Investors Real Estate Trust Announces Financial And Operating Results For The Quarter And Fiscal Year Ended April 30, 2016
-Increases Total Revenue by 7.5% and 5.0% Year over Year for Fourth Quarter and Fiscal Year 2016-
-Reports Funds From Operations of $0.14 and $0.76 per Share/Unit for Fourth Quarter and Fiscal Year 2016-
-Initiates FFO Guidance for Fiscal Year 2017 of $0.48 to $0.54 per Share/Unit-
MINOT, N.D., June 29, 2016 /PRNewswire/ -- Investors Real Estate Trust (NYSE: IRET) (NYSE: IRETPR) (NYSE: IRETPRB), a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest, today reported its financial and operating results for the quarter and fiscal year ended April 30, 2016.
Fourth Quarter Highlights
- Same-store multifamily Net Operating Income ("NOI") growth year over year was up 4.8%, excluding energy impacted markets
- Reported Funds from Operations ("FFO") of $19.2 million or $0.14 per share/unit
- For the same-store multifamily portfolio, excluding energy impacted markets, weighted average occupancy was 95.0%, compared to 94.4% in the fourth quarter of fiscal year 2015
- For the same-store multifamily portfolio, excluding energy impacted markets, average rental rate was $900 per unit per month, up 2.5% from the fourth quarter of fiscal year 2015
- Acquired 393 multifamily units at four properties in Rochester, MN, for a total purchase price of $71.8 million
- Placed into service two multifamily development projects, containing 414 units, and representing aggregate investment of $74.6 million
- Disposed of eight student housing properties, one healthcare property, one retail property and one parcel of unimproved land for sales prices totaling $31.8 million
Fiscal Year Highlights
- Same-store multifamily NOI growth year over year was up 1.4%, excluding energy impacted markets
- Reported FFO of $103.9 million or $0.76 per share/unit
- For the same-store multifamily portfolio, excluding energy impacted markets, average rental rate was $895 per unit per month, up 2.7% from the prior year
- Acquired one healthcare property and 743 multifamily units at six properties, for a total purchase price of $143.5 million
- Placed into service seven development projects totaling $211.8 million
- Disposed of 8 student housing properties, 40 office properties, 2 healthcare properties, 18 retail properties and 3 parcels of unimproved land for a total sales price of $414.1 million and transferred ownership of 9 office properties pursuant to a deed in lieu transaction
President and Chief Executive Officer Tim Mihalick commented, "Our fourth quarter and full year results, which included increases in revenue of 7.5% and 5.0% respectively, show the value of our continued efforts to reposition the portfolio and focus our strategy. Within our multifamily portfolio, we continue to drive strong NOI growth in our total portfolio as we complete and lease up our development pipeline, and we captured strong same store NOI growth across most of our platform, with the exception of our energy-affected markets."
Mr. Mihalick continued, "During the fourth quarter, our disposition volume totaled approximately $32 million, bringing our total sales price for assets sold in fiscal year 2016 to $414.1 million. Moving forward, we will continue to execute on our strategic and capital plans to further simplify our platform and transition to a pure-play multifamily REIT, improve operations and maximize margins, execute on our redevelopment initiatives, and optimize our capital allocation and balance sheet. We believe that the successful execution of this strategy will enhance our long term growth profile and is the best path for value creation for our shareholders."
Financial Results for the Three and Twelve Months Ended April 30, 2016 Compared to the Prior Year Period
Net Income Available to Common Shareholders for the quarter ended April 30, 2016 was $8.1 million compared to $7.9 million for the same period of the prior fiscal year. Net Income Available to Common Shareholders for the twelve month period ending April 30, 2016 was $60.5 million compared to $12.6 million for the same period of the prior fiscal year. The increase in Net Income Available to Common Shareholders was primarily due to gain on extinguishment of debt of $36.5 million and gain on sale of discontinued operations of $23.8 million recognized in the twelve months ended April 30, 2016.
Funds from Operations ("FFO") for the quarter ending April 30, 2016 was $19.2 million or $0.14 per share/unit. FFO for the twelve months ending April 30, 2016 was $103.9 million or $0.76 per share/unit. Excluding gain or loss on extinguishment of debt, default interest, and gain on bargain purchase, FFO would have been $0.55 for the twelve months ended April 30, 2016.
The table below highlights FFO and Adjusted Funds from Operations ("AFFO") results by quarter for fiscal year 2016.
| Fiscal Year Ended |
Q4 ended |
Q3 ended |
Q2 ended |
Q1 ended |
||||||||||||
| April 30, 2016 |
April 30, 2016 |
January 31, 2016 |
October 31, 2015 |
July 31, 2015 |
||||||||||||
| FFO per share |
$ |
.76 |
$ |
.14 |
$ |
.40 |
$ |
.06 |
$ |
.16 |
||||||
| AFFO per share |
$ |
.51 |
$ |
.11 |
$ |
.13 |
$ |
.11 |
$ |
.16 |
||||||
Operating Results for the Three Months Ended April 30, 2016 Compared to the Prior Year Period
Total revenue for the Company increased by $3.4 million, or 7.5%, in the three months ended April 30, 2016 compared to same period one year ago.
