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Previous: STRONG MUNICIPAL BOND FUND INC, 485BPOS, EX-99.R, 2000-07-27 |
Next: VAN KAMPEN EQUITY TRUST, 485BPOS, 2000-07-27 |
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
|
April 30, 2000 |
0-14851 |
INVESTORS REAL ESTATE TRUST
(Exact name of Registrant as specified
in its charter)
|
incorporation or organization) North Dakota |
45-0311232 |
|
12 South Main, Suite 100, Minot, North Dakota |
58701 |
(Registrant's Telephone Number,
including area code)
701-837-4738
Securities registered pursuant to
Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
|
Capital Shares of Beneficial Interest |
on which registered NASDAQ - Small Cap Market |
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.
|
|
|
Page 1
The aggregate market value of the Registrant's outstanding Capital Shares of Beneficial Interest held by non-affiliates is $160,140,496 based on the last reported sale price on May 31, 2000.
The number of shares outstanding as of April 30, 2000, was 22,452,069 Shares of Beneficial Interest (no par value).
Portions of the Trust's definitive proxy statement for the 2000 Annual Meeting of Shareholders are incorporated by reference in Part III hereof.
Page 2
INVESTORS REAL ESTATE TRUST
(Registrant)
INDEX
| Item No. | Page No. |
| Cover Page |
1
|
| Index |
3
|
| PART I | |
| 1. Business |
4
|
| 2. Risk Factors |
6
|
| 3. Properties |
14
|
| 4. Legal Proceedings |
22
|
| 5. Submission of Matters to a Vote of Security Holders |
22
|
| PART II | |
| 6. Market for Registrant's Common Stock and Related Security Holder Matters |
22
|
| 7. Sales of Shares of Beneficial Interest |
24
|
| 8. Selected Financial Data |
27
|
| 9. Management's Discussion and Analysis of Financial Condition and Results of Operations |
28
|
| 9a. Quantitative and Qualitative Disclosures About Market Risk |
37
|
| 10. Financial Statements and Supplementary Data |
37
|
| 11. Disagreements on Accounting and Financial Disclosure |
37
|
| PART III | |
| 12. Directors and Executive Officers of the Registrant |
37
|
| 13. Executive Compensation |
38
|
| 14. Security Ownership of Certain Beneficial Owners and Management |
38
|
| 15. Certain Relationships and Related Transactions |
39
|
| PART IV | |
| 16. Exhibits, Financial Statement Schedules and Reports on Form 8-K |
39
|
| Exhibit Index |
39
|
| Signatures |
42
|
| Report of Independent Certified Public Accountants |
F-1
|
Page 3
ITEM 1. BUSINESS
Investors Real Estate Trust (hereinafter "IRET"), a North Dakota Real Estate Investment 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 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 distributes cash on a quarterly basis in the amounts determined by the Trust which will result in each limited partner receiving the same distributions 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.
IRET has its only office in Minot, North Dakota, and operates principally in the northern plains states with its operating partnership owning real estate investments in the states of North Dakota, Minnesota, South Dakota, Georgia, Nebraska, Montana, Michigan, Colorado, Idaho, Washington, Arizona, Kansas and Texas.
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 are as follows:
Page 4
|
|
2000
|
1999
|
1998
|
| Revenue from Operations | |||
| Real Estate Rentals |
$54,257,881
|
$38,785,287
|
$31,694,586
|
| Interest, Discount & Fees |
1,187,312
|
1,141,975
|
712,959
|
|
$55,445,193
|
$39,927,262
|
$32,407,545
|
|
| Expense |
45,577,319
|
33,525,586
|
27,716,347
|
| Net Real Estate Investment Income |
$9,867,874
|
$ 6,401,676
|
$4,691,198
|
| Gain on Sale of Investments (Capital Gain) |
1,754,496
|
1,947,184
|
465,499
|
| Allowance for Impaired Value of Real Estate |
-1,319,316
|
-0
|
-0
|
| Minority Interest of Unit Holders in Operating Partnership |
-1,495,209
|
-744,725
|
-141,788
|
| Net Income |
$8,807,845
|
$7,604,135
|
$5,014,909
|
| Per Share | |||
| Net Income |
$.42
|
$.44
|
$.32
|
| Dividends Paid |
$.50
|
$.47
|
$.42
|
As indicated above, IRET's principal source of operating revenue is rental income from real estate properties owned by its operating partnership. A minor amount of revenue is derived from interest income from mortgages and contracts for deed secured by real estate, interest on investments in government securities and interest on savings deposits. In addition to operating income, the Trust recognizes capital gain income when real estate properties are sold at a price in excess of the depreciated cost of said properties.
On April 30, 2000, IRET had no employees. Its business was 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 the President of the Advisor and served as President of IRET from its inception until June 30, 2000, and 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 Watne Realty Company from 1954 to January 1, 1970, and since that time as the owner of his own realty firm.
Mr. Wentz is Vice President and Chief Investment Officer of the Advisor and 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. Until August 1, 1998, Mr. Wentz' principal occupation was the practice of law as a partner in the firm of Pringle & Herigstad, P.C., counsel to the Trust. Mr. Wentz currently serves as President and Chief Executive Officer of IRET.
Page 5
Timothy P. Mihalick is Vice President and Chief Operating Officer of IRET and the Advisor. Mr. Mihalick is a graduate of Minot State University, receiving his B.A. degree in Business Administration in 1981.He has been employed by Odell-Wentz & Associates since 1981.Thomas A. Wentz, Jr. is Vice President and Legal Counsel of IRET and the Advisor. Mr. Wentz is a graduate of Harvard College, receiving his A.B. degree in 1988, and of the University of North Dakota Law School, receiving his J.D. degree in 1992.
Diane K. Bryantt is Secretary and Controller of IRET and the Advisor. She graduated from Minot State University in 1986, receiving a B.A. degree in Accounting. Mrs. Bryantt was employed by Bremer Bank in Minot, ND from 1989 to 1996. She has been an employee of Odell-Wentz & Associates since June of 1996.
On July 1, 2000, the real estate and tangible and intangible assets of Odell-Wentz & Associates, L.L.C. used in connection with its business as Advisor were acquired by IRET in exchange for 255,000 of IRET Limited Partnership Units. Thus, from July 1, 2000, IRET has been self-advised and all employees of the Advisor are now employees of IRET properties.
ITEM 2. RISK FACTORS
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K405. In this section, "we" or "us" refers to IRET and "you" refers to IRET's shareholders.
RISKS
DUE TO INVESTMENT IN REAL ESTATE
Real property investments are subject
to varying degrees of risk. The yields available from equity investments
in real estate depend upon the amount of revenues generated and expenses
incurred. If properties do not generate revenues sufficient to meet operating
expenses, debt service and capital expenditures, our results of operations
and ability to make distributions to you and to pay amounts due on our
debt will be adversely affected. The performance of the economy in each
of the areas in which the properties are located affects occupancy, market
rental rates and expenses. These factors consequently can have an impact
on the revenues from the properties and their underlying values. The financial
results of major local employers may also have an impact on the revenues
and value of certain properties.
Other factors may further adversely affect revenues from properties. These factors include the general economic climate, local conditions in the areas in which properties are located such as an oversupply of apartment units or a reduction in the demand for apartment units, the attractiveness of the properties to residents, competition from other multi-family communities and commercial properties and our ability to provide adequate facilities maintenance, services and amenities. Our revenues would also be adversely affected if residents were unable to pay rent or we were unable to rent apartments on favorable terms.
Page 6
DEVELOPMENT AND CONSTRUCTION PROJECTS
MAY NOT BE COMPLETED OR COMPLETED SUCCESSFULLY
IRET is constructing apartment communities
in Bismarck, North Dakota, and Rochester, Minnesota. As a general matter,
property development and construction projects typically have a higher,
and sometimes substantially higher, level of risk than the acquisition
of existing properties. There can be no assurance that we will complete
development of the properties currently under development or any other
development project that we may undertake. Risks associated with our development
and construction activities may include the following:
|
|
development opportunities may be abandoned; |
|
|
construction costs of multifamily apartment communities may exceed original estimates, possibly making the communities uneconomical; |
|
|
occupancy rates and rents at newly completed communities may not be sufficient to make the communities profitable; |
|
|
financing for the construction and development of projects may not be available on favorable terms or at all; |
|
|
construction and lease-up may not be completed on schedule; and |
|
|
expenses of operating a completed community may be higher than anticipated. |
In addition, development and construction activities, regardless of whether or not they are ultimately successful, typically require a substantial portion of management's time and attention. Development and construction activities are also subject to risks relating to the inability to obtain, or delays in obtaining, all necessary zoning, land-use, building, occupancy, and other required governmental permits and authorizations.
Page 7
ILLIQUIDITY OF REAL ESTATE AND REINVESTMENT
RISK MAY REDUCE ECONOMIC RETURNS TO INVESTORS
Real estate investments are relatively
illiquid and, therefore, tend to limit our ability to adjust our portfolio
in response to changes in economic or other conditions. Additionally, the
Code places certain limits on the number of properties a REIT may sell
without adverse tax consequences. To effect our current operating strategy,
we have in the past raised, and will seek to continue to raise additional
funds, both through outside financing and through the orderly disposition
of assets which no longer meet our investment criteria. Depending upon
interest rates, current development and acquisition opportunities and other
factors, generally we will reinvest the proceeds in commercial and multifamily
properties, although such funds may be employed in other uses. In the markets
we have targeted for future acquisition of commercial and multifamily properties,
there is considerable buying competition from other real estate companies,
many of whom may have greater resources, experience or expertise than us.
In many cases, this competition for acquisition properties has resulted
in an increase in property prices and a decrease in property yields. Due
to the relatively low capitalization rates currently prevailing in the
pricing of potential acquisitions of commercial and multifamily properties
which meet our investment criteria, no assurance can be given that the
proceeds realized from the disposition of assets which no longer meet our
investment criteria can be reinvested to produce economic returns comparable
to those being realized from the properties disposed of, or that we will
be able to acquire properties meeting our investment criteria. To the extent
that we are unable to reinvest proceeds from the assets which no longer
meet our investment criteria, or if properties acquired with such proceeds
produce a lower rate of return than the properties disposed of, such results
may have a material adverse effect on us. In addition, a delay in reinvestment
of such proceeds may have a material adverse effect on us.
Page 8
All of the properties currently owned by us are located in developed areas. There are numerous other real estate companies, many of which have greater financial and other resources than we have, within the market area of each of the properties which will compete with us for tenants and development and acquisition opportunities. The number of competitive properties and real estate companies in such areas could have a material effect on (1) our ability to rent our real estate properties and the rents charged and (2) development and acquisition opportunities. The activities of these competitors could cause us to pay a higher price for a new property than we otherwise would have paid or may prevent us from purchasing a desired property at all, which could have a material adverse effect on us and our ability to make distributions to you and to pay amounts due on our debt.
GEOGRAPHIC
CONCENTRATION OF PROPERTIES DEPENDENCE ON GREAT PLAINS REGION
Our portfolio is primarily located in
the north central states of North and South Dakota, Minnesota and Montana.
IRET also has significant investments in Nebraska, Kansas, Colorado, and
Texas. Our performance could be adversely affected by economic conditions
in, and other factors relating to, these geographic areas, including supply
and demand for apartments in these areas, zoning and other regulatory conditions
and competition from other properties and alternative forms of housing.
In that regard, certain of these areas have in the recent past experienced
economic recessions and depressed conditions in the local real estate markets.
To the extent general economic or social conditions in any of these areas
deteriorate or any of these areas experiences natural disasters, the value
of the portfolio, our results of operations and our ability to make distributions
to you and to pay amounts due on our debt could be materially adversely
affected.
INABILITY
TO IMPLEMENT GROWTH STRATEGY; POTENTIAL FAILURE TO IDENTIFY, ACQUIRE OR
INTEGRATE NEW ACQUISITIONS
Our future growth will be dependent upon
a number of factors, including our ability to identify acceptable properties
for development and acquisition, complete acquisitions and developments
on favorable terms, successfully integrate acquired and newly developed
properties, and obtain financing to support expansion. There can be no
assurance that we will be successful in implementing our growth strategy,
that growth will continue at historical levels or at all, or that any expansion
will improve operating results. The failure to identify, acquire and integrate
new properties effectively could have a material adverse affect on us and
our ability to make distributions to you and to pay amounts due on our
debt.
Page 9
RESTRICTIONS ON THE OPERATIONS OF
THE OPERATING PARTNERSHIP
IRET's properties are held by IRET Properties,
a North Dakota Limited Partnership, which is referred to in this Annual
Report on Form 10-K405 as the "Operating Partnership." We are the sole
managing member of the Operating Partnership and, as of April 30, 2000,
held approximately an 83% equity interest in the Operating Partnership.
The remaining equity interests in the Operating Partnership are held by
third parties as non managing members.
The Operating Partnership has contracted with most of these third party Limited Partners not to sell the real estate property contributed by that Limited Partner during his or her lifetime. Such restriction may prevent the sale of such property even though a sale would be advisable.
UNINSURED AND UNDERINSURED LOSSES;
LIMITED INSURANCE COVERAGE
We carry comprehensive liability, fire,
extended coverage and rental loss insurance with respect to our properties
with certain policy specifications, limits and deductibles. No assurance
can be given that such coverage will be available on acceptable terms or
at an acceptable cost, or at all, in the future, or if obtained, that the
limits of those policies will cover the full cost of repair or replacement
of covered properties. In addition, there may be certain extraordinary
losses (such as those resulting from civil unrest) that are not generally
insured (or fully insured against) because they are either uninsurable
or not economically insurable. Should an uninsured or underinsured loss
occur to a property, we could be required to use our own funds for restoration
or lose all or part of our investment in, and anticipated revenues from,
the property and would continue to be obligated on any mortgage indebtedness
on the property. Any such loss could have a material adverse effect on
us and our ability to make distributions to you and pay amounts due on
our debt.
ADVERSE
CHANGES IN LAWS MAY AFFECT OUR POTENTIAL LIABILITY RELATING TO THE PROPERTIES
AND OUR OPERATIONS
Increases in real estate taxes and income,
service and transfer taxes cannot always be passed through to all tenants
in the form of higher rents, and may adversely affect our cash available
for distribution and our ability to make distributions to you and to pay
amounts due on our debt. Similarly, changes in laws increasing the potential
liability for environmental conditions existing on properties or increasing
the restrictions on discharges or other conditions, as well as changes
in laws affecting development, construction and safety requirements, may
result in significant unanticipated expenditures, which could have a material
adverse effect on us and our ability to make distributions to you and pay
amounts due on our debt. In addition, future enactment of rent control
or rent stabilization laws or other laws regulating multifamily housing
may reduce rental revenues or increase operating costs.
Page 10
LIABILITIES ASSUMED MAY EXCEED EXPECTATIONS
We acquire properties either by acquiring
title to the properties and related assets (plus assumption of associated
contractual obligations of the contributing parties) or by acquiring all
of the ownership interests in the partnerships or limited liability companies
which held such properties. As a matter of law, we automatically
assume all of the liabilities (known, unknown or contingent) of the partnerships
and limited liability companies whose ownership interests were acquired
by us, potentially including liabilities unrelated to the properties conveyed
pursuant to such transfer. Moreover, even in cases where title to the properties
and related assets (rather than ownership interests therein) were acquired
by us, the legal doctrine of successor liability may give creditors of
and claimants against the prior owners the right to hold us responsible
for liabilities which arose with respect to such properties prior to their
acquisition by us, whether or not such liabilities were expressly assumed
by us.
As a result of the foregoing, there can be no assurance that we will not be subject to liabilities and claims arising from events which occurred or circumstances which existed prior to our acquisition of those properties, which could have a material adverse effect on us and our ability to make distributions to you and pay amounts due on our debt.
RISKS
DUE TO REAL ESTATE FINANCING
We anticipate that future developments
and acquisitions will be financed, in whole or in part, under various construction
loans, lines of credit, other forms of secured or unsecured financing or
through the issuance of additional debt or equity by us. We expect periodically
to review our financing options regarding the appropriate mix of debt and
equity financing. Equity, rather than debt, financing of future developments
or acquisitions could have a dilutive effect on the interests of our existing
shareholders. Similarly, there are certain risks involved with financing
future developments and acquisitions with debt, including those described
below. In addition, if new developments are financed through construction
loans, there is a risk that, upon completion of construction, permanent
financing for such properties may not be available or may be available
only on disadvantageous terms or that the cash flow from new properties
will be insufficient to cover debt service. If a newly developed or acquired
property is unsuccessful, our losses may exceed our investment in the property.
Any of the foregoing could have a material adverse effect on us and our
ability to make distributions to you and to pay amounts due on our debt.
Page 11
INCREASE IN COST OF INDEBTEDNESS
DUE TO RISING INTEREST RATES
We have incurred and expect in the future
to incur indebtedness which bears interest at a variable rate. Accordingly,
increases in interest rates would increase our interest costs, which could
have a material adverse effect on us and our ability to make distributions
to you or cause us to be in default under certain debt instruments (including
our debt). In addition, an increase in market interest rates may lead holders
of our common shares to demand a higher yield on their shares from distributions
by us, which could adversely affect the market price for IRET Shares of
Beneficial Interest.
POTENTIAL INCURRENCE OF ADDITIONAL
DEBT AND RELATED DEBT SERVICE
We currently fund the acquisition and
development of multifamily communities partially through borrowings (including
our line of credit) as well as from other sources such as sales of properties
which no longer meet our investment criteria or the contribution of property
to joint ventures. We could become more highly leveraged, resulting in
an increase in debt service, which could have a material adverse effect
on us and our ability to make distributions and to pay amounts due on our
debt and in an increased risk of default on our obligations.
