EX-99.1 2 iret12312019exhibit991.htm EXHIBIT 99.1
Exhibit 99.1

Earnings Release
IRET Announces Financial and Operating Results for the Year Ended
December 31, 2019 and Provides 2020 Financial Outlook
MINNEAPOLIS, MN, February 19, 2020 – IRET (NYSE: IRET) announced today its financial and operating results for the year ended December 31, 2019. Net income and Funds from Operations (“FFO”) per share for the transition period ended December 31, 2019, are detailed below. Core FFO adjusts FFO for certain non-routine items, and both FFO and Core FFO are reconciled to net income in the tables accompanying this earnings release.

|  | Three Months Ended December 31, |  | Twelve Months Ended December 31,
Per Share |  | 2019 |  | 2018 |  | 2019 |  | 2018
Earnings (loss) per share - diluted |  | $ | 3.89 |  |  | $ | (0.49 | ) |  | $ | 6.00 |  |  | $ | (1.83 | )
FFO - diluted |  | 0.90 |  |  | 0.92 |  |  | 4.05 |  |  | 3.29 |
Core FFO - diluted |  | 0.96 |  |  | 0.92 |  |  | 3.72 |  |  | 3.41 |

|  | Year-Over-Year Comparison |  | Sequential Comparison |  | YTD Comparison
Same-Store Results |  | 4Q19 vs 4Q18 |  | 4Q19 vs. 3Q19 |  | CY19 vs. CY18
Revenues |  | 2.8 | % |  | 0.4 | % |  | 3.7 | %
Expenses |  | 6.4 | % |  | 1.6 | % |  | 3.8 | %
Net Operating Income (“NOI”) |  | 0.2 | % |  | (0.4 | )% |  | 3.6 | %

|  | Three months ended |  | Twelve months ended
Same-Store Results |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | December 31, 2019 |  | December 31, 2018
Weighted Average Occupancy |  | 94.0 | % |  | 93.3 | % |  | 94.2 | % |  | 94.3 | % |  | 93.6 | %

Net operating income ("NOI"), funds from operations ("FFO"), and Core FFO are non-GAAP financial measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to "Non-GAAP Financial Measures and Reconciliations" below.
Financial Highlights for the Year Ended December 31, 2019

• | Grew earnings per share to $6.00 per diluted share for the year ended December 31, 2019, compared to a net loss of $1.83 per diluted share for the year ended December 31, 2018.

• | Increased FFO year-over-year from $3.29 per diluted share to $4.05 per diluted share and increased Core FFO from $3.41 per diluted share to $3.72 per diluted share.

• | Increased same-store revenue year-over-year by 3.7% driven by 3.0% growth in rental revenue and 0.7% growth in occupancy, while same-store operating expenses grew 3.8% year-over-year, primarily due to real estate taxes and insurance. The combination of 3.7% same-store revenue growth and expense control initiatives that limited same-store controllable expenses growth to approximately 1.8% over the same period in 2018, led to same-store NOI growth of 3.6% for the year ended December 31, 2019.

• | Acquired three new apartment communities in the key growth markets of Minneapolis, Minnesota and Denver, Colorado, consisting of 696 homes, for an aggregate purchase price of $169.3 million.

• | Exited slower-growth, less efficient markets in Topeka, Kansas, Sioux City, Iowa, and Sioux Falls, South Dakota, and sold five apartment communities in Bismarck, North Dakota, consisting of a total of 21 apartment communities, two commercial properties, and three parcels of land for an aggregate sale price of $203.1 million.

| 1 |

• | Originated a $29.9 million construction loan and a $15.3 million mezzanine loan, in December 2019, for the development of a multifamily community located in Minneapolis, Minnesota. The loans are secured by mortgages and mature on December 31, 2023. We have an option to purchase the development.

• | Registered an ongoing at-the-market ("ATM") offering and sale of up to $150.0 million in common shares under our 2019 ATM program, from which we issued 308,444 common shares at an average price of $72.29 per share, net of commissions. Total consideration, net of commissions and issuance costs, were approximately $22.0 million in the year ended December 31, 2019.

• | Repurchased and retired approximately 465,000 common shares and Units for an aggregate cost of $26.2 million, including commissions, at an average price per share of $56.24, in the year ended December 31, 2019.

• | Entered into a $150.0 million private shelf agreement. Of the $150.0 million available under the private shelf agreement, we funded $75.0 million of Series A unsecured senior notes and $50.0 million of Series B unsecured senior notes. Proceeds from this private placement facility were used to repay outstanding amounts on IRET’s credit facility and retire mortgage debt. Following the funding of the Series B Notes, our average debt maturity duration increased to 6.0 years from 4.6 years while our weighted average interest rate of debt decreased from 4.3% at December 31, 2018 to 4.0% at December 31, 2019. The Company’s debt has decreased from 69% secured at December 31, 2018 to 51% secured at December 31, 2019.

Balance Sheet
At December 31, 2019, we had $226.5 million of total liquidity on our balance sheet, including $199.9 million available on our line of credit.
2020 Financial Overview
We are providing the following guidance for our 2020 calendar year performance.

2020 Calendar Year Financial Outlook
|  |  | Range for 2020
| 2019 Actual |  | Low |  | High
Earnings Per Share - diluted | $ | 6.00 |  |  | $ | (1.35 | ) |  | $ | (1.07 | )
FFO per Share - diluted | $ | 4.05 |  |  | $ | 3.52 |  |  | $ | 3.80 |
Core FFO per Share - diluted | $ | 3.72 |  |  | $ | 3.52 |  |  | $ | 3.80 |

Additional assumptions:

• | Same-store capital expenditures of $825 per home to $900 per home

• | Value-add expenditures of $10.0 million to $15.0 million

• | Investments of $66.0 million to $72.0 million

FFO and Core FFO are non-GAAP measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, please refer to "2020 Financial Outlook" in the Supplemental Information below.
Quarterly Distributions
On December 5, 2019, our Board of Trustees declared a regular quarterly distribution of $0.70 per share/unit (NYSE: IRET), payable on January 15, 2020 to common shareholders and unitholders of record on January 2, 2020. IRET has paid cash dividends to common shareholders and unitholders every quarter since its initial dividend payment in 1971. It represents an annualized rate of $2.80 per share/unit.
On December 5, 2019, our Board of Trustees also declared a dividend of $0.4140625 per share on the 6.625% Series C Cumulative Redeemable Preferred Shares (NYSE: IRET-PC), payable on December 31, 2019, to holders of record on December 16, 2019. Series C preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.65625 per share.

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Earnings Call

Live webcast and replay: http://ir.iretapartments.com
Live Conference Call |  | Conference Call Replay
Thursday, February 20, 2020 at 10:00 AM ET |  | Replay available until March 5, 2020
USA Toll Free Number | 1-877-509-9785 |  | USA Toll Free Number | 1-877-344-7529
International Toll Free Number | 1-412-902-4132 |  | International Toll Free Number | 1-412-317-0088
Canada Toll Free Number | 1-855-669-9657 |  | Canada Toll Free Number | 1-855-669-9658
|  |  | Conference Number | 10137963

Supplemental Information
Supplemental Operating and Financial Data for the year ended December 31, 2019 (“Supplemental Information”), is available in the Investors section on IRET’s website at www.iretapartments.com or by calling Investor Relations at 701-837-7104. Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Information, which accompanies this earnings release.
About IRET
IRET is a real estate company focused on the ownership, management, acquisition, redevelopment, and development of apartment communities. As of December 31, 2019, IRET owned interests in 69 apartment communities consisting of 11,953 homes. IRET's common shares and Series C preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: IRET and IRET-PC, respectively).
Forward-Looking Statements
Certain statements in this press release are based on our current expectations and assumptions, and are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Forward-looking statements are typically identified by the use of terms such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of those words and similar expressions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance. Such risks and uncertainties are detailed from time to time in our filings with the SEC, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2019, in subsequent quarterly reports on Form 10-Q, and in other public reports. We assume no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.
Investor Relations Contact Information
Jonathan Bishop
Vice President - Finance
Phone: 701-837-7104
E-mail: IR@iret.com

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Supplemental Financial and Operating Data
Table of Contents
December 31, 2019

| Page
Common Share Data | S-1
Key Financial Data |
Condensed Consolidated Statements of Operations | S-2
Condensed Consolidated Balance Sheets | S-3
Non-GAAP Financial Measures and Reconciliations |
Net Operating Income Detail | S-4
Funds From Operations | S-5
Adjusted EBITDA | S-7
Debt and Capital Analysis |
Debt Analysis | S-8
Capital Analysis | S-9
Portfolio Analysis |
Same-Store Comparison | S-10
Portfolio Summary | S-13
Same-Store Capital Expenditures | S-14
2020 Financial Outlook | S-15

