Investors Real Estate Trust Announces Second Quarter Fiscal 2009 Financial and Operating Results
- Press Release
- Source: Investors Real Estate Trust
- On 4:39 pm EST, Wednesday December 10, 2008
MINOT, ND--(MARKET WIRE)--Dec 10, 2008 -- Investors Real Estate Trust (NasdaqGS:IRET - News) (NasdaqGS:IRETP - News) reported financial and operating results today for the quarter ended October 31, 2008. These results are summarized below; for the full report, please access the IRET website at www.iret.com to view the quarterly report on Form 10-Q filed with the Securities and Exchange Commission for the quarter ended October 31, 2008 (click on "Investors", "Financial Reporting" and then on "SEC Filings").
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During the second quarter of fiscal year 2009, IRET's revenues increased from the year-earlier period, due primarily to property acquisitions. Funds From Operations (FFO)(1)increased on an absolute basis from the year-earlier period, but declined slightly on a per share and unit basis, primarily due to dilution following the Company's October 2007 public offering of 6.9 million common shares. Net income declined from the year-earlier period, primarily due to an increase in operating expenses in the three and six months ended October 31, 2008 compared to the three and six months ended October 31, 2007. Additionally, an increase in vacancy rates in our portfolio and associated operating costs for the vacant space unreimbursed by tenants impacted net income in the second quarter of fiscal year 2009. For the three month period ended October 31, 2008, as compared to the same period of the prior fiscal year:
-- Revenues increased to $59.6 million from $54.2 million.
-- FFO increased to $16.4 million on approximately 79,668,000 weighted
average shares and units outstanding, from $15.6 million on
approximately 70,158,000 weighted average shares and units outstanding
($.21 per share and unit compared to $.22 per share and unit).
-- Net Income Available to Common Shareholders, as computed under
generally accepted accounting principles, was $1.9 million, compared to
$2.2 million.
For the six month period ended October 31, 2008, as compared to the same
period of the prior fiscal year:
-- Revenues increased to $118.4 million from $107.8 million.
-- FFO increased to $32.5 million on approximately 79,441,000 weighted
average shares and units outstanding, from $31.4 million on
approximately 69,552,000 weighted average shares and units outstanding
($.41 per share and unit compared to $.45 per share and unit).
-- Net Income Available to Common Shareholders, as computed under
generally accepted accounting principles, was $3.7 million, compared
to $4.6 million.Operating Results
Net Operating Income (NOI)(2) from stabilized properties(3) decreased approximately 2.7%, or $869,000, during the three months ended October 31, 2008, compared to the same period one year ago. NOI from stabilized properties decreased in all of our segments except multi-family residential, which increased 5.1%.
Economic occupancy(4) levels on a stabilized property basis declined in two of our five reportable segments during the three months ended October 31, 2008, compared to the three months ended October 31, 2007. Economic occupancy levels on an all-property basis decreased or were flat in two of our five reportable segments during the three months ended October 31, 2008, compared to the three months ended October 31, 2007. Economic occupancy rates on a stabilized property and all-property basis for the three months ended October 31, 2008, as compared to the three months ended October 31, 2007, were as follows:
Economic Occupancy Levels on a Stabilized Property and All Property Basis:
Stabilized
Segments Properties(a) All Properties
-------------------- --------------------
2nd 2nd 2nd 2nd
Quarter Quarter Quarter Quarter
Fiscal Fiscal Fiscal Fiscal
2009 2008 2009 2008
--------- --------- --------- ---------
Multi-Family Residential 95.1% 94.2% 94.9% 93.8%
Commercial Office 88.5% 92.9% 88.8% 92.9%
Commercial Medical 95.8% 95.6% 95.6% 95.6%
Commercial Industrial 96.5% 98.4% 97.3% 97.2%
Commercial Retail 88.8% 86.9% 88.8% 86.9%
a. For 2nd Quarter Fiscal 2009 and 2nd Quarter Fiscal 2008, stabilized
properties excluded:
Multi-Family Residential - Indian Hills, Sioux City, IA; Cottonwood IV
Apartments, Bismarck, ND; Greenfield Apartments,
Omaha, NE; Minot 4th Street Apartments, Minot,
ND; Minot 11th Street Apartments, Minot, ND;
Minot Fairmont Apartments, Minot, ND; Minot
Westridge Apartments, Minot, ND; Thomasbrook
Apartments, Lincoln, NE and Evergreen
Apartments, Isanti, MN.
