EX-99.2 3 iretexhibit992-12102013.htm CERTAIN SUPPLEMENTAL INFORMATION NOT INCLUDED IN THE EARNINGS RELEASE

Exhibit 99.2



Second Quarter Fiscal 2014
Supplemental Operating and Financial Data
for the Quarter Ended October 31, 2013

 
 
 
 
 
CONTACT:
Lindsey Knoop-Anderson
Director of Investor Relations
Direct Dial: 701-837-4738
E-Mail: landerson@iret.com
 
 
 
1400 31st Avenue SW, Suite 60
Minot, ND 58701
Tel: 701.837.4738
Fax: 701.838.7785
www.iret.com





Supplemental Financial and Operating Data
Table of Contents
October 31, 2013

 
Page
 
 
Company Background and Highlights                                                                                                                                                                                                          
2
 
 
Property Cost by Segment                                                                                                                                                                                                          
5
 
 
Key Financial Data
 
Condensed Consolidated Balance Sheets                                                                                                                                                                                                  
6
Condensed Consolidated Statements of Operations                                                                                                                                                                                                  
7
Funds From Operations                                                                                                                                                                                                  
8
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)                                                                                                                                                                                                  
9
 
 
Capital Analysis
 
Long-Term Mortgage Debt Analysis                                                                                                                                                                                                  
10
Long-Term Mortgage Debt Detail                                                                                                                                                                                                  
11-13
Capital Analysis                                                                                                                                                                                                  
14
 
 
Portfolio Analysis
 
Stabilized Properties Net Operating Income Summary                                                                                                                                                                                                  
15
Net Operating Income Detail                                                                                                                                                                                                  
16-19
Stabilized Properties and Overall Physical Occupancy Levels by Segment                                                                                                                                                                                                  
20
 
 
Tenant Analysis
 
Multi-Family Residential Summary                                                                                                                                                                                                  
21
Commercial Leasing Summary                                                                                                                                                                                                  
22-25
10 Largest Commercial Tenants - Based on Annualized Base Rent                                                                                                                                                                                                  
26
Commercial Lease Expirations                                                                                                                                                                                                  
27
 
 
Growth and Strategy
 
Acquisition Summary                                                                                                                                                                                                  
28
Development Summary                                                                                                                                                                                                  
29
 
 
Definitions                                                                                                                                                                                                        
30
1
 




Company Background and Highlights
Second Quarter Fiscal 2014
Investors Real Estate Trust is a self-administered, equity real estate investment trust (REIT) investing in a portfolio of income-producing properties located primarily in the upper Midwest.  IRET's portfolio is diversified among multi-family residential; commercial office; commercial healthcare, including senior housing; commercial industrial and commercial retail segments.
During the second quarter of fiscal year 2014, the Company closed on its acquisitions of:
·
a 24-unit multi-family residential property and a 98,174-square foot senior housing property (with an associated parcel of unimproved land) in Sartell, Minnesota, on approximately 21.6 acres of land, for a purchase price of $15.2 million, paid in cash;
·
a 96-unit multi-family residential property in Grand Forks, North Dakota, on approximately 6.0 acres of land, for a purchase price of $10.6 million, of which $10.4 million was paid in cash and the remainder in limited partnership units of the Operating Partnership valued at $200,000;
·
an approximately 58.6% interest in a joint venture entity currently constructing the RED 20 project in Minneapolis, Minnesota, a 130-unit multi-family residential property with approximately 10,000 square feet of commercial space; and
·
an approximately 9.2 acre parcel of vacant land in Jamestown, North Dakota, acquired for possible future development for a purchase price of approximately $700,000, paid in cash.
During the second quarter of fiscal year 2014, the Company placed in service the 108-unit Landing at Southgate multi-family residential property in Minot, North Dakota, owned by a joint venture entity in which the Company has an approximately 51% interest. During the second quarter of fiscal year 2014, the Company sold three commercial office properties and five commercial industrial properties for a total sales price of $47.4 million.
During the second quarter of fiscal year 2014, high occupancy levels in the Company's multi-family residential portfolio continued to allow the Company to implement selected rent increases, creating growth in revenue and NOI compared to the same quarter of the previous fiscal year. These gains are in large part due to the continued housing shortage in certain of the Company's markets impacted by the energy activity in the Bakken region. The Company expects to see continued favorable results in the multi-family segment in the remainder of fiscal year 2014, with phase 2 of the Company's Cypress Court project in St. Cloud, Minnesota and phase 2 of the Company's River Ridge project in Bismarck, North Dakota scheduled for completion and leasing in the third quarter of fiscal year 2014. Phase 1 of the Cypress Court project, phase 1 of the River Ridge project, and the Landing at Southgate in Minot, North Dakota were completed in the second quarter of fiscal year 2014. However, the Company's ability to maintain occupancy levels and selectively raise rents remains dependent on continued economic recovery and employment and wage growth. The Company also continues to observe considerable multi-family residential development activity in the Company's markets, and as this new construction is completed and leased, IRET will experience increased competition for tenants.
The Company's commercial office segment, mostly concentrated in Minnesota, is still pressured by a number of adverse macro conditions, including weak job and wage growth. Even though overall employment levels in the office sector are slightly above pre-recession levels in most of our markets, businesses, in a continued focus on efficiency and costs, appear to be maintaining their goal of increasing the density of their work spaces by placing more employees in less total square footage and downsizing upon lease renewals, as they have not yet reached the point of having to lease more space to accommodate their growth. As a result, while the rate of vacant commercial office absorption in IRET's markets is generally positive, absorption still remains below GDP growth.  Even though the Company has experienced some modest growth in occupancy levels during the quarter, we continue to expect a slow and uneven recovery in the office segment.
Absorption of retail space in the Company's markets remains modest, and the Company has seen little new retail development in its markets. The Company's markets generally experienced healthy absorption of industrial space during the second quarter of fiscal year 2014, although office showroom space continued to lag. Industrial rents do not yet appear to be rising to reflect continuing space absorption, but tenant concessions appear to be dissipating.
The Company's healthcare segment consists of medical office properties and senior housing facilities. The medical office sector remains stable with modest increases in both occupancy and rents. However, the difficulties surrounding the implementation of the Affordable Care Act may cause some medical office users to delay making decisions on their space needs. Likewise, senior housing assets continue to benefit from a recovery of the housing market, as occupancy trends are closely aligned with the ability of seniors to sell their homes in anticipation of moving to a senior care facility.
The Company plans to continue in the remainder of fiscal year 2014 its selective disposition of assets in non-core markets, particularly industrial and retail segment assets, and intends to use the proceeds from these dispositions to continue deleveraging its portfolio and for developing and acquiring high-quality assets in its multi-family and healthcare segments. During the second quarter of fiscal year 2014, the Company sold three commercial office properties and five industrial properties for a total sales price of approximately $47.4 million.
In the second quarter of fiscal year 2014, IRET paid its 170th consecutive quarterly distribution. The $0.1300 per share/unit distribution was payable on October 1, 2013. Subsequent to the end of the second quarter of fiscal year 2014, on December 5, 2013, the Company's Board of Trustees declared a regular quarterly distribution of $0.1300 per share and unit on the Company's common shares of beneficial interest and the limited partnership units of IRET Properties, payable January 15, 2014 to common shareholders and unitholders of record on January 2, 2014. Also on December 5, 2013, the Company's Board of Trustees' declared a distribution of $0.5156 per share on the Company's Series A preferred shares of beneficial interest, payable December 31, 2013 to Series A preferred shareholders of record on December 16, 2013, and declared a distribution of $0.4968 per share on the Company's Series B preferred shares of beneficial interest, payable December 31, 2013 to Series B preferred shareholders of record on December 16, 2013.
As of October 31, 2013, IRET owns a diversified portfolio of 262 properties consisting of 93 multi-family residential properties, 65 commercial office properties, 66 commercial healthcare properties (including senior housing), 10 commercial industrial properties and 28 commercial retail properties.  IRET's common shares are publicly traded on the New York Stock Exchange (NYSE: IRET).





Company Snapshot
(as of October 31, 2013)
Company Headquarters                                                                                              
Minot, North Dakota
Fiscal Year-End                                                                                              
April 30
Reportable Segments                                                                                              
Multi-Family Residential, Commercial Office, Commercial Healthcare, Commercial Industrial, Commercial Retail
Total Properties                                                                                              
262
Total Square Feet
 
(commercial properties)                                                                                          
10.8 million
Total Units
 
(multi-family residential properties)                                                                                          
10,705
Common Shares Outstanding (thousands)                                                                                              
105,554
Limited Partnership Units Outstanding (thousands)
21,836
Common Share Distribution - Quarter/Annualized
$0.13/$0.52
Dividend Yield                                                                                              
6.0%
Total Capitalization (see p.14 for detail)                                                                                              
$2.3 billion


Investor Information
(as of December 10, 2013)
Board of Trustees
Jeffrey L. Miller                                                            
Trustee and Chairman
John D. Stewart                                                            
Trustee, Vice Chairman, and Chair of Nominating and Governance Committee
Jeffrey K. Woodbury                                                            
Trustee, Chair of Audit Committee
Linda J. Hall                                                            
Trustee, Chair of Compensation Committee
Terrance P. Maxwell                                                            
Trustee
Stephen L. Stenehjem                                                            
Trustee
Timothy P. Mihalick                                                            
Trustee, President and Chief Executive Officer
Thomas A. Wentz, Jr.                                                            
Trustee, Executive Vice President and Chief Operating Officer


Management
Timothy P. Mihalick                                                            
President and Chief Executive Officer; Trustee
Thomas A. Wentz, Jr                                                            
Executive Vice President and Chief Operating Officer; Trustee
Diane K. Bryantt                                                            
Executive Vice President and Chief Financial Officer
Michael A. Bosh                                                            
Executive Vice President, General Counsel and Assistant Secretary
Mark Reiling                                                            
Executive Vice President of Asset Management
Charles A. Greenberg                                                            
Senior Vice President, Commercial Asset Management
Ted E. Holmes                                                            
Senior Vice President, Finance
Andrew Martin                                                            
Senior Vice President, Residential Property Management


Corporate Headquarters:
1400 31st Avenue SW, Suite 60
Post Office Box 1988
Minot, North Dakota 58702-1988
Trading Symbol:  IRET
Stock Exchange Listing:  NYSE
Investor Relations:
Lindsey Knoop-Anderson
landerson@iret.com





Common Share Data (NYSE: IRET)*
 
2nd Quarter
Fiscal Year 2014
1st Quarter
Fiscal Year 2014
4th Quarter
Fiscal Year 2013
3rd Quarter
Fiscal Year 2013
2nd Quarter
Fiscal Year 2013
High Closing Price
$
9.03
$
9.77
$
10.00
$
9.40
$
8.49
Low Closing Price
$
8.05
$
8.09
$
9.20
$
7.73
$
7.92
Average Closing Price
$
8.41
$
9.03
$
9.59
$
8.70
$
8.25
Closing Price at end of quarter
$
8.62
$
8.64
$
9.73
$
9.36
$
8.42
Common Share Distributions—annualized
$
0.520
$
0.520
$
0.520
$
0.520
$
0.520
Closing Dividend Yield - annualized
 
6.0%
 
6.0%
 
5.3%
 
5.6%
 
6.2%
Closing common shares outstanding (thousands)
 
105,554
 
104,226
 
101,488
 
94,386
 
93,161
Closing limited partnership units outstanding (thousands)
 
21,836
 
21,849
 
21,635
 
21,489
 
21,336
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)
$
1,098,102
$
1,089,288
$
1,197,987
$
1,084,590
$
964,065

*Effective December 18, 2012, IRET transferred the listing of its common shares and Series A preferred shares to the New York Stock Exchange from the NASDAQ Global Select Market.

