debt due after Fiscal 2017 | 0 | 0 | 0 | 0 | 372,319 | 372,319 | ||||||||
Sub-Total Multi-Family Residential | $ | 2,808 | $ | 2,119 | $ | 10,560 | $ | 1,844 | $ | 372,319 | $ | 389,650 | ||
Commercial Office | ||||||||||||||
Whitewater Plaza - Minnetonka, MN (3) | 3/1/2014 | $ | 2,487 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 2,487 | |
Whitewater Plaza - Minnetonka, MN (3) | 3/1/2014 | 1,289 | 0 | 0 | 0 | 0 | 1,289 | |||||||
Viromed - Eden Prairie, MN (2) | 4/1/2014 | 83 | 0 | 0 | 0 | 0 | 83 | |||||||
Wirth Corporate Center - Golden Valley, MN (4) | 4/1/2014 | 3,538 | 0 | 0 | 0 | 0 | 3,538 | |||||||
TCA Building - Eagan, MN (5) | 5/1/2014 | 0 | 6,722 | 0 | 0 | 0 | 6,722 | |||||||
Burnsville Bluffs II - Burnsville, MN | 8/8/2014 | 0 | 1,690 | 0 | 0 | 0 | 1,690 | |||||||
Plymouth IV - Plymouth, MN | 8/8/2014 | 0 | 3,117 | 0 | 0 | 0 | 3,117 | |||||||
Plymouth V - Plymouth, MN | 8/8/2014 | 0 | 3,642 | 0 | 0 | 0 | 3,642 | |||||||
Plaza VII - Boise, ID | 9/1/2014 | 0 | 946 | 0 | 0 | 0 | 946 | |||||||
Crosstown Centre - Eden Prairie, MN | 12/1/2014 | 0 | 3,209 | 0 | 0 | 0 | 3,209 | |||||||
Crosstown Centre - Eden Prairie, MN | 12/1/2014 | 0 | 9,627 | 0 | 0 | 0 | 9,627 | |||||||
Northgate I - Maple Grove, MN | 12/10/2014 | 0 | 5,024 | 0 | 0 | 0 | 5,024 | |||||||
Plymouth I - Plymouth, MN | 12/10/2014 | 0 | 1,126 | 0 | 0 | 0 | 1,126 | |||||||
Plymouth II - Plymouth, MN | 12/10/2014 | 0 | 1,126 | 0 | 0 | 0 | 1,126 | |||||||
Plymouth III - Plymouth, MN | 12/10/2014 | 0 | 1,386 | 0 | 0 | 0 | 1,386 | |||||||
Benton Business Park - Sauk Rapids, MN | 1/1/2015 | 0 | 508 | 0 | 0 | 0 | 508 | |||||||
West River Business Park - Waite Park, MN | 1/1/2015 | 0 | 508 | 0 | 0 | 0 | 508 | |||||||
Highlands Ranch I - Highlands Ranch, CO | 3/1/2015 | 0 | 8,050 | 0 | 0 | 0 | 8,050 | |||||||
Highlands Ranch II - Highlands Ranch, CO | 3/1/2015 | 0 | 7,677 | 0 | 0 | 0 | 7,677 | |||||||
US Bank Financial Center - Bloomington, MN | 7/1/2015 | 0 | 0 | 13,186 | 0 | 0 | 13,186 | |||||||
Rapid City 900 Concourse Drive - Rapid City, SD | 8/1/2015 | 0 | 0 | 818 | 0 | 0 | 818 | |||||||
Westgate I - Boise, ID | 8/1/2015 | 0 | 0 | 1,167 | 0 | 0 | 1,167 | |||||||
Westgate II - Boise, ID | 8/1/2015 | 0 | 0 | 2,857 | 0 | 0 | 2,857 | |||||||
Brook Valley I - LaVista, NE | 1/1/2016 | 0 | 0 | 1,268 | 0 | 0 | 1,268 | |||||||
Spring Valley IV - Omaha, NE | 1/1/2016 | 0 | 0 | 754 | 0 | 0 | 754 | |||||||
Spring Valley V - Omaha, NE | 1/1/2016 | 0 | 0 | 830 | 0 | 0 | 830 | |||||||
Spring Valley X - Omaha, NE | 1/1/2016 | 0 | 0 | 770 | 0 | 0 | 770 | |||||||
Spring Valley XI - Omaha, NE | 1/1/2016 | 0 | 0 | 755 | 0 | 0 | 755 | |||||||
American Corporate Center – Mendota Heights, MN | 9/1/2016 | 0 | 0 | 0 | 8,824 | 0 | 8,824 | |||||||
Mendota Office Center I – Mendota Heights, MN | 9/1/2016 | 0 | 0 | 0 | 3,800 | 0 | 3,800 | |||||||
Mendota Office Center II - Mendota Heights, MN | 9/1/2016 | 0 | 0 | 0 | 5,614 | 0 | 5,614 | |||||||
Mendota Office Center III - Mendota Heights, MN | 9/1/2016 | 0 | 0 | 0 | 3,858 | 0 | 3,858 |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF JANUARY 31, 2014 (continued)
(in thousands)
(in thousands)
Property | Maturity Date | Fiscal 2014 | Fiscal 2015 | Fiscal 2016 | Fiscal 2017 | Thereafter | Total(1) | |||||||
Commercial Office - continued | ||||||||||||||
Mendota Office Center IV - Mendota Heights, MN | 9/1/2016 | $ | 0 | $ | 0 | $ | 0 | $ | 4,587 | $ | 0 | $ | 4,587 | |
Corporate Center West – Omaha, NE | 10/6/2016 | 0 | 0 | 0 | 17,315 | 0 | 17,315 | |||||||
Farnam Executive Center – Omaha, NE | 10/6/2016 | 0 | 0 | 0 | 12,160 | 0 | 12,160 | |||||||
Flagship – Eden Prarie, MN | 10/6/2016 | 0 | 0 | 0 | 21,565 | 0 | 21,565 | |||||||
Gateway Corporate Center – Woodbury, MN | 10/6/2016 | 0 | 0 | 0 | 8,700 | 0 | 8,700 | |||||||
Miracle Hills One – Omaha, NE | 10/6/2016 | 0 | 0 | 0 | 8,895 | 0 | 8,895 | |||||||
Pacific Hills – Omaha, NE | 10/6/2016 | 0 | 0 | 0 | 16,770 | 0 | 16,770 | |||||||
Riverport – Maryland Heights, MO | 10/6/2016 | 0 | 0 | 0 | 19,690 | 0 | 19,690 | |||||||
Timberlands – Leawood, KS | 10/6/2016 | 0 | 0 | 0 | 13,155 | 0 | 13,155 | |||||||
Woodlands Plaza IV – Maryland Heights, MO | 10/6/2016 | 0 | 0 | 0 | 4,360 | 0 | 4,360 | |||||||
2030 Cliff Road – Eagan, MN | 1/11/2017 | 0 | 0 | 0 | 945 | 0 | 945 | |||||||
Summary of Debt due after Fiscal 2017 | 0 | 0 | 0 | 0 | 98,908 | 98,908 | ||||||||
Sub-Total Commercial Office | $ | 7,397 | $ | 54,358 | $ | 22,405 | $ | 150,238 | $ | 98,908 | $ | 333,306 | ||
Commercial Healthcare | ||||||||||||||
High Pointe Health Campus - Lake Elmo, MN (6) | 4/1/2014 | $ | 5,400 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 5,400 | |
Edgewood Vista - Billings, MT | 12/10/2014 | 0 | 1,856 | 0 | 0 | 0 | 1,856 | |||||||
Edgewood Vista - East Grand Forks, MN | 12/10/2014 | 0 | 2,827 | 0 | 0 | 0 | 2,827 | |||||||
Edgewood Vista - Sioux Falls, SD | 12/10/2014 | 0 | 1,063 | 0 | 0 | 0 | 1,063 | |||||||
Garden View Medical - St Paul, MN | 8/1/2015 | 0 | 0 | 923 | 0 | 0 | 923 | |||||||
Edina 6363 France Medical - St Paul, MN | 8/6/2015 | 0 | 0 | 9,895 | 0 | 0 | 9,895 | |||||||
2800 Medical Building - Minneapolis, MN | 9/1/2015 | 0 | 0 | 5,253 | 0 | 0 | 5,253 | |||||||
2828 Medical Building - Minneapolis, MN | 9/1/2015 | 0 | 0 | 8,258 | 0 | 0 | 8,258 | |||||||
Edina 6405 France Medical - Edina, MN | 9/1/2015 | 0 | 0 | 8,552 | 0 | 0 | 8,552 | |||||||
Ritchie Medical Plaza - St Paul, MN | 9/1/2015 | 0 | 0 | 6,288 | 0 | 0 | 6,288 | |||||||
Airport Medical – Bloomington, MN | 6/1/2016 | 0 | 0 | 0 | 850 | 0 | 850 | |||||||
Park Dental – Brooklyn Center, MN | 6/1/2016 | 0 | 0 | 0 | 488 | 0 | 488 | |||||||
Edgewood Vista – Fargo, ND | 10/25/2016 | 0 | 0 | 0 | 12,541 | 0 | 12,541 | |||||||
Sartell 2000 23rd St S – Sartell, MN | 12/1/2016 | 0 | 0 | 0 | 2,662 | 0 | 2,662 | |||||||
Billings 2300 Grant Road – Billings, MT | 12/31/2016 | 0 | 0 | 0 | 1,499 | 0 | 1,499 | |||||||
Missoula 3050 Great Northern Ave – Missoula, MT | 12/31/2016 | 0 | 0 | 0 | 1,567 | 0 | 1,567 | |||||||
Summary of Debt due after Fiscal 2017 | 0 | 0 | 0 | 0 | 174,513 | 174,513 | ||||||||
Sub-Total Commercial Healthcare | $ | 5,400 | $ | 5,746 | $ | 39,169 | $ | 19,607 | $ | 174,513 | $ | 244,435 | ||
Commercial Industrial | ||||||||||||||
Stone Container - Fargo, ND | 12/1/2015 | 0 | 0 | 469 | 0 | 0 | 469 | |||||||
