CENTERSPACE - FORM 8-K - EX-99.2

Attached files

file	filename
EX-99.1 - EX-99.1 - CENTERSPACE	iret-20161212ex991d22450.htm
8-K - 8-K - CENTERSPACE	iret-20161212x8k.htm

Exhibit 99.2

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Supplemental Financial and Operating Data

Table of Contents

October 31, 2016


		Page

Company Background		2

Property Cost by Segment and by State		4

Key Financial Data
Condensed Consolidated Balance Sheets		5
Condensed Consolidated Statements of Operations		6
Funds From Operations		7
Adjusted EBITDA		8

Capital Analysis
Long-Term Mortgage Debt Analysis		9
Long-Term Mortgage Debt Detail		10
Capital Analysis		12

Portfolio Analysis
Net Operating Income Detail		13-16

Tenant Analysis
Multifamily Summary		17
Healthcare Leasing Summary		18-20
10 Largest Commercial Tenants - Based on Annualized Base Rent		21

Growth Analysis
Acquisitions and Development Summary		22

Definitions		23

Company Background

Second Quarter Fiscal 2017

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

As of October 31, 2016, we held for investment a portfolio of 130 properties consisting of 86 multifamily properties, 30 healthcare properties, and 14 other commercial properties. As of October 31, 2016, our common shares, Series A preferred shares and Series B preferred shares were publicly traded on the New York Stock Exchange (NYSE symbols: IRET, IRETPR and IRETPRB, respectively). On December 2, 2016, we fully redeemed our Series A preferred shares, and such shares are no longer deemed outstanding.

Company Snapshot

(as of October 31, 2016)

Company Headquarters	Minot, North Dakota
Fiscal Year-End	April 30
Reportable Segments	Multifamily and Healthcare
Total Properties Held for Investment	130
Total Units Held for Investment
(multifamily properties)	12,751
Total Square Feet Held for Investment
(healthcare and other commercial properties)	2.7 million
Common Shares Outstanding (thousands)	121,701
Limited Partnership Units Outstanding (thousands)	16,229
Common Share Distribution - Quarter/Annualized	$0.13/$0.52
Dividend Yield	8.6%
Total Capitalization (see p.12 for detail)	$2.0 billion

Investor Information

Board of Trustees

Jeffrey L. Miller	Trustee and Chair
John D. Stewart	Trustee, Vice Chair, and Interim Chair of the Audit Committee
Linda J. Hall	Trustee, Chair of Compensation Committee
Jeffrey P. Caira	Trustee, Interim Chair of the Nominating and Governance Committee
Michael T. Dance	Trustee
Terrance P. Maxwell	Trustee
John A. Schissel	Trustee
Timothy P. Mihalick	Trustee, Chief Executive Officer
Jeffrey K. Woodbury	Trustee

Management


Timothy P. Mihalick	Chief Executive Officer; Trustee
Mark O. Decker, Jr.	President and Chief Investment Officer
Diane K. Bryantt	Executive Vice President and Chief Operating Officer
Ted E. Holmes	Executive Vice President and Chief Financial Officer
Michael A. Bosh	Executive Vice President, General Counsel and Assistant Secretary
Andrew Martin	Executive Vice President – Asset Management
Nancy B. Andersen	Senior Vice President and Principal Accounting Officer
Joy S. Newborg	Senior Vice President, Chief Compliance Officer, Corporate Secretary and Associate General Counsel
Matthew M. Volpano	Senior Vice President – Investments


Corporate Headquarters:	Investor Relations Contact:
1400 31st Avenue SW, Suite 60	Stephen Swett
Post Office Box 1988	701-837-7104
Minot, North Dakota 58702-1988	IR@iret.com

Trading Symbol for Common Shares: IRET
Stock Exchange Listing: NYSE

Common Share Data (NYSE: IRET)


	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
	Fiscal Year 2017			Fiscal Year 2017			Fiscal Year 2016			Fiscal Year 2016			Fiscal Year 2016
High Closing Price	$	6.67		$	6.63		$	7.48		$	8.39		$	8.16
Low Closing Price	$	5.67		$	6.01		$	5.97		$	6.24		$	6.51
Average Closing Price	$	6.21		$	6.35		$	6.71		$	7.35		$	7.39
Closing Price at end of quarter	$	6.07		$	6.62		$	6.02		$	6.52		$	8.12
Common Share Distributions—annualized	$	0.52		$	0.52		$	0.52		$	0.52		$	0.52
Closing Dividend Yield - annualized		8.6	%		7.9	%		8.6	%		8.0	%		6.4	%
Closing common shares outstanding (thousands)		121,701			121,528			121,091			121,034			122,798
Closing limited partnership units outstanding (thousands)		16,229			16,285			16,285			13,864			13,890
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)	$	837,235		$	912,322		$	827,004		$	879,535		$	1,109,907

Certain statements in these supplemental disclosures are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from projected results. Such risks, uncertainties and other factors that might cause such differences include, but are not limited to: intentions and expectations regarding future distributions on common shares and units; changes in operating costs; fluctuations in interest rates; adverse capital and credit market conditions that might affect IRET’s access to various sources of capital and cost of capital; IRET’s ability to manage its current debt levels and repay or refinance its indebtedness upon maturity or other payment dates; IRET’s ability to maintain financial covenant compliance under its debt agreements; adequate insurance coverage; the effect of government regulation; delays or inability to obtain necessary governmental permits and authorizations; changes in general and local economic and real estate market conditions; changes in demand for IRET properties that may result in lower than expected occupancy and/or rental rates; ability to acquire quality properties in IRET’s targeted markets; ability to successfully dispose of certain assets; competition for tenants from similar competing properties; IRET’s ability to attract and retain skilled personnel; cyber-intrusion; abandonment of development or redevelopment opportunities for which IRET has already incurred costs; delays in completing development, redevelopment and/or lease up of properties and increased costs; IRET’s ability to maintain effective internal controls over financial reporting and disclosure controls and procedures; and those risks and uncertainties detailed from time to time in IRET’s filings with the Securities and Exchange Commission, including IRET’s Form 10-K for the fiscal year ended April 30, 2016 and subsequent quarterly reports on Form 10-Q. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Second Quarter Fiscal 2017

Property Cost by Segment for Properties Held for Investment

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Percentage of Total Property Cost by State for Properties Held for Investment

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands)