Certain statements in these supplemental disclosures are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from projected results. Such risks, uncertainties and other factors include, but are not limited to: intentions and expectations regarding future distributions on our common shares and units, fluctuations in interest rates, the effect of government regulation, the availability of capital, changes in general and local economic and real estate market conditions, competition, our ability to attract and retain skilled personnel, and those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our 2013 Form 10-K. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Second Quarter Fiscal 2014 Acquisition
 
Southpoint (exterior)
2151 36th Ave South
 Grand Forks, ND 58201
 
 
 
 
Southpoint (interior)
2151 36th Ave South
 Grand Forks, ND 58201
Southpoint (interior)
2151 36th Ave South
 Grand Forks, ND 58201
 





Property Cost by Segment – Second Quarter Fiscal 2014
With investments in the multi-family residential and commercial office, commercial healthcare, commercial industrial and commercial retail segments, IRET's diversified portfolio helps to provide stability during market fluctuations in returns from specific property types.







INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)

 
10/31/2013
7/31/2013
4/30/2013
1/31/2013
10/31/2012
ASSETS
 
 
 
 
 
 
 
 
 
 
Real estate investments
 
 
 
 
 
 
 
 
 
 
Property owned
$
2,032,747
$
2,016,523
$
2,032,970
$
2,007,832
$
1,983,978
Less accumulated depreciation
 
(431,318)
 
(429,376)
 
(420,421)
 
(408,400)
 
(394,256)
 
 
1,601,429
 
1,587,147
 
1,612,549
 
1,599,432
 
1,589,722
Development in progress
 
90,052
 
77,396
 
46,782
 
20,127
 
23,218
Unimproved land
 
21,619
 
20,774
 
21,503
 
18,879
 
11,670
Total real estate investments
 
1,713,100
 
1,685,317
 
1,680,834
 
1,638,438
 
1,624,610
Real estate held for sale
 
2,620
 
3,969
 
0
 
733
 
1,844
Cash and cash equivalents
 
68,727
 
93,193
 
94,133
 
62,302
 
84,258
Other investments
 
642
 
640
 
639
 
638
 
637
Receivable arising from straight-lining of rents, net of allowance
 
26,336
 
26,671
 
26,354
 
25,471
 
24,895
Accounts receivable, net of allowance
 
6,541
 
8,370
 
4,534
 
3,560
 
2,854
Real estate deposits
 
230
 
489
 
196
 
165
 
55
Prepaid and other assets
 
7,605
 
4,741
 
5,124
 
5,545
 
2,101
Intangible assets, net of accumulated amortization
 
35,625
 
36,989
 
40,457
 
41,009
 
42,281
Tax, insurance, and other escrow
 
11,864
 
12,344
 
12,569
 
13,306
 
12,177
Property and equipment, net of accumulated depreciation
 
1,191
 
1,217
 
1,221
 
1,288
 
1,351
Goodwill
 
1,100
 
1,100
 
1,106
 
1,106
 
1,110
Deferred charges and leasing costs, net of accumulated amortization
 
20,666
 
21,602
 
22,387
 
22,513
 
21,164
TOTAL ASSETS
$
1,896,247
$
1,896,642
$
1,889,554
$
1,816,074
$
1,819,337
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
57,453
$
52,563
$
50,797
$
44,540
$
38,762
Revolving line of credit
 
10,000
 
10,000
 
10,000
 
10,000
 
10,000
Mortgages payable
 
1,021,170
 
1,030,407
 
1,049,206
 
1,041,623
 
1,045,197
Other
 
31,689
 
32,366
 
18,170
 
21,632
 
32,889
TOTAL LIABILITIES
 
1,120,312
 
1,125,336
 
1,128,173
 
1,117,795
 
1,126,848
 
 
 
 
 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
 
 
 
 
 
Investors Real Estate Trust shareholders' equity
 
 
 
 
 
 
 
 
 
 
Series A Preferred Shares of Beneficial Interest
 
27,317
 
27,317
 
27,317
 
27,317
 
27,317
Series B Preferred Shares of Beneficial Interest
 
111,357
 
111,357
 
111,357
 
111,357
 
111,357
Common Shares of Beneficial Interest
 
818,516
 
807,928
 
784,454
 
721,742
 
711,880
Accumulated distributions in excess of net income
 
(331,116)
 
(323,406)
 
(310,341)
 
(305,145)
 
(295,396)
Total Investors Real Estate Trust shareholders' equity
 
626,074
 
623,196
 
612,787
 
555,271
 
555,158
Noncontrolling interests – Operating Partnership
 
120,678
 
122,334
 
122,539
 
121,940
 
122,357
Noncontrolling interests – consolidated real estate entities
 
29,183
 
25,776
 
26,055
 
21,068
 
14,974
Total equity
 
775,935
 
771,306
 
761,381
 
698,279
 
692,489
TOTAL LIABILITIES AND EQUITY
$
1,896,247
$
1,896,642
$
1,889,554
$
1,816,074
$
1,819,337






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)

 
Six Months Ended
Three Months Ended
OPERATING RESULTS
10/31/2013
10/31/2012
10/31/2013
7/31/2013
4/30/2013
1/31/2013
10/31/2012
Real estate revenue
$
131,697
$
121,603
$
66,190
$
65,507
$
64,594
$
63,487
$
62,258
Real estate expenses
 
53,339
 
48,114
 
26,515
 
26,824
 
26,175
 
25,562
 
24,049
Gain on involuntary conversion
 
966
 
2,263
 
0
 
966
 
2,821
 
0
 
2,263
Net operating income
 
79,324
 
75,752
 
39,675
 
39,649
 
41,240
 
37,925
 
40,472
Depreciation/amortization
 
(36,352)
 
(31,201)
 
(17,257)
 
(19,095)
 
(15,922)
 
(15,588)
 
(15,758)
Administrative expenses, advisory and trustee services
 
(5,280)
 
(4,157)
 
(2,527)
 
(2,753)
 
(2,092)
 
(2,245)
 
(2,061)
Other expenses
 
(1,357)
 
(1,032)
 
(678)
 
(679)
 
(677)
 
(464)
 
(513)
Impairment of real estate investments
 
(265)
 
0
 
0
 
(265)
 
0
 
0
 
0
Interest expense
 
(29,500)
 
(31,544)
 
(14,848)
 
(14,652)
 
(14,680)
 
(15,282)
 
(15,727)
Interest and other income
 
862
 
345
 
652
 
210
 
148
 
255
 
203
Income from continuing operations
 
7,432
 
8,163
 
5,017
 
2,415
 
8,017
 
4,601
 
6,616
Income from discontinued operations
 
6,081
 
3,843
 
5,280
 
801
 
3,796
 
1,552
 
3,394
Net income
$
13,513
$
12,006
$
10,297
$
3,216
$
11,813
$
6,153
$
10,010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interest – Operating Partnership
 
(1,276)
 
(1,541)
 
(1,226)
 
(50)
 
(1,536)
 
(556)
 
(1,290)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
(372)
 
(274)
 
(284)
 
(88)
 
(262)
 
(273)
 
(208)
Net income attributable to Investors Real Estate Trust
 
11,865
 
10,191
 
8,787
 
3,078
 
10,015
 
5,324
 
8,512
Dividends to preferred shareholders
 
(5,757)
 
(3,471)
 
(2,878)
 
(2,879)
 
(2,879)
 
(2,879)
 
(2,878)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
$
6,108
$
6,720
$
5,909
$
199
$
7,136
$
2,445
$
5,634
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share from continuing operations – Investors Real Estate Trust – basic & diluted
$
.01
$
.04
$
.02
$
(.01)
$
.04
$
.01
$
.03
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic & diluted
 
.05
 
.03
 
.04
 
.01
 
.03
 
.02
 
.03
Net income per common share – basic & diluted
$
.06
$
.07
$
.06
$
.00
$
.07
$
.03
$
.06
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
40.5%
 
39.6%
 
40.1%
 
40.9%
 
40.5%
 
40.3%
 
38.6%
Depreciation/amortization
 
27.6%
 
25.7%
 
26.1%
 
29.1%
 
24.6%
 
24.6%
 
25.3%
General and administrative
 
4.0%
 
3.4%
 
3.8%
 
4.2%
 
3.2%
 
3.5%
 
3.3%
Interest
 
22.4%
 
25.9%
 
22.4%
 
22.4%
 
22.7%
 
24.1%
 
25.3%
Income from discontinued operations
 
4.6%
 
3.2%
 
8.0%
 
1.2%
 
5.9%
 
2.4%
 
5.5%
Net income
 
10.3%
 
9.9%
 
15.6%
 
4.9%
 
18.3%
 
9.7%
 
16.1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA(1)/Interest expense
 
2.30x
 
2.19x
 
2.37x
 
2.23x
 
2.41x
 
2.34x
 
2.28x
EBITDA(1)/Interest expense plus preferred distributions
 
1.94x
 
1.98x
 
2.00x
 
1.88x
 
2.03x
 
1.98x
 
1.95x

(1) See Definitions on page 30.  EBITDA is a non-GAAP measure; see page 9 for a reconciliation of EBITDA to net income.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FUNDS FROM OPERATIONS (unaudited)
(in thousands, except per share and unit data)

