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Section 1: 8-K (8-K)

Document





UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K
  
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): June 27, 2018 (June 25, 2018)
 
INVESTORS REAL ESTATE TRUST
(Exact name of Registrant as specified in its charter)
 

 
 
 
 
 
 
 
 
 
 
North Dakota
 
001-35624
 
45-0311232
(State or Other Jurisdiction
of Incorporation or Organization)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
 
1400 31st Avenue SW, Suite 60, Post Office Box 1988, Minot, ND 58702-1988
(Address of principal executive offices) (Zip code)

(701) 837-4738
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 2.02. Results of Operations and Financial Condition.
Investors Real Estate Trust (the “Company”) issued an earnings release on June 27, 2018, announcing certain financial and operational results for the three and twelve months ended April 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1.
The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 furnished pursuant to Item 9.01, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities under that Section. Furthermore, the information in this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 25, 2018, Andrew Martin, the Company’s Executive Vice President, Property Operations, notified the Board of Trustees (the “Board”) that he will be resigning as an officer of the Company, effective June 25, 2018.
In connection with his departure, the Company agreed to provide Mr. Martin with a Confidential Severance Agreement and Release, dated June 25, 2018, whereby:
He will receive a lump sum severance payment of $318,750, equal to nine months of base salary and 75% of his target short-term incentive cash award for fiscal year 2019.
As of his resignation date, vesting will accelerate on all 7,625 of his outstanding time-based restricted shares of common stock, which were awarded to him under the Company’s long-term incentive program. All outstanding performance shares awarded to him under the long-term incentive program will be forfeited.
He will receive other employee benefits valued at $20,926.
The payments and benefits are conditioned on Mr. Martin’s release and waiver of claims arising out of his employment or the separation of his employment with the Company, and Mr. Martin’s agreement to maintain the confidentiality of information about the Company that he acquired during his employment.
The foregoing description is a summary only and does not purport to be a complete description of all of the terms, provisions, covenants, and agreements contained in Mr. Martin’s Confidential Severance Agreement and Release and is subject to and qualified in its entirety by reference to the full text of the Agreement, the form of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is hereby incorporated by reference.
On June 25, 2018, the Board appointed Anne Olson, the Company’s Executive Vice President, General Counsel and Secretary, to the additional position of Chief Operating Officer, effective as of June 25, 2018.
Ms. Olson, age 41, has served as Executive Vice President, General Counsel and Secretary of the Company since April 30, 2017. From 2011 to April 30, 2017, Ms. Olson was in the private practice of law, most recently as a partner with the law firm of Dorsey & Whitney LLP, in its Real Estate Practice Group. Prior to 2011, she served as Director of Investment Operations and in-house counsel for Welsh Companies, LLC and its affiliates, a provider of commercial real estate services, providing leadership in the growth of its asset portfolio and development of a successful capital markets strategy. Ms. Olson began her legal career practicing real estate law at Dorsey & Whitney LLP. She holds a B.A in English from Drake University and earned her J.D. with highest honors from Drake University Law School.




There were no arrangements or understandings between Ms. Olson and any other person pursuant to which Ms. Olson was selected as an officer. Ms. Olson does not have any family relationships subject to disclosure under Item 401(d) of Regulation S-K or any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
In connection with her promotion, Ms. Olson’s annual base salary was increased from $325,000 to $360,000 effective June 25, 2018, and her target long-term incentive award for fiscal year 2019 was increased from 70% to 100% of her annual base salary.
The Company previously entered into an Indemnification Agreement with Ms. Olson in substantially the same form as previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 21, 2015, and a Change in Control Severance Agreement as previously described in, and in substantially the same form as previously filed as Exhibit 10.1 to, the Company’s Current Report on Form 8-K filed with the SEC on July 7, 2015.
Item 7.01. Regulation FD Disclosure.
Certain supplemental operating and financial data regarding the Company not included in the earnings release is attached as Exhibit 99.2. The foregoing information is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in filings under the Securities Act of 1933.
ITEM 9.01    Financial Statements and Exhibits
Exhibits
 
 
Exhibit
 
Number
Description
 
 
10.1
 
 
99.1
 
 
99.2





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
 
 
INVESTORS REAL ESTATE TRUST
 
 
 
By
/s/ Mark O. Decker, Jr.
 
 
Mark O. Decker, Jr.
Date: June 27, 2018
 
President and Chief Executive Officer


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Section 2: EX-10.1 (EXHIBIT 10.1)

Exhibit


CONFIDENTIAL SEVERANCE AGREEMENT AND RELEASE
This CONFIDENTIAL SEVERANCE AGREEMENT AND RELEASE (“Agreement”) is made and entered into by and between Andrew Martin (“Executive”) and Investors Real Estate Trust, Inc. (“Company”) on behalf of itself, its predecessors, parents, subsidiaries and affiliated entities (collectively, the “Company”).

1.Termination of Employment. Executive agrees and acknowledges that his employment with the Company terminated at the close of business on June 25, 2018 (the “Termination Date”). Executive will be paid his regular salary through the Termination Date. Except as provided in this Severance Agreement, all privileges of employment will end as of the Termination Date. Please note that Executive may not sign this Agreement until on or after his Termination Date.
Upon Executive’s receipt of his final paycheck, which includes payment for employment through the Termination Date, Executive will have received all wages owed to his by virtue of his employment with the Company or the termination thereof.
Executive specifically acknowledges and agrees that he is not eligible for any other payments or benefits by virtue of his employment with the Company or the termination thereof except for those expressly described in this Agreement.
2.Consideration. In consideration of Executive’s promises and obligations under this Severance Agreement—subject to the terms and conditions of this Severance Agreement, including the release of claims set forth in paragraph 3 below—the Company will provide Executive with the following compensation and benefits, provided that he does not revoke or rescind this Severance Agreement:
2.1    Severance Payment. The Company agrees to pay Executive a severance payment within twenty (20) days of Executive’s execution of this Agreement, which execution may not take place before June 25, 2018. The severance payment will be the sum of $318,750, subject to applicable tax withholding and deductions as required by law. The severance calculation is based on .75x base salary, plus .75 target bonus ((.75 x $250,000) + (.75 x $175,000) = $318,750). In addition to this payment, the Company further agrees to pay Executive an additional lump sum dollar amount equivalent to .75x the current annual premium for Executive’s current health insurance coverage.
2.2    Vesting of Time-Based Stock Grants. Executive’s 7,625 shares of time-based stock grants will fully vest on the Termination Date.
2.3    Other Benefits. The Company agrees to provide outplacement services for Executive for up to six months from the Termination Date and completion of Executive’s personal executive coaching program for the remainder of 2018.
3.Release and Waiver of Claims. Executive, on behalf of himself, Executive’s agents, representatives, attorneys, assignees, heirs, executors, and administrators, hereby covenants that

