<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-K
Annual Report Pursuant To
Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File No.
April 30, 1995 0-14851
----------------------
INVESTORS REAL ESTATE TRUST
(Exact name of Registrant as specified in its charter)
North Dakota 45-0311232
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
12 South Main, Minot, North Dakota 58701
(Address of principal executive offices) (Zip Code)
701-852-1756
(Registrant's Telephone Number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Capital Shares of Beneficial Interest Not Listed
----------------------
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the Registrant's outstanding Capital Shares
of Beneficial Interest held by non-affiliates is $69,738,125 based on the last
reported sale price on June 23, 1995.
The number of shares outstanding as of June 23, 1995 was 11,565,195 Capital
Shares of Beneficial Interest (no par value).
Portions of the Trust's definitive proxy statement for the 1995 annual
meeting of shareholders are incorporated by reference in Part III hereof.
- - --------------------------------------------------------------------------------
<PAGE>
INVESTORS REAL ESTATE TRUST
(Registrant)
INDEX
Item Page
No. No.
- - --- ---
Cover Page . . . . . . . . . . . . . . . . . . . . . . . 1
Index. . . . . . . . . . . . . . . . . . . . . . . . . . 2
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . 5
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 10
4. Submission of Matters to a Vote of Security Holders. . . 11
PART II
5. Market for Registrant's Common Stock and
Related Security Holder Matters. . . . . . . . . . . . . 11
6. Selected Financial Data. . . . . . . . . . . . . . . . . 12
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . 12
8. Financial Statements and Supplementary Data. . . . . . . 19
9. Disagreements on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . 19
PART III
10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . . . . 19
11. Executive Compensation . . . . . . . . . . . . . . . . . 21
12. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . 21
13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . . . . . 21
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K. . . . . . . . . . . . . . . . . . . 21
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . 22
Signatures . . . . . . . . . . . . . . . . . . . . . . . 24
Report of Independent Certified Public
Accountants. . . . . . . . . . . . . . . . . . . . . . . F-3
2
<PAGE>
PART I
Item 1. BUSINESS
Investors Real Estate Trust (hereinafter "IRET"), an unincorporated business
trust, was organized under the laws of the State of North Dakota on July 31,
1970. IRET has qualified and operated as a "real estate investment trust" under
Sections 856-858 of the Internal Revenue Code since its inception.
IRET, pursuant to the requirements of Sections 856-858 of the Internal Revenue
Code which govern real estate investment trusts, is engaged in the business of
making passive investments in real estate equities and mortgages.
IRET has its only office in Minot, North Dakota, and operates principally within
the confines of the State of North Dakota, although it has some real estate
investments in the states of Minnesota, South Dakota, Nebraska, Montana,
Colorado, Wisconsin, Arizona and Idaho.
IRET is the general partner of seven limited partnerships which own investment
real estate. IRET, as the general partner and as a creditor of said limited
partnerships, has a substantial influence over the operation of the
partnerships. Thus, the financial statements of IRET and the seven partnerships
have been consolidated for financial reporting purposes and all material
intercompany transactions and balances have been eliminated. The seven limited
partnerships are:
Eastgate Properties, Ltd.
Bison Properties, Ltd.
First Avenue Building, Ltd.
Chateau Properties, Ltd.
Sweetwater Properties, Ltd.
Hill Park Properties, Ltd.
Colton Heights, Ltd.
IRET operates on a fiscal year ending April 30. For its past three fiscal
years, its sources of operating revenue, total expenses, net real estate
investment income, capital gain income, total income, and dividend distributions
consolidated with said seven limited partnerships are as follows:
3
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Ending 4/30
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
REVENUE FROM OPERATIONS
Real Estate Rentals $12,733,261 $10,204,670 $6,376,733
Interest, Discount &
Fees
1,384,433 1,679,909 1,939,910
---------- ---------- ---------
$14,117,694 $11,884,579 $8,316,643
EXPENSE $10,549,680 $ 8,706,478 $6,085,551
---------- ---------- ---------
NET REAL ESTATE INVESTMENT
INCOME $ 3,568,014 $ 3,178,101 $2,231,092
GAIN ON SALE OF INVESTMENTS
(CAPITAL GAIN) 403,094 64,962 132,610
---------- ---------- ---------
NET INCOME $ 3,971,108 $ 3,243,063 $2,363,702
---------- ---------- ---------
---------- ---------- ---------
PER SHARE
Net Income $ .38 $ .35 $ .29
Dividends Paid $ .35 $ .33 $ .32
</TABLE>
As indicated above, IRET has two principal sources of operating revenue: rental
income from real estate properties owned by the trust and interest income from
mortgages and contracts for deed secured by real estate. A minor amount of
revenue is derived from interest on short-term investments in government
securities, interest on savings deposits and fees derived from serving as a
general partner of certain limited partnerships. In addition to operating
income, the trust has received capital gain income when real estate properties
have been sold at a price in excess of the depreciated cost of said properties.
IRET has no employees. Its business is conducted through the services of an
independent contractor (Odell-Wentz & Associates LLC, a North Dakota Limited
Liability Company, having as its members Roger R. Odell and Thomas A. Wentz)
which serves as the advisor to the trust. Since the inception of the Trust and
until January 1, 1986, Roger R. Odell, 12 South Main, Minot, North Dakota,
served as advisor to the trust, providing office facilities, administering
day-to-day operations of the trust, and advising with respect to investments and
investment policy. Effective January 1, 1986, the trust entered into a revised
advisory agreement with Mr. Odell and Thomas A. Wentz.
Mr. Odell is a graduate of the University of Texas, receiving his B.A. degree in
1947. He has been a resident of Minot, North Dakota since 1947. From 1947 to
1954, he was employed by Minot Federal Savings & Loan Association, serving as
secretary of the association from 1952 to 1954. Since 1954, Mr. Odell has been
a realtor in Minot, serving as an officer and stockholder of Watne Realty
Company from 1954 to January 1, 1970, and since that time as the owner of his
own realty firm.
Mr. Wentz is a graduate of Harvard College and Harvard Law School, receiving his
A.B. degree in 1957 and his L.L.B. degree in 1960. He has been a resident of
Minot, North Dakota, since 1962. Mr. Wentz' principal occupation is the
practice of law as a partner in the law firm of Pringle & Herigstad, P.C.,
counsel to the trust and he provides services to Odell-Wentz & Associates on a
part-time basis.
4
<PAGE>
There have been no material changes in the conduct of the Trust's business since
its inception and none are planned.
Item 2. PROPERTIES
IRET is a qualified "real estate investment trust" under Section 856-858 of the
Internal Revenue Code, and is in the business of making passive investments in
real estate equities and mortgages. These real estate investments are managed
by independent contractors on behalf of IRET.
IRET owned the following properties as of April 30, 1995:
INVESTMENT PORTFOLIO - INVESTORS REAL ESTATE TRUST
AS OF APRIL 30, 1995
A. REAL ESTATE OWNED:
<TABLE>
<CAPTION>
FISCAL MORTGAGES
1995 YEAR PAYABLE
LOCATION SIZE/TYPE OCCUPANCY PURCHASED COST (RATE)
-------- --------- --------- --------- ---- ---------
<S> <C> <C> <C> <C> <C>
APARTMENTS:
612 & 618 7th Ave. 18 & 17 Unit 97% 1974 $ 352,852 $ 79,761
Mobridge, SD Apt. Bldgs. (9.75%)
155 High St. 24 Unit 94% 1977 399,770 33,281
Hutchinson, MN Apt. Bldg. (10%)
Century Apartments 192 Unit 93% 1986 3,507,233 2,266,709
Williston, ND Apt. Complex (9.02%)
Century Condos 22 Condo 83% 1983 421,683 0
Beulah, ND Apt. Units & 1989
Century Apts. 120 Unit 96% 1986 1,726,072 1,178,928
Dickinson, ND Apt. Complex (9.53%)
201-301 17th Ave. NE 2 24-Unit 88% 1987 804,436 293,459
Waseca, MN Apt. Bldgs. (10%)
Virginia Apts. 14 Unit 92% 1988 217,083 30,592
Minot, ND Apt. Bldg. (10%)
1305 Birch St. 24 Unit 89% 1989 398,175 153,154
Marshall, MN Apt. Bldg. (9.0%)
Oak Manor Apts. 27 Unit 100% 1989 267,417 243,000
Dickinson, ND Apt. Bldg. (10.5%)
4301-4313 9th Ave. SW 2 18-Unit 96% 1988 995,126 583,661
Fargo, ND Apt. Bldgs. (8.65%)
Parkway Apts. 2 18-Unit 85% 1989 68,466 0
Beulah, ND Apt. Bldgs.
Scottsbluff Estates 2 24-Unit 97% 1988 693,887 311,874
Scottsbluff, NE Apt. Bldgs. (10.25%)
177 10th Ave. E 41 Unit 89% 1989 360,818 238,965
Dickinson, ND Apt. Bldg. (8.75%)
312 12th Ave. NW 18 Unit 100% 1989 256,750 57,673
Mandan, ND Apt. Bldg. (8.75%)
5
<PAGE>
Lantern Court 12 Unit 97% 1990 55,016 0
Minot, ND Apt. Bldg.
105 Grant St. 12 Unit 75% 1990 171,885 0
Harvey, ND Apt. Bldg.
Candlelight Apts. 66 Unit 94% 1992 838,017 552,170
Fargo, ND Apt. Complex (9.0%)
Forest Park 270 Unit 98% 1993 6,515,247 4,220,518
Grand Forks, ND Apt. Complex (9.75%)
Oakwood Estates 100 Unit 99% 1993 3,291,611 2,120,562
Sioux Falls, SD Apt. Complex (7.64%)
Prairie Winds 48 Unit 92% 1993 1,960,108 1,426,174
Sioux Falls, SD Apt. Complex (7.19%)
Crestview Apts. 152 Unit 94% 1994 4,525,031 2,996,871
Bismarck, ND Apt. Complex (8.97%)
Pointe West 90 Unit 91% 1994 3,777,775 2,497,043
Rapid City, SD Apt. Complex (8.98%)
Oxbow Apts. 120 Unit 90% 1994 4,898,513 3,184,364
Sioux Falls, SD Apt. Complex (9.25 to 9.5%)
Pine Cone 195 Unit N/A 1995 13,026,079 10,685,215
Ft. Collins, CO Apt. Complex (7.79%)
Southview 24 Unit N/A 1994 653,585 0
Minot, ND Apt. Complex
North Pointe 49 Units Now N/A Not 1,460,150 0
Bismarck, ND Under Construction Completed
South Pointe 196 Units Now N/A Not 2,062,466 0
Minot, ND Under Construction Completed
Stonehill In the Process of N/A Not 340,525 0
St. Cloud, MN Acquiring Completed
Others In the Process of N/A Not 32,957 0
Acquiring Completed
COMMERCIAL:
108 4th Ave. SE 5,000 sq. ft. 100% 1973 328,808 0
Minot, ND Office Bldg.
114 S. Main 3,500 sq. ft. 100% 1978 103,905 26,073
Minot, ND Retail Bldg. (9%)
408 1st St. SE Rental House 100% 1986 46,873 0
Minot, ND
Arrowhead Center 80,000 sq. ft. 94% 1973 2,387,095 242,369
Minot, ND Shopping Center (10%)
Superpumper Gas Station/ 100% 1986 297,064 0
Emerado, ND Conven. Store
Superpumper Gas Station/ 100% 1987 239,212 0
Langdon, ND Conven. Store
6
<PAGE>
401 South Main 9,200 sq. ft. 96% 1988 471,889 0
Minot, ND Commercial Bldg.
Lester Chiropractic 5,000 sq. ft. 100% 1988 286,917 0
Clinic Clinic Bldg.
Bismarck, ND (1/2 int.)