 
Six Months Ended
Three Months Ended
 
10/31/2013
10/31/2012
10/31/2013
7/31/2013
4/30/2013
1/31/2013
10/31/2012
Funds From Operations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Investors Real Estate Trust
$
11,865
$
10,191
$
8,787
$
3,078
$
10,015
$
5,324
$
8,512
Less dividends to preferred shareholders
 
(5,757)
 
(3,471)
 
(2,878)
 
(2,879)
 
(2,879)
 
(2,879)
 
(2,878)
Net income available to common shareholders
 
6,108
 
6,720
 
5,909
 
199
 
7,136
 
2,445
 
5,634
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests – Operating Partnership
 
1,276
 
1,541
 
1,226
 
50
 
1,536
 
556
 
1,290
Depreciation and amortization
 
37,045
 
32,707
 
17,490
 
19,555
 
16,572
 
16,263
 
16,520
Impairment of real estate investments
 
1,860
 
0
 
57
 
1,803
 
305
 
0
 
0
Gain on depreciable property sales
$
(6,641)
$
(2,680)
 
(4,698)
 
(1,943)
 
(3,433)
 
(772)
 
(2,753)
Funds from operations applicable to common shares and Units
 
39,648
 
38,288
$
19,984
$
19,664
$
22,116
$
18,492
$
20,691
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share and unit - basic and diluted
$
0.32
$
0.34
$
0.16
$
0.16
$
0.19
$
0.16
$
0.18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted funds from operations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds from operations applicable to common shares and Units
$
39,648
$
38,288
$
19,984
$
19,664
$
22,116
$
18,492
$
20,691
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant improvements at stabilized properties
 
(4,184)
 
(3,591)
 
(1,841)
 
(2,343)
 
(3,092)
 
(3,156)
 
(1,385)
Leasing costs at stabilized properties
 
(1,651)
 
(2,286)
 
(735)
 
(916)
 
(610)
 
(2,231)
 
(951)
Recurring capital expenditures(1)
 
(2,765)
 
(3,689)
 
(1,364)
 
(1,401)
 
(687)
 
(1,614)
 
(1,893)
Straight-line rents
 
(1,318)
 
(1,632)
 
(666)
 
(652)
 
(883)
 
(576)
 
(768)
Non-real estate depreciation
 
167
 
219
 
82
 
85
 
82
 
80
 
83
Gain on involuntary conversion
 
(966)
 
(2,263)
 
0
 
(966)
 
(2,821)
 
0
 
(2,263)
Adjusted funds from operations applicable to common shares and Units
$
28,931
$
25,046
$
15,460
$
13,471
$
14,105
$
10,995
$
13,514
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AFFO per share and unit - basic and diluted
$
0.23
$
0.22
$
0.12
$
0.11
$
0.12
$
0.10
$
0.12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares and units
 
125,440
 
112,458
 
126,713
 
124,179
 
118,192
 
115,207
 
113,690

(1)
See Definitions on page 30.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) (unaudited)
(in thousands)

 
Six Months Ended
Three Months Ended
 
10/31/2013
10/31/2012
10/31/2013
07/31/2013
04/30/2013
01/31/2013
10/31/2012
EBITDA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Investors Real Estate Trust
$
11,865
$
10,191
$
8,787
$
3,078
$
10,015
$
5,324
$
8,512
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests – Operating Partnership
 
1,276
 
1,541
 
1,226
 
50
 
1,536
 
556
 
1,290
Income before noncontrolling interests – Operating Partnership
 
13,141
 
11,732
 
10,013
 
3,128
 
11,551
 
5,880
 
9,802
Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
29,787
 
32,886
 
14,904
 
14,883
 
15,069
 
15,731
 
16,369
Depreciation/amortization related to real estate investments
 
35,268
 
31,210
 
16,675
 
18,593
 
15,759
 
15,506
 
15,757
Amortization related to non-real estate investments
 
1,832
 
1,632
 
839
 
993
 
848
 
794
 
799
Amortization related to real estate revenues(2)
 
113
 
83
 
59
 
54
 
49
 
43
 
46
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
(773)
 
(106)
 
(585)
 
(188)
 
(46)
 
(70)
 
(88)
Gain on sale of real estate, land and other investments
 
(6,641)
 
(2,680)
 
(4,698)
 
(1,943)
 
(3,433)
 
(772)
 
(2,753)
Gain on involuntary conversion
 
(966)
 
(2,263)
 
0
 
(966)
 
(2,821)
 
0
 
(2,263)
EBITDA
$
71,761
$
72,494
$
37,207
$
34,554
$
36,976
$
37,112
$
37,669
(1) Definitions on page 30.
(2) Included in real estate revenue in the Statement of Operations.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* ANALYSIS
(in thousands)
Debt Maturity Schedule
Annual Expirations
Total Mortgage Debt*
 
 

 
Future Maturities of Mortgage Debt
 
Fiscal Year
Fixed Debt
Variable Debt
Total Debt
Weighted
Average(1)
% of
Total Debt
2014
$
12,898
$
2,834
$
15,732
4.65%
1.5%
2015
 
67,306
 
0
 
67,306
5.56%
6.6%
2016
 
74,092
 
0
 
74,092
5.51%
7.3%
2017
 
174,727
 
0
 
174,727
6.12%
17.1%
2018
 
77,043
 
0
 
77,043
5.03%
7.5%
2019
 
92,645
 
5,523
 
98,168
5.87%
9.6%
2020
 
121,147
 
0
 
121,147
5.91%
11.9%
2021
 
123,831
 
0
 
123,831
5.35%
12.1%
2022
 
131,792
 
0
 
131,792
5.62%
12.9%
2023
 
38,294
 
0
 
38,294
4.25%
3.8%
Thereafter
 
99,038
 
0
 
99,038
4.53%
9.7%
Total maturities
$
1,012,813
$
8,357
$
1,021,170
5.50%
100.0%
(1)
Weighted average interest rate of debt that matures in fiscal year.
 
10/31/2013
7/31/2013
4/30/2013
1/31/2013
10/31/2012
Balances Outstanding
 
 
 
 
 
 
 
 
 
 
Mortgage
 
 
 
 
 
 
 
 
 
 
Fixed rate
$
1,012,813
$
1,014,632
$
1,022,990
$
1,004,567
$
1,021,661
Variable rate
 
8,357
 
15,775
 
26,216
 
37,056
 
23,536
Mortgage total
$
1,021,170
$
1,030,407
$
1,049,206
$
1,041,623
$
1,045,197
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Interest Rates
 
 
 
 
 
 
 
 
 
 
Secured
 
5.50%
 
5.54%
 
5.55%
 
5.65%
 
5.66%





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF OCTOBER 31, 2013
(in thousands)
Property
Maturity Date
Fiscal 2014
Fiscal 2015
Fiscal 2016
Fiscal 2017
Thereafter
Total(1)
 
 
 
 
 
 
 
 
Multi-Family Residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Monticello Village - Monticello, MN
3/1/2014
 
$
2,834
$
0
$
0
$
0
$
0
$
2,834
 Evergreen II - Isanti, MN
11/1/2014
 
 
0
 
2,128
 
0
 
0
 
0
 
2,128
 Campus Center - St Cloud, MN
6/1/2015
 
 
0
 
0
 
1,244
 
0
 
0
 
1,244
 Campus Knoll - St Cloud, MN
6/1/2015
 
 
0
 
0
 
829
 
0
 
0
 
829
 Landmark - Grand Forks, ND
8/24/2015
 
 
0
 
0
 
1,670
 
0
 
0
 
1,670
 Regency Park Estates - St Cloud, MN
1/1/2016
 
 
0
 
0
 
6,898
 
0
 
0
 
6,898
 Pebble Springs – Bismarck, ND
7/1/2016
 
 
0
 
0
 
0
 
783
 
0
 
783
 
 Southview – Minot, ND
7/1/2016
 
 
0
 
0
 
0
 
1,070
 
0
 
1,070
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
374,227
 
374,227
Sub-Total Multi-Family Residential
 
 
$
2,834
$
2,128
$
10,641
$
1,853
$
374,227
$
391,683
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Office
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Whitewater Plaza - Minnetonka, MN
3/1/2014
 
