CENTERSPACE - FORM 8-K - EX-99.1 - June 28, 2017

Attached files

file filename
EX-99.2 - EX-99.2 - CENTERSPACEex-99d2.htm
8-K - 8-K - CENTERSPACEf8-k.htm

Exhibit 99.1

Earnings Release

C:\Users\nandersen\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\V90Q6TCB\IRET_Logo_Trans-PNG--300x2701.png

 

 

IRET ANNOUNCES FINANCIAL AND OPERATING RESULTS

FOR THE QUARTER AND FISCAL YEAR ENDED APRIL  30, 2017

 

(Minot, ND) – June 28, 2017 - IRET (NYSE: IRET) today reported its financial and operating results for the quarter and fiscal year ended April 30, 2017.

Chief Executive Officer Mark Decker commented, “During our fiscal fourth quarter, we continued to make substantial progress on our strategic transformation into a premier, focused multifamily REIT.  Our total portfolio revenue and NOI increased by 12.0% and 14.3%, respectively, driven primarily by our developments which are performing strongly.  Several of our legacy markets were still impacted by weakness in the oil sector and construction activity, however we recorded a year-over-year increase in same store revenue during the quarter, and with quarter-end occupancies still above 94%, we believe we are on track for further improvement.  On the investment front, we are pleased with our recent acquisition of Oxbō Apartments, a brand new Class A multifamily community in St. Paul, Minnesota.  We were able to efficiently redeploy a portion of the proceeds from our recent non-core property sales, and we continue to pursue additional investments which we believe will add the quality of our portfolio and enhance our long term growth profile.  Finally, we added talent to our management team, bringing in executives with substantial public company and multifamily industry expertise.  As we look ahead to fiscal 2018, we are motivated and energized as we continue to implement our strategic initiatives, and drive value for our shareholders.”

Fourth Quarter Fiscal Year 2017 Highlights

·

Total revenue was $54.3 million, up 12.0% from the fourth quarter of fiscal year 2016.

·

Net income available to common shareholders was $28.0 million compared to $8.1 million for the fourth quarter of fiscal year 2016. The increase was primarily due to an increase in gains on sale of discontinued operations.

·

Funds from Operations (“FFO”) was  $10.2 million, or $0.07 per share/unit.

·

Excluding one-time items, including $3.2 million in lease termination fee income, a $3.2 million write off of development pursuit costs, $2.9 million in loss on debt extinguishment and $1.2 million in severance costs net of reduced share based compensation, FFO would have been $0.11 per share/unit.

·

Disposed of 22 properties, including 19 senior housing properties, 2 medical office properties and 1 multifamily property for a total sales price of $155.4 million with a gain on sale of $37.5 million, netting approximately $126.2 million in proceeds after repayment of debt.

·

Subsequent to quarter end, in May, acquired Oxbō Apartments, a 191-unit multifamily property in St. Paul, Minnesota for $61.5 million.

·

In April, implemented leadership transformation, promoting Mark O. Decker, Jr. to Chief Executive Officer in addition to President. Also, Jeffrey P. Caira was appointed Chairman of the Board of Trustees, John A. Kirchmann was named Executive Vice President, and Anne Olson was named Executive Vice President, General Counsel and Corporate Secretary. Subsequent to quarter end, in June, Susan J. Picotte was named Vice President of Asset Management.

 

Fiscal Year 2017 Highlights

·

Total revenue was $205.7 million, up 9.2% from fiscal year 2016.

·

Net income available to common shareholders was $31.4 million compared to $60.5 million for the prior fiscal year. The decrease was primarily due to net gain on extinguishment of debt in discontinued operations that was

i

 

recognized in the prior period and an increase in non-cash impairment expense attributable to IRET, net of an increase in gains on sale of real estate.

·

FFO was $55.2 million, or $0.40 per share/unit.

·

Excluding one-time items, including $3.2 million in lease termination fee income, $4.9 million in loss on debt extinguishment, a $3.2 million write off of development pursuit costs, $2.6 million in severance costs and $1.4 million of redemption costs for the Series A Preferred Shares, FFO would have been $0.47 per share/unit.

·

Disposed of 38 properties, including 32 senior housing properties, 2 medical office properties, 1 multifamily property, 1 industrial property, 1 retail property and 2 parcels of vacant land for a total sales price of $286.9 million with a gain on sale of $74.9 million, netting approximately $229.7 million in proceeds after repayment of debt.

·

During the twelve months ended April 30, 2017, two development project were placed in service, containing a total of 443 units, and representing aggregate development costs of $102.9 million.

·

Adjusted the dividend to a level covered by operating cash flow, from an annualized $0.52 to $0.28 per share/unit.

·

Entered into a new $250.0 million line of credit providing for improved size, terms and flexibility.

