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, 1996 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 (Sec. 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 $85,060,870 based on the last reported
sale price on June 21, 1996.
The number of shares outstanding as of June 21, 1996,
was 13,501,725 Capital Shares of Beneficial Interest (no
par value).
Portions of the Trust's definitive proxy statement for
the 1996 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. . . . . . . . . . . . . . . . . . . . . 3
PART I
1. Business . . . . . . . . . . . . . . . . . . . 4
2. Properties . . . . . . . . . . . . . . . . . . 6
3. Legal Proceedings. . . . . . . . . . . . . . . 12
4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . 12
PART II
5. Market for Registrant's Common Stock and
Related Security Holder Matters. . . . . . . . 12
6. Selected Financial Data. . . . . . . . . . . . 13
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 14
8. Financial Statements and Supplementary Data. . 23
9. Disagreements on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . 23
PART III
10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . 23
11. Executive Compensation . . . . . . . . . . . . 24
12. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . 24
13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . 25
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K. . . . . . . . . . . . . . 25
Exhibit Index. . . . . . . . . . . . . . . . . 26
Signatures . . . . . . . . . . . . . . . . . . 27
Report of Independent Certified Public
Accountants. . . . . . . . . . . . . . . . . . F-1
<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
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, Idaho and Arizona.
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, prior to its Fiscal Year 1996, the
financial statements of IRET and the seven partnerships were
consolidated for financial reporting purposes and all
material intercompany transactions and balances have been
eliminated. During IRET's Fiscal Year ended April 30, 1996,
Chateau Properties refinanced its 64 unit apartment complex
resulting in the payment in full of its contract for deed
obligation to IRET. IRET was not required to guarantee
Chateau's new mortgage loan. Thus, under generally accepted
accounting rules, Chateau's financial statement is not
to be consolidated with that of IRET. Prior year's results
shown in this report have been restated to reflect the
removal of Chateau from the consolidated statement. (See
Note 11 to the Financial Statements.) The six limited
partnerships consolidated with IRET are:
Eastgate Properties, Ltd.
Bison Properties, Ltd.
First Avenue Building, Ltd.
Sweetwater Properties, Ltd.
Hill Park Properties, Ltd.
Colton Heights, Ltd.
<PAGE>
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 six limited partnerships are as
follows:
<TABLE>
<CAPTION>
Fiscal Year Ending 4/30
1996 1995 Restated 1994 Restated
<S> <C> <C> <C>
REVENUE FROM
OPERATIONS
Real Estate Rentals $17,635,297 $12,280,738 $ 9,765,701
Interest, Discount &
Fees 1,024,368 1,520,385 1,817,307
$18,659,665 $13,801,123 $11,583,008
EXPENSE $15,041,858 $10,240,805 $ 8,447,582
NET REAL ESTATE
INVESTMENT INCOME $ 3,617,807 $ 3,560,318 $ 3,135,426
GAIN ON SALE OF
INVESTMENTS
(CAPITAL GAIN) 994,163 407,512 64,962
NET INCOME $ 4,611,970 $ 3,967,830 $ 3,200,388
PER SHARE
Net Income $ .38 $ .38 $ .36
Dividends Paid $ .36 $ .35 $ .33
</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.
<PAGE>
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,
Sr.) 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, Sr.
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.
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.
<PAGE>
IRET owned the following properties as of April 30, 1996:
INVESTMENT PORTFOLIO - INVESTORS REAL ESTATE TRUST
AS OF APRIL 30, 1996
REAL ESTATE OWNED:
<TABLE>
<CAPTION>
Fiscal Mortgages
1996 Year Payable
Location Size/Type Occupancy Purchased Cost (rate)
<S> <C> <C> <C> <C> <C>
Apartments:
155 High St. 24 Unit 95% 1977 403,336 0
Hutchinson, MN Apt. Bldg.
Century Apartments 192 Unit 89% 1986 3,565,505 2,700,000
Williston, ND Apt. Complex (7.5%)
Century Condos 22 Condo 94% 1983 421,683 0
Beulah, ND Apt. Units & 1989
Century Apartments 120 Unit 98% 1986 1,741,619 1,595,000
Dickinson, ND Apt. Complex (7.5%)
201-301 17th Ave NE 2 24-Unit 92% 1987 806,694 0
Waseca, MN Apt. Bldgs.
Virginia Apts. 14 Unit 95% 1988 217,083 2,377
Minot, ND Apt. Bldg. (10%)
1305 Birch St. 24 Unit 94% 1989 399,278 135,871
Marshall, MN Apt. Bldg. (9.0%)
Oak Manor Apts. 27 Unit 99% 1989 285,917 238,264
Dickinson, ND Apt. Bdg. (9.75%)
4301-13 9th Ave SW 2 18-Unit 97% 1988 997,642 218,330
Fargo, ND Apt. Bldgs. (8.65%)
Parkway Apts. 2 18-Unit 93% 1989 82,386 0
Beulah, ND Apt. Bldgs.
Scottsbluff Estates 2 24-Unit 96% 1988 710,039 196,024
Scottsbluff, NE Apt. Bldgs. (10.25%)
177 10th Ave. E 41 Unit 86% 1989 360,877 234,660
Dickinson, ND Apt. Bldg. (8.75%)
312 12th Ave NW 18 Unit 97% 1989 256,750 45,670
Mandan, ND Apt. Bldg. (8.75%)
405 Grant Ave 12 Unit 80% 1990 171,884 0
Harvey, ND Apt. Bldg.
Candlelight Apts. 66 Unit 97% 1992 838,017 539,961
Fargo, ND (2/3rds) Apt. Complex (8.25%)
Forest Park 270 Unit 97% 1993 6,596,264 4,177,577
Grand Forks, ND Apt. Complex (9.75%)
Oakwood Estates 100 Unit 95% 1993 3,323,305 2,250,000
Sioux Falls, SD Apt. Complex (7.5%)
Prairie Winds 48 Unit 98% 1993 1,960,108 1,388,452
Sioux Falls, SD Apt. Complex (7.19%)
<PAGE>
Crestview Apts. 152 Unit 92% 1994 4,572,879 2,880,049
Bismarck, ND Apt. Complex (8.30%)
Pointe West 90 Unit 86% 1994 3,812,603 2,395,789
Rapid City, SD Apt. Complex (8.34%)
Oxbow Apts. 120 Unit 98% 1994 4,942,650 3,565,000
Sioux Falls, SD Apt. Complex (7.5%)
Pine Cone 195 Unit 92% 1995 13,071,638 10,645,576
Ft. Collins, CO Apt. Complex (7.125%)
Southview 24 Unit 98% 1995 653,948 0
Minot, ND Apt. Complex
North Pointe 49 Unit 96% 1996 2,387,600 1,382,528
Bismarck, ND Apt. Complex (8.18%)
South Pointe - 98 Unit N/A 1996 4,789,552 2,775,212
Phase I Apt. Complex Completed (8.01%)
Minot, ND
Stonehill 313 Unit 96% 1995 11,106,355 8,186,235
St. Cloud, MN Apt. Complex (9.21%)
1112 32nd Ave. SW 18 Unit 99% 1995 593,147 414,283
Minot, ND Apt. Complex (9.0%)
South Winds 164 Unit N/A 1995 5,433,683 3,721,568
Grand Forks, ND Apt. Complex (7.84%)
South Pointe - 98 Unit N/A Not 4,290,062 0
Phase II Apt. Complex Completed
Minot, ND
Billings, MT 98 Unit N/A Not 3,754,088 0
Apt. Complex Completed
Columbia Park 116 Unit N/A Not 4,035,609 0
Grand Forks, ND Apt. Complex Completed
Circle 50 49 Unit N/A Not 491,247 0
Billings, MT Apt. Complex Completed
Commercial:
114 S. Main 3,500 sq. ft. 100% 1978 103,905 18,389
Minot, ND Retail Bldg. (9%)
408 1st St. SE Rental House 100% 1986 46,873 0
Minot, ND
Arrowhead Center 80,000 sq. ft. 97% 1973 2,397,414 145,277
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
401 South Main 9,200 sq. ft. 96% 1988 474,686 0
Minot, ND Commercial Bldg.
Lester Chiropractic 5,000 sq. ft. 100% 1988 268,916 0
Clinic Clinic Bldg.
Bismarck, ND (1/2 int.)
<PAGE>
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 653,876 350,023
Moorhead, MN (8.625%)
Lindberg Office/Whse. 100% 1991 1,455,789 851,838
Eden Prairie, MN (8.5%)
Creekside Office Bldgs. 91% 1991 1,571,135 946,482
Billings, MT (8.35%)
Superpumper Gas Station/ 100% 1992 120,600 0
Sidney, MT Conven. Store
Hutchinson Tech. Manufacturing 100% 1992 4,429,026 2,470,548
Sioux Falls, SD Plant (8.5%)
Minot Plaza 11,200 sq. ft. 100% 1993 502,898 0
Minot, ND Strip Shopping Center
Retail Warehouse 70,000 sq. ft. 58% 1994 5,639,576 3,629,797
Boise, ID Retail Warehouse (9.75%)
Midco Theatre 28,528 sq. ft. 100% 1994 2,545,736 1,703,009
Grand Forks, ND 10-screen theatre (8.65%)
30 Year Lease
Pet Foods 18,000 sq. ft. 100% 1995 1,276,776 834,130
Fargo, ND Retail/Whse. (8.31%)
Barnes and Noble 30,000 sq. ft. 100% 1995 3,292,012 2,317,499
Fargo, ND Retail/Whse. (7.98%)
Stone Container Currently Under N/A 1995 4,938,486 3,271,632
Fargo, ND Construction (8.25%)
Barnes and Noble Currently Under 100% 1995 3,699,101 2,510,624
Omaha, NE Construction __________ (7.98%)
TOTAL COMMERCIAL 35,417,879
</TABLE>
<TABLE>
<CAPTION>
Consolidated Partnerships:
<S> <C> <C> <C> <C> <C>
Sweetwater
Properties 114 Apt. 79% 1972 1,354,230 251,014
Devils Lake & Units (9.75%)
Grafton, ND
Bison Properties 125 Apt. 90% 1972 1,490,135 152,946
Jamestown, Units (10%)
Carrington &
Cooperstown, ND
<PAGE>
First Avenue
Building 16,500 sq. ft. 93% 1981 779,817 0
Minot, ND Office Bldg.
