UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

20549

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For Quarter Ended January 31, 2015

Commission File Number 0-14851

INVESTORS REAL ESTATE TRUST

(Exact name of registrant as specified in its charter)

North Dakota	45-0311232
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
1400 31st Avenue SW, Suite 60
Post Office Box 1988
Minot, ND 58702-1988
(Address of principal executive offices) (Zip code)

(701) 837-4738

(Registrant's telephone number, including area code)

N/A

(Former name, former address, and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.

Yes R

No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes R

No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

	Large accelerated filer R	Accelerated filer £
	Non-accelerated filer £	Smaller Reporting Company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £

No R

Registrant is a North Dakota Real Estate Investment Trust. As of February 20, 2015, it had 122,600,010 common shares of beneficial interest outstanding.

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TABLE OF CONTENTS

	Page
Part I. Financial Information
Item 1. Financial Statements - Third Quarter - Fiscal 2015:	3
Condensed Consolidated Balance Sheets (unaudited)	3
January 31, 2015 and April 30, 2014
Condensed Consolidated Statements of Operations  (unaudited)	4
For the Three and Nine Months ended January 31, 2015 and 2014
Condensed Consolidated Statements of Equity (unaudited)	5
For the Nine Months ended January 31, 2015 and 2014
Condensed Consolidated Statements of Cash Flows  (unaudited)	6
For the Nine Months ended January 31, 2015 and 2014
Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	53
Item 4. Controls and Procedures	54
Part II. Other Information
Item 1. Legal Proceedings	55
Item 1A. Risk Factors	55
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3. Defaults Upon Senior Securities	55
Item 4. Mine Safety Disclosures	55
Item 5. Other Information	55
Item 6. Exhibits	55
Signatures	56

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PART I

ITEM 1. FINANCIAL STATEMENTS - THIRD QUARTER - FISCAL 2015

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	(in thousands, except share data)
	January 31, 2015		April 30, 2014
ASSETS
Real estate investments
Property owned	$	2,093,148	$	1,996,031
Less accumulated depreciation		(439,153)		(424,288)
		1,653,995		1,571,743
Development in progress		114,005		104,609
Unimproved land		27,675		22,864
Total real estate investments		1,795,675		1,699,216
Real estate held for sale		44,259		2,951
Cash and cash equivalents		52,148		47,267
Other investments		329		329
Receivable arising from straight-lining of rents, net of allowance of $714 and $796, respectively		27,169		27,096
Accounts receivable, net of allowance of $445 and $248, respectively		5,574		10,206
Real estate deposits		7,494		145
Prepaid and other assets		5,580		4,639
Intangible assets, net of accumulated amortization of $25,423 and $24,071, respectively		28,475		32,639
Tax, insurance, and other escrow		11,277		20,880
Property and equipment, net of accumulated depreciation of $1,364 and $2,041, respectively		1,619		1,681
Goodwill		1,940		1,100
Deferred charges and leasing costs, net of accumulated amortization of $21,020 and $21,068, respectively		19,803		21,072
TOTAL ASSETS	$	2,001,342	$	1,869,221
LIABILITIES AND EQUITY
LIABILITIES
Accounts payable and accrued expenses	$	69,901	$	59,105
Revolving line of credit		50,500		22,500
Mortgages payable		1,006,179		997,689
Other		132,210		63,178
TOTAL LIABILITIES		1,258,790		1,142,472
COMMITMENTS AND CONTINGENCIES (NOTE 6)
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES		6,340		6,203
EQUITY
Investors Real Estate Trust shareholders' equity
Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at January 31, 2015 and April 30, 2014, aggregate liquidation preference of $28,750,000)		27,317		27,317
Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 shares issued and outstanding at January 31, 2015 and April 30, 2014, aggregate liquidation preference of $115,000,000)		111,357		111,357
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 122,134,143 shares issued and outstanding at January 31, 2015, and 109,019,341 shares issued and outstanding at April 30, 2014)		935,287		843,268
Accumulated distributions in excess of net income		(430,282)		(389,758)
Total Investors Real Estate Trust shareholders' equity		643,679		592,184
Noncontrolling interests – Operating Partnership (14,397,983 units at January 31, 2015 and 21,093,445 units at April 30, 2014)		61,177		105,724
Noncontrolling interests – consolidated real estate entities		31,356		22,638
Total equity		736,212		720,546
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	2,001,342	$	1,869,221

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

for the three and nine months ended January 31, 2015 and 2014

	(in thousands, except per share data)
	Three Months Ended January 31				Nine Months Ended January 31
		2015		2014		2015		2014
REVENUE
Real estate rentals	$	60,440	$	56,156	$	176,401	$	164,256
Tenant reimbursement		11,513		11,473		33,431		34,243
TRS senior housing revenue		963		804		2,599		804
TOTAL REVENUE		72,916		68,433		212,431		199,303
EXPENSES
Depreciation/amortization related to real estate investments		16,834		16,733		49,846		51,156
Utilities		5,367		5,042		15,141		15,173
Maintenance		7,799		7,828		23,391		22,719
Real estate taxes		8,816		7,679		25,583		24,415
Insurance		1,479		1,190		4,560		3,904
Property management expenses		4,746		4,064		13,731		12,383
Other property expenses		227		124		783		304
TRS senior housing expenses		825		671		2,243		671
General and administrative		3,242		2,935		10,986		9,572
Amortization related to non-real estate investments		916		756		2,628		2,500
Impairment of real estate investments		540		4,798		6,105		4,798
TOTAL EXPENSES		50,791		51,820		154,997		147,595
Gain on involuntary conversion		0		1,514		0		2,480
Operating income		22,125		18,127		57,434		54,188
Interest expense		(14,595)		(15,130)		(43,858)		(44,525)
Interest income		561		573		1,681		1,346
Other income		109		34		376		123
Income before gain (loss) on sale of real estate and other investments and income from discontinued operations		8,200		3,604		15,633		11,132
Gain (loss) on sale of real estate and other investments		951		0		(811)		0
Income from continuing operations		9,151		3,604		14,822		11,132
Income from discontinued operations		0		465		0		6,450
NET INCOME		9,151		4,069		14,822		17,582
Net income attributable to noncontrolling interests – Operating Partnership		(657)		(130)		(618)		(1,406)
Net income attributable to noncontrolling interests – consolidated real estate entities		(123)		(436)		(870)		(808)
Net income attributable to Investors Real Estate Trust		8,371		3,503		13,334		15,368
Dividends to preferred shareholders		(2,879)		(2,879)		(8,636)		(8,636)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	5,492	$	624	$	4,698	$	6,732
Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	.05	$	.00	$	.04	$	.01
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		.00		.00		.00		.05
NET INCOME PER COMMON SHARE – BASIC AND DILUTED	$	.05	$	.00	$	.04	$	.06
DIVIDENDS PER COMMON SHARE	$	.1300	$	.1300	$	.3900	$	.3900

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited)

for the nine months ended January 31, 2015 and 2014

	(in thousands)
	NUMBER OF PREFERRED SHARES	PREFERRED SHARES		NUMBER OF COMMON SHARES	COMMON SHARES		ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME		NONCONTROLLING INTERESTS		TOTAL EQUITY
									(as revised)		(as revised)
Balance April 30, 2013	5,750	$	138,674	101,488	$	784,454	$	(310,341)	$	142,657	$	755,444
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests								15,368		2,038		17,406
Distributions – common shares and units								(40,685)		(8,508)		(49,193)
Distributions – Series A preferred shares								(1,779)				(1,779)
Distributions – Series B preferred shares								(6,857)				(6,857)
Distribution reinvestment and share purchase plan				5,239		44,153						44,153
Share-based compensation				13		112						112
Partnership units issued										3,480		3,480
Redemption of units for common shares				197		1,131				(1,131)		0
Contributions from nonredeemable noncontrolling interests – consolidated real estate entities										3,316		3,316
Other						(34)				(731)		(765)
Balance January 31, 2014	5,750	$	138,674	106,937	$	829,816	$	(344,294)	$	141,121	$	765,317
Balance April 30, 2014	5,750	$	138,674	109,019	$	843,268	$	(389,758)	$	128,362	$	720,546
Net income attributable to Investors Real Estate Trust and nonredeemable  noncontrolling interests								13,334		1,351		14,685
Distributions – common shares and units								(45,222)		(6,753)		(51,975)
Distributions – Series A preferred shares								(1,779)				(1,779)
Distributions – Series B preferred shares								(6,857)				(6,857)
Distribution reinvestment and share purchase plan				6,205		50,875						50,875
Share-based compensation				204		2,632						2,632
Partnership units issued										100		100
Redemption of units for common shares				6,706		38,512				(38,512)		0
Contributions from nonredeemable noncontrolling interests – consolidated real estate entities										8,540		8,540
Other										(555)		(555)
Balance January 31, 2015	5,750	$	138,674	122,134	$	935,287	$	(430,282)	$	92,533	$	736,212

