Published:
Investors Real Estate Trust Announces Results for the Three and Twelve Months Ended April 30, 2007
Investors Real Estate Trust (NASDAQ: IRETS)
(NASDAQ: IRETP), a real estate investment trust with a diversified
portfolio of multi-family residential and office, medical, industrial and
retail properties located primarily in the upper Midwest, reported the
following results today for the three and twelve months ended April 30,
2007:
(unaudited; in thousands, except per share
amounts)
-------------------------------------------
For the three months For the twelve months
ended April 30, ended April 30,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Revenues $ 52,698 $ 43,346 $ 197,817 $ 170,448
Net Income $ 4,035 $ 5,001 $ 14,110 $ 11,567
Net Income available to common
shareholders $ 3,442 $ 4,408 $ 11,738 $ 9,195
Net Income Per Share - Diluted $ .07 $ .10 $ .24 $ .20
Funds from Operations ("FFO") $ 15,345 $ 12,200 $ 57,003 $ 46,711
FFO Per Share - Diluted $ .23 $ .21 $ .88 $ .79
Total revenues for the three months ended April 30, 2007 were $52.7
million, compared to $43.3 million for the same period in 2006, a 21.7%
increase. Total revenues were $197.8 million and $170.4 million for the
twelve months ended April 30, 2007 and 2006, respectively, a 16.1%
increase. The increase in revenue for the three and twelve months ended
April 30, 2007 was due primarily to rent from properties acquired during
fiscal year 2007, and to increases in rent from properties acquired in
fiscal year 2006 in excess of that received in fiscal year 2006 from the
same properties.
Net Income available to common shareholders for the three months ended
April 30, 2007 was $3.4 million, compared to $4.4 million for the same
period in 2006, a 22.7% decrease due primarily to lower gains on sales of
properties in the fourth quarter of fiscal year 2007 compared to the fourth
quarter of fiscal year 2006. Net income available to common shareholders
was $11.7 million and $9.2 million for the twelve months ended April 30,
2007 and 2006, respectively, a 27.2% increase. The increase in net income
available to common shareholders for the twelve months ended April 30, 2007
was due primarily to an increase in rental income from new acquisitions.
Net Income per diluted share for the three months ended April 30, 2007 was
$.07, compared to $.10 for the same period in 2006, a 30.0% decrease. Net
Income per diluted share was $.24 and $.20 for the twelve months ended
April 30, 2007 and 2006, respectively, a 20.0% increase. The changes in net
income per share for the three and twelve months ended April 30, 2007
compared to the year-earlier periods were due to the same factors discussed
above affecting net income available to common shareholders.
Funds from Operations ("FFO"), a non-GAAP financial measure, was $15.3
million for the three months ended April 30, 2007, compared to $12.2
million for the same period in 2006, a 25.4% increase. FFO was $57.0
million and $46.7 million for the twelve months ended April 30, 2007 and
2006, respectively, a 22.1% increase. FFO per diluted share, a non-GAAP
financial measure, for the three months ended April 30, 2007 was $.23,
representing a 9.5% increase from FFO per diluted share of $.21 for the
three months ended April 30, 2006. FFO per diluted share for the twelve
months ended April 30, 2007 was $.88, representing an 11.4% increase over
FFO per diluted share of $.79 for the twelve months ended April 30, 2006.
A reconciliation of net income to FFO is provided in the condensed
consolidated statement of operations information below.
Economic Occupancy rates for each of IRET's property types are shown below
for the three and twelve months ended April 30, 2007 and 2006:
For the three For the twelve
months months
ended April 30, ended April 30,
-------------- --------------
2007 2006 2007 2006
------ ------ ------ ------
Multi-Family Residential Economic Occupancy 92.5% 91.7% 93.2% 91.6%
Commercial - Office Economic Occupancy 92.4% 93.2% 91.9% 92.6%
Commercial - Medical Economic Occupancy 96.3% 96.7% 96.7% 96.1%
Commercial - Industrial Economic Occupancy 97.8% 89.0% 95.1% 87.2%
Commercial - Retail Economic Occupancy 89.6% 88.6% 89.6% 89.2%
We define "economic occupancy" as 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.