Stone Container - Fargo, ND | 12/1/2015 | 0 | 0 | 582 | 0 | 0 | 582 | |||||||
Summary of Debt due after Fiscal 2017 | 0 | 0 | 0 | 0 | 12,909 | 12,909 | ||||||||
Sub-Total Commercial Industrial | $ | 0 | $ | 0 | $ | 1,051 | $ | 0 | $ | 12,909 | $ | 13,960 |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF JANUARY 31, 2014 (continued)
(in thousands)
(in thousands)
Property | Maturity Date | Fiscal 2014 | Fiscal 2015 | Fiscal 2016 | Fiscal 2017 | Thereafter | Total(1) | |||||||
Commercial Retail | ||||||||||||||
Omaha Barnes & Noble - Omaha, NE | 6/1/2014 | 0 | 2,306 | 0 | 0 | 0 | 2,306 | |||||||
Jamestown Buffalo Mall - Jamestown, ND | 9/1/2014 | 0 | 222 | 0 | 0 | 0 | 222 | |||||||
Fargo Express Center - Fargo, ND | 10/1/2014 | 0 | 897 | 0 | 0 | 0 | 897 | |||||||
Lakeville Strip Center - Lakeville, MN | 10/1/2014 | 0 | 889 | 0 | 0 | 0 | 889 | |||||||
Summary of Debt due after Fiscal 2017 | 0 | 0 | 0 | 0 | 22,859 | 22,859 | ||||||||
Sub-Total Commercial Retail | $ | 0 | $ | 4,314 | $ | 0 | $ | 0 | $ | 22,859 | $ | 27,173 | ||
Total | $ | 15,605 | $ | 66,537 | $ | 73,185 | $ | 171,689 | $ | 681,508 | $ | 1,008,524 |
* | Mortgage debt does not include the Company's multi-bank line of credit or construction loans. The line of credit has a maturity date of December 1, 2016; as of January 31, 2014, the Company had borrowings of $22.5 million outstanding under this line. Construction loans and other debt totaled $47.7 million as of January 31, 2014. |
(1) | Totals are principal balances as of January 31, 2014. |
(2) | Loan was paid off subsequent to January 31, 2014. |
(3) | Loan was renewed subsequent to January 31, 2014. |
(4) | Loan has anticipated payoff on April 1, 2014. |
(5) | Loan was refinanced subsequent to January 31, 2014. |
(6) | Loan is under application for renewal. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CAPITAL ANALYSIS
(in thousands, except per share and unit amounts)
Three Months Ended | ||||||||||
1/31/2014 | 10/31/2013 | 7/31/2013 | 4/30/2013 | 1/31/2013 | ||||||
Equity Capitalization | ||||||||||
Common shares outstanding | 106,937 | 105,554 | 104,226 | 101,488 | 94,386 | |||||
Operating partnership (OP) units outstanding | 21,799 | 21,836 | 21,849 | 21,635 | 21,489 | |||||
Total common shares and OP units outstanding | 128,736 | 127,390 | 126,075 | 123,123 | 115,875 | |||||
Market price per common share (closing price at end of period) | $ | 8.69 | $ | 8.62 | $ | 8.64 | $ | 9.73 | $ | 9.36 |
Equity capitalization-common shares and OP units | $ | 1,118,716 | $ | 1,098,102 | $ | 1,089,288 | $ | 1,197,987 | $ | 1,084,590 |
Recorded book value of preferred shares | $ | 138,674 | $ | 138,674 | $ | 138,674 | $ | 138,674 | $ | 138,674 |
Total equity capitalization | $ | 1,257,390 | $ | 1,236,776 | $ | 1,227,962 | $ | 1,336,661 | $ | 1,223,264 |
Debt Capitalization | ||||||||||
Total debt | $ | 1,078,741 | $ | 1,062,788 | $ | 1,072,696 | $ | 1,077,282 | $ | 1,073,152 |
Total capitalization | $ | 2,336,131 | $ | 2,299,564 | $ | 2,300,658 | $ | 2,413,943 | $ | 2,296,416 |
Total debt to total capitalization | 0.46:1 | 0.46:1 | 0.47:1 | 0.45:1 | 0.47:1 | |||||
Nine Months Ended | Three Months Ended | |||||||||||||
1/31/2014 | 1/31/2013 | 1/31/2014 | 10/31/2013 | 7/31/2013 | 4/30/2013 | 1/31/2013 | ||||||||
Earnings to fixed charges(1) | 1.17x | 1.24x | 1.15x | 1.25x | 1.13x | 1.48x | 1.26x | |||||||
Earnings to combined fixed charges and preferred distributions(1) | 0.99x | 1.10x | 0.97x | 1.05x | 0.95x | 1.25x | 1.07x | |||||||
Debt service coverage ratio(1) | 1.54x | 1.56x | 1.46x | 1.64x | 1.54x | 1.64x | 1.63x | |||||||
Distribution Data | ||||||||||||||
Common shares and units outstanding at record date | 128,004 | 115,284 | 128,004 | 126,629 | 123,976 | 116,338 | 115,284 | |||||||
Total common distribution paid | $ | 49,193 | $ | 44,126 | $ | 16,639 | $ | 16,461 | $ | 16,093 | $ | 15,124 | $ | 14,956 |
Common distribution per share and unit | $ | .3900 | $ | .3900 | $ | .1300 | $ | .1300 | $ | .1300 | $ | .1300 | $ | .1300 |
Payout ratio (FFO per share and unit basis)(1) | 79.6% | 78.0% | 76.5% | 81.3% | 81.3% | 68.4% | 81.3% | |||||||
Payout ratio (AFFO per share and unit basis)(1) | 114.7% | 121.9% | 118.2% | 108.3% | 118.2% | 108.3% | 130.0% |
(1) | See Definitions on page 30. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
STABILIZED PROPERTIES NET OPERATING INCOME SUMMARY
(in thousands)
Stabilized Properties(1) | Stabilized Properties(1) | |||||||||
Three Months Ended January 31, | Nine Months Ended January 31, | |||||||||
Segment | 2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||
Multi-Family Residential | $ | 10,918 | $ | 10,048 | 8.7% | $ | 31,733 | $ | 31,512 | 0.7% |
Commercial Office | 10,357 | 9,776 | 5.9% | 29,760 | 28,623 | 4.0% | ||||
Commercial Healthcare | 12,905 | 11,752 | 9.8% | 36,157 | 33,828 | 6.9% | ||||
Commercial Industrial | 1,067 | 978 | 9.1% | 3,024 | 2,673 | 13.1% | ||||
Commercial Retail | 2,180 | 2,235 | (2.5%) | 6,465 | 6,422 | 0.7% | ||||
$ | 37,427 | $ | 34,789 | 7.6% | $ | 107,139 | $ | 103,058 | 4.0% |
(1) | See list of properties excluded from stabilized properties on page ii. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
Three Months Ended January 31, 2014 | ||||||||||||||
Reporting Segments | ||||||||||||||
Multi-Family Residential | Commercial Office | Commercial Healthcare | Commercial Industrial | Commercial Retail | Corporate and Other | Total | ||||||||
Real estate rental revenue | ||||||||||||||
Stabilized(1) | $ | 19,352 | $ | 19,394 | $ | 16,969 | $ | 1,466 | $ | 3,448 | $ | 0 | $ | 60,629 |
Non-stabilized | 6,496 | 0 | 273 | 198 | 33 | 0 | 7,000 | |||||||
Total | 25,848 | 19,394 | 17,242 | 1,664 | 3,481 | 0 | 67,629 | |||||||
Real estate expenses | ||||||||||||||
Stabilized(1) | 8,434 | 9,037 | 4,064 | 399 | 1,268 | 0 | 23,202 | |||||||
Non-stabilized | 2,564 | 0 | 56 | 94 | 11 | 0 | 2,725 | |||||||
Total | 10,998 | 9,037 | 4,120 | 493 | 1,279 | 0 | 25,927 | |||||||
Gain on involuntary conversion | ||||||||||||||
Stabilized(1) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||
Non-stabilized | 1,514 | 0 | 0 | 0 | 0 | 0 | 1,514 | |||||||
Total | 1,514 | 0 | 0 | 0 | 0 | 0 | 1,514 | |||||||
Net operating income (NOI) | ||||||||||||||
Stabilized(1) | 10,918 | 10,357 | 12,905 | 1,067 | 2,180 | 0 | 37,427 | |||||||
