SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-K405
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, 1997 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 ( )
<PAGE>
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 $99,844,111 based on the last
reported sale price on June 18, 1997.
The number of shares outstanding as of June 18, 1997,
was 15,082,192 Capital Shares of Beneficial Interest (no
par value).
Portions of the Trust's definitive proxy statement
for the 1997 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 . . . . . . . . . . . . . . . . . . 7
3. Legal Proceedings. . . . . . . . . . . . . . . 14
4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . 14
PART II
5. Market for Registrant's Common Stock and
Related Security Holder Matters. . . . . . . . 15
6. Selected Financial Data. . . . . . . . . . . . 15
7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . 16
8. Financial Statements and Supplementary Data. . 26
9. Disagreements on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . 26
PART III
10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . 27
11. Executive Compensation . . . . . . . . . . . . 28
12. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . 28
13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . 28
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K. . . . . . . . . . . . . . 28
Exhibit Index. . . . . . . . . . . . . . . . . 29
Signatures . . . . . . . . . . . . . . . . . . 31
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.
On February 1, 1997, the Trust reorganized its structure
in order to convert to Umbrella Partnership Real Estate
Investment Trust (UPREIT) status. The Trust established
an operating partnership (IRET Properties, a North
Dakota Limited Partnership) with a wholly owned
corporate subsidiary acting as its sole general partner
(IRET, Inc., a North Dakota Corporation). At that date,
the Trust transferred all of its assets and liabilities
to the operating partnership in exchange for general
partnership units.
The general partner has full and exclusive management
responsibility for the real estate investment portfolio
owned by the operating partnership. The partnership must
be operated in a manner that will allow IRET to continue
its qualification as a real estate investment trust
under the Internal Revenue Code.
All limited partners of the operating partnership will
have "exchange rights" allowing them, at their option,
to exchange their limited partnership units for shares
of the Trust on a one for one basis. The exchange rights
are subject to certain restrictions including no
exchanges for at least one year following the
acquisition of the limited partnership units. The
operating partnership will distribute cash on a
quarterly basis in the amounts determined by the Trust
which will result in each limited partner receiving the
same dividends as an IRET shareholder.
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.
<PAGE>
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 also the general partner of seven limited
partnerships which own investment real estate. IRET, as
the general partner and as a creditor of six of said
limited partnerships, has a substantial influence over
the operation of the partnerships. Thus, the financial
statements of IRET and the six partnerships are
consolidated for financial reporting purposes and all
material intercompany transactions and balances have
been eliminated. 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.
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:
Fiscal Year Ending 4/30
1997 1996 1995
REVENUE FROM
OPERATIONS
Real Estate Rentals $22,972,369 $17,635,297 $12,280,738
Interest, Discount &
Fees 861,613 1,024,368 1,520,385
___________ ___________ ___________
$23,833,982 $18,659,665 $13,801,123
EXPENSE $20,334,539 $15,041,858 $10,240,805
___________ ___________ ___________
NET REAL ESTATE
INVESTMENT INCOME $ 3,499,443 $ 3,617,807 $ 3,560,318
GAIN ON SALE OF
INVESTMENTS
(CAPITAL GAIN) 398,424 994,163 407,512
MINORITY INTEREST
OF UNIT HOLDERS
IN OPERATING
PARTNERSHIP (18) 0 0
___________ ___________ ___________
NET INCOME $ 3,897,849 $ 4,611,970 $ 3,967,830
=========== =========== ===========
PER SHARE
Net Income $ .28 $ .38 $ .38
Dividends Paid $ .39 $ .36 $ .35
<PAGE>
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
shortterm investments in government securities, interest
on savings deposits and fees derived from serving as a
general partner of certain limited partnerships. In
addition to operating income, the Trust has received
capital gain income when real estate properties have
been sold at a price in excess of the depreciated cost
of said properties.
IRET has no employees. Its business is conducted through
the services of an independent contractor (Odell-Wentz &
Associates, LLC, a North Dakota Limited Liability
Company, having as its members Roger R. Odell and Thomas
A. Wentz, 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.
<PAGE>
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.
<PAGE>
ITEM 2. PROPERTIES
IRET is a qualified "real estate investment trust" under
Section 856-858 of the Internal Revenue Code, and is in
the business of making passive investments in real
estate equities and mortgages. These real estate
investments are managed by independent contractors on
behalf of IRET.
IRET owned the following properties as of April 30,
1997:
<TABLE>
<CAPTION>
REAL ESTATE OWNED: Fiscal Mortgage
1997 Year Payable
Size/Type Occupancy Purchased Cost Interest Rate
<S> <C> <C> <C> <C> <C>
APARTMENTS
1112 32ND AVE SW 18 Unit 96% 1996 $595,100 $395,737
Minot, ND Apt. Bldg. 8.50%
1305 BIRCH ST 24 Unit 89% 1988 $402,791 $116,968
Marshall, MN Apt. Bldg. 9.00%
177 10TH AVE E 41 Unit 80% 1989 $371,977 $230,341
Dickinson, ND Apt. Bldg 8.38%
312 12TH AVE NW 18 Unit 97% 1989 $261,812 $29,892
Mandan, ND Apt. Bldg. 8.75
405 GRANT AVE 12 Unit 85% 1991 $218,199 -
Harvey, ND Apt. Bldg.
4301-4313 9TH AVE 2 18-unit 94% 1988 $1,006,879 $506,456
SW Apt. Bldgs. 8.67%
Fargo, ND
BEULAH CONDOS ND 22 Condo 78% 1983 $428,635 -
Beaulah, ND Units
CANDLELIGHT APTS 44 Units 98% 1993 $850,323 $519,133
Fargo, ND Apt. Bldg 8.50%
CENTURY APTS 120 Unit 94% 1986 $1,816,942 $1,559,661
Dickinson, ND Apt Complex 7.69%
CENTURY APTS 192 Unit 76% 1986 $3,660,482 $2,640,305
Williston, ND Apt Complex 7.69%
CIRCLE FIFTY 49 Unit N/A Not $1,426,986 - -
Billings, MT Apt Complex Completed
COLUMBIA PARK 201 Unit N/A Not $676,836 -
PHASE II Apt Complex Completed
Grand Forks, ND
COTTONWOOD LAKE 268 Unit N/A Not $1,055,862 -
Bismarck, ND Apt Complex Completed
CRESTVIEW APTS 152 Unit 95% 1994 $4,643,201 $2,748,588
Bismarck, ND Apt Bldg 8.38%
<PAGE>
FOREST PARK 270 Unit 91% 1993 $6,783,548 $4,127,732
ESTATES Apt Complex 7.50%
Grand Forks, ND
JENNER PROP. - 125 Units N/A Not $5,400 -
UPREIT Apt Bldgs Completed
LEGACY APTS 116 Unit 92% 1996 $6,946,811 $3,986,207
Grand Forks, ND Apt Complex 7.56%
MIRAMONT APT 210 Unit 96% 1996 $14,235,460 $11,566,494
Ft. Collins, CO Apt Complex 8.25%
NEIGHBORHOOD APT 192 Unit 90% 1996 $10,849,561 $7,501,027
Colorado Springs, Apt Complex 7.98%
CO
NORTH POINTE 49 49 Unit 99% 1995 $2,396,761 $1,345,937
Bismarck, ND Apt Bldg 8.05%
OAK MANOR APTS 27 Unit 100% 1989 $290,726 $234,590
Dickinson, ND Apt Bldg 8.75%
OAKWOOD ESTATES 160 Unit 83% 1993 $5,340,464 $3,506,545
Sioux Falls, SD Apt Complex 7.69%
OXBOW 120 UNITS 120 Unit 100% 1994 $4,954,453 $3,486,180
Sioux Falls, SD Apt Complex 7.69%
PARK MEADOWS APT 360 Unit 89% 1997 $10,242,747 $8,025,780
St. Cloud, MN Apt Complex 4.25%
PARK PLACE 48 Unit 90% 1988 $810,820 -
Waseca, MN Apt Bldg
PARKWAY APTS 36 Unit 98% 1988 $93,730 -
Beaulah, ND Apt Bldg
PINE CONE APTS 195 Unit 88% 1994 $13,079,584 $10,591,870
Ft. Collins, CO Apt Complex 7.13%
POINTE WEST APTS 90 Unit 93% 1994 $3,824,395 $2,284,864
Rapid City, SD Apt Complex 8.55%
PRAIRIE WINDS APTS 48 Unit 98% 1993 $1,968,277 $1,363,526
Sioux Falls, SD Apt Bldg 7.76%
ROCKY MEADOWS 98 Unit 95% 1996 $6,966,109 $2,950,765
Billings, MT Apt Complex 8.00%
SCOTTSBLUFF 48 Unit 97% 1988 $707,592 -
ESTATES Apt Bldg
Scottsbluff, NE
<PAGE>
SOUTH POINTE 196 Unit 85% 1995 $10,138,043 $5,648,089
Minot, ND Apt Complex 8.36%
SOUTHVIEW APTS 24 Unit 77% 1994 $668,749 -
Minot, ND Apt Bldg
SOUTHWIND APTS 164 Unit 85% 1996 $5,530,214 $3,589,435
Grand Forks, ND Apt Complex 8.74%
VIRGINIA 15 Unit 88% 1987 $219,365 -
APARTMENTS Apt Bldg
Minot, ND
WEST STONEHILL 313 Unit 93% 1995 $11,229,629 $8,119,358
St Cloud, MN Apt Complex 9.21%
WOODRIDGE APTS 108 Unit 99% 1996 $6,398,096 $4,379,282
Rochester, MN Apt Complex 7.85%
____________
Total Residential $141,096,561
COMMERCIAL
401 SOUTH MAIN 9,200 sq. 86% 1987 $475,249 -
Minot, ND ft.
Commercial
Bldg
408 1ST STREET SE Rental House 100% 1986 $46,873 -
Minot, ND
CREEKSIDE OFFICE Office Bldgs 100% 1992 $1,599,330 $912,165
BUILDING 8.35%
Billings, MT
LESTER 5,000 sq. 100% 1988 $268,917 -
CHIROPRACTIC ft.
CLINIC Clinic Bldg
Bismarck, ND
WALTERS 214 SO 3,500 sq. 100% 1978 $111,049 $10,086
MAIN ft. 9.00%
Minot, ND Retail Bldg
ARROWHEAD SHOPPING 80,000 sq. 95% 1973 $2,438,282 -
CNTR ft.
Minot, ND Shopping
Center
BARNES & NOBLE 30,000 sq. 100% 1994 $3,292,012 $2,229,880
Fargo, ND ft. 7.89%
Retail/Wrhse.
BARNES & NOBLE 30,000 sq. 100% 1995 $3,699,101 $2,415,703
Omaha, NB ft. 7.98%
Retail/Whse.
CARMICKE THEATRE 28,528 sq. 100% 1994 $2,545,737 $1,676,716
Grand Forks, ND ft. 8.65%
10 screen
threatre
COMPUTER CITY 16,080 sq. 100% 1996 $2,113,574 $1,534,724
Kentwood, MI ft. 7.75%
Strip
Shopping
Cntr
<PAGE>
EDGEWOOD VISTA 10,314 sq. 10% 1997 $962,428 $647,500
Missoula, MT ft. 9.75%
Assisted
Living
HUTCHINSON Manufacturing 100% 1993 $4,429,026 $2,349,413
TECHNOLOGY Plant 8.75%
Sioux Falls, SD
LINDBERG BUILDING Office/Whrse 100% 1992 $1,455,789 $813,700
Eden Prairie, MN 8.75%
MINOT PLAZA 11,200 sq. 100% 1993 $505,237 -
Minot, ND ft.