Net Operating Income (NOI) from all properties increased by $1.4 million, or 5.3% for the quarter ending April 30, 2016 compared to the same period one year ago. Non-Same-Store properties, primarily the Company's multifamily developments, provided for an increase in NOI of $1.9 million while Same-Store NOI decreased by approximately $518,000 for the quarter ending April 30, 2016 compared to the same period one year ago. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North.
Operating Results for the Twelve Months Ended April 30, 2016 Compared to the Prior Year Period
Total revenues for the Company increased by $9.0 million, or 5.0%, in the twelve months ended April 30, 2016 compared to same period one year ago.
NOI from all properties increased by $3.0 million, or 2.9% for the twelve month period ending April 30, 2016 compared to the same period one year ago. Non-Same-Store properties, primarily the Company's multifamily developments, provided for an increase in NOI of $4.6 million while Same-Store NOI decreased by $1.6 million. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota.
Multifamily Results for the Three Months Ended April 30, 2016 Compared to the Prior Year Period
Multifamily (including non-same-store) NOI increased by approximately $1.0 million or 5.8% for the quarter ending April 30, 2016 compared to the same period one year ago. Continued completion and lease up of the Company's development projects is having a positive effect on total operations.
Multifamily Results for the Twelve Months Ended April 30, 2016 Compared to the Prior Year Period
Multifamily (including non-same store) NOI increased by approximately $3.3 million or 4.9% for the twelve month period ending April 30, 2016 compared to the same period one year ago. Continued completion and lease up of the Company's development projects and accretive acquisitions in the period are having a positive effect on total operations.
Same-Store Multifamily Results for the Three Months Ended April 30, 2016 Compared to the Prior Year Period
Same-Store Multifamily NOI decreased by approximately $550,000 for the quarter ending April 30, 2016 compared to the same period one year ago. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota.
The Company's operating margins of Same-Store Multifamily NOI to Gross Revenues improved by 164 basis points quarter over quarter to 54.96% for the fourth quarter of fiscal year 2016, as compared to the third quarter of fiscal year 2016.
The table below represents Same-Store Multifamily performance for the fourth quarter ending April 30, 2016 compared to the same period one year ago. Excluding the highly impacted energy markets of Minot and Williston, North Dakota, the balance of the same-store portfolio showed improving NOI results year over year.
| FY16Q4 |
FY16Q4 |
FY16Q4 |
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 |
4/30/2016 |
Occupancy(1) |
NOI |
Rate(2) |
Revenues |
Expenses |
Income |
Rate |
Occupancy |
||||||||||||
| Billings, MT |
770 |
90.8 |
% |
92.0 |
% |
8.3 |
% |
$ |
909 |
(1.2) |
% |
(0.3) |
% |
(1.8) |
% |
3.4 |
% |
(4.6) |
% |
|||
| Bismarck, ND |
909 |
90.4 |
% |
89.8 |
% |
11.4 |
% |
$ |
1,046 |
(2.2) |
% |
(1.1) |
% |
(2.9) |
% |
1.9 |
% |
(4.1) |
% |
|||
| Grand Forks, ND |
1,230 |
94.9 |
% |
94.1 |
% |
12.2 |
% |
$ |
908 |
(1.7) |
% |
(5.8) |
% |
2.1 |
% |
(1.4) |
% |
(0.3) |
% |
|||
| Minneapolis, MN |
319 |
99.1 |
% |
98.6 |
% |
3.3 |
% |
$ |
910 |
7.6 |
% |
8.4 |
% |
6.9 |
% |
5.6 |
% |
2.0 |
% |
|||
| Omaha, NE |
1,370 |
96.9 |
% |
96.4 |
% |
13.2 |
% |
$ |
858 |
5.3 |
% |
5.5 |
% |
5.2 |
% |
0.8 |
% |
4.5 |
% |
|||
| Rapid City, SD |
270 |
96.7 |
% |
96.5 |
% |
2.5 |
% |
$ |
841 |
3.8 |
% |
17.6 |
% |
(5.6) |
% |
3.7 |
% |
0.0 |
% |
|||
| Rochester, MN |
1,104 |
97.0 |
% |
96.2 |
% |
15.7 |
% |
$ |
1,075 |
4.7 |
% |
(3.0) |
% |
9.5 |
% |
4.2 |