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Executive will not sue and hereby releases and forever discharges the Company, and its past and present employees, agents, insurers, officials, officers, directors, divisions, parents, subsidiaries, predecessors and successors, and all affiliated entities and persons, and all of their respective past and present employees, agents, insurers, officials, officers, and directors from any and all claims and causes of action of any type arising, or which may have arisen, out of or in connection with his employment or the separation of his employment with the Company, including but not limited to claims, demands or actions arising under Federal, state or local employment discrimination laws, regulations or requirements, including but not limited to the Federal Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., the Americans with Disabilities Act, 29 U.S.C. § 2101, et seq., the Family and Medical Leave Act, 29 U.S.C. § 2611, et seq., the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 626, as amended by the Older Workers Benefit Protection Act (“ADEA”), the Executive Retirement Income Security Act, as amended, the National Labor Relations Act, the Minnesota Human Rights Act; the Women’s Economic Security Act; the Minnesota Equal Pay for Equal Work Law, Minn. Stat. §§ 181.66–181.71; Minn. § 181.81 (age discrimination); Minn. Stat. § 176.82 (retaliatory discharge); Minn. Stat. §§ 181.931, 181.932, 181.935 (whistleblower protection); Minn. Stat. §§ 181.940–181.944 (family leave); Minn. Stat. §§ 181.961–181.966 (personnel record access statutes), and any other federal, state or local statute, ordinance, regulation or order regarding employment, compensation for employment, termination of employment, or discrimination in employment, and the common law of any state.

Executive further understands that this discharge of claims extends to, but is not limited to, all claims which Executive may have as of the date of this Agreement based upon statutory or common law claims for defamation, libel, slander, assault, battery, negligent or intentional infliction of emotional distress, negligent hiring or retention, breach of contract, retaliation, state common law whistleblowing, promissory estoppel, fraud, wrongful discharge, or any other theory, whether legal or equitable, and any and all claims for wages, salary, bonuses, commissions, damages, attorneys’ fees or costs. Executive additionally represents, warrants and agrees that Executive has received full and timely payment of all wages, salary, bonuses, and other compensation, and benefits that may have been due and payable to Executive by the Company. Executive further represents, warrants and agrees that Executive has received all leave or other benefits that may have been available to Executive under the Family and Medical Leave Act of 1993 (“FMLA”) or any comparable state law and that Executive has not been denied any rights or benefits available to Executive under the FMLA or any comparable state law. Executive expressly acknowledges and agrees that the Company is entering into this Agreement in reliance upon these representations by Executive.

Executive acknowledges that this release includes all claims that Executive is legally permitted to release. As such, the Executive understands that nothing contained in this Severance Agreement, including, but not limited to, this section, will be interpreted to prevent the Executive from filing a charge with the Equal Employment Opportunity Commission (“EEOC”), or other local civil rights enforcement agency, or from participating in or cooperating with an EEOC or other such agency investigation or proceeding. However, the Executive acknowledges and agrees that he is waiving the right to monetary damages or other individual legal or equitable relief awarded as a result of any such proceeding.

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Notwithstanding any provision of this Severance Agreement to the contrary, by execution of this Severance Agreement, the Executive is not releasing (i) any claims or rights he may have to the Severance Payments; (ii) any rights he may have to vested retirement benefits; or (iii) any claims that cannot be waived by law.
4.Confidential Information Acquired During Employment. Executive agrees that Executive will continue to treat, as private and privileged, any information, data, documents, reports, interpretations, financial information, operating information, marketing information, business plans, forecasts, projections, strategies, analyses, records and other information that is non-public, confidential, or proprietary in nature (whether in written, electronic, or oral form) containing or otherwise reflecting information about the Company, together with all notes, analyses, compilations, studies, forecasts, memoranda or other documents in tangible form (whether in written form, electronically stored, or otherwise) that Executive acquired while working for the Company. Executive agrees that Executive will not release any such information to any person or entity at any time and will not utilize any such confidential information for Executive’s benefit or the benefit of others, including, without limitation, others in direct or indirect competition with the Company, except as may be required by law, or as agreed to in writing by the Company. Executive acknowledges that any violation of this non-disclosure provision shall entitle the Company to appropriate injunctive relief and to any damages which it may sustain due to the improper disclosure.

5.Confidentiality of Agreement. Executive represents and agrees that Executive will keep the terms and facts of this Agreement completely confidential, and that Executive will not disclose any information concerning this Agreement to anyone, except for Executive’s counsel, tax accountant, spouse, or representatives of the EEOC or a comparable state or other government agency, unless otherwise ordered to do so by a court or agency of competent jurisdiction. This Agreement does not prohibit Executive from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation.

6.Opportunity to Review/Consult with Attorney. Executive agrees Executive has been given twenty-one (21) days to review and consider this Agreement. During this time, Executive agrees Executive has been advised to consult with an attorney before executing this Agreement. Any discussions about or changes to the Agreement, whether material or immaterial, do not restart the running of the 21 day period.

7.Notification of Release and Right to Rescind. Executive is hereby informed of his right to revoke this release of claims, insofar as it extends to potential claims under the Age Discrimination in Employment Act, by informing the Company of his intent to do so within seven (7) calendar days following his signing of this Severance Agreement. Executive is informed of his right to rescind his release of claims, insofar as it extends to potential claims under the Minnesota Human Rights Act, by informing the Company of his intent to do so within fifteen (15) calendar days following his signing of this Severance Agreement. The 7-day revocation period and the 15-day rescission period shall run concurrently. Executive understands that any such revocation or

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rescission must be made in writing and delivered by hand or by certified mail, return receipt requested, postmarked on or before the last day within the applicable revocation period to:
JoLynn Markison
Dorsey & Whitney LLP
50 South Sixth Street
Suite 1500
Minneapolis, MN 55402
Executive further understands that if Executive revokes or rescinds this Agreement, the Company will not be bound by the terms of this Agreement and, in such event, Executive will have no right to receive or right to retain the financial benefits conferred under this Agreement.

