MINOT, N.D., March 10, 2016 /PRNewswire/ -- Investors Real Estate Trust (NYSE: IRET) (NYSE: IRETPR) (NYSE: IRETPRB), a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest, today reported its financial and operating results for the quarter and year to date ended January 31, 2016.
Third Quarter Highlights
- Reported Funds from Operations ("FFO") of $54.5 million or $0.40 per share/unit
- Total revenue for the Company increased by $2.8 million, or 5.4%
- Net Operating Income ("NOI") from all properties increased by $1.6 million, or 4.8%, and Same-Store NOI decreased by approximately $85,000, or 0.3%
- Executed new and renewal commercial leases for same-store rental properties on 57,206 square feet
- Disposed of three retail properties for sales prices totaling $3.5 million and nine office properties that secured a $122.6 million non-recourse mortgage loan
Year to Date Highlights
- Reported FFO of $84.7 million or $0.61 per share/unit
- Total revenues for the Company increased by $5.7 million, or 3.7%
- NOI from all properties increased by $1.6 million, or 1.7%, and Same-Store NOI decreased by $1.3 million, or 1.5%
- Executed new and renewal commercial leases for same-store rental properties on 376,605 square feet
- Placed into service five development projects totaling $137.8 million
President and Chief Executive Officer Tim Mihalick commented, "We are pleased with our quarterly and year to date results, which demonstrated strong topline growth with revenues increasing by 5.4% and 3.7% for the third quarter and year to date, as well as continued progress in our portfolio repositioning efforts. Within our Same-Store multifamily portfolio, our operating margins were impacted by current market conditions in western North Dakota as well as seasonally low leasing volumes in the winter months, but we expect that we will be able to drive revenues upward as we enter the busier spring and summer leasing seasons. Additionally during the third quarter, we disposed of three retail properties and nine office properties, and have now largely completed our previously announced office and retail disposition program. As we have previously discussed, this process has resulted in meaningful disruptive FFO performance; however, we believe this capital recycling and portfolio repositioning program will result in a stronger operating platform with a more predictable net income stream."
Mr. Mihalick continued, "Looking ahead, our efforts in the coming quarters will be centered on driving revenue growth and reducing expenses in our market leading segments, as well as enhancing our balance sheet, given our manageable near term debt maturities. We continue to believe in our unique focus in the upper Midwest, which allows us to utilize our local market relationships, development platform and access to institutional capital, providing a meaningful competitive advantage to drive outsized returns over the long term."
Financial Results for the Three and Nine Months Ended January 31, 2016 Compared to the Prior Year Period
Net Income Attributable to Common Shareholders for the quarter ended January 31, 2016 was $36.9 million compared to $5.5 million for the same period of the prior fiscal year. Net Income Attributable to Common Shareholders for the nine month period ending January 31, 2016 was $52.4 million compared to $4.7 million for the same period of the prior fiscal year. The increase in Net Income Attributable to Common Shareholders was primarily due to gain on extinguishment of debt of $36.5 million recognized in the three and nine months ended January 31, 2016.
Funds from Operations ("FFO") for the quarter ending January 31, 2016 was $54.5 million or $0.40 per share/unit. FFO for the nine months ending January 31, 2016 was $84.7 million or $0.61 per share/unit. The increase in FFO was primarily due to gain on extinguishment of debt of $36.5 million recognized in the three and nine months ended January 31, 2016. Excluding gain or loss on extinguishment of debt and default interest, FFO would have been $0.14 and $0.44 for the three and nine months ended January 31, 2016, respectively.
The table below highlights the FFO and Adjusted Funds from Operations ("AFFO") results by quarter for the first nine months of fiscal year 2016.
|
Fiscal Year To Date,
Nine months
|
Q3 ending
January 31, 2016
|
Q2 ending
October 31, 2015
|
Q1 ending
July 31, 2015
|
|
FFO per share
|
$
|
.61
|
$
|
.40
|
$
|
.06
|
$
|
.16
|
|
AFFO per share
|
$
|
.40
|
$
|
.13
|
$
|
.11
|
$
|
.16
|
Operating Results for the Three Months Ended January 31, 2016 Compared to the Prior Year Period
Total revenue for the Company increased by $2.8 million, or 5.4%, in the three months ended January 31, 2016 compared to same period one year ago.
Total expenses for the Company increased by $2.8 million, or 7.6%, in the three months ended January 31, 2016 compared to same period one year ago. This increase is primarily due to an increase in depreciation expense at new acquisitions and developments placed in service.
Net Operating Income (NOI) from all properties increased by $1.6 million, or 4.8% for the quarter ending January 31, 2016 compared to the same period one year ago. Non-Same-Store properties, primarily the Company's multifamily developments, provided for an increase in NOI of $1.7 million while Same-Store NOI decreased by approximately $85,000 for the quarter ending January 31, 2016 compared to the same period one year ago. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota and shifting costs across the balance of the Company's portfolio, which had been impacted by the execution of its strategic plan to sell the commercial office and retail segments.
Operating Results for the Nine Months Ended January 31, 2016 Compared to the Prior Year Period
Total revenues for the Company increased by $5.7 million, or 3.7%, in the nine months ended January 31, 2016 compared to same period one year ago.