Strip
Shopping
Cntr
PETCO WAREHOUSE 18,000 sq. 100% 1994 $1,278,934 $802,327
Fargo, ND Retail/Whrse 8.50%
PIONEER SEED Office/Whse. 100% 1992 $653,876 $326,808
Moorhead, MN 8.38%
RETAIL WAREHOUSE 70,000 sq. 12% 1994 $5,639,576 $3,577,824
Boise, ID Retail/Whse. 9.75%
STONE CONTAINER Manufacturing 100% 1995 $4,998,485 $3,153,155
Fargo, ND Plant 8.25%
SUPERPUMPER Gas Station/ 100% 1989 $301,013 -
Bottineau, ND Conven.
Store
SUPERPUMPER Gas Station/ 100% 1988 $428,777 -
Crookston, MN Conven.
Store
SUPERPUMPER Gas Station/ 100% 1986 $297,064 -
Emerado, ND Conven.
Store
SUPERPUMPER Gas Station/ 100% 1991 $485,007 -
Grand Forks, ND Conven.
Store
SUPERPUMPER Gas Station/ 100% 1987 $239,212 -
Langdon, ND Conven.
Store
SUPERPUMPER Gas Station/ 100% 1992 $250,000 -
New Town, ND Conven.
Store
SUPERPUMPER Gas Station/ 100% 1993 $120,600 -
Sidney, MT Conven.
Store
WEDGEWOOD Assisted 100% 1996 $2,810,000 $1,566,720
RETIREMENT Living Cntr 8.38%
Sweetwater, GA ___________
Total Commercial $41,445,148
<PAGE>
Consolidated
Partnerships:
SWEETWATER 114 Unit 85% 1972 $1,580,766 $224,267
PROPERTIES Apt Bldgs 9.75%
Devils Lake &
Grafton, ND
BISON PROPERTIES 125 Apt 88% 1972 $1,579,626 $114,153
Jamestown, Units 10.00%
Carrington &
Cooperstown, ND
1ST AVENUE 16,500 sq. 66% 1981 $795,948 -
BUILDING ft.
Minot, ND Office Bldg.
EASTGATE 116 Unit 69% 1970 $1,746,072 -
PROPERTIES Apt Complex
Moorhead, MN
COLTON HEIGHTS 18 Unit 84% 1984 $817,040 $361,356
PROPERTIES, Apt Bldg 8.75%
Minot, ND
HILL PARK 92 Unit 90% 1985 $2,823,348 $1,427,430
PROPERTIES Apt Complex 7.69%
Bismarck, ND ____________
Total Partnerships $9,342,800
__________________________
Total Real Estate Owned $191,884,509 $115,608,689
Less: Accumulated Depreciation (16,948,156)
------------
Net Carrying Value $174,936,353
============
</TABLE>
<PAGE>
- TITLE. The title to all of the above properties is
in the name of either IRET Properties, a
North Dakota Limited Partnership, IRET or a wholly-
owned subsidiary 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, 1997,
IRET had not entered into any contracts or options
to sell any of the above properties.
- OCCUPANCY AND LEASES. Occupancy rates shown above are
for the fiscal year ended April 30, 1997. 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 in 1996. The lease has
been terminated and the Trust is seeking a new tenant.
<TABLE>
<CAPTION>
MORTGAGE LOANS RECEIVABLE - UNRELATED:
Real Estate 4/30/97
Location Security Balance Rate
<S> <C> <C> <C>
BILLINGS, MT
Colton Heights Apts.-144 Units $ 193,657 9%
DENVER, CO
Writer Corp. Residential Lots 78,471 14%
Centrebrooke Homes Residential Lots 103,127 12%
GILBERT, AZ
NE-27-2-6 Commercial Land 669,048 8%
DOUGLAS, GA
Sweetwater Springs Retirement Center 983,737 9%
OTHER MORTGAGES
Over $100,000 $ 860,368 8-10 1/4%
$50,000 to $99,999 0
$20,000 to $49,999 215,322 8-12%
Less than $20,000 5,203 7%
-----------
TOTAL $ 3,108,933
Unearned Discounts (10,524)
Allowance for Losses (124,881)
Deferred Gain (18,713)
-----------
$ 2,954,815
===========
<PAGE>
SUMMARY OF REAL ESTATE INVESTMENT PORTFOLIO
REAL ESTATE INVESTMENTS:
Real Estate Owned $191,884,509
Less Depreciation Reserve (16,948,156) $174,936,353 94%
Mortgage Loans 3,108,933
Less unearned discounts
and interest (10,524)
Less allowance for losses (124,881)
Less deferred gain (18,713) 2,954,815 1%
------------
Total Real Estate Investments $177,891,168
============
OTHER ASSETS:
Cash and marketable securities $ 6,457,182
Deposits and accruals 2,645,593
Total Other Assets $ 9,102,775 5%
------------
TOTAL ASSETS $186,993,943 100%
============
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 21, 1996 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.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SECURITY HOLDER MATTERS
The shares of Beneficial Interest of IRET are offered for
sale by Inland National Securities, Inc., 21 South Main, Minot, ND
58701, American Investment Services, Incorporated, 600 High Point
Lane, E. Peoria, IL 61611, Garry Pierce Financial Services, 2910 E.
Broadway Ave., Ste. 33, Bismarck, ND 58501, Huntingdon Securities
Corporation, 216 S. Broadway, Minot, ND 58701 and Primevest
Financial Services, Inc., 400 1st Street S., Ste. 300, St. Cloud, MN
56301. The current asked price is $7.20 per share. Shares are re-
purchased by IRET at 92% of the current asked price ($6.62) subject
to the following limitation: $100,000 per shareholder and a
cumulative limit of $600,000, increased by the sales of shares by
the selling brokers on a dollar for dollar basis. Set forth below,
by quarter-year, are the total number of IRET shares traded, the
high and low reported sales prices and the per share dividend paid
for the past three years:
</TABLE>
<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>
1994 July-September 134,529 5.37 5.63 6.10 6.25 .088
1994 October-December 335,518 5.63 5.89 6.25 6.40 .084
1995 January-March 210,106 5.89 5.89 6.40 6.40 .085
1995 April-June 137,766 5.89 6.03 6.40 6.55 .0862
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
1996 July-September 254,041 6.30 6.30 6.85 7.00 .0925
1996 October-December 259,672 6.30 6.44 7.00 7.00 .095
1997 January-March 353,479 6.44 6.62 7.00 7.20 .0975
1997 April-June 244,520 6.62 6.62 7.20 7.20 .10
</TABLE>
As of May 31, 1997, IRET had 3,075 shareholders. No
shareholder held more than 5% of the 14,997,591
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.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
Year Ended April 30
--------------------------------------------------------------------
1997 1996 1995 1994 1993
(Restated) (Restated)
<S> <C> <C> <C> <C> <C>
Consolidated Income Statement Data
Revenue $ 23,833,982 $ 18,659,665 $13,801,123 $11,583,008 $ 8,316,643
Operating Income 3,499,443 3,617,807 3,560,318 3,135,426 2,231,092
Gain on repossession/
sale of investments 398,424 994,163 407,512 64,962 132,610
Minority interest of
unitholders in
operating partner-
ship (18) 0 0 0 0
Net Income 3,897,849 4,611,970 3,967,830 3,200,388 2,363,702
<PAGE>
Balance Sheet Data
Total real estate
investments $177,891,168 $122,377,909 $84,005,635 $64,089,476 $50,041,059
Total assets 186,993,943 131,355,638 94,616,744 72,391,548 54,658,569
Shareholders' equity 59,997,619 50,711,920 37,835,654 29,997,189 23,745,443
Consolidated Per Share Data
Net income $ .25 $ .38 $ .38 $ .36 $ .29
Gain on repossession/
sale of investments .03 .08 .04 .01 .01
Dividends .39 .36 .35 .33 .32
Tax status of dividend
capital gain 21.0% 1.6% 11.0% 7.37% 4.08%
Ordinary income 79.0% 98.4% 89.0% 92.63% 74.04%
Return of capital 0.0% 0.0% 0.0% 0.00% 21.88%
</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. On
February 1, 1997, IRET re-structured itself as an Umbrella
Partnership Real Estate Investment Trust (UPREIT). No other
major change in IRET's business has occurred from the organization
of the Trust in 1970 to the date of this filing, and none are
planned at this time.
RESULTS OF OPERATIONS:
FISCAL YEAR 1997 COMPARED TO FISCAL YEAR 1996. IRET's
Fiscal Year 1997, which ended on April 30, 1997, saw a
continuation of IRET's rapid growth with assets owned
increasing by more than 40%. IRET's 27th year ended with
total assets, revenues, funds from operations and
shareholder equity all reaching record levels.
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 1997
increased to $7,144,622 ($.51 per share), compared to
$5,977,431 ($.49 per share) generated by IRET in Fiscal
1996 and the $5,434,244 ($.52 per share) recognized in
Fiscal 1995.
<PAGE>
EARNINGS. IRET's net taxable earnings for Fiscal Year
1997 decreased to $3,897,849 from the $4,611,970 earned
in Fiscal 1996 and the $3,967,830 earned in Fiscal 1995.
Approximately one-half of the decrease in earnings from
the Fiscal 1996 level resulted from a decrease in
capital gain income. In Fiscal 1997, $398,424 of capital
gain income was recorded, as compared to $994,163 in the
prior year.
The other principle reason for the decline in taxable
income is the continuing acquisition by IRET of new real
estate investments which result in an increase in
depreciation allowance. In Fiscal 1997, $3,584,591 of
depreciation was recorded as compared to $2,261,724 in
the prior year. This will result in a significant
portion of IRET's dividends being sheltered from income
tax by the increased depreciation allowance.
On a per share basis, net taxable income was $.28 per
share for Fiscal 1997, compared to $.38 per share
recorded in both Fiscal 1996 and 1995.
REVENUES. Total revenues for Fiscal 1997 were
$23,833,982, compared to $18,659,665 in Fiscal 1996 (an
increase of 28%) and $13,801,123 in Fiscal 1995. The
increase in revenues received during Fiscal 1997 in
excess of the prior year revenues was $5,174,317. This
increase resulted from:
Rent from 11 properties acquired in
Fiscal 1997 $4,451,266
Rent from 7 properties acquired in
Fiscal 1996 in excess of that
received in Fiscal 1996 1,526,453
A decrease in rental income on
existing properties (-5.4%) (625,949)
An increase in rent on Smith Home
Furnishing Building (bankruptcy of
tenant) 61,892
A decrease in rent - properties sold
during 1996 (76,590)
A decrease in interest income (162,755)
---------
$5,174,317
This increase in revenue resulted primarily from the
addition of new real estate properties to the portfolio.
Rents received on properties owned prior to the
beginning of Fiscal Year 1996 saw an increase in
scheduled rents of 2.25%, but the occupancy level for
those properties decreased from approximately 95% to
slightly over 90% resulting in a decrease in rental
income from those properties of $625,949. However, the
new properties acquired during Fiscal Years 1996 and
1997 generated nearly $6,000,000 of new revenues.