8.Minnesota Law, Forum and Merger. The terms of this Agreement shall be governed by the laws of the State of Minnesota, and shall be construed and enforced thereunder. Any dispute arising under this Agreement shall be determined exclusively by a Minnesota court of appropriate jurisdiction. This Agreement supersedes and replaces all prior oral and written agreements, understandings, and representations between Executive and the Company. Further, Executive understands and agrees that, except as provided in this Agreement, all claims which Executive has or may have against the Company and the other released parties are fully released and discharged by this Agreement. The only claim which Executive may hereafter assert against the Company or any of the other released parties is limited to an alleged breach of this Agreement.

9.Invalidity. If any one or more of the terms of this Agreement are deemed to be invalid or unenforceable by a court of law, the validity, enforceability, and legality of the remaining provisions of this Agreement will not in any way be affected or impaired thereby.

10.Remedies. Any material breach by Executive of the terms and conditions contained in this Agreement shall give the Company the right to discontinue the performance of any unperformed duties and obligations under this Agreement to the extent permitted by applicable law. If Executive breaches any term of the Agreement, any delay by the Company to enforce the Agreement shall not be deemed a waiver, acceptance, or acquiescence. No waiver shall bind the Company unless supported by consideration, executed in writing, and delivered to Executive by an authorized officer of the Company.

11.Executive Understands the Terms of this Agreement. Other than stated herein, Executive warrants that (a) no promise or inducement has been offered for this Agreement; (b) this Agreement is executed without reliance upon any statement or representation of the Company or its representatives concerning the nature and extent of any claims or liability therefor, if any; (c) Executive is legally competent to execute this Agreement and accepts full responsibility therefor; and (d) the Company has advised Executive to consult with an attorney, and Executive has had a sufficient opportunity to consult with an attorney.

PLEASE READ CAREFULLY BEFORE SIGNING. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

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IN WITNESS WHEREOF, the parties have executed this Severance Agreement by their signatures below.




Dated: _____________________________
ANDREW MARTIN


________________________________



Dated: __________ ___________________
INVESTORS REAL ESTATE TRUST

By ______________________________
Mark O. Decker, Jr., Chief Executive Officer




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Section 3: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
Earnings Release
394044893_iretlogojpeg1200x1080a01.jpg 
 
IRET Announces Financial and Operating Results
for the Quarter and Fiscal Year Ended April 30, 2018
 
MINOT, ND, June 27, 2018 – IRET (NYSE: IRET) announced today its fiscal fourth quarter 2018 financial and operating results. Net income and Funds from Operations (“FFO”) per share for the three and twelve months ended April 30, 2018, are detailed below. Core FFO adjusts FFO for certain non-routine items, and both FFO and Core FFO are reconciled to net income in the tables accompanying this earnings release.
 
 
Three Months Ended
 
Twelve Months Ended
 
 
April 30,
 
April 30,
Per Share
 
2018
 
2017
 
2018
 
2017
Net Income (Loss)
 
$
(0.19
)
 
$
0.23

 
$
0.87

 
$
0.26

FFO
 
0.06

 
0.07

 
0.27

 
0.40

Core FFO
 
0.08

 
0.11

 
0.38

 
0.47

 
 
Quarterly
Comparison
 
Sequential
Comparison
 
YTD
Comparison
Multifamily Same-Store Results
 
4Q18 vs. 4Q17
 
4Q18 vs. 3Q18
 
4Q18 vs. 4Q17
Revenues
 
5.2
%
 
1.3
 %
 
4.3
%
Expenses
 
5.8
%
 
(0.2
)%
 
9.5
%
Net Operating Income (“NOI”)
 
4.7
%
 
2.4
 %
 
0.4
%
Multifamily Same-Store Results
 
4Q18
 
3Q18
 
4Q17
Physical Occupancy
 
96.5
%
 
95.2
%
 
93.8
%
Weighted Average Occupancy
 
95.1
%
 
93.9
%
 
91.6
%
“The last twelve months were pivotal in positioning ourselves as a multifamily company,” said Mark O. Decker, Jr., IRET’s President and CEO. “The next twelve months and beyond will be as pivotal in our quest to be the premier provider of apartment homes in our markets.”
IRET also announced that it has promoted Anne Olson to Chief Operating Officer and that Andrew Martin has resigned from his position as Executive Vice President, Property Operations, of the Company effective June 25, 2018. Mr. Martin will assist with his transition through July 31, 2018. Ms. Olson has served as Executive Vice President, General Counsel and Secretary since April 30, 2017, overseeing the Asset Management and Legal Departments, and will continue in her capacity as General Counsel and Secretary. “Anne has been an integral part of our leadership team over the last 14 months, and I am confident that she can assist us in leveraging the progress we have made and continue to demonstrate our commitment to improve our residents’ experience and our company’s financial results.”

 
1
 



Fourth Quarter Fiscal Year 2018 Highlights
Achieved quarterly same-store revenue growth of 5.2% over the same period in the prior year, driven by a 3.8% increase in occupancy and 1.4% growth in revenue per occupied home.
Experienced elevated quarterly same-store expense growth of 5.8% over the same period in the prior year, driven by previously disclosed changes to capitalization policies, additional costs related to increasing occupancy, higher labor costs, and increased real estate taxes primarily attributable to higher levy rates in select markets.
Grew quarterly same-store NOI growth by 4.7% over the same period in the prior year, driven by the aforementioned revenue growth of 5.2% offset by the 5.8% increase in expenses.
Closed the acquisition of Westend, a 390-home apartment community in Denver, Colorado, completing our second investment in this top-25 MSA where we now have 664 apartment homes.
Closed a $6.0 million operating line of credit to manage cash balances more effectively and enhance treasury management activities.
Fiscal Year 2018 Highlights
Substantially completed our transformation into a focused multifamily company by selling 50 commercial and other non-core multifamily properties for an aggregate sales price of $515.1 million. We used a portion of the proceeds from these sales to purchase four apartment communities with 1,355 homes for $373.1 million.
Achieved same-store revenue growth of 4.3% over the prior fiscal year, driven by a 2.4% increase in occupancy and 1.9% increase in revenue per occupied home. Realized these increases through a combination of initiatives, including better revenue management across the portfolio and the expansion of utility billings and ancillary revenue programs.
Experienced elevated same-store expense growth of 9.5% over the prior fiscal year, driven by previously disclosed changes to capitalization policies, additional costs related to increasing occupancy, higher labor costs, and increased real estate taxes.
Posted same-store NOI growth of 0.4% over the prior fiscal year, driven by the aforementioned revenue growth of 4.3% but offset by the 9.5% increase in expenses.
Issued 4,118,460 shares of 6.625% Series C preferred shares for gross proceeds of $103.0 million and redeemed all 4,600,000 shares of 7.95% Series B preferred shares for an aggregate cost, including accrued dividends, of $115.8 million, which will result in a reduction of $2.3 million in annual preferred dividend payments.
Increased the commitments to our unsecured line of credit by $50 million to a current total of $300 million. Closed a $70 million unsecured term loan and executed a swap agreement to synthetically fix the interest rate for the full duration of the loan.
Established a new senior management team to complete the portfolio transition and continue the operational improvements while achieving a $1.6 million year-over-year reduction in general and administrative expenses.
Strengthened our board with two new trustees who add expertise in customer-facing service operations and technology application as well as public company leadership experience in both board and management roles.
Acquisitions
We added one new community to our portfolio during the quarter:
 
