Centerspace 10K 2003 Annual report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the fiscal year ended April 30, 2003

Commission File Number 000-14851

INVESTORS REAL ESTATE TRUST

(Exact name of Registrant as specified in its charter)


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

12 South Main Street
Minot, North Dakota 58701
(Address of principal executive offices)

701-837-4738
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None

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


*Title of each class:*		*Name of each exchange on which registered:*
Shares of Beneficial Interest (no par value)		The NASDAQ National Market

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.þ Yeso No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 126-2).þ Yeso No

The aggregate market value of the Registrant’s outstanding capital shares of beneficial interest held by non-affiliates was $312,262,733, based on the last reported sale price on the NASDAQ National Market on October 31, 2002.

The number of shares of beneficial interest outstanding as of June 30, 2003, was 36,215,919.

References in this Annual Report or Form 10-K to the “Company,” “IRET,” “we,” “us,” or “our” include consolidated subsidiaries, unless the context indicates otherwise.

Documents Incorporated by Reference: Portions of IRET’s definitive Proxy Statement for its 2003 Annual Meeting of Shareholders are incorporated by reference into Part III (Items 10, 11, 12 and 13) hereof.

TABLE OF CONTENTS


PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for the Registrant’s Common Stock and Related Security holder Matters
	Item 6. Selected Financial Data for Fiscal Years Ended April 30, Including Discontinued Operations.
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7a. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accounting and Financial Disclosure
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
	Item 14. Internal Controls and Procedures
PART IV
	Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Exhibit Index
Signatures
Certifications
INDEPENDENT AUDITOR’S REPORT
	CONSOLIDATED BALANCE SHEETS
	CONSOLIDATED STATEMENTS OF OPERATIONS
	CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
	CONSOLIDATED STATEMENTS OF CASH FLOWS
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
	INDEPENDENT AUDITOR’S REPORT ON ADDITIONAL INFORMATION
	REAL ESTATE AND ACCUMULATED DEPRECIATION
	INVESTMENTS IN MORTGAGE LOANS ON REAL ESTATE
	SELECTED FINANCIAL DATA
	GAIN(LOSS) FROM PROPERTY DISPOSITIONS
	MORTGAGE LOANS PAYABLE
	PROPERTY ACQUISITIONS
	QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS
EX-21.(i) Subsidiaries of the Company
EX-99.(i) Section 906 Certification of CEO
EX-99.(ii) Section 906 Certification of CFO

INVESTORS REAL ESTATE TRUST

INDEX


		PAGE
PART I
	1. Business		2
	2. Properties		30
	3. Legal Proceedings		43
	4. Submission of Matters to a Vote of Security Holders		43
PART II
	5. Market for Registrant’s Common Stock and Related Security Holder Matters		43
	6. Selected Financial Data for Fiscal Years Ended April 30, Including Discontinued Operations		45
	7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		46
	7a. Quantitative and Qualitative Disclosures about Market Risk		71
	8. Financial Statements and Supplementary Data		72
	9. Changes in and Disagreements on Accounting and Financial Disclosure		72
PART III
	10. Directors and Executive Officers of the Registrant		73
	11. Executive Compensation		73
	12. Security Ownership of Certain Beneficial Owners and Management		73
	13. Certain Relationships and Related Transactions		73
PART IV
	14. Internal Controls and Procedures		74
	15. Exhibits, Financial Statement Schedules and Reports on Form 8-K		74
	Exhibit Index		75
	Signatures		76
	Certifications		78
	Report of Independent Certified Public Accountants		F-1 - F-58

Special Note Regarding Forward Looking Statements

Certain statements included in this Annual Report on Form 10-K and the documents incorporated into this document by reference are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements include statements about our intention to invest in properties that we believe will increase in income and value; our belief that the real estate markets in which we invest will continue to perform well; our belief that we have the liquidity and capital resources necessary to meet our known obligations and to make additional real estate acquisitions and capital improvements when appropriate to enhance long term growth; and other statements preceded by, followed by or otherwise including words such as “believe,” “expect,” “intend,” “project,” “anticipate,” “potential,” “may,” “will,” “designed,” “estimate,” “should,” “continue” and other similar expressions. These statements indicate that we have used assumptions that are subject to a number of risks and uncertainties that could cause our actual results or performance to differ materially from those projected.

Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include:

	•		the economic health of the markets in which we hold investments, specifically the states of Minnesota and North Dakota, or other markets in which we may invest in the future;

	•		the economic health of our commercial tenants;

	•		our ability to identify and secure additional multi-family residential and commercial properties that meet our criteria for investment;

	•		the level and volatility of prevailing market interest rates and the pricing of our shares of beneficial interest;

	•		financing risks, such as the inability to obtain debt or equity financing on favorable terms, or at all;

	•		timely completion and lease-up of properties under construction;

	•		compliance with applicable laws, including those concerning the environment and access by persons with disabilities; and

	•		our inability to secure casualty insurance for losses caused by terrorist acts.

In light of these uncertainties, the events anticipated by our forward-looking statements might not occur. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause our actual results to differ materially from those contemplated in any forward-looking statements included in this Annual Report on Form 10-K should not be construed as exhaustive.

PART I

Item 1. Business

Internet Website

Our internet address is www.iret.com. We make available, free of charge, through the “SEC filings” tab under the Investor Relations section of our internet website, our Annual Report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such forms are filed with or furnished to the SEC. Information on our internet website does not constitute part of this Annual Report on Form 10-K.

Overview

We are a self-administered, externally managed equity Real Estate Investment Trust or REIT and our business consists of owning and operating income-producing real properties. We are structured as an Umbrella Partnership Real Estate Investment Trust or UPREIT and we conduct our day-to-day business operations though our operating partnership, IRET Properties, a North Dakota Limited Partnership. We have fundamental strategies of focusing our real estate investments in the upper Midwest, primarily in Minnesota, North Dakota, South Dakota, Montana and Nebraska, and of diversifying our investments between multi-family residential and commercial properties. For the twelve months ended April 30, 2003, our real estate investments in the states listed above accounted for 82.5% of our total gross revenue.

Our objective is to increase shareholder value by employing a disciplined investment strategy. This strategy is focused on growing assets in desired geographical markets, achieving diversification by property type and location, adhering to targeted returns by acquiring properties in an attempt to create value for our investors. We have increased our cash distributions every year since our inception 33 years ago and every quarter since 1988.

We seek to diversify our investments between multi-family residential and commercial properties. As of April 30, 2003, our real estate portfolio consisted of:

•

64 multi-family residential properties, containing 8,227 apartment units and having a total investment (less accumulated depreciation) of $348.3 million; and

•

125 commercial properties, containing 6.1 million square feet of leasable space and having a total investment (less accumulated depreciation) of $495.8 million.

Typically, we attempt to concentrate our multi-family residential properties in communities with populations of approximately 35,000 to 500,000 and we attempt to concentrate our commercial holdings in metropolitan areas with populations of approximately 100,000 to 3.0 million. Our multi-family residential properties include apartment buildings, complexes and communities. Our commercial properties include office buildings, warehouse and industrial facilities, medical office and health care facilities, and retail stores and centers. As of April 30, 2003, no single tenant accounted for more than 10.0% of our total rental revenues. At April 30, 2003, the economic occupancy rates for our multi-family residential properties and our commercial properties were 91.2% and 95.4% respectively. Our average economic occupancy rates for those properties we have owned for at least the past 12 months or what we label as stabilized properties for the twelve-month period ended April 30, 2003, were 92.2% for multi-family residential properties and 95.3% for commercial properties. Economic occupancy rates are calculated by dividing the rent collected by the rent scheduled.

We generally use available cash or short-term floating rate debt to acquire real estate. We then replace such cash or short-term floating rate debt with fixed-rate secured debt, typically in an amount equal to 65.0% to 70.0% of the acquisition cost. In appropriate circumstances, we also may acquire one or more properties in exchange for limited partnership units of IRET Properties, which are convertible, after the expiration of a minimum holding period of one-year, into cash or, at our sole discretion, into our Shares of Beneficial Interest (“Shares”) on a one-to-one basis. Subject to our continued ability to raise equity capital and exchange limited partnership units, we anticipate acquiring $100.0 million to $200.0 million of real estate assets on an annual basis.

We generally contract with locally based third-party management companies to handle all onsite management duties necessary for the proper operation of our properties. Generally, all of our management contracts provide for compensation ranging from 2.5% to 5.0% of gross rent collections and, in all but two contracts, we may terminate these contracts in 60 days or less. The two management contracts that may not be terminated in 60 days or less may be terminated if the manager fails to meet certain financial performance goals. The use of locally-based management companies allows us to enjoy the benefits of local knowledge of the applicable real estate market, while avoiding the cost and difficulty associated with maintaining management personnel in every city in which we operate.

Investments Since May 1, 2002

During the past fiscal year we acquired 62 commercial properties consisting of 2.4 million leasable square feet for $163.5 million and invested $7.1 million in expanding our Southdale Medical Center. We also acquired two residential apartment communities containing 132 units for $3.9 million. In addition, eight undeveloped or vacant properties were acquired for $2.8 million. In order to complete these acquisitions, we used $22.2 million of our own cash,

issued 894,085 limited partnership units of IRET Properties with a value of $8.9 million, issued 7,350,918 Shares with a value net of issue costs of $61.3 million, borrowed or assumed debt of $83.4 million from various lenders, and had a minority partner investment of equity in the amount of $1.5 million. The majority of the commercial properties we acquired during the past year were part of our merger with the T.F. James Company located in Minneapolis, Minnesota. As a result of the merger, we opened an office in Minneapolis, which is located at 21500 Highway 7, Greenwood, Minnesota.

Other Developments

Property dispositions.During the past fiscal year, we sold three commercial properties for a total of $6.6 million, four residential apartment communities for a total $4.6 million, and land for $102,000, resulting in a total gain of $1.6 million on gross sale proceeds of $11.2 million for fiscal 2003.

Investment certificates.In April 2002, we discontinued the issuance of investment certificates. All outstanding certificates will be redeemed as they mature. During the past year, we redeemed $16.2 million of investment certificates. The amount of investment certificates to be redeemed in fiscal 2004 and succeeding years is as follows:


Year Ending April 30,	Principal Balance

2004	$	1,908,958
2005		2,305,138
2006		2,271,037
2007		2,407,958
2008		141,605

	$	9,034,696

Third Restated Declaration of Trust.At our Annual Meeting of Shareholders to be held on September 23, 2003, our shareholders may approve Articles of Amendment and a Third Restated Declaration of Trust. Our Board of Trustees has already unanimously approved the Third Restated Declaration of Trust. If approved, the Third Restated Declaration of Trust will, among other things, remove all references to a “sponsor” or “advisor;” simplify our corporate governance by removing provisions regarding our investment policies, borrowing and other limitations and compensation and fees; modifying provisions regarding transfer restrictions and ownership limitations of Shares; and modifying provisions regarding our capital structure by allowing our Board of Trustees to establish by resolution more than one class or series of Shares and to fix the relative rights and preferences of such different class or series of shares without the prior approval of our shareholders. For a more complete summary of the material differences between our Second Restated Declaration of Trust and our proposed Third Restated Declaration of Trust , please see our definitive Proxy Statement for our 2003 Annual Meeting of Shareholders to be filed with the SEC on or about August 11, 2003.

Our Executive Officers

Set forth below are the names, ages, titles and biographies of each of our executive officers as of July 15, 2003.


Name	Age		Title

Thomas A. Wentz, Sr.		68	President and Chief Executive Officer
Charles Wm. James		55	Senior Vice President
Timothy P. Mihalick		44	Senior Vice President and Chief Operating Officer
Thomas A. Wentz, Jr.		37	Senior Vice President & General Counsel
Diane K. Bryantt		39	Senior Vice President and Chief Financial Officer
Michael A. Bosh		32	Secretary and Associate General Counsel

Thomas A. Wentz, Sr.has been associated with us since our formation on July 31, 1970. Mr. Wentz, Sr. was a member of our Board of Trustees from 1970 to 1998, Secretary from 1970 to 1987, and Vice President from 1987 to July 2000. Mr. Wentz, Sr. has served as our President and Chief Executive Officer since July 2000. Previously, from 1985 to 1991, Mr. Wentz, Sr. was a Vice President of our advisor, Odell-Wentz & Associates, L.L.C., and, until August 1, 1998, was a partner in the law firm of Pringle & Herigstad, P.C.

Charles Wm. Jameswas appointed as a Senior Vice President in February, 2003. Prior to becoming a Senior Vice President, Mr. James served in several officer positions from 1976 to February 2003, including the officer of President, with the T.F. James Company, an Iowa corporation that was merged into IRET, Inc. in February 2003. Mr. James is currently a managing member of Thomas F. James Properties, L.L.C., an Arkansas commercial development company; a partner of Peak Properties Development, a Montana commercial development partnership; a partner of James Family Properties, a Minnesota commercial development partnership; and a limited partner of Thomas F. James Realty Limited Partnership, L.L.L.P., a commercial property management company;

Timothy P. Mihalickjoined us as a financial officer in May 1981, after graduating from Minot State University. He has served in various capacities with us over the years and was named Vice President in 1992. Mr. Mihalick has served as the Chief Operating Officer since 1997, as a Senior Vice President since 2002, and as a member of our Board of Trustees since 1999.

Thomas A. Wentz, Jr.joined us as General Counsel and Vice President in January 2000. He has served as a Senior Vice President since 2002 and as a member of our Board of Trustees since 1996. Prior to 2000, Mr. Wentz, Jr. was a shareholder in the law firm of Pringle & Herigstad, P.C. from 1992 to 1999. Mr. Wentz, Jr. is a member of the North Dakota Bar Association and a Director of SRT Communications, Inc. Mr. Wentz, Jr. is the son of Mr. Wentz, Sr.

Diane K. Bryanttjoined us in June 1996 and served as our Controller and Corporate Secretary before being appointed to the positions of Senior Vice President and Chief Financial Officer in 2002. Prior to joining us, Ms. Bryantt was employed by First American Bank, Minot, North Dakota.

Michael A. Boshjoined us as Associate General Counsel and Secretary in September 2002. Prior to 2002, Mr. Bosh was a shareholder in the law firm of Pringle & Herigstad, P.C. Mr. Bosh graduated from Jamestown College in 1992 and from Washington & Lee University School of Law in 1995. Mr. Bosh is a member of the American Bar Association and the North Dakota Bar Association.

Employees

As of April 30, 2003, we had 28 full time employees.

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, owners, as well as tenants and operators, of real estate, may be required to investigate and clean up hazardous substances released at a property, and may be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred in connection with any contamination. In addition, some environmental laws create a lien on a contaminated site in favor of the government for damages and costs it incurs in connection with the contamination. We have done an environmental review for all properties that we own. Based upon that review we do not believe that any of these properties are subject to any material environmental contamination. However, no assurances can be given that:

	•		a prior owner, operator or occupant of the properties we own or the properties we intend to acquire did not create a material environmental condition not known to us, which might have been revealed by more in-depth study of the properties; and

	•		future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations) will not result in the imposition of environmental liability upon us.

Structure

We were organized as a REIT under the laws of the State of North Dakota on July 31, 1970. Our Second Restated Declaration of Trust provides that we will continue in existence until the expiration of 20 years after the death of the last survivor of the seven original members of our Board of Trustees, unless sooner terminated or extended by a vote of shareholders holding a majority of the issued and outstanding Shares. Five of the seven original members of our Board of Trustees are still living, the youngest being 68 years of age. Our existence may be extended indefinitely by an action of the members of our Board of Trustees, which is approved by the vote of shareholders holding 50.0% or more of the outstanding Shares.

Since our formation, we have operated as a REIT under Sections 856-858 of the Internal Revenue Code, as amended (the “Code”), and since February 1, 1997, we have been structured as an UPREIT. Since restructuring as an UPREIT, we have conducted all of our daily business operations through IRET Properties. IRET Properties is organized under the laws of the State of North Dakota pursuant to an Agreement of Limited Partnership dated January 31, 1997. IRET Properties is principally engaged in acquiring, owning, operating and leasing multi-family residential and commercial real estate. The sole general partner of IRET Properties is IRET, Inc., a North Dakota corporation and our wholly-owned subsidiary. All of our assets (except for qualified REIT subsidiaries) and liabilities were contributed to IRET Properties, through IRET, Inc., in exchange for the sole general partnership interest in IRET Properties, which is held by IRET, Inc. As of April 30, 2003, IRET, Inc. owned a 78.0% interest in IRET Properties. The remaining ownership of IRET Properties is held by individual limited partners, none of who own more than 10.0% of the outstanding limited partnership units.

Competition

Investing in and operating real estate is a very competitive business. We compete against other REITs, financial institutions, individuals and public and private companies who are actively engaged in this business. We do not believe we have a dominant position in any of the geographic markets in which we operate but some of our competitors are dominant in selected markets. Many of our competitors have greater financial and management resources than we have. We believe, however, that the geographic diversity of our investments, the experience and abilities of our management, the quality of our assets and the financial strength of many of our commercial tenants affords us some competitive advantages that have in the past and will in the future allow us to operate our business successfully despite the competitive nature of our business. During the past year, we witnessed an unprecedented demand for quality investment real estate. This demand caused an escalation in price for all types of real estate. As a result, we were unable to purchase properties that will generate rates of return similar to those we acquired in previous years. We expect that the levels of return to be achieved through the investment in existing and stabilized real estate will remain lower than in previous periods as long as interest rates remain at historically low levels.

Investment Strategy and Policies

Our investment strategy is to invest in multi-family residential properties and certain commercial properties, such as warehouses, retirement homes, manufacturing plants, offices and retail properties, that are leased to single or multiple tenants, usually for five years or longer, and are located throughout the upper Midwest. We operate mainly within the states of North Dakota and Minnesota, although we do have real estate investments in South Dakota, Montana, Nebraska, Colorado, Georgia, Idaho, Iowa, Kansas, Michigan, Washington, Texas and Wisconsin. We generally seek to leverage all of the property that we acquire so that the debt on such property is approximately 65.0% to 70.0% of the property’s value.

In order to implement our investment strategy we have certain investment policies. Our significant investment policies are as follows:

	•		Investments in the securities of, or interests in, persons primarily engaged in real estate activities and other securities.While we are permitted to invest in the securities of other entities engaged in the ownership and operation of real estate, as well as other securities, we currently have no plans to make any investments in other securities. Over the past three years, we have purchased United States guaranteed obligations and common shares of five other publicly traded REITs. These purchases were made solely for the purpose of holding cash until future real estate investments were identified.

			In no event were the purchases of the shares of publicly traded REITs made for the purpose of exercising control over such issuer. As of the date of this report, we have no investments in the securities of, or interests in, persons primarily engaged in real estate, except we do own interests in a number of limited partnerships and companies that were organized for the sole purpose of conducting our real estate business activities.

			Any policy, as it relates to investments in other securities, may be changed by a majority of the members of our Board of Trustees at anytime, or from time to time, without notice to, or a vote of, our shareholders.

	•		Investments in real estate or interests in real estate.We currently own multi-family residential properties and/or commercial properties in 13 states. We may invest in real estate, or interests in real estate, that is located anywhere in the United States, however, we currently plan to focus our investments in those states in which we already have property, with specific concentration in Minnesota, North Dakota, Nebraska, Montana, and South Dakota. Similarly, we may invest in any type of real estate or interest in real estate including, but not limited to, office buildings, apartment buildings, shopping centers, industrial and commercial properties, special purpose buildings and undeveloped acreage. We may not, however, invest more than 10.0% of our total assets in unimproved real estate, excluding property being developed or property where development will be commenced within one year.

			The operation of our real estate, as it pertains to the day-to-day management, is delegated to third-party professional real estate management companies. All major operating decisions concerning the operation of our real estate are, however, made by our Board of Trustees. The method of financing the purchase of real estate investments is primarily from borrowed funds and from the sale of Shares.

			We intend to distribute all of the net income generated from rental income and interest income to our shareholders and limited partners in quarterly cash distributions in January, April, July, and October of each year.

			There is no limitation on the number or amount of mortgages that may be placed on any one piece of property, unless we seek to borrow an amount in excess of 300% of our total net assets, in which case our Second Restated Declaration of Trust requires that such amount be approved by a majority of the independent members of our Board of Trustees and disclosed to our shareholders in the next quarterly report, along with justification for such excess. In addition to the 300% limitation on total indebtedness, it is our policy that we will not exceed a 65.0% to 70.0% debt level on our real estate assets. As of April 30, 2003, our ratio of total real estate mortgages to total real estate assets was 58.6% while our ratio of total indebtedness as compared to our net assets was 186.3%. This policy may be changed at anytime, or from time to time, without notice to, or approval of, our shareholders.

			It is not our policy to acquire assets primarily for capital gain through sale in the short term. Rather, it is our policy to acquire assets with an intention to hold such assets for at least a 10-year period. During the holding period, it is our policy to seek current income and capital appreciation through an increase in the price of our Shares as a result of the increase in value of the underlying real estate portfolio, as well as increased revenue as a result of higher rents.

			Any policy as it relates to investments in real estate or interests in real estate may be changed by our Board of Trustees at anytime without notice to or a vote of our shareholders.

	•		Investments in real estate mortgages.While not our primary business focus, we do make loans to others that are secured by mortgages, liens or deeds of trust covering real estate. Over the last three years, we have made a number of mortgage loans. We have no restrictions on the type of property that may be used as collateral for a mortgage loan; provided, however, that except for loans insured or guaranteed by a government or a governmental agency, we may not invest in or make a mortgage loan unless an appraisal is obtained concerning the value of the underlying property.

			Unless otherwise approved by our Board of Trustees, it is our policy that we will not invest in mortgage loans on any one property if in the aggregate the total indebtedness on the property, including our mortgage, exceeds 85% of the property’s appraised value.

			We can invest in second mortgages without notice to, or the approval of, our shareholders. As of April 30, 2003, we only had five second mortgages with a principal balance net of allowance of $1.2 million. We do not currently plan to invest in any other second mortgages.

			Our policies relating to mortgage loans, including second mortgages, may be changed by our Board of Trustees at any time, or from time to time, without notice to, or a vote of, our shareholders.

Total Real Estate Rental Revenue

As of April 30, 2003, our real estate portfolio consisted of 43.4% multi-family residential properties, based on the dollar amount of our original investment plus capital improvements through April 30, 2003, and 56.6% commercial properties, based on the dollar amount of our original investment plus capital improvements through April 30, 2003. The dollar amounts and percentages of total real estate rental revenue by property group for each of the three most recent fiscal years ended April 30, were as follows:


	Apartment					Commercial
	Gross Revenue		%			Gross Revenue		%			Total Revenue

2003	$	59,734,691		50.2	%	$	59,166,328		49.8	%	$	118,901,019
2002		58,429,394		64.4	%		32,298,473		35.6	%		90,727,867
2001		55,244,032		74.7	%		18,672,410		25.3	%		73,916,442

Increase of Commercial Property Investments

Historically, the assets in our portfolio consisted predominantly of multi-family residential properties, as compared to commercial properties. More recently, our investment activities have caused this balance to shift so that the percentage of commercial properties held in our portfolio has increased significantly. Specifically, approximately 90.4% of our property acquisitions made during the past 24 months have been commercial properties. This change is predominantly due to the greater availability of commercial properties on terms that meet our financial and strategic objectives. Based on current market conditions, we anticipate that the percentage of commercial properties that we may acquire will continue to significantly exceed the number of multi-family residential properties that we may acquire during fiscal 2004. This may not, however, be a long-term trend as in future periods we may purchase a greater percentage of multi-family residential properties depending on market conditions.

Major Tenants

No single tenant accounted for more than 10.0% of revenues during the past fiscal year. As of April 30, 2003, our ten largest commercial tenants, as a percentage of total real estate rental income, were:

% of

Tenant Name

Stock Symbol

Exchange

Total

Edgewood Living Communities, Inc.

N/A

2.7

Healtheast - Woodbury & Maplewood

N/A

1.6

Microsoft - Great Plains

MSFT

NASDAQ

1.6

Northland Insurance Company

N/A

1.5

Smurfit - Stone Container Corp.

SSCC

NASDAQ

1.4

Alliant Techsystems, Inc.

ATK

NYSE

1.0

Wilsons The Leather Experts Inc.

WLSN

NASDAQ

1.0

Miracle-Ear, Inc.

N/A

1.9

Agere Systems, Inc.

AGRA

NYSE

1.8

Barnes & Noble, Inc.

BKS

NASDAQ

1.7

Economic Occupancy Rates

Economic occupancy rates are shown below for each property group in each of the three most recent fiscal years ending April 30. Economic occupancy rates are calculated by dividing the rent collected by the rent scheduled. In the case of multi-family residential properties, lease arrangements with individual tenants vary from month-to-month to one-year leases, with the normal term being six months. Leases on commercial properties vary from month-to-month to 20 years.


	2003			2002			2001

Multi-Family Residential Occupancy		91.2	%		94.4	%		94.0	%
Commercial Occupancy		95.4	%		97.9	%		97.2	%

Material Lease Terms

Multi-family residential.Our typical residential lease terms are as follows:

	(i)		Terms of three to twelve months.

	(ii)		Month-to-month occupancy may be, but is generally not, permitted.

	(iii)		Water, sewer and garbage are included in the monthly rent, and all other utilities and services are the direct responsibility of the tenant.

	(iv)		Tenants are not required to carry renter’s insurance.

Commercial.Our typical commercial lease terms are as follows:

	(i)		Terms from one to 20 years, plus guaranteed renewal terms.

	(ii)		Renewal term rents are generally equal to current market rents at the time of renewal, and in no event are less than the most recent rental rate.

	(iii)		Tenant pays all expenses associated with taxes, insurance, repairs, daily operations and maintenance.

	(iv)		Rent is payable in fixed monthly amounts (less than five percent of rental income is based on our commercial tenant’s sales).

	(v)		Tenants are prohibited from assigning their lease or subleasing without our written approval.

	(vi)		We may sell the property and assign the lease at any time without the approval of the tenant.

	(vii)		We rarely grant tenants an option to purchase the property.

Certain Lending Requirements

In certain instances, in connection with the acquisition of investment properties, the lender financing such properties may require, as a condition of the loan, that the properties be owned by a “single asset entity.” Accordingly, we have organized two wholly-owned subsidiary corporations, and IRET Properties has organized several limited partnerships, for the purpose of holding title in an entity that complies with such lending conditions. All financial statements of these subsidiaries are consolidated into our financial statements.

Selection, Management and Custody of Our Real Estate Assets

The day-to-day management of our real estate assets is handled by third-party professional real estate management companies. Day-to-day management activities include: the negotiation of potential leases, the preparation of proposed operating budgets, and the supervision of routine maintenance and capital improvements that have been authorized by us. All activities relating to purchase, sale, insurance coverage, capital improvements, approval of commercial leases, annual operating budgets and major renovations are made exclusively by our employees and are then implemented by the third-party property management companies.

As of April 30, 2003, we had property management contracts with the following companies:


Firm		Address

Bayport Properties		300 S. Hwy. 169, Suite 120, Minneapolis, MN 55426

Builder’s Management & Investment Co.		1445 1st Avenue North, Fargo, ND 58102

Coast Management		PO Box 2066, Boise, ID 83701-2066; 2610 Wetmore Avenue, Everett, WA 98206

Coldwell Banker First Realty		PO Box 9379, Fargo, ND 58106-9379

ConAm		2301 Ohio Dr., Suite 285, Plano, TX 75093; 10800 E. Bethany Dr., Aurora, CO 80014

Dakota Commercial		1197 B S. Columbia Rd., Grand Forks, ND 58201

Fischer & Erwin Property Management		730 Main Street, Suite 204, Billings, MT 59107

Hoyt Properties, Inc.		5700 Smetana Dr., Minnetonka, MN 55343

Investors Management and Marketing, Inc.		PO Box 2064, Minot, ND 58702-2064

Illies Nohave Heinen Property Mgmt		300 E. Germain St., St. Cloud, MN 56304

Kahler Property Management		2020 W. Omaha, Rapid City, SD 57702

Opus Northwest Management, L.L.C.		10350 Bren Rd. W., Minnetonka, MN 55343; PO Box 59110, Minneapolis, MN 55459-0110

Remada Companies		12400 Whitewater Dr, Suite 140, Minnetonka, MN 55343

United Properties		3500 West 80th Street, Minneapolis, MN 55431

Weis Management		2227 7th St. NW, Rochester, MN 55901

Generally, all of our management contracts provide for compensation ranging from 2.5% to 5.0% of gross rent collections and, in all but two contracts, we may terminate these contracts in 60 days or less. The two management contracts that may not be terminated in 60 days or less may be terminated if the manager fails to meet certain financial performance goals. It is our understanding that each of the property management companies listed above are properly licensed, insured and bonded to the extent required for their particular duties.

With the exception of Hoyt Properties, Inc., none of the firms engaged to provide property management services are affiliated with us, our officers or members of our Board of Trustees. Hoyt Properties, Inc. is owned 100.0% by Steven B. Hoyt, a member of our Board of Trustees, and his wife. Hoyt Properties, Inc. manages the commercial buildings that we acquired from him pursuant to written management contracts.

With respect to multi-tenant commercial properties, we rely almost exclusively on third-party brokers to locate potential tenants. As compensation, brokers may receive a commission of up to 7.0% of the total rent to be paid over the term of the lease. This commission rate is the industry standard, which we believe is commercially reasonable.

Policies With Respect to Certain of Our Activities

Our current policies as they pertain to certain of our activities are described below.

	•		Cash distributions to shareholders and holders of limited partnership units.We intend to continue our policy of making cash distributions to our shareholders and the holders of limited partnership units of approximately 65.0% to 80.0% of our funds from operations and to use the remaining funds for capital improvements or the purchase of additional properties. This policy may be changed at any time by our Board of Trustees without notice to, or approval of, our shareholders.

	•		Issuing senior securities.We have issued and outstanding investment certificates, which are issued for a definite term and annual interest rate. In the event of our dissolution, the investment certificates would be paid in preference to our Shares. In April 2002, we discontinued the issuance of investment certificates.

	•		Borrowing money.We rely on borrowed funds in pursuing our investment objectives and goals. It is our policy to seek to borrow up to 65.0% to 70.0% of the cost of all new real estate acquired or developed. This policy concerning borrowed funds is vested solely with our Board of Trustees and can be changed by our Board of Trustees at any time, or from time to time, without notice to, or a vote of, our shareholders. Such policy is subject, however, to the limitation in our Second Restated Declaration of Trust, which provides that unless justified and approved by a majority of the independent members of our Board of Trustees and disclosed to our shareholders in the next quarterly report along with justification for such excess, we may not borrow more than 300% of the value of our total portfolio of assets. Our Second Restated

			Declaration of Trust does not impose any limitation on the amount that we may borrow against any one particular property.

			For the three most recent fiscal years ended April 30, we have borrowed funds on new property acquisitions and developments as follows:


	2003			2002			2001

Cost of property acquired or developed	$	177,206,783		$	143,280,342		$	143,042,292
Net increase in borrowings	$	79,828,297		$	90,611,975		$	93,794,047
Borrowing as a percentage of cost		45.0	%		63.2	%		65.6	%

	•		Underwriting securities of other issuers.We have not, for the past three years, engaged in, and we are not currently engaging in, the underwriting of securities of other issuers. Our Second Restated Declaration of Trust does not impose any limitation on our ability to underwrite the securities of other issuers. Any decision to do so is vested solely in our Board of Trustees and may be changed at any time, or from time to time, without notice to, or a vote of, our shareholders.

	•		Engaging in the purchase and sale or turnover of investments.We have not, for the past three years, engaged in, and we are not currently engaging in the purchase and sale or turnover of investments. It is our policy to acquire or develop real estate that will be held for a period of at least ten years. Even though we have not engaged, and we are not currently engaging in this practice, our Second Restated Declaration of Trust does not impose any limitation on our ability to do so. Any decision to do so is vested solely in our Board of Trustees and may be changed at any time, or from time to time, without notice to, or a vote of, our shareholders.

	•		Offering securities in exchange for property.Our organizational structure allows us to offer limited partnership units of IRET Properties in exchange for real estate, and we plan to do such on a continuous and ongoing basis. The limited partnership units are convertible into Shares on a one-for-one basis after a minimum one-year holding period. All limited partnership units receive the same cash distributions as those paid on Shares. Limited partners are not entitled to vote on any matters affecting us until they convert their limited partnership units to Shares. All exchanges of limited partnership units to Shares are subject to approval by our Board of Trustees, on such terms and conditions that are deemed reasonable by our Board.

			Our Second Restated Declaration of Trust does not contain any restrictions on our ability to offer the limited partnership units of IRET Properties in exchange for property. As a result, any decision to do so is vested solely in our Board of Trustees. This policy may be changed at any time, or from time to time, without notice to, or a vote of, our shareholders. For the three most recent fiscal years ending April 30, we have issued the following limited partnership units of IRET Properties in exchange for properties:


	2003		2002		2001

Limited partnership units issued		894,085		2,269,643		2,968,030
Dollar value	$	8,860,420	$	20,138,748	$	25,344,059

	•		Acquiring or repurchasing Shares.As a REIT, it is our intention to only invest in real estate assets. Our Second Restated Declaration of Trust does not prohibit the acquisition or repurchase of Shares or other securities so long as such activity does not prohibit us from operating as a REIT under the Code. Any policy regarding the acquisition or repurchase of Shares or other securities is vested solely in our Board of Trustees and may be changed at any time, or from time to time, without notice to, or a vote of, our shareholders.

			During the past three years, we have repurchased Shares under the terms of our distribution reinvestment plan for allocation to those shareholders that elect to reinvest their distributions in additional Shares. For the three most recent fiscal years ended April 30, we have repurchased the following number and amount of Shares:


For the Period Ending April 30	2003		2002		2001

Number of Shares		0		16,200		555,785
Total price paid by IRET	$	0	$	134,986	$	4,478,401
Average price per share	$	0	$	8.33	$	8.06

•

To make loans to other persons.Our organizational structure does allow us to make loans to other persons, subject to certain conditions and subject to our election to be taxed as a REIT. All loans must be secured by real property or limited partnership units of IRET Properties. Over the past three fiscal years, our mortgage loan receivables were as follows:


	Mortgage Loan Receivables

	2003		2002		2001

Fricke	$	0	$	0	$	954
Hausman		0		0		278,527
Diamond T. Enterprises LLC		0		105,837		106,926
K-Mox, Inc.		35,515		39,550		43,313
D. Duane Peterson		130,000		130,000		130,000
Edgewood Vista, LLC		816,570		477,375		477,375
Mankato Heights Plaza		0		3,200,000		0
C. Grueber – Cottage Grove		198,101		0		0
Abbott Northwestern		27,754		0		0

	$	1,207,940	$	3,952,762	$	1,037,095

•

To invest in the securities of other issuers for the purpose of exercising control.We have not, for the past three years, engaged in, and we are not currently engaging in, the investment in the securities of other issuers for the purpose of exercising control. Our Second Restated Declaration of Trust does not impose any limitation on our ability to invest in the securities of other issuers for the purpose of exercising control.

			Any decision to do so is vested solely in our Board of Trustees and may be changed at any time, or from time to time, without notice to , or a vote of, our shareholders.

	•		To make annual or other reports available to security holders and the nature and scope of such report.Our organizational documents require that an annual report be provided to shareholders at least once a year. The report must be provided no later than 120 days from the end of our most recent fiscal year ending April 30. The annual reports are generally mailed during the second week of August. The annual report contains a financial statement certified by an independent public accountant. The requirement to provide an annual report to shareholders may only be changed by a vote of a majority of our shareholders.

			We also have a policy of providing quarterly reports to our shareholders during January, April, July, and October of each year. The quarterly reports do not contain financial statements certified by an independent public accountant. The provision of a quarterly report to our shareholders is not required by our organizations documents and may be changed by a majority of our Board of Trustees at any time without notice to or a vote of our shareholders.

			Additionally, throughout the year, we disclose material information in reports filed with the Securities and Exchange Commission (the “SEC”). While we do not mail these reports to our shareholders, these reports are available at our internet website, www.iret.com, and at the SEC internet website, www.sec.gov. You may also obtain a copy of these reports by contacting Mike Hale by mail at 12 South Main Street, P.O. Box 1988, Minot, North Dakota, 58702-1988, by telephone at (701) 837-4738, or by fax at (701) 838-7785.

IRET Properties Agreement of Limited Partnership

We conduct our day-to-day business activities through our operating partnership, IRET Properties, a North Dakota Limited Partnership. The material terms of the Agreement of Limited Partnership of IRET Properties are as follows:

	•		Authority of the sole general partner.As the sole general partner, IRET, Inc. has full, exclusive and complete authority, responsibility and discretion in the management and control of IRET Properties, and the limited partners have no authority in their capacity as limited partners to transact business for, or participate in, the management activities or decisions of IRET Properties, except as required by applicable law.

	•		Amendment of the agreement of limited partnership.Any amendment to the Agreement of Limited Partnership that would (i) adversely affect the exchange rights, as described below, (ii) adversely affect the limited partners’ rights to receive cash distributions, or (iii) alter the limited partnership’s allocations of capital, requires the consent of more than 50.0% of the limited partnership units.

	•		Transferability of general partnership and limited partnership interests and certain transactions.IRET, Inc. may not (i) voluntarily withdraw as the sole general partner of IRET Properties, or (ii) transfer or assign its general partnership units, unless the transaction in which such withdrawal or transfer occurs results in the limited partners receiving property in an amount equal to the amount they would have received had they exercised their exchange rights, as discussed below, immediately prior to such transaction, or unless the successor to IRET, Inc. contributes substantially all of its assets to the IRET Properties in return for an interest in IRET Properties. With certain limited exceptions, the limited partners may not transfer their limited partnership units, in whole or in part, without the written consent of IRET, Inc., which may be withheld in its sole discretion. IRET, Inc. may not consent to any transfer that would cause IRET Properties to be treated as a corporation for federal income tax purposes.

			IRET Properties may not engage in any transaction that would result in a change of control transaction unless, in connection with the transaction, the limited partners receive or have the right to receive cash or other property equal to the product of the number of Shares into which each limited partnership unit is then exchangeable and the greatest amount of cash, securities or other property paid in the transaction to the holder of one Share in consideration of one such Share. If, in connection with the transaction, a purchase, tender or exchange offer has been made to, and accepted by, the holders of more than 50.0% of our outstanding Shares, each holder of limited partnership units will receive, or will have the right to elect to receive, the greatest amount of cash, securities or other property that such holder would have received had he or she exercised his or her right to redemption and received Shares in exchange for his or her limited partnership units immediately prior to the expiration of such purchase, tender or exchange offer and had accepted such purchase, tender or exchange offer.

			Despite the foregoing paragraph, we may merge, or otherwise combine our assets, with another entity if, immediately after such merger or other combination, substantially all of the assets of the surviving entity, other than our ownership in IRET Properties, are contributed to IRET Properties as a capital contribution in exchange for general partnership units of IRET Properties with a fair market value, as reasonable determined by us, equal to the agreed value of the assets so contributed. In connection with any transaction described in this or the preceding paragraph, we are required to use our commercially reasonable efforts to structure such transaction to avoid causing the limited partners to recognize gain for federal income tax purposes by virtue of the occurrence of, or their participation in, such transaction; provided that such efforts are consistent with the exercise of the fiduciary duties of the members of our Board of Trustees under applicable law.

	•		Capital contributions to IRET Properties.All of our assets were contributed to, and are now held, by IRET Properties or a subsidiary of IRET Properties. Under the

			Agreement of Limited Partnership, IRET, Inc. is obligated to contribute, or cause us to contribute, the proceeds of any offering of Shares as additional capital to IRET Properties. As such, any proceeds that we receive from future stock offerings will be contributed to IRET Properties and will be deemed to be a capital contribution to IRET Properties in the amount of the gross proceeds of the offering. IRET Properties will simultaneously be deemed to have paid the expenses incurred in connection with any such offering.