Eastgate Properties 116 Unit 81% 1970 1,693,189 0
Moorhead, MN Apt. Complex
Colton Heights 18 Unit 97% 1984 816,561 381,682
Minot, ND Apt. Bldg. (9.5%)
Hill Park Properties 92 Unit 86% 1985 2,822,476 1,470,000
Bismarck, ND Apt. Complex ___________ (7.5%)
TOTAL PARTNERSHIPS 8,956,408
____________________________
Total Real Estate Owned $131,447,734 $71,321,337
Less Accumulated Depreciation (13,551,571)
____________
Net Carrying Value $117,896,163
Other Properties Sold Contract
For Deed $ 377,722
$71,699,059
</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.
- PLANNED IMPROVEMENTS. There are no plans for
material improvements to any of the above properties.
- CONTRACTS OR OPTIONS TO SELL. As of April 30, 1996,
IRET had not entered into any contracts or options to
sell any of the above properties, other than an
agreement to sell the 24 unit apartment complex in
Hutchinson, Minnesota, for $500,000.
- OCCUPANCY AND LEASES. Occupancy rates shown above are
for the fiscal year ended April 30, 1996. 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. The tenant occupying the retail warehouse in
Boise, Idaho, declared bankruptcy. The lease has been
terminated and the Trust is seeking a new tenant.
<PAGE>
MORTGAGE LOANS RECEIVABLE - UNRELATED:
<TABLE>
<CAPTION>
Real Estate 4/30/96
Location Security Balance Rate
<S> <C> <C> <C>
BILLINGS, MT
Colton Heights Apts.-144 Units $ 320,938 9%
DENVER, CO
Westminister-
Writer Corp. Residential Lots 618,810 14%
Centrebrooke Homes Residential Lots 205,517 12%
GILBERT, AZ
NE(-27-2-6 Commercial Land 681,032 8%
BISMARCK, ND
M. Knutt Apts. 236,880 11%
DOUGLAS, GA
Sweetwater Springs Retirement Center 1,254,810 9%
OTHER MORTGAGES
Over $100,000 $ 978,893 8-10 1/4%
$50,000 to $99,999 360,998 8-12%
$20,000 to $49,999 252,315 8-12%
Less than $20,000 21,950 7-12%
TOTAL $ 4,932,138
Unearned Discounts (18,222)
Allowance for Losses (165,074)
Deferred Gain (267,096)
$ 4,481,746
</TABLE>
TO INVEST IN THE SECURITIES OF OTHER ISSUERS FOR THE PURPOSE
OF EXERCISING CONTROL. The Trust has not invested in such
securities in the past. The decision to do so is vested
solely in the Board of Trustees and may be changed without a
vote of the shareholders.
<PAGE>
SUMMARY OF REAL ESTATE INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
REAL ESTATE INVESTMENTS:
<S> <C> <C> <C>
Real Estate Owned $131,447,734
Less Depreciation Reserve (13,551,571) $117,896,163 90%
Mortgage Loans 4,932,138
Less unearned discounts
and interest (18,222)
Less allowance for losses (165,074)
Less deferred gain (267,096) 4,481,746 3%
Total Real Estate Investments $122,377,909
OTHER ASSETS:
Cash and marketable securities $ 7,127,131
Deposits and accruals 1,850,598
Total Other Assets $ 8,977,729 7%
TOTAL ASSETS $131,355,638 100%
</TABLE>
Item 3. LEGAL PROCEEDINGS
IRET is not involved in any legal proceedings or litigation
other than normal collection matters that will not have a
material impact on financial results.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the August 9, 1995 Annual Shareholders' meeting, the
only matters submitted to a vote of security holders were
the election of ten Trustees and ratification of the re-
appointment 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 National Securities, Inc., 21 South
Main, Minot, ND 58701, and Financial Advantage Brokerage
Services, 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:
<PAGE>
<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>
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
1995 July-September 452,665 6.03 6.16 6.55 6.70 .0925
1995 October-December 466,447 6.16 6.16 6.70 6.70 .08875
1996 January-March 451,383 6.16 6.30 6.70 6.85 .09
1996 April-June 551,418 6.30 6.30 6.85 6.85 .09125
</TABLE>
As of May 31, 1996, IRET had 2,884 shareholders. No
shareholder held more than 5% of the 13,365,393 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 National 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.
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended April 30
1996 1995 1994 1993 1992
(Restated) (Restated)
<S> <C> <C> <C> <C> <C>
Consolidated Income Statement Data
Revenue $ 18,659,665 $ 13,801,123 $11,583,008 $ 8,316,643 $ 7,206,054
Operating Income 3,617,807 3,560,318 3,135,426 2,231,092 1,628,155
Gain on repossession/
sale of investments 994,163 407,512 64,962 132,610 22,858
Net Income 4,611,970 3,967,830 3,200,388 2,363,702 1,651,013
Balance Sheet Data
Total real estate
investments $122,377,909 $ 84,005,635 $64,089,476 $50,041,059 $34,302,341
Total assets 131,355,638 94,616,744 72,391,548 54,658,569 38,997,080
Shareholders' equity 50,711,920 37,835,654 29,997,189 23,745,443 18,849,635
Consolidated Per Share Data
Net income $ .38 $ .38 $ .36 $ .29 $ .23
Gain on repossession/
sale of investments .08 .04 .01 .01 .00
Dividends .36 .35 .33 .32 .31
Tax status of dividend
capital gain 1.6% 11.0% 7.37% 4.08% 1.0%
Ordinary income 98.4% 89.0% 92.63% 74.04% 68.0%
Return of capital 0.0% 0.0% 0.00% 21.88% 31.0%
</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 has occurred from the
organization of the Trust in 1970 to the date of this
Prospectus, and none are planned at this time.
RESULTS OF OPERATIONS:
FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995. IRET's
Fiscal Year 1996, which ended on April 30, 1996, produced
very favorable results, including a substantial increase
in IRET's investment portfolio and satisfactory increases
in earnings and funds from operations.
EARNINGS. IRET's net taxable earnings for Fiscal Year
1996 increased to $4,611,970, compared to $3,967,830
earned in Fiscal 1995 and $3,200,388 earned in
Fiscal 1994. Fiscal 1996 taxable income includes
$994,163 of capital gain income from the sale of assets
from the investment portfolio, compared to $407,512 of
capital gain income in Fiscal 1995 and $64,962 of
capital gain income in Fiscal 1994.
On a per share basis, net taxable income was $.38 per
share for Fiscal 1996, the same as earned in Fiscal
1995. Per share taxable income in Fiscal 1994 was $.36
per share.
As noted in prior reports, as IRET repositions its
investment portfolio by replacing high yielding
mortgage loans with equity investments in real estate
properties, taxable earnings are depressed.
FUNDS FROM OPERATIONS. Funds from operations (taxable
income increased by non-cash deductions of depreciation
and amortization, and reduced by capital gain income
and other extraordinary income items) for Fiscal 1996
increased to $5,977,431 ($.49 per share) from the
$5,434,244 ($.52 per share) generated in Fiscal 1995
and the $4,607,708 ($.52 per share) generated in
Fiscal 1994.
<PAGE>
REVENUES. Total revenues for Fiscal 1996 were
$18,659,665, compared to $13,801,123 in Fiscal 1995
and $11,583,008 in Fiscal 1994. The increase in
revenues received during Fiscal 1996 in excess of
Fiscal 1995 revenues was $4,858,542. This increase
resulted from:
<TABLE>
<CAPTION>
<S> <C>
Rent from 6 properties acquired in
Fiscal 1996 $3,272,078
Rent from 6 properties acquired in
Fiscal 1995 in excess of that
received in Fiscal 1994 2,094,922
An increase in rental rates on
existing properties (2.5%) 259,084
A decrease in rent on Smith Home
Furnishing Building (bankruptcy
of tenant) (348,310)
A decrease in rent - properties sold
during 1996 (178,888)
A decrease in interest income (240,344)
$4,858,542
</TABLE>
The increase in revenue during Fiscal Year 1996
resulted primarily from the addition of new real estate
properties to the portfolio. Rents received on
properties acquired prior to the beginning of Fiscal
1995 increased by 2.5%. Overall occupancy was stable at
95%. The decline in operating income per share (from
$.35 per share in Fiscal 1994, to $.34 in 1995 and $.30
in 1996) reflects the continuing repositioning of the
investment portfolio from a mix of real estate equities
and mortgage loans to one consisting entirely of real
estate equities. The income on the mortgage loans made
by the Trust was immediately reflected in operating
income. Many of these mortgage loans earned interest at
14% per annum and several produced additional
participation income. These mortgages have now been
largely paid off and have been replaced with equity
investments in apartments and triple net leased
commercial property. The initial operating and taxable
income on the equity investments is lower than what
was being earned on the mortgage loans, but management
is of the opinion that these new investments will
produce very satisfactory investment returns in the
years ahead.
<PAGE>
Capital gain income, on the other hand, has been
increasing ($.01 per share in Fiscal 1994 compared to
$.04 per share in Fiscal 1995 and $.08 per share in
Fiscal 1996). IRET is marketing its older and smaller
apartment investments and will continue to reposition
its portfolio into newer and larger properties.
The $644,140 increase in net income for Fiscal 1996
over the net income earned in the prior fiscal year
resulted from:
<TABLE>
<CAPTION>
<S> <C>
An increase in gain from sale of investments $ 586,651
An increase in net rental income (rents, less
utilities, maintenance, taxes, insurance
and management) 3,193,087
A decrease in interest income (496,017)
An increase in interest expense (2,063,429)
An increase in depreciation expense (494,430)
A decrease in bad debt expense 200,000
An increase in operating expenses
and advisory trustee services (204,481)
An increase in amortization expense (77,241)
$ 644,140
</TABLE>
PROPERTY ACQUISITIONS. IRET acquired over $40,000,000
of new properties during Fiscal 1996. They were:
COMMERCIAL: Cost
- Barnes & Noble Superbookstore,
Omaha, NE (15 year net lease) $ 3,627,206**
- Stone Container Manufacturing Plant,
Fargo, ND $ 4,042,217**
<PAGE>
APARTMENTS:
- 96 units, Billings, MT $ 3,727,440*
- 49 units, North Pointe, Bismarck, ND $ 927,450**
- 98 units, South Pointe, Phase I,
Minot, ND $ 2,727,085**
- 313 units, West Stonehill, St. Cloud,
MN $10,765,830**
- 18 units, Minot, ND $ 593,147
- 49 units, Grand Forks, ND $ 3,373,754*
- 164 units, South Winds, Grand Forks,
ND $ 5,433,683
- 98 units, South Pointe II, Minot,
ND $ 4,290,061*
- 49 units, Circle 50, Billings, MT $ 491,247*
- 67 units, Columbia Park II,
Grand Forks, ND $ 661,855*
$40,660,975
* Property not placed in service at April 30, 1996.