Total number of units, 611. Occupancy % for the
three and six months ended October 31, 2008,
92.6% and 88.4%, respectively.
Commercial Office - 610 Business Center, Brooklyn Park, MN;
Intertech, Fenton, MO; Plymouth 5095, Plymouth,
MN and Bismarck 715 E Broadway, Bismarck, ND.
Total square footage, 185,825. Occupancy % for
the three and six months ended October 31, 2008,
95.4% and 95.1%, respectively.
Commercial Medical - Barry Point, Kansas City, MO; Edgewood Vista
Billings, Billings, MT; Edgewood Vista East
Grand Forks, East Grand Forks, MN; Edgewood
Vista Sioux Falls, Sioux Falls, SD; Edina 6405
France Medical, Edina, MN; Edina 6363 France
Medical, Edina, MN; Minneapolis 701 25th Ave
Medical (Riverside), Minneapolis, MN; Burnsville
303 Nicollet Medical (Ridgeview), Burnsville,
MN; Burnsville 305 Nicollet Medical
(Ridgeview South), Burnsville, MN; Eagan 1440
Duckwood Medical, Eagan, MN; Edgewood Vista
Belgrade, Belgrade, MT; Edgewood Vista Columbus,
Columbus, NE; Edgewood Vista Fargo, Fargo, ND;
Edgewood Vista Grand Island, Grand Island, NE;
Edgewood Vista Norfolk, Norfolk, NE and 2828
Chicago Avenue, Minneapolis, MN.
Total square footage, 597,265. Occupancy % for
the three and six months ended October 31, 2008,
95.2% and 97.0%, respectively.
Commercial Industrial - Cedar Lake Business Center, St. Louis Park, MN;
Urbandale, Urbandale, IA; Woodbury 1865,
Woodbury, MN and Eagan 2785 & 2795 Highway 55,
Eagan, MN.
Total square footage, 846,953. Occupancy % for
the three and six months ended October 31, 2008,
100.0% and 100.0%, respectively.
Discontinued operations from fiscal 2008 include:
Multi-Family Residential - 405 Grant Avenue Apartments, Harvey, ND and
Sweetwater - Green Acres 1&2 Apartments, Devils
Lake, ND.
Total number of units, 60.
Commercial Office - Minnetonka Office Building, Minnetonka, MN.
Total square footage, 1,142Acquisition and Disposition Activity
During the second quarter of fiscal year 2009, IRET acquired a 36-unit apartment building located in Isanti, Minnesota, for a purchase price of $3.1 million, consisting of approximately $1.3 million in cash and limited partnership units of IRET's operating partnership valued at approximately $1.8 million, and also acquired an approximately 22,500 square foot one-story office building, on approximately 2.5 acres in Bismarck, North Dakota, for a purchase price of approximately $2.2 million. The office building is connected to a vacant four-story office property that the Company is demolishing; this vacant property is classified as Unimproved Land in the table below. The Company had no material dispositions in the second quarter of fiscal year 2009.
During the first quarter of fiscal year 2009, IRET acquired a parcel of unimproved land in Bismarck, North Dakota for approximately $576,000, and four small apartment buildings with a total of 52 units in Minot, North Dakota, for a total purchase price (excluding closing costs) of approximately $2.5 million, including the issuance of limited partnership units of IRET Properties, the Company's operating partnership, valued at $2.0 million. The Company had no dispositions in the first quarter of fiscal year 2009.
