EX-99.2 3 ex-99d2.htm EX-99.2

Exhibit 99.2

Supplemental Financial and Operating Data

Table of Contents

July 31, 2017

|  | Page
Company Background |  | S-2
Key Financial Data |  |
Condensed Consolidated Balance Sheets |  | S-4
Condensed Consolidated Statements of Operations |  | S-5
Funds From Operations |  | S-6
Adjusted EBITDA |  | S-7
Capital Analysis |  |
Debt Analysis |  | S-8
Debt Detail |  | S-10
Capital Analysis |  | S-12
Portfolio Analysis |  |
Net Operating Income Detail |  | S-13
Tenant Analysis |  |
Same-Store Multifamily Comparison |  | S-15
Multifamily Summary |  | S-16
Healthcare Leasing Summary |  | S-17
10 Largest Commercial Tenants |  | S-19
Growth Analysis |  |
Acquisition Summary |  | S-20
Definitions |  | S-21

S-1

Company Background

First Quarter Fiscal 2018

We are a real estate investment trust (REIT) focused on the acquisition, development, redevelopment and management of multifamily communities located primarily in select growth markets throughout the Midwest. Our portfolio consists of multifamily and healthcare segments.

As of July 31, 2017, we held for investment a portfolio of 130 properties consisting of 88 multifamily properties, 29 healthcare properties, and 13 other commercial properties. As of July 31, 2017, our common shares and Series B preferred shares were publicly traded on the New York Stock Exchange (NYSE symbols: IRET and IRETPRB, respectively).

Company Snapshot

(as of July 31, 2017)

Company Headquarters | Minot, North Dakota
Fiscal Year-End | April 30
Reportable Segments | Multifamily and Healthcare
Total Properties Held for Investment | 130
Total Units Held for Investment |
(multifamily properties) | 13,076
Total Square Feet Held for Investment |
(healthcare and other commercial properties) | 2.6 million
Common Shares Outstanding (thousands) | 120,587(1)
Limited Partnership Units Outstanding (thousands) | 14,657
Common Share Distribution - Quarter/Annualized | $0.07/$0.28
Annualized Dividend Yield | 4.5%
Total Capitalization (see p. S-12 for detail) | $1.8 billion

| (1) |  | Common Shares and Limited Partnership Units outstanding as of September 5, 2017 were 120,586,875 and 14,633,687, respectively.

Investor Information

Board of Trustees

Jeffrey P. Caira | Trustee and Chair
John D. Stewart | Trustee, Vice Chair, and Chair of the Audit Committee
Linda J. Hall | Trustee, Chair of Compensation Committee
Jeffrey L. Miller | Trustee, Chair of the Nominating and Governance Committee
Michael T. Dance | Trustee, Chair of Capital Markets Committee
Terrance P. Maxwell | Trustee
John A. Schissel | Trustee
Mark O. Decker, Jr. | Trustee, President, Chief Executive Officer and Chief Investment Officer

Management

Mark O. Decker, Jr. | President, Chief Executive Officer and Chief Investment Officer; Trustee
John A. Kirchmann | Executive Vice President and Chief Financial Officer
Anne Olson | Executive Vice President, General Counsel and Secretary
Andrew Martin | Executive Vice President – Property Operations
Nancy B. Andersen | Senior Vice President and Principal Accounting Officer
Matthew M. Volpano | Senior Vice President – Capital Markets

Corporate Headquarters: | Investor Relations Contact:
1400 31 st Avenue SW, Suite 60 | Matthew Volpano
Post Office Box 1988 | 701-837-7104
Minot, North Dakota 58702-1988 | IR@iret.com
Trading Symbol for Common Shares: IRET |
Stock Exchange Listing: NYSE |

S-2

Common Share Data (NYSE: IRET)

|  |  |  | 1st Quarter |  |  | 4th Quarter |  | 3rd Quarter |  | 2nd Quarter |  | 1st Quarter |  | 4th Quarter |
|  |  |  | Fiscal Year 2018 |  |  | Fiscal Year 2017 |  | Fiscal Year 2017 |  | Fiscal Year 2017 |  | Fiscal Year 2017 |  | Fiscal Year 2016 |
High Closing Price |  |  | $ | 6.72 |  | $ | 6.61 |  | $ | 7.20 |  | $ | 6.67 |  | $ | 6.63 |  | $ | 7.48 |
Low Closing Price |  |  | $ | 5.64 |  | $ | 5.67 |  | $ | 5.81 |  | $ | 5.67 |  | $ | 6.01 |  | $ | 5.97 |
Average Closing Price |  |  | $ | 6.07 |  | $ | 6.09 |  | $ | 6.65 |  | $ | 6.21 |  | $ | 6.35 |  | $ | 6.71 |
Closing Price at end of quarter |  |  | $ | 6.22 |  | $ | 5.91 |  | $ | 6.44 |  | $ | 6.07 |  | $ | 6.62 |  | $ | 6.02 |
Common Share Distributions—annualized |  |  | $ | 0.28 |  | $ | 0.28 |  | $ | 0.28 |  | $ | 0.52 |  | $ | 0.52 |  | $ | 0.52 |
Closing Dividend Yield - annualized |  |  |  | 4.5 | % |  | 4.7 | % |  | 4.3 | % |  | 8.6 | % |  | 7.9 | % |  | 8.6 | %
Closing common shares outstanding (thousands) |  |  |  | 120,587 |  |  | 121,199 |  |  | 121,889 |  |  | 121,701 |  |  | 121,528 |  |  | 121,091 |
Closing limited partnership units outstanding (thousands) |  |  |  | 14,657 |  |  | 15,617 |  |  | 16,034 |  |  | 16,229 |  |  | 16,285 |  |  | 16,285 |
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands) |  |  | $ | 841,218 |  | $ | 808,583 |  | $ | 888,224 |  | $ | 837,235 |  | $ | 912,322 |  | $ | 827,004 |

This Supplemental Operating and Financial Data 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 our future plan and anticipated operating results, are based on our 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; changes in operating costs; fluctuations in interest rates; adverse capital and credit market conditions that might affect our access to various sources of capital and cost of capital; our ability to manage our current debt levels and repay or refinance its indebtedness upon maturity or other payment dates; our ability to maintain financial covenant compliance under its debt agreements; 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 our properties that may result in lower than expected occupancy and/or rental rates; ability to acquire quality properties in targeted markets; ability to successfully dispose of certain assets; competition for tenants from similar competing properties; ability to attract and retain skilled personnel; cyber-intrusion; abandonment of development or redevelopment opportunities for which we have already incurred costs; delays in completing development, redevelopment and/or lease up of properties and increased costs; ability to maintain effective internal controls over financial reporting and disclosure controls and procedures; and those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended April 30, 2017 and subsequent quarterly reports on Form 10-Q. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

S-3

IRET

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands)