Page 12
Our current policy is to obtain a Phase I environmental study on each property we seek to acquire and to proceed accordingly. No assurance can be given, however, that the Phase I environmental studies or other environmental studies undertaken with respect to any of our current or future properties will reveal all or the full extent of potential environmental liabilities, that any prior owner or operator of a property did not create any material environmental condition unknown to us, that a material environmental condition does not otherwise exist as to any one or more of such properties or that environmental matters will not have a material adverse effect on us and our ability to make distributions to you and to pay amounts due on our debt. We currently carry no insurance for environmental liabilities.
Certain environmental laws impose liability on a previous owner of property to the extent that hazardous or toxic substances were present during the prior ownership period. A transfer of the property does not relieve an owner of such liability. Thus, we may have liability with respect to properties previously sold by us or our predecessors.
PROVISIONS WHICH COULD LIMIT A CHANGE
IN CONTROL OR DETER A TAKEOVER
In order to maintain our qualification
as a REIT, not more than 50% in value of our outstanding capital stock
may be owned, actually or constructively, by five or fewer individuals
(as defined in the Code to include certain entities). In order to protect
us against risk of losing our status as a REIT due to a concentration of
ownership among our shareholders, our articles of incorporation provide,
among other things, that if the Board determines, in good faith, that direct
or indirect ownership of IRET Shares of Beneficial Interest has or may
become concentrated to an extent that would prevent us from qualifying
as a REIT, the Board may prevent the transfer or call for redemption (by
lot or other means affecting one or more shareholders selected in the sole
discretion of the Board) of a number of shares sufficient in the opinion
of the Board to maintain or bring the direct or indirect ownership of IRET
Shares of Beneficial Interest into conformity with the requirements for
maintaining REIT status. These limitations may have the effect of precluding
acquisition of control of us by a third-party without consent of the Board.
Page 13
TAX LIABILITIES AS A CONSEQUENCE
OF FAILURE TO QUALITY AS A REIT
Although management believes that we are
organized and are operating so as to qualify as a REIT under the Code,
no assurance can be given that we have in fact operated or will be able
to continue to operate in a manner so as to qualify or remain so qualified.
Qualification as a REIT involves the application of highly technical and
complex Code provisions for which there are only limited judicial or administrative
interpretations and the determination of various factual matters and circumstances
not entirely within our control. For example, in order to qualify as a
REIT, at least 90% of our taxable gross income in any year must be derived
from qualifying sources and we must make distributions to shareholders
aggregating annually at least 90% of our REIT taxable income (excluding
net capital gains). Thus, to the extent revenues from non qualifying sources
such as income from third-party management represents more than 10% of
our gross income in any taxable year, we will not satisfy the 90% income
test and may fail to qualify as a REIT, unless certain relief provisions
apply, and, even if those relief provisions apply, a tax would be imposed
with respect to excess net income, any of which could have a material adverse
effect on us and our ability to make distributions to you and to pay amounts
due on our debt. Additionally, to the extent the Operating Partnership
or certain other subsidiaries are determined to be taxable as a corporation,
we would not qualify as a REIT, which could have a material adverse effect
on us and our ability to make distributions to you and to pay amounts due
on our debt. Finally, no assurance can be given that new legislation, new
regulations, administrative interpretations or court decisions will not
change the tax laws with respect to qualification as a REIT or the federal
income tax consequences of such qualification.
If we fail to qualify as a REIT, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at corporate rates, which would likely have a material adverse effect on us and our ability to make distributions to you and to pay amounts due on our debt. In addition, unless entitled to relief under certain statutory provisions, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. This treatment would reduce funds available for investment or distributions to you because of the additional tax liability to us for the year or years involved. In addition, we would no longer be required to make distributions to you. To the extent that distributions to you would have been made in anticipation of qualifying as a REIT, we might be required to borrow funds or to liquidate certain investments to pay the applicable tax.
ITEM 3. PROPERTIES
IRET is a qualified "real estate investment trust" under Section 856-858 of the Internal Revenue Code, and is in the business of making passive investments in real estate equities and mortgages. These real estate investments are managed by independent contractors on behalf of IRET.
Page 14
SUMMARY OF REAL
ESTATE INVESTMENT PORTFOLIO
|
April 30, 2000
|
||
| Real Estate Owned |
$449,919,890
|
|
| Less Depreciation Reserve |
-33,232,952
|
|
|
$416,686,938
|
96.2%
|
|
| Mortgage Loans Receivable |
1,650,284
|
|
| Less Unearned Discounts and Allowances |
-120,706
|
|
|
$1,529,578
|
.4%
|
OTHER ASSETS
|
April 30, 2000
|
||
| Cash and Marketable Securities |
$6,623,495
|
|
| Deposits and Accruals |
8,138,288
|
|
| Total Other Assets |
$14,761,783
|
3.4%
|
| TOTAL ASSETS |
$432,978,299
|
100.0%
|
The remainder of this page has been intentionally left blank.
Page 15
SUMMARY OF INDIVIDUAL PROPERTIES
COMMERCIAL PROPERTIES
|
|
|
FEET |
|
OCCUPANCY |
| COLORADO | ||||
| Evergreen | ||||
| Evergreen-72 | Strip Mall |
40,000
|
$1,409,445
|
100.00%
|
| Colorado Total |
40,000
|
$1,409,445
|
100.00%
|
|
| GEORGIA | ||||
| Lithia Springs | ||||
| Wedgewood | Retirement Center |
29,408
|
$3,971,878
|
100.00%
|
| Georgia Total |
29,408
|
$3,971,878
|
100.00%
|
|
| IDAHO | ||||
| Boise | ||||
| America's Best | Furniture Store |
139,198
|
$4,788,094
|
100.00%
|
| Idaho Total |
139,198
|
$4,788,094
|
100.00%
|
|
| MICHIGAN | ||||
| Kentwood | ||||
| Comp USA | Retail |
16,000
|
$2,113,574
|
100.00%
|
| Michigan Total |
16,000
|
$2,113,574
|
100.00%
|
|
| MINNESOTA | ||||
| Duluth (Hermantown) | ||||
| Edgewood Vista | Assisted Living |
10,400
|
$4,212,400
|
100.00%
|
| Eagan | ||||
| Lexington Commerce | Office Building |
89,840
|
5,489,322
|
100.00%
|
| S.E. Tech Center | Office Building |
58,300
|
6,111,371
|
100.00%
|
| East Grand Forks | ||||
| Corner Express | Convenience Store |
14,490
|
1,385,315
|
100.00%
|
| Edgewood Vista | Assisted Living |
10,778
|
899,821
|
100.00%
|
| Eden Prairie | ||||
| Flying Cloud Drive | Office Building |
61,217
|
4,921,181
|
100.00%
|
| Lindberg Building | Office / Warehouse |
40,941
|
1,608,535
|
100.00%
|
| ViroMed | Office Building |
48,700
|
4,863,634
|
100.00%
|
| Maple Grove | ||||
| Northgate II | Office Building |
25,999
|
2,340,064
|
100.00%
|
| Moorhead | ||||
| Pioneer Seed Co. | Office/Warehouse |
75,900
|
653,876
|
100.00%
|
| Rochester | ||||
| Maplewood Square | Strip Mall |
118,397
|
11,898,946
|
97.96%
|
| Minnesota Total |
554,962
|
$44,384,465
|
99.34%
|
|
| MONTANA | ||||
| Belgrade | ||||
| Edgewood Vista | Assisted Living |
5,200
|
$448,896
|
100.00%
|
| Billings | ||||
| Creekside Office Park | Office Building |
37,318
|
1,739,142
|
72.18%
|
| Edgewood Vista | Assisted Living |
11,971
|
980,218
|
100.00%
|
| Missoula | ||||
| Edgewood Vista | Assisted Living |
10,314
|
962,428
|
100.00%
|
| Montana Total |
64,803
|
$4,130,684
|
82.34%
|
Page 16
|
|
|
|
|
|
| NEBRASKA | ||||
| Columbus | ||||
| Edgewood Vista | Assisted Living |
5,200
|
$448,780
|
100.00%
|
| Grand Island | ||||
| Edgewood Vista | Assisted Living |
5,200
|
448,780
|
100.00%
|
| Omaha | ||||
| Ameritrade | Office Building |
73,774
|
8,306,535
|
100.00%
|
| Barnes & Noble | Retail Bookstore |
27,500
|
3,699,197
|
100.00%
|
| Under Construction | ||||
| Hastings, Omaha, Freemont Edgewood Vista | Assisted Living |
15,600
|
209,587
|
n/a
|
| Nebraska Total |
127,274
|
$13,112,879
|
100.00%
|
|
| NORTH DAKOTA | ||||
| Bismarck | ||||
| Lester Chiropractic | Office Building |
5,400
|
$268,917
|
100.00%
|
| Fargo | ||||
| Barnes & Noble | Retail |
30,000
|
3,292,012
|
100.00%
|
| Petco | Retail |
18,000
|
1,278,934
|
100.00%
|
| Stone Container | Office/Manufacturing |
151,850
|
4,998,485
|
100.00%
|
| Great Plains Software | Campus Facility |
121,600
|
15,375,154
|
100.00%
|
| Grand Forks | ||||
| Carmike Theatre | Retail |
28,300
|
2,545,737
|
100.00%
|
| MedPark Mall | Retail |
45,328
|
5,492,362
|
100.00%
|
| Minot | ||||
| 114 South Main Street | Retail |
3,500
|
111,996
|
100.00%
|
| 1st Avenue Building | Office Building |
15,900
|
530,462
|
50.97%
|
| 401 South Main & 408 1st Street SE | Office Building/Parking |
11,200
|
660,214
|
87.07%
|
| Arrowhead | Retail/Office |
80,000
|
2,912,822
|
100.00%
|
| Corner Express | Retail |
4,674
|
1,581,260
|
100.00%
|
| Edgewood Vista | Assisted Living |
97,821
|
6,270,707
|
100.00%
|
| Minot Plaza | Retail |
10,020
|
509,954
|
92.50%
|
| North Dakota Total |
623,593
|
$45,829,016
|
97.81%
|
|
| SOUTH DAKOTA | ||||
| Sioux Falls | ||||
| Edgewood Vista | Assisted Living |
11,971
|
$974,739
|
100.00%
|
| South Dakota Total |
11,971
|
$974,739
|
100.00%
|
|
| TOTAL COMMERCIAL |
1,607,209
|
$ 120,714,774
|
97.77%
|
The remainder of this page has been intentionally left blank.
Page 17
APARTMENT COMMUNITIES
| STATE & CITY |
UNITS
|
INVESTMENT
|
OCCUPANCY |
| COLORADO | |||
| Colorado Springs | |||
| Neighborhood |
192
|
$11,291,683
|
95.18%
|
| Ft. Collins | |||
| MiraMont |
210
|
14,315,599
|
93.92%
|
| Pine Cone |
195
|
13,230,150
|
95.35%
|
| Colorado Total |
597
|
$38,837,432
|
94.77%
|
| IDAHO | |||
| Boise | |||
| Clearwater |
60
|
$3,833,486
|
94.32%
|
| Idaho Total |
60
|
$3,833,486
|
94.32%
|
| KANSAS | |||
| Topeka | |||
| Crown Colony |
220
|
$10,643,038
|
82.65%
|
| Sherwood |
300
|
15,898,882
|
88.53%
|
| Total Kansas |
520
|
$26,541,920
|
86.10%
|
| MINNESOTA | |||
| Moorhead | |||
| Terrace on the Green |
116
|
$2,123,889
|
92.45%
|
| Rochester | |||
| Woodridge |
108
|
6,723,956
|
99.94%
|
| Heritage Manor |
182
|
7,598,173
|
99.43%
|
| Sunset Trail |
n/a
|
3,028,409
|
n/a
|
| St. Cloud | |||
| West Stonehill |
313
|
11,649,087
|
99.66%
|
| Park Meadows |
360
|
11,400,635
|
97.67%
|
| Lancaster Place |
84
|
3,188,120
|
89.28%
|
| Total Minnesota |
1,163
|
$45,712,269
|
98.47%
|
| MONTANA | |||
| Billings | |||
| Castle Rock |
165
|
$5,709,639
|
85.34%
|
| Country Meadows I |
67
|
4,357,240
|
94.16%
|
| Rocky Meadows |
98
|
6,715,749
|
91.41%
|
| Country Meadows II |
67
|
4,332,287
|
n/a
|
| Rimrock |
78
|
3,867,625
|
93.02%
|
| Total Montana |
475
|
$24,982,540
|
88.96%
|
| NORTH DAKOTA | |||
| Bismarck | |||
| Cottonwood Lake |
134
|
$12,106,636
|
85.91%
|
| Crestview |
152
|
4,804,503
|
89.43%
|
| Garden Grove |
92
|
3,066,138
|
89.31%
|
| Kirkwood Manor |
108
|
3,621,223
|
92,21%
|
| North Pointe |
49
|
2,418,464
|
98.10%
|
| Pebble Creek |
18
|
756,693
|
99.18%
|
| Westwood Park |
64
|
2,172,163
|
98.27%
|
Page 18
| STATE & CITY |
UNITS
|
INVESTMENT
|
|
| Dickinson | |||
| Eastwood |
38
|
445,272
|
76.44%
|
| Century |
120
|
2,205,494
|
81.21%
|
| Oak Manor |
27
|
361,033
|
94.72%
|
| Fargo | |||
| Candlelight |
44
|
932,070
|
98.84%
|
| Park East |
122
|
5,066,651
|
98.54%
|
| Sunchase |
36
|
1,039,845
|
98.96%
|
| Grand Forks | |||
| Forest Park Estates |
270
|
7,304,715
|
95.71%
|
| Landmark Estates |
121
|
2,191,033
|
76.44%
|
| Legacy |
183
|
10,893,125
|
98.23%
|
| Legacy - Underground |
67
|
6,844,516
|
n/a
|
| Southwinds |
164
|
5,778,731
|
95.93%
|
| Valley Park Manor |
168
|
4,520,008
|
95.90%
|
| Minot | |||
| Chateau |
64
|
2,444,200
|
97.43%
|
| Colton Heights |
18
|
957,199
|
99.06%
|
| Dakota Arms |
18
|
621,189
|
99.10%
|
| Magic City |
248
|
5,549,059
|
96.01%
|
| South Pointe |
196
|
10,310,803
|
98.22%
|
| Southview |
24
|
724,212
|
90.68%
|
| Williston | |||
| Century |
192
|
3,954,445
|
66.43%
|
| Other Communities | |||
| Beulah Condominiums |
26
|
474,980
|
57.50%
|
| The Meadows - Jamestown |
54
|
3,718,609
|
n/a
|
| Bison Properties - Carrington & Cooperstown |
35
|
227,376
|
76.99%
|
| Lonetree Manor - Harvey |
12
|
227,376
|
86.43%
|
| Parkway Apartments - Beulah |
36
|
143,980
|
78.26%
|
| Sweetwater Properties - D.L. & Grafton |
114
|
1,573,838
|
77.40%
|
| North Dakota Total |
3,014
|
$107,836,564
|
91.68%
|
| NEBRASKA | |||
| Lincoln | |||
| Thomasbrook |
264
|
$9,572,130
|
94.62%
|
| Nebraska Total |
264
|
$9,572,130
|
94.62%
|
| SOUTH DAKOTA | |||
| Rapid City | |||
| Pointe West |
90
|
$3,997,816
|
94.37%
|
| Sioux Falls | |||
| Oakwood Estates |
160
|
5,548,406
|
97.35%
|
| Oxbow |
120
|
5,010,541
|
99.36%
|
| Prairie Winds |
48
|
2,002,844
|
99.60%
|
| South Dakota Total |
418
|
$16,559,607
|
97.56%
|
| TEXAS | |||
| Irving | |||
| Dakota Hill at Valley Ranch |
504
|
$37,473,258
|
90.13%
|
| Texas Total |
504
|
$37,473,258
|
90.13%
|
Page 19
| STATE & CITY |
UNITS
|
INVESTMENT
|
OCCUPANCY |
| WASHINGTON | |||
| Vancouver | |||
| Ivy Club |
204
|
$11,737,597
|
91.35%
|
| Van Mall Woods |
100
|
6,118,313
|
95.60%
|
| Washington Total |
304
|
$17,855,910
|
92.81%
|
| TOTAL APARTMENT COMMUNITIES |
7,319
|
$329,205,117
|
93.24%
|
n/a
= Property held less than 12 months.
|
|
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, 2000, 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, 2000. 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 remainder of this page has been intentionally left blank.
Page 20
SUMMARY OF REAL ESTATE
INVESTMENT BY STATE
|
|
INVESTMENT |
OF TOTAL |
| COLORADO | ||
| Residential |
$38,837,432
|
|
| Commercial |
1,409,445
|
|
| Total |
$40,246,877
|
|
| GEORGIA | ||
| Commercial |
$3,971,878
|
|
| Total |
$3,971,878
|
|
| IDAHO | ||
| Commercial |
$4,788,094
|
|
| Residential |
3,833,486
|
|
| Total |
$8,621,580
|
|
| KANSAS | ||
| Residential |
$26,541,920
|
|
| Total |
$26,541,920
|
|
| MICHIGAN | ||
| Commercial |
$2,113,574
|
|
| Total |
$2,113,574
|
|
| MINNESOTA | ||
| Commercial |
$44,384,465
|
|
| Residential |
$45,712,269
|
|
| Total |
$90,096,734
|
|
| MONTANA | ||
| Commercial |
$4,130,684
|
|
| Residential |
24,982,540
|
|
| Total |
$29,113,224
|
|
| NORTH DAKOTA | ||
| Commercial |
$45,829,016
|
|
| Residential |
$ 107,836,564
|
|
| Total |
$ 153,665,580
|
|
| NEBRASKA | ||
| Commercial |
$13,112,879
|
|
| Residential |
9,572,130
|
|
| Total |
$22,685,009
|
|
| SOUTH DAKOTA | ||
| Commercial |
$974,739
|
|
| Residential |
16,559,607
|
|
| Total |
$17,534,346
|
|
| TEXAS | ||
| Residential |
$37,473,258
|
|
| Total |
$37,473,258
|
|
| WASHINGTON | ||
| Residential |
$17,855,910
|
|
| Total |
$17,855,910
|
|
| TOTAL |
$449,919,890
|
|
Page 21
|
|
|
04/30/00
BALANCE |
|
| Gilbert, AZ | |||
| NE 1/4-27-2-6 | Commercial Land |
$598,843
|
|
| Other Mortgages | |||
| Over $100,000 |
1,003,242
|
|
|
| $50,000 to $99,999 |
0
|
|
|
| $20,000 to $49,999 |
45,930
|
|
|
| Less than $20,000 |
2,269
|
|
|
| TOTAL |
1,650,284
|
||
| Unearned Discounts |
-392
|
||
| Allowance for Losses |
-120,314
|
||
|
$1,529,578
|
ITEM 4. 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 5. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the August 17, 1999, Annual Shareholders'
meeting, the only matters submitted to a vote of security holders were
the election of ten Trustees and ratification of the re-appointment of
the independent certified public accountants.