	10/31/2016		7/31/2016		4/30/2016		1/31/2016		10/31/2015
ASSETS
Real estate investments
Property owned	$	1,665,354	$	1,667,442	$	1,681,471	$	1,589,921	$	1,552,448
Less accumulated depreciation		(321,790)		(319,087)		(312,889)		(308,876)		(296,927)
		1,343,564		1,348,355		1,368,582		1,281,045		1,255,521
Development in progress		20,921		27,454		51,681		78,341		89,843
Unimproved land		19,069		18,933		20,939		22,304		22,485
Total real estate investments		1,383,554		1,394,742		1,441,202		1,381,690		1,367,849
Assets held for sale and assets of discontinued operations		191,233		215,817		220,537		231,212		324,278
Cash and cash equivalents		68,729		54,438		66,698		47,117		55,133
Other investments		—		—		50		50		329
Receivable arising from straight-lining of rents, net of allowance		7,660		7,683		7,179		7,168		6,681
Accounts receivable, net of allowance		9,815		3,018		1,524		2,180		3,015
Real estate deposits		1,370		—		—		1,250		444
Prepaid and other assets		3,496		2,265		2,937		3,868		3,243
Intangible assets, net of accumulated amortization		842		1,172		1,858		1,590		2,132
Tax, insurance, and other escrow		4,786		4,752		5,450		7,221		6,752
Property and equipment, net of accumulated depreciation		928		977		1,011		948		897
Goodwill		1,645		1,680		1,680		1,697		1,697
Deferred charges and leasing costs, net of accumulated amortization		5,261		4,999		4,896		4,815		4,615
TOTAL ASSETS	$	1,679,319	$	1,691,543	$	1,755,022	$	1,690,806	$	1,777,065

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
LIABILITIES
Liabilities held for sale and liabilities of discontinued operations	$	69,326	$	76,195	$	77,488	$	89,110	$	223,597
Accounts payable and accrued expenses		40,382		41,797		39,727		47,636		54,631
Revolving line of credit		47,500		17,500		17,500		17,500		17,500
Mortgages payable, net of loan costs		779,568		812,082		812,393		688,023		654,781
Construction debt and other		82,742		78,481		82,130		132,364		120,578
TOTAL LIABILITIES		1,019,518		1,026,055		1,029,238		974,633		1,071,087

REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES		8,585		7,468		7,522		7,244		7,105
EQUITY
Investors Real Estate Trust shareholders’ equity
Series A Preferred Shares of Beneficial Interest		27,317		27,317		27,317		27,317		27,317
Series B Preferred Shares of Beneficial Interest		111,357		111,357		111,357		111,357		111,357
Common Shares of Beneficial Interest		920,759		922,698		922,084		924,658		936,893
Accumulated distributions in excess of net income		(489,356)		(482,264)		(442,000)		(434,388)		(455,508)
Total Investors Real Estate Trust shareholders’ equity		570,077		579,108		618,758		628,944		620,059
Noncontrolling interests – Operating Partnership		71,994		73,071		78,484		58,254		55,957
Noncontrolling interests – consolidated real estate entities		9,145		5,841		21,020		21,731		22,857
Total equity		651,216		658,020		718,262		708,929		698,873
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	1,679,319	$	1,691,543	$	1,755,022	$	1,690,806	$	1,777,065

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)


	Six Months Ended						Three Months Ended
OPERATING RESULTS	10/31/2016			10/31/2015			10/31/2016			7/31/2016			4/30/2016			1/31/2016			10/31/2015
Real estate revenue	$	100,220		$	91,391		$	50,609		$	49,611		$	48,523		$	48,406		$	46,346
Real estate expenses		43,207			38,255			21,573			21,634			20,524			20,321			19,951
Net operating income		57,013			53,136			29,036			27,977			27,999			28,085			26,395
Depreciation/amortization		(27,798)			(23,622)			(13,531)			(14,267)			(13,517)			(12,693)			(12,405)
Impairment of real estate investments		(54,153)			(3,158)			—			(54,153)			(2,223)			(162)			(1,873)
General and administrative expenses		(5,308)			(5,387)			(2,702)			(2,606)			(2,951)			(2,929)			(2,933)
Acquisition and investment related costs		(47)			(398)			(4)			(43)			(397)			(35)			(391)
Other expenses		(1,668)			(1,230)			(816)			(852)			(950)			(51)			(813)
Interest expense		(20,990)			(16,555)			(10,626)			(10,364)			(10,062)			(9,151)			(8,741)
Loss on extinguishment of debt		—			(106)			—			—			—			—			(106)
Interest and other income		1,682			1,272			637			1,045			600			701			665
(Loss) income before income (loss) on sale of real estate and other investments and income (loss) from discontinued operations		(51,269)			3,952			1,994			(53,263)			(1,501)			3,765			(202)
Income (loss) on sale of real estate and other investments		8,855			(175)			(103)			8,958			8,369			1,446			—
Gain on bargain purchase		—			—			—			—			3,424			—			—
(Loss) income from continuing operations		(42,414)			3,777			1,891			(44,305)			10,292			5,211			(202)
Income from discontinued operations		14,110			17,627			10,399			3,711			1,463			38,232			16,879
Net (loss) income	$	(28,304)		$	21,404		$	12,290		$	(40,594)		$	11,755		$	43,443		$	16,677

Net loss (income) attributable to noncontrolling interest – Operating Partnership		2,122			(1,713)			(1,174)			3,296			(1,092)			(4,227)			(1,527)
Net loss attributable to noncontrolling interests – consolidated real estate entities		16,139			1,515			484			15,655			340			581			1,516
Net (loss) income attributable to Investors Real Estate Trust		(10,043)			21,206			11,600			(21,643)			11,003			39,797			16,666
Dividends to preferred shareholders		(5,757)			(5,757)			(2,878)			(2,879)			(2,878)			(2,879)			(2,878)
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	(15,800)		$	15,449		$	8,722		$	(24,522)		$	8,125		$	36,918		$	13,788

Per Share Data
(Loss) earnings per common share from continuing operations – Investors Real Estate Trust – basic & diluted	$	(0.23)		$	—		$	—		$	(0.23)		$	0.06		$	0.02		$	(0.01)
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic & diluted		0.10			0.12			0.07			0.03			0.01			0.28			0.12
Net (loss) income per common share – basic & diluted	$	(0.13)		$	0.12		$	0.07		$	(0.20)		$	0.07		$	0.30		$	0.11

Percentage of Revenues
Real estate expenses		43.1	%		41.9	%		42.6	%		43.6	%		42.3	%		42.0	%		43.0	%
Depreciation/amortization		27.7	%		25.8	%		26.7	%		28.8	%		27.9	%		26.2	%		26.8	%
General and administrative expenses		5.3	%		5.9	%		5.3	%		5.3	%		6.1	%		6.1	%		6.3	%
Interest		20.9	%		18.1	%		21.0	%		20.9	%		20.7	%		18.9	%		18.9	%
Income from discontinued operations		14.1	%		19.3	%		20.5	%		7.5	%		3.0	%		79.0	%		36.4	%
Net income		(28.2)	%		23.4	%		24.3	%		(81.8)	%		24.2	%		89.7	%		36.0	%

Ratios
Adjusted EBITDA(1)/Interest expense		2.53	x		2.19	x		2.54	x		2.52	x		2.76	x		2.29	x		2.08	x
Adjusted EBITDA(1)/Interest expense plus preferred distributions		2.04	x		1.85	x		2.05	x		2.03	x		2.23	x		1.92	x		1.74	x

(1)

See Definitions on page 23. Adjusted EBITDA is a non-GAAP measure; see page 8 for a reconciliation of Adjusted EBITDA to net income.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

FUNDS FROM OPERATIONS (unaudited)

