<PAGE>
Form 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
(Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended July 31, 1996
Commission file number 0-14851
INVESTORS REAL ESTATE TRUST
(Exact name of registrant as specified in its charter)
North Dakota 45-0311232
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12 South Main, Minot, ND 58701
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area
code:(701)852-1756
(Former name, former address and former fiscal year, if
changed since last report.) No change
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes ( X ) No ( )
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date. Applicant is a Business Trust. As of
July 31, 1996, it had 13,666,570 Shares of Beneficial Interest outstanding.
<PAGE>
PART I
Item 1. Financial Statements.
The following financial statements have been prepared from
the records of Investors Real Estate Trust and its six
affiliated limited partnerships and have not been audited or
reviewed by the Trust's independent certified public
accountants. Accordingly, these statements are subject to
adjustments upon audit, which audit will be conducted for
the Fiscal Year ending April 30, 1997. Reference is made to
the footnotes to the Statements prepared by the Trust's
auditors for the Fiscal Year ended April 30, 1996, contained
in the Annual Report for Fiscal 1996. In the opinion of the
Trust, there have been no developments requiring footnote
disclosure for the periods covered by the Financial
Statements set forth below that are not adequately disclosed
in the footnotes to the April 30, 1996, statements.
BALANCE SHEETS
For the Periods Ended July 31, 1996 & 1995
(unaudited)
<TABLE>
<CAPTION>
ASSETS: 07-31-96 07-31-95
<S> <C> <C>
Cash $ 2,337,764 $ 1,442,979
Marketable Securities
-GNMA's 4,203,355 4,712,181
-Other REIT's 603,119 0
Tax & Insurance Escrow 1,529,646 906,502
Deferred Charges 1,041,141 225,787
Prepaid Insurance 99,962 76,787
Deposits 70,000 25,000
General Partnerships 85,576 0
$ 9,970,563 $ 7,389,236
Real Estate Investments
Real Estate Owned $137,118,745 $112,423,263
Less Accumulated Deprec. (14,043,454) (13,580,483)
Net Real Estate Owned 123,075,291 98,842,780
Real Estate Mortgages (related) 0 117,692
Real Estate Mortgages
(unrelated) 3,282,698 3,651,972
Less Unearned Discounts (18,222) (34,792)
Less Deferred Gain from
Property Dispositions (165,074) (219,861)
Less Reserve for Bad Debts (197,096) (267,096)
Net Mortgages & Contracts 2,902,306 3,247,915
Total Real Estate Investments $125,977,597 $102,090,695
TOTAL ASSETS $135,948,160 $109,479,931
LIABILITIES:
Accounts Payable & Other
Liabilities $ 1,900,295 $ 4,890,340
Mortgages Payable 74,106,387 58,305,787
Investment Certificates
Payable 6,718,161 5,166,884
Due on Margin Account 0 0
TOTAL LIABILITIES $82,724,843 $68,363,011
SHAREHOLDERS' EQUITY
Shares of Beneficial Interest
Outstanding Shares of 07-31-96 07-31-95
13,666,570 as of 07/31/96
11,697,025 as of 07/31/95 $ 56,853,298 $ 44,633,712
Undistributed Net Income (3,629,981) (3,516,792)
Total Shareholders' Equity $ 53,223,317 $ 41,116,920
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $135,948,160 $109,479,931
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
For the Three-Month Periods Ended July 31, 1996 & 1995
(unaudited)
<TABLE>
<CAPTION>
3 Months Ended
July 31
<S> <C> <C>
OPERATING INCOME: 1996 1995
Real Estate Rentals $4,750,394 $3,542,483
Interest Income 214,648 215,178
Mortgage Discount & Fees 1,433 24,400
$4,966,475 $3,782,061
OPERATING EXPENSE:
Interest $1,421,183 $1,116,188
Utilities & Maintenance 774,431 495,287
Property Management 377,718 163,863
Taxes & Insurance 552,750 371,562
Advisory & Trustees Fees 129,217 98,183
Operating Expenses 42,709 31,510
$3,298,008 $2,276,593
OPERATING INCOME
(before reserves): $1,668,467 $1,505,468
DEPRECIATION/AMORTIZATION (690,360) (496,000)