			Upon the contribution of the proceeds from offerings of Shares or other capital contributions, we or IRET, Inc., as applicable, will receive additional general partnership units and our or IRET, Inc.’s percentage interest, as applicable, in IRET Properties will be increased on a proportionate basis based upon the amount of such contributions. Conversely, the percentage interests of the limited partners will be decreased on a proportionate basis. In the event that a capital contribution in the form of property is made by us or IRET, Inc., as applicable, to IRET Properties, IRET, Inc. will revalue the property of IRET Properties to its fair market value as determined by IRET, Inc. and the capital accounts of the partners will be adjusted to reflect the manner in which the unrealized gain or loss inherent in such property, which has not been reflected in the capital accounts previously, would be allocated among the partners under the terms of the Agreement of Limited Partnership if there were a taxable disposition of such property at fair market value on the date of the revaluation. The Agreement of Limited Partnership further provides that if at any time, or from time to time, IRET Properties requires additional funds in excess of funds available to IRET Properties from borrowing or capital contributions, either we or IRET, Inc. may borrow such funds from a financial institution or other lender and lend such funds to IRET Properties on the same terms and conditions as are applicable to us or IRET, Inc., as applicable, in connection with the borrowing of such funds.

			Furthermore, IRET, Inc. is authorized to cause IRET Properties to issue partnership units for less than fair market value if we (i) have concluded in good faith that such issuance is in the best interest of us and IRET Properties and (ii) IRET, Inc. makes a capital contribution in an amount equal to the proceeds of such issuance.

	•		Exchange rights of limited partners.Pursuant to the Agreement of Limited Partnership of IRET Properties, the limited partners have exchange rights that enable them to cause IRET Properties to exchange their limited partnership units for cash, or at the option of IRET, Inc., Shares, on a one-for-one basis. The exchange price will be paid in cash in the event that the issuance of Shares to the exchanging limited partner would:

	(i)		result in any person owning, directly or indirectly, Shares in excess of the ownership limitation of 50% of the outstanding Shares;

	(ii)		result in our Shares being owned by fewer than 100 persons;

	(iii)		result in us being “closely held” within the meaning of Section 856(h) of the Code;

	(iv)		cause us to own, actually or constructively, ten percent or more of the ownership interest in our or IRET Properties’ tenants’ real estate, within the meaning of Section 856(d)(2)(D) of the Code; or

	(v)		cause the acquisition of Shares by such redeeming limited partner to be “integrated” with any other distribution of Shares for purposes of complying with the Securities Act.

			The exchange may, generally, be exercised by the limited partners at any time after the first anniversary of the date of the acquisition of the limited partnership units; provided, however, that not more than two exchanges may occur during each calendar year, and each limited partner may not exercise the exchange for less than 1,000 units or, if such limited partner holds less than 1,000 units, all of the units held by such limited partner. Some limited partners have contractually agreed to a holding period of greater than one year. The number of Shares issuable upon an exchange will be adjusted upon the occurrence of share splits, mergers, consolidations or similar pro rata share transactions, which otherwise would have the effect of diluting the ownership interests of the limited partners or our shareholders.

	•		Operation of IRET Properties and payment of expenses.The Agreement of Limited Partnership of IRET Properties requires that the partnership be operated in a manner that will enable us to satisfy the requirements for being classified as a REIT for federal tax purposes, to avoid any federal income or excise tax liability imposed by the Code and to ensure that IRET Properties will not be classified as a publicly traded partnership for purposes of Section 704 of the Code. In addition to the administrative and operating costs and expenses incurred by IRET Properties, IRET Properties will pay all of the administrative costs and expenses for us and IRET, Inc. All of our expenses will be considered expenses of IRET Properties. Our expenses generally include:

	(i)		all expenses relating to the operation and continuity of existence of both us and IRET, Inc.;

	(ii)		all of our expenses relating to the public offering and registration of our securities;

	(iii)		all expenses incurred by us that are associated with the preparation and filing of any periodic reports required under federal, state or local laws or regulations;

	(iv)		all expenses incurred by us or IRET, Inc. that are associated with the compliance with laws, rules and regulations promulgated by any regulatory body; and

(v)

all other operating or administrative costs of IRET, Inc. incurred in the ordinary course of its business on behalf of IRET Properties.

	•		Distributions and liquidation.The Agreement of Limited Partnership of IRET Properties provides that it will distribute cash from operations on a quarterly basis, in amounts determined by IRET, Inc. in its sole discretion, to the partners in accordance with their respective percentage interests in IRET Properties. Upon the liquidation of IRET Properties, and after payment of, or adequate provision for, debts and obligations of IRET Properties, any remaining assets will be distributed to all partners with positive capital accounts in accordance with their respective positive capital account balances. In the event that we have a negative balance in our capital account following a liquidation, we will be obligated to contribute cash equal to the negative balance in our capital account.

	•		Allocations.Income, gain and loss of IRET Properties for each fiscal year is allocated among the partners in accordance with their respective interests, subject to compliance with the provisions of Code Sections 704(b) and 704(c) regulations issued thereunder.

	•		Term.IRET Properties will continue until April 30, 2050, or until sooner dissolved upon:

	(i)		the bankruptcy, dissolution or withdrawal of IRET, Inc.;

	(ii)		the sale or other disposition of all or substantially all of its assets;

	(iii)		the redemption of all limited partnership interests; or

	(iv)		the election by IRET, Inc.

	•		Fiduciary duty.Before becoming a limited partner, each limited partner must agree that in the event of any conflict in the fiduciary duties owed by us to our shareholders and by IRET, Inc. to such limited partners, IRET, Inc. will fulfill its fiduciary duties to such limited partnership by acting in the best interests of our shareholders.

	•		Tax matters.IRET, Inc. is the tax matters partner of IRET Properties and, as such, has authority to handle tax audits and to make tax elections under the Code on behalf of IRET Properties and the limited partners.

Risk Factors

Like all businesses, we are faced with certain general risks that could negatively impact our operations. Additionally, due to the specific nature of our activities in real estate and the locations in which we operate, we are faced with certain specific risk factors which may negatively affect our business during the upcoming fiscal year. While not intended to be an exhaustive list, some of the more significant risks are:

	•		Our increasing ownership of commercial properties subjects us to different risks than our traditional base of multi-family residential properties.Historically, the assets in our investment portfolio consisted predominantly of multi-family residential properties, as compared to commercial properties. More recently, our investment activities have caused this balance to shift so that the percentage of commercial properties held in our portfolio has increased significantly. Within the past 24 months, approximately 90.4% of our property acquisitions have been commercial properties due to the greater availability of these properties on terms that meet our financial and strategic objectives. Commercial properties now comprise a majority of our real estate assets with the majority of our commercial assets being located in the Minneapolis, Minnesota area. Based on current market conditions, we anticipate that the percentage of commercial properties that we may acquire will continue to significantly exceed the number of multi-family residential properties that we may acquire during fiscal 2004. This may not, however, be a long-term trend as in future periods we may purchase a greater percentage of multi-family residential properties depending on market conditions.

			Our historical experience in acquiring multi-family residential properties may not be directly applicable to the acquisition of a greater percentage of commercial properties. Commercial properties involve different risks than multi-family residential properties, including: direct exposure to business and economic downturns; exposure to tenant lease terminations or bankruptcies; and competition from real estate investors with greater experience in developing and owning commercial properties. Our earnings may be negatively affected if we are not successful in acquiring or managing commercial properties.

	•		Current and future physical vacancies may negatively impact earnings.In the twelve months subsequent to April 30, 2003, leases covering approximately 16.1% of our total commercial square footage will expire. At April 30, 2003, approximately 7.6% of our total commercial square footage was vacant. Of that vacancy, approximately 16.4% is represented by a building in Rapid City, SD, formerly occupied by Conseco, which has been vacant since February 2003. As a result, in the event we are unable to rent or sell those properties that are vacant or affected by expiring leases, approximately 23.7% of our total commercial square footage will be vacant within the next 12 months. Even greater vacancies will be created to the extent that a number of tenants, or any one significant tenant, files for bankruptcy protection and rejects our lease. Such vacancies may negatively impact our earnings, may result in lower

			distributions to our shareholders and may cause a decline in the value of our real estate portfolio.

			While it is difficult to clearly identify those specific properties that may not produce sufficient returns, we currently have three commercial properties that potentially fall into such category. All three locations are currently leased to Fleming Companies, Inc. (“Fleming”) (NYSE FLM). Fleming filed a Chapter 11 Bankruptcy Petition on April 1, 2003. Fleming has until September 30, 2003, to either accept or reject the current leases. The three locations include a 48,244 square foot grocery store at the Maplewood Square Mall in Rochester, Minnesota, with seven years left on the lease at an annual net rent of $361,824, a 47,621 square foot grocery store at the West Lake Center Mall in Forest Lake, Minnesota, with five years left on the lease at an annual net rent of $183,000, and a 21,184 square foot grocery store at the Pine City Center Mall in Pine City, Minnesota, with six years left on the lease at an annual net rent of $118,958. Fleming is still paying rent and its share of operating costs at all three locations and, with the exception of the Rochester location, the locations are open for business. The Forest Lake location has been purchased by Roundy’s Inc., a Wisconsin-based grocery company, and the lease at this location was assumed by Roundy’s.

			At April 30, 2003, approximately 6.5% of the units in our multi-family residential properties were physically vacant. Multi-family residential vacancies could increase from current levels due to general economic conditions, local economic or competitive conditions, unsatisfactory property management, the physical condition of our properties or other factors. An increase in vacancies in our multi-family residential properties may negatively impact our earnings, may result in lower distributions to our shareholders and may cause a decline in the value of our real estate portfolio.

	•		Our inability to effectively manage our rapid growth may adversely affect our operating results.Our total assets have increased from $570.3 million at April 30, 2001, to $885.7 million at April 30, 2003, principally through the acquisition of additional real estate properties. Subject to our continued ability to raise equity capital and exchange limited partnership units, we anticipate acquiring $100.0 million to $200.0 million of real estate assets on an annual basis. Effective management of growth presents various challenges, including: the expansion of our management team and staff, diverted management attention, the enhancement of internal operating systems and controls, increased reliance on outside advisors and property managers and the ability to consistently achieve targeted returns. If we are unable to effectively manage our growth, our operating results may be adversely affected.

	•		Our geographic concentration in North Dakota and Minnesota may result in losses.For the fiscal year ended April 30, 2003, we received 81.5% of our commercial gross revenue from commercial properties in Minnesota and 10.2% of our commercial

			gross revenue from commercial properties in North Dakota. Minnesota accounts for 66.9% of our commercial real estate portfolio by square footage, while North Dakota accounts for 13.1%. As a result of this concentration, we may be subject to substantially greater risk than if our investments were more geographically dispersed. Specifically, changes in local conditions, such as building by competitors or a decrease in employment, may adversely affect the performance of our investments much more severely.

			For the fiscal year ended April 30, 2003, we received 16.7% of our apartment gross revenue from multi-family residential properties in Minnesota and 30.2% of our apartment gross revenue from multi-family properties in North Dakota. As of that same date, we owned 1,309 apartment units, 15.9% of our total number of apartment units, in Minnesota, and 2,794 apartment units, 34.0% of our total number of apartment units, in North Dakota.

			The economic climate in Minnesota is highly dependent on the service, manufacturing and high technology industries. Economic weakening in any of these industries may adversely affect the performance of our real estate portfolio by decreasing demand for rental space. In contrast, the North Dakota economy is dependent on the agricultural and mineral development industries. Both of these industries have been depressed for most of the past decade and, in our opinion, there appears little prospect for improvement.

			Unlike Minnesota, 69.5% of our assets in North Dakota are multi-family residential properties, which are dependent on a stable or growing population. If North Dakota’s population declines, we may experience difficulty in renting our properties at acceptable rates. This would result in a decrease in net income and a corresponding decline in the level of distributions to our shareholders.

	•		Competition may negatively impact our earnings.We compete with many kinds of institutions, including other REITs, private partnerships, individuals, pension funds and banks, for tenants and investment opportunities. Many of these institutions are active in the markets in which we invest, and have greater financial and other resources that may be used to compete against us. With respect to tenants, such competition may affect our ability to lease our properties, the price at which we are able to lease our properties and the cost of required renovations or build-outs. With respect to acquisition and development investment opportunities, this competition may cause us to pay higher prices for new properties than we otherwise would have paid, or may prevent us from purchasing a desired property at all. Such events may have a material adverse effect on us, our ability to make distributions to our shareholders and our ability to pay amounts due on our debt.

			There are also thousands of private limited partnerships organized to invest in real estate. As such, we must compete with these entities for investments. The yields

			available on mortgage and other real estate investments depend upon many factors, including, the supply of money available for such investments and the demand for mortgage money. The presence of these competitors increases the price for real estate assets and the available supply of funds to our prospective borrowers. All these factors, in turn, vary in relation to many other factors, such as: general and local economic conditions; conditions in the construction industry; opportunities for other types of investments; and international, national and local political affairs, legislation, governmental regulation, tax laws and other factors. We cannot predict the effect that such factors will have on our operations.

	•		Our inability to continue to make accretive property acquisitions may adversely affect our ability to increase our operating income. From fiscal 2001 to fiscal 2003, we increased our operating income from $10.8 million to $15.9 million. Most of this growth was attributable to the acquisition of additional real estate properties. If we are unable to continue to make real estate acquisitions on terms that meet our financial and strategic objectives, whether due to market conditions, a changed competitive environment, or unavailability of capital, our ability to increase our operating income may be materially and adversely affected.

	•		High leverage on individual properties or our overall portfolio may result in losses.We seek to borrow approximately 65.0% to 70.0% of the cost of real estate purchased or constructed. The 70.0% per property borrowing limitation is a policy that has been established by management and approved by our Board of Trustees and may be changed at any time, or from time to time, without notice to, or the approval of, our shareholders. For the past three years ended April 30, our total mortgage indebtedness, as it relates to our total real estate assets at book value before depreciation, has been as follows:


	Fiscal 2003			Fiscal 2002			Fiscal 2001

Real Estate Assets	$	919,780,802		$	740,319,436		$	591,636,468
Mortgages Payable	$	539,397,202		$	459,568,905		$	368,956,930
Leverage Percentage		58.6	%		62.1	%		62.4	%

In addition to the policy of not exceeding an overall 70.0% debt ratio on all real estate, our Second Restated Declaration of Trust provides that our total borrowings, secured and unsecured, must be reasonable in relation to our total net assets and reviewed by our Board of Trustees at least quarterly. The maximum borrowings in relation to the net assets, in the absence of a satisfactory showing that a higher level of borrowing is appropriate, may not exceed 300.0% of net assets before depreciation in the aggregate. Currently, our ratio of total indebtedness, as it relates to our total net assets, is 186.3%. As a result, we may, without any additional approval, increase our total indebtedness, as compared to total net assets, by 113.7% or $351.8 million. There is no limitation on the increase that may be permitted if approved by a majority of the independent members of our Board of Trustees and disclosed to our

			shareholders in the next quarterly report, along with justification for such excess. In no event are we required to obtain the approval of our shareholders to increase our debt level.

			For the past three years ended April 30, our total indebtedness, as it relates to our total net assets, has been as follows:


	Fiscal 2003			Fiscal 2002			Fiscal 2001

Total indebtedness	$	576,317,935		$	495,351,764		$	389,086,105
Total net assets	$	309,362,586		$	234,857,254		$	181,236,019
Leverage percentage		186.3	%		210.9	%		214.7	%

			This amount of leverage may expose us to cash flow problems in the event rental income decreases. Such a scenario may have an adverse effect on us to the extent that we must sell properties at a loss, we are unable to make distributions to our shareholders or we are unable to pay amounts due, which may result in a default on our obligations and the loss of the property through foreclosure.

	•		The cost of our indebtedness may increase and the market value of our Shares may decrease due to rising interest rates.We have incurred, and we expect to continue to incur, indebtedness that bears interest at a variable rate. Accordingly, increases in interest rates will increase our interest costs, which could have a material adverse effect on us, our ability to make distributions to our shareholders and our ability to pay amounts due on our debt.

			As of April 30, 2003, $23.2 million, or 4.3%, of the total mortgage indebtedness was subject to variable interest rate agreements. The range of interest rates on the variable rate mortgages are from 3.5% to 7.5%. An increase of one percent in our variable interest rate would collectively increase our interest payments by $2.3 million annually.

			In addition, an increase in market interest rates may cause shareholders to demand a higher yield on their Shares from distributions by us, which could adversely affect the market price for our Shares.

	•		We may not be able to renew, repay or refinance our debt.We are subject to the normal risks associated with debt financing, including: the risk that our cash flow will be insufficient to meet required payments of principal and interest; the risk that indebtedness on our properties, or unsecured indebtedness, will not be able to be renewed, repaid or refinanced when due; or that the terms of any renewal or refinancing will not be available on terms as favorable as the terms of our current indebtedness. In the event that we are unable to refinance our indebtedness on acceptable terms, or at all, we may be forced to dispose of one or more of the properties on disadvantageous terms, which may result in losses to us. Such losses

			could have a material adverse effect on us, our ability to make distributions to our shareholders and our ability to pay amounts due on our debt. Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgagee could foreclose upon the property, appoint a receiver and receive an assignment of rents and leases or pursue other remedies, all with a consequent loss of our revenues and asset value. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Code.

			The balance of our indebtedness in individual mortgage loans secured by individual commercial and residential properties totaled $539.4 million as of April 30, 2003. Of this amount, $23.2 million is subject to variable interest rate agreements and $516.2 million is in fixed rates mortgages. Of the outstanding mortgages, both fixed and variable, $15.1 million will come due during fiscal 2004, $18.5 million will come due during fiscal 2005 and the remaining balance will come due in later years.

	•		Our mortgage lending activities may result in losses.For the three years ended April 30, 2003, 2002 and 2001, we had mortgages outstanding, less unearned discounts, deferred gain from property dispositions and allowance for losses, in the aggregate amounts of $1.2 million, $3.9 million and $1.0 million, respectively. As of April 30, 2003, all of our mortgage loans were current and none of the loans were in default.

			All real estate investments are subject to some degree of risk that, in certain cases, vary according to the size of the investment as a percentage of the value of the real property. In the event of a default by a borrower on a mortgage loan, it may be necessary for us to foreclose our mortgage or engage in negotiations that may involve further outlays to protect our investment.

			The mortgages securing our loans may, in certain instances, be subordinate to mechanics’ liens, materialmen’s liens or government liens. In connection with junior mortgages, we may be required to make payments in order to maintain the status of the prior lien or to discharge it entirely. We may lose first priority of our lien to mechanics’ or materialmen’s liens due to wrongful acts of the borrower. It is possible that the total amount that may be recovered by us in such cases may be less than our total investment, which may result in losses to us. The loans that we make may, in certain cases, be subject to statutory restrictions that limit the maximum interest charges and impose penalties, which including the restitution of excess interest. Such statutory restrictions may also, in certain cases, affect enforceability of the debt. There can be no assurance that all, or a portion of, the charges and fees that we receive on our loans will not be held to exceed the statutory maximum, in which case we may be subjected to the penalties imposed by the statutes.

			We may change our policies relating to our mortgage lending at any time, and from time to time, without prior notice to, or the approval of, our shareholders.

	•		We do not carry insurance against all possible losses.We carry comprehensive liability, fire, extended coverage and rental loss insurance with respect to our properties. No assurance can be given that such coverage will be available in the future or, if available, that such coverage will be at an acceptable cost or with acceptable terms. Furthermore, no assurance can be given that current or future policies will have limits that will cover the full cost of repair or replacement of covered properties.

			Additionally, there may be certain extraordinary losses, such as those resulting from civil unrest, terrorism or environmental contamination, that are not generally, or fully, insured against because they are either uninsurable or not economically insurable. We do not currently carry environmental insurance. Should an uninsured or underinsured loss occur to a property, we could be required to use our own funds for restoration or lose all or part of our investment in, and anticipated revenues from, the property. In any event, we would continue to be obligated on any mortgage indebtedness on the property. Any such loss could have a material adverse effect on us, our ability to make distributions to our shareholders and our ability to pay amounts due on our debt.

	•		Adverse changes in applicable laws may affect our potential liabilities relating to our properties and operations.Increases in real estate taxes and income, service and transfer taxes cannot always be passed through to all tenants in the form of higher rents. As a result, any such increases may adversely affect our cash available for distribution, our ability to make distributions to our shareholders and our ability to pay amounts due on our debt. Similarly, changes in laws that increase the potential liability for environmental conditions existing on properties, that increase the restrictions on discharges or other conditions or that affect development, construction and safety requirements may result in significant unanticipated expenditures that could have a material adverse effect on us, our ability to make distributions to our shareholders and our ability to pay amounts due on our debt. In addition, future enactment of rent control or rent stabilization laws or other laws regulating multi-family residential properties may reduce rental revenues or increase operating costs.

	•		Complying with laws benefiting disabled persons may affect our costs and investment strategies.Certain federal, state and local laws and regulations, including the Americans with Disabilities Act, may require certain modifications to, or restrict certain renovations of, existing buildings to improve access to, or use of, such buildings by disabled persons. Additionally, such laws and regulations may require that certain structural features be added to buildings under construction, which may add to the cost of such buildings. Any legislation or regulations that may be adopted in the future may impose further burdens or restrictions on us with respect to improved access to, and use of such buildings by, disabled persons. The costs of complying with these laws and regulations may be substantial and limits or restrictions on construction, or the completion of required renovations, may limit the implementation of our investment strategy, in certain instances, or reduce overall

			returns on our investments. This could have a material adverse effect on us, our ability to make distributions to our shareholders and our ability to pay amounts due on our debt.

			We review our properties periodically to determine the level of compliance and, if necessary, take appropriate action to bring such properties into compliance. We believe, based on property reviews to date, that the costs of such compliance would not have a material adverse effect on us. Such conclusions are based upon currently available information and data and no assurance can be given that further review and analysis of our properties, or future legal interpretations or legislative changes, will not significantly increase the costs of compliance.

	•		We may be responsible for potential liabilities under certain environmental laws. Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around or under property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of such substances, or the failure to properly remediate any property containing such substances, may adversely affect the owner’s or operator’s ability to sell or rent the affected property or to borrow using such property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal of, or remediation of, such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person. Certain environmental laws impose liability for the release of asbestos-containing materials into the air, and third parties may also seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials, as well as other hazardous or toxic substances. The operation and subsequent removal of certain underground storage tanks are also regulated by federal and state laws. In connection with the current or former ownership (direct or indirect), operation, management, development and/or control of real properties, we may be considered to be an owner or operator of such properties, or to have arranged for the disposal or treatment of hazardous or toxic substances. As such, we may be potentially liable for removal or remediation costs, as well as certain other costs, including governmental fines and claims for injuries to persons and property.

			It is currently our policy to obtain a Phase I environmental study on each property that we seek to acquire. If the Phase I indicates any possible environmental problems, it is our policy is to order a Phase II study, which involves testing the soil and ground water for actual hazardous substances. No assurance can be given that the Phase I or Phase II environmental studies, or any other environmental studies undertaken with respect to any of our current or future properties, will reveal the full extent of potential environmental liabilities, that any prior owner or operator of a property did not create any material environmental condition unknown to us, that a material

			environmental condition does not otherwise exist as to any one or more of such properties or that environmental matters will not have a material adverse effect on us, our ability to make distributions to our shareholders and our ability to pay amounts due on our debt. We currently do not carry insurance for environmental liabilities.

			Certain environmental laws impose liability on a previous owner of property to the extent that hazardous or toxic substances were present during the prior ownership period. A transfer of the property does not relieve an owner of such liability. As a result, in addition to any liability that we may have with respect to our current properties, we may also have liability with respect to properties previously sold by our predecessors or by us. To our knowledge, as of the date of this prospectus, we do not own and we have not sold any properties that contain known material environmental liabilities.

	•		We may be unable to retain or attract qualified management. We are dependent upon our officers for essentially all aspects of our business operations. Our officers have experience in the specialized business segments in which we operate and, therefore, the loss of any of our officers would likely have a material adverse effect on our operations. Our officers may terminate their relationship with us at any time, without providing advance notice. We currently rely on our senior officers, including Thomas A. Wentz, Sr., Timothy P. Mihalick, Thomas A. Wentz, Jr., Charles Wm. James, Diane K. Bryantt and Michael A. Bosh.

			We do not have employment contracts or agreements with any of our officers, members of our Board of Trustees or other employees. We would incur significant expense in order to recruit and relocate officers to our Minot, North Dakota location.

	•		Conflicts of interest may negatively impact our financial performance. The members of our Board of Trustees and our management are subject to certain conflicts of interest that could adversely impact our future performance. Potential conflicts of interest include competition by, or the purchase of services or goods from, members of our Board of Trustees or management.

			Certain of the members of our Board of Trustees and certain of our officers either directly, or though entities controlled by them, are currently engaged, and may engage in the future, in other real estate ownership, management or development activities for their own personal accounts that may compete with our activities. Accordingly, certain conflicts of interest may arise with respect to the activities of such entities and persons and our activities that may, in turn, adversely effect our financial performance.

			As of April 30, 2003, other than ownership of both our Shares and limited partnership units of IRET Properties, no employee or member of our Board of Trustees has any ownership interest in any of our subsidiaries, real estate projects or business activities.

			However, without notice to, or the approval of, our shareholders, we may enter into joint ventures with any member of our Board of Trustees or our officers.

			We are not precluded from purchasing assets or services from members of our Board of Trustees or our management, and such purchases do not require notice to, or the approval of, our shareholders, provided that all relationships are on terms no more favorable than those that could be obtained from third-party providers.

Item 2. Properties

IRET is a qualified REIT under Section 856-858 of the Code, and is in the business of making passive investments in real estate properties and mortgages. These real estate investments are managed by third-party professional real estate management companies on our behalf.

Summary of Real Estate Investment Portfolio


		April 30, 2003					April 30, 2002

Real Estate Investments
	Real Estate Owned	$	919,780,802				$	740,319,436
	Less Depreciation Reserve		(75,638,772	)				(58,925,517	)

		$	844,142,030		95.3	%	$	681,393,919		93.3	%

	Mortgage Loans Receivable		1,182,940		.1	%		3,952,762		0.5	%

	Total Real Estate Investments	$	845,324,970				$	685,346,681

Other Assets
	Cash & Marketable Securities	$	18,641,974				$	22,833,426
	Furniture & Fixtures		2,088,074					209,121
	Goodwill		1,440,817					1,440,817
	Deposits & Accruals		18,184,686					20,378,973

	Total Other Assets	$	40,355,551		4.6	%	$	44,862,337		6.2	%

	Total Assets	$	885,680,521		100.0	%	$	730,209,018		100.0	%

The remainder of this page has been intentionally left blank.

Summary of Individual Properties Owned as of April 30, 2003
(N/A = Property held less than 12 months)

Commercial Properties


							Fiscal 2003
							Economic
State & City		Property Type	Square Feet		Investment		Occupancy

Georgia
Lithia Springs		Retirement Center		29,408	$	3,971,878		100.0	%

Georgia Total				29,408	$	3,971,878		100.0	%
Idaho
Boise
	Plaza VII	Office Building		27,297	$	3,393,162		N/A
	Westgate	Office Building		103,332		11,648,328		N/A

Idaho Total				130,629	$	15,041,490		64.0	%
Iowa
Des Moines
	Dixon Industrial Park	Commercial Industrial		604,711	$	12,900,879		N/A

Iowa Total				604,711	$	12,900,879		N/A
Michigan
Kentwood
	Thomasville Furniture	Retail		16,080	$	2,121,474		100.0	%

Michigan Total				16,080	$	2,121,474		100.0	%
Minnesota
Andover
	Tom Thumb	Retail		3,000	$	280,000		N/A
Anoka
	Anoka Strip Center	Retail		10,625		725,000		N/A
Bethel
	Tom Thumb	Retail		4,800		510,000		N/A
Blaine
	Tom Thumb	Retail		8,750		520,000		N/A
Bloomington
	Airport Medical	Medical Office		24,218		4,678,418		N/A
	Bloomington Bus. Ctr.	Office Building		121,064		7,587,358		96.6	%
	Pillsbury Business Ctr.	Office Building		42,220		1,842,601		78.9	%
	Three Paramont Plaza	Office Building		75,526		7,879,527		N/A
Brooklyn Center
	Park Dental	Medical/Office		10,008		2,952,052		N/A
Brooklyn Park
	Wilson’s Leather	Office Building		353,049		13,053,614		N/A
Buffalo
	Tom Thumb	Retail		7,700		460,000		N/A
Burnsville
	Burnsville Bluffs	Office/Warehouse		45,158		2,453,911		100.0	%
	Burnsville Strip Center I	Retail		8,526		983,424		N/A
	Burnsville Strip Center II	Retail		8,400		760,000		N/A
	Nicollet VII	Office/Warehouse		125,385		7,380,670		100.0	%


							Fiscal 2003
							Economic
State & City		Property Type	Square Feet		Investment		Occupancy

Centerville
	Tom Thumb	Retail		3,000	$	330,000		N/A
Chanhassen
	West Village Center	Retail		135,969		20,868,446		N/A
Duluth
	Edgewood Vista I & II	Assisted Living		74,984		7,081,519		100.0	%
	Edgewood Vista III	Assisted Living		44,365		4,623,938		N/A
Eagan
	2030 Cliff Road	Office Building		13,374		982,763		100.0	%
	Eagan — PDQ	Retail		3,886		782,896		N/A
	Eagan Retail Center I	Retail		5,400		510,405		N/A
	Eagan Retail Center II	Retail		13,901		1,348,714		N/A
	Lexington Commerce	Office Building		89,840		5,824,078		90.3	%
	S.E. Tech Center	Office Building		58,300		6,115,854		100.0	%
East Grand Forks
	East Grand Station	Convenience Store		16,103		1,392,251		100.0	%
	Edgewood Vista I & II	Assisted Living		16,392		1,430,136		100.0	%
Eden Prairie
	Central Bank Office	Office Building		39,525		4,600,000		N/A
	Flying Cloud Drive	Office Building		62,585		5,750,837		94.4	%
	Lindberg Building	Office/Warehouse		41,880		2,151,601		100.0	%
	ViroMed	Office Building		48,700		4,863,634		100.0	%
Edina
	Dewey Hill Business Ctr	Office Building		73,338		4,890,177		98.4	%
	Interlachen	Office Building		105,084		16,691,307		100.0	%
	Paul Larson Clinic	Medical Office		12,140		1,012,962		N/A
	Southdale Medical Center	Medical Office		195,983		33,096,379		89.6	%
	Southdale Medical Center Expansion	Medical Office		N/A		7,223,906		N/A
Excelsior
	Excelsior Retail Center	Retail		7,993		900,000		N/A
Faribault
	Checkers Auto	Retail		5,600		340,000		N/A
Forest Lake
	Champion Auto Center	Retail		6,836		496,000		N/A
	West Lake Center	Retail		100,656		8,007,107		N/A
Glencoe
	Tom Thumb	Retail		4,800		530,000		N/A
Golden Valley
	Wirth Corporate Center	Commercial Office		75,216		8,643,238		100.0	%
Greenwood
	Chiropractic Office Bldg	Office Building		1,600		330,000		N/A
Ham Lake
	Tom Thumb	Retail		4,800		535,000		N/A
Howard Lake
	Tom Thumb	Retail		3,571		380,000		N/A


								Fiscal 2003
								Economic
State & City			Property Type	Square Feet		Investment		Occupancy

Inver Grove
		PDQ	Retail		8,400	$	940,000		N/A
Lakeland
		Tom Thumb	Retail		3,650		440,000		N/A
Lakeville
		Tom Thumb	Retail		9,500		1,361,008		N/A
Lindstrom
		Tom Thumb	Retail		4,000		320,000		N/A
Lino Lakes
		Tom Thumb	Retail		6,325		440,000		N/A
Long Prairie
		Tom Thumb	Retail		5,216		700,000		N/A
Maple Grove
		Northgate II	Office Building		25,999		2,357,893		100.0	%
Maplewood & Woodbury
		HealthEast I & II	Medical Office		114,316		21,600,999		100.00	%
Mendota Heights
		Mendota Center I	Office Building		59,852		7,004,133		100.0	%
		Mendota Center II	Office Building		88,398		11,538,729		98.8	%
		Mendota Center III	Office Building		60,776		6,703,956		99.5	%
		Mendota Center IV	Office Building		72,231		8,705,137		100.0	%
		Mendota Northland	Office Building		146,808		17,660,421		100.0	%
Minnetonka
		Brenwood Office Park	Office Building		176,917		14,206,423		N/A
		Hospitality Associates	Office Building		4,000		400,898		100.0	%
		Wayroad	Office Building		62,383		5,445,195		98.7	%
Minneapolis
		Thresher Square East	Office Building		57,891		6,562,525		96.9	%
		Thresher Square West	Office Building		54,945		4,560,933		73.1	%
Monticello
		Tom Thumb	Retail		3,575		855,000		N/A
Moorhead
	Pioneer Seed Co.		Office/Warehouse		13,600		653,876		49.3	%
Mora
		Tom Thumb	Retail		3,571		300,000		N/A
Mound
		PDQ Center	Retail		3,864		360,000		N/A
Mounds View
		Interstate Bakery	Retail		4,560		290,000		N/A
New Brighton
		Metal Improvement Co.	Industrial Building		49,620		2,449,056		100.0	%
Oakdale
		Tom Thumb	Retail		6,266		731,155		N/A
Paynesville
		Tom Thumb	Retail		4,800		365,000		N/A


							Fiscal 2003
							Economic
State & City		Property Type	Square Feet		Investment		Occupancy

Pine City
	Evergreen Shopping Ctr	Retail		63,225	$	2,802,229		N/A
	Tom Thumb	Retail		4,800		440,000		N/A
Plymouth
	Plymouth Tech IV	Office Building		53,309		5,901,898		100.0	%
	Plymouth Tech V	Office Building		73,500		8,445,892		100.0	%
Prior Lake
	PDQ Center	Retail		6,800		970,746		N/A
	Prior Lake Peak	Retail		4,200		478,800		N/A
Rochester
	Checkers Auto	Retail		6,225		440,000		N/A
	Maplewood Square	Strip Mall		118,398		11,906,217		92.5	%
Roseville
	Stone Container	Distribution Center		229,072		8,250,115		100.0	%
St. Cloud
	Cold Spring Center	Office Building		77,533		8,494,269		90.3	%
St. Louis
	Dilly Lily	Retail		3,444		340,000		N/A
St. Paul
	Interstate Bakery	Retail		6,225		320,000		N/A
	UH Medical	Medical Office		43,046		7,407,752		N/A
Sartell
	Abbott Northwestern	Medical Office		60,095		13,636,966		N/A
Sauk Rapids
	Tom Thumb	Retail		3,575		250,000		N/A
Shoreview
	Tom Thumb	Retail		3,000		330,000		N/A
Virginia
	Edgewood Vista	Assisted Living		70,313		7,070,369		100.0	%
Waconia
	Stone Container	Distribution Center		29,440		1,666,518		100.0	%
Willmar
	Sam Goody/Musicland	Retail		6,225		400,000		N/A
Winsted
	Sterner Lighting	Manufacturing Plant		38,000		1,000,789		66.7	%
	Tom Thumb	Retail		3,571		410,000		N/A

Minnesota Total				4,069,709	$	401,714,620		96.2	%
Montana
Belgrade
	Edgewood Vista	Assisted Living		5,100	$	453,494		100.0	%
Billings
	Edgewood Vista	Assisted Living		11,800		980,218		100.0	%
Kalispell
	Edgewood Vista	Assisted Living		5,895		588,113		100.0	%
	Ernst Home Center	Retail		52,000		2,500,000		N/A


							Fiscal 2003
							Economic
State & City		Property Type	Square Feet		Investment		Occupancy

Livingston
	Pamida	Retail		41,200	$	1,800,000		N/A
Missoula
	Edgewood Vista	Assisted Living		10,150		962,428		100.0	%

Montana Total				126,145	$	7,284,253		100.0	%
Nebraska
Columbus
	Edgewood Vista	Assisted Living		5,100	$	455,626		100.0	%
Fremont
	Edgewood Vista	Assisted Living		6,042		552,172		100.0	%
Grand Island
	Edgewood Vista	Assisted Living		5,100		455,626		100.0	%
Hastings
	Edgewood Vista	Assisted Living		6,042		571,539		100.0	%
Omaha
	Ameritrade Headquarters	Office Building		73,742		8,348,798		100.0	%
	Barnes & Noble	Retail Bookstore		27,500		3,699,197		100.0	%
	Edgewood Vista	Assisted Living		6,042		641,252		100.0	%

Nebraska Total				129,568	$	14,724,210		100.0	%
North Dakota
Fargo
	Barnes & Noble	Retail		30,000	$	3,274,996		100.0	%
	Express Shopping Center	Retail		30,227		1,425,000		N/A
	Microsoft — Great Plains Software	Campus Facility		122,040		15,375,154		100.0	%
	Petco	Retail		18,040		1,278,934		100.0	%
	Stone Container	Office/Manufacturing		195,075		7,105,566		100.0	%
Grand Forks
	Carmike Theatre	Retail		28,528		2,545,737		100.0	%
	MedPark Mall	Retail		59,177		5,648,599		98.7	%
Jamestown
	Jamestown Mall	Retail		99,403		1,321,021		N/A
Minot
	1^st Avenue Building	Office Building		15,357		539,940		39.5	%
	17 South Main	Office Building		3,250		90,717		91.9	%
	401 South Main	Office Building/Parking		8,597		622,135		48.0	%
	Arrowhead Shopping Ctr	Strip Mall		76,424		3,053,961		94.0	%
Minot
	Edgewood Vista	Assisted Living		97,821		6,270,707		100.0	%
	Minot Plaza	Retail		11,020		521,350		100.0	%

North Dakota Total				794,959	$	49,073,817		96.7	%
South Dakota
Rapid City
	900 Concourse Drive	Office Building		75,815	$	7,046,826		66.7	%


							Fiscal 2003
							Economic
State & City		Property Type	Square Feet		Investment		Occupancy

Sioux Falls
	Edgewood Vista	Assisted Living		11,800	$	974,739		100.0	%

South Dakota Total				87,615	$	8,021,565		71.4	%
Wisconsin
Ladysmith
	Pamida	Retail		41,000	$	1,500,000		N/A
Schofield
	Plaza Shopping Center	Retail		53,764		1,750,000		N/A

Wisconsin Total				94,764	$	3,250,000		N/A

Total Commercial				6,083,588	$	518,104,186		95.4	%

Apartment Communities


						Fiscal 2003
State & City		Units		Investment		Occupancy

Colorado
Colorado Springs
	Neighborhood		192	$	11,698,838		89.5	%
Ft. Collins
	MiraMont		210		14,561,890		90.9	%
	Pine Cone		195		13,497,339		87.9	%

Colorado Total			597	$	39,758,067		89.5	%
Idaho
Boise
	Clearwater		60	$	3,894,385		92.5	%

Idaho Total			60	$	3,894,385		92.5	%
Iowa
Sioux City
	Ridge Oaks		132	$	4,765,404		91.6	%

Iowa Total			132	$	4,765,404		91.6	%
Kansas
Topeka
	Crown Colony		220	$	11,107,714		93.5	%
	Sherwood		300		16,418,339		93.4	%

Kansas Total			520	$	27,526,053		93.4	%
Minnesota
Moorhead
	Eastgate		116	$	2,606,528		93.8	%
Rochester
	Heritage Manor		182		7,988,139		91.1	%
	Woodridge		108		6,981,477		92.5	%


						Fiscal 2003
State & City		Units		Investment		Occupancy

	Sunset Trail		73	$	7,788,452		88.6	%
	Sunset Trail II		73		6,836,316		88.6	%
	Sunset Trail III		N/A		337,155		N/A
St. Cloud
	Lancaster Place		84		3,287,489		77.8	%
	Park Meadows		360		12,458,003		87.9	%
	West Stonehill		313		12,826,835		93.5	%

Minnesota Total			1,309	$	61,110,394		90.0	%
Montana
Billings
	Castle Rock		165	$	6,090,294		82.9	%
	Country Meadows I		67		4,377,663		95.4	%
	Country Meadows II		67		4,370,007		94.7	%
	Olympic Village		274		12,090,811		97.0	%
	Pinehurst		21		766,794		99.5	%
	Rimrock West		78		4,003,670		99.0	%
	Rocky Meadows		98		6,783,595		95.5	%

Montana Total			770	$	38,482,834		93.3	%
Nebraska
Lincoln
	Thomasbrook		264	$	10,303,237		96.8	%
Omaha
	Applewood on the Green		234		11,829,230		58.2	%

Nebraska Total			498	$	22,132,467		78.1	%
North Dakota
Bismarck
	Cottonwood Lake I		67	$	4,697,270		87.8	%
	Cottonwood Lake II		67		4,300,213		82.7	%
	Cottonwood Lake III		67		4,623,605		90.6	%
	Cottonwood Lake IV		N/A		263,966		N/A
	Crestview		152		5,296,570		97.5	%
	Kirkwood Manor		108		3,846,558		95.6	%
	North Pointe		49		2,458,772		93.9	%
	Pebble Springs		16		805,268		94.6	%
Bismarck
	Westwood Park		64		2,369,187		97.5	%
Fargo
	Candlelight		44		1,082,504		96.0	%
	Park East		122		5,275,861		97.8	%
	Prairiewood Meadows		85		3,016,210		94.1	%
Grand Forks
	Forest Park Estates		270		7,872,524		97.5	%
	Jenner Properties		90		1,993,372		97.6	%
	Legacy I		116		7,265,194		99.4	%
	Legacy II		67		3,874,336		99.8	%


						Fiscal 2003
State & City		Units		Investment		Occupancy

	Legacy IV		67	$	7,117,046		99.6	%
	Southwinds		164		6,232,703		98.4	%
	Valley Park Manor		168		5,293,011		96.5	%
Minot
	Chateau		64		2,640,773		97.3	%
	Colton Heights		18		981,775		98.5	%
	Dakota Arms		18		647,669		97.5	%
	Magic City		220		5,170,162		95.2	%
	South Pointe		195		10,418,770		98.2	%
	Southview		24		751,895		97.1	%
Williston
	Century		192		4,424,030		92.4	%
Other Locations N.D.
	408 1^st Street SE — Minot		1		46,907		100.0	%
	Beulah Condominiums — Beulah		26		489,861		54.1	%
	Parkway Apartments — Beulah		36		199,730		57.1	%
	Bison Properties — Carrington & Cooperstown		35		659,595		62.2	%
	Sweetwater Properties — Devils Lake & Grafton		90		1,747,280		78.1	%
	Lonetree Manor — Harvey		12		259,034		69.9	%
	The Meadows I — Jamestown		27		1,838,469		99.2	%
	The Meadows II — Jamestown		27		1,925,559		99.0	%
	The Meadows III — Jamestown		27		2,198,696		99.3	%

North Dakota Total			2,794	$	112,084,375		95.2	%
South Dakota
Rapid City
	Canyon Lake		109	$	4,296,410		92.2	%
	Pointe West		90		4,565,174		92.4	%
Sioux Falls
	East Park		84		2,601,604		N/A
	Oakmont		80		5,441,069		84.9	%
	Oakwood Estates		160		5,905,338		75.9	%
	Oxbow		120		5,180,718		95.6	%
	Prairie Winds		48		2,054,540		77.0	%
	Sycamore		48		1,456,020		N/A

South Dakota Total			739	$	31,500,873		87.1	%
Texas
Irving
	Dakota Hill at Valley Ranch		504	$	38,097,248		90.9	%

Texas Total			504	$	38,097,248		90.9	%
Washington
Vancouver
	Ivy Club		204	$	13,290,832		86.8	%
	Van Mall Woods		100		6,273,684		95.4	%

Washington Total			304	$	19,564,516		89.7	%

Total Apartment Communities			8,227	$	398,916,616		91.2	%

Undeveloped and Vacant Land
(N/A = Owned less than 12 months)


State & City		Property Type	Square Feet		Investment

Minnesota
	Andover	Vacant Land		152,896	$	150,000
	Centerville	Vacant Land		40,000		100,000
	Inver Grove	Vacant Land		177,635		560,000
	Long Prairie	Vacant Land		281,833		150,000
	Prior Lake	Vacant Land		35,697		50,000

Minnesota Total				688,061	$	1,010,000
Montana
	Libby	Vacant Land		205,347	$	150,000
	Kalispell	Vacant Land		368,430		1,400,000

Montana Total				583,810	$	1,550,000
Wisconsin
	River Falls	Vacant Land		80,958	$	200,000

Wisconsin Total				80,958		200,000
Total Undeveloped Land				1,352,829	$	2,760,000

Total Real Estate Owned					$	919,780,802

Occupancy and Leases

Occupancy rates shown above are for the fiscal year ended April 30, 2003. In the case of multi-family residential properties, lease arrangements with individual tenants vary from month-to-month to one-year leases, with the normal term being six months. Leases on commercial properties vary from month-to-month to 20 years.

