<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
(Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended July 31, 1995
Commission file number 0-14851
INVESTORS REAL ESTATE TRUST
(Exact name of registrant as specified in its charter)
North Dakota 45-0311232
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12 South Main, Minot, ND 58701
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area
code:(701)852-1756
(Former name, former address and former fiscal year, if
changed since last report.) No change
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __X___ No ______
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date. Applicant is a Business Trust. As of July
31, 1995, it had 11,697,025 Shares of Beneficial Interest
outstanding.
<PAGE>
PART I
Item 1. Financial Statements.
The following financial statements have been prepared from
the records of Investors Real Estate Trust and its seven
affiliated limited partnerships and have not been audited or
reviewed by the Trust's independent certified public
accountants. Accordingly, these statements are subject to
adjustments upon audit, which audit will be conducted for
the Fiscal Year ending April 30, 1996. Reference is made to
the footnotes to the Statements prepared by the Trust's
auditors for the Fiscal Year ended April 30, 1995, contained
in the Annual Report for Fiscal 1995. In the opinion of the
Trust, there have been no developments requiring footnote
disclosure for the periods covered by the Financial
Statements set forth below that are not adequately disclosed
in the footnotes to the April 30, 1995, statements.
<PAGE>
BALANCE SHEETS
For the Periods Ended July 31, 1995 & 1994
(unaudited)
<TABLE>
<CAPTION>
ASSETS: 07-31-95 07-31-94
<S> <C> <C>
Cash $ 1,442,979 $ 3,969,344
Marketable Securities 4,712,181 5,163,911
Tax & Insurance Escrow 906,502 481,169
Deferred Charges 225,787 232,910
Prepaid Insurance 76,787 33,917
Deposits 25,000 475,148
$ 7,389,236 $10,356,399
Real Estate Investments
Real Estate Owned $112,423,263 $70,659,303
Less Accumulated Deprec. (13,580,483) (11,820,925)
Net Real Estate Owned 98,842,780 58,838,378
Real Estate Mortgages (related) 117,692 628,444
Real Estate Mortgages
(unrelated) 3,651,972 6,994,232
Less Unearned Discounts (34,792) (49,462)
Less Deferred Gain from
Property Dispositions (219,861) (235,360)
Less Reserve for Bad Debts (267,096) (293,366)
Net Mortgages & Contracts 3,247,915 7,044,488
Total Real Estate Investments $102,090,695 $65,882,866
TOTAL ASSETS $109,479,931 $76,239,265
LIABILITIES:
Accounts Payable & Other
Liabilities $ 4,890,340 $ 997,704
Mortgages Payable 58,305,787 38,502,596
Investment Certificates
Payable 5,166,884 4,800,260
Due on Margin Account 0 0
TOTAL LIABILITIES $68,363,011 $44,300,560
SHAREHOLDERS' EQUITY
Shares of Beneficial Interest
Outstanding Shares of 07-31-95 07-31-94
11,697,025 as of 07/31/95
10,184,996 as of 07/31/94 $44,633,712 $35,762,886
Undistributed Net Income (3,516,792) (3,824,180)
Total Shareholders' Equity $41,116,920 $31,938,706
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $109,479,931 $76,239,266
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
For the Three-Month Periods Ended July 31, 1995 & 1994
(unaudited)
<TABLE>
<CAPTION>
3 Months Ended
July 31
OPERATING INCOME: 1995 1994
<S> <C> <C>
Real Estate Rentals $3,542,483 $2,992,775
Interest Income 215,178 287,821
Mortgage Discount & Fees 24,400 48,200
$3,782,061 $3,328,796
OPERATING EXPENSE:
Interest $1,116,188 $ 831,868
Utilities & Maintenance 495,287 629,936
Property Management 163,863 177,318
Taxes & Insurance 371,562 288,501
Advisory & Trustees Fees 98,183 79,923
Operating Expenses 31,510 26,495
$2,276,593 $2,034,041
OPERATING INCOME
(before reserves): $1,505,468 $1,294,755
DEPRECIATION (496,000) (450,000)
OPERATING INCOME (after reserves): $1,009,468 $ 844,755