Thomas A. Wentz, Sr., President and Chief Executive Officer, stated,
"During fiscal year 2007, IRET saw improvements in economic occupancy
levels in all of our property segments other than office properties. Our
revenues increased by $27.4 million in fiscal year 2007 compared to fiscal
year 2006, to $197.8 million compared to $170.4 million. We were able to
raise rents and decrease tenant concessions at certain of our multi-family
residential properties, as mortgage interest rate rises have begun to
decrease the availability of housing alternatives for our prospective
tenants. Additionally, despite continuing high prices for investment
properties that in some cases made it difficult for us to identify
acquisition properties meeting our investment criteria, during fiscal year
2007 IRET completed the largest acquisition in its history, when we
acquired a portfolio of office properties from Magnum Resources, Inc. In
fiscal year 2008, we will continue our focus on reducing vacancy levels,
improving operations, and pursuing the acquisition of quality multi-family
residential, office, medical, industrial and retail properties."
Company Information: IRET is a self-advised equity real estate investment
trust engaged in owning and operating income-producing properties located
primarily in the upper Midwest. IRET owns a diversified portfolio of 217
properties, consisting of 69 multi-family residential properties, 64 office
properties, 34 medical properties (including senior housing and assisted
living facilities), 13 industrial properties (including miscellaneous
commercial properties) and 37 retail properties.
IRET's cash distributions to common shareholders/unitholders during fiscal
year 2007 increased to 66.1 cents per share/unit, compared to 65.3 cents
paid in the prior fiscal year, an increase of 1%. In each of the last 36
calendar years, the annual distribution has increased over the amount paid
in the preceding year.
Annual Meeting of Shareholders: IRET's 37th Annual Meeting of Shareholders
will be held on Tuesday, September 18, 2007 at 7:00 p.m. CDT at the Grand
International, 1505 North Broadway, Minot, North Dakota.
A full description and discussion of IRET's results of operations for
fiscal year 2007 will be contained in IRET's Annual Report on Form 10-K,
which will be filed with the Securities and Exchange Commission no later
than July 16, 2007, and mailed to shareholders in August. IRET's press
releases 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. Such risks,
uncertainties and other factors include, but are not limited to: potential
fluctuations in our operating results; the need for additional capital; the
direction of interest rates and their subsequent effect on our business;
competition; our ability to attract and retain skilled personnel; and those
risks and uncertainties discussed in filings made by us with the Securities
and Exchange Commission. Except as otherwise required by the federal
securities laws, the Company assumes no liability to update the information
in this press release.
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30, 2007 and 2006 (unaudited)
(in thousands)
------------------------
2007 2006
----------- -----------
ASSETS
Real estate investments
Property owned $ 1,489,287 $ 1,269,423
Less accumulated depreciation (180,544) (148,607)
----------- -----------
1,308,743 1,120,816
Unimproved land 7,392 5,175
Mortgage loan receivable, net of allowance 399 409
----------- -----------
Total real estate investments 1,316,534 1,126,400
Other assets
Cash and cash equivalents 44,516 17,485
Marketable securities - available-for-sale 2,048 2,402
Receivable arising from straight-lining of
rents, net of allowance 12,558 9,474
Accounts receivable, net of allowance 3,171 2,364
Real estate deposits 735 1,177
Prepaid and other assets 568 436