Common Share Data (NYSE: IRET)

|  | Three Months Ended |  | Two Months Ended
|  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018
High Closing Price |  | $ | 78.91 |  |  | $ | 74.67 |  |  | $ | 61.28 |  |  | $ | 61.50 |  |  | $ | 54.70 |
Low Closing Price |  | $ | 71.74 |  |  | $ | 59.22 |  |  | $ | 57.19 |  |  | $ | 49.92 |  |  | $ | 47.00 |
Average Closing Price |  | $ | 74.67 |  |  | $ | 66.83 |  |  | $ | 59.54 |  |  | $ | 58.11 |  |  | $ | 52.45 |
Closing Price at end of quarter |  | $ | 72.50 |  |  | $ | 74.67 |  |  | $ | 58.67 |  |  | $ | 59.91 |  |  | $ | 49.07 |
Common Share Distributions—annualized |  | $ | 2.80 |  |  | $ | 2.80 |  |  | $ | 2.80 |  |  | $ | 2.80 |  |  | $ | 2.80 |
Closing Dividend Yield - annualized |  | 3.9 | % |  | 3.8 | % |  | 4.8 | % |  | 4.7 | % |  | 5.7 | %
Closing common shares outstanding (thousands) |  | 12,099 |  |  | 11,625 |  |  | 11,656 |  |  | 11,768 |  |  | 11,942 |
Closing limited partnership units outstanding (thousands) |  | 1,058 |  |  | 1,223 |  |  | 1,224 |  |  | 1,365 |  |  | 1,368 |
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands) |  | $ | 953,883 |  |  | $ | 959,360 |  |  | $ | 755,670 |  |  | $ | 786,798 |  |  | $ | 653,122 |

| S-1 |

IRET
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share amounts)

|  | Three Months Ended |  |  | Twelve months ended
|  | 12/31/2019 |  | 9/30/2019 |  | 6/30/2019 |  | 3/31/2019 |  | 12/31/2018 |  |  | 12/31/2019 |  | 12/31/2018
REVENUE |  | $ | 45,777 |  |  | $ | 47,436 |  |  | $ | 46,934 |  |  | $ | 45,608 |  |  | $ | 45,730 |  |  |  | $ | 185,755 |  |  | $ | 180,368 |
EXPENSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property operating expenses, excluding real estate taxes |  | 14,018 |  |  | 14,485 |  |  | 13,942 |  |  | 14,804 |  |  | 13,292 |  |  |  | 57,249 |  |  | 55,910 |
Real estate taxes |  | 4,835 |  |  | 5,425 |  |  | 5,574 |  |  | 5,232 |  |  | 5,098 |  |  |  | 21,066 |  |  | 20,171 |
Property management expenses |  | 1,634 |  |  | 1,553 |  |  | 1,445 |  |  | 1,554 |  |  | 1,447 |  |  |  | 6,186 |  |  | 5,537 |
Casualty loss |  | 205 |  |  | 178 |  |  | 92 |  |  | 641 |  |  | 540 |  |  |  | 1,116 |  |  | 815 |
Depreciation/amortization |  | 18,972 |  |  | 18,751 |  |  | 18,437 |  |  | 18,111 |  |  | 18,812 |  |  |  | 74,271 |  |  | 77,624 |
Impairment of real estate investments |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,221 |  |  |  | — |  |  | 19,030 |
General and administrative expenses |  | 3,647 |  |  | 3,448 |  |  | 3,549 |  |  | 3,806 |  |  | 3,769 |  |  |  | 14,450 |  |  | 14,883 |
TOTAL EXPENSES |  | $ | 43,311 |  |  | $ | 43,840 |  |  | $ | 43,039 |  |  | $ | 44,148 |  |  | $ | 44,179 |  |  |  | $ | 174,338 |  |  | $ | 193,970 |
Operating income (loss) |  | 2,466 |  |  | 3,596 |  |  | 3,895 |  |  | 1,460 |  |  | 1,551 |  |  |  | 11,417 |  |  | (13,602 | )
Interest expense |  | (7,357 | ) |  | (7,694 | ) |  | (7,590 | ) |  | (7,896 | ) |  | (7,682 | ) |  |  | (30,537 | ) |  | (32,733 | )
Loss on extinguishment of debt |  | (864 | ) |  | (1,087 | ) |  | (407 | ) |  | (2 | ) |  | (5 | ) |  |  | (2,360 | ) |  | (678 | )
Interest and other income |  | 702 |  |  | 498 |  |  | 468 |  |  | 424 |  |  | 483 |  |  |  | 2,092 |  |  | 2,027 |
Income (loss) before gain (loss) on sale of real estate and other investments, gain (loss) on litigation settlement, and income (loss) from discontinued operations |  | (5,053 | ) |  | (4,687 | ) |  | (3,634 | ) |  | (6,014 | ) |  | (5,653 | ) |  |  | (19,388 | ) |  | (44,986 | )
Gain (loss) on sale of real estate and other investments |  | 57,850 |  |  | 39,105 |  |  | 615 |  |  | 54 |  |  | 612 |  |  |  | 97,624 |  |  | 12,011 |
Gain (loss) on litigation settlement |  | — |  |  | 300 |  |  | 6,286 |  |  | — |  |  | — |  |  |  | 6,586 |  |  | — |
Income (loss) from continuing operations |  | 52,797 |  |  | 34,718 |  |  | 3,267 |  |  | (5,960 | ) |  | (5,041 | ) |  |  | 84,822 |  |  | (32,975 | )
Income (loss) from discontinued operations |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  | — |  |  | 14,690 |
Net income (loss) |  | $ | 52,797 |  |  | $ | 34,718 |  |  | $ | 3,267 |  |  | $ | (5,960 | ) |  | $ | (5,041 | ) |  |  | $ | 84,822 |  |  | $ | (18,285 | )
Dividends to preferred unitholders |  | (160 | ) |  | (160 | ) |  | (160 | ) |  | (57 | ) |  | — |  |  |  | (537 | ) |  | — |
Net (income) loss attributable to noncontrolling interest – Operating Partnership |  | (4,202 | ) |  | (3,145 | ) |  | (148 | ) |  | 743 |  |  | 665 |  |  |  | (6,752 | ) |  | 2,553 |
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities |  | 223 |  |  | 183 |  |  | 154 |  |  | 576 |  |  | 270 |  |  |  | 1,136 |  |  | 709 |
Net income (loss) attributable to controlling interests |  | 48,658 |  |  | 31,596 |  |  | 3,113 |  |  | (4,698 | ) |  | (4,106 | ) |  |  | 78,669 |  |  | (15,023 | )
Dividends to preferred shareholders |  | (1,705 | ) |  | (1,705 | ) |  | (1,706 | ) |  | (1,705 | ) |  | (1,705 | ) |  |  | (6,821 | ) |  | (6,821 | )
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS |  | $ | 46,953 |  |  | $ | 29,891 |  |  | $ | 1,407 |  |  | $ | (6,403 | ) |  | $ | (5,811 | ) |  |  | $ | 71,848 |  |  | $ | (21,844 | )
Per Share Data - Basic |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Earnings (loss) per common share from continuing operations – basic |  | $ | 3.95 |  |  | $ | 2.57 |  |  | $ | 0.11 |  |  | $ | (0.54 | ) |  | $ | (0.49 | ) |  |  | $ | 6.06 |  |  | $ | (2.93 | )
Earnings (loss) per common share from discontinued operations – basic |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  | — |  |  | 1.10 |
Net earnings (loss) per common share – basic |  | $ | 3.95 |  |  | $ | 2.57 |  |  | $ | 0.11 |  |  | $ | (0.54 | ) |  | $ | (0.49 | ) |  |  | $ | 6.06 |  |  | $ | (1.83 | )
Per Share Data - Diluted |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Earnings (loss) per common share from continuing operations – diluted |  | $ | 3.89 |  |  | $ | 2.54 |  |  | $ | 0.11 |  |  | $ | (0.54 | ) |  | $ | (0.49 | ) |  |  | $ | 6.00 |  |  | $ | (2.93 | )
Earnings (loss) per common share from discontinued operations – diluted |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  | — |  |  | $ | 1.10 |
Net earnings (loss) per common share – diluted |  | $ | 3.89 |  |  | $ | 2.54 |  |  | $ | 0.11 |  |  | $ | (0.54 | ) |  | $ | (0.49 | ) |  |  | $ | 6.00 |  |  | $ | (1.83 | )

| S-2 |

IRET
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)

|  | 12/31/2019 |  | 9/30/2019 |  | 6/30/2019 |  | 3/31/2019 |  | 12/31/2018
ASSETS |  |  |  |  |  |  |  |  |  |
Real estate investments |  |  |  |  |  |  |  |  |  |
Property owned |  | $ | 1,643,078 |  |  | $ | 1,720,352 |  |  | $ | 1,663,539 |  |  | $ | 1,673,158 |  |  | $ | 1,627,636 |
Less accumulated depreciation |  | (349,122 | ) |  | (370,492 | ) |  | (380,321 | ) |  | (371,672 | ) |  | (353,871 | )
|  | 1,293,956 |  |  | 1,349,860 |  |  | 1,283,218 |  |  | 1,301,486 |  |  | 1,273,765 |
Unimproved land |  | 1,376 |  |  | 1,376 |  |  | 1,746 |  |  | 2,252 |  |  | 5,301 |
Mortgage loans receivable |  | 16,140 |  |  | 10,140 |  |  | 10,140 |  |  | 10,260 |  |  | 10,410 |
Total real estate investments |  | 1,311,472 |  |  | 1,361,376 |  |  | 1,295,104 |  |  | 1,313,998 |  |  | 1,289,476 |
Cash and cash equivalents |  | 26,579 |  |  | 8,500 |  |  | 17,406 |  |  | 23,329 |  |  | 13,792 |
Restricted cash |  | 19,538 |  |  | 3,339 |  |  | 4,672 |  |  | 4,819 |  |  | 5,464 |
Other assets |  | 34,829 |  |  | 30,589 |  |  | 30,626 |  |  | 29,166 |  |  | 27,265 |
TOTAL ASSETS |  | $ | 1,392,418 |  |  | $ | 1,403,804 |  |  | $ | 1,347,808 |  |  | $ | 1,371,312 |  |  | $ | 1,335,997 |
LIABILITIES, MEZZANINE EQUITY, AND EQUITY |  |  |  |  |  |  |  |  |  |
LIABILITIES |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 47,155 |  |  | $ | 40,546 |  |  | $ | 44,766 |  |  | $ | 40,697 |  |  | $ | 40,892 |
Revolving line of credit |  | 50,079 |  |  | 103,143 |  |  | 177,939 |  |  | 118,677 |  |  | 57,500 |
Notes payable, net of loan costs |  | 269,058 |  |  | 269,006 |  |  | 144,082 |  |  | 144,036 |  |  | 143,991 |
Mortgages payable, net of loan costs |  | 329,664 |  |  | 360,886 |  |  | 370,461 |  |  | 430,950 |  |  | 444,197 |
TOTAL LIABILITIES |  | $ | 695,956 |  |  | $ | 773,581 |  |  | $ | 737,248 |  |  | $ | 734,360 |  |  | $ | 686,580 |
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 5,968 |
SERIES D PREFERRED UNITS |  | 16,560 |  |  | 16,560 |  |  | 16,560 |  |  | 16,560 |  |  | — |
EQUITY |  |  |  |  |  |  |  |  |  |
Series C Preferred Shares of Beneficial Interest |  | 99,456 |  |  | 99,456 |  |  | 99,456 |  |  | 99,456 |  |  | 99,456 |
Common Shares of Beneficial Interest |  | 917,400 |  |  | 886,598 |  |  | 888,541 |  |  | 895,381 |  |  | 899,234 |
Accumulated distributions in excess of net income |  | (390,196 | ) |  | (428,680 | ) |  | (450,433 | ) |  | (443,661 | ) |  | (429,048 | )
Accumulated other comprehensive income (loss) |  | (7,607 | ) |  | (9,793 | ) |  | (7,598 | ) |  | (3,139 | ) |  | (856 | )
Total shareholders’ equity |  | $ | 619,053 |  |  | $ | 547,581 |  |  | $ | 529,966 |  |  | $ | 548,037 |  |  | $ | 568,786 |
Noncontrolling interests – Operating Partnership |  | 55,284 |  |  | 60,169 |  |  | 57,902 |  |  | 66,060 |  |  | 67,916 |
Noncontrolling interests – consolidated real estate entities |  | 5,565 |  |  | 5,913 |  |  | 6,132 |  |  | 6,295 |  |  | 6,747 |
Total equity |  | $ | 679,902 |  |  | $ | 613,663 |  |  | $ | 594,000 |  |  | $ | 620,392 |  |  | $ | 643,449 |
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY |  | $ | 1,392,418 |  |  | $ | 1,403,804 |  |  | $ | 1,347,808 |  |  | $ | 1,371,312 |  |  | $ | 1,335,997 |