(in thousands, except per share and unit data)


	Six Months Ended				Three Months Ended
	10/31/2016		10/31/2015		10/31/2016		7/31/2016		4/30/2016		1/31/2016		10/31/2015
Funds From Operations(1)
Net (loss) income attributable to Investors Real Estate Trust	$	(10,043)	$	21,206	$	11,600	$	(21,643)	$	11,003	$	39,797	$	16,666
Less dividends to preferred shareholders		(5,757)		(5,757)		(2,878)		(2,879)		(2,878)		(2,879)		(2,878)
Net (loss) income available to common shareholders		(15,800)		15,449		8,722		(24,522)		8,125		36,918		13,788
Adjustments:
Noncontrolling interests – Operating Partnership		(2,122)		1,713		1,174		(3,296)		1,092		4,227		1,527
Depreciation and amortization of real property		26,408		33,119		12,971		13,437		15,694		14,975		14,860
Impairment of real estate investments attributable to Investors Real Estate Trust		39,190		3,598		—		39,189		2,223		162		1,873
(Gain) loss on depreciable property sales	$	(15,358)	$	(23,733)		(6,400)		(8,958)		(7,910)		(1,778)		(23,909)
FFO applicable to common shares and Units		32,318		30,146	$	16,467	$	15,850	$	19,224	$	54,504	$	8,139

FFO per share and unit - basic and diluted(2)	$	0.24	$	0.22	$	0.12	$	0.12	$	0.14	$	0.40	$	0.06

Adjusted funds from operations(1)
FFO applicable to common shares and Units	$	32,318	$	30,146	$	16,467	$	15,850	$	19,224	$	54,504	$	8,139
Adjustments:
Tenant improvements at same-store(3) properties		(862)		(348)		(362)		(500)		(778)		(383)		(157)
Leasing costs at same-store properties(3)		(634)		(395)		(464)		(170)		(89)		(102)		(59)
Recurring capital expenditures(1)(3)		(2,224)		(3,330)		(1,140)		(1,141)		(825)		(1,406)		(1,713)
Straight-line rents		(535)		(66)		162		(697)		(238)		(554)		(309)
Non-real estate depreciation		157		180		69		88		93		80		80
Acquisition costs(4)		—		153		—		—		91		9		153
Default interest		—		3,116		—		—		—		1,566		1,567
(Gain) loss on extinguishment of debt		72		7,226		72		—		—		(36,456)		7,226
Gain on bargain purchase		—		—		—		—		(3,424)		—		—
Share-based compensation expense		865		605		603		262		864		787		539
AFFO applicable to common shares and Units	$	29,157	$	37,287	$	15,407	$	13,692	$	14,918	$	18,045	$	15,466

AFFO per share and unit - basic and diluted	$	0.21	$	0.27	$	0.11	$	0.10	$	0.11	$	0.13	$	0.11

Weighted average shares and units		137,411		138,686		137,418		137,402		136,438		135,741		138,565

(1)

See Definitions on page 23.

(2)

Excluding gain or loss on extinguishment of debt and default interest, FFO would have been $19.6 million and $0.14 per share and unit for the three months ended January 31, 2016, $16.9 million and $0.12 per share and unit for the three months ended October 31, 2015 and $40.5 million and $0.29 per share and unit for the six months ended October 31, 2015.

(3)

Quarterly information is for properties in the same-store pool at that point in time; consequently, quarterly numbers may not total to year-to-date numbers.

(4)

Three months ended July 31, 2015 was revised to include acquisition costs.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (ADJUSTED EBITDA) (unaudited)

(in thousands)


	Six Months Ended				Three Months Ended
	10/31/2016		10/31/2015		10/31/2016		7/31/2016		4/30/2016		1/31/2016		10/31/2015
Adjusted EBITDA(1)
Net (loss) income attributable to Investors Real Estate Trust	$	(10,043)	$	21,206	$	11,600	$	(21,643)	$	11,003	$	39,797	$	16,666
Adjustments:
Noncontrolling interests – Operating Partnership		(2,122)		1,713		1,174		(3,296)		1,092		4,227		1,527
Income before noncontrolling interests – Operating Partnership		(12,165)		22,919		12,774		(24,939)		12,095		44,024		18,193
Add:
Interest expense		23,759		28,723		12,021		11,738		11,475		13,976		13,762
Loss (gain) loss on extinguishment of debt		72		7,226		72		—		—		(36,456)		7,226
Depreciation/amortization related to real estate investments		26,511		33,209		13,014		13,497		15,765		15,024		14,903
Amortization related to real estate revenues(2)		54		92		27		27		23		31		38
Impairment of real estate investments attributable to Investors Real Estate Trust		39,189		3,598		—		39,189		2,223		162		1,873
Less:
Interest income		(1,172)		(1,121)		(600)		(572)		(570)		(566)		(565)
Gain on sale of real estate and other investments		(15,358)		(24,505)		(6,400)		(8,958)		(7,911)		(1,777)		(24,680)
Adjusted EBITDA	$	60,890	$	70,141		30,908		29,982		33,100		34,418		30,750

(1)

See Definitions on page 23.

(2)

Included in real estate revenue in the Statement of Operations.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

LONG-TERM MORTGAGE DEBT* ANALYSIS

(in thousands)

Debt Maturity Schedule

Annual Expirations

Total Mortgage Debt*


	Future Maturities of Mortgage Debt(1)

Fiscal Year	Fixed Debt		Variable Debt		Total Debt		Weighted Average(2)			% of Total Debt
2017 (remainder)	$	6,931	$	101,921	$	108,852		3.32	%		12.9	%
2018		17,584		25,538		43,122		3.99	%		5.1	%
2019		25,416		64,785		90,201		3.77	%		10.7	%
2020		107,510		32,926		140,436		5.53	%		16.6	%
2021		123,500		—		123,500		5.04	%		14.6	%
2022		107,474		1,721		109,195		5.56	%		12.9	%
2023		40,213		—		40,213		4.25	%		4.7	%
2024		62,899		—		62,899		4.26	%		7.5	%
2025		19,118		—		19,118		4.04	%		2.3	%
2026		55,634		—		55,634		3.74	%		6.6	%
Thereafter		51,415		—		51,415		4.07	%		6.1	%
Total maturities	$	617,694	$	226,891	$	844,585		4.52	%		100.0	%

(1)

Includes mortgages on properties held for sale.

(2)

Weighted average interest rate of debt that matures in fiscal year.