Total expenses for the Company increased by $6.2 million, or 5.6%, in the nine months ended January 31, 2016 compared to same period one year ago. This increase is primarily due to an increase in depreciation expense and property management expense at new acquisitions and developments placed in service.
NOI from all properties increased by $1.6 million, or 1.7% for the nine month period ending January 31, 2016 compared to the same period one year ago. Non-Same-Store properties, primarily the Company's multifamily developments, provided for an increase in NOI of $2.9 million while Same-Store NOI decreased by $1.3 million. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota and shifting costs across the balance of the Company's portfolio, which had been impacted by the execution of its strategic plan to sell the commercial office and retail segments.
Multifamily Results for the Three Months Ended January 31, 2016 Compared to the Prior Year Period
Multifamily (including non-same-store) NOI increased by approximately $898,000 or 5.3% for the quarter ending January 31, 2016 compared to the same period one year ago. Continued completion and lease up of our development projects is having a positive effect on total operations.
Multifamily Results for the Nine Months Ended January 31, 2016 Compared to the Prior Year Period
Multifamily (including non-same store) NOI increased by approximately $2.3 million or 4.6% for nine month period ending January 31, 2016 compared to the same period one year ago. Continued completion and lease up of our development projects and accretive acquisitions in the period are having a positive effect on total operations.
Same-Store Multifamily Results for the Three Months Ended January 31, 2016 Compared to the Prior Year Period
Same-Store Multifamily NOI decreased by approximately $725,000 for the quarter ending January 31, 2016 compared to the same period one year ago. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota and shifting costs across the balance of the Company's portfolio, which had been impacted by the execution of its strategic plan to sell the commercial office and retail segments.
The Company's operating margins of Same-Store Multifamily NOI to Gross Revenues improved by 60 basis points quarter over quarter to 53.3% for the third quarter of fiscal year 2016, as compared to the second quarter of fiscal year 2016.
The table below represents Same-Store Multifamily performance for the third quarter ending January 31, 2016 compared to the same period one year ago. Excluding the highly impacted energy markets of Minot and Williston, North Dakota, the balance of the same-store portfolio showed improving NOI results year over year.
|
|
|
|
|
3rd Quarter Increase (Decrease) From Prior Year's 3rd Quarter
|
|
Regions
|
Rentable
Units
|
Occupancy
1/31/2016
|
FY16Q3
Weighted
Average
Occupancy(1)
|
FY16Q3
% of
Actual
NOI
|
FY16Q3
Average
Rental
Rate(2)
|
Revenues
|
Expenses
|
Net
Operating
Income
|
Average
Rental
Rate
|
Weighted
Average
Occupancy
|
|
Billings, MT
|
770
|
91.9%
|
91.7%
|
7.6%
|
$
|
887
|
(3.7%)
|
11.6%
|
(13.5%)
|
2.0%
|
(5.6%)
|
|
Bismarck, ND
|
909
|
92.1%
|
92.1%
|
12.0%
|
$
|
1,061
|
0.9%
|
8.9%
|
(3.6%)
|
4.8%
|
(3.9%)
|
|
Grand Forks, ND
|
1,230
|
93.3%
|
93.2%
|
13.5%
|
$
|
915
|
(2.7%)
|
(15.3%)
|
8.8%
|
0.4%
|
(3.1%)
|
|
Minneapolis, MN
|
319
|
99.7%
|
99.0%
|
3.2%
|
$
|
882
|
8.9%
|
1.8%
|
16.5%
|
3.3%
|
5.6%
|
|
Omaha, NE
|
1,370
|
97.4%
|
96.2%
|
11.6%
|
$
|
858
|
6.1%
|
22.4%
|
(8.0%)
|
0.7%
|
5.5%
|
|
Rapid City, SD
|
270
|
97.8%
|
96.7%
|
2.6%
|
$
|
830
|
3.2%
|
(13.8%)
|
24.0%
|
2.5%
|
0.6%
|
|
Rochester, MN
|
1,104
|
96.3%
|
96.7%
|
15.3%
|
$
|
1,065
|
5.6%
|
(1.1%)
|
10.3%
|
4.4%
|
1.2%
|
|
Sioux Falls, SD
|
969
|
99.2%
|
97.9%
|
7.6%
|
$
|
804
|
5.5%
|
12.3%
|
(1.6%)
|
3.7%
|
1.8%
|
|
St. Cloud, MN
|
1,015
|
96.3%
|
95.6%
|
7.9%
|
$
|
846
|
4.4%
|
3.5%
|
5.5%
|
2.9%
|
1.4%
|
|
Topeka, KS
|
1,042
|
97.8%
|
96.8%
|
9.9%
|
$
|
762
|
7.2%
|
(5.8%)
|
18.9%
|
3.3%
|
3.9%
|
|
Same Store Subtotals
|
8,998
|
95.9%
|
95.2%
|
91.2%
|
$
|
896
|
3.2%
|
3.3%
|
3.1%
|
2.7%
|
0.5%
|
|
Minot, ND(3)
|
734
|
86.8%
|
88.7%
|
7.0%
|
$
|
1,008
|
(17.4%)
|
3.4%
|
(31.9%)
|
(10.6%)
|
(6.8%)
|
|
Williston, ND(3)
|
145
|
75.2%
|
69.4%
|
1.8%
|
$
|
1,706
|
(54.9%)
|
7.3%
|
(73.0%)
|
(39.1%)
|
(15.9%)
|
|
Same Store Property Totals
|
9,877
|
94.9%
|
94.0%
|
100.0%
|
$
|
916
|
(1.3%)
|
3.4%
|
(5.1%)
|
(0.4%)
|
(0.9%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Weighted average occupancy is defined as gross potential rent less vacancy losses divided by gross potential rent for the period.