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

for the nine months ended January 31, 2015 and 2014

	(in thousands)
	Nine Months Ended January 31
	2015		2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	14,822	$	17,582
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		53,583		55,996
Loss (gain) on sale of real estate, land, other investments and discontinued operations		811		(6,999)
Gain on involuntary conversion		0		(2,480)
Share-based compensation expense		1,935		0
Impairment of real estate investments		6,105		6,658
Bad debt expense		840		346
Changes in other assets and liabilities:
Increase in receivable arising from straight-lining of rents		(244)		(2,179)
Decrease (increase) in accounts receivable		2,217		(3,483)
Increase in prepaid and other assets		(1,140)		(3,127)
Increase in tax, insurance and other escrow		(548)		(1,779)
Increase in deferred charges and leasing costs		(2,716)		(3,506)
Increase in accounts payable, accrued expenses, and other liabilities		5,109		3,075
Net cash provided by operating activities		80,774		60,104
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from real estate deposits		575		926
Payments for real estate deposits		(7,924)		(4,232)
Decrease in lender holdbacks for improvements		11,063		2,186
Increase in lender holdbacks for improvements		(913)		(12,388)
Proceeds from sale of discontinued operations		0		78,879
Proceeds from sale of real estate and other investments		26,758		165
Insurance proceeds received		2,537		2,452
Payments for acquisitions of real estate assets		(24,404)		(33,662)
Payments for development and re-development of real estate assets		(143,256)		(97,288)
Payments for improvements of real estate assets		(24,681)		(25,815)
Net cash used by investing activities		(160,245)		(88,777)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages payable		78,875		40,733
Principal payments on mortgages payable		(83,198)		(81,432)
Proceeds from revolving line of credit and other debt		45,000		12,500
Proceeds from construction debt		69,051		39,784
Principal payments on revolving line of credit and other debt		(17,000)		(17,443)
Proceeds from financing liability		0		7,900
Proceeds from sale of common shares under distribution reinvestment and share purchase program		38,819		33,160
Proceeds from noncontrolling partner – consolidated real estate entities		1,916		416
Distributions paid to common shareholders, net of reinvestment of $11,550 and $10,511, respectively		(33,672)		(30,174)
Distributions paid to preferred shareholders		(8,636)		(8,636)
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership, net of reinvestment of $506 and $482, respectively		(6,247)		(8,026)
Distributions paid to noncontrolling interests – consolidated real estate entities		(556)		(748)
Net cash provided (used) by financing activities		84,352		(11,966)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		4,881		(40,639)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		47,267		94,133
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	52,148	$	53,494

(continued)

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, continued)

for the nine months ended January 31, 2015 and 2014

	(in thousands)
	Nine Months Ended January 31
	2015		2014
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES FOR THE PERIOD
Distribution reinvestment plan	$	11,550	$	10,511
Operating partnership distribution reinvestment plan		506		482
Operating partnership units converted to shares		38,512		1,131
Shares issued under the Incentive Award Plan		860		112
Real estate assets acquired through the issuance of operating partnership units		100		3,480
Real estate assets acquired through assumption of indebtedness and accrued costs		12,169		0
Increase (decrease) to accounts payable included within real estate investments		6,384		(325)
Real estate assets contributed by noncontrolling interests – consolidated real estate entities		6,624		2,900
Involuntary conversion of assets due to flood and fire damage		0		7,052
Forfeiture of note payable in conjunction with sale of property		0		600
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized of $3,628 and $2,139, respectively	$	39,073	$	40,845

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

for the nine months ended January 31, 2015 and 2014

NOTE 1 • ORGANIZATION

Investors Real Estate Trust ("IRET" or the "Company") is a self-advised real estate investment trust engaged in acquiring, owning and leasing multi-family and commercial real estate. IRET has elected to be taxed as a Real Estate Investment Trust ("REIT") under Sections 856-860 of the Internal Revenue Code of 1986, as amended. As a REIT, we are subject to a number of organizational and operational requirements, including a requirement to distribute 90% of ordinary taxable income to shareholders, and, generally, are not subject to federal income tax on net income, except for taxes on undistributed REIT taxable income and taxes on the income generated by our taxable REIT subsidiary ("TRS"). Our TRS is subject to corporate federal and state income tax on its taxable income at regular statutory rates. We have considered estimated future taxable income and have determined that there were no material income tax provisions or material net deferred income tax items for our TRS for the nine months ended January 31, 2015 and 2014. IRET's multi-family residential properties and commercial properties are located mainly in the states of North Dakota and Minnesota, but also in the states of Colorado, Idaho, Iowa, Kansas, Missouri, Montana, Nebraska, South Dakota, Wisconsin and Wyoming. As of January 31, 2015, IRET owned 99 multi-family residential properties with 11,765 apartment units and 160 commercial properties, consisting of office, healthcare, industrial and retail properties, totaling 9.8 million net rentable square feet. IRET conducts a majority of its business activities through its consolidated operating partnership, IRET Properties, a North Dakota Limited Partnership (the "Operating Partnership"), as well as through a number of other consolidated subsidiary entities.

All references to IRET or the Company refer to Investors Real Estate Trust and its consolidated subsidiaries.

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the accounts of IRET and all subsidiaries in which it maintains a controlling interest. All intercompany balances and transactions are eliminated in consolidation. The Company's fiscal year ends April 30th.

The accompanying condensed consolidated financial statements include the accounts of IRET and its interest in the Operating Partnership. The Company's interest in the Operating Partnership was 89.5% of the common units of the Operating Partnership as of January 31, 2015 and 83.8% as of April 30, 2014. The limited partners in the Operating Partnership have a redemption option that they may exercise. Upon exercise of the redemption option by the limited partners, IRET has the choice of redeeming the limited partners' interests ("Units") for IRET common shares of beneficial interest, on a one-for-one basis, or making a cash payment to the unitholder. The redemption generally may be exercised by the limited partners at any time after the first anniversary of the date of the acquisition of the Units (provided, however, that in general not more than two redemptions by a limited partner may occur during each calendar year, and each limited partner may not exercise the redemption for less than 1,000 Units, or, if such limited partner holds less than 1,000 Units, for all of the Units held by such limited partner). The Operating Partnership and some limited partners have contractually agreed to a holding period of greater than one year and/or a greater number of redemptions during a calendar year.

The condensed consolidated financial statements also reflect the ownership by the Operating Partnership of certain joint venture entities in which the Operating Partnership has a general partner or controlling interest. These entities are consolidated into IRET's other operations, with noncontrolling interests reflecting the noncontrolling partners' share of ownership and income and expenses.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The interim condensed consolidated financial statements of IRET have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") are omitted. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of the Company's financial position, results of operations and cash flows for the interim periods have been included.

The current period's results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2014, as filed with the SEC on June 30, 2014.

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RECENT ACCOUNTING PRONOUNCEMENTS

In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360):  Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this standard, a disposal (or classification as held for sale) of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. In addition, the new guidance requires expanded disclosures about the assets, liabilities, income and expenses of discontinued operations. The ASU is effective for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company adopted this update effective February 1, 2014 and determined that the adoption did not have a material impact on the Company's consolidated results of operations or financial condition.

As a result of the adoption of ASU No. 2014-08, results of operations and gains or losses on sale for properties that are disposed or classified as held for sale in the ordinary course of business on or subsequent to February 1, 2014 would generally be included in continuing operations on the Company's consolidated statements of operations, to the extent such disposals did not meet the criteria for classification as a discontinued operation described above. During the quarter ended April 30, 2014, the Company applied the new standard to one property that was classified as held for sale. The Company applied the new standard to nine property dispositions and thirteen properties classified as held for sale during the nine months ended January 31, 2015.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU No. 2014-09 does not apply to lease contracts accounted for under Accounting Standards Codification Topic ("ASC") 840, Leases. The ASU is effective for annual and interim periods beginning after December 15, 2016. The Company does not expect adoption of this update to have a material impact on the Company's operating results or financial position.

In June 2014, the FASB issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718):  Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU No. 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share-based award has ended, as a performance condition that affects vesting. The ASU is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015. The Company does not expect the adoption of this update to have a material impact on the Company's operating results or financial position.

In January 2014, the FASB issued ASU No. 2015-01, Income Statement – Extraordinary and Unusual Items (Subtopic 225-20):  Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU No. 2015-01 eliminates from GAAP the concept of extraordinary items. The presentation and disclosure guidance for items that are unusual in nature and occurring infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company does not expect the adoption of this update to have a material impact on the Company's operating results or financial position.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically evaluates its long-lived assets, including its investments in real estate, for impairment indicators. The impairment evaluation is performed on assets by property such that assets for a property form an asset group. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group and legal and environmental concerns. If indicators exist, the Company compares the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset group. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset group, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. If our anticipated holding period for properties, the estimated fair value of properties or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

During the nine months ended January 31, 2015, the Company incurred a loss of $6.1 million due to impairment of four commercial properties and two parcels of unimproved land. The Company recognized impairments of $2.1 million on a retail property in Kalispell, Montana, approximately $183,000 on an office property in Golden Valley, Minnesota, $1.8 million on an office property in

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Minneapolis, Minnesota, $1.4 million on an office property in Boise, Idaho, approximately $98,000 on unimproved land in Eagan, Minnesota, and approximately $442,000 on unimproved land in Weston, Wisconsin. These properties were written-down to estimated fair value during the first, second and third quarters of fiscal year 2015 based on receipt of individual market offers to purchase and the Company's intent to dispose of the properties or, in the case of the Boise, Idaho and Weston, Wisconsin properties, an independent appraisal. The Kalispell and Golden Valley properties were sold in the second quarter of fiscal year 2015. The Minneapolis property is classified as held for sale at January 31, 2015. During the nine months ended January 31, 2014, the Company incurred a loss of $6.7 million due to impairment of five commercial properties, of which $1.9 million is reflected in discontinued operations.  See Note 7 for additional information on discontinued operations. The Company recognized impairments of approximately $864,000 on a commercial industrial property in St. Louis Park, Minnesota; $329,000 on a commercial office property in Bloomington, Minnesota; $265,000 on a commercial retail property in Anoka, Minnesota; $402,000 on a commercial industrial property in Clive, Iowa and $4.8 million on a commercial industrial property in Roseville, Minnesota.