	10/31/2016			7/31/2016			4/30/2016			1/31/2016			10/31/2015
Balances Outstanding(1)
Mortgage
Fixed rate	$	617,694		$	635,251		$	689,346		$	682,312		$	920,234
Variable rate		226,891			249,169			196,801			89,994			89,826
Mortgage total	$	844,585		$	884,420		$	886,147		$	772,306		$	1,010,060

Weighted Average Interest Rates Secured		4.52	%		4.54	%		4.54	%		4.83	%		5.04	%

(1)

Includes mortgages on properties held for sale.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

LONG-TERM MORTGAGE DEBT* DETAIL AS OF OCTOBER 31, 2016

(in thousands)


Property	Maturity Date	Fiscal 2017		Fiscal 2018		Fiscal 2019		Fiscal 2020		Thereafter		Total(1)

Multifamily
Southgate Apartments-Minot, ND(2)	11/1/2016	$	31,400	$	—	$	—	$	—	$	—	$	31,400
Arcata Apartments-Golden Valley, MN	2/15/2017		23,072		—		—		—		—		23,072
Evergreen II – Isanti, MN	11/1/2017		—		1,997		—		—		—		1,997
Ponds – Sartell, MN	11/1/2017		—		3,696		—		—		—		3,696
Homestead Gardens II - Rapid City, SD	6/1/2018		—		—		3,205		—		—		3,205
River Ridge – Bismarck, ND	6/30/2018		—		—		13,000		—		—		13,000
Plaza - Minot, ND	8/1/2018		—		—		5,142		—		—		5,142
Greenfield - Omaha, NE	2/1/2019		—		—		3,478		—		—		3,478
Brooklyn Heights - Minot, ND(3)	4/1/2019		—		—		605		—		—		605
Colton Heights - Minot, ND(3)	4/1/2019		—		—		340		—		—		340
Pines - Minot, ND(3)	4/1/2019		—		—		97		—		—		97
Summit Park - Minot, ND(3)	4/1/2019		—		—		839		—		—		839
Terrace Heights - Minot, ND(3)	4/1/2019		—		—		140		—		—		140
Avalon Cove-Rochester, MN	4/5/2019		—		—		25,603		—		—		25,603
Crystal Bay-Rochester, MN	4/5/2019		—		—		7,908		—		—		7,908
French Creek-Rochester, MN	4/5/2019		—		—		3,064		—		—		3,064
Monticello Village - Monticello, MN	5/28/2019		—		—		—		2,877		—		2,877
Rimrock West - Billings, MT	9/1/2019		—		—		—		3,192		—		3,192
Rocky Meadows - Billings, MT	9/1/2019		—		—		—		4,949		—		4,949
Cimarron Hills - Omaha, NE	10/1/2019		—		—		—		4,606		—		4,606
Cottonwood - Bismarck, ND	10/1/2019		—		—		—		15,238		—		15,238
Forest Park - Grand Forks, ND	10/1/2019		—		—		—		7,350		—		7,350
Renaissance Heights I - Williston, ND	10/1/2019		—		—		—		23,715		—		23,715
Williston Garden - Williston, ND	10/30/2019		—		—		—		7,400		—		7,400
Williston Garden - Williston, ND	10/30/2019		—		—		—		270		—		270
Evergreen - Isanti, MN	11/1/2019		—		—		—		1,932		—		1,932
Pinehurst - Billings, MT	11/1/2019		—		—		—		142		—		142
Northridge - Bismarck, ND	12/1/2019		—		—		—		6,064		—		6,064
Castlerock - Billings, MT	1/1/2020		—		—		—		6,407		—		6,407
Thomasbrook - Lincoln, NE	1/1/2020		—		—		—		5,742		—		5,742
Westwood Park - Bismarck, ND	1/1/2020		—		—		—		1,898		—		1,898
Kirkwood Manor - Bismarck, ND	2/1/2020		—		—		—		3,175		—		3,175
Brookfield Village - Topeka, KS	3/1/2020		—		—		—		5,076		—		5,076
Crown Colony - Topeka, KS	4/1/2020		—		—		—		7,860		—		7,860
Mariposa - Topeka, KS	4/1/2020		—		—		—		2,844		—		2,844
Sherwood - Topeka, KS	4/1/2020		—		—		—		11,804		—		11,804
Summary of Debt due after Fiscal 2020			—		—		—		—		344,148		344,148
Sub-Total Multifamily		$	54,472	$	5,693	$	63,421	$	122,541	$	344,148	$	590,275


Healthcare
Billings 2300 Grant Road – Billings, MT	12/31/2016		846		—		—		—		—		846
Missoula 3050 Great Northern Ave – Missoula, MT	12/31/2016		851		—		—		—		—		851
Edgewood Vista – Fargo, ND(3)	2/25/2017		11,002		—		—		—		—		11,002
Edgewood Vista – Fremont, NE(3)	2/25/2017		516		—		—		—		—		516
Edgewood Vista – Hastings, NE(3)	2/25/2017		532		—		—		—		—		532
Edgewood Vista – Hermantown I, MN(3)	2/25/2017		14,257		—		—		—		—		14,257
Edgewood Vista – Kalispell, MT(3)	2/25/2017		533		—		—		—		—		533
Edgewood Vista – Missoula, MT(3)	2/25/2017		757		—		—		—		—		757

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

LONG-TERM MORTGAGE DEBT* DETAIL AS OF OCTOBER 31, 2016

(in thousands)

Property	Maturity Date	Fiscal 2017		Fiscal 2018		Fiscal 2019		Fiscal 2020		Thereafter		Total(1)
Healthcare continued
Edgewood Vista – Omaha, NE(3)	2/25/2017		337		—		—		—		—		337
Edgewood Vista – Virginia, MN(3)	2/25/2017		12,127		—		—		—		—		12,127
High Pointe Health Campus – Lake Elmo, MN	4/1/2017		7,389		—		—		—		—		7,389
Edgewood Vista – Billings, MT(3)	4/10/2017		1,690		—		—		—		—		1,690
Edgewood Vista – East Grand Forks, MN(3)	4/10/2017		2,575		—		—		—		—		2,575
Edgewood Vista – Sioux Falls, SD(3)	4/10/2017		968		—		—		—		—		968
St Michael Clinic – St. Michael, MN	4/1/2018		—		1,705		—		—		—		1,705
PrairieCare Medical - Brooklyn Park, MN	4/10/2018		—		14,718		—		—		—		14,718
Garden View Medical – St. Paul, MN	6/30/2018		—		—		6,890		—		—		6,890
Ritchie Medical Plaza – St. Paul, MN	6/30/2018		—		—		8,320		—		—		8,320
Health East St John & Woodwinds - Maplewood & Woodbury, MN	2/1/2019		—		—		4,746		—		—		4,746
Denfeld Clinic - Duluth, MN	8/1/2019		—		—		—		1,245		—		1,245
Gateway Clinic - Sandstone, MN	8/1/2019		—		—		—		721		—		721
Mariner Clinic - Superior, WI	8/1/2019		—		—		—		1,577		—		1,577
Pavilion I - Duluth, MN	8/1/2019		—		—		—		4,154		—		4,154
Pavilion II - Duluth, MN	8/1/2019		—		—		—		7,645		—		7,645
Wells Clinic - Hibbing, MN	8/1/2019		—		—		—		1,100		—		1,100
Summary of Debt due after Fiscal 2020			—		—		—		—		114,306		114,306
Sub-Total Healthcare		$	54,380	$	16,423	$	19,956	$	16,442	$	114,306	$	221,507

All Other
Roseville 3075 Long Lake Road - Roseville, MN	5/1/2017		—		10,820		—		—		—		10,820
Urbandale 3900 106th Street – Urbandale, IA	7/5/2017		—		10,186		—		—		—		10,186
Plaza 16 – Minot, ND	8/1/2018		—		—		6,824		—		—		6,824
Lexington Commerce Center - Eagan, MN	2/1/2020		—		—		—		1,453		—		1,453
Summary of Debt due after Fiscal 2020			—		—		—		—		3,520		3,520
Sub-Total All Other		$	—	$	21,006	$	6,824	$	1,453	$	3,520	$	32,803

Total		$	108,852	$	43,122	$	90,201	$	140,436	$	461,974	$	844,585

* Mortgage debt does not include our multi-bank line of credit or construction loans. The line of credit has a maturity date of September 1, 2017. As of October 31, 2016, we had borrowings of $47.5 million outstanding under this line. Construction loans and other debt totaled $82.7 million as of October 31, 2016.