<PAGE>
Interest income continued to decline as IRET completes
the repositioning of its investment portfolio from a mix
of real estate equities and mortgage loans to one
consisting entirely of real estate equities. Management
is of the opinion that the long term yields from real
estate equity investments will exceed that available
from interest income on mortgage loans but, in the short
run, the switch does result in lower immediate revenues
and taxable income.
Capital gain income for Fiscal 1997 was $398,424
resulting from the sale of two older and smaller
investment properties. This compares to $994,163 of
capital gain income recognized in Fiscal 1996 and the
$407,512 recognized in Fiscal 1995. IRET will continue
to seek to market several of its older and smaller
apartment properties.
NET TAXABLE INCOME. The $714,121 decrease in net taxable
income for Fiscal 1997 over the net income earned in the
prior fiscal year resulted from:
A decrease in gain from sale of
investments $ (595,739)
An increase in net rental income
(rents, less utilities, maintenance,
taxes, insurance and management) 3,518,152
A decrease in interest income (162,755)
An increase in interest expense (2,091,037)
An increase in depreciation expense (1,322,867)
An increase in operating expenses
and advisory trustee services (97,169)
A decrease in amortization expense 37,312
An increase in Minority interest of
Operating Partnership Income (18)
-----------
$ (714,121)
<PAGE>
PROPERTY ACQUISITIONS. IRET added nearly $60,000,000
of real estate to its portfolio during Fiscal 1997,
including:
COMMERCIAL:
Computer City, Kentwood, MI $ 2,113,574
Edgewood Vista, Missoula, MT 962,428
Wedgwood Retirement Inns,
Sweetwater, GA 2,810,000
UNITS APARTMENTS
67 Circle 50, Billings, MT* $ 1,519,855
98 South Pointe II, Minot, ND** 1,024,234
60 Rosewood Court, Sioux Falls,
SD 1,938,245
116 Legacy Apts., Grand Forks, ND** 3,573,057
98 Rocky Meadows, Billings, MT** 2,654,554
210 Miramont Apts., Fort Collins,
CO 14,235,461
192 Neighborhood Apts., Colorado
Springs, CO 10,849,561
108 Woodridge Apts., Rochester, MN 6,398,096
67 Cottonwood Lake, Bismarck, ND* 1,055,862
360 Park Meadows Apts., St. Cloud,
MN 10,242,747
-----------
Total $59,377,674
*Property not placed in service at April 30,
1997. Additional costs are still to be incurred.
**Represents costs to complete a project started
in year ending April 30, 1996.
PROPERTY DISPOSITIONS. During Fiscal 1997, IRET sold a
24 plex apartment building in Hutchinson, MN, realizing
a gain of $252,000. It also recognized a gain of
$138,600 from the previous sale of an 18 plex apartment
building in Mandan, ND. It is management's intention to
continue to market IRET's older and smaller apartment
projects.
FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995. This
comparative report is reproduced as it was submitted for
Fiscal Year 1996. 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.
<PAGE>
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.
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:
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
<PAGE>
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 $.30 in 1996) reflects the continuing
repositioning of the investment portfolio from a mix
of real estate equities and mortgage loans to one
consisting entirely of real estate equities. The
income on the mortgage loans made by the Trust was
immediately reflected in operating income. Many of
these mortgage loans earned interest at 14% per annum
and several produced additional participation income.
These mortgages have now been largely paid off and
have been replaced with equity investments in
apartments and triple net leased commercial property.
The initial operating and taxable income on the equity
investments is lower than what was being earned on the
mortgage loans, but management is of the opinion that
these new investments will produce very satisfactory
investment returns in the years ahead.
Capital gain income, on the other hand, has been
increasing ($.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:
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
===========
<PAGE>
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**
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.
<PAGE>
DIVIDENDS. The following dividends were paid during Fiscal
1997:
Date Per Share Dividend
---- ------------------
July 1, 1996 $.0975*
October 1, 1996 $.095
January 8, 1997 $.0975
April 1, 1997 $.1000
------
$.39
* Includes $.005 special dividend.
FUNDS FROM OPERATIONS. The funds derived during Fiscal
1997 by the Trust from its operations increased by 20%
over the prior year and by 34% from the Fiscal 1995 level
($7,144,622 in Fiscal 1997, versus $5,977,431 in 1996 and
$5,348,271 in 1995). (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.)
The following is a comparison of dividends paid during
the past five fiscal years to Funds From Operations (as
defined above):
<PAGE>
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal Fiscal Fiscal
Item 1997 1996 1995(Restated) 1994(Restated) 1993
<S> <C> <C> <C> <C> <C>
Net Income (GAAP) $3,897,849 $4,611,970 $3,967,830 $3,200,388 $2,363,702
Adjustments
Gain from Property
Sales (398,424) (994,163) (407,512) (64,962) (132,610)
Minority Int. in
Operating Prtnshp. 18
---------- ---------- ---------- ---------- ----------
Operating Income $3,499,443 $3,617,807 $3,560,318 $3,135,426 $2,231,092
Plus Depreciation 3,584,591 2,261,724 1,767,294 1,323,474 1,051,370
Plus Amortization 60,588 97,900 20,659 28,199 16,364
---------- ---------- ---------- ---------- ----------
Funds from Operations $7,144,622 $5,977,431 $5,348,271 $4,487,099 $3,298,826
Dividends Paid $5,508,689 $4,439,034 $3,660,986 $3,102,061 $2,633,799
---------- ---------- ---------- ---------- ----------
$1,635,933 $1,538,397 $1,687,285 $1,385,038 $ 665,027
</TABLE>
Management expects that the Funds From Operations (as
defined above) will continue to improve during Fiscal 1998
and will continue to exceed dividends paid in the coming
year.
LIQUIDITY AND CAPITAL RESOURCES. IRET's financial
condition at the end of Fiscal 1997 continued at the very
strong level of its prior fiscal year.
- Equity capital increased to $59,997,619 from
$50,711,920 on April 30, 1996, a gain of
$9,285,699 (18%). Equity capital on April 30,
1995, was $37,835,654. These increases result
from the sale of shares of beneficial interest
and the reinvestment of dividends in new shares.
- Liabilities increased to $126,995,322 from
$80,643,718 on April 30, 1996, and $56,781,090 on
April 30, 1995.
- Total assets increased to $186,993,943 from
$131,355,638 on April 30, 1996, and $94,616,744 on
April 30, 1995.
- Cash and marketable securities were $6,457,182
compared to the year earlier figure of $7,127,131, and
$9,595,254 on April 30, 1995.
- In addition to its cash and marketable securities,
IRET has unsecured line of credit agreements
with First American Bank West, First International Bank
& Trust and First Western Bank & Trust, all of Minot,
North Dakota, of $9,500,000, none of which was in use
on April 30, 1997.
<PAGE>
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 were 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 and 1997, 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.
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-K405 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 1997 saw generally normal economic
conditions in the northern plains states in which IRET
operates. Occupancy rates for residential properties declined
to 90.5% and scheduled rent levels for Trust properties
improved only slightly in Fiscal 1997 (2.25%). The severe
winter of 1996-97 also impacted earnings by increasing snow
removal and utility expenses and vacancy rates.
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.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and Trustees of IRET as of April 30,
1997, were:
<TABLE>
<CAPTION>
Name, Age Business Experience During Year Position
and Position Past Five Years Commenced
- ------------ --------------- ---------
<S> <C> <C>
*C. Morris Anderson President of North Hill Bowl, Inc.; 1970
Age 68 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; former 1970
Age 68 Director of First Bank - Minot, N.A.
Trustee and Chairman Chairman of IRET.
*John D. Decker Investor 1970
Age 80
Trustee
*Mike F. Dolan Investor; Vice-Chairman of IRET. 1978
Age 86
Trustee & Vice-Chairman
*J. Norman Ellison, Jr. Businessman; Managing Partner of 1970
Age 74 Ellison Realty Co.; Former Director
Trustee of First Bank - Minot, N.A.
*Daniel L. Feist Realtor; Broker; Real Estate Developer; 1985
Age 65 Builder; General Contractor; President -
Trustee Owner Feist Construction & Realty;
Investor; Businessman, former Director
of First Bank System - Minot, N.A.;
Director N.D. Holdings, Inc. - Minot.
*Patrick G. Jones Investor 1986
Age 49
Trustee
*Jeff L. Miller Investor; Businessman; President of 1985
Age 53 M&S Concessions, Inc. and former
Trustee & Vice-Chairman president of Coca-Cola Bottling Co. of
Minot; former Director of First Bank -
Minot.
Roger R. Odell Realtor; President of IRET; Partner in 1970
Age 71 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, Jr. Attorney, Pringle & Herigstad, P.C.; 1996
Age 31 General Partner of WENCO, a North Dakota
Trustee Limited Partnership.
Timothy P. Mihalick Realtor; Operations Manager of 1988
Age 38 Odell-Wentz & Associates (Advisor to
Secretary the Trust); Secretary of IRET.
</TABLE>
* Unaffiliated Trustees.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information
under the caption "Remuneration and Transactions with
Trustees and Advisor" in the Registrant's definitive proxy
statement relating to its annual meeting of shareholders to
be held on August 19, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
As of May 31, 1997, 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 8.76% 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 1997 annual meeting of shareholders,
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information
under the caption "Remuneration and Transactions with
Trustees and Advisor" in the Registrant's definitive proxy
statement relating to its annual meeting of shareholders to
be held August 19, 1997.
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:
<PAGE>
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-K405:
I Marketable Securities - Other Investments
IV Noncurrent Indebtedness of Related Parties
Mortgage Loans Receivable
X Supplemental Income Statement Information
XI Real Estate Owned and Accumulated
Depreciation
XII Investments in Mortgage Loans on Real
Estate XIII Other Investments - Partnerships
See the Table of Contents to Financial
Statements and Supplemental Data.
3. Documents Incorporated by Reference
Part of Form 10-K405
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 19, 1997
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-K405 for the fiscal year ended April 30,
1997. 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-K405 or are
incorporated by reference as indicated below.
3(i) Restated Declaration of Trust of Investors Real
Estate Trust, dated October 24, 1996, and filed as
Exhibit 3(i) to Form S-11 Registration Statement
effective March 14, 1997 (SEC File No. 333-21945)
filed for the Registrant (File No. 0-14851) and
incorporated herein by reference.
3(ii) IRET Properties Partnership Agreement filed as
Exhibit 3(ii) to Form S-11 Registration Statement
effective March 14, 1997 (SEC File No. 333-21945)
filed for the Registrant (File No. 0-14851) and
incorporated herein by reference.
10 Advisory Agreement between the Registrant and
Odell-Wentz & Associates, L.L.C., filed as Exhibit
10 to said Form 10 and incorporated herein by reference.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INVESTORS REAL ESTATE TRUST
Date: July 25, 1997 By: /S/ THOMAS A. WENTZ, SR.
____________________________
Thomas A. Wentz, Sr.
Vice-President
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:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Roger R. Odell
___________________________ President, Trustee and July 25, 1997
Roger R. Odell Principal Executive Officer
/s/ Thomas A. Wentz, Sr.