GAIN ON SALE OF INVESTMENTS 0 0
NET TAXABLE INCOME $1,009,468 $ 844,755
NET INCOME PER SHARE:
Operating Income
(after depreciation) .09 .08
Gain on Sale of Investments 0 0
Total Taxable Income/Share .09 .08
DIVIDENDS PAID PER SHARE .0925 .088
Average Number of Shares
Outstanding 11,500,787 10,033,319
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH PERIODS ENDED JULY 31, 1995, AND 1994
(unaudited)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES 1995 1994
<S> <C> <C>
Net Income $ 1,009,469 $ 844,756
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 496,000 450,000
Interest reinvested in investment
certificates 14,375 30,131
Changes in other assets and liabilities:
(Increase) decrease in other assets (564,305) (158,102)
Increase in accounts payable and
accrued expenses 431,283 403,678
NET CASH PROVIDED FROM OPERATING
ACTIVITIES $1,386,822 $1,570,463
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of securities 120,415 107,543
Principal payments on mortgage
loan receivables 1,305,458 881,331
Payments for acquisition of
properties (20,443,742) (2,367,538)
Investment in mortgage loan
receivables (68,395) (51,204)
NET CASH PROVIDED FROM (USED FOR)
INVESTING ACTIVITIES $(19,086,264) $(1,429,868)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan refinance $ 8,657,569 $ 1,447,779
Proceeds from sale of shares 2,618,862 1,114,664
Dividends paid (408,420) (327,231)
Proceeds from investment
certificates issued 212,863 307,775
Loan on margin account 3,773,437 0
Redemption of investment
certificates (142,293) (141,452)
Principal payments on mortgage
loans and notes payable (342,339) (564,365)
Payments on margin account 0 0
NET CASH USED FOR FINANCING
ACTIVITIES $14,369,679 $ 1,837,170
NET INCREASE (DECREASE) IN CASH $(3,329,763) $ 1,977,765
CASH AT APRIL 30 $ 4,772,742 $ 1,991,578
CASH AT JULY 31 $ 1,442,979 $ 3,969,343
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUPPLEMENTARY SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES 1995 1994
<S> <C> <C>
Dividends reinvested $ 655,347 $ 551,255
Real estate investment and mortgage
loans receivable acquired through
borrowings on margin account and
new originations 8,657,569 1,827,651
Mortgages paid directly by owner of
contract 0 5,007
Interest reinvested directly in
investment certificates 14,375 30,131
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest paid on mortgages $ 1,043,164 $ 732,273
Interest paid on margin account
and other 0 0
Interest paid on investment
certificates 30,477 32,379
$10,400,932 $ 3,178,696
</TABLE>
(The balance of this page was left blank intentionally.)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations. IRET had net taxable earnings for
its first quarter of Fiscal 1996 of $1,009,468, compared to
$844,755 for the same period of the prior fiscal year, an
increase of 19%.
Funds from operations (taxable income increased by non-cash deductions of
depreciation and amortization, less extraordinary income items) increased to
$1,505,468 from the year earlier figure of $1,294,755, an increase of 16%.
This increase in earnings and Funds From Operations resulted from:
- the addition of the Pine Cone and West Stonehill
apartment complexes to our portfolio. During the
first month of ownership, earnings are favorably
influenced because rental income is received in
full, but many of the rental expenses are not
reflected until the following month.
- a continued strong rental market for most of our
properties. Occupancy is at or above normal levels
and we continue to seek rent increases.
We continue to be pleased with the performance of our
portfolio. The continued significant expansion of real
estate investments by IRET will result in important earnings
increases in the years ahead. For the short run, net taxable
earnings will grow at a modest level.