| S-3 |

IRET
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)
This release contains certain non-GAAP financial measures. The non-GAAP measures should not be considered a substitute for operating results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The definitions and calculations of these non-GAAP measures, as calculated by us, may not be comparable to non-GAAP measures reported by other REITs that do not define each of the non-GAAP measures exactly as we do.
We provide certain information on a same-store and non-same-store basis. Same-store apartment communities are owned or in service for the entirety of the periods being compared, and, in the case of development properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, we determine the composition of our same-store pool for that year as well as adjust the previous year, which allows us to evaluate full period-over-period operating comparisons for existing apartment communities and their contribution to net income. We believe that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of our communities are performing year-over-year. We use this measure to assess whether or not we have been successful in increasing NOI, renewing the leases on existing residents, controlling operating costs, and making prudent capital improvements.
Reconciliation of Operating Income (Loss) to Net Operating Income
Net operating income, or NOI, is a non-GAAP measure which we define as total real estate revenues less property operating expenses, including real estate taxes. We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. 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.

| (in thousands, except percentages)
| Three Months Ended December 31, |  |  | Twelve Months Ended December 31,
| 2019 |  | 2018 |  | $ Change |  | % Change |  |  | 2019 |  | 2018 |  | $ Change |  |  | % Change |
Operating income (loss) | $ | 2,466 |  |  | $ | 1,551 |  |  | $ | 915 |  |  | 59.0 | % |  |  | $ | 11,417 |  |  | $ | (13,602 | ) |  | $ | 25,019 |  |  | (183.9 | )%
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property management expenses | 1,634 |  |  | 1,447 |  |  | 187 |  |  | 12.9 | % |  |  | 6,186 |  |  | 5,537 |  |  | 649 |  |  | 11.7 | %
Casualty loss | 205 |  |  | 540 |  |  | (335 | ) |  | (62.0 | )% |  |  | 1,116 |  |  | 815 |  |  | 301 |  |  | 36.9 | %
Depreciation and amortization | 18,972 |  |  | 18,812 |  |  | 160 |  |  | 0.9 | % |  |  | 74,271 |  |  | 77,624 |  |  | (3,353 | ) |  | (4.3 | )%
Impairment | — |  |  | 1,221 |  |  | (1,221 | ) |  | (100.0 | )% |  |  | — |  |  | 19,030 |  |  | (19,030 | ) |  | (100.0 | )%
General and administrative expenses | 3,647 |  |  | 3,769 |  |  | (122 | ) |  | (3.2 | )% |  |  | 14,450 |  |  | 14,883 |  |  | (433 | ) |  | (2.9 | )%
Net operating income | $ | 26,924 |  |  | $ | 27,340 |  |  | $ | (416 | ) |  | (1.5 | )% |  |  | $ | 107,440 |  |  | $ | 104,287 |  |  | $ | 3,153 |  |  | 3.0 | %
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store | $ | 34,303 |  |  | $ | 33,374 |  |  | $ | 929 |  |  | 2.8 | % |  |  | $ | 135,939 |  |  | $ | 131,149 |  |  | $ | 4,790 |  |  | 3.7 | %
Non-same-store | 8,089 |  |  | 4,608 |  |  | 3,481 |  |  | 75.5 | % |  |  | 25,495 |  |  | 15,646 |  |  | 9,849 |  |  | 62.9 | %
Other properties and dispositions | 3,385 |  |  | 7,748 |  |  | (4,363 | ) |  | (56.3 | )% |  |  | 24,321 |  |  | 33,573 |  |  | (9,252 | ) |  | (27.6 | )%
Total | 45,777 |  |  | 45,730 |  |  | 47 |  |  | 0.1 | % |  |  | 185,755 |  |  | 180,368 |  |  | 5,387 |  |  | 3.0 | %
Property operating expenses, including real estate taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store | 14,715 |  |  | 13,832 |  |  | 883 |  |  | 6.4 | % |  |  | 58,155 |  |  | 56,047 |  |  | 2,108 |  |  | 3.8 | %
Non-same-store | 2,704 |  |  | 1,404 |  |  | 1,300 |  |  | 92.6 | % |  |  | 9,031 |  |  | 5,518 |  |  | 3,513 |  |  | 63.7 | %
Other properties and dispositions | 1,434 |  |  | 3,154 |  |  | (1,720 | ) |  | (54.5 | )% |  |  | 11,129 |  |  | 14,516 |  |  | (3,387 | ) |  | (23.3 | )%
Total | 18,853 |  |  | 18,390 |  |  | 463 |  |  | 2.5 | % |  |  | 78,315 |  |  | 76,081 |  |  | 2,234 |  |  | 2.9 | %
Net operating income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store | 19,588 |  |  | 19,542 |  |  | 46 |  |  | 0.2 | % |  |  | 77,784 |  |  | 75,102 |  |  | 2,682 |  |  | 3.6 | %
Non-same-store | 5,385 |  |  | 3,204 |  |  | 2,181 |  |  | 68.1 | % |  |  | 16,464 |  |  | 10,128 |  |  | 6,336 |  |  | 62.6 | %
Other properties and dispositions | 1,951 |  |  | 4,594 |  |  | (2,643 | ) |  | (57.5 | )% |  |  | 13,192 |  |  | 19,057 |  |  | (5,865 | ) |  | (30.8 | )%
Total | $ | 26,924 |  |  | $ | 27,340 |  |  | $ | (416 | ) |  | (1.5 | )% |  |  | $ | 107,440 |  |  | $ | 104,287 |  |  | $ | 3,153 |  |  | 3.0 | %

| S-4 |

Same-Store Expense Comparison

| (in thousands, except percentages)
| Three Months Ended December 31, |  |  | Twelve Months Ended December 31,
| 2019 |  | 2018 |  | $ Change |  | % Change |  |  | 2019 |  | 2018 |  | $ Change |  | % Change
Controllable expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation | $ | 3,921 |  |  | $ | 3,731 |  |  | $ | 190 |  |  | 5.1 | % |  |  | $ | 15,267 |  |  | $ | 15,555 |  |  | $ | (288 | ) |  | (1.9 | )%
Repairs and maintenance | 2,904 |  |  | 2,429 |  |  | 475 |  |  | 19.6 | % |  |  | 11,137 |  |  | 10,452 |  |  | 685 |  |  | 6.6 | %
Utilities | 2,411 |  |  | 2,364 |  |  | 47 |  |  | 2.0 | % |  |  | 9,923 |  |  | 9,756 |  |  | 167 |  |  | 1.7 | %
Administrative and marketing | 771 |  |  | 743 |  |  | 28 |  |  | 3.8 | % |  |  | 3,024 |  |  | 2,891 |  |  | 133 |  |  | 4.6 | %
Total | $ | 10,007 |  |  | $ | 9,267 |  |  | $ | 740 |  |  | 8.0 | % |  |  | $ | 39,351 |  |  | $ | 38,654 |  |  | $ | 697 |  |  | 1.8 | %
Non-controllable expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate taxes | $ | 3,639 |  |  | $ | 3,766 |  |  | $ | (127 | ) |  | (3.4 | )% |  |  | $ | 15,116 |  |  | $ | 14,853 |  |  | $ | 263 |  |  | 1.8 | %
Insurance | 1,069 |  |  | 799 |  |  | 270 |  |  | 33.8 | % |  |  | 3,688 |  |  | 2,540 |  |  | 1,148 |  |  | 45.2 | %
Total | 4,708 |  |  | 4,565 |  |  | 143 |  |  | 3.1 | % |  |  | 18,804 |  |  | 17,393 |  |  | 1,411 |  |  | 8.1 | %
Total | $ | 14,715 |  |  | $ | 13,832 |  |  | $ | 883 |  |  | 6.4 | % |  |  | $ | 58,155 |  |  | $ | 56,047 |  |  | $ | 2,108 |  |  | 3.8 | %

Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds From Operations, Core Funds From Operations, and Adjusted Funds From Operations
We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding:

• | depreciation and amortization related to real estate;