(1)Totals are principal balances as of October 31, 2016.

(2)Loan was refinanced subsequent to October 31, 2016.

(3)Property is classified as held for sale at October 31, 2016

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CAPITAL ANALYSIS

(in thousands, except per share and unit amounts)


	Three Months Ended
	10/31/2016		7/31/2016		4/30/2016		1/31/2016		10/31/2015
Equity Capitalization
Common shares outstanding		121,701		121,528		121,091		121,034		122,798
Operating partnership (OP) units outstanding		16,229		16,285		16,285		13,864		13,890
Total common shares and OP units outstanding		137,930		137,813		137,376		134,898		136,688
Market price per common share (closing price at end of period)	$	6.07	$	6.62	$	6.02	$	6.52	$	8.12
Equity capitalization-common shares and OP units	$	837,235	$	912,322	$	827,004	$	879,535	$	1,109,907
Recorded book value of preferred shares	$	138,674	$	138,674	$	138,674	$	138,674	$	138,674
Total equity capitalization	$	975,909	$	1,050,996	$	965,678	$	1,018,209	$	1,248,581

Debt Capitalization
Total debt	$	982,486	$	988,031	$	993,323	$	940,294	$	1,007,825
Total capitalization	$	1,958,395	$	2,039,027	$	1,959,001	$	1,958,503	$	2,256,406

Total debt to total capitalization		0.50:1		0.48:1		0.51:1		0.48:1		0.45:1


	Six Months Ended						Three Months Ended
	10/31/2016			10/31/2015			10/31/2016			7/31/2016			4/30/2016			1/31/2016			10/31/2015
Earnings to fixed charges(1)		(2)	x		1.06	x		1.19			(5)	x		1.85	x		1.32	x		1.02	x
Earnings to combined fixed charges and preferred distributions(1)		(2)	x		(3)	x		(4)			(5)	x		1.49	x		1.11			(6)
Debt service coverage ratio(1)		1.64	x		1.56	x		1.66	x		1.62	x		1.86	x		1.65	x		1.49	x

Distribution Data
Common shares and units outstanding at record date		137,934			139,540			137,934			137,376			134,897			135,408			139,540
Total common distribution paid	$	35,790		$	36,151		$	17,931		$	17,859		$	17,536		$	17,603		$	18,136
Common distribution per share and unit	$	0.26		$	0.26		$	0.13		$	0.13		$	0.13		$	0.13		$	0.13
Payout ratio (FFO per share and unit basis)(1)		108.3	%		118.2	%		108.3	%		108.3	%		92.9	%		32.5	%		216.7	%
Payout ratio (AFFO per share and unit basis)(1)		123.8	%		96.3	%		118.2	%		130.0	%		118.2	%		100	%		118.2	%

(1)

See Definitions on page 23.

(2)

Earnings were inadequate to cover fixed charges and combined fixed charges and preferred distributions by $26.5 million and $32.2 million, respectively. Excluding non-cash asset impairment and gain on sale charges of $45.1 million in the six months ended October 31, 2016, the ratio of earnings to fixed charges and of earnings to combined fixed charges and preferred distributions would have been 1.77x and 1.43x, respectively, for the six months ended October 31, 2016.

(3)

Earnings were inadequate to cover combined fixed charges and preferred distributions by $3.7 million. Excluding non-cash asset impairment and gain on sale charges of $3.3 million in the six months ended October 31, 2015, the ratio of earnings to combined fixed charges and preferred distributions would have been .99x for the six months ended October 31, 2015.

(4)

Earnings were inadequate to cover combined fixed charges and preferred distributions by $590,000. Excluding non-cash gain on sale charges of $103,000 in the three months ended October 31, 2016, the ratio of earnings to combined fixed charges and preferred distributions would have been .95x for the three months ended October 31, 2016.

(5)

Earnings were inadequate to cover fixed charges and combined fixed charges and preferred distributions by $28.7 million and $31.6 million, respectively. Excluding non-cash asset impairment and gain on sale charges of $45.2 million in the three months ended July 31, 2016, the ratio of earnings to fixed charges and of earnings to combined fixed charges and preferred distributions would have been 2.38x and 1.92x, respectively, for the three months ended July 31, 2016.

(6)

Earnings were inadequate to cover combined fixed charges and preferred distributions by $2.6 million. Excluding non-cash asset impairment and loss on sale charges of $1.9 million in the three months ended October 31, 2015, the ratio of earnings to combined fixed charges and preferred distributions would have been .96x for the three months ended October 31, 2015.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NET OPERATING INCOME DETAIL

(in thousands)


	Three Months Ended October 31, 2016
	Reporting Segments
							Corporate and
	Multifamily		Healthcare		All Other		Other		Total
Real estate rental revenue
Same-store	$	27,613	$	10,205	$	2,260	$	—	$	40,078
Non-same-store		8,637		1,456		438		—		10,531
Total		36,250		11,661		2,698		—		50,609

Real estate expenses(1)
Same-store		12,033		3,730		635		872		17,270
Non-same-store		3,533		421		95		254		4,303
Total		15,566		4,151		730		1,126		21,573

Net operating income (NOI)
Same-store		15,580		6,475		1,625		(872)		22,808
Non-same-store		5,104		1,035		343		(254)		6,228
Net operating income (loss)	$	20,684	$	7,510	$	1,968	$	(1,126)	$	29,036

Reconciliation of NOI to net income (loss) available to common shareholders
Depreciation/amortization	$	(9,677)	$	(2,874)	$	(912)	$	(68)	$	(13,531)
General and administrative expenses		—		—		—		(2,702)		(2,702)
Acquisition and investment related costs		—		—		—		(4)		(4)
Other expenses		—		—		—		(816)		(816)
Interest expense		(7,863)		(2,002)		(425)		(336)		(10,626)
Interest and other income		—		—		—		637		637
Income before gain (loss) on sale of real estate and other investments, gain on bargain purchase and income from discontinued operations		3,144		2,634		631		(4,415)		1,994
Gain (loss) on sale of real estate and other investments		—		(102)		—		(1)		(103)
Income (loss) from continuing operations		3,144		2,532		631		(4,416)		1,891
Income from discontinued operations		—		10,399		—		—		10,399
Net income (loss)		3,144		12,931		631		(4,416)		12,290
Net income attributable to noncontrolling interests – Operating Partnership		—		—		—		(1,174)		(1,174)
Net loss attributable to noncontrolling interests – consolidated real estate entities		—		—		—		484		484
Net income (loss) attributable to Investors Real Estate Trust		3,144		12,931		631		(5,106)		11,600
Dividends to preferred shareholders		—		—		—		(2,878)		(2,878)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	3,144	$	12,931	$	631	$	(7,984)	$	8,722