% |
0.5 |
% |
|||
| Sioux Falls, SD |
969 |
97.9 |
% |
97.7 |
% |
8.0 |
% |
$ |
814 |
4.7 |
% |
6.0 |
% |
3.4 |
% |
4.0 |
% |
0.7 |
% |
|||
| St. Cloud, MN |
991 |
96.0 |
% |
94.8 |
% |
7.2 |
% |
$ |
848 |
8.3 |
% |
5.5 |
% |
12.3 |
% |
4.5 |
% |
3.8 |
% |
|||
| Topeka, KS |
1,042 |
97.0 |
% |
96.9 |
% |
9.8 |
% |
$ |
767 |
6.9 |
% |
(3.0) |
% |
15.1 |
% |
3.6 |
% |
3.3 |
% |
|||
| Same Store Subtotals |
8,974 |
95.5 |
% |
95.0 |
% |
91.6 |
% |
$ |
900 |
3.2 |
% |
1.2 |
% |
4.8 |
% |
2.5 |
% |
0.6 |
% |
|||
| Minot, ND(3) |
734 |
91.1 |
% |
90.6 |
% |
6.2 |
% |
$ |
920 |
(22.4) |
% |
6.9 |
% |
(40.5) |
% |
(19.6) |
% |
(2.8) |
% |
|||
| Williston, ND(3) |
145 |
66.2 |
% |
73.1 |
% |
2.2 |
% |
$ |
1,658 |
(54.1) |
% |
(26.0) |
% |
(64.3) |
% |
(45.7) |
% |
(8.4) |
% |
|||
| Same Store Property Totals |
9,853 |
94.8 |
% |
94.1 |
% |
100.0 |
% |
$ |
912 |
(1.7) |
% |
1.0 |
% |
(3.8) |
% |
(1.6) |
% |
(0.1) |
% |
|||
| _______________________________ |
|||||
| (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. |
||||
Same-Store Multifamily Results for the Twelve Months Ended April 30, 2016 Compared to the Prior Year Period
Same-Store Multifamily NOI decreased by $2.9 million for the twelve months ended April 30, 2016 compared to the same period one year ago. The decrease in Same-Store NOI was primarily due to reduced revenues at properties located in energy impacted markets in western North Dakota.
The Company's operating margins of Same-Store Multifamily NOI to Gross Revenues decreased by 256 basis points year over year to 54.05% for the twelve months ended April 30, 2016.
The table below represents Same-Store Multifamily performance for the twelve months ended April 30, 2016 compared to the same period one year ago. Excluding the highly impacted energy markets of Minot and Williston, North Dakota, the balance of the same-store portfolio showed improving NOI results year over year.
| FY16Q |
FY16 |
FY16 |
Increase (Decrease) From Prior Year |
|||||||||||||||||||
| Weighted |
% of |
Average |
Net |
Average |
Weighted |
|||||||||||||||||
| Rentable |
Occupancy |
Average |
Actual |
Rental |
Operating |
Rental |
Average |
|||||||||||||||
| Regions |
Units |
4/30/2016 |
Occupancy(1) |
NOI |
Rate(2) |
Revenues |
Expenses |
Income |
Rate |
Occupancy |
||||||||||||
| Billings, MT |
770 |
90.8 |
% |
92.8 |
% |
8.0 |
% |
$ |
899 |
(1.6) |
% |
6.0 |
% |
(6.6) |
% |
2.6 |
% |
(4.2) |
% |
|||
| Bismarck, ND |
909 |
90.4 |
% |
92.5 |
% |
11.7 |
% |
$ |
1,049 |
(0.6) |
% |
10.1 |
% |
(6.3) |
% |
3.8 |
% |
(4.4) |
% |
|||
| Grand Forks, ND |
1,230 |
94.9 |
% |
94.4 |
% |
12.9 |
% |
$ |
917 |
(1.8) |
% |
(0.5) |
% |
(2.7) |
% |
0.8 |
% |
(2.6) |
% |
|||
| Minneapolis, MN |
319 |
99.1 |
% |
98.1 |
% |
3.1 |
% |
$ |
886 |
6.6 |
% |
4.6 |
% |
8.5 |
% |
4.1 |
% |
2.5 |
% |
|||
| Omaha, NE |
1,370 |
96.9 |
% |
96.3 |
% |
12.7 |
% |
$ |
863 |
6.6 |
% |
9.6 |
% |
3.9 |
% |
1.6 |
% |
5.0 |
% |
|||
| Rapid City, SD |
270 |
96.7 |
% |
97.0 |
% |
2.5 |
% |
$ |
829 |
2.0 |
% |
4.4 |
% |
(0.1) |
% |
2.2 |
% |
(0.2) |
% |
|||
| Rochester, MN |
1,104 |
97.0 |
% |
96.3 |
% |
14.9 |
% |
$ |
1,062 |
5.9 |
% |
0.4 |
% |
9.8 |
% |
4.1 |
% |
1.8 |
% |
|||
| Sioux Falls, SD |
969 |
97.9 |
% |
97.5 |
% |
7.6 |
% |
$ |
803 |
4.6 |
% |
7.9 |
% |
1.0 |
% |
3.7 |
% |
0.9 |
% |
|||
| St. Cloud, MN |
991 |
96.0 |
% |
94.3 |
% |
6.8 |
% |
$ |
832 |
4.3 |
% |
7.4 |
% |
0.0 |
% |
3.1 |
% |
1.2 |
% |
|||
| Topeka, KS |
1,042 |
97.0 |
% |
96.1 |
% |
9.0 |
% |
$ |
757 |
5.3 |
% |
(0.6) |
% |
10.7 |
% |
2.4 |
% |
2.9 |
% |
|||
| Same Store Subtotals |
8,974 |
95.5 |
% |
95.2 |
% |
89.2 |
% |
$ |
895 |
3.0 |
% |
4.9 |
% |
1.4 |
% |
2.7 |
% |
0.3 |
% |
|||
| Minot, ND(3) |
734 |
91.1 |
% |
90.8 |
% |
8.0 |
% |
$ |
1,040 |
(13.2) |
% |
12.7 |
% |
(27.8) |
% |
(7.9) |
% |
(5.3) |
% |
|||
| Williston, ND(3) |
145 |
66.2 |
% |
73.8 |