During the three months ended October 31, 2008, IRET completed the remaining interior work and tenant improvements in its approximately 31,643 square foot addition to the Company's Southdale Medical Building in Edina, Minnesota. The cost of the expansion project was approximately $6.5 million, excluding relocation, tenant improvement and leasing costs incurred to relocate tenants in the existing facility. Also during the second quarter of fiscal year 2009, IRET completed construction of an approximately 56,239 square foot medical office building and adjoining parking ramp next to the Company's existing five-story medical office building located at 2828 Chicago Avenue in Minneapolis, Minnesota. The new medical office building and adjoining parking ramp cost approximately $11.3 million to construct.
The following table details the Company's acquisitions and development projects placed in-service during the six months ended October 31, 2008:
(in thousands)
----------------------------------------
Intangible Acquisition
Acquisitions Land Building Assets Cost
-------- -------- ---------- -----------
Multi-Family Residential
33-unit Minot Westridge
Apartments - Minot, ND $ 67 $ 1,887 $ 0 $ 1,954
12-unit Minot Fairmont
Apartments - Minot, ND 28 337 0 365
4-unit Minot 4th Street
Apartments - Minot, ND 15 74 0 89
3-unit Minot 11th Street
Apartments - Minot, ND 11 53 0 64
36-unit Evergreen Apartments -
Isanti, MN 380 2,720 0 3,100
-------- -------- ---------- -----------
501 5,071 0 5,572
Commercial Property - Office
22,500 sq. ft. Bismarck 715 E.
Broadway - Bismarck, ND 389 1,267 255 1,911
-------- -------- ---------- -----------
389 1,267 255 1,911
Commercial Property - Medical
56,239 sq. ft. 2828 Chicago
Avenue - Minneapolis, MN* 727 11,319 0 12,046
31,643 sq. ft. Southdale Medical
Expansion (6545 France) -
Edina, MN** 0 6,473 0 6,473
-------- -------- ---------- -----------
727 17,792 0 18,519
Unimproved Land
Bismarck 2130 S. 12th Street -
Bismarck, ND 576 0 0 576
Bismarck 700 E. Main - Bismarck,
ND 314 0 0 314
-------- -------- ---------- -----------
890 0 0 890
-------- -------- ---------- -----------
Total Property Acquisitions $ 2,507 $ 24,130 $ 255 $ 26,892
======== ======== ========== ===========
* Development property placed in service September 16, 2008.
** Development property placed in service September 17, 2008.Development Activity
The Company has several ongoing development or renovation projects. As of October 31, 2008, IRET is engaged in the following significant development activity:
IRET Corporate Plaza: During fiscal year 2007, the Company purchased an unimproved parcel of land in Minot, North Dakota for approximately $1.8 million. The Company is constructing a mixed-use project on this site, consisting of 71 apartments and 60,100 rentable square feet of office and retail space. The Company will move its Minot, North Dakota offices to this location, occupying approximately one-third of the proposed office/retail space. Apartment marketing at the project commenced in November 2008. Current estimates are that the commercial portion of the project will be completed in the third quarter of the Company's fiscal year 2009. The expected total cost of the project is approximately $20.7 million. As of October 31, 2008, the Company has incurred approximately $16.9 million of the estimated construction cost of this project.
Shareholder Equity, Distributions and Capital Structure
On October 1, 2008, IRET paid a quarterly distribution of $0.1690 per share and unit on its common shares and limited partnership units of IRET Properties. This was IRET's 150th consecutive distribution at equal or increasing rates. IRET also paid, on September 30, 2008, a quarterly distribution of $0.5156 per share on its Series A preferred shares.
As of October 31, 2008, IRET had a total capitalization of $1.9 billion. Total capitalization is defined as the market value (closing price at end of period) of the Company's outstanding common shares and the imputed market value of the outstanding limited partnership units of IRET Properties (which are convertible, at the expiration of a specified holding period, into cash or, at the Company's sole discretion, into common shares of the Company on a one-to-one basis), plus the book value of the Company's preferred shares and the outstanding principal balance of the consolidated debt of the Company.