Non-stabilized | 5,446 | 0 | 217 | 104 | 22 | 0 | 5,789 | |||||||
Net operating income | $ | 16,364 | $ | 10,357 | $ | 13,122 | $ | 1,171 | $ | 2,202 | $ | 0 | $ | 43,216 |
Reconciliation of NOI to net income (loss) available to common shareholders | ||||||||||||||
Depreciation/amortization | $ | (5,444) | $ | (5,776) | $ | (4,938) | $ | (457) | $ | (792) | $ | (82) | $ | (17,489) |
Administrative, advisory and trustee fees | 0 | 0 | 0 | 0 | 0 | (2,662) | (2,662) | |||||||
Impairment of real estate investments | 0 | 0 | 0 | 0 | 0 | (4,798) | (4,798) | |||||||
Other expenses | 0 | 0 | 0 | 0 | 0 | (273) | (273) | |||||||
Interest expense | (5,491) | (5,083) | (4,053) | (213) | (421) | 131 | (15,130) | |||||||
Interest and other income | 0 | 0 | 0 | 0 | 0 | 740 | 740 | |||||||
Income (loss) from continuing operations | 5,429 | (502) | 4,131 | 501 | 989 | (6,944) | 3,604 | |||||||
(Loss) income from discontinued operations | (205) | 0 | 0 | 861 | (191) | 0 | 465 | |||||||
Net income (loss) | 5,224 | (502) | 4,131 | 1,362 | 798 | (6,944) | 4,069 | |||||||
Net income attributable to noncontrolling interests – Operating Partnership | 0 | 0 | 0 | 0 | 0 | (130) | (130) | |||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | 0 | 0 | 0 | 0 | 0 | (436) | (436) | |||||||
Net income (loss) attributable to Investors Real Estate Trust | 5,224 | (502) | 4,131 | 1,362 | 798 | (7,510) | 3,503 | |||||||
Dividends to preferred shareholders | 0 | 0 | 0 | 0 | 0 | (2,879) | (2,879) | |||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | 5,224 | (502) | 4,131 | 1,362 | 798 | $ | (10,389) | $ | 624 |
(1) | See list of properties excluded from stabilized properties on page ii. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
Three Months Ended January 31, 2013 | ||||||||||||||
Reporting Segments | ||||||||||||||
Multi-Family Residential | Commercial Office | Commercial Healthcare | Commercial Industrial | Commercial Retail | Corporate and Other | Total | ||||||||
Real estate rental revenue | ||||||||||||||
Stabilized(1) | $ | 18,901 | $ | 19,046 | $ | 15,869 | $ | 1,404 | $ | 3,485 | $ | 0 | $ | 58,705 |
Non-stabilized | 3,958 | 0 | 83 | 334 | 0 | 0 | 4,375 | |||||||
Total | 22,859 | 19,046 | 15,952 | 1,738 | 3,485 | 0 | 63,080 | |||||||
Real estate expenses | ||||||||||||||
Stabilized(1) | 8,853 | 9,270 | 4,117 | 426 | 1,250 | 0 | 23,916 | |||||||
Non-stabilized | 1,355 | 0 | 11 | 66 | 0 | 0 | 1,432 | |||||||
Total | 10,208 | 9,270 | 4,128 | 492 | 1,250 | 0 | 25,348 | |||||||
Net operating income (NOI) | ||||||||||||||
Stabilized(1) | 10,048 | 9,776 | 11,752 | 978 | 2,235 | 0 | 34,789 | |||||||
Non-stabilized | 2,603 | 0 | 72 | 268 | 0 | 0 | 2,943 | |||||||
Net operating income | $ | 12,651 | $ | 9,776 | $ | 11,824 | $ | 1,246 | $ | 2,235 | $ | 0 | $ | 37,732 |
Reconciliation of NOI to net income (loss) available to common shareholders | ||||||||||||||
Depreciation/amortization | $ | (4,541) | $ | (5,250) | $ | (4,451) | $ | (409) | $ | (762) | $ | (80) | $ | (15,493) |
Administrative, advisory and trustee fees | 0 | 0 | 0 | 0 | 0 | (2,245) | (2,245) | |||||||
Other expenses | 0 | 0 | 0 | 0 | 0 | (464) | (464) | |||||||
Interest expense | (5,306) | (5,269) | (3,634) | (359) | (522) | (107) | (15,197) | |||||||
Interest and other income | 0 | 0 | 0 | 0 | 0 | 255 | 255 | |||||||
Income (loss) from continuing operations | 2,804 | (743) | 3,739 | 478 | 951 | (2,641) | 4,588 | |||||||
Income (loss) from discontinued operations | 782 | 104 | 0 | 681 | (2) | 0 | 1,565 | |||||||
Net income (loss) | 3,586 | (639) | 3,739 | 1,159 | 949 | (2,641) | 6,153 | |||||||
Net income attributable to noncontrolling interests – Operating Partnership | 0 | 0 | 0 | 0 | 0 | (556) | (556) | |||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | 0 | 0 | 0 | 0 | 0 | (273) | (273) | |||||||
Net income (loss) attributable to Investors Real Estate Trust | 3,586 | (639) | 3,739 | 1,159 | 949 | (3,470) | 5,324 | |||||||
Dividends to preferred shareholders | 0 | 0 | 0 | 0 | 0 | (2,879) | (2,879) | |||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | 3,586 | (639) | 3,739 | 1,159 | 949 | $ | (6,349) | $ | 2,445 |
(1) | See list of properties excluded from stabilized properties on page ii. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
Nine Months Ended January 31, 2014 | ||||||||||||||
Reporting Segments | ||||||||||||||
Multi-Family Residential | Commercial Office | Commercial Healthcare | Commercial Industrial | Commercial Retail | Corporate and Other | Total | ||||||||
Real estate rental revenue | ||||||||||||||
Stabilized(1) | $ | 57,945 | $ | 58,075 | $ | 48,470 | $ | 4,218 | $ | 10,048 | $ | 0 | $ | 178,756 |
Non-stabilized | 17,714 | 0 | 870 | 1,055 | 104 | 0 | 19,743 | |||||||
Total | 75,659 | 58,075 | 49,340 | 5,273 | 10,152 | 0 | 198,499 | |||||||
Real estate expenses | ||||||||||||||
Stabilized(1) | 26,212 | 28,315 | 12,313 | 1,194 | 3,583 | 0 | 71,617 | |||||||
Non-stabilized | 6,794 | 0 | 221 | 253 | 13 | 0 | 7,281 | |||||||
Total | 33,006 | 28,315 | 12,534 | 1,447 | 3,596 | 0 | 78,898 | |||||||
Gain on involuntary conversion | ||||||||||||||
Stabilized(1) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||
Non-stabilized | 2,480 | 0 | 0 | 0 | 0 | 0 | 2,480 | |||||||
Total | 2,480 | 0 | 0 | 0 | 0 | 0 | 2,480 | |||||||
Net operating income (NOI) | ||||||||||||||
Stabilized(1) | 31,733 | 29,760 | 36,157 | 3,024 | 6,465 | 0 | 107,139 | |||||||
Non-stabilized | 13,400 | 0 | 649 | 802 | 91 | 0 | 14,942 | |||||||
Net operating income | $ | 45,133 | $ | 29,760 | $ | 36,806 | $ | 3,826 | $ | 6,556 | $ | 0 | $ | 122,081 |
Reconciliation of NOI to net income (loss) available to common shareholders | ||||||||||||||
Depreciation/amortization | $ | (16,527) | $ | (16,564) | $ | (16,510) | $ | (1,410) | $ | (2,396) | $ | (249) | $ | (53,656) |
Administrative, advisory and trustee services | 0 | 0 | 0 | 0 | 0 | (7,942) | (7,942) | |||||||
Impairment of real estate investments | 0 | 0 | 0 | 0 | 0 | (4,798) | (4,798) | |||||||
Other expenses | 0 | 0 | 0 | 0 | 0 | (1,630) | (1,630) | |||||||
Interest expense | (16,276) | (15,271) | (11,776) | (768) | (1,406) | 972 | (44,525) | |||||||
Interest and other income | 0 | 0 | 0 | 0 | 0 | 1,602 | 1,602 | |||||||