___________________________ Vice-President July 25, 1997
Thomas A. Wentz, Sr.
___________________________ Trustee and Chairman July ___, 1997
Ralph A. Christensen
/s/ Mike F. Dolan
___________________________ Trustee and Vice-Chairman July 28, 1997
Mike F. Dolan
/s/ Jeff L. Miller
___________________________ Trustee and Vice-Chairman July 28, 1997
Jeff L. Miller
/s/ C. Morris Anderson
___________________________ Trustee July 28, 1997
C. Morris Anderson
/s/ J. Norman Ellison, Jr.
___________________________ Trustee July 29, 1997
J. Norman Ellison, Jr.
/s/ Daniel L. Feist
___________________________ Trustee July 28, 1997
Daniel L. Feist
/s/ Patrick G. Jones
___________________________ Trustee July 25, 1997
Patrick G. Jones
/s/ John D. Decker
___________________________ Trustee July 28, 1997
John D. Decker
/s/ Thomas A. Wentz, Jr.
___________________________ Trustee July 25, 1997
Thomas A. Wentz, Jr.
/s/ Timothy P. Mihalick
___________________________ Secretary July 29, 1997
Timothy P. Mihalick
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
MINOT, NORTH DAKOTA
CONSOLIDATED FINANCIAL STATEMENTS
AS OF
APRIL 30, 1997 AND 1996
AND
INDEPENDENT AUDITOR'S REPORT
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
TABLE OF CONTENTS
Pages
-----
INDEPENDENT AUDITOR'S REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 2-3
Consolidated Statements of Operations 4
Consolidated Statements of Shareholders' Equity 5
Consolidated Statements of Cash Flows 6-7
Notes to Consolidated Financial Statements 8-18
ADDITIONAL INFORMATION
Independent Auditor's Report on Additional Information 19
Marketable Securities 20
Noncurrent Indebtedness of Related Parties -
Mortgage Loans Receivable 21
Supplemental Income Statement Information 22
Real Estate and Accumulated Depreciation 23-27
Investments in Mortgage Loans on Real Estate 28-29
Selected Financial Data 30
Gain from Property Dispositions 31
Mortgage Loans 32-33
Significant Property Acquisitions 34
Schedules other than those listed above are omitted
since they are not required or are not applicable, or
the required information is shown in the financial
statement or notes thereon.
Quarterly Results of Consolidated Operations (Unaudited) 35
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Trustees
Investors Real Estate Trust
and Subsidiaries
Minot, North Dakota
We have audited the accompanying consolidated balance sheets of Investors
Real Estate Trust and Subsidiaries as of April 30, 1997 and 1996, and the
related consolidated statements of operations, shareholders' equity and
cash flows for the years ended April 30, 1997, 1996 and 1995. 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 Subsidiaries as of April 30,
1997 and 1996, and the consolidated results of its operations and cash flows
for the years ended April 30, 1997, 1996 and 1995, in conformity with
generally accepted accounting principles.
BRADY, MARTZ & ASSOCIATES, P.C.
May 23, 1997
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1997 AND 1996
ASSETS
1997 1996
---- ----
REAL ESTATE INVESTMENTS
Property owned $ 191,884,509 $ 131,447,734
Less accumulated depreciation (16,948,156) (13,551,571)
$ 174,936,353 $ 117,896,163
Mortgage loans receivable 3,108,933 4,932,138
Less- unearned discounts and deferred
interest (10,524) (18,222)
- deferred gain from property
dispositions (18,713) (165,074)
- allowance for loan losses (124,881) (267,096)
Total real estate investments $ 177,891,168 $ 122,377,909
OTHER ASSETS
Cash 1,718,257 2,715,274
Marketable securities - held-to-maturity 4,055,459 4,411,857
Marketable securities - available-for-
sale 683,466 -
Accounts receivable 332,814 30,269
Real estate deposits 100,000 -
Investment in partnership 78,469 85,576
Prepaid insurance 248,377 128,541
Tax and insurance escrow 1,250,469 1,151,527
Deferred charges 635,464 454,685
------------- -------------
TOTAL ASSETS $ 186,993,943 $ 131,355,638
============= =============
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996
---- ----
LIABILITIES
Accounts payable and accrued expenses $ 3,073,071 $ 3,142,190
Mortgages payable 115,734,946 71,699,059
Investment certificates issued 8,187,305 5,802,469
------------ ------------
Total liabilities $126,995,322 $ 80,643,718
============ ============
MINORITY INTEREST OF UNITHOLDERS IN
OPERATING PARTNERSHIP $ 1,002 $ -
------------ ------------
SHAREHOLDERS' EQUITY
Shares of beneficial interest
(unlimited authorization, no
par value, 14,940,513 shares
outstanding in 1997 and 13,258,908
shares outstanding in 1996) $ 65,073,951 $ 54,263,917
Accumulated distributions in excess
of net income (5,162,837) (3,551,997)
Unrealized gain on securities available-
for-sale 86,505 -
------------ ------------
Total shareholders' equity $ 59,997,619 $ 50,711,920
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $186,993,943 $131,355,638
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED APRIL 30, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
REVENUE
Real estate rentals $22,972,369 $17,635,297 $12,280,738
Interest, discounts and fees 861,613 1,024,368 1,520,385
----------- ----------- -----------
Total revenue $23,833,982 $18,659,665 $13,801,123
EXPENSES
Interest $ 7,638,776 $ 5,547,739 $ 3,484,310
Depreciation 3,584,591 2,261,724 1,767,294
Utilities and maintenance 3,741,878 3,167,560 2,352,968
Taxes and insurance 2,720,495 2,065,017 1,220,434
Property management expenses 1,870,435 1,281,311 779,024
Advisory and trustee services 559,149 458,019 336,142
Operating expenses 158,627 162,588 79,974
Amortization 60,588 97,900 20,659
Provision for loan losses - - 200,000
----------- ----------- -----------
Total expenses $20,334,539 $15,041,858 $10,240,805
=========== =========== ===========
OPERATING INCOME $ 3,499,443 $ 3,617,807 $ 3,560,318
GAIN ON SALE OF PROPERTIES 398,424 994,163 407,512
MINORITY INTEREST PORTION OF
OPERATING PARTNERSHIP INCOME (18) - -
----------- ----------- -----------
NET INCOME $ 3,897,849 $ 4,611,970 $ 3,967,830
=========== =========== ===========
Net income per share:
Operating income $.25 $.30 $.34
Gain on sale of investments .03 .08 .04
---- ---- ----
Net income $.28 $.38 $.38
==== ==== ====
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Accumulated Unrealized
Shares of Distributions Gain Total
Beneficial in excess of on Securities Shareholders'
Interest Net Income Available-for-Sale Equity
---------- ------------- ------------------ -------------
<S> <C> <C> <C> <C>
BALANCE, MAY 1, 1994 $34,096,966 $(4,099,777) $ - $29,997,187
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
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
Net income - 3,897,849 - 3,897,849
Dividends distributed - (5,508,689) - (5,508,689)
Dividends reinvested 3,579,744 - - 3,579,744
Sale of shares 9,025,706 - - 9,025,706
Shares repurchased (1,795,416) - - (1,795,416)
Increase in unrealized
gain on securities
available-for-sale - - 86,505 86,505
----------- ----------- ------------ -----------
BALANCE, APRIL 30, 1997 $65,073,951 $(5,162,837) $ 86,505 $59,997,619
=========== =========== ============ ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,897,849 $ 4,611,970 $ 3,967,830
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,645,179 2,359,624 1,787,953
Minority interest portion of operating
partnership income 18 - -
Accretion of discount on contracts (7,698) (16,570) (14,670)
Gain on sale of properties (398,424) (994,163) (407,512)
Interest reinvested in investment
certificates 288,517 161,813 205,491
Changes in other assets and liabilities:
Increase in real estate deposits (100,000) - -
Increase in other assets (596,053) (273,636) (119,685)
Increase in tax and insurance escrow (98,942) (834,007) (3,603)
Increase (decrease) in accounts payable
and accrued expenses (69,119) 1,219,771 (108,444)
------------ ------------ ------------
Net cash provided from operating
activities $ 6,561,327 $ 6,234,802 $ 5,307,360
============ ============ ============
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity of marketable
securities held-to-maturity $ 356,398 $ 417,952 $ 441,644
Principal payments on mortgage loans
receivable 1,706,202 2,642,346 4,059,328
Proceeds from sale of property - 389,784 -
Payments for acquisition and
improvement of properties (38,046,177) (32,462,846) (10,584,694)
Purchase of marketable securities
available-for-sale (596,961) - -
Investment in mortgage loans receivable (2,835,212) (1,784,981) (653,952)
------------ ------------ ------------
Net cash used for investing activities $(39,415,750) $(30,797,745) $ (6,737,674)
============ ============ ============
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of shares $ 9,025,706 $ 9,820,470 $ 5,288,343
Proceeds from investment certificates issued 4,225,004 1,695,924 947,093
Proceeds from mortgages payable 27,094,270 29,025,001 2,092,266
Proceeds from short-term lines of credit 8,450,000 - -
Proceeds from sale of minority interest 1,000 - -
Repurchase of shares (1,795,416) (218,128) -
Dividends paid (1,930,455) (1,338,046) (1,417,708)
Redemption of investment certificates (2,128,686) (917,732) (695,803)
Principal payments on mortgage loans (2,634,017) (15,554,717) (1,979,111)
Payments on short-term lines of credit (8,450,000) - -
------------ ------------ ------------
Net cash provided from financing
activities $ 31,857,406 $ 22,512,772 $ 4,235,080
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH $ (997,017) $ (2,050,171) $ 2,804,766
CASH AT BEGINNING OF YEAR 2,715,274 4,765,445 1,960,679
------------ ------------ ------------
CASH AT END OF YEAR $ 1,718,257 $ 2,715,274 $ 4,765,445
============ ============ ============
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
SUPPLEMENTARY SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Dividends reinvested $ 3,579,744 $ 3,100,988 $ 2,175,278
Real estate investment and mortgage
loans receivable acquired through
assumption of mortgage loans
payable and accrual of costs 19,575,635 8,232,568 15,917,788
Mortgage loan receivable transferred
to property owned 2,810,000 - -
Proceeds from sale of properties
deposited directly with escrow agent 455,329 426,352 940,258
Mortgages paid directly by
owner of contract - - 543,598
Interest reinvested directly in
investment certificates 288,517 161,813 205,491
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest paid on mortgages $ 6,773,978 $ 4,661,065 $ 3,109,727
Interest paid on investment
certificates 508,686 292,660 157,233
----------- ----------- -----------
$ 7,282,664 $ 4,953,725 $ 3,266,960
=========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997, 1996 AND 1995
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS - Investors Real Estate Trust qualifies under
Section 856 of the Internal Revenue Code 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, real estate related governmental
backed securities (GNMA), and equity securities in other real estate
investment trusts.
Effective February 1, 1997, the Trust reorganized its structure in
order to convert to Umbrella Partnership Real Estate Investment
Trust (UPREIT) status. The Trust established an operating
partnership (IRET Properties, a North Dakota Limited Partnership)
with a wholly owned corporate subsidiary acting as its sole general
partner (IRET, Inc., a North Dakota Corporation). At that date,
the Trust transferred all of its assets and liabilities to the
operating partnership in exchange for general partnership units.