$
2,499
$
0
$
0
$
0
$
0
$
2,499
 Whitewater Plaza - Minnetonka, MN
3/1/2014
 
 
1,296
 
0
 
0
 
0
 
0
 
1,296
 Viromed - Eden Prairie, MN
4/1/2014
 
 
165
 
0
 
0
 
0
 
0
 
165
 Wirth Corporate Center - Golden Valley, MN
4/1/2014
 
 
3,538
 
0
 
0
 
0
 
0
 
3,538
 TCA Building - Eagan, MN
5/1/2014
 
 
0
 
6,843
 
0
 
0
 
0
 
6,843
 Burnsville Bluffs II - Burnsville, MN
8/8/2014
 
 
0
 
1,699
 
0
 
0
 
0
 
1,699
 Plymouth IV - Plymouth, MN
8/8/2014
 
 
0
 
3,134
 
0
 
0
 
0
 
3,134
 Plymouth V - Plymouth, MN
8/8/2014
 
 
0
 
3,663
 
0
 
0
 
0
 
3,663
 Plaza VII - Boise, ID
9/1/2014
 
 
0
 
962
 
0
 
0
 
0
 
962
 Crosstown Centre - Eden Prairie, MN
12/1/2014
 
 
0
 
3,240
 
0
 
0
 
0
 
3,240
 Crosstown Centre - Eden Prairie, MN
12/1/2014
 
 
0
 
9,722
 
0
 
0
 
0
 
9,722
 Northgate I - Maple Grove, MN
12/10/2014
 
 
0
 
5,071
 
0
 
0
 
0
 
5,071
 Plymouth I - Plymouth, MN
12/10/2014
 
 
0
 
1,137
 
0
 
0
 
0
 
1,137
 Plymouth II - Plymouth, MN
12/10/2014
 
 
0
 
1,137
 
0
 
0
 
0
 
1,137
 Plymouth III - Plymouth, MN
12/10/2014
 
 
0
 
1,399
 
0
 
0
 
0
 
1,399
 Benton Business Park - Sauk Rapids, MN
1/1/2015
 
 
0
 
526
 
0
 
0
 
0
 
526
 West River Business Park - Waite Park, MN
1/1/2015
 
 
0
 
526
 
0
 
0
 
0
 
526
 Highlands Ranch I - Highlands Ranch, CO
3/1/2015
 
 
0
 
8,108
 
0
 
0
 
0
 
8,108
 Highlands Ranch II - Highlands Ranch, CO
3/1/2015
 
 
0
 
7,752
 
0
 
0
 
0
 
7,752
 US Bank Financial Center - Bloomington, MN
7/1/2015
 
 
0
 
0
 
13,267
 
0
 
0
 
13,267
 Rapid City 900 Concourse Drive - Rapid City, SD
8/1/2015
 
 
0
 
0
 
938
 
0
 
0
 
938
 Westgate I - Boise, ID
8/1/2015
 
 
0
 
0
 
1,177
 
0
 
0
 
1,177
 Westgate II - Boise, ID
8/1/2015
 
 
0
 
0
 
2,881
 
0
 
0
 
2,881
 Brook Valley I - LaVista, NE
1/1/2016
 
 
0
 
0
 
1,279
 
0
 
0
 
1,279
 Spring Valley IV - Omaha, NE
1/1/2016
 
 
0
 
0
 
761
 
0
 
0
 
761
 Spring Valley V - Omaha, NE
1/1/2016
 
 
0
 
0
 
838
 
0
 
0
 
838
 Spring Valley X - Omaha, NE
1/1/2016
 
 
0
 
0
 
777
 
0
 
0
 
777
 Spring Valley XI - Omaha, NE
1/1/2016
 
 
0
 
0
 
761
 
0
 
0
 
761
 American Corporate Center – Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
0
 
8,853
 
0
 
8,853
 Mendota Office Center I – Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
0
 
3,812
 
0
 
3,812
 Mendota Office Center II - Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
0
 
5,632
 
0
 
5,632
 Mendota Office Center III - Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
0
 
3,871
 
0
 
3,871




 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF OCTOBER 31, 2013 (continued)
(in thousands)
Property
Maturity Date
Fiscal 2014
Fiscal 2015
Fiscal 2016
Fiscal 2017
Thereafter
Total(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Office - continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Mendota Office Center IV - Mendota Heights, MN
9/1/2016
 
$
0
$
0
$
0
$
4,602
$
0
$
4,602
 Corporate Center West – Omaha, NE
10/6/2016
 
 
0
 
0
 
0
 
17,315
 
0
 
17,315
 Farnam Executive Center – Omaha, NE
10/6/2016
 
 
0
 
0
 
0
 
12,160
 
0
 
12,160
 Flagship – Eden Prarie, MN
10/6/2016
 
 
0
 
0
 
0
 
21,565
 
0
 
21,565
 Gateway Corporate Center – Woodbury, MN
10/6/2016
 
 
0
 
0
 
0
 
8,700
 
0
 
8,700
 Miracle Hills One – Omaha, NE
10/6/2016
 
 
0
 
0
 
0
 
8,895
 
0
 
8,895
 Pacific Hills – Omaha, NE
10/6/2016
 
 
0
 
0
 
0
 
16,770
 
0
 
16,770
 Riverport – Maryland Heights, MO
10/6/2016
 
 
0
 
0
 
0
 
19,690
 
0
 
19,690
 Timberlands – Leawood, KS
10/6/2016
 
 
0
 
0
 
0
 
13,155
 
0
 
13,155
 Woodlands Plaza IV – Maryland Heights, MO
10/6/2016
 
 
0
 
0
 
0
 
4,360
 
0
 
4,360
 2030 Cliff Road – Eagan, MN
1/11/2017
 
 
0
 
0
 
0
 
952
 
0
 
952
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
99,634
 
99,634
Sub-Total Commercial Office
 
 
$
7,498
$
54,919
$
22,679
$
150,332
$
99,634
$
335,062
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Healthcare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 High Pointe Health Campus - Lake Elmo, MN
4/1/2014
 
$
5,400
$
0
$
0
$
0
$
0
$
5,400
 Edgewood Vista - Billings, MT
12/10/2014
 
 
0
 
1,873
 
0
 
0
 
0
 
1,873
 Edgewood Vista - East Grand Forks, MN
12/10/2014
 
 
0
 
2,852
 
0
 
0
 
0
 
2,852
 Edgewood Vista - Sioux Falls, SD
12/10/2014
 
 
0
 
1,073
 
0
 
0
 
0
 
1,073
 Garden View Medical - St Paul, MN
8/1/2015
 
 
0
 
0
 
1,058
 
0
 
0
 
1,058
 Edina 6363 France Medical - St Paul, MN
8/6/2015
 
 
0
 
0
 
9,958
 
0
 
0
 
9,958
 2800 Medical Building - Minneapolis, MN
9/1/2015
 
 
0
 
0
 
5,302
 
0
 
0
 
5,302
 2828 Medical Building - Minneapolis, MN
9/1/2015
 
 
0
 
0
 
8,299
 
0
 
0
 
8,299
 Edina 6405 France Medical - Edina, MN
9/1/2015
 
 
0
 
0
 
8,630
 
0
 
0
 
8,630
 Ritchie Medical Plaza - St Paul, MN
9/1/2015
 
 
0
 
0
 
6,347
 
0
 
0
 
6,347
 Airport Medical – Bloomington, MN
6/1/2016
 
 
0
 
0
 
0
 
929
 
0
 
929
 Park Dental – Brooklyn Center, MN
6/1/2016
 
 
0
 
0
 
0
 
533
 
0
 
533
 Edgewood Vista – Fargo, ND
10/25/2016
 
 
0
 
0
 
0
 
12,653
 
0
 
12,653
 Sartell 2000 23rd St S – Sartell, MN
12/1/2016
 
 
0
 
0
 
0
 
2,864
 
0
 
2,864
 Billings 2300 Grant Road – Billings, MT
12/31/2016
 
 
0
 
0
 
0
 
1,549
 
0
 
1,549
 Missoula 3050 Great Northern Ave – Missoula, MT
12/31/2016
 
 
0
 
0
 
0
 
1,622
 
0
 
1,622
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
176,227
 
176,227
Sub-Total Commercial Healthcare
 
 
$
5,400
$
5,798
$
39,594
$
20,150
$
176,227
$
247,169
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Stone Container - Fargo, ND
12/1/2015
 
 
0
 
0
 
525
 
0
 
0
 
525
 Stone Container - Fargo, ND
12/1/2015
 
 
0
 
0
 
653
 
0
 
0
 
653
 Minnetonka 13600 County Road 62 – Minnetonka, MN2
2/27/2017
 
 
0
 
0
 
0
 
2,392
 
0
 
2,392
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
12,956
 
12,956
Sub-Total Commercial Industrial
 
 
$
0
$
0
$
1,178
$
2,392
$
12,956
$
16,526






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF OCTOBER 31, 2013 (continued)
(in thousands)

Property
Maturity Date
Fiscal 2014
Fiscal 2015
Fiscal 2016
Fiscal 2017
Thereafter
Total(1)
Commercial Retail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Omaha Barnes & Noble - Omaha, NE
6/1/2014
 
 
0
 
2,344
 
0
 
0
 
0
 
2,344
 Jamestown Buffalo Mall - Jamestown, ND
9/1/2014
 
 
0
 
303
 
0
 
0
 
0
 
303
 Fargo Express Center - Fargo, ND
10/1/2014
 
 
0
 
911
 
0
 
0
 
0
 
911
 Lakeville Strip Center - Lakeville, MN
10/1/2014
 
 
0
 
903
 
0
 
0
 
0
 
903
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
26,269
 
26,269
Sub-Total Commercial Retail
 
 
$
0
$
4,461
$
0
$
0
$
26,269
$
30,730
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
$
15,732
$
67,306
$
74,092
$
174,727
$
689,313
$
1,021,170
* Mortgage debt does not include the Company's multi-bank line of credit or construction loans. As of October 31, 2013 the line of credit had a maturity date of August 12, 2014, and the Company had borrowings of $10.0 million outstanding under this line. Subsequent to the end of the second quarter of fiscal year 2014, the Company's Operating Partnership entered into an amended and restated loan agreement to renew this line of credit, which currently has a maturity date of December 1, 2016 and total lending commitments of $72.0 million. As of December 10, 2013, the Company had borrowings of $12.5 million outstanding under this renewed line of credit. Construction loans and other debt totaled $31.6 million as of October 31, 2013.
(1) Totals are principal balances as of October 31, 2013.
(2) Loan was paid off subsequent to October 31, 2013.








 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CAPITAL ANALYSIS
(in thousands, except per share and unit amounts)

 
Three Months Ended
 
10/31/2013
7/31/2013
4/30/2013
1/31/2013
10/31/2012
Equity Capitalization
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
 
105,554
 
104,226
 
101,488
 
94,386
 
93,161
Operating partnership (OP) units outstanding
 
21,836
 
21,849
 
21,635
 
21,489
 
21,336
Total common shares and OP units outstanding
 
127,390
 
126,075
 
123,123
 
115,875
 
114,497
Market price per common share (closing price at end of period)
$
8.62
$
8.64
$
9.73
$
9.36
$
8.42
Equity capitalization-common shares and OP units
$
1,098,102
$
1,089,288
$
1,197,987
$
1,084,590
$
964,065
Recorded book value of preferred shares
$
138,674
$
138,674
$
138,674
$
138,674
$
138,674
Total equity capitalization
$
1,236,776
$
1,227,962
$
1,336,661
$
1,223,264
$
1,102,739
 
 
 
 
 
 
 
 
 
 
 
Debt Capitalization
 
 
 
 
 
 
 
 
 
 
Total debt
$
1,062,788
$
1,072,696
$
1,077,282
$
1,073,152
$
1,087,972
Total capitalization
$
2,299,564
$
2,300,658
$
2,413,943
$
2,296,416
$
2,190,711
 
 
 
 
 
 
 
 
 
 
 
Total debt to total capitalization
 
0.46:1
 
0.47:1
 
0.45:1
 
0.47:1
 
0.50:1
 
 
 
 
 
 
 
 
 
 
 


 
Six Months Ended
Three Months Ended
 
10/31/2013
10/31/2012
10/31/2013
7/31/2013
4/30/2013
1/31/2013
10/31/2012
Earnings to fixed charges(1)
 
1.18
 
1.23x
 
1.25x
 
1.11x
 
1.48x
 
1.26x
 
1.38x
Earnings to combined fixed charges and preferred distributions(1)
 