HELD FOR SALE

The Company classifies properties as held for sale when they meet the U.S. GAAP criteria, which include: (a) management commits to and initiates a plan to sell the asset (disposal group), (b) the sale is probable and expected to be completed within one year under terms that are usual and customary for sales of such assets (disposal groups), and (c) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Depreciation is not recorded on assets classified as held for sale. Prior to February 1, 2014, the Company reported, in discontinued operations, the results of operations and the related gains or losses of properties that had either been disposed of or classified as held for sale and otherwise met the classification of a discontinued operation. As a result of the adoption of ASU No. 2014-08, results of operations and gains or losses on sale for properties that are disposed or classified as held for sale in the ordinary course of business on or subsequent to February 1, 2014 would generally be included in continuing operations on the Company's consolidated statements of operations, to the extent such disposals did not meet the criteria for classification as a discontinued operation described above in Recent Accounting Pronouncements. At January 31, 2015, the Company had 10 office properties, one retail property, one healthcare property and one parcel of unimproved land classified as held for sale with assets of $44.3 million and liabilities of $22.6 million.

COMPENSATING BALANCES AND OTHER INVESTMENTS; HOLDBACKS

The Company maintains compensating balances, not restricted as to withdrawal, with several financial institutions in connection with financing received from those institutions and/or to ensure future credit availability. At January 31, 2015, the Company's compensating balances totaled $14.3 million and consisted of the following: First International Bank, Watford City, North Dakota, deposit of $6.1 million; Private Bank, Minneapolis, Minnesota, deposit of $2.0 million; Associated Bank, Green Bay, Wisconsin, deposit of $3.6 million; American National Bank, Omaha, Nebraska, deposit of $400,000; Dacotah Bank, Minot, North Dakota, deposit of $350,000; United Community Bank, Minot, North Dakota, deposit of $275,000; Peoples State Bank of Velva, North Dakota, deposit of $225,000, Commerce Bank, a Minnesota Banking Corporation, deposit of $100,000,and Bremer Bank, Saint Paul, Minnesota, deposit of $1.3 million. The deposits at United Community Bank and a portion of the deposit at Dacotah Bank are held as certificates of deposit and comprise the approximately $329,000 in other investments on the Condensed Consolidated Balance Sheets. The certificates of deposit have remaining terms of less than two years and the Company intends to hold them to maturity.

The Company has a number of mortgage loans under which the lender retains a portion of the loan proceeds or requires a deposit for the payment of construction costs or tenant improvements. The decrease of $11.1 million in holdbacks for improvements reflected in the Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2015 is due primarily to the release of loan proceeds to the Company upon completion of construction and tenant improvement projects, while the increase of approximately $913,000 represents additional amounts retained by lenders for new projects.

IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES AND GOODWILL

Upon acquisition of real estate, the Company records the intangible assets and liabilities acquired (for example, if the leases in place for the real estate property acquired carry rents above the market rent, the difference is classified as an intangible asset) at their estimated fair value separate and apart from goodwill. The Company amortizes identified intangible assets and liabilities that are determined to have finite lives based on the period over which the assets and liabilities are expected to affect, directly or indirectly, the future cash flows of the real estate property acquired (generally the life of the lease). In the nine months ended January 31, 2015 and 2014, respectively, the Company added approximately $365,000 and $900,000 of new intangible assets and no new intangible liabilities. The weighted average lives of the intangible assets acquired in the nine months ended January 31, 2015 and 2014 are 0.5 years and 0.7 years, respectively. Amortization of intangibles related to above or below-market leases is recorded in real estate rentals in the Condensed Consolidated Statements of Operations. Amortization of other intangibles is recorded in depreciation/amortization related to real estate investments in the Condensed Consolidated Statements of Operations. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

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An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its estimated fair value.

The Company's identified intangible assets and intangible liabilities at January 31, 2015 and April 30, 2014 were as follows:

	(in thousands)
	January 31, 2015		April 30, 2014
Identified intangible assets (included in intangible assets):
Gross carrying amount	$	53,898	$	56,710
Accumulated amortization		(25,423)		(24,071)
Net carrying amount	$	28,475	$	32,639
Identified intangible liabilities (included in other liabilities):
Gross carrying amount	$	134	$	173
Accumulated amortization		(107)		(127)
Net carrying amount	$	27	$	46

The amortization of acquired below-market leases and acquired above-market leases reduced rental income by approximately $6,000 and $11,000 for the three months ended January 31, 2015 and 2014, respectively, and approximately $19,000 and $32,000 for the nine months ended January 31, 2015 and 2014, respectively. The estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2016	$	20
2017		12
2018		(1)
2019		(2)
2020		(1)

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $1.3 million and $1.5 million for the three months ended January 31, 2015 and 2014, respectively, and $4.5 million and $6.9 million for the nine months ended January 31, 2015 and 2014, respectively. The estimated annual amortization of all other identified intangible assets for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2016	$	4,505
2017		4,036
2018		3,605
2019		3,481
2020		3,395

The excess of the cost of an acquired business over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill.  The Company's goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The book value of goodwill as of January 31, 2015 and April 30, 2014 was $1.9 million and $1.1 million, respectively. The annual review at April 30, 2014 indicated no impairment to goodwill and there was no indication of impairment at January 31, 2015.  During the nine months ended January 31, 2015, the Company recognized approximately $852,000 of goodwill from the acquisition of the Homestead Garden residential property and disposed of one residential property to which goodwill had been assigned, and as a result, approximately $11,000 of goodwill was derecognized. During the nine months ended January 31, 2014, the Company disposed of one commercial industrial property to which goodwill had been assigned, and as a result, approximately $7,000 of goodwill was derecognized.

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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RECLASSIFICATIONS

Certain previously reported amounts have been reclassified to conform to the current financial statement presentation. Prior to February 1, 2014, the Company reported, in discontinued operations, the results of operations and the related gains or losses of properties that had either been disposed of or classified as held for sale and otherwise met the classification of a discontinued operation. As a result of the adoption of ASU No. 2014-08, results of operations and gains or losses on sale for properties that are disposed or classified as held for sale in the ordinary course of business on or subsequent to February 1, 2014 would generally be included in continuing operations on the Company's consolidated statements of operations, to the extent such disposals did not meet the criteria for classification as a discontinued operation described above in Recent Accounting Pronouncements. As a result of discontinued operations recognized prior to February 1, 2014, retroactive reclassifications that change prior period numbers have been made. See Note 7 for additional information. During fiscal year 2014, the Company classified as discontinued operations two multi-family residential properties, three office properties, twelve industrial properties and three retail properties.

On the Condensed Consolidated Statements of Operations, the Company reclassified administrative expenses, advisory and trustee services and other expenses to general and administrative and also reclassified TRS senior housing revenue and TRS senior housing expenses from other income to TRS senior housing revenue and TRS senior housing expenses, respectively.

REVISION

During fiscal year 2014 the Company identified an error pertaining to the reporting for a noncontrolling interest in a consolidated real estate joint venture formed in the fourth quarter of fiscal year 2013 for which the holder of such interest has the right to require the Company to acquire the interest at fair value twelve months after the final certificate of occupancy is obtained for the joint venture's development project. Accounting guidance in ASC 480-10-S99 Redeemable Preferred Stocks, requires that this noncontrolling interest be classified outside of permanent equity because it is redeemable at the option of the joint venture partner. This error resulted in an overstatement of noncontrolling interests and equity in the Company's consolidated statement of equity. This non-cash revision did not impact the Company's consolidated statements of operations or statements of cash flows for any period.

In accordance with accounting guidance found in ASC 250-10, Materiality, the Company assessed the materiality of the error and concluded that the error was not material to any of the Company's previously issued financial statements.  In accordance with accounting guidance found in ASC 250-10, Considering the Effects of Prior Year Misstatement when Quantifying Misstatements in Current Year Financial Statements, the Company revised its previously issued statement of equity to correct the effect of this error.