|  | 7/31/2017 |  | 4/30/2017 |  | 1/31/2017 |  | 10/31/2016 |  | 7/31/2016 |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property owned |  | $ | 1,744,252 |  | $ | 1,677,481 |  | $ | 1,685,823 |  | $ | 1,665,354 |  | $ | 1,667,442 |
Less accumulated depreciation |  |  | (368,769) |  |  | (340,417) |  |  | (334,875) |  |  | (321,790) |  |  | (319,087) |
|  |  | 1,375,483 |  |  | 1,337,064 |  |  | 1,350,948 |  |  | 1,343,564 |  |  | 1,348,355 |
Development in progress |  |  | — |  |  | — |  |  | 11,531 |  |  | 20,921 |  |  | 27,454 |
Unimproved land |  |  | 15,195 |  |  | 18,455 |  |  | 19,076 |  |  | 19,069 |  |  | 18,933 |
Total real estate investments |  |  | 1,390,678 |  |  | 1,355,519 |  |  | 1,381,555 |  |  | 1,383,554 |  |  | 1,394,742 |
Assets held for sale and assets of discontinued operations |  |  | 37,552 |  |  | 37,708 |  |  | 140,226 |  |  | 191,233 |  |  | 215,817 |
Cash and cash equivalents |  |  | 23,801 |  |  | 28,819 |  |  | 56,999 |  |  | 68,729 |  |  | 54,438 |
Receivable arising from straight-lining of rents, net of allowance |  |  | 7,992 |  |  | 7,822 |  |  | 7,839 |  |  | 7,660 |  |  | 7,683 |
Accounts receivable, net of allowance |  |  | 2,184 |  |  | 2,600 |  |  | 3,878 |  |  | 9,815 |  |  | 3,018 |
Real estate deposits |  |  | — |  |  | 23,659 |  |  | — |  |  | 1,370 |  |  | — |
Prepaid and other assets |  |  | 2,125 |  |  | 3,131 |  |  | 4,060 |  |  | 3,496 |  |  | 2,265 |
Notes receivable |  |  | 3,000 |  |  | — |  |  | — |  |  | — |  |  | — |
Intangible assets, net of accumulated amortization |  |  | 1,249 |  |  | 658 |  |  | 731 |  |  | 842 |  |  | 1,172 |
Tax, insurance, and other escrow |  |  | 4,285 |  |  | 5,050 |  |  | 5,724 |  |  | 4,786 |  |  | 4,752 |
Property and equipment, net of accumulated depreciation |  |  | 836 |  |  | 901 |  |  | 915 |  |  | 928 |  |  | 977 |
Goodwill |  |  | 1,572 |  |  | 1,572 |  |  | 1,645 |  |  | 1,645 |  |  | 1,680 |
Deferred charges and leasing costs, net of accumulated amortization |  |  | 7,076 |  |  | 7,075 |  |  | 5,517 |  |  | 5,261 |  |  | 4,999 |
TOTAL ASSETS |  | $ | 1,482,350 |  | $ | 1,474,514 |  | $ | 1,609,089 |  | $ | 1,679,319 |  | $ | 1,691,543 |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liabilities held for sale and liabilities of discontinued operations |  | $ | 29,683 |  | $ | 30,062 |  | $ | 54,291 |  | $ | 69,326 |  | $ | 76,195 |
Accounts payable and accrued expenses |  |  | 36,859 |  |  | 40,350 |  |  | 41,351 |  |  | 40,382 |  |  | 41,797 |
Revolving line of credit |  |  | 125,900 |  |  | 57,050 |  |  | 157,000 |  |  | 47,500 |  |  | 17,500 |
Mortgages payable, net of loan costs |  |  | 660,753 |  |  | 661,960 |  |  | 688,424 |  |  | 779,568 |  |  | 812,082 |
Construction debt and other |  |  | 20,205 |  |  | 41,817 |  |  | 39,524 |  |  | 82,742 |  |  | 78,481 |
TOTAL LIABILITIES |  |  | 873,400 |  |  | 831,239 |  |  | 980,590 |  |  | 1,019,518 |  |  | 1,026,055 |
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES |  |  | 7,010 |  |  | 7,181 |  |  | 7,300 |  |  | 8,585 |  |  | 7,468 |
EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
IRET shareholders’ equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Series A Preferred Shares of Beneficial Interest |  |  | — |  |  | — |  |  | — |  |  | 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 |  |  | 912,625 |  |  | 916,121 |  |  | 921,735 |  |  | 920,759 |  |  | 922,698 |
Accumulated distributions in excess of net income |  |  | (488,535) |  |  | (466,541) |  |  | (486,015) |  |  | (489,356) |  |  | (482,264) |
Total IRET shareholders’ equity |  |  | 535,447 |  |  | 560,937 |  |  | 547,077 |  |  | 570,077 |  |  | 579,108 |
Noncontrolling interests – Operating Partnership |  |  | 64,789 |  |  | 73,233 |  |  | 72,007 |  |  | 71,994 |  |  | 73,071 |
Noncontrolling interests – consolidated real estate entities |  |  | 1,704 |  |  | 1,924 |  |  | 2,115 |  |  | 9,145 |  |  | 5,841 |
Total equity |  |  | 601,940 |  |  | 636,094 |  |  | 621,199 |  |  | 651,216 |  |  | 658,020 |
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY |  | $ | 1,482,350 |  | $ | 1,474,514 |  | $ | 1,609,089 |  | $ | 1,679,319 |  | $ | 1,691,543 |

S-4

IRET

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

|  | Three Months Ended |
OPERATING RESULTS |  | 7/31/2017 |  | 4/30/2017 |  | 1/31/2017 |  | 10/31/2016 |  | 7/31/2016 |
Real estate revenue |  | $ | 52,735 |  | $ | 54,344 |  | $ | 51,174 |  | $ | 50,609 |  | $ | 49,611 |
Real estate expenses |  |  | 24,250 |  |  | 22,355 |  |  | 22,793 |  |  | 21,573 |  |  | 21,634 |
Net operating income |  |  | 28,485 |  |  | 31,989 |  |  | 28,381 |  |  | 29,036 |  |  | 27,977 |
Depreciation/amortization |  |  | (28,927) |  |  | (13,736) |  |  | (13,475) |  |  | (13,531) |  |  | (14,267) |
Impairment of real estate investments |  |  | (256) |  |  | (2,875) |  |  | — |  |  | — |  |  | (54,153) |
General and administrative expenses |  |  | (4,002) |  |  | (4,728) |  |  | (4,172) |  |  | (3,522) |  |  | (3,501) |
Development pursuit and other write-offs |  |  | — |  |  | (3,224) |  |  | — |  |  | — |  |  | — |
Interest expense |  |  | (9,295) |  |  | (9,457) |  |  | (10,680) |  |  | (10,626) |  |  | (10,364) |
Loss on extinguishment of debt |  |  | (199) |  |  | (1,192) |  |  | (1,907) |  |  | — |  |  | — |
Interest and other income |  |  | 231 |  |  | 465 |  |  | 430 |  |  | 93 |  |  | 188 |
(Loss) income before income (loss) on sale of real estate and other investments and income (loss) from discontinued operations |  |  | (13,963) |  |  | (2,758) |  |  | (1,423) |  |  | 1,450 |  |  | (54,120) |
Income (loss) on sale of real estate and other investments |  |  | 124 |  |  | 7,409 |  |  | 2,437 |  |  | (103) |  |  | 8,958 |
(Loss) income from continuing operations |  |  | (13,839) |  |  | 4,651 |  |  | 1,014 |  |  | 1,347 |  |  | (45,162) |
Income from discontinued operations |  |  | 560 |  |  | 28,989 |  |  | 24,175 |  |  | 10,943 |  |  | 4,568 |
Net (loss) income |  | $ | (13,279) |  | $ | 33,640 |  | $ | 25,189 |  | $ | 12,290 |  | $ | (40,594) |
Net loss (income) attributable to noncontrolling interest – Operating Partnership |  |  | 1,644 |  |  | (3,656) |  |  | (2,525) |  |  | (1,174) |  |  | 3,296 |
Net loss attributable to noncontrolling interests – consolidated real estate entities |  |  | 371 |  |  | 296 |  |  | 446 |  |  | 484 |  |  | 15,655 |
Net (loss) income attributable to IRET |  |  | (11,264) |  |  | 30,280 |  |  | 23,110 |  |  | 11,600 |  |  | (21,643) |
Dividends to preferred shareholders |  |  | (2,286) |  |  | (2,286) |  |  | (2,503) |  |  | (2,878) |  |  | (2,879) |
Redemption of Preferred Shares |  |  | — |  |  | — |  |  | (1,435) |  |  | — |  |  | — |
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS |  | $ | (13,550) |  | $ | 27,994 |  | $ | 19,172 |  | $ | 8,722 |  | $ | (24,522) |
Per Share Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Loss) earnings per common share from continuing operations – IRET – basic & diluted |  | $ | (0.11) |  | $ | 0.02 |  | $ | (0.02) |  | $ | (0.01) |  | $ | (0.23) |
Earnings per common share from discontinued operations – IRET – basic & diluted |  |  | — |  |  | 0.21 |  |  | 0.18 |  |  | 0.08 |  |  | 0.03 |
Net (loss) income per common share – basic & diluted |  | $ | (0.11) |  | $ | 0.23 |  | $ | 0.16 |  | $ | 0.07 |  | $ | (0.20) |
Percentage of Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate expenses |  |  | 46.0 | % |  | 41.1 | % |  | 44.5 | % |  | 42.6 | % |  | 43.6 | %
Depreciation/amortization |  |  | 54.9 | % |  | 25.3 | % |  | 26.3 | % |  | 26.7 | % |  | 28.8 | %
General and administrative expenses |  |  | 7.6 | % |  | 8.7 | % |  | 8.1 | % |  | 7.0 | % |  | 7.0 | %
Interest |  |  | 17.6 | % |  | 17.4 | % |  | 20.9 | % |  | 21.0 | % |  | 20.9 | %
Income from discontinued operations |  |  | 1.1 | % |  | 53.3 | % |  | 47.2 | % |  | 21.6 | % |  | 9.2 | %
Net (loss) income |  |  | (25.2) | % |  | 61.9 | % |  | 49.2 | % |  | 24.3 | % |  | (81.8) | %
Ratios |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Adjusted EBITDA(1)/Interest expense |  |  | 2.45 | x |  | 2.45 | x |  | 2.47 | x |  | 2.54 | x |  | 2.52 | x
Adjusted EBITDA(1)/Interest expense plus preferred distributions |  |  | 2.00 | x |  | 2.00 | x |  | 2.04 | x |  | 2.05 | x |  | 2.03 | x

| (1) |  | See Definitions on page S-21. Adjusted EBITDA is a non-GAAP measure; see page S-7 for a reconciliation of Adjusted EBITDA to net income.