1.00
 
1.11x
 
1.06x
 
0.94x
 
1.25x
 
1.07x
 
1.18x
Debt service coverage ratio(1)
 
1.59
 
1.52x
 
1.64x
 
1.54x
 
1.64x
 
1.63x
 
1.60x
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares and units outstanding at record date
 
126,629
 
113,516
 
126,629
 
123,976
 
116,338
 
115,284
 
113,516
Total common distribution paid
$
32,554
$
29,170
$
16,461
$
16,093
$
15,124
$
14,956
$
14,757
Common distribution per share and unit
$
.2600
$
.2600
$
.1300
$
.1300
$
.1300
$
.1300
$
.1300
Payout ratio (FFO per share and unit basis)(1)
 
81.3%
 
76.5%
 
81.3%
 
81.3%
 
68.4%
 
81.3%
 
72.2%
Payout ratio (AFFO per share and unit basis)(1)
 
113.0%
 
118.2%
 
118.2%
 
118.2%
 
108.3%
 
130.0%
 
108.3%

(1) See Definitions on page 30.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
STABILIZED PROPERTIES NET OPERATING INCOME SUMMARY
(in thousands)

 
Stabilized Properties(1)
Stabilized Properties(1)
 
Three Months Ended
October 31,
Six Months Ended
October 31,
Segment
2013
2012
%
Change
2013
2012
%
Change
Multi-Family Residential
$
10,725
$
11,305
(5.1%)
$
21,012
$
21,653
(3.0%)
Commercial Office
 
9,842
 
9,619
2.3%
 
19,403
 
18,848
2.9%
Commercial Healthcare
 
11,697
 
11,082
5.6%
 
23,252
 
22,075
5.3%
Commercial Industrial
 
1,094
 
1,058
3.4%
 
2,205
 
1,943
13.5%
Commercial Retail
 
2,333
 
2,151
8.5%
 
4,300
 
4,197
2.5%
 
$
35,691
$
35,215
1.4%
$
70,172
$
68,716
2.1%
(1) See list of properties excluded from stabilized properties on page ii.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
Three Months Ended October 31, 2013
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
$
19,688
$
19,367
$
15,735
$
1,562
$
3,369
$
0
$
59,721
Non-stabilized
 
5,964
 
0
 
290
 
181
 
34
 
0
 
6,469
Total
 
25,652
 
19,367
 
16,025
 
1,743
 
3,403
 
0
 
66,190
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
8,963
 
9,525
 
4,038
 
468
 
1,036
 
0
 
24,030
Non-stabilized
 
2,312
 
0
 
91
 
80
 
2
 
0
 
2,485
Total
 
11,275
 
9,525
 
4,129
 
548
 
1,038
 
0
 
26,515
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
10,725
 
9,842
 
11,697
 
1,094
 
2,333
 
0
 
35,691
Non-stabilized
 
3,652
 
0
 
199
 
101
 
32
 
0
 
3,984
Net operating income
$
14,377
$
9,842
$
11,896
$
1,195
$
2,365
$
0
$
39,675
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation/amortization
$
(5,656)
$
(5,393)
$
(4,860)
$
(469)
$
(797)
$
(82)
$
(17,257)
Administrative, advisory and trustee fees
 
0
 
0
 
0
 
0
 
0
 
(2,527)
 
(2,527)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(678)
 
(678)
Interest expense
 
(5,449)
 
(5,083)
 
(4,095)
 
(272)
 
(479)
 
530
 
(14,848)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
652
 
652
Income (loss) from continuing operations
 
3,272
 
(634)
 
2,941
 
454
 
1,089
 
(2,105)
 
5,017
Income (loss) from discontinued operations
 
0
 
6,296
 
0
 
(1,016)
 
0
 
0
 
5,280
Net income (loss)
 
3,272
 
5,662
 
2,941
 
(562)
 
1,089
 
(2,105)
 
10,297
Net income attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
(1,226)
 
(1,226)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(284)
 
(284)
Net income (loss) attributable to Investors Real Estate Trust
 
3,272
 
5,662
 
2,941
 
(562)
 
1,089
 
(3,615)
 
8,787
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(2,878)
 
(2,878)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
3,272
 
5,662
 
2,941
 
(562)
 
1,089
$
(6,493)
$
5,909
(1)
See list of properties excluded from stabilized properties on page ii.



INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
Three Months Ended October 31, 2012
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
$
19,120
$
18,815
$
15,262
$
1,437
$
3,360
$
0
$
57,994
Non-stabilized
 
3,985
 
0
 
0
 
279
 
0
 
0
 
4,264
Total
 
23,105
 
18,815
 
15,262
 
1,716
 
3,360
 
0
 
62,258
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
7,815
 
9,196
 
4,180
 
379
 
1,209
 
0
 
22,779
Non-stabilized
 
1,194
 
0
 
0
 
76
 
0
 
0
 
1,270
Total
 
9,009
 
9,196
 
4,180
 
455
 
1,209
 
0
 
24,049
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on involuntary conversion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Non-stabilized
 
2,263
 
0
 
0
 
0
 
0
 
0
 
2,263
Total
 
2,263
 
0
 
0
 
0
 
0
 
0
 
2,263
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
11,305
 
9,619
 
11,082
 
1,058
 
2,151
 
0
 
35,215
Non-stabilized
 
5,054
 
0
 
0
 
203
 
0
 
0
 
5,257
Net operating income
$
16,359
$
9,619
$
11,082
$
1,261
$
2,151
$
0
$
40,472
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation/amortization
$
(4,833)
$
(5,248)
$
(4,408)
$
(418)
$
(768)
$
(83)
$
(15,758)
Administrative, advisory and trustee fees
 
0
 
0
 
0
 
0
 
0
 
(2,061)
 
(2,061)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(513)
 
(513)
Interest expense
 
(5,230)
 
(5,305)
 
(4,000)
 
(451)
 
(620)
 
(121)
 
(15,727)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
203
 
203
Income (loss) from continuing operations
 
6,296
 
(934)
 
2,674
 
392
 
763
 
(2,575)
 
6,616
Income (loss) from discontinued operations
 
2,839
 
73
 
(53)
 
490
 
45
 
0
 
3,394
Net income (loss)
 
9,135
 
(861)
 
2,621
 
882
 
808
 
(2,575)
 
10,010
Net income attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
(1,290)
 
(1,290)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(208)
 
(208)
Net income (loss) attributable to Investors Real Estate Trust
 
9,135
 
(861)
 
2,621
 
882
 
808
 
(4,073)
 
8,512
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(2,878)
 
(2,878)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
9,135
 
(861)
 
2,621
 
882
 
808
$
(6,951)
$
5,634
(1) See list of properties excluded from stabilized properties on page ii.






 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)

 
Six Months Ended October 31, 2013
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
$
39,016
$
38,681
$
31,500
$
3,096
$
6,661
$
0
$
118,954
Non-stabilized
 
11,218
 
0
 
598
 
857
 
70
 
0
 
12,743
Total
 
50,234
 
38,681
 
32,098
 
3,953
 
6,731
 
0
 
131,697
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
18,004
 
19,278
 
8,248
 
891
 
2,361
 
0
 
48,782
Non-stabilized
 
4,230
 
0
 
164
 
161
 
2
 
0
 
4,557
Total
 
22,234
 
19,278
 
8,412
 
1,052
 
2,363
 
0
 
53,339
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on involuntary conversion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Non-stabilized
 
966
 
0
 
0
 
0
 
0
 
0
 
966
Total
 
966
 
0
 
0
 
0
 
0
 
0
 
966
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
21,012
 
19,403
 
23,252
 
2,205
 
4,300
 
0
 
70,172
Non-stabilized
 
7,954
 
0
 
434
 
696
 
68
 
0
 
9,152
Net operating income
$
28,966
$
19,403
$
23,686
$
2,901
$
4,368
$
0
$
79,324
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation/amortization
$
(11,172)
$
(10,789)
$
(11,572)
$
(1,032)
$
(1,620)
$
(167)
$
(36,352)
Administrative, advisory and trustee services
 
0
 
0
 
0
 
0
 
0
 
(5,280)
 
(5,280)
Impairment of real estate investments
 
0
 
0
 
0
 
0
 
0
 
(265)
 
(265)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(1,357)
 
(1,357)
Interest expense
 
(10,786)
 
(10,188)
 
(7,723)
 
(652)
 
(992)
 
841
 
(29,500)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
862
 
862
Income (loss) from continuing operations
 
7,008
 
(1,574)
 
4,391
 
1,217
 
1,756
 
(5,366)
 
7,432
Income (loss) from discontinued operations
 
0
 
6,014
 
0
 
183
 
(116)
 
0
 
6,081
Net income (loss)
 
7,008
 
4,440
 
4,391
 
1,400
 
1,640
 
(5,366)
 
13,513
Net income attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
(1,276)
 
(1,276)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(372)
 
(372)
Net income (loss) attributable to Investors Real Estate Trust
 
7,008
 
4,440
 
4,391
 
1,400
 
1,640
 
(7,014)
 
11,865
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(5,757)
 
(5,757)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
7,008
$
4,440
$
4,391
$
1,400
$
1,640
$
(12,771)
$
6,108
(1)
See list of properties excluded from stabilized properties on page ii.