·

Redeemed all the outstanding Series A preferred shares on December 2, 2016 for $29.2 million.

·

Authorized a one-year share repurchase program of up to $50 million worth of common shares and/or Series B preferred shares.

 

Financial Results for the Three and Twelve Months Ended April 30, 2017 Compared to the Prior Year Periods

Net income available to common shareholders for the quarter ended April 30, 2017 was $28.0 million compared to $8.1 million for the same period of the prior fiscal year. The increase of $19.9 million was primarily due to an increase in income from discontinued operations (including gains on sale) of $27.0 million, net of a decrease in gain on bargain purchase of $3.4 million and an increase in net income attributable to noncontrolling interests – Operating Partnership of $2.6 million. Net income available to common shareholders for the twelve months ended April 30, 2017 was $31.4 million compared to $60.5 million for the prior fiscal year. The decrease of $29.1 million was primarily due to net gain on extinguishment of debt in discontinued operations that was recognized in the prior period of $29.3 million and an increase in impairment expense attributable to IRET of $42.1 million, net of an increase in gains on sale of real estate (including discontinued operations) of $41.4 million.

FFO for the quarter ended April 30, 2017 was $10.2 million, or $0.07 per share/unit. FFO for the twelve months ended April 30, 2017 was $55.2 million, or $0.40 per share/unit.

The table below highlights FFO and Adjusted Funds from Operations (“AFFO”) results for the most recent five quarters.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 Ended

 

 

Q3 Ended

 

Q2 Ended

 

Q1 Ended

 

Q4 Ended

 

 

    

 

4/30/2017

    

 

1/31/2017

    

10/31/2016

    

7/31/2016

    

4/30/2016

 

FFO per share

 

$

.07

 

$

.09

 

$

.12

 

$

.12

 

$

.14

 

AFFO per share

 

$

.09

 

$

.10

 

$

.11

 

$

.10

 

$

.11

 

Occupancy

Occupancy as of April 30, 2017 compared to April 30, 2016 decreased in the multifamily and healthcare segments by 0.7% and 3.1%, respectively, on a same-store basis. Occupancy represents the actual number of units or square footage leased divided by the total number of units or square footage at the end of the period.

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-Store Properties

 

All Properties

 

Segments

    

4/30/2017

 

4/30/2016

 

4/30/2017

 

4/30/2016

 

Multifamily

 

94.2

%  

94.9

%  

93.1

%  

90.8

%

Healthcare

 

92.1

%  

95.2

%  

92.8

%  

89.4

%

Operating Results for the Three Months Ended April 30, 2017 Compared to the Prior Year Period

Total revenue increased by $5.8 million, or 12.0%, in the three months ended April 30, 2017 compared to same period one

ii

 

year ago. NOI from all properties increased by approximately $4.0 million, or 14.3%, for the quarter ended April 30, 2017 compared to the same period one year ago. Non-Same-Store properties, primarily recent developments which continue to perform strongly, provided for an increase in NOI of $5.0 million while Same-Store NOI decreased by approximately $997,000 for the quarter ended April 30, 2017 compared to the prior year.

Multifamily Results for the Three Months Ended April 30, 2017 Compared to the Prior Year Period

Multifamily (including Non-Same-Store) NOI increased by approximately $1.5 million or 7.8% for the quarter ended April 30, 2017 compared to the same period one year ago.

Same-Store Multifamily Results for the Three Months Ended April 30, 2017 Compared to the Prior Year Period

The Same-Store portfolio showed generally mixed results year over year, as NOI was slightly lower for the non-energy impacted markets. Increased revenues and average rental rates were offset by increases in expenses across most markets.  On a comparative period basis in the non-energy impacted markets, Billings, Bismarck and Rochester experienced the most significant expenses increases due to increases in utility costs in both Billings and Bismarck, maintenance costs in all three markets due to excess snow removal expenses, and increased administrative labor expenses in both Billings and Rochester. Rochester was also affected by increased turnover and janitorial expenses as our properties adjust to new supply in this market.  Bismarck was also affected by stabilizing real estate taxes on our newest asset. Operating margins of Same-Store multifamily NOI to gross revenues decreased by 2.2% year over year to 55.1% for the fourth quarter of fiscal year 2017, as compared to the fourth quarter of fiscal year 2016.