S-5

IRET

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO

IRET TO FFO AND CORE FFO (unaudited)

(in thousands, except per share and unit data)

|  | Three Months Ended |
|  | 7/31/2017 |  | 4/30/2017 |  | 1/31/2017 |  | 10/31/2016 |  | 7/31/2016 |
Funds From Operations(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net (loss) income attributable to IRET |  | $ | (11,264) |  | $ | 30,280 |  | $ | 23,110 |  | $ | 11,600 |  | $ | (21,643) |
Less dividends to preferred shareholders |  |  | (2,286) |  |  | (2,286) |  |  | (2,503) |  |  | (2,878) |  |  | (2,879) |
Less redemption of preferred shares |  |  | — |  |  | — |  |  | (1,435) |  |  | — |  |  | — |
Net (loss) income available to common shareholders |  |  | (13,550) |  |  | 27,994 |  |  | 19,172 |  |  | 8,722 |  |  | (24,522) |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncontrolling interests – Operating Partnership |  |  | (1,644) |  |  | 3,656 |  |  | 2,525 |  |  | 1,174 |  |  | (3,296) |
Depreciation and amortization of real property |  |  | 28,119 |  |  | 13,222 |  |  | 12,933 |  |  | 12,971 |  |  | 13,437 |
Impairment of real estate investments attributable to IRET |  |  | 256 |  |  | 2,875 |  |  | — |  |  | — |  |  | 39,189 |
Gain on depreciable property sales |  |  | (124) |  |  | (37,517) |  |  | (21,972) |  |  | (6,400) |  |  | (8,958) |
FFO applicable to common shares and Units |  | $ | 13,057 |  | $ | 10,230 |  | $ | 12,658 |  | $ | 16,467 |  | $ | 15,850 |
FFO per share and unit - basic and diluted |  | $ | 0.10 |  | $ | 0.07 |  | $ | 0.09 |  | $ | 0.12 |  | $ | 0.12 |
Adjustments to Core FFO: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Lease termination fees |  |  | — |  |  | (3,244) |  |  | (7) |  |  | — |  |  | — |
Straight-line rents |  |  | (66) |  |  | (174) |  |  | (292) |  |  | 162 |  |  | (697) |
Non-real estate depreciation |  |  | 77 |  |  | 78 |  |  | 69 |  |  | 69 |  |  | 88 |
Loss on extinguishment of debt |  |  | 199 |  |  | 2,910 |  |  | 1,907 |  |  | 72 |  |  | — |
Redemption of Preferred Shares |  |  | — |  |  | — |  |  | 1,435 |  |  | — |  |  | — |
Transition and severance costs |  |  | 464 |  |  | 1,191 |  |  | — |  |  | — |  |  | — |
Development pursuit and other write-offs |  |  | — |  |  | 3,224 |  |  | — |  |  | — |  |  | — |
Core FFO applicable to common shares and Units |  | $ | 13,731 |  | $ | 14,215 |  | $ | 15,770 |  | $ | 16,770 |  | $ | 15,241 |
Core FFO per share and unit - basic and diluted |  | $ | 0.10 |  | $ | 0.10 |  | $ | 0.11 |  | $ | 0.12 |  | $ | 0.11 |
Weighted average shares and units |  |  | 135,549 |  |  | 136,952 |  |  | 137,375 |  |  | 137,418 |  |  | 137,402 |

| (1) |  | See Definitions on page S-21.

S-6

IRET

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO

IRET TO ADJUSTED EARNINGS BEFORE INTEREST,

TAXES, DEPRECIATION, AND AMORTIZATION (ADJUSTED EBITDA) (unaudited)

(in thousands)

|  | Three Months Ended |
|  | 7/31/2017 |  | 4/30/2017 |  | 1/31/2017 |  | 10/31/2016 |  | 7/31/2016 |
Adjusted EBITDA(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net (loss) income attributable to IRET |  | $ | (11,264) |  | $ | 30,280 |  | $ | 23,110 |  | $ | 11,600 |  | $ | (21,643) |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncontrolling interests – Operating Partnership |  |  | (1,644) |  |  | 3,656 |  |  | 2,525 |  |  | 1,174 |  |  | (3,296) |
Income before noncontrolling interests – Operating Partnership |  |  | (12,908) |  |  | 33,936 |  |  | 25,635 |  |  | 12,774 |  |  | (24,939) |
Add: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | 9,703 |  |  | 10,303 |  |  | 11,880 |  |  | 12,021 |  |  | 11,738 |
Loss on extinguishment of debt |  |  | 199 |  |  | 2,910 |  |  | 1,907 |  |  | 72 |  |  | — |
Depreciation/amortization related to real estate investments |  |  | 28,215 |  |  | 13,280 |  |  | 12,983 |  |  | 13,014 |  |  | 13,497 |
Amortization related to real estate revenues(2) |  |  | — |  |  | 20 |  |  | 21 |  |  | 27 |  |  | 27 |
Impairment of real estate investments attributable to IRET |  |  | 256 |  |  | 2,875 |  |  | — |  |  | — |  |  | 39,190 |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  | (564) |  |  | (557) |  |  | (816) |  |  | (600) |  |  | (572) |
Gain on sale of real estate and other investments |  |  | (124) |  |  | (37,517) |  |  | (21,972) |  |  | (6,400) |  |  | (8,958) |
Adjusted EBITDA |  |  | 24,777 |  |  | 25,250 |  |  | 29,638 |  |  | 30,908 |  |  | 29,983 |

| (1) |  | See Definitions on page S-21.

| (2) |  | Included in real estate revenue in the Statement of Operations.

S-7

IRET

DEBT ANALYSIS

(in thousands)

Debt Maturity Schedule

Annual Expirations

Total Maturing Debt

|  | Future Maturities of Debt(1) |
Fiscal Year |  | Fixed Debt |  | Variable Debt |  | Total Debt |  | Weighted Average(2) |  | % of Total Debt |
2018 |  | $ | 5,574 |  | $ | 23,099 |  | $ | 28,673 |  |  | 3.86 | % |  | 3.5 | %
2019 |  |  | 20,094 |  |  | 43,343 |  |  | 63,437 |  |  | 4.17 | % |  | 7.7 | %
2020 |  |  | 104,779 |  |  | 32,265 |  |  | 137,044 |  |  | 5.59 | % |  | 16.5 | %
2021 |  |  | 93,553 |  |  | — |  |  | 93,553 |  |  | 5.13 | % |  | 11.2 | %
2022 |  |  | 120,858 |  |  | 1,681 |  |  | 122,539 |  |  | 5.17 | % |  | 14.7 | %
2023 |  |  | 28,556 |  |  | — |  |  | 28,556 |  |  | 4.13 | % |  | 3.4 | %
2024 |  |  | 50,937 |  |  | — |  |  | 50,937 |  |  | 4.02 | % |  | 6.1 | %
2025 |  |  | 18,738 |  |  | — |  |  | 18,738 |  |  | 4.04 | % |  | 2.2 | %
2026 |  |  | 54,973 |  |  | — |  |  | 54,973 |  |  | 3.74 | % |  | 6.6 | %
2027 |  |  | 92,000 |  |  | — |  |  | 92,000 |  |  | 3.56 | % |  | 11.1 | %
Thereafter |  |  | 14,966 |  |  | — |  |  | 14,966 |  |  | 4.93 | % |  | 1.8 | %
Total maturing debt |  | $ | 605,028 |  | $ | 100,388 |  | $ | 705,416 |  |  | 4.62 | % |  | 84.8 | %
Unsecured line of credit |  |  | — |  |  | 125,900 |  |  | 125,900 |  |  | 2.98 | % |  | 15.2 | %
Total debt |  |  | 605,028 |  |  | 226,288 |  |  | 831,316 |  |  | 4.37 | % |  | 100.0 | %

| (1) |  | Includes mortgages on properties held for sale, construction debt, and line of credit.

| (2) |  | Weighted average interest rate of debt that matures in fiscal year.

S-8

IRET

DEBT ANALYSIS

(in thousands)

|  |  | 7/31/2017 |  | 4/30/2017 |  | 1/31/2017 |  | 10/31/2016 |  | 7/31/2016 |
Debt Balances Outstanding(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed rate |  | $ | 605,028 |  | $ | 629,535 |  | $ | 658,224 |  | $ | 617,694 |  | $ | 635,251 |
Variable rate |  |  | 100,388 |  |  | 99,445 |  |  | 81,314 |  |  | 226,891 |  |  | 249,169 |
Line of credit |  |  | 125,900 |  |  | 57,050 |  |  | 157,000 |  |  | 47,500 |  |  | 17,500 |
Debt total |  | $ | 831,316 |  | $ | 786,030 |  | $ | 896,538 |  | $ | 892,085 |  | $ | 901,920 |
Weighted Average Interest Rates Secured |  |  | 4.62 | % |  | 4.63 | % |  | 4.71 | % |  | 4.52 | % |  | 4.54 | %
Line of Credit Rate |  |  | 2.98 | % |  | 2.74 | % |  | 2.55 | % |  | 4.75 | % |  | 4.75 | %

| (1) |  | Includes mortgages on properties held for sale.