Additional costs are still to be incurred.
** Represents costs to complete a project started in
the year ending April 30, 1995.
PROPERTY DISPOSITIONS: During Fiscal 1996, IRET sold
several older and smaller apartment buildings. In
addition, a contract for deed receivable from Chateau
Properties, Ltd., was paid in full, resulting in the
recognition of deferred capital gain. The total gain
recognized from the sale of properties (both current
and deferred) was $994,163 for Fiscal 1996, compared
to $407,512 in Fiscal 1995, and $64,962 in Fiscal 1994.
It is management's intention to continue to market
IRET's older and smaller apartment projects.
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994: (This
comparative report is reproduced as it was submitted for
Fiscal Year 1995. The Fiscal 1995 results were restated
in the Fiscal 1996 Financial Report because of the
removal of Chateau Properties from the consolidated
Financial Report resulting in small changes to the
Fiscal 1995 results. See Note 11 to the attached
Financial Report for an explanation of these changes.)
Net income for Fiscal 1995 increased to $3,971,108,
compared to $3,243,063 for Fiscal 1994 and $2,363,702
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.
<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 1994 and $8,316,643 in 1993. The Fiscal
1995 revenue increase of $2,233,115 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 1993 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 (260,001)
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>
<CAPTIONl
<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 (441,163)
A decrease in bad debt expense 50,000
An increase in operating expenses &
other items (87,407)
$ 728,045
</TABLE>
<PAGE>
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 result in a decrease in
net income because of increased depreciation.
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.
DIVIDENDS. The following dividends were paid during Fiscal
1996:
<TABLE>
<CAPTION>
Date Per Share Dividend
<S> <C>
July 1, 1995 $.09*
October 1, 1995 $.0875
January 5, 1996 $.09
April 1, 1996 $.09125
$.35875
* Includes $.005 special dividend.
</TABLE>
FUNDS FROM OPERATIONS. The funds derived during Fiscal 1996
by the Trust from its operations increased by 12% over the
prior year and by 33% from the Fiscal 1994 level ($5,977,431
in Fiscal 1996, versus $5,348,271 in 1995 and $4,487,099 in
1994). (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 in the
Consolidated Financial Statements attached hereto.)
<PAGE>
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 1996 1995 (Restated) 1994 (Restated) 1993 1992
<S> <C> <C> <C> <C> <C>
Net Income (GAAP) $4,611,970 $3,967,830 $3,200,388 $2,363,702 $1,651,073
Less Gains (Losses from
Property Sales 994,163 407,512 64,962 132,610 22,858
Operating Income $3,617,807 $3,560,318 $3,135,426 $2,231,092 $1,628,155
Plus Depreciation 2,261,724 1,767,294 1,323,474 1,051,370 824,369
Plus Amortization 97,900 20,659 28,199 16,364 11,289
Funds from Operations $5,977,431 $5,348,271 $4,487,099 $3,298,826 $2,463,813
Dividends Paid $4,439,034 $3,660,986 $3,102,061 $2,633,799 $2,257,303
$1,538,397 $1,687,285 $1,385,038 $ 665,027 $ 206,510
</TABLE>
Management expects that the Funds From Operations (as
defined above) will continue to improve during Fiscal 1997
and will exceed dividends paid in the coming year.
LIQUIDITY AND CAPITAL RESOURCES. IRET's financial condition
at the end of Fiscal 1996 continued at the very strong level
of its prior fiscal year.
- Equity capital increased to $50,711,920 from
$37,835,654 on April 30, 1995, a gain of
$12,876,266 (34%). Equity capital on April 30,
1994, was $30,320,401. These increases result
from the sale of shares of beneficial
interest and the reinvestment of dividends in
new shares.
- Liabilities increased to $80,643,718 from
$56,781,090 on April 30, 1995, and $42,409,447
on April 30, 1994.
- Total assets increased to $131,355,638 from
$94,616,744 on April 30, 1995, and $72,729,848
on April 30, 1994.
- Cash and marketable securities were $7,127,131
compared to the year earlier figure of $9,595,254,
and $7,263,031 on April 30, 1994.
<PAGE>
- In addition to its cash and marketable securities,
IRET has an unsecured line of credit agreement
with First American Bank West, Minot, North Dakota,
of $5,000,000, none of which was in use on April 30,
1996.
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) did not produce sufficient
cash flow to pay debts due to IRET as scheduled prior to
Fiscal Year 1996, 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.) During Fiscal Year
1996, a new mortgage loan was negotiated by Chateau
Properties, Ltd., on its 64-unit apartment building in
Minot, North Dakota. As a result of this refinancing, the
partnership paid the balance that it owed to IRET on the
contract for deed under which the apartment building had
been purchased from IRET. Further, IRET was not required to
guarantee the new mortgage loan made by the partnership.
Accordingly, for Fiscal 1996, IRET is accounting for its
partnership interest in Chateau Properties under the equity
method of accounting. Prior financial statements included in
the audited financial statement and this report have been
restated to reflect this change. See Note 11 in the attached
financial report for a detail of the effect of this
accounting change.
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.
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>
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS. The financial statement
included in this Form 10-K consolidates the financial
statements of IRET and six of the above seven limited
partnerships. (Chateau Properties is excluded.) 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.
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 expense. 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 1996 saw continued good economic
conditions 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 rates were stable at 95% and rent
levels for Trust properties improved only slightly in Fiscal
1996 (2 1/2%).
<PAGE>
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,
1996, were:
Name, Age Business Experience During Year Position
and Position Past Five Years Commenced
*C. Morris Anderson President of North Hill Bowl, Inc.; 1970
Age 67 Director of Dakota Boys Ranch (25 yrs.);
Trustee Director of International Inn, Inc.
and Norwest Bank - Minot, N.A. and a
Partner in Magic City Realty, Ltd.
*Ralph A. Christensen Retired rancher; 1970
Age 67 Director of First Bank - Minot, N.A.
Trustee and Chairman Chairman of IRET.
*John D. Decker Investor 1970
Age 79
Trustee
*Mike F. Dolan Investor; Vice-Chairman of IRET. 1978
Age 84
Trustee & Vice-Chairman
*J. Norman Ellison, Jr. Businessman; Managing Partner of 1970
Age 73 Ellison Realty Co.; Former Director
Trustee of First Bank - Minot, N.A.
*Daniel L. Feist Realtor; Broker; Real Estate Developer; 1985
Age 64 Builder; General Contractor; President -
Trustee Owner Feist Construction & Realty;
Investor; Businessman, Director of
First Bank System - Minot, N.A.;
Director N.D. Holdings, Inc. - Minot.
<PAGE>
*Patrick G. Jones Investor; Former President of Central 1986
Age 48 Venture Capital, Inc.; Former Manager
Trustee and Director of the Minot Daily News.
*Jeff L. Miller Investor; Businessman; President of 1985
Age 52 M&S Concessions, Inc. and former
Trustee & Vice-Chairman president of Coca-Cola Bottling Co. of
Minot; Director of First Bank - Minot.
Roger R. Odell Realtor; President of IRET; Partner in 1970
Age 70 Odell-Wentz & Associates (Advisor to
Trustee, President IRET); Director of Investors Management
and Advisor & Marketing, Inc. and Inland National
Securities, Inc.; Partner in Magic City
Realty, Ltd.
Thomas A. Wentz Attorney, Pringle & Herigstad, P.C.; 1970
Age 61 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 37 Odell-Wentz & Associates (Advisor to
Secretary the Trust); Secretary of IRET.
* Unaffiliated Trustees.
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 21, 1996.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
As of May 31, 1996, 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 8.38% 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 1996 annual meeting of shareholders, incorporated
herein by reference.
<PAGE>
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 21, 1996.
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:
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.
<PAGE>
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 21, 1996
4. Exhibits
See the following list of exhibits.
(b) Reports on Form 8-K - None filed.
(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, 1996. 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.
10. Advisory Agreement between the Registrant and
Odell-Wentz & Associates, filed as Exhibit 10 to
said Form 10 and incorporated herein by reference.
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 24, 1996 By: /S/ Thomas A. Wentz, Sr.
___________________________
Thomas A. Wentz, Sr.
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 24, 1996
_________________________ Principal Executive Officer
Roger R. Odell
/s/ Thomas A. Wentz, Sr.
___________________________ Vice-President and Trustee July 24, 1996
Thomas A. Wentz, Sr.
/s/ Ralph A. Christensen
___________________________ Trustee and Chairman July 24, 1996
Ralph A. Christensen
/s/ Mike F. Dolan
___________________________ Trustee and Vice-Chairman July 24, 1996
Mike F. Dolan
/s/ Jeff L. Miller
___________________________ Trustee and Vice-Chairman July 26, 1996
Jeff L. Miller
/s/ C. Morris Anderson
___________________________ Trustee July 24, 1996
C. Morris Anderson
/s/ J. Norman Ellison, Jr.
___________________________ Trustee July 24, 1996
J. Norman Ellison, Jr.
/s/ Daniel L. Feist
___________________________ Trustee July 24, 1996
Daniel L. Feist
/s/ Patrick G. Jones
___________________________ Trustee July 24, 1996
Patrick G. Jones
/s/ John D. Decker
___________________________ Trustee July 24, 1996
John D. Decker
/s/ Timothy P. Mihalick
___________________________ Secretary July 24, 1996
Timothy P. Mihalick
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
MINOT, NORTH DAKOTA
CONSOLIDATED FINANCIAL STATEMENTS
as of
April 30, 1996 and 1995
and
INDEPENDENT AUDITOR'S REPORT
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
TABLE OF CONTENTS
Pages
INDEPENDENT AUDITOR'S REPORT 3
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 4-5
Consolidated Statements of Operations 6
Consolidated Statements of Shareholders' Equity 7-8
Consolidated Statements of Cash Flows 9-11
Notes to Consolidated Financial Statements 12-25
ADDITIONAL INFORMATION
Independent Auditor's Report on Additional
Information 26
Marketable Securities 27
Noncurrent Indebtedness of Related Parties -
Mortgage Loans Receivable 28
Supplemental Income Statement Information 29
Real Estate and Accumulated Depreciation 30-38
Investments in Mortgage Loans on Real Estate 39-41
Selected Financial Data 42
Gain from Property Dispositions 43
Mortgage Loans 44-47
Significant Property Acquisitions 48
Quarterly Results of Consolidated Operations
(Unaudited) 49
Other schedules are omitted due to inapplicability
<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, 1996 and 1995,and the related consolidated
statements of operations, shareholders' equity and cash
flows for the years ended April 30, 1996, 1995 and 1994.