OPERATING INCOME (after reserves): $ 978,107 $1,009,468
GAIN ON SALE OF INVESTMENTS 254,929 0
NET INCOME $1,233,036 $1,009,468
NET INCOME PER SHARE:
Operating Income
(after depreciation) .07 .09
Gain on Sale of Investments .02 0
Total Net Income/Share .09 .09
DIVIDENDS PAID PER SHARE .0975 .0925
Average Number of Shares
Outstanding 13,559,802 11,500,787
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH PERIODS ENDED JULY 31, 1996, AND 1995
(unaudited)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES 1996 1995
<S> <C> <C>
Net Income $ 1,233,036 $ 1,009,469
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 690,361 496,000
Interest reinvested in investment
certificates 18,885 14,375
Changes in other assets and liabilities:
(Increase) decrease in other assets (257,068) (564,305)
Increase in accounts payable and
accrued expenses 637,650 431,283
NET CASH PROVIDED FROM OPERATING
ACTIVITIES $ 2,322,864 $ 1,386,822
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of REIT stock $ (600,000)$ 0
Proceeds from sale of securities 208,502 120,415
Principal payments on mortgage
loans receivable 706,091 1,305,458
Payments for acquisition of
properties (6,154,468) (20,443,742)
Investment in mortgage loans
receivable (324,780) (68,395)
NET CASH PROVIDED FROM (USED FOR)
INVESTING ACTIVITIES $ (6,164,655)$(19,086,264)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan refinance $ 3,900,000 $ 8,657,569
Proceeds from sale of shares 1,701,643 2,618,862
Dividends paid (473,903) (408,420)
Proceeds from investment
certificates issued 769,668 212,863
Loan on margin account 0 3,773,437
Redemption of investment
certificates (132,961) (142,293)
Principal payments on mortgage
loans and notes payable (1,545,869) (342,339)
Payments on margin account 0 0
NET CASH USED FOR FINANCING
ACTIVITIES $ 4,218,578 $ 14,369,679
NET INCREASE (DECREASE) IN CASH $ (376,787) $(3,329,763)
CASH AT APRIL 30 $ 2,714,552 $ 4,772,742
CASH AT JULY 31 $ 2,337,764 $ 1,442,979
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUPPLEMENTARY SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES 1996 1995
<S> <C> <C>
Dividends reinvested $ 839,350 $ 655,347
Real estate investment and mortgage
loans receivable acquired through
borrowings on margin account and
new originations 0 8,657,569
Mortgages paid directly by owner of
contract 0 0
Interest reinvested directly in
investment certificates 18,885 14,375
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest paid on mortgages $ 1,478,051 $ 1,043,164
Interest paid on margin account
and other 0 0
Interest paid on investment
certificates 32,815 30,477
$ 2,369,101 $10,400,932
</TABLE>
(The balance of this page was left blank intentionally.)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations. IRET had net earnings for
its first quarter of Fiscal 1997 of $1,233,036, compared to
$1,009,468 for the same period of the prior fiscal year, an
increase of 22%. This year's first quarter earnings include
$254,929 of capital gain income. No capital gain income was
recognized in the first quarter of the prior year.
Funds from operations (taxable income increased by non-cash
deductions of depreciation and amortization, less
extraordinary income items) increased to $1,670,748 from the
year earlier figure of $1,505,468, an increase of 11%.
Operating results were negatively impacted by the continued
vacancy of the large retail building in Boise, Idaho,
formerly occupied by Smith Home Furnishings. Lost rent on
this property is approximately $50,000 per month and we
continue to seek a new tenant for this property.
Otherwise, our portfolio continues to perform
satisfactorily. Rental income for the first quarter rose to
$4,750,394 from $3,542,483 received in the prior year, and
we project rapidly increasing rental income as IRET expands
its investment portfolio. We are particularly pleased with
the performance of our newly acquired investments.