PART II
ITEM 6. MARKET FOR THE REGISTRANT'S COMMON STOCK AND SECURITY HOLDER MATTERS
Since October 17, 1997, IRET Shares of Beneficial Interest have traded on the NASDAQ Small Cap market under the symbol IRETS.
Closing Price Range
|
|
High
|
|
Total
Volume |
Trades |
|
|
.344
|
|
437,487
|
196
|
|
|
7.250
|
|
359,835
|
118
|
|
|
7.500
|
|
489,586
|
232
|
|
|
7.688
|
|
343,128
|
249
|
|
|
8.000
|
|
445,900
|
313
|
|
|
17.875
|
|
1,306,290
|
754
|
|
|
10.500
|
|
962,576
|
746
|
|
|
8.375
|
|
620,291
|
737
|
|
|
8.125
|
|
1,170,063
|
1,178
|
Page 22
|
SHARES
|
DOLLARS
|
|
| 05/01/98 Beginning Balance |
16,391,412
|
$74,708,559
|
| Quarter Ended 07/31/98 | ||
| Shares Sold |
573,081
|
$4,075,505
|
| Commissions Paid |
-148,902
|
|
| Shares Repurchased |
-197,124
|
-1,389,936
|
|
16,767,369
|
$77,245,225
|
|
| Quarter Ended 10/31/98 | ||
| Shares Sold |
768,922
|
$5,565,703
|
| Commissions Paid |
-290,653
|
|
| Shares Repurchased |
-126,336
|
-912,133
|
|
17,409,955
|
$81,608,143
|
|
| Quarter Ended 01/31/99 | ||
| Shares Sold |
793,599
|
$5,689,642
|
| Commissions Paid |
-356,872
|
|
| Shares Repurchased |
-68,853
|
-514,881
|
|
18,134,701
|
$86,426,032
|
|
| Quarter Ended 04/30/99 | ||
| Shares Sold |
994,953
|
$7,620,458
|
| Commissions Paid |
-480,732
|
|
| Shares Repurchased |
-62,700
|
-469,938
|
|
19,066,954
|
$93,095,819
|
|
| Quarter Ended 07/31/99 | ||
| Shares Sold |
856,738
|
$7,172,603
|
| Commissions Paid |
-466,368
|
|
|
19,923,692
|
$99,802,054
|
|
| Quarter Ended 10/31/99 | ||
| Shares Sold |
1,216,465
|
$9,789,966
|
| Commissions Paid |
-497,488
|
|
|
21,140,157
|
$109,094,532
|
Page 23
|
SHARES
|
DOLLARS
|
|
| Quarter Ended 01/31/00 | ||
| Shares Sold |
850,779
|
6,881,751
|
| Commissions Paid |
-310,900
|
|
|
21,990,936
|
$115,665,383
|
|
| Quarter Ended 04/30/00 | ||
| Shares Sold |
461,133
|
$3,887,039
|
| Commissions Paid |
-319,252
|
|
|
22,452,069
|
119,233,170
|
ITEM 7. SALE OF SHARES OF BENEFICIAL INTEREST
IRET files this Report of Sales of Securities
and Use of Proceeds therefrom in accordance with Rule 463 (17 CFR 230.463).
|
|
Effective date of the registration statement for which this form is filed: |
| December 14, 1999 | |
|
|
SEC file number assigned to the registration statement: |
| 333-90691 | |
|
|
IRET CUSIP Number: |
| 461730 | |
|
|
The date the offering commenced: |
| December 14, 1999 | |
|
|
All shares registered under the offering were sold. |
|
|
The offering terminated on May 23, 2000. |
|
|
The name(s) of the managing underwriter(s) are: |
| American
Heartland Investments, Inc.
American Investment Services, Inc. Berthel Fisher Financial Services, Inc. Eagle One Investments, L.L.C. Fintegra Financial Solutions First Montauk Securities Corp. Garry Pierce Financial Services, L.L.P. Huntingdon Securities Corporation Inland National Securities, Inc., Invest Financial Investment Centers of America, Inc. ND Capital, Inc. Netcap Preferred Equity, Ltd. Primevest Financial Services, Inc. Proequities, Inc. |
|
|
|
The
title and code of each class of securities registered:
Title of Security - (01) Shares of Beneficial Interest Code - EQ |
|
|
The following table shows the amount and aggregate offering price of securities registered and sold for the account of the issuer: |
Page 24
|
|
|
|
Sold |
|
|
|
|
|
|
|
|
|
The following is the amount of expenses incurred for the issuer's account in connection with the issuance and distribution of the securities registered for each category listed below. | |||||
Direct or indirect payments to directors, officers, general partners of the issuer or their associates; to persons owning ten percent or more of any class of equity securities of the issuer; and to affiliates of the issuer |
Direct or indirect payments to others |
|||||
| (01) Underwriting discounts and commissions |
$0
|
$ 558,034
|
||||
| (02) Finders' Fees |
$0
|
$0
|
||||
| (03) Expenses paid to or for underwriters |
$0
|
$0
|
||||
| (04) Other expenses |
$0
|
$30,521
|
||||
| (05) Total Expenses |
$0
|
$ 588,555
|
||||
Page 25
|
|
The
net offering proceeds to the issuer after the total expenses listed above.
$ 7,811,445 |
|
|
The amount of net offering proceeds to the issuer used for each of the purposes listed below. |
Direct or indirect payments to directors, officers, general partners of the issuer or their associates; to persons owning ten percent or more of any class of equity securities of the issuer; and to affiliates of the issuer |
Direct or indirect payments to others |
|
| (01) Construction of plant, building and facilities |
$0
|
$0
|
| (02) Purchase and installation of machinery and equipment |
$0
|
$0
|
| (03) Purchase of real estate |
$ 0
|
$7,811,445
|
| (04) Acquisition of other businesses(es) |
$0
|
$0
|
| (05) Total Expenses |
$0
|
$0
|
| (06) Working Capital |
$0
|
$0
|
| Temporary investment (specify) - None. | ||
| Other purposes (specify) - None. |
The use of proceeds shown above does not represent a material change in the use of proceeds described in the prospectus.
As of May 31, 2000, IRET had 4,373 shareholder accounts, compared to 3,972 on the same date in 1999. No shareholder held 5% or more of the 22,452,069 Shares of Beneficial Interest outstanding on 05/31/00. IRET has no other classes of stock and there were no warrants, stock options or other contractual arrangements requiring the issuance of its stock (other than "exchange rights" of holders of Limited Partnership Units in IRET Properties, the operating partnership of IRET).
Page 26
| Fiscal Year |
2000
|
1999
|
1998
|
| July 1st |
$.124
|
$.1100
|
$.10125
|
| October 1st |
.126
|
.1150
|
.10300
|
| January 16th (15th) |
.128
|
.1200
|
.10500
|
| April 1st |
.130
|
.1225
|
.10700
|
|
$.508
|
$.4675
|
$.41625
|
Item 8. Selected Financial Data
|
|
|
|
|
|
|
| Consolidated Income Statement Data | |||||
| Revenue |
$55,445,193
|
$39,927,262
|
$32,407,545
|
$23,833,981
|
$18,659,665
|
| Income before gain/loss on properties and minority interest |
9,867,874
|
6,401,676
|
4,691,198
|
3,499,443
|
3,617,807
|
| Gain on repossession/ Sale of properties |
1,754,496
|
1,947,184
|
465,499
|
398,424
|
994,163
|
| Loss on Impairment of Properties |
-1,319,316
|
0
|
0
|
0
|
0
|
| Minority interest of portion of operating partnership income |
-1,495,209
|
-744,725
|
-141,788
|
-18
|
0
|
| Net income |
8,807,845
|
7,604,135
|
5,014,909
|
3,897,849
|
4,611,970
|
| Consolidated Balance Sheet Data | |||||
| Total real estate investments |
$418,216,516
|
$280,311,442
|
$213,211,369
|
$177,891,168
|
$122,377,909
|
| Total assets |
432,978,299
|
291,493,311
|
224,718,514
|
186,993,943
|
131,355,638
|
| Shareholders' equity |
109,920,591
|
85,783,294
|
88,152,626
|
59,997,619
|
50,711,920
|
| Consolidated Per Share Data (basic and diluted) | |||||
| Income before gain/loss on properties and minority interest |
$.47
|
$37
|
$.30
|
$.25
|
$ .30
|
| Net Income |
.42
|
.44
|
.32
|
.28
|
.38
|
| Dividends |
.51
|
.47
|
.42
|
.39
|
.37
|
| CALENDAR YEAR |
|
|
|
|
|
| Tax status of dividend | |||||
| Capital gain |
30.3%
|
6.3%
|
2.9%
|
21.0%
|
1.6%
|
| Ordinary income |
69.7%
|
76.0%
|
97.1%
|
79.0%
|
98.4%
|
| Return of capital |
0%
|
17.7%
|
0.0%
|
0.0%
|
0.0%
|
Page 27
General : IRET has operated as a 'real estate investment trust' under Sections 856-858 of the Internal Revenue Code since its formation in 1970 and is in the business of owning income-producing real estate investments.
On February 1, 1997, IRET restructured itself as an Umbrella Partnership Real Estate Investment Trust (UPREIT). IRET, through its wholly owned subsidiary, IRET, Inc., is the general partner of IRET Properties, a North Dakota limited partnership (the 'Operating Partnership'). All business operations for IRET are conducted through the Operating Partnership. On July 1, 2000, IRET became 'self-advised' as a result of the acquisition of the advisory business and assets of Odell-Wentz & Associates, L.L.C. IRET Properties issued 255,000 of its Limited Partnership units to Odell-Wentz & Associates, L.L.C. in exchange for those assets. The valuation was determined by independent appraisal of the business and assets. All employees of the Advisory Company became employees of IRET Properties on July 1, 2000.
No other material change in IRET's business is contemplated at this time.
This discussion and analysis should be read in conjunction with the attached audited financial statements prepared by Brady Martz & Associates, certified public accountants, who have served as the auditor for IRET since its inception.
Certain matters included in this discussion are forward-looking statements within the meaning of federal securities laws. Although IRET believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that the expectations expressed will actually be achieved. Many factors may cause actual results to differ materially from IRET's current expectations, including general economic conditions, local real estate conditions, the general level of interest rates and the availability of financing, timely completion and lease up of properties under construction, and various other economic risks inherent in the business of owning and operating investment real estate.
RESULTS FROM OPERATIONS
Fiscal Year 2000 Compared to Fiscal Years 1999 and 1998
OVERVIEW On April 30, 2000, IRET celebrated it's 30th anniversary as a Real Estate Investment Trust. In the opinion of management, this 30th year was IRET's best year ever.
The following is a summary of the major events and results of IRET's Fiscal Year 2000 which will be commented on in more detail in the balance of this discussion.
Page 28
Funds from Operations increased to $16,832,777 from $11,623,825 an increase of $5,208,952 (45%). On a per share basis, FFO increased from .68¢ per share to .80¢ per share, an increase of 18% (.04¢ of this increase resulted from the straight-line rent recorded which increased rental income by $831,364 representing rents to be collected in future years on long-term commercial leases.)
Net Income increased to $8,807,845 from $7,604,135 even after a $1,319,316 provision for an impairment of value allowance on two real estate properties - America's Best furniture store - Boise, Idaho and the First Avenue Building - Minot, North Dakota.
Revenues increased to $55,445,193 from $39,927,262, an increase of $15,517,931 or 39%.
Real Estate Owned increased to $449,919,890 from $295,825,839, an increase of $154,094,051 or 52%. This increase is after establishment of a loss reserve of $1,319,316 reflecting a write-down on the Boise furniture store and the First Avenue Building in Minot. Both properties are producing rental income below that necessary to justify their carrying values. Accordingly, a loss reserve has been established for this impairment of value.
Shareholder Equity increased to $109,920,591 from $85,783,294, an increase of $24,137,297 or 28%. In addition, $20,647,039 of equity capital was contributed to the Operating Partnership in UPREIT transactions for a total increase in equity capital of $44,784,336.
Dividends increased to 50.8 cents per share from 46.75 cents, an increase of 4.05 cents (8.7%).
"Self-Advised" Status. On July 1, 2000, IRET became "self-advised" when the Advisory business assets of Odell-Wentz and Associates, L.L.C. were acquired by IRET's Operating Partnership
FUNDS FROM OPERATIONS Funds from operations of the Operating Partnership (taxable income increased by non-cash deductions of real estate asset depreciation and amortization, and reduced by capital gain income and other extraordinary income items) for Fiscal 2000 increased to $16,832,777 ($.805 per share) from the Fiscal 1999 amount of $11,623,825 ($.6753 per share), compared to $9,447,425 ($.6042 per share) for Fiscal 1998. The Fiscal 2000 computation of FFO includes $831,364 ($.0398 per share) of "straight-line rent." Due to an accounting pronouncement which impacts many of our new long-term commercial leases, we are required to recognize as income rents from commercial leases that will not be received until future years. IRET has several commercial properties with leases that provide for periodic rent increases. This pronouncement requires that we calculate the total rents that will be received under each lease and report as income a pro-rata amount each year. Thus, we will report more rent than actually received in the early years of the lease and less rent in the later years. We will report each year the amount of the total difference between the cash actually received in that year and the "straight-line amount" that must be used in our financial reports. The remainder of these increases in funds from operations resulted primarily from increased revenues from existing and newly acquired rental properties as detailed below.
Page 29
These increases in net income resulted primarily from increased rental income, with the exact changes in revenues and expenses detailed below.
REVENUES
Total revenues of the Operating
Partnership for Fiscal 2000 were $55,445,193, compared to $39,927,262 in
Fiscal 1999 (an increase of 38%) and $32,407,545 in Fiscal 1998. The increase
in revenues received during Fiscal 2000 in excess of the prior year revenues
was $15,517,931. This increase resulted from:
| Rent from 27 properties acquired/completed in Fiscal 2000 |
$10,206,154
|
| Rent from 12 properties acquired in Fiscal 1999 in excess of that received in 1999 |
4,419,227
|
| An increase in rental income on existing properties |
579,151
|
| A decrease in rent on the Boise, Idaho Furniture Store (bankruptcy of tenant) |
-38,622
|
| A decrease in rent - properties sold during 1999 |
-524,680
|
| An increase in interest income |
45,337
|
| An increase in rent (straight-line calculations) |
831,364
|
|
$15,517,931
|
The increase in revenues received
during Fiscal 1999 in excess of that received during Fiscal 1998 was $7,519,717.
This increase resulted from:
| Rent from 12 properties acquired in Fiscal 1999 |
$3,182,170
|
| Rent from 7 properties acquired in Fiscal 1998 in excess of that received in Fiscal 1998 |
3,245,774
|
| An increase in rental income on existing properties |
1,081,995
|
| An increase in interest income |
429,016
|
| A decrease in rent on the Boise, Idaho Furniture Store (bankruptcy of tenant) |
-30,877
|
| A decrease in rent - properties sold during 1999 |
-388,091
|
|
$7,519,717
|
As shown by the above analysis, the Fiscal 2000 and 1999 increases in revenues resulted primarily from the addition of new real estate properties to the operating partnership's portfolio. Rents received on properties owned at the beginning of Fiscal 1999 increased by $1,081,995 in Fiscal 1999 and another $579,151 in Fiscal 2000. Thus, the new properties acquired during Fiscal Years 1999 and 2000 generated most of the new revenues during the past two years.
CAPITAL
GAINS
The Operating Partnership realized
capital gain income for Fiscal 2000 of $1,754,496. This compares to $1,947,184
of capital gain income recognized in Fiscal 1999 and the $465,499 recognized
in Fiscal 1998. IRET will continue to seek to market several of its older
and smaller apartment and commercial properties.