• | gains and losses from the sale of certain real estate assets; and

• | impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

Due to the limitations of the FFO definition adopted by Nareit, we have made certain interpretations in applying the definition. We believe that all such interpretations not specifically provided for in the Nareit definition are consistent with the definition. Nareit's FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT's main business are excluded from FFO, and a REIT has the option to exclude impairment write-downs of assets that are incidental to the main business.
We believe that FFO, which is a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, thereby providing an additional perspective on our operating results. We believe that GAAP historical cost depreciation of real estate assets is not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. The exclusion in Nareit’s definition of FFO of impairment write-downs and gains and losses from the sale of real estate assets helps to identify the operating results of the long-term assets that form the base of our investments, and assists management and investors in comparing those operating results between periods.
While FFO is widely used by us as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO in the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, and is not necessarily indicative of sufficient cash flow to fund all of our needs or our ability to service indebtedness or make distributions.
Core Funds from Operations ("Core FFO") is FFO as adjusted for non-routine items or items not considered core to our business operations. By further adjusting for items that are not considered part of our core business operations, we believe that 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 that may

| S-5 |

be calculated differently by other REITs and that should not be considered a substitute for operating results determined in accordance with GAAP.

|  | (in thousands, except per share amounts)
|  | Three Months Ended |  |  | Twelve Months Ended
|  | 12/31/2019 |  | 9/30/2019 |  | 6/30/2019 |  | 3/31/19 |  | 12/31/2018 |  |  | 12/31/2019 |  | 12/31/2018
Net (loss) income available to common shareholders |  | $ | 46,953 |  |  | $ | 29,891 |  |  | $ | 1,407 |  |  | $ | (6,403 | ) |  | $ | (5,811 | ) |  |  | $ | 71,848 |  |  | $ | (21,844 | )
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncontrolling interests - Operating Partnership |  | 4,202 |  |  | 3,145 |  |  | 148 |  |  | (743 | ) |  | (665 | ) |  |  | 6,752 |  |  | (2,553 | )
Depreciation and amortization |  | 18,972 |  |  | 18,751 |  |  | 18,437 |  |  | 18,111 |  |  | 18,812 |  |  |  | 74,271 |  |  | 77,624 |
Less depreciation - non real estate |  | (88 | ) |  | (71 | ) |  | (79 | ) |  | (85 | ) |  | (76 | ) |  |  | (322 | ) |  | (305 | )
Less depreciation - partially owned entities |  | (454 | ) |  | (452 | ) |  | (474 | ) |  | (678 | ) |  | (680 | ) |  |  | (2,059 | ) |  | (2,795 | )
Impairment of real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,221 |  |  |  | — |  |  | 19,030 |
Gain on sale of real estate |  | (57,850 | ) |  | (39,105 | ) |  | (615 | ) |  | (54 | ) |  | (612 | ) |  |  | (97,624 | ) |  | (25,245 | )
FFO applicable to common shares and Units |  | $ | 11,735 |  |  | $ | 12,159 |  |  | $ | 18,824 |  |  | $ | 10,148 |  |  | $ | 12,189 |  |  |  | $ | 52,866 |  |  | $ | 43,912 |
Adjustments to Core FFO: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Casualty loss write off |  | — |  |  | — |  |  | — |  |  | — |  |  | 43 |  |  |  | — |  |  | 43 |
Loss on extinguishment of debt |  | 864 |  |  | 1,087 |  |  | 407 |  |  | 2 |  |  | 5 |  |  |  | 2,360 |  |  | 678 |
Gain on litigation settlement |  | — |  |  | (300 | ) |  | (6,286 | ) |  | — |  |  | — |  |  |  | (6,586 | ) |  | — |
Severance and transitions costs |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  | — |  |  | 811 |
Other miscellaneous items |  | (113 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  |  | (113 | ) |  | — |
Core FFO applicable to common shares and Units |  | $ | 12,486 |  |  | $ | 12,946 |  |  | $ | 12,945 |  |  | $ | 10,150 |  |  | $ | 12,237 |  |  |  | $ | 48,527 |  |  | $ | 45,444 |
FFO applicable to common shares and Units |  | $ | 11,735 |  |  | $ | 12,159 |  |  | $ | 18,824 |  |  | $ | 10,148 |  |  | $ | 12,189 |  |  |  | $ | 52,866 |  |  | $ | 43,912 |
Dividends to preferred unitholders |  | 160 |  |  | 160 |  |  | 160 |  |  | 57 |  |  | — |  |  |  | 537 |  |  | — |
FFO applicable to common shares and Units - diluted |  | $ | 11,895 |  |  | $ | 12,319 |  |  | $ | 18,984 |  |  | $ | 10,205 |  |  | $ | 12,189 |  |  |  | $ | 53,403 |  |  | $ | 43,912 |
Core FFO applicable to common shares and Units |  | $ | 12,486 |  |  | $ | 12,946 |  |  | $ | 12,945 |  |  | $ | 10,150 |  |  | $ | 12,237 |  |  |  | $ | 48,527 |  |  | $ | 45,444 |
Dividends to preferred unitholders |  | 160 |  |  | 160 |  |  | 160 |  |  | 57 |  |  | — |  |  |  | 537 |  |  | — |
Core FFO applicable to common shares and Units - diluted |  | $ | 12,646 |  |  | $ | 13,106 |  |  | $ | 13,105 |  |  | $ | 10,207 |  |  | $ | 12,237 |  |  |  | $ | 49,064 |  |  | $ | 45,444 |
Per Share Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Earnings (loss) per share and unit - diluted |  | $ | 3.89 |  |  | $ | 2.54 |  |  | $ | 0.12 |  |  | $ | (0.54 | ) |  | $ | (0.49 | ) |  |  | $ | 6.00 |  |  | $ | (1.83 | )
FFO per share and unit - diluted |  | $ | 0.90 |  |  | $ | 0.93 |  |  | $ | 1.45 |  |  | $ | 0.77 |  |  | $ | 0.92 |  |  |  | $ | 4.05 |  |  | $ | 3.29 |
Core FFO per share and unit - diluted |  | $ | 0.96 |  |  | $ | 0.99 |  |  | $ | 1.00 |  |  | $ | 0.77 |  |  | $ | 0.92 |  |  |  | $ | 3.72 |  |  | $ | 3.41 |
Weighted average shares and units - diluted |  | 13,188 |  |  | 13,087 |  |  | 13,197 |  |  | 13,230 |  |  | 13,317 |  |  |  | 13,182 |  |  | 13,344 |

| S-6 |

Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA
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, gain on litigation settlement, 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.

|  | (in thousands)
|  | Three Months Ended |  |  | Twelve Months Ended
|  | 12/31/2019 |  | 9/30/2019 |  | 6/30/2019 |  | 3/31/2019 |  | 12/31/2018 |  |  | 12/31/2019 |  | 12/31/2018
Net income (loss) attributable to controlling interests |  | $ | 48,658 |  |  | $ | 31,596 |  |  | $ | 3,113 |  |  | $ | (4,698 | ) |  | $ | (4,106 | ) |  |  | $ | 78,669 |  |  | $ | (15,023 | )
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dividends to preferred unitholders |  | 160 |  |  | 160 |  |  | 160 |  |  | 57 |  |  | — |  |  |  | 537 |  |  | — |
Noncontrolling interests – Operating Partnership |  | 4,202 |  |  | 3,145 |  |  | 148 |  |  | (743 | ) |  | (665 | ) |  |  | 6,752 |  |  | (2,553 | )
Income (loss) before noncontrolling interests – Operating Partnership |  | 53,020 |  |  | 34,901 |  |  | 3,421 |  |  | (5,384 | ) |  | (4,771 | ) |  |  | 85,958 |  |  | (17,576 | )
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  | 7,112 |  |  | 7,448 |  |  | 7,343 |  |  | 7,558 |  |  | 7,336 |  |  |  | 29,461 |  |  | 31,193 |
Loss on extinguishment of debt |  | 864 |  |  | 1,087 |  |  | 407 |  |  | 2 |  |  | 4 |  |  |  | 2,360 |  |  | 677 |
Depreciation/amortization related to real estate investments |  | 18,518 |  |  | 18,299 |  |  | 17,963 |  |  | 17,433 |  |  | 18,133 |  |  |  | 72,213 |  |  | 74,832 |
Impairment of real estate investments |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,221 |  |  |  | — |  |  | 19,030 |
Interest income |  | (415 | ) |  | (402 | ) |  | (402 | ) |  | (407 | ) |  | (465 | ) |  |  | (1,626 | ) |  | (1,933 | )
Gain (loss) on sale of real estate and other investments |  | (57,850 | ) |  | (39,105 | ) |  | (615 | ) |  | (54 | ) |  | (611 | ) |  |  | (97,624 | ) |  | (25,244 | )
Gain on litigation settlement |  | — |  |  | (300 | ) |  | (6,286 | ) |  | — |  |  | — |  |  |  | (6,586 | ) |  | — |
Other miscellaneous items |  | (113 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  |  | (113 | ) |  | — |
Adjusted EBITDA |  | $ | 21,136 |  |  | $ | 21,928 |  |  | $ | 21,831 |  |  | $ | 19,148 |  |  | $ | 20,847 |  |  |  | $ | 84,043 |  |  | $ | 80,979 |

| S-7 |

IRET
DEBT ANALYSIS
(in thousands)
Debt Maturity Schedule
Annual Expirations

|  | Future Maturities of Debt
|  | Secured Fixed Debt |  | Unsecured Fixed Debt(1) |  | Unsecured Variable Debt |  | Total Debt |  | % of Total Debt |  | Weighted Average Interest Rate(2)
2020 |  | $ | 9,533 |  |  | $ | — |  |  | $ | 79 |  |  | $ | 9,612 |  |  | 1.5 | % |  | 4.84 | %
2021 |  | 36,097 |  |  | — |  |  | — |  |  | 36,097 |  |  | 5.5 | % |  | 5.36 | %
2022 |  | 34,449 |  |  | 50,000 |  |  | — |  |  | 84,449 |  |  | 13.0 | % |  | 3.80 | %
2023 |  | 48,226 |  |  | — |  |  | — |  |  | 48,226 |  |  | 7.4 | % |  | 4.02 | %
2024 |  | — |  |  | 70,000 |  |  | — |  |  | 70,000 |  |  | 10.7 | % |  | 3.68 | %
Thereafter |  | 203,071 |  |  | 200,000 |  |  | — |  |  | 403,071 |  |  | 61.9 | % |  | 3.90 | %
Total debt |  | $ | 331,376 |  |  | $ | 320,000 |  |  | $ | 79 |  |  | $ | 651,455 |  |  | 100.0 | % |  | 3.97 | %

(1) | Term loans have variable interest rates that are fixed with interest rate swaps and $50.0 million of our variable interest, primary line of credit is fixed with an interest rate swap.