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, 1996 and
1995, and the consolidated results of its operations and
cash flows for the years ended April 30, 1996, 1995 and
1994, in conformity with generally accepted accounting
principles.
BRADY, MARTZ & ASSOCIATES, P.C.
Minot, North Dakota
May 20, 1996
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1995
1996 (Restated)
<S> <C> <C>
REAL ESTATE INVESTMENTS
Property owned $131,447,734 $ 90,892,662
Less accumulated depreciation (13,551,571 (11,732,655)
$117,896,163 $ 79,160,007
Mortgage loans receivable
- related parties - 1,449,312
- other 4,932,138 4,366,460
Less - unearned discounts and
deferred interest (18,222) (34,792)
- deferred gain from property
dispositions (165,074) (641,987)
- allowance for loan losses (267,096) (293,365)
Total real estate investments $122,377,909 $ 84,005,635
OTHER ASSETS
Cash $ 2,715,274 $ 4,765,445
Marketable securities 4,411,857 4,829,809
Accounts receivable 30,269 60,260
Real estate deposits - 175,000
Investment in partnership 85,576 166,955
Prepaid insurance 128,541 99,426
Tax and insurance escrow 1,151,527 317,520
Deferred charges 454,685 196,694
TOTAL ASSETS $131,355,638 $ 94,616,744
</TABLE>
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1995
1996 (Restated)
<S> <C> <C>
LIABILITIES
Accounts payable and accrued
expenses $ 3,142,190 $ 1,922,419
Mortgages payable 71,699,059 49,996,207
Investment certificates issued 5,802,469 4,862,464
Total liabilities $ 80,643,718 $ 56,781,090
SHAREHOLDERS' EQUITY
Shares of beneficial interest
(unlimited authorization,
no par value, 13,258,908
shares outstanding in 1996
and 11,187,786 shares
outstanding in 1995) $ 54,263,917 $ 41,560,587
Accumulated distributions in
excess of net income (3,551,997) (3,724,933)
Total shareholders' equity $ 50,711,920 $ 37,835,654
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $131,355,638 $ 94,616,744
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
1996 (Restated (Restated)
<S> <C> <C> <C>
REVENUE
Real estate rentals $17,635,297 $12,280,738 $ 9,765,701
Interest, discounts
and fees 1,024,368 1,520,385 1,817,307
Tot al revenue $18,659,665 $13,801,123 $11,583,008
EXPENSES
Interest $ 5,547,739 $ 3,484,310 $ 2,652,400
Depreciation 2,261,724 1,767,294 1,323,474
Utilities and
maintenance 3,167,560 2,352,968 2,146,120
Taxes and insurance 2,065,017 1,220,434 1,054,880
Property management
expenses 1,281,311 779,024 641,054
Advisory and trustee
services 458,019 336,142 304,898
Operating expenses 162,588 79,974 46,557
Amortization 97,900 20,659 28,199
Provision for loan
losses - 200,000 250,000
Total expenses $15,041,858 $10,240,805 $ 8,447,582
OPERATING INCOME $ 3,617,807 $ 3,560,318 $ 3,135,426
GAIN ON SALE OF
PROPERTIES 994,163 407,512 64,962
NET INCOME $ 4,611,970 $ 3,967,830 $ 3,200,388
Net income per share:
Operating income $ .30 $ .34 $ .35
Gain on sale of
investments .08 .04 .01
Net income $ .38 $ .38 $ .36
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Accumulated
Shares of Distributions Total
Beneficial in Excess of Shareholders'
Interest Net Income Equity
<S> <C> <C> <C>
BALANCE, MAY 1,
1993, AS
PREVIOUSLY
REPORTED $27,663,010 $(3,917,567) $23,745,443
Adjustment for the
cumulative effect
on prior years of
a change in the
reporting entity - $ (361,537) $ (361,537)
BALANCE, MAY 1,
1993, AS RESTATED $27,663,010 $(4,279,104) $23,383,906
Net income - 3,200,388 3,200,388
Dividends
distributed - (3,021,061) (3,021,061)
Dividends
reinvested 1,853,356 - 1,853,356
Sale of shares 4,580,600 - 4,580,600
BALANCE, APRIL 30,
1994 $34,096,966 $(4,099,777) $29,997,189
BALANCE, MAY 1,
1994, AS
PREVIOUSLY
REPORTED $34,096,966 $(3,776,565) $30,320,401
Adjustment for the
cumulative effect
on prior years of
a change in the
reporting entity - $ (323,212) $ (323,212)
<PAGE>
BALANCE, MAY 1,
1994, AS RESTATED $34,096,966 $(4,099,777) $29,997,189
Net income - 3,967,830 3,967,830
Dividends
distributed - (3,592,986) (3,592,986)
Dividends
reinvested 2,175,278 - 2,175,278
Sale of Shares 5,288,343 - 5,288,343
BALANCE, APRIL 30,
1995 $41,560,587 $(3,724,933) $37,835,654
BALANCE, MAY 1,
1995, AS
PREVIOUSLY
REPORTED $41,560,587 $(3,466,443) $38,094,144
Adjustment for the
cumulative effect
on prior years of
a change in the
reporting entity - $ (258,490) $ (258,490)
BALANCE, MAY 1,
1995, AS RESTATED $41,560,587 $(3,724,933) $37,835,654
Net income - 4,611,970 4,611,970
Dividends
distributed - (4,439,034) (4,439,034)
Dividends
reinvested 3,100,988 - 3,100,988
Sale of shares 9,820,470 - 9,820,470
Shares repurchased (218,128) - (218,128)
BALANCE, APRIL 30,
1996 $54,263,917 $(3,551,997) $50,711,920
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
1996 (Restated) (Restated)
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income $ 4,611,970 $ 3,967,830 $ 3,200,388
Adjustments to
reconcile net income
to net cash provided
by operating activities:
Depreciation and
amortization 2,359,624 $ 1,787,953 $ 1,351,673
Provision for loan
losses - - 250,000
Accretion of discount
on contracts (16,570) (14,670) (120,485)
Gain on sale of
properties (994,163) (407,512) (64,962)
Interest reinvested in
investment certifi-
cates 161,813 205,491 237,415
Changes in other
assets and liabili-
ties:
Increase in other
assets (273,636) (119,685) (39,067)
Increase in tax and
insurance escrow (834,007) (3,603) (49,720)
Increase (decrease)
in accounts payable
& accrued expenses 1,219,771 (108,444) 163,195
Net cash provided
from operating
activities $ 6,234,802 $ 5,307,360 $ 4,928,437
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from
maturity of invest-
ment securities $ 417,952 $ 441,644 $ 992,872
Principal payments
on mortgage loans
receivable 2,642,346 $ 4,059,328 $ 4,808,981
<PAGE>
Proceeds from sale
of other assets 389,784 - -
Payments for acqui-
sition and improve-
ment of properties (32,462,846)$(10,584,694)$(8,372,346)
Purchase of invest-
ment securities - - (3,035,142)
Investment in mortgage
loans receivable (1,784,981) (653,952) (3,159,230)
Net cash used for in-
vesting activities $(30,797,745)$ (6,737,674)$(8,764,865)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from sale
of shares $ 9,820,470 $ 5,288,343 $ 4,580,600
Repurchase of shares (218,128) - -
Proceeds from invest-
ment certificates
issued 1,695,924 947,093 896,657
Proceeds from mort-
gages payable 29,025,001 2,092,266 3,453,849
Loan on margin account - - 2,250,000
Dividends paid (1,338,046) (1,417,708) (1,167,705)
Redemption of invest-
ment certificates (917,732) (695,803) (1,488,070)
Principal payments on
mortgage loans (15,554,717) (1,979,111) (1,355,233)
Payments on margin
account - - (2,250,000)
Net cash provided
from financing
activities $ 22,512,772 $ 4,235,080 $ 4,920,098
NET INCREASE (DECREASE)
IN CASH $ (2,050,171)$ 2,804,766 $ 1,083,670
CASH AT BEGINNNING OF
YEAR 4,765,445 1,960,679 877,009
CASH AT END OF YEAR $ 2,715,274 $ 4,765,445 $ 1,960,679
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
SUPPLEMENTARY SCHEDULE
OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Dividends reinvested $ 3,100,988 $ 2,175,278 $ 1,853,356
Real estate invest-
ment and mortgage
loans receivable
acquired through
assumption of mort-
gage loans payable
and accrual of costs 8,232,568 15,917,788 9,510,351
Proceeds from sale
of properties
deposited directly
with escrow agent 426,352 940,258 -
Mortgages paid
directly by owner
of contract - 543,598 18,826
Interest reinvested
directly in invest-
ment certificates 161,813 205,491 237,415
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid during the year for:
Interest paid on
mortgages $ 4,642,186 $ 3,109,727 $ 2,215,752
Interest paid on
investment certifi-
cates 292,660 157,233 192,450
$ 4,934,846 $ 3,266,960 $ 2,408,202
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996, 1995 AND 1994
NOTE 1 - NATURE OF OPERATIONS AND 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 commercial and residential
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. 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.
Sweetwater Properties, Ltd.
Hill Park Properties, Ltd.
Colton Heights, Ltd.
All material intercompany transactions and balances
have been eliminated in the consolidated financial
statements.
<PAGE>
NOTE 1 - (CONTINUED)
ACCOUNTING POLICIES
USE OF ESTIMATES - The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of
the financial statements and the reported amounts
of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
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.
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 which approximates the
effective interest method. 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.
<PAGE>
NOTE 1 - (CONTINUED)
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 which approximates the
effective interest method. Gains or losses on
marketable securities are recognized on the basis
of specific identification.
INVESTMENT IN PARTNERSHIP - As described in Note
11, the Trust is accounting for its investment in
Chateau Properties, Ltd. under the equity method of
accounting, wherein the appropriate portion of the
earnings or loss is recognized currently. The Trust
has a general partnership interest in the limited
partnership. Chateau Properties, Ltd. has invested
in real estate properties.
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.
<PAGE>
NOTE 1 - (CONTINUED)
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 several property sales
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 in conformity with FASB
Statement No. 114, as discussed in Note 4. 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.
NOTE 2 - OFF-BALANCE-SHEET RISK
The Trust had deposits at Norwest Bank,
North Dakota, N.A., and First American Bank
which exceeded Federal Deposit Insurance
Corporation limits by $1,286,202 and $779,367,
respectively, at April 30, 1996.