 
 
 
 
 
(in thousands)
 
 
Community Name
 
Location
 
Apartment Homes
 
Total Cost
 
% Occupied
as of 4/30/2018
Westend
 
Denver, CO
 
390
 
$
128,700

 
93.8
%
Dispositions
During the quarter, we sold one commercial property and adjacent parcel of unimproved land in Bismarck, ND for an aggregate sales price of $5.5 million.

 
2
 



Balance Sheet
At the end of the fourth quarter, we had $193.9 million of total liquidity on our balance sheet, including $176.0 million available on our corporate revolver and $6.0 million on our operating line of credit.
During the quarter, we repurchased and retired approximately 548,000 common shares and redeemed approximately 39,000 Units for an aggregate cost of approximately $3.0 million, representing an average price of approximately $5.09 per share.
During fiscal year 2018, we incurred a loss of $18.1 million due to impairment of one apartment community, three other commercial properties, and four parcels of land.
Quarterly Distributions
On June 5, 2018, IRET’s Board of Trustees declared a regular quarterly distribution of $0.07 per share/unit payable on July 2, 2018, to common shareholders and unitholders of record on June 15, 2018. This distribution will be the 189th consecutive quarterly distribution paid by IRET since its inception in 1970. It represents an annualized rate of $0.28 per share/unit with an annualized yield of 4.7% based on IRET’s closing share price as of June 26, 2018.
The Board of Trustees also declared a distribution of $0.4140625 per share on the 6.625% Series C Cumulative Redeemable Preferred Shares (NYSE: IRET PRC) payable on July 2, 2018, to holders of record on June 15, 2018. Series C preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.65625 per share.
Earnings Call
Live webcast and replay:  http://ir.iretapartments.com
 
 
 
Live Conference Call
 
Conference Call Replay
Thursday, June 28, 2018, at 10:00 AM ET
 
Replay available until July 12, 2018
USA Toll Free Number
1-877-509-9785
 
USA Toll Free Number
1-877-344-7529
International Toll Free Number
1-412-902-4132
 
International Toll Free Number
1-412-317-0088
Canada Toll Free Number
1-855-669-9657
 
Canada Toll Free Number
1-855-669-9658
 
 
 
Conference Number
10120792
Supplemental Information
Supplemental Operating and Financial Data for the Quarter Ended April 30, 2018 (“Supplemental Information”), is available in the Investors section on IRET’s website at www.iretapartments.com or by calling Investor Relations at 701-837-7104. Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Information, which accompanies this earnings release.
About IRET
IRET is a real estate company focused on the ownership, management, acquisition, redevelopment, and development of apartment communities. As of April 30, 2018, IRET owned interests in 90 apartment communities consisting of 14,176 apartment homes. IRET's common shares and Series C preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: IRET and IRET PRC, respectively).
Forward Looking Statements
Certain statements in this press release are based on our current expectations and assumptions, and are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Froward-looking statements are typically identified by the use of terms such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of those words and similar expressions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance. Such risks and uncertainties are detailed from time to time in our filings with the SEC, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended April 30, 2018, in subsequent quarterly reports on Form 10-Q and in other public reports. We assume no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

 
3
 



IRET
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO
IRET TO FFO AND CORE FFO
z
 
 
(in thousands, except per share amounts)
Three Months Ended April 30,
 
2018
 
2017
 
 
Amount
 
Weighted
Avg Shares
and Units(1)
 
Per
Share
And
Unit(2)
 
Amount
 
Weighted
Avg Shares
and Units(1)
 
 
Per
Share
And
Unit(2)
Net income (loss) attributable to controlling interests
 
$
(20,874
)
 
 
 
 
 
$
30,280

 
 
 
 
 
Less dividends to preferred shareholders
 
1,705

 
 
 
 
 
2,286

 
 
 
 
 
Less redemption of preferred shares
 

 
 
 
 
 

 
 
 
 
 
Net income (loss) available to common shareholders
 
(22,579
)
 
119,588

 
$
(0.19
)
 
27,994

 
121,155

 
 
$
0.23

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interest – Operating Partnership
 
(2,663
)
 
14,115

 
 
 
3,656

 
15,797

 
 
 
Depreciation and amortization
 
20,269

 
 
 
 
 
13,222

 
 
 
 
 
Impairment of real estate investments
 
15,192

 
 
 
 
 
2,875

 
 
 
 
 
Gains on depreciable property sales attributable to controlling interests
 
(2,210
)
 
 
 
 
 
(37,517
)
 
 
 
 
 
FFO applicable to common shares and Units(1)
 
$
8,009

 
133,703

 
$
0.06

 
$
10,230

 
136,952

 
 
$
0.07

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments to Core FFO:
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease termination fees
 

 
 
 
 
 
(3,244
)
 
 
 
 
 
Development pursuit and other write offs
 
 
 
 
 
 
 
3,224

 
 
 
 
 
Loss on extinguishment of debt
 
122

 
 
 
 
 
2,910

 
 
 
 
 
Severance related costs
 
301

 
 

 
 

 
2,612

 
 
 
 
 
Land impairment
 
2,617

 
 
 
 
 

 
 
 
 
 
Redemption of Preferred Shares
 

 
 
 
 
 

 
 
 
 
 
Core FFO applicable to common shares and Units(1)
 
$
11,049

 
133,703

 
$
0.08

 
$
15,732

 
136,952

 
 
$
0.11

(1)
Units of the Operating Partnership are exchangeable for cash or, at our discretion, Common Shares on a one-for-one basis.
(2)
Net income attributable to IRET is calculated on a per common share basis. FFO is calculated on a per common share and Unit basis.