Page 30
NET
INCOME The $1,203,710
increase in net taxable income for Fiscal 2000 over the net income earned
in the prior fiscal year resulted from:
| An decrease in gain from sale of investments |
$-192,688
|
| An increase in net rental income | |
| (rents, less utilities, maintenance, taxes, insurance and management) |
11,432,978
|
| An increase in interest income |
45,337
|
| An increase in interest expense |
-4,912,189
|
| An increase in depreciation expense |
-2,493,238
|
| An increase in operating expenses and advisory trustee services |
-545,270
|
| An increase in amortization expense |
-61,420
|
| An increase in minority interest of operating partnership income |
-750,484
|
| An increase in loss on impairment of properties |
-1,319,316
|
|
$1,203,710
|
The
$2,589,226 increase in net taxable income for Fiscal 1999 over the net
income earned in the prior fiscal year resulted from:
| An increase in gain from sale of investments |
$1,481,685
|
| An increase in net rental income | |
| (rents, less utilities, maintenance, taxes, insurance and management) |
4,357,772
|
| A decrease in interest income |
429,016
|
| An increase in interest expense |
-1,622,877
|
| An increase in depreciation expense |
-1,174,967
|
| An increase in operating expenses and advisory trustee services |
-229,897
|
| An increase in amortization expense |
-48,569
|
| An increase in minority interest of operating partnership income |
-602,937
|
|
$2,589,226
|
RESULTS FROM STABILIZED
PROPERTIES
IRET defines fully stabilized properties
as those both owned at the beginning of the prior fiscal year and having
completed the rent-up phase (90% occupancy). "Same store" results of these
properties for Fiscal 2000 and 1999 were as follows:
|
Fiscal 2000
|
Fiscal 1999
|
% Increase
|
|
| Scheduled Rent |
$35,258,759
|
$34,583,936
|
1.95%
|
| Actual Collected Rent |
34,601,729
|
34,076,215
|
1.54%
|
| Utilities & Maintenance |
5,901,031
|
5,798,120
|
1.77%
|
| Management |
2,976,991
|
2,893,392
|
2.89%
|
| Taxes & Insurance |
3,537,693
|
3,567,326
|
.83%
|
| Total Operating Expense |
$12,415,715
|
$12,258,838
|
1.27%
|
| "Same Store" Net Operating Income |
$22,186,014
|
$21,817,377
|
1.68%
|
Page 31
PROPERTY
ACQUISITIONS
The Operating Partnership added
$155,284,745 of real estate investments to its portfolio during Fiscal
2000, compared to $62,455,508 added in the prior year, as detailed below:
Fiscal
2000 Property Acquisitions
| COMMERCIAL | |||
| Maplewood Square | Retail | Rochester, MN |
$11,800,000
|
| Great Plains | Computer Software Mfg. | Fargo, ND |
15,000,000
|
| Edgewood Vista | Assisted Living | Grand Island, NE |
446,000
|
| Edgewood Vista | Assisted Living | Columbus, NE |
446,000
|
| Edgewood Vista | Assisted Living | Belgrade, MT |
446,000
|
| Corner C-Store | Convenience Store | East Grand Forks, MN |
1,385,000
|
| Flying Cloud Drive | Office Building | Eden Prairie, MN |
4,900,000
|
| Lexington Commerce Center | Office Warehouse | Eagan, MN |
4,800,000
|
| Northgate II | Office Warehouse | Maple Grove, MN |
2,300,000
|
| Southeast Tech Center | Office Warehouse | Eagan, MN |
6,050,000
|
| MedPark Mall | Retail | Grand Forks, ND |
5,300,000
|
| Edgewood Vista | Assisted Living | Hermantown, MN |
4,800,000
|
|
$57,673,000
|
|||
| APARTMENTS |
|
||
| Rimrock West |
|
Billings, MT |
$3,750,000
|
| Valley Park Manor |
|
Grand Forks, ND |
4,400,000
|
| The Meadows I*** |
|
Jamestown, ND |
247,700
|
| Thomasbrook |
|
Lincoln, NE |
9,188,470
|
| Pebble Creek |
|
Bismarck, ND |
720,000
|
| Country Meadows II*** |
|
Billings, MT |
3,010,325
|
| Crown Colony |
|
Topeka, KS |
10,500,000
|
| Sherwood |
|
Topeka, KS |
15,750,000
|
| Sunset Trail** |
|
Rochester, MN |
1,500,000
|
| Legacy IV |
|
Grand Forks, ND |
4,301,250
|
| Dakota Hill |
|
Irving, TX |
36,500,000
|
| The Meadows II |
|
Jamestown, ND |
1,845,000
|
| Lancaster Place |
|
St. Cloud, MN |
3,200,000
|
| The Meadows III** |
|
Jamestown, ND |
68,000
|
| Cottonwood Lake III** |
|
Bismarck, ND |
2,631,000
|
|
$97,611,745
|
|||
| TOTAL |
$155,284,745
|
**Property
not placed in service at April 30, 2000. Additional costs are still to
be incurred.
***Represents costs
to complete a project started in year ending April 30, 1999. The
remainder of this page has been intentionally left blank.
Page 32
Fiscal 1999 Property
Acquisitions
| COMMERCIAL | |||
| Edgewood Vista | Assisted Living | Sioux Falls, SD |
$965,000
|
| Edgewood Vista | Assisted Living | Billings, MT |
965,000
|
| Corner Express | Convenience Store | Minot, ND |
1,190,432
|
| Viromed | Office/Laboratory | Eden Prairie, MN |
4,826,310
|
| Ameritrade Holdings | Office | Omaha, NE |
8,283,977
|
|
$ 16,230,719
|
|||
| APARTMENTS |
|
||
| Heritage Manor |
|
Rochester, MN |
$7,371,208
|
| Westwood Park |
|
Bismarck, ND |
2,025,455
|
| Country Meadows II** |
|
Billings, MT |
1,321,962
|
| Clearwater |
|
Boise, ID |
3,786,463
|
| Legacy III*** |
|
Grand Forks, ND |
2,260,345
|
| Van Mall |
|
Vancouver, WA |
6,021,312
|
| The Meadows by IRET** |
|
Jamestown, ND |
1,502,301
|
| Castle Rock |
|
Billings, MT |
5,614,223
|
| Cottonwood II |
|
Bismarck, ND |
4,645,444
|
| Ivy Club |
|
Vancouver, WA |
11,676,076
|
|
|
$46,244,789
|
||
| TOTAL |
$62,455,508
|
**Property
not placed in service at April 30, 1998. Additional costs are still to
be incurred.
***Represents costs
to complete a project started in year ending April 30, 1997.
Property
Dispositions
Real estate assets sold by the Operating
Partnership during Fiscal 2000 and 1999 were as follows:
| Property Sold |
Sales Price
|
Book Value & Sales
Costs
|
Gain
|
| Fiscal 2000 | |||
| Superpumper - Grand Forks, ND |
$485,000
|
$398,521
|
$86,479
|
| Superpumper - Crookston, MN |
428,000
|
338,097
|
89,903
|
| Superpumper - Langdon, ND |
239,000
|
174,648
|
64,352
|
| Superpumper - Sydney, MT |
120,000
|
102,839
|
17,161
|
| Mandan Apartments - Mandan, ND |
325,000
|
249,388
|
75,612
|
| Sweetwater Apartments - Devils Lake, ND |
480,000
|
144,697
|
335,303
|
| Hutchinson Technology - Hutchinson, MN |
5,200,000
|
4,090,997
|
1,109,003
|
| Jenner 18-Plex - Devils Lake, ND |
340,000
|
354,009
|
-14,009
|
| Virginia Apartments - Minot, ND |
165,000
|
175,308
|
-10,308
|
| Installment Sales |
1,000
|
||
| Total Fiscal 2000 Gain |
$1,754,496
|
Page 33
| Property Sold |
Sales Price
|
Book Value & Sales
Costs
|
Gain
|
| Fiscal 1999 | |||
| Fairfield Apartments - Marshall, MN |
$466,000
|
$385,878
|
$80,122
|
| Superpumper - Emerado, ND |
297,000
|
138,854
|
158,146
|
| Bison Apartments - Jamestown, ND |
1,760,000
|
418,101
|
1,341,899
|
| Park Place Apartments - Waseca, MN |
960,000
|
593,983
|
366,017
|
| Installment Sales |
1,000
|
||
| Total Fiscal 1999 Gain |
$1,947,184
|
DIVIDENDS
The following dividends were paid
during Fiscal Years 2000, 1999 and 1998:
| Date |
|
|
|
| July 1, |
$.124
|
$.1100
|
$.10125
|
| October 1, |
.126
|
.1150
|
.10300
|
| January 15, (16th) |
.128
|
.1200
|
.10500
|
| April 1, 2000 |
.130
|
.1225
|
.10700
|
|
$.508
|
$.4675
|
$.41625
|
The Fiscal 2000 dividends increased 8.7% over the dividends paid during Fiscal Year 1999 and 22% over Fiscal 1998.
FUNDS
FROM OPERATIONS
The funds derived during Fiscal
2000 by the Trust from its operations increased by 45% over the prior year
and by 80% from the Fiscal 1998 level, ($16,832,777 in Fiscal 2000, $11,623,825
in Fiscal 1999, and $9,341,317 in 1998). The Fiscal 2000 FFO results include
$831,364 of additional non-cash income due to the "straight-line rent"
requirement which impacts rent recognition on long-term commercial leases.
On a per share basis, Funds From Operations increased to $.8053 per share
from $.6753 in Fiscal 1999 (an increase of 19%) and $.6042 generated in
Fiscal 1998. (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 of real estate assets, and after adjustments for unconsolidated
partnerships and joint ventures calculated on the same basis." It is emphasized
that funds from operations as so calculated and presented does not represent
cash flows from operations as defined under generally accepted accounting
principles and should not be considered as an alternative to net income
as an indication of operating performance or to cash flows as a measure
of liquidity or ability to fund all cash needs.) (See the Consolidated
Statements of Cash Flows in the Consolidated Financial Statements attached
hereto.)
Page 34
The
following is a comparison of dividends paid during the past five fiscal
years to Funds From Operations (as defined above):
|
|
2000 |
1999 |
1998 |
1997 |
1996 |
| Net Income (GAAP) |
$ 8,807,845
|
$ 7,604,135
|
$ 5,014,909
|
$ 3,897,849
|
$ 4,611,970
|
| Adjustments | |||||
| Impairment reserve |
1,319,316
|
0
|
0
|
0
|
0
|
| Gain from property sales |
-1,754,496
|
-1,947,184
|
-465,499
|
-398,424
|
-994,163
|
| Operating income |
8,372,665
|
$5,656,951
|
$4,549,410
|
$3,499,425
|
$3,617,807
|
| Plus depreciation |
8,460,112
|
5,966,874
|
4,791,907
|
3,584,591
|
2,261,724
|
| Funds from operations |
*16,832,777
|
11,623,825
|
9,341,317
|
7,084,016
|
5,893,531
|
| Dividends paid |
10,645,963
|
8,193,538
|
6,518,627
|
5,508,689
|
4,439,034
|
|
$6,186,814
|
$3,430,287
|
$2,822,690
|
$1,575,327
|
$1,440,497
|
*Includes $837,364 of "straight-line rent" - see above explanation.
Management expects that the Funds From Operations (as defined above) will continue to improve during Fiscal 2001 and will continue to substantially exceed dividends paid in the coming year.
LIQUIDITY
AND CAPITAL RESOURCES
Important investment and financing
events in Fiscal 2000 were:
|
|
The net proceeds from sale of Shares of Beneficial Interest under 'best efforts' offerings were $24,137,297; |
|
|
An additional $20,647,039 of equity capital was contributed to the Operating Partnership in UPREIT transactions for a total increase of equity capital of $44,784,336; |
|
|
Mortgage loans increased substantially due to the acquisition of new investment properties to $265,056,767 on 04/30/00, from $175,071,069 on 04/30/99 - the weighted interest rate on these loans increased to 7.59% from 7.12% at the end of Fiscal 1999. At 4/30/99, the weighted interest rate on the $175,071,069 of mortgage indebtedness owed by IRET was 7.12%; |
|
|
$155,284,745 of new real estate investments were made by the Operating Partnership. |
Page 35
|
|
IRET's shareholder equity increased to $109,920,591 from $85,783,297 on April 30, 1999, a gain of $24,137,297 (28%). Equity capital on April 30, 1998 was $68,152,626. These increases resulted from the sale of Shares of Beneficial Interest and the reinvestment of dividends in new shares. |
|
|
Liabilities of the Operating Partnership increased to $287,940,038 from $191,229,475 as of April 30, 1999. IRET's liabilities on April 30, 1998, were $140,276,615. |
|
|
Total assets of the Operating Partnership increased to $432,978,299 from $291,493,311 as of April 30, 1999. Total assets on April 30, 1998, were $224,718,514. |
|
|
Cash and marketable securities were $6,623,495 on April 30, 2000, compared to the year earlier figure of $7,412,236 on April 30, 1999, and $6,389,446 on April 30, 1998. |
|
|
In addition to its cash and marketable securities, IRET Properties has unsecured line of credit agreements with First International Bank & Trust, Bremer Bank and First Western Bank & Trust, all of Minot, North Dakota, totaling $17,500,000. On April 30, 2000, $6,452,420 was in use. Credit lines in Fiscal 1999 totaling $11,500,000 were not in use at the end of 1999. |
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 2000 saw continued stable
economic conditions in the states in which IRET operates. Occupancy rates
for residential properties decreased slightly from the year earlier level.
The current economic outlook for much of IRET's trade area indicates a
continuation of our current rental experiences. Higher interest rates will
increase the interest expense of IRET's borrowings. Of IRET's $265,056,767
of mortgage debt in place at 04/30/00, only $22,711,952 is variable rate
debt on which the interest rates may be adjusted upward. None of the mortgages
come due in Fiscal 2001 and only $9,072,618 will come due in Fiscal 2002.
Thus, most of IRET's mortgage debt has fixed interest rates for the next
two years.
YEAR
2000 COSTS
IRET experienced no costs or problems
associated with the Year 2000 issue for computer hardware and software.
As of 04/30/00, IRET itself did not own or operate computer systems and
had no direct costs to update such systems. IRET was not impacted by computer
costs or failures of its third-party vendors.
Page 36
ITEM 9a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risks inherent in IRET's business include:
Changes in market values of owned securities. On April 30, 2000, IRET owned $2,601,420 of GNMA securities which it intends to hold to maturity and $572,811 of common stock of other real estate investment trusts which it may sell.
Changes in interest rates payable by IRET on its indebtedness. As of 04/30/00, IRET owed $6,452,420 on its credit line which is tied to the New York Prime interest rate; $10,087,256 on investment certificates of which $6,115,525 will come due during Fiscal year 2001 and will either be renewed at the then prevailing interest rates or redeemed, and $265,056,767 of mortgage loans secured by individual buildings, $22,711,952 of which is subject to variable interest rate agreements and none of which will come due in Fiscal 2001 and $9,072,618 which will come due in Fiscal 2002 and the balance in later years. IRET has not entered into any interest rate hedge or other such agreements with respect to its indebtedness or business.
ITEM 10. 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 11. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 12. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The
executive officers and Trustees of IRET as of April 30, 2000, were:
| Name/Age/Position | Business Experience During Past 5 Years |
|
| C. Morris Anderson* Age 71Trustee & Vice Chairman | Director
of Dakota Boys Ranch (26 yrs.);
President of North Hill Bowl, Inc.; Chairman of the Board, International Inn, Inc.; Director, Norwest Bank - Minot, N.A. |
|
| John F. Decker* Age 58 Trustee | Financial
Advisor/Senior Vice President, D.A.
Davidson;
30 years' experience in the securities business |
|
Page 37
| Name/Age/Position | Business Experience During Past 5 Years |
|
| Daniel L. Feist* Age 68 Trustee & Vice Chairman | Realtor,
Real Estate Developer; General
Contractor; President-Owner Feist
Construction & Realty; Investor;
Businessman;
Former Director of First Bank - Minot, N.A.; Director ND Holdings, Inc. - Minot, ND |
|
| Patrick G. Jones* Age 52 Trustee | Investor |
|
| Timothy P. Mihalick Age 41 Trustee | Vice
President of IRET;
Vice President of Odell-Wentz.& Associates, L.L.C. |
|
| Jeffrey L. Miller* Age 56 Trustee & Chairman | Investor;
Businessman;
President of M&S Concessions, Inc.; Former President of Coca-Cola Bottling, Co. |
|
| Stephen L. Stenehjem* Age 45 Trustee | President
& Chief Executive Officer of Watford
City BancShares, Inc.;
President & Chairman of First International Bank & Trust, Watford City, ND; Vice President & Director of First International Bank & Trust, Scottsdale, AZ |
|
| Thomas A. Wentz, Jr. Age 34 Trustee | Vice
President & Legal Counsel of IRET;
Director of SRT Communications, Inc.; Sole General Partner of Wenco, Ltd.; Shareholder & Attorney with Pringle & Herigstad, P.C. until 12/31/99 |
|
* unaffiliated Trustee
ITEM 13. 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 15, 2000.
ITEM 14. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of May 31, 2000, 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 10.84% of such shares on said date.
Page 38
ITEM 15. 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 15, 2000.
PART IV
ITEM 16. EXHIBITS, FINANCIAL
STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
| (a) | The following documents are filed as part of this report: | |
| 1. | Financial Statements | |
| See the Table of Contents to Financial Statements and Supplemental Data. | ||
| 2. | Financial Statement Schedules | |
| The following financial statement schedules should be read in conjunction with the financial statements incorporated by reference in Item 8 of this Annual Report on Form 10-K405: |
|
II
|
Marketable Securities - Other Investments |
|
IV
|
Non-current 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 |
Page 39
| 3. | Documents Incorporated by Reference | |||
|
|
|
|||
| Proxy Statement to be filed in connection with the annual meeting of shareholders to be held August 15, 2000 |
|
|||
| 4. | Exhibits | |
| See the following list of exhibits. | ||
| (b) | Reports on Form 8-K. |
|
|
|
|
|
Sales Report for Best Efforts Offering of Shares of Beneficial Interest |
|
|
Sales Report for Best Efforts Offering of Shares of Beneficial Interest |
|
|
Sales Report for Best Efforts Offering of Shares of Beneficial Interest |
|
|
The following is a list of Exhibits to the Registrant's Annual Report on Form 10-K405 for the fiscal year ended April 30, 2000. 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) | Second Restated Declaration of Trust of Investors Real Estate Trust, dated February 10, 1999, and filed as Exhibit 3(i) to Form S-11 Registration Statement effective June 4, 1999, (SEC File No. 333 21945) filed for the Registrant (File No. 0-14851) and incorporated herein by reference. |
Page 40
| 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 Odell-Wentz & Associates, L.L.C., filed as Exhibit 10 to said Form 10 and incorporated herein by reference. |
The remainder of this page has been intentionally left blank.
Page 41
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.
| Date:_______________________________ | INVESTORS REAL ESTATE TRUST |
| By:
/S/ Thomas A. Wentz, Sr.