The following table presents the effect of this correction on the Company's Condensed Consolidated Statement of Equity for the period affected:

	(in thousands)
Nine Months Ended January 31, 2014	As Previously Reported		Adjustment		As Revised
Consolidated Statement of Equity
Noncontrolling Interests
Balance April 30, 2013	$	148,594	$	(5,937)	$	142,657
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests		2,214		(176)		2,038
Balance January 31, 2014		147,234		(6,113)		141,121
Total Equity
Balance April 30, 2013		761,381		(5,937)		755,444
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests		17,582		(176)		17,406
Balance January 31, 2014		771,430		(6,113)		765,317

INVOLUNTARY CONVERSION OF ASSETS

In June 2011, the Company's Chateau Apartments property, which at that time consisted of two 32-unit buildings, was extensively damaged by a flood. In February 2012, one of the buildings of the Chateau Apartments property, which had been undergoing restoration work following the flood, was completely destroyed by fire (the "2012 Fire"). During the first and third quarters of fiscal year 2014, the Company received $966,000 and $1.3 million, respectively, of insurance proceeds for the 2012 Fire.  The total insurance proceeds for redevelopment related to the 2012 Fire exceeded the basis in the assets requiring replacement, resulting in recognition of $2.5 million in gain from involuntary conversion in the nine months ended January 31, 2014.

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In December 2013, 15-unit and 57-unit buildings at the Chateau Apartments property were destroyed by fire (the "2013 Fire"). Both buildings were under construction and were unoccupied. The Company is rebuilding both buildings, and currently expects them to be completed in the first quarter of fiscal year 2016. The Company received proceeds for the 2013 Fire claim of $1.0 million in fiscal year 2014, $2.0 million in the three months ended July 31, 2014 and $4.0 million in the three months ended October 31, 2014, which reduced to zero the accounts receivable recorded at the time of the fire for expected proceeds. No gain or loss on involuntary conversion was recorded due to the settlement of the claim.

PROCEEDS FROM FINANCING LIABILITY

During the first quarter of fiscal year 2014, the Company sold a non-core assisted living property in exchange for $7.9 million in cash and a $29.0 million contract for deed. The buyer leased the property back to the Company, and also granted an option to the Company to repurchase the property at a specified price at or prior to July 31, 2018. IRET accounted for the transaction as a financing due to the Company's continuing involvement with the property and recorded the $7.9 million in sales proceeds within other liabilities on the Condensed Consolidated Balance Sheets.  The balance of the liability as of January 31, 2015 is $7.9 million.

VARIABLE INTEREST ENTITY

On November 27, 2012 the Company entered into a joint venture operating agreement with a real estate development company to construct an apartment project in Minot, North Dakota as IRET – Minot Apartments, LLC. The Company estimated total costs for the project at $52.2 million, with approximately 69% of the project financed with third-party debt and approximately 7% financed with debt from IRET to the joint venture entity. The first phase of the project, Landing at Southgate, was substantially completed in the second quarter of fiscal year 2014. The second phase of the project, Commons at Southgate, was substantially completed in the third quarter of fiscal year 2015. See Development, Expansion and Renovation Projects in Note 6 for additional information on Commons at Southgate. As of January 31, 2015 IRET is the approximately 52.9% owner of the joint venture and will have management and leasing responsibilities when the project is completed; the real estate development company owns approximately 47.1% of the joint venture and is responsible for the development and construction of the property. The Company has determined that the joint venture is a variable interest entity ("VIE"), primarily based on the fact that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support. The Company has also determined that IRET is the primary beneficiary of the VIE due to the fact that IRET is providing more than 50% of the equity contributions, the subordinated debt and a guarantee on the third party debt and has the power to direct the most significant activities that impact the entity's economic performance.

On June 12, 2014 the Company entered into a joint venture operating agreement with a real estate development company and two other partners to construct a three-phase apartment and retail project in Edina, Minnesota as IRET – 71 France, LLC. The Company estimates total costs for the project at $73.3 million, with approximately 69% of the project financed with third-party debt and approximately 7% financed with debt from IRET to the joint venture entity. The first and second phases of the project are expected to be completed in the second and third quarters of fiscal year 2016, respectively. Construction of the third phase has not commenced, but is expected to be completed in the first quarter of fiscal year 2017. See Development, Expansion and Renovation Projects in Note 6 for additional information. As of January 31, 2015 IRET is the approximately 52.6% owner of the joint venture and will have management and leasing responsibilities after the project has been in service for 24 months; the real estate development company and the other two partners own approximately 47.4% of the joint venture and are responsible for the development, construction and initial leasing of the property. The Company has determined that the joint venture is a variable interest entity ("VIE"), primarily based on the fact that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support. The Company has also determined that IRET is the primary beneficiary of the VIE due to the fact that IRET is providing more than 50% of the equity contributions, the subordinated debt and a guarantee on the third party debt and has the power to direct the most significant activities that impact the entity's economic performance.

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NOTE 3 • EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. The Company has no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. Units can be exchanged for shares on a one-for-one basis after a minimum holding period of one year. The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements for the three and nine months ended January 31, 2015 and 2014:

	(in thousands, except per share data)
	Three Months Ended January 31				Nine Months Ended January 31
	2015		2014		2015		2014
NUMERATOR
Income from continuing operations – Investors Real Estate Trust	$	8,371	$	3,117	$	13,334	$	10,034
Income from discontinued operations – Investors Real Estate Trust		0		386		0		5,334
Net income attributable to Investors Real Estate Trust		8,371		3,503		13,334		15,368
Dividends to preferred shareholders		(2,879)		(2,879)		(8,636)		(8,636)
Numerator for basic earnings per share – net income available to common shareholders		5,492		624		4,698		6,732
Noncontrolling interests – Operating Partnership		657		130		618		1,406
Numerator for diluted earnings per share	$	6,149	$	754	$	5,316	$	8,138
DENOMINATOR
Denominator for basic earnings per share weighted average shares		120,855		106,208		116,303		104,472
Effect of convertible operating partnership units		14,461		21,819		17,334		21,830
Denominator for diluted earnings per share		135,316		128,027		133,637		126,302
Earnings (loss) per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	.05	$	.00	$	.04	$	.01
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		.00		.00		.00		.05
NET INCOME (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	.05	$	.00	$	.04	$	.06

NOTE 4 • EQUITY

On June 27, 2013, the Company filed a shelf registration statement with the SEC to enable the Company to offer and sell, from time to time, in one or more offerings, an indeterminate amount of its common and preferred shares of beneficial interest and debt securities. On October, 27, 2014, the Company filed a prospectus supplement under this registration statement, relating to 10 million common shares registered for purchase under the Company's Distribution Reinvestment and Share Purchase Plan. On August 30, 2013, the Company entered into an ATM program with Robert W. Baird & Co. Incorporated as sales agent, pursuant to which the Company may from time to time offer and sell its common shares of beneficial interest having an aggregate gross sales price of up to $75.0 million, under this registration statement. Sales of common shares, if any, under the program will depend upon market conditions and other factors to be determined by the Company. The Company to date has issued no shares under the ATM program.

During the first quarter of fiscal year 2015, the Company issued approximately 204,000 common shares, with a total grant-date value of approximately $1.9 million, under the Company's 2008 Incentive Award Plan, for executive officer and trustee share-based compensation for fiscal year 2014 performance. Of these shares, approximately 105,000 are restricted, and will vest on the one-year anniversary of the grant date (i.e., on April 30, 2015), provided the recipient is still employed with the Company, and subject to the terms and conditions of the Company's long-term incentive plan ("LTIP").   During the first quarter of fiscal year 2014, the Company issued approximately 13,000 common shares, with a total grant-date value of approximately $112,000, under the 2008 Incentive Award Plan, for trustee share-based compensation for fiscal year 2013 performance.

The Company has a Distribution Reinvestment and Share Purchase Plan ("DRIP"). The DRIP provides common shareholders and UPREIT Unitholders of the Company an opportunity to invest their cash distributions in common shares of the Company, and purchase additional shares through voluntary cash contributions, at a discount (currently 3%) from the market price. The maximum monthly voluntary cash contribution permitted without prior Company approval is currently $10,000. The Company can issue waivers

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to DRIP participants to provide for investments in excess of the $10,000 maximum monthly investment. There were no waivers issued during the three months ended January 31, 2015 and 2014. During the nine months ended January 31, 2015, the Company issued approximately 926,000 shares at an average price of $8.64 per share pursuant to such waivers, for total net proceeds to the Company of $8.0 million. During the nine months ended January 31, 2014, the Company issued 1.4 million shares at an average price of $8.88 per share pursuant to such waivers, for total net proceeds to the Company of $12.0 million.

During the three months ended January 31, 2015 and 2014, 2.0 million and 1.3 million common shares with a total value included in equity of $16.1 million and $11.1 million, and an average price per share after applicable discounts of $8.06 and $8.27, respectively, were issued under the DRIP plan. During the nine months ended January 31, 2015 and 2014, 6.2 million and 5.2 million common shares with a total value included in equity of $50.9 million and $44.2 million, and an average price per share after applicable discounts of $8.20 and $8.43, respectively, were issued under the DRIP plan.

During the three months ended January 31, 2015 and 2014, respectively, approximately 333,000 Units and approximately 37,000 Units were converted to common shares, with a total value of approximately $811,000 and approximately $185,000 included in equity. During the nine months ended January 31, 2015 and 2014, respectively, 6.7 million Units and approximately 197,000 Units were converted to common shares, with a total value of $38.5 million and $1.1 million included in equity.