(1)

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

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NET OPERATING INCOME DETAIL

(in thousands)


	Three Months Ended October 31, 2015
	Reporting Segments
							Corporate and
	Multifamily		Healthcare		All Other		Other		Total
Real estate rental revenue
Same-store	$	28,099	$	10,280	$	2,330	$	—	$	40,709
Non-same-store		4,077		1,071		489		—		5,637
Total		32,176		11,351		2,819		—		46,346

Real estate expenses(1)
Same-store		12,148		3,432		598		1,237		17,415
Non-same-store		2,043		402		22		69		2,536
Total		14,191		3,834		620		1,306		19,951

Net operating income (NOI)
Same-store		15,951		6,848		1,732		(1,237)		23,294
Non-same-store		2,034		669		467		(69)		3,101
Net operating income (loss)	$	17,985	$	7,517	$	2,199	$	(1,306)	$	26,395

Reconciliation of NOI to net income (loss) available to common shareholders
Depreciation/amortization	$	(8,568)	$	(2,864)	$	(908)	$	(65)	$	(12,405)
Impairment of real estate investments		(1,873)		—		—		—		(1,873)
General and administrative expenses		—		—		—		(2,933)		(2,933)
Acquisition and investment related costs		—		—		—		(391)		(391)
Other expenses		—		—		—		(813)		(813)
Interest expense		(6,594)		(2,150)		(396)		399		(8,741)
Loss on debt extinguishment		(93)		—		(13)		—		(106)
Interest and other income		—		—		—		665		665
Income (loss) from continuing operations		857		2,503		882		(4,444)		(202)
Income (loss) from discontinued operations		—		358		16,521		—		16,879
Net income (loss)		857		2,861		17,403		(4,444)		16,677
Net income attributable to noncontrolling interests – Operating Partnership		—		—		—		(1,527)		(1,527)
Net income attributable to noncontrolling interests – consolidated real estate entities		—		—		—		1,516		1,516
Net income (loss) attributable to Investors Real Estate Trust		857		2,861		17,403		(4,455)		16,666
Dividends to preferred shareholders		—		—		—		(2,878)		(2,878)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	857	$	2,861	$	17,403	$	(7,333)	$	13,788

(1)

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

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NET OPERATING INCOME DETAIL

(in thousands)


	Six Months Ended October 31, 2016
	Reporting Segments
							Corporate and
	Multifamily		Healthcare		All Other		Other		Total
Real estate rental revenue
Same-store	$	54,999	$	20,322	$	4,571	$	—	$	79,892
Non-same-store		16,291		2,880		1,157		—		20,328
Total		71,290		23,202		5,728		—		100,220

Real estate expenses
Same-store		23,813		7,502		1,230		2,489		35,034
Non-same-store		6,632		841		226		474		8,173
Total		30,445		8,343		1,456		2,963		43,207

Net operating income (NOI)
Same-store		31,186		12,820		3,341		(2,489)		44,858
Non-same-store		9,659		2,039		931		(474)		12,155
Net operating income	$	40,845	$	14,859	$	4,272	$	(2,963)	$	57,013

Reconciliation of NOI to net income (loss) available to common shareholders
Depreciation/amortization	$	(20,121)	$	(5,702)	$	(1,834)	$	(141)	$	(27,798)
Impairment of real estate investments		(51,401)		—		—		(2,752)		(54,153)
General and administrative expenses		—		—		—		(5,308)		(5,308)
Acquisition and investment related costs		—		—		—		(47)		(47)
Other expenses		—		—		—		(1,668)		(1,668)
Interest expense		(15,505)		(4,021)		(801)		(663)		(20,990)
Interest and other income		—		—		—		1,682		1,682
Income (loss) before gain (loss) on sale of real estate, gain on bargain purchase and other investments and (loss) income from discontinued operations		(46,182)		5,136		1,637		(11,860)		(51,269)
Gain (loss) on sale of real estate and other investments		—		(102)		8,982		(25)		8,855
Income (loss) from continuing operations		(46,182)		5,034		10,619		(11,885)		(42,414)
(Loss) income from discontinued operations		—		14,110				—		14,110
Net income (loss)		(46,182)		19,144		10,619		(11,885)		(28,304)
Net income attributable to noncontrolling interests – Operating Partnership		—		—		—		2,122		2,122
Net loss attributable to noncontrolling interests – consolidated real estate entities		—		—		—		16,139		16,139
Net income (loss) attributable to Investors Real Estate Trust		(46,182)		19,144		10,619		6,376		(10,043)
Dividends to preferred shareholders		—		—		—		(5,757)		(5,757)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	(46,182)	$	19,144	$	10,619	$	619	$	(15,800)

(1)

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

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NET OPERATING INCOME DETAIL

(in thousands)


	Six Months Ended October 31, 2015
	Reporting Segments
							Corporate and
	Multifamily		Healthcare		All Other		Other		Total
Real estate rental revenue
Same-store	$	56,269	$	20,448	$	4,658	$	—	$	81,375
Non-same-store		7,340		1,682		994		—		10,016
Total		63,609		22,130		5,652		—		91,391

Real estate expenses
Same-store		24,002		6,670		1,093		1,976		33,741
Non-same-store		3,629		646		135		104		4,514
Total		27,631		7,316		1,228		2,080		38,255

Net operating income (NOI)
Same-store		32,267		13,778		3,565		(1,976)		47,634
Non-same-store		3,711		1,036		859		(104)		5,502
Net operating income	$	35,978	$	14,814	$	4,424	$	(2,080)	$	53,136

Reconciliation of NOI to net income (loss) available to common shareholders
Depreciation/amortization	$	(16,161)	$	(5,483)	$	(1,828)	$	(150)	$	(23,622)
Impairment of real estate investments		(1,873)		—		—		(1,285)		(3,158)
General and administrative expenses		—		—		—		(5,387)		(5,387)
Acquisition and investment related costs		—		—		—		(398)		(398)
Other expenses		—		—		—		(1,230)		(1,230)
Interest expense		(12,517)		(4,277)		(791)		1,030		(16,555)
Loss on debt extinguishment		(93)		—		—		(13)		(106)
Interest and other income		—		—		—		1,272		1,272
Income (loss) before gain (loss) on sale of real estate and other investments and (loss) income from discontinued operations		5,334		5,054		1,805		(8,241)		3,952
Gain (loss) on sale of real estate and other investments		—		—		(175)		—		(175)
Income (loss) from continuing operations		5,334		5,054		1,630		(8,241)		3,777
(Loss) income from discontinued operations		—		1,784		15,843		—		17,627
Net income (loss)		5,334		6,838		17,473		(8,241)		21,404
Net income attributable to noncontrolling interests – Operating Partnership		—		—		—		(1,713)		(1,713)
Net income attributable to noncontrolling interests – consolidated real estate entities		—		—		—		1,515		1,515
Net income (loss) attributable to Investors Real Estate Trust		5,334		6,838		17,473		(8,439)		21,206
Dividends to preferred shareholders		—		—		—		(5,757)		(5,757)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	5,334	$	6,838	$	17,473	$	(14,196)	$	15,449