Conference Call Information
The Conference Call for 2nd Quarter Earnings is scheduled for Friday, December 12, 2008 at 9:00 a.m. Central Standard Time. In order to use the limited time available more efficiently, the Company requests that questions be submitted in advance, via e-mail to the attention of IRET's Investor Relations Director at msaari@iret.com, by 5:00 p.m. Central Standard Time on Wednesday, December 11, 2008. During the question and answer period, priority will be given to addressing questions submitted in advance. The call will be limited to one hour, including questions and answers. Conference call access information is as follows:
USA Toll Free Number: 1-800-860-2442
International Toll Free Number: 1-412-858-4600
A replay of the call will be archived on the "Investor Relations/Upcoming Events and Presentations" page of IRET's website, http://www.iret.com, through Friday, December 26, 2008. Questions regarding the conference call should be directed to IRET Investor Relations at msaari@iret.com.
About IRET
IRET is a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest. IRET owns a diversified portfolio of properties consisting of 77 multi-family residential properties with 9,564 apartment units; and 66 office properties, 49 medical properties (including senior housing), 17 industrial properties and 33 retail properties with a total of approximately 11.6 million square feet of leasable space. IRET's distributions have increased every year for 38 consecutive years. IRET common and preferred shares are publicly traded on the NASDAQ Global Select Market (symbols: IRET and IRETP). IRET's press releases and supplemental information are available on the Company website at www.iret.com or by contacting Investor Relations at 701-837-4738.
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from projected results. Such risks, uncertainties and other factors include, but are not limited to: fluctuations in interest rates, the effect of government regulation, the availability of capital, changes in general and local economic and real estate market conditions, competition, our ability to attract and retain skilled personnel, and those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our 2008 Form 10-K. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except
share data)
------------------------
October 31, April 30,
2008 2008
----------- -----------
ASSETS
Real estate investments
Property owned $ 1,690,763 $ 1,648,259
Less accumulated depreciation (240,452) (219,379)
----------- -----------
1,450,311 1,428,880
Development in progress 17,603 22,856
Unimproved land 5,036 3,901
Mortgage loans receivable, net of allowance of
$11 and $11, respectively 528 541
----------- -----------
Total real estate investments 1,473,478 1,456,178
----------- -----------
Other assets
Cash and cash equivalents 40,855 53,481
Marketable securities - available-for-sale 420 420
Receivable arising from straight-lining of
rents, net of allowance of $787 and $992,
respectively 14,962 14,113
Accounts receivable, net of allowance of $291
and $261, respectively 3,676 4,163
Real estate deposits 86 1,379
Prepaid and other assets 1,813 349
Intangible assets, net of accumulated
amortization of $39,845 and $34,493,
respectively 56,576 61,649
Tax, insurance, and other escrow 6,182 8,642
Property and equipment, net of accumulated
depreciation of $951 and $1,328, respectively 1,432 1,467
Goodwill 1,392 1,392
Deferred charges and leasing costs, net of
accumulated amortization of $8,751 and $7,265,
respectively 16,037 14,793
----------- -----------
TOTAL ASSETS $ 1,616,909 $ 1,618,026
=========== ===========
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 26,645 $ 33,757
Revolving lines of credit 15,000 0
Mortgages payable 1,066,113 1,063,858
Other 703 978
----------- -----------
TOTAL LIABILITIES 1,108,461 1,098,593
----------- -----------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST IN PARTNERSHIPS 13,098 12,609
MINORITY INTEREST OF UNITHOLDERS IN OPERATING
PARTNERSHIP 157,622 161,818
(21,287,484 units at October 31, 2008 and
21,238,342 units at April 30, 2008)
SHAREHOLDERS’ EQUITY