|
|
(2)
|
Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
|
|
(3)
|
Denotes markets with high exposure to energy-related industries.
|
Same-Store Multifamily Results for the Nine Months Ended January 31, 2016 Compared to the Prior Year Period
Same-Store Multifamily NOI decreased by $2.4 million for the nine months ending January 31, 2016 compared to the same period one year ago. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota and shifting costs across the balance of the Company's portfolio, which had been impacted by the execution of its strategic plan to sell the commercial office and retail segments.
The Company's operating margins of Same-Store Multifamily NOI to Gross Revenues decreased by 290 basis points year over year to 53.9% for the nine months ended January 31, 2016.
The table below represents Same-Store Multifamily performance for the nine months ending January 31, 2016 compared to the same period one year ago. Excluding the highly impacted energy markets of Minot and Williston, North Dakota, the balance of the same-store portfolio showed improving NOI results year over year.
|
|
|
|
|
YTD Increase (Decrease) From Prior Year's YTD
|
|
Regions
|
Rentable
Units
|
Occupancy
1/31/2016
|
FY16Q3
Weighted
Average
Occupancy(1)
|
FY16Q3
% of
Actual
NOI
|
FY16Q3
Average
Rental
Rate(2)
|
Revenues
|
Expenses
|
Net
Operating
Income
|
Average
Rental
Rate
|
Weighted
Average
Occupancy
|
|
Billings, MT
|
770
|
91.9%
|
93.1%
|
7.8%
|
$
|
893
|
(2.0%)
|
7.4%
|
(8.2%)
|
2.0%
|
(4.1%)
|
|
Bismarck, ND
|
909
|
92.1%
|
93.3%
|
11.8%
|
$
|
1,063
|
(0.5%)
|
12.7%
|
(7.4%)
|
4.0%
|
(4.5%)
|
|
Grand Forks, ND
|
1,230
|
93.3%
|
94.5%
|
13.1%
|
$
|
919
|
(2.0%)
|
1.1%
|
(4.2%)
|
1.4%
|
(3.3%)
|
|
Minneapolis, MN
|
319
|
99.7%
|
98.0%
|
3.1%
|
$
|
876
|
6.2%
|
3.2%
|
9.1%
|
3.6%
|
2.6%
|
|
Omaha, NE
|
1,370
|
97.4%
|
96.3%
|
12.6%
|
$
|
864
|
6.9%
|
10.9%
|
3.4%
|
1.8%
|
5.1%
|
|
Rapid City, SD
|
270
|
97.8%
|
97.2%
|
2.4%
|
$
|
823
|
1.3%
|
0.6%
|
2.0%
|
1.6%
|
(0.3%)
|
|
Rochester, MN
|
1,104
|
96.3%
|
96.3%
|
14.6%
|
$
|
1,056
|
6.2%
|
1.1%
|
9.9%
|
3.9%
|
2.3%
|
|
Sioux Falls, SD
|
969
|
99.2%
|
97.4%
|
7.4%
|
$
|
800
|
4.5%
|
8.5%
|
0.1%
|
3.6%
|
0.9%
|
|
St. Cloud, MN
|
1,015
|
96.3%
|
94.3%
|
7.0%
|
$
|
834
|
2.9%
|
8.6%
|
(4.4%)
|
2.7%
|
0.3%
|
|
Topeka, KS
|
1,042
|
97.8%
|
95.8%
|
8.7%
|
$
|
753
|
4.7%
|
0.1%
|
9.1%
|
2.0%
|
2.8%
|
|
Same Store Subtotals
|
8,998
|
95.9%
|
95.3%
|
88.5%
|
$
|
892
|
2.8%
|
5.9%
|
0.3%
|
2.6%
|
0.1%
|
|
Minot, ND(3)
|
734
|
86.8%
|
90.9%
|
8.5%
|
$
|
1,070
|
(11.1%)
|
12.4%
|
(23.8%)
|
(4.9%)
|
(6.2%)
|
|
Williston, ND(3)
|
145
|
75.2%
|
74.0%
|
3.0%
|
$
|
2,181
|
(38.7%)
|
8.2%
|
(52.7%)
|
(22.7%)
|
(16.0%)
|
|
Same Store Property Totals
|
9,877
|
94.9%
|
94.3%
|
100.0%
|
$
|
923
|
(0.3%)
|
6.4%
|
(5.5%)
|
0.8%
|
(1.2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Weighted average occupancy is defined as gross potential rent less vacancy losses divided by gross potential rent for the period.
|
|
(2)
|
Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
|
|
(3)
|
Denotes markets with high exposure to energy-related industries.
|
In addition to our initiatives to grow our multifamily portfolio through acquisitions and development, we have launched a value add program whereby we will be committing an estimated $3.5 million per quarter to rehab 4,000 units. Apartments will be remodeled as the leases expire and upgrades will include a variety of new appliances, flooring, lighting, kitchen cabinets, and bathroom upgrades. Management expects these upgrades to range from $10,000 to $13,000 per unit and result in a return on investment of approximately 8% to 10% per year per unit.