Superpumper Gas Station/ 100% 1988 301,013 0
Bottineau, ND Conven. Store
Superpumper Gas Station/ 100% 1988 428,778 0
Crookston, MN Conven. Store
Superpumper Gas Station/ 100% 1991 485,007 0
Grand Forks, ND Conven. Store
Superpumper Gas Station/ 100% 1991 250,000 0
New Town, ND Conven. Store
Pioneer Hi-Bred Office/Whse. 100% 1991 606,931 369,711
Moorhead, MN (7.38%)
Lindberg Office/Whse. 100% 1991 1,371,409 883,344
Eden Prairie, MN (9.25%)
Creekside Office Bldgs. 97% 1991 1,538,174 962,992
Billings, MT (9.5%)
Superpumper Gas Station/ 100% 1992 120,600 0
Sidney, MT Conven. Store
Hutchinson Technology Manufacturing 100% 1992 4,429,026 2,580,542
Sioux Falls, SD Plant (8.5%)
Minot Plaza 11,200 sq. ft. 100% 1993 502,898 0
Minot, ND Strip Shopping Center
Smith's Home 70,000 sq. ft. 100% 1994 5,639,576 3,673,868
Furnishings Retail Warehouse (9.75%)
Boise, ID
Midco Theatre 28,528 sq. ft. 100% 1994 2,543,237 1,731,283
Grand Forks, ND 10-screen theatre (9.40%)
30 Year Lease
Pet Foods 18,000 sq. ft. N/A 1995 1,251,719 0
Fargo, ND Retail/Whse.
Barnes and Noble 30,000 sq. ft. N/A 1995 3,292,012 2,046,381
Fargo, ND Retail/Whse. (8.5%)
Stone Container Currently Under N/A Not 896,268 0
Fargo, ND Construction Completed
Barnes and Noble Currently Under N/A Not 71,895 0
Omaha, NE Construction Completed
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED PARTNERSHIPS:
Year Partner-
Name, Location, Size Ship Formed Fiscal Mortgages
& Type of Real and % Owned 1995 Year Payable
Estate Owned by IRET Occupancy Purchased Cost (rate)
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CHATEAU PROPERTIES, LTD.
Apartment Complex 1979 99% 1972 $2,663,654 $1,318,597
- - - Minot, ND, 64 Units 26.7% (7%)
SWEETWATER PROPERTIES, LTD.
Apartment Complex 1981 94% 1972 1,354,230 275,285
- Devils Lake, ND 0% (9.25%)
72 Units
- - - Grafton, ND, 42 Units
BISON PROPERTIES, LTD.
Apartment Complex 1982 94% 1972 1,490,135 188,062
- Jamestown, ND 20% (8.5 to
90 Units 10%)
- Carrington, ND
18 Units
- Cooperstown, ND
17 Units
FIRST AVENUE BUILDING, LTD.
16,500 sq. ft. Office
Building 1981 95% 1981 778,817 0
- - - 15 First Ave. SW 20%
Minot, ND
EASTGATE PROPERTIES, LTD.
Apartment Complex 1983 85% 1970 1,681,203 0
- - - Terrace on the Green 18%
Moorhead, MN
116 Units
COLTON HEIGHTS, LTD.
Apartment Building 1984 97% 1984 816,561 399,197
- - - Minot, ND, 18 Units 18.69% (8.5%)
HILL PARK PROPERTIES, LTD.
Garden Grove Apts. 1985 92% 1985 2,820,677 1,551,775
- - - 201 Xavier Drive 7.14% (10.625%)
Bismarck, ND, 92 Units
-------------------------------
Total Real Estate Owned $93,556,316 $49,453,453
-----------
Less Accumulated Depreciation (13,084,483)
-----------
Net Carrying Value $80,471,833
-----------
-----------
</TABLE>
- - - TITLE. The title to all of the above properties is in the name of IRET in
fee simple (in each case, IRET has in its files an attorney's title opinion
or a title insurance policy evidencing its title).
- - - INSURANCE. In the opinion of management, all of said properties are
adequately covered by casualty and liability insurance.
8
<PAGE>
- - - PLANNED IMPROVEMENTS. There are no plans for material improvements to any
of the above properties.
- - - CONTRACTS OR OPTIONS TO SELL. As of April 30, 1995, IRET had not entered
into any contracts or options to sell any of the above properties.
- - - OCCUPANCY AND LEASES. Occupancy rates shown above are for the fiscal year
ended April 30, 1995. In the case of apartment properties, lease
arrangements with individual tenants vary from month-to-month to one year
leases, with the normal term being six months. Leases on commercial
properties vary from one year to 20 years.
B. MORTGAGE LOANS RECEIVABLE - UNRELATED:
<TABLE>
<CAPTION>
Real Estate 4/30/95
Location Security Balance Rate
- - -------- -------- ------- ----
<S> <C> <C> <C>
BILLINGS, MT
Colton Heights Apts.-144 Units $ 437,302 9%
AURORA, CO
Geneva Del Mar Apt. Complex 328,277 12%
Pier Point-Writer Corp. Residential Lots 407,842 12%
DENVER, CO
Westminister-
Writer Corp. Residential Lots 281,101 14%
Centrebrooke Homes Residential Lots 724,832 12%
GILBERT, AZ
NE1/4-27-2-6 Commercial Land 700,015 8%
OTHER MORTGAGES
Over $100,000 977,249 8-12 1/2%
$50,000 to $99,999 370,724 8-9%
$20,000 to $49,999 111,933 8-10%
Less than $20,000 27,185 7-12%
----------
TOTAL $4,366,460
Unearned Discounts (34,792)
Allowance for Losses (293,365)
Deferred Gain (219,861)
----------
$3,818,442
----------
----------
</TABLE>
9
<PAGE>
C. MORTGAGE LOANS RECEIVABLE - RELATED PARTIES
<TABLE>
<CAPTION>
Real Estate 4/30/95
Location Security Balance Rate
- - -------- -------- ------- ----
<S> <C> <C> <C>
MINOT, ND
Investors Management &
Marketing, Inc. 10 Unit Apt. Bldg. $ 118,137 11%
-----------
TOTAL $ 118,137
-----------
-----------
</TABLE>
D. SUMMARY OF REAL ESTATE INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
REAL ESTATE INVESTMENTS:
<S> <C> <C> <C>
Real Estate Owned $93,556,316
Less Depreciation Reserve (13,084,483) $80,471,833 85%
------------
Related Mortgage Loans 118,137
Other Mortgage Loans 4,366,460
Less unearned discounts
and interest (34,792)
Less allowance for losses (293,365)
Less deferred gain (219,861) 3,936,579 4%
----------- -----------
Total Real Estate Investments $84,408,412
-----------
-----------
OTHER ASSETS:
Cash and marketable securities $ 9,602,551
Deposits and accruals 880,031
-----------
Total Other Assets $10,482,582 11%
-----------
-----------
TOTAL ASSETS $94,890,994 100%
-----------
-----------
</TABLE>
Item 3. LEGAL PROCEEDINGS
On September 29, 1994, IRET brought suit against Centrebrooke Development, Inc.,
Daniel B. Najor and Land Title Guarantee Company to recover on a $475,232.55
loan to Centrebrooke guaranteed by Najor. Judgment against Centrebrooke for
$577,131.66 (which amount includes accrued interest and costs) was ordered on
June 6, 1995. However, Centrebrooke is thought to be insolvent and litigation
against Najor continues to realize on his guarantee of the loan. Also, IRET is
proceeding to foreclose on residential lots which are also held as security for
this loan. An addition of $200,000 was made to the reserve for loan losses
during Fiscal 1995.
10
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the August 10, 1994 Annual Shareholders' meeting, the only matters submitted
to a vote of Security holders were the election of ten Trustees and ratification
of the reappointment of the independent certified public accountants.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The shares of Beneficial Interest of IRET are traded in the over-the-counter
market only within the State of North Dakota by Inland Securities, Inc., 21
South Main, Minot, ND 58701, and Financial Advantage Brokerage Serices, Inc., 17
South Main, Minot, ND 58701. Set forth below, by quarter-year, are the total
number of IRET shares traded, the high and low reported sales prices and the per
share dividend paid for the past three years:
<TABLE>
<CAPTION>
Calendar No. of Bid Asked Per Share
Year Months Shares Sold Low High Low High Dividend
---- ------ ----------- --- --- ---- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1992 July-September 136,882 4.84 4.93 5.50 5.60 .0795
1992 October-December 170,497 4.93 5.02 5.60 5.70 .08
1993 January-March 241,353 5.02 5.10 5.70 5.80 .0805
1993 April-June 230,068 5.10 5.19 5.80 5.90 .081
1993 July-September 140,339 5.10 5.19 5.90 5.90 .0815
1993 October-December 181,613 5.16 5.28 5.90 6.00 .082
1994 January-March 250,167 5.20 5.37 6.00 6.10 .0825
1994 April-June 163,347 5.20 5.37 6.10 6.10 .083
1994 July-September 134,529 5.37 5.63 6.10 6.25 .084
1994 October-December 335,518 5.63 5.89 6.25 6.40 .085
1995 January-March 210,106 5.89 5.89 6.40 6.40 .08625
1995 April-June 137,766 5.89 6.03 6.40 6.55 .0875
</TABLE>
As of May 31, 1995, IRET had 2,132 shareholders. No shareholder held more than
5% of the 11,231,947 shares outstanding and there were no warrants or stock
options outstanding. Dividends are paid on January 5, April 1, July 1, and
October 1 of each year.
IRET shares are sold on the primary market only for cash to bona fide residents
of the State of North Dakota by Inland Securities, Inc., and Financial Advantage
Brokerage Services, Inc., which are securities dealers registered with the
State of North Dakota. IRET claims exemption from the registration of its
shares of Beneficial Interest under the Securities Act of 1933 under Section
3(a)(11) of said Act.
11
<PAGE>
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended April 30
----------------------------------------------------------------------
1995 1994 1993 1992 1991
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consolidated Income Statement Data
Revenue $ 14,117,694 $ 11,884,579 $ 8,316,643 $ 7,206,054 $ 6,591,500
Operating Income 3,568,014 3,178,101 2,231,092 1,628,155 1,160,634
Gain on repossession/
sale of investments 403,094 64,962 132,610 22,858 (10,008)
Net Income 3,971,108 3,243,063 2,363,702 1,651,013 1,150,626
Balance Sheet Data
Total real estate
investments $ 84,408,412 $ 64,427,776 $ 50,041,059 $ 34,302,341 $ 31,722,867
Total assets 94,890,994 72,729,848 54,658,569 38,997,080 35,757,950
Shareholders' equity 38,094,144 30,320,401 23,745,443 18,849,635 15,770,048
Consolidated Per Share Data
Net income $ .38 $ .36 $ .29 $ .23 $ .18
Gain on repossession/
sale of investments .04 .01 .01 .00 .00
Dividends .35 .33 .32 .31 .31
Tax status of dividend
Capital gain 11.0% 7.37% 4.08% 1.0% 4.9%
Ordinary income 89.0% 92.63% 74.04% 68.0% 53.8%
Return of capital 0.0% 0.0% 21.88% 31.0% 41.3%
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL:
IRET has operated as a "real estate investment trust" under Sections 856-858 of
the Internal Revenue Code since its formation in 1970. IRET is in the business
of owning income producing real estate investments. No major changes in IRET's
business occurred in the fiscal year which ended April 30, 1995, and none are
planned at this time.
RESULTS OF OPERATIONS:
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994. Net income for Fiscal
1995 increased to $3,971,108, from the $3,243,063 earned in Fiscal 1994 and the
$2,363,702 of net income recorded for Fiscal 1993. On a per share basis, net
income was $.38 for Fiscal 1995, an increase of 6% over the $.36 earned in the
prior year and 31% more than the $.29 earned in Fiscal 1993.