Income (loss) from continuing operations | 12,330 | (2,075) | 8,520 | 1,648 | 2,754 | (12,045) | 11,132 | |||||||
(Loss) income from discontinued operations | (99) | 6,014 | 0 | 1,115 | (580) | 0 | 6,450 | |||||||
Net income (loss) | 12,231 | 3,939 | 8,520 | 2,763 | 2,174 | (12,045) | 17,582 | |||||||
Net income attributable to noncontrolling interests – Operating Partnership | 0 | 0 | 0 | 0 | 0 | (1,406) | (1,406) | |||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | 0 | 0 | 0 | 0 | 0 | (808) | (808) | |||||||
Net income (loss) attributable to Investors Real Estate Trust | 12,231 | 3,939 | 8,520 | 2,763 | 2,174 | (14,259) | 15,368 | |||||||
Dividends to preferred shareholders | 0 | 0 | 0 | 0 | 0 | (8,636) | (8,636) | |||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | 12,231 | $ | 3,939 | $ | 8,520 | $ | 2,763 | $ | 2,174 | $ | (22,895) | $ | 6,732 |
(1) | See list of properties excluded from stabilized properties on page ii. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
Nine Months Ended January 31, 2013 | ||||||||||||||
Reporting Segments | ||||||||||||||
Multi-Family Residential | Commercial Office | Commercial Healthcare | Commercial Industrial | Commercial Retail | Corporate and Other | Total | ||||||||
Real estate rental revenue | ||||||||||||||
Stabilized(1) | $ | 56,285 | $ | 56,214 | $ | 46,203 | $ | 3,815 | $ | 9,912 | $ | 0 | $ | 172,429 |
Non-stabilized | 10,473 | 0 | 83 | 889 | 0 | 0 | 11,445 | |||||||
Total | 66,758 | 56,214 | 46,286 | 4,704 | 9,912 | 0 | 183,874 | |||||||
Real estate expenses | ||||||||||||||
Stabilized(1) | 24,773 | 27,591 | 12,375 | 1,142 | 3,490 | 0 | 69,371 | |||||||
Non-stabilized | 3,511 | 0 | 12 | 208 | 0 | 0 | 3,731 | |||||||
Total | 28,284 | 27,591 | 12,387 | 1,350 | 3,490 | 0 | 73,102 | |||||||
Gain on involuntary conversion | ||||||||||||||
Stabilized(1) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||
Non-stabilized | 2,263 | 0 | 0 | 0 | 0 | 0 | 2,263 | |||||||
Total | 2,263 | 0 | 0 | 0 | 0 | 0 | 2,263 | |||||||
Net operating income (NOI) | ||||||||||||||
Stabilized(1) | 31,512 | 28,623 | 33,828 | 2,673 | 6,422 | 0 | 103,058 | |||||||
Non-stabilized | 9,225 | 0 | 71 | 681 | 0 | 0 | 9,977 | |||||||
Net operating income | $ | 40,737 | $ | 28,623 | $ | 33,899 | $ | 3,354 | $ | 6,422 | $ | 0 | $ | 113,035 |
Reconciliation of NOI to net income (loss) available to common shareholders | ||||||||||||||
Depreciation/amortization | $ | (13,810) | $ | (15,746) | $ | (13,243) | $ | (1,168) | $ | (2,239) | $ | (299) | $ | (46,505) |
Administrative, advisory and trustee services | 0 | 0 | 0 | 0 | 0 | (6,402) | (6,402) | |||||||
Other expenses | 0 | 0 | 0 | 0 | 0 | (1,496) | (1,496) | |||||||
Interest expense | (15,280) | (15,845) | (11,575) | (1,143) | (1,825) | (886) | (46,554) | |||||||
Interest and other income | 0 | 0 | 0 | 0 | 0 | 600 | 600 | |||||||
Income (loss) from continuing operations | 11,647 | (2,968) | 9,081 | 1,043 | 2,358 | (8,483) | 12,678 | |||||||
Income (loss) from discontinued operations | 3,689 | 248 | (59) | 1,557 | 46 | 0 | 5,481 | |||||||
Net income (loss) | 15,336 | (2,720) | 9,022 | 2,600 | 2,404 | (8,483) | 18,159 | |||||||
Net income attributable to noncontrolling interests – Operating Partnership | 0 | 0 | 0 | 0 | 0 | (2,097) | (2,097) | |||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | 0 | 0 | 0 | 0 | 0 | (547) | (547) | |||||||
Net income (loss) attributable to Investors Real Estate Trust | 15,336 | (2,720) | 9,022 | 2,600 | 2,404 | (11,127) | 15,515 | |||||||
Dividends to preferred shareholders | 0 | 0 | 0 | 0 | 0 | (6,350) | (6,350) | |||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | 15,336 | $ | (2,720) | $ | 9,022 | $ | 2,600 | $ | 2,404 | $ | (17,477) | $ | 9,165 |
(1) | See list of properties excluded from stabilized properties on page ii. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
STABILIZED PROPERTIES AND ALL PROPERTIES PHYSICAL OCCUPANCY LEVELS BY SEGMENT
3rd Quarter Fiscal 2014 vs. 3rd Quarter Fiscal 2013
Segments | Stabilized Properties | All Properties | ||
3rd Quarter | 3rd Quarter | 3rd Quarter | 3rd Quarter | |
Fiscal 2014 | Fiscal 2013 | Fiscal 2014 | Fiscal 2013 | |
Multi-Family Residential | 93.5% | 94.5% | 91.8% | 93.5% |
Commercial Office | 80.4% | 78.9% | 80.4% | 78.9% |
Commercial Healthcare | 96.4% | 94.9% | 96.5% | 94.8% |
Commercial Industrial | 85.6% | 93.2% | 86.2% | 94.4% |
Commercial Retail | 86.9% | 88.3% | 86.9% | 88.3% |
![](https://capedge.com/proxy/8-K/0000798359-14-000016/image5.jpg)
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
MULTI-FAMILY RESIDENTIAL SUMMARY(2)
Three Months Ended | ||||||||||
1/31/2014 | 10/31/2013 | 7/31/2013 | 4/31/2013 | 1/31/2013 | ||||||
Number of Units | 10,725 | 10,705 | 10,351 | 10,280 | 9,924 | |||||
Average Investment Per Unit | ||||||||||
Stabilized | $ | 61,187 | $ | 60,592 | $ | 60,118 | $ | 58,765 | $ | 58,506 |
Non-Stabilized | 96,467 | 93,353 | 86,581 | 87,408 | 87,083 | |||||
All Properties | $ | 68,728 | $ | 67,034 | $ | 64,743 | $ | 63,659 | $ | 63,107 |
Average Scheduled Rent(1) per Unit | ||||||||||
Stabilized | $ | 781 | $ | 771 | $ | 764 | $ | 748 | $ | 742 |
Non-Stabilized | 1,010 | 976 | 955 | 944 | 994 | |||||
All Properties | $ | 830 | $ | 811 | $ | 797 | $ | 781 | $ | 782 |
Total Receipts per Unit | ||||||||||
Stabilized | $ | 767 | $ | 768 | $ | 754 | $ | 739 | $ | 731 |
Non-Stabilized | 947 | 951 | 968 | 954 | 1,004 | |||||
All Properties | $ | 806 | $ | 804 | $ | 792 | $ | 776 | $ | 775 |
Total Recurring Capital Expenditures per Unit(1) | $ | 130 | $ | 160 | $ | 164 | $ | 176 | $ | 134 |
Physical Occupancy% | ||||||||||
Stabilized | 93.5% | 94.6% | 93.3% | 94.7% | 94.0% | |||||
Non-Stabilized | 85.3% | 90.4% | 90.7% | 94.5% | 91.4% | |||||
All Properties | 91.8% | 93.8% | 92.9% | 94.6% | 93.6% | |||||
Operating Expenses as a % of Scheduled Rent | ||||||||||
Stabilized | 43.0% | 45.6% | 46.4% | 44.0% | 47.3% | |||||
Non-Stabilized | 39.8% | 41.0% | 40.7% | 43.0% | 38.7% | |||||
All Properties | 42.2% | 44.5% | 45.2% | 43.8% | 45.5% |
(1) | See Definitions on page 30. |
(2) | Previously-reported amounts are not revised for discontinued operations or changes in the composition of the stabilized properties pool. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)
Commercial Leasing Activity