Occupancy Levels on a Same-Store Property and All Property Basis
|
Segments
|
Same-Store as of
January 31, 2016
|
Same-Store as of
January 31, 2015
|
All Properties as of
January 31, 2016
|
All Properties as of
January 31, 2015
|
|
Multifamily
|
94.9%
|
94.5%
|
91.1%
|
91.3%
|
|
Healthcare
|
95.8%
|
95.8%
|
94.7%
|
95.9%
|
|
Industrial
|
100.0%
|
100.0%
|
85.3%
|
100.0%
|
Development Projects in Progress
As of January 31, 2016, the following projects are being developed:
- Deer Ridge, a 163 unit, $24.9 million Multifamily development in Jamestown, ND
- Cardinal Point, a 251 unit $48.2 million Multifamily development in Grand Forks, ND
- 71 France, a 241 unit, $73.3 million Multifamily development in Edina, MN
- Monticello Crossings, a 202 unit, $31.8 million Multifamily development in Monticello, MN
Development Projects Placed in Service
During the three months ended January 31, 2016 no development projects were placed in service. During the nine months ended January 31, 2016, development projects totaling $136.8 million were placed in service.
The following table reflects the projects placed into service during the nine months ending January 31, 2016:
|
Project Name and Location
|
Segment
|
Rentable Sq Ft or
Number of Units
|
Percentage
Leased or
Committed
|
Development Cost
Incurred
|
Anticipated
Same Store Date
|
|
|
Chateau II-Minot, ND
|
Multifamily
|
72 units
|
79.2%
|
$
|
14,641
|
1Q 2019
|
|
Edina 6565 France SMC III-Edina, MN
|
Healthcare
|
57,624 sq ft
|
24.5%
|
$
|
32,725
|
1Q 2019
|
|
Renaissance Heights-Williston, ND
|
Multifamily
|
288 units
|
46.2%
|
$
|
62,451
|
1Q 2019
|
|
Minot Southgate Retail-Minot, ND
|
Other
|
7,963 sq ft
|
0%
|
$
|
2,623
|
1Q 2019
|
|
PrairieCare Medical-Brooklyn Park, MN
|
Healthcare
|
70,756 sq ft
|
100.0%
|
$
|
24,358
|
1Q 2018
|
|
|
|
|
$
|
136,798
|
|
|
|
|
|
|
|
|
|
|
|
Disposition Activity
During the three months ended January 31, 2016, the Company disposed of the following properties:
- Three retail properties for sales prices totaling $3.5 million, which sales are part of the implementation of the Company's strategic plan to sell its commercial office and retail properties.
- Nine office properties that secured a $122.6 million non-recourse mortgage loan. Ownership in these properties was transferred to the mortgage lender and the Company removed the debt obligation and accrued interest from its balance sheet.
Liquidity
At January 31, 2016, the Company had $47.1 million cash on hand and $82.5 million available on its line of credit, which matures September 1, 2017.
Shareholder Equity and Capital Structure
Under the Company's share repurchase program, during the three months ended January 31, 2016, the Company repurchased 1.8 million shares at an average price of $7.30 per share.
As of January 31, 2016, the Company's total capitalization was $2.0 billion. Total capitalization is defined as the market value (closing price at end of period) of IRET's outstanding common shares and the imputed market value of the outstanding limited partnership units of its operating partnership IRET Properties (which may be exchanged, at the expiration of a specified holding period, for either cash or its common shares, in the Company's sole discretion, on a one-for-one basis), plus the book value of preferred shares and the outstanding principal balance of the Company's consolidated debt.
Quarterly Distribution
On January 15, 2016, the Company paid a quarterly distribution of $0.1300 per common share and unit of IRET Properties. This was the Company's 179th consecutive distribution. The Company also paid, on December 31, 2015, a quarterly distribution of $0.5156 per share on its Series A preferred shares and a quarterly distribution of $0.4968 per share on its Series B preferred shares.
Subsequent to the end of the third quarter of fiscal year 2016, on March 8, 2016, the Board of Trustees declared a regular quarterly distribution of $0.1300 per common share and unit, payable April 1, 2016 to common shareholders and unitholders of record on March 21, 2016.
Also on March 8, 2016, the Board declared a distribution of $0.5156 per share on the Company's Series A preferred shares, payable March 31, 2016 to Series A preferred shareholders of record on March 21, 2016, and declared a distribution of $0.4968 per share on the Company's Series B preferred shares, payable March 31, 2016 to Series B preferred shareholders of record on March 21, 2016.