 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)

 
Six Months Ended October 31, 2012
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
$
37,800
$
37,169
$
30,334
$
2,745
$
6,486
$
0
$
114,534
Non-stabilized
 
6,514
 
0
 
0
 
555
 
0
 
0
 
7,069
Total
 
44,314
 
37,169
 
30,334
 
3,300
 
6,486
 
0
 
121,603
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
16,147
 
18,321
 
8,259
 
802
 
2,289
 
0
 
45,818
Non-stabilized
 
2,154
 
0
 
0
 
142
 
0
 
0
 
2,296
Total
 
18,301
 
18,321
 
8,259
 
944
 
2,289
 
0
 
48,114
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on involuntary conversion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Non-stabilized
 
2,263
 
0
 
0
 
0
 
0
 
0
 
2,263
Total
 
2,263
 
0
 
0
 
0
 
0
 
0
 
2,263
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
21,653
 
18,848
 
22,075
 
1,943
 
4,197
 
0
 
68,716
Non-stabilized
 
6,623
 
0
 
0
 
413
 
0
 
0
 
7,036
Net operating income
$
28,276
$
18,848
$
22,075
$
2,356
$
4,197
$
0
$
75,752
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation/amortization
$
(9,357)
$
(10,496)
$
(8,793)
$
(838)
$
(1,498)
$
(219)
$
(31,201)
Administrative, advisory and trustee services
 
0
 
0
 
0
 
0
 
0
 
(4,157)
 
(4,157)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(1,032)
 
(1,032)
Interest expense
 
(10,044)
 
(10,576)
 
(7,941)
 
(899)
 
(1,305)
 
 
(779)
 
(31,544)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
345
 
345
Income (loss) from continuing operations
 
8,875
 
(2,224)
 
5,341
 
619
 
1,394
 
(5,842)
 
8,163
Income (loss) from discontinued operations
 
2,877
 
143
 
(57)
 
820
 
60
 
0
 
3,843
Net income (loss)
 
11,752
 
(2,081)
 
5,284
 
1,439
 
1,454
 
(5,842)
 
12,006
Net income attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
(1,541)
 
(1,541)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(274)
 
(274)
Net income (loss) attributable to Investors Real Estate Trust
 
11,752
 
(2,081)
 
5,284
 
1,439
 
1,454
 
(7,657)
 
10,191
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(3,471)
 
(3,471)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
11,752
$
(2,081)
$
5,284
$
1,439
$
1,454
$
(11,128)
$
6,720
(1) See list of properties excluded from stabilized properties on page ii.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
STABILIZED PROPERTIES AND ALL PROPERTIES PHYSICAL OCCUPANCY LEVELS BY SEGMENT
2nd Quarter Fiscal 2014 vs. 2nd Quarter Fiscal 2013

Segments
Stabilized Properties
All Properties
 
2nd Quarter
2nd Quarter
2nd Quarter
2nd Quarter
 
Fiscal 2014
Fiscal 2013
Fiscal 2014
Fiscal 2013
Multi-Family Residential
94.6%
95.4%
93.8%
94.6%
Commercial Office
81.0%
78.9%
81.0%
78.9%
Commercial Healthcare
96.1%
95.1%
96.2%
95.1%
Commercial Industrial
83.3%
79.8%
72.4%
82.9%
Commercial Retail
85.9%
88.0%
85.9%
88.0%






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
MULTI-FAMILY RESIDENTIAL SUMMARY(2)

 
Three Months Ended
 
10/31/2013
7/31/2013
4/30/2013
1/31/2013
10/31/2012
Number of Units
 
10,705
 
10,351
 
10,280
 
9,924
 
9,934
Average Investment Per Unit
 
 
 
 
 
 
 
 
 
 
Stabilized
$
60,592
$
60,118
$
58,765
$
58,506
$
58,308
Non-Stabilized
 
93,353
 
86,581
 
87,408
 
87,083
 
85,580
All Properties
$
67,034
$
64,743
$
63,659
$
63,107
$
62,614
 
 
 
 
 
 
 
 
 
 
 
Average Scheduled Rent(1) per Unit
 
 
 
 
 
 
 
 
 
 
Stabilized
$
771
$
764
$
748
$
742
$
734
Non-Stabilized
 
976
 
955
 
944
 
994
 
967
All Properties
$
811
$
797
$
781
$
782
$
771
 
 
 
 
 
 
 
 
 
 
 
Total Receipts per Unit
 
 
 
 
 
 
 
 
 
 
Stabilized
$
768
$
754
$
739
$
731
$
733
Non-Stabilized
 
951
 
968
 
954
 
1,004
 
996
All Properties
$
804
$
792
$
776
$
775
$
774
 
 
 
 
 
 
 
 
 
 
 
Total Recurring Capital Expenditures per Unit(1)
$
160
$
164
$
176
$
134
$
193
 
 
 
 
 
 
 
 
 
 
 
Physical Occupancy%
 
 
 
 
 
 
 
 
 
 
Stabilized
 
94.6%
 
93.3%
 
94.7%
 
94.0%
 
94.8%
Non-Stabilized
 
90.4%
 
90.7%
 
94.5%
 
91.4%
 
93.4%
All Properties
 
93.8%
 
92.9%
 
94.6%
 
93.6%
 
94.6%
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses as a % of Scheduled Rent
 
 
 
 
 
 
 
 
 
 
Stabilized
 
45.6%
 
46.4%
 
44.0%
 
47.3%
 
41.3%
Non-Stabilized
 
41.0%
 
40.7%
 
43.0%
 
38.7%
 
36.9%
All Properties
 
44.5%
 
45.2%
 
43.8%
 
45.5%
 
40.4%
(1)
See Definitions on page 30.
(2)
Previously-reported amounts are not revised for discontinued operations or changes in the composition of the stabilized properties pool.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)

Commercial Leasing Activity
During fiscal year 2014, we have executed new and renewal commercial leases for our stabilized rental properties on 378,163 square feet for the three months ended October 31, 2013 and 974,370 square feet for the six months ended October 31, 2013.  As a result of our leasing efforts, occupancy in our stabilized commercial portfolio increased to 86.1% as of October 31, 2013, up from 84.7% as of October 31, 2012.
The total leasing activity for our stabilized commercial rental properties, expressed in square feet of leases signed during the period, and the resulting physical occupancy levels are as follows:
Three Months Ended October 31, 2013
 
Square Feet of
New Leases(1)
Square Feet of
Leases Renewed(1) (2)
Total
Square Feet of
Leases Executed(1)
 
Physical Occupancy
 
 
Segments
2013
2012
2013
2012
2013
2012
 
2013
2012
Office
86,863
75,225
84,829
30,798
171,692
106,023
 
81.0%
78.9%
Healthcare
9,590
3,725
3,734
9,988
13,324
13,713
 
96.1%
95.1%
Industrial
120,363
0
29,754
0
150,117
0
 
83.3%
79.8%
Retail
5,902
30,207
37,128
37,110
43,030
67,317
 
85.9%
88.0%
Total
222,718
109,157
155,445
77,896
378,163
187,053
 
86.1%
84.7%
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period.
(2)
Leases renewed include the retained occupancy of tenants on a month-to-month basis past their original lease expiration date.
Six Months Ended October 31, 2013
 
Square Feet of
New Leases(1)
Square Feet of
Leases Renewed(1) (2)
Total
Square Feet of
Leases Executed(1)
 
Physical Occupancy
 
 
Segments
2013
2012
2013
2012
2013
2012
 
2013
2012
Office
213,855
109,865
142,374
94,977
356,229
204,842
 
81.0%
78.9%
Healthcare
31,093
10,226
17,262
11,456
48,355
21,682
 
96.1%
95.1%
Industrial
170,403
0
251,831
9,702
422,234
9,702
 
83.3%
79.8%
Retail
97,859
39,277
49,693
39,530
147,552
78,807
 
85.9%
88.0%
Total
513,210
159,368
461,160
155,665
974,370
315,033
 
86.1%
84.7%
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period.
(2)
Leases renewed include the retained occupancy of tenants on a month-to-month basis past their original lease expiration date.




INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)

New Leases
The following table sets forth the average effective rents and the estimated costs of tenant improvements and leasing commissions, on a per square foot basis, that we are obligated to fulfill under the new leases signed for our stabilized commercial rental properties:
Three Months Ended October 31, 2013
 
Square Feet of
New Leases(1)
Average Term
in Years
 
 
Average
 Effective Rent(2)
Estimated Tenant Improvement Cost per Square Foot(1)
Leasing
Commissions per Square Foot(1)
 
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Office
 
86,863
 
75,225
 
3.9
 
4.9
$
16.38
$
12.12
$
14.77
$
5.82
$
5.17
$
2.50
Healthcare
 
9,590
 
3,725
 
4.6
 
7.8
 
20.28
 
21.65
 
50.48
 
17.60
 
10.12
 
6.08
Industrial
 
120,363
 
0
 
2.1
 
0
 
3.59
 
0
 
0.25
 
0
 
0.82
 
0
Retail
 
5,902
 
30,207
 
7.3
 
2.5
 
14.03
 
5.43
 
16.87
 
1.41
 
3.47
 
0.31
Total
 
222,718
 
109,157
 
4.3
 
4.8
$
9.57
$
10.60
$
8.51
$
5.00
$
2.99
$
2.01
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period. 
(2)
Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
Six Months Ended October 31, 2013
 
Square Feet of
New Leases(1)
Average Term
in Years
 
 
Average
 Effective Rent(2)
Estimated Tenant Improvement Cost per Square Foot(1)
Leasing
Commissions per Square Foot(1)
 
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Office
 
213,855
 
109,865
 
4.6
 
4.4
$
14.38
$
13.25
$
15.01
$
8.43
$
4.67
$
3.34
Healthcare
 
31,093
 
10,226
 
5.3
 
7.2
 
21.43
 
22.60
 
49.94
 
42.88
 
6.79
 
5.58
Industrial
 
170,403
 
0
 
3.2
 
0
 
3.74
 
0
 
0.18
 
0
 
0.68
 
0
Retail
 
97,859
 
39,277
 
5.4
 
3.1
 
4.25
 
7.04
 
1.55
 
1.16
 
4.15
 
0.45
Total
 
513,210
 
159,368
 
4.7
 
4.6
$
9.34
$
12.32
$
9.63
$
8.85
$
3.37
$
2.77
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period. 
(2)
Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
Our ability to maintain or increase occupancy rates is a principal driver of maintaining and increasing the average effective rents in our commercial segments. The decrease in the average effective rental rates of new leases executed in the six months ended October 31, 2013 in our commercial retail segment when compared to new leases executed for the same period in the prior year is due to the signing of a new anchor tenant lease at our Jamestown Buffalo Mall property. In June of 2013, we executed a ten year lease with an effective date of August 1, 2013 for 84,338 square feet with a new anchor tenant at an average effective rent of $2.75 per square foot. This space was vacated by the former anchor tenant, which was paying $1.70 per square foot at the time their lease expired on May 31, 2013. Absent this transaction, the average effective rental rate for leases executed in our commercial retail segment in the six months ended October 31, 2013 would have been $13.59 per square foot. The decrease in the average effective rental rate of new leases executed in the total commercial portfolio for the six months ended October 31, 2013 when compared to the same period in the prior year is due primarily to the lease transaction mentioned above and the fact that there were no new commercial industrial leases executed in the six months ended October 31, 2012.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)

Lease Renewals
The following table summarizes our lease renewal activity within our stabilized commercial segments (square feet data in thousands):
Three Months Ended October 31, 2013
 