 
4
 



IRET
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO
IRET TO FFO AND CORE FFO
 
 
(in thousands, except per share amounts)
Twelve Months Ended April 30,
 
2018
 
2017
 
 
Amount
 
Weighted
Avg Shares
and Units
(1)
 
Per
Share
And
Unit
(2)
 
Amount
 
Weighted
Avg Shares
and Units
(1)
 
Per
Share
And
Unit
(2)
Net income attributable to controlling interests
 
$
116,788

 
 
 
 
 
$
43,347

 
 
 
 
Less dividends to preferred shareholders
 
(8,569
)
 
 
 
 
 
(10,546
)
 
 
 
 
Less redemption of preferred shares
 
(3,657
)
 
 
 
 
 
(1,435
)
 
 
 
 
Net income available to common shareholders
 
104,562

 
119,977

 
$
0.87

 
31,366

 
121,169

 
$
0.26

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interest – Operating Partnership
 
12,702

 
14,617

 
 
 
4,059

 
16,130

 
 
Depreciation and amortization
 
87,299

 
 
 
 
 
52,564

 
 
 
 
Impairment of real estate investments attributable to controlling interests
 
15,448

 
 
 
 
 
42,065

 
 
 
 
Gains on depreciable property sales attributable to controlling interests
 
(183,687
)
 
 
 
 
 
(74,847
)
 
 
 
 
FFO applicable to common shares and Units(1)
 
$
36,324

 
134,594

 
$
0.27

 
$
55,207

 
137,299

 
$
0.40

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments to Core FFO:
 
 
 
 
 
 
 
 
 
 
 
 
Lease termination fees
 

 
 
 
 
 
(3,251
)
 
 
 
 
Development pursuit and other write offs
 

 
 
 
 
 
3,224

 
 
 
 
Loss on extinguishment of debt
 
7,448

 
 
 
 
 
4,889

 
 
 
 
Land impairment
 
2,617

 
 
 
 
 

 
 
 
 
Redemption of Preferred Shares
 
3,657

 
 
 
 
 
1,435

 
 
 
 
Severance and transition costs
 
951

 
 
 
 
 
2,612

 
 
 
 
Core FFO applicable to common shares and Units(1)
 
$
50,997

 
134,594

 
$
0.38

 
$
64,116

 
137,299

 
$
0.47

(1)
Units of the Operating Partnership are exchangeable for cash or, at our discretion, common shares on a one-for-one basis.
(2)
Net income attributable to IRET is calculated on a per common share basis. FFO is calculated on a per common share and Unit basis.

 
5
 



IRET
RECONCILIATION OF NET OPERATING INCOME TO THE
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(in thousands)
Three Months Ended April 30, 2018
Multifamily
 
All Other
 
Total
Real estate revenue
$
42,360

 
$
1,825

 
$
44,185

Real estate expenses
18,164

 
570

 
18,734

Net operating income
$
24,196

 
$
1,255

 
25,451

Property management
 
 
 
 
(1,411
)
Casualty gain
 
 
 
 
155

Depreciation and amortization
 
 
 
 
(21,072
)
Impairment of real estate investments
 
 
 
 
(17,809
)
General and administrative expenses
 
 
 
 
(4,093
)
Acquisition and investment related costs
 
 
 
 
(30
)
Interest expense
 
 
 
 
(8,302
)
Loss on debt extinguishment
 
 
 
 
(122
)
Interest and other income
 
 
 
 
592

Loss before gain on sale of real estate and other investments and income from discontinued operations
 
 
 
 
(26,641
)
Gain on sale of real estate and other investments
 
 
 
 
2,285

Loss from continuing operations
 
 
 
 
(24,356
)
Income from discontinued operations
 
 
 
 
197

Net income (loss)
 
 
 
 
$
(24,159
)


 
6
 




IRET
RECONCILIATION OF NET OPERATING INCOME TO THE
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(in thousands)
Three Months Ended April 30, 2017
Multifamily
 
All Other
 
Total
Real estate revenue
$
36,228

 
$
6,583

 
$
42,811

Real estate expenses
15,720

 
722

 
16,442

Net operating income
$
20,508

 
$
5,861

 
26,369

Property management
 
 
 
 
(1,239
)
Casualty gain
 
 
 
 
51

Depreciation and amortization
 
 
 
 
(11,060
)
Impairment of real estate investments
 
 
 
 
(2,875
)
General and administrative expenses
 
 
 
 
(4,728
)
Acquisition and investment related costs
 
 
 
 
(3,224
)
Interest expense
 
 
 
 
(8,281
)
Loss on debt extinguishment
 
 
 
 
(1,193
)
Interest and other income
 
 
 
 
461

Loss before gain on sale of real estate and other investments and income from discontinued operations
 
 
 
 
(5,719
)
Gain on sale of real estate and other investments
 
 
 
 
7,409

Income from continuing operations
 
 
 
 
1,690

Income from discontinued operations
 
 
 
 
31,950

Net income (loss)
 
 
 
 
$
33,640



 
7
 



 
(in thousands)
Twelve Months Ended April 30, 2018
Multifamily
 
All Other
 
Total
Real estate revenue
$
159,983

 
$
9,762

 
$
169,745

Real estate expenses
70,460

 
2,574

 
73,034

Net operating income
$
89,523

 
$
7,188

 
96,711

Property management
 
 
 
 
(5,526
)
Casualty loss
 
 
 
 
(500
)
Depreciation and amortization
 
 
 
 
(82,070
)
Impairment of real estate investments
 
 
 
 
(18,065
)
General and administrative expenses
 
 
 
 
(14,203
)
Acquisition and investment related costs
 
 
 
 
(51
)
Interest expense
 
 
 
 
(34,178
)
Loss on debt extinguishment
 
 
 
 
(940
)
Interest and other income
 
 
 
 
1,508

Loss before gain on sale of real estate and other investments and income from discontinued operations
 
 
 
 
(57,314
)
Gain on sale of real estate and other investments
 
 
 
 
20,120

Loss from continuing operations
 
 
 
 
(37,194
)
Income from discontinued operations
 
 
 
 
164,823

Net income (loss)
 
 
 
 
$
127,629


 
(in thousands)
Twelve Months Ended April 30, 2017
Multifamily
 
All Other
 
Total
Real estate revenue
$
142,214

 
$
17,890

 
$
160,104

Real estate expenses
60,895

 
3,431

 
64,326

Net operating income
$
81,319

 
$
14,459

 
95,778

Property management
 
 
 
 
(5,046
)
Casualty loss
 
 
 
 
(414
)
Depreciation and amortization
 
 
 
 
(44,253
)
Impairment of real estate investments
 
 
 