<PAGE>
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, 1995
April 30, 1996 (Restated)
<S> <C> <C>
Residential $ 96,029,855 $ 62,241,542
Less accumulated
depreciation (9,620,990) (8,065,367)
$ 86,408,865 $ 54,176,175
Commercial $ 35,417,879 $ 28,651,120
Less accumulated
depreciation (3,930,581) (3,667,288)
$ 31,487,298 $ 24,983,832
Remaining cost $117,896,163 $ 79,160,007
</TABLE>
There were no repossessions during the years ended
April 30, 1996 and 1995.
The above cost of residential real estate owned
included construction in progress of $12,544,357
and $3,863,141 as of April 30, 1996 and 1995,
respectively. The above cost of commercial real
estate owned included construction in progress of
$968,163 as of April 30, 1995.
Construction period interest of $690,665 has been
capitalized for the year ended April 30, 1996.
Construction period interest of $94,313 was
capitalized for the year ended April 30, 1995.
Residential apartment units are rented to
individual tenants with lease terms up to one year.
Gross revenues from residential rentals totaled
$12,286,492, $9,076,477 and $7,313,780 for the
years ended April 30, 1996, 1995 and 1994,
respectively.
<PAGE>
NOTE 3 - (CONTINUED)
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 $25,054,
$16,586 and $22,943 for the years ended April 30,
1996, 1995 and 1994, respectively.
The future minimum lease payments to be received
under these operating leases for the commercial
properties as of April 30, 1996, are as follows:
<TABLE>
<CAPTION>
Year ending April 30,
<S> <C>
1997 $ 3,155,683
1998 2,817,310
1999 2,621,910
2000 2,564,304
2001 2,540,964
Thereafter 18,461,882
$32,162,053
</TABLE>
NOTE 4 - MORTGAGE LOANS RECEIVABLE
Mortgage loans receivable consists of approximately
thirty contracts which are collateralized by real
estate. 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, 1996 are as follows:
<PAGE>
NOTE 4 - (CONTINUED)
<TABLE>
<CAPTION>
Year ending April 30,
<S> <C>
1997 $ 2,722,999
1998 1,002,768
1999 195,884
2000 104,529
2001 71,943
Later years 834,015
$ 4,932,138
</TABLE>
Details concerning mortgage loans receivable from
related parties can be found in Note 9.
Non-performing mortgage loans receivable were
$377,464 at April 30, 1996. These loans are
recognized as impaired in conformity with FASB
Statement No. 114, ACCOUNTING BY CREDITORS FOR
IMPAIRMENT OF A LOAN. The total allowance for
credit losses related to those loans was
approximately $151,800 at April 30, 1996. The
average balance of impaired loans for the year
ended April 30, 1996 was approximately $447,600.
For impairment recognized in conformity with
FASB Statement No. 114, the entire change in
present value of expected cash flows is reported
as bad debt expense in the same manner in which
impairment initially was recognized or as a
reduction in the amount of bad debt expense that
otherwise would be reported. Additional interest
income that would have been earned on these loans
if they had not been non-performing amounted to
approximately $31,600 in 1996. Interest income on
non-performing loans recognized on a cash basis
amounted to approximately $18,600 in 1996.
NOTE 5 - MARKETABLE SECURITIES
Marketable securities consist of Governmental
National Mortgage Association (GNMA) securities
bearing interest from 6.5% to 9.5% with maturity
dates ranging from May 15, 2016 to June 15, 2023.
The details of the amortized cost and approximate
market value of marketable securities at April 30,
1996 and 1995 are as follows:
<PAGE>
NOTE 5 - (CONTINUED)
<TABLE>
<CAPTION>
1996 1995
Amortized Fair Amortized Fair
Cost Value Cost Value
<S> <C> <C> <C> <C>
GNMA
Due after 10 yrs $4,411,857 $4,282,445 $4,829,809 $4,588,905
</TABLE>
The amortized cost and estimated market values with
unrealized gains and losses of marketable
securities at April 30, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
1996 Gross Gross
Amortized Unrealized Unrealized Fair
Issuer Cost Gains Losses Value
<S> <C> <C> <C> <C>
GNMA $4,411,857 $ - $ 129,412 $4,282,445
</TABLE>
<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>
There were no realized gains or losses on sales of
securities for the years ended April 30, 1996, 1995
and 1994.
NOTE 6 - MORTGAGES PAYABLE
Mortgages payable as of April 30, 1996, included
mortgages on properties owned totaling $71,327,918,
and mortgages of $371,141 on property sold on
contract. The carrying value of the related real
estate owned was $106,653,490 and the carrying
value of the related mortgage loans receivable was
$905,752 as of April 30, 1996.
Mortgages payable as of April 30, 1995, included
mortgages on properties owned totaling $48,134,856,
and mortgages of $1,861,351 on property sold on
contract. The carrying value of the related real
estate owned was $74,840,061 and the carrying value
of the related mortgage loans receivable was
$1,990,167 as of April 30, 1995.
<PAGE>
NOTE 6 - (CONTINUED)
Monthly installments are due on the mortgages with
interest rates ranging from 7.19% to 10.25% and
with varying maturity dates thru November 30, 2034.
The aggregate amount of required future principal
payments on mortgages payable is as follows:
<TABLE>
<CAPTION>
Years ending April 30,
<S> <C>
1997 $ 2,165,211
1998 2,155,476
1999 2,223,016
2000 2,193,352
2001 2,302,104
Later years 60,659,900
Total payments $71,699,059
</TABLE>
NOTE 7 - INVESTMENT CERTIFICATES ISSUED
The Trust has placed investment certificates with
the public. The interest rates vary from 7% 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>
1997 $ 3,111,167
1998 672,693
1999 930,624
2000 1,008,839
2001 79,146
$ 5,802,469
</TABLE>
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
<PAGE>
NOTE 8 - (CONTINUED)
$54,788, $15,499, and $69,380 for the years ended
April 30, 1996, 1995 and 1994, respectively.
NOTE 9 - TRANSACTIONS WITH RELATED PARTIES
Mr. Roger R. Odell and Mr. Thomas A. Wentz, Sr.,
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, 1996, Odell-Wentz &
Associates received total fees under said agreement
of $484,086. The fees for April 30, 1995 were
$339,128, and for April 30, 1994 were $350,812.
For the years ended April 30, 1996, 1995 and 1994,
the Trust has capitalized $115,993, $49,323 and
$95,772, respectively, of these fees, with the
remainder of $368,093, $289,805 and $255,040,
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 R. Odell is a shareholder in IMM. IMM
received $281,717, $212,018 and $170,870 for
services rendered for years ended April 30, 1996,
1995 and 1994, respectively. In addition, IMM owed
the Trust $118,137 at April 30, 1995. This
receivable was paid in November, 1995.
Inland National Securities is a corporation that
provides underwriting services in the sale of
additional shares for the Trust. Roger R. Odell is
also a shareholder in Inland National Securities.
Fees for services totaled $269,656 for the year
<PAGE>
NOTE 9 - (CONTINUED)
ended April 30, 1996, $272,615 for the year ended
April 30, 1995, and $507,036 for the year ended
April 30, 1994.
The Trust paid fees and expense reimbursements to
the law firm in which Thomas A. Wentz, Sr. is a
partner totaling $23,488, $4,890 and $4,692 for the
years ending April 30, 1996, 1995 and 1994,
respectively.
The Trust had a mortgage loan receivable from
Jenner Properties 1978, a limited partnership in
which Roger R. Odell and Thomas A. Wentz, Sr. are
investors. This contract was paid off during the
year ended April 30, 1995.
The Trust had a mortgage loan receivable from
Chateau Properties, Ltd., a limited partnership,
in which the Trust is a general partner as
described in Note 1 and Note 11. This contract was
paid off during the year ended April 30, 1996. The
contract balance at April 30, 1995 was $1,331,175.
Investment certificates issued by the Trust to
officers and trustees totaled $1,258,133 at
April 30, 1996, and $1,179,324 at April 30, 1995.
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 National Securities, Inc., 21 South Main,
Minot, North Dakota and Financial Advantage
Brokerage Services, Inc., 17 South Main, Minot
North Dakota. The price range is as follows:
<TABLE>
<CAPTION>
Bid Ask
Low High Low High
<S> <C> <C> <C> <C>
1994 $5.22 $5.49 $ 5.80 $ 6.10
1995 5.49 5.89 6.10 6.40
1996 5.89 6.30 6.40 6.85
</TABLE>
<PAGE>
NOTE 11 - CHANGE IN THE REPORTING ENTITY
The consolidated financial statements have
previously included the accounts of Investors Real
Estate Trust and all limited partnerships in which
the Trust was a general partner and maintained a
controlling interest. Due to the control exerted by
the Trust in their position as general partner and
the limited liability of the other partners
involved, all limited partnerships were included in
the consolidated financial statements. For the
current year ended April 30, 1996, the control
exerted over Chateau Properties, Ltd. has been
reduced to a level not requiring consolidation
under current accounting guidelines. As of April
30, 1996, the Trust is accounting for its interest
in Chateau Properties, Ltd. under the equity method
of accounting. Prior period financial statements
included in this report have been restated to
properly reflect this change in the reporting
entity.
The effect of the change in the reporting entity on
income previously reported is shown as follows:
<TABLE>
<CAPTION>
Increase (Decrease)
1995 1994
<S> <C> <C>
Assets $ (274,250) $ (338,300)
Liabilities (15,760) (15,088)
Shareholders' equity (258,490) (323,212)
Income before
extraordinary item
and net income (3,278) (42,675)
Earnings per share - -
</TABLE>
NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to
establish the fair value of each class of financial
instruments for which it is practicable to estimate
that value:
Mortgage loans receivable - Fair values are based
on the discounted value of future cash flows
expected to be received for a loan using current
<PAGE>
NOTE 12 - (CONTINUED)
rates at which similar loans would be made to
borrowers with similar credit risk and the same
remaining maturities.
Cash - The carrying amount approximates fair value
because of the short maturity of those
instruments.
Marketable securities - The fair values of these
instruments are estimated based on quoted market
prices for these instruments.
Mortgages payable - For variable rate loans that
reprice frequently, fair values are based on
carrying values. The fair value of fixed-rate
loans is estimated based on the discounted cash
flows of the loans using current market rates.
Investment certificates issued - The fair value
is estimated using a discounted cash flow
calculation that applies interest rates currently
being offered on deposits with similar remaining
maturities.
Accrued interest payable - The carrying amount
approximates fair value because of the short-term
nature of when interest will be paid.