% |
2.8 |
% |
$ |
2,051 |
(42.5) |
% |
(1.3) |
% |
(55.5) |
% |
(28.4) |
% |
(14.1) |
% |
|||
| Same Store Property Totals |
9,853 |
94.8 |
% |
94.2 |
% |
100.0 |
% |
$ |
922 |
(0.5) |
% |
5.3 |
% |
(5.0) |
% |
0.4 |
% |
(0.9) |
% |
|||
| ______________________________ |
|
| (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. |
In addition to these initiatives to grow the multifamily portfolio through acquisitions and development, the Company has launched a value add program whereby IRET will be committing an estimated $3.5 million per quarter to rehab approximately 1,500 units in fiscal year 2017. Apartments will be remodeled as the leases expire and upgrades will include a variety of new appliances, flooring, lighting, kitchen cabinets, and bathroom upgrades. Management expects these upgrades to range from $7,000 to $13,000 per unit and result in a return on investment of approximately 8% to 10% per year per unit. During fiscal year 2016, under the value add program the Company completed remodeling of 539 units at an average cost of $7,553 with an average return on investment for leased units of 11.3%.
FFO per Share and Unit for the Quarter and Fiscal Year Ended April 30, 2016
| Q4 Ended April 30, 2016 |
Fiscal Year Ended April 30, 2016 |
|||
| FFO per share and unit |
$ |
0.14 |
$ |
0.76 |
| Less gain on extinguishment of debt and plus default interest |
— |
0.19 |
||
| Less gain on bargain purchase per share and unit |
0.02 |
0.02 |
||
| FFO per share and unit, excluding gain on extinguishment of debt, default interest and gain on bargain purchase |
$ |
0.12 |
$ |
0.55 |
Occupancy Levels on a Same-Store Property and All Property Basis
| Same-Store as of |
Same-Store as of |
All Properties as of |
All Properties as of |
||||||
| Segments |
April 30, 2016 |
April 30, 2015 |
April 30, 2016 |
4/30/2015 |
|||||
| Multifamily |
94.8 |
% |
95.1 |
% |
90.8 |
% |
92.0 |
% |
|
| Healthcare |
95.6 |
% |
95.3 |
% |
89.4 |
% |
91.5 |
% |
Development Projects in Progress
As of April 30, 2016, the following projects are being developed:
- 71 France, a 241 unit, $73.3 million Multifamily development in Edina, MN
- Monticello Crossings, a 202 unit, $31.8 million Multifamily development in Monticello, MN
Development Projects Placed in Service
During the three months ended April 30, 2016 two development projects totaling $74.6 million were placed in service. During the twelve months ended April 30, 2016, seven development projects totaling $211.8 million were placed in service.
The following table reflects the projects placed into service during the twelve months ended April 30, 2016:
| Occupancy |
Development Cost |
|||||||||||
| Rentable Sq Ft or |
as of |
as of |
Anticipated |
|||||||||
| Project Name and Location |
Segment |
Number of Units |
April 30, 2016 |
April 30, 2016 |
Same Store Date |
|||||||
| Chateau II-Minot, ND |
Multifamily |
72 units |
84.7 |
% |
$ |
14,648 |
1Q 2019 |
|||||
| Edina 6565 France SMC III-Edina, MN(1) |
Healthcare |
57,624 sq ft |
24.5 |
% |
33,041 |
1Q 2019 |
||||||
| Renaissance Heights-Williston, ND |
Multifamily |
288 units |
43.8 |
% |
62,514 |
1Q 2019 |
||||||
| Minot Southgate Retail-Minot, ND |
Other |
7,963 sq ft |
0 |
% |
2,623 |
1Q 2019 |
||||||
| PrairieCare Medical-Brooklyn Park, MN |
Healthcare |
70,756 sq ft |
100.0 |
% |
24,440 |
1Q 2018 |
||||||
| Cardinal Point - Grand Forks, ND |
Multifamily |
251 units |
50.9 |
% |
49,732 |
1Q 2019 |
||||||
| Deer Ridge - Jamestown, ND |
Multifamily |
163 units |
44.2 |
% |
24,837 |
1Q 2019 |
||||||
| $ |
211,835 |
|||||||||||
| (1) |
Percentage leased or committed as of June 23, 2016, was 88.0%. |
Disposition Activity
During the three months ended April 30, 2016, the Company disposed of the following properties:
- Eight student housing properties in St. Cloud, MN, for a sales price totaling $5.6 million.