The general partner has full and exclusive management
responsibility for the real estate investment portfolio owned by
the operating partnership. The partnership will be operated in a
manner that will allow IRET to continue its qualification as a real
estate investment trust under the Internal Revenue Code.
All limited partners of the operating partnership will have
"exchange rights" allowing them, at their option, to exchange their
limited partnership units for shares of the Trust on a one for one
basis. The exchange rights are subject to certain restrictions
including no exchanges for at least one year following the
acquisition of the limited partnership units. The operating
partnership will distribute cash on a quarterly basis in the
amounts determined by the Trust which will result in each limited
partner receiving the same dividends as a Trust shareholder.
BASIS OF PRESENTATION - The consolidated financial statements
include the accounts of Investors Real Estate Trust and all of its
subsidiaries in which it maintains a controlling interest. The
Trust is the sole shareholder of IRET, Inc. which is the general
partner of the operating partnership, IRET Properties. IRET
Properties is a general partner in six limited partnerships, and
due to the immaterial involvement of the limited partners, has
substantial influence over their operations. These limited
partnerships are as follows:
<PAGE>
NOTE 1 - (CONTINUED)
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.
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
straightline method. Useful lives range from 12 years for
furniture and fixtures to 20 - 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.
MARKETABLE SECURITIES - The Trust's investments in securities are
classified as securities "held-to-maturity" and securities "available-
for-sale". The securities classified as held-to-maturity 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
<PAGE>
NOTE 1 - (CONTINUED)
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.
The securities classified as "available-for-sale" consist of equity
shares in other real estate investment trusts and are stated at fair
value. Unrealized gains and losses on securities available-for-sale
are recognized as direct increases or decreases in shareholders'
equity. Cost of securities sold are recognized on the basis of
specific identification.
INVESTMENT IN PARTNERSHIP - 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 Operating Partnership has a general
partnership interest in the limited partnership. Chateau
Properties, Ltd. has invested in real estate properties.
MINORITY INTEREST - Capital contributions, distributions and profits
and losses are allocated to minority interests in accordance with
the terms of the operating partnership agreement.
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.
UPREIT status allows non-recognition of gain by an owner of
appreciated real estate if that owner contributes the real estate
to a partnership in exchange for a partnership interest. The
UPREIT concept was born when the non-recognition provisions of
Section 721 of the Internal Revenue Code were combined with
"Exchange Rights" which allow the contributing partner to exchange
the limited partnership interest received in exchange for the
appreciated real estate for the Trust stock. Upon conversion of
the partnership units to Trust shares, a taxable event occurs for
that limited partner. Income or loss of the operating partnership
shall be allocated among its partners in compliance with the
provisions of Internal Revenue Code Sections 701 (b) and 704 (c).
<PAGE>
NOTE 1 - (CONTINUED)
REVENUE RECOGNITION - Residential rental properties are leased
under operating leases with terms generally of one year or less.
Commercial properties are leased to tenants for various terms
exceeding one year. 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. Rental income is recognized as it is earned,
which is not materially different than on a straight-line basis.
Profit on sales of real estate 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 was not reasonably assured as required
by generally accepted accounting principles. 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 as discussed in Note 4.
INTEREST CAPITALIZATION - Interest is capitalized on accumulated
expenditures relating to the acquisition and development of certain
qualifying properties.
RECLASSIFICATIONS - Certain previously reported amounts have been
reclassified to conform with the current financial statement
presentation.
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 $31,658 and $335,999, respectively, at
April 30, 1997.
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:
<PAGE>
NOTE 3 - (CONTINUED)
<TABLE>
April 30, 1997 April 30, 1996
-------------- --------------
<S> <C> <C>
Residential $ 149,643,413 $ 96,029,855
Less accumulated
depreciation (11,845,692) (9,620,990)
------------- --------------
$ 137,797,721 $ 86,408,865
------------- --------------
Commercial $ 42,241,096 $ 35,417,879
Less accumulated
depreciation (5,102,464) (3,930,581)
------------- --------------
$ 37,138,632 $ 31,487,298
============= ==============
Remaining cost $ 174,936,353 $ 117,896,163
============= ==============
</TABLE>
There were no repossessions during the years ended April 30, 1997
and 1996.
The above cost of residential real estate owned included
construction in progress of $2,482,849 and $12,544,357 as of April
30, 1997 and 1996, respectively.
Construction period interest of $269,513 has been capitalized for
the year ended April 30, 1997. Construction period interest of
$690,665 was capitalized for the year ended April 30, 1996.
Residential apartment units are rented to individual tenants with
lease terms up to one year. Gross revenues from residential
rentals totaled $18,935,111, $12,286,492 and $9,076,477 for the
years ended April 30, 1997, 1996 and 1995, respectively.
Gross revenues from commercial property rentals totaled
$4,037,258, $5,348,805, and $3,204,261 for the years ended April
30, 1997, 1996, and 1995, respectively. Commercial properties are
leased to tenants under terms of leases expiring at various dates
through 2015. Lease terms often include renewal options. In
addition, a number of the commercial leases provide for a base
rent plus a percentage rent based on gross sales in excess of a
stipulated amount. Rents based on a percentage of sales totaled
$16,517, $25,054 and $16,586 for the years ended April 30, 1997, 1996
and 1995, respectively.
The future minimum lease payments to be received under these
operating leases for the commercial properties as of April 30,
1997, are as follows:
Year ending April 30,
1998 $ 3,915,469
1999 3,837,598
2000 3,639,671
2001 3,601,838
2002 3,486,406
Thereafter 25,631,642
------------
$ 44,112,624
============
<PAGE>
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, 1997 are as follows:
Year ending April 30,
1998 $ 1,513,357
1999 192,186
2000 298,323
2001 84,946
2002 91,647
Later years 928,474
------------
$ 3,108,933
============
Details concerning mortgage loans receivable from related parties
can be found in Note 9.
Non-performing mortgage loans receivable were $174,911 at April 30,
1997 and $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 $30,000 and
$151,800, respectively. The average balance of impaired loans for
the year ended April 30, 1997 was approximately $276,000. 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 nonperforming amounted to approximately $33,000 in 1997 and
$31,600 in 1996. Interest income on non-performing loans recognized
on a cash basis amounted to approximately $-0- in 1997 and $18,600
in 1996.
NOTE 5 - MARKETABLE SECURITIES
The amortized cost and estimated market values of
marketable securities held-to-maturity at April 30, 1997
and 1996 are as follows:
<PAGE>
NOTE 5 - (CONTINUED)
<TABLE>
<CAPTION>
1997
---- Gross Gross
Amortized Unrealized Unrealized Fair
Issuer Cost Gains Losses Value
------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
GNMA $ 4,055,459 $ - $ 166,031 $ 3,889,428
=========== =========== =========== ===========
1996
----
GNMA $ 4,411,857 $ - $ 129,412 $ 4,282,445
=========== =========== =========== ===========
The amortized cost and estimated market values of marketable
securities available-for-sale at April 30, 1997 and 1996 are as
follows:
1997
---- Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
Equity shares in
other REIT's $ 596,961 $ 90,015 $ 3,510 $ 683,466
=========== =========== =========== ===========
1996
----
Equity shares in
other REIT's $ - $ - $ - $ -
=========== =========== =========== ===========
</TABLE>
There were no realized gains or losses on sales of securities for
the years ended April 30, 1997, 1996 and 1995.
Marketable securities held-to-maturity 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 following is a summary of the maturities of
securities held-to-maturity at April 30, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------------------------ ------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Due after 10 years $ 4,055,459 $ 3,889,428 $ 4,411,857 $ 4,282,445
=========== =========== =========== ===========
NOTE 6 - MORTGAGES PAYABLE
Mortgages payable as of April 30, 1997, included mortgages on
properties owned totaling $115,608,689, and mortgages of $126,257 on
property sold on contract. The carrying value of the related real
estate owned was $165,399,893 and the carrying value of the related
mortgage loans receivable was $353,480 as of April 30, 1997.
<PAGE>
NOTE 6 - (CONTINUED)
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.
Monthly installments are due on the mortgages with interest rates
ranging from 7.13% to 10.00% and with varying maturity dates through
November 30, 2034.
The aggregate amount of required future principal payments on
mortgages payable is as follows:
Years ending April 30,
1998 $ 2,763,852
1999 2,953,508
2000 6,115,493
2001 3,258,957
2002 3,520,246
Later years 97,122,890
------------
Total payments $115,734,946
============
As of April 30, 1997, the Trust had lines of credit available
from two financial institutions. An unsecured line of credit was
issued form First Western Bank & Trust on September 6, 1996, in
the amount of $2,000,000 carrying an interest rate equal to prime
and maturing September 1, 1997. A second unsecured line of
credit from First International Bank & Trust was issued September
12, 1996, in the amount of $2,500,000 carrying an interest rate
equal to prime and maturing September 12, 1997. Interest
payments are due monthly on both notes. As of April 30, 1997,
the Trust had no upaid balances on either line of credit.
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.
Due in years ending April 30
1998 $ 4,454,245
1999 837,611
2000 1,502,516
2001 92,082
2002 849,792
Thereafter 451,059
-----------
$ 8,187,305
===========
<PAGE>
NOTE 8 - DEFERRED GAIN FROM PROPERTY DISPOSITIONS
Deferred gain represents gain from property dispositions that
have been reported on the installment method. With the installment
method of reporting, the proportionate share of the gain is recognized
at the point cash is received. Deferred gain recognized on the
installment basis was $146,361, $476,913, and $19,917 for the years
ended April 30, 1997, 1996 and 1995, 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, 1997, Odell-Wentz &
Associates received total fees under said agreement of $489,533.
The fees for April 30, 1996 were $484,086, and for April 30, 1995
were $339,128.
For the years ended April 30, 1997, 1996 and 1995, the Trust has
capitalized $177,834, $115,993 and $49,323, respectively, of these
fees, with the remainder of $311,699, $368,093 and $289,805,
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 $408,904, $281,717 and $212,018 for services
rendered for years ended April 30, 1997, 1996 and 1995,
respectively.
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 $291,143 for the year ended
April 30, 1997, $269,656 for the year ended April 30, 1995, and
$272,615 for the year ended April 30, 1995.
The Trust paid fees and expense reimbursements to the law firm in
which Thomas A. Wentz, Sr. is a partner totaling $36,045, $23,488
and $4,890 for the years ended April 30, 1997, 1996 and 1995,
respectively.
Investment certificates issued by the Trust to officers and
trustees totaled $519,528 at April 30, 1997 and $1,258,133 at April
30, 1996.