Thomas A. Wentz, Sr. President & Principal Executive Officer |
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:
|
|
|
|
| /S/
Timothy P. Mihalick
Timothy P. Mihalick |
Trustee & Senior Vice President |
|
| /S/
Thomas A. Wentz, Jr.
Thomas A. Wentz, Jr. |
Trustee & Vice President |
|
| /S/
Diane K. Bryantt
Diane K. Bryantt |
Secretary |
|
| /S/
Jeffrey L. Miller
Jeffrey L. Miller |
Trustee & Chairman |
|
| /C/
Morris Anderson
C. Morris Anderson |
Trustee & Vice Chairman |
|
| /S/
Daniel L. Feist
Daniel L. Feist |
Trustee & Vice Chairman |
|
| /S/
Patrick G. Jones
Patrick G. Jones |
Trustee |
|
| /S/
John F. Decker
John F. Decker |
Trustee |
|
| /S/
Steven L. Stenehjem
Steven L. Stenehjem |
Trustee |
|
Page 42
INVESTORS REAL ESTATE
TRUST
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
April 30, 2000,
1999 and 1998
and INDEPENDENT
AUDITOR'S REPORT
12 South Main Street - Suite
100
Minot, ND 58701
701-837-4738
fax 701-838-7785
email: [email protected]
www.irets.com
F-1
INVESTORS REAL ESTATE TRUST
AND SUBSIDIARIES
TABLE OF CONTENTS
|
PAGE
|
|
| INDEPENDENT AUDITORS 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 |
8-21
|
| ADDITIONAL INFORMATION | |
| Independent Auditor's Report on Additional Information |
22
|
| Marketable Securities |
23
|
| Supplemental Income Statement Information |
24
|
| Real Estate Accumulated Depreciation |
25 - 31
|
| Investments in Mortgage Loans on Real Estate |
32
|
| Selected Financial Data |
33
|
| Gain From Property Dispositions |
34
|
| Mortgage Loans Payable |
35 - 36
|
| Significant Property Acquisitions |
37
|
| 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) |
38
|
F-2
INDEPENDENT AUDITOR'S REPORT
Board
of Trustees
Investor 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, 2000 and 1999, and the related consolidated statements of operations, shareholders' equity, and cash flows for the years ended April 30, 2000, 1999 and 1998. 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 of 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, 2000 and 1999, and the consolidated results of its operations and cash flows for the years ended April 30, 2000, 1999 and 1998, in conformity with generally accepted accounting principles.
BRADY, MARTZ & ASSOCIATES, P.C.
/S/ Brady, Martz & Associates, P.C.
Minot, North Dakota
May 25, 2000
F-3
ASSETS
|
|
|
|
| REAL ESTATE INVESTMENTS | ||
| Property owned |
$ 449,919,890
|
$ 295,825,839
|
| Less accumulated depreciation |
-33,232,952
|
-26,112,399
|
|
$ 416,686,938
|
$ 269,713,440
|
|
| Mortgage loans receivable |
1,650,284
|
10,721,214
|
| Less discounts and allowances |
-120,706
|
-123,212
|
| Total real estate investments |
$ 418,216,516
|
$ 280,311,442
|
| OTHER ASSETS | ||
| Cash |
$3,449,264
|
$ 3,713,053
|
| Marketable securities - held-to-maturity |
2,601,420
|
2,964,434
|
| Marketable securities - available-for-sale |
572,811
|
734,749
|
| Accounts receivable |
467,441
|
77,438
|
| Rent receivable |
1,055,922
|
0
|
| Real estate deposits |
768,850
|
300,900
|
| Prepaid insurance |
110,183
|
216,348
|
| Tax and insurance escrow |
3,218,603
|
1,761,195
|
| Deferred charges |
2,517,289
|
1,413,752
|
| TOTAL ASSETS |
$432,978,299
|
$ 291,493,311
|
F-4
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
| LIABILITIES | ||
| Accounts payable and accrued expenses |
$6,343,595
|
$
4,388,270
|
| Notes payable |
6,452,420
|
0
|
| Mortgages payable |
265,056,767
|
175,071,069
|
| Investment certificates issued |
10,087,256
|
11,770,136
|
| Total Liabilities |
$ 287,940,038
|
$ 191,229,475
|
| MINORITY INTEREST OF UNIT HOLDERS IN OPERATING PARTNERSHIP |
$35,117,670
|
$14,480,542
|
| SHAREHOLDER'S EQUITY | ||
| Shares of beneficial interest (unlimited authorization, no par value, 22,452,069 shares outstanding in 2000 and 19,066,954 shares outstanding in 1999) |
$119,233,172
|
$93,095,819
|
| Accumulated distributions in excess of net income |
-9,094,076
|
-7,255,958
|
| Accumulated other comprehensive income/loss |
-218,505
|
-56,567
|
| Total shareholders' equity |
$109,920,591
|
$85,783,294
|
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$432,978,299
|
$ 291,493,311
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-5
|
|
|
|
|
| REVENUE | |||
| Real estate rentals |
$54,257,881
|
$38,785,287
|
$31,694,586
|
| Interest, discounts and fees |
1,187,312
|
1,141,975
|
712,959
|
| Total revenue |
$55,445,193
|
$39,927,262
|
$32,407,545
|
| EXPENSES | |||
| Interest |
$17,014,170
|
$12,101,981
|
$10,479,104
|
| Depreciation |
8,460,112
|
5,966,874
|
4,791,907
|
| Utilities and maintenance |
8,044,530
|
6,356,483
|
5,142,459
|
| Taxes |
5,282,361
|
4,025,559
|
3,252,521
|
| Insurance |
476,962
|
384,203
|
283,626
|
| Property management expenses |
4,290,275
|
3,288,267
|
2,642,977
|
| Advisory and trustee services |
1,159,120
|
844,901
|
745,907
|
| Operating expenses |
633,692
|
402,641
|
271,738
|
| Amortization |
216,097
|
154,677
|
106,108
|
| Total expenses |
$45,577,319
|
$33,525,586
|
$27,716,347
|
| INCOME BEFORE GAIN/LOSS ON PROPERTIES AND MINORITY INTEREST |
$9,867,874
|
$6,401,676
|
$4,691,198
|
| GAIN ON SALE OF PROPERTIES |
1,754,496
|
1,947,184
|
465,499
|
| LOSS ON IMPAIRMENT OF PROPERTIES |
-1,319,316
|
0
|
0
|
| MINORITY INTEREST PORTION OF OPERATING PARTNERSHIP INCOME |
-1,495,209
|
-744,725
|
-141,788
|
| NET INCOME |
$8,807,845
|
$7,604,135
|
$5,014,909
|
| Net income per share (basic and diluted) |
$.42
|
$.44
|
$.32
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS
F-6
INVESTORS REAL ESTATE
TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
EQUITY
for the years ended April 30,
2000, 1999 and 1998
|
|
|
|
|
|
|
BALANCE April 30, 1997 |
14,940,513
|
$65,073,951
|
$-5,162,837
|
$86,505
|
$59,997,619
|
| Comprehensive income | |||||
| Net income |
0
|
0
|
5,014,909
|
0
|
5,014,909
|
| Unrealized gain on securities available for sale |
0
|
0
|
0
|
24,117
|
_____24,117
|
| Total comprehensive income |
$ 5,039,026
|
||||
| Dividends distributed |
0
|
0
|
-6,518,627
|
0
|
-6,518,627
|
| Dividends reinvested |
636,799
|
4,290,541
|
0
|
0
|
4,290,541
|
| Sale of shares |
1,196,562
|
8,421,858
|
0
|
0
|
8,421,858
|
| Shares repurchased |
-382,462
|
-3,077,791
|
0
|
0
|
_ -3,077,791
|
BALANCE APRIL 30, 1998 |
16,391,412
|
$ 74,708,559
|
$-6,666,555
|
$110,622
|
$68,152,626
|
| Comprehensive Income | |||||
| Net income |
0
|
0
|
7,604,135
|
0
|
7,604,135
|
| Unrealized loss on securities available for sale |
0
|
0
|
0
|
-167,189
|
-167,189
|
| Total comprehensive income |
$7,436,946
|
||||
| Dividends distributed |
0
|
0
|
-8,193,538
|
0
|
-8,193,538
|
| Dividends reinvested |
762,051
|
5,389,464
|
0
|
0
|
5,389,464
|
| Sale of shares |
2,368,504
|
16,284,684
|
0
|
0
|
16,284,684
|
| Shares repurchased |
-455,013
|
-3,286,888
|
0
|
0
|
_-3,286,888
|
BALANCE APRIL 30, 1999 |
19,066,954
|
$ 93,095,819
|
$-7,255,958
|
$-56,567
|
$85,783,294
|
| Comprehensive income | |||||
| Net income |
0
|
0
|
8,807,845
|
0
|
8,807,845
|
| Unrealized loss on securities available for sale |
0
|
0
|
0
|
-161,938
|
-161,938
|
| Total comprehensive income |
$8,645,907
|
||||
| Dividends distributed |
0
|
0
|
-10,645,963
|
0
|
-10,645,963
|
| Dividends reinvested |
803,192
|
6,330,301
|
0
|
0
|
6,330,301
|
| Sales of shares |
3,115,789
|
24,022,246
|
0
|
0
|
24,022,246
|
| Shares repurchased |
-533,866
|
-4,215,194
|
0
|
0
|
-4,215,194
|
| BALANCE APRIL 30, 2000 |
22,452,069
|
$119,233,172
|
$-9,094,076
|
$-218,505
|
$109,920,591
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-7
INVESTORS REAL ESTATE
TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
for the years ended April 30,
2000, 1999 and 1998
|
|
|
|
|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net Income |
$8,807,845
|
$7,604,135
|
$5,014,909
|
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation and amortization |
8,676,209
|
6,121,551
|
4,898,015
|
| Minority interest portion of operating partnership income |
1,495,209
|
744,725
|
141,788
|
| Accretion of discount on contracts |
-1,506
|
-2,920
|
-5,706
|
| Gain on sale of properties |
-1,754,496
|
-1,947,184
|
-465,499
|
| Loss on impairment of properties |
1,319,316
|
0
|
0
|
| Interest reinvested in investment certificates |
363,935
|
408,097
|
349,791
|
| Changes in other assets and liabilities: | |||
| (Increase) decrease in real estate deposits |
-467,950
|
2,192,813
|
-350,000
|
| (Increase) decrease in rent receivable |
-1,055,922
|
0
|
0
|
| (Increase) decrease in other assets |
-283,838
|
-11,884
|
377,758
|
| Increase in tax and insurance escrow |
-1,457,408
|
-507,127
|
-3,599
|
| Increase in deferred charges |
-1,319,634
|
-480,413
|
-558,660
|
|
Increase (decrease) in accounts payable and accrued
expenses |
1,955,325
|
1,541,190
|
-225,991
|
| Net cash provided from operating activities |
$16,277,085
|
$15,662,983
|
$9,172,806
|
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
|
Proceeds from maturity of marketable securities
held-to-maturity |
$363,014
|
$572,104
|
$518,921
|
| Principal payments on mortgage loans receivable |
492,547
|
372,155
|
565,359
|
| Proceeds from sale of property |
7,326,563
|
435,787
|
1,482,046
|
| Payments for acquisitions and improvement of properties |
-121,931,571
|
-45,325,061
|
-22,894,602
|
| Purchase of marketable securities available-for-sale |
0
|
-181,250
|
0
|
| Investment in mortgage loans receivable |
-6,291,617
|
-7,655,061
|
-2,061,179
|
| Net cash used for investing activities |
$ -120,041,064
|
$-51,781,326
|
$-22,389,455
|
F-8
INVESTORS REAL ESTATE
TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS (continued)
for the years ended April 30,
2000, 1999 and 1998
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Proceeds from sale of shares, net of issue costs |
$24,022,246
|
$16,284,684
|
$8,421,858
|
| Proceeds from investment certificates issued |
3,769,003
|
4,591,528
|
3,283,248
|
| Proceeds from mortgages payable |
93,969,098
|
32,326,973
|
10,612,652
|
| Repurchase of shares and minority interest units |
-4,832,012
|
-3,534,813
|
-3,077,791
|
| Dividends paid |
-4,315,662
|
-2,804,074
|
-2,228,086
|
| Distributions paid to minority interest unitholders |
-1,846,104
|
-791,458
|
179,185
|
| Redemption of investment certificates |
-5,815,818
|
,599,050
|
-1,450,783
|
| Principal payments on mortgage loans |
-7,902,981
|
-3,774,614
|
-2,751,301
|
| Net increase (decrease) in short-term lines of credit |
6,452,420
|
-1,000,000
|
1,000,000
|
| Net cash provided from financing activities |
$103,500,190
|
$37,699,176
|
$13,630,612
|
| NET INCREASE (DECREASE) IN CASH |
$-263,789
|
$1,580,833
|
$413,963
|
| CASH AT BEGINNING OF YEAR |
3,713,053
|
2,132,220
|
1,718,257
|
| CASH AT END OF YEAR |
$3,449,264
|
$3,713,053
|
$2,132,220
|
| SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | |||
| Dividends reinvested |
$6,330,301
|
$5,389,464
|
$4,290,541
|
|
Real estate investment and mortgage loans receivable
acquired through assumption of mortgage loans payable and accrual of costs |
4,049,568
|
12,458,735
|
10,463,677
|
| Mortgage loan receivable transferred to property owned |
15,000,000
|
0
|
1,161,878
|
|
Proceeds from sale of properties deposited directly
with escrow agent |
0
|
6,863,691
|
2,870,387
|
|
Properties acquired through the issuance of minority
interest units in the operating partnership |
21,602,841
|
6,485,927
|
8,325,652
|
| Interest reinvested directly in investment certificates |
363,935
|
408,097
|
349,791
|
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||
| Cash paid during the year for: | |||
| Interest paid on mortgages |
$15,670,488
|
$10,998,722
|
$9,613,154
|
| Interest paid on investment certificates |
544,977
|
895,214
|
657,966
|
|
$16,215,465
|
$11,893,936
|
$10,271,120
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS.
F-9
INVESTORS REAL ESTATE
TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
April 30, 2000, 1999 and 1998
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 primarily 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. Rental revenue from residential properties represents the major source of revenues for the Trust.
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 substantially 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 is operated in a manner that allows IRET to continue its qualification as a real estate investment trust under the Internal Revenue Code.
All limited partners of the operating partnership 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 distributes cash on a quarterly basis in the amounts determined by the Trust, which results in each limited partner receiving a distribution equivalent to the dividend received by 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. The trust is also the sole shareholder of Miramont - IRET Inc. and Pine Cone - IRET Inc., both of which are invested in real estate.
The Trust is also the sole shareholder of the following entities: Forest Park - IRET, Inc., Thomasbrook - IRET, Inc., Dakota - IRET, Inc., MedPark - IRET, Inc., and Flying Cloud - IRET, Inc. These entities are the sole general partners and IRET Properties is the sole limited partner for the following limited partnerships, respectively: Forest Park Properties, a North Dakota Limited Partnership; Thomasbrook Properties, a Nebraska Limited Partnership; Dakota Hill Properties, a Texas Limited Partnership; MedPark Properties, a North Dakota Limited Partnership; and 7901 Properties L.P. These limited partnerships are all invested in real estate.
All material intercompany transactions and balances have been eliminated in the consolidated financial statements.
F-10
Prior to May 1, 1998, IRET Properties was also a general partner in six limited partnerships, and due to the immaterial involvement of the limited partners, had substantial influence over their operations. These limited partnership were as follows:
Eastgate
Properties, Ltd.
Bison Properties, Ltd.
First Avenue Building, Ltd.
Sweetwater Properties, Ltd.
Hill Park Properties, Ltd.
Colton Heights, Ltd.
The above partnerships were consolidated in prior year financial statements. Effective May 1, 1998, the related partnerships were acquired by IRET Properties through the issuance of operating partnership units as part of UPREIT transactions.
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. Interest, real estate taxes, and other development costs relating to the acquisition and development of certain qualifying properties are also capitalized. Expenditures for maintenance and repairs which do not add to the value or extend useful lives are charged to expense as incurred.
The Trust assesses whether there has been an impairment in the value of its real estate by comparing its carrying amount to the aggregate undiscounted future cash flows without interest charges. Such cash flows consider factors such as expected future operating income, trends and prospects as well as the effects of demand, competition and other economic factors. Such market factors include a lessee's ability to pay rent under the terms of the lease. If a property is leased at a significantly lower rent, the Trust may recognize a loss if the income stream is not sufficient to recover its investment.
DEPRECIATION is provided to amortize the cost of individual assets over their estimated useful lives using principally the straight-line method. Useful lives range from 5 - 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.
F-11
NOTE 1 - (continued)
MARKETABLE SECURITIES - The Trust's investments in securities are classified as securities "held-to-maturity" and securities "available-for-sale." 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. The securities classified as "held-to-maturity" consist of Government National Mortgage Association securities for which the Trust has positive intent and ability to hold to maturity. They are reported at cost, adjusted by amortization of premiums and accretion of discounts which are recognized in interest income using the straight line method over the period to maturity which approximates the effective interest method.
REAL ESTATE DEPOSITS consist of funds held by an escrow agent to be applied toward the purchase of real estate qualifying for gain deferral as a like-kind exchange of property under section 1031 of the Internal Revenue Code. It also consists of earnest money, or "good faith deposits," to be used by the Trust toward the purchase of property or the payment of loan costs associated with loan refinancing.
MINORITY INTEREST - Interests in the operating partnerships held by limited partners are represented by operating partnership units. The operating partnerships' income is allocated to holders of units based upon the ratio of their holdings to the total units outstanding during the period. 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 - Effective May 1, 1998, the Trust adopted Statement of Financial Accounting Standard No. 128, Earnings Per Share. Basic net income per share is computed using the weighted average number of shares outstanding. There is potential for dilution of net income per share due to the conversion option of operating partnership units. However, basic and diluted net income per share are the same. The computation of basic and diluted net income per share can be found in Note 13.