12
<PAGE>
Gain from the sale of real estate investments constituted $403,094 ($.04 per
share) of the Fiscal 1995 net income, compared to $64,962 ($.01 per share)
included in the Fiscal 1994 net income and $132,610 ($.01 per share) for Fiscal
1993.
Total revenues were $14,117,694 in Fiscal 1995, compared to $11,884,579 in
Fiscal 1994 and $8,316,643 in Fiscal 1993. The revenue increase of $2,233,115
between Fiscal 1995 and the prior year consisted of:
<TABLE>
<CAPTION>
<S> <C>
Rent from 4 properties acquired in Fiscal 1995 $ 534,013
Rent from 4 properties acquired in Fiscal 1994
in excess of that received in Fiscal 1994 1,860,429
An increase in rental rates on existing
properties (3%) 213,973
An increase in occupancy rates on existing
properties (1/2%) 52,171
A decrease in rent - property sold during 1995
(Yankton) (131,995)
A decrease in interest income (295,476)
----------
Net revenue increase (1995 over 1994) $2,233,115
----------
----------
</TABLE>
Thus, the increase in revenue resulted primarily from the addition of new real
estate properties to the portfolio. Scheduled rents on existing properties
increased by 3%, while occupancy increased to 95.5% from 95% in the prior year.
The $728,045 increase in net income for Fiscal 1995 over the amount earned in
the prior year resulted from:
<TABLE>
<CAPTION>
<S> <C>
An increase in gain from sale of investments $ 338,132
An increase in net rental income (rents, less
utilities, maintenance, taxes, insurance
and management) 1,999,032
A decrease in interest income (295,476)
An increase in interest expense (832,073)
An increase in depreciation expense (444,163)
A decrease in bad debt expense 50,000
An increase in operating expenses & other items (87,407)
----------
$ 728,045
----------
----------
</TABLE>
IRET purchased some $27,000,000 of real estate properties during Fiscal 1995 and
has contracted to acquire approximately $25,000,000 of additional real estate
properties in the coming year. Thus, the Trust's portfolio will shift rapidly
from a significant investment in high-yielding mortgage loans to a portfolio
consisting primarily of equity positions in real estate. This change in the
portfolio will show a decrease in net income because of increased depreciation.
13
<PAGE>
We expect earnings in Fiscal 1996 to exceed this year's level. Occupancy, rental
rates and interest rates are expected to remain at present levels and the new
properties that are being added to the portfolio will enhance net income.
FISCAL YEAR 1994 COMPARED TO FISCAL YEAR 1993. Net income for Fiscal
1994 increased to $3,243,000, compared to $2,363,702 for Fiscal 1993 and
$1,651,013 for Fiscal 1992. On a per share basis, net income was $.35 for Fiscal
1994, an increase of 21% over the $.29 earned in the prior year and 52% more
than the $.23 earned in Fiscal 1992.
Total revenues were $11,884,579 in Fiscal 1994, compared to $8,316,643 in 1993
and $7,206,054 in 1992. The Fiscal 1994 revenue increase of $3,567,936 consisted
of:
<TABLE>
<CAPTION>
<S> <C>
Rent from 4 properties acquired in Fiscal 1994 $ 722,319
Rent from the 6 properties acquired in Fiscal 1993
in excess of that received in Fiscal 1993 2,568,085
An increase in rental rates on existing
properties (3.3%) 336,542
An increase in occupancy rates on existing
properties (2%) 200,991
A decrease in interest income (260,001)
----------
Net revenue increase (1994 over 1993) $3,567,936
----------
----------
</TABLE>
The continuing increase in net income resulted from:
- The acquisition of additional real estate properties which have performed
at a higher income level than the average of our portfolio.
- A continuation of the trend of improved rental rates and occupancy in all
of our rental properties. Scheduled rents were up an average of 3.3%, while
occupancy increased from 93% to 95%. Rental income was $3,827,937 higher in
Fiscal 1994 than in the prior year, while rental expenses (utilities,
maintenance, taxes, insurance and managements) were $1,276,774 higher.
- A decrease in interest rates on new and existing variable rate mortgages.
During Fiscal 1994, IRET increased its allowance for bad debts by $250,000. A
residential lot development loan made by IRET to Centrebrooke Homes of Denver,
CO, went into default and it is likely that a portion of the $900,708 loan
balance will not be collectible.
14
<PAGE>
DIVIDENDS. The following dividends were paid during Fiscal 1995:
<TABLE>
<CAPTION>
Date Per Share Dividend
---- ------------------
<S> <C>
July 1, 1994 $.088*
October 1, 1994 $.084
January 5, 1995 $.085
April 1, 1995 $.08625
-------
$.34325
* Includes $.005 special dividend.
</TABLE>
FUNDS FROM OPERATIONS. The funds derived by the Trust from its operations
increased by 18% over the prior year. (IRET uses the definition of "Funds From
Operations" recommended by the National Association of Real Estate Investment
Trusts to mean "net income (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures calculated on the same basis."
It is emphasized that funds from operations as so calculated and presented does
not represent cash flows from operations as defined under generally accepted
accounting principles and should not be considered as an alternative to net
income as an indication of operating performance or to cash flows as a measure
of liquidity or ability to fund all cash needs.) (See the Consolidated
Statements of Cash Flows on pages 6 and 7 of the Consolidated Financial
Statements attached hereto.)
The following is a comparison of dividends paid during the past five fiscal
years to Funds From Operations (as defined above):
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal Fiscal Fiscal
Item 1995 1994 1993 1992 1991
- - ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Income (GAAP) $3,971,108 $3,243,063 $2,363,702 $1,651,073 $1,150,626
Less Gains (Losses) from
Property Sales 403,094 64,962 132,610 22,858 (10,008)
---------- ---------- ---------- ---------- ----------
Operating Income $3,568,014 $3,178,101 $2,231,092 $1,628,155 $1,160,634
Plus Depreciation 1,845,571 1,401,408 1,051,370 824,369 789,646
Plus Amortization 20,659 28,199 16,364 11,289 11,364
---------- ---------- ---------- ---------- ----------
Funds from
Operations $5,434,244 $4,607,708 $3,298,826 $2,463,813 $1,961,644
Dividends Paid $3,660,986 $3,102,061 $2,633,799 $2,257,303 $2,020,303
---------- ---------- ---------- ---------- ----------
$1,773,258 $1,505,647 $ 665,027 $ 206,510 $ (58,659)
</TABLE>
Management expects that the Funds From Operations (as defined above) will
continue to improve during Fiscal 1996 and will exceed dividends paid in the
coming year. IRET plans to continue its policy of increasing its dividend with
an ultimate objective of paying out approximately one-half of its depreciation
deduction.
15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES. IRET's financial condition during Fiscal 1995
continued at the very strong level of its prior fiscal year.
- Equity capital increased to $38,094,144 from $30,320,401 on April 30, 1994,
a gain of $7,773,743, (26%). Equity capital on April 30, 1993 was
$23,745,443. These increases result primarily from the sale of shares of
beneficial interest.
- Liabilities increased to $56,796,850 from $42,409,447 on April 30, 1994,
and $30,409,447 on April 30, 1993.
- Total assets increased to $94,890,994 from $72,729,848 on April 30, 1994,
and $54,658,569 on April 30, 1993.
- Cash and marketable securities were $9,602,551 compared to the year earlier
figure of $7,263,031, and $4,124,651 on April 30, 1993.
AFFILIATED PARTNERSHIPS. IRET has sponsored and serves as a general partner of
seven limited partnerships. Because of IRET's position as a general partner and
creditor of these partnerships and because the partnerships (with the exception
of Chateau Properties) have not produced sufficient cash flow to pay debts due
to IRET as scheduled, the financial statements of IRET and the seven
partnerships have been consolidated for financial reporting purposes to more
properly depict the financial status of IRET. It is emphasized that the
consolidation of the financial reports does not change the legal relationship
between IRET and the partnerships, nor the income tax reporting by IRET or the
partnerships.
The seven affiliated partnerships are as follows:
<TABLE>
<CAPTION>
YEAR PROPERTY IRET
NAME FORMED OWNED OWNERSHIP
- - ---------------------------------------------------------------------
<S> <C> <C> <C>
Chateau Properties, 1979 64 Unit 26.7%
Ltd. Apt. Bldg.
Sweetwater Properties, 1981 114 Units 0%
Ltd. Apts.
Bison Properties, 1982 125 Units 20%
Ltd. Apts.
First Avenue Building, 1981 16,500 sq. ft. 20%
Ltd. Office Bldg.
16
<PAGE>
Eastgate Properties, 1983 116 Units 18%
Ltd. Apts.
Colton Heights, Ltd. 1984 18 Unit 18.69%
Apt. Bldg.
Hill Park Properties, 1985 96 Units 7.14%
Ltd. Apts.
</TABLE>
CONSOLIDATED FINANCIAL STATEMENTS:
The financial statement included in this Form 10-K consolidates the financial
statements of IRET and the above seven limited partnerships. All material
inter-company transactions and balances have been eliminated on the consolidated
statement. The principal impact of this consolidation on the statement of
operations is to reduce reported income as a result of increased depreciation.
On the balance sheet, related mortgage loans and the investment in partnerships
is reduced and real estate owned is increased. Also, the deferred income
account is decreased and the retained earnings account is also decreased.
PROPERTY ACQUIRED: During Fiscal 1995, the Trust made the following
investments:
EQUITIES:
Commercial:
- 28,300 sq.ft. 10-screen state-of-the-art
theatre in Grand Forks, ND. Built to suit
& net leased to MIDCO Theatre on a 30-yr.
lease. $ 2,543,237
- 30,000 sq.ft. upscale retail building in
Fargo, ND. Built for & net leased to
Barnes & Noble Bookstore on a 15-yr. lease. $ 3,292,012
- 18,000 sq.ft. building in Fargo, ND. This
new sales concept in pet care is net leased
to Pet Food Warehouse on a 15-yr. lease. $ 1,251,719
All of the above properties are on-line and producing income.
Under Construction:
- 151,850 sq.ft. manufacturing plant in Fargo,
ND. Upon completion, will be net leased to
Stone Container on a 15-yr. lease. $ 896,268
17
<PAGE>
- 27,500 sq.ft. retail building in Omaha, NE.
Upon completion, will be net leased to
Barnes & Noble Bookstore on a 15-yr lease. $ 71,895
Apartments:
- 195 luxury unit complex named Pine Cone
Apartments in Fort Collins, Colorado, built
in 1994. $ 13,026,079
- 24 unit Oxbow Apartments complex in
Sioux Falls, SD. Construction was completed
on the 96 units started in 1994 and we added
24 more units. $ 1,746,707
- 24 unit Southview complex in Minot, ND. $ 653,585
The apartments described above are on our books
and producing income.
Under Construction/Pending Purchases:
- 49 unit North Pointe Apartments complex in
Bismarck, ND. Estimated completion date,
July, 1995. $ 1,460,150
- 98 unit South Pointe Apartments complex in
Minot, ND. Estimated completion date,
August, 1995. $ 2,062,466
- 313 unit West Stonehill Apartments complex
in St. Cloud, MN. We are under contract to
purchase these newer apartments in July,
1995. Purchase Deposit - $ 340,525
--------------
Total Real Estate Acquisitions $ 27,344,643
--------------
--------------
MORTGAGE LOANS RECEIVABLE:
1995 1994
---- ----
Mortgage Loans Receivable,
Beginning of Year $ 9,853,941 $ 11,546,075
New Participations in &
Advances on Mortgage Loans $ 653,952 $ 3,135,673
------------- --------------
$ 10,507,893 $ 14,681,748
18
<PAGE>
Collections $ (5,823,296) $ (4,827,807)
Write-off Through Allowance (200,000)
------------- --------------
Mortgage Loans Receivable,
End of Year $ 4,484,597 $ 9,853,941
------------- --------------
------------- --------------
PROPERTY SOLD: The Trust sold a 42-unit apartment complex in Yankton, SD, in
Fiscal 1995 for a gain of $305,542. It also sold the two tri-plex apartments in
Northwest Minot with a gain of $82,053. We will continue to offer our older and
smaller apartment complexes for sale in Fiscal 1996.