The estimated fair values of the Company's
financial instruments are as follows:
<TABLE>
<CAPTION>
1995
Carrying Fair
Amount Value
FINANCIAL ASSETS
<S> <C> <C>
Mortgage loans
receivable $ 4,932,138 $ 4,949,278
Cash 2,715,274 2,715,274
Marketable securities 4,411,857 4,282,445
<PAGE>
NOTE 12 - (CONTINUED)
FINANCIAL LIABILITIES
Mortgages payable $71,699,059 $70,694,035
Investment certificates
issued 5,802,469 5,692,317
Accrued interest payable 656,080 656,080
</TABLE>
<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, 1996, 1995 and
1994, 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 18
through 31 related to the 1996, 1995 and 1994 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 31 that is market "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, 1996, 1995 and 1994, 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, 1993, and 1992, and the related
consolidated statements of operations, shareholders' equity,
and cash flows for each of the two years ended April 30,
1993, and 1992, none of which is presented herein, and we
expressed unqualified opinions on those consolidated
financial statements. In our opinion, the information on
page 26 relating to the 1993 and 1992 consolidated financial
statements is fairly stated in all material respects in
relation to the basic consolidated financial statements from
which it has been derived.
BRADY, MARTZ & ASSOCIATES, P.C.
May 20, 1996
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1996 AND 1995
Schedule I
MARKETABLE SECURITIES
<TABLE>
<CAPTION>
April 30, 1996 April 30, 1995
Principal Principal
Amount Market Amount Market
<S> <C> <C> <C> <C>
GNMA Pools $4,411,857 $4,282,445 $4,829,809 $4,588,905
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1996 AND 1995
Schedule IV
NONCURRENT INDEBTEDNESS OF RELATED PARTIES
<TABLE>
<CAPTION>
Mortgage loans receivable
Year ended April 30, Beginning Ending
1996 Balance Additions Deductions Balance
<S> <C> <C> <C> <C>
Chateau Properties,
Ltd. $1,331,175 $ - $1,331,175 $ -
Investors Management
and Marketing 118,137 - 118,137 -
$1,449,312 $ - $1,449,312 $ -
<CAPTION>
Year ended April 30,
1995 (Restated)
<S> <C> <C> <C> <C>
Chateau Properties,
Ltd. $1,358,413 $ - $ (27,238) $1,331,175
Jenner Properties
1978, Ltd. 543,598 - (543,598) -
Investors Management
and Marketing 119,793 - (1,656) 118,137
$2,021,804 $ $ 572,492 $1,449,312
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
Schedule X
SUPPLEMENTAL INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
Charged to Costs and Expenses
1996 1995 1994
<S> <C> <C> <C>
Item
Maintenance and repairs $ 1,702,365 $ 1,338,236 $1,236,251
Taxes, other than payroll and
income taxes
Property taxes 1,873,720 1,078,712 928,600
Royalties * * *
Advertising costs * * *
*Less than 1 percent of total revenues
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1996
<TABLE>
<CAPTION>
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost to Trust
Buildings and
Description Encumbrances Land Improvements
<S> <C> <C> <C>
Apartments:
Hutchinson 6,577 24,772 332,250
Century-Williston 2,700,000 200,000 3,166,750
Beulah 0 6,360 336,589
Century-Dickinson 1,595,000 100,000 1,564,598
Waseca, MN 0 40,000 634,737
Virginia 2,378 37,600 163,036
Parkway 0 7,000 40,738
4301-4313 9th Ave. 546,353 52,870 908,727
Marshall 135,872 35,000 275,000
Scottsbluff 196,024 60,000 570,000
Oak Manor 238,264 25,000 225,000
177 10th Ave. E 234,661 40,000 318,109
312 12th Ave. NW 45,670 20,000 236,750
405 Grand Avenue 0 13,584 157,211
Sweetwater 251,014 90,767 1,208,847
Bison 152,946 100,210 1,348,127
Eastgate 0 23,917 1,490,181
Colton Heights 381,682 80,000 734,286
Hill Park 1,470,000 224,750 2,562,296
Candlelight Apts. 539,961 80,040 757,977
Forest Park 4,177,577 810,000 5,579,164
Oakwood Estates 2,250,000 342,800 2,783,950
Prairie Winds 1,388,480 144,097 1,816,011
Crestview Apts. 2,880,049 235,000 4,290,031
Pointe West 2,395,789 240,000 3,537,775
Oxbow Apts. 3,565,000 404,072 4,494,441
96 Units, Billings, MT 0 655,985 3,098,103
49 units, Bismarck, ND 1,382,528 143,500 2,244,100
South Pointe, Minot, ND 0 275,000 4,514,552
Stonehill, St. Cloud, MN 8,186,235 939,000 10,167,355
Pine Cone, Ft. Collins, CO 10,645,576 904,545 12,167,093
South View, Minot, ND 0 185,000 468,585
1112 32nd Ave. S 414,283 50,000 543,147
South Winds 3,721,568 400,000 5,033,683
Columbia Park-G.F. Phase I 0 700,000 2,673,754
South Pointe, Minot Phase II 2,775,212 275,000 4,015,062
Circle 50-Billings, MT 0 491,247 0
Columbia Park-G.F. Phase II 0 661,855 0
Office Buildings:
114 S. Main 18,389 27,055 76,076
408 1st St. SE 0 10,000 34,836
401 South Main 0 70,600 334,308
Lester Building 0 25,000 243,916
<PAGE>
First Avenue 0 30,000 219,496
Creekside 946,452 311,310 1,088,149
Commercial:
Arrowhead Shopping Center $ 145,277 $ 100,359 $ 1,063,925
Superpumper, Emerado, ND 0 25,000 225,564
Superpumper, Langdon, ND 0 59,674 151,500
Superpumper, Bottineau, ND 0 15,000 186,013
Superpumper, Crookston, MN 0 13,125 214,152
Superpumper,
Grand Forks, ND 0 80,000 405,007
Superpumper, New Town, ND 0 69,900 180,100
Pioneer Hi-Bred 350,023 56,925 548,075
Lindberg Building 851,838 198,000 1,154,404
Superpumper, Sidney, MT 0 12,000 108,600
Hutchinson Tech 2,470,548 244,800 4,029,426
Minot Plaza 0 50,000 452,898
Smith's, Boise, ID 3,629,797 765,000 4,874,576
Midco Theatre, Grand Forks,
ND 1,703,010 183,515 2,359,721
Pet Foods, Fargo, ND 834,130 324,148 927,570
Barnes & Noble, Fargo, ND 4,828,123 540,000 2,752,012
Stone Container, Fargo, ND 3,271,632 440,251 4,498,235
Barnes & Noble, Omaha, NE 0 600,000 3,099,101
$ 71,327,918 $13,370,633 $113,685,675
</TABLE>
<PAGE>
Schedule XI (Continued)
<TABLE>
<CAPTION>
Cost Capitalized Subsequent
To Acquisition
Carrying
Description Improvements Costs
<S> <C> <C>
Apartments:
Hutchinson 46,314 0
Century-Williston 198,755 0
Beulah 78,734 0
Century-Dickinson 77,021 0
Waseca, MN 131,957 0
Virginia 16,447 0
Parkway 34,648 0
4301-4313 9th Ave. 36,045 0
Marshall 89,278 0
Scottsbluff 80,039 0
Oak Manor 35,917 0
177 10th Ave. E 2,768 0
312 12th Ave. NW 0 0
405 Grand Avenue 1,089 0
Sweetwater 54,616 0
Bison 41,798 0
Eastgate 179,091 0
Colton Heights 2,275 0
Hill Park 35,430 0
Candlelight Apts. 0 0
Forest Park 207,100 0
Oakwood Estates 196,555 0
Prairie Winds 0 0
Crestview Apts. 47,848 0
Pointe West 34,828 0
Oxbow Apts. 44,137 0
96 units, Billings, MT 0 0
49 units, Bismarck, ND 0 0
South Pointe, Minot, ND 0 0
Stonehill, St. Cloud, MN 0 0
Pine Cone, Ft. Collins, CO 0 0
South View, Minot, ND 363 0
1112 32nd Ave. S 0 0
South Winds 0 0
Columbia Park-G.F. Phase I 0 0
South Pointe, Minot Phase II 0 0
Circle 50-Billings, MT 0 0
Columbia Park-G.F. Phase II 0 0
Office Buildings:
114 S. Main 774 0
408 1st St. SE 2,037 0
401 South Main 69,778 0
Lester Building 0 0
First Avenue 530,321 0
Creekside 171,676 0
<PAGE>
Commercial:
Arrowhead Shopping Center 1,233,130 0
Superpumper, Emerado, ND 46,500 0
Superpumper, Langdon, ND $ 28,038 $ 0
Superpumper, Bottineau, ND 100,000 0
Superpumper, Crookston, MN 201,500 0
Superpumper, Grand Forks, ND 0 0
Superpumper, New Town, ND 0 0
Pioneer Hi-Bred 48,876 0
Lindberg Building 103,385 0
Superpumper, Sidney, MT 0 0
Hutchinson Tech 154,800 0
Minot Plaza 0 0
Smith's, Boise, ID 0 0
Midco Theatre, Grand Forks, ND 2,500 0
Pet Foods, Fargo, ND 25,058 0
Barnes & Noble, Fargo, ND 0 0
Stone Container, Fargo, ND 0 0
Barnes & Noble, Omaha, NE 0 0
$ 4,391,426 $ 0
</TABLE>
<PAGE>
Schedule XI (Continued)
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at Close of Period
Buildings and
Description Land Improvements Total
<S> <C> <C> <C>
Apartments:
Hutchinson 25,551 377,785 403,336
Century-Williston 274,970 3,290,535 3,565,505
Beulah 78,327 343,356 421,683
Century-Dickinson 126,738 1,614,881 1,741,619
Waseca, MN 40,000 766,694 806,694
Virginia 37,600 179,483 217,083
Parkway 11,446 70,940 82,386
4301-4313 9th Ave. 66,912 930,730 997,642
Marshall 35,360 363,918 399,278
Scottsbluff 60,000 650,039 710,039
Oak Manor 29,012 256,905 285,917
177 10th Ave. E 40,218 320,659 360,877
312 12th Ave. NW 20,000 236,750 256,750
405 Grand Avenue 14,674 157,210 171,884
Sweetwater 94,270 1,259,960 1,354,230
Bison 100,210 1,389,925 1,490,135
Eastgate 28,638 1,664,551 1,693,189
Colton Heights 80,000 736,561 816,561
Hill Park 245,653 2,576,823 2,822,476
Candlelight Apts. 80,040 757,977 838,017
Forest Park 811,954 5,784,310 6,596,264
Oakwood Estates 342,800 2,980,505 3,323,305
Prairie Winds 144,097 1,816,011 1,960,108
Crestview Apts. 235,000 4,337,879 4,572,879
Pointe West 240,000 3,572,603 3,812,603
Oxbow Apts. 404,072 4,538,578 4,942,650
96 units, Billings, MT 655,985 3,098,103 3,754,088
49 units, Bismarck, ND 143,500 2,244,100 2,387,600
South Pointe, Minot, ND 275,000 4,514,552 4,789,552
Stonehill, St. Cloud, MN 939,000 10,167,355 11,106,355
Pine Cone, Ft. Collins, CO 904,545 12,167,093 13,071,638
South View, Minot, ND 185,000 468,948 653,948