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 the Internal Revenue Code Section 701(b) and 704(c).
REVENUE RECOGNITION - Residential rental properties are leased under operating leases with terms generally of one year or less. Commercial properties are leased under operating leases to tenants for various terms exceeding one year. Lease terms often include renewal options. Rental revenue is recognized on the straight-line basis, which averages minimum required rents over the terms of the leases.
F-12
NOTE 1 - (continued)
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. These percentage rents are recorded once the required sales level is achieved and are included in rental income at that time.
Profit on sales of real estate shall be recognized in full when real estate is sold, provided 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 and the earnings process is virtually complete, that is, the seller is not obliged to perform significant activities after the sale to earn the profit.
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.
RECLASSIFICATIONS - Certain previously reported amounts have been reclassified to conform with the current financial statement presentation.
THE DIVIDEND REINVESTMENT PLAN is available to all shareholders of the Trust. Under the Dividend Reinvestment Plan, shareholders may elect for their dividends to be used by the plan administrator to acquire additional shares on the NASDAQ Small Cap Market or, if not available, directly from the Trust for approximately 95% of the market price on the date of purchase.
NOTE 2 - OFF-BALANCE-SHEET RISK
The Trust had deposits at First Western Bank, Bremer Bank, and First International Bank which exceeded Federal Deposit Insurance Corporation limits by $1,499,057, $593,348 and $339,405, respectively, at April 30, 2000.
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:
|
|
|
|
| Residential |
$329,205,116
|
$228,574,976
|
| Less accumulated depreciation |
-25,029,645
|
-19,002,784
|
|
$304,175,471
|
$209,572,192
|
|
| Commercial |
$120,714,774
|
$ 67,250,863
|
| Less accumulated depreciation |
-8,203,307
|
-7,109,615
|
|
$112,511,467
|
$60,141,248
|
|
| Remaining Cost |
$416,686,938
|
$269,713,440
|
There were no repossessions during the years ended April 30, 2000 and 1999.
F-13
NOTE 3 - (continued)
The above cost of residential real estate owned included construction in progress of $6,190,287 and $7,492,062 as of April 30, 2000 and 1999, respectively. As of April 30, 2000, the trust expects to fund approximately $6,000,000 during the upcoming year to complete these construction projects. The Trust also has outstanding offers to purchase selected properties as part of their normal operations. As of April 30, 2000, significant signed purchase commitments are estimated at $27,850,000 for the upcoming year.
Construction period interest of $404,089, $211,882 and $220,573 has been capitalized for the years ended April 30, 2000, 1999 and 1998, respectively.
Residential apartment units are rented to individual tenants with lease terms up to one year. Gross revenues from residential rentals totaled $42,379,855, $33,010,126 and $27,231,714 for the years ended April 20, 2000, 1999 and 1998, respectively.
Gross revenues from commercial property rentals totaled $11,878,026, $5,775,161 and $4,462,872 for the years ended April 30, 2000, 1999 and 1998, respectively. Commercial properties are leased to tenants under terms of leases expiring at various dates through 2024. 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 $102,659, $101,032 and $28,316 for the years ended April 30, 2000, 1999 and 1998, respectively.
The
future minimum lease payments to be received under these operating leases
for the commercial properties as of April 30, 2000, are as follows:
| Year ending April 30, | |
| 2001 |
$13,235,043
|
| 2002 |
13,041,779
|
| 2003 |
12,627,156
|
| 2004 |
12,148,862
|
| 2005 |
11,540,473
|
| Thereafter |
84,932,691
|
|
$147,526,004
|
Loss on impairment of two commercial properties totaled $1,319,316 for the year ended April 30, 2000. The carrying value of First Avenue Building, located in Minot, North Dakota, was reduced by $311,202, resulting from deficiencies in rent collections. The carrying value of a commercial building located in Boise, Idaho was reduced by $1,008,114, resulting from rent concessions allowed through the Leasee's bankruptcy proceedings. Impairment amounts were estimated based on the expected future cash flows from each property.
NOTE 4 - MORTGAGE LOANS RECEIVABLE
Mortgage loans receivable consists of seven contracts which are collateralized by real estate. Contract terms call for monthly payments of principals and interest. Interest rates range from 7% to 11%. Mortgage loans receivable have been evaluated for possible losses considering repayment history, market value of underlying collateral, deferred gains and economic conditions.
F-14
Future principal
payments due under the mortgage loans contracts as of April 30, 2000, are
as follows:
| Year ending April 30, | |
| 2001 |
$ 512,146
|
| 2002 |
37,495
|
| 2003 |
142,351
|
| 2004 |
86,532
|
| 2005 |
44,077
|
| Later years |
827,683
|
|
$1,650,284
|
There were no significant non-performing mortgage loans receivable as of April 30, 2000 and 1999. Non-performing loans are recognized as impaired in conformity with FASB Statement No. 114, Accounting by Creditors for Impairment of a Loan. The average balance of impaired loans for the year ended April 30, 2000 and 1999 was not significant. 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 loans if they had not been non-performing was not significant in 2000, 1999 or 1998. There was no interest income on non-performing loans recognized on a cash basis for 2000, 1999 and 1998.
NOTE 5 - MARKETABLE SECURITIES
The
amortized cost and estimated market values of marketable securities held-to-maturity
at April 30, 2000 and 1999 are as follows:
|
|
Cost |
Unrealized Gains |
Gross
Unrealized Losses |
Value |
| ISSUER GNMA |
$2,601,420
|
$34,608
|
$159,785
|
$2,476,243
|
|
|
||||
| ISSUER GNMA |
$2,964,434
|
$34,773
|
$21,723
|
$2,977,484
|
F-15
The amortized
cost and estimated market values of marketable securities available-for-sale
at April 30, 2000 and 1999 are as follows:
|
|
Cost |
Unrealized Gains |
Unrealized Losses |
Value |
| Equity shares in other REIT's |
$791,316
|
$65,338
|
$283,843
|
$572,811
|
|
|
||||
| Equity shares in other REIT's |
$791,316
|
$82,524
|
$139,091
|
$734,749
|
There were no realized gains or losses on sales of securities for the years ended April 30, 2000, 1999 and 1998.
Marketable
securities held-to-maturity consists of Governmental National Mortgage
Association (GNMA) securities bearing interest from 6.5% to 9.5% with maturity
dates ranging from May 15, 2016, to September 15, 2023. The following is
a summary of the maturities of securities held-to-maturity at April 30,
2000 and 1999:
|
|
||||
|
Cost |
Value |
Cost |
Value |
|
| Due After 10 years |
$2,601,420
|
$2,476,243
|
$2,964,434
|
$2,977,484
|
NOTE 6 - NOTES PAYABLE
As of April 30, 2000, the trust had lines of credit available from three financial institutions. An unsecured line of credit was issued by First Western Bank & Trust in the amount of $4,000,000 carrying an interest rate equal to prime and maturing August 1, 2000. A second unsecured line of credit from First International Bank & Trust was issued in the amount of $3,500,000 carrying an interest rate equal to prime and maturing September 15, 2000. A third unsecured line of credit from Bremer Bank was issued in the amount of $10,000,000 carrying an interest rate equal to Bremer Financial Corp.'s reference rate and maturing August 1, 2001. Interest payments are due monthly on all three notes. As of April 30, 2000, the Trust had an unpaid balance of $6,452,420 on their line of credit at Bremer Bank. As of April 30, 1999, the Trust had no unpaid balances on any of their lines of credit.
NOTE 7 - MORTGAGES PAYABLE
Mortgages payable as of April 30, 2000, included mortgages on properties owned totaling $265,056,767. The carrying value of the related real estate owned was $410,776,553.
Mortgages payable as of April 30, 1999, included mortgages on properties owned totaling $175,064,346 and mortgages of $6,723 on property sold on contract. The carrying value of the related real estate owned was $198,076,573 and the carrying value of the related mortgage loans receivable was $159,965 as of April 30, 1999.
F-16
NOTE 7 - (continued)
Monthly installments are due on the mortgages with interest rates ranging from 6.47% to 9.75% and with varying maturity dates through November 30, 2036.
Of the mortgages payable, the balances of fixed rate mortgages totaled $232,919,354 and $138,616,556, and the balances of variable rate mortgages totaled $32,137,413 and $36,454,513 as of April 30, 2000 and 1999, respectively.
The aggregate
amount of required future principal payments on mortgages payable is as
follows:
| Year ending April 30, | |
| 2001 |
$
5,673,960
|
| 2002 |
14,872,886
|
| 2003 |
6,373,759
|
| 2004 |
6,821,967
|
| 2005 |
7,257,213
|
| Later years |
224,056,982
|
| Total payments |
$265,056,767
|
NOTE 8 - INVESTMENT CERTIFICATES ISSUED
The
Trust has placed investment certificates with the public. The interest
rates vary from 6% to 9% 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.
| Year ending April 30, | |
| 2001 |
$ 6,115,525
|
| 2002 |
936,984
|
| 2003 |
1,308,191
|
| 2004 |
751,311
|
| 2005 |
963,941
|
| Thereafter |
11,304
|
|
$10,087,256
|
NOTE 9 - 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 $1,000, $1,000 and $16,713 for the years ended April 30, 2000, 1999 and 1998, respectively.
F-17
NOTE 10 - 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, 2000, Odell-Wentz & Associates received total fees under said agreement of $1,400,973. The fees for April 30, 1999, were $951,234 and for April 30, 1998, were $740,393.
For the years ended April 30, 2000, 1999 and 1998, the Trust has capitalized $316,458, $195,019 and $141,468, respectively, of these fees, with the remainder of $1,084,515, $756,215 and $598,925, respectively, expensed as advisory fees on the statement of operations. The advisor is obligated to provide office space, staff, office equipment, 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 $649,729, $609,783 and $530,678 for services rendered for years ended April 30, 2000, 1999 and 1998, 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 $100,081, $157,392 and $171,755, for the years ended April 30, 2000, 1999 and 1998, respectively.
The Trust paid fees and expense reimbursements to the law firm in which Thomas A. Wentz, Jr. was, until December 31, 1999, a partner totaling $89,497, $33,022 and $62,293 for the years ended April 30, 2000, 1999 and 1998, respectively. Thomas A. Wentz, Jr. is a trustee of the Trust.
Investment certificates issued by the Trust to officers and trustees totaled $200,000, $2,138,758 and $1,219,457, at April 30, 2000, 1999 and 1998, respectively.
The Trust issued 334,172 limited partnership units at $7.20/unit to Roger R. Odell and C. Morris Anderson upon the completion of the UPREIT transaction with Magic City Realty during the year ended April 30, 1998. Mr. Odell and Mr. Anderson owned all of Magic City Realty. Mr. Anderson is also a trustee of the Trust.
NOTE 11 - MARKET PRICE RANGE OF SHARES
For the year ended April 30, 2000, a total of 4,058,018 shares were traded in 3,414 separate trades. The high trade price during the period was 17.875, low was 7.681, and the closing price on April 30, 2000 was 7.875. For the year ended April 30, 1999, a total of 1,862,187 shares were traded in 1,017 separate trades. The high trade price during the period was 14.00, low was 6.50, and the closing price on April 30, 1999 was 7.50. For the year ended April 30, 1998, a total of 812,498 shares were traded in 445 separate trades. The high trade price during the period was 7.41, low was 6.56, and the closing price on April 30, 1998, was 7.12.
F-18
NOTE 12 - OPERATING SEGMENTS
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated by the chief decision makers in deciding how to allocate resources and in assessing performance. Operating segments of the Trust would include commercial and residential rental operations. Generally, segmental information follows the same accounting policies utilized for consolidated reporting, except, certain expenses, such as depreciation, are not allocated to segments for management purposes.
The following information summarizes the Trust's segment reporting for Residential and Commercial properties along with reconciliations to the consolidated financial statements:
YEAR ENDING APRIL 30, 2000
|
|
|
|
|
| Segment Revenue | |||
| Rental revenue |
$11,878,026
|
$ 42,379,855
|
$ 54,257,881
|
| Segment Expenses | |||
| Mortgage interest |
3,980,450
|
12,312,038
|
16,292,488
|
| Utilities and maintenance |
452,229
|
7,592,301
|
8,044,530
|
| Taxes |
481,191
|
4,801,170
|
5,282,361
|
| Insurance |
52,288
|
424,674
|
476,962
|
| Property management |
132,435
|
4,157,840
|
4,290,275
|
| Total Segment Expense |
$5,098,593
|
$ 29,288,023
|
$ 34,386,616
|
| Segment Gross Profit |
$6,779,433
|
$ 13,091,832
|
$ 19,871,265
|
| Reconciliation to consolidated operations: | |
| Interest discounts and fee revenue |
1,187,312
|
| Other interest expense |
-721,682
|
| Depreciation |
-8,460,112
|
| Advisory and trust fees |
-1,159,120
|
| Operating expenses |
-633,692
|
| Amortization |
-216,097
|
| Consolidated income before gain/loss on properties and minority interest |
$ 9,867,874
|
APRIL 30, 2000
|
|
|
|
|
| Segment Assets | |||
| Property owned |
$ 120,714,774
|
$ 329,205,116
|
$ 449,919,890
|
| Less accumulated depreciation |
-8,203,307
|
-25,029,645
|
-33,232,952
|
| Total consolidated property owned |
$ 112,511,467
|
$ 304,175,471
|
$ 416,686,938
|
F-19
YEAR ENDING APRIL 30, 1999
|
|
|
|
|
| Segment Revenue | |||
| Rental revenue |
$5,775,161
|
$ 33,010,126
|
$ 38,785,287
|
| Segment Expenses | |||
| Mortgage interest |
2,417,316
|
8,782,600
|
11,199,916
|
| Utilities and maintenance |
113,374
|
6,243,109
|
6,356,483
|
| Taxes |
192,930
|
3,832,629
|
4,025,559
|
| Insurance |
30,067
|
354,136
|
384,203
|
| Property management |
60,612
|
3,227,655
|
3,288,267
|
| Total Segment Expense |
$2,814,299
|
$22,440,129
|
$ 25,254,428
|
| Segment Gross Profit |
$2,960,862
|
$10,569,997
|
$ 13,530,859
|
| Reconciliation to consolidated operations: | |
| Interest discounts and fee revenue |
1,141,975
|
| Other interest expense |
-902,065
|
| Depreciation |
-5,966,874
|
| Advisory and trust fees |
-927,063
|
| Operating expenses |
-320,479
|
| Amortization |
-154,677
|
| Consolidated income before gain/loss on properties and minority interest |
$ 6,401,676
|
APRIL 30, 1999
|
|
|
|
|
| Segment Assets | |||
| Property owned |
$67,250,863
|
$228,574,976
|
$295,825,839
|
| Less accumulated depreciation |
-7,109,615
|
-19,002,784
|
-26,112,399
|
| Total consolidated property owned |
$60,141,248
|
$209,572,192
|
$269,713,440
|
F-20
YEAR ENDING APRIL 30, 1998
|
|
|
|
|
| Segment Revenue | |||
| Rental revenue |
$ 4,462,872
|
$ 27,231,714
|
$ 31,694,586
|
| Segment Expenses | |||
| Mortgage interest |
2,048,990
|
7,665,969
|
9,714,959
|
| Utilities and maintenance |
113,374
|
5,029,085
|
5,142,459
|
| Taxes |
174,077
|
3,078,444
|
3,252,521
|
| Insurance |
33,161
|
250,465
|
283,626
|
| Property management |
50,700
|
2,592,277
|
2,642,977
|
| Total Segment Expense |
$2,420,302
|
$ 18,616,240
|
$ 21,036,542
|
| Segment Gross Profit |
$2,042,570
|
$
8,615,474
|
$ 10,658,044
|
| Reconciliation to consolidated operations: | |
| Interest discounts and fee revenue |
712,959
|
| Other interest expense |
-764,145
|
| Depreciation |
-4,791,907
|
| Advisory and trust fees |
-745,907
|
| Operating expenses |
-271,738
|
| Amortization |
-106,108
|
| Consolidated income before gain/loss on properties and minority interest |
$ 4,691,198
|
APRIL 30, 1998
| Segment Assets |
|
|
|
| Property owned |
$ 50,429,416
|
$180,986,906
|
$231,416,322
|
| Less accumulated depreciation |
-6,066,393
|
-15,449,736
|
-21,516,129
|
| Total consolidated property owned |
$ 44,363,023
|
$165,537,170
|
$209,900,193
|
F - 21
NOTE 13 - EARNINGS PER SHARE
Basic
earnings per share are computed by dividing the earnings available to stockholders
by the weighted average number of shares outstanding during the period.
Diluted earnings per share reflect per share amounts that would have resulted
if potential dilutive securities had been converted to shares. Operating
partnership units can be exchanged for shares on a one for one basis. The
following tables reconciles amounts reported in the consolidated financial
statements for the years ended April 30, 2000, 1999, and 1998:
|
|
|
|
|
| NUMERATOR | |||
| Net income applicable to shares |
$8,807,845
|
$7,604,135
|
$5,014,909
|
| Numerator for basic earnings per share |
8,807,845
|
7,604,135
|
5,014,909
|
| Minority
interest portion of operating
partnership income |
1,495,209
|
744,725
|
141,788
|
| Numerator for diluted earnings per share |
$ 10,303,054
|
$8,348,860
|
$5,156,697
|
| DENOMINATOR | |||
| Denominator
for basic earnings per share
Weighted average shares |
20,899,848
|
17,441,976
|
15,636,214
|
| Effect
of dilutive securities
Convertible operating partnership units |
3,577,136
|
1,662,489
|
417,445
|
| Denominator for diluted earnings per share |
24,476,984
|
19,104,465
|
16,053,659
|
| Basic earnings per share |
$.42
|
$
0.44
|
$
0.32
|
| Diluted earnings per share |
$.42
|
$
0.44
|
$
0.32
|
NOTE 14 - 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.