 
(57,028
)
General and administrative expenses
 
 
 
 
(15,871
)
Acquisition and investment related costs
 
 
 
 
(3,276
)
Interest expense
 
 
 
 
(34,314
)
Loss on debt extinguishment
 
 
 
 
(1,651
)
Interest and other income
 
 
 
 
1,146,000

Loss before gain on sale of real estate and other investments and income from discontinued operations
 
 
 
 
(64,929
)
Gain on sale of real estate and other investments
 
 
 
 
18,701

Loss from continuing operations
 
 
 
 
(46,228
)
Income from discontinued operations
 
 
 
 
76,753

Net income (loss)
 
 
 
 
$
30,525


 
8
 
(Back To Top)

Section 4: EX-99.2 (EXHIBIT 99.2)

Exhibit


Exhibit 99.2
394044893_q42018.jpg




Supplemental Financial and Operating Data
Table of Contents
April 30, 2018
 
Page
 
 
S-2 
 
 
Key Financial Data
 
Condensed Consolidated Balance Sheets
S-4 
Condensed Consolidated Statements of Operations
Funds From Operations
Adjusted EBITDA
 
 
Debt and Capital Analysis
 
Debt Analysis
Capital Analysis
 
 
Portfolio Analysis
 
Net Operating Income Detail
Same-Store Comparison
Portfolio Summary
Same-Store Capital Expenditures
 
 
Growth Analysis
 
Fiscal 2018 Acquisition Summary
 
 
Definitions

 
S-1
 



Company Background
Fourth Quarter Fiscal 2018
IRET is a real estate company focused on the ownership, management, acquisition, redevelopment, and development of apartment communities. As of April 30, 2018, IRET owned interests in 90 communities consisting of 14,176 apartment homes. IRET's common shares and Series C preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: IRET and IRET PRC, respectively).
Company Snapshot
(as of April 30, 2018)
Company Headquarters
Minot, North Dakota
Fiscal Year-End
April 30
Reportable Segment
Multifamily
Total Apartment Communities
90
Total Apartment Homes
14,176
Common Shares Outstanding (thousands)
119,526
Limited Partnership Units Outstanding (thousands)
14,099
Common Share Distribution – Quarter/Annualized
$0.07/$0.28
Annualized Dividend Yield
5.3%
Total Capitalization
$1.5 billion
Common Shares and Limited Partnership Units outstanding as of June 20, 2018, were 119,406,963 and 14,098,506, respectively.
Investor Information
(as of June 27, 2018)
Board of Trustees
Jeffrey P. Caira
Trustee and Chair
Michael T. Dance
Trustee, Chair of Audit Committee
Mark O. Decker, Jr.
Trustee, President, Chief Executive Officer and Chief Investment Officer
Emily Nagle Green
Trustee
Linda J. Hall
Trustee, Chair of Compensation Committee
Terrance P. Maxwell
Trustee
Jeffrey L. Miller
Trustee, Chair of the Nominating and Governance Committee
John A. Schissel
Trustee, Chair of Capital Markets Committee
Mary J. Twinem
Trustee
Management
Mark O. Decker, Jr.
President, Chief Executive Officer, and Chief Investment Officer; Trustee
John A. Kirchmann
Executive Vice President and Chief Financial Officer
Anne Olson
Executive Vice President and Chief Operating Officer, General Counsel and Secretary
Nancy B. Andersen
Senior Vice President and Chief Accounting Officer
Grant Campbell
Senior Vice President - Investments
Sue Picotte
Senior Vice President - Asset Management & Operations Support
Shawnee Tharp
Senior Vice President - Property Operations
Executive Offices:
Investor Relations Contact:
800 LaSalle Avenue
Jon Bishop
Suite 1600
701-837-7104
Minneapolis, MN 55402
IR@iret.com
 
 
Trading Symbol for Common Shares:  IRET
 
Trading Symbol for Series C Preferred Shares:  IRET PRC
 
Stock Exchange Listing:  NYSE
 

 
S-2
 



Common Share Data (NYSE: IRET)
 
 
4th Quarter
 
3rd Quarter
 
2nd Quarter
 
1st Quarter
 
4th Quarter 
 
 
Fiscal Year 2018
 
Fiscal Year 2018
 
Fiscal Year 2018
 
Fiscal Year 2018
 
Fiscal Year 2017
High Closing Price
 
$
5.58

 
$
6.06

 
$
6.32

 
$
6.72

 
$
6.61

Low Closing Price
 
$
4.65

 
$
5.52

 
$
5.81

 
$
5.64

 
$
5.67

Average Closing Price
 
$
5.09

 
$
5.80

 
$
6.09

 
$
6.07

 
$
6.09

Closing Price at end of quarter
 
$
5.33

 
$
5.67

 
$
5.85

 
$
6.22

 
$
5.91

Common Share Distributions – annualized
 
$
0.28

 
$
0.28

 
$
0.28

 
$
0.28

 
$
0.28

Closing Dividend Yield – annualized
 
5.3
%
 
4.9
%
 
4.8
%
 
4.5
%
 
4.7
%
Closing common shares outstanding (thousands)
 
119,526

 
120,035

 
120,188

 
120,587

 
121,199

Closing limited partnership units outstanding (thousands)
 
14,099

 
14,168

 
14,618

 
14,657

 
15,617

Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)
 
$
712,221

 
$
760,931

 
$
788,615

 
$
841,218

 
$
808,583

This Supplemental Operating and Financial Data contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Froward-looking statements are typically identified by the use of terms such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of those words and similar expressions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved.
Such risks, uncertainties and other factors that might cause such differences include, but are not limited to: economic conditions in the markets where we own properties or markets in which we may invest in the future; rental conditions in our markets, including occupancy levels and rental rates, our potential inability to renew tenants or obtain new tenants upon expiration of existing leases, changes in tax and housing laws, or other factors; adverse changes in real estate markets, including the extent of future demand for multifamily apartment homes in our significant markets, barriers of entry into new markets, limitations on our ability to increase rental rates, our ability to identify and consummate attractive acquisitions on favorable terms, our ability to consummate any planned dispositions in a timely manner, our ability to reinvest sales proceeds successfully, and our ability to accommodate any significant decline in the market value of real estate serving as collateral for our mortgage obligations; inability to succeed in any new markets we may enter; failure of new acquisitions to achieve anticipated results or be efficiently integrated; inability to complete lease-up of our projects on schedule and on budget; inability to sell our non-core properties on terms that are acceptable; failure to reinvest proceeds from sales of properties into tax-deferred exchanges, which could necessitate special dividend and tax protection payments; the need to fund capital expenditures out of cash flow; the need to reduce the dividends on our common shares; financing risks, including our potential inability to obtain debt or equity financing on favorable terms, or at all; level and volatility of interest or capitalization rates or capital market conditions; changes in operating costs, including real estate taxes, utilities, and insurance costs; the availability and cost of casualty insurance for losses; inability to continue to satisfy complex rules in order to maintain our status as a REIT for federal income tax purposes, inability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal income tax purposes, and the risk of changes in laws affecting REITs; inability to attract and retain qualified personnel; cyber liability or potential liability for breaches of our privacy or information security systems; inability to comply with environmental laws and regulations; and those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended April 30, 2018 subsequent quarterly reports on Form 10-Q, and other public filings.  We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