During fiscal year 2014, we have executed new and renewal commercial leases for our stabilized rental properties on 282,292 square feet for the three months ended January 31, 2014 and 1.3 million square feet for the nine months ended January 31, 2014. As a result of our leasing efforts, occupancy in our stabilized commercial portfolio increased to 86.4% as of January 31, 2014, up from 86.3% as of January 31, 2013.
The total leasing activity for our stabilized commercial rental properties, expressed in square feet of leases signed during the period, and the resulting physical occupancy levels are as follows:
Three Months Ended January 31, 2014
Square Feet of New Leases(1) | Square Feet of Leases Renewed(1) (2) | Total Square Feet of Leases Executed(1) | Physical Occupancy | ||||||
Segments | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |
Office | 64,288 | 34,280 | 80,424 | 32,055 | 144,712 | 66,335 | 80.4% | 78.9% | |
Healthcare | 175 | 11,656 | 17,734 | 0 | 17,909 | 11,656 | 96.4% | 94.9% | |
Industrial | 64,000 | 0 | 0 | 0 | 64,000 | 0 | 85.6% | 93.2% | |
Retail | 27,107 | 24,925 | 28,564 | 16,457 | 55,671 | 41,382 | 86.9% | 88.3% | |
Total | 155,570 | 70,861 | 126,722 | 48,512 | 282,292 | 119,373 | 86.4% | 86.3% |
(1) | The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP. Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. |
(2) | Leases renewed include the retained occupancy of tenants on a month-to-month basis past their original lease expiration date. |
Nine Months Ended January 31, 2014
Square Feet of New Leases(1) | Square Feet of Leases Renewed(1) (2) | Total Square Feet of Leases Executed(1) | Physical Occupancy | ||||||
Segments | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |
Office | 278,143 | 144,145 | 222,798 | 127,032 | 500,941 | 271,177 | 80.4% | 78.9% | |
Healthcare | 31,268 | 21,882 | 34,996 | 11,456 | 66,264 | 33,338 | 96.4% | 94.9% | |
Industrial | 234,403 | 0 | 251,831 | 9,702 | 486,234 | 9,702 | 85.6% | 93.2% | |
Retail | 124,966 | 64,202 | 78,257 | 55,987 | 203,223 | 120,189 | 86.9% | 88.3% | |
Total | 668,780 | 230,229 | 587,882 | 204,177 | 1,256,662 | 434,406 | 86.4% | 86.3% |
(1) | The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP. Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. |
(2) | Leases renewed include the retained occupancy of tenants on a month-to-month basis past their original lease expiration date. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)
New Leases
The following table sets forth the average effective rents and the estimated costs of tenant improvements and leasing commissions, on a per square foot basis, that we are obligated to fulfill under the new leases signed for our stabilized commercial rental properties:
Three Months Ended January 31, 2014
Square Feet of New Leases(1) | Average Term in Years | Average Effective Rent(2) | Estimated Tenant Improvement Cost per Square Foot(1) | Leasing Commissions per Square Foot(1) | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||
Office | 64,288 | 34,280 | 3.6 | 5.4 | $ | 13.85 | $ | 12.40 | $ | 6.76 | $ | 8.76 | $ | 3.20 | $ | 4.93 | ||||
Healthcare | 175 | 11,656 | 0.8 | 5.1 | 13.71 | 14.24 | 0 | 0 | 0 | 0 | ||||||||||
Industrial | 64,000 | 0 | 2.8 | 0 | 3.03 | 0 | 0 | 0 | 0.03 | 0 | ||||||||||
Retail | 27,107 | 24,925 | 5.4 | 5.9 | 10.94 | 13.14 | 2.89 | 23.64 | 5.61 | 1.46 | ||||||||||
Total | 155,570 | 70,861 | 3.9 | 5.6 | $ | 8.89 | $ | 12.96 | $ | 3.30 | $ | 12.55 | $ | 2.31 | $ | 2.90 |
(1) | The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP. Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period. |
(2) | Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net. |
Nine Months Ended January 31, 2014
Square Feet of New Leases(1) | Average Term in Years | Average Effective Rent(2) | Estimated Tenant Improvement Cost per Square Foot(1) | Leasing Commissions per Square Foot(1) | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||
Office | 278,143 | 144,145 | 4.3 | 4.6 | $ | 14.26 | $ | 13.05 | $ | 13.10 | $ | 8.51 | $ | 4.33 | $ | 3.72 | ||||
Healthcare | 31,268 | 21,882 | 4.8 | 6.6 | 21.38 | 18.15 | 49.66 | 20.04 | 6.75 | 2.61 | ||||||||||
Industrial | 234,403 | 0 | 3.1 | 0 | 3.55 | 0 | 0.13 | 0 | 0.50 | 0 | ||||||||||
Retail | 124,966 | 64,202 | 5.4 | 4.9 | 5.70 | 9.41 | 1.84 | 9.89 | 4.47 | 0.84 | ||||||||||
Total | 668,780 | 230,229 | 4.4 | 4.9 | $ | 9.24 | $ | 12.52 | $ | 8.16 | $ | 9.99 | $ | 3.13 | $ | 2.81 |
(1) | The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP. Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period. |
(2) | Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net. |
Our ability to maintain or increase occupancy rates is a principal driver of maintaining and increasing the average effective rents in our commercial segments. The decrease in the average effective rental rates of new leases executed in the nine months ended January 31, 2014 in our commercial retail segment when compared to new leases executed for the same period in the prior year is due to the signing of a new anchor tenant lease at our Jamestown Buffalo Mall property. In June of 2013, we executed a ten year lease with an effective date of August 1, 2013 for 84,338 square feet with a new anchor tenant at an average effective rent of $2.75 per square foot. This space was vacated by the former anchor tenant, which was paying $1.70 per square foot at the time their lease expired on May 31, 2013. Absent this transaction, the average effective rental rate for leases executed in our commercial retail segment in the nine months ended January 31, 2014 would have been $11.83 per square foot. The decrease in the average effective rental rate of new leases executed in the total commercial portfolio for the nine months ended January 31, 2014 when compared to the same period in the prior year is due primarily to the lease transaction mentioned above and the fact that there were no new commercial industrial leases executed in the nine months ended January 31, 2013. The decrease in the average effective rental rate of new leases executed in the total commercial portfolio for the three months ended January 31, 2014 when compared to the same period in the prior year is due solely to the fact that there were no new commercial industrial leases executed in the three months ended January 31, 2013.