IMPACT OF INFLATION. The costs of utilities and other rental expenses continue
to increase, but in most areas, IRET has been able to increase rental income
sufficiently to cover inflationary increases in rental expenses. Increases in
rental income are not precluded by long-term lease obligations except for a few
commercial properties subject to long-term net lease agreements. Thus, as
market conditions allow, rents will be increased to cover inflationary expenses
and to provide a better return to IRET.
ECONOMIC CONDITIONS. Fiscal 1995 was a very good year in the northern plains
states in which the Trust operates. The economy was strong, due to adequate
rainfall and higher commodity prices and a moderate improvement in energy
activity. Occupancy and rent levels for Trust properties improved only slightly
in Fiscal 1995.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data listed in the accompanying Index
to Financial Statements and Supplementary Data are incorporated herein by
reference and filed as a part of this report.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and Trustees of IRET as of April 30, 1995, were:
19
<PAGE>
Name, Age Business Experience During Year Position
and Position Past Five Years Commenced
- - ------------ -------------------------- -------------
*C. Morris Anderson President of North Hill Bowl, Inc,; 1970
Age 66 Director of International Inn, Inc, and
Trustee Norwest Bank - Minot, N.A. and a
Partner in Magic City Realty, Ltd.
*Ralph A. Christensen Partner in Thompson-Christensen 1970
Age 66 Ranch, Towner, ND; Director of First
Trustee and Chairman Bank - Minot, N.A.; Chairman of IRET.
*John D. Decker Investor 1970
Age 78
Trustee
*Mike F. Dolan Investor; Vice-Chairman of IRET. 1978
Age 83
Trustee & Vice Chairman
*J. Norman Ellison, Jr. Businessman; Managing Partner of 1970
Age 72 Ellison Realty Co.; Former Director
Trustee of First Bank - Minot, N.A.
*Daniel L. Feist Real Estate Development; President 1985
Age 63 of Feist Construction & Realty, Inc.;
Trustee Director of First Bank - Minot, N.A.
*Patrick G. Jones Investor; Former President of Central 1986
Age 47 Venture Capital, Inc.; Former Manager
Trustee and Director of the Minot Daily News
*Jeff L. Miller Businessman; President of M&S 1985
Age 51 Concessions, Inc. & Former President
Trustee & Vice Chairman of Coca Cola Bottling Co. of Minot;
President and Director of Western
Sales and Service, Inc.; Director of
First Bank - Minot, N.A.
Roger R. Odell Realtor; President of IRET; Partner in 1970
Age 69 Odell-Wentz & Associates (Advisor to
Trustee, President IRET); Director of Investors Manage-
and Advisor ment & Marketing, Inc. and Inland
Securities, Inc.; Partner in Magic City
Realty, Ltd.
Thomas A. Wentz Attorney, Pringle & Herigstad, P.C.; 1970
Age 60 Vice-President of IRET; Partner in
Trustee & Vice President Odell-Wentz & Associates (Advisor to
the Trust).
Timothy P. Mihalick Realtor; Operations Manager of 1988
Age 36 Odell-Wentz & Associates (Advisor to
Secretary the Trust); Secretary of IRET.
* unaffiliated Trustees
20
<PAGE>
Item 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information under the caption
"Remuneration and Transactions with Trustees and Advisor" in the Registrant's
definitive proxy statement relating to its annual meeting of shareholders to be
held on August 9, 1995.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of May 31, 1995, no person, nor any trustee or officer individually was known
by the Trust to own beneficially more than 5% of the outstanding Shares of
Beneficial Interest.
Collectively, the Trustees owned 6.14% of such shares on said date.
Additional information regarding security ownership is to be found in portions
of the Trust's definitive proxy statement for the 1995 annual meeting of
shareholders, incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information under the caption
"Remuneration and Transactions with Trustees and Advisor" in the Registrant's
definitive proxy statement relating to its annual meeting of shareholders to be
held August 9, 1995.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
See the Table of Contents to Financial Statements and Supplemental
Data.
2. Financial Statement Schedules
The following financial statement schedules should be read in
conjunction with the financial statements incorporated by reference in
Item 8 of this Annual Report on Form 10-K:
21
<PAGE>
I Marketable Securities - Other Investments
IV Noncurrent Indebtedness of Related Parties -
Mortgage Loans Receivable
X Supplemental Income Statement Information
XI Real Estate Owned and Accumulated Depreciation
XII Investments in Mortgage Loans on Real Estate
XIII Other Investments - Partnerships
See the Table of Contents to Financial Statements and
Supplemental Data.
3. Documents Incorporated by Reference
Part of Form 10-K
into which Document
Document is Incorporated
-------------------------------- -------------------
Proxy Statement to be filed Part III
in connection with the annual
meeting of shareholders to be
held August 9, 1995
4. Exhibits
See the following list of exhibits.
(b) Reports on Form 8-K
IRET filed a Form 8-K on April 28, 1995, pursuant to the purchase of a 196-unit
Pine Cone Apartment complex located in Fort Collins, Colorado.
(c) The following is a list of Exhibits to the Registrant's Annual Report
on Form 10-K for the fiscal year ended April 30, 1995. The Registrant will
furnish a copy of any exhibit listed below to any security holder of the
Registrant who requests it upon payment of a fee of 15 cents per page. All
Exhibits are either contained in this Annual Report on Form 10-K or are
incorporated by reference as indicated below.
3. Declaration of Trust, dated July 31, 1970, and First Amendment thereto
dated August 26, 1970, and Second Amendment thereto dated July 11,
1974, filed as Exhibit 3 to Form 10 filed for the Registrant (File No.
0-14851) and incorporated herein by reference.
22
<PAGE>
10. Advisory Agreement between the Registrant and Odell-Wentz &
Associates, filed as Exhibit 10 to said Form 10 and incorporated herein by
reference.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: July 20, 1995 By: /s/ Thomas A. Wentz
__________________________
Thomas A. Wentz
Vice-President and Trustee
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Roger R. Odell President, Trustee and July 20, 1995
________________________ Principal Executive Officer
Roger R. Odell
/s/ Thomas A. Wentz
_________________________ Vice-President and Trustee July 20, 1995
Thomas A. Wentz
/s/ Ralph A. Christensen
________________________ Trustee and Chairman July 24, 1995
Ralph A. Christensen
/s/ Mike F. Dolan
________________________ Trustee and Vice Chairman July 21, 1995
Mike F. Dolan
/s/ Jeff L. Miller
________________________ Trustee and Vice Chairman July 24, 1995
Jeff L. Miller
/s/ C. Morris Anderson
________________________ Trustee July 21, 1995
C. Morris Anderson
/s/ J. Norman Ellison Jr.
_________________________ Trustee July 24, 1995
J. Norman Ellison Jr.
/s/ Daniel L. Feist
________________________ Trustee July 21, 1995
Daniel L. Feist
/s/ Patrick G. Jones
________________________ Trustee July 21, 1995
Patrick G. Jones
/s/ John D. Decker
________________________ Trustee July 21, 1995
John D. Decker
/s/ Timothy P. Mihalick
________________________ Secretary July 20, 1995
Timothy P. Mihalick
24
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
MINOT, NORTH DAKOTA
CONSOLIDATED FINANCIAL STATEMENTS
AS OF
APRIL 30, 1995 AND 1994
AND
INDEPENDENT AUDITOR'S REPORT
F-1
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
TABLE OF CONTENTS
Pages
-----
INDEPENDENT AUDITOR'S REPORT F-3
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets F-4
Consolidated Statements of Operations F-6
Consolidated Statements of Shareholders' Equity F-7
Consolidated Statements of Cash Flows F-8
Notes to Consolidated Financial Statements F-10
ADDITIONAL INFORMATION
Independent Auditor's Report on Additional Information F-17
Marketable Securities F-18
Noncurrent Indebtedness of Related Parties -
Mortgage Loans Receivable F-19
Supplemental Income Statement Information F-20
Real Estate and Accumulated Depreciation F-21
Investments in Mortgage Loans on Real Estate F-24
Selected Financial Data F-27
Gain from Property Dispositions F-28
Mortgage Loans F-29
Significant Property Acquisitions F-30
Quarterly Results of Consolidated Operations (Unaudited) F-31
OTHER SCHEDULES ARE OMITTED DUE TO INAPPLICABILITY
F-2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Trustees
Investors Real Estate Trust
and Affiliated Partnerships
Minot, North Dakota
We have audited the accompanying consolidated balance sheets of Investors Real
Estate Trust and Affiliated Partnerships as of April 30, 1995 and 1994, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the years ended April 30, 1995, 1994 and 1993. These consolidated
financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Investors Real Estate Trust and Affiliated Partnerships at April 30, 1995 and
1994, and the consolidated results of its operations and cash flows for the
years ended April 30, 1995, 1994 and 1993, in conformity with generally accepted
accounting principles.
/s/ Brady, Martz & Associates, P.C.
- - -------------------------------------
BRADY, MARTZ & ASSOCIATES, P.C.