- One healthcare property in Omaha, NE, for a sales price of $24.5 million, due to the exercise of the tenant's purchase option.
- One retail property in Minot, ND, for a sales price of $1.7 million.
- One parcel of unimproved land in River Falls, WI, for approximately $20,000.
During the twelve months ended April 30, 2016, the Company disposed of 8 multifamily properties, 40 office properties, 2 healthcare properties, 18 retail properties, and 3 parcels of unimproved land for a total sales price of $414.1 million and transferred ownership of 9 office properties pursuant to a deed in lieu transaction.
Liquidity
At April 30, 2016, the Company had $66.7 million cash on hand and $82.5 million available on its line of credit, which matures September 1, 2017.
Quarterly Distribution
On April 1, 2016, the Company paid a quarterly distribution of $0.1300 per common share and unit of IRET Properties. This was the Company's 180th consecutive distribution. The Company also paid, on March 31, 2016, a quarterly distribution of $0.5156 per share on its Series A preferred shares and a quarterly distribution of $0.4968 per share on its Series B preferred shares.
Subsequent to the end of the fourth quarter of fiscal year 2016, on June 2, 2016, the Board of Trustees declared a regular quarterly distribution of $0.1300 per common share and unit, payable July 1, 2016 to common shareholders and unitholders of record on June 15, 2016.
Also on June 2, 2016, the Board declared a distribution of $0.5156 per share on the Company's Series A preferred shares, payable June 30, 2016 to Series A preferred shareholders of record on June 15, 2016, and declared a distribution of $0.4968 per share on the Company's Series B preferred shares, payable June 30, 2016 to Series B preferred shareholders of record on June 15, 2016.
Guidance
For the fiscal year ending April 30, 2017, management expects to report FFO in the range of $0.48 to $0.54 per share/unit. This guidance reflects management's view of current market conditions, as well as the earnings impact of certain events referenced in this release and discussed during the scheduled fourth quarter and fiscal year 2016 conference call. This guidance does not include the operational or capital impact of any future acquisition, development, disposition, or capital markets activity, including potential transactions discussed as part of the Company's strategic initiatives. This guidance is also based on management's assumption of same-store multifamily NOI growth of 2% to 4%. A number of factors could impact the Company's ability to meet its guidance and assumption, and there can be no assurance that the Company can achieve such results. This guidance and assumption are subject to change.
Conference Call Information
The Conference Call for 4th Quarter Earnings is scheduled for Thursday, June 30, 2016 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
The Company is a self-administered, equity real estate investment trust investing in income-producing properties located primarily in the upper Midwest. As of April 30, 2016, it held for investment a portfolio of 146 properties consisting of 99 multifamily properties, consisting of 12,950 units, 31 healthcare properties, and 16 other commercial properties with a total of 2.9 million square feet of leasable space. The Company's common shares, Series A preferred shares and Series B preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: IRET, IRETPR and IRETPRB, respectively). The Company's press releases and supplemental information are available on its website at www.iret.com or by contacting Investor Relations at 203-682-8377.
Supplemental Information
The Company produced the Supplemental Operating and Financial Data for the Quarter Ended April 30, 2016 ("Supplemental Information"), which is available on the Company'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 the Company's future plans, anticipated operating results, anticipated timing of development projects being placed into service, anticipated implementation and results of its value add program, and anticipated timing of properties becoming same-store properties, are based on the Company'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 expectations regarding future distributions on common shares and units; fluctuations in interest rates; adverse capital and credit market conditions that might affect the Company's access to various sources of capital and cost of capital; 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 Company properties that may result in lower than expected occupancy and/or rental rates; ability to acquire quality properties in the Company's targeted markets; ability to successfully dispose of certain assets; competition for tenants from similar competing properties; the Company's ability to attract and retain skilled personnel; cyber-intrusion; abandonment of development or redevelopment opportunities for which the Company has already incurred costs; delays in completing development, redevelopment and/or lease up of properties and increased costs; and those risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K for the fiscal year ended April 30, 2016 and subsequent quarterly reports on Form 10-Q.