The table below represents Same-Store multifamily performance by region for the fourth quarter ended April 30, 2017 compared to the prior year period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FY17Q4

 

FY17Q4

 

FY17Q4

 

4th Quarter Increase (Decrease) From Prior Year’s 4th Quarter

 

 

 

 

 

 

 

Weighted

 

% of

 

Average

 

 

 

 

 

Net

 

Average

 

Weighted

 

 

 

Rentable

 

Occupancy

 

Average

 

Actual

 

Rental

 

 

 

 

 

Operating

 

Rental

 

Average

 

Regions

    

Units

    

4/30/2017

    

Occupancy(1)

    

NOI

    

Rate(2)

    

Revenues

    

Expenses(4)

    

Income

    

Rate

    

Occupancy

 

Billings, MT

 

770

 

91.2

%  

89.6

%  

7.7

%  

$

985

 

5.6

%  

19.3

%  

(2.6)

%  

8.4

%  

(2.8)

%

Bismarck, ND

 

977

 

93.9

%  

90.6

%  

10.2

%  

$

1,023

 

(1.4)

%  

13.6

%  

(10.1)

%  

(1.9)

%  

0.5

%

Grand Forks, ND

 

1,229

 

92.5

%  

90.2

%  

10.4

%  

$

916

 

(3.3)

%  

5.3

%  

(10.1)

%  

0.9

%  

(4.2)

%

Minneapolis, MN

 

558

 

97.5

%  

95.3

%  

6.0

%  

$

997

 

7.9

%  

0.2

%  

14.4

%  

9.8

%  

(1.9)

%

Omaha, NE

 

1,370

 

96.0

%  

95.1

%  

12.8

%  

$

900

 

3.4

%  

2.9

%  

3.8

%  

4.9

%  

(1.5)

%

Rapid City, SD

 

474

 

97.5

%  

94.5

%  

5.0

%  

$

939

 

3.5

%  

(3.2)

%  

8.4

%  

5.8

%  

(2.3)

%

Rochester, MN

 

1,106

 

93.8

%  

92.1

%  

13.0

%  

$

1,135

 

1.2

%  

23.8

%  

(10.7)

%  

5.5

%  

(4.3)

%

Sioux Falls, SD

 

969

 

96.0

%  

94.0

%  

7.9

%  

$

856

 

1.2

%  

(0.8)

%  

3.2

%  

5.2

%  

(4.0)

%

St Cloud, MN

 

1,187

 

92.6

%  

90.7

%  

10.4

%  

$

953

 

4.3

%  

(2.9)

%  

12.1

%  

9.4

%  

(5.1)

%

Topeka, KS

 

1,042

 

96.6

%  

94.5

%  

9.7

%  

$

811

 

3.1

%  

(0.9)

%  

5.8

%  

5.8

%  

(2.7)

%

Same-Store Subtotals

 

9,682

 

94.5

%  

92.4

%  

93.1

%  

$

948

 

2.0

%  

5.6

%  

(0.6)

%  

4.9

%  

(2.9)

%

Minot, ND(3)

 

640

 

93.4

%  

93.1

%  

6.2

%  

$

1,053

 

(6.7)

%  

0.4

%  

(12.7)

%  

(7.8)

%  

1.1

%

Williston, ND(3)

 

189

 

79.4

%  

82.7

%  

0.7

%  

$

973

 

(34.4)

%  

18.0

%  

(72.2)

%  

(39.2)

%  

4.8

%

Same-Store Totals

 

10,511

 

94.2

%  

92.3

%  

100.0

%  

$

955

 

0.5

%  

5.5

%  

(3.3)

%  

2.6

%  

(2.1)

%

(1)

Weighted average occupancy is defined as gross potential rent less vacancy losses divided by gross potential rent for the period.

(2)

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

(3)

Denotes markets with high exposure to energy-related industries.

(4)

Same-Store results by region do not include offsite costs associated with property management or casualty-related amounts, which increased by $135,000 and $123,000, respectively, for FY17 Q4 as compared to FY16 Q4.

Same-Store Multifamily Results for the Twelve Months Ended April 30, 2017 Compared to the Prior Year Period

The Same-Store portfolio showed generally mixed results year over year, as NOI was slightly lower for the non-energy impacted markets and significantly lower when including the energy impacted markets. Increased revenues and average rental rates in the non-energy impacted markets were offset by increases in expenses across most markets. Bismarck, Minneapolis and Rochester experienced the most significant expenses increases due to increases in maintenance snow removal expenses and administrative labor expenses in all three markets, and increased real estate expenses in Bismarck.  Although the Minneapolis market did experience an average rental rate increase of 10.3% resulting in an NOI increase for the comparative period of 8.9%. Operating margins of Same-Store multifamily NOI to gross revenues decreased by 1.7% year over year to 55.6% for fiscal year 2017, as compared to fiscal year 2016.

iii

 

The table below represents Same-Store multifamily performance by region for the twelve months ended April 30, 2017 compared to the same period one year ago.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FY17Q4 YTD

 

FY17Q4 YTD

 

 

FY17Q4 YTD

 

Increase (Decrease) From Prior Year 12 Month Period

 

 

 

 

 

 

 

Weighted

 

% of

 

 

Average

 

 