NOTE 5 • SEGMENT REPORTING

IRET reports its results in five reportable segments: multi-family residential, office, healthcare (including senior housing), industrial and retail properties. The Company's reportable segments are aggregations of similar properties.

IRET measures the performance of its segments based on net operating income ("NOI"), which the Company defines as total real estate revenues and gain on involuntary conversion less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance, property management expenses and other property expenses). IRET believes 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.

The revenues and net operating income for these reportable segments are summarized as follows for the three and nine month periods ended January 31, 2015 and 2014, along with reconciliations to the condensed consolidated financial statements. Segment assets are also reconciled to total assets as reported in the condensed consolidated financial statements.

Three Months Ended January 31, 2015	(in thousands)
	Multi-Family Residential		Office		Healthcare		Industrial		Retail		Total
Real estate revenue	$	30,256	$	19,086	$	17,587	$	1,741	$	3,283	$	71,953
Real estate expenses		13,318		9,050		4,315		501		1,250		28,434
Net operating income	$	16,938	$	10,036	$	13,272	$	1,240	$	2,033		43,519
TRS senior housing revenue												963
TRS senior housing expenses												(825)
Depreciation/amortization												(17,750)
General and administrative												(3,242)
Impairment of real estate investments												(540)
Interest expense												(14,595)
Interest and other income												670
Income before gain on sale of real estate and other investments												8,200
Gain on sale of real estate and other investments												951
Net income											$	9,151

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Three Months Ended January 31, 2014	(in thousands)
	Multi-Family Residential		Office		Healthcare		Industrial		Retail		Total
Real estate revenue	$	25,848	$	19,394	$	17,242	$	1,664	$	3,481	$	67,629
Real estate expenses		10,998		9,037		4,120		493		1,279		25,927
Gain on involuntary conversion		1,514		0		0		0		0		1,514
Net operating income	$	16,364	$	10,357	$	13,122	$	1,171	$	2,202		43,216
TRS senior housing revenue												804
TRS senior housing expenses												(671)
Depreciation/amortization												(17,489)
General and administrative												(2,935)
Impairment of real estate investments												(4,798)
Interest expense												(15,130)
Interest and other income												607
Income from continuing operations												3,604
Income from discontinued operations												465
Net income											$	4,069

Nine Months Ended January 31, 2015	(in thousands)
	Multi-Family Residential		Office		Healthcare		Industrial		Retail		Total
Real estate revenue	$	87,576	$	56,917	$	50,322	$	4,904	$	10,113	$	209,832
Real estate expenses		37,700		27,873		12,905		1,223		3,488		83,189
Net operating income	$	49,876	$	29,044	$	37,417	$	3,681	$	6,625		126,643
TRS senior housing revenue												2,599
TRS senior housing expenses												(2,243)
Depreciation/amortization												(52,474)
General and administrative												(10,986)
Impairment of real estate investments												(6,105)
Interest expense												(43,858)
Interest and other income												2,057
Income before loss on sale of real estate and other investments												15,633
Loss on sale of real estate and other investments												(811)
Net income											$	14,822

Nine Months Ended January 31, 2014	(in thousands)
	Multi-Family Residential		Office		Healthcare		Industrial		Retail		Total
Real estate revenue	$	75,659	$	58,075	$	49,340	$	5,273	$	10,152	$	198,499
Real estate expenses		33,006		28,315		12,534		1,447		3,596		78,898
Gain on involuntary conversion		2,480		0		0		0		0		2,480
Net operating income	$	45,133	$	29,760	$	36,806	$	3,826	$	6,556		122,081
TRS senior housing revenue												804
TRS senior housing expenses												(671)
Depreciation/amortization												(53,656)
General and administrative												(9,572)
Impairment of real estate investments												(4,798)
Interest expense												(44,525)
Interest and other income												1,469
Income from continuing operations												11,132
Income from discontinued operations												6,450
Net income											$	17,582

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Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of January 31, 2015, and April 30, 2014, along with reconciliations to the condensed consolidated financial statements:

	(in thousands)
As of January 31, 2015	Multi-Family Residential		Office		Healthcare		Industrial		Retail		Total
Segment Assets
Property owned	$	932,718	$	478,590	$	519,588	$	50,900	$	111,352	$	2,093,148
Less accumulated depreciation		(172,987)		(112,093)		(115,395)		(10,836)		(27,842)		(439,153)
Net property owned	$	759,731	$	366,497	$	404,193	$	40,064	$	83,510		1,653,995
Real estate held for sale												44,259
Cash and cash equivalents												52,148
Other investments												329
Receivables and other assets												108,931
Development in progress												114,005
Unimproved land												27,675
Total assets											$	2,001,342

	(in thousands)
As of April 30, 2014	Multi-Family Residential		Office		Healthcare		Industrial		Retail		Total
Segment assets
Property owned	$	753,731	$	544,628	$	525,028	$	55,375	$	117,269	$	1,996,031
Less accumulated depreciation		(158,100)		(121,892)		(105,843)		(10,198)		(28,255)		(424,288)
Net property owned	$	595,631	$	422,736	$	419,185	$	45,177	$	89,014		1,571,743
Real estate held for sale												2,951
Cash and cash equivalents												47,267
Other investments												329
Receivables and other assets												119,458
Development in progress												104,609
Unimproved land												22,864
Total assets											$	1,869,221

NOTE 6 • COMMITMENTS AND CONTINGENCIES

Litigation.  The Company is not a party to any legal proceedings which are expected to have a material effect on the Company's liquidity, financial position, cash flows or results of operations. The Company is subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of its business, most of which are covered by liability insurance. Various claims of resident discrimination are also periodically brought, most of which also are covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of such legal proceedings and claims will not have a material effect on the Company's liquidity, financial position, cash flows or results of operations.

Insurance.  IRET carries insurance coverage on its properties in amounts and types that the Company believes are customarily obtained by owners of similar properties and are sufficient to achieve IRET's risk management objectives.

Purchase Options.  The Company has granted options to purchase certain IRET properties to tenants in these properties, under lease agreements. In general, the options grant the tenant the right to purchase the property at the greater of such property's appraised value or an annual compounded increase of a specified percentage of the initial cost of the property to IRET. As of January 31, 2015, the total property cost of the 15 properties subject to purchase options was $120.5 million, and the total gross rental revenue from these properties was $7.7 million for the nine months ended January 31, 2015.  The tenant in the Company's Nebraska Orthopaedic Hospital property has exercised its option to purchase the property. The Company and its tenant are currently engaged in an arbitration proceeding pursuant to the lease agreement to determine the purchase price. The Company currently can give no assurance that the sale of the property pursuant to the purchase option will be completed.

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Environmental Matters.  Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around or under the property. While IRET currently has no knowledge of any material violation of environmental laws, ordinances or regulations at any of its properties, there can be no assurance that areas of contamination will not be identified at any of the Company's properties, or that changes in environmental laws, regulations or cleanup requirements would not result in material costs to the Company.

Restrictions on Taxable Dispositions.  Approximately 95 of IRET's properties, consisting of 4.1 million square feet of the Company's combined commercial segments' properties and 4,831 apartment units, are subject to restrictions on taxable dispositions under agreements entered into with some of the sellers or contributors of the properties. The real estate investment amount of these properties (net of accumulated depreciation) was $726.9 million at January 31, 2015. The restrictions on taxable dispositions are effective for varying periods. The terms of these agreements generally prevent the Company from selling the properties in taxable transactions. The Company does not believe that the agreements materially affect the conduct of the Company's business or decisions whether to dispose of restricted properties during the restriction period because the Company generally holds these and the Company's other properties for investment purposes, rather than for sale. Historically, however, where IRET has deemed it to be in the shareholders' best interests to dispose of restricted properties, it has done so through transactions structured as tax-deferred transactions under Section 1031 of the Internal Revenue Code.

Redemption Value of Units.  The limited partnership units of the Company's operating partnership, IRET Properties, are redeemable at the option of the holder for cash, or, at our option, for the Company's common shares of beneficial interest on a one-for-one basis, after a minimum one-year holding period.  All Units receive the same cash distributions as those paid on common shares.  Units are redeemable for an amount of cash per Unit equal to the average of the daily market price of an IRET common share for the ten consecutive trading days immediately preceding the date of valuation of the Unit.  As of January 31, 2015 and 2014, the aggregate redemption value of the then-outstanding Units of the operating partnership owned by limited partners was approximately $122.0 million and $186.9 million, respectively.

Joint Venture Buy/Sell Options.  Certain of IRET's joint venture agreements contain buy/sell options in which each party under certain circumstances has the option to acquire the interest of the other party, but do not generally require that the Company buy its partners' interests. The Company currently has one joint venture, the Company's Southgate apartment project in Minot, North Dakota, in which the Company's joint venture partner can, for a four-year period beginning twelve months after the last certificate of occupancy is received for the project, compel the Company to acquire the partner's interest, for a price to be determined in accordance with the provisions of the joint venture agreement. The joint venture partner's interest is reflected as a redeemable noncontrolling interest on the Condensed Consolidated Balance Sheets.