The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
| INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES |
|||||||
| (in thousands, except share data) |
|||||||
| April 30, 2016 |
April 30, 2015 |
||||||
| ASSETS |
|||||||
| Real estate investments |
|||||||
| Property owned |
$ |
1,681,471 |
$ |
1,335,687 |
|||
| Less accumulated depreciation |
(312,889) |
(279,417) |
|||||
| 1,368,582 |
1,056,270 |
||||||
| Development in progress |
51,681 |
153,994 |
|||||
| Unimproved land |
20,939 |
25,827 |
|||||
| Total real estate investments |
1,441,202 |
1,236,091 |
|||||
| Assets held for sale and assets of discontinued operations |
220,761 |
675,764 |
|||||
| Cash and cash equivalents |
66,698 |
48,970 |
|||||
| Other investments |
50 |
329 |
|||||
| Receivable arising from straight-lining of rents, net of allowance of $333 and $222, respectively |
7,179 |
6,504 |
|||||
| Accounts receivable, net of allowance of $97 and $439, respectively |
1,524 |
2,390 |
|||||
| Real estate deposits |
0 |
2,489 |
|||||
| Prepaid and other assets |
2,937 |
3,134 |
|||||
| Intangible assets, net of accumulated amortization of $6,230 and $6,112, respectively |
1,858 |
1,388 |
|||||
| Tax, insurance, and other escrow |
5,450 |
9,499 |
|||||
| Property and equipment, net of accumulated depreciation of $1,058 and $1,374, respectively |
1,011 |
1,027 |
|||||
| Goodwill |
1,680 |
1,718 |
|||||
| Deferred charges and leasing costs, net of accumulated amortization of $8,716 and $7,524, respectively |
9,827 |
8,534 |
|||||
| TOTAL ASSETS |
$ |
1,760,177 |
$ |
1,997,837 |
|||
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
|||||||
| LIABILITIES |
|||||||
| Liabilities held for sale and liabilites of discontinued operations |
$ |
77,712 |
$ |
401,299 |
|||
| Accounts payable and accrued expenses |
39,727 |
55,540 |
|||||
| Revolving line of credit |
17,500 |
60,500 |
|||||
| Mortgages payable |
817,324 |
596,965 |
|||||
| Construction debt and other |
82,130 |
136,211 |
|||||
| TOTAL LIABILITIES |
1,034,393 |
1,250,515 |
|||||
| COMMITMENTS AND CONTINGENCIES |
|||||||
| REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES |
7,522 |
6,368 |
|||||
| EQUITY |
|||||||
| Investors Real Estate Trust shareholders' equity |
|||||||
| Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at April 30, 2016 and April 30, 2015, aggregate liquidation preference of $28,750,000) |
27,317 |
27,317 |
|||||
| Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 shares issued and outstanding at April 30, 2016 and April 30, 2015, aggregate liquidation preference of $115,000,000) |
111,357 |
111,357 |
|||||
| Common Shares of Beneficial Interest (Unlimited authorization, no par value, 121,091,249 shares issued and outstanding at April 30, 2016, and 124,455,624 shares issued and outstanding at April 30, 2015) |
922,084 |
951,868 |
|||||
| Accumulated distributions in excess of net income |
(442,000) |
(438,432) |
|||||
| Total Investors Real Estate Trust shareholders' equity |
618,758 |
652,110 |
|||||
| Noncontrolling interests – Operating Partnership (13,863,575 units at January 31, 2016 and 13,999,725 units at April 30, 2015) |
78,484 |
58,325 |
|||||
| Noncontrolling interests – consolidated real estate entities |
21,020 |
30,519 |
|||||
| Total equity |
718,262 |
740,954 |
|||||
| TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
$ |
1,760,177 |
$ |
1,997,837 |
|||
| INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES |
|||||||||||||
| (in thousands, except per share data) |
|||||||||||||
| Three Months Ended |
Twelve Months Ended |
||||||||||||
| April 30 |
April 30 |
||||||||||||
| 2016 |
2015 |
2016 |
2015 |
||||||||||
| REVENUE |
|||||||||||||
| Real estate rentals |
$ |
44,065 |
$ |
40,629 |
$ |
170,698 |
$ |
159,969 |
|||||
| Tenant reimbursement |
4,458 |
4,512 |
17,622 |
19,352 |
|||||||||
| TOTAL REVENUE |
48,523 |
45,141 |
188,320 |
179,321 |
|||||||||
| EXPENSES |
|||||||||||||
| Property operating expenses, excluding real estate taxes |
14,907 |
13,661 |
58,859 |
53,535 |
|||||||||
| Real estate taxes |
5,617 |
4,883 |
20,241 |
19,602 |
|||||||||
| Depreciation and amortization |
13,517 |
11,180 |
49,832 |
42,784 |
|||||||||
| Impairment of real estate investments |
2,223 |
— |
5,543 |
4,663 |
|||||||||