 

 

 

Net

 

Average

 

Weighted

 

 

 

Rentable

 

Occupancy

 

Average

 

Actual

 

 

Rental

 

 

 

 

 

Operating

 

Rental

 

Average

 

Regions

    

Units

    

4/30/2017

    

Occupancy(1)

    

NOI

    

 

Rate(2)

    

Revenues

    

Expenses

    

Income

    

Rate

    

Occupancy

    

Billings, MT

 

770

 

91.2

%  

90.6

%  

7.8

%  

$

955

 

3.8

%  

5.7

%  

2.5

%  

6.3

%  

(2.5)

%  

Bismarck, ND

 

977

 

93.9

%  

89.3

%  

10.2

%  

$

1,029

 

(5.5)

%  

9.5

%  

(14.0)

%  

(2.6)

%  

(2.9)

%  

Grand Forks, ND

 

1,229

 

92.5

%  

90.8

%  

11.1

%  

$

917

 

(4.0)

%  

5.1

%  

(10.2)

%  

(0.1)

%  

(3.9)

%  

Minneapolis, MN

 

558

 

97.5

%  

93.7

%  

5.6

%  

$

972

 

7.7

%  

6.2

%  

8.9

%  

10.3

%  

(2.6)

%  

Omaha, NE

 

1,370

 

96.0

%  

95.5

%  

12.7

%  

$

885

 

1.8

%  

(1.5)

%  

4.5

%  

2.7

%  

(0.9)

%  

Rapid City, SD

 

474

 

97.5

%  

95.1

%  

4.8

%  

$

921

 

2.7

%  

(2.2)

%  

6.4

%  

3.9

%  

(1.2)

%  

Rochester, MN

 

1,106

 

93.8

%  

91.9

%  

13.2

%  

$

1,119

 

0.7

%  

12.2

%  

(5.9)

%  

5.4

%  

(4.7)

%  

Sioux Falls, SD

 

969

 

96.0

%  

94.9

%  

7.9

%  

$

850

 

3.0

%  

(1.4)

%  

7.4

%  

5.8

%  

(2.8)

%  

St Cloud, MN

 

1,187

 

92.6

%  

90.9

%  

9.6

%  

$

919

 

3.3

%  

(0.9)

%  

8.1

%  

7.7

%  

(4.4)

%  

Topeka, KS

 

1,042

 

96.6

%  

94.0

%  

9.0

%  

$

797

 

3.0

%  

0.7

%  

4.6

%  

5.3

%  

(2.3)

%  

Same-Store Subtotals

 

9,682

 

94.5

%  

92.4

%  

91.9

%  

$

934

 

1.0

%  

3.2

%  

(0.7)

%  

3.9

%  

(2.9)

%  

Minot, ND(3)

 

640

 

93.4

%  

93.0

%  

6.6

%  

$

1,070

 

(13.8)

%  

(1.3)

%  

(22.6)

%  

(17.1)

%  

3.3

%  

Williston, ND(3)

 

189

 

79.4

%  

81.4

%  

1.5

%  

$

1,118

 

(40.1)

%  

(12.3)

%  

(57.5)

%  

(43.7)

%  

3.6

%  

Same-Store Totals

 

10,511

 

94.2

%  

92.2

%  

100.0

%  

$

946

 

(1.5)

%  

2.4

%  

(4.3)

%  

0.4

%  

(1.9)

%  

(1)

Weighted average occupancy is defined as gross potential rent less vacancy losses divided by gross potential rent for the period.

(2)

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

(3)

Denotes markets with high exposure to energy-related industries.

(4)

Same-Store results by region do not include offsite costs associated with property management or casualty-related amounts, which increased by $921,000 and $144,000, respectively, for the twelve months ended April 30, 2017 as compared to the twelve months ended April 30, 2016.

Development Projects Placed in Service

During the twelve months ended April 30, 2017, two development projects were placed in service, as detailed in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy

 

Development Cost

 

 

 

 

 

 

 

Rentable Sq Ft or

 

as of

 

as of

 

Anticipated

 

Project Name and Location

    

Segment

    

Number of Units

    

April 30, 2017

    

April 30, 2017

    

Same Store Date

 

71 France - Edina, MN(1)

 

Multifamily

 

241

 

90.5

%

$

72,362

 

1Q 2019

 

Monticello Crossings - Monticello, MN

 

Multifamily

 

202

 

87.6

%

 

30,516

 

1Q 2019

 

 

 

 

 

 

 

 

 

$

102,878

 

 

 

(1)

IRET is 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.

Acquisition Activity

Subsequent to year end, in May, acquired Oxbō Apartments, a 191-unit multifamily property in St. Paul, Minnesota for $61.5 million.