<PAGE>
NOTE 10 - MARKET PRICE RANGE OF SHARES
Investors Real Estate Trust shares are traded on the Over-The-
Counter-Market. The price range is as follows:
Bid Ask
-------------- --------------
Low High Low High
1995 $ 5.49 $ 5.89 $ 6.10 $ 6.40
1996 5.89 6.30 6.40 6.85
1997 6.44 6.62 7.00 7.20
NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate 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 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:
<PAGE>
NOTE 11 - (CONTINUED)
</TABLE>
<TABLE>
<CAPTION>
1997 1996
------------------------ -------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------------------ -------------------------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Mortgage loan
receivable $ 3,108,933 $ 3,108,933 $ 4,932,138 $ 4,949,278
Cash 1,718,257 1,718,257 2,715,274 2,715,274
Marketable securities
held-to-maturity 4,055,459 3,889,428 4,411,857 4,282,445
Marketable securities
available-for-sale 683,466 683,466 - -
FINANCIAL LIABILITIES
Mortgages payable $115,734,946 $113,007,861 $ 71,699,059 $ 70,694,035
Investment certificates
issued 8,187,305 8,136,971 5,802,469 5,692,317
Accrued interest
payable 1,012,193 1,012,193 656,080 656,080
</TABLE>
<PAGE>
ADDITIONAL INFORMATION
<PAGE>
INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION
Board of Trustees
Investors Real Estate Trust
and Subsidiaries
Minot, North Dakota
Our report on our audit of the basic consolidated financial statements of
Investors Real Estate Trust and Subsidiaries for the years ended April 30,
1997, 1996 and 1995, 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 19 through 35 related to the
1997, 1996 and 1995 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 35 that is marked "unaudited" on which we express no opinion, has
been subjected to the auditing procedures applied in the audits of the basic
consolidated financial statements, and, in our opinion, the information is
fairly stated in all material respects in relation to the basic consolidated
financial statements for the years ended April 30, 1997, 1996 and 1995,
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, 1994, and 1993, and the
related consolidated statements of operations, shareholders' equity, and
cash flows for each of the two years ended April 30, 1994 and 1993, none of
which is presented herein, and we expressed unqualified opinions on those
consolidated financial statements. In our opinion, the information on page
30 relating to the 1994 and 1993 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 23, 1997
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
APRIL 30, 1997 AND 1996
Schedule I
MARKETABLE SECURITIES
April 30, 1997 April 30, 1996
---------------------- ----------------------
Principal Principal
Amount Market Amount Market
---------- ---------- ---------- ----------
GNMA Pools $4,055,459 $3,889,428 $4,411,857 $4,282,445
========== ========== ========== ==========
Cost Market Cost Market
---------- ---------- ---------- ----------
Equity shares in
other REIT's $ 596,961 $ 683,466 $ - $ -
========== ========== ========== ==========
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
APRIL 30, 1997 AND 1996
Schedule IV
NONCURRENT INDEBTEDNESS OF RELATED PARTIES
MORTGAGE LOANS RECEIVABLE
<TABLE>
<CAPTION>
Beginning Ending
Balance Additions Deductions Balance
----------- ----------- ----------- ----------
Year ended April 30, 1996
<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 $ -
</TABLE>
There were no balances outstanding during the year ended April 30, 1997.
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
FOR THE YEARS ENDED APRIL 30, 1997, 1996 AND 1995
Schedule X
SUPPLEMENTAL INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
Charged to Costs and Expenses
---------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Item
Maintenance and repairs $ 1,812,496 $ 1,702,365 $ 1,338,236
Taxes, other than payroll and
income taxes
Property taxes 2,515,631 1,873,720 1,078,712
Royalties * * *
Advertising costs * * *
</TABLE>
* Less than 1 percent of total revenues
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
APRIL 30, 1997
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
COST CAPITALIZATION SUBSEQUENT
INITIAL COST TO TRUST TO ACQUISITION
----------------------------------------------------------
BUILDING & CARRYING
ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COSTS
------------ ---- ------------ ------------ -----
<S> <C> <C> <C> <C> <C>
APARTMENTS
1112 32nd Ave. SW $ 395,737 $ 50,000 $ 543,147 $ 1,953 $ 871,021
1305 Birch St., Marshall, MN 116,968 35,000 275,000 92,791 0
177 10th Ave E, Dickinson 230,341 40,000 318,109 13,868 0
312 12th Ave NW, Mandan, ND 29,892 20,000 236,750 5,062 0
405 Grant Ave, Harvey, ND 0 13,584 157,211 47,404 0
4301-4313 9th Ave SW, Fargo 506,456 52,870 908,727 45,282 0
Beulah Condos, ND 0 6,360 336,589 85,686 0
Bison Properties 114,153 100,210 1,348,127 131,288 0
Candlelight Apts, Fargo, ND 519,133 80,040 757,977 12,306 0
Century Apts, Dickinson 1,559,661 100,000 1,564,598 152,344 0
Century Apts, Williston, ND 2,640,305 200,000 3,166,750 293,732 0
Circle Fifty, Billings, MT 0 491,247 1,456,757 0 63,098
Colton Heights Properties 361,356 80,000 734,286 2,754 0
Columbia Park Phase II, GF 0 661,855 14,981 0 0
Cottonwood Lake, Bismarck 0 1,055,862 0 0 0
Crestview Apts, Bismarck 2,748,588 235,000 4,290,031 118,170 0
Eastgate Properties 0 23,917 1,490,181 231,974 0
Forest Park Estates, G Forks 4,127,732 810,000 5,579,164 394,384 0
Hill Park Properties 1,437,430 224,750 2,562,296 36,302 0
Jenner Prop. - UPREIT 0 0 5,400 0 0
Legacy Apts, Grand Forks 3,986,207 700,000 6,021,189 47,636 177,986
Miramont Apts, Ft. Collins, CO 11,566,494 1,470,000 12,765,460 0 0
Neighborhood Apt, Co Springs, CO 7,501,027 1,033,592 9,811,600 4,369 0
North Pointe 49, Bismarck 1,345,937 143,500 2,120,413 9,161 123,687
Oak Manor Apts, Dickinson 234,590 25,000 225,000 40,726 0
Oakwood Estates, S Falls, SD 2,200,254 342,800 2,783,950 275,469 0
Oxbow 120 Units, Sioux Falls 3,486,180 404,072 4,494,441 55,940 0
Park Meadows, Waite Park, MN 8,025,780 1,143,450 9,099,297 0 0
Park Place, Waseca, MN 0 40,000 634,737 136,083 0
Parkway Apts, Beulah, ND 0 7,000 40,738 45,992 0
Pine Cone Apts, Ft. Collins 10,591,870 904,545 12,167,093 7,946 0
Pointe West Apts, Minot 2,284,864 240,000 3,537,775 46,620 0
Prairie Winds Apts, S Falls 1,363,526 144,097 1,816,011 8,169 0
Rocky Meadows 96, Billings 2,950,765 655,985 5,588,113 34,518 103,378
Rosewood/Oakwood, S Falls 1,306,291 200,000 1,738,245 0 0
Scottsbluff, NE 0 60,000 570,000 77,592 0
South Pointe Phase I, Minot 2,711,007 275,000 4,252,511 17,098 279,140
South Pointe Phase II, Minot 2,937,082 275,000 4,898,464 17,099 123,732
Southview Apts, Minot 0 185,000 468,585 15,164 0
Southwind Apts, Grand Forks 3,589,435 400,000 5,033,683 96,531 0
Sweetwater Properties 224,267 90,767 1,208,847 281,152 0
Virginia Apts, Minot 0 37,600 163,036 18,729 0
West Stonehill, St Cloud, MN 8,119,358 939,000 10,167,355 123,274 0
Woodridge Apts, Rochester 4,379,282 370,000 6,028,096 0 0
------------ ------------ ------------ ------------ -----------
$ 93,591,968 $ 14,367,103 $131,380,720 $ 3,024,569 $ 871,021
============ ============ ============ ============ ===========
<PAGE>
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
COST CAPITALIZATION SUBSEQUENT
INITIAL COST TO TRUST TO ACQUISITION
----------------------------------------------------------
BUILDING & CARRYING
ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COSTS
------------ ---- ------------ ------------ -----
OFFICE BUILDINGS
1st Avenue Building $ 0 $ 30,000 $ 219,496 $ 546,452 $ 0
401 South Main 0 70,600 334,308 70,341 0
408 1st Street SE, Minot 0 10,000 34,836 2,037 0
Creekside Office Bldg, Billings 912,165 311,310 1,088,149 199,871 0
Lester Chiropractic Clinic 0 25,000 243,917 0 0
Walters 214 So. Main, Minot 10,086 27,055 76,076 7,918 0
------------ ------------ ------------ ------------ -----------
$ 922,251 $ 473,965 $ 1,996,782 $ 826,619 $ 0
------------ ------------ ------------ ------------ -----------
COMMERCIAL
Arrowhead Shopping Center $ 0 $ 100,359 $ 1,063,925 $ 1,273,998 $ 0
Barnes & Noble, Fargo 2,229,880 540,000 2,752,012 0 0
Barnes & Noble, Omaha, NE 2,415,703 600,000 3,099,101 0 0
Carmike Theatre, Grand Forks 1,676,716 183,515 2,292,653 2,501 67,068
Computer City, Kentwood, MI 1,534,724 225,000 1,888,574 0 0
Edgewood Vista, Missoula, MT 647,500 108,900 853,528 0 0
Hutchinson Tech, S Falls, SD 2,349,413 244,800 4,029,426 154,800 0
Lindberg Bldg, Eden Prairie 813,700 198,000 1,154,404 103,385 0
Minot Plaza, Minot, ND 0 50,000 452,898 2,339 0
Pet Food Warehouse, Fargo 802,327 324,148 900,325 27,216 27,245
Pioneer Seed, Moorhead, MN 326,808 56,925 548,075 48,876 0
Retail Warehouse, Boise, ID 3,577,824 765,000 4,874,576 0 0
Stone Container, Fargo 3,153,155 440,251 4,409,079 59,999 89,156
Superpumper, Bottineau, ND 0 15,000 186,013 100,000 0
Superpumper, Crookston, MN 0 13,125 214,513 201,500 0
Superpumper, Emerado, ND 0 25,000 225,564 46,500 0
Superpumper, Grand Forks, ND 0 80,000 405,007 0 0
Superpumper, Langdon, ND 0 59,674 151,500 28,038 0
Superpumper, New Town, ND 0 69,900 180,100 0 0
Superpumper, Sidney, MT 0 12,000 108,600 0 0
Wedgewood, Sweetwater, GA 1,566,720 334,346 2,475,654 0 0
------------ ------------ ------------ ------------ -----------
$ 21,094,470 $ 4,445,943 $ 32,265,167 $ 2,049,151 $ 183,469
------------ ------------ ------------ ------------ -----------
TOTALS $115,608,689 $ 19,287,011 $165,642,669 $ 5,900,339 $ 1,054,490
============ ============ ============ ============ ===========
</TABLE>
<PAGE>
Schedule XI (Continued)
<TABLE>
<CAPTION>
LIFE ON WHICH
BUILDINGS LATEST INCOME
AND ACCUMULATED DATE STATEMENT
LAND IMPROVEMENTS TOTAL DEPRECIATION ACQUIRED IS COMPUTED
---- ------------ ----- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
APARTMENTS
1112 32nd Ave. SW $ 50,000 $ 545,100 $ 595,100 $ 20,412 1996 12-40 years
1305 Birch St., Marshall, MN 35,360 367,431 402,791 67,353 1988 12-40 years
177 10th Ave E, Dickinson 40,278 331,699 371,977 60,338 1989 12-40 years
312 12th Ave NW, Mandan, ND 20,000 241,812 261,812 44,521 1989 12-40 years
405 Grant Ave, Harvey, ND 14,674 203,525 218,199 26,092 1991 12-40 years
4301-4313 9th Ave SW, Fargo 68,868 938,011 1,006,879 203,842 1988 12-40 years
Beulah Condos, ND 78,339 350,296 428,635 291,695 1983 12-40 years
Bison Properties 100,210 1,479,416 1,579,626 1,076,049 1972 25-40 years
Candlelight Apts, Fargo, ND 80,040 770,283 850,323 85,625 1993 12-40 years
Century Apts, Dickinson 126,738 1,690,204 1,816,942 497,446 1986 12-40 years