(2) | Weighted average interest rate of debt that matures during the year, including the effect of interest rate swaps on the term loans and line of credit.

|  | 12/31/2019 |  | 9/30/2019 |  | 6/30/2019 |  | 3/31/2019 |  | 12/31/2018
Debt Balances Outstanding(1) |  |  |  |  |  |  |  |  |  |
Secured fixed rate |  | $ | 331,376 |  |  | $ | 362,731 |  |  | $ | 371,951 |  |  | $ | 432,588 |  |  | $ | 445,974 |
Unsecured fixed rate line of credit(2) |  | 50,000 |  |  | 50,000 |  |  | 50,000 |  |  | — |  |  | — |
Secured line of credit(3) |  | — |  |  | — |  |  | 15,000 |  |  | 15,000 |  |  | — |
Unsecured variable rate line of credit |  | 79 |  |  | 53,143 |  |  | 112,939 |  |  | 103,677 |  |  | 57,500 |
Unsecured term loans |  | 145,000 |  |  | 145,000 |  |  | 145,000 |  |  | 145,000 |  |  | 145,000 |
Unsecured senior notes |  | 125,000 |  |  | 125,000 |  |  | — |  |  | — |  |  | — |
Debt total |  | $ | 651,455 |  |  | $ | 735,874 |  |  | $ | 694,890 |  |  | $ | 696,265 |  |  | $ | 648,474 |
Quarterly Weighted Average Interest Rates |  |  |  |  |  |  |  |  |  |
Mortgage debt |  | 4.02 | % |  | 4.15 | % |  | 4.37 | % |  | 4.54 | % |  | 4.58 | %
Lines of credit (rate with swap) |  | 3.52 | % |  | 3.73 | % |  | 3.91 | % |  | 3.89 | % |  | 3.72 | %
Term loan (rate with swap) |  | 4.19 | % |  | 4.14 | % |  | 4.14 | % |  | 3.99 | % |  | 4.01 | %
Senior notes |  | 3.78 | % |  | 3.78 | % |  | — |  |  | — |  |  | — |

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

(2) | A portion of our primary line of credit is fixed through an interest rate swap.

(3) | Our revolving line of credit consists primarily of unsecured borrowings. A portion of the line was secured in connection with our acquisition of SouthFork Townhomes, under an agreement which allowed us to offer the seller tax protection upon purchase.

Debt Maturity by Quarter for the Next Two Years

Year |  | First Quarter |  | Second Quarter |  | Third Quarter |  | Fourth Quarter |  | Total
2020 |  | $ | — |  |  | $ | 79 |  |  | $ | — |  |  | $ | 9,533 |  |  | $ | 9,612 |
2021 |  | 15,078 |  |  | 2,043 |  |  | 18,976 |  |  | — |  |  | 36,097 |
|  |  |  |  |  |  |  |  |  | $ | 45,709 |

| S-8 |

IRET
CAPITAL ANALYSIS
(in thousands, except per share and unit amounts)

|  | 12/31/2019 |  | 9/30/2019 |  | 6/30/2019 |  | 3/31/2019 |  | 12/31/2018
Equity Capitalization |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common shares outstanding |  | 12,099 |  |  | 11,625 |  |  | 11,656 |  |  | 11,768 |  |  | 11,942 |
Operating partnership units outstanding |  | 1,058 |  |  | 1,223 |  |  | 1,224 |  |  | 1,365 |  |  | 1,368 |
Total common shares and Units outstanding |  | 13,157 |  |  | 12,848 |  |  | 12,880 |  |  | 13,133 |  |  | 13,310 |
Market price per common share (closing price at end of period) |  | $ | 72.50 |  |  | $ | 74.67 |  |  | $ | 58.67 |  |  | $ | 59.91 |  |  | $ | 49.07 |
Equity capitalization-common shares and Units |  | $ | 953,883 |  |  | $ | 959,360 |  |  | $ | 755,670 |  |  | $ | 786,798 |  |  | $ | 653,122 |
Recorded book value of preferred shares |  | $ | 99,456 |  |  | $ | 99,456 |  |  | $ | 99,456 |  |  | $ | 99,456 |  |  | $ | 99,456 |
Total equity capitalization |  | $ | 1,053,339 |  |  | $ | 1,058,816 |  |  | $ | 855,126 |  |  | $ | 886,254 |  |  | $ | 752,578 |
Series D Preferred Units |  | $ | 16,560 |  |  | $ | 16,560 |  |  | $ | 16,560 |  |  | $ | 16,560 |  |  | — |
Debt Capitalization |  |  |  |  |  |  |  |  |  |
Total debt |  | 651,455 |  |  | 735,874 |  |  | 694,889 |  |  | 696,265 |  |  | 648,474 |
Total capitalization |  | $ | 1,721,354 |  |  | $ | 1,811,250 |  |  | $ | 1,566,575 |  |  | $ | 1,599,079 |  |  | $ | 1,401,052 |
Total debt to total capitalization(1) |  | 37.8% |  |  | 40.6% |  |  | 44.4% |  |  | 43.5% |  |  | 46.3% |

(1) | 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 common shares, operating partnership units, Series C preferred shares, and Series D preferred units outstanding at the end of the period.

|  | Three Months Ended |  |  | Twelve Months Ended
|  | 12/31/2019 |  | 9/30/2019 |  | 6/30/2019 |  | 3/31/2019 |  | 12/31/2018 |  |  | 12/31/2019 |  | 12/31/2018
Debt service coverage ratio(1) |  | 2.39 | x |  | 2.26 | x |  | 2.24 | x |  | 1.86 | x |  | 2.07 | x |  |  | 2.18 | x |  | 1.77 | x
Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization |  | 1.98 | x |  | 1.90 | x |  | 1.88 | x |  | 1.58 | x |  | 1.77 | x |  |  | 1.83 | x |  | 1.64 | x
Net debt/Adjusted EBITDA(4) |  | 7.19 | x |  | 8.29 | x |  | 7.76 | x |  | 8.79 | x |  | 7.61 | x |  |  | 7.23 | x |  | 7.84 | x
Net debt and preferred equity/Adjusted EBITDA(4) |  | 8.56 | x |  | 9.62 | x |  | 9.09 | x |  | 10.30 | x |  | 8.80 | x |  |  | 8.61 | x |  | 9.07 | x
Distribution Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common shares and units outstanding at record date |  | 13,157 |  |  | 12,848 |  |  | 12,914 |  |  | 13,135 |  |  | 13,276 |  |  |  | 13,157 |  |  | 13,276 |
Total common distribution declared |  | $ | 9,210 |  |  | $ | 8,994 |  |  | $ | 9,039 |  |  | $ | 9,195 |  |  | $ | 9,293 |  |  |  | $ | 36,438 |  |  | $ | 37,372 |
Common distribution per share and unit |  | $ | 0.70 |  |  | $ | 0.70 |  |  | $ | 0.70 |  |  | $ | 0.70 |  |  | $ | 0.70 |  |  |  | $ | 2.80 |  |  | $ | 2.80 |
Payout ratio (FFO per diluted share and unit basis)(2) |  | 77.8 | % |  | 75.3 | % |  | 48.3 | % |  | 90.9 | % |  | 76.1 | % |  |  | 69.1 | % |  | 85.1 | %
Payout ratio (Core FFO per diluted share and unit basis)(3) |  | 72.9 | % |  | 70.7 | % |  | 70.0 | % |  | 90.9 | % |  | 76.1 | % |  |  | 75.3 | % |  | 82.1 | %

(1) | Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization.

(2) | Payout ratio (FFO per diluted 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 diluted share and unit. This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP.

(3) | Payout ratio (Core FFO per diluted 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 Core FFO per diluted share and unit. This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP.

(4) | Net debt is the total debt balance less cash and cash equivalents and net tax deferred exchange proceeds (included within restricted cash). For the quarterly period presented, adjusted EBITDA is annualized. Net debt and adjusted EBITDA are non-GAAP measures and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within the Non-GAAP Financial Measures and Reconciliations section.