Square Feet of Leases Renewed(1)
Percent of Expiring Leases Renewed(2)
Average Term
in Years
Weighted Average Growth (Decline)
 in Effective Rents(3)
Estimated
Tenant Improvement
Cost per Square Foot(1)
Leasing Commissions per Square Foot(1)
 
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Office
 
84,829
 
30,798
 
17.7%
 
81.0%
 
4.3
 
5.3
 
(5.0%)
 
(3.5%)
$
6.52
$
15.28
$
5.70
$
6.84
Healthcare
 
3,734
 
9,988
 
100.0%
 
100.0%
 
3.0
 
5.3
 
11.4%
 
9.3%
 
0
 
9.92
 
0
 
2.48
Industrial
 
29,754
 
0
 
100.0%
 
0%
 
3.0
 
0
 
16.1%
 
0
 
2.71
 
0
 
1.78
 
0
Retail
 
37,128
 
37,110
 
88.1%
 
100.0%
 
3.0
 
3.0
 
11.2%
 
1.3%
 
0.40
 
0
 
0.06
 
0.05
Total
 
155,445
 
77,896
 
38.9%
 
86.8%
 
3.6
 
4.9
 
0.2%
 
0.0%
$
4.17
$
7.31
$
3.47
$
3.05
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period.
(2)
Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. Expiring leases where the tenant retained occupancy on a month-to-month basis past the lease expiration date were considered to have been renewed.
(3)
Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
Six Months Ended October 31, 2013
 
Square Feet of Leases Renewed(1)
Percent of Expiring Leases Renewed(2)
Average Term
in Years
Weighted Average Growth (Decline)
 in Effective Rents(3)
Estimated
Tenant Improvement
Cost per Square Foot(1)
Leasing Commissions per Square Foot(1)
 
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Office
 
142,374
 
94.977
 
59.1%
 
88.5%
 
3.9
 
3.9
 
(3.1%)
 
(0.3%)
$
4.78
$
6.23
$
4.12
$
3.13
Healthcare
 
17,262
 
11,456
 
100.0%
 
77.8%
 
6.0
 
5.3
 
8.2%
 
9.7%
 
20.19
 
11.85
 
2.21
 
2.48
Industrial
 
251,831
 
9,702
 
52.7%
 
100.0%
 
3.2
 
3.3
 
(6.1%)
 
0
 
0.32
 
0.52
 
0.48
 
0.52
Retail
 
49,693
 
39,530
 
29.9%
 
81.3%
 
3.5
 
3.4
 
8.3%
 
0.1%
 
0.30
 
0
 
0.05
 
0.12
Total
 
461,160
 
155,665
 
53.1%
 
85.2%
 
3.8
 
4.1
 
2.3%
 
0.7%
$
2.44
$
4.71
$
1.62
$
2.16
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period
(2)
Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. Expiring leases where the tenant retained occupancy on a month-to-month basis past the lease expiration date were considered to have been renewed.
(3)
Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
Our ability to re-lease expiring space is generally dependent on the current market and economic conditions of the regions in which our properties are located. The decrease in the percent of expiring leases renewed in the three months Ended October 31, 2013 in our commercial office segment when compared to the percent of expiring leases renewed for the same period in the prior year was due to the lease expirations of two tenants that accounted for 87,471 square feet of the 148,799 square feet, or 59%, of expiring leases in the quarter.  One of these lease expirations was for a 49,570 square foot space at our Wells Fargo property for which a new lease was executed with the existing subtenant prior to the original tenant's lease expiring.  This lease transaction was executed in the first quarter of fiscal year 2014 and was reported as a new lease transaction in that quarter.
The decrease in the percent of expiring leases renewed in the six months ended October 31, 2013 in our commercial retail segment when compared to the percent of expiring leases renewed for the same period in the prior year was due to the lease expiration of an anchor tenant at our Jamestown Buffalo Mall property which occupied 84,338 square feet. Although this lease expired on May 31, 2013, we were able to execute a lease with a new tenant for the entire 84,338 square feet with an effective date of August 1, 2013 that resulted in an increase in effective rent of 61.8% when compared to the rent paid by the prior tenant.  Not taking into account the previously mentioned vacated space, the percent of expiring leases renewed for our retail segment for the six months ended October 31, 2013 would have been 78.2%.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)

Lease Expirations
Our ability to maintain and improve occupancy rates, and base rents, primarily depends upon our continuing ability to re-lease expiring space. The following table reflects the in-service portfolio lease expiration schedule of our consolidated commercial segments properties, including square footage and annualized base rent for expiring leases, as of October 31, 2013.
Fiscal Year of Lease Expiration
# of Leases
Square Footage of
 Expiring Leases(3)
 
Percentage of Total
 Commercial Segments
Leased Square Footage
Annualized Base
Rent of Expiring
Leases at Expiration(2)
 
Percentage of Total
 Commercial Segments
Annualized Base Rent
2014(1)
121
810,334
 
9.0%
$
9,605,040
 
7.7%
2015
128
889,075
 
9.8%
 
12,710,586
 
10.2%
2016
116
1,252,881
 
13.8%
 
16,951,657
 
13.7%
2017
104
1,189,099
 
13.2%
 
18,942,588
 
15.3%
2018
79
670,615
 
7.4%
 
11,643,066
 
9.4%
2019
65
1,089,140
 
12.0%
 
14,699,565
 
11.9%
2020
20
448,768
 
5.0%
 
4,780,636
 
3.9%
2021
27
285,701
 
3.2%
 
4,481,569
 
3.6%
2022
41
1,313,347
 
14.5%
 
16,101,879
 
13.0%
2023
12
471,436
 
5.2%
 
2,093,077
 
1.7%
Thereafter
48
627,020
 
6.9%
 
11,960,984
 
9.6%
Totals
761
9,047,416
 
100.0%
$
123,970,647
 
100.0%
(1)
Includes month-to-month leases. As of October 31, 2013 month-to-month leases accounted for 214,757 square feet.
(2)
Annualized Base Rent is monthly scheduled rent as of October 1, 2013, multiplied by 12.
(3)
Assuming that none of the tenants exercise renewal or termination options, and including leases renewed prior to expiration. Also excludes 98,174 square feet of income producing real estate operated within a Taxable REIT Subsidiary.
Information on current market rents can be difficult to obtain, is highly subjective, and is often not directly comparable between properties. Accordingly, we believe the average effective rent realized on new leases and the increase or decrease in effective rent of lease renewals, as previously defined, are the most objective and meaningful performance measurements of our leasing activity.








INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
10 LARGEST COMMERCIAL TENANTS – BASED ON ANNUALIZED BASE RENT(1)
as of October 31, 2013

Tenant
Number of
Properties
Average
Remaining
Lease Term
in Months
% of Total
Commercial
Segments'
Minimum
Rents
Aggregate
Rentable
Square Feet
% of Aggregate
Occupied
Square
Feet
Affiliates of Edgewood Vista
32
79
13.8%
1,481,647
16.3%
St. Luke's Hospital of Duluth, Inc.
6
29
3.6%
198,775
2.2%
Fairview Health Services
9
42
3.6%
247,019
2.7%
Applied Underwriters
3
40
2.4%
141,724
1.6%
HealthEast Care System
1
64
1.7%
114,316
1.3%
Affiliates of Siemens USA (NYSE: SI)
2
41
1.3%
112,848
1.2%
Microsoft (NASDAQ: MSFT)
1
185
1.3%
61,758
0.7%
Arcadis Corporate Services, Inc.
1
33
1.3%
71,430
0.8%
Nebraska Orthopaedic Hospital
1
62
1.3%
122,040
1.3%
State of Idaho Department of Health and Welfare
2
52
1.2%
103,342
1.1%
Total/Weighted Average
 
58
31.5%
2,654,899
29.2%
(1) See Definitions on page .





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASE EXPIRATIONS
as of October 31, 2013

 
(dollars in thousands except average rental rates)
Fiscal Year
Number of
Leases
Rentable
Square Feet(1)
% of Rentable
Square Feet
Annualized
Rent(2)
Average
Rental
Rate
% of
Annualized
 Base Rent
Commercial Office
 
 
 
 
 
 
 
 
2014(3)
58
349,151
8.9%
$
4,150
$
11.89
7.0%
2015
67
417,505
10.7%
 
7,424
 
17.78
12.5%
2016
52
646,390
16.5%
 
10,140
 
15.69
17.1%
2017
53
807,157
20.7%
 
14,045
 
17.40
23.7%
2018
38
453,265
11.6%
 
6,869
 
15.16
11.6%
2019 and thereafter
72
1,236,431
31.6%
 
16,686
 
13.5
28.1%
 
340
3,909,899
100.0%
$
59,314
$
15.17
100.0%
 
 
 
 
 
 
 
 
 
Commercial Healthcare
 
 
 
 
 
 
 
 
2014(4)
31
355,603
12.5%
$
4,698
$
13.21
9.6%
2015
17
105,201
3.7%
 
2,793
 
26.55
5.7%
2016
25
175,570
6.2%
 
3,656
 
20.82
7.5%
2017
24
143,790
5.1%
 
3,070
 
21.35
6.3%
2018
22
176,758
6.2%
 
4,259
 
24.10
8.7%
2019 and thereafter
97
1,882,355
66.3%
 
30,438
 
16.17
62.2%
 
216
2,839,277
100.0%
$
48,914
$
17.23
100.0%
 
 
 
 
 
 
 
 
 
Commercial Industrial
 
 
 
 
 
 
 
 
2014(5)
1
44,000
3.8%
$
198
$
4.50
3.4%
2015
1
30,000
2.6%
 
105
 
3.50
1.8%
2016
6
307,533
26.5%
 
1,682
 
5.47
29.0%
2017
2
112,110
9.7%
 
628
 
5.60
10.8%
2018
0
0
0.0%
 
0
 
0.00
0.0%
2019 and thereafter
8
664,284
57.4%
 
3,194
 
4.81
55.0%
 
18
1,157,927
100.0%
$
5,807
$
5.02
100.0%
 
 
 
 
 
 
 
 
 
Commercial Retail
 
 
 
 
 
 
 
 
2014(6)
32
66,484
5.8%
$
623
$
9.37
6.3%
2015
42
331,465
29.1%
 
2,324
 
7.01
23.4%
2016
33
123,388
10.8%
 
1,474
 
11.94
14.8%
2017
25
126,042
11.1%
 
1,200
 
9.52
12.1%
2018
19
40,592
3.5%
 
515
 
12.68
5.2%
2019 and thereafter
36
452,342
39.7%
 
3,800
 
8.40
38.2%
 
187
1,140,313
100.0%
$
9,936
$
8.71
100.0%
 
 
 