1112 32nd Ave. SW 50,000 543,147 593,147
South Winds 400,000 5,033,683 5,433,683
Columbia Park-G.F. Phase I 700,000 2,673,754 3,373,754
South Pointe, Minot Phase II 275,000 4,015,062 4,290,062
Circle 50-Billings, MT 491,247 0 491,247
Columbia Park-G.F. Phase II 661,855 0 661,855
Office Buildings:
114 S. Main 27,829 76,076 103,905
408 1st St. SE 10,016 36,857 46,873
401 South Main 70,722 403,964 474,686
Lester Building 25,000 243,916 268,916
First Avenue 67,711 712,106 779,817
Creekside 311,310 1,259,825 1,571,135
<PAGE>
Commercial:
Arrowhead Shopping Ctr. $ 100,412 $ 2,297,002 $ 2,397,414
Superpumper, Emerado, ND 25,000 272,064 297,064
Superpumper, Langdon, ND 59,674 179,538 239,212
Superpumper, Bottineau, ND 15,000 286,013 301,013
Superpumper, Crookston, MN 13,125 415,652 428,777
Superpumper, Grand Forks,
ND 80,000 405,007 485,007
Superpumper, New Town, ND 69,900 180,100 250,000
Pioneer Hi-Bred 56,925 596,951 653,876
Lindberg Building 198,000 1,257,789 1,455,789
Superpumper, Sidney, MT 12,000 108,600 120,600
Hutchinson Tech 244,800 4,184,226 4,429,026
Minot Plaza 50,000 452,898 502,898
Smith's, Boise, ID 765,000 4,874,576 5,639,576
Midco Theatre,
Grand Forks, ND 183,515 2,362,221 2,545,736
Pet Foods, Fargo, ND 324,148 952,628 1,276,776
Barnes & Noble, Fargo, ND 540,000 2,752,012 3,292,012
Stone Container, Fargo, ND 440,251 4,498,235 4,938,486
Barnes & Noble, Omaha, NE 600,000 3,099,101 3,699,101
$13,639,012 $117,808,722 $131,447,734
</TABLE>
<PAGE>
Schedule XI (Continued)
<TABLE>
<CAPTION>
Life on Which
Latest Income
Accumulated Date Statement
Description Depreciation Acquired is Computed
<S> <C> <C> <C>
Apartments:
Hutchinson 188,006 1977 33 1/2-40 years
Century-Williston 964,800 1985 35-40 years
Beulah 269,854 1983 15-40 years
Century-Dickinson 450,420 1986 35-40 years
Waseca, MN 241,601 1987 27 1/2-40 years
Virginia 51,821 1987 27 1/2-40 years
Parkway 8,762 1988 5-40 years
4301-4313 9th Ave. 180,492 1988 40 years
Marshall 58,166 1988 40 years
Scottsbluff 118,134 1988 40 years
Oak Manor 41,121 1989 40 years
177 10th Ave. E 52,012 1989 40 years
312 12th Ave. NW 38,472 1989 40 years
405 Grand Avenue 21,579 1991 40 years
Sweetwater 897,854 1972 20-33 years
Bison 1,029,078 1972 25-33 years
Eastgate 1,214,428 1970 33 years
Colton Heights 300,453 1984 33 years
Hill Park 982,436 1985 33 years
Candlelight Apts. 66,323 1993 40 years
Forest Park 497,045 1993 40 years
Oakwood Estates 254,287 1993 40 years
Prairie Winds 158,901 1993 40 years
Crestview Apts. 268,725 1994 40 years
Pointe West 221,546 1994 40 years
Oxbow Apts. 169,094 1994 40 years
96 units, Billings, MT 0
49 units, Bismarck, ND 26,505 1995 40 years
South Pointe, Minot, ND 52,943 1995 40 years
Stonehill, St. Cloud, MN 127,092 1995 40 years
Pine Cone, Ft. Collins, CO 304,177 1994 40 years
South View, Minot, ND 19,889 1994 40 years
1112 32nd Ave. SW 6,789 1996 40 years
South Winds 62,921 1996 40 years
Columbia Park-G.F. Phase I 0 1996 40 years
South Pointe, Minot Phase II 0 1996 40 years
Circle 50 - Billings, MT 0 1996 40 years
Columbia Park-G.F. Phase II 0 1996 40 years
Office Buildings:
114 S. Main 68,347 1978 20 years
408 1st St. SE 18,256 1986 19-40 years
401 South Main 101,657 1987 31 1/2-40 years
Lester Building 45,912 1988 40 years
First Avenue 275,265 1981 33 years
Creekside 130,347 1992 40 years
<PAGE>
Commercial:
Arrowhead Shopping Ctr. $ 1,993,595 1973 15-40 years
Superpumper, Emerado, ND 121,328 1986 19-40 years
Superpumper, Langdon, ND 45,527 1987 31 1/2-40 years
Superpumper, Bottineau,
ND 43,271 1989 40 years
Superpumper, Crookston,
MN 59,074 1988 40 years
Superpumper, Grand Forks,
ND 55,688 1991 40 years
Superpumper, New Town, ND 20,261 1992 40 years
Pioneer Hi-Bred 62,336 1992 40 years
Lindberg Building 132,113 1992 40 years
Superpumper, Sidney, MT 9,502 1993 40 years
Hutchinson Tech 358,406 1993 40 years
Minot Plaza 39,629 1993 40 years
Smith's, Boise, ID 304,661 1994 40 years
Midco Theatre, Grand Forks,
ND 88,521 1994 40 years
Pet Foods, Fargo, ND 35,097 1994 40 years
Barnes & Noble, Fargo, ND 103,200 1994 40 years
Stone Container, Fargo, ND 55,113 1995 40 years
Barnes & Noble, Omaha, NE 38,739 1995 40 years
$13,551,571
</TABLE>
<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, 1996, 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of year $ 90,892,662 $ 63,861,793 $ 46,319,398
Additions during year
- acquisitions 40,660,975 27,371,289 17,094,188
- improvements 635,791 344,255 448,207
$132,189,428 $ 91,577,337 $ 63,861,793
Deductions during year
- cost of real estate sold (741,694) (684,675) -
Balance at close of year $131,447,734 $ 90,892,662 $ 63,861,793
Reconciliations of accumulated depreciation for the three
years ended April 30, 1996, 1995 and 1994 are as follows:
1995 1994
1996 (Restated) (Restated)
Balance at beginning of year $11,732,655 $10,097,374 $ 8,773,900
Additions during year
- provisions for
depreciation 2,261,724 1,767,294 1,323,474
Deductions during year
- accumulated depreciation
on real estate sold (442,808) (132,013) -
Balance at close of year $13,551,571 $11,732,655 $10,097,374
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1996
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% 9-01-98 Monthly -
Higley Heights, Phoenix,
AZ 8% 3-31-04 Monthly -
North Park - Writer Corp. 14% 1-04-98 Monthly -
Centrebrooke Homes 12% 1-14-94 Monthly -
Marcella Knutt 11% 6-01-08 Monthly -
Sweetwater Springs Balloon
Retirement Center 9% 7-15-96 Payment -
Melanie Betsinger 8% 6-01-25 Monthly -
Rolland Hausman 9% 2-01-16 Monthly -
Other-over $100,000 9-10 1/4% 5-01-96 to
8-01-07 Monthly -
-from $50,000-99,999 8-12% 7-01-96 to
1-01-00 Monthly -
-from $20,000-49,999 8-12% 9-01-97 to
12-1-03 Monthly -
-less than $20,000 7-12% 9-04-97 to
3-01-02 Monthly
Total
Less - Unearned discounts
- Deferred gain from property dispositions
- Allowance for bad debts
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Amount
Face Carrying of Loans Subject to
Amounts of Amounts of Delinquent Principal
Mortgages Mortgages or Interest
<S> <C> <C>
$ 1,500,000 $ 320,938 $ -
809,786 681,032 -
1,550,000 618,810 -
1,900,000 205,512 141,345
300,000 236,880 -
2,810,000 1,254,810 -
217,761 216,154 -
315,659 314,710 -
678,814 448,029 -
1,340,381 360,998 3,473
768,088 252,315 -
293,304 21,950 -
$12,483,793 $ 4,932,138 $ 144,818
(18,222)
(165,074)
(267,096)
$ 4,481,746
</TABLE>
<PAGE>
Schedule XII (Continued)
<TABLE>
<CAPTION>
1995 1994
1996 (Restated) (Restated)
<S> <C> <C> <C>
MORTGAGE LOANS RECEIVABLE,
BEGINNING OF YEAR $ 5,815,772 $11,212,354 $12,869,463
New participations in and
advances on mortgage loans 1,790,070 653,952 3,170,698
$ 7,605,842 $11,866,306 $16,040,161
Collections (2,647,434) (5,850,534) (4,827,807)
Write-off through allowance (26,270) (200,000) -
MORTGAGE LOANS RECEIVABLE,
END OF YEAR $ 4,932,138 $ 5,815,772 $11,212,354
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended April 30
1995 1994 1993 1992
1996 (Restated) (Restated) (Restated) (Restated)_
<S> <C> <C> <C> <C>
Consolidated Income
Statement Data
Revenue $ 18,659,665 $13,801,123 $11,583,008 $ 8,048,916 $ 6,955,404
Operating income 3,617,807 3,560,318 3,135,426 2,222,313 1,612,231
Gain on repossession/sale
of investments 994,163 407,512 64,962 145,165 34,408
Net income 4,611,970 3,967,830 3,200,388 2,367,478 1,646,639
Consolidated Balance Sheet
Data
Total real estate
investments $122,377,909 $84,005,635 $63,972,042 $49,492,380 $33,707,171
Total assets 131,355,638 94,616,744 72,391,548 54,248,011 38,555,050
Shareholders' equity 50,711,920 37,835,654 29,997,189 23,347,449 18,420,243
Consolidated Per Share Data
Operating income $ .30 $ .34 $ .35 $ .28 $ .23
Gain on repossession/
sale of investments .08 .04 .01 .01 .00
Dividends .37 .34 .33 .31 .30
Tax status of dividend
Capital gain 1.6% 11.0% 7.4% 4.1% 1.0%
Ordinary income 98.4% 89.0% 92.6% 74.0% 67.8%
Return of capital 0.0% 0.0% 0.0% 21.9% 31.2%
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1996, 1995 AND 1994
GAIN FROM PROPERTY DISPOSITIONS
<TABLE>
<CAPTION>
Total
Original Unrealized Realized Realized Realized
Property Gain 4/30/96 4/30/96 4/30/95 4/30/94
<S> <C> <C> <C> <C>
Brooklyn Addition* $ 25,000 $ 4,000 $ 1,000 $ 1,000 $ 1,000
1411 South 20th* 34,696 - 1,177 3,292 3,039
1302 South 19 1/2* 87,669 22,444 6,215 5,739 5,299
600 Maple* 60,025 - 41,253 859 766
406 17th Street - Mandan* 233,522 138,629 5,143 4,609 4,131
1320 19 1/2 South* 74,424 - - - 50,727
419 and 404 - Minot 82,053 - - 82,053 -
Yankton, SD 305,542 - - 305,542 -
108 4th Avenue SE - Minot 173,211 - 173,244 - -
Mobridge, SD 293,035 - 293,035 - -
Lantern Court 50,971 - 50,971 - -
Chateau 684,914 - 422,125 4,418 -__
$ - $994,163 $407,512 $ 64,962
<FN>
* The gain from the sale of these properties is being realized based on the installment
method. The amount of deferred gain realized was $476,913, $19,917 and $64,962 for the
years ended April 30, 1996, 1995 and 1994, respectively.