| S-9 |

IRET
SAME-STORE FOURTH QUARTER COMPARISONS
($ in thousands)

|  | Homes Included |  | Revenues |  | Expenses |  | NOI
Regions |  |  | CY19Q4 |  | CY18Q4 |  | % Change |  | CY19Q4 |  | CY18Q4 |  | % Change |  | CY19Q4 |  | CY18Q4 |  | % Change
Minneapolis, MN |  | 1,796 |  |  | $ | 7,788 |  |  | $ | 7,542 |  |  | 3.3 | % |  | $ | 3,428 |  |  | $ | 3,026 |  |  | 13.3 | % |  | $ | 4,360 |  |  | $ | 4,516 |  |  | (3.5 | )%
Rochester, MN |  | 1,711 |  |  | 6,385 |  |  | 6,227 |  |  | 2.5 | % |  | 2,571 |  |  | 2,367 |  |  | 8.6 | % |  | 3,814 |  |  | 3,860 |  |  | (1.2 | )%
Grand Forks, ND |  | 1,555 |  |  | 4,329 |  |  | 4,125 |  |  | 4.9 | % |  | 1,980 |  |  | 1,906 |  |  | 3.9 | % |  | 2,349 |  |  | 2,219 |  |  | 5.9 | %
Omaha, NE |  | 1,370 |  |  | 3,751 |  |  | 3,771 |  |  | (0.5 | )% |  | 1,721 |  |  | 1,535 |  |  | 12.1 | % |  | 2,030 |  |  | 2,236 |  |  | (9.2 | )%
St. Cloud, MN |  | 1,190 |  |  | 3,550 |  |  | 3,473 |  |  | 2.2 | % |  | 1,719 |  |  | 1,484 |  |  | 15.8 | % |  | 1,831 |  |  | 1,989 |  |  | (7.9 | )%
Bismarck, ND |  | 845 |  |  | 2,755 |  |  | 2,595 |  |  | 6.2 | % |  | 982 |  |  | 1,128 |  |  | (12.9 | )% |  | 1,773 |  |  | 1,467 |  |  | 20.9 | %
Billings, MT |  | 749 |  |  | 2,182 |  |  | 2,115 |  |  | 3.2 | % |  | 816 |  |  | 822 |  |  | (0.7 | )% |  | 1,366 |  |  | 1,293 |  |  | 5.6 | %
Minot, ND |  | 712 |  |  | 2,123 |  |  | 2,155 |  |  | (1.5 | )% |  | 921 |  |  | 1,037 |  |  | (11.2 | )% |  | 1,202 |  |  | 1,118 |  |  | 7.5 | %
Rapid City, SD |  | 474 |  |  | 1,440 |  |  | 1,371 |  |  | 5.0 | % |  | 577 |  |  | 527 |  |  | 9.5 | % |  | 863 |  |  | 844 |  |  | 2.3 | %
Same-Store Total |  | 10,402 |  |  | $ | 34,303 |  |  | $ | 33,374 |  |  | 2.8 | % |  | $ | 14,715 |  |  | $ | 13,832 |  |  | 6.4 | % |  | $ | 19,588 |  |  | $ | 19,542 |  |  | 0.2 | %

|  | % of NOI |  | Weighted Average Occupancy (1) |  | Weighted Average Monthly Rental Rate (2) |  | Weighted Average Monthly Revenue per Occupied Home (3)
Regions |  |  | CY19Q4 |  | CY18Q4 |  | Growth |  | CY19Q4 |  | CY18Q4 |  | % Change |  | CY19Q4 |  | CY18Q4 |  | % Change
Minneapolis, MN |  | 22.3 | % |  | 91.9 | % |  | 92.7 | % |  | (0.8 | )% |  | $ | 1,467 |  |  | $ | 1,418 |  |  | 3.5 | % |  | $ | 1,573 |  |  | $ | 1,511 |  |  | 4.1 | %
Rochester, MN |  | 19.5 | % |  | 94.5 | % |  | 95.1 | % |  | (0.6 | )% |  | 1,251 |  |  | 1,212 |  |  | 3.2 | % |  | 1,316 |  |  | 1,276 |  |  | 3.1 | %
Grand Forks, ND |  | 12.0 | % |  | 94.8 | % |  | 91.8 | % |  | 3.0 | % |  | 903 |  |  | 913 |  |  | (1.1 | )% |  | 978 |  |  | 964 |  |  | 1.9 | %
Omaha, NE |  | 10.4 | % |  | 93.5 | % |  | 95.8 | % |  | (2.3 | )% |  | 897 |  |  | 876 |  |  | 2.4 | % |  | 977 |  |  | 958 |  |  | 1.8 | %
St. Cloud, MN |  | 9.3 | % |  | 94.0 | % |  | 95.2 | % |  | (1.2 | )% |  | 950 |  |  | 945 |  |  | 0.5 | % |  | 1,058 |  |  | 1,021 |  |  | 3.4 | %
Bismarck, ND |  | 9.0 | % |  | 96.4 | % |  | 94.0 | % |  | 2.4 | % |  | 1,045 |  |  | 1,035 |  |  | 1.0 | % |  | 1,127 |  |  | 1,090 |  |  | 3.8 | %
Billings, MT |  | 7.0 | % |  | 95.4 | % |  | 96.5 | % |  | (1.1 | )% |  | 935 |  |  | 906 |  |  | 3.2 | % |  | 1,017 |  |  | 976 |  |  | 4.3 | %
Minot, ND |  | 6.1 | % |  | 94.3 | % |  | 96.4 | % |  | (2.1 | )% |  | 997 |  |  | 1,001 |  |  | (0.4 | )% |  | 1,054 |  |  | 1,046 |  |  | 0.6 | %
Rapid City, SD |  | 4.4 | % |  | 96.2 | % |  | 96.7 | % |  | (0.5 | )% |  | 961 |  |  | 933 |  |  | 3.0 | % |  | 1,052 |  |  | 996 |  |  | 5.5 | %
Same-Store Total |  | 100.0 | % |  | 94.0 | % |  | 94.3 | % |  | (0.3 | )% |  | $ | 1,085 |  |  | $ | 1,064 |  |  | 2.0 | % |  | $ | 1,169 |  |  | $ | 1,134 |  |  | 3.1 | %

(1) | Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rent.

(2) | Weighted average monthly rental rate is scheduled rental revenue divided by the total number of homes. Scheduled rental revenue represents the value of all homes, with occupied homes valued at contractual rates pursuant to leases and vacant homes valued at estimated market rents. When calculating actual rents for occupied homes and market rents for vacant homes, delinquencies and concessions are not taken into account. The currently offered effective rates on new leases at the community are used as the starting point in determination of the market rates of vacant homes.

(3) | Weighted average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment units for the period.

| S-10 |

IRET
SAME-STORE SEQUENTIAL QUARTER COMPARISONS
($ in thousands)

|  | Homes Included |  | Revenues |  | Expenses |  | NOI
Regions |  |  | CY19Q4 |  | CY19Q3 |  | % Change |  | CY19Q4 |  | CY19Q3 |  | % Change |  | CY19Q4 |  | CY19Q3 |  | % Change
Minneapolis, MN |  | 1,796 |  |  | $ | 7,788 |  |  | $ | 7,773 |  |  | 0.2 | % |  | $ | 3,428 |  |  | $ | 3,360 |  |  | 2.0 | % |  | $ | 4,360 |  |  | $ | 4,413 |  |  | (1.2 | )%
Rochester, MN |  | 1,711 |  |  | 6,385 |  |  | 6,446 |  |  | (0.9 | )% |  | 2,571 |  |  | 2,386 |  |  | 7.8 | % |  | 3,814 |  |  | 4,060 |  |  | (6.1 | )%
Grand Forks, ND |  | 1,555 |  |  | 4,329 |  |  | 4,287 |  |  | 1.0 | % |  | 1,980 |  |  | 1,882 |  |  | 5.2 | % |  | 2,349 |  |  | 2,405 |  |  | (2.3 | )%
Omaha, NE |  | 1,370 |  |  | 3,751 |  |  | 3,738 |  |  | 0.3 | % |  | 1,721 |  |  | 1,740 |  |  | (1.1 | )% |  | 2,030 |  |  | 1,998 |  |  | 1.6 | %
St. Cloud, MN |  | 1,190 |  |  | 3,550 |  |  | 3,517 |  |  | 0.9 | % |  | 1,719 |  |  | 1,557 |  |  | 10.4 | % |  | 1,831 |  |  | 1,960 |  |  | (6.6 | )%
Bismarck, ND |  | 845 |  |  | 2,755 |  |  | 2,707 |  |  | 1.8 | % |  | 982 |  |  | 1,069 |  |  | (8.1 | )% |  | 1,773 |  |  | 1,638 |  |  | 8.2 | %
Billings, MT |  | 749 |  |  | 2,182 |  |  | 2,144 |  |  | 1.8 | % |  | 816 |  |  | 882 |  |  | (7.5 | )% |  | 1,366 |  |  | 1,262 |  |  | 8.2 | %
Minot, ND |  | 712 |  |  | 2,123 |  |  | 2,117 |  |  | 0.3 | % |  | 921 |  |  | 1,035 |  |  | (11.0 | )% |  | 1,202 |  |  | 1,082 |  |  | 11.1 | %
Rapid City, SD |  | 474 |  |  | 1,440 |  |  | 1,424 |  |  | 1.1 | % |  | 577 |  |  | 574 |  |  | 0.5 | % |  | 863 |  |  | 850 |  |  | 1.5 | %
Same-Store Total |  | 10,402 |  |  | $ | 34,303 |  |  | $ | 34,153 |  |  | 0.4 | % |  | $ | 14,715 |  |  | $ | 14,485 |  |  | 1.6 | % |  | $ | 19,588 |  |  | $ | 19,668 |  |  | (0.4 | )%

|  | % of NOI |  | Weighted Average Occupancy |  | Weighted Average Monthly Rental Rate |  | Weighted Average Monthly Revenue per Occupied Home
Regions |  |  | CY19Q4 |  | CY19Q3 |  | Growth |  | CY19Q4 |  | CY19Q3 |  | % Change |  | CY19Q4 |  | CY19Q3 |  | % Change
Minneapolis, MN |  | 22.3 | % |  | 91.9 | % |  | 90.8 | % |  | 1.1 | % |  | $ | 1,467 |  |  | $ | 1,478 |  |  | (0.7 | )% |  | $ | 1,573 |  |  | $ | 1,590 |  |  | (0.9 | )%
Rochester, MN |  | 19.5 | % |  | 94.5 | % |  | 94.6 | % |  | (0.1 | )% |  | 1,251 |  |  | 1,257 |  |  | (0.5 | )% |  | 1,316 |  |  | 1,327 |  |  | (0.8 | )%
Grand Forks, ND |  | 12.0 | % |  | 94.8 | % |  | 94.1 | % |  | 0.7 | % |  | 903 |  |  | 908 |  |  | (0.6 | )% |  | 978 |  |  | 977 |  |  | 0.3 | %
Omaha, NE |  | 10.4 | % |  | 93.5 | % |  | 93.0 | % |  | 0.5 | % |  | 897 |  |  | 900 |  |  | (0.3 | )% |  | 977 |  |  | 977 |  |  | (0.2 | )%
St. Cloud, MN |  | 9.3 | % |  | 94.0 | % |  | 93.8 | % |  | 0.2 | % |  | 950 |  |  | 959 |  |  | (0.9 | )% |  | 1,058 |  |  | 1,050 |  |  | 0.7 | %
Bismarck, ND |  | 9.0 | % |  | 96.4 | % |  | 93.8 | % |  | 2.6 | % |  | 1,045 |  |  | 1,055 |  |  | (0.9 | )% |  | 1,127 |  |  | 1,138 |  |  | (0.8 | )%
Billings, MT |  | 7.0 | % |  | 95.4 | % |  | 95.0 | % |  | 0.4 | % |  | 935 |  |  | 941 |  |  | (0.6 | )% |  | 1,017 |  |  | 1,004 |  |  | 1.4 | %
Minot, ND |  | 6.1 | % |  | 94.3 | % |  | 93.9 | % |  | 0.4 | % |  | 997 |  |  | 999 |  |  | (0.2 | )% |  | 1,054 |  |  | 1,055 |  |  | (0.1 | )%
Rapid City, SD |  | 4.4 | % |  | 96.2 | % |  | 96.1 | % |  | 0.1 | % |  | 961 |  |  | 963 |  |  | (0.2 | )% |  | 1,052 |  |  | 1,042 |  |  | 1.0 | %
Same-Store Total |  | 100.0 | % |  | 94.0 | % |  | 93.4 | % |  | 0.6 | % |  | $ | 1,085 |  |  | $ | 1,092 |  |  | (0.6 | )% |  | $ | 1,169 |  |  | $ | 1,172 |  |  | (0.2 | )%