Intangible assets, net of accumulated
amortization 33,240 26,449
Tax, insurance, and other escrow 7,222 8,893
Property and equipment, net 1,458 1,506
Goodwill 1,397 1,441
Deferred charges and leasing costs - net 11,942 9,288
----------- -----------
TOTAL ASSETS $ 1,435,389 $ 1,207,315
=========== ===========
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 28,995 $ 24,223
Revolving lines of credit 0 3,500
Mortgages payable 951,139 765,890
Investment certificates issued 11 2,451
Other 885 1,075
----------- -----------
TOTAL LIABILITIES 981,030 797,139
----------- -----------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST IN PARTNERSHIPS 12,925 16,403
MINORITY INTEREST OF UNITHOLDERS IN OPERATING
PARTNERSHIP 156,465 104,213
(19,981,259 units at April 30, 2007 and
13,685,522 units at April 30, 2006)
SHAREHOLDERS’ EQUITY
Preferred Shares of Beneficial Interest
(Cumulative redeemable preferred shares, no
par value,1,150,000 shares issued and
outstanding at April 30, 2007 and 2006,
aggregate liquidation preference of
$28,750,000) 27,317 27,317
Common Shares of Beneficial Interest (Unlimited
authorization, no par value, 48,570,461 shares
outstanding at April 30, 2007, and 46,915,352
shares outstanding at April 30, 2006) 354,495 339,384
Accumulated distributions in excess of net
income (96,827) (77,093)
Accumulated other comprehensive loss (16) (48)
----------- -----------
Total shareholders’ equity 284,969 289,560
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,435,389 $ 1,207,315
=========== ===========
INVESTORS REAL ESTATE TRUST
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER AND YEAR ENDED
APRIL 30, 2007 and 2006
(in thousands, except per share data)
(unaudited)
Results from Operations
For the Three-Month and Twelve-Month Periods ended April 30, 2007 and 2006
(unaudited)
(in thousands, except per share amounts)
------------------------------------------
3 Months Ended 12 Months Ended
-------------------- --------------------
04-30-07 04-30-06 04-30-07 04-30-06
--------- --------- --------- ---------
Revenues $ 52,698 $ 43,346 $ 197,817 $ 170,448
========= ========= ========= =========
Net income $ 4,035 $ 5,001 $ 14,110 $ 11,567
Preferred stock dividends (593) (593) (2,372) (2,372)
--------- --------- --------- ---------
Net income available to common
shareholders 3,442 4,408 11,738 9,195
Minority interest in earnings
of unitholders 1,390 1,284 4,299 2,705
--------- --------- --------- ---------
Diluted Net Income $ 4,832 $ 5,692 $ 16,037 $ 11,900
========= ========= ========= =========
Net income per common share:
Basic and diluted $ .07 $ .10 $ .24 $ .20
========= ========= ========= =========
Average number of common
shares and share
equivalents outstanding:
Basic 48,313 45,585 47,672 45,717
========= ========= ========= =========
Diluted 67,284 58,588 64,639 59,046
========= ========= ========= =========
FFO applicable to common shares $ 15,345 $ 12,200 $ 57,003 $ 46,711
========= ========= ========= =========
FFO per diluted share $ .23 $ .21 $ .88 $ .79
========= ========= ========= =========
Average number of common
shares and share equivalents
outstanding used for
determining funds from
operations per diluted share 67,284 58,588 64,639 59,046
========= ========= ========= =========
Reconciliation of Net Income to Funds From Operations
For the Three-Month Periods ended April 30, 2007 and 2006 (unaudited)
(unaudited, in thousands, except per share amounts)
---------------------------------------------------
3 Months Ended
---------------------------------------------------
04-30-07 04-30-06
------------------------ -------------------------
Weighted Weighted
Avg Per Avg Per
Shares Share & Shares Share &
Amount Units(2) Unit(3) Amount Units(2) Unit(3)
-------- --------- ----- -------- --------- -------
Net Income $ 4,035 $ 5,001