Mortgage Loans Payable

As of April 30, 2003, the above properties were encumbered with individual first mortgage liens totaling $539.4 million. The original principal balance was $572.8 million. Of the $539.4 million of mortgage indebtedness on April 30, 2003, $23.2 million is represented by variable rate mortgages on which the future interest rate will vary based on changes in the interest rate index for each respective loan and the balance of fixed rate mortgages was $516.2 million. The principal payments due on all of the mortgage indebtedness are as follows:


Year Ending April 30		Mortgage Principal

	2003	$	15,118,657
	2004		18,476,246
	2005		17,736,455
	2006		18,457,557
	2007		38,261,152
	Later Years		431,347,135

	Total	$	539,397,202

•		Title

		The title to the interest owned by us in all of the above properties is in our name, the name of either IRET Properties or the name of one of our wholly-owned subsidiaries, in fee simple (in each case, we have in our files an attorney’s title opinion or a title insurance policy evidencing its title).

•		Insurance

		In the opinion of management, all of said properties are adequately covered by casualty and liability insurance.

•		Planned Improvements and Acquisitions

		We currently have plans to complete the expansion of the Southdale Medical Center in Edina, Minnesota, at an estimated cost of $13.7 million and to finance a $5.1 million addition to the existing Edgewood Vista facility in Virginia, Minnesota. Each year we carefully review the physical condition of each property we own. In order for our properties to remain competitive, attract new tenants, and retain existing tenants, we plan for a reasonable amount of capital improvements. For the year ended April 30, 2003, we spent $13.9 million on capital improvements.

•		Contracts or Options to Sell

		As of April 30, 2003, there were no contracts to sell any of our properties. We have, however, granted options to purchase certain assets to various third parties, with the exception of the Excelsior Retail Center option which is held by Charles Wm. James. Mr. James is currently an officer and member of our Board of Trustees. The option was granted prior to Mr. James becoming an officer and Board member. The option price is equal to the price paid by us plus an annual consumer price index (“CPI”) increase. Each option grants the right to purchase certain Trust assets at the greater of its appraised value or an annual compounded increase of 2.0% to 2.5% of the initial cost to us, with the exception of the Excelsior Retail Center which is an annual CPI increase in the purchase price. The property cost and gross rental revenue on these properties are as follows:


				Gross Rental Receipts

		Property Cost		2003		2002		2001

East Grand Station - EGF, MN		$	1,392,251	$	152,352	$	152,352	$	161,825
Edgewood Vista - Belgrade, MT			453,494		49,060		49,060		49,063
Edgewood Vista - Billings, MT			980,218		106,150		106,150		106,150
Edgewood Vista - Columbus, NE			455,626		49,060		49,060		49,063
Edgewood Vista - Duluth, MN			7,081,519		1,245,619		770,004		588,501
Edgewood Vista - EGF, MN			1,430,136		155,012		155,012		98,175
Edgewood Vista - Fremont, NE			552,172		58,911		58,911		19,637
Edgewood Vista - Grand Island, NE			455,626		49,060		49,060		49,063
Edgewood Vista - Hastings, NE			571,539		60,588		60,588		20,196
Edgewood Vista - Kalispell, MT			588,113		61,600		61,600		10,267
Edgewood Vista - Minot, ND			6,270,707		761,905		681,055		681,055
Edgewood Vista - Missoula, MT			962,428		120,175		113,644		104,500
Edgewood Vista - Omaha, NE			641,252		67,188		67,188		16,797
Edgewood Vista - Sioux Falls, SD			974,739		106,150		106,150		106,150
Edgewood Vista - Virginia, MN			7,070,369		759,000		0		0
Excelsior Retail Ctr - Excelsior, MN			900,000		22,346		0		0
Great Plains Software - Fargo, ND			15,375,154		1,875,000		1,875,000		1,875,000
HealthEast - - Woodbury & Maplewood, MN			21,600,999		1,916,636		1,916,636		1,916,636

	TOTAL	$	67,756,342	$	8,529,407	$	6,271,469	$	5,852,079

Summary of Real Estate Investment by State


		Total Real Estate
State		Investment		Percent of Total

Colorado
	Residential	$	39,758,067
	Commercial		0

	Total	$	39,758,067		4.3	%
Georgia
	Residential	$	0
	Commercial		3,971,878

	Total	$	3,971,878		0.4	%
Idaho
	Residential	$	3,894,385
	Commercial		15,041,490

	Total	$	18,935,875		2.1	%
Iowa
	Residential	$	4,765,404
	Commercial		12,900,879

	Total	$	17,666,283		1.9	%


		Total Real Estate
State		Investment		Percent of Total

Kansas
	Residential	$	27,526,053
	Commercial		0

	Total	$	27,526,053		3.0	%
Michigan
	Residential	$	0
	Commercial		2,121,474

	Total	$	2,121,474		0.2	%
Minnesota
	Residential	$	61,110,394
	Commercial		401,714,620
	Undeveloped		1,010,000

	Total	$	463,835,014		50.4	%
Montana
	Residential	$	38,482,834
	Commercial		7,284,253
	Undeveloped		1,550,000

	Total	$	47,317,087		5.2	%
Nebraska
	Residential	$	22,132,467
	Commercial		14,724,210

	Total	$	36,856,677		4.0	%
North Dakota
	Residential	$	112,084,375
	Commercial		49,073,817

	Total	$	161,158,192		17.5	%
South Dakota
	Residential	$	31,500,873
	Commercial		8,021,565

	Total	$	39,522,438		4.3	%
Texas
	Residential	$	38,097,248
	Commercial		0

	Total	$	38,097,248		4.2	%
Washington
	Residential	$	19,564,516
	Commercial		0

	Total	$	19,564,516		2.1	%
Wisconsin
	Residential	$	0
	Commercial		3,250,000
	Undeveloped		200,000

	Total	$	3,450,000		0.4	%

	Total	$	919,780,802		100.0	%

Mortgage Loans Receivable


Location		April 30, 2003 Balance		Rate

Other Mortgages
	$501,000 and higher	$	816,570		9%
	$100,000 to $500,000		328,101		6.5-7.5%
	$50,000 to $99,999		0		N/A
	$20,000 to $49,999		63,269		8-10.9%
	Less than $20,000		0		N/A

Total		$	1,207,940

	Less Allowance for doubtful accounts		25,000

		$	1,182,940

Item 3. Legal Proceedings

In the ordinary course of our operations we become involved in litigation. At this time, we know of no material pending or threatened legal proceedings or other proceedings contemplated by governmental authorities that would have a material impact upon us.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to our shareholders during the fourth quarter of the fiscal year ended April 30, 2003.

PART II

Item 5. Market for the Registrant’s Common Stock and Related Security Holder Matters

Quarterly Share Data

Since April 9, 2002, our Shares have traded on the NASDAQ National Market under the symbol IRETS. Prior to April 9, 2002, and from October of 1997, our Shares traded on the NASDAQ SmallCap Market. The following table reflects the range of high and low prices of our Shares for each full quarterly period within the two most recent years. This information is based on selling prices as reported on the NASDAQ National Market and NASDAQ SmallCap Market, as applicable.


Fiscal Quarter Ended	High		Low

07/31/01		10.49		8.25
10/31/01		9.43		8.80
01/31/02		10.00		9.00
04/30/02		10.45		9.51
07/31/02		11.90		8.55
10/31/02		11.00		9.05
01/31/03		11.00		9.66
04/30/03		10.00		8.98

Holders

On June 30, 2003, we had 10,697 shareholders of record.

Unregistered Sale of Shares

On February 1, 2003, the T.F. James Company was merged into IRET, Inc. As consideration for the merger, we issued 3,422,022 Shares and assumed outstanding debt and liabilities in the amount of $37.7 million. The issuance of these Shares was not registered under the Securities Act of 1933 and such Shares were issued in reliance upon Section 4(2) of the Securities Act. As a result of the merger, we acquired approximately 52 retail and commercial real estate properties containing approximately 807,154 square feet of rentable space, as well as eight underdeveloped or primarily vacant parcels of real estate. The merger increased our real estate portfolio by $70.2 million and is expected to increase gross rental revenues by $6.4 million on an annual basis.

Registered Sale of Shares and Repurchase of Shares

During fiscal 2003, we sold 3,928,896 Shares under best efforts offerings through various brokers registered with the National Association of Securities Dealers. These Shares were sold at $9.50 per Share. We also issued 971,292 Shares pursuant to our distribution reinvestment plan. We repurchased fractional units of Shares during fiscal 2003 and 2002. Following is a two-year summary, by quarter, of the issuance of Shares in offerings, the issuance of distribution reinvestment Shares and the repurchase of fractional Shares:


		Shares			Dollars

05/01/01 Beginning Balance			24,068,346		$	132,148,768
Quarter Ended 07/31/01
	Distribution Reinvestment Plan		193,687		$	1,609,600
	Shares Redeemed		(816	)		(7,101	)

			24,261,217		$	133,751,267
Quarter Ended 10/31/01
	Shares Sold		60,140		$	516,800
	Distribution Reinvestment Plan		208,952			1,736,807
	Shares Redeemed		(300	)		(2,573	)

			24,530,009		$	136,002,301
Quarter Ended 01/31/02
	Shares Sold		2,789,249		$	23,367,681
	Commissions Paid		N/A			(1,308,100	)
	Distribution Reinvestment Plan		221,169			2,463,087
	Shares Redeemed		(843	)		(8,032	)

			27,539,584		$	160,516,937


		Shares			Dollars

Quarter Ended 04/30/02
	Shares Sold		98,598		$	857,626
	Commissions Paid		N/A			(1,285	)
	Distribution Reinvestment Plan		209,072			2,005,001
	Shares Redeemed		(175	)		(1,730	)

			27,847,079		$	163,376,549
Quarter Ended 07/31/02
	Shares Sold		3,709,948		$	32,886,846
	Distribution Reinvestment Plan		229,520			2,193,872
	Shares Redeemed		(568	)		(5,658	)

			31,785,979		$	198,451,609
Quarter Ended 10/31/02
	Shares Sold		13,580		$	(60,539	)
	Distribution Reinvestment Plan		224,817			2,401,258
	Shares Redeemed		(396	)		(3,869	)

			32,023,980		$	200,788,459
Quarter Ended 01/31/03
	Shares Sold		154,324		$	1,279,172
	Distribution Reinvestment Plan		238,763			2,294,508
	Shares Redeemed		(1,130	)		(11,396	)

			32,415,937		$	204,350,743
Quarter Ended 04/30/03
	Shares Sold		3,473,066		$	33,729,087
	Distribution Reinvestment Plan		278,192			2,573,282
	Shares Redeemed		(844	)		(7,905	)

			36,166,351		$	240,645,207

Distributions

We have paid quarterly cash distributions since July 1, 1971. Cash distributions paid during the past three fiscal years were as follows:


Fiscal Year	2003		2002		2001

July 1^st	$	.1540	$	.1450	$	.1325
October 1^st		.1560		.1475		.1350
January 15^th		.1570		.1500		.1400
April 1^st		.1580		.1520		.1425

	$	.6250	$	.5945	$	.5500

Item 6. Selected Financial Data for Fiscal Years Ended April 30, Including Discontinued Operations.

Set forth below is selected financial data for the periods and dates indicated. This information should be read in conjunction with, and is qualified in its entirety by reference to, the consolidated financial statements and notes included in this Annual Report on Form 10-K.


		2003			2002			2001			2000			1999

Consolidated Income Statement Data
	Revenue	$	120,766,665		$	93,016,069		$	75,767,150		$	55,445,193			$	39,927,262
	Income before gain/loss on properties and minority interest		15,486,435			13,865,934			10,187,812			8,548,558				6,401,676
	Gain on repossession/ sale of properties		1,594,798			546,927			601,605			1,754,496				1,947,184
	Minority interest of portion operating partnership income		(4,833,072	)		(3,812,732	)		(2,095,177	)		(1,495,209	)			(744,725	)
	Net income		12,248,161			10,600,129			8,694,240			8,807,845				7,604,135
Consolidated Balance Sheet Data
	Total real estate investments	$	845,324,970		$	685,346,681		$	548,580,418		$	418,216,516			$	280,311,442
	Total assets		885,680,521			730,209,018			570,322,124			432,978,299				291,493,311
	Shareholders’ equity		214,761,105			145,578,131			118,945,160			109,920,591				85,783,294
Consolidated Per Share (basic and diluted)
	Net Income		.38			.42			.38			.42				.44
	Distributions		.63			.59			.55			.51				.47


CALENDAR YEAR		2002			2001			2000			1999			1998

Tax status of distribution
	Capital gain		0.0	%		0.0	%		0.7	%		30.3	%		6.3	%
	Ordinary income		68.3	%		66.0	%		86.8	%		69.8	%		76.0	%
	Return of capital		31.7	%		34.2	%		12.5	%		0.0	%		17.7	%

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information is provided in connection with, and should be read in conjunction with, the consolidated financial statements included in this Annual Report on Form 10-K. We operate on a fiscal year ending on April 30. The following discussion and analysis is for the fiscal year ended April 2003.

Revenues

Total revenues of IRET Properties, our operating partnership, for fiscal 2003 were $119.1 million, compared to $90.9 million in fiscal 2002 and $74.1 million in fiscal 2001. The increase in revenues received during fiscal 2003 was $28.2 million greater than fiscal 2002 and $45.0 million greater than fiscal 2001. This increase resulted from:


Rent from 14 properties acquired in fiscal 2002 in excess of that received in 2002 from the same 14 properties	$	16,427,325
Rent from 64 properties acquired in Fiscal 2003		10,643,595
Increase in rental income on existing properties		1,695,313
A decrease in straight-line rents		80,122
A decrease in ancillary income		19,311
A decrease in rent from properties sold		(673,203	)

	$	28,192,463

Rent from 28 properties acquired in fiscal 2001 in excess of that received in 2001 from the same 28 properties	$	11,236,492
Rent from 14 properties acquired in fiscal 2002		4,737,866
Increase in rental income on existing properties		960,240
An increase in straight-line rents		96,726
An increase in ancillary income		1,533
A decrease in rent from properties sold		(219,899	)

	$	16,812,958

As illustrated above, the substantial majority of the increase in our gross revenue for fiscal 2003 and 2002, respectively, resulted from the addition of new real estate properties to the IRET Properties’ portfolio rather than rental increases on existing properties. For the next 12 to 18 months, we expect acquisitions to be the most significant factor to increase our revenues and ultimately our net income. While acceptable real estate assets are still available for purchase, the slow economy combined with a widespread demand for real estate from traditional and non-traditional investors has resulted in a significant reduction in the investment returns from all types of real estate. This reduction in the rates of return has been offset to some extent by the dramatic drop in borrowing costs to historically low levels. While we were able to take advantage of those lower borrowing costs for most of our recent acquisitions, the majority of our debt is fixed and not prepayable without significant prepayment costs and fees.

Capital Gain Income

IRET Properties realized capital gain income for fiscal 2003 of $1.6 million. This compares to $0.5 million of capital gain income recognized in fiscal 2002 and $0.6 million recognized in fiscal 2001. A list of the properties sold during each of these years showing sales price, depreciated cost plus sales costs and net gain (loss) is included below under the caption “Property Dispositions.” We anticipate that we will continue to sell our older and smaller locations as opportunities arise. We do not believe that this is inconsistent with our strategy of acquiring properties that we intend to retain for at least ten years.

Expenses and Net Income

The operating income of IRET Properties for fiscal 2003 increased to $15.9 million from $14.3 million in fiscal 2002 and $10.8 million in fiscal 2001. Our net income for generally accepted accounting purposes for fiscal 2003 was $12.2 million, compared to $10.6 million in fiscal 2002 and $8.7 million in fiscal 2001. On a per share basis, net income was $.38 per share in fiscal 2003 compared to $.42 in fiscal 2002 and $.38 in fiscal 2001.

These changes in operating income and net income result from the changes in revenues and expenses detailed below:

For fiscal 2003, an increase in net income of $1.6 million, resulting from:


An increase in net rental income (rents, less utilities, maintenance, taxes, insurance and management)	$	13,924,558
A decrease in interest income		(232,004	)
An increase in ancillary income		19,311
An increase in interest expense		(6,984,293	)
An increase in depreciation expense		(4,175,882	)
A decrease in minority interest of operating partnership income		35,208
An increase in operating expenses, administrative, advisory & trustee services		(801,027	)
An increase in minority interest of other partnership		(735,550	)
An increase in amortization expense		(151,484	)
A decrease in gain on sale of investments		(231,585	)
An increase in discontinued operations, net		980,780

	$	1,648,032

For fiscal 2002, an increase in net income of $1.9 million, resulting from:


An increase in net rental income (rents, less utilities, maintenance, taxes, insurance and management)	$	12,239,178
A increase in interest income		309,122
An increase in ancillary income		1,533
An increase in interest expense		(5,394,980	)
An increase in depreciation expense		(3,192,345	)
An increase in minority interest of operating partnership income		(1,503,993	)
An increase in operating expenses, administrative, advisory & trustee services		(336,458	)
An increase in minority interest of other partnership		(198,564	)
An increase in amortization expense		(121,012	)
A decrease in gain on sale of investments		(54,678	)
An increase in discontinued operations, net		158,086

	$	1,905,889

Factors Impacting Net Income During Fiscal 2003 as Compared to 2002 and 2001

Compared to the prior two fiscal years, there were a number of factors that continued to limit the growth of our total revenue and ultimately negatively impacted our net income per share. A discussion of the factors having the greatest impact on our business compared to the prior two fiscal years is set forth below. While most of these negative influences show no signs of lessening in the next twelve months, the most significant negative factor, our uninvested cash that was raised in June, 2002, by our offering of additional Shares, was resolved during our second quarter of fiscal 2003 by the investment of such cash. Despite the positive development pertaining to our uninvested cash, the same factor reduced our full earnings for fiscal 2003.

	•		Increased economic vacancy.During fiscal 2003, vacancy levels at our stabilized multi-family residential properties continued to increase throughout our entire portfolio from 5.9% at the end of 2002 to 7.8% at the end of fiscal 2003. Likewise, vacancy levels at our stabilized commercial properties increased from 0.9% at the end of fiscal 2002 to 4.7% at the end of fiscal 2003. A majority of the markets in which we operate continue to experience overall poor economic conditions as it pertains to job creation. The poor economic climate has translated directly into increased vacancy at many of our properties.

			Our commercial vacancy is primarily due to our inability to either renew existing leases or to re-lease space being vacated by tenants at the expiration of their lease. While not necessarily indicative of future business cycles, in past economic downturns, a recovery in occupancy levels generally trails the pick up in economic activity by twelve months or more. Despite some positive economic developments, we have yet to see an increase in demand for multi-family residential or commercial space. We continue to expect that demand in our markets for both apartments and commercial space will remain weak through the balance of 2003.

	•		Uninvested cash.The most significant reason for the decline in net income per share during fiscal 2003, as compared to fiscal 2002 and fiscal 2001 is the large balance of cash and marketable securities. While this money was invested in short-term income producing investments, we ordinarily seek to invest in income producing real estate. During the first and second quarters of fiscal 2003, we were able to fully invest the proceeds from the equity raised during first quarter 2003 into income producing real estate. This delay in investing such proceeds resulted in a reduction in earnings per share for the fiscal year ending April 30, 2003.

	•		Increased real estate taxes.Taxes imposed on our real estate properties increased by $4.5 million or 49.8% for the fiscal year ending April 30, 2003, as compared to the corresponding period of fiscal 2002. Of the increased real estate taxes, $3.4 million or 76.3% is attributable to the addition of new real estate acquired in fiscal 2002 and 2003, while $1.1 million or 23.7% is due to increased costs for real estate taxes on existing real estate assets. Most of our new property acquisitions during the past year

			were in Minnesota, a jurisdiction with higher property taxes than North Dakota and the other states in which we own property.

			Under the terms of most of our commercial leases, the full cost of real estate tax is paid by the tenant as additional rent. One commercial property, Southdale Medical Center, which is located in Edina, Minnesota, accounts for $0.9 million or 20.0% of the increase in real estate tax costs for the fiscal year ending April 30, 2003. Due to increased vacancy at Southdale Medical Center during fiscal 2003 we were unable to fully recover the real estate tax cost from the tenants. We expect that the increased vacancy at Southdale Medical Center will persist for at least the first three months of fiscal 2004. For our noncommercial real estate properties, any increase in our real estate tax costs must be collected from tenants in the form of a general rent increase. While we have implemented portfolio wide rent increases, the current economic conditions and increased vacancy levels have prevented us from raising rents in the amount necessary to fully recover our increased real estate tax costs. To further compound the problem, a number of states in which we operate are facing record state budget shortfalls. Our past experience is such shortfalls translate into local governments raising property taxes.

	•		Increased maintenance expense.The maintenance expense category increased by $4.7 million or 64.3% for the fiscal year ending April 30, 2003, as compared to the corresponding period of fiscal 2002. Of the increased maintenance costs for the fiscal year ending April 30, 2003, $3.5 million or 74.9% is attributable to the addition of new real estate acquired in fiscal 2002 and 2003, while $1.2 million or 25.1% is due to increased costs for maintenance on existing real estate assets. Under the terms of most of our commercial leases, the full cost of maintenance is paid by the tenant as additional rent. Southdale Medical Center accounts for $0.8 million or 17.9% of the increase in maintenance costs for the fiscal year ending April 30, 2003. Due to increased vacancy at Southdale Medical Center during the fiscal year ending April 30, 2003, we were unable to fully recover the maintenance cost from the tenants. For our noncommercial real estate properties, any increase in our maintenance costs must be collected from tenants in the form of a general rent increase. While we have implemented portfolio wide rent increases, the current economic conditions and increased vacancy levels have prevented us from raising rents in the amount necessary to fully recover our increased maintenance costs.

	•		Increased utility expense.The utility expense category increased by $2.8 million or 54.3% for the fiscal year ending April 30, 2003, as compared to the corresponding period of fiscal 2002. Of the increased utility costs, $1.8 million or 64.4% is attributable to the addition of new real estate acquired in fiscal 2002 and 2003, while $1.0 million or 35.6% is due to increased costs for utilities on existing real estate assets. Under the terms of most of our commercial leases, the full cost of utilities is paid by the tenant as additional rent. Southdale Medical Center accounts for $0.7 million or 25.7% of the increase in utility costs for the fiscal year ending April 30,

			2003. Due to increased vacancy at Southdale Medical Center during the fiscal year ending April 30, 2003, we were unable to fully recover the utility cost from the tenants. For our other noncommercial real estate properties, any increase in our utility costs must be collected from tenants in the form of a general rent increase. While we have implemented portfolio wide rent increases, the current economic conditions and increased vacancy levels have prevented us from raising rents in the amount necessary to fully recover our increased utility costs. Since our real estate portfolio is primarily located in Minnesota and North Dakota, the severity of winters will have a large impact on our utility costs.

	•		Increased administrative and operating expense.Administrative and operating expenses increased by $0.8 million or 37.5% for the fiscal year ending April 30, 2003, as compared to the corresponding period of fiscal 2002. Of this increase in administrative and operating expense for the fiscal year ending April 30, 2003, $139,000 or 17.4% was due to professional fees and costs associated with our offering of Shares in the first quarter of fiscal 2003. In prior years, the work associated with offerings of Shares to the public was largely done by our employees. Over the past year we have hired ten new employees. The addition of these new employees, together with increases in the wages and benefits paid to existing employees, account for $428,044 or 53.4% of the increase in administrative and operating costs for the fiscal year ending April 30, 2003.

	•		Increased insurance premiums.Insurance expense increased by $0.9 million or 66.4% for the fiscal year ending April 30, 2003, compared to the prior fiscal year. Of the increased insurance costs, $331,286 or 38.4% is attributable to the addition of new real estate, while $0.5 million or 61.6% is due to increased premium costs for coverage on existing real estate assets. Under the terms of most of our commercial leases, the full cost of insurance is paid by the tenant as additional rent. For our other real estate properties, any increase in our insurance costs must be collected from tenants in the form of a general rent increase. While we have implemented portfolio wide rent increases, the current economic conditions and increased vacancy levels have prevented us from raising rents in the amount necessary to fully recover our increased insurance costs. We do not expect our insurance costs to decline during fiscal 2004.

	•		Slower increase of interest expense.Our mortgage debt increased $79.8 million or 17.4% for the fiscal year ending April 30, 2003. Due to the fact that interest rates on new mortgages incurred during those periods were at lower rates than mortgages in prior periods, our interest expense increased by only $7.3 million or 25.4% for the fiscal year ending April 30, 2003, as compared to the corresponding periods of fiscal 2002. Of the increased interest expense for the fiscal year ending April 30, 2003, $8.0 million or 110.3% is attributable to the addition of new real estate, while interest expenses on existing real estate assets declined by $0.7 million or 10.3%, due primarily to the decline in interest rates on our adjustable rate mortgages.

•

Increased minority partnership interests.In addition to the factors discussed above that have negatively impacted our earnings per share despite an overall increase in gross revenue, the increase in the number of limited partnership units issued by IRET Properties has also had an impact on our revenue per share. Even though our revenue increased by $28.2 million or 31.0% for the fiscal year ending April 30, 2003, our net income only increased $1.6 million or 15.5%. For the fiscal year ending April 30, 2003, outstanding limited partnership units increased by 569,789. Under the terms of the Agreement of Limited Partnership of IRET Properties, each limited partner is entitled to an equal allocation of net income or net loss. Limited partnership units are issued in exchange for the contribution of an interest in real estate. If capital gain income and the limited partnership ownership interest reflected as minority interests on the financial statements are excluded, the increase in net income is more closely related to the increase in revenue:


For the Fiscal Year Ending		04/30/03			04/30/02			% Change

Net Income		$	12,248,161		$	10,600,129			15.5	%
Add back portion allocated to:
	minority interests – other partnerships		934,114			198,564
	minority interests – operating partnerships		3,679,239			3,714,447
Add back Discontinued Operations			686,750			(294,030	)
Subtract capital gain income			(315,342	)		(546,927	)

Total Portfolio Net Income		$	17,232,922		$	13,672,183			26.0	%

Telephone Endorsement Fee

During fiscal 2001, we received a payment of $0.9 million from a major telecommunications provider for allowing marketing access by that provider to residents of the apartment communities owned by us, totaling 5,863 units. The contract provides that we will allow promotional materials to be placed in our apartment communities advertising the availability of tele-communication services over a 12-year period. Of this payment, $110,979 was recognized as income by us during fiscal 2001, $65,959 in fiscal 2002, and $65,959 in fiscal 2003. The balance of $0.6 million will be recognized ratably over the remaining portion of the contract period and there is a possibility of a refund of these monies if we should violate the contractual terms of the agreement.

The remainder of this page has been intentionally left blank.

Comparison of Results from Commercial and Residential Properties

The following is an analysis of the contribution by each of the two categories of real estate owned by us - multi-family residential and commercial:


Fiscal Years Ended 4/30		2003		%			2002		%			2001		%

Real Estate Investments- net of accumulated depreciation
	Commercial	$	495,777,967		59	%	$	333,092,927		49	%	$	218,261,880		40	%
	Residential		348,364,063		41	%		348,300,992		51	%		329,281,443		60	%

Total		$	844,142,030		100	%	$	681,393,919		100	%	$	547,543,323		100	%
Gross Real Estate Rental Revenues
	Commercial	$	59,166,328		50	%	$	32,298,473		36	%	$	18,672,410		25	%
	Residential		59,734,691		50	%		58,429,394		64	%		55,244,032		75	%

Total		$	118,901,019		100	%	$	90,727,867		100	%	$	73,916,442		100	%
Expenses-before depreciation - see Note 11 to Financial Statement for detail
	Commercial	$	36,645,248		46	%	$	17,705,181		30	%	$	9,851,021		20	%
	Residential		43,252,081		54	%		40,561,869		70	%		39,100,225		80	%

Total		$	79,897,329		100	%	$	58,267,050		100	%	$	48,951,246		100	%
Segment Gross Profit- before depreciation
	Commercial	$	22,521,080		58	%	$	14,593,292		45	%	$	8,821,389		35	%
	Residential		16,482,610		42	%		17,867,525		55	%		16,143,807		65	%

Total		$	39,003,690		100	%	$	32,460,817		100	%	$	24,965,196		100	%

Commercial Properties - Analysis of Lease Expirations and Credit Exposure

The following table shows the annual lease expiration percentages for the commercial properties owned by us as of April 30, 2003, for fiscal years 2004 through 2013 and the leases that will expire during fiscal year 2014 and beyond.



						Annualized Base		Percentage
			Percentage of			Rent of Expiring		of Total
Year of Lease	Square Footage of		Total Leased			Leases at		Annualized
Expiration	Expiring Leases		Square Footage			Expiration		Base Rent

2004		979,937		16.1	%	$	3,064,411		11.1	%
2005		636,434		10.5	%		2,561,956		9.3	%
2006		221,361		3.6	%		1,357,818		4.9	%
2007		500,520		8.2	%		2,007,415		7.3	%
2008		344,586		5.7	%		2,196,470		8.0	%
2009		248,550		4.1	%		1,148,447		4.2	%
2010		218,343		3.6	%		731,238		2.7	%
2011		605,642		10.0	%		2,536,823		9.2	%
2012		102,156		1.7	%		1,172,397		4.3	%


			Percentage of Total			Annualized Base Rent of Expiring		Percentage
Year of Lease	Square Footage of		Leased Square			Leases at		of Total Annualized
Expiration	Expiring Leases		Footage			Expiration		Base Rent

2013		97,821		1.6	%	$	392,109		1.4	%
2014 and beyond		2,128,238		35.0	%		10,402,079		37.7	%

Total		6,083,588		100.0	%	$	27,571,165		100.0	%

The following table shows the percentage of commercial leases by size of leased space in 10,000 square foot increments as of April 30, 2003:


						Percentage of
	Percentage of					Aggregate Portfolio
	Aggregate Portfolio			Annualized		Annualized
Square Feet Under Lease	Leased Square Feet			Base Rent		Base Rent

10,000 or Less		19.9	%	$	16,677,964		30.5	%
10,001 - 20,000		10.3	%		5,563,520		10.2	%
20,001 - 30,000		12.0	%		6,212,521		11.4	%
30,001 - 40,000		5.6	%		2,926,213		5.4	%
40,001 - 50,000		6.2	%		2,428,473		4.4	%
50,001 +		46.0	%		20,814,261		38.1	%

Total		100.0	%	$	54,622,952		100.0	%

The following table lists our top ten commercial tenants on April 30, 2003, for all commercial properties owned by us:


			% of Total
Lessee	Monthly Rent		Commercial Rent

Edgewood Living Communities, Inc.	$	269,968.53		5.5	%
HealthEast - Woodbury & Maplewood		159,719.68		3.2	%
Microsoft - Great Plain		156,250.00		3.2	%
Northland Insurance Company		146,749.00		3.0	%
Smurfit - Stone Container Corp.		141,704.51		2.9	%
Alliant Techsystems, Inc.		101,098.00		2.1	%
Wilsons The Leather Experts Inc.		94,791.67		1.9	%
Miracle-Ear, Inc.		86,842.00		1.8	%
Agere Systems, Inc.		79,755.00		1.6	%
Barnes & Noble, Inc.		68,615.24		1.4	%
All Others		3,625,033.67		73.4	%

Total Monthly Rent as of April 30, 2003	$	4,930,527.30		100.0	%

Results from Stabilized Properties

We define fully stabilized properties as those both owned at the beginning of the prior fiscal year and having completed the rent-up phase (90% occupancy). “Same-store” results for fiscal 2003 and 2002 for residential and commercial were:


Same-Store Residential	2003		2002		% Change

Scheduled Rent	$	60,155,653	$	59,282,878		1.5	%

Total Receipts	$	56,626,760	$	57,166,149		(0.9	)%

Utilities & Maintenance		10,731,423		10,125,196		6.0	%
Management		5,961,333		6,783,170		(12.1	%)
Taxes		6,411,780		6,380,233		.5	%
Insurance		1,390,900		1,016,735		36.8	%
Mortgage Interest		16,226,409		16,126,887		.6	%

Total Expenses	$	40,721,845	$	40,432,221		.7	%

Net Operating Income	$	15,904,915	$	16,733,928		(5.0	)%


Same-Store Commercial	2003		2002		% Change

Scheduled Rent	$	24,024,468	$	23,692,181		1.4	%

Total Receipts	$	29,706,330	$	28,207,331		5.3	%

Utilities & Maintenance		2,948,228		1,322,153		123.0	%
Management		1,182,231		802,206		47.4	%
Taxes		3,070,276		2,043,417		50.3	%
Insurance		287,125		137,075		109.5	%
Mortgage Interest		10,673,321		11,026,743		(3.2	%)

Total Expenses	$	18,161,181	$	15,331,594		18.5	%

Net Operating Income	$	11,545,149	$	12,875,737		(10.3	%)

Property Acquisitions

IRET Properties added $177.2 million of real estate investments to its portfolio during fiscal 2003, compared to $143.3 million added in fiscal 2002 and $143.0 million in fiscal 2001. The fiscal 2003 and 2002 additions are detailed below.