| S-11 |

IRET
SAME-STORE YEAR-TO-DATE COMPARISONS
($ in thousands)

|  | Homes Included |  | Revenues |  | Expenses |  | NOI
Regions |  |  | CY19 |  | CY18 |  | % Change |  | CY19 |  | CY18 |  | % Change |  | CY19 |  | CY18 |  | % Change
Minneapolis, MN |  | 1,796 |  |  | $ | 31,086 |  |  | $ | 29,428 |  |  | 5.6 | % |  | $ | 13,108 |  |  | $ | 12,010 |  |  | 9.1 | % |  | $ | 17,978 |  |  | $ | 17,418 |  |  | 3.2 | %
Rochester, MN |  | 1,711 |  |  | 25,345 |  |  | 24,382 |  |  | 3.9 | % |  | 9,861 |  |  | 9,686 |  |  | 1.8 | % |  | 15,484 |  |  | 14,696 |  |  | 5.4 | %
Grand Forks, ND |  | 1,555 |  |  | 16,975 |  |  | 16,691 |  |  | 1.7 | % |  | 7,937 |  |  | 7,749 |  |  | 2.4 | % |  | 9,038 |  |  | 8,942 |  |  | 1.1 | %
Omaha, NE |  | 1,370 |  |  | 14,949 |  |  | 14,799 |  |  | 1.0 | % |  | 6,870 |  |  | 6,452 |  |  | 6.5 | % |  | 8,079 |  |  | 8,347 |  |  | (3.2 | )%
St. Cloud, MN |  | 1,190 |  |  | 14,127 |  |  | 13,563 |  |  | 4.2 | % |  | 6,609 |  |  | 6,320 |  |  | 4.6 | % |  | 7,518 |  |  | 7,243 |  |  | 3.8 | %
Bismarck, ND |  | 845 |  |  | 10,797 |  |  | 10,418 |  |  | 3.6 | % |  | 4,214 |  |  | 4,301 |  |  | (2.0 | )% |  | 6,583 |  |  | 6,117 |  |  | 7.6 | %
Billings, MT |  | 749 |  |  | 8,555 |  |  | 8,125 |  |  | 5.3 | % |  | 3,273 |  |  | 3,063 |  |  | 6.9 | % |  | 5,282 |  |  | 5,062 |  |  | 4.3 | %
Minot, ND |  | 712 |  |  | 8,503 |  |  | 8,367 |  |  | 1.6 | % |  | 3,999 |  |  | 4,215 |  |  | (5.1 | )% |  | 4,504 |  |  | 4,152 |  |  | 8.5 | %
Rapid City, SD |  | 474 |  |  | 5,602 |  |  | 5,376 |  |  | 4.2 | % |  | 2,284 |  |  | 2,251 |  |  | 1.5 | % |  | 3,318 |  |  | 3,125 |  |  | 6.2 | %
Same-Store Total |  | 10,402 |  |  | $ | 135,939 |  |  | $ | 131,149 |  |  | 3.7 | % |  | $ | 58,155 |  |  | $ | 56,047 |  |  | 3.8 | % |  | $ | 77,784 |  |  | $ | 75,102 |  |  | 3.6 | %

|  | % of NOI |  | Weighted Average Occupancy |  | Weighted Average Monthly Rental Rate |  | Weighted Average Monthly Revenue per Occupied Home
Regions |  |  | CY19 |  | CY18 |  | Growth |  | CY19 |  | CY18 |  | % Change |  | CY19 |  | CY18 |  | % Change
Minneapolis, MN |  | 23.1 | % |  | 92.7 | % |  | 91.8 | % |  | 0.9 | % |  | $ | 1,448 |  |  | $ | 1,401 |  |  | 3.4 | % |  | $ | 1,556 |  |  | $ | 1,488 |  |  | 4.7 | %
Rochester, MN |  | 19.9 | % |  | 95.2 | % |  | 93.9 | % |  | 1.3 | % |  | 1,237 |  |  | 1,217 |  |  | 1.6 | % |  | 1,296 |  |  | 1,265 |  |  | 2.7 | %
Grand Forks, ND |  | 11.6 | % |  | 94.1 | % |  | 93.0 | % |  | 1.1 | % |  | 906 |  |  | 915 |  |  | (1.0 | )% |  | 967 |  |  | 962 |  |  | 0.6 | %
Omaha, NE |  | 10.4 | % |  | 93.8 | % |  | 95.0 | % |  | (1.2 | )% |  | 889 |  |  | 870 |  |  | 2.2 | % |  | 970 |  |  | 947 |  |  | 2.2 | %
St. Cloud, MN |  | 9.7 | % |  | 94.7 | % |  | 94.5 | % |  | 0.2 | % |  | 950 |  |  | 929 |  |  | 2.3 | % |  | 1,044 |  |  | 1,005 |  |  | 4.0 | %
Bismarck, ND |  | 8.5 | % |  | 95.2 | % |  | 93.9 | % |  | 1.3 | % |  | 1,043 |  |  | 1,044 |  |  | (0.1 | )% |  | 1,118 |  |  | 1,094 |  |  | 2.3 | %
Billings, MT |  | 6.8 | % |  | 95.6 | % |  | 93.2 | % |  | 2.4 | % |  | 926 |  |  | 911 |  |  | 1.6 | % |  | 996 |  |  | 970 |  |  | 2.9 | %
Minot, ND |  | 5.8 | % |  | 94.8 | % |  | 94.9 | % |  | (0.1 | )% |  | 997 |  |  | 1,002 |  |  | (0.5 | )% |  | 1,050 |  |  | 1,032 |  |  | 1.7 | %
Rapid City, SD |  | 4.2 | % |  | 96.1 | % |  | 95.6 | % |  | 0.5 | % |  | 950 |  |  | 922 |  |  | 3.0 | % |  | 1,025 |  |  | 988 |  |  | 3.7 | %
Same-Store Total |  | 100.0 | % |  | 94.3 | % |  | 93.6 | % |  | 0.7 | % |  | $ | 1,078 |  |  | $ | 1,061 |  |  | 1.6 | % |  | $ | 1,155 |  |  | $ | 1,123 |  |  | 3.0 | %

| S-12 |

IRET
PORTFOLIO SUMMARY (1)

|  | Three Months Ended
|  | 12/31/2019 |  | 9/30/2019 |  | 6/30/2019 |  | 3/31/2019 |  | 12/31/2018
Number of Units |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-Store |  | 10,402 |  |  | 11,785 |  |  | 12,848 |  |  | 12,848 |  |  | 12,847 |
Non-Same-Store |  | 1,551 |  |  | 1,551 |  |  | 1,127 |  |  | 1,127 |  |  | 855 |
All Properties |  | 11,953 |  |  | 13,336 |  |  | 13,975 |  |  | 13,975 |  |  | 13,702 |
Average Scheduled Rent(2) per Unit |  |  |  |  |  |  |  |  |  |  |
Same-Store |  | $ | 1,085 |  |  | $ | 1,062 |  |  | $ | 1,028 |  |  | $ | 1,013 |  |  | $ | 1,018 |
Non-Same-Store |  | 1,722 |  |  | 1,742 |  |  | 1,692 |  |  | 1,772 |  |  | 1,797 |
All Properties |  | $ | 1,168 |  |  | $ | 1,123 |  |  | $ | 1,081 |  |  | $ | 1,064 |  |  | $ | 1,066 |
Average Revenue per Occupied Home(3) |  |  |  |  |  |  |  |  |  |  |
Same-Store |  | $ | 1,169 |  |  | $ | 1,141 |  |  | $ | 1,101 |  |  | $ | 1,075 |  |  | $ | 1,082 |
Non-Same-Store |  | 1,869 |  |  | 1,887 |  |  | 1,848 |  |  | 1,943 |  |  | 1,939 |
All Properties |  | $ | 1,260 |  |  | $ | 1,210 |  |  | $ | 1,161 |  |  | $ | 1,134 |  |  | $ | 1,136 |
Weighted Average Occupancy(4) |  |  |  |  |  |  |  |  |  |  |
Same-Store |  | 94.0 | % |  | 93.3 | % |  | 94.3 | % |  | 95.6 | % |  | 94.4 | %
Non-Same-Store |  | 93.0 | % |  | 94.2 | % |  | 94.8 | % |  | 94.9 | % |  | 92.7 | %
All Properties |  | 93.8 | % |  | 93.4 | % |  | 94.4 | % |  | 95.5 | % |  | 94.2 | %
Operating Expenses as a % of Scheduled Rent |  |  |  |  |  |  |  |  |  |  |
Same-Store |  | 43.5 | % |  | 43.0 | % |  | 42.8 | % |  | 45.6 | % |  | 42.4 | %
Non-Same-Store |  | 33.8 | % |  | 38.1 | % |  | 37.4 | % |  | 37.6 | % |  | 30.5 | %
All Properties |  | 41.6 | % |  | 42.3 | % |  | 42.2 | % |  | 44.7 | % |  | 41.1 | %
Capital Expenditures |  |  |  |  |  |  |  |  |  |  |
Total Capital Expenditures per Home – Same-Store |  | $ | 427 |  |  | $ | 178 |  |  | $ | 192 |  |  | $ | 80 |  |  | $ | 254 |

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

(2) | Scheduled rent represents the value of all homes, with occupied homes valued at contractual rates pursuant to leases and vacant homes valued at estimated market rents. When calculating actual rents for occupied homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant homes. Average scheduled rent is scheduled rent divided by the total number of homes.