Financial Condition. IRET's liquidity and capital resources
remain strong and reflect the rapid growth experienced over
the past year. This growth continues as the Trust has
purchased a substantial amount of real estate investments
which will come on line during the balance of this fiscal
year. Comparative balance sheet figures are:
<PAGE>
07/31/96 07/31/95
<TABLE>
<S> <C> <C>
Cash and Marketable Securities $ 7,144,238 $ 6,155,160
Net Real Estate Owned 123,075,291 98,842,780
Net Real Estate Mortgages 2,902,306 3,247,915
Total Assets 135,948,160 109,479,931
Total Liabilities 82,724,842 68,363,011
Shareholder Equity 53,223,317 41,116,920
</TABLE>
<PAGE>
Consolidated Financial Reports. The Financial Statements
shown in this report consolidate IRET's financial report
with those of the six limited partnerships of which IRET
is the General Partner and creditor.
Sale of Properties. During the first quarter, IRET sold the
24 unit apartment building in Hutchinson, Minnesota, for
$500,000, recognizing a capital gain of $254,929.
The following apartment complexes were added to our
portfolio during the first quarter and are producing income:
Cost
- 60 unit Rosewood Apartment
complex in Sioux Falls, SD $ 1,900,000
- 98 unit South Pointe - Phase II
apartment complex, Minot, ND $ 5,180,008
The following properties are under construction:
- 98 unit apartment complex in
Billings, MT $ 5,500,000
- 49 unit Circle 50 apartment
complex in Billings, MT $ 2,600,000
- 67 unit Legacy Apartment complex
in Grand Forks, ND $ 5,400,000
- Sweetwater Springs Retirement
Home, Douglasville, GA $ 4,350,000
IRET has entered into purchase agreements to acquire the
following properties:
- 360 unit Park Meadows apartment
complex, St. Cloud, MN $10,120,000
- 192 unit Neighborhood apartment
complex, Colorado Springs, CO $10,750,000
- 210 unit Miramont apartment
complex, Fort Collins, CO $14,200,000
- 108 unit Woodridge apartment
complex, Rochester, MN $ 6,300,000
- 16,000 sq. ft. Computer City
retail commercial building,
Grand Rapids, MI $ 2,100,000
<PAGE>
Dividends. IRET paid a regular dividend of 9.25 cents, plus
a special dividend of .5 cents, for a total dividend of 9.75
cents per share on July 1, 1996, to shareholders of record
at the close of business on June 21, 1996. This was an
increase from the 9.125 cents per share dividend paid on
April 1, 1996, and was the 101st consecutive quarterly
dividend paid by IRET.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
None
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
INVESTORS REAL ESTATE TRUST
(Registrant)
/s/ Thomas A. Wentz, Sr.
Date: September 25, 1996 By______________________________
Thomas A. Wentz, Sr.,
Vice-President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> JUL-31-1996
<CASH> 2,337,764
<SECURITIES> 4,803,355
<RECEIVABLES> 3,282,698
<ALLOWANCES> (380,392)
<INVENTORY> 0
<CURRENT-ASSETS> 2,826,325
<PP&E> 137,118,745
<DEPRECIATION> (14,043,454)
<TOTAL-ASSETS> 135,945,041
<CURRENT-LIABILITIES> 76,006,682
<BONDS> 6,718,160
<COMMON> 56,853,298
0
0
<OTHER-SE> (3,633,099)
<TOTAL-LIABILITY-AND-EQUITY> 135,945,041
<SALES> 0
<TOTAL-REVENUES> 4,966,475
<CGS> 0
<TOTAL-COSTS> 2,567,185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,421,183
<INCOME-PRETAX> 978,107
<INCOME-TAX> 0
<INCOME-CONTINUING> 978,107
<DISCONTINUED> 254,929
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,233,036
<EPS-PRIMARY> .09
<EPS-DILUTED> 0
</TABLE>