Fiscal 2003(May 1, 2002 to April 30, 2003)

Purchase

Residential

Location

Property Type

Units

Price

East Park Apartments

Sioux Falls, SD

Apartment Community

2,520,354

Sycamore Village

Sioux Falls, SD

Apartment Community

1,417,699

Total Residential

132

3,938,053

Square

Purchase

Commercial

Location

Property Type

Foot

Price

Abbott Northwestern

Sartell, MN

Commercial Medical

60,095

12,993,496

Airport Medical

Bloomington, MN

Commercial Medical

24,218

4,678,418

Anoka Strip Center

Anoka, MN

Commercial Retail

10,625

725,000

Brenwood Office Park

Minnetonka, MN

Commercial Office

176,917

14,014,085

Burnsville Strip Center

Burnsville, MN

Commercial Retail

8,400

760,000

Central Bank

Eden Prairie, MN

Commercial Office

39,525

4,600,000

Champion Auto Center

Forest Lake, MN

Commercial Retail

6,836

496,000

Chanhassen Retail Center

Chanhassen, MN

Commercial Retail

135,969

20,850,000

Checkers Auto

Rochester, MN

Commercial Retail

6,225

440,000

Checkers Auto

Faribault, MN

Commercial Retail

5,600

340,000

Chiropractic Office Bldg

Greenwood, MN

Commercial Office

1,600

330,000

Dilly Lily

St. Louis Park, MN

Commercial Retail

3,444

340,000

Dixon Industrial Park

Des Moines, IA

Commercial Industrial

604,711

11,872,351

Eagan Strip Center I

Eagan, MN

Commercial Retail

5,400

510,405

Eagan Strip Center II

Eagan, MN

Commercial Retail

13,901

1,348,714

Edgewood Vista

Hermantown, MN

Assisted Living

44,365

4,623,938

Evergreen Center

Pine City, MN

Commercial Retail

63,225

2,800,000

Excelsior Strip Center

Excelsior, MN

Commercial Retail

7,993

900,000

Express Center

Fargo, ND

Commercial Retail

30,227

1,425,000

Forest Lake Retail Center

Forest Lake, MN

Commercial Retail

100,656

8,007,107

Gas Plus More

Paynesville, MN

Commercial Retail

4,800

365,000

Interstate Bakery

St. Paul, MN

Commercial Retail

6,225

320,000

Interstate Bakery

Mounds View, MN

Commercial Retail

4,560

290,000

Inver Grove Center PDQ

Inver Grove, MN

Commercial Retail

8,400

940,000

Jamestown Mall

Jamestown, ND

Commercial Retail

99,403

1,320,000

Pamida

Kalispell, MT

Commercial Retail

52,000

2,500,000

Pamida

Livingston, MT

Commercial Retail

41,200

1,800,000

Pamida

Ladysmith, WI

Commercial Retail

41,000

1,500,000

Park Dental

Brooklyn Center, MN

Commercial Medical

10,008

2,952,052

Paul Larson Clinic

Edina, MN

Commercial Medical

12,140

1,012,962

PDQ

Burnsville, MN

Commercial Retail

8,526

980,000

PDQ

Prior Lake, MN

Commercial Retail

6,800

970,746

PDQ

Eagan, MN

Commercial Retail

3,886

782,896

PDQ

Mound, MN

Commercial Retail

3,864

360,000

Plaza VII

Boise, ID

Commercial Office

27,297

3,357,662

Prior Lake Peak

Prior Lake, MN

Commercial Retail

4,200

478,800

Sam Goody

Willmar, MN

Commercial Retail

6,225

400,000

Schofield Plaza

Schofield, MN

Commercial Retail

53,764

1,750,000

Southdale Expansion

Edina, MN

Commercial Medical

7,056,438

Three Paramount Plaza

Edina, MN

Commercial Office

75,526

7,367,227

Tom Thumb

Lakeville, MN

Commercial Retail

9,500

1,262,945

Tom Thumb

Monticello, MN

Commercial Retail

3,575

855,000

Tom Thumb

Oakdale, MN

Commercial Retail

6,266

730,000

Tom Thumb

Long Prairie, MN

Commercial Retail

5,216

700,000

Tom Thumb

Ham Lake, MN

Commercial Retail

4,800

535,000

Square

Purchase

Commercial

Location

Property Type

Foot

Price

Tom Thumb

Glencoe, MN

Commercial Retail

4,800

530,000

Tom Thumb

Blaine, MN

Commercial Retail

8,750

520,000

Tom Thumb

Bethel, MN

Commercial Retail

4,800

510,000

Tom Thumb

Buffalo, MN

Commercial Retail

7,700

460,000

Tom Thumb

Lakeland, MN

Commercial Retail

3,650

440,000

Tom Thumb

Lino Lakes, MN

Commercial Retail

6,325

440,000

Tom Thumb

Pine City, MN

Commercial Retail

4,800

440,000

Tom Thumb

Winsted, MN

Commercial Retail

3,571

410,000

Tom Thumb

Howard Lake, MN

Commercial Retail

3,571

380,000

Tom Thumb

Centerville, MN

Commercial Retail

3,000

330,000

Tom Thumb

Shoreview, MN

Commercial Retail

3,000

330,000

Tom Thumb

Lindstrom, MN

Commercial Retail

4,000

320,000

Tom Thumb

Mora, MN

Commercial Retail

3,571

300,000

Tom Thumb

Andover, MN

Commercial Retail

3,000

280,000

Tom Thumb

Sauk Rapids, MN

Commercial Retail

3,575

250,000

UH Medical

St. Paul, MN

Commercial Medical

43,046

7,407,752

Westgate Office Ctr North

Boise, ID

Commercial Office

103,332

11,509,091

Wilson’s Leather

Brooklyn Park, MN

Commercial Industrial

353,049

13,010,645

Total Commercial

2,416,653

170,508,730

Undeveloped Land

Andover, MN

Undeveloped Land

150,000

Centerville, MN

Undeveloped Land

100,000

Inver Grove, MN

Undeveloped Land

560,000

Kalispell, MT

Undeveloped Land

1,400,000

Libby, MT

Undeveloped Land

150,000

Long Prairie, MN

Undeveloped Land

150,000

Prior Lake, MN

Undeveloped Land

50,000

River Falls, MN

Undeveloped Land

200,000

Total Undeveloped Land

2,760,000

Total Fiscal 2003 Acquisitions

177,206,783

Fiscal 2002(May 1, 2001 to April 30, 2002)

Purchase

Residential

Location

Property Type

Units

Price

Applewood on the Green

Omaha, NE

Apartment Community

234

10,810,426

Canyon Lake Apartments

Rapid City, SD

Apartment Community

109

4,280,120

Oakmont Apartments

Sioux Falls, SD

Apartment Community

5,257,468

Pinehurst Apartments

Billings, MT

Apartment Community

751,310

Sunset Trail Phase II

Rochester, MN

Apartment Community

2,851,600

Total Residential

517

23,950,924

Square

Purchase

Commercial

Location

Property Type

Foot

Price

Bloomington Bus. Plaza

Bloomington, MN

Multi-tenant Office

114,819

7,445,108

Cottage Grove Center

Cottage Grove, MN

Strip Mall

15,217

1,116,089

Edgewood Vista

Virginia, MN

Assisted Living

70,313

6,958,383

Interlachen

Edina, MN

Multi-tenant Office

105,084

16,691,306

Mendota Hghts. Office

Mendota Heights, MN

Multi-tenant Office

428,065

51,280,260

Morgan Chemical

New Brighton, MN

Industrial Building

49,620

2,428,810

Stone Container

Roseville, MN

Industrial Building

229,072

8,265,238

Thresher Square E & W

Minneapolis, MN

Multi-tenant Office

113,736

11,119,958

Wayroad

Minnetonka, MN

Commercial Office

62,383

5,394,985

Wirth Corporate Center

Golden Valley, MN

Commercial Office

75,216

8,629,281

Total Commercial

1,263,525

119,329,418

Total Fiscal 2002 Acquisitions

143,280,342

Property Dispositions

Real estate assets sold by IRET Properties during fiscal 2003 and 2002 were as follows:


				Book Value
Property Sold		Sales Price		Sales Costs		Gain/Loss

2003
	Eastwood Apartments	$	620,000	$	438,188	$	181,812
	Oak Manor Apartments		420,000		342,377		77,623
	Jenner Apartments		275,000		271,867		3,133
	Cottage Grove Strip Center		1,275,000		1,222,226		52,774
	Creekside Office Building		1,950,000		1,795,416		154,584
	America’s Best		3,350,000		3,655,757		(305,757	)
	Century Apartments		3,250,000		1,819,371		1,430,629
	Edgewood Vista – Duluth Land		102,000		102,000		0

Total Fiscal 2003 Gain						$	1,594,798


				Book Value
Property Sold		Sales Price		Sales Costs		Gain/Loss

2002
	Sunchase Apartments	$	1,100,000	$	803,591	$	296,409
	Lester Chiropractic Clinic		317,500		232,221		85,279
	Carmen Court – Magic City Apartments		295,000		291,654		3,346
	Walter’s Building		0		35,062		(35,062	)
	Corner Express		1,714,713		1,460,403		254,310

Total Fiscal 2002 Gain						$	604,282

Funds from Operations

Funds from operations (“FFO”) for the operating partnership increased to $34,178,597 for fiscal 2003, compared to $29,143,549 for fiscal 2002, and $22,440,463 for fiscal 2001. We consider FFO a useful measure of performance for an equity REIT. FFO is a supplemental non-GAAP financial measurement used as a standard in the real estate industry to measure and compare the operating performance of real estate companies. We adhere to the NAREIT definition of FFO. NAREIT defines FFO as net income or loss, excluding gains on losses from sales of depreciated property, plus operating property depreciation and amortization and adjustments for minority interest and unconsolidated companies on the same basis. FFO presented herein is not necessarily comparable to FFO presented by other real estate companies because not all real estate companies use the same definition.

FFO should not be considered as an alternative to net income determined in accordance with GAAP as a measure of our liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of our needs or our ability to service indebtedness or make distributions. A reconciliation of FFO to GAAP net income is as follows:

Reconciliation of Net Income to Funds From Operations(unaudited)
For the Twelve-Month Periods ended April 30, 2003 and 2002 and 2001


		12 MONTHS ENDED

		04-30-03							04-30-02							04-30-01

					Weighted							Weighted							Weighted
					Avg		Per					Avg		Per					Avg		Per
		Amount			Shares⁽²⁾		Share		Amount			Shares⁽²⁾		Share		Amount			Shares⁽²⁾		Share

NET INCOME AVAILABLE FOR COMMON SHARES		$	12,248,161			32,574,429	$	0.38	$	10,600,129			25,492,282	$	0.42	$	8,694,240			23,071,500	$	0.38
Add Back:
	Minority interest in earnings of unitholders	$	3,898,958			10,040,669			$	3,614,168			8,289,087			$	2,095,177			5,506,200

FULLY DILUTED NET INCOME		$	16,147,119			42,615,098	$	0.38	$	14,214,297			33,781,369	$	0.42	$	10,789,417			28,577,700	$	0.38

Adjustments:
	Depreciation and Amortization⁽¹⁾	$	19,626,276						$	15,476,179						$	12,252,651
	(Earnings) loss from depreciable property sales		(1,594,798	)						(546,927	)						(601,605	)

FULLY DILUTED FUNDS FROM OPERATIONS		$	34,178,597			42,615,098	$	0.80	$	29,143,549			33,781,369	$	0.86	$	22,440,463			28,577,700	$	0.79

Cash distributions paid to shareholders/unitholders⁽³⁾		$	26,586,680						$	20,272,212						$	15,732,399

(1)		Depreciation on office equipment and other assets used by us are excluded. Amortization of financing and other expenses are excluded, except for amortization of leasing commissions which are included.

(2)		Limited partnership units of IRET Properties are exchangeable for Shares on a one-for-one basis.

(3)		Cash distributions are paid equally on Shares and limited partnership units. It is our intent to distribute approximately 65.0% to 80.0% of FFO to our shareholders and the holders of limited partnership units of IRET Properties.

Self-Advised Status

On July 1, 2000, IRET Properties became self-advised. Prior to that date, Odell-Wentz and Associates, L.L.C., pursuant to an advisory contract with us, provided all office space, personnel, office equipment, and other equipment and services necessary to conduct all of our day-to-day operations. Odell-Wentz and its predecessor firms had acted as our advisor since our inception in 1970. We obtained an independent appraisal of the value of the advisory business and assets from certified public accountants not otherwise employed by either us or the advisory company. The purchase price for the business and assets was $2.1 million allocated as follows:


Real Estate	$	475,000
Furniture, Fixtures & Vehicles		193,350
Goodwill		1,645,000
Less Real Estate Mortgages Assumed		(230,000	)

	$	2,083,350

IRET Properties issued 255,000 limited partnership units in exchange for the above-described assets. Except for Roger R. Odell, who retired on July 1, 2000, all officers and employees of Odell-Wentz and Associates, L.L.C. were retained by IRET Properties.

Cash Distributions

The following cash distributions were paid to our shareholders and holders of limited partners units during fiscal years 2003, 2002, and 2001:


Date	2003		2002		2001

July 1,	$	.1540	$	.1450	$	.1325
October 1,		.1560		.1475		.1350
January 15,		.1570		.1500		.1400
April 1,		.1580		.1520		.1425

	$	.6250	$	.5945	$	.5500

The fiscal 2003 cash distributions increased 5.1% over the cash distributions paid during fiscal year 2002 and 13.6% over fiscal 2001.

Liquidity and Capital Resources

Important equity capital and financing events in fiscal 2003 were:

•

As a result of the sale of additional Shares, shareholder equity increased during fiscal 2003 by $77.3 million. Additionally, the equity capital of IRET Properties was increased by $3.9 million as a result of contributions of real estate in exchange for limited partnership units and the minority interest in other partnerships controlled by us increased by $1.4 million, resulting in a total increase in equity capital for IRET Properties of $82.6 million.

	•		Cash and marketable securities on April 30, 2003, totaled $18.6 million compared to $22.8 million on the same date in 2002 and $9.4 million in 2001.

	•		Mortgage loan indebtedness increased due to the acquisition of new investment properties to $539.4 million on April 30, 2003, from $459.6 million on April 30, 2002, and $369.0 million on April 30, 2001. The weighted interest rate on these loans increased to 7.4% per annum from 7.4% on April 30, 2002, and compared to 7.6% at the end of fiscal 2001.

	•		The issuance of investment certificates was discontinued in April 2002, and the $9.0 million of certificates outstanding on April 30, 2003, will be redeemed upon maturity as follows:


Certificates Maturing	Face Amount

Fiscal 2003	$	1,908,958
Fiscal 2004		2,305,138
Fiscal 2005		2,271,037
Fiscal 2006		2,407,958
Fiscal 2007		141,605

Total	$	9,034,696

	•		New real estate investments of $177.2 million were made by IRET Properties in fiscal 2003, compared to $143.3 million in fiscal 2002 and $143.0 million in fiscal 2001.

	•		Net cash provided from operating activities increased to $38.5 million from $26.9 million due to the addition of new investments to our real estate portfolio.

	•		Net cash used in investing activities decreased to $59.3 million from the $75.9 million used in fiscal 2002. This decrease resulted because less cash was needed to acquire new investment properties.

	•		Net cash provided from financing activities also decreased to $24.0 million from the year earlier figure of $54.9 million because of a small decrease in our activity in acquiring new properties using borrowed funds.

	•		We currently have plans to complete the expansion of the Southdale Medical Center at an estimated cost of $13.7 million and to finance a $5.1 million addition to the existing facility of Edgewood Vista, in Virginia, Minnesota.

•

As of year-end April 30, 2003, we had entered into agreements to purchase the following:


Property	Address	Purchase Price

Benton Business Park	940 Industrial Drive South - Sauk Rapids, MN	$	1,600,000
West River Business Park	416 Great Oak Drive - Waite Park, MN		1,500,000
Nebraska Orthopedic Hospital	Omaha, NE		19,400,000

Total Pending		$	22,500,000

All pending acquisitions are subject to certain conditions and contingencies and, therefore, no assurance can be given that these transactions will be consummated. On July 1, 2003, we did, however, complete the acquisition of Benton Business Park and West River Business Park.

We expect that our short-term liquidity requirements will be met through the net cash provided by our operations and also expect that we will meet our long-term liquidity requirements, including scheduled debt maturities, maturing investment certificates, construction and development activities, and property acquisitions through long-term secured borrowings and the issuance of additional equity securities, including Shares, as well as limited partnership units of IRET Properties.

We believe that our net cash provided by operations will continue to be adequate to meet both operating requirements and cash distributions to our shareholders in accordance with REIT requirements in both the short and long term. Budgeted expenditures for ongoing maintenance and capital improvements and renovations to our real estate portfolio are expected to be funded from cash flow generated from operations of current properties.

In addition to our cash and marketable securities, IRET Properties has unsecured line of credit agreements with First International Bank & Trust, Bremer Bank, and First Western Bank & Trust, all of Minot, North Dakota, totaling $19.4 million. On April 30, 2003, there were $10.6 million of borrowings outstanding. On April 30, 2002 and 2001, there were no borrowings outstanding.

Certain Relationships and Related Transactions

Property Management Services

Hoyt Properties, Inc., a provider of property management services (“Hoyt Properties”), is owned by Steven B. Hoyt, a member of our Board. During the fiscal year ended April 30, 2003, Hoyt Properties managed the following commercial buildings pursuant to written management contracts:


Cold Spring Center		4150 2nd Street South, St. Cloud, MN

2030 Cliff Road		2030 Cliff Road, Eagan, MN

Plymouth IV & V		5000 & 5010 Cheshire Lane, Plymouth, MN

Nicollet VII		12109-12139 Nicollet Avenue South, Burnsville, MN

Burnsville Bluffs		11351 Rupp Drive, Burnsville, MN

Pillsbury Business Center		8300-8324 Pillsbury Avenue South, Bloomington, MN

Bloomington Business Plaza		9201 East Bloomington Freeway, Bloomington, MN

Thresher Square		700 & 708 South 3rd Street, Minneapolis, MN

Wirth Corporate Center		4101 Dahlberg Drive, Golden Valley, MN

Brenwood Office Complex 1, 2, 3 & 4		5620, 5640, 5700, 5720 Smetana Drive, Minnetonka, MN

Effective July 1, 2003, Hoyt Properties, Inc. no longer manages 2030 Cliff Road. The Company assumed management of such property directly.

As compensation for its services, Hoyt Properties receives a monthly fee of 5% percent of the gross rental income, provided that such management fee is reimbursable by the building’s tenants pursuant to the tenant’s lease agreement. In the event that the Company is not reimbursed for such fee by a tenant and must pay such fee from our rent proceeds, the annual fee is 3.5% of the gross rental proceeds. In addition to such management fee, Hoyt Properties is paid a separate fee for leasing space to tenants at each location. Any leasing commissions earned by Hoyt Properties are not reimbursed by the building’s tenants. The leasing commission rates are set forth in a written contract between the Company and Hoyt Properties.

Each of the written management and leasing contracts with Hoyt Properties commenced on April 1, 2001, with the exception of the contracts for Bloomington Business Plaza, which commenced on October 1, 2001, Thresher Square, which commenced on January 2, 2002, Wirth Corporate Center, which commenced on April 1, 2002, and Brenwood Office Complex, which commenced on October 1, 2002. All such contracts may be terminated by either party on 30 days written notice for any reason and without penalty. In fiscal 2003, the Company paid management fees to Hoyt Properties in the amount of $503,976, 99.9% of which has been reimbursed by the tenants. Additionally, during that same period, the Company paid leasing commissions to Hoyt Properties in the amount of $179,553. The Company believes that all of the terms of the management contracts are commercially reasonable and are on terms no less favorable than we could have obtained from unrelated property management firms.

We currently have a management contract with Investors Management and Marketing, Inc. (“IMM”). Until July 2000, there was a relationship between IMM, Odell-Wentz and IRET because of the affiliation of Mr. Roger Odell with each entity. Specifically, Mr. Odell was a majority owner of IMM; a 50% owner of Odell-Wentz, our advisor; and an officer of IRET.

Mr. Odell retired from all positions with IRET in July 2000, and since that time has had no relationship with us. In July 2000, we purchased Odell-Wentz and converted to self-advised status. IMM still manages a number of our apartment complexes. All management contracts with IMM are at fees ranging from 3.0% to 5.0% of gross rents and may be terminated on a 30-day written notice without penalty.

Bloomington Business Plaza

On October 1, 2001, we acquired the Bloomington Business Plaza from a general partnership controlled by Steven B. Hoyt. The property was acquired pursuant to the terms of a contract dated January 8, 2001, as amended by an agreement dated September 27, 2001. At the time of acquisition, Mr. Hoyt was a member of our Board of Trustees. At the time the original acquisition contract was signed, however, Mr. Hoyt was not a member of our Board of Trustees.

The property was purchased for an agreed value of $7.2 million, of which $215,000 was paid in cash and the balance of $7.0 million of which was paid with 812,405 limited partnership units of IRET Properties having a value of $8.60 per unit. The limited partnership units are convertible on a one-to-one basis to Shares. The units must be held for a two-year period before they may be converted to Shares and sold. In addition to the purchase price of $7.2 million, we incurred acquisition costs of $203,989 for commissions, loan costs and legal costs. The acquisition was approved by all of the members of our Board of Trustees. A subsequent independent appraisal of the property as part of the loan process determined the value of the property to be $7.0 million.

Bloomington Business Plaza is a multi-tenant office/warehouse building constructed in 1985. It consists of 121,064 square feet of leasable space. As of June 1, 2003, the property was 100.0% leased to 22 tenants with remaining lease terms ranging from four months to 54 months. All rents paid by the current tenants are at market rates. No one tenant occupies more than 18.0% of the leasable space.

Acquisition of Thresher Square East and West

On January 2, 2002, we acquired a seven-story office building containing 112,836 square feet located at 700 and 708 South Third Street, Minneapolis, Minnesota, from WPT I, L.L.C. WPT I, L.L.C. is an affiliate of Steven B. Hoyt, a member of our Board of Trustees, in that Mr. Hoyt owns 78% of WPT I, L.L.C.

The property was purchased for an agreed value of $10.9 million, which was paid by the assumption of existing debt with unpaid principal balances of $3.7 million and $2.6 million, respectively, as of January 1, 2002. The assumed debt bears interest at the rates of 7.0% and 7.4%, respectively, payable in monthly installments of $34,582 and $33,270, respectively, amortized over remaining terms of 14 years and nine years, respectively. The balance of $4.4 million was paid by the distribution of 507,651 limited partnership units of IRET Properties to the seller with an agreed value of $8.60 per unit. The limited partnership units are convertible on a one-to-one basis to shares of beneficial interest of IRET. The units must be

held for a two-year period before they may be converted to shares of IRET and sold. In addition to the purchase price, IRET incurred acquisition costs of $168,574.56 for commission and legal costs.

All of the members of our Board of Trustees approved the transaction as being fair and reasonable to us and determined that substantial justification existed for us to pay a price greater than the cost of the property to WPT I, L.L.C. Mr. Hoyt abstained from the vote. We did not obtain an independent appraisal of the property, however, we did prepare an internal current appraisal of the property that determined the value to be $10.9 million.

As of June 1, 2003, the property was 71.0% leased to seven different tenants with remaining lease terms of six months to six years. No one tenant leases more than 52.6% of the property.

Acquisition of Brenwood Office Complex from Steven B. Hoyt, Marisa Moe and Natalie Hoyt

During fiscal 2003, the Company acquired four commercial buildings from affiliates of Steven B. Hoyt, a member of our Board. On October 1, 2002, the Company acquired a 51.0% ownership interest in IRET-BD, LLC, a Minnesota limited liability company, for $13.1 million with the total joint venture project having an independent third-party appraised value of $25.7 million. The joint venture partners are Steven B. Hoyt, Marisa Moe and Natalie Hoyt, who own 29.4%, 9.8% and 9.8% respectively. Marisa Moe and Natalie Hoyt are the adult daughters of Steven B. Hoyt. Steven B. Hoyt, Natalie Hoyt and Marisa Moe acquired their respective interest in the joint venture by contributing a parcel of real estate known as Brenwood Office Complex located at 5620 in Minnetonka, Minnesota, which was previously acquired on February 1, 2002, by Steven Hoyt, Natalie Hoyt and Marisa Moe for a purchase price of $12.5 million. This transaction required the approval of a majority of our Board and a majority of the independent members of our Board. Such approval was obtained on August 21, 2003. The office complex was appraised by an independent third-party MAI appraiser on September 13, 2002, at $13.9 million. In addition to the purchase price, the joint venture incurred acquisition costs of $186,436.

The project consists of the four office buildings contributed by Steven B. Hoyt, Marisa Moe and Natalie Hoyt, as well as three industrial/warehouse buildings purchased by the joint venture on October 1, 2002, for $11.8 million. The individual properties are as follows:


				Leasable
Property	Address	Year Built		Square Footage		Floors

Brenwood I	5720 Smetana Drive, Minnetonka, MN		1979/80		50,150		4
Brenwood II	5700 Smetana Drive, Minnetonka, MN		1979/80		51,077		4
Brenwood III	5640 Smetana Drive, Minnetonka, MN		1979/80		38,065		3
Brenwood IV	5620 Smetana Drive, Minnetonka, MN		1979/80		37,625		3
4121 Dixon Avenue	Des Moines, IA		1977		177,431		1
4141 Dixon Avenue	Des Moines, IA		1977		263,196		1
4161 Dixon Avenue	Des Moines, IA		1979		164,084		1

The Company’s 51.0% interest in the joint venture was acquired by contributing cash in the amount of $1.5 million, with the balance paid by the assumption, joint and severally with the joint venture partners, of existing debt with an unpaid principal balance of $22.7 million as of April 30, 2003. The assumed debt consists of a loan from Allstate Life Insurance Company secured by a first mortgage on the Brenwood Office Complex, with an unpaid principal balance $8.8 million as of April 30, 2003, bearing interest at a fixed rate of 8.1%, and amortized over 25 years with monthly installment payments of $70,061, with a final payment of all outstanding principal due on October 1, 2010, and a loan from Aegon secured by a first mortgage on the Dixon property with an unpaid principal balance of $9.0 million as of April 30, 2003, bearing interest at a fixed rate of 5.8% and amortized over ten years with monthly installment payments of $56,620 with a final payment of all outstanding principal due January 1, 2013.

The balance of the assumed debt of $5.3 million on April 30, 2003, currently consists of two short-term unsecured promissory notes from us as the managing member. Both notes bear interest at a variable rate equal to the Prime Rate plus 150 basis points or 1.5%. The rate is currently 6.0% with a provision that the rate may never be below 6.0%.

As of April 30, 2003, the Brenwood Office Complex is 81.0% leased to approximately 25 different tenants, with remaining lease terms of one month to five years. No one tenant occupies more than 22.0% of the total leasable space. As of April 30, 2003, the three Dixon Avenue buildings are 93.0% leased to nine different tenants, with remaining lease terms of one month to five years. No one tenant occupies more than 32.0% of the total leasable space.

Charles Wm. James - Ripley and Excelsior Options

On February 1, 2003, the Company entered into a merger agreement with the T.F. James Company. As part of the merger agreement, two affiliated entities of the T.F. James Company, Thomas F. James Realty Limited Partnership, L.L.L.P. and Thomas F. James Properties, LLC, were granted the right to purchase certain real property acquired by the Company as a result of the merger. Charles Wm. James, a member of our Board, has an ownership interest in each of Thomas F. James Realty Limited Partnership, L.L.L.P. and Thomas F. James Properties, LLC, of less than 10.0%. Both agreements required the approval of a majority of our Board and a majority of the independent members of our Board. Such approval was obtained on February 12, 2003. Under the terms of the agreement, the Thomas F. James Realty Limited Partnership, L.L.L.P. purchased a parcel of property located in Ripley, Tennessee for $250,000. The purchase price was equal to the amount paid by us to T.F. James two months earlier. The agreement further provides that Thomas F. James Properties, LLC has the option, but not the obligation, to purchase a commercial strip mall located in Excelsior, Minnesota, for the sum of $900,000, plus an annual CPI increase from February 2003 until the date the option is exercised. The option purchase price is equal to the price the Company paid at closing on February 1, 2003. The purchase price is equal to the value set by an independent appraisal. Until such time as the option is exercised, the Company will continue to operate the property and collect all rents from the tenants.

Director and Executive Officer Loans

As a result of the acquisition of Odell-Wentz & Associates, L.L.C., the entity that acted as our advisor prior to July 1, 2000, the Company assumed a note receivable from Mr. Mihalick in the amount of $101,002. Proceeds of said note were used to purchase Shares. The note bears interest at New York Prime less 1.0% and is payable on demand. The note was paid in full by Mr. Mihalick on October 4, 2002, including principal and interest in the amount of $92,769.

On January 16, 2002, our Board authorized an UPREIT unit loan program that was available to persons holding $1.0 million or more of IRET Properties limited partnership units. Under such loan program, the Company could lend up to 50.0% of the value of the borrower’s limited partnership units, with such value to be based on the closing price of the Shares on the NASDAQ National Market on the date of the loan. Such loans were to be for terms of two years or less, secured by the borrower’s limited partnership units in IRET Properties and at a variable interest rate of 1.5% over the interest rate charged to us by a participating lender. The interest rate adjusted on the first of each month. In connection with such loans, the Company charged a .5% loan fee.

On January 30, 2002, a loan in the amount of $3.5 million was made to Steven B. Hoyt, a member of our Board. Our Board approved such loan. The terms of the loan required Mr. Hoyt to make quarterly interest payments beginning April 1, 2002, with the full balance of the principal sum due on or before January 31, 2004. The initial interest rate was equal to the Wall Street Journal Prime Rate as of January 31, 2002, plus 1.5%, which equaled 6.25%. Mr. Hoyt paid a $17,500 loan fee to the Company at the loan closing on January 30, 2002. On March 31, 2002, Mr. Hoyt made his first required interest payment of $35,959. On June 30, 2002, Mr. Hoyt made his second required quarterly interest payment of $54,538. On October 1, 2002, Mr. Hoyt repaid the loan in full in the amount of $3.5 million plus accrued interest in the amount of $55,137.

Security Sale Services

D.A. Davidson & Co. is a corporation that has, and may in the future, on a best-efforts basis, participated in offerings of the Company’s Shares. John F. Decker, a member of our Board, is an employee of D.A. Davidson. In the Company’s two most recent offerings, D.A. Davidson & Co. participated as a member of the selling syndicate and sold 600,000 and 700,000 Shares, respectively. In connection with such offerings during the fiscal year ended April 30, 2002, the Company authorized and paid D.A. Davidson commissions in the amount of $490,000, and reimbursed it for legal and travel expenses in the amount of $4,814. Of these amounts, Mr. Decker personally received $37,370 in compensation from D.A. Davidson in connection with such offerings. The Company did not pay any commissions or expenses to D.A. Davidson during the fiscal year ended April 30, 2003.

Critical Accounting Policies

Our most critical accounting policies involve our investments in real property. These policies affect the following:

•

Straight-line rents.An accounting rule requires us to record as revenue “straight-line rents” on our commercial property leases that contain future rental increases. This rule requires us to calculate the total rents that the tenant has contracted to pay us for the entire term of the lease and to divide that total by the number of months of the lease and to record as revenue each month the resulting average monthly rent. The result is that, in the beginning years of a lease, we must record as revenue an amount that exceeds the actual cash rent we have collected. In the later years of such leases, we will record as revenue an amount less than the actual cash then being received. The amount of “straight-line rents” (that is, the amount that the recorded rent is greater than the actual cash rent we have collected) we have recorded in the past three years is:


	2003		2002		2001

Straight-line Rents	$	1,391,226	$	1,311,105	$	1,214,379

Our revenues, net income and FFO shown in this report are increased by the above described “straight-line rents.” We have established an allowance for loss to provide for a reserve in the event of default of lease where straight-line rents apply. A summary of that reserve is as follows:


	2003			2002

Balance at beginning of year	$	140,785		$	120,315
Provision for doubtful accounts		190,000			30,000
Write-offs		(240,785	)		(9,530	)

Balance at close of year	$	90,000		$	140,785

	•		Revenue recognition.Residential rental properties are leased under operating leases with terms generally of one year or less. Commercial properties are leased under operating leases to tenants for various terms exceeding one year. Lease terms often include renewal options. Rental revenue is recognized on the straight-line basis, which averages minimum required rents over the terms of the leases. Rents recognized in advance of collection are reflected as rent receivable, net of allowance for doubtful accounts. We evaluate the need for an allowance for doubtful accounts periodically. In performing our evaluation, our management assesses the recoverability of individual real estate mortgage loans and rent receivables by a comparison of their carrying amount with their estimated net realizable value.

			Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as revenue in the period the applicable expenditures are incurred. We receive payments for these reimbursements from substantially all its

			multi-tenant commercial tenants throughout the year based on estimates. Differences between estimated recoveries and the final billed amounts, which are immaterial, are recognized in the subsequent year.

			A number of the commercial leases provide for a base rent plus a percentage rent based on gross sales in excess of a stipulated amount. These percentage rents are recorded once the required sales level is achieved and are included in rental income at that time.

			Profit on sales of real estate shall be recognized in full when the real estate is sold, provided the collectibility of the sales price is reasonably assured or the amount that will be collectible can be estimated and the seller is not obliged to perform significant activities after the sale to earn the profit. Any gain or loss on a sale or disposition is recognized in accordance with GAAP.

	•		Accounting for property owned.Real estate is recorded at cost less accumulated depreciation less an adjustment, if any, for impairment. A land value is assigned based on the purchase price if land is acquired separately or based on market research if acquired in a merger or in a single or portfolio acquisition.

			Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. We use a 20-40 year estimated life for buildings and improvements and a 5-12 year estimated life for furniture, fixtures and equipment.

			Expenditures for ordinary maintenance and repairs are expensed to operations as incurred and significant renovations and improvements that improve and/or extend the useful life of the asset are capitalized over their estimated useful life, generally five to ten years. Property sales or dispositions are recorded when title transfers and sufficient consideration has been received by us. Upon disposition, the related costs and accumulated depreciation are removed from the respective accounts. Any gain or loss on sale is recognized in accordance with GAAP. We periodically evaluate our long-lived assets, including our investments in real estate, for impairment indicators. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset and legal and environmental concerns. Future events could occur which would cause us to conclude that impairment indicators exist and an impairment loss is warranted. If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset against the carrying amount of that asset. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, an impairment loss would be recorded for the difference between the estimated fair value and the carrying amount of the asset.

			The fair value of the property is the amount that would be recoverable upon the disposition of the property. Techniques used to establish fair value include present

value of estimated expected future cash flows using a discount rate commensurate with the risks involved, the appraised value, and recent sales of comparable assets in close proximity to the Trust’s property.

Recent Accounting Pronouncements

Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities, established accounting and reporting standards requiring that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Certain provisions of SFAS 133 were amended by SFAS 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities” an amendment of Statement 133. The impact of SFAS 133 is not significant.

We adopted FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others, for any guarantees issued or modified after December 31, 2002. FASB Interpretation No 45 requires a liability to be recognized upon issuance of certain guarantees, whether or not payment under the guarantee is probable. It also requires the disclosure of certain information related to new and previously existing guarantees. We do not believe that we have entered into any guarantees that fall within the guidance of FASB Interpretation No. 45 and, thus, such Interpretation has no impact on our financial statements.

We have adopted FASB Interpretation No. 46, Consolidation of Variable Interest Entities. These consolidation requirements apply to variable interest entities created after January 31, 2003, and to existing variable interest entities beginning August 1, 2003. FASB Interpretation No. 46 requires that a variable interest entity be consolidated if we are subject to a majority of the risk of loss from its activities or are entitled to receive a majority of the entities’ returns. We do believe that we have interests in any variable interest entities, and thus, this Interpretation has no impact on the our financial statements.

Effective May 1, 2003, SFAS No. 143, Accounting for Asset Retirement Obligations, requires us to recognize obligations incurred in conjunction with the retirement of tangible long-lived assets. It is anticipated that the adoption of this standard will not have a material impact on our financial statements.

We adopted SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, effective for activities initiated after December 31, 2002. This standard establishes the need for recognition of liabilities for costs associated with exit or disposal activities. The adoption of SFAS No. 146 has not materially impacted the our financial statements.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk is limited primarily to fluctuations in the general level of interest rates on its current and future fixed and variable rate debt obligations, and secondarily to our deposits with and investment in certain products issued by various financial institutions.

	•		Variable interest rates. Even though our philosophy is to maintain a fairly low exposure to interest rate fluctuation risk, we are still vulnerable to significant fluctuations in interest rates on our variable rate debt, on any future repricing or refinancing of our fixed rate debt and on future debt.

			We primarily use long-term (more than ten years) and medium-term (five to seven years) debt as a source of capital. We do not currently use derivative securities, interest-rate swaps or any other type of hedging activity to manage our costs of capital. As of April 30, 2003, we had the following amount of future principal payments on mortgages secured by our real estate:


Long Term Debt	2004			2005			2006				2007				2008				Thereafter			Total

Fixed Rate	$	13,493,670		$	16,761,777			$	14,209,389			$	16,681,363			$	36,441,796		$	418,629,619		$	516,217,614
Variable Rate	$	1,624,987		$	1,714,469			$	3,527,066			$	1,776,194			$	1,819,356		$	12,717,516		$	23,179,588

																						$	539,397,202

Average Interest Rate (%)		(1	)		(1	)			(1	)			(1	)			(1	)		(1	)

(1)

The weighted average interest rate as of April 30, 2003, was 7.4%. Any fluctuations on the variable interest rates could increase or decrease our interest expenses. For example, an increase of one percent per annum on our $23,179,588 of variable rate indebtedness would increase our annual interest expense by $231,796.

•

Investments with certain financial institutions.As of April 30, 2003, we had a $3.1 million investment in certain securities classified as “available-for-sale” represent an investment in a Merrill Lynch Money Market Mutual Fund (the “Fund”) and is stated at fair value. The Fund is a money market mutual fund that is subject to all of the requirements of Rule 2a-7 under the Investment Company Act of 1940, as amended. The Fund invests in a diversified portfolio of U.S. dollars denominated money market securities. These securities consist primarily of short-term U.S. Government securities, U.S. Government agency securities, bank obligations, commercial paper and repurchase agreements. The Fund may also invest in domestic bank obligations and foreign bank obligations and other short-term debt securities issued by U.S. and foreign entities. These securities will have remaining maturities of up to 762 days (25 months) in the case of U.S. Government securities and 397 days (13 months) in the case of all other securities. The Fund’s dollar-weighted average portfolio maturity will not exceed 90 days. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

			Unrealized gains and losses on securities “available-for-sale” are recognized as direct increases or decreases in shareholders’ equity. Cost of securities sold is recognized on the basis of specific identification. During fiscal 2003, our investment in this security ranged from a low of $2.5 million to a high of $28.0 million. We had no securities “held-to-maturity” as of April 30, 2003 or 2002.

			We have entered into a standard cash management arrangement with First Western Bank with respect to deposit accounts with First Western Bank that exceed FDIC Insurance coverage. Pursuant to sweep account and repurchase agreements between us and First Western Bank, on a daily basis such excess amounts, up to a maximum amount of $15.1 million as of April 30, 2003 and 2002, are invested in U.S. government securities sold to us by First Western Bank. We can require First Western Bank to repurchase such obligations at any time, at a purchase price equal to what we paid for the obligations plus interest.

	•		Deposits exceeding FDIC insurance.We had deposits at First Western Bank, Bremer Bank, First International Bank, and US Bank that exceeded Federal Deposit Insurance Corporation limits by $10.3 million, $218,263, $2.4 million, and $4.7 million, respectively, as of April 30, 2003.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data listed in the accompanying Index to Financial Statements and Supplementary Data are filed as a part of this report and incorporated herein by reference.

Item 9. Changes in and Disagreements with Accounting and Financial Disclosure

Subsequent to the end of fiscal 2003, on July 23, 2003, our Board of Trustees, upon recommendation of our Audit Committee, terminated the engagement of Brady, Martz & Associates, P.C. (“Brady Martz”) as our independent public accountants and engaged Deloitte & Touche LLP (“Deloitte & Touche”) to serve as our independent public accountants for our fiscal year ending April 30, 2004. We anticipate that we will, in the future, retain Brady Martz from time to time for tax and other advising issues.

On July 23, 2003, our management informed Brady Martz that it would no longer be engaged as our principal independent accountants. The reports of Brady Martz on our consolidated financial statements for each of the fiscal years ended April 30, 2003 and 2002 did not contain an adverse opinion or disclaimer of opinion, nor were such financial statements qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended April 30, 2003 and 2002, and through July 23, 2003, there were (i) no disagreements with Brady Martz on any matter of accounting principals or practices, financial statement disclosure or auditing scope or procedure which, if not resolved, to the satisfaction of Brady Martz, would have caused Brady Martz to make reference to the subject

matter in connection with its report on our consolidated financial statements for such years; and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

During the fiscal years ended April 30, 2003 and 2002, and through July 23, 2003, we did not consult Deloitte & Touche with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, or any other matters or reportable events as set forth Items 304(a)(2)(i) and (ii) of Regulation S-K.

We provided Brady Martz with a copy of the foregoing disclosures. By copy of a letter dated July 23, 2003, Brady Martz stated its agreement with such statements.

PART III

Item 10. Directors and Executive Officers of the Registrant

Information regarding executive officers required by this Item is set forth in Part I, Item 1 of this Annual Report on Form 10-K pursuant to Instruction 3 to Item 401(b) of Regulation S-K. Other information required by this Item will be included in our definitive Proxy Statement for our 2003 Annual Meeting of Shareholders and such information is incorporated herein by reference.

Item 11. Executive Compensation

The information required by this Item will be contained in our definitive Proxy Statement for our 2003 Annual Meeting of Shareholders and such information is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by this Item will be contained in our definitive Proxy Statement for our 2003 Annual Meeting of Shareholders and such information is incorporated herein by reference. We do not have any equity compensation plans and, as such, have omitted the disclosure required by Item 201(d) of Regulation S-K.

Item 13. Certain Relationships and Related Transactions

The information required by this Item will be contained in our definitive Proxy Statement for our 2003 Annual Meeting of Shareholders and such information is incorporated herein by reference. The information required by this Item is also contained in Part II, Item 7 of this Annual Report on Form 10-K.

Item 14. Internal Controls and Procedures

Within the 90 days prior to the date of this report, our management carried out an evaluation, under the supervision and with the participation of the President, the Chief Operating Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 and 15d-14. Based upon that evaluation, the President, Chief Operating Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings.

There have been no significant changes in our internal controls or in other factors that could significantly affect those controls since our evaluation of these controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)

The following documents are filed as part of this report:

Financial Statements


	See the table of contents to Financial Statements and Supplemental Data.

Financial Statement Schedules


	The following financial statement schedules should be read in conjunction with the financial statements incorporated by reference in Part II, Item 8 of this Annual Report on Form 10-K:

			III Real Estate Owned and Accumulated Depreciation IV Investments in Mortgage Loans on Real Estate

	3.		Exhibits


	See the list of exhibits set forth in part (c) below.

(b)		Reports on Form 8-K.

		On February 18, 2003, we filed a Current Report on Form 8-K reporting under Item 2 - Acquisition or Disposition of Assets, that we had completed three transactions that individually were insignificant, as defined by Regulation S-X, but in the aggregate constituted a significant amount of assets, as defined in Regulation S-X.