Preferred Shares of Beneficial Interest
(Cumulative redeemable preferred shares, no
par value, 1,150,000 shares issued and
outstanding at October 31, 2008 and April 30,
2008, aggregate liquidation preference of
$28,750,000) 27,317 27,317
Common Shares of Beneficial Interest (Unlimited
authorization, no par value, 58,713,015 shares
issued and outstanding at October 31, 2008,
and 57,731,863 shares issued and outstanding
at April 30, 2008) 448,803 440,187
Accumulated distributions in excess of net
income (138,392) (122,498)
----------- -----------
Total shareholders’ equity 337,728 345,006
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,616,909 $ 1,618,026
=========== ===========
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
for the three months and six months ended October 31, 2008 and 2007
Three Months Ended Six Months Ended
October 31 October 31
------------------ ------------------
(in thousands, except per share data)
--------------------------------------
2008 2007 2008 2007
-------- -------- -------- --------
REVENUE
Real estate rentals $ 48,857 $ 44,543 $ 96,514 $ 88,636
Tenant reimbursement 10,716 9,668 21,905 19,148
-------- -------- -------- --------
TOTAL REVENUE 59,573 54,211 118,419 107,784
-------- -------- -------- --------
EXPENSES
Interest 17,078 15,687 33,966 31,129
Depreciation/amortization related
to real estate investments 13,480 12,164 26,798 24,353
Utilities 4,607 4,296 9,041 8,244
Maintenance 6,585 6,021 13,584 12,027
Real estate taxes 7,487 6,463 14,857 12,892
Insurance 754 606 1,504 1,256
Property management expenses 4,520 3,667 8,771 7,508
Administrative expenses 1,125 1,101 2,356 2,223
Advisory and trustee services 114 166 214 240
Other expenses 482 457 844 710
Amortization related to non-real
estate investments 479 340 928 683
-------- -------- -------- --------
TOTAL EXPENSES 56,711 50,968 112,863 101,265
-------- -------- -------- --------
Interest income 210 339 433 693
Other income 78 92 103 373
-------- -------- -------- --------
Income before gain on sale of other
investments and minority interest
and discontinued operations 3,150 3,674 6,092 7,585
Gain on sale of other investments 54 3 54 2
Minority interest portion of
operating partnership income (700) (855) (1,347) (1,835)
Minority interest portion of other
partnerships’ loss 19 0 82 36
-------- -------- -------- --------
Income from continuing operations 2,523 2,822 4,881 5,788
Discontinued operations, net of
minority interest 0 14 0 29
-------- -------- -------- --------
NET INCOME 2,523 2,836 4,881 5,817
Dividends to preferred
shareholders (593) (593) (1,186) (1,186)
-------- -------- -------- --------
NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS $ 1,930 $ 2,243 $ 3,695 $ 4,631
======== ======== ======== ========
Earnings per common share from
continuing operations $ .03 $ .04 $ .06 $ .09
Earnings per common share from
discontinued operations .00 .00 .00 .00
-------- -------- -------- --------
NET INCOME PER COMMON SHARE - BASIC
AND DILUTED $ .03 $ .04 $ .06 $ .09
======== ======== ======== ========
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
(in thousands, except per share amounts)
------------------------------------------------------
Three Months Ended
October 31, 2008 2007
-------------------------- --------------------------
Weighted Per Weighted Per
Avg Share Avg Share
Shares and Shares and
Amount Units(2) Unit(3) Amount Units(2) Unit(3)
-------- --------- ------- -------- --------- -------
Net income $ 2,523 $ 2,836
Less dividends to
preferred
shareholders (593) (593)
-------- --------
Net income
available to
common
shareholders 1,930 58,374 $ .03 2,243 49,675 $ .04
Adjustments:
Minority interest
in earnings of
Unitholders 700 21,294 859 20,483
Depreciation and
amortization(1) 13,840 12,452
Gain on depreciable
property sales (54) (3)
-------- --------- ------- -------- --------- -------
Funds from
operations
applicable to
common shares
and Units $ 16,416 79,668 $ .21 $ 15,551 70,158 $ .22
======== ========= ======= ======== ========= =======
(in thousands, except per share amounts)
------------------------------------------------------
Six Months Ended