| General and administrative expenses |
2,951 |
2,516 |
11,267 |
11,824 |
|||||||||
| Acquisition and investment related costs |
397 |
125 |
830 |
362 |
|||||||||
| Other expenses |
950 |
207 |
2,231 |
1,647 |
|||||||||
| TOTAL EXPENSES |
40,562 |
32,572 |
148,803 |
134,417 |
|||||||||
| Operating income |
7,961 |
12,569 |
39,517 |
44,904 |
|||||||||
| Interest expense |
(10,062) |
(8,972) |
(35,768) |
(34,447) |
|||||||||
| Loss on extinguishment of debt |
— |
— |
(106) |
— |
|||||||||
| Interest income |
569 |
557 |
2,256 |
2,238 |
|||||||||
| Other income |
31 |
347 |
317 |
718 |
|||||||||
| (Loss) income before gain (loss) on sale of real estate and other investments and income from discontinued operations |
(1,501) |
4,501 |
6,216 |
13,413 |
|||||||||
| Gain (loss) on sale of real estate and other investments |
8,369 |
6,904 |
9,640 |
6,093 |
|||||||||
| Gain on bargain purchase |
3,424 |
— |
3,424 |
0 |
|||||||||
| Income from continuing operations |
10,292 |
11,405 |
19,280 |
19,506 |
|||||||||
| Income from discontinued operations |
1,463 |
2,457 |
57,322 |
9,178 |
|||||||||
| NET INCOME |
11,755 |
13,862 |
76,602 |
28,684 |
|||||||||
| Net income attributable to noncontrolling interests – Operating Partnership |
(1,092) |
(908) |
(7,032) |
(1,526) |
|||||||||
| Net loss (income) attributable to noncontrolling interests – consolidated real estate entities |
340 |
(2,201) |
2,436 |
(3,071) |
|||||||||
| Net income attributable to Investors Real Estate Trust |
11,003 |
10,753 |
72,006 |
24,087 |
|||||||||
| Dividends to preferred shareholders |
(2,878) |
(2,878) |
(11,514) |
(11,514) |
|||||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS |
$ |
8,125 |
$ |
7,875 |
$ |
60,492 |
$ |
12,573 |
|||||
| Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted |
$ |
.06 |
$ |
.05 |
$ |
.08 |
$ |
.04 |
|||||
| Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted |
.01 |
.02 |
.41 |
.07 |
|||||||||
| NET INCOME PER COMMON SHARE – BASIC AND DILUTED |
$ |
.07 |
$ |
.07 |
$ |
.49 |
$ |
.11 |
|||||
| DIVIDENDS PER COMMON SHARE |
$ |
.13 |
$ |
.13 |
$ |
.52 |
$ |
.52 |
|||||
| INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES |
|||||||||||||||||
| (in thousands, except per share amounts) |
|||||||||||||||||
| Three Months Ended April 30, |
2016 |
2015 |
|||||||||||||||
| 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 |
$ |
11,003 |
$ |
10,753 |
|||||||||||||
| Less dividends to preferred shareholders |
(2,878) |
(2,878) |
|||||||||||||||
| Net income available to common shareholders |
8,125 |
120,943 |
$ |
0.07 |
7,875 |
123,286 |
$ |
0.05 |
|||||||||
| Adjustments: |
|||||||||||||||||
| Noncontrolling interest – Operating Partnership |
1,092 |
15,495 |
908 |
14,126 |
|||||||||||||
| Depreciation and amortization of real property |
15,694 |
18,083 |
|||||||||||||||
| Impairment of real estate investments |
2,223 |
— |
|||||||||||||||
| Gain on depreciable property sales |
(7,910) |
(4,890) |
|||||||||||||||
| FFO applicable to Common Shares and Units(1)(3) |
$ |
19,224 |
136,438 |
$ |
0.14 |
$ |
21,976 |
137,412 |
$ |
0.17 |
|||||||
| (in thousands, except per share amounts) |
|||||||||||||||||
| Twelve Months Ended April 30, |
2016 |
2015 |
|||||||||||||||
| 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 |
$ |
72,006 |
$ |
24,087 |
|||||||||||||
| Less dividends to preferred shareholders |
(11,514) |
(11,514) |
|||||||||||||||
| Net income available to common shareholders |
60,492 |
123,094 |
$ |
0.49 |
12,573 |
118,004 |
$ |
0.11 |
|||||||||
| Adjustments: |
|||||||||||||||||
| Noncontrolling interest – Operating Partnership |
7,032 |
14,278 |
1,526 |
16,594 |
|||||||||||||
| Depreciation and amortization of real property |
63,789 |
70,450 |
|||||||||||||||
| Impairment of real estate investments |
5,983 |
6,105 |
|||||||||||||||
| Gain on depreciable property sales |
(33,422) |
(4,079) |
|||||||||||||||
| FFO applicable to Common Shares and Units(1)(3) |
$ |
103,874 |
137,372 |
$ |
0.76 |
$ |
86,575 |
134,598 |
$ |
0.64 |
|||||||
| ____________________________ |
|
| (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. |
| (3) |