		On February 27, 2003, we filed a Current Report on Form 8-K reporting under Item 5 - Other Events, that Thomas F. James Realty Limited Partnership, LLLP, will purchase a parcel of property located in Ripley, Tennessee, and that Thomas F. James Properties, LLC, has the option, but not the obligation, to purchase a commercial strip mall located in Excelsior, Minnesota. On April 15, 2003, we filed a Current Report on Form 8-K-A reporting under Item 7 - Financial Statements and Exhibits, the financial statements and pro forma financial information regarding the three transactions that in the aggregate constituted a significant amount of assets, as defined in Regulation S-X. This filing was an amendment to our previously filed Current Report on Form 8-K filed on February 18, 2003.

(c)		The following is a list of Exhibits to this Annual Report on Form 10-K. We will furnish a copy of any exhibit listed below to any security holder who requests it upon payment of a fee of 15 cents per page. All Exhibits are either contained in this Annual Report on Form 10-K or are incorporated by reference as indicated below.

	3(i)		Second Restated Declaration of Trust of Investors Real Estate Trust, dated February 10, 1999, filed as Exhibit 3(i) to the Registration Statement on Form S-11, effective June 4, 1999, (SEC File No. 333 21945) filed for the Registrant (File No. 0-14851) and incorporated herein by reference.

	3(ii)		Governing Provisions (Bylaws) of IRET, Inc.,as adopted on January 15, 1997, amended on July 15, 1998, amended on June 20, 2001, filed as Exhibit 3(ii) to the Annual Report on Form 10-K for the fiscal year ended April 30, 2002 and incorporated herein by reference.

	10(i)		Agreement of Limited Partnership of IRET Properties, A North Dakota Limited Partnership, dated January 31, 1997, filed as Exhibit 3(ii) to the Registration Statement on Form S-11, effective March 14, 1997 (SEC File No. 333-21945) filed for the Registrant (File No. 0-14851) and incorporated herein by reference.

	21(i)		Subsidiaries of Investors Real Estate Trust, filed herewith.

	99(i)		Section 906 Certification of the President and Chief Executive Officer, filed herewith.

	99(ii)		Section 906 Certification of the Senior Vice President and Chief Financial Officer, filed herewith.

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Investors Real Estate Trust

Date: July 23, 2003	By:	/s/ Thomas A. Wentz, Sr.

		Thomas A. Wentz, Sr. President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:


Signature	Title	Date

/S/ Jeffrey L. Miller Jeffrey L. Miller	Trustee & Chairman	July 23, 2003

/S/ C. Morris Anderson C. Morris Anderson	Trustee & Vice Chairman	July 23, 2003

/S/ Daniel L. Feist Daniel L. Feist	Trustee & Vice Chairman	July 23, 2003

/S/ Thomas A. Wentz, Sr. Thomas A. Wentz, Sr.	President & Chief Executive Officer	July 23, 2003

/S/ Timothy P. Mihalick Timothy P. Mihalick	Trustee, Senior Vice President & Chief Operating Officer	July 23, 2003

/S/ Thomas A. Wentz, Jr. Thomas A. Wentz, Jr.	Trustee, Senior Vice President & General Counsel	July 23, 2003

/S/ Diane K. Bryantt Diane K. Bryantt	Senior Vice President & Chief Financial Officer	July 23, 2003

/S/ Charles Wm. James Charles Wm. James	Trustee & Senior Vice President	July 23, 2003

/S/ John F. Decker John F. Decker	Trustee	July 23, 2003


Signature	Title	Date

/S/ Steven B. Hoyt Steven B. Hoyt	Trustee	July 23, 2003

/S/ Patrick G. Jones Patrick G. Jones	Trustee	July 23, 2003

/S/ Stephen L. Stenehjem Stephen L. Stenehjem	Trustee	July 23, 2003

/S/ Michael A. Bosh Michael A. Bosh	Secretary and Associate General Counsel	July 23, 2003

Certifications

I, Thomas A. Wentz, Sr., certify that:

1.		I have reviewed this annual report on Form 10-K of Investors Real Estate Trust;

2.		Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.		Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	c)		presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: July 23, 2003


By:		/S/ Thomas A. Wentz, Sr.

		Thomas A. Wentz, Sr., President & CEO

I, Diane K. Bryantt certify that:

1.		I have reviewed this annual report on Form 10-K of Investors Real Estate Trust;

2.		Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.		Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	c)		presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: July 23, 2003


By:		/S/ Diane K. Bryantt

		Diane K. Bryantt, Senor Vice President & CFO

INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
April 30, 2003, 2002 and 2001

and

INDEPENDENT AUDITOR’S REPORT

PO Box 1988
12 South Main Street
Minot, ND 58702-1988
701-837-4738
fax: 701-838-7785
email: info@iret.com
www.iret.com

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

TABLE OF CONTENTS


		PAGE
INDEPENDENT AUDITORS REPORT			1
CONSOLIDATED FINANCIAL STATEMENTS
	Consolidated Balance Sheets		2 - 3
	Consolidated Statements of Operations		4
	Consolidated Statements of Shareholders’ Equity		5
	Consolidated Statements of Cash Flows		6 - 7
	Notes to Consolidated Financial Statements		8 - 32
ADDITIONAL INFORMATION
	Independent Auditor’s Report on Additional Information		34
	Real Estate Accumulated Depreciation		35 - 47
	Investments in Mortgage Loans on Real Estate		48
	Selected Financial Data		49
	Gain (Loss) From Property Dispositions		50
	Mortgage Loans Payable		51 - 55
	Significant Property Acquisitions		56 - 57
Schedules other than those listed above are omitted since they are not required or are not applicable, or the required information is shown in the financial statement or notes thereon.
	Quarterly Results of Consolidated Operations(unaudited)		58

INDEPENDENT AUDITOR’S REPORT

Board of Trustees
Investor Real Estate Trust
and Subsidiaries
Minot, North Dakota

We have audited the accompanying consolidated balance sheets of Investors Real Estate Trust and Subsidiaries as of April 30, 2003, and 2002, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the years ended April 30, 2003, 2002, and 2001. These consolidated financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis of our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Investors Real Estate Trust and Subsidiaries as of April 30, 2003, and 2002, and the consolidated results of its operations and cash flows for the years ended April 30, 2003, 2002, and 2001, in conformity with accounting principles generally accepted in the United States of America.

/S/ Brady Martz and Associates, P.C.

BRADY, MARTZ & ASSOCIATES, P.C.
Minot, North Dakota, USA

May 22, 2003

F-1

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

April 30, 2003 and 2002


			2003			2002

ASSETS
Real estate investments			$	919,780,802		$	740,319,436
	Less accumulated depreciation			(75,638,772	)		(58,925,517	)

			$	844,142,030		$	681,393,919
Mortgage loans receivable, net of allowance				1,182,940			3,952,762

	Total real estate investments		$	845,324,970		$	685,346,681
Cash and cash equivalents			$	15,564,714		$	12,333,426
Marketable securities - available-for-sale				3,077,260			10,500,000
Rent receivable, net of allowance				4,604,150			3,233,765
Real estate deposits				353,600			422,045
Notes Receivable				0			3,500,000
Prepaid and other assets				1,086,620			3,513,791
Tax, insurance, and other escrow				7,433,923			6,210,450
Property and Equipment, net				2,088,074			209,121
Goodwill				1,440,817			1,440,817
Deferred charges and leasing costs				4,706,393			3,498,922

		TOTAL ASSETS	$	885,680,521		$	730,209,018

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-2

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS(continued)

April 30, 2003 and 2002

LIABILITIES AND SHAREHOLDERS’ EQUITY


			2003			2002

LIABILITIES
	Accounts payable and accrued expenses		$	16,638,506		$	10,596,277
	Notes Payable			11,247,531			0
	Mortgages payable			539,397,202			459,568,905
	Investment certificates issued			9,034,696			25,186,582

		Total Liabilities	$	576,317,935		$	495,351,764

COMMITMENTS AND CONTINGENCIES (NOTE 17)
MINORITY INTEREST IN PARTNERSHIPS			$	14,224,628		$	12,819,077

MINORITY INTEREST OF UNIT HOLDERS IN OPERATING PARTNERSHIP			$	80,376,853		$	76,460,046

SHAREHOLDER’S EQUITY
	Shares of beneficial interest(unlimited authorization, no par value, 36,166,351 shares outstanding in 2003 and 27,847,079 shares outstanding in 2002)		$	240,645,207		$	163,376,549
	Accumulated distributions in excess of net income			(25,884,102	)		(17,798,418	)

	Total shareholders’ equity		$	214,761,105		$	145,578,131

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	885,680,521		$	730,209,018

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-3

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

for the years ended April 30, 2003, 2002, and 2001


		2003			2002			2001

REVENUE
	Real Estate Rentals	$	118,901,019		$	90,727,867		$	73,916,442
	Discounts and Fees		234,271			214,960			213,427

	Total Revenue	$	119,135,290		$	90,942,827		$	74,129,869

OPERATING EXPENSE
	Interest	$	37,072,908		$	30,088,615		$	24,693,635
	Depreciation		19,414,402			15,238,520			12,046,175
	Utilities and Maintenance		19,820,585			12,374,017			11,175,146
	Taxes		13,568,355			9,056,481			7,393,165
	Insurance		2,159,270			1,297,420			788,386
	Property Management Expenses		7,816,236			6,570,562			5,576,463
	Property Management Related Party		503,976			321,348			114,421
	Administrative Expense		2,051,212			1,569,853			1,057,469
	Advisory and Trustee Services		112,956			112,889			423,227
	Operating Expenses		885,403			565,802			431,390
	Amortization		662,818			542,667			428,188
	Amortization of Related Party Costs		37,866			6,533			0

	Total Operating Expense	$	104,105,987		$	77,744,707		$	64,127,665

Non-Operating Income		$	830,119		$	1,062,123		$	753,001

Income Before Gain/Loss on Properties and Minority Interest		$	15,859,422		$	14,260,243		$	10,755,205
Gain on Sale of Investment			315,342			546,927			601,605
Minority Interest Portion of Other Partnerships’ Income			(934,114	)		(198,564	)		0
Minority Interest Portion of Operating Partnership Income			(3,679,239	)		(3,714,447	)		(2,210,454	)

Income From Continuing Operations		$	11,561,411		$	10,894,159		$	9,146,356
Discontinued Operations, net			686,750			(294,030	)		(452,116	)

Net Income		$	12,248,161		$	10,600,129		$	8,694,240

Net Income Per Share (basic and diluted)		$	.38		$	.42		$	.38

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-4

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

for the years ended April 30, 2003, 2002, and 2001


											ACCUMULATED
					SHARES OF			DISTRIBUTIONS			OTHER			TOTAL
		NUMBER			BENEFICIAL			IN EXCESS OF			COMPREHENSIVE			SHAREHOLDER’S
		OF SHARES			INTEREST			NET INCOME			INCOME (LOSS)			EQUITY

BALANCE MAY 1, 2000			22,452,069		$	119,233,172		$	(9,094,076	)	$	(218,505	)	$	109,920,591
Comprehensive Income
	Net income		0			0			8,694,240			0			8,694,240
	Unrealized gain on securities available-for-sale		0			0			0			88,054			88,054

Total comprehensive income														$	8,782,294
Distributions			0			0			(12,673,321	)		0			(12,673,321	)
Distribution reinvestment plan			273,155			2,230,445			0			0			2,230,445
Sale of shares			1,383,908			11,001,509			0			0			11,001,509
Fractional shares repurchased			(40,786	)		(316,358	)		0			0			(316,358	)

BALANCE APRIL 30, 2001			24,068,346		$	132,148,768		$	(13,073,157	)	$	(130,451	)	$	118,945,160
Comprehensive Income
	Net income		0			0			10,600,129			0			10,600,129
	Unrealized gain on securities available-for-sale		0			0			0			130,451			130,451

Total comprehensive income														$	10,730,580
Distributions			0			0			(15,325,390	)		0			(15,325,390	)
Distribution reinvestment plan			832,708			7,297,694			0			0			7,297,694
Sale of shares			2,947,986			23,949,523			0			0			23,949,523
Fractional shares repurchased			(1,961	)		(19,436	)		0			0			(19,436	)

BALANCE APRIL 30, 2002			27,847,079		$	163,376,549		$	(17,798,418	)	$	0		$	145,578,131
Comprehensive Income
	Net income		0			0			12,248,161			0			12,248,161

Total comprehensive income														$	12,248,161
Distributions			0			0			(20,333,845	)		0			(20,333,845	)
Distribution reinvestment plan			971,292			9,462,920			0			0			9,462,920
Sale of shares			7,350,918			67,834,566			0			0			67,834,566
Fractional shares repurchased			(2,938	)		(28,828	)		0			0			(28,828	)

BALANCE APRIL 30, 2003			36,166,351		$	240,645,207		$	(25,884,102	)	$	0		$	214,761,105

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-5

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended April 30, 2003, 2002, and 2001


		2003			2002			2001

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income		$	12,248,161		$	10,600,129		$	8,694,240
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization		20,306,618			16,064,368			12,727,720
	Minority interest portion of operating partnership income		4,833,072			3,812,732			2,095,177
	Gain on sale of properties		(1,594,798	)		(546,927	)		(601,605	)
	Interest reinvested in investment certificates		374,946			486,198			360,181
Effects on operating cash flows due to changes in:
	Real estate deposits		85,060			1,062,876			246,350
	Rent receivable		(1,370,385	)		(1,308,336	)		(990,213	)
	Other assets		3,174,743			(2,850,807	)		(201,547	)
	Tax, insurance and other escrow		(1,020,333	)		(1,886,489	)		(1,105,357	)
	Deferred charges		(1,728,602	)		(847,260	)		(805,364	)
	Related Party Capitalized Leasing Commissions		(179,553	)		(27,324	)		0
	Accounts payable and accrued expenses		3,386,226			2,359,053			1,909,163

Net cash provided from operating activities		$	38,515,155		$	26,918,213		$	22,328,745

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity of marketable securities available for sale		$	43,100,000		$	3,085,208		$	250,172
Principal payments on mortgage loans receivable			5,888,830			5,591,429			613,934
Proceeds from sale of property			4,957,564			269,501			0
Payments for acquisitions and improvement of properties			(78,100,677	)		(62,301,069	)		(72,319,419	)
Purchase of marketable securities available-for-sale			(35,677,260	)		(10,500,000	)		0
Investment in mortgage loans receivable			(2,944,008	)		(8,507,096	)		(4,709,838	)
Proceeds from notes receivable			3,500,000			0			0
Investment in notes receivable			0			(3,500,000	)		0

Net cash used for investing activities		$	(59,275,551	)	$	(75,862,027	)	$	(76,165,151	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of shares, net of issue costs		$	31,912,977		$	13,520,867		$	11,001,509
Proceeds from investment certificates issued			0			24,109,305			3,257,574
Proceeds from mortgages payable			43,925,000			43,093,345			79,369,000
Proceeds from notes payable			14,100,000			0			0
Proceeds from sale of minority interest units			0			345,603			0
Repurchase of shares and minority interest units			(28,827	)		(29,868	)		(5,497,952	)
Distributions paid			(11,663,416	)		(8,362,657	)		(5,963,290	)
Distributions paid to minority interest unitholders			(5,461,170	)		(4,476,875	)		(3,059,078	)
Distributions paid to other minority partners			(1,014,672	)		(150,082	)		0
Redemption of investment certificates			(16,526,833	)		(2,195,531	)		(1,828,594	)
Principal payments on mortgage loans			(24,348,340	)		(10,932,930	)		(14,083,544	)
Principal payments on notes payable			(6,903,035	)
Net increase (decrease) in short-term lines of credit			0			0			(6,452,420	)

Net cash provided from financing activities		$	23,991,684		$	54,921,177		$	56,743,205

NET INCREASE IN CASH AND CASH EQUIVALENTS		$	3,231,288		$	5,977,363		$	2,906,799
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		$	12,333,426			6,356,063			3,449,264

CASH AND CASH EQUIVALENTS AT END OF YEAR		$	15,564,714		$	12,333,426		$	6,356,063

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-6

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS(continued)

for the years ended April 30, 2003, 2002, and 2001


		2003		2002		2001

SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Distribution reinvestment plan		$	9,462,920	$	7,297,694	$	2,230,445
Property acquired through issue of shares			33,332,680		0		0
Real estate investment acquired through assumption of mortgage loans payable and accrual of costs			61,258,092		59,650,208		38,611,547
Real estate investment acquired through assumption of notes payable			4,050,566		0		0
Mortgage loan receivable transferred to property owned			0		0		4,709,838
Mortgage loan receivable acquired through assumption of mortgage loans payable and accrual of costs			175,000		0		0
Proceeds from sale of properties deposited directly with escrow agent			4,562,915		856,411		4,093,684
Proceeds from sale of property to pay off mortgage or assumption of debt			1,006,454		0		0
Properties and goodwill acquired through the issuance of minority interest units in the operating partnership			8,860,420		19,793,183		25,543,524
Minority partner interest in IRET-BD			1,486,108		0		0
Minority partner interest in Southdale Medical Center			0		0		3,287,655
Minority partner interest in Mendota Properties			0		9,482,931		0
Interest reinvested directly in investment certificates			374,946		486,198		360,181
Investment certificates transferred to shares			0		9,089,807		0
UPREIT units converted to shares			2,588,908		1,338,849		0
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
	Interest paid on mortgages	$	35,949,777	$	27,318,816	$	23,763,584
	Interest paid on investment certificates		989,413		663,774		745,391
	Interest paid on margin account and other		103,799		1,438		0

		$	37,042,989	$	27,984,028	$	24,508,975

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-7

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2003, 2002, and 2001

NOTE 1 - ORGANIZATION

Investors Real Estate Trust (“IRET”) elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended April 30, 1971. REITs are subject to a number of organization and operational requirements, including a requirement to distribute 90% of ordinary taxable income to its shareholders and, generally, are not subject to Federal income tax on net income. IRET is engaged in the acquisition and ownership of residential apartment communities and commercial properties located mainly in the states of North Dakota and Minnesota but also in the states of Colorado, Idaho, Iowa, Georgia, Kansas, Montana, Nebraska, South Dakota, Texas, Michigan, Washington and Wisconsin. As of April 30, 2003, IRET owned 64 apartment communities with 8,227 apartments and 125 commercial properties totaling 6,083,588 net rentable square feet. IRET conducts a majority of its business activities through its operating partnership, IRET Properties, a North Dakota Limited Partnership, as well as through a number of other subsidiary entities.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

		BASIS OF PRESENTATIONThe consolidated financial statements include the accounts of IRET and all its subsidiaries in which it maintains a controlling interest. The financial statements have been prepared on the basis of accounting principles that are in effect as of the financial statement date. IRET operates on a fiscal year commencing May 1 and ending April 30.

		The Trust merged with T. F. James Company on February 1, 2003. The assets and liabilities were reflected at fair value in accordance with the purchase method of accounting required under SFAS 141, Business Combinations. The merger included assets totaling $71,641,725, liabilities totaling $38,082,004, and stockholders’ equity of $33,559,721 represented by the issuance of 3,442,022 shares.

		The accompanying consolidated financial statements include the accounts of IRET and its 78% general partnership interest, (as of April 30, 2003), in the operating partnership. Such interest has been calculated as the percentage of units owned by the Trust divided by the total operating partnership units (“UPREIT Units”) outstanding. The remaining 22% is reflected as Minority Interest of Unit Holders in Operating Partnership in these consolidated financial statements.

		The consolidated financial statements also include the ownership by IRET Properties of: (1) a 60.31% ownership interest in Minnesota Medical Investors LLC, SMB Operating Company LLC, and SMB MM LLC, collectively known as Southdale Medical Center; (2) a 51% ownership interest in Mendota Properties, LLC, a Minnesota limited liability company, the holder of all of the issued and outstanding membership interests in Mendota Office Holding LLC, a Minnesota limited liability company and Mendota Office Three and Four, LLC, a Minnesota limited liability company which are the owners of five multi-tenant commercial real estate properties in Dakota County, Minnesota, known as Mendota Heights, and (3) a 51% ownership interest in IRET-BD, LLC, a Minnesota limited liability company, the holder of all of the issued and outstanding membership interests in IRET – DMS, LLC and IRET – Brenwood, LLC, which are the owners of a warehouse facility in Des Moines, Iowa, known as Dixon Avenue, and a four building office complex in Minnetonka, MN, known as Brenwood Office, respectively. These companies are consolidated into IRET’s other operations with minority interests reflecting the minority partners’ share of ownership and income and expenses.

F-8

NOTE 2- (continued)

		All material inter-company transactions and balances have been eliminated in the consolidated financial statements.

		NEW ACCOUNTING PRONOUNCEMENTSStatement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, established accounting and reporting standards requiring that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Certain provisions of SFAS 133 were amended by SFAS 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities” an amendment of Statement 133. The impact of SFAS 133 is not significant.

		The Trust adopted FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others, for any guarantees issued or modified after December 31, 2002. This Interpretation requires a liability to be recognized upon issuance of certain guarantees, whether or not payment under the guarantee is probable. It also requires the disclosure of certain information related to new and previously existing guarantees. The Trust does not believe it has entered into any guarantees that fall within the guidance of this Interpretation and thus, this Interpretation has no impact on the Trust’s financial statements.

		The Trust adopted FASB Interpretation No. 46, Consolidation of Variable Interest Entities. These consolidation requirements apply to variable interest entities created after January 31, 2003, and to existing variable interest entities beginning August 1, 2003. The Interpretation requires that a variable interest entity be consolidated if the Trust is subject to a majority of the risk of loss from its activities or is entitled to receive a majority of the entities’ returns. The Trust does not believe it has interests in any variable interest entities, and thus, this Interpretation has no impact on the Trust’s financial statements.

		Effective May 1, 2003, Statement of Financial Accounting Standard No. 143, Accounting for Asset Retirement Obligations, requires the Trust to recognize obligations incurred in conjunction with the retirement of tangible long-lived assets. It is anticipated that the adoption of this standard will not have a material impact on the Trust’s financial statements.

		The Trust adopted SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, effective for activities initiated after December 31, 2002. This standard establishes the need for recognition of liabilities for costs associated with exit or disposal activities. The adoption of SFAS 146 has not materially impacted the Trust’s financial statements.

		USE OF ESTIMATESThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates

		REAL ESTATE ASSETS AND DEPRECIATION OF INVESTMENT IN REAL ESTATEReal estate is recorded at cost less accumulated depreciation less an adjustment, if any, for impairment. A land value is assigned based on the purchase price if land is acquired separately or based on market research if acquired in a merger or in a single or portfolio acquisition.

F-9

NOTE 2- (continued)

		Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. The Trust uses a 20-40 year estimated life for buildings and improvements and a 5-12 year estimated life for furniture, fixtures and equipment.

		Expenditures for ordinary maintenance and repairs are expensed to operations as incurred and significant renovations and improvements that improve and/or extend the useful life of the asset are capitalized over their estimated useful life, generally five to ten years. Property sales or dispositions are recorded when title transfers and sufficient consideration has been received by the Trust. Upon disposition, the related costs and accumulated depreciation are removed from the respective accounts. Any gain or loss on sale is recognized in accordance with accounting principles generally accepted in the United States of America. The Trust periodically evaluates its long-lived assets, including its investments in real estate, for impairment indicators. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset and legal and environmental concerns. Future events could occur which would cause the Trust to conclude that impairment indicators exist and an impairment loss is warranted. If indicators exist, the Trust compares the expected future undiscounted cash flows for the long-lived asset against the carrying amount of that asset. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, an impairment loss would be recorded for the difference between the estimated fair value and the carrying amount of the asset.

		The fair value of the property is the amount that would be recoverable upon the disposition of the property. Techniques used to establish fair value include present value of estimated expected future cash flows using a discount rate commensurate with the risks involved, the appraised value, and recent sales of comparable assets in close proximity to the Trust’s property.

		REAL ESTATE HELD FOR SALEis stated at the lower of its carrying amount or estimated fair value less disposal costs. Depreciation is not recorded on assets classified as held for sale.

		In the normal course of business IRET will receive offers for sale of its properties, either solicited or unsolicited. For those offers that are accepted, the prospective buyer will usually acquire a due diligence period before completion of the transaction. It is not unusual for matters to arise that result in the withdrawal or rejection of the offer during this process. As a result, real estate is not classified as “held-for-sale” until it is likely, in the opinion of management that a property will be disposed of in the near term, even if sale negotiations for such property are currently under way.

		The Trust reports in discontinued operations, the results of operations of a property that has either been disposed of or is classified as held for sale unless certain conditions are met. Any gains or losses from the sale of a property are reported in discontinued operations also, unless certain conditions are met.

		GOODWILLIn June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 prohibits the amortization of goodwill and requires that goodwill be reviewed for impairment at least annually. The Trust adopted this standard effective May 1, 2002.

		The Goodwill asset represents the difference between the purchase price of $2,083,350 paid by the Trust for Odell-Wentz, and the actual value of the real property acquired by the Trust as part of the acquisition. Prior to the adoption of FASB 142, the Trust elected to amortize the Goodwill over a 15-year period. The parties agreed to a purchase price that would result in the Trust receiving a return on its purchase price going forward in the form of reduced operating costs. The agreed rate of return was approximately 12% or reduced expenses of approximately $280,000 for the fiscal year ending April 30, 2002.

F-10

NOTE 2- (continued)

		On May 1^st of each year, and periodically throughout the year if a material event occurs that may reduce the value of the Goodwill, the Trust compares its administrative expenses against what would have been paid as an external advisory fee to Odell-Wentz under the advisory fee agreement in place prior to the acquisition of Odell-Wentz by the Trust. If the comparison of costs shows a return on investment or reduced operating costs of less than 12%, the Trust will impair the Goodwill accordingly.

		PROPERTY AND EQUIPMENTconsists of the administrative office buildings and equipment contained at IRET’s headquarters in Minot, North Dakota and the office location in Excelsior, Minnesota. The balance sheet reflects these assets stated at cost net of accumulated depreciation. As of April 30, 2003 and 2002, the cost accordingly was $2,513,768 and $498,210. Accumulated depreciation was $425,694 and $289,089 as of April 30, 2003 & 2002, respectively.

		MORTGAGE LOANS RECEIVABLEis shown at cost. Interest income is accrued and reflected in the related balance.

		MARKETABLE SECURITIESIRET’s investments in securities are classified as securities “held-to-maturity” and securities “available-for-sale.” The securities classified as “available-for-sale” represent an investment in a Merrill Lynch money market mutual fund and is stated at fair value. The Fund is a money market mutual fund that is subject to all of the requirements of Rule 2a-7 under the Investment Company Act of 1940, as amended. The Fund invests in a diversified portfolio of U.S. dollars denominated money market securities. These securities consist primarily of short-term U.S. Government securities, U.S. Government agency securities, bank obligations, commercial paper and repurchase agreements. The Fund may also invest in domestic bank obligations and foreign bank obligations and other short-term debt securities issued by U.S. and foreign entities. These securities will have remaining maturities of up to 762 days (25 months) in the case of U.S. Government securities and 397 days (13 months) in the case of all other securities. The Fund’s dollar-weighted average portfolio maturity will not exceed 90 days. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Unrealized gains and losses on securities “available-for-sale” are recognized as direct increases or decreases in shareholders’ equity. Cost of securities sold is recognized on the basis of specific identification. IRET has no securities “held-to-maturity” as of April 30, 2003 or 2002.

		TAX, INSURANCE, AND OTHER ESCROWincludes funds deposited with the lender for payment of real estate tax and insurance. Other escrow includes reserve for replacement funds to be used for replacement of structural elements and mechanical equipment of certain projects. The funds are under the control of the lender. Disbursements are made after supplying written documentation to the lender.

		REAL ESTATE DEPOSITSconsist of funds held by an escrow agent to be applied toward the purchase of real estate qualifying for gain deferral as a like-kind exchange of property under Section 1031 of the Internal Revenue Code. It also consists of earnest money, or “good faith deposits,” to be used by IRET toward the purchase of property or the payment of loan costs associated with loan placement or refinancing.

		DEFERRED LEASING AND LOAN ACQUISITION COSTSCosts and commissions incurred in obtaining tenant leases are amortized on the straight-line method over the terms of the related leases. Costs incurred in obtaining long-term financing are amortized over the life of the loan and charged to amortization expense over the terms of the related debt agreements.

F-11

NOTE 2- (continued)

		CASH AND CASH EQUIVALENTSconsists of bank deposits and short-term investment securities acquired subject to repurchase agreements.

		MINORITY INTERESTInterests in the operating partnership held by limited partners are represented by operating partnership units. The operating partnerships’ income is allocated to holders of units based upon the ratio of their holdings to the total units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to minority interests in accordance with the terms of the operating partnership agreement. IRET reflects minority interests in the Southdale Medical Center, Mendota Heights Office Complex, and Brenwood and Dixon properties on the balance sheet for the portion of properties consolidated by IRET that are not wholly owned by IRET. The earnings or losses from these properties attributable to the minority interests are reflected as limited partner minority interests in the consolidated statements of operations.

		NET INCOME PER SHAREBasic net income per share is computed using the weighted average number of shares outstanding over the earnings period. There is potential for dilution of net income per share due to the conversion option of operating partnership units. However, basic and diluted net income per share are the same.

		INCOME TAXESIRET intends to continue to qualify as a real estate investment trust as defined by the Internal Revenue Code and, as such, will not be taxed on the portion of the income that is distributed to the shareholders, provided at least 90% of its real estate investment trust taxable income is distributed and other requirements are met. IRET intends to distribute all of its taxable income and realized capital gains from property dispositions within the prescribed time limits and, accordingly, there is no provision or liability for income taxes shown on the financial statements.

		IRET conducts all of its business activity as an umbrella real estate investment trust through its operating partnership, IRET Properties. This UPREIT status allows IRET to accept the contribution of real estate in exchange for limited partnership units. Generally, such a contribution to a limited partnership allows for the non-recognition of gain by an owner of appreciated real estate. The UPREIT concept is based on the combination of the non-recognition provisions of Section 721 of the Internal Revenue Code and the limited partnership conversion rights which allow the contributing partner to exchange the limited partnership interest received in exchange for the appreciated real estate for IRET’s stock. Upon conversion of the partnership units to IRET shares, a taxable event occurs for that limited partner. Income or loss of the operating partnership shall be allocated among its partners in compliance with the provisions of the Internal Revenue Code Section 701(b) and 704(c).

		REVENUE RECOGNITIONResidential rental properties are leased under operating leases with terms generally of one year or less. Commercial properties are leased under operating leases to tenants for various terms exceeding one year. Lease terms often include renewal options. Rental revenue is recognized on the straight-line basis, which averages minimum required rents over the terms of the leases. Rents recognized in advance of collection are reflected as rent receivable, net of allowance for doubtful accounts.

		Management evaluates the appropriate amount of the allowance for doubtful accounts by assessing the recoverability of individual real estate mortgage loans and rent receivables by a comparison of their carrying amount with their estimated realizable value. Management also considers the tenant financial condition, credit history and current economic conditions.

F-12

NOTE 2- (continued)

Receivable balances are written off when deemed uncollectible. Recoveries of receivables previously written off, if any, are recorded when received. A summary of the changes in the allowance for doubtful accounts for the years ended April 30, 2003 and 2002, are as follows:


	2003			2002

Balance at beginning of year	$	140,785		$	120,315
Provision for doubtful accounts		215,000			30,000
Write-offs		(240,785	)		(9,530	)

Balance at close of year	$	115,000		$	140,785

		Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as revenue in the period the applicable expenditures are incurred. IRET receives payments for these reimbursements from substantially all its multi-tenant commercial tenants throughout the year based on estimates. Differences between estimated recoveries and the final billed amounts, which are immaterial, are recognized in the subsequent year.

		A number of the commercial leases provide for a base rent plus a percentage rent based on gross sales in excess of a stipulated amount. These percentage rents are recorded once the required sales level is achieved and are included in rental income at that time.

		Profit on sales of real estate shall be recognized in full when the real estate is sold, provided the collectibility of the sales price is reasonably assured or the amount that will be collectible can be estimated and the seller is not obliged to perform significant activities after the sale to earn the profit. Any gain or loss on a sale or disposition is recognized in accordance with accounting principles generally accepted in the United States of America.

		Interest on mortgage loans receivable is recognized in income as it accrues during the period the loan is outstanding. In the case of non-performing loans, income is recognized as discussed in Note 5.

		RECLASSIFICATIONSCertain previously reported amounts have been reclassified to conform with the current financial statement presentation.

		THE DISTRIBUTION REINVESTMENT PLANis available to all shareholders of IRET and all limited partners of IRET Properties. Under the Distribution Reinvestment Plan, shareholders or limited partners may elect to have all or a portion of their distribution used to purchase additional IRET shares.

NOTE 3 - OFF-BALANCE-SHEET RISK

		IRET had deposits at First Western Bank, Bremer Bank, First International Bank, and US Bank that exceeded Federal Deposit Insurance Corporation limits by $10,265,313, $218,263, $2,425,467, and $4,710,666, respectively, as of April 30, 2003.

		IRET has entered into a standard cash management arrangement with First Western Bank with respect to deposit accounts with First Western Bank that exceed FDIC Insurance coverage. Pursuant to sweep account and repurchase agreements between IRET and First Western Bank, on a daily basis such excess amounts, up to a maximum amount of $15,075,000 as of April 30, 2003 and 2002, are invested in United States government securities sold to IRET by First Western Bank. IRET can require First Western Bank to repurchase such obligations at any time, at a purchase price equal to what IRET paid for the obligations plus interest.

F-13

NOTE 3- (continued)

First Western Bank automatically repurchases obligations when collected amounts on deposit in IRET’s deposit accounts fall below the maximum insurance amount, with the proceeds of such repurchases being transferred to IRET’s deposit accounts to bring the amount on deposit back up to the threshold amount. The amounts invested by IRET pursuant to the repurchase agreement are not insured by FDIC. The repurchase agreements have no impact on the fair market value of the underlying bank accounts since IRET is entitled to recover only up to the par value of their accounts, subject to the above maximum threshold. Therefore, IRET has considered the repurchase investments to be cash equivalents, with no differences between the book value and the fair market value.

NOTE 4 - PROPERTY OWNED UNDER LEASE

Property consisting principally of real estate owned under lease is stated at cost less accumulated depreciation and is summarized as follows:


		April 30, 2003			April 30, 2002

Residential		$	398,916,616		$	389,930,454
	Less accumulated depreciation		(50,552,553	)		(41,629,462	)

		$	348,364,063		$	348,300,992

Commercial		$	520,864,186		$	350,388,982
	Less accumulated depreciation		(25,086,219	)		(17,296,055	)

		$	495,777,967		$	333,092,927

Remaining Cost		$	844,142,030		$	681,393,919

		There were no repossessions during the years ended April 30, 2003, and 2002.

		The above cost of commercial real estate owned included construction in progress of $7,223,906 and $167,468 as of April 30, 2003, and 2002, respectively. As of April 30, 2003, IRET has plans to complete the expansion of the Southdale Medical Center in Edina, Minnesota, at an estimated cost of $13,706,425 and to finance a $5,100,000 addition to the existing facility of Edgewood Vista, in Virginia, Minnesota. As of year-end April 30, 2003, IRET has entered into agreements to purchase the following:


Property	Address	Purchase Price

Benton Business Park	940 Industrial Drive South - Sauk Rapids, MN	$	1,600,000
West River Business Park	416 Great Oak Dr - Waite Park, MN		1,500,000
Nebraska Orthopaedic Hospital	Omaha, NE		19,400,000

Total Pending		$	22,500,000

		All pending acquisitions are subject to certain conditions and contingencies; therefore no assurance can be given that these transactions will be consummated.

		Construction period interest of $90,939, $99,668, and $316,644 has been capitalized for the year ended April 30, 2003, 2002, and 2001, respectively.

F-14

NOTE 4- (continued)

		Residential apartment units are rented to individual tenants with lease terms up to one year. Gross revenues from residential rentals totaled $59,734,691, $58,429,394, and $55,244,032 for the year ended April 30, 2003, 2002, and 2001, respectively.

		Gross revenues from commercial property rentals totaled $59,166,328, $32,298,473 and $18,672,410 for the year ended April 30, 2003, 2002, and 2001, respectively. Commercial properties are leased to tenants under terms expiring at various dates through 2024. Lease terms often include renewal options and, in limited instances, buyout options. In addition, a number of the commercial leases provide for a base rent plus a percentage rent based on gross sales in excess of a stipulated amount. Rents based on a percentage of sales totaled $102,894, $116,239, and $124,092 for the years ended April 30, 2003, 2002, and 2001, respectively.

		The future minimum lease payments to be received under leases for commercial properties as of April 30, 2003, assuming that no options to renew or buy out the lease are exercised, are as follows:


Year ending April 30,

2004	$	46,851,658
2005		42,503,338
2006		38,531,996
2007		34,926,711
2008		31,104,216
Thereafter		181,149,783

	$	375,067,702

IRET evaluates impairment losses based on present value of estimated expected future cash flows from each property. For the years ended April 30, 2003, 2002, and 2001, the Trust did not record any losses due to impairment charges.

NOTE 5 - MORTGAGE LOANS RECEIVABLE - NET

		Mortgage loans receivable consists of five separate loans that are secured by real estate. Contract terms vary in their payments of principals and interest. Interest rates range from 7% to 11%. Mortgage loans receivable have been evaluated for possible losses considering repayment history, market value of underlying collateral, and economic conditions.

		Future principal payments due under the mortgage loans contracts as of April 30, 2003, are as follows:


Year ending April 30,

2004	$	865,122
2005		14,366
2006		14,904
2007		5,622
2008		177,926
Later Years		130,000

	$	1,207,940
Less allowance for doubtful accounts		(25,000	)

	$	1,182,940

F-15

NOTE 5- (continued)

There were no significant non-performing mortgage loans receivable as of April 30, 2003, or 2002. Non-performing loans are recognized as impaired in conformity with FASB Statement No. 114,Accounting by Creditors for Impairment of a Loan. The average balance of impaired loans for the years ended April 30, 2003, and 2002, was not significant. For impairment recognized in conformity with FASB Statement No. 114, the entire change in present value of expected cash flows is reported as bad debt expense in the same manner in which impairment initially was recognized or as a reduction in the amount of bad debt expense that otherwise would be reported. Additional interest income that would have been earned on loans if they had not been non-performing was not significant in fiscal 2003, 2002, or 2001. There was no interest income on non-performing loans recognized on a cash basis for fiscal 2003, 2002, and 2001.

NOTE 6 - MARKETABLE SECURITIES

The amortized cost and estimated market values of marketable securities available-for-sale at April 30, 2003, and 2002, are as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

2003
ISSUER Merrill Lynch	$	3,077,260	$	0	$	0	$	3,077,260

2002
ISSUER Merrill Lynch	$	10,500,000	$	0	$	0	$	10,500,000

There was a $68,881 realized loss on sales of securities available-for-sale for the year ended April 30, 2002. There were no realized gains or losses for the years ended April 30, 2003, and 2001.

NOTE 7 - NOTES PAYABLE

As of April 30, 2003, IRET had lines of credit available from three financial institutions. The first unsecured line of credit is with First Western Bank & Trust in the amount of $5,000,000 carrying a variable interest rate equal to prime and maturing August 15, 2003. The weighted average interest rate for the year ended April 30, 2003, was 4.26%. The second unsecured line of credit is with First International Bank & Trust in the amount of $4,400,000 with a variable interest rate equal to prime and maturing December 12, 2003. The weighted average interest rate for year ended April 30, 2003, was 4.25%. The third unsecured line of credit is with Bremer Bank in the amount of $10,000,000 with a variable interest rate equal to Bremer’s reference rate and maturing September 15, 2004. The weighted average interest rate for the year ended April 30, 2003, was 5.40%. Interest payments are due monthly on all three notes. As of April 30, 2002, IRET had no unpaid balances on any of their lines of credit. As of April 30, 2003, IRET had unpaid balances of $4,700,000, $2,700,000, and $3,169,588 at First Western Bank & Trust, First International Bank, and Bremer Bank, respectively.