Century Apts, Williston, ND 274,971 3,385,511 3,660,482 1,059,727 1986 12-40 years
Circle Fifty, Billings, MT 491,247 1,519,855 2,011,102 0 1996 40 years
Colton Heights Properties 80,095 736,945 817,040 320,817 1984 33-40 years
Columbia Park Phase II, GF 676,836 0 676,836 0 1996 40 years
Cottonwood Lake, Bismarck 1,055,862 0 1,055,862 0 1997 40 years
Crestview Apts, Bismarck 235,000 4,408,201 4,643,201 378,360 1994 12-40 years
Eastgate Properties 28,639 1,717,433 1,746,072 1,265,208 1970 33-40 years
Forest Park Estates, G Forks 811,954 5,971,595 6,783,548 644,490 1993 12-40 years
Hill Park Properties 245,653 2,577,695 2,823,348 1,055,567 1985 33-40 years
Jenner Prop. - UPREIT 0 5,400 5,400 0 1996 40 years
Legacy Apts, Grand Forks 700,000 6,246,811 6,946,811 78,276 1996 40 years
Miramont Apts, Ft. Collins, CO 1,470,000 12,765,460 14,235,460 159,568 1996 40 years
Neighborhood Apt, Co Sprgs, CO 1,033,592 9,815,969 10,849,561 122,700 1996 40 years
North Pointe 49, Bismarck 143,500 2,253,261 2,396,761 82,734 1995 12-40 years
Oak Manor Apts, Dickinson 29,012 261,714 290,726 47,606 1989 12-40 years
Oakwood Estates, S Falls, SD 342,800 3,059,419 3,402,219 329,988 1993 12-40 years
Oxbow 120 Units, Sioux Falls 404,072 4,550,381 4,954,453 282,784 1994 12-40 years
Park Meadows, Waite Park, MN 1,143,450 9,099,297 10,242,747 113,741 1997 40 years
Park Place, Waseca, MN 40,000 770,820 810,820 268,803 1988 12-40 years
Parkway Apts, Beulah, ND 11,816 81,914 93,730 10,673 1988 12-40 years
Pine Cone Apts, Ft. Collins 904,545 12,175,039 13,079,584 608,454 1994 40 years
Pointe West Apts, Minot 240,000 3,584,395 3,824,395 311,075 1994 12-40 years
Prairie Winds Apts, S Falls 144,097 1,824,179 1,968,277 204,428 1993 12-40 years
Rocky Meadows 96, Billings 655,984 5,726,009 6,381,994 71,575 1996 40 years
Rosewood/Oakwood, S Falls 200,000 1,738,246 1,938,246 21,728 1996 40 years
Scottsbluff, NE 60,000 647,592 707,592 134,553 1988 40 years
South Pointe Phase I, Minot 275,000 4,548,749 4,823,749 166,362 1995 12-40 years
South Pointe Phase II, Minot 275,000 5,039,295 5,314,295 62,991 1996 40 years
Southview Apts, Minot 185,000 483,749 668,749 31,818 1994 12-40 years
Southwind Apts, Grand Forks 409,892 5,120,322 5,530,214 190,097 1996 12-40 years
Sweetwater Properties 94,270 1,486,496 1,580,766 931,837 1972 33-40 years
Virginia Apts, Minot 37,600 181,765 219,365 58,191 1987 12-40 years
West Stonehill, St Cloud, MN 939,000 10,290,629 11,229,629 382,817 1995 40 years
Woodridge Apts, Rochester 370,000 6,028,095 6,398,095 75,351 1996 40 years
------------ ------------ ------------ -----------
$ 14,623,394 $135,020,019 $149,643,413 $11,845,692
------------ ------------ ------------ -----------
</TABLE>
<PAGE>
Schedule XI (Continued)
<TABLE>
<CAPTION>
LIFE ON WHICH
BUILDINGS LATEST INCOME
AND ACCUMULATED DATE STATEMENT
LAND IMPROVEMENTS TOTAL DEPRECIATION ACQUIRED IS COMPUTED
---- ------------ ----- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
OFFICE BUILDINGS
1st Avemue Building $ 67,710 $ 728,238 $ 795,948 $ 296,575 1981 20-40 years
401 South Main, Minot 70,722 404,527 475,249 114,020 1987 12-40 years
408 1st Street SE, Minot 10,016 36,858 46,873 20,140 1986 12-40 years
Creekside Office Bldg, Billings 311,310 1,288,020 1,599,330 162,195 1992 40 years
Lester Chiropractic Clinic 25,000 243,916 268,917 52,010 1988 40 years
Walters 214 So Main, Minot 27,829 83,220 111,049 72,240 1978 12-40 years
------------ ------------ ------------ -----------
$ 512,587 $ 2,784,779 $ 3,297,366 $ 717,180
------------ ------------ ------------ -----------
COMMERCIAL
Arrowhead Shopping Center $ 100,411 $ 2,337,870 $ 2,438,282 $ 2,067,593 1973 15 1/2-40 years
Barnes & Noble, Fargo 540,000 2,752,012 3,292,012 172,001 1994 40 years
Barnes & Noble, Omaha, NE 600,000 3,099,101 3,699,101 116,216 1995 40 years
Carmike Theatre, Grand Forks 183,516 2,362,221 2,545,737 147,576 1994 40 years
Computer City, Kentwood, MI 225,000 1,888,574 2,113,574 23,607 1996 40 years
Edgewood vista, Missoula, MT 108,900 853,528 962,428 10,669 1997 40 years
Hutchinson Tech, S Falls, SD 244,800 4,184,226 4,429,026 463,012 1993 40 years
Lindberg Bldg, Eden Prairie 198,000 1,257,789 1,455,789 163,558 1992 40 years
Minot Plaza, Minot, ND 50,000 455,237 505,237 50,980 1993 40 years
Pet Food Warehouse, Fargo 324,148 954,786 1,278,934 58,940 1994 40 years
Pioneer Seed, Moorhead, MN 56,925 596,951 653,876 77,259 1992 40 years
Retail Warehouse, Boise, ID 765,000 4,874,576 5,639,576 426,525 1994 40 years
Stone Container, Fargo 440,251 4,558,235 4,998,485 168,319 1995 40 years
Superpumper, Bottineau, ND 15,000 286,013 301,013 50,421 1989 40 years
Superpumper, Crookston, MN 13,125 415,652 428,777 69,465 1988 40 years
Superpumper, Emerado, ND 25,000 272,064 297,064 134,362 1986 19-40 years
Superpumper, Grand Forks, ND 80,000 405,007 485,007 65,814 1991 40 years
Superpumper, Langdon, ND 59,674 179,538 239,212 51,040 1987 31 1/2-40 years
Superpumper, New Town, ND 69,900 180,100 250,000 24,764 1992 40 years
Superpumper, Sidney, MT 12,000 108,600 120,600 12,217 1993 40 years
Wedgewood, Sweetwater, GA 334,346 2,475,654 2,810,000 30,946 1996 40 years
------------ ------------ ------------ -----------
$ 4,445,996 $ 34,497,734 $ 38,943,730 $ 4,385,284
------------ ------------ ------------ -----------
TOTALS $ 19,581,977 $172,298,162 $191,884,509 $16,948,156
============ ============ ============ ===========
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
Schedule XI (Continued)
Reconciliations of total real estate carrying value for the three years ended
April 30, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of year $131,447,734 $ 90,892,662 $ 63,861,793
Additions during year
- acquisitions 59,377,674 40,660,975 27,371,289
- improvements 1,463,878 635,791 344,255
------------ ------------ ------------
$192,289,286 $132,189,428 $ 91,577,337
Deductions during year
- cost of real estate sold (404,777) (741,694) (684,675)
------------ ------------ ------------
Balance at close of year $191,884,509 $131,447,734 $ 90,892,662
============ ============ ============
Reconciliations of accumulated depreciation for the three years ended April
30, 1997, 1996 and 1995 are as follows:
1997 1996 1995
------------ ------------ ------------
Balance at beginning of year $ 13,551,571 $ 11,732,655 $ 10,097,374
Additions during year
- provisions for depreciation 3,584,591 2,261,724 1,767,294
Deduction during year
- accumulated depreciation
on real estate sold (188,006) (442,808) (132,013)
------------ ------------ ------------
Balance at close of year $ 16,948,156 $ 13,551,571 $ 11,732,655
============ ============ ============
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
APRIL 30, 1996
Schedule XII
INVESTMENTS IN MORTGAGE LOANS ON REAL ESTATE
<TABLE>
<CAPTION>
Principal Amount
Final Face Carrying of Loans Subject to
Interest Maturity Payment Prior Amounts of Amounts of Delinquent Principal
Rate Date Terms Liens Mortgages Mortgages or Interest
---- ---- ----- ----- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
RESIDENTIAL
Billings, MT - 144 units 9% 9-1-98 Monthly - $ 1,500,000 $ 193,657 $ -
Higley Heights, Phoenix, AZ 8% 3-31-04 Monthly - 809,786 669,048 -
Sweetwater Springs Balloon
Retirement Center 9% 7-1-97 Payment - 1,540,239 983,737 -
Melanie Bentsinger 8% 6-1-25 Monthly - 217,761 214,162 -
Rolland Hausman 9% 2-1-16 Monthly - 315,659 308,710 -
Other - over $100,000 9-12% 5-1-97 to
8-1-07 Monthly - 2,336,446 439,993 102,696
- from $50,000-99,999 14% 5-31-97 Monthly - 1,550,000 78,471 -
- from $20,000-49,999 8-9% 9-1-97 to
5-1-00 Monthly - 1,295,396 215,849 -
- less than $20,000 7% 3-1-02 Monthly - 16,500 5,306 -
----------- ----------- ---------
Total $ 9,581,787 $ 3,108,933 $ 102,696
=========== =========== =========
Less - Unearned discounts (10,524)
- Deferred gain from property dispositions (18,713)
- Allowance for loan losses (124,881)
-----------
$ 2,954,815
===========
</TABLE>
<PAGE>
Schedule XII (Continued)
1997 1996
----------- -----------
MORTGAGE LOANS RECEIVABLE,
BEGINNING OF YEAR $ 4,932,138 $ 5,815,772
New participations in and
advances on mortgage loans 2,835,212 1,790,070
----------- -----------
$ 7,767,350 $ 7,605,842
Collections (4,516,202) (2,647,434)
Write-off through allowance (142,215) (26,270)
----------- -----------
MORTGAGE LOANS RECEIVABLE,
END OF YEAR $ 3,108,933 $ 4,932,138
=========== ===========
<PAGE
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended April 30
--------------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Consolidated Income Statement Data
Revenue $ 23,833,982 $ 18,659,665 $ 13,801,123 $ 11,583,008 $ 8,048,916
Operating income 3,499,443 3,617,807 3,560,318 3,135,426 2,222,313
Gain on repossession/
sale of investments 398,424 994,163 407,512 64,962 145,165
Minority interest of
portion of operating
partnership income (18) - - - -
Net income 3,897,849 4,611,970 3,967,830 3,200,388 2,367,478
Consolidated Balance Sheet Data
Total real estate
investments $177,891,168 $122,377,909 $ 84,005,635 $ 63,972,042 $ 49,492,380
Total assets 186,993,943 131,355,638 94,616,744 72,391,548 54,248,011
Shareholders' equity 59,997,619 50,711,920 37,835,654 29,997,189 23,347,449
Consolidated Per Share Data
Operating income $ .25 $ .30 $ .34 $ .35 $ .28
Gain on sale of
investments .03 .08 .04 .01 .01
Dividends .39 .37 .34 .33 .31
Tax status of dividend
Capital gain 21.0% 1.6% 11.0% 7.4% 4.1%
Ordinary income 79.0% 98.4% 89.0% 92.6% 74.0%
Return of capital 0.0% 0.0% 0.0% 0.0% 21.9%
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND AFFILIATED PARTNERSHIPS
APRIL 30, 1997, 1996 AND 1995
GAIN FROM PROPERTY DISPOSITIONS
<TABLE>
<CAPTION>
Total
Original Unrealized Realized Realized Realized
Property Gain 4/30/97 4/30/97 4/30/96 4/30/95
- -------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Brooklyn Addition * $ 25,000 $ 3,000 $ 1,000 $ 1,000 $ 1,000
1411 South 20th * 34,696 - - 1,177 3,292
1302 South 19 1/2 * 87,669 15,713 6,732 6,215 5,739
600 Maple * 60,025 - - 41,253 859
406 17th Street-
Mandan * 233,522 - 138,629 5,143 4,609
Chateau* 684,914 - - 422,125 4,418
419 and 404-Minot 82,053 - - - 82,053
Yankton, SD 305,542 - - - 305,542
108 4th Avenue SE-
Minot 173,244 - - 173,244 -
Mobridge, SD 293,035 - - 293,035 -
Lantern Court 50,971 - - 50,971 -
Hutchinson, MN 252,063 - 252,063 - -
-------- -------- -------- -------- --------
$ 18,713 $398,424 $994,163 $407,512
======== ======== ======== ========
</TABLE>
* The gain from the sale of these properties is being realized
based on the installment method. The amount of deferred gain
realized was $146,361, $476,913 and $19,917 for the years ended
April 30, 1997, 1996 and 1995, respectively.