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

(4) | Weighted average occupancy is the percentage resulting from dividing actual rental revenue by scheduled rent. We believe that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and our calculation of weighted average occupancy may not be comparable to that disclosed by other real estate companies.

| S-13 |

IRET
CAPITAL EXPENDITURES
($ in thousands, except per home amounts)

|  | Three Months Ended
|  | 12/31/2019 |  | 12/31/2018
Total Multifamily Same-Store Homes |  | 10,402 |  |  | 10,402 |
Turnover |  | $ | 852 |  |  | $ | 859 |
Furniture & Equipment |  | 110 |  |  | 142 |
Building - Interior |  | 138 |  |  | 249 |
Building - Exterior |  | 2,370 |  |  | 1,220 |
Landscaping & Grounds |  | 973 |  |  | 303 |
Capital Expenditures |  | $ | 4,443 |  |  | $ | 2,773 |
CapEx per Home |  | $ | 427 |  |  | $ | 267 |
Value Add |  | $ | 1,713 |  |  | $ | 305 |
Total Capital Spend |  | $ | 6,156 |  |  | $ | 3,078 |
Total Capital Spend per Home |  | $ | 592 |  |  | $ | 296 |
All Properties - Weighted Average Homes |  | 12,599 |  |  | 13,702 |
Capital Expenditures |  | $ | 4,939 |  |  | $ | 3,810 |
CapEx per Home |  | 392 |  |  | 278 |
Value Add |  | 2,014 |  |  | 316 |
Acquisition Capital |  | 1,814 |  |  | $ | 62 |
Total Capital Spend |  | $ | 8,767 |  |  | $ | 4,188 |
Total Capital Spend per Home |  | $ | 696 |  |  | $ | 306 |

|  | Twelve Months Ended
|  | 12/31/2019 |  | 12/31/2018
Total Multifamily Same-Store Homes |  | 10,402 |  |  | 10,402 |
Turnover |  | $ | 3,140 |  |  | $ | 3,558 |
Furniture & Equipment |  | 294 |  |  | 324 |
Building - Interior |  | 306 |  |  | 515 |
Building - Exterior |  | 3,466 |  |  | 3,073 |
Landscaping & Grounds |  | 1,854 |  |  | 1,109 |
Capital Expenditures |  | $ | 9,060 |  |  | $ | 8,579 |
CapEx per Home |  | $ | 871 |  |  | $ | 825 |
Value Add |  | $ | 4,375 |  |  | $ | 1,836 |
Total Capital Spend |  | $ | 13,435 |  |  | $ | 10,415 |
Total Capital Spend per Home |  | $ | 1,292 |  |  | $ | 1,001 |
All Properties - Weighted Average Homes |  | 13,552 |  |  | 13,875 |
Capital Expenditures |  | $ | 11,128 |  |  | $ | 11,554 |
CapEx per Home |  | 821 |  |  | 833 |
Value Add |  | 5,011 |  |  | 1,882 |
Acquisition Capital |  | 3,713 |  |  | 1,749 |
Total Capital Spend |  | $ | 19,852 |  |  | $ | 15,185 |
Total Capital Spend per Home |  | $ | 1,465 |  |  | $ | 1,094 |

| S-14 |

IRET
2020 Financial Outlook
($ in thousands, except per share amounts)
We are providing guidance for 2020.

| 12 Months Ended |  | 2020 Full-Year Guidance Range
| December 31, 2019 |  | Low |  | High
| Actuals |  | Amount |  | Amount
Same-store growth (1) |  |  |  |  |
Revenue | $ | 155,414 |  |  | 2.50 | % |  | 4.00 | %
Controllable expenses | $ | 43,670 |  |  | 1.50 | % |  | 3.00 | %
Non-controllable expenses | $ | 21,229 |  |  | 10.50 | % |  | 12.50 | %
Total Expenses | $ | 64,899 |  |  | 4.50 | % |  | 6.00 | %
Same-store NOI (1) | $ | 90,515 |  |  | 1.00 | % |  | 3.00 | %
Components of NOI |  |  |  |  |
Same-store NOI (1) | $ | 90,515 |  |  | $ | 91,420 |  |  | $ | 93,230 |
Non-same-store NOI (1) | $ | 3,733 |  |  | $ | 8,375 |  |  | $ | 8,670 |
Other Commercial NOI (1) | $ | 2,357 |  |  | $ | 2,605 |  |  | $ | 2,800 |
Other Sold NOI (1) | $ | 10,835 |  |  | — |  |  | — |
Total NOI | $ | 107,440 |  |  | $ | 102,400 |  |  | $ | 104,700 |
Accretion from investments | — |  |  | 1,450 |  |  | 1,550 |
Interest expense | $ | (30,537 | ) |  | (27,700 | ) |  | (27,300 | )
Preferred dividends | (6,821 | ) |  | (6,800 | ) |  | (6,800 | )
Recurring income and expenses |  |  |  |  |
Interest and other income | $ | 1,914 |  |  | 2,050 |  |  | 2,150 |
General and administrative | (14,384 | ) |  | (14,650 | ) |  | (14,350 | )
Property management expenses | (6,186 | ) |  | (6,725 | ) |  | (6,475 | )
Casualty losses | (1,116 | ) |  | (1,400 | ) |  | (1,150 | )
Non-real estate depreciation and amortization | (322 | ) |  | (300 | ) |  | (300 | )
Non-controlling interest | (924 | ) |  | (1,125 | ) |  | (1,075 | )
Total recurring income and expenses | $ | (21,018 | ) |  | (22,150 | ) |  | $ | (21,200 | )
FFO | $ | 53,403 |  |  | $ | 47,200 |  |  | $ | 50,950 |
FFO per diluted share | $ | 4.05 |  |  | $ | 3.52 |  |  | $ | 3.80 |
Non-core income and expenses |  |  |  |  |
Gain (loss) on early retirement of debt, net | $ | (2,360 | ) |  | $ | — |  |  | $ | — |
Gain (loss) on litigation settlement | 6,586 |  |  | — |  |  | — |
Other miscellaneous items | 113 |  |  | — |  |  | — |
Total non-core income and expenses | $ | 4,339 |  |  | $ | — |  |  | $ | — |
Core FFO | $ | 49,064 |  |  | $ | 47,200 |  |  | $ | 50,950 |
Core FFO per diluted share | $ | 3.72 |  |  | $ | 3.52 |  |  | $ | 3.80 |
EPS - Diluted | $ | 6.00 |  |  | $ | (1.35 | ) |  | $ | (1.07 | )
Weighted average shares outstanding - diluted | 13,182 |  |  | 13,410 |  |  | 13,410 |

(1) | Amounts for the year ended December 31, 2019 reflect the 2020 same-store pool.

Additional assumptions:

• | Same-store capital expenditures of $825 per home to $900 per home

• | Value-add expenditures of $10.0 million to $15.0 million

• | Investments of $66.0 million to $72.0 million

| S-15 |

Reconciliation of Net Income (Loss) Available to Common Shareholders to FFO and Core FFO
The following table presents reconciliations of Net income (loss) available to common shareholders to FFO and Core FFO, which are non-GAAP measures described in greater detail under "Non-GAAP Financial Measures and Reconciliations." They should not be considered as alternatives to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, and is not necessarily indicative of sufficient cash flow to fund all of our needs or our ability to service indebtedness or make distributions. The outlook and projections provided below are based on current expectations and are forward-looking.

|  |  | Outlook
| 12 Months Ended |  | 12 Months Ended
| December 31, 2019 |  | December 31, 2020
| Amount |  |  | Low |  | High
Net income (loss) available to common shareholders | $ | 71,848 |  |  |  | $ | (17,340 | ) |  | $ | (13,590 | )
Noncontrolling interests - Operating Partnership | 6,752 |  |  |  | (1,380 | ) |  | (1,380 | )
Depreciation and amortization | 71,890 |  |  |  | 65,280 |  |  | 65,280 |
Gain on sale of real estate attributable to controlling interests | (97,624 | ) |  |  | — |  |  | — |
Dividends to preferred unitholders | $ | 537 |  |  |  | $ | 640 |  |  | $ | 640 |
FFO applicable to common shares and Units | $ | 53,403 |  |  |  | $ | 47,200 |  |  | $ | 50,950 |
Adjustments to Core FFO: |  |  |  |  |  |
Casualty loss write off | — |  |  |  | — |  |  | — |
Loss on extinguishment of debt | 2,360 |  |  |  | — |  |  | — |
Gain on litigation settlement | (6,586 | ) |  |  | — |  |  | — |
Other miscellaneous items | (113 | ) |  |  | — |  |  | — |
Core FFO applicable to common shares and Units | $ | 49,064 |  |  |  | $ | 47,200 |  |  | $ | 50,950 |
Earnings per share - diluted | $ | 6.00 |  |  |  | $ | (1.35 | ) |  | $ | (1.07 | )
FFO per share - diluted | $ | 4.05 |  |  |  | $ | 3.52 |  |  | $ | 3.80 |
Core FFO per share - diluted | $ | 3.72 |  |  |  | $ | 3.52 |  |  | $ | 3.80 |

| S-16 |