S-9

IRET

DEBT DETAIL AS OF JULY 31, 2017

(in thousands)

Property |  | Maturity Date |  | Fiscal 2018 |  | Fiscal 2019 |  | Fiscal 2020 |  | Fiscal 2021 |  | Thereafter |  | Total(1) |
Multifamily |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Evergreen II – Isanti, MN |  | 11/1/2017 |  |  | 1,960 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,960 |
Ponds – Sartell, MN |  | 11/1/2017 |  |  | 3,614 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,614 |
Monticello Crossings - Monticello, MN |  | 5/4/2018 |  |  | — |  |  | 20,043 |  |  | — |  |  | — |  |  | — |  |  | 20,043 |
Homestead Gardens II - Rapid City, SD |  | 6/1/2018 |  |  | — |  |  | 3,008 |  |  | — |  |  | — |  |  | — |  |  | 3,008 |
Cardinal Point - Grand Forks, ND |  | 8/1/2018 |  |  | — |  |  | 23,300 |  |  | — |  |  | — |  |  | — |  |  | 23,300 |
Plaza - Minot, ND |  | 8/1/2018 |  |  | — |  |  | 5,031 |  |  | — |  |  | — |  |  | — |  |  | 5,031 |
Greenfield - Omaha, NE |  | 2/1/2019 |  |  | — |  |  | 3,437 |  |  | — |  |  | — |  |  | — |  |  | 3,437 |
Brooklyn Heights - Minot, ND(2) |  | 4/1/2019 |  |  | — |  |  | 557 |  |  | — |  |  | — |  |  | — |  |  | 557 |
Colton Heights - Minot, ND(2) |  | 4/1/2019 |  |  | — |  |  | 313 |  |  | — |  |  | — |  |  | — |  |  | 313 |
Pines - Minot, ND(2) |  | 4/1/2019 |  |  | — |  |  | 89 |  |  | — |  |  | — |  |  | — |  |  | 89 |
Summit Park - Minot, ND(2) |  | 4/1/2019 |  |  | — |  |  | 773 |  |  | — |  |  | — |  |  | — |  |  | 773 |
Terrace Heights - Minot, ND(2) |  | 4/1/2019 |  |  | — |  |  | 129 |  |  | — |  |  | — |  |  | — |  |  | 129 |
Monticello Village - Monticello, MN |  | 5/28/2019 |  |  | — |  |  | — |  |  | 2,843 |  |  | — |  |  | — |  |  | 2,843 |
Rimrock West - Billings, MT |  | 9/1/2019 |  |  | — |  |  | — |  |  | 3,143 |  |  | — |  |  | — |  |  | 3,143 |
Rocky Meadows - Billings, MT |  | 9/1/2019 |  |  | — |  |  | — |  |  | 4,873 |  |  | — |  |  | — |  |  | 4,873 |
Cimarron Hills - Omaha, NE |  | 10/1/2019 |  |  | — |  |  | — |  |  | 4,539 |  |  | — |  |  | — |  |  | 4,539 |
Cottonwood - Bismarck, ND |  | 10/1/2019 |  |  | — |  |  | — |  |  | 15,046 |  |  | — |  |  | — |  |  | 15,046 |
Forest Park - Grand Forks, ND |  | 10/1/2019 |  |  | — |  |  | — |  |  | 7,236 |  |  | — |  |  | — |  |  | 7,236 |
Renaissance Heights I - Williston, ND |  | 10/1/2019 |  |  | — |  |  | — |  |  | 23,267 |  |  | — |  |  | — |  |  | 23,267 |
Williston Garden - Williston, ND |  | 10/30/2019 |  |  | — |  |  | — |  |  | 7,274 |  |  | — |  |  | — |  |  | 7,274 |
Williston Garden - Williston, ND |  | 10/30/2019 |  |  | — |  |  | — |  |  | 203 |  |  | — |  |  | — |  |  | 203 |
Evergreen - Isanti, MN |  | 11/1/2019 |  |  | — |  |  | — |  |  | 1,904 |  |  | — |  |  | — |  |  | 1,904 |
Pinehurst - Billings, MT |  | 11/1/2019 |  |  | — |  |  | — |  |  | 110 |  |  | — |  |  | — |  |  | 110 |
Northridge - Bismarck, ND |  | 12/1/2019 |  |  | — |  |  | — |  |  | 5,952 |  |  | — |  |  | — |  |  | 5,952 |
Castlerock - Billings, MT |  | 1/1/2020 |  |  | — |  |  | — |  |  | 6,316 |  |  | — |  |  | — |  |  | 6,316 |
Thomasbrook - Lincoln, NE |  | 1/1/2020 |  |  | — |  |  | — |  |  | 5,659 |  |  | — |  |  | — |  |  | 5,659 |
Westwood Park - Bismarck, ND |  | 1/1/2020 |  |  | — |  |  | — |  |  | 1,870 |  |  | — |  |  | — |  |  | 1,870 |
Kirkwood Manor - Bismarck, ND |  | 2/1/2020 |  |  | — |  |  | — |  |  | 3,130 |  |  | — |  |  | — |  |  | 3,130 |
Brookfield Village - Topeka, KS |  | 3/1/2020 |  |  | — |  |  | — |  |  | 4,999 |  |  | — |  |  | — |  |  | 4,999 |
Crown Colony - Topeka, KS |  | 4/1/2020 |  |  | — |  |  | — |  |  | 7,739 |  |  | — |  |  | — |  |  | 7,739 |
Mariposa - Topeka, KS |  | 4/1/2020 |  |  | — |  |  | — |  |  | 2,801 |  |  | — |  |  | — |  |  | 2,801 |
Sherwood - Topeka, KS |  | 4/1/2020 |  |  | — |  |  | — |  |  | 11,625 |  |  | — |  |  | — |  |  | 11,625 |
Deer Ridge |  | 5/1/2020 |  |  | — |  |  | — |  |  | — |  |  | 11,419 |  |  | — |  |  | 11,419 |
Valley Park - Grand Forks, ND |  | 6/1/2020 |  |  | — |  |  | — |  |  | — |  |  | 3,664 |  |  | — |  |  | 3,664 |
Country Meadows II - Billings, MT |  | 10/1/2020 |  |  | — |  |  | — |  |  | — |  |  | 3,338 |  |  | — |  |  | 3,338 |
Olympic Village - Billings, MT |  | 11/1/2020 |  |  | — |  |  | — |  |  | — |  |  | 10,102 |  |  | — |  |  | 10,102 |
Villa West Apartments - Topeka, KS |  | 12/1/2020 |  |  | — |  |  | — |  |  | — |  |  | 11,678 |  |  | — |  |  | 11,678 |
Park Meadows - Waite Park, MN |  | 1/1/2021 |  |  | — |  |  | — |  |  | — |  |  | 8,157 |  |  | — |  |  | 8,157 |
Sunset Trail - Rochester, MN |  | 2/1/2021 |  |  | — |  |  | — |  |  | — |  |  | 7,695 |  |  | — |  |  | 7,695 |
Summary of Debt due after Fiscal 2021 |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 344,785 |  |  | 344,785 |
Sub-Total Multifamily |  |  |  | $ | 5,574 |  | $ | 56,680 |  | $ | 120,529 |  | $ | 56,053 |  | $ | 344,785 |  | $ | 583,621 |
Healthcare |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Edgewood Vista – Hermantown I, MN(2) |  | 8/28/2017 |  |  | 15,869 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,869 |
High Pointe Health Campus – Lake Elmo, MN |  | 4/1/2018 |  |  | 7,230 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 7,230 |
Denfeld Clinic - Duluth, MN |  | 8/1/2019 |  |  | — |  |  | — |  |  | 1,147 |  |  | — |  |  | — |  |  | 1,147 |
Gateway Clinic - Sandstone, MN |  | 8/1/2019 |  |  | — |  |  | — |  |  | 664 |  |  | — |  |  | — |  |  | 664 |
Mariner Clinic - Superior, WI |  | 8/1/2019 |  |  | — |  |  | — |  |  | 1,452 |  |  | — |  |  | — |  |  | 1,452 |
Pavilion I - Duluth, MN |  | 8/1/2019 |  |  | — |  |  | — |  |  | 3,826 |  |  | — |  |  | — |  |  | 3,826 |
Pavilion II - Duluth, MN |  | 8/1/2019 |  |  | — |  |  | — |  |  | 7,041 |  |  | — |  |  | — |  |  | 7,041 |

S-10

IRET

DEBT DETAIL AS OF JULY 31, 2017

(in thousands)