October 31, 2008 2007
-------------------------- --------------------------
Weighted Per Weighted Per
Avg Share Avg Share
Shares and Shares and
Amount Units(2) Unit(3) Amount Units(2) Unit(3)
-------- --------- ------- -------- --------- -------
Net income $ 4,881 $ 5,817
Less dividends to
preferred
shareholders (1,186) (1,186)
-------- --------
Net income
available to
common
shareholders 3,695 58,145 $ .06 4,631 49,169 $ .09
Adjustments:
Minority interest
in earnings of
Unitholders 1,347 21,296 1,846 20,383
Depreciation and
amortization(4) 27,481 24,937
Gain on depreciable
property sales (54) (2)
-------- --------- ------- -------- --------- -------
Funds from
operations
applicable to
common shares
and Units $ 32,469 79,441 $ .41 $ 31,412 69,552 $ .45
======== ========= ======= ======== ========= =======
(1) Real estate depreciation and amortization consists of the sum of
depreciation/amortization related to real estate investments and
amortization related to non-real estate investments from the Condensed
Consolidated Statements of Operations, totaling $13,959 and $12,504,
and depreciation/amortization from Discontinued Operations of $0 and
$13, less corporate-related depreciation and amortization on office
equipment and other assets of $119 and $65, for the three months
ended October 31, 2008 and 2007, respectively.
(2) UPREIT Units of the Operating Partnership are exchangeable for common
shares of beneficial interest on a one-for-one basis.
(3) Net income is calculated on a per share basis. FFO is calculated on a
per share and unit basis.
(4) Real estate depreciation and amortization consists of the sum of
depreciation/amortization related to real estate investments and
amortization related to non-real estate investments from the Condensed
Consolidated Statements of Operations, totaling $27,726 and $25,036,
and depreciation/amortization from Discontinued Operations of $0 and
$29, less corporate-related depreciation and amortization on office
equipment and other assets of $245 and $128, for the six months ended
October 31, 2008 and 2007, respectively.
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
RECONCILATION OF NET OPERATING INCOME TO THE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
---------------------------------------------------------
Three Months Multi-
Ended October Family Commercial Commercial Commercial Commercial
31, 2008 Residential -Office -Medical -Industrial -Retail Total
--------- --------- --------- --------- -------- -------
Real estate
revenue $ 19,402 $ 20,723 $ 12,960 $ 2,975 $ 3,513 $59,573
Real estate
expenses 8,929 9,203 3,863 802 1,156 23,953
--------- --------- --------- --------- -------- -------
Net operating
income $ 10,473 $ 11,520 $ 9,097 $ 2,173 $ 2,357 35,620
========= ========= ========= ========= ======== -------
Interest (17,078)
Depreciation/
amortization (13,959)
Administrative,
advisory and
trustee fees (1,239)
Other expenses (482)
Other income 288
--------- --------- --------- --------- -------- -------
Income before
gain on sale of
other
investments and
minority
interest and
discontinued
operations $ 3,150
========= ========= ========= ========= ======== =======
(in thousands)
---------------------------------------------------------
Three Months Multi-
Ended October Family Commercial Commercial Commercial Commercial
31, 2007 Residential -Office -Medical -Industrial -Retail Total
--------- --------- --------- --------- -------- -------
Real estate
revenue $ 18,268 $ 20,611 $ 8,920 $ 3,027 $ 3,385 $54,211
Real estate
expenses 8,676 8,721 2,043 626 987 21,053
--------- --------- --------- --------- -------- -------
Net operating
income $ 9,592 $ 11,890 $ 6,877 $ 2,401 $ 2,398 33,158
========= ========= ========= ========= ======== -------
Interest (15,687)
Depreciation/
amortization (12,504)
Administrative,
advisory and
trustee fees (1,267)
Other expenses (457)
Other income 431
--------- --------- --------- --------- -------- -------
Income before
gain on sale of
other
investments and
minority
interest and
discontinued
operations $ 3,674
========= ========= ========= ========= ======== =======
(in thousands)