Conference Call Information
The Conference Call for 3rd Quarter Earnings is scheduled for Friday, March 11, 2016 at 10:00 A.M. Eastern Time. Conference call access information is as follows:
USA Toll Free Number: 1-877-509-9785
International Toll Free Number: 1-412-902-4132
Canada Toll Free Number: 1-855-669-9657
A webcast of the call will be archived on the "Investor Info/ Presentations & Events/Presentations" page of IRET's website, http://www.iret.com, for one year. Questions regarding the conference call should be directed to IR@iret.com.
About IRET
We are a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest. We hold for investment a portfolio of 177 properties consisting of 94 multifamily properties, 66 healthcare properties (including senior housing), 7 industrial properties and 10 other commercial properties with a total of 4.5 million square feet of leasable space. Our common shares, Series A preferred shares and Series B preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: IRET, IRETPR and IRETPRB, respectively). Our press releases and supplemental information are available on our website at www.iret.com or by contacting Investor Relations at 203-682-8377.
Supplemental Information
The Company produced the Supplemental Operating and Financial Data for the Quarter Ended January 31, 2016 ("Supplemental Information") that provides detailed information regarding operating, capital, portfolio and tenant analyses and development and acquisition activity. This Supplemental Information is considered part of this earnings release.
Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined under the section titled "Definitions" in the Supplemental Information.
Forward-Looking Statements
This earnings release, including the Supplemental Information, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, which may be identified by the use of words such as "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "outlook" and similar expressions that do not relate to historical matters, specifically including the Company's future plans, anticipated operating results, anticipated timing of development projects being placed into service, anticipated implementation and results of its value add program, and anticipated timing of properties becoming same-store properties, are based on the Company's expectations, forecasts and assumptions at the time of this earnings release. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in such forward-looking statements.
Such risks, uncertainties and other factors that might cause such differences include, but are not limited to: intentions and expectations regarding future distributions on common shares and units; fluctuations in interest rates; adverse capital and credit market conditions that might affect the Company's access to various sources of capital and cost of capital; adequate insurance coverage; the effect of government regulation; delays or inability to obtain necessary governmental permits and authorizations; changes in general and local economic and real estate market conditions; changes in demand for Company properties that may result in lower than expected occupancy and/or rental rates; ability to acquire quality properties in the Company's targeted markets; ability to successfully dispose of certain assets; competition for tenants from similar competing properties; the Company's ability to attract and retain skilled personnel; cyber-intrusion; abandonment of development or redevelopment opportunities for which the Company has already incurred costs; delays in completing development, redevelopment and/or lease up of properties and increased costs; and those risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K for the fiscal year ended April 30, 2015 and subsequent quarterly reports on Form 10-Q.
The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
|
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
|
|
|
(in thousands, except share data)
|
|
January 31, 2016
|
April 30, 2015
|
|
ASSETS
|
|
|
|
|
|
Real estate investments
|
|
|
|
|
|
Property owned
|
$
|
1,801,019
|
$
|
1,546,367
|
|
Less accumulated depreciation
|
|
(346,895)
|
|
(313,308)
|
|
|
1,454,124
|
|
1,233,059
|
|
Development in progress
|
|
78,341
|
|
153,994
|
|
Unimproved land
|
|
22,304
|
|
25,827
|
|
Total real estate investments