 
S-3
 




IRET
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
 
 
4/30/2018
 
1/31/2018
 
10/31/2017
 
7/31/2017
 
4/30/2017
ASSETS
 
 
 
 
 
 
 
 
 
 
Real estate investments
 
 
 
 
 
 
 
 
 
 
Property owned
 
$
1,669,764

 
$
1,568,725

 
$
1,510,890

 
$
1,424,251

 
$
1,358,529

Less accumulated depreciation
 
(311,324
)
 
(304,149
)
 
(292,976
)
 
(280,563
)
 
(255,599
)
 
 
1,358,440

 
1,264,576

 
1,217,914

 
1,143,688

 
1,102,930

Unimproved land
 
11,476

 
15,123

 
15,216

 
15,195

 
18,455

Mortgage loans receivable
 
10,329

 
10,329

 
10,329

 

 

Total real estate investments
 
1,380,245

 
1,290,028

 
1,243,459

 
1,158,883

 
1,121,385

Assets held for sale and assets of discontinued operations
 

 

 
239,688

 
280,083

 
283,023

Cash and cash equivalents
 
11,891

 
22,666

 
42,464

 
23,801

 
28,819

Restricted cash
 
4,225

 
121,337

 
3,782

 
3,713

 
27,981

Other assets
 
30,297

 
21,664

 
21,634

 
15,870

 
13,306

TOTAL ASSETS
 
$
1,426,658

 
$
1,455,695

 
$
1,551,027

 
$
1,482,350

 
$
1,474,514

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY
 
 
 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
 
 
 
Liabilities held for sale and liabilities of discontinued operations
 
$

 
$
2,016

 
$
95,193

 
$
127,413

 
$
130,904

Accounts payable and accrued expenses
 
29,018

 
33,690

 
32,581

 
34,248

 
35,566

Revolving line of credit
 
124,000

 
67,000

 
247,500

 
125,900

 
57,050

Term loan payable, net of loan costs
 
69,514

 
69,483

 

 

 

Mortgages payable, net of loan costs
 
509,919

 
553,388

 
561,798

 
565,705

 
565,978

Construction debt
 

 
86

 
21,649

 
20,134

 
41,741

TOTAL LIABILITIES
 
732,451

 
725,663

 
958,721

 
873,400

 
831,239

 
 
 
 
 
 
 
 
 
 
 
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES
 
6,708

 
6,644

 
6,812

 
7,010

 
7,181

EQUITY
 
 
 
 
 
 
 
 
 
 
Series B Preferred Shares of Beneficial Interest
 

 

 

 
111,357

 
111,357

Series C Preferred Shares of Beneficial Interest
 
99,456

 
99,456

 
99,467

 

 

Common Shares of Beneficial Interest
 
907,843

 
910,173

 
910,683

 
912,625

 
916,121

Accumulated distributions in excess of net income
 
(395,669
)
 
(364,684
)
 
(490,612
)
 
(488,535
)
 
(466,541
)
Accumulated other comprehensive income
 
1,779

 
359

 

 

 

Total shareholders’ equity
 
613,409

 
645,304

 
519,538

 
535,447

 
560,937

Noncontrolling interests – Operating Partnership
 
73,012

 
76,915

 
64,291

 
64,789

 
73,233

Noncontrolling interests – consolidated real estate entities
 
1,078

 
1,169

 
1,665

 
1,704

 
1,924

Total equity
 
687,499

 
723,388

 
585,494

 
601,940

 
636,094

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY
 
$
1,426,658

 
$
1,455,695

 
$
1,551,027

 
$
1,482,350

 
$
1,474,514


 
S-4
 



IRET
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share amounts)
 
 
Three Months Ended
 
 
 Twelve Months Ended
OPERATING RESULTS
 
4/30/2018
 
1/31/2018
 
10/31/2017
 
7/31/2017
 
4/30/2017
 
 
4/30/2018
 
4/30/2017
Real estate revenue
 
$
44,185

 
$
42,716

 
$
41,866

 
$
40,978

 
$
42,811

 
 
$
169,745

 
$
160,104

Real estate expenses
 
18,734

 
18,055

 
18,718

 
17,527

 
16,442

 
 
73,034

 
64,326

Net operating income
 
25,451

 
24,661

 
23,148

 
23,451

 
26,369

 
 
96,711

 
95,778

Property management expenses
 
(1,411
)
 
(1,387
)
 
(1,372
)
 
(1,356
)
 
(1,239
)
 
 
(5,526
)
 
(5,046
)
Casualty gain (loss)
 
155

 
(55
)
 
(115
)
 
(485
)
 
51

 
 
(500
)
 
(414
)
Depreciation/amortization
 
(21,072
)
 
(18,390
)
 
(17,270
)
 
(25,338
)
 
(11,060
)
 
 
(82,070
)
 
(44,253
)
Impairment of real estate investments
 
(17,809
)
 

 

 
(256
)
 
(2,875
)
 
 
(18,065
)
 
(57,028
)
General and administrative expenses
 
(4,093
)
 
(3,011
)
 
(3,118
)
 
(4,002
)
 
(4,728
)
 
 
(14,203
)
 
(15,871
)
Acquisition and investment related costs
 
(30
)
 

 

 

 
(3,224
)
 
 
(51
)
 
(3,276
)
Interest expense
 
(8,302
)
 
(9,236
)
 
(8,509
)
 
(8,131
)
 
(8,281
)
 
 
(34,178
)
 
(34,314
)
Loss on extinguishment of debt
 
(122
)
 
(285
)
 
(334
)
 
(199
)
 
(1,193
)
 
 
(940
)
 
(1,651
)
Interest and other income
 
592

 
433

 
255

 
228

 
461

 
 