F-16

NOTE 7- (continued)

The balance remaining of $677,943 relates to a mortgage note with Marshall and Ilsley Bank for the Greenwood, Minnesota office. The interest rate is 8.125% and the maturity date is April 22, 2009. Future minimum payments are as follows:


Year ending April 30,

2004	$	25,139
2005		23,123
2006		25,075
2007		27,191
2008		29,485
Later years		547,930

Total payments	$	677,943

NOTE 8 - MORTGAGES PAYABLE

		Mortgages payable as of April 30, 2003, included mortgages on properties owned totaling $539,397,202. The carrying value of the related real estate owned was $881,402,976.

		Mortgages payable as of April 30, 2002, included mortgages on properties owned totaling $459,568,905. The carrying value of the related real estate owned was $716,964,492.

		Monthly installments are due on the mortgages with interest rates ranging from 3.39% to 10.50% and with varying maturity dates through November 30, 2036.

		Of the mortgages payable, the balances of fixed rate mortgages totaled $516,217,614 and $428,565,814, and the balances of variable rate mortgages totaled $23,179,588 and $31,003,091 as of April 30, 2003, and 2002, respectively. Most of the fixed rate mortgages have substantial pre-payment penalties. As of April 30, 2003, mortgages payable with prepayment penalties totaling $2,788,000 are expected to be refinanced at more favorable interest rates. The aggregate amount of required future principal payments on mortgages payable as of April 30, 2003, is as follows:


Year ending April 30,

2004	$	15,118,657
2005		18,476,246
2006		17,736,455
2007		18,457,557
2008		38,261,152
Later years		431,347,135

Total payments	$	539,397,202

THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.

F-17

NOTE 9 - GOODWILL

As of May 1, 2002, the Trust adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. Accordingly, goodwill is no longer amortized, but is tested on an annual basis for impairment. No impairment was present at April 30, 2003. The following reflects net income and earnings per share for the years ended April 30, 2003, 2002 and 2001 as if SFAS 142 had been applied to those periods.


		2003		2002		2001

Reported net income		$	12,248,161	$	10,600,129	$	8,694,240
	Add back goodwill amortization		0		109,429		91,191

Adjusted net income		$	12,248,161	$	10,709,558	$	8,785,431

Reported earnings per share		$	.38	$	.42	$	.38
	Add back goodwill amortization per		.00		.00		.00

Adjusted earnings per share		$	.38	$	.42	$	.38

NOTE 10 - INVESTMENT CERTIFICATES ISSUED

IRET has sold investment certificates to the public. The interest rates vary from 6% to 8% per annum, depending on the term of the security. Interest is paid annually, semiannually, or quarterly on the anniversary date of issuance. In April of 2002, IRET discontinued the sale of investment certificates and the outstanding certificates will be redeemed at maturity as follows:


Year ending April 30,

2004	$	1,908,958
2005		2,305,138
2006		2,271,037
2007		2,407,958
2008		141,605

	$	9,034,696

THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.

F-18

NOTE 11 - TRANSACTIONS WITH RELATED PARTIES

		ACQUISITION OF ODELL-WENTZ & ASSOCIATES, L.L.C. On July 1, 2000, IRET Properties acquired assets from Odell-Wentz & Associates, L.L.C. in exchange for limited partnership units having a value of $2.1 million. The acquired assets included real estate, furniture, fixtures, equipment and other assets valued at $675,000, goodwill of approximately $1.6 million, and the assumption of mortgages and other liabilities of approximately $236,000. Included in such transactions was the assumption of a note receivable from Timothy Mihalick, an executive officer, in the amount of $101,002. The proceeds of such note were used to purchase shares. The note bears interest at New York Prime less 1% and is payable upon demand. The note is current. With the exception of Roger R. Odell, who retired, all officers and employees of Odell-Wentz and Associates, L.L.C. were retained by IRET.

		Odell-Wentz & Associates, L.L.C. was owned equally by Thomas A. Wentz, Sr., IRET’s current President and Chief Executive Officer, and Roger R. Odell, who, as of the acquisition date of July 1, 2000, was the President. Mr. Odell retired in July 2000, and he did not seek re-election to the Board of Trustees in August 2000. Currently, Mr. Odell has no relationship with the company as an employee, officer or trustee. Prior to the acquisition, Odell-Wentz & Associates, L.L.C. acted as the sole advisor to IRET. Pursuant to an advisory contract, IRET paid an advisor’s fee based on its net assets and a percentage fee for investigating and negotiating the acquisition of new investments. No fees were paid for fiscal years ended April 30, 2003 and 2002. For the fiscal year ended April 30, 2001, IRET paid $265,573 to Odell-Wentz & Associates L.L.C. under such contract.

		PROPERTY MANAGEMENT SERVICESInvestors Management and Marketing, Inc. (“IMM”) provides property management services to IRET Properties and IRET. Roger R. Odell is a shareholder in IMM. From May 1, 2000, through June 30, 2000, (the last full month in which Mr. Odell served as President and as a member of the Board of Trustees), IRET paid $114,421 to IMM for services rendered.

		Hoyt Properties, Inc., a provider of property management services (“Hoyt Properties”), is owned by Steven B. Hoyt, a member of the Board of Trustees. During the fiscal year ended April 30, 2003, Hoyt Properties managed the following commercial buildings pursuant to written management contracts:


Cold Spring Center		4150 2nd Street South - St. Cloud, MN
2030 Cliff Road		2030 Cliff Road - Eagan, MN
Plymouth IV & V		5000 & 5010 Cheshire Lane - Plymouth, MN
Nicollet VII		12109-12139 Nicollet Avenue South - Burnsville, MN
Burnsville Bluffs		11351 Rupp Drive - Burnsville, MN
Pillsbury Business Center		8300-8324 Pillsbury Avenue South - Bloomington, MN
Bloomington Business Plaza		9201 East Bloomington Freeway - Bloomington, MN
Thresher Square		700 & 708 South 3rd Street - Minneapolis, MN
Wirth Corporate Center		4101 Dahlberg Drive - Golden Valley, MN
Brenwood Office Complex 1, 2, 3 & 4		5620, 5640, 5700, 5720 Smetana Drive - Minnetonka, MN

F-19

NOTE 11- (continued)

		In the event that the Trust is not reimbursed for such fee by a tenant and must pay such fee from our rent proceeds, the annual fee is 3.5% of the gross rental proceeds. In addition to such management fee, Hoyt Properties is paid a separate fee for leasing space to tenants at each location. Any leasing commissions earned by Hoyt Properties are not reimbursed by the building’s tenants. The leasing commission rates are set forth in a written contract between the Trust and Hoyt Properties.

		Each of the written management and leasing contracts with Hoyt Properties commenced on April 1, 2001, with the exception of the contracts for Bloomington Business Plaza, which commenced on October 1, 2001, Thresher Square, which commenced on January 2, 2002, Wirth Corporate Center, which commenced on April 1, 2002, and Brenwood Office Complex, which commenced on October 1, 2002. All such contracts may be terminated by either party on 30 days written notice for any reason and without penalty. In Fiscal 2003 and 2002, the Trust paid management fees to Hoyt Properties in the amount of $503,976 and $321,348, respectively. Of this amount, 98% and 99% was reimbursed by tenants renting space at the respective properties.

		Additionally, during that same period, the Trust paid leasing commissions to Hoyt Properties in the amount of $179,553 and $27,324, respectively. The Trust believes that all of the terms of the management contracts are commercially reasonable and are on terms no less favorable than we could have obtained from unrelated property management firms.

		ACQUISITION OF BRENWOOD OFFICE COMPLEX FROM STEVEN B. HOYT, MARISA MOE AND NATALIE HOYTDuring Fiscal 2003, the Trust acquired four commercial buildings from affiliates of Steven B. Hoyt, a member of the Board. On October 1, 2002, the Trust acquired a 51% ownership interest in IRET-BD, LLC, a Minnesota limited liability company, for $13,107,000, with the total joint venture project having an independent third-party appraised value of $25,700,000. The joint venture partners are Steven B. Hoyt, Marisa Moe and Natalie Hoyt, who own 29.44%, 9.8% and 9.8% respectively. Marisa Moe and Natalie Hoyt are the adult daughters of Steven B. Hoyt. Steven B. Hoyt, Natalie Hoyt and Marisa Moe acquired their respective interest in the joint venture by contributing a parcel of real estate known as Brenwood Office Complex located at 5620 in Minnetonka, Minnesota, which was previously acquired on February 1, 2002, by Steven Hoyt, Natalie Hoyt and Marisa Moe for a purchase price of $12,500,000. This transaction required the approval of a majority of the Board and a majority of the independent members of the Board. Such approval was obtained on August 21, 2003.

		The office complex was appraised by an independent third-party MAI appraiser on September 13, 2002, at $13,900,000. In addition to the purchase price, the joint venture incurred acquisition costs of $132,886. The project consists of the four office buildings contributed by Steven B. Hoyt, Marisa Moe and Natalie Hoyt, as well as three industrial/warehouse buildings purchased by the joint venture on October 1, 2002, for $11,800,000. The individual properties are as follows:


			Leasable
			Footage
Property	Address	Year Built	Square		Floors

Brenwood I	5720 Smetana Drive - Minnetonka, MN	1979/80		50,150		4
Brenwood II	5700 Smetana Drive - Minnetonka, MN	1979/80		51,077		4
Brenwood III	5640 Smetana Drive - Minnetonka, MN	1979/80		38,065		3
Brenwood IV	5620 Smetana Drive - Minnetonka, MN	1979/80		37,625		3
4121 Dixon Ave	Des Moines, IA	1977		177,431		1
4141 Dixon Ave	Des Moines, IA	1977		263,196		1
4161 Dixon Ave	Des Moines, IA	1979		164,084		1

F-20

NOTE 11- (continued)

		The Trust’s 51% interest in the joint venture was acquired by contributing cash in the amount of $1,546,765, with the balance paid by the assumption, joint and severally with the joint venture partners, of existing debt as well as the placement of new debt with an unpaid principal balance of $22,729,238 as of October 1, 2002. The assumed debt consists of a loan from Allstate Life Insurance Company secured by a first mortgage on the Brenwood Office Complex, with an unpaid principal balance $8,691,536 as of April 30, 2003, bearing interest at a fixed rate of 8.1%, and amortized over 25 years with monthly installment payments of $70,061, with a final payment of all outstanding principal due on October 1, 2010. The new debt consists of a loan from Transamerica Life Insurance Company secured by a first mortgage on the Dixon Avenue property, with an unpaid principal balance of $8,959,322 as of April 30, 2003, bearing interest at a fixed rate of 5.75%, and amortized over 25 years with monthly installment payments of $56,620 and a final payment of all outstanding principal due on December 1, 2002.

		The balance of the assumed debt of $5,254,037 on April 30, 2003, currently consists of two short-term unsecured promissory notes from us as the managing member. Both notes bear interest at a variable rate equal to the Prime Rate plus 150 basis points or 1.5%. The rate is currently 6% with a provision that the rate may never be below 6%. These promissory notes are eliminated in the presentation of consolidated financial statements.

		THRESHER SQUARE EAST AND WESTOn January 2, 2002, IRET acquired a seven-story office building containing 113,736 square feet located at 700 and 708 South Third Street, Minneapolis, Minnesota. The property was purchased for an agreed value of $10,943,414, which was paid by the assumption by IRET of existing debt with unpaid principal balances of $3,655,000 for loan one and $2,580,000 for loan two as of January 1, 2002. The assumed debt bears interest at the rate of 7.03% for loan one and 7.37% for loan two payable in monthly installments of $34,582 for loan one and $33,270 for loan two amortized over a remaining term of 14 years for loan one and 9 years for loan two. The balance of $4,365,802 was paid by the distribution of 507,651 limited partnership units of IRET Properties to the seller with an agreed value of $8.60 per unit. The limited partnership units are convertible on a one-to-one basis to shares of beneficial interest of IRET. The units must be held for a two-year period before they may be converted to shares of IRET and sold. In addition to the purchase price, IRET incurred acquisition costs of $168,574.56 for commission and legal costs.

		The property was acquired from WPT I, L.L.C. The seller is an affiliate of Steven B. Hoyt. Mr. Hoyt owns 78% of the seller. At the time of the acquisition, Mr. Hoyt was a member of the Board of Trustees of IRET. All of the trustees of IRET approved the transaction as being fair and reasonable to IRET and that substantial justification existed for IRET to pay a price greater than the cost of the property to the seller. Mr. Hoyt abstained from the vote. IRET did not obtain an independent appraisal of the property, but did prepare an internal current appraisal of the property which determined the value to be $10,943,414. The property is 100% leased to eight different tenants with remaining lease terms of less than one month to seven years. No one tenant leases more than 53% of the property.

		BLOOMINGTON BUSINESS PLAZAOn October 1, 2001, IRET acquired the Bloomington Business Plaza from a general partnership controlled by Steven B. Hoyt. The property was acquired pursuant to the terms of a contract dated January 8, 2001, as amended by an agreement dated September 27, 2001. At the time of acquisition, Mr. Hoyt was a member of the Board of Trustees for IRET. At the time the original acquisition contract was signed, Mr. Hoyt was not a member of the Board of Trustees for IRET.

F-21

NOTE 11- (continued)

		The property was purchased for an agreed value of $7,201,680 of which $215,000 was paid in cash and the balance of $6,986,680 with 812,404.65 limited partnership units of IRET Properties with a value of $8.60 per unit. The limited partnership units are convertible on a one-to-one basis to shares of beneficial interest of IRET. The units must be held for a two-year period before they may be converted to shares of IRET and sold. In addition to the purchase price of $7,201,680, IRET incurred acquisition costs of $203,989 for commissions, loan costs and legal costs. The acquisition was approved by all members of the Board of Trustees of IRET. A subsequent independent appraisal of the property as part of the loan process determined the value to be $6,975,000.

		Bloomington Business Plaza is a multi-tenant office/warehouse building constructed in 1985. It consists of 121,063 square feet of leasable space and is currently 100% leased to 21 tenants with remaining lease terms ranging from five months to four years and 10 months. All rents paid by the current tenants are at market rates. No one tenant occupies more than 17.08% of the leasable space.

		WIRTH CORPORATE CENTEROn April 1, 2002, IRET acquired Wirth Corporate Center, an 89,384 square foot, four-story office building from Mr. Hoyt. The Board of Trustees, other than Mr. Hoyt who abstained from the vote, approved the transaction as being fair and reasonable to IRET. The purchase price was based on an appraisal from an independent third-party who determined the value of the property to be $8.6 million.

		In addition to these acquisitions, on April 1, 2001, prior to the time that Mr. Hoyt was elected to the Board of Trustees, IRET acquired a group of six commercial properties from Mr. Hoyt, or affiliates of Mr. Hoyt. Such properties included 2030 Cliff Road, a 13,374 square foot, multi-tenant office building located in Eagan, Minnesota; Burnsville Bluffs, a 26,186 square foot, multi-tenant office building located in Burnsville, Minnesota; Cold Spring Center, a 77,533 square foot, multi-tenant office building located in St. Cloud, Minnesota; Nicollet VII, a 118,400 square foot, multi-tenant office building located in Burnsville, Minnesota; Pillsbury Business Center, a 42,220 square foot, multi-tenant office building located in Bloomington, Minnesota; and Plymouth IV and V, two multi-tenant office buildings have an aggregate of 126,809 square feet and located in Plymouth, Minnesota. The aggregate purchase price for these commercial properties was $34.4 million. The acquisition of these commercial properties was approved by the Board of Trustees.

		CHARLES WM. JAMES - RIPLEY AND EXCELSIOR OPTIONSOn February 1, 2003, the Trust entered into a merger agreement with the T. F. James Company. As part of the merger agreement, two affiliated entities of the T. F. James Company, Thomas F. James Realty Limited Partnership, L.L.L.P. and Thomas F. James Properties, LLC, were granted the right to purchase certain real property acquired by the Trust as a result of the merger. Charles Wm. James, a member of the Board, has an ownership interest in each of Thomas F. James Realty Limited Partnership, L.L.L.P., and Thomas F. James Properties, LLC, of less than ten percent. Both agreements required the approval of a majority of the Board and a majority of the independent members of the Board. Such approval was obtained on February 12, 2003.

		Under the terms of the agreement, the Thomas F. James Realty Limited Partnership, L.L.L.P. purchased a parcel of property located in Ripley, Tennessee for $250,000. Under the terms of the agreement, Thomas F. James Properties, LLC has the option, but not the obligation, to purchase a commercial strip mall located in Excelsior, Minnesota, for the sum of $900,000, plus an annual Consumer Price Index increase from February 2003 until the date the option is exercised. The option purchase price is equal to the price the Trust paid to acquire the property at closing on February 1, 2003, and is equal to the value set by an independent appraisal. Until such time as the option is exercised, the Trust will continue to operate the property and collect all rents from the tenants.

F-22

NOTE 11- (continued)

		DIRECTOR AND EXECUTIVE OFFICER LOANSAs a result of the acquisition of Odell-Wentz & Associates, L.L.C., the company that acted as advisor prior to July 1, 2000, the Trust assumed a note receivable from Mr. Mihalick in the amount of $101,001.80. Proceeds of said note were used to purchase Shares. The note bears interest at New York Prime less 1% and is payable on demand. The note was paid in full by Mr. Mihalick on October 4, 2002, including principal and interest in the amount of $92,769.

		On January 16, 2002, the Board authorized an UPREIT unit loan program that was available to persons holding $1.0 million or more of IRET Properties limited partnership units. Under such loan program, the Trust could lend up to 50% of the value of the borrower’s limited partnership units, with such value to be based on the closing price of the Shares on the NASDAQ National Market on the date of the loan. Such loans were to be for terms of two years or less, secured by the borrower’s limited partnership units in IRET Properties and at a variable interest rate of 1.5% over the interest rate charged to the Trust by a participating lender. The interest rate adjusted on the first of each month. In connection with such loans, the Trust charges a .5% loan fee.

		On January 30, 2002, a loan in the amount of $3.5 million was made to Steven B. Hoyt, a member of the Board. The Board approved such loan. The terms of the loan required Mr. Hoyt to make quarterly interest payments beginning April 1, 2002, with the full balance of the principal sum due on or before January 31, 2004. The initial interest rate was equal to the Wall Street Journal Prime Rate as of January 31, 2002, plus 1.5%, which equaled 6.25%. Mr. Hoyt paid a $17,500 loan fee to the Trust at the loan closing on January 30, 2002. On March 31, 2002, Mr. Hoyt made his first required interest payment of $35,958.90. On June 30, 2002, Mr. Hoyt made his second required quarterly interest payment of $54,537.67. On October 1, 2002, Mr. Hoyt repaid the loan in full in the amount of $3,500,000 plus accrued interest in the amount of $55,136.99.

		SECURITY SALE SERVICESD.A. Davidson & Co. is a corporation that has, and may in the future, on a best-efforts basis, participated in offerings of the Trust’s shares. John F. Decker, a member of the Board, is an employee of D.A. Davidson. In connection with the Trust’s two most recent offerings, D. A. Davidson & Co. participated as a member of the selling syndicate and sold 600,000 and 700,000 Shares, respectively. In connection with offerings during the fiscal year ended April 30, 2002, the Trust authorized and paid D. A. Davidson commissions in the amount of $490,000, and reimbursed it for legal and travel expenses in the amount of $4,814. Of these amounts, Mr. Decker personally received $37,370 in compensation from D.A. Davidson in connection with such offerings. The Trust did not pay any commissions or expenses to D. A. Davidson during the fiscal year ended April 30, 2003.

		UPREIT CONTRIBUTIONOn April 30, 2002, Edgeview Estates I, Ltd., a North Dakota limited partnership contributed the proceeds from the sale of real estate pursuant to IRET Properties UPREIT Contribution Program. The total amount contributed to IRET Properties by Edgeview in exchange for limited partnership units was $386,168.17. A total of 38,908.632 units were allocated to the partnership at a price of $9.925 per unit. The unit price of $9.925 was determined using the average NASDAQ closing price for the 14 trading days prior to April 30, 2002, excluding the highest close and the lowest close during the 14-day period. No commissions, fees or other costs were paid or incurred by IRET Properties.

		Edgeview Estates I, Ltd is owned by current officers as well as current trustees and past trustees of IRET as follows: Thomas A. Wentz Sr., 6.67% - President, Investors Real Estate Trust; Thomas A. Wentz Jr., 26.67% - Vice President and Trustee of Investors Real Estate Trust; Roger R. Odell, 33.33%, Past President and former Trustee of Investors Real Estate Trust until July 1, 2000, and Mike F. Dolan, 33.33%, former Trustee of Investors Real Estate Trust until August, 1999.

F-23

NOTE 12 - MARKET PRICE RANGE OF SHARES

		For the year ended April 30, 2003, a total of 10,805,213 shares were traded on the NASDAQ in 22,283 separate trades. The high trade price during this period was $11.900, the low was $8.550, and the closing price on April 30, 2003, was $9.800.

		For the year ended April 30, 2002, a total of 7,644,522 shares were traded in 12,798 separate trades. The high was $10.49, low $8.25 and closing price on April 30, 2002, was $10.03.

		For the year ended April 30, 2001, a total of 3,668,819 shares were traded in 4,692 separate trades. The high trade price during the period was $8.980, the low was $7.375, and the closing price on April 30, 2001, was $8.770.

NOTE 13 - OPERATING SEGMENTS

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated by the chief decision makers in deciding how to allocate resources and in assessing performance. Operating segments of IRET are determined to be commercial and residential rental operations. All properties falling into these categories have similar economic characteristics, as well as similar production processes, type of customers, distribution methods, and regulatory environments. Although information is available on a property-by-property basis, including rental income and operating expenses, most analysis and decisions are primarily made based on residential and commercial segments. Generally, segmental information follows the same accounting policies utilized for consolidated reporting except certain expenses such as depreciation are not allocated to segments for reporting purposes.

THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.

F-24

NOTE 13- (continued)

		The following information summarizes IRET’s segment reporting for residential and commercial properties along with reconciliations to the consolidated financial statements:

		YEAR ENDING APRIL 30, 2003


			Commercial		Residential		Total

Segment Revenue
	Rental revenue		$	59,166,328	$	59,734,691	$	118,901,019

Segment Expenses
	Mortgage interest			18,673,126		17,355,781		36,028,907
	Utilities and maintenance			8,254,825		11,565,760		19,820,585
	Taxes			6,799,658		6,768,697		13,568,355
	Insurance			614,029		1,545,241		2,159,270
	Property management			2,303,610		6,016,602		8,320,212

		Total Segment Expense	$	36,645,248	$	43,252,081	$	79,897,329

Segment Gross Profit			$	22,521,080	$	16,482,610	$	39,003,690

Reconciliation to consolidated operations:
	Interest discounts and fee revenue						$	1,064,390
	Other interest expense							(1,044,001	)
	Depreciation							(19,414,402	)
	Administration, advisory, and trust fees							(2,164,168	)
	Operating expenses							(885,403	)
	Amortization							(700,684	)

Consolidated income before gain/loss on properties and minority interest							$	15,859,422


		Commercial			Residential			Total

Segment Assets
	Property owned	$	520,864,186		$	398,916,616		$	919,780,802
	Less accumulated depreciation		(25,086,219	)		(50,552,553	)		(75,638,772	)

Total consolidated property owned		$	495,777,967		$	348,364,063		$	844,142,030

F-25

NOTE 13- (continued)

YEAR ENDING APRIL 30, 2002


			Commercial		Residential		Total

Segment Revenue
	Rental revenue		$	32,298,473	$	58,429,394	$	90,727,867

Segment Expenses
	Mortgage interest			12,077,797		16,569,425		28,647,222
	Utilities and maintenance			1,935,285		10,438,732		12,374,017
	Taxes			2,593,370		6,463,111		9,056,481
	Insurance			189,219		1,108,201		1,297,420
	Property management			909,510		5,982,400		6,891,910

		Total Segment Expense	$	17,705,181	$	40,561,869	$	58,267,050

Segment Gross Profit			$	14,593,292	$	17,867,525	$	32,460,817

Reconciliation to consolidated operations:
	Interest discounts and fee revenue						$	1,277,083
	Other interest expense							(1,441,393	)
	Depreciation							(15,238,520	)
	Administration, advisory, and trust fees							(1,682,742	)
	Operating expenses							(565,802	)
	Amortization							(549,200	)

Consolidated income before gain/loss on properties and minority interest							$	14,260,243


		Commercial			Residential			Total

Segment Assets
	Property owned	$	350,388,982		$	389,930,454		$	740,319,436
	Less accumulated depreciation		(17,296,055	)		(41,629,462	)		(58,925,517	)

Total consolidated property owned		$	333,092,927		$	348,300,992		$	681,393,919

F-26

NOTE 13- (continued)

YEAR ENDING APRIL 30, 2001


			Commercial		Residential		Total

Segment Revenue
	Rental revenue		$	18,672,410	$	55,244,032	$	73,916,442

Segment Expenses
	Mortgage interest			7,621,780		16,281,885		23,903,665
	Utilities and maintenance			831,705		10,343,441		11,175,146
	Taxes			968,583		6,424,582		7,393,165
	Insurance			121,233		667,153		788,386
	Property management			307,720		5,383,164		5,690,884

		Total Segment Expense	$	9,851,021	$	39,100,225	$	48,951,246

Segment Gross Profit			$	8,821,389	$	16,143,807	$	24,965,196

Reconciliation to consolidated operations:
	Interest discounts and fee revenue						$	966,428
	Other interest expense							(789,970	)
	Depreciation							(12,046,175	)
	Administration, advisory, and trust fees							(1,480,696	)
	Operating expenses							(431,390	)
	Amortization							(428,188	)

Consolidated income before gain/loss on properties and minority interest							$	10,755,205


		Commercial			Residential			Total

Segment Assets
	Property owned	$	230,058,846		$	361,577,622		$	591,636,468
	Less accumulated depreciation		(11,796,966	)		(32,296,179	)		(44,093,145	)

Total consolidated property owned		$	218,216,880		$	329,281,443		$	547,543,323

F-27

NOTE 14 - DISCONTINUED OPERATIONS

The Trust adopted SFAS 144, Accounting for the Impairment or Disposal of Long Lived Assets, on May 1, 2003. SFAS 144 requires the Trust to report in discontinued operations the results of operations of a property that has either been disposed of or is classified as held for sale unless certain conditions are met. It also requires that any gains or losses from the sale of a property be reported in discontinued operations, unless certain conditions are met. There were no properties held for sale as of April 30, 2003 or 2002. The following information reflects details of the effect on net income, net of minority interest, and the gains or losses from the sale of properties classified as discontinued operations for the years ended April 30, 2003, 2002 and 2001.


		2003			2002			2001

REVENUE
	Real Estate Rentals	$	800,967		$	1,010,735		$	884,280
	Discounts and Fees		289			384			0

Total Revenue		$	801,256		$	1,011,119		$	884,280
OPERATING EXPENSE
	Interest	$	502,573		$	516,231		$	537,763
	Depreciation		191,532			276,648			253,357
	Utilities and Maintenance		263,526			335,597			371,420
	Taxes		123,925			128,118			152,017
	Insurance		26,850			55,202			43,577
	Property Management Expenses		65,837			93,632			93,539

Total operating expenses		$	1,174,243		$	1,405,428		$	1,451,673

Loss Before Gain on Properties and Minority Interest			(372,987	)		(394,309	)		(567,393	)
Minority Interest Portion of Operating Partnership Income			(219,719	)		100,279			115,277

Gain on sale of operations			1,279,456			0			0

Net Income(Loss)		$	686,750		$	(294,030	)	$	(452,116	)

	Residential		1,135,328			116,605			65,652
	Commercial		(448,578	)		(410,635	)		(517,768	)

Total		$	686,750		$	(294,030	)	$	(452,116	)

Property sale data
	Sales Price	$	8,550,000			N/A			N/A
	Net cost of property sold		7,270,544			N/A			N/A

Gain(loss)		$	1,279,456			N/A			N/A

F-28

NOTE 15 - EARNINGS PER SHARE

Basic earnings per share are computed by dividing the earnings available to stockholders by the weighted average number of shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if potential dilutive securities had been converted to shares. Operating partnership units can be exchanged for shares on a one-for-one basis after a holding period of one to two years. The following table reconciles amounts reported in the consolidated financial statements for the years ended April 30, 2003, 2002, and 2001:


		2003		2002		2001

NUMERATOR
Net income applicable to shares		$	12,248,161	$	10,600,129	$	8,694,240

Numerator for basic earnings per share			12,248,161		10,600,129		8,694,240
Minority interest portion of operating partnership income			3,898,958		3,614,168		2,095,177

Numerator for diluted earnings per share		$	16,147,119	$	14,214,297	$	10,789,417

DENOMINATOR
Denominator for basic earnings per share
	Weighted average shares		32,574,429		25,492,282		23,071,500
Effect of dilutive securities
	Convertible operating partnership units		10,040,669		8,289,087		5,506,200

Denominator for diluted earnings per share		$	42,615,098	$	33,781,369	$	28,577,700

Basic earnings per share		$	0.38	$	0.42	$	.38

Diluted earnings per share		$	0.38	$	0.42	$	.38

NOTE 16 - RETIREMENT PLAN

As part of the acquisition on July 1, 2000, of Odell-Wentz & Associates, LLC, IRET assumed a defined contribution profit sharing retirement plan and a defined contribution 401K retirement plan. Employees over the age of 21 and after completion of one year of service are eligible to participate in the profit sharing plan. Contributions to the profit sharing plan are at the discretion of the management. All employees are immediately eligible to participate in the 401K plan and may contribute up to 15% of their compensation subject to maximum levels. IRET matches up to 3% of participating employees’ wages. Plan expenses to IRET for the years ended April 30, 2003, 2002, and 2001, were $46,875, $90,455, and $45,301, respectively.

NOTE 17 - COMMITMENTS AND CONTINGENCIES

INSURANCEIRET’s portfolio-wide general liability and property insurance policies renewed on May 1, 2002. Fiscal 2003 premium was $1,992,668 for both commercial and residential properties. A portion of IRET’s insurance costs is passed through to certain commercial tenants pursuant to the terms of the applicable lease agreement. Of IRET’s total insurance costs, $622,643 or 32.24% was billed back to IRET’s commercial tenants. For Fiscal 2004, all of IRET’s real estate properties are insured against the customary casualty and liability claims, including acts of terrorism. The additional cost for terrorism coverage will be $79,224. IRET also carries Directors’ and Officers’ liability insurance. For Fiscal 2003 and 2002, this premium amount was $79,584 and $72,681, respectively. This amount will be $99,875 for Fiscal 2004.

F-29

NOTE 17- (continued)

PURCHASE OPTIONSThe Trust has granted options to purchase certain Trust assets to various parties. The options grant the parties the right to purchase certain Trust assets at the greater of its appraised value or an annual compounded increase of 2% to 2.5% of the initial cost to the Trust. The property cost and gross rental revenue on these properties are as follows:


				Gross Rental Receipts

		Property Cost		2003		2002		2001

East Grand Station - EGF, MN		$	1,392,251	$	152,352	$	152,352	$	161,825
Edgewood Vista - Belgrade, MT			453,494		49,060		49,060		49,063
Edgewood Vista - Billings, MT			980,218		106,150		106,150		106,150
Edgewood Vista - Columbus, NE			455,626		49,060		49,060		49,063
Edgewood Vista - Duluth, MN			7,081,519		1,245,619		770,004		588,501
Edgewood Vista - EGF, MN			1,430,136		155,012		155,012		98,175
Edgewood Vista - Fremont, NE			552,172		58,911		58,911		19,637
Edgewood Vista - Grand Island, NE			455,626		49,060		49,060		49,063
Edgewood Vista - Hastings, NE			571,539		60,588		60,588		20,196
Edgewood Vista - Kalispell, MT			588,113		61,600		61,600		10,267
Edgewood Vista - Minot, ND			6,270,707		761,905		681,055		681,055
Edgewood Vista - Missoula, MT			962,428		120,175		113,644		104,500
Edgewood Vista - Omaha, NE			641,252		67,188		67,188		16,797
Edgewood Vista - Sioux Falls, SD			974,739		106,150		106,150		106,150
Edgewood Vista - Virginia, MN			7,070,369		759,000		0		0
Excelsior Retail Ctr - Excelsior, MN			900,000		22,346		0		0
Great Plains Software - Fargo, ND			15,375,154		1,875,000		1,875,000		1,875,000
HealthEast - Woodbury & Maplewood, MN			21,600,999		1,916,636		1,916,636		1,916,636

	TOTAL	$	67,756,342	$	8,529,407	$	6,271,469	$	5,852,079

ENVIRONMENTAL MATTERSUnder various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around or under property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of such substances, or the failure to properly remediate any property containing such substances, may adversely affect the owner’s or operator’s ability to sell or rent the affected property or to borrow using such property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal of, or remediation of, such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person. Certain environmental laws impose liability for the release of asbestos-containing materials into the air, and third parties may also seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials, as well as other hazardous or toxic substances. The operation and subsequent removal of certain underground storage tanks are also regulated by federal and state laws. In connection with the current or former ownership (direct or indirect), operation, management, development and/or control of real properties, IRET may be considered to be an owner or operator of such properties, or to have arranged for the disposal or treatment of hazardous or toxic substances. As such, IRET may be potentially liable for removal or remediation costs, as well as certain other costs, including governmental fines and claims for injuries to persons and property.

F-30

NOTE 17- (continued)

			It is currently IRET’s policy to obtain a Phase I environmental study on each property that IRET seeks to acquire. If the Phase I indicated any possible environmental problems, IRET’s policy is to order a Phase II study, which involves testing the soil and ground water for actual hazardous substances. No assurance can be given that the Phase I or Phase II environmental studies, or any other environmental studies undertaken with respect to any of IRET’s current or future properties, will reveal the full extent of potential environmental liabilities, that any prior owner or operator of a property did not create any material environmental condition unknown to IRET, that a material environmental condition does not otherwise exist as to any one or more of such properties or that environmental matters will not have a material adverse effect on IRET, IRET’s ability to make distributions to shareholders and IRET’s ability to pay amounts due on debt. IRET currently does not carry insurance for environmental liabilities.

			Certain environmental laws impose liability on a previous owner of property to the extent that hazardous or toxic substances were present during the prior ownership period. A transfer of the property does not relieve an owner of such liability. As a result, in addition to any liability that IRET may have with respect to current properties, IRET may also have liability with respect to properties previously sold by IRET’s predecessors or by IRET. To management’s knowledge, as of April 30, 2003, IRET does not own and has not sold any properties that contain known material environmental liabilities.

NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS

			The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate value:

			Mortgage loans receivable - Fair values are based on the discounted value of future cash flows expected to be received for a loan using current rates at which similar loans would be made to borrowers with similar credit risk and the same remaining maturities.

			Cash - The carrying amount approximates fair value because of the short maturity.

			Marketable securities - The fair values of these instruments are estimated based on quoted market prices for the security.

			Notes payable - The carrying amount approximates fair value because of the short maturity of such notes.

			Mortgages payable - For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using current market rates.

			Investment certificates issued - The fair value is estimated using a discounted cash flow calculation that applies interest rates currently being offered on deposits with similar remaining maturities.

			Accrued interest payable - The carrying amount approximates fair value because of the short-term.

F-31

NOTE 18- (continued)

The estimated fair values of the Trust’s financial instruments are as follows:


	2003				2002

	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

FINANCIAL ASSETS
Mortgage loan receivable	$	1,182,940	$	1,182,940	$	3,952,762	$	3,952,762
Cash		15,564,714		15,564,714		12,333,426		12,333,426
Marketable securities available-for-sale		3,077,260		3,077,260		10,500,000		10,500,000
FINANCIAL LIABILITIES
Notes payable	$	11,247,531	$	11,247,531	$	0	$	0
Mortgages payable		539,397,202		567,146,224		459,568,905		446,861,536
Investment certificates issued		9,034,696		9,034,696		25,186,582		24,880,390
Accrued interest payable		3,333,029		3,333,029		3,380,046		3,380,046

NOTE 19 – ADVERTISING COSTS

Advertising costs, which were expensed as incurred, total $956,852 for the year ended April 30, 2003.

THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.

F-32

ADDITIONAL INFORMATION

F-33

INDEPENDENT AUDITOR’S REPORT ON ADDITIONAL INFORMATION

Board of Trustees
Investor Real Estate Trust
and Subsidiaries
Minot, North Dakota

Our report on our audit of the consolidated balance sheets of Investors Real Estate Trust and Subsidiaries as of April 30, 2003, and 2002, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the years ended April 30, 2003, 2002, and 2001, appears on page 1. Those audits were made for the purpose of forming an opinion on such consolidated financial statements taken as a whole. The information on pages 35 through 57 related to the consolidated balance sheets of Investors Real Estate Trust and Subsidiaries as of April 30, 2003, and 2002, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the years ended April 30, 2003, 2002, and 2001 is presented for purposes of additional analysis and is not a required part of the basic consolidated financial statements. Such information, except for information on page 58 that is marked “unaudited” on which we express no opinion, has been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements, and, in our opinion, the information is fairly stated in all material respects in relation to the consolidated balance sheets of Investors Real Estate Trust and Subsidiaries as of April 30, 2003, and 2002, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the years ended April 30, 2003, 2002, and 2001 taken as a whole.

We also have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheets of Investors Real Estate Trust and Subsidiaries as of April 30, 2001, 2000, and 1999, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the two years ended April 30, 2000, and 1999, none of which is presented herein, and we expressed unqualified opinions on those consolidated financial statements. In our opinion, the information on page 49 relating to the consolidated balance sheets of Investors Real Estate Trust and Subsidiaries as of April 30, 2001, 2000, and 1999, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the two years ended April 30, 2000, and 1999, is fairly stated in all material respects in relation to the basic consolidated financial statements from which it has been derived.

/S/ Brady, Martz & Associates, P.C.