 
 
 
 
 
 
Commercial Total
 
 
 
 
 
 
 
 
2014(7)
122
815,238
9.0%
$
9,669
$
11.86
7.8%
2015
127
884,171
9.8%
 
12,646
 
14.30
10.2%
2016
116
1,252,881
13.9%
 
16,952
 
13.53
13.7%
2017
104
1,189,099
13.1%
 
18,943
 
15.93
15.3%
2018
79
670,615
7.4%
 
11,643
 
17.36
9.4%
2019 and thereafter
213
4,235,412
46.8%
 
54,118
 
12.78
43.6%
 
761
9,047,416
100.0%
$
123,971
$
13.70
100.0%

(1) Excludes 98,174 square feet of income producing real estate operated within a Taxable REIT Subsidiary.
(2) Annualized Base Rent is monthly scheduled rent as of October 1, 2013 (cash basis), multiplied by 12.
(3) Includes month-to-month leases.  As of October 31, 2013 month-to-month leases accounted for 149,450 square feet.
(4) Includes month-to-month leases.  As of October 31, 2013 month-to-month leases accounted for 28,674 square feet.
(5) The Commercial Industrial segment has no month-to-month leases in place as of October 31, 2013.
(6) Includes month-to-month leases.  As of October 31, 2013 month-to-month leases accounted for 36,633 square feet.
(7) Includes month-to-month leases.  As of October 31, 2013 month-to-month leases accounted for 214,757 square feet.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2014 ACQUISITION SUMMARY
as of October 31, 2013
(dollars in thousands)

Property(1)
 
Location
 
Segment Type
 
Acquisition
Date
Square
Feet/Units
Leased
Percentage
At
Acquisition
October 31,
2013 Leased
Percentage
Acquisition
Cost
 
 
 
 
 
 
 
 
 
 
 
 
Alps Park
 
Rapid City, SD
 
Multi-Family Residential
 
May 1, 2013
71
97.2%
100.0%
$
6,200
Chateau II
 
Minot, ND
 
Unimproved Land
 
May 21, 2013
n/a
n/a
n/a
 
179
Jamestown Unimproved
 
Jamestown, ND
 
Unimproved Land
 
August 9, 2013
n/a
n/a
n/a
 
700
RED 20(2)
 
Minneapolis, MN
 
Unimproved Land
 
August 20, 2013
n/a
n/a
n/a
 
1,900
Landing at Southgate(3)
 
Minot, ND
 
Multi-Family Residential
 
September 4, 2013
108
77.8%
77.8%
 
8,822
Southpoint
 
Grand Forks, ND
 
Multi-Family Residential
 
September 5, 2013
96
100.0%
99.0%
 
10,600
Pinecone Villas
 
Sartell, MN
 
Multi-Family Residential
 
October 31, 2013
24
83.3%
83.3%
 
2,800
Legends at Heritage Place
 
Sartell, MN
 
Commercial Healthcare and Unimproved Land
 
October 31, 2013
98,174
100.0%
100.0%
 
12,400
 
 
 
 
 
 
Total Square Feet
98,174
 
 
$
43,601
 
 
 
 
 
 
Total Units
299
 
 
 
 
(1)
 Development projects that are placed in service in phases are excluded from this table until the entire project has been placed in service..
(2)
The Company is an approximately 59% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity.
(3)
Development property placed in service September 4, 2013. Additional costs paid in fiscal year 2013 totaled $6.3 million, for a total project cost at October 31, 2013 of $15.1 million. The Company is a 51% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2014 DEVELOPMENT IN PROGESS SUMMARY
as of October 31, 2013
(dollars in thousands)

Property and Location
Planned
Segment
Total Rentable
Square Feet
or # of Units
Percentage
Leased
or Committed
Anticipated
Total
Cost
Cost to
Date
Anticipated
Construction
Completion
River Ridge - Bismarck, ND(1)
Multi-Family Residential
146 units
85.9%
$
25,900
$
23,507
3rd Quarter Fiscal 2014
Cypress Court - St. Cloud, MN(2)
Multi-Family Residential
132 units
81.5%
 
14,300
 
13,506
3rd Quarter Fiscal 2014
Chateau II - Minot, ND(3)
Multi-Family Residential
72 units
0%
 
14,700
 
6.461
1st Quarter Fiscal 2015
Dakota Commons  - Williston, ND
Multi-Family Residential
44 units
0%
 
10,700
 
3,796
1st Quarter Fiscal 2015
Commons at Southgate - Minot, ND(4)
Multi-Family Residential
233 units
0%
 
36,400
 
17,170
2nd Quarter Fiscal 2015
Renaissance Heights I - Williston, ND(5)
Multi-Family Residential
288 units
0%
 
62,400
 
26,859
2nd Quarter Fiscal 2015
Arcata - Golden Valley, MN
Multi-Family Residential
165 units
0%
 
34,400
 
5,922
2nd Quarter Fiscal 2015
RED 20 - Minneapolis, MN(6)
Multi-Family Residential and Commercial
130 units and 10,625 sq ft
0%
 
29,500
 
5,917
2nd Quarter Fiscal 2015
Cardinal Point - Grand Forks, ND
Multi-Family Residential
251 units
0%
 
40,000
 
4,550
4th Quarter Fiscal 2015
Other
n/a
n/a
n/a
 
n/a
 
154
n/a
 
 
 
 
$
268,300
$
107,842
 
(1)
Costs as of October 31, 2013 include $10.6 million for phase 1 of the project, which was placed in service during the three months ended October 31, 2013.
(2)
The Company is an approximately 79% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity. Costs as of October 31, 2013 include $7.2 million for phase 1 of the project, which was placed in service during the three months ended October 31, 2013.
(3)
On December 5, 2013, this development project was destroyed by fire. No decisions have been made at this time concerning the rebuilding of this development project.
(4)
The Company is a 51% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity.
(5)
The Company is a 70% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity.
(6)
The Company is an approximately 59% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity.





Definitions
October 31, 2013
Adjusted funds from operations (AFFO) is calculated by subtracting from Funds from operations (FFO) (1) tenant improvements and leasing costs at stabilized properties, and recurring capital expenditures that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding (3) non-real estate depreciation and amortization. We may also subtract from FFO certain unusual non-recurring items that do not produce cash available for distribution to shareholders. Previously-reported AFFO amounts are not revised for changes in the composition of the stabilized properties pool. AFFO is included herein because we consider it to be a measure of a REIT's ability to incur and service debt and to pay distributions to its shareholders. AFFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs. Through the second quarter of fiscal year 2013, our calculation of AFFO excluded (that is, subtracted from FFO) tenant improvements and leasing costs on an all-property basis. In the third quarter of fiscal year 2013, we revised our calculation to subtract from FFO leasing commissions and tenant improvements at stabilized properties only, since we consider tenant improvement and leasing cost levels at non-stabilized properties unrepresentative of expected levels at stabilized properties. This change in definition had no effect on AFFO per share and unit as previously reported. We also updated the calculation to exclude the write-off of fully-amortized leasing costs, which had previously been included in the calculation. This change resulted in a decrease in AFFO per share and unit in the second quarter of fiscal year 2013 from $0.13 to $0.12. The AFFO per share and unit payout ratio had a corresponding increase in the second quarter of fiscal year 2013 from 100.00% to 108.3%.
Annualized base rent (ABR) is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.
Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet plus the market value of shares outstanding at the end of the period.
Debt service coverage ratio is computed by dividing earnings before interest income and expense, depreciation, amortization and gain on sale of real estate by interest expense and principal amortization.
EBITDA is earnings before interest, taxes, depreciation and amortization. We consider EBITDA to be an appropriate supplemental performance measure because it eliminates depreciation, interest and the gain/loss from property dispositions, which permits investors to view income from operations without the effect of non-cash depreciation or the cost of debt; however, EBIDTA as we calculate it has not been adjusted for the effect of nonrecurring events such as asset impairment and gain/loss on involuntary conversion.  EBITDA is a non-GAAP measure. EBITDA as calculated by us is not comparable to EBITDA reported by other REITs that do not define EBITDA exactly as we do.
Funds from operations (FFO) - The National Association of Real Estate Investment Trusts, Inc. (NAREIT) defines FFO as "net income (computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis." In addition, in October 2011 NAREIT clarified its computation of FFO to exclude impairment charges for all periods presented. FFO is a non-GAAP measure.  We consider FFO, which is a standard supplemental measure for equity real estate investment trusts, helpful to investors because it facilitates an understanding of the operating performance of properties without giving effect to impairment write-downs and to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time.  Since real estate values instead historically rise or fall with market conditions, we believe that FFO provides investors and management with a more accurate indication of our financial and operating results.
Net Operating Income (NOI) is total real estate revenues and gain on involuntary conversion less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance and property management expenses).  We believe that NOI is an important supplemental measure of operating performance for a REIT's operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders or cash flow from operating activities as a measure of financial performance.
Payout ratio (FFO per share and unit basis) - The ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual FFO per share and unit.
Ratio of earnings to fixed charges - The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Fixed charges consist of mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest.
Ratio of earnings to combined fixed charges and preferred distributions - The ratio of earnings to combined fixed charges and preferred distributions is computed by dividing earnings by combined fixed charges and preferred distributions. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Combined fixed charges and preferred distributions consist of fixed charges (mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest) and preferred distributions.
Recurring capital expenditures are expenditures (excluding capital expenditures recoverable from tenants and capital expenditures at properties sold during the period) made on a regular or recurring basis to maintain a property's competitive position within its market, generally with a depreciable life of 5 to 12 years, but excluding (a) capital expenditures made in the year of acquisition and in subsequent periods until the property is stabilized (i.e., excluding capital expenditures on non-stabilized properties), (b) improvements associated with the expansion or re-development of a building, (c) renovations to a building which change the underlying classification of the building (for example, from industrial to office or Class C office to Class A office) or (d) capital improvements that represent the addition of something new to a property, rather than the replacement of an existing item.
Scheduled rent revenue is the total possible revenue from all leasable units and square footage, with occupied space valued at contract rates pursuant to leases and vacant units or square footage at market rates.
Stabilized properties are properties owned or in service for the entirety of the periods being compared, and, in the case of development or re-development properties, which have achieved a target level of occupancy of 90% for multi-family residential properties and 85% for commercial office, healthcare, industrial and retail properties.