---------------------------------------------------------
Six Months Multi-
Ended October Family Commercial Commercial Commercial Commercial
31, 2008 Residential -Office -Medical -Industrial -Retail Total
--------- --------- --------- --------- -------- -------
Real estate
revenue $ 38,003 $ 41,529 $ 25,825 $ 6,071 $ 6,991 $118,419
Real estate
expenses 17,654 18,647 7,625 1,535 2,296 47,757
--------- --------- --------- --------- -------- --------
Net operating
income $ 20,349 $ 22,882 $ 18,200 $ 4,536 $ 4,695 70,662
========= ========= ========= ========= ======== --------
Interest (33,966)
Depreciation/
amortization (27,726)
Administrative,
advisory and
trustee fees (2,570)
Other expenses (844)
Other income 536
--------- --------- --------- --------- -------- --------
Income before
gain on sale of
other
investments and
minority
interest and
discontinued
operations $ 6,092
========= ========= ========= ========= ======== ========
(in thousands)
---------------------------------------------------------
Six Months Multi-
Ended October Family Commercial Commercial Commercial Commercial
31, 2007 Residential -Office -Medical -Industrial -Retail Total
--------- --------- --------- --------- -------- -------
Real estate
revenue $ 35,987 $ 41,206 $ 17,885 $ 5,689 $ 7,017 $107,784
Real estate
expenses 16,960 17,437 4,316 1,125 2,089 41,927
--------- --------- --------- --------- -------- --------
Net operating
income $ 19,027 $ 23,769 $ 13,569 $ 4,564 $ 4,928 65,857
========= ========= ========= ========= ======== --------
Interest (31,129)
Depreciation/
amortization (25,036)
Administrative,
advisory and
trustee fees (2,463)
Other expenses (710)
Other income 1,066
--------- --------- --------- --------- -------- --------
Income before
gain on sale of
other
investments and
minority
interest and
discontinued
operations $ 7,585
========= ========= ========= ========= ======== ========(1) The National Association of Real Estate Investment Trusts, Inc. (NAREIT) defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding gains/losses from sales of property plus real estate depreciation and amortization. We consider FFO to be a standard supplemental measure for equity real estate investment trusts because it facilitates an understanding of the operating performance of properties without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values instead historically rise or fall with market conditions, we believe that FFO provides investors and management with a more accurate indication of our financial and operating results.
(2) We measure the performance of our segments based on NOI, which we define as total revenues less property operating expenses and real estate taxes. We believe that NOI is an important supplemental measure of operating performance for a real estate investment trust's operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with GAAP, and should not be considered an alternative to net income, net income available for common shareholders or cash flow from operating activities as a measure of financial performance. See tables below for a reconciliation of NOI to the condensed consolidated financial statements.
(3) Stabilized properties are those properties owned for the entirety of both periods being compared. While results presented on a stabilized property basis are not determined in accordance with GAAP, management believes that measuring performance on a stabilized property basis is useful to investors and to management because it enables evaluation of how the Company's properties are performing year over year.
(4) Economic occupancy represents actual rental revenues recognized for the period indicated as a percentage of scheduled rental revenues for the period. Percentage rents, tenant concessions, straightline adjustments and expense reimbursements are not considered in computing either actual revenues or scheduled rent revenues.
Contact:
CONTACT INFO
Michelle R. Saari
Investors Real Estate Trust
PO Box 1988
12 Main Street S
Minot, North Dakota 58701
phone: 701.837.4738
fax: 701.838.7785
email: msaari@iret.com
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