Less dividends to
preferred
shareholders (593) (593)
-------- --------- ----- ------- --------- -------
Net Income Available
to Common
Shareholders $ 3,442 48,313 $ .07 $ 4,408 45,585 $ .10
Adjustments:
Minority interest in
earnings of
unitholders 1,390 18,971 1,284 13,003
Depreciation and
amortization(1) 12,129 9,779
Gains on depreciable
property sales (1,616) (3,271)
-------- --------- ----- ------- --------- -------
Funds from operations
applicable to common
shares and units(4) $ 15,345 67,284 $ .23 $12,200 58,588 $ .21
======== ========= ===== ======= ========= =======
For the Twelve-Month Periods ended April 30, 2007 and 2006 (unaudited)
(unaudited, in thousands, except per share amounts)
----------------------------------------------------
12 Months Ended
----------------------------------------------------
04-30-07 04-30-06
------------------------ --------------------------
Weighted Weighted
Avg Per Avg Per
Shares Share & Shares Share &
Amount Units(2) Unit(3) Amount Units(2) Unit(3)
-------- --------- ----- -------- --------- -------
Net Income $ 14,110 $ 11,567
Less dividends to
preferred
shareholders (2,372) (2,372)
-------- --------- ----- -------- --------- -------
Net Income Available
to Common
Shareholders $ 11,738 47,672 $ .25 $ 9,195 45,717 $ .20
Adjustments:
Minority interest in
earnings of
unitholders 4,299 17,017 2,705 13,329
Depreciation and
amortization(1) 45,568 38,104
Gains on depreciable
property sales (4,602) (3,293)
-------- --------- ----- -------- --------- -------
Funds from operations
applicable to common
shares and units(4) $ 57,003 64,639 $ .88 $ 46,711 59,046 $ .79
======== ========= ===== ======== ========= =======
(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 $12,065
and $9,578, and depreciation/amortization from Discontinued
Operations of $130 and $258, less corporate-related depreciation
and amortization on office equipment and other assets of $66 and
$57, for the three months ended April 30, 2007 and 2006,
respectively. 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
$45,563 and $37,698, and depreciation/amortization from Discontinued
Operations of $246 and $629, less corporate-related depreciation and
amortization on office equipment and other assets of $241 and $223,
for the twelve months ended April 30, 2007 and 2006, 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) In accordance with SEC and NAREIT guidance, IRET does not exclude
impairment write-downs from FFO (that is, impairment charges are not
added back to GAAP net income in calculating FFO). IRET recorded
impairment charges of $640, $409 and $570 for the fiscal years
ended April 30, 2007, 2006 and 2005, respectively. If these
impairment charges are excluded from the Company's calculation of
FFO, the Company's FFO per share and unit would be $.89 and $.80 for
Fiscal 2007 and 2006, respectively.
Property Acquisitions
During fiscal year 2007, IRET purchased from subsidiaries of Omaha-based
Magnum Resources, Inc., a portfolio of nine office complexes, consisting of
15 buildings totaling approximately 936,568 rentable square feet, for
aggregate consideration of approximately $140.8 million (the "Magnum
Portfolio"). In addition to the Magnum Portfolio, the Company during
fiscal year 2007 added five apartment properties, one office property, two
medical properties (including the acquisition of the remaining ownership
interest in a medical office building previously partially owned by the
Company), two industrial properties, two retail properties (including the
construction of a retail drug store property to replace an existing older
retail property owned by the Company) and six parcels of unimproved land to
its investment portfolio, for an aggregate purchase price and construction
cost (including the Magnum properties) of approximately $220.7 million.