Minot, North Dakota
May 19, 1995
F-3
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
REAL ESTATE INVESTMENTS
Property owned $93,556,316 $66,522,947
Less accumulated depreciation (13,084,483) (11,370,925)
----------- -----------
$80,471,833 $55,152,022
Mortgage loans receivable - related parties 118,137 663,391
- other 4,366,460 9,190,550
Less - unearned discounts and deferred interest (34,792) (49,462)
- deferred gain from property dispositions (219,861) (235,360)
- allowance for loan losses (293,365) (293,365)
----------- -----------
Total real estate investments $84,408,412 $64,427,776
OTHER ASSETS
Cash 4,772,742 1,991,578
Marketable securities 4,829,809 5,271,453
Accounts receivable 60,260 -
Real estate deposits 175,000 449,148
Prepaid insurance 101,465 43,066
Tax and insurance escrow 317,520 313,917
Deferred charges 225,786 232,910
----------- -----------
TOTAL ASSETS $94,890,994 $72,729,848
----------- -----------
----------- -----------
</TABLE>
F-4
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
LIABILITIES
Accounts payable and accrued expenses $ 1,938,179 $ 1,014,211
Mortgages payable 49,996,207 36,989,553
Investment certificates issued 4,862,464 4,405,683
----------- -----------
Total liabilities $56,796,850 $42,409,447
----------- -----------
SHAREHOLDERS' EQUITY
Shares of beneficial interest (unlimited authorization,
no par value, 11,187,786 shares outstanding in 1995
and 9,881,643 shares outstanding in 1994) $41,560,587 $34,096,966
Accumulated distributions in excess of net income (3,466,443) (3,776,565)
----------- -----------
Total shareholders' equity $38,094,144 $30,320,401
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $94,890,994 $72,729,848
----------- -----------
----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
F-5
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- ------------
<S> <C> <C> <C>
REVENUE
Real estate rentals $12,733,261 $10,204,670 $ 6,376,733
Interest, discounts and fees 1,384,433 1,679,909 1,939,910
----------- ----------- ------------
Total revenue $14,117,694 $11,884,579 $ 8,316,643
----------- ----------- ------------
EXPENSES
Interest $ 3,483,909 $ 2,651,836 $ 1,924,662
Depreciation 1,845,571 1,401,408 1,051,370
Utilities and maintenance 2,495,783 2,271,284 1,504,354
Taxes and insurance 1,271,049 1,103,959 787,476
Property management expenses 779,024 641,054 447,693
Advisory and trustee services 336,142 304,898 252,013
Operating expenses 117,543 53,840 58,253
Amortization 20,659 28,199 16,364
Provision for loan losses 200,000 250,000 43,366
----------- ----------- ------------
Total expenses $10,549,680 $ 8,706,478 $ 6,085,551
----------- ----------- ------------
OPERATING INCOME $ 3,568,014 $ 3,178,101 $ 2,231,092
GAIN ON SALE OF PROPERTIES 403,094 64,962 132,610
----------- ----------- ------------
NET INCOME $ 3,971,108 $ 3,243,063 $ 2,363,702
----------- ----------- ------------
----------- ----------- ------------
Net income per share:
Operating income $ .34 $ .35 $ .28
----- ----- -----
Gain on sale of investments .04 .01 .01
----- ----- -----
Net income $ .38 $ .36 $ .29
----- ----- -----
----- ----- -----
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
F-6
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Accumulated
Shares of Distributions Total
Beneficial in excess of Shareholders'
Interest Net Income Equity
------------ ------------- ------------
<S> <C> <C> <C>
BALANCE, MAY 1, 1992 $ 22,497,105 $ (3,647,470) $ 18,849,635
Net income -- 2,363,702 2,363,702
Dividends distributed -- (2,633,799) (2,633,799)
Dividends reinvested 1,513,143 -- 1,513,143
Sale of shares 3,652,762 -- 3,652,762
------------ ------------- ------------
BALANCE, APRIL 30, 1993 $ 27,663,010 $ (3,917,567) $ 23,745,443
Net income -- 3,243,063 3,243,063
Dividends distributed -- (3,102,061) (3,102,061)
Dividends reinvested 1,853,356 -- 1,853,356
Sale of shares 4,580,600 -- 4,580,600
------------ ------------- ------------
BALANCE, APRIL 30, 1994 $ 34,096,966 $ (3,776,565) $ 30,320,401
Net income -- 3,971,108 3,971,108
Dividends distributed -- (3,660,986) (3,660,986)
Dividends reinvested 2,175,278 -- 2,175,278
Sale of shares 5,288,343 -- 5,288,343
------------ ------------- ------------
BALANCE, APRIL 30, 1995 $ 41,560,587 $ (3,466,443) $ 38,094,144
------------ ------------- ------------
------------ ------------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
F-7
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,971,108 $ 3,243,063 $ 2,363,702
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,866,230 1,429,606 1,067,734
Provision for loan losses -- 250,000 43,366
Accretion of discount on contracts (14,670) (120,485) (139,353)
Gain on sale of properties (403,094) (64,962) (132,610)
Interest reinvested in investment certificates 205,491 237,415 233,088
Changes in other assets and liabilities:
(Increase) decrease in other assets 138,350 (24,601) (137,775)
Increase (decrease) in accounts payable
and accrued expenses (109,116) 165,719 282,437
------------ ------------ ------------
Net cash provided from operating activities $ 5,654,299 $ 5,115,755 $ 3,580,589
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity of investment securities $ 441,644 $ 992,872 $ 430,755
Principal payments on mortgage loans receivable 4,032,090 4,808,981 3,114,315
Proceeds from sale of other assets -- -- 115,000
Payments for acquisition and
improvement of properties (10,859,997) (8,508,607) (7,375,840)
Purchase of investment securities -- (3,035,142) (996,969)
Investment in mortgage loans receivable (653,952) (3,116,847) (2,773,125)
------------ ------------ ------------
Net cash used for investing activities $ (7,040,215) $ (8,858,743) $ (7,485,864)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of shares $ 5,288,343 $ 4,580,600 $ 3,652,762
Proceeds from investment certificates issued 947,093 896,657 1,115,929
Proceeds from mortgages payable 2,092,266 3,453,849 1,524,642
Loan on margin account -- 2,250,000 --
Dividends paid (1,485,708) (1,248,705) (1,120,656)
Redemption of investment certificates (695,803) (1,488,070) (551,957)
Principal payments on mortgage loans (1,979,111) (1,355,233) (1,480,390)
Payments on margin account -- (2,250,000) --
------------ ------------ ------------
Net cash provided from financing activities $ 4,167,080 $ 4,839,098 $ 3,140,330
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH $ 2,781,164 $ 1,096,110 $ (764,945)
CASH AT BEGINNING OF YEAR 1,991,578 895,468 1,660,413
------------ ------------ ------------
CASH AT END OF YEAR $ 4,772,742 $ 1,991,578 $ 895,468
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
F-8
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
SUPPLEMENTARY SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Dividends reinvested $ 2,175,278 $ 1,853,356 $ 1,513,143
Real estate investment and mortgage
loans receivable acquired through
assumption of mortgage loans payable
and accrual of costs 15,917,788 9,510,351 10,303,021
Proceeds from sale of properties
deposited directly with escrow agent 940,258 -- --
Mortgages paid directly by
owner of contract 543,598 18,826 661,089
Interest reinvested directly in
investment certificates 205,491 237,415 233,088
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest paid on mortgages $ 3,109,727 $ 2,215,752 $ 1,512,201
Interest paid on margin account and other -- 9,413 8,689
Interest paid on investment certificates 157,233 183,037 141,218
------------ ------------ ------------
$ 3,266,960 $ 2,408,202 $ 1,662,108
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
F-9
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS - Investors Real Estate Trust qualifies under
Section 856 of the Internal Revenue Code of 1954 as a real estate
investment trust. The Trust has properties located throughout the
Upper Midwest, with principal offices located in Minot, North Dakota.
The company invests in real estate, real estate contracts and real
estate related governmental backed securities (GNMA).
PRINCIPALS OF CONSOLIDATION - The consolidated financial statements
include the accounts of Investors Real Estate Trust and all limited
partnerships in which Investors Real Estate Trust is a general partner
and maintains a controlling interest in accordance with the definition
provided by Statement of Position 78-9. Due to the immaterial
involvement of the limited partners, the trust's general partnership
interest provides it with substantial influence over operations of the
partnerships. These limited partnerships are as follows:
Eastgate Properties, Ltd.
Bison Properties, Ltd.
First Avenue Building, Ltd.
Chateau Properties, Ltd.
Sweetwater Properties, Ltd.
Hill Park Properties, Ltd.
Colton Heights, Ltd.
All material intercompany transactions and balances have been
eliminated in the consolidated financial statements.
ACCOUNTING POLICIES
PROPERTY OWNED - REAL ESTATE IS STATED AT COST. Expenditures for
renewals and improvements that significantly add to the productive
capacity or extend the useful life of an asset are capitalized.
Expenditures for maintenance and repairs which do not add to the value
or extend the useful life are charged to expense as incurred.
DEPRECIATION is provided to amortize the cost of individual assets
over their estimated useful lives using principally the straight-line
method. Useful lives range from 15 to 40 years for buildings and
improvements.
F-10
<PAGE>
NOTE 1 - (CONTINUED)
MORTGAGE LOANS RECEIVABLE are shown at cost less unearned discount.
Discounts on contracts are accreted using the straight-line method
over the term of the contract. Deferred gain is recognized as income
on the installment method when principal payments are received.
Interest income is accrued and reflected in the related balance.
ALLOWANCE FOR LOAN LOSSES - The Trust evaluates the need for an
allowance for loan losses periodically. In performing its evaluation,
management assesses the recoverability of individual real estate loans
by a comparison of their carrying amount with their estimated net
realizable value.
MARKETABLE SECURITIES - The Trust's investments in securities are
classified as securities to be held to maturity. These securities
consist of Government National Mortgage Association securities for
which the Trust has the positive intent and ability to hold to
maturity. They are reported at cost, adjusted by amortization of
premiums and accretion of discounts which are recognized in interest
income using the straight line method over the period to maturity.
NET INCOME PER SHARE of beneficial interest has been computed based on
the weighted average number of shares outstanding during the year.
INCOME TAXES - The Trust intends to continue to qualify as a real
estate investment trust as defined by the Internal Revenue Code and,
as such, will not be taxed on the portion of the income that is
distributed to the shareholders, provided at least 95% of its real
estate investment trust taxable income is distributed and other
requirements are met. The Trust intends to distribute all of its
taxable income and realized capital gains from property dispositions
within the prescribed time limits and, accordingly, there is no
provision or liability for income taxes shown on the financial
statements.
INCOME RECOGNITION - In accordance with Statement of Financial
Accounting Standards No. 66, "Accounting for Sales of Real Estate",
profit shall be recognized in full when real estate is sold, provided:
a. The profit is determinable, that is, the collectibility of
the sales price is reasonably assured or the amount that
will be collectible can be estimated.
b. The earnings process is virtually complete, that is, the
seller is not obliged to perform significant activities
after the sale to earn the profit.
Based on the economic climate and the terms of many contracts, the
collectibility of the sales price is not reasonably assured as
required by Statement of Financial Accounting Standards No. 66.
Consequently, the Trust uses the installment method of accounting for
profits on real estate sold as it more fairly reflects earned revenue.
Interest on mortgage loans receivable is recognized in income as it
accrues during the period the loan is outstanding. In the case of
non-performing loans, income is recognized only to the extent of cash
received. Rent from leases of real estate is recognized in income as
it accrues on the straight-line basis. Advance rental deposits are
recorded as deferred income. Gains or losses on marketable securities
are recognized on the basis of specific identification.
F-11
<PAGE>
NOTE 2 - OFF-BALANCE-SHEET RISK
The Trust had deposits at Norwest Bank, North Dakota, N.A., First Bank
and First International Bank which exceeded Federal Deposit Insurance
Corporation limits by $1,435,153, $1,255,270 and $1,427,013,
respectively, at April 30, 1995.
NOTE 3 - PROPERTY OWNED UNDER LEASE
Property consisting principally of real estate owned under lease is
stated at cost less accumulated depreciation and is summarized as
follows:
<TABLE>
<CAPTION>
April 30, April 30,
1995 1994
------------- -------------
<S> <C> <C>
Residential $ 64,905,196 $ 46,166,682
Less accumulated depreciation (9,417,195) (8,282,229)
------------- -------------
$ 55,488,001 $ 37,884,453
------------- -------------
Commercial $ 28,651,120 $ 20,356,265
Less accumulated depreciation (3,667,288) (3,088,696)
------------- -------------
$ 24,983,832 $ 17,267,569
------------- -------------
Remaining cost $ 80,471,833 $ 55,152,022
------------- -------------
------------- -------------
</TABLE>
There were no repossessions during the years ended April 30, 1995 and
1994.
Construction period interest of $94,313 has been capitalized for the
year ended April 30, 1995. There was no interest capitalized for the
year ended April 30, 1994.
Residential apartment units are rented to individual tenants with
lease terms up to one year. Gross revenues from residential rentals
totaled $9,528,999, $7,752,749 and $4,651,112 for the years ended
April 30, 1995, 1994 and 1993, respectively.
Commercial properties are leased to tenants under terms of leases
expiring at various dates through 2015. Lease terms often include
renewal options. In addition, a number of the commercial leases
provide for a base rent plus a percentage rent based on gross sales in
excess of a stipulated amount. Rents based on a percentage of sales
totaled $16,586, $22,943 and $14,107 for the years ended April 30,
1995, 1994 and 1993, respectively.
The future minimum lease payments to be received under these operating
leases for the commercial properties as of April 30, 1995, are as
follows:
<TABLE>
<CAPTION>
Year ending April 30,
<S> <C>
1996 $ 3,243,410
1997 3,074,807
1998 2,830,573
1999 2,757,545
2000 2,684,332
Thereafter 18,507,120
------------
$ 33,097,787
------------
------------
</TABLE>
F-12
<PAGE>
NOTE 4 - MORTGAGE LOANS RECEIVABLE
Mortgage loans receivable consists of approximately thirty contracts
which are collateralized by real estate. Discounts on the contracts,
where applicable, are being accreted on the straight-line method over
the term of the contract. Contract terms call for monthly payments of
principal and interest. Interest rates range from 7 to 14%. Mortgage
loans receivable have been evaluated for possible losses considering
repayment history, market value of underlying collateral, deferred
gains and economic conditions.