Tenant Improvements. In entering into leases with tenants, IRET may commit itself to fund improvements or build-outs of the rented space to suit tenant requirements. These tenant improvements are typically funded at the beginning of the lease term, and IRET is accordingly exposed to some risk of loss if a tenant defaults prior to the expiration of the lease term, and the rental income that was expected to cover the cost of the tenant improvements is not received. As of January 31, 2015, the Company is committed to fund $9.3 million in tenant improvements, within approximately the next 12 months.

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Development, Expansion and Renovation Projects.  As of January 31, 2015, the Company had several development, expansion and renovation projects underway or placed in service during the quarter, the costs for which have been capitalized, as follows:

				(in thousands)					(in fiscal years)
Project Name and Location	Planned Segment		Rentable Square Feet or Number of Units	Anticipated Total Cost		Costs as of January 31, 2015(1)			Anticipated Construction Completion
Commons at Southgate - Minot, ND(2)	Multi-Family Residential		233 units	$	37,201	$	34,612		In Service
Minot Wells Fargo Bank - Minot, ND	Retail		4,998 sq ft		3,288		3,185		In Service
Cypress Court II – St. Cloud, MN(3)	Multi-Family Residential		64 units		7,028		6,638		In Service
Arcata - Golden Valley, MN	Multi-Family Residential		165 units		33,448		30,384		In Service
Red 20 - Minneapolis, MN(4)	Multi-Family Residential		130 units		29,462		28,330		In Service
Roseville 3075 Long Lake Rd - Roseville, MN	Industrial		202,807 sq ft		13,915		8,900		4Q 2015
Minot Office Center - Minot, ND	Retail		7,963 sq ft		2,923		1,802		1Q 2016
Renaissance Heights - Williston, ND(5)	Multi-Family Residential		288 units		62,362		54,713		1Q 2016
Chateau II - Minot, ND	Multi-Family Residential		72 units		14,711		11,257		1Q 2016
Edina 6565 France SMC III - Edina, MN	Healthcare		57,479 sq ft		34,665		16,668		1Q 2016
Cardinal Point - Grand Forks, ND	Multi-Family Residential		251 units		40,042		19,885		2Q 2016
Deer Ridge – Jamestown, ND	Multi-Family Residential		163 units		24,519		11,202		2Q 2016
PrairieCare Medical - Brooklyn Park, MN	Healthcare		72,895 sq ft		24,251		12,195		2Q 2016
71 France Phase I & II - Edina, MN(6)	Multi-Family Residential		181 units		52,055		20,787		3Q 2016
Other	n/a		n/a		n/a		2,547		n/a
				$	379,870	$	263,105

(1)	Includes costs related to development projects that are placed in service in phases (Renaissance Heights - $46.0 million).

(2)	The Company is currently an approximately 52.9% partner in the joint venture entity constructing this project; the anticipated total cost amount given is the total cost to the joint venture entity.

(3)	The Company is an approximately 86.1% partner in the joint venture entity constructing this project; the anticipated total cost amount given is the total cost to the joint venture entity.

(4)	The Company is an approximately 58.6% partner in the joint venture entity constructing this project; the anticipated total cost amount given is the total cost to the joint venture entity. The anticipated total cost includes approximately 10,625 square feet of retail space.

(5)	The Company is an approximately 70% partner in the joint venture entity constructing this project; the anticipated total cost amount given is the total cost to the joint venture entity.

(6)

The project will be constructed in three phases by a joint venture entity in which the Company has an approximately 52.6% interest. The anticipated total cost amount given in the table above is the total cost to the joint venture entity of the project's first and second phase. The expected total project cost for all three phases is approximately $73.3 million for a total of approximately 241 residential units and approximately 21,772 square feet of retail space.

These development projects are subject to various contingencies, and no assurances can be given that they will be completed within the time frames or on the terms currently expected.

Construction interest capitalized for the three month periods ended January 31, 2015 and 2014, respectively, was $1.4 million and approximately $778,000 for development projects completed and in progress. Construction interest capitalized for the nine month periods ended January 31, 2015 and 2014, respectively, was $3.6 million and $2.1 million for development projects completed and in progress.

Pending Acquisitions. The Company currently has signed purchase agreements for the acquisition of the following properties. These pending acquisitions are subject to various closing conditions and contingencies, and no assurances can be given that the transactions will be completed on the terms currently proposed, or at all:

·	a 119-unit multi-family residential property in Bismarck, North Dakota, for a purchase price of $15.0 million, of which approximately $14.3 million is to be paid in cash with the remainder in limited partnership units of the Operating Partnership valued at approximately $700,000;

·	a 74-unit multi-family residential property in Grand Forks, North Dakota, for a purchase price of $9.3 million, of which approximately $8.9 million is to be paid in cash with the remainder in limited partnership units of the Operating Partnership valued at approximately $400,000;

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Pending Dispositions. The Company currently has signed sales agreements for the disposition of the following properties. These pending dispositions are subject to various closing conditions and contingencies, and no assurances can be given that the transactions will be completed on the terms currently proposed, or at all:

·	an office property in Minneapolis, Minnesota, for a sales price of $7.0 million;

·	a portfolio of seven office properties in Burnsville, Plymouth, Eagan and Minnetonka, Minnesota, for a sales price of $26.6 million;

·	an office property in Eagan, Minnesota, for a sales price of $950,000; and

·	a parcel of unimproved land in Eagan, Minnesota, for a sales price of $325,000.

NOTE 7 • DISCONTINUED OPERATIONS

Prior to February 1, 2014, the Company reported, in discontinued operations, the results of operations and the related gains or losses of properties that had either been disposed of or classified as held for sale and otherwise met the classification of a discontinued operation. As a result of the adoption of ASU No. 2014-08, results of operations and gains or losses on sale for properties that are disposed or classified as held for sale in the ordinary course of business on or subsequent to February 1, 2014 would generally be included in continuing operations on the Company's consolidated statements of operations, to the extent such disposals did not meet the criteria for classification as a discontinued operation described above. See Note 2 for additional information.

During the nine months ended January 31, 2015, the Company applied ASU No. 2014-08 to the dispositions of nine properties and to the classification of thirteen properties as held for sale and did not record any discontinued operations.  During the first three quarters of fiscal year 2014, the Company disposed of two multi-family residential properties, three office properties, twelve industrial properties and three retail properties that were classified as discontinued operations. During the quarter ended April 30, 2014, the Company applied ASU No. 2014-08 to one property that was classified as held for sale and did not record any discontinued operations. The following information shows the effect on net income and the gains or losses from the sale of properties classified as discontinued operations for the three and nine months ended January 31, 2014:

	(in thousands)
	Three Months Ended January 31		Nine Months Ended January 31
		2014		2014
REVENUE
Real estate rentals	$	327	$	3,173
Tenant reimbursement		64		1,302
TOTAL REVENUE		391		4,475
EXPENSES
Depreciation/amortization related to real estate investments		75		920
Utilities		26		164
Maintenance		35		299
Real estate taxes		80		951
Insurance		10		97
Property management expenses		27		222
Amortization related to non-real estate investments		2		90
Impairment of real estate investments		0		1,860
TOTAL EXPENSES		255		4,603
Operating income (loss)		136		(128)
Interest expense		(29)		(421)
Income (loss) from discontinued operations before gain on sale		107		(549)
Gain on sale of discontinued operations		358		6,999
INCOME FROM DISCONTINUED OPERATIONS	$	465	$	6,450

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NOTE 8 • ACQUISITIONS, DEVELOPMENTS PLACED IN SERVICE AND DISPOSITIONS

PROPERTY ACQUISITIONS

The Company added approximately $41.3 million of real estate properties to its portfolio through property acquisitions during the nine months ended January 31, 2015, compared to $35.1 million in the nine months ended January 31, 2014. The Company expensed approximately $104,000 and $160,000 of transaction costs related to the acquisitions in the nine months ended January 31, 2015 and 2014, respectively. The Company's acquisitions during the nine months ended January 31, 2015 and 2014 are detailed below.

Nine Months Ended January 31, 2015

		(in thousands)
		Total Acquisition Cost		Form of Consideration						Investment Allocation
Acquisitions	Date Acquired			Cash		Units(1)		Other(2)		Land		Building		Intangible Assets
Multi-Family Residential
152 unit - Homestead Garden - Rapid City, SD(3)	2014-06-02	$	15,000	$	5,092	$	0	$	9,908	$	655	$	14,139	$	206
52 unit - Silver Springs - Rapid City, SD	2014-06-02		3,280		1,019		0		2,261		215		3,006		59
68 unit - Northridge - Bismarck, ND	2014-09-12		8,500		8,400		100		0		884		7,516		100
			26,780		14,511		100		12,169		1,754		24,661		365
Unimproved Land
Creekside Crossing - Bismarck, ND	2014-05-22		4,269		4,269		0		0		4,269		0		0
PrairieCare Medical - Brooklyn Park, MN	2014-06-05		2,616		2,616		0		0		2,616		0		0
71 France Phase I - Edina, MN(4)	2014-06-12		1,413		0		0		1,413		1,413		0		0
Monticello 7th Addition - Monticello, MN	2014-10-09		1,660		1,660		0		0		1,660		0		0
71 France Phase II & III - Edina, MN(4)	2014-11-04		3,309		0		0		3,309		3,309		0		0
Minot 1525 24th Ave SW - Minot, ND	2014-12-23		1,250		1,250		0		0		1,250		0		0
			14,517		9,795		0		4,722		14,517		0		0
Total Property Acquisitions		$	41,297	$	24,306	$	100	$	16,891	$	16,271	$	24,661	$	365

(1)	Value of limited partnership units of the Operating Partnership at the acquisition date.