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)
Lease Renewals
The following table summarizes our lease renewal activity within our stabilized commercial segments (square feet data in thousands):
Three Months Ended January 31, 2014
Square Feet of Leases Renewed(1) | Percent of Expiring Leases Renewed(2) | Average Term in Years | Weighted Average Growth (Decline) in Effective Rents(3) | Estimated Tenant Improvement Cost per Square Foot(1) | Leasing Commissions per Square Foot(1) | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Office | 80,424 | 32,055 | 44.4% | 49.1% | 3.2 | 1.8 | (1.0%) | 13.0% | $ | 4.54 | $ | 0 | $ | 1.87 | $ | 0.54 | ||||||||
Healthcare | 17,734 | 0 | 100.0% | 82.0% | 2.3 | 0 | 9.6% | 0% | 0 | 0 | 0.02 | 0 | ||||||||||||
Industrial | 0 | 0 | 0% | 53.6% | 0 | 0 | 0% | 0% | 0 | 0 | 0 | 0 | ||||||||||||
Retail | 28,564 | 16,457 | 100.0% | 60.9% | 4.0 | 3.2 | 13.3% | 0.8% | 4.63 | 0.85 | 0.06 | 0.57 | ||||||||||||
Total | 126,722 | 48,512 | 55.4% | 62.5% | 3.3 | 2.3 | 3.6% | 9.4% | $ | 3.93 | $ | 0.29 | $ | 1.20 | $ | 0.55 |
(1) | The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP. Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period. |
(2) | Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. Expiring leases where the tenant retained occupancy on a month-to-month basis past the lease expiration date were considered to have been renewed. |
(3) | Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net. |
Nine Months Ended January 31, 2014
Square Feet of Leases Renewed(1) | Percent of Expiring Leases Renewed(2) | Average Term in Years | Weighted Average Growth (Decline) in Effective Rents(3) | Estimated Tenant Improvement Cost per Square Foot(1) | Leasing Commissions per Square Foot(1) | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Office | 222,798 | 127,032 | 55.5% | 88.9% | 3.6 | 3.2 | (2.4%) | 1.9% | $ | 4.69 | $ | 4.66 | $ | 3.31 | $ | 2.48 | ||||||||
Healthcare | 34,996 | 11,456 | 100.0% | 89.9% | 3.6 | 5.3 | 8.8% | 9.7% | 9.96 | 11.85 | 1.10 | 2.48 | ||||||||||||
Industrial | 251,831 | 9,702 | 42.3% | 69.4% | 3.2 | 3.3 | 7.5% | (6.1%) | 0.32 | 0.52 | 0.48 | 0.52 | ||||||||||||
Retail | 78,257 | 55,987 | 46.0% | 68.4% | 3.7 | 3.3 | 10.0% | 0.4% | 1.88 | 0.25 | 0.05 | 0.26 | ||||||||||||
Total | 587,882 | 204,177 | 53.7% | 82.8% | 3.6 | 3.5 | 2.7% | 2.3% | $ | 2.76 | $ | 3.66 | $ | 1.53 | $ | 1.78 |
(1) | The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP. Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period |
(2) | Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. Expiring leases where the tenant retained occupancy on a month-to-month basis past the lease expiration date were considered to have been renewed. |
(3) | Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net. |
The decrease in the percent of expiring leases renewed in the nine months ended January 31, 2014 in our commercial retail segment when compared to the percent of expiring leases renewed for the same period in the prior year was due to the lease expiration of an anchor tenant at our Jamestown Buffalo Mall property which occupied 84,338 square feet. Although this lease expired on May 31, 2013, we were able to execute a lease with a new tenant for the entire 84,338 square feet with an effective date of August 1, 2013 that resulted in an increase in effective rent of 61.8% when compared to the rent paid by the prior tenant. Not taking into account the previously mentioned vacated space, the percent of expiring leases renewed for our retail segment for the nine months ended January 31, 2014 would have been 87.7%.
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)
Lease Expirations
Our ability to maintain and improve occupancy rates, and base rents, primarily depends upon our continuing ability to re-lease expiring space. The following table reflects the in-service portfolio lease expiration schedule of our consolidated commercial segments properties, including square footage and annualized base rent for expiring leases, as of January 31, 2014.
Fiscal Year of Lease Expiration | # of Leases | Square Footage of Expiring Leases(3) | Percentage of Total Commercial Segments Leased Square Footage | Annualized Base Rent of Expiring Leases at Expiration(2) | Percentage of Total Commercial Segments Annualized Base Rent | |||
2014(1) | 86 | 558,714 | 6.2% | $ | 6,658,548 | 5.4% | ||
2015 | 128 | 865,562 | 9.6% | 12,539,223 | 10.2% | |||
2016 | 120 | 1,218,840 | 13.5% | 17,053,103 | 13.8% | |||
2017 | 116 | 1,183,764 | 13.1% | 19,328,509 | 15.7% | |||
2018 | 81 | 680,492 | 7.6% | 11,732,667 | 9.5% | |||
2019 | 77 | 1,285,678 | 14.3% | 15,633,526 | 12.7% | |||
2020 | 22 | 461,874 | 5.1% | 4,779,779 | 3.9% | |||
2021 | 33 | 317,115 | 3.5% | 4,775,559 | 3.9% | |||
2022 | 41 | 1,313,347 | 14.6% | 16,106,939 | 13.0% | |||
2023 | 12 | 471,436 | 5.2% | 2,098,988 | 1.7% | |||
Thereafter | 56 | 662,280 | 7.3% | 12,582,661 | 10.2% | |||
Totals | 772 | 9,019,102 | 100.0% | $ | 123,289,502 | 100.0% |
(1) | Includes month-to-month leases. As of January 31, 2014 month-to-month leases accounted for 416,107 square feet. |
(2) | Annualized Base Rent is monthly scheduled rent as of January 1, 2014, multiplied by 12. |
(3) | Assuming that none of the tenants exercise renewal or termination options, and including leases renewed prior to expiration. Also excludes 98,174 square feet of income producing real estate operated within a Taxable REIT Subsidiary. |
Information on current market rents can be difficult to obtain, is highly subjective, and is often not directly comparable between properties. Accordingly, we believe the average effective rent realized on new leases and the increase or decrease in effective rent of lease renewals, as previously defined, are the most objective and meaningful performance measurements of our leasing activity.