Property |  | Maturity Date |  | Fiscal 2018 |  | Fiscal 2019 |  | Fiscal 2020 |  | Fiscal 2021 |  | Thereafter |  | Total (1) |
Wells Clinic - Hibbing, MN |  | 8/1/2019 |  |  | — |  |  | — |  |  | 1,013 |  |  | — |  |  | — |  |  | 1,013 |
Edina 6525 France SMC II - Edina, MN |  | 12/1/2020 |  |  | — |  |  | — |  |  | — |  |  | 9,340 |  |  | — |  |  | 9,340 |
Edina 6545 France - 2nd Mtg/Parking Ramp - Edina, MN |  | 12/1/2020 |  |  | — |  |  | — |  |  | — |  |  | 880 |  |  | — |  |  | 880 |
Edina 6545 France SMC I - Edina, MN |  | 12/1/2020 |  |  | — |  |  | — |  |  | — |  |  | 27,280 |  |  | — |  |  | 27,280 |
Summary of Debt due after Fiscal 2021 |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 35,574 |  |  | 35,574 |
Sub-Total Healthcare |  |  |  | $ | 23,099 |  | $ | — |  | $ | 15,143 |  | $ | 37,500 |  | $ | 35,574 |  | $ | 111,316 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Plaza 16 – Minot, ND |  | 8/1/2018 |  |  | — |  |  | 6,676 |  |  | — |  |  | — |  |  | — |  |  | 6,676 |
Lexington Commerce Center - Eagan, MN |  | 2/1/2020 |  |  | — |  |  | — |  |  | 1,372 |  |  | — |  |  | — |  |  | 1,372 |
Summary of Debt due after Fiscal 2021 |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,350 |  |  | 2,350 |
Sub-Total All Other |  |  |  | $ | — |  | $ | 6,676 |  | $ | 1,372 |  | $ | — |  | $ | 2,350 |  | $ | 10,398 |
Total maturing debt |  |  |  | $ | 28,673 |  | $ | 63,356 |  | $ | 137,044 |  | $ | 93,553 |  | $ | 382,709 |  | $ | 705,335 |
Unsecured line of credit |  | 1/31/2021 |  |  | — |  |  | — |  |  | — |  |  | 125,900 |  |  | — |  |  | 125,900 |
Total debt |  |  |  | $ | 28,673 |  | $ | 63,356 |  | $ | 137,044 |  | $ | 219,453 |  | $ | 382,709 |  | $ | 831,235 |

| (1) |  | Totals are principal balances of mortgages, construction debt and line of credit as of July 31, 2017.

| (2) |  | Property is classified as held for sale at July 31, 2017.

S-11

IRET

CAPITAL ANALYSIS

(in thousands, except per share and unit amounts)

|  |  | Three Months Ended
|  |  | 7/31/2017 |  | 4/30/2017 |  | 1/31/2017 |  | 10/31/2016 |  | 7/31/2016 |
Equity Capitalization |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common shares outstanding |  |  | 120,587 |  |  | 121,199 |  |  | 121,889 |  |  | 121,701 |  |  | 121,528 |
Operating partnership (OP) units outstanding |  |  | 14,657 |  |  | 15,617 |  |  | 16,034 |  |  | 16,229 |  |  | 16,285 |
Total common shares and OP units outstanding |  |  | 135,244 |  |  | 136,816 |  |  | 137,923 |  |  | 137,930 |  |  | 137,813 |
Market price per common share (closing price at end of period) |  | $ | 6.22 |  | $ | 5.91 |  | $ | 6.44 |  | $ | 6.07 |  | $ | 6.62 |
Equity capitalization-common shares and OP units |  | $ | 841,218 |  | $ | 808,583 |  | $ | 888,224 |  | $ | 837,235 |  | $ | 912,322 |
Recorded book value of preferred shares |  | $ | 111,357 |  | $ | 111,357 |  | $ | 111,357 |  | $ | 138,674 |  | $ | 138,674 |
Total equity capitalization |  | $ | 952,575 |  | $ | 919,940 |  | $ | 999,581 |  | $ | 975,909 |  | $ | 1,050,996 |
Debt Capitalization |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total debt |  | $ | 839,134 |  | $ | 793,827 |  | $ | 943,751 |  | $ | 982,486 |  | $ | 988,031 |
Total capitalization |  | $ | 1,791,709 |  | $ | 1,713,767 |  | $ | 1,943,332 |  | $ | 1,958,395 |  | $ | 2,039,027 |
Total debt to total capitalization |  |  | 0.47:1 |  |  | 0.46:1 |  |  | 0.49:1 |  |  | 0.50:1 |  |  | 0.48:1 |

|  | Three Months Ended |
|  | 7/31/2017 |  | 4/30/2017 |  | 1/31/2017 |  | 10/31/2016 |  | 7/31/2016 |
Earnings to fixed charges(1) |  |  | (2) |  |  | 1.48 | x |  | 1.12 | x |  | 1.14 | x |  | (5) |
Earnings to combined fixed charges and preferred distributions(1) |  |  | (2) |  |  | 1.21 |  |  | (3) |  |  | (4) |  |  | (5) |
Debt service coverage ratio(1) |  |  | 1.75 | x |  | 1.69 | x |  | 1.67 | x |  | 1.66 | x |  | 1.62 | x
Distribution Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common shares and units outstanding at record date |  |  | 135,830 |  |  | 137,723 |  |  | 137,944 |  |  | 137,934 |  |  | 137,376 |
Total common distribution paid |  | $ | 9,509 |  | $ | 9,641 |  | $ | 17,929 |  | $ | 17,931 |  | $ | 17,859 |
Common distribution per share and unit |  | $ | 0.07 |  | $ | 0.07 |  | $ | 0.07 |  | $ | 0.13 |  | $ | 0.13 |
Payout ratio (FFO per share and unit basis)(1) |  |  | 70.0 | % |  | 100.0 | % |  | 77.8 | % |  | 108.3 | % |  | 108.3 | %

| (1) |  | Payout ratio (FFO per share and unit basis) is 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.

| (2) |  | Earnings were inadequate to cover (a) fixed charges and (b) combined fixed charges and preferred distributions by $13.4 million and $15.7 million, respectively. Excluding non-cash depreciation charges related to a change in depreciable lives of $14.4 million in the three months ended July 31, 2017, the ratio of earnings to fixed charges and of earnings to combined fixed charges and preferred distributions would have been 1.10x and 0.90x, respectively, for the three months ended July 31, 2017.

| (3) |  | Earnings were inadequate to cover combined fixed charges and preferred distributions by $1.1 million. The ratio of earnings to combined fixed charges and preferred distributions was .92x for the three months ended January 31, 2017.

| (4) |  | Earnings were inadequate to cover combined fixed charges and preferred distributions by $1.1 million. The ratio of earnings to combined fixed charges and preferred distributions was .92x for the three months ended October 31, 2016.

| (5) |  | Earnings were inadequate to cover (a) fixed charges and (b) combined fixed charges and preferred distributions by $29.6 million and $32.5 million, respectively. Excluding non-cash asset impairment charges of $54.2 million in the three months ended July 31, 2016, the ratio of earnings to fixed charges and of earnings to combined fixed charges and preferred distributions would have been 3.06x and 2.47x, respectively, for the three months ended July 31, 2016.

S-12

IRET

NET OPERATING INCOME DETAIL

(in thousands)

|  | Three Months Ended July 31, 2017 |
|  | Reporting Segments |
|  |  |  |  |  |  |  |  |  |  | Corporate and |  |  |  |
|  | Multifamily |  | Healthcare |  | All Other |  | Other |  | Total |
Real estate rental revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store |  | $ | 31,938 |  | $ | 10,808 |  | $ | 2,280 |  | $ | — |  | $ | 45,026 |
Non-same-store |  |  | 6,492 |  |  | 570 |  |  | 647 |  |  | — |  |  | 7,709 |
Total |  |  | 38,430 |  |  | 11,378 |  |  | 2,927 |  |  | — |  |  | 52,735 |
Real estate expenses(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store |  |  | 14,728 |  |  | 4,080 |  |  | 585 |  |  | 1,520 |  |  | 20,913 |
Non-same-store |  |  | 2,737 |  |  | 205 |  |  | 208 |  |  | 187 |  |  | 3,337 |
Total |  |  | 17,465 |  |  | 4,285 |  |  | 793 |  |  | 1,707 |  |  | 24,250 |
Net operating income (NOI) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store |  |  | 17,210 |  |  | 6,728 |  |  | 1,695 |  |  | (1,520) |  |  | 24,113 |
Non-same-store |  |  | 3,755 |  |  | 365 |  |  | 439 |  |  | (187) |  |  | 4,372 |
Net operating income (loss) |  | $ | 20,965 |  | $ | 7,093 |  | $ | 2,134 |  | $ | (1,707) |  | $ | 28,485 |
Reconciliation of NOI to net income (loss) available to common shareholders |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation/amortization |  | $ | (22,317) |  | $ | (3,630) |  | $ | (2,903) |  | $ | (77) |  | $ | (28,927) |
Impairment of real estate investments |  |  | — |  |  | — |  |  | — |  |  | (256) |  |  | (256) |
General and administrative expenses |  |  | — |  |  | — |  |  | — |  |  | (4,002) |  |  | (4,002) |
Interest expense |  |  | (6,880) |  |  | (1,164) |  |  | (247) |  |  | (1,004) |  |  | (9,295) |
Loss on debt extinguishment |  |  | (199) |  |  | — |  |  | — |  |  | — |  |  | (199) |
Interest and other income |  |  | — |  |  | — |  |  | — |  |  | 231 |  |  | 231 |
(Loss) income before gain on sale of real estate and other investments and income from discontinued operations |  |  | (8,431) |  |  | 2,299 |  |  | (1,016) |  |  | (6,815) |  |  | (13,963) |
Gain on sale of real estate and other investments |  |  | — |  |  | — |  |  | 108 |  |  | 16 |  |  | 124 |
(Loss) income from continuing operations |  |  | (8,431) |  |  | 2,299 |  |  | (908) |  |  | (6,799) |  |  | (13,839) |
Income from discontinued operations |  |  | — |  |  | 560 |  |  | — |  |  | — |  |  | 560 |
Net (loss) income |  |  | (8,431) |  |  | 2,859 |  |  | (908) |  |  | (6,799) |  |  | (13,279) |
Net loss attributable to noncontrolling interests – Operating Partnership |  |  | — |  |  | — |  |  | — |  |  | 1,644 |  |  | 1,644 |
Net loss attributable to noncontrolling interests – consolidated real estate entities |  |  | — |  |  | — |  |  | — |  |  | 371 |  |  | 371 |
Net (loss) income attributable to IRET |  |  | (8,431) |  |  | 2,859 |  |  | (908) |  |  | (4,784) |  |  | (11,264) |
Dividends to preferred shareholders |  |  | — |  |  | — |  |  | — |  |  | (2,286) |  |  | (2,286) |
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS |  | $ | (8,431) |  | $ | 2,859 |  | $ | (908) |  | $ | (7,070) |  | $ | (13,550) |