Disposition Activity

During the three months ended April 30, 2017, IRET disposed of 22 properties, including 19 senior housing properties, 2 healthcare properties and 1 multifamily property for a total sales price of $155.4 million with a gain on sale of $37.5 million, netting approximately $126.2 million in proceeds after repayment of debt.

Subsequent to year end, IRET disposed of a retail property for a total sales price of $3.4 million with a gain on sale of approximately $108,000, netting approximately $3.2 million in proceeds.

Liquidity

At April 30, 2017, IRET had $28.8 million cash on hand and its operating partnership had available borrowing capacity of $149.0 million under its $206.0 million line of credit, which matures January 31, 2021.

iv

 

Quarterly Distributions

On April 3, 2017, IRET paid a quarterly distribution of $0.07 per common share and unit of IRET Properties. This was IRET’s 184th consecutive distribution. IRET also paid, on March 31, 2017, a quarterly distribution of $0.496875 per share on its Series B preferred shares.

Declaration of Distributions for First Quarter of Fiscal Year 2018

 

The Board of Trustees has declared quarterly distributions in the aggregate amount of $0.07 per share/unit, payable on July 3, 2017 to common shareholders and unitholders of record at the close of business on June 15, 2017.  Additionally, the Board of Trustees declared a distribution of $0.496875 per share on the 7.95% Series B Cumulative Redeemable Preferred Shares (NYSE: IRET PRB), payable on July 3, 2017 to holders of record at the close of business on June 15, 2017. Series B preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.9875 per share.

 

Conference Call Information

The conference call to discuss Fourth Quarter Earnings is scheduled for Thursday, June 29, 2017 at 10:00 A.M. Eastern Time. Conference call access information is as follows:

USA Toll Free Number: 1-877-509-9785

International Toll Free Number: 1-412-902-4132

Canada Toll Free Number: 1-855-669-9657

About IRET

IRET focuses on the acquisition, development, redevelopment and management of multifamily communities located primarily in select growth markets throughout the Midwest. As of April 30, 2017, IRET owned interests in 129 properties that were held for investment, consisting of: (1) 87 multifamily properties containing 12,855 units, and (2) 42 commercial properties, including 29 healthcare properties, containing a total of approximately 2.6 million square feet of leasable space.  IRET’s common shares and Series B preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: IRET and IRETPRB, respectively). IRET’s press releases and supplemental information are available on its website at www.iret.com or by contacting Investor Relations at 701-837-7104.

Supplemental Information

IRET produced the Supplemental Operating and Financial Data for the Quarter Ended April 30, 2017 (“Supplemental Information”), which is available on IRET’s website at www.iret.com.

Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined under the section titled “Definitions” in the Supplemental Information.

Forward-Looking Statements

This earnings release, including the Supplemental Information, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, which may be identified by the use of words such as “expects,” “plans,” “estimates,” “anticipates,” “projects,” “intends,” “believes,” “outlook” and similar expressions that do not relate to historical matters, specifically including IRET’s future plans and anticipated operating results, are based on IRET’s expectations, forecasts and assumptions at the time of this earnings release. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in such forward-looking statements.

Such risks, uncertainties and other factors that might cause such differences include, but are not limited to: intentions and

v

 

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, 2017 and subsequent quarterly reports on Form 10-Q.

IRET assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

vi

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share data)

 

 

 

April 30, 2017

 

April 30, 2016

 

ASSETS

 

 

 

 

 

 

 

Real estate investments

 

 

 

 

 

 

 

Property owned

 

$

1,677,481

 

$
1,681,471

 

Less accumulated depreciation

 

 

(340,417)

 

 
(312,889)

 

 

 

 

1,337,064

 

 

1,368,582

 

Development in progress

 

 

 —

 

 
51,681

 

Unimproved land

 

 

18,455

 

 
20,939

 

Total real estate investments

 

 

1,355,519

 

 

1,441,202

 

Assets held for sale and assets of discontinued operations

 

 

37,708

 

 
220,537

 

Cash and cash equivalents

 

 

28,819

 

 
66,698

 

Other investments

 

 

 —

 

 
50

 

Receivable arising from straight-lining of rents, net of allowance of $340 and $333, respectively

 

 

7,822

 

 
7,179

 

Accounts receivable, net of allowance of $210 and $97, respectively

 

 

2,600

 

 
1,524

 

Real estate deposits

 

 

23,659

 

 

 —

 

Prepaid and other assets

 

 

3,131

 

 
2,937

 

Intangible assets, net of accumulated amortization of $5,444 and $6,230, respectively

 

 

658

 

 
1,858

 

Tax, insurance, and other escrow

 

 

5,050

 

 
5,450

 

Property and equipment, net of accumulated depreciation of $1,199 and $1,058, respectively

 

 

901

 

 
1,011

 

Goodwill

 