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1995
MORTGAGE LOANS
<TABLE>
<CAPTION>
Final Periodic
Interest Maturity Payment Face Amount
Rate Date Terms of Mortgage
<S> <C> <C> <C> <C>
Arrowhead Shopping
Center, Minot, ND 10.00% 10-01-97 Monthly $ 1,152,278
Century Apartments,
Williston,
196 unit complex 7.50 3-01-96 Monthly 2,700,000
Century Apartments,
Dickinson,
120 unit complex 7.50 3-01-96 Monthly 1,595,000
Colton Heights Assoc.,
Billings, MT 9.00 3-01-97 Monthly 1,291,000
Sweetwater Properties,
Grafton, Devils Lake, 2003 to
114 units 9.75 2004 Monthly 914,138
Bison Properties,
Jamestown, Carrington,
Cooperstown, 1999 to
125 units 10.00 2000 Monthly 1,001,650
Hill Park Properties,
Ltd., Bismarck, ND,
96 units 7.50 3-01-06 Monthly 1,470,000
Colton Heights, Ltd.
Minot, ND, 18 units 9.50 1-01-00 Monthly 730,000
Residential Properties,
Single family - 7.50 to 6-01-96 to
36 unit complexes 10.50 3-01-03 Monthly 4,017,631
Commercial Properties,
Retail stores 9.00 5-01-98 Monthly 97,500
Pioneer Hi-Bred,
Moorhead, MN 8.625 11-01-01 Monthly 425,000
Creekside Office Complex
Billings, MT 8.35 12-01-16 Monthly 1,023,750
Hutchinson Tech
Sioux Falls, SD 8.50 8-01-99 Monthly 2,800,000
Candlelight Apts. 8.25 12-01-04 Monthly 578,000
Oakwood Apts. 7.50 3-01-06 Monthly 2,250,000
Prairie Winds 7.19 5-01-18 Monthly 1,470,000
Forest Park 9.75 5-01-03 Monthly 4,500,000
Pointe West Apts. 8.34 1-01-14 Monthly 2,625,000
Crestview Apts. 8.30 1-01-14 Monthly 3,150,000
Midco Theatre 8.65 7-01-14 Monthly 1,750,000
Oxbow, Sioux Falls, SD 7.50 3-01-96 Monthly 3,565,000
Smith's Home Furnishings 9.75 3-29-03 Monthly 3,750,000
Lindberg Building 8.50 4-01-00 Monthly 950,000
Barnes & Noble, Fargo, ND 7.98 11-20-10 Monthly 4,900,000
Pine Cone 7.125 12-20-34 Monthly 10,685,215
<PAGE>
1112 32nd Ave. SW -
18 plex 9.00 9-01-10 Monthly 425,000
West Stonehill,
St. Cloud, MN 9.21 2-01-98 to
1-01-00 Monthly 8,232,569
North Pointe Apts.,
Bismarck, ND 8.18 8-01-15 Monthly 1,400,000
Southpointe Apts., I,
Minot, ND 8.01 9-01-15 Monthly 2,800,000
Southwind Apts.,
Grand Forks, ND 7.84 11-01-10 Monthly 3,780,000
Stone Container, Fargo,
ND 8.25 12-01-10 Monthly 3,300,000
Pet Food Warehouse,
Fargo, ND 8.31 12-01-10 Monthly 840,000
$80,168,731
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1995
MORTGAGE LOANS
<TABLE>
<CAPTION>
Carrying Delinquent
Amount of Principal
Mortgages or Interest
<S> <C> <C>
Arrowhead Shopping
Center, Minot, ND $ 145,277 $ -
Century Apartments,
Williston,
196 unit complex 2,700,000 -
Century Apartments,
Dickinson,
120 unit complex 1,595,000 -
Colton Heights Assoc.,
Billings, MT 142,541 -
Sweetwater Properties,
Grafton, Devils Lake,
114 units 251,014 -
Bison Properties,
Jamestown, Carrington,
Cooperstown,
125 units 152,946
Hill Park Properties,
Ltd., Bismarck, ND,
96 units 1,470,000 -
Colton Heights, Ltd.,
Minot, ND, 18 units 381,682 -
Residential Properties,
Single family -
36 unit complexes 1,634,398 -
Commercial Properties,
Retail stores 18,389 -
Pioneer Hi-Bred,
Moorhead, MN 350,023 -
Creekside Office Complex,
Billings, MT 946,482 -
Hutchinson Tech,
Sioux Falls, SD 2,470,548 -
Candlelight Apts. 539,961 -
Oakwood Apts. 2,250,000 -
Prairie Winds 1,388,452 -
Forest Park 4,177,577 -
Pointe West Apts. 2,395,789 -
Crestview Apts. 2,880,049 -
Midco Theatre 1,703,009 -
Oxbow, Sioux Falls, SD 3,565,000 -
Smith's Home Furnishings 3,629,797 -
Lindberg Building 851,838 -
Barnes & Noble, Fargo, ND 4,828,123 -
Pine Cone 10,645,576 -
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1995
MORTGAGE LOANS (Continued)
<TABLE>
<CAPTION>
Carrying Delinquent
Amount of Principal
Mortgages or Interest
<S> <C> <C>
1112 32nd Ave. SW -
18 plex 414,283 -
West Stonehill,
St. Cloud, MN 8,186,235 -
North Pointe Apts.,
Bismarck, ND 1,382,528 -
Southpointe Apts., I,
Minot, ND 2,775,212 -
Southwind Apts.,
Grand Forks, ND 3,721,568 -
Stone Container, Fargo
ND 3,271,632 -
Pet Food Warehouse,
Fargo, ND 834,130 -
$71,699,059 $ -
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1996
SIGNIFICANT PROPERTY ACQUISITIONS
<TABLE>
<CAPTION>
<S> <C>
Acquisition for cash and assumptions of
mortgages
Commercial:
Barnes & Noble, Omaha, NE ** $ 3,627,206
Stone Container, Fargo, ND ** 4,042,217
$ 7,669,423
Apartments:
96 Units, Billings, MT * $ 3,727,440
North Pointe, Bismarck, ND ** 927,450
South Pointe I, Minot, ND ** 2,727,085
West Stonehill, St. Cloud, MN ** 10,765,830
1112 32nd Avenue SW, Minot, ND 593,147
Columbia Park Phase I, Grand Forks, ND * 3,373,754
Southwinds, Grand Forks, ND 5,433,683
South Pointe II, Minot, ND * 4,290,061
Circle 50, Billings, MT * 491,247
Columbia Park II, Grand Forks, ND * 661,855
$ 32,991,552
Total $ 40,660,975
<FN>
* Property not placed in service at April 30, 1996.
Additional costs are still to be incurred.
** Represents costs to complete a project started in year
ending April 30, 1995.
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
7-31-95 10-31-95 1-31-96 4-30-96
<S> <C> <C> <C> <C>
Revenues $ 3,782,061 $ 4,715,186 $ 5,104,409 $ 5,058,009
Income before gains on
sale of investments 1,009,468 1,058,136 1,082,506 467,697
Net gain on sale of
investments - - 522,001 472,162
Net income 1,009,468 1,058,136 1,604,507 939,859
Per share
Income before gains on
sale of investments .09 .09 .09 .04
Net gain on sale of
investments - - .04 .04
QUARTER ENDED
7-31-94 10-31-94 1-31-95 4-30-95
Revenues $ 3,247,910 $ 3,529,364 $ 3,492,941 $ 3,530,908
Income before gains on
sale of investments 794,755 1,066,229 1,014,011 685,323
Net gain on sale of
investments - 305,543 - 101,969
Net income 794,755 1,371,772 1,014,011 787,292
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 $ 2,619,795 $ 2,831,487 $ 2,898,989 $ 3,232,737
Income before gains on
sale of investments 841,939 852,618 872,875 567,994
Net gain on sale of
investments - - - 64,962
Net income 841,939 852,618 872,875 632,956
Per share
Income before gains on
sale of investments .10 .10 .10 .05
Net gain on sale of
investments - - - .01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<CASH> 4,535,603
<SECURITIES> 4,411,857
<RECEIVABLES> 4,962,407
<ALLOWANCES> (450,392)
<INVENTORY> 0
<CURRENT-ASSETS> 13,459,475
<PP&E> 131,447,734
<DEPRECIATION> (13,551,571)
<TOTAL-ASSETS> 131,355,638
<CURRENT-LIABILITIES> 3,142,190
<BONDS> 77,501,528
<COMMON> 54,263,917
0
0
<OTHER-SE> (3,551,997)
<TOTAL-LIABILITY-AND-EQUITY> 131,355,638
<SALES> 0
<TOTAL-REVENUES> 18,659,665
<CGS> 0
<TOTAL-COSTS> 9,494,119
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,547,739
<INCOME-PRETAX> 3,617,807
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,617,807
<DISCONTINUED> 0
<EXTRAORDINARY> 994,163
<CHANGES> 0
<NET-INCOME> 4,611,970
<EPS-PRIMARY> .38
<EPS-DILUTED> 0
</TABLE>