(2)	Consists of assumed debt (Homestead Garden I: $9.9 million, Silver Springs: $2.3 million) and value of land contributed by the joint venture partner (71 France: $4.7 million).

(3)	At acquisition the Company adjusted the assumed debt to fair value and recognized approximately $852,000 of goodwill.

(4)	Land was contributed to a joint venture in which the Company has an approximately 52.6% interest. The joint venture is consolidated in IRET's financial statements.

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Nine Months Ended January 31, 2014

		(in thousands)
		Total Acquisition Cost		Form of Consideration						Investment Allocation
Acquisitions	Date Acquired			Cash		Units(1)		Other(2)		Land		Building		Intangible Assets
Multi-Family Residential
71 unit - Alps Park - Rapid City, SD	2013-05-01	$	6,200	$	2,920	$	3,280	$	0	$	287	$	5,551	$	362
96 unit - Southpoint - Grand Forks, ND	2013-09-05		10,600		10,400		200		0		576		9,893		131
24 unit - Pinecone Villas - Sartell, MN	2013-10-31		2,800		2,800		0		0		584		2,191		25
			19,600		16,120		3,480		0		1,447		17,635		518
Healthcare
98,174 sq ft Legends at Heritage Place - Sartell, MN	2013-10-31		11,863		11,863		0		0		970		10,511		382
Unimproved Land
Chateau II - Minot, ND	2013-05-21		179		179		0		0		179		0		0
Jamestown Unimproved - Jamestown, ND	2013-08-09		700		700		0		0		700		0		0
Red 20 - Minneapolis, MN(3)	2013-08-20		1,900		0		0		1,900		1,900		0		0
Legends at Heritage Place - Sartell, MN	2013-10-31		537		537		0		0		537		0		0
Spring Creek Fruitland - Fruitland, IA	2014-01-21		335		335		0		0		335		0		0
			3,651		1,751		0		1,900		3,651		0		0
Total Property Acquisitions		$	35,114	$	29,734	$	3,480	$	1,900	$	6,068	$	28,146	$	900

(1)	Value of limited partnership units of the Operating Partnership at the acquisition date.

(2)	Value of land contributed by the joint venture partner.

(3)	Land was contributed to a joint venture in which the Company has an approximately 58.6% interest. The joint venture is consolidated in IRET's financial statements.

Acquisitions in the nine months ended January 31, 2015 and 2014 are immaterial to our real estate portfolio both individually and in the aggregate, and consequently no proforma information is presented. The results of operations from acquired properties are included in the Condensed Consolidated Statements of Operations as of their acquisition date. The revenue and net income of our acquisitions in the nine months ended January 31, 2015 and 2014, respectively, (excluding development projects placed in service) are detailed below.

	(in thousands)
	Nine Months Ended January 31
	2015		2014
Total revenue	$	1,756	$	1,149
Net loss	$	(27)	$	(194)

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DEVELOPMENT PROJECTS PLACED IN SERVICE

IRET Properties placed $113.6 million and $53.5 million of development projects in service during the nine months ended January 31, 2015 and 2014, respectively. The development projects placed in service during the nine months ended January 31, 2015 and 2014 are detailed below.

Nine Months Ended January 31, 2015

		(in thousands)
Development Projects Placed in Service (1)	Date Placed in Service	Land		Building		Development Cost
Multi-Family Residential
44 unit - Dakota Commons - Williston, ND(2)	2014-07-15	$	823	$	9,596	$	10,419
130 unit - Red 20 - Minneapolis, MN(3)	2014-11-21		1,900		26,430		28,330
233 unit - Commons at Southgate - Minot, ND(4)	2014-12-09		3,691		30,921		34,612
64 unit - Cypress Court II - St. Cloud, MN(5)	2015-01-01		447		6,191		6,638
165 unit - Arcata - Golden Valley, MN(6)	2015-01-01		2,088		28,296		30,384
			8,949		101,434		110,383
Commercial Retail
4,998 sq ft Minot Wells Fargo Bank - Minot, ND(7)	2014-11-10		992		2,193		3,185
Total Development Projects Placed in Service		$	9,941	$	103,627	$	113,568

(1)

Development projects that are placed in service in phases are excluded from this table until the entire project has been placed in service. See Note 6 for additional information on the Renaissance Heights project, which was partially placed in service during the fiscal year 2014 and the nine months ended January 31, 2015.

(2)	Costs paid in prior fiscal years totaled $8.1 million. Additional costs paid in fiscal year 2015 totaled $2.3 million, for a total project cost at January 31, 2015 of $10.4 million.

(3)

Costs paid in prior fiscal years totaled $12.2 million. Additional costs paid in fiscal year 2015 totaled $16.1 million, for a total project cost at January 31, 2015 of $28.3 million. The project is owned by a joint venture entity in which the Company has an approximately 58.6% interest. The joint venture is consolidated in IRET's financial statements.

(4)

Costs paid in prior fiscal years totaled $26.5 million, respectively. Additional costs paid in fiscal year 2015 totaled $8.1 million, for a total project cost at January 31, 2015 of $34.6 million. The project is owned by a joint venture entity in which the Company has an approximately 52.9% interest. The joint venture is consolidated in IRET's financial statements.

(5)

Costs paid in prior fiscal years totaled $1.2 million. Additional costs paid in fiscal year 2015 totaled $5.5 million, for a total project cost at January 31, 2015 of $6.6 million. The project is owned by a joint venture entity in which the Company has an approximately 86.1% interest. The joint venture is consolidated in IRET's financial statements.

(6)	Costs paid in prior fiscal years totaled $11.3 million, respectively. Additional costs paid in fiscal year 2015 totaled $19.1 million, for a total project cost at January 31, 2015 of $30.4 million.

(7)	Costs paid in fiscal year 2015 totaled $3.2 million, including land acquired in fiscal year 2013.

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Nine Months Ended January 31, 2014

		(in thousands)
Development Projects Placed in Service	Date Placed in Service	Land		Building		Development Cost
Multi-Family Residential
108 unit - Landing at Southgate - Minot, ND(1)	2013-09-04	$	2,262	$	12,864	$	15,126
132 unit- Cypress Court - St. Cloud, MN(3)	2013-11-01		1,136		12,447		13,583
146 unit- River Ridge - Bismarck, ND(3)	2013-12-02		589		24,229		24,818
Total Development Projects Placed in Service		$	3,987	$	49,540	$	53,527

(1)	Costs paid in prior fiscal years totaled $6.3 million. Costs paid in fiscal year 2014 totaled $8.8 million for a total project cost at January 31, 2014 of $15.1 million. The project is owned by a joint venture entity in which the Company has an approximately 52.9% interest.

(2)	Costs paid in prior fiscal years totaled $5.8 million. Costs paid in fiscal year 2014 totaled $7.8 million for a total project cost at January 31, 2014 of $13.6 million. The project is owned by a joint venture entity in which the Company has an approximately 86.1% interest.

(3)	Costs paid in prior fiscal years totaled $10.1 million. Costs paid in fiscal year 2014 totaled $14.7 million for a total project cost at January 31, 2014 of $24.8 million.

PROPERTY DISPOSITIONS

During the third quarter of fiscal year 2015, the Company sold one office property and one retail property for a total sales price of $10.0 million.