 

1,572

 

 
1,680

 

Deferred charges and leasing costs, net of accumulated amortization of $4,275 and $3,719, respectively

 

 

7,075

 

 
4,896

 

TOTAL ASSETS

 

$

1,474,514

 

$

1,755,022

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Liabilities held for sale and liabilities of discontinued operations

 

$

30,062

 

$
77,488

 

Accounts payable and accrued expenses

 

 

40,350

 

 
39,727

 

Revolving line of credit

 

 

57,050

 

 
17,500

 

Mortgages payable, net of unamortized loan costs of $3,480 and $4,931, respectively

 

 

661,960

 

 
812,393

 

Construction debt and other

 

 

41,817

 

 
82,130

 

TOTAL LIABILITIES

 

 

831,239

 

 

1,029,238

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES

 

 

7,181

 

 

7,522

 

EQUITY

 

 

 

 

 

 

 

Investors Real Estate Trust shareholders’ equity

 

 

 

 

 

 

 

Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, no shares issued and outstanding at April 30, 2017 and 1,150,000 issued and outstanding at April 30, 2016, aggregate liquidation preference of $28,750,000)

 

 

 —

 

 

27,317

 

Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 shares issued and outstanding at April 30, 2017 and April 30, 2016, aggregate liquidation preference of $115,000,000)

 

 

111,357

 

 

111,357

 

Common Shares of Beneficial Interest (Unlimited authorization, no par value, 121,199,299 shares issued and outstanding at April 30, 2017, and 121,091,249 shares issued and outstanding at April 30, 2016)

 

 

916,121

 

 

922,084

 

Accumulated distributions in excess of net income

 

 

(466,541)

 

 

(442,000)

 

Total Investors Real Estate Trust shareholders’ equity

 

 

560,937

 

 

618,758

 

Noncontrolling interests – Operating Partnership (15,617,216 units at April 30, 2017 and 16,285,239 units at April 30, 2016)

 

 

73,233

 

 

78,484

 

Noncontrolling interests – consolidated real estate entities

 

 

1,924

 

 

21,020

 

Total equity

 

 

636,094

 

 

718,262

 

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

 

$

1,474,514

 

$

1,755,022

 

 

vii

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share data)

 

 

 

Three Months Ended 

 

Twelve Months Ended

 

 

 

April 30,

 

April 30,

 

 

    

2017

    

2016

    

2017

    

2016

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate rentals

 

$

49,715

 

$

44,065

 

$
186,837

 

$
170,698

 

Tenant reimbursement

 

 

4,629

 

 

4,458

 

 
18,901

 

 
17,622

 

TOTAL REVENUE

 

 

54,344

 

 

48,523

 

 

205,738

 

 

188,320

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses, excluding real estate taxes

 

 

15,863

 

 

14,907

 

 
64,768

 

 
58,859

 

Real estate taxes

 

 

6,492

 

 

5,617

 

 
23,587

 

 
20,241

 

Depreciation and amortization

 

 

13,736

 

 

13,517

 

 
55,009

 

 
49,832

 

Impairment of real estate investments

 

 

2,875

 

 

2,223

 

 
57,028

 

 
5,543

 

General and administrative expenses

 

 

3,637

 

 

2,951

 

 
12,075

 

 
11,267

 

Acquisition and investment related costs

 

 

3,224

 

 

397

 

 
3,276

 

 
830

 

Other expenses

 

 

1,091

 

 

950

 

 
3,796

 

 
2,231

 

TOTAL EXPENSES

 

 

46,918

 

 

40,562

 

 

219,539

 

 

148,803

 

Operating income (loss)

 

 

7,426

 

 

7,961

 

 

(13,801)

 

 

39,517

 

Interest expense

 

 

(9,457)

 

 

(10,062)

 

 
(41,127)

 

 
(35,768)

 

Loss on extinguishment of debt

 

 

(1,192)

 

 

 —

 

 

(3,099)

 

 

(106)

 

Interest income

 

 

13

 

 

26

 

 
369

 

 
81

 

Other income

 

 

452

 

 

31

 

 
807

 

 
317

 

(Loss) income before gain on sale of real estate and other investments, gain on bargain purchase and income from discontinued operations

 

 

(2,758)

 

 

(2,044)

 

 

(56,851)

 

 

4,041

 

Gain on sale of real estate and other investments

 

 

7,409

 

 

8,369

 

 
18,701

 

 

9,640

 

Gain on bargain purchase

 

 

 —

 

 

3,424

 

 

 —

 

 

3,424

 

Income (loss) from continuing operations

 

 

4,651

 

 

9,749

 

 

(38,150)

 

 

17,105

 

Income from discontinued operations

 

 

28,989

 

 

2,006

 

 
68,675

 

 
59,497

 