| (1) |  | Offsite costs associated with property management and casualty-related amounts are included in the Corporate and Other column.

S-13

IRET

NET OPERATING INCOME DETAIL

(in thousands)

|  | Three Months Ended July 31, 2016 |
|  | Reporting Segments |
|  |  |  |  |  |  |  |  |  |  | Corporate and |  |  |  |
|  | Multifamily |  | Healthcare |  | All Other |  | Other |  | Total |
Real estate rental revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store |  | $ | 30,752 |  | $ | 10,605 |  | $ | 2,259 |  | $ | — |  | $ | 43,616 |
Non-same-store |  |  | 4,290 |  |  | 936 |  |  | 769 |  |  | — |  |  | 5,995 |
Total |  |  | 35,042 |  |  | 11,541 |  |  | 3,028 |  |  | — |  |  | 49,611 |
Real estate expenses(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store |  |  | 12,930 |  |  | 3,886 |  |  | 583 |  |  | 1,727 |  |  | 19,126 |
Non-same-store |  |  | 1,949 |  |  | 306 |  |  | 142 |  |  | 111 |  |  | 2,508 |
Total |  |  | 14,879 |  |  | 4,192 |  |  | 725 |  |  | 1,838 |  |  | 21,634 |
Net operating income (NOI) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store |  |  | 17,822 |  |  | 6,719 |  |  | 1,676 |  |  | (1,727) |  |  | 24,490 |
Non-same-store |  |  | 2,341 |  |  | 630 |  |  | 627 |  |  | (111) |  |  | 3,487 |
Net operating income (loss) |  | $ | 20,163 |  | $ | 7,349 |  | $ | 2,303 |  | $ | (1,838) |  | $ | 27,977 |
Reconciliation of NOI to net income (loss) available to common shareholders |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation/amortization |  | $ | (10,445) |  | $ | (2,828) |  | $ | (922) |  | $ | (72) |  | $ | (14,267) |
Impairment of real estate investments |  |  | (51,401) |  |  | — |  |  | — |  |  | (2,752) |  |  | (54,153) |
General and administrative expenses |  |  | — |  |  | — |  |  | — |  |  | (3,501) |  |  | (3,501) |
Interest expense |  |  | (7,642) |  |  | (2,019) |  |  | (376) |  |  | (327) |  |  | (10,364) |
Interest and other income |  |  | — |  |  | — |  |  | — |  |  | 188 |  |  | 188 |
(Loss) income (loss) before gain (loss) on sale of real estate and other investments and income from discontinued operations |  |  | (49,325) |  |  | 2,502 |  |  | 1,005 |  |  | (8,302) |  |  | (54,120) |
Gain (loss) gain on sale of real estate and other investments |  |  | — |  |  | — |  |  | 8,982 |  |  | (24) |  |  | 8,958 |
(Loss) income from continuing operations |  |  | (49,325) |  |  | 2,502 |  |  | 9,987 |  |  | (8,326) |  |  | (45,162) |
Income from discontinued operations |  |  | — |  |  | 4,255 |  |  | 313 |  |  | — |  |  | 4,568 |
Net (loss) income |  |  | (49,325) |  |  | 6,757 |  |  | 10,300 |  |  | (8,326) |  |  | (40,594) |
Net loss attributable to noncontrolling interests – Operating Partnership |  |  | — |  |  | — |  |  | — |  |  | 3,296 |  |  | 3,296 |
Net loss attributable to noncontrolling interests – consolidated real estate entities |  |  | — |  |  | — |  |  | — |  |  | 15,655 |  |  | 15,655 |
Net (loss) income attributable to IRET |  |  | (49,325) |  |  | 6,757 |  |  | 10,300 |  |  | 10,625 |  |  | (21,643) |
Dividends to preferred shareholders |  |  | — |  |  | — |  |  | — |  |  | (2,879) |  |  | (2,879) |
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS |  | $ | (49,325) |  | $ | 6,757 |  | $ | 10,300 |  | $ | 7,746 |  | $ | (24,522) |

| (1) |  | Offsite costs associated with property management and casualty-related amounts are included in the Corporate and Other column.

S-14

IRET

SAME-STORE MULTIFAMILY COMPARISON

|  |  |  |  |  | FY18Q1 |  | FY18Q1 |  | FY18Q1 |  | 1st Quarter Increase (Decrease) From Prior Year's 1st Quarter |
|  |  |  | Physical |  | Weighted |  | % of |  | Average |  |  |  |  |  | Net |  | Average |  | Weighted |
|  | Rentable |  | Occupancy |  | Average |  | Actual |  | Revenue |  |  |  |  |  | Operating |  | Rental |  | Average |
Regions |  | Units |  | 7/31/2017 |  | Occupancy(1) |  | NOI |  | Per Unit(2) |  | Revenues |  | Expenses(3) |  | Income |  | Rate |  | Occupancy |
Rochester, MN |  | 1,775 |  | 92.4 | % | 90.4 | % | 21.2 | % | $ | 1,279 |  | 3.9 | % | 23.9 | % | (6.5) | % | 1.5 | % | 2.4 | %
Omaha, NE |  | 1,370 |  | 96.6 | % | 95.3 | % | 11.2 | % | $ | 918 |  | 4.3 | % | 5.3 | % | 3.4 | % | 5.1 | % | (0.9) | %
Grand Forks, ND |  | 1,303 |  | 94.5 | % | 93.7 | % | 10.4 | % | $ | 918 |  | 0.3 | % | 10.9 | % | (7.5) | % | (0.9) | % | 1.2 | %
St. Cloud, MN |  | 1,187 |  | 94.7 | % | 92.9 | % | 9.0 | % | $ | 976 |  | 10.6 | % | 14.3 | % | 6.7 | % | 10.4 | % | 0.1 | %
Bismarck, ND |  | 977 |  | 93.8 | % | 92.8 | % | 8.9 | % | $ | 1,024 |  | 6.0 | % | 23.3 | % | (4.9) | % | 0.3 | % | 5.6 | %
Topeka, KS |  | 1,042 |  | 97.8 | % | 95.2 | % | 7.9 | % | $ | 823 |  | 6.5 | % | 11.3 | % | 3.0 | % | 5.4 | % | 1.2 | %
Minneapolis, MN |  | 688 |  | 96.5 | % | 95.5 | % | 7.9 | % | $ | 1,171 |  | 10.5 | % | 0.9 | % | 18.4 | % | 8.1 | % | 2.4 | %
Billings, MT |  | 770 |  | 88.6 | % | 87.4 | % | 6.7 | % | $ | 1,017 |  | 4.6 | % | 9.9 | % | 0.7 | % | 8.6 | % | (4.1) | %
Sioux Falls, SD |  | 969 |  | 95.3 | % | 94.2 | % | 6.5 | % | $ | 871 |  | 1.7 | % | 11.9 | % | (7.6) | % | 4.3 | % | (2.5) | %
Minot, ND |  | 640 |  | 93.8 | % | 95.1 | % | 5.2 | % | $ | 1,024 |  | (3.5) | % | 26.6 | % | (23.3) | % | (5.0) | % | 1.5 | %
Rapid City, SD |  | 474 |  | 94.7 | % | 94.1 | % | 4.2 | % | $ | 961 |  | 2.7 | % | 4.6 | % | 1.2 | % | 6.1 | % | (3.4) | %
Williston, ND |  | 189 |  | 95.2 | % | 86.2 | % | 0.9 | % | $ | 945 |  | (22.2) | % | 26.0 | % | (54.7) | % | (32.4) | % | 10.1 | %
Same-Store Totals |  | 11,384 |  | 94.4 | % | 92.9 | % | 100.0 | % | $ | 1,007 |  | 3.9 | % | 13.9 | % | (3.4) | % | 2.7 | % | 1.2 | %