Future principal payments due under the mortgage loan contracts as of
April 30, 1995 are as follows:
<TABLE>
<CAPTION>
Year ending April 30,
<S> <C>
1996 $ 2,093,653
1997 544,561
1998 626,353
1999 180,304
2000 52,339
Later years 987,387
-----------
$ 4,484,597
-----------
-----------
</TABLE>
Details concerning mortgage loans receivable from related parties can
be found in Note 9.
NOTE 5 - MARKETABLE SECURITIES
Marketable securities consist of Governmental National Mortgage
Association (GNMA) securities bearing interest from 6.5% to 9.5% with
varying maturity dates. The details of the amortized cost and
approximate market value of marketable securities at April 30, 1995
and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------ --------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
GNMA
Due after 10 years $ 4,829,809 $ 4,588,905 $ 5,271,453 $ 5,303,469
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The amortized cost and estimated market values with unrealized gains
and losses of marketable securities at April 30, 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
1995 Gross Gross
Amortized Unrealized Unrealized Fair
Issuer Cost Gains Losses Value
------------ ----------- ---------- -------------
<S> <C> <C> <C> <C>
GNMA $ 4,829,809 $ -- $ 240,904 $ 4,588,905
------------ ----------- ---------- -------------
------------ ----------- ---------- -------------
</TABLE>
F-13
<PAGE>
NOTE 5 - CONTINUED
<TABLE>
<CAPTION>
1994 Gross Gross
------ Amortized Unrealized Unrealized Fair
Issuer Cost Gains Losses Value
<S> <C> <C> <C> <C>
GNMA $ 5,271,453 $ 32,016 $ -- $ 5,303,469
------------ ---------- ---------- ------------
------------ ---------- ---------- ------------
</TABLE>
There were no realized gains or losses on sales of securities for the
years ended April 30, 1995, 1994 and 1993.
NOTE 6 - MORTGAGES PAYABLE
Mortgages payable as of April 30, 1995, included mortgages on
properties owned totaling $49,453,453, and mortgages of
$542,754 on property sold on contract. The carrying value of
the related real estate owned was $76,151,887 and the
carrying value of the related mortgage loans receivable was
$1,081,118 as of April 30, 1995.
Mortgages payable as of April 30, 1994, included mortgages on
properties owned totaling $34,917,196, and mortgages of $2,072,357
on property sold on contract. The carrying value of the related real
estate owned was $51,165,379 and the carrying value of the related
mortgage loans receivable was $3,833,005 as of April 30, 1994.
Monthly installments are due on the mortgages with interest rates
ranging from 7.0% to 10.63% and with varying maturity dates thru
May 1, 2018.
The aggregate amount of required future principal payments on
mortgages payable is as follows:
<TABLE>
<CAPTION>
Years ending April 30,
<S> <C>
1996 $ 1,728,448
1997 1,829,558
1998 1,550,277
1999 3,595,124
2000 1,333,269
Later years 39,959,531
------------
Total payments $ 49,996,207
------------
------------
</TABLE>
NOTE 7 - INVESTMENT CERTIFICATES ISSUED
The Trust has placed investment certificates with the public. The
interest rates vary from 6% to 11% per annum, depending on the term
of the security. Total securities maturing within fiscal years ending
April 30 are shown below. Interest is paid annually, semiannually,
or quarterly on the anniversary date of the security.
<TABLE>
<CAPTION>
Due in years ending April 30
<S> <C>
1996 $ 2,242,139
1997 616,953
1998 652,831
1999 383,655
2000 966,886
------------
$ 4,862,464
------------
------------
</TABLE>
F-14
<PAGE>
NOTE 8 - DEFERRED GAIN FROM PROPERTY DISPOSITIONS
Deferred gain represents gain from property dispositions that have
been reported on the installment method. With the installment method
of reporting, the proportionate share of the gain is recognized at the
point cash is received. Deferred gain recognized on the installment
basis was $15,499, $64,962, and $14,385 for the years ended April 30,
1995, 1994 and 1993, respectively.
NOTE 9 - TRANSACTIONS WITH RELATED PARTIES
Mr. Roger Odell and Mr. Tom Wentz, officers and shareholders of the
Trust, are partners in Odell-Wentz & Associates, the advisor to the
Trust. Under the Advisory Contract between the Trust and Odell-Wentz
& Associates, the Trust pays an advisor's fee based on the net assets
of the Trust and a percentage fee for investigating and negotiating
the acquisition of new investments. For the year ended April 30,
1995, Odell-Wentz & Associates received total fees under said
agreement of $339,128. The fees for April 30, 1994 were $350,815, and
for April 30, 1993 were $272,253. For the years ended April 30, 1995,
1994 and 1993, the Trust has capitalized $49,323, $95,772 and $57,666,
respectively, of these fees, with the remainder of $289,805, $255,040
and $214,587, respectively, expensed as advisory and trustee fees on
the statement of operations. The advisor is obligated to provide
office space, staff, office equipment and computer services and other
services necessary to conduct the business affairs of the Trust.
Investors Management and Marketing (IMM) provides property management
services to the Trust. Roger Odell is a shareholder in IMM. IMM
received $212,018, $170,870 and $91,639 for services rendered for
years ended April 30, 1995, 1994 and 1993, respectively. In addition,
IMM owed the Trust $118,137 and $119,793 at April 30, 1995 and 1994,
respectively. This receivable earns interest at 11% and is due in
November, 1995.
Inland Securities is a corporation that provides underwriting services
in the sale of additional shares for the Trust. Roger Odell is also a
shareholder in Inland Securities. Fees for services totaled $272,615
for the year ended April 30, 1995, $507,036 for the year ended April
30, 1994, and $405,709 for the year ended April 30, 1993.
The Trust paid fees and expense reimbursements to the law firm in
which Tom Wentz is a partner totaling $4,890, $4,692 and $4,383 for
the years ended April 30, 1995, 1994 and 1993, respectively.
The Trust had a mortgage loan receivable from Jenner Properties 1978,
a limited partnership in which Roger Odell and Tom Wentz are
investors. This contract was paid off during the year ended April 30,
1995. The contract balance at April 30, 1994 was $543,598.
F-15
<PAGE>
NOTE 9 - (CONTINUED)
Investment certificates issued by the Trust to officers and trustees
totaled $1,179,324 at April 30, 1995 and $1,156,684 at April 30, 1994.
In addition, Daniel Feist, a trustee, was paid $59,564 in conjunction
with the brokerage of a contract receivable during the year ended
April 30, 1993.
NOTE 10 - MARKET PRICE RANGE OF SHARES
Investors Real Estate Trust shares are traded on the
Over-The-Counter-Market, with sales handled by Inland Securities,
Inc., 21 South Main, Minot, North Dakota. The price range is as
follows:
<TABLE>
<CAPTION>
Bid Ask
---------------------- ----------------------
Low High Low High
------- ------- ------- -------
<S> <C> <C> <C> <C>
1993 $ 4.95 $ 5.22 $ 5.50 $ 5.80
1994 5.22 5.49 5.80 6.10
1995 5.49 5.89 6.10 6.40
</TABLE>
F-16
<PAGE>
ADDITIONAL INFORMATION
<PAGE>
INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION
Board of Trustees
Investors Real Estate Trust
and Affiliated Partnerships
Minot, North Dakota
Our report on our audit of the basic consolidated financial statements of
Investors Real Estate Trust and Affiliated Partnerships for the years ended
April 30, 1995, 1994 and 1993, appears on page 1. Those audits were made for
the purpose of forming an opinion on such consolidated financial statements
taken as a whole. The information on pages 16 through 29 related to the 1995,
1994 and 1993 consolidated financial statements is presented for purposes of
additional analysis and is not a required part of the basic consolidated
financial statements. Such information, except for information on page 29 that
is marked "unaudited" on which we express no opinion, has been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements, and, in our opinion, the information is fairly stated in all
material respects in relation to the basic consolidated financial statements for
the years ended April 30, 1995, 1994 and 1993, taken as a whole.
We also have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheets of Investors Real Estate Trust and
Affiliated Partnerships as of April 30, 1992, and 1991, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the two years in the period ended April 30, 1992, none of which is
presented herein, and we expressed unqualified opinions on those consolidated
financial statements. In our opinion, the information on page 25 relating to
the 1992 and 1991 consolidated financial statements is fairly stated in all
material respects in relation to the basic consolidated financial statements
from which it has been derived.
/s/ Brady, Martz & Associates, P.C.
- - -----------------------------------
BRADY, MARTZ & ASSOCIATES, P.C.