NET INCOME

 

 

33,640

 

 

11,755

 

 

30,525

 

 

76,602

 

Net income attributable to noncontrolling interests – Operating Partnership

 

 

(3,656)

 

 

(1,092)

 

 
(4,059)

 

 

(7,032)

 

Net loss attributable to noncontrolling interests – consolidated real estate entities

 

 

296

 

 

340

 

 
16,881

 

 

2,436

 

Net income attributable to Investors Real Estate Trust

 

 

30,280

 

 

11,003

 

 

43,347

 

 

72,006

 

Dividends to preferred shareholders

 

 

(2,286)

 

 

(2,878)

 

 

(10,546)

 

 

(11,514)

 

Redemption of Preferred Shares

 

 

 —

 

 

 —

 

 

(1,435)

 

 

 —

 

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

 

$

27,994

 

$

8,125

 

$

31,366

 

$

60,492

 

Earnings (loss) per common share from continuing operations – Investors Real Estate Trust – basic and diluted

 

$
0.02

 

$
0.06

 

$
(0.24)

 

$
0.06

 

Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted

 

 
0.21

 

 
0.01

 

 
0.50

 

 
0.43

 

NET INCOME PER COMMON SHARE – BASIC & DILUTED

 

$
0.23

 

$
0.07

 

$
0.26

 

$
0.49

 

DIVIDENDS PER COMMON SHARE

 

$
0.07

 

$
0.13

 

$
0.46

 

$
0.52

 

 

viii

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO

INVESTORS REAL ESTATE TRUST TO FUNDS FROM OPERATIONS

 

z

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share amounts)

 

Three Months  Ended April 30,

 

 

2017

 

 

2016

 

 

    

 

 

    

 

    

Per

    

 

 

    

 

    

Per

 

 

 

 

 

 

Weighted

 

Share

 

 

 

 

Weighted

 

Share

 

 

 

 

 

 

Avg Shares

 

And

 

 

 

 

Avg Shares

 

And

 

 

    

Amount

    

and Units(1)

    

Unit(2)

    

 

Amount

    

and Units(1)

    

Unit(2)

 

Net income attributable to Investors Real Estate Trust

 

$

30,280

 

 

 

$

 

 

$
11,003

 

 

 

$

 

 

Less dividends to preferred shareholders

 

 

(2,286)

 

 

 

 

 

 

 
(2,878)

 

 

 

 

 

 

Net income available to common shareholders

 

 

27,994

 

121,155

 

 
0.23

 

 

8,125

 

120,943

 

 
0.07

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interest – Operating Partnership

 

 

3,656

 

15,797

 

 

 

 

 

1,092

 

15,495

 

 

 

 

Depreciation and amortization

 

 

13,222

 

 

 

 

 

 

 
15,694

 

 

 

 

 

 

Impairment of real estate investments

 

 

2,875

 

 

 

 

 

 

 

2,223

 

 

 

 

 

 

Gains on depreciable property sales attributable to Investors Real Estate Trust

 

 

(37,517)

 

 

 

 

 

 

 

(7,910)

 

 

 

 

 

 

FFO applicable to Common Shares and Units(1)

 

$

10,230

 

136,952

 

$
0.07

 

$
19,224

 

136,438

 

$
0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share amounts)

 

Twelve Months Ended April 30,

 

2017

 

2016

 

 

 

 

 

    

 

 

Per

 

 

 

 

 

Per

 

 

 

 

 

 

Weighted

 

Share

 

 

 

Weighted

 

Share

 

 

 

 

 

 

Avg Shares

 

And

 

 

 

Avg Shares

 

And

 

 

    

Amount

 

and Units(1)

    

Unit(2)

    

Amount

    

and Units(1)

    

Unit(2)

 

Net income attributable to Investors Real Estate Trust

    

$

43,347

 

 

 

$

 

 

$

72,006

 

 

 

$

 

 

Less dividends to preferred shareholders

 

 
(10,546)

 

 

 

 

 

 

 
(11,514)

 

 

 

 

 

 

Less redemption of preferred shares

 

 

(1,435)

 

 

 

 

 

 

 

 —

 

 

 

 

 

 

Net income available to common shareholders

 

 

31,366

 

121,169

 

 
0.26

 

 

60,492

 

123,094

 

 
0.49

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interest – Operating Partnership

 

 

4,059

 

16,130

 

 

 

 

 

7,032

 

14,278

 

 

 

 

Depreciation and amortization

 

 

52,564

 

 

 

 

 

 

 

63,789

 

 

 

 

 

 

Impairment of real estate investments attributable to Investors Real Estate Trust

 

 

42,065

 

 

 

 

 

 

 

5,983

 

 

 

 

 

 

Gains on depreciable property sales attributable to Investors Real Estate Trust

 

 

(74,847)

 

 

 

 

 

 

 

(33,422)

 

 

 

 

 

 

FFO applicable to Common Shares and Units(1)

 

$

55,207

 

137,299

 

$
0.40

 

$
103,874

 

137,372

 

$
0.76

 

(1)Units of the Operating Partnership are exchangeable for cash, or, at our discretion, for Common Shares on a one-for-one basis.