Excluding gain or loss on extinguishment of debt, default interest and gain on bargain purchase, FFO would have been $15.8 million and $0.12 per Common Share and Unit for the three months ended April 30, 2016 and $75.9 million and $0.55 per Common Share and Unit for the twelve months ended April 30, 2016. |
| INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES |
|||||||||||||
| (in thousands) |
|||||||||||||
| Three Months Ended April 30, 2016 |
Multifamily |
Healthcare |
All Other |
Total |
|||||||||
| Real estate revenue |
$ |
34,116 |
$ |
11,632 |
$ |
2,775 |
$ |
48,523 |
|||||
| Real estate expenses |
15,623 |
4,263 |
638 |
20,524 |
|||||||||
| Net operating income |
$ |
18,493 |
$ |
7,369 |
$ |
2,137 |
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 |
600 |
||||||||||||
| Loss before gain on sale of real estate and other investments, gain on bargain purchase and income from discontinued operations |
(1,501) |
||||||||||||
| Gain on sale of real estate and other investments |
8,369 |
||||||||||||
| Gain on bargain purchase |
3,424 |
||||||||||||
| Income from continuing operations |
10,292 |
||||||||||||
| Income from discontinued operations |
1,463 |
||||||||||||
| Net income |
$ |
11,755 |
|||||||||||
| (in thousands) |
|||||||||||||
| Three Months Ended April 30, 2015 |
Multifamily |
Healthcare |
All Other |
Total |
|||||||||
| Real estate revenue |
$ |
30,949 |
$ |
10,693 |
$ |
3,499 |
$ |
45,141 |
|||||
| Real estate expenses |
13,469 |
4,055 |
1,020 |
18,544 |
|||||||||
| Net operating income |
$ |
17,480 |
$ |
6,638 |
$ |
2,479 |
26,597 |
||||||
| Depreciation and amortization |
(11,180) |
||||||||||||
| General and administrative expenses |
(2,516) |
||||||||||||
| Acquisition and investment related costs |
(125) |
||||||||||||
| Other expenses |
(207) |
||||||||||||
| Interest expense |
(8,972) |
||||||||||||
| Interest and other income |
904 |
||||||||||||
| Income before gain on sale of real estate and other investments and income from discontinued operations |
4,501 |
||||||||||||
| Gain on sale of real estate and other investments |
6,904 |
||||||||||||
| Income from continuing operations |
11,405 |
||||||||||||
| Income from discontinued operations |
2,457 |
||||||||||||
| Net income |
$ |
13,862 |
|||||||||||
| INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES |
|||||||||||||
| (in thousands) |
|||||||||||||
| Twelve Months Ended April 30, 2016 |
Multifamily |
Healthcare |
All Other |
Total |
|||||||||
| Real estate revenue |
$ |
131,149 |
$ |
45,621 |
$ |
11,550 |
$ |
188,320 |
|||||
| Real estate expenses |
60,477 |
16,021 |
2,602 |
79,100 |
|||||||||
| Net operating income |
$ |
70,672 |
$ |
29,600 |
$ |
8,948 |
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 |
2,573 |
||||||||||||
| Income before gain on sale of real estate and other investments, gain on bargain purchase and income from discontinued operations |
6,216 |
||||||||||||
| Gain on sale of real estate and other investments |
9,640 |
||||||||||||
| Gain on bargain purchase |
3,424 |
||||||||||||
| Income from continuing operations |
19,280 |
||||||||||||
| Income from discontinued operations |
57,322 |
||||||||||||
| Net income |
$ |
76,602 |
|||||||||||
| (in thousands) |
|||||||||||||
| Twelve Months Ended April, 2015 |
Multifamily |
Healthcare |
All Other |
Total |
|||||||||
| Real estate revenue |
$ |
118,526 |
$ |
44,153 |
$ |
16,642 |
$ |
179,321 |
|||||
| Real estate expenses |
51,172 |
16,240 |
5,725 |
73,137 |
|||||||||
| Net operating income |
$ |
67,354 |
$ |
27,913 |
$ |
10,917 |
106,184 |
||||||
| Depreciation and amortization |
(42,784) |
||||||||||||
| Impairment of real estate investments |
(4,663) |
||||||||||||
| General and administrative expenses |
(11,824) |
||||||||||||
| Acquisition and investment related costs |
(362) |
||||||||||||
| Other expenses |
(1,647) |
||||||||||||
| Interest expense |
(34,447) |
||||||||||||
| Interest and other income |
2,956 |
||||||||||||
| Income before loss on sale of real estate and other investments and income from discontinued operations |
13,413 |
||||||||||||
| Loss on sale of real estate and other investments |
6,093 |
||||||||||||
| Income from continuing operations |
19,506 |
||||||||||||
| Income from discontinued operations |
9,178 |
||||||||||||
| Net income |
$ |
28,684 |
|||||||||||
SOURCE Investors Real Estate Trust
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