BRADY, MARTZ & ASSOCIATES, P.C.
Minot, North Dakota, USA

May 22, 2003

F-34

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION


							COST CAPITALIZATION
			INITIAL COST TO TRUST				SUBSEQUENT TO ACQUISITION

					BUILDINGS &					CARRYING
APARTMENTS	ENCUMBRANCES		LAND		IMPROVEMENTS		IMPROVEMENTS			COSTS

408 1ST STREET SE - MINOT, ND	$	0	$	10,000	$	36,907	$	0		$	0
APPLEWOOD ON THE GREEN - OMAHA, NE		7,558,068		706,200		10,009,570		1,018,804			94,656
BEULAH CONDOS - BEULAH, ND		0		6,360		481,964		1,537			0
BISON PROPERTIES - CARRINGTON, ND		0		100,210		524,380		35,005			0
CANDLELIGHT APTS - FARGO, ND		338,683		80,040		951,819		50,645			0
CANYON LAKE APTS - RAPID CITY, SD		2,951,857		304,500		3,902,939		16,290			72,681
CASTLE ROCK - BILLINGS, MT		3,755,711		736,000		5,092,773		261,521			0
CENTURY APTS - WILLISTON, ND		2,129,563		200,000		4,030,209		193,821			0
CHATEAU APTS - MINOT, ND		1,964,256		122,000		2,400,589		118,184			0
CLEARWATER - BOISE, ID		2,518,454		585,000		3,288,512		20,873			0
COLTON HEIGHTS - MINOT, ND		186,248		80,000		891,797		9,978			0
COTTONWOOD LAKE - BISMARCK, ND		7,980,695		1,055,862		12,681,459		33,381			114,352
COUNTRY MEADOWS PHASE I - BILLINGS, MT		2,422,608		245,624		4,004,971		6,247			120,821
COUNTRY MEADOWS PHASE II - BILLINGS, MT		2,444,847		245,624		4,119,348		5,035			0
CRESTVIEW APTS - BISMARCK, ND		3,113,735		235,000		4,840,589		220,981			0
CROWN COLONY - TOPEKA, KS		7,098,300		620,000		10,261,547		226,167			0
DAKOTA ARMS - MINOT, ND		235,721		50,000		583,823		13,846			0
DAKOTA HILL AT VALLEY RANCH - IRVING, TX		24,794,645		3,650,000		34,164,473		282,775			0
EAST PARK APARTMENTS - SIOUX FALLS, SD		1,737,103		115,200		2,405,154		81,250			0
EASTGATE PROPERTIES - MOORHEAD, MN		1,564,697		23,917		2,497,566		85,045			0
FOREST PARK ESTATES - GRAND FORKS, ND		7,141,333		810,000		6,830,288		232,236			0
HERITAGE MANOR - ROCHESTER, MN		4,446,490		403,256		7,494,664		90,219			0
IVY CLUB - VANCOUVER, WA		7,928,730		1,274,000		10,622,204		1,394,628			0
JENNER PROPERTIES - GRAND FORKS, ND		888,541		201,000		2,046,932		(254,560	)		0
KIRKWOOD APTS - BISMARCK, ND		2,201,253		449,290		3,341,202		56,066			0
LANCASTER APTS - ST CLOUD, MN		1,607,769		289,000		2,971,739		26,750			0
LEGACY APTS - GRAND FORKS, ND		5,903,037		1,361,855		9,509,739		43,756			224,180
LEGACY IV - GRAND FORKS, ND		2,820,969		725,277		6,359,611		32,158			0
LONETREE APTS - HARVEY, ND		0		13,584		223,995		21,455			0
MAGIC CITY APTS - MINOT, ND		1,307,689		462,000		4,578,460		129,702			0
MEADOWS PHASE I & II - JAMESTOWN, ND		1,933,833		111,550		3,647,763		4,715			0
MEADOWS PHASE III - JAMESTOWN, ND		1,125,426		55,775		2,142,241		680			0
MIRAMONT - FORT COLLINS, CO		11,263,923		1,470,000		12,988,518		103,372			0
NEIGHBORHOOD APTS - CO. SPRINGS, CO		6,756,308		1,033,592		10,522,644		142,602			0
NORTH POINTE - BISMARCK, ND		1,596,416		143,500		2,182,708		8,877			123,687
OAKMONT APTS - SIOUX FALLS, SD		4,038,533		422,915		4,807,085		183,601			27,468
OLYMPIC VILLAGE - BILLINGS, MT		8,235,347		1,164,000		10,819,207		107,604			0
OXBOW - SIOUX FALLS, SD		4,163,275		404,072		4,658,972		117,674			0
PARK EAST APTS - FARGO, ND		3,292,341		83,000		5,113,596		79,265			0

F-35

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION- (continued)


									COST CAPITALIZATION
				INITIAL COST TO TRUST					SUBSEQUENT TO ACQUISITION

						BUILDINGS &						CARRYING
APARTMENTS - CONTINUED		ENCUMBRANCES		LAND		IMPROVEMENTS			IMPROVEMENTS			COSTS

PARK MEADOWS - WAITE PARK, MN		$	10,677,633	$	1,143,450	$	10,866,733		$	447,820		$	0
PARKWAY APTS - BEULAH, ND			0		7,000		174,421			18,309			0
PEBBLE SPRINGS - BISMARCK, ND			427,822		7,200		789,599			8,469			0
PINE CONE APTS - FORT COLLINS, CO			10,154,157		904,545		12,417,920			174,874			0
PINEHURST APTS - BILLINGS, MT			485,343		71,500		674,302			15,484			5,508
POINTE WEST APTS - MINOT, ND			2,197,931		240,000		4,074,422			250,752			0
PRAIRIE WINDS APTS - SIOUX FALLS, SD			1,269,692		144,097		1,882,939			27,504			0
PRAIRIEWOOD MEADOWS - FARGO, ND			1,961,826		280,000		2,616,253			119,957			0
RIDGE OAKS APTS - SIOUX CITY, IA			2,837,112		178,100		4,417,527			169,777			0
RIMROCK APTS - BILLINGS, MT			2,512,691		329,708		3,657,610			16,352			0
ROCKY MEADOWS 96 - BILLINGS, MT			3,570,667		655,985		6,013,148			11,084			103,378
ROSEWOOD/OAKWOOD - SIOUX FALLS, SD			3,820,417		542,800		5,251,577	��		110,961			0
SHERWOOD APTS - TOPEKA, KS			10,647,451		1,150,000		15,118,055			150,284			0
SOUTH POINTE - MINOT, ND			6,103,943		550,000		9,429,187			36,911			402,672
SOUTHVIEW APTS - MINOT, ND			0		185,000		548,498			18,397			0
SOUTHWIND APTS - GRAND FORKS, ND			3,850,179		400,000		5,688,737			143,966			0
SUNSET TRAIL PHASE I - ROCHESTER, MN			4,267,783		168,188		7,604,646			15,618			0
SUNSET TRAIL PHSE II & III - ROCHESTER, MN			0		336,376		6,851,383			(14,288	)		0
SWEETWATER PROP - DEVILS LAKE, ND			0		90,767		1,614,417			42,096			0
SYCAMORE VILLAGE APTS - SIOUX FALLS, SD			977,120		100,800		1,316,899			38,321			0
THOMASBROOK - LINCOLN, NE			5,867,741		600,000		9,555,696			147,541			0
VALLEY PARK MANOR - GRAND FORKS, ND			2,938,128		293,500		4,878,431			121,080			0
VAN MALL WOODS - VANCOUVER, WA			3,654,490		600,000		5,591,712			81,972			0
WEST STONEHILL - ST. CLOUD, MN			7,245,849		939,000		11,031,748			856,087			0
WESTWOOD PARK - BISMARCK, ND			1,144,680		161,114		2,092,638			115,435			0
WOODRIDGE APTS - ROCHESTER, MN			3,663,780		370,000		6,479,155			132,322			0

	TOTAL APARTMENTS	$	239,722,839	$	30,498,333	$	358,669,610		$	8,459,270		$	1,289,403

F-36

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION- (continued)


								COST CAPITALIZATION
				INITIAL COST TO TRUST				SUBSEQUENT TO ACQUISITION

						BUILDINGS &					CARRYING
OFFICE BUILDINGS		ENCUMBRANCES		LAND		IMPROVEMENTS		IMPROVEMENTS			COSTS

17 SOUTH MAIN - MINOT, ND		$	0	$	15,000	$	75,000	$	717		$	0
1ST AVENUE BUILDING - MINOT, ND			0		30,000		507,189		2,751			0
2030 CLIFF ROAD - EAGAN, MN			619,363		145,900		836,863		0			0
401 SOUTH MAIN - MINOT, ND			0		70,600		546,682		4,853			0
7901 FLYING CLOUD DR - EDEN PRAIRIE, MN			3,760,343		1,062,000		4,098,600		590,237			0
BLMNGTON BUS PLAZA - BLOOMINGTON, MN			4,897,585		1,300,000		6,105,669		142,249			39,440
BRENWOOD - MINNETONKA, MN			8,691,536		1,762,100		12,251,985		192,338			0
BURNSVILLE BLUFFS - BURNSVILLE, MN			1,569,742		300,300		2,156,349		(2,738	)		0
CENTRAL BANK OFFICE - EDEN PRAIRIE, MN			2,545,000		531,000		4,069,000		0			0
CHIROPRACTOR OFF BLDG - GRNWOOD, MN			230,533		189,000		141,000		0			0
COLD SPRING CENTER - ST. CLOUD, MN			5,044,833		588,000		7,809,336		96,933			0
INTERLACHEN CORP CENTER - EAGAN, MN			11,283,875		1,650,000		14,850,000		0			191,307
LEXINGTON COMMERCE CTR - EAGAN, MN			3,278,320		453,400		5,036,323		334,355			0
MENDOTA CTR I - MENDOTA HEIGHTS, MN			4,451,469		1,570,253		5,433,880		0			0
MENDOTA CTR II - MENDOTA HEIGHTS, MN			7,122,241		1,073,951		10,132,661		332,117			0
MENDOTA CTR III - MENDOTA HEIGHTS, MN			4,011,183		1,500,986		5,202,970		0			0
MENDOTA CTR IV - MENDOTA HEIGHTS, MN			5,208,551		1,385,330		7,319,807		0			0
MENDOTA NORTHLAND CTR - M. HGHTS, MN			11,223,715		1,331,383		16,329,038		0			0
NICOLLET VII - BURNSVILLE, MN			4,646,355		429,400		6,931,270		20,000			0
NORTHGATE II - MAPLE GROVE, MN			1,506,255		357,800		2,000,093		0			0
PAUL LARSON CLINIC - EDINA, MN			0		351,282		661,680		0			0
PILLSBURY BUSINESS CENTER - EDINA, MN			1,200,610		284,400		1,558,570		(369	)		0
PLAZA VII - BOISE, ID			0		300,000		3,057,662		35,500			0
PLYMOUTH IV & V - PLYMOUTH, MN			9,020,272		640,500		13,707,290		0			0
SOUTHDALE EXPANSION - EDINA, MN			0		0		7,223,906		0			0
SOUTHDALE MEDICAL CENTER - EDINA, MN			23,577,208		3,500,000		29,088,538		507,841			0
SOUTHEAST TECH CENTER - EAGAN, MN			4,075,750		559,500		5,556,354		0			0
THREE PARAMOUNT PLAZA - BLMNGTN, MN			5,100,907		1,260,712		6,106,515		512,300			0
THRESHER SQUARE E - MINNEAPOLIS, MN			3,490,000		645,661		5,910,771		1,750			4,343
THRESHER SQUARE W - MINNEAPOLIS, MN			2,365,000		448,680		4,106,877		1,750			3,626
WAYROAD - MINNETONKA, MN			3,533,599		530,000		4,845,000		50,210			19,985
WESTGATE - BOISE, ID			8,100,000		1,000,000		10,509,091		139,237			0
WIRTH CORP CENTER - GOLDEN VALLEY, MN			5,369,308		970,000		7,630,000		13,958			29,281

	TOTAL OFFICE BUILDINGS	$	145,923,553	$	26,237,138	$	211,795,969	$	2,975,988		$	287,982

F-37

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION-(continued)


							COST CAPITALIZATION
			INITIAL COST TO TRUST				SUBSEQUENT TO ACQUISITION

					BUILDINGS &					CARRYING
COMMERCIAL	ENCUMBRANCES		LAND		IMPROVEMENTS		IMPROVEMENTS			COSTS

ABBOTT NORTHWEST - SARTELL, MN	$	8,644,277	$	0	$	12,993,496	$	643,470		$	0
AIRPORT MEDICAL - BLOOMINGTON, MN		3,166,159		0		4,678,418		0			0
AMERITRADE - OMAHA, NE		5,514,329		326,500		8,022,298		0			0
ANOKA STRIP CENTER - ANOKA, MN		252,518		123,200		601,800		0			0
ARROWHEAD SHOPPING CENTER - MINOT, ND		1,227,849		100,359		2,905,060		48,542			0
BARNES & NOBLE - FARGO, ND		1,528,992		540,000		2,784,131		(49,135	)		0
BARNES & NOBLE - OMAHA, NE		1,656,408		600,000		3,099,197		0			0
CARMIKE THEATRE - GRAND FORKS, ND		1,728,771		183,515		2,295,154		0			67,068
CHAMPION AUTO - FOREST LAKE, MN		56,354		49,600		446,400		0			0
CHECKERS AUTO - FARIBAULT, MN		120,246		83,400		256,600		0			0
CHECKERS AUTO - ROCHESTER, MN		156,323		76,200		363,800		0			0
CONSECO BLDG - RAPID CITY, SD		4,305,143		285,000		6,759,870		1,956			0
DEWEY HILL BUSINESS CENTER - EDINA, MN		3,027,115		985,000		3,884,054		21,123			0
DILLY LILY - ST. LOUIS PARK, MN		120,246		168,000		172,000		0			0
DIXON AVE INDUST PARK - DES MOINES, IA		8,959,322		1,438,780		10,433,571		1,028,528			0
EAGAN PDQ - EAGAN, MN		563,379		214,400		568,496		0			0
EAGAN RETAIL CENTER I - EAGAN, MN		379,097		196,000		314,405		0			0
EAGAN RETAIL CENTER II - EAGAN, MN		971,904		291,300		1,057,414		0			0
EAST GRAND STATION - E GRAND FORKS, ND		823,935		150,000		1,242,251		0			0
EDGEWOOD VISTA - BILLINGS, MT		564,576		130,000		850,218		0			0
EDGEWOOD VISTA - DULUTH, MN		4,366,614		390,000		6,737,903		(46,384	)		0
EDGEWOOD VISTA PHSE III - DULUTH, MN		0		0		4,623,938		0			0
EDGEWOOD VISTA - SIOUX FALLS, SD		575,028		130,000		844,739		0			0
EDGEWOOD VISTA - BELGRADE, MT		255,421		14,300		439,194		0			0
EDGEWOOD VISTA - COLUMBUS, NE		274,121		14,300		441,326		0			0
EDGEWOOD VISTA - EAST GRAND FORKS, MN		914,215		25,000		1,405,136		0			0
EDGEWOOD VISTA - FREMONT, ND		341,908		56,000		496,172		0			0
EDGEWOOD VISTA - GRAND ISLAND, NE		274,121		14,300		441,326		0			0
EDGEWOOD VISTA - MISSOULA, MT		542,770		108,900		853,528		0			0
EDGEWOOD VISTA - OMAHA, NE		408,083		88,567		552,685		0			0
EDGEWOOD VISTA - HASTINGS, NE		352,937		13,971		557,568		0			0
EDGEWOOD VISTA - KALISPELL, MT		358,342		70,000		518,113		0			0
EDGEWOOD VISTA - MINOT, ND		3,317,040		260,000		6,010,707		0			0
EDGEWOOD VISTA - VIRGINIA, MN		4,723,662		246,370		6,653,630		111,986			58,383
ERNST HOME CENTER - KALISPELL, MT		1,091,815		250,000		2,250,000		0			0
EVERGREEN SHOPPING CTR - PINE CITY, MN		1,639,522		154,200		2,645,800		2,229			0
EXCELSIOR RETAIL CENTER - EXCELSIOR, MN		0		274,500		625,500		0			0
EXPRESS SHOPPING CENTER - FARGO, ND		1,106,959		305,000		1,120,000		0			0
GREAT PLAINS SOFTWARE - FARGO, ND		7,921,363		125,501		15,249,653		0			0
HEALTHEAST MED CTR - WOODBURY & ST. JOHNS, MN		18,488,202		3,238,275		18,362,724		0			0
HOSPITALITY ASSOCIATES - MINNETONKA, MN		0		40,000		365,548		(4,650	)		0

F-38

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION-(continued)


							COST CAPITALIZATION
			INITIAL COST TO TRUST				SUBSEQUENT TO ACQUISITION

					BUILDINGS &					CARRYING
COMMERCIAL - CONTINUED	ENCUMBRANCES		LAND		IMPROVEMENTS		IMPROVEMENTS			COSTS

INTERSTATE BAKERY - MOUNDS VIEW, MN	$	108,162	$	47,100	$	242,900	$	0		$	0
INTERSTATE BAKERY - ST. PAUL, MN		53,310		70,400		249,600		0			0
INVER GROVE CENTER - PDQ - INVER GROVE HEIGHTS, MN		207,839		220,700		719,300		0			0
JAMESTOWN MALL - JAMESTOWN, ND		774,174		297,000		1,023,000		1,021			0
LINDBERG BLDG - EDEN PRAIRIE, MN		1,096,504		198,000		1,410,535		543,066			0
MAPLEWOOD SQUARE - ROCHESTER, MN		6,451,857		3,275,000		8,631,217		0			0
MED PARK MALL - GRAND FORKS, ND		3,286,735		680,500		5,016,088		(47,989	)		0
METAL IMPROVEMENT CO - N. BRIGHTON, MN		1,482,490		240,000		2,185,000		20,246			3,810
MINOT PLAZA - MINOT, ND		0		50,000		469,615		1,735			0
PAMIDA - LADYSMITH, WI		664,894		89,100		1,410,900		0			0
PAMIDA - LIVINGSTON, MT		594,242		226,950		1,573,050		0			0
PARK DENTAL - BROOKLYN, MN		1,815,885		185,000		2,767,052		0			0
PDQ CENTER - MOUND, MN		0		100,000		260,000		0			0
PDQ CENTER - PRIOR LAKE, MN		966,400		202,120		768,626		0			0
PETCO WAREHOUSE - FARGO, ND		720,031		324,148		927,541		0			27,245
PIONEER SEED - MOORHEAD, MN		0		56,925		596,951		0			0
PLAZA SHOPPING CENTER - SCHOFIELD, WI		0		175,000		1,575,000		0			0
PRIOR LAKE PEAK - PRIOR LAKE, MN		0		47,880		430,920		0			0
SAM GOODY/MUSICLAND - WILLMAR, MN		0		170,400		229,600		0			0
STERNER LIGHTING - WINSTED, MN		0		100,000		900,789		0			0
STONE CONTAINER - ROSEVILLE, MN		5,152,889		810,000		7,290,000		(15,124	)		165,239
STONE CONTAINER - WACONIA, MN		0		165,000		1,501,518		0			0
STONE CONTAINER - FARGO, ND		2,194,329		440,251		6,576,159		0			89,156
STRIP CENTER I - BURNSVILLE, MN		372,084		207,500		772,500		3,424			0
STRIP CENTER II - BURNSVILLE, MN		261,372		291,300		468,700		0			0
THOMASVILLE - KENTWOOD, MI		1,232,635		225,000		1,896,474		0			0
TOM THUMB - ANDOVER, MN		0		103,700		176,300		0			0
TOM THUMB - BETHEL, MN		0		32,000		478,000		0			0
TOM THUMB - BLAINE, MN		0		120,800		399,200		0			0
TOM THUMB - BUFFALO, MN		127,842		130,700		329,300		0			0
TOM THUMB - CENTERVILLE, MN		191,466		78,000		252,000		0			0
TOM THUMB - GLENCOE, MN		0		52,300		477,700		0			0
TOM THUMB - HAM LAKE, MN		0		143,400		391,600		0			0
TOM THUMB - HOWARD LAKE, MN		144,296		22,000		358,000		0			0
TOM THUMB - LAKELAND, MN		264,406		85,900		354,100		0			0
TOM THUMB - LAKEVILLE, MN		102,339		121,000		1,141,945		98,063			0
TOM THUMB - LINDSTROM, MN		0		66,500		253,500		0			0
TOM THUMB - LINO LAKES, MN		114,634		120,800		319,200		0			0

F-39

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION-(continued)


								COST CAPITALIZATION
				INITIAL COST TO TRUST				SUBSEQUENT TO ACQUISITION

						BUILDINGS &				CARRYING
COMMERCIAL - CONTINUED		ENCUMBRANCES		LAND		IMPROVEMENTS		IMPROVEMENTS		COSTS

TOM THUMB - LONG PRAIRIE, MN		$	458,122	$	38,900	$	661,100	$	0	$	0
TOM THUMB - MONTICELLO, MN			0		85,500		769,500		0		0
TOM THUMB - MORA, MN			0		55,000		245,000		0		0
TOM THUMB - OAKDALE, MN			187,635		351,000		379,000		1,155		0
TOM THUMB - PAYNESVILLE, MN			0		30,800		334,200		0		0
TOM THUMB - PINE CITY, MN			0		82,800		357,200		0		0
TOM THUMB - SAUK RAPIDS, MN			0		25,000		225,000		0		0
TOM THUMB - SHOREVIEW, MN			0		63,300		266,700		0		0
TOM THUMB - WINSTED, MN			143,404		35,200		374,800		0		0
U.H. MEDICAL - ST. PAUL, MN			4,849,584		0		7,407,752		0		0
VIROMED - EDEN PRAIRIE, MN			2,575,827		666,000		4,197,634		0		0
WEDGEWOOD - SWEETWATER, GA			1,326,222		334,346		3,637,532		0		0
WEST LAKE CENTER - FOREST LAKE, MN			3,975,973		2,396,600		5,610,507		0		0
WEST VILLAGE CENTER - CHANHASSEN, MN			12,047,805		5,035,000		15,815,000		18,446		0
WILSON’S LEATHER - BROOKLYN PARK, MN			8,986,343		1,368,000		11,642,645		42,969		0

	TOTAL COMMERCIAL	$	153,650,796	$	32,300,258	$	241,671,273	$	2,424,677	$	410,901

UNDEVELOPED LAND
ANDOVER, MN		$	0	$	150,000	$	0	$	0	$	0
CENTERVILLE, MN			0		100,000		0		0		0
INVER GROVE, MN			100,014		560,000		0		0		0
KALISPELL, MT			0		1,400,000		0		0		0
LIBBY, MT			0		150,000		0		0		0
LONG PRAIRIE, MN			0		150,000		0		0		0
PRIOR LAKE, MN			0		50,000		0		0		0
RIVER FALLS, WI			0		200,000		0		0		0

	TOTAL UNDEVELOPED LAND	$	100,014	$	2,760,000	$	0	$	0	$	0

	TOTALS	$	539,397,202	$	91,795,729	$	812,136,852	$	13,859,935	$	1,988,286

F-40

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION


											LIFE ON WHICH
											LATEST INCOME
			BUILDING &				ACCUMULATED		DATE		STATEMENT IS
APARTMENTS	LAND		IMPROVEMENTS		TOTAL		DEPRECIATION		ACQUIRED		COMPUTED

408 1ST STREET SE - MINOT, ND	$	10,000	$	36,907	$	46,907	$	31,465		2001	40 years
APPLEWOOD ON THE GREEN - OMAHA, NE		706,200		11,123,030		11,829,230		362,511		2001	40 years
BEULAH CONDOS - BEULAH, ND		6,360		483,501		489,861		338,077		1983	15-40 years
BISON PROPERTIES - CARRINGTON, ND		100,210		559,385		659,595		390,487		1972	25-40 years
CANDLELIGHT APTS - FARGO, ND		80,040		1,002,464		1,082,504		244,007		1993	24-40 years
CANYON LAKE APTS - RAPID CITY, SD		304,500		3,991,910		4,296,410		163,846		2001	40 years
CASTLE ROCK - BILLINGS, MT		736,000		5,354,294		6,090,294		600,455		1999	40 years
CENTURY APTS - WILLISTON, ND		200,000		4,224,030		4,424,030		1,745,952		1986	35-40 years
CHATEAU APTS - MINOT, ND		122,000		2,518,773		2,640,773		328,693		1997	12-40 years
CLEARWATER - BOISE, ID		585,000		3,309,385		3,894,385		394,883		1999	40 years
COLTON HEIGHTS - MINOT, ND		80,000		901,775		981,775		469,256		1996	40 years
COTTONWOOD LAKE - BISMARCK, ND		1,055,862		12,829,192		13,885,054		1,384,242		1999	40 years
COUNTRY MEADOWS PHS I - BILLINGS, MT		245,624		4,132,039		4,377,663		452,798		1984	33-40 years
COUNTRY MEADOWS PHS II - BILLINGS, MT		245,624		4,124,383		4,370,007		452,798		1997	40 years
CRESTVIEW APTS - BISMARCK, ND		235,000		5,061,570		5,296,570		1,126,379		1994	24-40 years
CROWN COLONY - TOPEKA, KS		620,000		10,487,714		11,107,714		956,063		2000	40 years
DAKOTA ARMS - MINOT, ND		50,000		597,669		647,669		114,633		1996	24-40 years
DAKOTA HILL AT VALLEY RCH - IRVING, TX		3,650,000		34,447,248		38,097,248		2,796,712		2000	40 years
EAST PARK APTS - SIOUX FALLS, SD		115,200		2,486,404		2,601,604		50,426		2002	40 years
EASTGATE PROPERTIES - MOORHEAD, MN		23,917		2,582,611		2,606,528		1,743,936		1970	33-40 years
FOREST PARK ESTATES - G. FORKS, ND		810,000		7,062,524		7,872,524		1,768,291		1993	24-40 years
HERITAGE MANOR - ROCHESTER, MN		403,256		7,584,883		7,988,139		927,649		1999	40 years
IVY CLUB - VANCOUVER, WA		1,274,000		12,016,832		13,290,832		1,191,887		1999	40 years
JENNER PROPERTIES - GRAND FORKS, ND		201,000		1,792,372		1,993,372		270,995		1996	40 years
KIRKWOOD APTS - BISMARCK, ND		449,290		3,397,268		3,846,558		520,899		1997	12-40 years
LANCASTER APTS - ST CLOUD, MN		289,000		2,998,489		3,287,489		245,363		2000	40 years
LEGACY APTS - GRAND FORKS, ND		1,361,855		9,777,675		11,139,530		1,577,904		1996	24-40 years
LEGACY IV - GRAND FORKS, ND		725,277		6,391,769		7,117,046		549,681		2000	40 years
LONETREE APTS - HARVEY, ND		13,584		245,450		259,034		63,904		1991	24-40 years
MAGIC CITY APTS - MINOT, ND		462,000		4,708,162		5,170,162		701,329		1997	12-40 years
MEADOWS PHASE I & II - JAMESTOWN, ND		111,550		3,652,478		3,764,028		319,414		2000	40 years
MEADOWS PHASE III - JAMESTOWN, ND		55,775		2,142,921		2,198,696		86,970		2002	40 years
MIRAMONT - FORT COLLINS, CO		1,470,000		13,091,890		14,561,890		2,153,583		1996	40 years
NEIGHBORHOOD APTS - CO. SPRINGS, CO		1,033,592		10,665,246		11,698,838		1,813,819		1996	40 years
NORTH POINTE - BISMARCK, ND		143,500		2,315,272		2,458,772		427,488		1995	24-40 years
OAKMONT APTS - SIOUX FALLS, SD		422,915		5,018,154		5,441,069		130,021		2002	40 years
OLYMPIC VILLAGE - BILLINGS, MT		1,164,000		10,926,811		12,090,811		765,069		2001	40 years
OXBOW - SIOUX FALLS, SD		404,072		4,776,646		5,180,718		1,001,025		1994	24-40 years

F-41

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION-(continued)


												LIFE ON WHICH
												LATEST INCOME
				BUILDING &				ACCUMULATED		DATE		STATEMENT IS
APARTMENTS - CONTINUED		LAND		IMPROVEMENTS		TOTAL		DEPRECIATION		ACQUIRED		COMPUTED

PARK EAST APTS - FARGO, ND		$	83,000	$	5,192,861	$	5,275,861	$	660,354		1997	12-40 years
PARK MEADOWS - WAITE PARK, MN			1,143,450		11,314,553		12,458,003		2,063,587		1997	40 years
PARKWAY APTS - BEULAH, ND			7,000		192,730		199,730		42,074		1988	5-40 years
PEBBLE SPRINGS - BISMARCK, ND			7,200		798,068		805,268		72,613		2000	40 years
PINE CONE APTS - FORT COLLINS, CO			904,545		12,592,794		13,497,339		2,520,279		1994	40 years
PINEHURST APTS - BILLINGS, MT			71,500		695,294		766,794		21,123		2002	40 years
POINTE WEST APTS - MINOT, ND			240,000		4,325,174		4,565,174		965,125		1994	24-40 years
PRAIRIE WINDS APTS - SIOUX FALLS, SD			144,097		1,910,443		2,054,540		496,987		1993	24-40 years
PRAIRIEWOOD MEADOWS - FARGO, ND			280,000		2,736,210		3,016,210		195,895		2001	40 years
RIDGE OAKS APTS - SIOUX CITY, IA			178,100		4,587,304		4,765,404		355,867		2001	40 years
RIMROCK APTS - BILLINGS, MT			329,708		3,673,962		4,003,670		354,098		2000	40 years
ROCKY MEADOWS 96 - BILLINGS, MT			655,985		6,127,610		6,783,595		1,023,304		1996	40 years
ROSEWOOD/OAKWOOD - SIOUX FALLS, SD			542,800		5,362,538		5,905,338		1,202,790		1996	40 years
SHERWOOD APTS - TOPEKA, KS			1,150,000		15,268,339		16,418,339		1,400,878		2000	40 years
SOUTH POINTE - MINOT, ND			550,000		9,868,770		10,418,770		1,733,096		1995	24-40 years
SOUTHVIEW APTS - MINOT, ND			185,000		566,895		751,895		129,218		1994	24-40 years
SOUTHWIND APTS - GRAND FORKS, ND			400,000		5,832,703		6,232,703		1,077,782		1996	24-40 years
SUNSET TRAIL PHS I - ROCHESTER, MN			168,188		7,620,264		7,788,452		489,616		2001	40 years
SUNSET TRAIL PHS II & III - ROCHESTER, MN			336,376		6,837,095		7,173,471		274,573		2002	40 years
SWEETWATER PROP - DEVILS LAKE, ND			90,767		1,656,513		1,747,280		1,018,723		1972	5-40 years
SYCAMORE VILLAGE APTS - SIOUX FALLS, SD			100,800		1,355,220		1,456,020		27,603		2002	40 years
THOMASBROOK - LINCOLN, NE			600,000		9,703,237		10,303,237		1,017,672		2000	40 years
VALLEY PARK MANOR - GRAND FORKS, ND			293,500		4,999,511		5,293,011		506,962		2000	40 years
VAN MALL WOODS - VANCOUVER, WA			600,000		5,673,684		6,273,684		654,354		1999	40 years
WEST STONEHILL - ST. CLOUD, MN			939,000		11,887,835		12,826,835		2,198,480		1995	40 years
WESTWOOD PARK - BISMARCK, ND			161,114		2,208,073		2,369,187		286,435		1999	40 years
WOODRIDGE APTS - ROCHESTER, MN			370,000		6,611,477		6,981,477		1,100,155		1996	40 years

	TOTAL APARTMENTS	$	30,498,333	$	368,418,283	$	398,916,616	$	50,552,553

F-42

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION-(continued)


												LIFE ON WHICH
												LATEST INCOME
				BUILDING &				ACCUMULATED		DATE		STATEMENT IS
OFFICE BUILDINGS		LAND		IMPROVEMENTS		TOTAL		DEPRECIATION		ACQUIRED		COMPUTED

17 SOUTH MAIN - MINOT, ND		$	15,000	$	75,717	$	90,717	$	5,274		2001	40 years
1ST AVENUE BUILDING - MINOT, ND			30,000		509,940		539,940		432,438		1981	33-40 years
2030 CLIFF ROAD - EAGAN, MN			145,900		836,863		982,763		42,711		1986	19-40 years
401 SOUTH MAIN - MINOT, ND			70,600		551,535		622,135		196,598		1987	24-40 years
7901 FLYING CLOUD DR - EDEN PRAIRIE, MN			1,062,000		4,688,837		5,750,837		381,060		2000	40 years
BLMNGTN BUS PLAZA - BLOOMINGTON, MN			1,300,000		6,287,358		7,587,358		243,351		2001	40 years
BRENWOOD - MINNETONKA, MN			1,762,100		12,444,323		14,206,423		177,474		2002	40 years
BURNSVILLE BLUFFS - BURNSVILLE, MN			300,300		2,153,611		2,453,911		109,924		2001	40 years
CENTRAL BANK OFFICE - EDEN PRAIRIE, MN			531,000		4,069,000		4,600,000		21,193		2003	40 years
CHIROPRACTOR OFF BLDG - GRNWD, MN			189,000		141,000		330,000		734		2003	40 years
COLD SPRING CENTER - ST. CLOUD, MN			588,000		7,906,269		8,494,269		403,208		2001	40 years
INTERLACHEN CORP CENTER - EAGAN, MN			1,650,000		15,041,307		16,691,307		658,555		2001	40 years
LEXINGTON COMMERCE CTR - EAGAN, MN			453,400		5,370,678		5,824,078		425,082		2000	40 years
MENDOTA CTR I - MENDOTA HEIGHTS, MN			1,570,253		5,433,880		7,004,133		167,176		2002	40 years
MENDOTA CTR II - MENDOTA HEIGHTS, MN			1,073,951		10,464,778		11,538,729		295,190		2002	40 years
MENDOTA CTR III - MENDOTA HEIGHTS, MN			1,500,986		5,202,970		6,703,956		153,307		2002	40 years
MENDOTA CTR IV - MENDOTA HEIGHTS, MN			1,385,330		7,319,807		8,705,137		204,220		2002	40 years
MENDOTA NORTHLAND CTR - M. HGHTS, MN			1,331,383		16,329,038		17,660,421		446,899		2002	40 years
NICOLLET VII - BURNSVILLE, MN			429,400		6,951,270		7,380,670		354,895		2001	40 years
NORTHGATE II - MAPLE GROVE, MN			357,800		2,000,093		2,357,893		167,092		2000	40 years
PAUL LARSON CLINIC - EDINA, MN			351,282		661,680		1,012,962		8,400		2002	40 years
PILLSBURY BUSINESS CENTER - EDINA, MN			284,400		1,558,201		1,842,601		79,529		2001	40 years
PLAZA VII - BOISE, ID			300,000		3,093,162		3,393,162		22,480		2003	40 years
PLYMOUTH IV & V - PLYMOUTH, MN			640,500		13,707,290		14,347,790		661,181		2001	40 years
SOUTHDALE EXPANSION - EDINA, MN			0		7,223,906		7,223,906		0		2003	40 years
SOUTHDALE MEDICAL CENTER - EDINA, MN			3,500,000		29,596,379		33,096,379		1,569,405		2001	40 years
SOUTHEAST TECH CENTER - EAGAN, MN			559,500		5,556,354		6,115,854		470,660		2000	40 years
THREE PARAMOUNT PLAZA - BLMNGTN, MN			1,260,712		6,618,815		7,879,527		158,790		2002	40 years
THRESHER SQUARE EAST - MPLS, MN			645,661		5,916,864		6,562,525		191,106		2002	40 years
THRESHER SQUARE WEST - MPLS, MN			448,680		4,112,253		4,560,933		132,832		2002	40 years
WAYROAD - MINNETONKA, MN			530,000		4,915,195		5,445,195		128,291		2002	40 years
WESTGATE - BOISE, ID			1,000,000		10,648,328		11,648,328		77,290		2003	40 years
WIRTH CORP CENTER - GOLDEN VALLEY, MN			970,000		7,673,238		8,643,238		202,200		2002	40 years

	TOTAL OFFICE BUILDINGS	$	26,237,138	$	215,059,939	$	241,297,077	$	8,588,545

F-43

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION-(continued)


											LIFE ON WHICH
											LATEST
											INCOME
			BUILDING &				ACCUMULATED		DATE		STATEMENT IS
COMMERCIAL - CONTINUED	LAND		IMPROVEMENTS		TOTAL		DEPRECIATION		ACQUIRED		COMPUTED

ABBOTT NORTHWEST - SARTELL, MN	$	0	$	13,636,966	$	13,636,966	$	210,396		2002	40 years
AIRPORT MEDICAL - BLOOMINGTON, MN		0		4,678,418		4,678,418		73,100		2002	40 years
AMERITRADE - OMAHA, NE		326,500		8,022,298		8,348,798		807,939		1999	40 years
ANOKA STRIP CENTER - ANOKA, MN		123,200		601,800		725,000		3,134		2003	40 years
ARROWHEAD SHOPPING CTR - MINOT, ND		100,359		2,953,602		3,053,961		2,293,192		1973	15 1/2-40 years
BARNES & NOBLE - FARGO, ND		540,000		2,734,996		3,274,996		585,589		1994	40 years
BARNES & NOBLE - OMAHA, NE		600,000		3,099,197		3,699,197		581,091		1995	40 years
CARMIKE THEATRE - GRAND FORKS, ND		183,515		2,362,222		2,545,737		501,909		1994	40 years
CHAMPION AUTO - FOREST LAKE, MN		49,600		446,400		496,000		2,320		2003	40 years
CHECKERS AUTO - FARIBAULT, MN		83,400		256,600		340,000		1,336		2003	40 years
CHECKERS AUTO - ROCHESTER, MN		76,200		363,800		440,000		1,895		2003	40 years
CONSECO BUILDING - RAPID CITY, SD		285,000		6,761,826		7,046,826		471,768		2001	40 years
DEWEY HILL BUSINESS CENTER - EDINA, MN		985,000		3,905,177		4,890,177		225,632		2001	40 years
DILLY LILY - ST. LOUIS PARK, MN		168,000		172,000		340,000		896		2003	40 years
DIXON AVE INDUST PARK - DES MOINES, IA		1,438,780		11,462,099		12,900,879		153,794		2002	40 years
EAGAN PDQ - EAGAN, MN		214,400		568,496		782,896		2,425		2003	40 years
EAGAN RETAIL CENTER I - EAGAN, MN		196,000		314,405		510,405		1,271		2003	40 years
EAGAN RETAIL CENTER II - EAGAN, MN		291,300		1,057,414		1,348,714		4,577		2003	40 years
EAST GRAND STATION - E GRND FORKS, ND		150,000		1,242,251		1,392,251		107,273		2000	40 years
EDGEWOOD VISTA - BILLINGS, MT		130,000		850,218		980,218		103,526		1999	40 years
EDGEWOOD VISTA - DULUTH, MN		390,000		6,691,519		7,081,519		454,395		2000	40 years
EDGEWOOD VISTA PHSE III - DULUTH, MN		0		4,623,938		4,623,938		0		2003	40 years
EDGEWOOD VISTA - SIOUX FALLS, SD		130,000		844,739		974,739		102,912		1999	40 years
EDGEWOOD VISTA - BELGRADE, MT		14,300		439,194		453,494		41,191		2000	40 years
EDGEWOOD VISTA - COLUMBUS, NE		14,300		441,326		455,626		41,180		2000	40 years
EDGEWOOD VISTA - E GRAND FORKS, MN		25,000		1,405,136		1,430,136		155,760		1997	40 years
EDGEWOOD VISTA - FREMONT, ND		56,000		496,172		552,172		29,352		2001	40 years
EDGEWOOD VISTA - GRAND ISLAND, NE		14,300		441,326		455,626		41,180		2000	40 years
EDGEWOOD VISTA - MISSOULA, MT		108,900		853,528		962,428		138,698		1997	40 years
EDGEWOOD VISTA - OMAHA, NE		88,567		552,685		641,252		30,186		2001	40 years
EDGEWOOD VISTA - HASTINGS, NE		13,971		557,568		571,539		31,751		2001	40 years
EDGEWOOD VISTA - KALISPELL, MT		70,000		518,113		588,113		28,454		2001	40 years
EDGEWOOD VISTA - MINOT, ND		260,000		6,010,707		6,270,707		828,978		1997	40 years
EDGEWOOD VISTA - VIRGINIA, MN		246,370		6,823,999		7,070,369		177,475		2002	40 years
ERNST HOME CENTER - KALISPELL, MT		250,000		2,250,000		2,500,000		11,719		2003	40 years
EVERGREEN SHOPPING CTR - PINE CITY, MN		154,200		2,648,029		2,802,229		13,787		2003	40 years
EXCELSIOR RETAIL CTR - EXCELSIOR, MN		274,500		625,500		900,000		3,258		2003	40 years
EXPRESS SHOPPING CENTER - FARGO, ND		305,000		1,120,000		1,425,000		5,833		2003	40 years
GREAT PLAINS SOFTWARE - FARGO, ND		125,501		15,249,653		15,375,154		1,413,624		2000	40 years

F-44

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION-(continued)


											LIFE ON WHICH
											LATEST
											INCOME
			BUILDING &				ACCUMULATED		DATE		STATEMENT IS
COMMERCIAL - CONTINUED	LAND		IMPROVEMENTS		TOTAL		DEPRECIATION		ACQUIRED		COMPUTED