1,508

 
1,146

Income (loss) before gain on sale of real estate and other investments and income from discontinued operations
 
(26,641
)
 
(7,270
)
 
(7,315
)
 
(16,088
)
 
(5,719
)
 
 
(57,314
)
 
(64,929
)
Gain on sale of real estate and other investments
 
2,285

 
12,387

 
5,324

 
124

 
7,409

 
 
20,120

 
18,701

Income (loss) from continuing operations
 
(24,356
)
 
5,117

 
(1,991
)
 
(15,964
)
 
1,690

 
 
(37,194
)
 
(46,228
)
Income from discontinued operations
 
197

 
146,811

 
15,130

 
2,685

 
31,950

 
 
164,823

 
76,753

Net income (loss)
 
(24,159
)
 
151,928

 
13,139

 
(13,279
)
 
33,640

 
 
127,629

 
30,525

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (income) loss attributable to noncontrolling interest – Operating Partnership
 
2,663

 
(16,236
)
 
(773
)
 
1,644

 
(3,656
)
 
 
(12,702
)
 
(4,059
)
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities
 
622

 
413

 
455

 
371

 
296

 
 
1,861

 
16,881

Net income (loss) attributable to controlling interests
 
(20,874
)
 
136,105

 
12,821

 
(11,264
)
 
30,280

 
 
116,788

 
43,347

Dividends to preferred shareholders
 
(1,705
)
 
(1,766
)
 
(2,812
)
 
(2,286
)
 
(2,286
)
 
 
(8,569
)
 
(10,546
)
Redemption of Preferred Shares
 

 
(8
)
 
(3,649
)
 

 

 
 
(3,657
)
 
(1,435
)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
 
$
(22,579
)
 
$
134,331

 
$
6,360

 
$
(13,550
)
 
$
27,994

 
 
$
104,562

 
$
31,366

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) earnings per common share from continuing operations – basic & diluted
 
$
(0.19
)
 
$
0.03

 
$
(0.06
)
 
$
(0.13
)
 
$

 
 
$
(0.36
)
 
$
(0.30
)
Earnings per common share from discontinued operations – basic & diluted
 

 
1.09

 
0.11

 
0.02

 
0.23

 
 
1.23

 
0.56

Net (loss) income per common share – basic & diluted
 
$
(0.19
)
 
$
1.12

 
$
0.05

 
$
(0.11
)
 
$
0.23

 
 
$
0.87

 
$
0.26

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
42.4
 %
 
42.3
%
 
44.7
%
 
42.8
 %
 
38.4
%
 
 
43.0
%
 
40.2
%
Depreciation/amortization
 
47.7
 %
 
43.1
%
 
41.3
%
 
61.8
 %
 
25.8
%
 
 
48.3
%
 
27.6
%
General and administrative expenses
 
9.3
 %
 
7.0
%
 
7.4
%
 
9.8
 %
 
11.0
%
 
 
8.4
%
 
9.9
%
Interest
 
18.8
 %
 
21.6
%
 
20.3
%
 
19.8
 %
 
19.3
%
 
 
20.1
%
 
21.4
%
Income from discontinued operations
 
0.4
 %
 
343.7
%
 
36.1
%
 
6.6
 %
 
74.6
%
 
 
97.1
%
 
47.9
%
Net (loss) income
 
(54.7
)%
 
355.7
%
 
31.4
%
 
(32.4
)%
 
78.6
%
 
 
75.2
%
 
19.1
%

 
S-5
 



IRET
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO
IRET TO FFO AND CORE FFO (unaudited)
(in thousands, except per share and unit amounts)
 
 
Three Months Ended
 
 
Twelve Months Ended
 
 
4/30/2018
 
1/31/2018
 
10/31/2017
 
7/31/2017
 
4/30/2017
 
 
4/30/2018
 
4/30/2017
Funds From Operations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to controlling interests
 
$
(20,874
)
 
$
136,105

 
$
12,821

 
$
(11,264
)
 
$
30,280

 
 
$
116,788

 
$
43,347

Less dividends to preferred shareholders
 
(1,705
)
 
(1,766
)
 
(2,812
)
 
(2,286
)
 
(2,286
)
 
 
(8,569
)
 
(10,546
)
Less redemption of preferred shares
 

 
(8
)
 
(3,649
)
 

 

 
 
(3,657
)
 
(1,435
)
Net income (loss) available to common shareholders
 
(22,579
)
 
134,331

 
6,360

 
(13,550
)
 
27,994

 
 
104,562

 
31,366

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests – Operating Partnership
 
(2,663
)
 
16,236

 
773

 
(1,644
)
 
3,656

 
 
12,702

 
4,059

Depreciation and amortization of real property
 
20,269

 
19,017

 
19,894

 
28,119

 
13,222

 
 
87,299

 
52,564

Impairment of real estate investments attributable to controlling interests
 
15,192

 

 

 
256

 
2,875

 
 
15,448

 
42,065

Gain on depreciable property sales
 
(2,210
)
 
(163,791
)
 
(17,562
)
 
(124
)
 
(37,517
)
 
 
(183,687
)
 
(74,847
)
FFO applicable to common shares and Units
 
$
8,009

 
$
5,793

 
$
9,465

 
$
13,057

 
$
10,230

 
 
$
36,324

 
$
55,207

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share and unit – basic and diluted
 
$
0.06

 
$
0.04

 
$
0.07

 
$
0.10

 
$
0.07

 
 
$
0.27

 
$
0.40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments to Core FFO:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease termination fees
 

 

 

 

 
(3,244
)
 
 

 
(3,251
)
Loss on extinguishment of debt
 
122

 
6,787

 
340

 
199

 
2,910

 
 
7,448

 
4,889

Redemption of Preferred Shares
 

 
8

 
3,649

 

 

 
 
3,657

 
1,435

Transition costs, including severance
 
301

 

 
186

 
464

 
2,612

 
 
951

 
2,612

Impairment of nondepreciable assets
 
2,617

 

 

 

 

 
 
2,617

 

Development pursuit and other write-offs
 

 

 

 

 
3,224

 
 

 
3,224

Core FFO applicable to common shares and Units
 
$
11,049

 
$
12,588

 
$
13,640

 
$
13,720

 
$
15,732

 
 
$
50,997

 
$
64,116

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core FFO per share and unit – basic and diluted
 
$
0.08

 
$
0.09

 
$
0.10

 
$
0.10

 
$
0.11

 
 
$
0.38

 
$
0.47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares and units
 
133,703