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
10 LARGEST COMMERCIAL TENANTS – BASED ON ANNUALIZED BASE RENT(1)
as of January 31, 2014
Tenant | Number of Properties | Average Remaining Lease Term in Months | % of Total Commercial Segments' Minimum Rents | Aggregate Rentable Square Feet | % of Aggregate Occupied Square Feet |
Affiliates of Edgewood Vista | 32 | 76 | 13.9% | 1,481,647 | 16.3% |
St. Luke's Hospital of Duluth, Inc. | 6 | 26 | 3.7% | 198,775 | 2.2% |
Fairview Health Services | 9 | 42 | 3.6% | 247,019 | 2.7% |
Applied Underwriters | 3 | 37 | 2.4% | 141,724 | 1.6% |
HealthEast Care System | 1 | 61 | 1.6% | 114,316 | 1.3% |
Affiliates of Siemens USA (NYSE: SI) | 2 | 38 | 1.4% | 112,848 | 1.2% |
Microsoft (NASDAQ: MSFT) | 1 | 59 | 1.3% | 122,040 | 1.3% |
Arcadis Corporate Services, Inc. | 1 | 30 | 1.3% | 71,430 | 0.8% |
Nebraska Orthopaedic Hospital | 1 | 182 | 1.3% | 61,758 | 0.7% |
State of Idaho Department of Health and Welfare | 2 | 49 | 1.2% | 103,342 | 1.1% |
Total/Weighted Average | 56 | 31.7% | 2,654,899 | 29.2% |
(1) | See Definitions on page 30. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASE EXPIRATIONS
as of January 31, 2014
(dollars in thousands except average rental rates) | ||||||||
Fiscal Year | Number of Leases | Rentable Square Feet(1) | % of Rentable Square Feet | Annualized Rent(2) | Average Rental Rate | % of Annualized Base Rent | ||
Commercial Office | ||||||||
2014(3) | 38 | 141,817 | 4.0% | $ | 1,782 | $ | 12.56 | 3.3% |
2015 | 67 | 400,294 | 11.3% | 7,299 | 18.23 | 13.5% | ||
2016 | 53 | 553,632 | 15.7% | 8,674 | 15.67 | 16.0% | ||
2017 | 56 | 814,561 | 23.1% | 14,228 | 17.47 | 26.3% | ||
2018 | 39 | 454,638 | 12.9% | 6,857 | 15.08 | 12.7% | ||
2019 and thereafter | 84 | 1,165,857 | 33.0% | 15,258 | 13.09 | 28.2% | ||
337 | 3,530,799 | 100.0% | $ | 54,098 | $ | 15.32 | 100.0% | |
Commercial Healthcare | ||||||||
2014(4) | 27 | 376,645 | 11.4% | $ | 4,557 | $ | 12.10 | 8.4% |
2015 | 19 | 106,178 | 3.2% | 2,829 | 26.64 | 5.2% | ||
2016 | 27 | 272,348 | 8.3% | 5,272 | 19.36 | 9.7% | ||
2017 | 31 | 164,655 | 5.0% | 3,411 | 20.72 | 6.3% | ||
2018 | 23 | 185,262 | 5.6% | 4,357 | 23.52 | 8.0% | ||
2019 and thereafter | 107 | 2,195,880 | 66.5% | 33,760 | 15.37 | 62.4% | ||
234 | 3,300,968 | 100.0% | $ | 54,186 | $ | 16.42 | 100.0% | |
Commercial Industrial | ||||||||
2014(5) | 0 | 0 | 0.0% | $ | 0 | $ | 0.00 | 0.0% |
2015 | 1 | 30,000 | 2.8% | 105 | 3.50 | 2.1% | ||
2016 | 5 | 265,848 | 25.3% | 1,608 | 6.05 | 31.5% | ||
2017 | 1 | 69,600 | 6.7% | 357 | 5.12 | 7.0% | ||
2018 | 0 | 0 | 0.0% | 0 | 0.00 | 0.0% | ||
2019 and thereafter | 9 | 684,663 | 65.2% | 3,027 | 4.42 | 59.4% | ||
16 | 1,050,111 | 100.0% | $ | 5,097 | $ | 4.85 | 100.0% | |
Commercial Retail | ||||||||
2014(6) | 21 | 40,252 | 3.5% | $ | 319 | $ | 7.93 | 3.2% |
2015 | 41 | 329,090 | 28.9% | 2,306 | 7.01 | 23.3% | ||
2016 | 35 | 127,012 | 11.2% | 1,499 | 11.80 | 15.1% | ||
2017 | 28 | 134,948 | 11.9% | 1,333 | 9.88 | 13.5% | ||
2018 | 19 | 40,592 | 3.6% | 519 | 12.77 | 5.2% | ||
2019 and thereafter | 41 | 465,330 | 40.9% | 3,932 | 8.45 | 39.7% | ||
185 | 1,137,224 | 100.0% | $ | 9,908 | $ | 8.71 | 100.0% | |
Commercial Total | ||||||||
2014(7) | 86 | 558,714 | 6.2% | $ | 6,658 | $ | 11.92 | 5.4% |
2015 | 128 | 865,562 | 9.6% | 12,539 | 14.49 | 10.2% | ||
2016 | 120 | 1,218,840 | 13.5% | 17,053 | 13.99 | 13.8% | ||
2017 | 116 | 1,183,764 | 13.1% | 19,329 | 16.33 | 15.7% | ||
2018 | 81 | 680,492 | 7.6% | 11,733 | 17.24 | 9.5% | ||
2019 and thereafter | 241 | 4,511,730 | 50.0% | 55,977 | 12.41 | 45.4% | ||
772 | 9,019,102 | 100.0% | $ | 123,289 | $ | 13.67 | 100.0% |
(1) | Excludes 98,174 square feet of income producing real estate operated within a Taxable REIT Subsidiary. |
(2) | Annualized Base Rent is monthly scheduled rent as of January 1, 2014 (cash basis), multiplied by 12. |
(3) | Includes month-to-month leases. As of January 31, 2014 month-to-month leases accounted for 73,796 square feet. |
(4) | Includes month-to-month leases. As of January 31, 2014 month-to-month leases accounted for 319,380 square feet. |
(5) | The Commercial Industrial segment has no month-to-month leases in place as of January 31, 2014. |
(6) | Includes month-to-month leases. As of January 31, 2014 month-to-month leases accounted for 22,931 square feet. |
(7) | Includes month-to-month leases. As of January 31, 2014 month-to-month leases accounted for 416,107 square feet. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2014 ACQUISITION SUMMARY
as of January 31, 2014
(dollars in thousands)
Property | Location | Segment Type | Acquisition Date | Square Feet/Units | Leased Percentage At Acquisition | January 31, 2014 Leased Percentage | Acquisition Cost | ||||
Alps Park | Rapid City, SD | Multi-Family Residential | May 1, 2013 | 71 | 97.2% | 100.0% | $ | 6,200 | |||
Chateau II | Minot, ND | Unimproved Land | May 21, 2013 | n/a | n/a | n/a | 179 | ||||
Jamestown Unimproved | Jamestown, ND | Unimproved Land | August 9, 2013 | n/a | n/a | n/a | 700 | ||||
RED 20(1) | Minneapolis, MN | Unimproved Land | August 20, 2013 | n/a | n/a | n/a | 1,900 | ||||
Landing at Southgate(2) | Minot, ND | Multi-Family Residential | September 4, 2013 | 108 | 77.8% | 92.6% | 8,809 | ||||
Southpoint | Grand Forks, ND | Multi-Family Residential | September 5, 2013 | 96 | 100.0% | 96.9% | 10,600 | ||||
Pinecone Villas | Sartell, MN | Multi-Family Residential | October 31, 2013 | 24 | 83.3% | 87.5% | 2,800 | ||||
Legends at Heritage Place | Sartell, MN | Commercial Healthcare and Unimproved Land | October 31, 2013 | 98,174 | 100.0% | 100.0% | 12,400 | ||||
Cypress Court(3) | St. Cloud, MN | Multi-Family Residential | November 1, 2013 | 132 | 59.1% | 66.7% | 7,836 | ||||
River Ridge(4) | Bismarck, ND | Multi-Family Residential | December 2, 2103 | 146 | 81.5% | 81.5% | 14,703 | ||||
Spring Creek Fruitland | Fruitland, ID | Unimproved Land | January 21, 2014 | n/a | n/a | n/a | 335 | ||||
Total Square Feet | 98,174 | $ | 66,462 | ||||||||
Total Units | 577 |
(1) | The Company is an approximately 58.6% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity. |
(2) | Development property placed in service September 4, 2013. Additional costs paid in fiscal year 2013 totaled $6.3 million, for a total project cost at January 31, 2014 of $15.1 million. The project is owned by a joint venture entity in which the Company has an approximately 51% interest. |
(3) | Development property placed in service November 1, 2013. Additional costs paid in fiscal year 2013 totaled $5.8 million, for a total project cost at January 31, 2014 of $13.6 million. The project is owned by a joint venture entity in which the Company has an approximately 86% interest. |
(4) | Development property placed in service December 2, 2013. Additional costs paid in fiscal year 2013 totaled $10.1 million, including land acquired in fiscal year 2009, for a total project cost at January 31, 2014 of $24.8 million. |
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2014 DEVELOPMENT IN PROGESS SUMMARY
as of January 31, 2014
(dollars in thousands)