HEALTHEAST MED CTR - WOODBURY & ST. JOHNS, MN	$	3,238,275	$	18,362,724	$	21,600,999	$	1,357,963		2001	40 years
HOSPITALITY ASSOC - MINNETONKA, MN		40,000		360,898		400,898		41,770		2001	40 years
INTERSTATE BAKERY - MOUNDS VIEW, MN		47,100		242,900		290,000		1,265		2003	40 years
INTERSTATE BAKERY - ST. PAUL, MN		70,400		249,600		320,000		1,300		2003	40 years
INVER GROVE CTR - PDQ - INVER GROVE HEIGHTS, MN		220,700		719,300		940,000		3,746		2003	40 years
JAMESTOWN MALL - JAMESTOWN, ND		297,000		1,024,021		1,321,021		5,385		2003	40 years
LINDBERG BUILDING - EDEN PRAIRIE, MN		198,000		1,953,601		2,151,601		369,251		1992	40 years
MAPLEWOOD SQUARE - ROCHESTER, MN		3,275,000		8,631,217		11,906,217		820,744		2000	40 years
MED PARK MALL - GRAND FORKS, ND		680,500		4,968,099		5,648,599		406,063		2000	40 years
METAL IMPROVEMENT CO - N. BRIGHTON, MN		240,000		2,209,056		2,449,056		57,338		2002	40 years
MINOT PLAZA - MINOT, ND		50,000		471,350		521,350		122,574		1993	40 years
PAMIDA - LADYSMITH, WI		89,100		1,410,900		1,500,000		7,349		2003	40 years
PAMIDA - LIVINGSTON, MT		226,950		1,573,050		1,800,000		8,193		2003	40 years
PARK DENTAL - BROOKLYN, MN		185,000		2,767,052		2,952,052		43,235		2002	40 years
PDQ CENTER - MOUND, MN		100,000		260,000		360,000		1,354		2003	40 years
PDQ CENTER - PRIOR LAKE, MN		202,120		768,626		970,746		3,998		2003	40 years
PETCO WAREHOUSE - FARGO, ND		324,148		954,786		1,278,934		202,158		1994	40 years
PIONEER SEED - MOORHEAD, MN		56,925		596,951		653,876		166,802		1992	40 years
PLAZA SHOPPING CENTER - SCHOFIELD, WI		175,000		1,575,000		1,750,000		8,203		2003	40 years
PRIOR LAKE PEAK - PRIOR LAKE, MN		47,880		430,920		478,800		1,262		2003	40 years
SAM GOODY/MUSICLAND - WILLMAR, MN		170,400		229,600		400,000		1,196		2003	40 years
STERNER LIGHTING - WINSTED, MN		100,000		900,789		1,000,789		54,530		2001	40 years
STONE CONTAINER - ROSEVILLE, MN		810,000		7,440,115		8,250,115		255,745		2001	40 years
STONE CONTAINER - WACONIA, MN		165,000		1,501,518		1,666,518		101,665		2001	40 years
STONE CONTAINER - FARGO, ND		440,251		6,665,315		7,105,566		933,522		1995	40 years
STRIP CENTER I - BURNSVILLE, MN		207,500		775,924		983,424		4,169		2003	40 years
STRIP CENTER II - BURNSVILLE, MN		291,300		468,700		760,000		2,441		2003	40 years
THOMASVILLE - KENTWOOD, MI		225,000		1,896,474		2,121,474		307,297		1996	40 years
TOM THUMB - ANDOVER, MN		103,700		176,300		280,000		918		2003	40 years
TOM THUMB - BETHEL, MN		32,000		478,000		510,000		2,490		2003	40 years
TOM THUMB - BLAINE, MN		120,800		399,200		520,000		2,079		2003	40 years
TOM THUMB - BUFFALO, MN		130,700		329,300		460,000		1,715		2003	40 years
TOM THUMB - CENTERVILLE, MN		78,000		252,000		330,000		1,313		2003	40 years
TOM THUMB - GLENCOE, MN		52,300		477,700		530,000		2,488		2003	40 years
TOM THUMB - HAM LAKE, MN		143,400		391,600		535,000		2,040		2003	40 years
TOM THUMB - HOWARD LAKE, MN		22,000		358,000		380,000		1,865		2003	40 years
TOM THUMB - LAKELAND, MN		85,900		354,100		440,000		1,844		2003	40 years
TOM THUMB - LAKEVILLE, MN		121,000		1,240,008		1,361,008		7,184		2003	40 years

F-45

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION-(continued)


												LIFE ON WHICH
												LATEST
												INCOME
				BUILDING &				ACCUMULATED		DATE		STATEMENT IS
COMMERCIAL - CONTINUED		LAND		IMPROVEMENTS		TOTAL		DEPRECIATION		ACQUIRED		COMPUTED

TOM THUMB - LINDSTROM, MN		$	66,500	$	253,500	$	320,000	$	1,320		2003	40 years
TOM THUMB - LINO LAKES, MN			120,800		319,200		440,000		1,663		2003	40 years
TOM THUMB - LONG PRAIRIE, MN			38,900		661,100		700,000		3,443		2003	40 years
TOM THUMB - MONTICELLO, MN			85,500		769,500		855,000		4,008		2003	40 years
TOM THUMB - MORA, MN			55,000		245,000		300,000		1,276		2003	40 years
TOM THUMB - OAKDALE, MN			351,000		380,155		731,155		1,978		2003	40 years
TOM THUMB - PAYNESVILLE, MN			30,800		334,200		365,000		1,741		2003	40 years
TOM THUMB - PINE CITY, MN			82,800		357,200		440,000		1,860		2003	40 years
TOM THUMB - SAUK RAPIDS, MN			25,000		225,000		250,000		1,172		2003	40 years
TOM THUMB - SHOREVIEW, MN			63,300		266,700		330,000		1,389		2003	40 years
TOM THUMB - WINSTED, MN			35,200		374,800		410,000		1,952		2003	40 years
UH MEDICAL - ST. PAUL, MN			0		7,407,752		7,407,752		115,746		2002	40 years
VIROMED - EDEN PRAIRIE, MN			666,000		4,197,634		4,863,634		441,551		1999	40 years
WEDGEWOOD - SWEETWATER, GA			334,346		3,637,532		3,971,878		563,262		1996	40 years
WEST LAKE CENTER - FOREST LAKE, MN			2,396,600		5,610,507		8,007,107		25,304		2003	40 years
WEST VILLAGE CENTER - CHANHASSEN, MN			5,035,000		15,833,446		20,868,446		77,405		2003	40 years
WILSON’S LEATHER - BROOKLYN PARK, MN			1,368,000		11,685,614		13,053,614		255,354		2002	40 years

	TOTAL COMMERCIAL	$	32,300,258	$	244,506,851	$	276,807,109	$	16,497,674

UNDEVELOPED LAND
ANDOVER, MN		$	150,000	$	0	$	150,000	$	0		2003	40 years
CENTERVILLE, MN			100,000		0		100,000		0		2003	40 years
INVER GROVE, MN			560,000		0		560,000		0		2003	40 years
KALISPELL, MT			1,400,000		0		1,400,000		0		2003	40 years
LIBBY, MT			150,000		0		150,000		0		2003	40 years
LONG PRAIRIE, MN			150,000		0		150,000		0		2003	40 years
PRIOR LAKE, MN			50,000		0		50,000		0		2003	40 years
RIVER FALLS, WI			200,000		0		200,000		0		2003	40 years

	TOTAL UNDEVELOPED LAND	$	2,760,000	$	0	$	2,760,000	$	0

	TOTALS	$	91,795,729	$	827,985,073	$	919,780,802	$	75,638,772

F-46

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

			Schedule III REAL ESTATE AND ACCUMULATED DEPRECIATION

			Reconciliations of total real estate carrying value for the three years ending April 30, 2003, 2002, and 2001 are as follows:


		2003			2002			2001

Balance at beginning of year		$	740,319,436		$	591,636,468		$	449,919,890
Additions during year
	Commercial Real Estate		170,508,730			119,329,418			110,199,692
	Residential Real Estate		3,938,053			23,950,924			32,842,600
	Undeveloped Land		2,760,000			0			0
	Improvements and Other		14,573,743			8,708,331			3,581,269

		$	932,099,962		$	743,625,141		$	596,543,451
Deduction during year
	Cost of Real Estate Sold		(11,907,657	)		(3,305,705	)		(4,906,983	)
	Reclassification		(411,503	)		0			0
	Impairment Value		0			0			0

Balance at close of year		$	919,780,802		$	740,319,436		$	591,636,468

Reconciliations of accumulated depreciation for the three years ended April 30, 2003, 2002, and 2001, are as follows:


	2003			2002			2001

Balance at beginning of year	$	58,925,517		$	44,093,145		$	33,232,952
Additions during year provisions for depreciation		19,605,934			15,515,168			12,299,532
Deduction during year accumulated depreciation on real estate sold		(2,892,679	)		(682,796	)		(1,439,339	)

Balance at close of year	$	75,638,772		$	58,925,517		$	44,093,145

F-47

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

Schedule IV
INVESTMENTS IN MORTGAGE LOANS ON REAL ESTATE


															Prin. Amt of
										Face		Carrying Amt.			Loans Subject
		Interest			Final		Payment	Prior		Amt. of		of			to Delinquent
		Rate			Maturity Date		Terms	Liens		Mortgages		Mortgages			Prin. or Int.

K-MOX			8.00	%		1/1/2004	Monthly/Balloon		—	$	46,500	$	35,515			—
Abbott Northwestern			10.90	%		5/1/2006	Monthly		—	$	36,022	$	27,754			—
C. Grueber - Cottage Grove			7.50	%		4/1/2001	Monthly/Balloon		—	$	475,000	$	198,101			—
D. Peterson - Med Park Mall			6.50	%		—	Quarterly		—	$	130,000	$	130,000			—
Edgewood Vista - Virginia, MN			9.00	%		8/1/2003	Balloon		—	$	5,100,000	$	816,570			—

										$	5,787,522	$	1,207,940			—

Less:
	Unearned discounts											$	0
	Deferred gain from property dispositions											$	0
	Allowance for loan losses											$	(25,000	)

												$	1,182,940


		2003			2002			2001

MORTGAGE LOANS RECEIVABLE, BEGINNING OF YEAR		$	3,952,762		$	1,037,095		$	1,650,284
	New participations in and advances on mortgage loans		1,024,526			3,200,000			0

		$	4,977,288		$	4,237,095		$	1,650,284
	Collections		(3,794,348	)		(284,333	)		(613,189	)

MORTGAGE LOANS RECEIVABLE, END OF YEAR		$	1,182,940		$	3,952,762		$	1,037,095

F-48

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

SELECTED FINANCIAL DATA
INCLUDING DISCONTINUED OPERATIONS


		2003			2002			2001			2000			1999

Consolidated Income Statement Data
	Revenue	$	120,766,665		$	93,016,069		$	75,767,150		$	55,445,193		$	39,927,262
	Income before gain/loss on property and minority interest		15,486,435			13,865,934			10,187,812			8,548,558			6,401,676
	Gain on repossession/ Sale of properties		1,594,798			546,927			601,605			1,754,496			1,947,184
	Minority interest portion of operating partnership income		(4,833,072	)		(3,812,732	)		(2,095,177	)		(1,495,209	)		(744,725	)
	Net income		12,248,161			10,600,129			8,694,240			8,807,845			7,604,135
Consolidated Balance Sheet Data
	Total real estate investments	$	845,324,970		$	685,346,681		$	548,580,418		$	418,216,516		$	280,311,442
	Total assets		885,680,521			730,209,018			570,322,124			432,978,299			291,493,311
	Shareholders’ equity		214,761,105			145,578,131			118,945,160			109,920,591			85,783,294
Consolidated Per Share Data (basic and diluted)
	Net Income		.38			.42			.38			.42			.44
	Distributions		.63			.59			.55			.51			.47


CALENDAR YEAR		2002			2001			2000			1999			1998

Tax status of distribution
	Capital gain		0.00	%		0.00	%		.72	%		30.30	%		6.30	%
	Ordinary income		68.29	%		65.98	%		86.76	%		69.70	%		76.00	%
	Return of capital		31.71	%		34.02	%		12.52	%		0.00	%		17.70	%

F-49

INVESTORS REAL ESTATE TRUST AND AFFILIATED
PARTNERSHIPS
April 30, 2003, 2002 and 2001

GAIN(LOSS) FROM PROPERTY DISPOSITIONS


	Total
	Original			Realized			Realized			Realized
	Gain(Loss)			04/30/03			04/30/02			04/30/01

EVERGREEN SHOPPING CENTER - EVERGREEN, CO	$	1,690		$	0		$	0		$	1,690
CHALET APARTMENTS - MINOT, ND		23,434			0			0			23,434
HILL PARK APTS - BISMARCK, ND		576,482			0			0			576,482
SUNCHASE APTS - FARGO, ND		296,409			0			296,409			0
LESTER CHIROPRACTIC BUILDING - BISMARCK, ND		85,279			0			85,279			0
CARMEN COURT - MINOT, ND		3,346			0			3,346			0
WALTERS - MINOT, ND		(35,062	)		0			(35,062	)		0
CORNER EXPRESS - MINOT, ND		254,310			0			254,310			0
EASTWOOD APTS - DICKINSON, ND		181,812			181,812			0			0
OAK MANOR APTS - DICKINSON, ND		77,623			77,623			0			0
JENNER APTS - DICKINSON, ND		3,133			3,133			0			0
COTTAGE GROVE STRIP CTR - CTGE GROVE, MN		52,774			52,774			0			0
CREEKSIDE OFFICE BUILDING - BILLINGS, MT		154,584			154,584			0			0
AMERICA’S BEST - BOISE, ID		(305,757	)		(305,757	)		0			0
CENTURY APTS - DICKINSON, ND		1,430,629			1,430,629			0			0
EDGEWOOD VISTA - DULUTH, MN		0			0			0			0

				$	1,594,798		$	604,282		$	601,605

F-50

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

MORTGAGE LOANS PAYABLE


				Final		Periodic			Carrying		Delinquent
	Interest			Maturity		Payment	Face Amount		Amount of		Principal or
	Rate			Date		Terms	of Mortgage		Mortgage		Interest

1112 32ND AVE SW - MINOT, ND		4.25	%		07/01/10	Monthly	$	425,000	$	235,721	$	0
2030 CLIFF ROAD - EAGAN, MN		7.40	%		04/01/11	Monthly		650,000		619,363		0
ABBOTT NORTHWESTERN - SARTELL, MN		7.64	%		10/01/17	Monthly		9,100,000		8,644,277		0
AIRPORT MEDICAL - BLOOMINGTON, MN		7.90	%		10/01/17	Monthly		3,233,317		3,166,159		0
AMERITRADE - OMAHA, NE		7.25	%		05/01/19	Monthly		6,150,000		5,514,329		0
ANOKA STRIP CENTER - ANOKA, MN		4.375	%		07/02/03	Monthly		255,063		252,518		0
APPLEWOOD ON THE GREEN - OMAHA, NE		6.55	%		10/10/08	Monthly		7,713,349		7,558,068		0
ARROWHEAD SHOPPING CNTR - MINOT, ND		8.25	%		01/01/20	Monthly		1,325,000		1,227,849		0
BARNES & NOBLE - FARGO, ND/OMAHA, NE		7.98	%		12/01/10	Monthly		4,900,000		3,185,400		0
BLOOMINGTON BUS PLAZA - BLMNGTN, MN		7.05	%		12/01/11	Monthly		5,000,000		4,897,585		0
BRENWOOD - MINNETONKA, MN		8.10	%		10/01/10	Monthly		8,758,307		8,691,536		0
BURNSVILLE BLUFFS - BURNSVILLE, MN		8.25	%		12/01/20	Monthly		1,644,551		1,569,742		0
CANDLELIGHT APTS - FARGO, ND		7.50	%		12/05/04	Monthly		578,000		338,683		0
CANYON LAKE APTS - RAPID CITY, SD		6.82	%		10/01/11	Monthly		3,000,000		2,951,857		0
CARMIKE - GRAND FORKS, ND		7.75	%		02/01/07	Monthly		2,000,000		1,728,771		0
CASTLE ROCK - BILLINGS, MT		6.66	%		03/01/09	Monthly		3,950,000		3,755,711		0
CENTRAL BANK OFFICE - EDEN PRAIRIE, MN		5.010	%		05/01/14	Monthly		2,575,000		2,545,000		0
CENTURY APTS - WILLISTON, ND		3.39	%		04/01/06	Monthly		2,700,000		2,129,563		0
CHAMPION AUTO - FOREST LAKE, MN		9.250	%		10/17/03	Monthly		65,036		56,354		0
CHATEAU APTS - MINOT, ND		7.11	%		07/01/11	Monthly		2,000,000		1,964,256		0
CHECKERS AUTO - FARIBAULT, MN		4.375	%		07/02/03	Monthly		121,459		120,246		0
CHECKERS AUTO - ROCHESTER, MN		4.375	%		07/02/03	Monthly		157,896		156,323		0
CHIROPRACTOR OFFICE BLDG - GRNWD, MN		8.750	%		09/02/09	Monthly		229,645		230,533		0
CLEARWATER APTS - BOISE, ID		6.47	%		01/01/09	Monthly		2,660,000		2,518,454		0
COLD SPRINGS CENTER - ST. CLOUD, MN		7.40	%		04/01/11	Monthly		5,250,000		5,044,833		0
COLTON HEIGHTS - MINOT, ND		8.35	%		06/01/07	Monthly		730,000		186,248		0
CONSECO - RAPID CITY, SD		8.07	%		08/01/15	Monthly		4,795,000		4,305,143		0
COTTONWOOD -PHASE I - BISMARCK, ND		6.59	%		01/01/09	Monthly		2,800,000		2,654,062		0
COTTONWOOD -PHASE II - BISMARCK, ND		7.55	%		11/01/09	Monthly		2,850,000		2,752,402		0
COTTONWOOD -PHASE III - BISMARCK, ND		6.66	%		01/01/09	Monthly		2,600,000		2,574,231		0
COUNTRY MEADOWS I - BILLINGS, MT		7.51	%		12/01/07	Monthly		2,660,000		2,422,608		0
COUNTRY MEADOWS II - BILLINGS, MT		8.10	%		07/31/20	Monthly		2,600,000		2,444,847		0
CRESTVIEW APTS - BISMARCK, ND		6.91	%		07/01/08	Monthly		3,400,000		3,113,735		0
DAKOTA HILL - IRVING TX		7.88	%		01/01/10	Monthly		25,550,000		24,794,645		0
DEWEY HILL - EDINA , MN		7.93	%		12/01/10	Monthly		3,125,000		3,027,115		0
DILLY LILY - ST. LOUIS PARK, MN		4.375	%		07/02/03	Monthly		121,459		120,246		0

F-51

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

MORTGAGE LOANS PAYABLE-(continued)


				Final		Periodic			Carrying		Delinquent
	Interest			Maturity		Payment	Face Amount		Amount of		Principal or
	Rate			Date		Terms	of Mortgage		Mortgage		Interest

DIXON AVE INDUST PARK - DES MOINES, IA		5.75	%		01/01/13	Monthly	$	9,000,000	$	8,959,322	$	0
EAGAN PDQ - EAGAN, MN		8.870	%		09/01/15	Monthly		553,048		563,379		0
EAGAN RETAIL CENTER I - EAGAN, MN		8.870	%		09/01/15	Monthly		368,699		379,097		0
EAGAN RETAIL CENTER II - EAGAN, MN		8.870	%		09/01/15	Monthly		952,472		971,904		0
EAST GRND STATION - E GRND FORKS, MN		4.28	%		08/01/15	Monthly		970,000		823,935		0
EAST PARK APTS - SIOUX FALLS, SD		5.86	%		12/01/12	Monthly		1,744,000		1,737,103		0
EASTGATE - MOORHEAD, MN		7.19	%		09/01/09	Monthly		1,627,500		1,564,697		0
EDGEWOOD VISTA - BILLINGS, MT		5.80	%		10/01/13	Monthly		720,000		564,576		0
EDGEWOOD VISTA - COLUMBUS/G. ISLAND, NE		4.710	%		07/01/15	Monthly		624,000		548,242		0
EDGEWOOD VISTA - DULUTH, MN		7.24	%		05/01/15	Monthly		4,821,000		4,366,614		0
EDGEWOOD VISTA - EAST GRAND FORKS, MN		6.850	%		08/01/11	Monthly		980,000		914,215		0
EDGEWOOD VISTA - FREEMONT, NE		6.750	%		09/05/11	Monthly		365,645		341,908		0
EDGEWOOD VISTA - HASTINGS, MT		6.750	%		09/05/11	Monthly		377,440		352,937		0
EDGEWOOD VISTA - KALISPELL, MT		5.98	%		10/01/11	Monthly		383,000		358,342		0
EDGEWOOD VISTA - MINOT, ND		6.342	%		08/01/12	Monthly		4,510,000		3,317,040		0
EDGEWOOD VISTA - MISSOULA/BELGRADE, MT		4.550	%		07/18/15	Monthly		945,000		798,191		0
EDGEWOOD VISTA - OMAHA, NE		6.75	%		09/05/11	Monthly		436,415		408,083		0
EDGEWOOD VISTA - SIOUX FALLS, SD		6.02	%		10/01/13	Monthly		720,000		575,028		0
EDGEWOOD VISTA - VIRGINIA, MN		6.94	%		05/01/12	Monthly		4,900,000		4,723,662		0
ERNST HOME CENTER - KALISPELL, MT		4.75	%		06/30/03	Monthly		1,119,460		1,091,815		0
EVERGREEN SHOPPING CNTR - PINE CITY, MN		8.130	%		01/01/10	Monthly		1,665,841		1,639,522		0
EXPRESS SHOPPING CENTER - FARGO, ND		7.500	%		09/01/14	Monthly		1,122,169		1,106,959		0
FLYING CLOUD - EDEN PRAIRIE, MN		8.61	%		07/01/09	Monthly		3,830,000		3,760,343		0
FOREST PARK ESTATES - GRAND FORKS, ND		7.33	%		08/01/09	Monthly		7,560,000		7,141,333		0
GREAT PLAINS SOFTWARE - FARGO, ND		7.08	%		10/01/13	Monthly		9,500,000		7,921,363		0
HEALTH INVESTORS TRUST - WOODBURY & ST. JOHN’S, MN		7.94	%		02/01/19	Monthly		19,482,851		18,488,202		0
HERITAGE MANOR - ROCHESTER, MN		6.80	%		10/01/18	Monthly		5,075,000		4,446,490		0
INTERLACHEN CORP CENTER - EDINA, MN		7.09	%		10/11/11	Monthly		11,550,000		11,283,875		0
INTERSTATE BAKERY - MOUNDS VIEW, MN		6.50	%		08/15/05	Monthly		131,720		108,162		0
INTERSTATE BAKERY - ST. PAUL, MN		8.750	%		01/14/04	Monthly		54,593		53,310		0
INVER GROVE CNTR - PDQ - INVER GROVE HEIGHTS, MN		8.750	%		02/10/09	Monthly		215,978		207,839		0
INVER GROVE UNDEVELOPED LAND - INVER GROVE HEIGHTS, MN		5.25	%		06/01/06	Monthly		110,368		100,014		0
IVY CLUB APTS - VANCOUVER, WA		6.980	%		09/01/11	Monthly		8,050,000		7,928,730		0
JAMESTOWN MALL - JAMESTOWN, ND		8.000	%		04/05/08	Monthly		807,725		774,174		0
JENNER PROPERTIES - GRAND FORKS, ND		4.25	%		11/01/04	Monthly		1,391,585		888,541		0

F-52

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

MORTGAGE LOANS PAYABLE-(continued)


				Final		Periodic			Carrying		Delinquent
	Interest			Maturity		Payment	Face Amount		Amount of		Principal or
	Rate			Date		Terms	of Mortgage		Mortgage		Interest

KIRKWOOD MANOR - BISMARCK, ND		8.15	%		05/01/10	Monthly	$	2,293,900	$	2,201,253	$	0
LANCASTER APTS - ST. CLOUD, MN		7.04	%		08/01/18	Monthly		1,769,568		1,607,769		0
LEGACY APTS PHSE I - GRAND FORKS, ND		7.07	%		01/01/05	Monthly		4,000,000		3,544,644		0
LEGACY APTS PHSE II - GRAND FORKS, ND		7.07	%		05/29/08	Monthly		2,575,000		2,358,393		0
LEGACY IV - GRAND FORKS, ND		8.10	%		07/31/20	Monthly		3,000,000		2,820,969		0
LEXINGTON COMMERCE CENTER - EAGAN, MN		8.09	%		02/01/10	Monthly		3,431,750		3,278,320		0
LINDBERG BUILDING - EDEN PRAIRIE, MN		7.625	%		02/01/07	Monthly		1,200,000		1,096,504		0
MAGIC CITY APARTMENTS - MINOT, ND		4.25	%		10/10/10	Monthly		2,794,299		1,307,689		0
MAPLEWOOD SQUARE - ROCHESTER, MN		6.90	%		08/01/09	Monthly		7,670,000		6,451,857		0
MEADOW I & II - JAMESTOWN, ND		8.155	%		07/01/10	Monthly		1,975,000		1,933,833		0
MEADOWS PHASE III - JAMESTOWN, ND		7.190	%		11/01/11	Monthly		1,150,000		1,125,426		0
MEDPARK MALL - GRAND FORKS, ND		8.075	%		02/01/10	Monthly		3,425,000		3,286,735		0
MENDOTA I, II, & NORTHLAND - M. HEIGHTS, MN		7.900	%		11/01/09	Monthly		18,000,000		17,097,640		0
MENDOTA I, II, & NORTHLAND - M. HEIGHTS, MN		5.370	%		11/01/09	Monthly		5,746,096		5,699,785		0
MENDOTA III & IV - MENDOTA HEIGHTS, MN		7.120	%		11/01/09	Monthly		9,300,000		9,219,734		0
METAL IMPROVEMENT CO - N. BRIGHTON, MN		7.01	%		10/01/09	Monthly		1,500,000		1,482,490		0
MIRAMONT APTS - FT. COLLINS, CO		8.25	%		08/01/36	Monthly		11,582,472		11,263,923		0
NEIGHBORHOOD APTS - FT. COLLINS, CO		7.98	%		01/01/07	Monthly		7,525,000		6,756,308		0
NICOLLET VII - BURNSVILLE, MN		8.05	%		11/29/10	Monthly		4,784,880		4,646,355		0
NORTH POINTE - BISMARCK, ND		7.12	%		01/01/08	Monthly		1,700,000		1,596,416		0
NORTHGATE II - MAPLE GROVE, MN		8.09	%		02/01/10	Monthly		1,576,750		1,506,255		0
OAKMONT APTS - SIOUX FALLS, SD		7.00	%		09/01/11	Monthly		4,070,001		4,038,533		0
OAKWOOD ESTATES - SIOUX FALLS, SD		6.67	%		06/01/11	Monthly		3,900,000		3,820,417		0
OLYMPIC VILLAGE - BILLINGS, MT		7.62	%		11/01/10	Monthly		8,400,000		8,235,347		0
OXBOW - SIOUX FALLS, SD		6.67	%		06/01/11	Monthly		4,250,000		4,163,275		0
PAMIDA - LADYSMITH, WI		8.750	%		10/01/11	Monthly		684,357		664,894		0
PAMIDA - LIVINGSTON, MT		7.500	%		12/10/08	Monthly		613,368		594,242		0
PARK DENTAL - BROOKLYN, MN		7.90	%		10/01/17	Monthly		1,950,000		1,815,885		0
PARK EAST - FARGO, ND		6.82	%		05/01/08	Monthly		3,500,000		3,292,341		0
PARK MEADOWS II AND III - WAITE PARK, MN		5.00	%		09/01/09	Monthly		7,800,000		7,771,767		0
PARK MEADOWS I - WAITE PARK, MN		7.19	%		09/01/09	Monthly		3,022,500		2,905,866		0
PDQ CENTER - PRIOR LAKE, MN		8.870	%		09/01/15	Monthly		1,013,922		966,400		0
PEBBLE SPRINGS - BISMARCK, ND		8.10	%		07/31/20	Monthly		455,000		427,822		0
PETCO WAREHOUSE - FARGO, ND		7.28	%		09/01/08	Monthly		1,100,000		720,031		0
PILLSBURY BUS CENTER - BLOOMINGTON, MN		7.40	%		04/01/11	Monthly		1,260,000		1,200,610		0

F-53

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

MORTGAGE LOANS PAYABLE-(continued)


				Final		Periodic			Carrying		Delinquent
	Interest			Maturity		Payment	Face Amount		Amount of		Principal or
	Rate			Date		Terms	of Mortgage		Mortgage		Interest

PINECONE - FT. COLLINS, CO		7.125	%		12/01/33	Monthly	$	10,685,215	$	10,154,157	$	0
PINEHURST APTS - BILLINGS, MT		7.500	%		05/24/17	Monthly		500,000		485,343		0
PLYMOUTH IV & V - PLYMOUTH, MN		8.17	%		01/01/11	Monthly		9,280,912		9,020,272		0
POINTE WEST APTS - MINOT, ND		6.91	%		07/01/08	Monthly		2,400,000		2,197,931		0
PRAIRIE WINDS APTS - SIOUX FALLS, SD		7.04	%		07/01/09	Monthly		1,325,000		1,269,692		0
PRAIRIEWOOD MEADOWS - FARGO, ND		7.70	%		11/01/20	Monthly		2,088,973		1,961,826		0
RIDGE OAKS APTS - SIOUX FALLS, SD		7.05	%		01/01/11	Monthly		2,900,000		2,837,112		0
RIMROCK APTS - BILLINGS, MT		7.33	%		08/01/09	Monthly		2,660,000		2,512,691		0
ROCKY MEADOWS - BILLINGS, MT		7.33	%		08/01/09	Monthly		3,780,000		3,570,667		0
SOUTH POINTE - MINOT, ND		7.12	%		01/01/08	Monthly		6,500,000		6,103,943		0
SOUTHDALE MEDICAL CENTER - EDINA, MN		7.80	%		01/01/11	Monthly		24,000,000		23,577,208		0
SOUTHEAST TECH CENTER - EAGAN, MN		8.09	%		02/01/10	Monthly		4,266,500		4,075,750		0
SOUTHWIND APTS - GRAND FORKS, ND		7.12	%		01/01/08	Monthly		4,100,000		3,850,179		0
STONE CONTAINER - FARGO, ND		8.25	%		02/01/11	Monthly		3,300,000		2,194,329		0
STONE CONTAINER - ROSEVILLE, MN		7.05	%		02/01/12	Monthly		5,300,000		5,152,889		0
STRIP CENTER I - BURNSVILLE, MN		8.79	%		07/02/03	Monthly		380,664		372,084		0
STRIP CENTER II - BURNSVILLE, MN		4.375	%		07/02/03	Monthly		267,209		261,372		0
SUNSET TRAIL I - ROCHESTER, MN		7.80	%		03/01/11	Monthly		4,350,000		4,267,783		0
SYCAMORE VILLAGE APT - SIOUX FALLS, SD		5.86	%		12/01/12	Monthly		981,000		977,120		0
THOMASBROOK - LINCOLN, NE		7.215	%		10/01/09	Monthly		6,200,000		5,867,741		0
THOMASVILLE - KENTWOOD, MI		7.75	%		02/01/11	Monthly		1,565,361		1,232,635		0
THREE PARAMOUNT PLAZA - BLMNGTON, MN		6.95	%		08/01/09	Monthly		5,200,000		5,100,907		0
THRESHER SQUARE EAST - MINNEAPOLIS, MN		6.750	%		05/01/15	Monthly		4,335,000		3,490,000		0
THRESHER SQUARE WEST - MINNEAPOLIS, MN		7.600	%		06/01/10	Monthly		3,805,000		2,365,000		0
TOM THUMB - BUFFALO, MN		9.870	%		09/10/05	Monthly		134,556		127,842		0
TOM THUMB - CENTERVILLE, MN		5.25	%		10/10/03	Monthly		191,466		191,466		0
TOM THUMB - HOWARD LAKE, MN		4.375	%		07/02/03	Monthly		145,750		144,296		0
TOM THUMB - LAKELAND, MN		5.25	%		10/10/03	Monthly		264,406		264,406		0
TOM THUMB - LAKEVILLE, MN		7.490	%		11/01/06	Monthly		108,782		102,339		0
TOM THUMB - LINO LAKES, MN		8.250	%		07/02/03	Monthly		119,516		114,634		0
TOM THUMB - LONG PRAIRIE, MN		7.500	%		09/01/07	Monthly		463,054		458,122		0
TOM THUMB - OAKDALE, MN		8.000	%		08/01/11	Monthly		186,403		187,635		0
TOM THUMB - WINSTED, MN		4.375	%		07/02/03	Monthly		145,750		143,404		0
SHERWOOD/CROWN COLONY - TOPEKA, KS		7.55	%		11/01/09	Monthly		18,375,000		17,745,751		0
U.H. MEDICAL - ST. PAUL, MN		8.10	%		08/01/15	Monthly		4,962,009		4,849,584		0

F-54

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

MORTGAGE LOANS PAYABLE-(continued)


					Final		Periodic			Carrying		Delinquent
		Interest			Maturity		Payment	Face Amount		Amount of		Principal or
		Rate			Date		Terms	of Mortgage		Mortgage		Interest

VALLEY PARK MANOR - GRAND FORKS, ND			8.190	%		11/01/10	Monthly	$	3,000,000	$	2,938,128	$	0
VAN MALL WOODS - VANCOUVER, WA			6.56	%		12/01/04	Monthly		4,070,426		3,654,490		0
VIRO-MED - EDEN PRAIRIE, MN			6.98	%		04/01/14	Monthly		3,120,000		2,575,827		0
WAYROAD CORP CENTER - MINNETONKA, MN			6.99	%		05/01/11	Monthly		3,626,993		3,533,599		0
WEDGEWD RETIREMENT - SWEETWATER, GA			3.6575	%		04/23/17	Monthly		1,566,720		1,326,222		0
WEST LAKE CENTER I - FOREST LAKE, MN			10.500	%		05/01/09	Monthly		2,546,597		3,154,385		0
WEST LAKE CENTER II - FOREST LAKE, MN			8.500	%		05/01/09	Monthly		712,611		821,588		0
WEST STONEHILL - ST. CLOUD, MN			7.93	%		06/01/07	Monthly		8,232,569		7,245,849		0
WEST VILLAGE CENTER I - CHANHASSEN, MN			8.750	%		09/01/05	Monthly		7,972,382		9,074,490		0
WEST VILLAGE CENTER II - CHANHASSEN, MN			7.000	%		01/27/06	Monthly		3,000,907		2,973,315		0
WESTGATE - BOISE, ID			5.85	%		04/01/08	Monthly		8,100,000		8,100,000		0
WESTWOOD PARK - BISMARCK, ND			7.88	%		12/01/09	Monthly		1,200,000		1,144,680		0
WILSON’S LEATHER - BROOKLYN PARK, MN			6.44	%		08/31/22	Monthly		9,100,000		8,986,343		0
WIRTH CORP CNTR - GOLDEN VALLEY, MN			6.90	%		02/01/12	Monthly		5,500,000		5,369,308		0
WOODRIDGE APTS - ROCHESTER, MN			7.875	%		12/01/16	Monthly		4,410,000		3,663,780		0

	TOTAL							$	572,784,184	$	539,397,202	$	0

F-55

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

PROPERTY ACQUISITIONS

Acquisitions for cash, assumptions of mortgages, and issuance of units in the operating partnership.


		PURCHASE PRICE

RESIDENTIAL
	East Park Apts - Sioux Falls, SD	$	2,520,354
	Sycamore Village - Sioux Falls, SD		1,417,699

	TOTAL RESIDENTIAL	$	3,938,053

COMMERCIAL
	Chanhassen Retail Center - Chanhassen, MN	$	20,850,000
	Brenwood Office Park - Minnetonka, MN		14,014,085
	Wilson’s Leather - Brooklyn Park, MN		13,010,645
	Abbott Northwestern - Sartell, MN		12,993,496
	Dixon Industrial Park - Des Moines, IA		11,872,351
	Westgate Office Center North - Boise, ID		11,509,091
	Forest Lake Retail Center - Forest Lake, MN		8,007,107
	U.H. Medical - St. Paul, MN		7,407,752
	Three Paramount Plaza - Edina, MN		7,367,227
	Southdale Expansion - Edina, MN		7,056,438
	Airport Medical - Bloomington, MN		4,678,418
	Edgewood Vista - Hermantown, MN		4,623,938
	Central Bank - Eden Prairie, MN		4,600,000
	Plaza VII - Boise, ID		3,357,662
	Park Dental - Brooklyn Center, MN		2,952,052
	Evergreen Center - Pine City, MN		2,800,000
	Pamida - Kalispell, MT		2,500,000
	Pamida - Livingston, MT		1,800,000
	Schofield Plaza - Schofield, MN		1,750,000
	Pamida - Ladysmith, WI		1,500,000
	Express Center - Fargo, ND		1,425,000
	Eagan Strip Center II - Eagan, MN		1,348,714
	Jamestown Mall - Jamestown, ND		1,320,000
	Tom Thumb - Lakeville, MN		1,262,945
	Paul Larson Clinic - Edina, MN		1,012,962
	PDQ - Burnsville, MN		980,000
	PDQ - Prior Lake, MN		970,746
	Inver Grove Center PDQ - Inver Grove, MN		940,000
	Excelsior Strip Center - Excelsior, MN		900,000
	Tom Thumb - Monticello, MN		855,000
	PDQ - Eagan, MN		782,896
	Burnsville Strip Center - Burnsville, MN		760,000
	Tom Thumb - Oakdale, MN		730,000
	Anoka Strip Center - Anoka, MN		725,000
	Tom Thumb - Long Prairie, MN		700,000
	Tom Thumb - Ham Lake, MN		535,000

F-56

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2003

PROPERTY ACQUISITIONS-(continued)


		PURCHASE PRICE

COMMERCIAL - -(continued)
	Tom Thumb - Glencoe, MN	$	530,000
	Tom Thumb - Blaine, MN		520,000
	Eagan Strip Center I - Eagan, MN		510,405
	Tom Thumb - Bethel, MN		510,000
	Champion Auto Center - Forest Lake, MN		496,000
	Prior Lake Peak - Prior Lake, MN		478,800
	Tom Thumb - Buffalo, MN		460,000
	Tom Thumb - Lakeland, MN		440,000
	Tom Thumb - Lino Lakes, MN		440,000
	Tom Thumb - Pine City, MN		440,000
	Checkers Auto - Rochester, MN		440,000
	Tom Thumb - Winsted, MN		410,000
	Sam Goody - Willmar, MN		400,000
	Tom Thumb - Howard Lake, MN		380,000
	Gas Plus More - Paynesville, MN		365,000
	PDQ - Mound, MN		360,000
	Checkers Auto - Faribault, MN		340,000
	Dily Lily - St. Louis Park, MN		340,000
	Tom Thumb - Centerville, MN		330,000
	Chiropractic Office Building - Greenwood, MN		330,000
	Tom Thumb - Shoreview, MN		330,000
	Tom Thumb - Lindstrom, MN		320,000
	Interstate Bakery - St. Paul, MN		320,000
	Tom Thumb - Mora, MN		300,000
	Interstate Bakery - Mounds View, MN		290,000
	Tom Thumb - Andover, MN		280,000
	Tom Thumb - Sauk Rapids, MN		250,000

	TOTAL COMMERCIAL	$	170,508,730

UNDEVELOPED LAND
	Kalispell, MT	$	1,400,000
	Inver Grove, MN		560,000
	River Falls, MN		200,000
	Andover, MN		150,000
	Libby, MT		150,000
	Long Prairie, MN		150,000
	Centerville, MN		100,000
	Prior Lake, MN		50,000

	TOTAL UNDEVELOPED LAND	$	2,760,000

	TOTAL	$	177,206,783

F-57

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS
INCLUDING DISCONTINUED OPERATIONS(unaudited)


		QUARTER ENDED
		07-31-02			10-31-02			01-31-03			04-30-03

Revenues		$	27,539,641		$	30,432,693		$	30,447,373		$	32,346,958
Income before gain on properties and minority interest			3,947,600			4,187,296			3,604,658			3,746,881
Net gain on sale of properties			262,568			52,774			(151,173	)		1,430,629
Minority interest portion of operating partnership income			(1,282,167	)		(1,171,848	)		(1,002,162	)		(1,376,895	)
Net Income			2,928,000			3,068,222			2,451,323			3,800,616
Per share
	Net Income		.10			.10			.08			.10


		QUARTER ENDED
		07-31-01			10-31-01			01-31-02			04-30-02

Revenues		$	21,780,094		$	23,175,041		$	23,605,772		$	24,455,162
Income before gain on properties and minority interest			3,250,866			3,743,415			3,642,689			3,228,964
Net gain on sale of properties			307,934			16,398			3,346			219,241
Minority interest portion of operating partnership income			(783,073	)		(813,898	)		(1,405,783	)		(809,976	)
Net Income			2,775,727			2,945,915			2,240,252			2,638,235
Per share
	Net Income		.11			.12			.09			.10


		QUARTER ENDED
		07-31-00			10-31-00			01-31-01			04-30-01

Revenues		$	17,431,644		$	18,404,260		$	19,004,737		$	20,926,509
Income before gain(loss) on properties and minority interest			2,565,131			2,707,811			2,719,679			2,195,191
Net gain(loss) on sale of properties			0			0			25,124			576,481
Minority interest portion of operating partnership income			(425,667	)		(538,618	)		(426,316	)		(704,576	)
Net Income			2,139,464			2,169,193			2,318,487			2,067,096
Per share
	Net Income		.09			.10			.10			.09

The above financial information is unaudited. In the opinion of management, all adjustments (which are of a normal recurring nature) have been included for a fair presentation.

F-58

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Good

Centerspace (CSR) 10-K2003 FY Annual report

Content analysis