|
|
1,554,769
|
|
1,412,880
|
|
Assets held for sale
|
|
22,064
|
|
463,103
|
|
Cash and cash equivalents
|
|
47,117
|
|
48,970
|
|
Other investments
|
|
50
|
|
329
|
|
Receivable arising from straight-lining of rents, net of allowance of $766 and $718, respectively
|
|
16,778
|
|
15,617
|
|
Accounts receivable, net of allowance of $163 and $438, respectively
|
|
5,118
|
|
2,865
|
|
Real estate deposits
|
|
1,250
|
|
2,489
|
|
Prepaid and other assets
|
|
3,943
|
|
3,174
|
|
Intangible assets, net of accumulated amortization of $21,214 and $19,610, respectively
|
|
23,913
|
|
26,213
|
|
Tax, insurance, and other escrow
|
|
7,834
|
|
10,073
|
|
Property and equipment, net of accumulated depreciation of $1,116 and $1,464, respectively
|
|
1,442
|
|
1,542
|
|
Goodwill
|
|
1,715
|
|
1,718
|
|
Deferred charges and leasing costs, net of accumulated amortization of $9,078 and $8,077, respectively
|
|
9,816
|
|
8,864
|
|
TOTAL ASSETS
|
$
|
1,695,809
|
$
|
1,997,837
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Liabilities held for sale
|
$
|
11,449
|
$
|
321,393
|
|
Accounts payable and accrued expenses
|
|
48,778
|
|
56,399
|
|
Revolving line of credit
|
|
17,500
|
|
60,500
|
|
Mortgages payable
|
|
761,645
|
|
668,112
|
|
Construction debt and other
|
|
140,264
|
|
144,111
|
|
TOTAL LIABILITIES
|
|
979,636
|
|
1,250,515
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES
|
|
7,244
|
|
6,368
|
|
EQUITY
|
|
|
|
|
|
Investors Real Estate Trust shareholders' equity
|
|
|
|
|
|
Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at January 31, 2016 and April 30, 2015, aggregate liquidation preference of $28,750,000)
|
|
27,317
|
|
27,317
|
|
Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 shares issued and outstanding at January 31, 2016 and April 30, 2015, aggregate liquidation preference of $115,000,000)
|
|
111,357
|
|
111,357
|
|
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 121,033,647 shares issued and outstanding at January 31, 2016, and 124,455,624 shares issued and outstanding at April 30, 2015)
|
|
924,658
|
|
951,868
|
|
Accumulated distributions in excess of net income
|
|
(434,388)
|
|
(438,432)
|
|
Total Investors Real Estate Trust shareholders' equity
|
|
628,944
|
|
652,110
|
|
Noncontrolling interests – Operating Partnership (13,863,575 units at January 31, 2016 and 13,999,725 units at April 30, 2015)
|
|
58,254
|
|
58,325
|
|
Noncontrolling interests – consolidated real estate entities
|
|
21,731
|
|
30,519
|
|
Total equity
|
|
708,929
|
|
740,954
|
|
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
|
$
|
1,695,809
|
$
|
1,997,837
|
|
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
|
|
for the three and nine months ended January 31, 2016 and 2015
|
|
|
(in thousands, except per share data)
|
|
Three Months Ended
January 31
|
Nine Months Ended
January 31
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
Real estate rentals
|
$
|
50,277
|
$
|
46,753
|
$
|
142,526
|
$
|
135,621
|
|
Tenant reimbursement
|
|
4,492
|
|
5,223
|
|
13,466
|
|
15,122
|
|
TRS senior housing revenue
|
|
1,003
|
|
963
|
|
3,006
|
|
2,599
|
|
TOTAL REVENUE
|
|
55,772
|
|
52,939
|
|
158,998
|
|
153,342
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
Depreciation/amortization related to real estate investments
|
|
14,789
|
|
12,627
|
|
42,522
|
|
37,700
|
|
Utilities
|
|
3,427
|
|
3,564
|
|
9,757
|
|
9,533
|
|
Maintenance
|
|
5,821
|
|
5,033
|
|
16,979
|
|
15,081
|
|
Real estate taxes
|
|
5,029
|
|
5,284
|
|
14,948
|
|
15,052
|
|
Insurance
|
|
1,214
|
|
1,215
|
|
3,558
|
|
3,745
|
|
Property management expenses
|
|
4,676
|
|
3,825
|
|
13,182
|
|
10,970
|
|
Other property expenses
|
|
169
|
|
197
|
|
344
|
|
753
|
|
TRS senior housing expenses
|
|
912
|
|
825
|
|
2,493
|
|
2,243
|
|
Administrative expenses
|
|
2,929
|
|
2,754
|
|
8,316
|
|
9,308
|
|
Other expenses
|
|
86
|
|
488
|
|
1,714
|
|
1,678
|
|
Amortization related to non-real estate investments
|
|
130
|
|
210
|
|
470
|
|
647
|
|
Impairment of real estate investments
|
|
162
|
|
540
|
|
3,320
|
|
4,663
|
|
TOTAL EXPENSES
|
|
39,344
|
|
36,562
|
|
117,603
|
|
111,373
|
|
Operating income
|
|
16,428
|
|
16,377
|
|
41,395
|
|
41,969
|
|
Interest expense
|
|
(10,540)
|
|
(10,009)
|
|
(29,867)
|
|
(29,710)
|
|
Loss on extinguishment of debt
|
|
0
|
|
0
|
|
(106)
|
|
0