|  |  |  |  |  | FY18Q1 |  | FY18Q1 |  | FY18Q1 |  | 1st Quarter Increase (Decrease) From 4th Quarter |
|  |  |  | Physical |  | Weighted |  | % of |  | Average |  |  |  |  |  | Net |  | Average |  | Weighted |
|  | Rentable |  | Occupancy |  | Average |  | Actual |  | Revenue |  |  |  |  |  | Operating |  | Rental |  | Average |
Regions |  | Units |  | 7/31/2017 |  | Occupancy(1) |  | NOI |  | Per Unit(2) |  | Revenues |  | Expenses(3) |  | Income |  | Rate |  | Occupancy |
Rochester, MN |  | 1,775 |  | 92.4 | % | 90.4 | % | 21.2 | % | $ | 1,279 |  | 2.7 | % | (0.8) | % | 5.2 | % | 0.9 | % | 1.8 | %
Omaha, NE |  | 1,370 |  | 96.6 | % | 95.3 | % | 11.2 | % | $ | 918 |  | 2.3 | % | 7.1 | % | (1.5) | % | 2.0 | % | 0.3 | %
Grand Forks, ND |  | 1,303 |  | 94.5 | % | 93.7 | % | 10.4 | % | $ | 918 |  | 2.4 | % | 1.9 | % | 2.8 | % | (0.9) | % | 3.2 | %
St. Cloud, MN |  | 1,187 |  | 94.7 | % | 92.9 | % | 9.0 | % | $ | 976 |  | 4.9 | % | 13.2 | % | (2.8) | % | 2.4 | % | 2.5 | %
Bismarck, ND |  | 977 |  | 93.8 | % | 92.8 | % | 8.9 | % | $ | 1,024 |  | 2.5 | % | 9.1 | % | (2.3) | % | 0.1 | % | 2.4 | %
Topeka, KS |  | 1,042 |  | 97.8 | % | 95.2 | % | 7.9 | % | $ | 823 |  | 2.2 | % | 20.0 | % | (8.6) | % | 1.4 | % | 0.8 | %
Minneapolis, MN |  | 688 |  | 96.5 | % | 95.5 | % | 7.9 | % | $ | 1,171 |  | 2.2 | % | 2.8 | % | 1.7 | % | 2.2 | % | (0.1) | %
Billings, MT |  | 770 |  | 88.6 | % | 87.4 | % | 6.7 | % | $ | 1,017 |  | 0.6 | % | 4.7 | % | (2.4) | % | 3.2 | % | (2.6) | %
Sioux Falls, SD |  | 969 |  | 95.3 | % | 94.2 | % | 6.5 | % | $ | 871 |  | 2.0 | % | 10.9 | % | (6.4) | % | 1.8 | % | 0.2 | %
Minot, ND |  | 640 |  | 93.8 | % | 95.1 | % | 5.2 | % | $ | 1,024 |  | (0.7) | % | 3.5 | % | (4.8) | % | (2.7) | % | 2.0 | %
Rapid City, SD |  | 474 |  | 94.7 | % | 94.1 | % | 4.2 | % | $ | 961 |  | 1.8 | % | 13.5 | % | (5.7) | % | 2.3 | % | (0.5) | %
Williston, ND |  | 189 |  | 95.2 | % | 86.2 | % | 0.9 | % | $ | 945 |  | 1.2 | % | (12.6) | % | 43.4 | % | (2.9) | % | 4.1 | %
Same-Store Totals |  | 11,384 |  | 94.4 | % | 92.9 | % | 100.0 | % | $ | 1,007 |  | 2.3 | % | 6.1 | % | (0.8) | % | 1.0 | % | 1.3 | %

| (1) |  | Weighted average occupancy is defined as scheduled rent less vacancy losses divided by scheduled rent for the period.

| (2) |  | Average revenue is defined as total rental revenues divided by the weighted average occupied apartment units for the period.

| (3) |  | Same-Store results by region do not include offsite costs associated with property management or casualty-related amounts, which increased by $80,000 and decreased $191,000, respectively, for FY18 Q1 as compared to FY17 Q1, and increased by $141,000 and $502,000, respectively, for FY18 Q1 as compared to FY17 Q4.

S-15

IRET

MULTIFAMILY SUMMARY(1)

|  | Three Months Ended |
|  |  | 07/31/17 |  |  | 04/30/17 |  |  | 01/31/17 |  |  | 10/31/16 |  |  | 07/31/16 |
Number of Units |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-Store |  |  | 11,384 |  |  | 10,512 |  |  | 10,513 |  |  | 10,513 |  |  | 10,840 |
Non-Same-Store |  |  | 2,019 |  |  | 2,693 |  |  | 2,652 |  |  | 2,589 |  |  | 2,196 |
All Properties |  |  | 13,403 |  |  | 13,205 |  |  | 13,165 |  |  | 13,102 |  |  | 13,036 |
Average Investment Per Unit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-Store |  | $ | 87,876 |  | $ | 78,996 |  | $ | 78,499 |  | $ | 77,814 |  | $ | 77,371 |
Non-Same-Store |  |  | 166,261 |  |  | 164,715 |  |  | 165,367 |  |  | 164,515 |  |  | 196,164 |
All Properties |  | $ | 99,684 |  | $ | 96,485 |  | $ | 95,998 |  | $ | 94,946 |  | $ | 97,382 |
Average Scheduled Rent(2) per Unit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-Store |  | $ | 954 |  | $ | 906 |  | $ | 902 |  | $ | 902 |  | $ | 888 |
Non-Same-Store |  |  | 1,182 |  |  | 1,267 |  |  | 1,289 |  |  | 1,336 |  |  | 1,458 |
All Properties |  | $ | 988 |  | $ | 980 |  | $ | 980 |  | $ | 988 |  | $ | 984 |
Average Revenue per Unit(3) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-Store |  | $ | 1,007 |  | $ | 955 |  | $ | 941 |  | $ | 950 |  | $ | 928 |
Non-Same-Store |  |  | 1,230 |  |  | 1,334 |  |  | 1,325 |  |  | 1,376 |  |  | 1,462 |
All Properties |  | $ | 1,041 |  | $ | 1,032 |  | $ | 1,019 |  | $ | 1,035 |  | $ | 1,020 |
Occupancy |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-Store |  |  | 94.5 | % |  | 94.2 | % |  | 92.7 | % |  | 92.9 | % |  | 93.0 | %
Non-Same-Store |  |  | 89.3 | % |  | 88.8 | % |  | 86.9 | % |  | 84.4 | % |  | 77.5 | %
All Properties |  |  | 93.7 | % |  | 93.1 | % |  | 91.5 | % |  | 91.2 | % |  | 90.4 | %
Operating Expenses as a % of Scheduled Rent |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-Store |  |  | 49.7 | % |  | 46.6 | % |  | 47.7 | % |  | 44.9 | % |  | 47.0 | %
Non-Same-Store |  |  | 40.8 | % |  | 42.1 | % |  | 39.2 | % |  | 36.4 | % |  | 31.2 | %
All Properties |  |  | 48.1 | % |  | 45.4 | % |  | 45.5 | % |  | 42.7 | % |  | 43.0 | %
Capital Expenditures |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total Capital Expenditures(2) per Unit - Same-Store |  | $ | 240 |  | $ | 281 |  | $ | 295 |  | $ | 296 |  | $ | 305 |
Value-Add Expenditures per Unit(4) |  | $ | — |  | $ | 8,213 |  | $ | 10,224 |  | $ | 13,998 |  | $ | 8,102 |

| (1) |  | Previously reported amounts are not revised for discontinued operations or changes in the composition of the same-store properties pool.

| (2) |  | See definition of scheduled rent on page S-21. Average scheduled rent is scheduled rent divided by the total number of units.

| (3) |  | Total revenues divided by the weighted average occupied units for the period.

| (4) |  | Cost per unit represents the average amount spent on completed and in-progress units during the period and also includes common area redevelopment costs at properties in the value add program.

S-16

IRET

HEALTHCARE LEASING SUMMARY (Same-Store Properties)

Healthcare Leasing Activity

The total leasing activity for our same-store healthcare properties, expressed in square feet of leases signed during the period, and the resulting occupancy levels, are as follows:

Three Months Ended July 31, 2017 and 2016

|  |  |  |  |  |  |  |  |  | Total |  |  |  |  |
|  | Square Feet of |  | Square Feet of |  | Square Feet of |  |  |  |  |
|  | New Leases(1) |  | Leases Renewed(1) |  | Leases Executed(1) |  | Occupancy |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |  | 2017 |  | 2016 |  | 2017 |  | 2016 |
Healthcare |  | — |  | 12,140 |  | 39,905 |  | 20,084 |  | 39,905 |  | 32,224 |  | 92.5 | % | 92.6 | %

| (1) |  | The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP. Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period.