Notes payable - The carrying amount approximates fair value because of the short maturity of those notes.
Mortgages payable - For variable rate loans that re-price 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.
F - 22
NOTE 14 - (continued)
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 which interest will be paid.
The estimated
fair values of the Company's financial instruments are as follows:
|
|
||||
|
Amount |
Value |
Amount |
Value |
|
| FINANCIAL ASSETS | ||||
| Mortgage loan receivable |
$1,650,284
|
$1,650,284
|
$10,721,214
|
$10,721,214
|
| Cash |
3,449,264
|
3,449,264
|
3,713,053
|
3,713,053
|
| Marketable
securities
held-to-maturity |
2,601,420
|
2,476,243
|
2,964,434
|
2,977,484
|
| Marketable
securities
available-for-sale |
572,811
|
572,811
|
734,749
|
734,749
|
| FINANCIAL LIABILITIES | ||||
| Notes payable |
$6,452,420
|
$6,452,420
|
$0
|
$0
|
| Mortgages payable |
265,057,767
|
250,897,221
|
175,071,069
|
175,561,542
|
| Investment certificates issued |
10,087,256
|
10,810,160
|
11,770,136
|
11,619,938
|
| Accrued interest payable |
1,679,000
|
1,679,000
|
1,428,222
|
1,428,222
|
F - 23
ADDITIONAL INFORMATION
F - 24
INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION
Board
of Trustees
Investor 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, 2000, 1999 and 1998, 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 24 through 37 related to the 2000, 1999 and 1998 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 38 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, 2000, 1999 and 1998, 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 Subsidiaries as of April 30, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each
of the two years ended April 30, 1997 and 1996, none of which is presented
herein, and we expressed unqualified opinions on those consolidated financial
statements. In our opinion, the information on page 33 relating to the
1997 and 1996 consolidated financial statements is fairly stated in all
material respects in relation to the basic consolidated financial statements
from which is has been derived.
/S/ Brady, Martz &
Associates, P.C.
BRADY, MARTZ & ASSOCIATES,
P.C.
Minot, North Dakota
May 25, 2000
F - 25
INVESTORS REAL ESTATE
TRUST AND SUBSIDIARIES
April 30, 2000 and 1999
Schedule I
MARKETABLE SECURITIES
|
|
||||
|
Amount |
|
Amount |
|
|
| GNMA Pools |
$2,601,420
|
$2,476,243
|
$2,964,434
|
$2,977,484
|
|
|
|
|
|
|
| Equity shares in other REIT's |
$791,316
|
$572,811
|
$
791,316
|
$734,749
|
F - 26
INVESTORS REAL ESTATE
TRUST AND SUBSIDIARIES
for the years ended April 30,
2000, 1999 and 1998
Schedule X
SUPPLEMENTAL INCOME STATEMENT INFORMATION
|
|
|||
|
|
|
|
|
| ITEM | |||
| Maintenance and repairs |
$4,564,693
|
$ 3,470,202
|
$ 2,832,772
|
| Taxes, other than payroll and income taxes |
$5,282,361
|
$ 4,025,560
|
$3,162,656
|
| Royalties |
*
|
*
|
*
|
| Advertising costs |
*
|
*
|
*
|
*Less than 1 percent of total revenues
F - 27
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
|
INITIAL COST TO TRUST SUBSEQUENT TO ACQUISITION |
|||||
|
|
|
|
|
|
|
| BEULAH CONDOS - BEULAH, ND |
$0
|
$6,360
|
$465,089
|
$3,531
|
$0
|
| BISON PROPERTIES - CARRINGTON, ND |
0
|
100,210
|
469,573
|
38,578
|
0
|
| CANDLELIGHT APTS - FARGO, ND |
444,065
|
80,040
|
819,052
|
32,978
|
0
|
| CASTLE ROCK - BILLINGS, MT |
3,903,494
|
736,000
|
4,937,197
|
36,441
|
0
|
| CENTURY APTS. - DICKINSON, ND |
1,437,073
|
100,000
|
2,024,281
|
81,213
|
0
|
| CENTURY APTS. - WILLISTON, ND |
2,432,662
|
200,000
|
3,709,583
|
44,862
|
0
|
| CHATEAU APTS. - MINOT, ND |
1,576,726
|
122,000
|
2,284,110
|
38,090
|
0
|
| CLEARWATER - BOISE, ID |
2,622,317
|
585,000
|
3,237,199
|
11,287
|
0
|
| COLTON HEIGHTS - MINOT, ND |
286,121
|
80,000
|
846,045
|
31,154
|
0
|
| COTTONWOOD LAKE - BISMARCK, ND |
5,600,619
|
1,055,862
|
8,791,175
|
2,145,245
|
114,353
|
| COUNTRY MEADOWS PHSI - BILLINGS, MT |
0
|
245,623
|
1,897,131
|
2,189,533
|
0
|
| COUNTRY MEADOWS PHSII - BILLINGS, MT |
2,567,670
|
245,624
|
3,648,297
|
342,498
|
120,821
|
| CRESTVIEW APTS. - BISMARCK, ND |
3,305,256
|
235,000
|
4,564,607
|
4,896
|
0
|
| CROWN COLONY - TOPEKA, KS |
7,322,656
|
620,000
|
10,023,038
|
0
|
0
|
| DAKOTA ARMS - MINOT, ND |
331,538
|
50,000
|
564,752
|
6,437
|
0
|
| DAKOTA HILL AT VALLEY RANCH - IRVING, TX |
25,514,754
|
3,650,000
|
33,823,258
|
0
|
0
|
| EASTGATE PROPERTIES - MOORHEAD, MN |
1,618,343
|
23,917
|
2,020,369
|
79,603
|
0
|
| EASTWOOD - DICKINSON, ND |
216,171
|
40,000
|
394,579
|
10,694
|
0
|
| FOREST PARK ESTATES. - GRAND FORKS, ND |
7,493,912
|
810,000
|
6,310,900
|
183,815
|
0
|
| HERITAGE MANOR - ROCHESTER, MN |
4,886,409
|
403,256
|
7,018,721
|
176,196
|
0
|
| HILL PARK PROPERTIES - BISMARCK, ND |
1,324,449
|
224,750
|
2,799,409
|
41,979
|
0
|
| IVY CLUB - VANCOUVER, WA |
6,997,864
|
1,274,000
|
10,422,668
|
40,929
|
0
|
| JENNER PROPERTIES - GRAND FORKS, ND |
1,155,272
|
220,000
|
1,971,034
|
0
|
0
|
| KIRKWOOD APTS. - BISMARCK, ND |
2,293,900
|
449,290
|
3,137,992
|
33,941
|
0
|
| LANCASTER APTS. - ST. CLOUD, MN |
1,765,640
|
289,000
|
2,899,120
|
0
|
0
|
| LEGACY APTS. - GRAND FORKS, ND |
6,291,732
|
1,361,855
|
9,246,522
|
60,567
|
224,180
|
| LEGACY UNDERGROUND - GRAND FORKS, ND |
0
|
725,277
|
2,260,345
|
3,858,894
|
0
|
| LONETREE APTS. - HARVEY, ND |
0
|
13,584
|
212,125
|
1,666
|
0
|
| MAGIC CITY APTS. - MINOT, ND |
2,350,016
|
532,000
|
4,896,774
|
120,285
|
0
|
| MEADOWS - JAMESTOWN, ND |
0
|
167,325
|
111,252
|
3,440,032
|
0
|
| MIRAMONT - FORT COLLINS, CO |
11,433,772
|
1,470,000
|
12,815,175
|
30,425
|
0
|
| NEIGHBORHOOD APTS. - COLORADO SPRINGS, CO |
7,172,881
|
1,033,592
|
10,063,591
|
194,501
|
0
|
| NORTH POINTE - BISMARCK, ND |
1,660,279
|
143,500
|
2,135,988
|
15,289
|
123,687
|
| OAK MANOR APTS. - DICKINSON, ND |
0
|
25,000
|
325,484
|
10,550
|
0
|
| OAKWOOD ESTATES - SIOUX FALLS, SD |
2,027,218
|
342,800
|
3,202,531
|
55,140
|
0
|
| OXBOW - SIOUX FALLS, SD |
3,212,015
|
404,072
|
4,585,201
|
21,268
|
0
|
| PARK EAST APTS. - FARGO, ND |
3,427,187
|
83,000
|
4,868,327
|
115,324
|
0
|
| PARK MEADOWS - WAITE PARK, MN |
8,205,156
|
1,143,450
|
9,997,564
|
259,621
|
0
|
| PARKWAY APTS. - BEULAH, ND |
0
|
7,000
|
115,058
|
21,922
|
0
|
| PEBBLE CREEK - BISMARCK, ND |
0
|
7,200
|
749,493
|
0
|
0
|
| PINE CONE APTS. - FORT COLLINS, CO |
10,388,494
|
904,545
|
12,312,375
|
13,230
|
0
|
| POINTE WEST APTS. - MINOT, ND |
2,333,122
|
240,000
|
3,717,341
|
40,475
|
0
|
| PRAIRIE WINDS APTS. - SIOUX FALLS, SD |
1,315,071
|
144,097
|
1,843,578
|
15,169
|
0
|
| RIMROCK APTS. - BILLINGS, MT |
2,636,747
|
329,708
|
3,537,917
|
0
|
0
|
| ROCKY MEADOWS 96 - BILLINGS, MT |
3,746,956
|
655,985
|
5,913,331
|
43,055
|
103,378
|
| ROSEWOOD/OAKWOOD - SIOUX FALLS, SD |
1,207,736
|
200,000
|
1,747,935
|
0
|
0
|
| SHERWOOD APTS. - TOPEKA, KS |
10,983,984
|
1,150,000
|
14,748,882
|
0
|
0
|
F - 28
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
(continued)
|
;
COST CAPITALIZATION
INITIAL COST TO TRUST SUBSEQUENT
TO ACQUISITION |
|||||
|
|
|
|
IMPROVEMENTS |
|
COSTS |
|
SOUTH
POINTE - MINOT, ND
|
$6,348,125
|
$550,000
|
$9,342,994
|
$15,137
|
$ 402,672
|
|
SOUTHVIEW
APTS. - MINOT, ND
|
0
|
185,000
|
528,128
|
11,084
|
0
|
|
SOUTHWIND
APTS. - GRAND FORKS, ND
|
4,004,202
|
400,000
|
5,312,354
|
66,377
|
0
|
|
SUNCHASE
- FARGO, ND
|
365,012
|
52,870
|
967,421
|
19,554
|
0
|
|
SUNSET
TRAIL - ROCHESTER, MN
|
0
|
504,563
|
2,523,846
|
0
|
0
|
|
SWEETWATER
PROPERTIES - DEVILS LAKE, ND
|
126,522
|
90,767
|
1,483,071
|
0
|
0
|
|
THOMASBROOK
- LINCOLN, NE
|
6,158,734
|
600,000
|
8,972,130
|
0
|
0
|
|
VALLEY
PARK MANOR - GRAND FORKS, ND
|
2,074,754
|
293,500
|
4,226,508
|
9
|
0
|
|
VAN MALL
WOODS - VANCOUVER, WA
|
3,947,992
|
600,000
|
5,434,347
|
83,965
|
0
|
|
WEST
STONEHILL - ST. CLOUD, MN
|
7,676,840
|
939,000
|
10,553,684
|
156,402
|
0
|
|
WESTWOOD
PARK - BISMARCK, ND
|
1,195,334
|
161,114
|
1,966,747
|
44,302
|
0
|
|
WOODRIDGE
APTS. - ROCHESTER, MN
|
4,063,458
|
370,000
|
6,164,011
|
189,945
|
0
|
|
$199,450,248
|
$ 27,676,737
|
$ 285,961,211
|
$14,478,077
|
$1,089,091
|
|
F - 29
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
|
|
|
|
|
DEPRECIATION |
ACQUIRED |
LATEST INCOME STATEMENT IS COMPUTED |
|
BEULAH
CONDOS - BEULAH, ND
|
$6,360
|
$468,620
|
$474,980
|
$325,843
|
|
|
|
BISON
PROPERTIES - CARRINGTON, ND
|
100,210
|
508,151
|
608,361
|
352,336
|
|
|
|
CANDLELIGHT
APTS. - FARGO, ND
|
80,040
|
852,030
|
932,070
|
152,286
|
|
|
|
CASTLE
ROCK - BILLINGS, MT
|
736,000
|
4,973,639
|
5,709,639
|
172,269
|
|
|
|
CENTURY
APTS. -DICKINSON, ND
|
100,000
|
2,105,494
|
2,205,494
|
676,645
|
|
|
|
CENTURY
APTS.- WILLISTON, ND
|
200,000
|
3,754,445
|
3,954,445
|
1,371,671
|
|
|
|
CHATEAU
APTS. - MINOT, ND
|
122,000
|
2,322,200
|
2,444,200
|
122,043
|
|
|
|
CLEARWATER
- BOISE, ID
|
585,000
|
3,248,486
|
3,833,486
|
131,991
|
|
|
|
COUNTRY
MEADOWS PHSI - BILLINGS, MT
|
245,624
|
4,111,616
|
4,357,240
|
148,786
|
|
|
|
COUNTRY
MEADOWS PHSE II - BILLINGS, MT
|
245,623
|
4,086,664
|
4,332,287
|
148,786
|
|
|
|
COLTON
HEIGHTS - MINOT, ND,
|
80,000
|
877,199
|
957,199
|
389,021
|
|
|
|
COTTONWOOD
LAKE, BISMARCK, ND
|
1,055,862
|
11,050,773
|
12,106,636
|
394,069
|
|
|
|
CRESTVIEW
APTS. - BISMARCK, ND
|
235,000
|
4,569,503
|
4,804,503
|
728,776
|
|
|
|
CROWN
COLONY - TOPEKA, KS
|
620,000
|
10,023,038
|
10,643,038
|
136,409
|
|
|
|
DAKOTA
ARMS - MINOT, ND
|
50,000
|
571,189
|
621,189
|
64,611
|
|
|
|
DAKOTA
HILLS - IRVING, TX
|
3,650,000
|
33,823,258
|
37,473,258
|
176,361
|
|
|
|
EASTGATE
PROPERTIES - MOORHEAD, MN
|
23,917
|
2,099,972
|
2,123,889
|
1,441,442
|
|
|
|
EASTWOOD
- DICKINSON, ND
|
40,000
|
405,272
|
445,272
|
96,619
|
|
|
|
FOREST
PARK ESTATES - G. FORKS, ND
|
810,000
|
6,494,715
|
7,304,715
|
1,143,054
|
|
|
|
HERITAGE
MANOR - ROCHESTER, MN
|
403,256
|
7,194,917
|
7,598,173
|
303,954
|
|
|
|
HILL
PARK PROPERTIES - BISMARCK, ND
|
224,750
|
2,841,388
|
3,066,138
|
1,289,615
|
|
|
|
IVY CLUB
- VANCOUVER, WA
|
1,274,000
|
10,463,597
|
11,737,597
|
317,930
|
|
|
|
JENNER
PROPERTIES - GRAND FORKS, ND
|
220,000
|
1,971,033
|
2,191,033
|
137,010
|
|
|
|
KIRKWOOD
APTS. - BISMARCK, ND
|
449,290
|
3,171,933
|
3,621,223
|
215,453
|
|
|
|
LANCASTER
APTS. - ST. CLOUD, MN
|
289,000
|
2,899,120
|
3,188,120
|
3,020
|
|
|
|
LEGACY
APTS. - GRAND FORKS, ND
|
1,361,855
|
9,531,270
|
10,893,125
|
764,702
|
|
|
|
LEGACY
UNDERGRND - GRAND FORKS, ND
|
725,277
|
6,119,239
|
6,844,516
|
70,590
|
|
|
|
LONETREE
APTS. - HARVEY, ND
|
13,584
|
213,792
|
227,376
|
43,018
|
|
|
|
MAGIC
CITY APTS. - MINOT, ND
|
532,000
|
5,017,059
|
5,549,059
|
323,902
|
|
|
|
MEADOWS
- JAMESTOWN, ND
|
167,325
|
3,551,284
|
3,718,609
|
45,903
|
|
|
|
MIRAMONT
- FT. COLLINS, CO
|
1,470,000
|
12,845,599
|
14,315,599
|
1,125,672
|
|
|
|
NEIGHBORHOOD
APTS. - COLORADO SPRINGS, CO
|
1,033,592
|
10,258,092
|
11,291,684
|
916,648
|
|
|
|
NORTH
POINTE - BISMARCK, ND
|
143,500
|
2,274,964
|
2,418,464
|
252,569
|
|
|
|
OAK MANOR
APTS. - DICKINSON, ND
|
25,000
|
336,033
|
361,033
|
72,879
|
|
|
|
OAKWOOD
ESTATES - SIOUX FALLS, SD
|
342,800
|
3,257,671
|
3,600,471
|
586,515
|
|
|
|
OXBOW,
- SIOUX FALLS, SD
|
404,072
|
4,606,469
|
5,010,541
|