|
|
Interest income
|
|
566
|
|
561
|
|
1,687
|
|
1,681
|
|
Other income
|
|
135
|
|
109
|
|
286
|
|
371
|
|
Income before gain (loss) on sale of real estate and other investments and income from discontinued operations
|
|
6,589
|
|
7,038
|
|
13,395
|
|
14,311
|
|
Gain (loss) on sale of real estate and other investments
|
|
1,446
|
|
951
|
|
1,271
|
|
(811)
|
|
Income from continuing operations
|
|
8,035
|
|
7,989
|
|
14,666
|
|
13,500
|
|
Income from discontinued operations
|
|
35,408
|
|
1,162
|
|
50,181
|
|
1,322
|
|
NET INCOME
|
|
43,443
|
|
9,151
|
|
64,847
|
|
14,822
|
|
Net income attributable to noncontrolling interests – Operating Partnership
|
|
(4,227)
|
|
(657)
|
|
(5,940)
|
|
(618)
|
|
Net loss (income) attributable to noncontrolling interests – consolidated real estate entities
|
|
581
|
|
(123)
|
|
2,096
|
|
(870)
|
|
Net income attributable to Investors Real Estate Trust
|
|
39,797
|
|
8,371
|
|
61,003
|
|
13,334
|
|
Dividends to preferred shareholders
|
|
(2,879)
|
|
(2,879)
|
|
(8,636)
|
|
(8,636)
|
|
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
$
|
36,918
|
$
|
5,492
|
$
|
52,367
|
$
|
4,698
|
|
Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted
|
$
|
.04
|
$
|
.04
|
$
|
.06
|
$
|
.03
|
|
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted
|
|
.26
|
|
.01
|
|
.36
|
|
.01
|
|
NET INCOME PER COMMON SHARE – BASIC AND DILUTED
|
$
|
.30
|
$
|
.05
|
$
|
.42
|
$
|
.04
|
|
DIVIDENDS PER COMMON SHARE
|
$
|
.13
|
$
|
.13
|
$
|
.39
|
$
|
.39
|
|
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
|
|
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO
|
|
INVESTORS REAL ESTATE TRUST TO FUNDS FROM OPERATIONS
|
|
for the three and nine months ended January 31, 2016 and 2015
|
|
|
Three Months Ended January 31,
|
(in thousands, except per share amounts)
|
|
2016
|
2015
|
|
Amount
|
Weighted
Avg Shares
and Units(1)
|
Per
Share
And
Unit(2)
|
Amount
|
Weighted
Avg Shares
and Units(1)
|
Per
Share
And
Unit(2)
|
|
Net income attributable to Investors Real Estate Trust
|
$
|
39,797
|
|
|
|
$
|
8,371
|
|
|
|
|
Less dividends to preferred shareholders
|
|
(2,879)
|
|
|
|
|
(2,879)
|
|
|
|
|
Net income available to common shareholders
|
|
36,918
|
121,864
|
$
|
0.30
|
|
5,492
|
120,855
|
$
|
0.05
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest – Operating Partnership
|
|
4,227
|
13,877
|
|
|
|
657
|
14,461
|
|
|
|
Depreciation and amortization of real property
|
|
14,975
|
|
|
|
|
17,706
|
|
|
|
|
Impairment of real estate investments
|
|
162
|
|
|
|
|
540
|
|
|
|
|
Gain on depreciable property sales
|
|
(1,777)
|
|
|
|
|
(951)
|
|
|
|
|
FFO applicable to Common Shares
and Units(1)(3)
|
$
|
54,505
|
135,741
|
$
|
0.40
|
$
|
23,444
|
135,316
|
$
|
0.17
|
|
Nine Months Ended January 31,
|
(in thousands, except per share amounts)
|
|
2016
|
2015
|
|
Amount
|
Weighted
Avg Shares
and Units(1)
|
Per
Share
And
Unit(2)
|
Amount
|
Weighted
Avg Shares
and Units(1)
|
Per
Share
And
Unit(2)
|
|
Net income attributable to Investors Real Estate Trust
|
$
|
61,003
|
|
|
|
$
|
13,334
|
|
|
|
|
Less dividends to preferred shareholders
|
|
(8,636)
|
|
|
|
|
(8,636)
|
|
|
|
|
Net income available to common shareholders
|
|
52,367
|
123,793
|
$
|
0.42
|
|
4,698
|
116,303
|
$
|
0.04
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest – Operating Partnership
|
|
5,940
|
13,913
|
|
|
|
618
|
17,334
|
|
|
|
Depreciation and amortization of real property
|
|
48,095
|
|
|
|
|
52,367
|
|
|
|
|
Impairment of real estate investments
|
|
3,760
|
|
|
|
|
6,105
|
|
|
|
|
(Gain) loss on depreciable property sales
|
|
(25,512)
|
|
|
|
|
811
|
|
|
|
|
FFO applicable to Common Shares
and Units(1)(3)
|
$
|
84,650
|
137,706
|
$
|
0.61
|
$
|
64,599
|
133,637
|
$
|
0.48
|
|
|
|
(1)
|
Units of the Operating Partnership are exchangeable for cash, or, at our discretion, for Common Shares on a one-for-one basis.
|
|
(2)
|
Net income attributable to Investors Real Estate Trust is calculated on a per Common Share basis. FFO is calculated on a per Common Share and Unit basis.
|
|
(3)
|
Excluding gain or loss on extinguishment of debt and default interest, FFO would have been $19.6 million and $0.14 per Common Share and Unit for the three months ended January 31, 2016 and $60.1 million and $0.44 per Common Share and Unit for the nine months ended January 31, 2016.