(1)

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

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

MULTIFAMILY SUMMARY(1)


	Three Months Ended
	10/31/16				07/31/16			04/30/16			01/31/16			10/31/15
Number of Units
Same-Store		10,513			10,840			9,853			9,877			9,877
Non-Same-Store		2,589			2,196			3,121			2,915			2,783
All Properties		13,102			13,036			12,974			12,792			12,660

Average Investment Per Unit
Same-Store	$	77,814		$	77,371		$	72,986		$	72,696		$	72,308
Non-Same-Store		164,515			196,164			161,851			142,111			134,136
All Properties	$	94,946		$	97,382		$	94,092		$	88,228		$	84,701

Average Scheduled Rent(2) per Unit
Same-Store	$	902		$	888		$	871		$	877		$	885
Non-Same-Store		1,336			1,458			1,244			1,229			1,218
All Properties	$	988		$	984		$	960		$	956		$	952

Average Rental Rate per Unit(3)
Same-Store	$	950		$	928		$	912		$	916		$	927
Non-Same-Store		1,376			1,462			1,276			1,255			1,240
All Properties	$	1,035		$	1,020		$	1,000		$	993		$	992

Occupancy
Same-Store		92.9	%		93.0	%		94.8	%		94.9	%		95.4	%
Non-Same-Store		84.4	%		77.5	%		78.4	%		78.1	%		79.5	%
All Properties		91.2	%		90.4	%		90.8	%		91.1	%		91.9	%

Operating Expenses as a % of Scheduled Rent
Same-Store		44.9	%		47.0	%		44.4	%		45.9	%		47.1	%
Non-Same-Store		36.4	%		31.2	%		36.6	%		34.0	%		39.9	%
All Properties		42.7	%		43.0	%		42.0	%		42.4	%		45.2	%

Capital Expenditures
Total Recurring Capital Expenditures(2) per Unit	$	108		$	105		$	84		$	142		$	173

Total Non-Recurring Capital Expenditures per Unit - Same-Store	$	188		$	200		$	85		$	77		$	291

Value-Add Expenditures per Unit(4)	$	13,998		$	8,102		$	7,632			n/a			n/a

(1)

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

(2)

See Definitions on page 23.

(3)

Average rental rate is defined as total revenues divided by the weighted average occupied units for the period.

(4)

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

During the three months ended October 31, 2016, thirteen multifamily properties were classified as held for sale and moved to non-same-store. Excluding these properties, the average investment per unit, average scheduled rent per unit and average rental rate per unit for non-same-store properties would have been $180,466, $1,437 and $1,475, respectively.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

HEALTHCARE LEASING SUMMARY (Same-Store Properties)

Healthcare Leasing Activity

During fiscal year 2017, we have executed new and renewal healthcare leases for our same-store properties on 21,843 square feet for the three months ended October 31, 2016 and 54,067 square feet for the six months ended October 31, 2016. Due to our leasing efforts, occupancy in our same-store healthcare portfolio has remained strong at 92.8% as of October 31, 2016.

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

Three Months Ended October 31, 2016 and 2015


					Total
	Square Feet of		Square Feet of		Square Feet of
	New Leases(1)		Leases Renewed(1)		Leases Executed(1)		Occupancy
	2016	2015	2016	2015	2016	2015	2016		2015
Healthcare	4,891	2,831	16,952	60,121	21,843	62,952	92.8	%	95.8	%

(1)

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

Six Months Ended October 31, 2016 and 2015


					Total
	Square Feet of		Square Feet of		Square Feet of
	New Leases(1)		Leases Renewed(1)		Leases Executed(1)		Occupancy
	2016	2015	2016	2015	2016	2015	2016		2015
Healthcare	17,031	4,455	37,036	106,543	54,067	110,998	92.8	%	95.8	%

(1)

Healthcare New Leases

The following table sets forth the average effective rents and the estimated costs of tenant improvements and leasing commissions, on a per square foot basis, that we are obligated to fulfill under the new leases signed for our same-store healthcare properties:

Three Months Ended October 31, 2016 and 2015


									Estimated Tenant				Leasing
	Square Feet of		Average Term		Average				Improvement Cost per				Commissions per
	New Leases(1)		in Years		Effective Rent(2)				Square Foot(1)				Square Foot(1)
	2016	2015	2016	2015		2016		2015		2016		2015		2016		2015
Healthcare	4,891	2,831	2.0	2.5	$	22.66	$	19.52	$	—	$	24.15	$	—	$	2.01

(1)

(2)

Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

HEALTHCARE LEASING SUMMARY (Same-Store Properties)

Six Months Ended October 31, 2016 and 2015


									Estimated Tenant				Leasing
	Square Feet of		Average Term		Average				Improvement Cost per				Commissions per
	New Leases(1)		in Years		Effective Rent(2)				Square Foot(1)				Square Foot(1)
	2016	2015	2016	2015	2016		2015		2016		2015		2016		2015
Healthcare	17,031	4,455	8.5	7.2	$	20.98	$	21.02	$	39.31	$	28.11	$	6.24	$	4.92

(1)

(2)

Healthcare Lease Renewals

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

Three Months Ended October 31, 2016 and 2015


													Estimated
									Weighted Average				Tenant Improvement				Leasing
	Square Feet of Leases		Percent of Expiring				Average Term		Growth (Decline)				Cost per Square				Commissions per
	Renewed(1)		Leases Renewed(2)				in Years		in Effective Rents(3)				Foot(1)				Square Foot(1)
	2016	2015	2016		2015		2016	2015	2016		2015		2016		2015		2016		2015
Healthcare	16,952	60,121	69.9	%	86.3	%	2.4	3.7	5.9	%	(2.1)	%	$	—	$	7.05	$	0.54	$	0.95

(1)

(2)

Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. The category of renewed leases does not include leases that have become month-to-month leases, as the month-to-month leases are considered lease amendments.

(3)

Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.

Six Months Ended October 31, 2016 and 2015


													Estimated
									Weighted Average				Tenant Improvement				Leasing
	Square Feet of Leases		Percent of Expiring				Average Term		Growth (Decline)				Cost per Square				Commissions per
	Renewed(1)		Leases Renewed(2)				in Years		in Effective Rents(3)				Foot(1)				Square Foot(1)
	2016	2015	2016		2015		2016	2015	2016		2015		2016		2015		2016		2015
Healthcare	37,036	106,543	94.5	%	86.4	%	3.0	5.4	5.2	%	6.0	%	$	2.23	$	10.62	$	1.61	$	3.28

(1)

(2)

(3)

Healthcare Lease Expirations

Our ability to maintain and improve occupancy rates, and base rents, primarily depends upon our continuing ability to re-lease expiring space. The following table reflects the in-service portfolio lease expiration schedule of our healthcare properties, including square footage and annualized base rent for expiring leases, as of October 31, 2016.