Healthcare 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 same-store healthcare properties:

Three Months Ended July 31, 2017 and 2016

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Estimated Tenant |  | Leasing |
|  | Square Feet of |  | Average Term |  | Average |  | Improvement Cost per |  | Commissions per |
|  | New Leases(1 |  | in Years |  | Effective Rent(2) |  | Square Foot(1) |  | Square Foot(1) |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |  |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Healthcare |  | — |  | 12,140 |  | n/a |  | 15.0 |  |  | n/a |  | $ | 20.30 |  |  | n/a |  | $ | 55.15 |  |  | n/a |  | $ | 8.75 |

| (1) |  | The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP. Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store 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.

S-17

IRET

HEALTHCARE LEASING SUMMARY (Same-Store Properties)

Healthcare Lease Renewals

The following table summarizes our lease renewal activity within our same-store healthcare segment (square feet data in thousands):

Three Months Ended July 31, 2017 and 2016

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Estimated |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Weighted Average |  | Tenant Improvement |  | Leasing |
|  | Square Feet of Leases |  | Percent of Expiring |  | Average Term |  | Growth (Decline) |  | Cost per Square |  | Commissions per |
|  | Renewed(1) |  | Leases Renewed(2) |  | in Years |  | in Effective Rents(3) |  | Foot(1) |  | Square Foot(1) |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |  | 2017 |  | 2016 |  | 2017 |  | 2016 |  | 2017 |  | 2016 |  | 2017 |  | 2016 |
Healthcare |  | 39,905 |  | 20,084 |  | 72.2 | % | 100.0 | % | 6.8 |  | 3.3 |  | 3.3 | % | 4.7 | % | $ | 15.50 |  | $ | 4.11 |  | $ | 5.49 |  | $ | 2.51 |

| (1) |  | The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP. Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store 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. The category of renewed leases does not include leases that have become month-to-month leases, as the month-to-month leases are considered lease amendments.

| (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.

Healthcare 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 healthcare properties, including square footage and annualized base rent for expiring leases, as of July 31, 2017.

|  |  |  |  |  | Percentage of Total |  | Annualized Base |  |  |  |  | Percentage of Total |
|  |  |  | Square Footage of |  | Healthcare |  | Rent of Expiring |  |  | Average |  | Healthcare |
Fiscal Year of Lease Expiration |  | # of Leases |  | Expiring Leases(2) |  | Leased Square Footage |  | Leases at Expiration(3) |  |  | Rental Rate |  | Annualized Base Rent |
2018(1) |  | 20 |  | 82,528 |  | 6.7 | % | $ | 1,494,595 |  | $ | 16.09 |  | 5.6 | %
2019 |  | 18 |  | 72,644 |  | 5.9 | % |  | 1,599,443 |  |  | 22.02 |  | 6.0 | %
2020 |  | 16 |  | 93,521 |  | 7.6 | % |  | 1,936,684 |  |  | 20.71 |  | 7.2 | %
2021 |  | 20 |  | 95,575 |  | 7.8 | % |  | 2,070,790 |  |  | 21.67 |  | 7.7 | %
2022 |  | 17 |  | 76,774 |  | 6.2 | % |  | 1,414,135 |  |  | 18.42 |  | 5.3 | %
2023 |  | 15 |  | 73,750 |  | 6.0 | % |  | 1,454,647 |  |  | 19.72 |  | 5.4 | %
2024 |  | 29 |  | 179,460 |  | 14.6 | % |  | 4,194,579 |  |  | 23.37 |  | 15.6 | %
2025 |  | 6 |  | 77,579 |  | 6.3 | % |  | 1,707,029 |  |  | 22.00 |  | 6.4 | %
2026 |  | 9 |  | 103,178 |  | 8.4 | % |  | 1,802,959 |  |  | 17.47 |  | 6.7 | %
2027 |  | 12 |  | 157,842 |  | 12.9 | % |  | 3,511,179 |  |  | 22.24 |  | 13.1 | %
Thereafter |  | 14 |  | 216,299 |  | 17.6 | % |  | 5,670,644 |  |  | 26.22 |  | 21.0 | %
Totals |  | 176 |  | 1,229,150 |  | 100.0 | % | $ | 26,856,684 |  | $ | 21.85 |  | 100.0 | %

| (1) |  | Includes month-to-month leases. As of July 31, 2017, month-to-month leases accounted for 19,293 square feet.

| (2) |  | Assuming that none of the tenants exercise renewal or termination options, and including leases renewed prior to expiration. Also excludes 1,361 square feet of space occupied by us.

| (3) |  | Annualized base rent is monthly scheduled rent as of July 2017, multiplied by 12.

S-18

IRET

10 LARGEST COMMERCIAL TENANTS – BASED ON ANNUALIZED BASE RENT(1)

as of July 31, 2017

|  |  |  | Average |  | % of Total |  |  |  | % of Aggregate |
|  |  |  | Remaining |  | Commercial |  | Aggregate |  | Occupied |
|  | Number of |  | Lease Term |  | Minimum |  | Rentable |  | Square |
Tenant |  | Properties |  | in Months |  | Rents |  | Square Feet |  | Feet |
Fairview Health Services |  | 8 |  | 47 |  | 11.7 | % | 239,203 |  | 8.8 | %
St. Luke's Hospital of Duluth, Inc. |  | 5 |  | 103 |  | 8.5 | % | 186,331 |  | 6.8 | %
Affiliates of Edgewood Vista |  | 2 |  | 53 |  | 8.3 | % | 279,834 |  | 10.2 | %
PrairieCare Medical LLC |  | 2 |  | 117 |  | 7.4 | % | 104,714 |  | 3.8 | %
Quality Manufacturing Corp |  | 1 |  | 66 |  | 3.2 | % | 427,798 |  | 15.6 | %
Children's Hospitals & Clinics |  | 3 |  | 52 |  | 2.7 | % | 54,378 |  | 2.0 | %
Allina Health |  | 4 |  | 45 |  | 2.6 | % | 53,132 |  | 1.9 | %
Noran Neurological Clinic |  | 1 |  | 73 |  | 2.3 | % | 38,506 |  | 1.4 | %
Amerada Hess |  | 1 |  | 108 |  | 2.2 | % | 50,610 |  | 1.8 | %
Obstetrics and Gynecology Asscociates, P.A. |  | 3 |  | 154 |  | 2.0 | % | 39,363 |  | 1.4 | %
Total/Weighted Average |  | 30 |  | 68 |  | 50.9 | % | 1,473,869 |  | 53.7 | %

(1)Annualized base rent is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.

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IRET

FISCAL 2018 ACQUISITIONS SUMMARY

as of July 31, 2017

(dollars in thousands)

Acquisitions

|  |  |  |  |  |  |  |  |  | Occupancy |  | Occupancy |  |  |  |
|  |  |  |  |  | Acquisition |  | Square |  | At |  | At |  | Acquisition |
Property |  | Location |  | Segment |  | Date |  | Feet/Units |  | Acquisition |  | 7/31/17 |  | Cost |
Oxbo(1) |  | St. Paul, MN |  | Multifamily |  | May 26, 2017 |  | 191 |  | 29.3 | % | 42.9 | % | $ | 61,500 |

| (1) |  | Property includes 11,477 sq ft of retail space.

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Definitions

July 31, 2017

Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of real estate investments, gain/loss on extinguishment of debt and gain/loss from involuntary conversion. We consider Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, the cost of debt, or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA as calculated by us is not comparable to Adjusted EBITDA reported by other REITs that do not define Adjusted EBITDA exactly as we do.

Core funds from operations (Core FFO) is FFO as adjusted for non-routine items or items not considered core to our business operations as outlined in the table below. By further adjusting for items that are not considered part of our core business operations, we believe Core FFO provides investors with additional information to compare our core operating and financial performance between periods. Core FFO should not be considered as an alternative to net income as an indication of financial performance, or as an alternative to cash flows from operations as a measure of liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions to shareholders. Core FFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.

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 Adjusted EBITDA by interest expense and principal amortization.

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 Debt to Annualized Adjusted EBITDA is total debt less cash and cash equivalents and real estate deposits as reported for the end of the quarter divided by Adjusted EBITDA as reported for the end of the quarter multiplied by 4.

Net Operating Income (NOI) is total real estate revenues less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance and property management expenses). We believe that NOI is an important supplemental measure of operating performance for a 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.

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.

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.

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Same-store properties are properties owned or in service for the entirety of the periods being compared (except for properties for which significant redevelopment or expansion occurred during either of the periods being compared, and properties sold or classified as held for sale), and, in the case of development or re-development properties, which have achieved a target level of occupancy of 90% for multifamily properties and 85% for office, healthcare, industrial and retail properties.

US GAAP – Accounting principles generally accepted in the United States of America.

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