|
|
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
|
|
RECONCILIATION OF NET OPERATING INCOME TO THE
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
for the three months ended January 31, 2016 and 2015
|
|
|
Three Months Ended January 31, 2016
|
(in thousands)
|
|
Multifamily
|
Healthcare
|
Industrial
|
All Other
|
Total
|
|
Real estate revenue
|
$
|
33,296
|
$
|
18,350
|
$
|
1,650
|
$
|
1,473
|
$
|
54,769
|
|
Real estate expenses
|
|
15,460
|
|
4,208
|
|
453
|
|
215
|
|
20,336
|
|
Net operating income
|
$
|
17,836
|
$
|
14,142
|
$
|
1,197
|
$
|
1,258
|
|
34,433
|
|
TRS senior housing revenue, net of expenses
|
|
|
|
|
|
|
|
|
|
91
|
|
Depreciation/amortization
|
|
|
|
|
|
|
|
|
|
(14,919)
|
|
Administrative expenses
|
|
|
|
|
|
|
|
|
|
(2,929)
|
|
Other expenses
|
|
|
|
|
|
|
|
|
|
(86)
|
|
Impairment of real estate investments
|
|
|
|
|
|
|
|
|
|
(162)
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
(10,540)
|
|
Interest and other income
|
|
|
|
|
|
|
|
|
|
701
|
|
Income before gain on sale of real estate and other investments and income from discontinued operations
|
|
6,589
|
|
Gain on sale of real estate and other investments
|
|
1,446
|
|
Income from continuing operations
|
|
8,035
|
|
Income from discontinued operations
|
|
35,408
|
|
Net income
|
$
|
43,443
|
|
Three Months Ended January 31, 2015
|
(in thousands)
|
|
Multifamily
|
Healthcare
|
Industrial
|
All Other
|
Total
|
|
Real estate revenue
|
$
|
30,256
|
$
|
17,491
|
$
|
1,741
|
$
|
2,488
|
$
|
51,976
|
|
Real estate expenses
|
|
13,318
|
|
4,260
|
|
501
|
|
1,039
|
|
19,118
|
|
Net operating income
|
$
|
16,938
|
$
|
13,231
|
$
|
1,240
|
$
|
1,449
|
|
32,858
|
|
TRS senior housing revenue, net of expenses
|
|
|
|
|
|
|
|
|
|
138
|
|
Depreciation/amortization
|
|
|
|
|
|
|
|
|
|
(12,837)
|
|
Administrative expenses
|
|
|
|
|
|
|
|
|
|
(2,754)
|
|
Other expenses
|
|
|
|
|
|
|
|
|
|
(488)
|
|
Impairment of real estate investments
|
|
|
|
|
|
|
|
|
|
(540)
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
(10,009)
|
|
Interest and other income
|
|
|
|
|
|
|
|
|
|
670
|
|
Income before gain on sale of real estate and other investments and income from discontinued operations
|
|
7,038
|
|
Gain on sale of real estate and other investments
|
|
951
|
|
Income from continuing operations
|
|
7,989
|
|
Income from discontinued operations
|
|
1,162
|
|
Net income
|
$
|
9,151
|
|
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
|
|
RECONCILIATION OF NET OPERATING INCOME TO THE
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
for the nine months ended January 31, 2016 and 2015
|
|
|
Nine Months Ended January 31, 2016
|
(in thousands)
|
|
Multifamily
|
Healthcare
|
Industrial
|
All Other
|
Total
|
|
Real estate revenue
|
$
|
96,782
|
$
|
50,435
|
$
|
4,913
|
$
|
3,862
|
$
|
155,992
|
|
Real estate expenses
|
|
44,602
|
|
12,202
|
|
1,138
|
|
826
|
|
58,768
|
|
Net operating income
|
$
|
52,180
|
$
|
38,233
|
$
|
3,775
|
$
|
3,036
|
|
97,224
|
|
TRS senior housing revenue, net of expenses
|
|
|
|
|
|
|
|
|
|
513
|
|
Depreciation/amortization
|
|
|
|
|
|
|
|
|
|
(42,992)
|
|
Administrative expenses
|
|
|
|
|
|
|
|
|
|
(8,316)
|
|
Other expenses
|
|
|
|
|
|
|
|
|
|
(1,714)
|
|
Impairment of real estate investments
|
|
|
|
|
|
|
|
|
|
(3,320)
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
(29,867)
|
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
(106)
|
|
Interest and other income
|
|
|
|
|
|
|
|
|
|
1,973
|
|
Income before gain on sale of real estate and other investments and income from discontinued operations
|
|
13,395
|
|
Gain on sale of real estate and other investments
|
|
1,271
|
|
Income from continuing operations
|
|
14,666
|
|
Income from discontinued operations
|
|
50,181
|
|
Net income
|
$
|
64,847
|
|
Nine Months Ended January 31, 2015
|
(in thousands)
|
|
Multifamily
|
Healthcare
|
Industrial
|
All Other
|
Total
|
|
Real estate revenue
|
$
|
87,576
|
$
|
50,024
|
$
|
4,904
|
$
|
8,239
|
$
|
150,743
|
|
Real estate expenses
|
|
37,700
|
|
12,726
|
|
1,223
|
|
3,485
|
|
55,134
|
|
Net operating income
|
$
|
49,876
|
$
|
37,298
|
$
|
3,681
|
$
|
4,754
|
|
95,609
|
|
TRS senior housing revenue, net of expenses
|
|
|
|
|
|
|
|
|
|
356
|
|
Depreciation/amortization
|
|
|
|
|
|
|
|
|
|
(38,347)
|
|
Administrative expenses
|
|
|
|
|
|
|
|
|
|
(9,308)
|
|
Other expenses
|
|
|
|
|
|
|
|
|
|
(1,678)
|
|
Impairment of real estate investments
|
|
|
|
|
|
|
|
|
|
(4,663)
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
(29,710)
|
|
Interest and other income
|
|
|
|
|
|
|
|
|
|
2,052
|
|
Income before loss on sale of real estate and other investments and income from discontinued operations
|
|
14,311
|
|
Loss on sale of real estate and other investments
|
|
(811)
|
|
Income from continuing operations
|
|
13,500
|
|
Income from discontinued operations
|
|
1,322
|
|
Net income
|
$
|
14,822
|
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/investors-real-estate-trust-announces-financial-and-operating-results-for-the-quarter-and-year-to-date-ended-january-31-2016-300234319.html
SOURCE Investors Real Estate Trust