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
APRIL 30, 1997
MORTGAGE LOANS PAYABLE
<TABLE>
<CAPTION>
Final Periodic Carrying Delinquent
Interest Maturity Payment Face Amount Amount of Principal or
Rate Date Terms of Mortgage Mortgage Interest
---- ---- ----- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1112 32nd Ave. SW, Minot, ND 8.50% 07/20/2010 Monthly $ 425,000 $ 395,737 $0
177 10th Ave. E, Dickinson, ND 8.375% 11/01/2018 Monthly 250,963 230,341 0
214 South Main 9.00% 05/01/98 Monthly 45,000 10,086 0
4301 9th Ave, Sunchase I 8.65% 09/01/2002 Monthly 364,765 187,090 0
4313 9th Ave, Sunchase II 8.069% 02/01/2014 Monthly 370,000 319,365 0
Barnes & Noble Stores 7.98% 11/01/2010 Monthly 4,900,000 4,645,582 0
Candlelight Apts 8.50% 12/01/99 Monthly 578,000 519,133 0
Carmike - Grand Forks 8.65% 06/05/2014 Monthly 1,750,000 1,676,716 0
Century Apts - Dickinson 7.9125% 03/01/2006 Monthly 1,595,000 1,559,661 0
Century Apts - Williston 7.9125% 03/01/2006 Monthly 2,700,000 2,640,305 0
Creekside - Billings 8.35% 05/01/2013 Monthly 1,023,750 912,165 0
Crestview Apts - Bismarck 8.38% 01/01/2004 Monthly 3,150,000 2,748,588 0
Computer City 7.75% 02/01/2001 Monthly 1,565,361 1,534,724 0
Edgewood Vista - Missoula 9.75% 4/15/2012 Monthly 647,500 647,500 0
Fairfield - Marshall 9.00% 01/01/98 Monthly 275,000 116,968 0
Forest Park Estates IDS 7.625% 05/01/2003 Monthly 4,500,000 4,127,732 0
Hutchinson Technology 8.75% 08/01/2008 Monthly 2,800,000 2,349,413 0
Legacy Apts - Grand Forks 7.773% 01/01/2004 Monthly 4,000,000 3,986,207 0
Lindberg Bldg, Eden Prairie 8.75% 12/01/2008 Monthly 950,000 813,700 0
Mandan Apts - 312 12th 8.75% 08/01/99 Monthly 134,767 29,892 0
Miramont Apts 8.25% 08/01/2036 Monthly 11,582,472 11,566,494 0
Neighborhood Apts - Rochester 7.98% 12/20/2006 Monthly 7,525,000 7,501,027 0
North Pointe - Bismarck 49 8.05% 08/01/2015 Monthly 1,400,000 1,345,937 0
Oak Manor Apts 27 Plex-Dickinson 8.75% 02/01/99 Monthly 250,000 234,590 0
Oakwood Estates Sioux Falls 7.9125% 03/01/2006 Monthly 2,250,000 2,200,254 0
Oxbow Sioux Falls 7.9125% 03/01/2006 Monthly 3,565,000 3,486,180 0
Park Meadows Phase I 8.25% 01/10/2007 Monthly 2,600,000 2,586,527 0
Park Meadows Phase II 7.8990% 01/10/2007 Monthly 2,214,851 2,204,254 0
Park Meadows Phase III 3.84% 30 yr bond Monthly 3,235,000 3,235,000 0
Pet Food Warehouse 8.50% 12/01/2010 Monthly 840,000 802,327 0
Pinecone Ft Collins 7.125% 12/01/2034 Monthly 10,685,215 10,591,870 0
Pioneer Building - Fargo 8.375% 12/01/2006 Monthly 425,000 326,808 0
Pointe West Apts 8.34% 01/01/2004 Monthly 2,625,000 2,284,864 0
Prairie Winds Apts - Sioux Falls 7.76% 05/01/2018 Monthly 1,470,000 1,363,526 0
Rocky Meadows - Billings 8.00% 08/01/2016 Monthly 3,000,000 2,950,765 0
RoseWood Ct - Sioux Falls 7.60% 09/01/96 Monthly 1,323,000 1,306,291 0
Smith's Home Furnishings 9.75% 03/29/2003 Monthly 3,750,000 3,577,824 0
South Pointe - Phase II 8.58% 06/05/2016 Monthly 3,000,000 2,937,082 0
South Pointe - Minot 98 8.14% 09/01/2015 Monthly 2,800,000 2,711,007 0
Southwind Apts 8.74% 04/28/2010 Monthly 3,780,000 3,589,435 0
Stone Container 8.25% 12/01/2010 Monthly 3,300,000 3,153,155 0
Wedgewood Retirement 8.38% 04/23/2017 Monthly 1,566,720 1,566,720 0
West Stonehill 9.21% 02/01/98 Monthly 8,232,569 8,119,358 0
Woodridge - Rochester 7.85% 12/01/2016 Monthly 4,410,000 4,379,282 0
Colton Heights 8.75% 06/01/2007 Monthly 730,000 361,356 0
Colton Heights 9.00% 09/01/97 Monthly 437,232 25,689 0
Grafton 24 Plex 9.75% 03/20/2003 Monthly 270,000 94,874 0
Grafton 18 Plex 9.75% 03/20/2003 Monthly 198,000 129,393 0
Hill Park Properties 7.9125% 03/01/2006 Monthly 1,470,000 1,437,430 0
Jamestown 610 10.00% 06/01/99 Monthly 250,000 53,757 0
Jamestown 611 10.00% 01/01/2000 Monthly 230,000 60,396 0
Melton/Olson/Thompson 8.50% 12/01/98 Monthly 400,000 57,302 0
1516 N Bismarck 8.00% 08/01/99 Monthly 246,000 43,266 0
------------ ------------ --
$122,086,165 $115,734,946 $0
============ ============ ==
</TABLE>
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
APRIL 30, 1997
Acquisitions for cash and assumptions of mortgages
Commercial:
Computer City, Kentwood, MI $ 2,113,574
Edgewood Vista, Missoula, MT 962,428
Wedgewood Retirement Inns, Sweetwater, GA 2,810,000
-----------
$ 5,886,002
===========
Apartments:
Circle 50, Billings, MT * $ 1,519,855
South Pointe II, Minot, ND ** 1,024,234
Rosewood Court, Sioux Falls, SD 1,938,245
Columbia Park Phase I, Grand Forks, ND ** 3,573,057
Rocky Meadows, Billings, MT ** 2,654,554
Miramont Apts, Fort Collins, CO 14,235,461
Neighborhood Apts, Colorado Springs, CO 10,849,561
Woodridge Apts, Rochester, MN 6,398,096
Cottonwood Lake, Bismarck, ND * 1,055,862
Park Meadows Apts, St Cloud, MN 10,242,747
-----------
$53,491,672
-----------
TOTAL $59,377,674
===========
* Property not placed in service at April 30, 1997. Additional costs are
still to be incurred.
** Represents costs to complete a project started in year ending April 30,
1996.
<PAGE>
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
-------------
7-31-96 10-31-96 1-31-97 4-30-97
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 4,966,475 $ 5,474,027 $ 6,383,030 $ 7,010,450
Income before gains on
sale of investments 978,107 1,048,154 1,027,117 446,065
Net gain on sale of investments 252,062 - 138,629 7,733
Minority interest of unitholders
in operating partnership - - - (18)
Net income 1,230,169 1,048,154 1,165,746 453,780
Per share
Income before gains on
sale of investments .07 .08 .07 .03
Net gain on sale of
investments .02 - .01 -
QUARTER ENDED
-------------
7-31-95 10-31-95 1-31-96 4-30-96
----------- ----------- ----------- -----------
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
</TABLE>
The above financial information is unaudited. In the opinion of management,
all adjustments (which are of a normal recurring nature) have been included for
a fair presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> APR-30-1997
<CASH> 1,718,257
<SECURITIES> 4,738,925
<RECEIVABLES> 3,108,933
<ALLOWANCES> (154,118)
<INVENTORY> 0
<CURRENT-ASSETS> 2,645,593
<PP&E> 191,884,509
<DEPRECIATION> (16,948,156)
<TOTAL-ASSETS> 186,993,943
<CURRENT-LIABILITIES> 118,809,019
<BONDS> 8,187,305
0
0
<COMMON> 65,073,951
<OTHER-SE> (5,076,332)
<TOTAL-LIABILITY-AND-EQUITY> 186,993,943
<SALES> 0
<TOTAL-REVENUES> 23,833,982
<CGS> 0
<TOTAL-COSTS> 12,695,763
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,638,776
<INCOME-PRETAX> 3,499,443
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,499,443
<DISCONTINUED> 0
<EXTRAORDINARY> 398,424
<CHANGES> (18)
<NET-INCOME> 3,897,849
<EPS-PRIMARY> .28
<EPS-DILUTED> 0
</TABLE>