May 19, 1995
F-17
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1995 AND 1994
Schedule I
MARKETABLE SECURITIES
<TABLE>
<CAPTION>
April 30, 1995 April 30, 1994
-------------------------- -------------------------
Principal Principal
Amount Market Amount Market
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
GNMA Pools $ 4,829,809 $ 4,588,905 $ 5,271,453 $ 5,303,469
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
F-18
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1995 AND 1994
Schedule IV
NONCURRENT INDEBTEDNESS OF RELATED PARTIES
<TABLE>
<CAPTION>
Mortgage loans receivable
- - -------------------------
Beginning Ending
Year ended April 30, 1995 Balance Additions Deductions Balance
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Jenner Properties 1978, Ltd. $ 543,598 $ -- $ (543,598) $ --
Investors Management
and Marketing 119,793 -- (1,656) 118,137
---------- ---------- ----------- ----------
$ 663,391 $ -- $ 545,254 $ 118,137
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
<CAPTION>
Year ended April 30, 1994
<S> <C> <C> <C> <C>
Jenner Properties 1978, Ltd. $ 597,657 $ 38,500 $ (92,559) $ 543,598
Investors Management
and Marketing 121,270 -- (1,477) 119,793
---------- ---------- ----------- ----------
$ 718,927 $ 38,500 $ (94,036) $ 663,391
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
F-19
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
Schedule X
SUPPLEMENTAL INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
Charged to Costs and Expenses
----------------------------------------------------
1995 1994 1993
------------ ------------ ----------
<S> <C> <C> <C>
ITEM
Maintenance and repairs $ 1,338,236 $ 1,236,251 $ 752,229
Depreciation and amortization of
intangible assets, preoperating
costs and similar deferrals * * *
Taxes, other than payroll and
income taxes
Property taxes 1,124,849 974,737 634,627
Royalties * * *
Advertising costs * * *
* Less than 1 percent of total revenues
</TABLE>
F-20
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1995
<TABLE>
<CAPTION>
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent
Initial Cost To Trust To Acquisition
----------------------- --------------------------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- - ----------- ------------ --------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Apartments:
Mobridge $ 79,761 $ 33,996 $ 312,518 $ 6,339 $ --
Hutchinson 33,281 24,772 332,250 42,748 --
Century - Williston 2,266,709 200,000 3,166,750 140,483 --
Beulah -- 6,360 336,589 78,734 --
Century - Dickinson 1,178,928 100,000 1,564,598 61,474 --
Waseca, MN 293,459 40,000 634,737 129,699 --
Virginia 30,592 37,600 163,036 16,447 --
Parkway -- 7,000 40,738 20,728 --
4301-4313 9th Ave. 583,661 52,870 908,727 33,531 --
Marshall 153,154 35,000 275,000 88,175 --
Scottsbluff 311,874 60,000 570,000 63,887 --
Oak Manor 243,000 25,000 225,000 17,417 --
177 10th Ave. E 238,965 40,000 318,109 2,709 --
312 12th Ave. NW 57,673 20,000 236,750 -- --
105 Grant Street -- 13,584 157,211 1,090 --
Lantern Court -- 15,000 40,000 16 --
Sweetwater 275,285 90,767 1,208,847 54,616 --
Bison 188,062 100,210 1,348,127 41,798 --
Eastgate -- 23,917 1,490,181 167,105 --
Chateau 1,318,597 60,000 2,539,381 64,273 --
Colton Heights 399,197 80,000 734,286 2,275 --
Hill Park 1,551,775 224,750 2,562,296 33,631 --
Candlelight Apts. 552,170 80,040 757,977 -- --
Forest Park 4,270,518 810,000 5,579,164 126,083 --
Oakwood Estates 2,120,562 342,800 2,783,950 164,861 --
Prairie Winds 1,426,174 144,097 1,816,011 -- --
Crestview Apts. 2,996,871 235,000 4,290,031 -- --
Pointe West 2,497,043 240,000 3,537,775 -- --
Oxbow Apts. 3,184,364 404,072 4,494,441 -- --
49 units, Bismarck, ND -- -- 1,460,150 -- --
Prairie Green, Minot, ND -- -- 2,062,466 -- --
Stonehill, St. Cloud, MN -- -- 340,525 -- --
Pine Cone, Ft. Collins, CO 10,685,215 904,545 12,121,534 -- --
South View, Minot, ND -- 185,000 468,585 -- --
Other -- -- 32,957 -- --
Office Buildings:
108 4th Ave. SE -- 42,195 286,588 25 --
114 S. Main 26,073 27,055 76,076 774 --
408 1st St. SE -- 10,000 34,836 2,037 --
401 South Main -- 70,600 334,308 66,981 --
Lester Building -- 25,000 243,916 -- --
First Avenue -- 30,000 219,496 529,321 --
Creekside 962,992 311,310 1,088,149 138,715 --
Commercial:
Arrowhead Shopping Center 242,369 100,359 1,063,925 1,222,811 --
Superpumper, Emerado, ND -- 25,000 225,564 46,500 --
Superpumper, Langdon, ND -- 59,674 151,500 28,038 --
Superpumper, Bottineau, ND -- 15,000 186,013 100,000 --
Superpumper, Crookston, MN -- 13,125 214,152 201,500 --
Superpumper,
Grand Forks, ND -- 80,000 405,007 -- --
Superpumper, New Town -- 69,900 180,100 -- --
Pioneer Hi-Bred 369,711 56,925 548,075 1,931 --
Lindberg Building 883,344 198,000 1,154,404 19,005 --
Superpumper, Sidney, MT -- 12,000 108,600 -- --
Hutchinson Tech 2,580,542 244,800 4,029,426 154,800 --
Minot Plaza -- 50,000 452,898 -- --
Smith's, Boise, ID 3,673,868 765,000 4,874,576 -- --
Midco Theatre, Grand Forks, ND 1,731,283 183,515 2,359,721 -- --
Pet Foods, Fargo, ND -- 324,148 927,570 -- --
Barnes & Noble, Fargo, ND 2,046,381 540,000 2,752,012 -- --
Stone Container, Fargo, ND -- -- 896,268 -- --
Barnes & Noble, Omaha, NE -- -- 71,895 -- --
------------- ------------ ------------- ------------ ---------
$ 49,453,453 $ 7,889,986 $ 81,795,773 $ 3,870,557 $ --
------------- ------------ ------------- ------------ ---------
------------- ------------ ------------- ------------ ---------
</TABLE>
F-21
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
<TABLE>
<CAPTION>
Schedule XI (Continued)
Gross Amount at Which
Carried at Close of Period
---------------------------------------
Life on Which
Buildings Latest Income
and Accumulated Date Statement
Description Land Improvements Total Depreciation Acquired Is Computed
- - ----------- --------- ------------ ----------- ------------ -------- --------------
Apartments:
<S> <C> <C> <C> <C> <C> <C>
Mobridge $ 33,996 $ 318,856 $ 352,852 $ 260,690 1974 25-40 years
Hutchinson 24,772 374,998 399,770 176,994 1977 33 1/2-40 years
Century - Williston 262,974 3,244,259 3,507,233 871,833 1985 35-40 years
Beulah 78,327 343,356 421,683 248,173 1983 15-40 years
Century - Dickinson 126,738 1,599,334 1,726,072 404,654 1986 35-40 years
Waseca, MN 40,000 764,436 804,436 214,583 1987 27 1/2-40 years
Virginia 37,600 179,483 217,083 45,481 1987 27 1/2-40 years
Parkway 11,445 57,021 68,466 7,163 1988 5-40 years
4301-4313 9th Ave. 64,397 930,729 995,126 157,244 1988 40 years
Marshall 35,360 362,815 398,175 49,082 1988 40 years
Scottsbluff 60,000 633,887 693,887 102,135 1988 40 years
Oak Manor 29,012 238,405 267,417 34,930 1989 40 years
177 10th Ave. E 40,159 320,659 360,818 43,995 1989 40 years
312 12th Ave. NW 20,000 236,750 256,750 32,553 1989 40 years
105 Grant Street 14,674 157,211 171,885 17,649 1991 40 years
Lantern Court 15,016 40,000 55,016 4,500 1991 40 years
Sweetwater 94,270 1,259,960 1,354,230 866,703 1972 20-33 years
Bison 100,210 1,389,925 1,490,135 983,225 1972 25-33 years
Eastgate 28,638 1,652,565 1,681,203 1,164,458 1970 33 years
Chateau 64,316 2,599,338 2,663,654 1,351,859 1972 33 years
Colton Heights 80,095 736,466 816,561 280,068 1984 33 years
Hill Park 245,653 2,575,024 2,820,677 909,339 1985 33 years
Candlelight Apts. 80,040 757,977 838,017 47,374 1993 40 years
Forest Park 810,000 5,705,247 6,515,247 353,426 1993 40 years
Oakwood Estates 342,800 2,948,811 3,291,611 180,170 1993 40 years
Prairie Winds 144,097 1,816,011 1,960,108 113,501 1993 40 years
Crestview Apts. 235,000 4,290,031 4,525,031 160,876 1994 40,years
Pointe West 240,000 3,537,775 3,777,775 132,667 1994 40 years
Oxbow Apts. 404,072 4,494,441 4,898,513 56,180 1994 40 years
49 units, Bismarck, ND -- 1,460,150 1,460,150 -- 1995 40 years
Prairie Green, Minot, ND -- 2,062,466 2,062,466 -- 1995 40 years
Stonehill, St. Cloud, MN -- 340,525 340,525 -- 1995 40 years
Pine Cone, Ft. Collins, CO 904,545 12,121,534 13,026,079 151,519 1994 40 years
South View, Minot, ND 185,000 468,585 653,585 8,170 1994 40 years
Other -- 32,957 32,957 -- 1995 40 years
Office Buildings:
108 4th Ave SE 42,221 286,587 328,808 177,587 1972 30 years
114 S. Main 27,829 76,076 103,905 64,543 1978 20 years
408 1st St. SE 10,016 36,857 46,873 16,372 1986 19-40 years
401 South Main 70,722 401,167 471,889 89,338 1987 31 1/2-40 years
Lester Building 25,000 243,917 268,917 39,814 1988 40 years
First Avenue 67,711 711,106 778,817 254,168 1981 33 years
Creekside 311,310 1,226,864 1,538,174 99,263 1992 40 years
Commercial:
Arrowhead Shopping Ctr. 100,412 2,286,683 2,387,095 1,920,867 1973 15-40 years
Superpumper, Emerado, ND 25,000 272,064 297,064 108,293 1986 19-40 years
Superpumper, Langdon, ND 59,674 179,538 239,212 40,014 1987 31 1/2-40 years
Superpumper, Bottineau, ND 15,000 286,013 301,013 36,120 1989 40 years
Superpumper, Crookston, MN 13,125 415,653 428,778 48,682 1988 40 years
Superpumper
Grand Forks, ND 80,000 405,007 485,007 45,563 1991 40 years
Superpumper, New Town, ND 69,900 180,100 250,000 15,759 1992 40 years
Pioneer Hi-Bred 56,925 550,006 606,931 47,999 1992 40 years
Lindberg Building 198,000 1,173,409 1,371,409 101,723 1992 40 years
Superpumper, Sidney, MT 12,000 108,600 120,600 6,788 1993 40 years
Hutchinson Tech 244,800 4,184,226 4,429,026 253,801 1993 40 years
Minot Plaza 50,000 452,898 502,898 28,306 1993 40 years
Smith's, Boise, ID 765,000 4,874,576 5,639,576 182,797 1994 40 years
Midco Theatre, Grand Forks, ND 183,516 2,359,721 2,543,237 29,497 1994 40 years
Pet Foods, Fargo, ND 324,148 927,571 1,251,719 11,595 1994 40 years
Barnes & Noble, Fargo, ND 540,000 2,752,012 3,292,012 34,400 1994 40 years
Stone Container, Fargo, ND -- 896,268 896,268 -- 1995 40 years
Barnes & Noble, Omaha, NE -- 71,895 71,895 -- 1995 40 years
------------ ------------- ------------- -------------
$ 8,145,515 $ 85,410,801 $ 93,556,316 $ 13,084,483
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
</TABLE>
F-22
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
Schedule XI (Continued)
Reconciliations of total real estate carrying value for the three years ended
April 30, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- ------------
<S> <C> <C> <C>
Balance at beginning of year $ 66,522,947 $ 48,953,137 $ 31,175,241
Additions during year
- acquisitions 27,371,289 17,094,188 17,249,765
- improvements 346,755 475,622 528,131
------------- ------------- ------------
$ 94,240,991 $ 66,522,947 $ 48,953,137
Deductions during year
- cost of real estate sold (684,675) -- --
------------- ------------- ------------
Balance at close of year $ 93,556,316 $ 66,522,947 $ 48,953,137
------------- ------------- ------------
------------- ------------- ------------
Reconciliations of accumulated depreciation for the three years ended April 30, 1995, 1994 and 1993
are as follows:
1995 1994 1993
------------- ------------- ------------