A considerable amount of capital is being invested in
constructing new properties and no "income" can be recorded
on this capital until the property is completed and begins
to produce rental income.
IRET has received notice that one of its tenants - Smith
Home Furnishings - has filed for Chapter 11 bankruptcy
production. The tenant has indicated that it plans to
continue with our Boise, Idaho, store. If so, IRET will
receive the agreed rent, but there is the possibility of a
default and the necessity to re-rent the property.
Financial Condition. IRET's liquidity and capital resources
remain strong and the Trust will close on the purchase of a
substantial amount of real estate investments during the
balance of this fiscal year. Comparative balance sheet
figures are:
<TABLE>
<CAPTION>
07/31/95 07/31/94
<S> <C> <C>
Cash and Marketable Securities $ 6,155,160 $ 9,133,255
Net Real Estate Owned 98,842,780 58,838,377
Net Real Estate Mortgages 3,247,915 7,044,488
Total Assets 109,479,931 76,239,265
Total Liabilities 68,363,011 44,300,560
Shareholder Equity 41,116,920 31,938,705
</TABLE>
<PAGE>
Consolidated Financial Reports. The Financial Statements
shown in this report consolidate IRET's financial report
with those of the seven limited partnerships of which IRET
is the General Partner and creditor.
Sale of Properties. During the first quarter, IRET did not
sell any of its properties, but an agreement to sell an
office building at 108 Burdick Expressway East in Minot for
$325,000 has been entered into. The gain on this sale will
be reported in the second quarter.
The following new investments were added to our portfolio
during the first quarter and are producing income:
- Barnes & Noble, Omaha, NE
Cost: $3,675,000
15 yr. lease
Return to IRET: 13.82%
- West Stonehill, St. Cloud, MN
Cost: $11,000,000
Units: 313
Return to IRET: 12.77%
- 18 Plex, Minot, ND
Cost: $590,000
Units: 18
The following properties are under construction:
- Stone Container ($4,850,000 commercial building
in Fargo, ND)
- 49-unit apartment complex in Bismarck, ND
- Land purchased in Douglasville, Georgia, to
construct a retirement center
- 196-unit apartment complex in Minot, ND
- Land in Grand Forks, ND, and Billings, MT,
to construct apartment complexes
Dividends. IRET paid a regular dividend of 8.75 cents, plus
a special dividend of .5 cents, for a total dividend of 9.25
cents per share on July 1, 1995, to shareholders of record
at the close of business on June 23, 1995. This was in
increase from the 8.625 cents per share dividend paid on
April 1, 1995, and was the 97th consecutive quarterly
dividend paid by IRET.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
IRET filed a Form 8-K on July 6, 1995, pursuant
to the purchase of a 313-unit (West Stonehill)
apartment complex located in St. Cloud, Minnesota.
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 thereunto duly
authorized.
INVESTORS REAL ESTATE TRUST
(Registrant)
Date: September 8, 1995 By_______________________________
Thomas A. Wentz, Vice-President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> JUL-31-1995
<CASH> 1,442,979
<SECURITIES> 4,712,181
<RECEIVABLES> 3,769,664
<ALLOWANCES> (521,749)
<INVENTORY> 0
<CURRENT-ASSETS> 1,234,076
<PP&E> 112,423,263
<DEPRECIATION> (13,580,483)
<TOTAL-ASSETS> 109,479,931
<CURRENT-LIABILITIES> 4,890,340
<BONDS> 63,472,671
<COMMON> 44,633,712
0
0
<OTHER-SE> (3,516,792)
<TOTAL-LIABILITY-AND-EQUITY> 109,479,931
<SALES> 0
<TOTAL-REVENUES> 3,782,061
<CGS> 0
<TOTAL-COSTS> 1,656,405
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,116,188
<INCOME-PRETAX> 1,009,468
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,009,188
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,009,188
<EPS-PRIMARY> .09
<EPS-DILUTED> 0
</TABLE>