(2)Net income attributable to Investors Real Estate Trust is calculated on a per Common Share basis. FFO is calculated on a per Common Share and Unit basis.

ix

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

RECONCILATION OF NET OPERATING INCOME TO THE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Three Months Ended April 30, 2017

 

Multifamily

 

Healthcare

 

All Other

 

Amounts Not
Allocated To
Segments(1)

 

Total

 

Real estate revenue

    

$

37,185

 

 

14,554

 

 

2,605

 

$

 —

 

$

54,344

 

Real estate expenses

 

 

16,511

 

 

3,860

 

 

729

 

 

1,255

 

 

22,355

 

Net operating income (loss)

 

$

20,674

 

$

10,694

 

$

1,876

 

$

(1,255)

 

 

31,989

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(13,736)

 

Impairment of real estate investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(2,875)

 

General and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(3,637)

 

Acquisition and investment related costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(3,224)

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(1,091)

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(9,457)

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(1,192)

 

Interest and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 
465

 

Loss before gain on sale of real estate and other investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,758)

 

Gain on sale of real estate and other investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 
7,409

 

Income from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,651

 

Income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 
28,989

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

33,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Three Months Ended April 30, 2016

 

Multifamily

 

Healthcare

 

All Other

 

Amounts Not
Allocated To
Segments(1)

 

Total

 

Real estate revenue

    

$

34,116

 

$

11,632

 

$

2,775

 

$

 —

 

$

48,523

 

Real estate expenses

 

 

14,935

 

 

4,152

 

 

638

 

 

799

 

 

20,524

 

Net operating income (loss)

 

$

19,181

 

$

7,480

 

$

2,137

 

$

(799)

 

 

27,999

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(13,517)

 

Impairment of real estate investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,223)

 

General and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(2,951)

 

Acquisition and investment related costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(397)

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(950)

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(10,062)

 

Interest and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 
57

 

Loss before gain on sale of real estate and other investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,044)

 

Gain on sale of real estate and other investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,369

 

Gain on Bargain Purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,424

 

Income from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,749

 

Income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,006

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

11,755

 

(1)

Consists of offsite costs associated with property management and casualty-related amounts.

 

 

x

 

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

RECONCILATION OF NET OPERATING INCOME TO THE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Twelve Months Ended April 30, 2017

    

Multifamily

    

Healthcare

    

All Other

    

Amounts Not
Allocated To
Segments(1)

 

Total

 

Real estate revenue

 

$

144,743

 

$

49,856

 

$

11,139

 

 

 —

 

$

205,738

 

Real estate expenses

 

 

63,292

 

 

16,419

 

 

3,024

 

 

5,620

 

 

88,355

 

Net operating income (loss)

 

$

81,451

 

$

33,437

 

$

8,115

 

$

(5,620)

 

 

117,383

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(55,009)

 

Impairment of real estate investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(57,028)

 

General and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(12,075)

 

Acquisition and investment related costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(3,276)

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(3,796)

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(41,127)

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(3,099)

 

Interest and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 
1,176

 

Loss before gain on sale of real estate and other investments and income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(56,851)

 

Gain on sale of real estate and other investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,701

 

Loss from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38,150)

 

Income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68,675

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

30,525

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Twelve Months Ended April 30, 2016

 

Multifamily

 

Healthcare

 

All Other

 

Amounts Not
Allocated To
Segments(1)

 

Total

 

Real estate revenue

    

$

131,149

 

$

45,621

 

$

11,550

 

$

 —

 

$

188,320

 

Real estate expenses

 

 

57,130

 

 

15,439

 

 

2,500

 

 

4,031

 

 

79,100

 

Net operating income (loss)

 

$

74,019

 

$

30,182

 

$

9,050

 

$

(4,031)

 

 

109,220

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(49,832)

 

Impairment of real estate investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(5,543)

 

General and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(11,267)

 

Acquisition and investment related costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(830)

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(2,231)

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(35,768)

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(106)

 

Interest and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 
398

 

Income before gain on sale of real estate and other investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,041

 

Gain on sale of real estate and other investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,640

 

Gain on Bargain Purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,424

 

Income from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,105

 

Income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

59,497

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

76,602

 

(1)

Consists of offsite costs associated with property management and casualty-related amounts.

 

 

xi

Stock widget

Investing forum

CENTERSPACE Reports