Balance at beginning of year $ 11,370,925 $ 9,969,517 $ 8,918,147
Additions during year
- provisions for depreciation 1,845,571 1,401,408 1,051,370
Deduction during year
- accumulated depreciation
on real estate sold (132,013) -- --
------------- ------------- ------------
Balance at close of year $ 13,084,483 $ 11,370,925 $ 9,969,517
------------- ------------- ------------
------------- ------------- ------------
</TABLE>
F-23
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1995
Schedule XII
INVESTMENTS IN MORTGAGE LOANS ON REAL ESTATE
<TABLE>
<CAPTION>
Interest Final Maturity Payment Prior
Rate Date Terms Liens
Residential
- - ----------- -------- -------------- -------
<S> <C> <C> <C> <C>
Billings, MT - 144 units 9% 9-1-98 Monthly --
Higley Heights, Phoenix, AZ 8% 3-31-04 Monthly --
North Park - Writer Corp. 14% 1-04-98 Monthly --
Pier Point - Writer Corp. 12% 10-01-95 Quarterly --
Geneva Del Mar Apts. 12% 6-30-95 Quarterly --
Centerbrooke Homes 12% 1-14-94 Monthly --
Other - over $100,000 8-12 1/2% 1-1-98 to
7-1-08 Monthly --
- from $50,000 - 99,999 8-9% 12-1-98 to
2-1-00 Monthly --
- from $20,000 - 49,999 8-10% 08-1-96 to
12-1-03 Monthly --
- less than $20,000 7-12% 8-1-96 to
12-1-01 Monthly
Total
Less - Unearned discounts
- Deferred gain from property dispositions
- Allowance for bad debts
</TABLE>
F-24
<PAGE>
<TABLE>
<CAPTION>
Principal Amount
Face Carrying of Loans Subject to
Amounts of Amounts of Delinquent Principal
Residential Mortgages Mortgages or Interest
- - ----------- ------------ ------------ --------------------
<S> <S> <C> <C>
Billings, MT - 144 units $ 1,500,000 $ 437,302 $ --
Higley Heights, Phoenix, AZ 809,786 700,015 --
North Park - Writer Corp. 1,550,000 281,101 --
Pier Point - Writer Corp. 887,000 407,842 --
Geneva Del Mar Apts. 586,000 328,277 --
Centerbrooke Homes 1,900,000 724,832 724,832
Other - over $100,000
1,795,483 1,095,386 --
- from $50,000 - 99,999
973,794 370,724 8,660
- from $20,000 - 49,999
383,660 111,933 --
- less than $20,000
235,189 27,185 --
------------- ------------ ----------
Total $ 10,620,912 $ 4,484,597 $ 733,492
------------- ----------
------------- ----------
Less - Unearned discounts (34,792)
- Deferred gain from property dispositions (219,861)
- Allowance for bad debts (293,365)
------------
$ 3,936,579
------------
------------
</TABLE>
F-25
<PAGE>
Schedule XII (CONTINUED)
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ -------------
<S> <C> <C> <C>
MORTGAGE LOANS RECEIVABLE,
BEGINNING OF YEAR $ 9,853,941 $ 11,546,075 $ 12,548,354
New participations in and advances
on mortgage loans 653,952 3,135,673 2,773,125
------------ ------------ -------------
$ 10,507,893 $ 14,681,748 $ 15,321,479
Collections (5,823,296) (4,827,807) (3,775,404)
Write-off through allowance (200,000) - -
------------ ------------ -------------
MORTGAGE LOANS RECEIVABLE,
END OF YEAR $ 4,484,597 $ 9,853,941 $ 11,546,075
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
F-26
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended April 30
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Consolidated Income Statement Data
Revenue $ 14,117,694 $ 11,884,579 $ 8,316,643 $ 7,206,054 $ 6,591,500
Operating income 3,568,014 3,178,101 2,231,092 1,628,155 1,160,634
Gain (loss) on repossession/
sale of investments 403,094 64,962 132,610 22,858 (10,008)
Net income 3,971,108 3,243,063 2,363,702 1,651,013 1,150,626
Consolidated Balance Sheet Data
Total real estate investments $ 84,408,412 $ 64,427,776 $ 50,041,059 $ 34,302,341 $ 31,722,867
Total assets 94,890,994 72,729,848 54,658,569 38,997,080 35,757,950
Shareholders' equity 38,094,144 30,320,401 23,745,443 18,849,635 15,770,048
Consolidated Per Share Data
Operating income $ .34 $ .35 $ .28 $ .23 $ .18
Gain on repossession/
sale of investments .04 .01 .01 .00 .00
Dividends .35 .34 .32 .31 .31
Tax status of dividend
Capital gain 11.0% 7.4% 4.1% 1.0% 4.9%
Ordinary income 89.0% 92.6% 74.0% 67.8% 53.8%
Return of capital 0.0% 0.0% 21.9% 31.2% 41.3%
</TABLE>
F-27
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1995, 1994 AND 1993
GAIN FROM PROPERTY DISPOSITIONS
<TABLE>
<CAPTION>
Total
Original Unrealized Realized Realized Realized
Property Gain 4/30/95 4/30/95 4/30/94 4/30/93
- - -------- --------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Brooklyn Addition * $ 25,000 $ 5,000 $ 1,000 $ 1,000 $ 1,000
1411 South 20th * 34,696 1,177 3,292 3,039 2,806
1302 South 19 1/2 * 87,669 28,659 5,739 5,299 4,893
600 Maple * 60,025 41,253 859 766 630
406 17th Street - Mandan * 233,522 143,772 4,609 4,131 3,702
1320 19 1/2 South* 74,424 -- -- 50,727 1,354
419 and 404 - Minot 82,053 -- 82,053 -- --
Yankton, SD 305,542 -- 305,542 -- --
Other gain realized -- -- -- -- 118,225
---------- ---------- --------- ----------
$ 219,861 $ 403,094 $ 64,962 $ 132,610
---------- ---------- --------- ----------
---------- ---------- --------- ----------
<FN>
* The gain from the sale of these properties is being realized based on the
installment method. The amount of deferred gain realized was $15,499,
$64,962 and $14,385 for the years ended April 30, 1995, 1994 and 1993,
respectively.
</TABLE>
F-28
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1994
MORTGAGE LOANS
<TABLE>
<CAPTION>
Final Periodic Carrying Delinquent
Interest Maturity Payment Face Amount Amount of Principal
Rate Date Terms of Mortgage Mortgages or interest
-------- -------- -------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Arrowhead Shopping
Center, Minot, ND 10.00% 10-1-97 Monthly $ 1,152,278 $ 242,369 $ --
Century Apartments,
Williston,
196 unit complex 9.02 10-1-15 Monthly 2,680,000 2,266,709 --
Century Apartments,
Dickinson,
120 unit complex 9.53 4-20-16 Monthly 1,320,000 1,178,928 --
Colton Heights Assoc.,
Billings, MT 9.00 3-1-97 Monthly 1,291,000 255,911 --
Chateau Properties,
Ltd., Minot, ND
64 unit complex 7.00 6-10-08 Monthly 1,400,000 1,318,597 --
Sweetwater Properties,
Grafton, Devils 2003 to
Lake, 114 units 9.25 2004 Monthly 914,138 275,285 --
Bison Properties,
Jamestown, Carrington,
Cooperstown, 8.50 to 1999 to
125 units 10.00 2000 Monthly 1,001,650 188,062 --
Hill Park Properties, Ltd.
Bismarck, ND, 96 units 10.625 9-1-15 Monthly 2,225,675 1,551,775 --
Colton Heights, Ltd.
Minot, ND, 18 units 8.50 1-1-00 Monthly 730,000 399,197 --
Residential Properties,
Single family - 7.25 to 5-1-95 to
36 unit complexes 10.50 3-1-03 Monthly 4,017,631 2,312,264 --
Commercial Properties,
Retail stores 9.00 5-1-98 Monthly 97,500 26,073 --
Pioneer Hi-Bred,
Moorhead, MN 7.38 11-1-01 Monthly 425,000 369,711 --
Creekside Office Complex
Billings, MT 9.50 12-1-16 Monthly 1,023,750 962,992 --
Hutchinson Tech
Sioux Falls, SD 8.50 8-1-99 Monthly 2,800,000 2,580,542 --
Candlelight Apts. 9.00 12-1-04 Monthly 578,000 552,170 --
Oakwood Apts. 7.64 5-1-99 Monthly 2,227,765 2,120,562 --
Prairie Winds 7.19 5-1-18 Monthly 1,470,000 1,426,174 --
Forest Park 9.75 5-1-03 Monthly 4,500,000 4,270,518 --
Pointe West Apts. 8.98 1-1-14 Monthly 2,625,000 2,497,042 --
Crestview Apts. 8.97 1-1-14 Monthly 3,150,000 2,996,871 --
Midco Theatre 9.40 7-1-14 Monthly 1,750,000 1,731,283 --
Sioux Falls, SD 9.25 7-15-14 Monthly 2,600,000 2,534,364 --
Smith's Home Furnishings 9.75 3-29-14 Monthly 3,750,000 3,673,868 --
Lindberg Building 8.75 4-1-00 Monthly 950,000 883,344 --
Barnes & Noble, Fargo, ND 8.50 12-5-14 Monthly 2,062,500 2,046,381 --
24 unit additions, Sioux Falls 9.50 4-10-15 Monthly 650,000 650,000 --
Pine Cone 7.79 11-30-99 Monthly 10,685,215 10,685,215 --
------------ ------------ ----------
$ 58,077,102 $ 49,996,207 $ --
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
F-29
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1995
SIGNIFICANT PROPERTY ACQUISITIONS
<TABLE>
<CAPTION>
<S> <C>
Acquisition for cash and assumptions of mortgages
Commercial:
Midco Theatre, Grand Forks, ND $ 2,543,237
Pet Foods, Fargo, ND 1,251,719
Barnes & Noble, Fargo, ND 3,292,012
Stone Container, Fargo, ND* 896,268
Barnes & Noble, Omaha, NE* 71,895
------------
$ 8,055,131
------------
Apartments:
North Pointe, Bismarck, ND* 1,460,150
South Pointe, Minot, ND* 2,062,466
Stonehill, St. Cloud, MN* 340,525
Pine Cone, Ft. Collins, CO 13,026,079
South View, Minot, ND 653,585
Oxbow Apts., Sioux Falls, SD** 1,746,707
-------------
$ 19,289,512
-------------
Total $ 27,344,643
-------------
-------------
<FN>
* Property not placed in service at April 30, 1995. Additional costs are
still to be incurred.
** Represents costs to complete a project started in year ending April 30,
1994.
</TABLE>
F-30
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------
7-31-94 10-31-94 1-31-95 4-30-95
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 3,328,796 $ 3,616,969 $ 3,574,068 $ 3,597,861
Income before gains on
sale of investments 794,755 1,066,229 1,014,011 693,019
Net gain on sale of investments - 305,543 - 97,551
Net income 794,755 1,371,772 1,014,011 790,570
Per share
Income before gains on
sale of investments .07 .10 .10 .07
Net gain on sale of
investments -- .03 -- .01
QUARTER ENDED
--------------------------------------------------------------------
7-31-93 10-31-93 1-31-94 4-30-94
------------ ------------ ------------ ------------
Revenues $ 2,690,066 $ 2,906,206 $ 2,983,480 $ 3,304,827
Income before gains on
sale of investments 841,939 852,618 872,875 610,669
Net gain on sale of investments -- -- -- 64,962
Net income 841,939 852,618 872,875 675,631
Per share
Income before gains on
sale of investments .10 .10 .10 .05
Net gain on sale of
investments -- -- -- .01
QUARTER ENDED
--------------------------------------------------------------------
7-31-92 10-31-92 1-31-93 4-30-93
------------ ------------ ------------ ------------
Revenues $ 2,007,460 $ 2,008,188 $ 2,013,495 $ 2,287,500
Income before gains on
sale of investments 642,241 578,070 656,909 353,872
Net gain on sale of investments -- -- -- 132,610
Net income 642,241 578,070 656,909 486,482
Per share
Income before gains on
sale of investments .08 .07 .08 .05
Net gain on sale of
investments -- -- -- .01
</TABLE>
F-31
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-START> MAY-01-1994
<PERIOD-END> APR-30-1995
<CASH> 5,592,513
<SECURITIES> 4,829,809
<RECEIVABLES> 4,544,857
<ALLOWANCES> (548,018)
<INVENTORY> 0
<CURRENT-ASSETS> 14,419,161
<PP&E> 93,556,316
<DEPRECIATION> (13,084,483)
<TOTAL-ASSETS> 94,890,994
<CURRENT-LIABILITIES> 1,938,179
<BONDS> 54,858,671
<COMMON> 41,560,587
0
0
<OTHER-SE> (3,466,443)
<TOTAL-LIABILITY-AND-EQUITY> 94,890,994
<SALES> 0
<TOTAL-REVENUES> 14,117,694
<CGS> 0
<TOTAL-COSTS> 6,865,771
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 200,000
<INTEREST-EXPENSE> 3,483,909
<INCOME-PRETAX> 3,568,014
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,568,014
<DISCONTINUED> 0
<EXTRAORDINARY> 403,094
<CHANGES> 0
<NET-INCOME> 3,971,108
<EPS-PRIMARY> .38
<EPS-DILUTED> 0
</TABLE>