			Percentage of Total		Annualized Base				Percentage of Total
		Square Footage of	Healthcare		Rent of Expiring			Average	Healthcare
Fiscal Year of Lease Expiration	# of Leases	Expiring Leases(2)	Leased Square Footage		Leases at Expiration(3)			Rental Rate	Annualized Base Rent
2017(1)	28	92,158	6.9	%	$	1,769,381	$	19.20	6.1	%
2018	18	101,971	7.7	%		2,071,054		20.31	7.2	%
2019	16	183,880	13.8	%		3,795,918		20.64	13.2	%
2020	15	83,762	6.3	%		1,733,420		20.69	6.0	%
2021	20	95,575	7.2	%		2,029,038		21.23	7.0	%
2022	14	71,610	5.4	%		1,314,549		18.36	4.5	%
2023	11	52,511	3.9	%		988,425		18.82	3.4	%
2024	26	165,687	12.4	%		3,883,048		23.44	13.5	%
2025	5	76,691	5.7	%		1,663,237		21.69	5.8	%
2026	9	103,178	7.7	%		1,780,197		17.25	6.2	%
Thereafter	20	307,142	23.0	%		7,827,010		25.48	27.1	%
Totals	182	1,334,165	100.0	%	$	28,855,277	$	21.63	100.0	%

(1)

Includes month-to-month leases. As of October 31, 2016, month-to-month leases accounted for 50,078 square feet.

(2)

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

(3)

Annualized Base Rent is monthly scheduled rent as of October 1, 2016, multiplied by 12.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

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

as of October 31, 2016



		Average	% of Total			% of Aggregate
		Remaining	Commercial		Aggregate	Occupied
	Number of	Lease Term	Minimum		Rentable	Square
Tenant	Properties	in Months	Rents		Square Feet	Feet
Affiliates of Edgewood Vista	25	43	30.1	%	1,331,903	34.0	%
Fairview Health Services	8	37	8.7	%	245,134	6.3	%
St. Luke’s Hospital of Duluth, Inc.	5	112	6.1	%	186,331	4.8	%
PrairieCare Medical LLC	1	144	5.2	%	100,292	2.6	%
HealthEast Care System	1	28	3.9	%	114,316	2.9	%
Quality Manufacturing Corp	1	75	2.3	%	427,798	10.9	%
Allina Health	4	45	1.9	%	53,132	1.4	%
Children’s Hospitals & Clinics	3	37	1.8	%	51,088	1.3	%
Noran Neurological Clinic	1	82	1.7	%	38,506	1.0	%
Amerada Hess	1	117	1.6	%	50,610	1.3	%
Total/Weighted Average	50	50	63.3	%	2,599,110	66.5	%

(1)See Definitions on page 23.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

FISCAL 2017 ACQUISITIONS AND DEVELOPMENT SUMMARY

as of October 31, 2016

(dollars in thousands)

Development Placed in Service

Occupancy at

Occupancy

Development

Date Placed in

as of

Cost as of

Property

Location

Segment

Service

Number of Units

Service

October 31, 2016

71 France(1)

Edina, MN

Multifamily

5/1/16

241

45.1

89.2

72,276

(1)

We are currently an approximately 52.6% partner in the joint venture entity constructing this project. The anticipated total cost amount given is the total cost to the joint venture entity.

Development in Progress

(in fiscal years)

Percentage

(in thousands)

Anticipated

Number

Leased or

Anticipated

Costs as of

Construction

Project Name and Location

Location

Planned Segment

of Units

Committed

Total Cost

October 31, 2016

Completion

Monticello Crossings

Monticello, MN

Multifamily

202 units

65.9

31,784

28,068

4Q 2017

Other

n/a

3,283

n/a

31,784

31,351

Definitions

October 31, 2016

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

Adjusted funds from operations (AFFO) is calculated by subtracting from Funds from operations (FFO) (1) tenant improvements and leasing costs at same-store properties, and recurring capital expenditures that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding (3) non-real estate depreciation and amortization and (4) share-based compensation expense. We may also adjust FFO for certain unusual non-recurring items that do not produce cash available for distribution to shareholders or are otherwise not representative of our ongoing operating performance. Our calculation subtracts from FFO leasing commissions and tenant improvements at same-store properties only, since we consider tenant improvement and leasing cost levels at non-same-store properties unrepresentative of expected levels at same-store properties. Previously-reported AFFO amounts are not revised for changes in the composition of the same-store properties pool. AFFO is included herein because we consider it to be a measure of a REIT's ability to incur and service debt and to pay distributions to its shareholders. AFFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.

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

Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet plus the market value of shares outstanding at the end of the period.

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

Funds from operations (FFO) - The National Association of Real Estate Investment Trusts, Inc. (NAREIT) defines FFO as “net income (computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.” In addition, in October 2011 NAREIT clarified its computation of FFO to exclude impairment charges for all periods presented. FFO is a non-GAAP measure. We consider FFO, which is a standard supplemental measure for equity real estate investment trusts, helpful to investors because it facilitates an understanding of the operating performance of properties without giving effect to impairment write-downs and to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead historically rise or fall with market conditions, we believe that FFO provides investors and management with a more accurate indication of our financial and operating results.

Net Operating Income (NOI) is total real estate revenues and gain on involuntary conversion less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance and property management expenses). We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders or cash flow from operating activities as a measure of financial performance.

Payout ratio (FFO per share and unit basis) - The ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual FFO per share and unit.

Ratio of earnings to fixed charges - The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Fixed charges consist of mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest.

Ratio of earnings to combined fixed charges and preferred distributions - The ratio of earnings to combined fixed charges and preferred distributions is computed by dividing earnings by combined fixed charges and preferred distributions. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Combined fixed charges and preferred distributions consist

of fixed charges (mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest) and preferred distributions.

Recurring capital expenditures are expenditures (excluding capital expenditures recoverable from tenants and capital expenditures at properties sold during the period) made on a regular or recurring basis to maintain a property’s competitive position within its market, generally with a depreciable life of 5 to 12 years, but excluding (a) capital expenditures made in the year of acquisition and in subsequent periods until the property is classified as same-store (i.e., excluding capital expenditures on non-same-store properties), (b) improvements associated with the expansion or re-development of a building, (c) renovations to a building which change the underlying classification of the building (for example, from industrial to office or Class C office to Class A office) or (d) capital improvements that represent the addition of something new to a property, rather than the replacement of an existing item.

Scheduled rent revenue is the total possible revenue from all leasable units and square footage, with occupied space valued at contract rates pursuant to leases and vacant units or square footage at market rates.

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

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

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