During the third quarter of fiscal year 2014, the Company sold two multi-family residential properties, three industrial properties and two retail properties for a total sales price of $11.7 million. The following table details the Company's dispositions during the nine months ended January 31, 2015 and 2014:

Nine Months Ended January 31, 2015

		(in thousands)
Dispositions	Date Disposed	Sales Price		Book Value and Sales Cost		Gain/(Loss)
Multi-Family Residential
83 unit - Lancaster - St. Cloud, MN	2014-09-22	$	4,451	$	3,033	$	1,418
Office
73,338 sq ft Dewey Hill - Edina, MN	2014-05-19		3,100		3,124		(24)
74,568 sq ft Wirth Corporate Center - Golden Valley, MN	2014-08-29		4,525		4,695		(170)
79,297 sq ft Northgate I – Maple Grove, MN	2014-12-01		7,200		6,881		319
			14,825		14,700		125
Industrial
198,600 sq ft Eagan 2785 & 2795 - Eagan, MN	2014-07-15		3,600		5,393		(1,793)
Retail
25,644 sq ft Weston Retail - Weston, WI	2014-07-28		n/a		1,176		(1,176)
52,000 sq ft Kalispell Retail - Kalispell, MT	2014-10-15		1,230		1,229		1
34,226 sq ft Fargo Express Center & SC Pad - Fargo, ND	2014-11-18		2,843		2,211		632
			4,073		4,616		(543)
Unimproved Land
Kalispell Unimproved - Kalispell, MT	2014-10-15		670		670		0
Total Property Dispositions		$	27,619	$	28,412	$	(793)

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Nine Months Ended January 31, 2014

		(in thousands)
Dispositions	Date Disposed	Sales Price		Book Value and Sales Cost		Gain/(Loss)
Multi-Family Residential
84 unit - East Park - Sioux Falls, SD	2013-12-18	$	2,214	$	2,358	$	(144)
48 unit - Sycamore Village - Sioux Falls, SD	2013-12-18		1,296		1,380		(84)
			3,510		3,738		(228)
Office
121,669 sq ft Bloomington Business Plaza - Bloomington, MN	2013-09-12		4,500		7,339		(2,839)
118,125 sq ft Nicollet VII - Burnsville, MN	2013-09-12		7,290		6,001		1,289
42,929 sq ft Pillsbury Business Center - Bloomington, MN	2013-09-12		1,160		1,164		(4)
			12,950		14,504		(1,554)
Industrial
41,880 sq ft Bodycote Industrial Building- Eden Prairie, MN	2013-05-13		3,150		1,375		1,775
42,244 sq ft Fargo 1320 45th Street N - Fargo, ND	2013-05-13		4,700		4,100		600
49,620 sq ft Metal Improvement Company - New Brighton, MN	2013-05-13		2,350		1,949		401
172,057 sq ft Roseville 2929 Long Lake Road - Roseville, MN	2013-05-13		9,275		9,998		(723)
322,751 sq ft Brooklyn Park 7401 Boone Ave - Brooklyn Park, MN	2013-09-12		12,800		12,181		619
50,400 sq ft Cedar Lake Business Center - St. Louis Park, MN	2013-09-12		2,550		2,607		(57)
35,000 sq ft API Building - Duluth, MN	2013-09-24		2,553		1,488		1,065
59,292 sq ft Lighthouse - Duluth, MN	2013-10-08		1,825		1,547		278
606,006 sq ft Dixon Avenue Industrial Park - Des Moines, IA	2013-10-31		14,675		10,328		4,347
41,685 sq ft Winsted Industrial Building - Winsted, MN	2014-01-17		725		747		(22)
69,984 sq ft Minnetonka 13600 County Road 62 - Minnetonka, MN	2014-01-30		3,800		3,084		716
42,510 sq ft Clive 2075 NW 94th Street - Clive, IA	2014-01-30		2,735		2,675		60
			61,138		52,079		9,059
Retail
23,187 sq ft Eagan Community - Eagan, MN	2013-05-14		2,310		2,420		(110)
10,625 sq ft Anoka Strip Center- Anoka, MN	2013-12-23		325		347		(22)
8,400 sq ft Burnsville 2 Strip Center - Burnsville, MN	2014-01-08		650		796		(146)
			3,285		3,563		(278)
Total Property Dispositions		$	80,883	$	73,884	$	6,999

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NOTE 9 • MORTGAGES PAYABLE AND LINE OF CREDIT

Most of the properties owned by the Company serve as collateral for separate mortgage loans on single properties or groups of properties. The majority of these mortgages payable are non-recourse to the Company, other than for standard carve-out obligations such as fraud, waste, failure to insure, environmental conditions and failure to pay real estate taxes. As of January 31, 2015, the management of the Company believes there are no defaults or material compliance issues in regard to any mortgages payable. Interest rates on mortgages payable range from 2.42% to 8.25%, and the mortgages have varying maturity dates from the current fiscal year through July 1, 2036.

Of the mortgages payable, the balances of fixed rate mortgages totaled $927.7 million at January 31, 2015 and $977.2 million at April 30, 2014. The balances of variable rate mortgages totaled $78.5 million and $20.5 million as of January 31, 2015 and April 30, 2014, respectively. The Company does not utilize derivative financial instruments to mitigate its exposure to changes in market interest rates. Most of the fixed rate mortgages have substantial pre-payment penalties. As of January 31, 2015, the weighted average rate of interest on the Company's mortgage debt was 5.17%, compared to 5.37% on April 30, 2014. The aggregate amount of required future principal payments on mortgages payable as of January 31, 2015, is as follows:

Fiscal year ended April 30,	(in thousands)
2015 (remainder)	$	22,390
2016		130,203
2017		203,510
2018		88,039
2019		134,503
Thereafter		427,534
Total payments	$	1,006,179

In the table above, included in the approximately $203.5 million (as of January 31, 2015) of future principal payments on mortgages payable in fiscal year 2017 is a non-recourse $122.6 million CMBS loan, for which nine of the Company's office properties serve as collateral and under which a special-purpose subsidiary of the Company is the borrower. This loan matures in October 2016. Because the loan amount significantly exceeds the Company's current estimate of the fair value of this nine-property portfolio, the Company contacted the master servicer to initiate discussions on various alternatives with regard to the loan. During the first quarter of fiscal year 2015, the Company was notified that the loan has been transferred to the special servicer. The Company cannot predict the outcome of discussions with the special servicer regarding the loan. To date the borrower is current on all payments under the loan.

In addition to the individual first mortgage loans comprising the Company's $1.0 billion of mortgage indebtedness, the Company also has a revolving, multi-bank line of credit with First International Bank and Trust, Watford City, North Dakota, as lead bank, which had, as of January 31, 2015, lending commitments of $90.0 million. This facility is not included in the Company's mortgage indebtedness total. As of January 31, 2015, the line of credit was secured by mortgages on 15 properties; under the terms of the line of credit, properties may be added and removed from the collateral pool with the agreement of the lenders. Participants in this credit facility as of January 31, 2015 included, in addition to First International Bank, the following financial institutions: The Bank of North Dakota; First Western Bank and Trust; Dacotah Bank; Highland Bank; American State Bank & Trust Company; Town & Country Credit Union and United Community Bank. As of January 31, 2015, the line of credit had an interest rate of 4.75% and a minimum outstanding principal balance requirement of $17.5 million, and as of January 31, 2015 and April 30, 2014, the Company had borrowed $50.5 million and $22.5 million, respectively. The facility includes covenants and restrictions requiring the Company to achieve on a fiscal and calendar quarter basis a debt service coverage ratio on borrowing base collateral of 1.25x in the aggregate and 1.00x on individual assets in the collateral pool, and the Company is also required to maintain minimum depository account(s) totaling $6.0 million with First International, of which $1.5 million is to be held in a non-interest bearing account. As of January 31, 2015, the Company believes it was in compliance with the facility covenants.

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NOTE 10 • FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement and Disclosures defines and establishes a framework for measuring fair value.  The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels, as follows:

Level 1:  Quoted prices in active markets for identical assets

Level 2:  Significant other observable inputs

Level 3:  Significant unobservable inputs

Fair value estimates may be different than the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

Fair Value Measurements on a Recurring Basis

The Company had no assets or liabilities recorded at fair value on a recurring basis at January 31, 2015 and April 30, 2014.

Fair Value Measurements on a Nonrecurring Basis

Non-financial assets and liabilities measured at fair value on a nonrecurring basis at January 31, 2015 consisted of real estate investments that were written-down to estimated fair value during the nine months ended January 31, 2015. Non-financial assets measured at fair value on a nonrecurring basis at April 30, 2014 consisted of real estate investments and real estate held for sale that was written-down to estimated fair value during fiscal year 2014. See Note 2 for additional information on impairment losses recognized during fiscal years 2015 and 2014. The aggregate fair value of these assets by their levels in the fair value hierarchy are as follows:

	(in thousands)
	January 31, 2015
	Total		Level 1		Level 2		Level 3
ASSETS:
Real estate investments	$	695	$	0	$	0	$	695
Real estate held for sale		44,259		0		0		44,259

	(in thousands)
	April 30, 2014
	Total		Level 1		Level 2		Level 3
ASSETS:
Real estate investments	$	89,537	$	0	$	0	$	89,537
Real estate held for sale		2,951		0		0		2,951

Financial Assets and Liabilities Not Measured at Fair Value

The following methods and assumptions were used to estimate the fair value of each class of financial assets and liabilities. The fair values of our financial instruments approximate their carrying amount in our consolidated financial statements except for debt.

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

Other Investments. The carrying amount, or cost plus accrued interest, of the certificates of deposit approximates fair value.

Other Debt. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using relevant treasury interest rates plus credit spreads (Level 2).

Lines of Credit.  The carrying amount approximates fair value because the variable rate debt re-prices frequently.

Mortgages Payable. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using relevant treasury interest rates plus credit spreads (Level 2).

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The estimated fair values of the Company's financial instruments as of January 31, 2015 and April 30, 2014, are as follows:

	(in thousands)
	January 31, 2015				April 30, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	52,148	$	52,148	$	47,267	$	47,267
Other investments		329		329		329		329
FINANCIAL LIABILITIES
Other debt		132,183		131,856		63,132		63,250
Line of credit		50,500		50,500		22,500		22,500
Mortgages payable		1,006,179		1,217,825		997,689		1,130,262