During fiscal year 2006, IRET added seven medical properties (including
five assisted living senior housing facilities), six office properties, one
multi-family residential property and two small parcels of vacant land
adjoining existing Company properties to our investment portfolio, for an
aggregate purchase price of approximately $93.4 million. Real estate
assets acquired by IRET during fiscal year 2007 are as follows:
Fiscal 2007 Acquisitions (May 1, 2006 to April 30, 2007) (in thousands)
----------------
Acquisition Cost
----------------
Multi-Family Residential
Arbors Apartments - Sioux City, NE $ 7,000
Quarry Ridge Apartments - Rochester, MN 14,570
St. Cloud Apartments -St. Cloud, MN 7,800
Indian Hills Apartments -Sioux City, IA 3,120
Rum River Apartments -Isanti, MN 5,650
----------------
38,140
Commercial Property - Office
Pacific Hills - Omaha, NE 16,502
Corporate Center West - Omaha, NE 21,497
Farnam Executive Center - Omaha, NE 12,853
Miracle Hills One - Omaha, NE 11,950
Woodlands Plaza IV - Maryland Heights, MO 5,840
Riverport - Maryland Heights, MO 21,906
Timberlands - Leawood, KS 14,546
Flagship - Eden Prairie, MN 26,094
Gateway Corporate Center - Woodbury, MN 9,612
Highlands Ranch I - Highlands Ranch, CO 12,250
----------------
153,050
Commercial Property - Medical (including assisted living)
Fox River Cottages - Grand Chute, WI 3,200
St. Michael Clinic - St. Michael, MN* 2,587
----------------
5,787
Commercial Property - Industrial
Bloomington 2000 - Bloomington, MN 6,750
Roseville 2929 - Roseville, MN 10,300
----------------
17,050
Commercial Property - Retail
Dakota West Plaza - Minot, ND 625
Weston Walgreens - Weston, WI** 2,144
----------------
2,769
Undeveloped Property
Monticello Undeveloped Parcel (City) - Monticello, MN 5
St. Michaels Undeveloped - St. Michael, MN 320
Monticello Undeveloped Parcel (Other) - Monticello, MN 75
Weston Undeveloped - Weston, WI 800
Quarry Ridge Undeveloped - Rochester, MN 930
Minot Prairie Green - Minot, ND 1,750
----------------
3,880
----------------
Total Fiscal 2007 Property Acquisitions $ 220,676
================
* Development property placed in service March 1, 2007.
** Development property placed in service May 1, 2006.
Property Dispositions
During fiscal year 2007, the Company disposed of two apartment complexes,
one office property, one medical (assisted living) property, 11 small
retail properties and two parcels of unimproved land, for sale prices
totaling approximately $22.5 million.
During fiscal year 2006, IRET Properties disposed of 17 properties and two
undeveloped properties for an aggregate sale price of $14.2 million. Real
estate assets sold by IRET during fiscal year 2007 are as follows:
Fiscal 2007 Dispositions
(May 1, 2006 to April 30, 2007) (in thousands)
-----------------------------------
Book Value
and Sales
Sales Price Cost Gain/Loss
----------- ----------- ----------
Multi-Family Residential
Clearwater Apartments - Boise, ID $ 4,000 $ 3,413 $ 587
Park East Apartments - Fargo, ND 6,188 4,476 1,712
----------- ----------- ----------
10,188 7,889 2,299
Commercial Property - Office
Greenwood Office - Greenwood, MN 1,500 961 539
----------- ----------- ----------
1,500 961 539
Commercial Property - Medical (Assisted
Living)
Wedgewood Sweetwater - Lithia
Springs, GA 4,550 3,836 714
----------- ----------- ----------
4,550 3,836 714
Commercial Property - Retail
Moundsview Bakery - Mounds View, MN 380 287 93
Howard Lake C-Store - Winsted, MN 550 374 176
Wilmar Sam Goody - Wilmar, MN 450 409 41
Winsted C-Store - Winsted, MN 190 214 (24)
Buffalo Strip Center - Buffalo, MN 800 667 133
Glencoe C-Store - Glencoe, MN 350 344 6
Long Prairie C-Store - Long
Prairie, MN 302 304 (2)
Faribault Checkers Auto -
Faribault, MN 525 337 188
Paynesville C-Store - Paynesville, MN 149 150 (1)
Prior Lake Strip Center I - Prior
Lake, MN 1,105 993 112
Prior Lake Strip Center III - Prior
Lake, MN 545 465 80
----------- ----------- ----------
5,346 4,544 802
Undeveloped Property
IGH Land - Inver Grove Heights, MN 900 613 287
Long Prairie Vacant Land - Long
Prairie, MN 59 60 (1)
----------- ----------- ----------
959 673 286
----------- ----------- ----------
Total Fiscal 2007 Property Dispositions $ 22,543 $ 17,903 $ 4,640
=========== =========== ==========
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