Property and Location | Planned Segment | Total Rentable Square Feet or # of Units | Percentage Leased or Committed | Anticipated Total Cost | Cost to Date | Anticipated Construction Completion | ||
Dakota Commons - Williston, ND | Multi-Family Residential | 44 units | 0% | $ | 10,736 | $ | 6,139 | 1st Quarter Fiscal 2015 |
Commons at Southgate - Minot, ND(1) | Multi-Family Residential | 233 units | 0% | 37,201 | 23,492 | 2nd Quarter Fiscal 2015 | ||
Renaissance Heights I - Williston, ND(2) | Multi-Family Residential | 288 units | 8.6% | 62,362 | 33,934 | 2nd Quarter Fiscal 2015 | ||
Arcata - Golden Valley, MN | Multi-Family Residential | 165 units | 0% | 33,151 | 9,250 | 2nd Quarter Fiscal 2015 | ||
RED 20 - Minneapolis, MN(3) | Multi-Family Residential and Commercial | 130 units and 10,625 sq ft | 0% | 29,462 | 9,333 | 2nd Quarter Fiscal 2015 | ||
Chateau II - Minot, ND(4) | Multi-Family Residential | 72 units | 0% | 14,711 | 1,741 | 4th Quarter Fiscal 2015 | ||
Cardinal Point - Grand Forks, ND | Multi-Family Residential | 251 units | 0% | 40,042 | 4,986 | 4th Quarter Fiscal 2015 | ||
Other | n/a | n/a | n/a | n/a | 211 | n/a | ||
$ | 227,665 | $ | 89,086 |
(1) | The Company is a 51% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity. |
(2) | The Company is a 70% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity. |
(3) | The Company is an approximately 58.6% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity. |
(4) | On December 5, 2013, this development project was destroyed by fire. |
Definitions
January 31, 2014
Adjusted funds from operations (AFFO) is calculated by subtracting from Funds from operations (FFO) (1) tenant improvements and leasing costs at stabilized properties, and recurring capital expenditures that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding (3) non-real estate depreciation and amortization. We may also subtract from FFO certain unusual non-recurring items that do not produce cash available for distribution to shareholders. Our calculation subtracts from FFO leasing commissions and tenant improvements at stabilized properties only, since we consider tenant improvement and leasing cost levels at non-stabilized properties unrepresentative of expected levels at stabilized properties. Previously-reported AFFO amounts are not revised for changes in the composition of the stabilized properties pool. AFFO is included herein because we consider it to be a measure of a REIT's ability to incur and service debt and to pay distributions to its shareholders. AFFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.
Annualized base rent (ABR) is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.
Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet plus the market value of shares outstanding at the end of the period.
Debt service coverage ratio is computed by dividing earnings before interest income and expense, depreciation, amortization and gain on sale of real estate by interest expense and principal amortization.
EBITDA is earnings before interest, taxes, depreciation and amortization. We consider EBITDA to be an appropriate supplemental performance measure because it eliminates depreciation, interest and the gain/loss from property dispositions, which permits investors to view income from operations without the effect of non-cash depreciation or the cost of debt; however, EBIDTA as we calculate it has not been adjusted for the effect of nonrecurring events such as asset impairment and gain/loss on involuntary conversion. EBITDA is a non-GAAP measure. EBITDA as calculated by us is not comparable to EBITDA reported by other REITs that do not define EBITDA exactly as we do.
Funds from operations (FFO) - The National Association of Real Estate Investment Trusts, Inc. (NAREIT) defines FFO as "net income (computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis." In addition, in October 2011 NAREIT clarified its computation of FFO to exclude impairment charges for all periods presented. FFO is a non-GAAP measure. We consider FFO, which is a standard supplemental measure for equity real estate investment trusts, helpful to investors because it facilitates an understanding of the operating performance of properties without giving effect to impairment write-downs and to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead historically rise or fall with market conditions, we believe that FFO provides investors and management with a more accurate indication of our financial and operating results.
Net Operating Income (NOI) is total real estate revenues and gain on involuntary conversion less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance and property management expenses). We believe that NOI is an important supplemental measure of operating performance for a REIT's operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders or cash flow from operating activities as a measure of financial performance.
Payout ratio (FFO per share and unit basis) - The ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual FFO per share and unit.
Ratio of earnings to fixed charges - The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Fixed charges consist of mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest.
Ratio of earnings to combined fixed charges and preferred distributions - The ratio of earnings to combined fixed charges and preferred distributions is computed by dividing earnings by combined fixed charges and preferred distributions. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Combined fixed charges and preferred distributions consist of fixed charges (mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest) and preferred distributions.
Recurring capital expenditures are expenditures (excluding capital expenditures recoverable from tenants and capital expenditures at properties sold during the period) made on a regular or recurring basis to maintain a property's competitive position within its market, generally with a depreciable life of 5 to 12 years, but excluding (a) capital expenditures made in the year of acquisition and in subsequent periods until the property is stabilized (i.e., excluding capital expenditures on non-stabilized properties), (b) improvements associated with the expansion or re-development of a building, (c) renovations to a building which change the underlying classification of the building (for example, from industrial to office or Class C office to Class A office) or (d) capital improvements that represent the addition of something new to a property, rather than the replacement of an existing item.
Scheduled rent revenue is the total possible revenue from all leasable units and square footage, with occupied space valued at contract rates pursuant to leases and vacant units or square footage at market rates.
Stabilized properties are properties owned or in service for the entirety of the periods being compared, and, in the case of development or re-development properties, which have achieved a target level of occupancy of 90% for multi-family residential properties and 85% for commercial office, healthcare, industrial and retail properties.
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