630,377
|
|
|
|
PARK
EAST APTS. - FARGO, ND
|
83,000
|
4,983,651
|
5,066,651
|
253,494
|
|
|
|
PARK
MEADOWS - WAITE PARK, MN
|
1,143,450
|
10,257,185
|
11,400,635
|
951,144
|
|
|
|
PARKWAY
APTS. - BEULAH, ND
|
7,000
|
136,980
|
143,980
|
21,935
|
|
|
|
PEBBLE
CREEK - BISMARCK, ND
|
7,200
|
749,493
|
756,693
|
11,700
|
|
|
|
PINE
CONE APTS. - FT. COLLINS, CO
|
904,545
|
12,325,605
|
13,230,150
|
1,539,847
|
|
|
|
POINTE
WEST APTS. - MINOT, ND
|
240,000
|
3,757,816
|
3,997,816
|
600,991
|
|
|
|
PRAIRIE
WINDS APTS. - SIOUX FALLS, SD
|
144,097
|
1,858,747
|
2,002,844
|
344,299
|
|
|
|
RIMROCK
APTS. - BILLINGS, MT
|
329,708
|
3,537,917
|
3,867,625
|
70,116
|
|
|
|
ROCKY
MEADOWS 96 - BILLINGS, MT
|
655,985
|
6,059,764
|
6,715,749
|
536,176
|
|
|
|
ROSEWOOD/OAKWOOD
- SIOUX FALLS, SD
|
200,000
|
1,747,935
|
1,947,935
|
152,549
|
|
|
|
SHERWOOD
APTS. - TOPEKA, KS
|
1,150,000
|
14,748,882
|
15,898,882
|
201,061
|
|
|
|
SOUTH
POINTE - MINOT, ND
|
550,000
|
9,760,803
|
10,310,803
|
969,368
|
|
|
|
SOUTHVIEW
APTS. -MINOT, ND
|
185,000
|
539,212
|
724,212
|
77,149
|
|
|
|
SOUTHWIND
APTS - GRAND FORKS, ND
|
400,000
|
5,378,731
|
5,778,731
|
597,118
|
|
|
F - 30
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
(continued)
|
|
|
IMPROVEMENTS |
|
DEPRECIATION |
ACQUIRED |
LATEST INCOME STATEMENT IS COMPUTED |
|
SWEETWATER
PROP. - DEVILS LAKE, ND
|
90,767
|
1,483,071
|
1,573,838
|
856,879
|
|
|
|
SUNCHASE
- FARGO, ND
|
52,870
|
986,975
|
1,039,845
|
277,628
|
|
|
|
SUNSET
TRAIL - ROCHESTER, MN
|
504,563
|
2,523,846
|
3,028,409
|
0
|
|
in progress |
|
THOMASBROOK
APTS. - LINCOLN, NE
|
600,000
|
8,972,130
|
9,572,130
|
140,944
|
|
|
|
VALLEY
PARK MANOR - GRAND FORKS, ND
|
293,500
|
4,226,508
|
4,520,008
|
84,648
|
|
|
|
VAN MALL
WOODS - VANCOUVER, WA
|
600,000
|
5,518,313
|
6,118,313
|
211,455
|
|
|
|
WEST
STONEHILL - ST CLOUD, MN
|
939,000
|
10,710,087
|
11,649,087
|
1,214,126
|
|
|
|
WESTWOOD
PARK - BISMARCK, ND
|
161,114
|
2,011,049
|
2,172,163
|
90,573
|
|
|
|
WOODRIDGE
APTS. -ROCHESTER, MN
|
370,000
|
6,353,956
|
6,723,956
|
553,668
|
|
|
|
$27,676,737
|
$301,528,379
|
$329,205,116
|
$25,029,645
|
F - 31
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000
Schedule
XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
|
INITIAL COST TO TRUST SUBSEQUENT TO ACQUISITION |
|||||
|
|
|
|
|
|
COSTS |
|
1ST AVENUE
BUILDING - MINOT, ND
|
$0
|
$30,000
|
$497,635
|
$2,826
|
$0
|
|
401 SOUTH
MAIN - MINOT, ND
|
0
|
70,600
|
538,519
|
4,188
|
0
|
|
408 1ST
STREET SE - MINOT, ND
|
0
|
10,000
|
36,907
|
0
|
0
|
|
7901
FLYING CLOUD DR - EDEN PRAIRIE, MN
|
0
|
,062,000
|
3,859,181
|
0
|
0
|
|
CREEKSIDE
OFF BLDG. - BILLINGS, MT
|
1,160,384
|
311,310
|
1,373,608
|
54,223
|
0
|
|
LESTER
CHIROPRACTIC CLINIC - BISMARCK, ND
|
0
|
25,000
|
243,917
|
0
|
0
|
|
LEXINGTON
COMMERCE CENTER - EAGAN, MN
|
3,424,614
|
453,400
|
5,035,922
|
0
|
0
|
|
NORTHGATE
II - MAPLE GROVE, MN
|
1,573,471
|
357,800
|
1,982,264
|
0
|
0
|
|
SOUTHEAST
TECH CENTER - EAGAN, MN
|
4,257,628
|
559,500
|
5,551,871
|
0
|
0
|
|
WALTERS
214 SO MAIN - MINOT, ND
|
0
|
27,055
|
84,885
|
56
|
0
|
|
$10,416,098
|
$2,906,665
|
$19,204,709
|
$61,294
|
$0
|
|
|
COMMERCIAL
|
|||||
|
AMERICA'S
BEST WAREHOUSE - BOISE, ID
|
$3,382,026
|
$765,000
|
$4,019,068
|
$4,026
|
$0
|
|
AMERITRADE
- OMAHA, NE
|
6,007,724
|
326,500
|
7,957,477
|
22,559
|
0
|
|
ARROWHEAD
SHOPPING CENTER - MINOT, ND
|
1,318,413
|
100,359
|
2,730,805
|
81,657
|
0
|
|
BARNES
& NOBLE - FARGO, ND
|
1,921,048
|
540,000
|
2,752,012
|
0
|
0
|
|
BARNES
& NOBLE - OMAHA, NE
|
2,081,135
|
600,000
|
3,099,101
|
96
|
0
|
|
CARMIKE
THEATRE - GRAND FORKS, ND
|
1,897,054
|
183,515
|
2,295,154
|
0
|
67,068
|
|
COMPUSA
- KENTWOOD, MI
|
1,412,841
|
225,000
|
1,888,574
|
0
|
0
|
|
CORNER
EXPRESS - MINOT, ND
|
835,524
|
195,000
|
1,001,342
|
384,918
|
0
|
|
CORNER
EXPRESS - EAST GRAND FORKS, ND
|
0
|
150,000
|
1,235,315
|
0
|
0
|
|
EDGEWOOD
VISTA - BELGRADE, MT
|
0
|
14,300
|
434,596
|
0
|
0
|
|
EDGEWOOD
VISTA - BILLINGS, MT
|
676,544
|
130,000
|
850,218
|
0
|
0
|
|
EDGEWOOD
VISTA - COLUMBUS, NE
|
0
|
14,300
|
434,480
|
0
|
0
|
|
EDGEWOOD
VISTA - DULUTH, MN
|
0
|
390,000
|
3,822,400
|
0
|
0
|
|
EDGEWOOD
VISTA - EAST GRAND FORKS, MN
|
577,697
|
25,000
|
874,821
|
0
|
0
|
|
EDGEWOOD
VISTA - GRAND ISLAND, NE
|
0
|
14,300
|
434,480
|
0
|
0
|
|
EDGEWOOD
VISTA - MINOT, ND
|
4,040,219
|
260,000
|
6,010,707
|
0
|
0
|
|
EDGEWOOD
VISTA - MISSOULA, MT
|
582,852
|
108,900
|
853,528
|
0
|
0
|
|
EDGEWOOD
VISTA - SIOUX FALLS, SD
|
679,748
|
130,000
|
844,739
|
0
|
0
|
|
EDGEWOOD
VISTAS - UNDER CONSTRUCTION - OMAHA, HASTINGS & FREEMONT, NE
|
0
|
42,900
|
166,687
|
0
|
0
|
|
EVERGREEN
72 - EVERGREEN, CO
|
0
|
200,000
|
1,209,445
|
0
|
0
|
|
GREAT
PLAINS SOFTWARE - FARGO, ND
|
9,297,644
|
125,501
|
15,249,652
|
0
|
0
|
|
LINDBERG
BLDG. - EDEN PRAIRIE, MN
|
1,160,638
|
198,000
|
1,257,789
|
152,746
|
0
|
|
MAPLEWOOD
SQUARE - ROCHESTER, MN
|
7,470,748
|
3,275,000
|
5,348,946
|
3,275,000
|
0
|
|
MED PARK
MALL - GRAND FORKS, ND
|
3,422,211
|
680,500
|
4,131,362
|
680,500
|
0
|
|
MINOT
PLAZA - MINOT, ND
|
0
|
50,000
|
459,079
|
874
|
0
|
|
PETCO
WAREHOUSE - FARGO, ND
|
982,755
|
324,148
|
927,541
|
0
|
27,245
|
|
PIONEER
SEED - MOORHEAD, MN
|
250,962
|
56,925
|
596,951
|
0
|
0
|
|
STONE
CONTAINER - FARGO, ND
|
2,732,568
|
440,251
|
4,469,078
|
0
|
89,156
|
|
VIRO-MED
- EDEN PRAIRIE, MN
|
2,997,813
|
666,000
|
4,197,634
|
0
|
0
|
|
WEDGEWOOD
-- SWEETWATER, GA
|
1,462,258
|
334,346
|
3,637,532
|
0
|
0
|
|
$55,190,421
|
$10,565,745
|
$83,190,515
|
$4,602,377
|
$183,469
|
|
|
$265,056,767
|
$41,149,147
|
$388,356,435
|
$19,141,748
|
$1,272,560
|
|
F - 32
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
|
OFFICE
BUILDINGS
|
|
IMPROVEMENTS |
|
DEPRECIATION |
ACQUIRED |
LATEST INCOME STATEMEN IS COMPUTED |
|
1ST AVENUE
BUILDING - MINOT, ND
|
$30,000
|
$570,462
|
$530,462
|
$363,385
|
|
|
|
401 SOUTH
MAIN - MINOT, ND
|
70,600
|
542,707
|
613,307
|
152,810
|
|
|
|
408 1ST
STREET SE - MINOT, ND
|
10,000
|
36,907
|
46,907
|
25,805
|
|
|
|
7901
FLYING CLOUD DR - EDEN PRAIRIE, MN
|
1,062,000
|
3,859,181
|
4,921,181
|
36,457
|
|
|
|
CREEKSIDE
OFF BLDG. - BILLINGS, MT
|
311,310
|
1,427,832
|
1,739,142
|
272,274
|
|
|
|
LESTER
CHIROPRACTIC CLINIC - BISMARCK, ND
|
25,000
|
243,917
|
268,917
|
70,303
|
|
|
|
LEXINGTON
COMMERCE CENTER - EAGAN, MN
|
453,400
|
5,035,922
|
5,489,322
|
45,801
|
|
|
|
NORTHGATE
II - MPLE GROVE, MN
|
357,800
|
1,982,264
|
2,340,064
|
18,490
|
|
|
|
SOUTHEAST
TECH CENTER - EAGAN, MN
|
559,500
|
5,551,871
|
6,111,371
|
52,044
|
|
|
|
WALTERS
214 SO MAIN - MINOT, ND
|
27,055
|
84,941
|
111,996
|
76,758
|
|
|
|
$2,906,665
|
$19,266,003
|
$22,172,668
|
$1,114,126
|
|||
| COMMERCIAL | ||||||
| AMERICA'S BEST WAREHOUSE - BOISE, ID |
$765,000
|
$4,023,094
|
$4,788,094
|
$798,268
|
|
|
| AMERITRADE - OMAHA, NE |
326,500
|
7,980,035
|
8,306,535
|
207,719
|
|
|
| ARROWHEAD SHOPPING CENTER - MINOT, ND |
100,349
|
2,812,463
|
2,912,822
|
2,179,674
|
|
|
| BARNES & NOBLE - FARGO, ND |
540,000
|
2,752,012
|
3,292,012
|
378,402
|
|
|
| BARNES & NOBLE - OMAHA, NE |
600,000
|
3,099,197
|
3,699,197
|
348,651
|
|
|
| CARMIKE THEATRE - GRAND FORKS, ND |
183,515
|
2,362,222
|
2,545,737
|
324,743
|
|
|
| COMPUSA - KENTWOOD, MI |
225,000
|
1,888,574
|
2,113,574
|
165,250
|
|
|
|
CORNER
EXPRESS, MINOT, ND
|
195,000
|
1,386,260
|
1,581,260
|
53,754
|
|
|
|
CORNER
EXPRESS - EAST GRAND FORKS, ND
|
150,000
|
1,235,315
|
1,385,315
|
14,155
|
|
|
|
EDGEWOOD
VISTA - BELGRADE, MT
|
14,300
|
434,596
|
448,896
|
8,597
|
|
|
|
EDGEWOOD
VISTA - BILLINGS, MT
|
130,000
|
850,218
|
980,218
|
39,759
|
|
|
|
EDGEWOOD
VISTA - COLUMBUS, NE
|
14,300
|
434,480
|
448,780
|
8,594
|
|
|
|
EDGEWOOD
VISTA - DULUTH, MN
|
390,000
|
3,822,400
|
4,212,400
|
8,367
|
|
|
|
EDGEWOOD
VISTA - EAST GRAND FORKS, MN
|
25,000
|
874,821
|
899,821
|
61,046
|
|
|
|
EDGEWOOD
VISTA - GRAND ISLAND, NE
|
14,300
|
434,480
|
448,780
|
8,594
|
|
|
|
EDGEWOOD
VISTA - MINOT, ND
|
260,000
|
6,010,707
|
6,270,707
|
378,175
|
|
|
|
EDGEWOOD
VISTA - MISSOULA, MT
|
108,900
|
853,528
|
962,428
|
74,684
|
|
|
|
EDGEWOOD
VISTA - SIOUX FALLS, SD
|
130,000
|
844,739
|
974,739
|
39,556
|
|
|
|
EDGEWOOD
VISTAS - UNDER CONSTRUCTION - OMAHA, HASTINGS & FREEMONT, NE
|
42,900
|
166,687
|
209,587
|
0
|
|
in progress |
|
EVERGREEN
72 - EVERGREEN, CO
|
200,000
|
1,209,445
|
1,409,445
|
1,260
|
|
|
|
GREAT
PLAINS SOFTWARE - FARGO, ND
|
125,501
|
15,249,652
|
15,375,154
|
269,900
|
|
|
|
LINDBERG
BLDG. - EDEN PRAIRIE, MN
|
198,000
|
1,410,535
|
1,608,535
|
258,369
|
|
|
|
MAPLEWOOD
SQUARE - ROCHESTER, MN
|
3,275,000
|
8,623,946
|
11,898,946
|
170,877
|
|
|
|
MEDPARK
MALL - GRAND FORKS, ND
|
680,500
|
4,811,862
|
5,492,362
|
25,044
|
|
|
|
MINOT
PLAZA - MINOT, ND
|
50,000
|
459,954
|
509,954
|
85,802
|
|
|
|
PETCO
- FARGO, ND
|
324,148
|
954,786
|
1,278,934
|
130,549
|
|
|
|
PIONEER
SEED - MOORHEAD, MN
|
56,925
|
596,951
|
653,876
|
122,031
|
|
|
|
STONE
CONTAINER - FARGO, ND
|
440,251
|
4,558,234
|
4,998,485
|
510,187
|
|
|
|
VIRO-MED
- EDEN PRAIRIE, MN
|
666,000
|
4,197,634
|
4,863,634
|
126,728
|
|
|
|
WEDGEWOOD
- SWEETWATER, GA
|
334,346
|
3,637,532
|
3,971,878
|
290,446
|
|
|
|
$10,565,745
|
$87,976,360
|
$98,542,106
|
$7,089,181
|
|||
|
$41,149,147
|
$408,773,743
|
$449,919,890
|
$33,232,952
|
F - 33
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
Reconciliations of total real estate
carrying value for the three years ending April 30, 2000, 1999 and 1998
are as follows:
|
|
|
|
|
|
Balance
at beginning of year
|
$295,825,839
|
$231,416,322
|
$191,884,509
|
|
Additions
during year
|
|||
|
- acquisitions
|
155,284,745
|
62,455,508
|
39,014,223
|
|
- improvements and other
|
7,041,248
|
4,780,853
|
1,788,339
|
|
$458,151,832
|
$298,652,683
|
$232,687,071
|
|
|
Deduction
during year
|
|||
|
- cost of real estate sold
|
-6,912,626
|
-2,826,844
|
-1,270,749
|
|
- impairment valuation
|
-1,319,316
|
0
|
0
|
|
Balance
at close of year
|
$449,919,890
|
$295,825,839
|
$231,416,322
|
Reconciliations of accumulated depreciation
for the three years ended April 30, 2000, 1999 and 1998 are as follows:
|
|
|
|
|
|
Balance
at beginning of year
|
$26,112,399
|
$21,516,129
|
$16,948,156
|
|
Additions
during year
|
|||
|
- provisions for depreciation
|
8,460,112
|
5,966,874
|
4,791,907
|
|
Deduction
during year
|
|||
|
- accumulated depreciation on real estate sold
|
-1,339,559
|
-1,370,604
|
-223,934
|
|
Balance
at close of year
|
$ 33,232,952
|
$ 26,112,399
|
$ 21,516,129
|
F - 34
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000
Schedule XII
INVESTMENTS IN MORTGAGE LOANS ON
REAL ESTATE
|
Rate |
Maturity Date |
Terms |
Liens |
Amt. of Mortgages |
|
Loans Subject to Delinquent Prin. or Int. |
|
|
RESIDENTIAL
|
|||||||
|
Fricke
|
|
|
|
|
$7,470
|
$2,269
|
$ 0
|
|
Higley
Heights - Phoenix, AZ
|
|
|
|
|
809,756
|
598,843
|
0
|
|
Rolland
Hausmann
|
|
|
|
|
315,659
|
287,115
|
0
|
|
Diamond
T - Scottsbluff, NE
|
|
|
/Balloon |
|
115,000
|
108,752
|
0
|
|
K-MOX
- Prior Lake, MN
|
|
|
/Balloon |
|
46,500
|
45,930
|
0
|
|
Duane
Peterson
|
|
|
|
|
130,000
|
130,000
|
0
|
|
Edgewood
- Norfolk, NE
|
|
|
|
|
477,375
|
477,375
|
0
|
|
LESS:
|
$ 1,901,760
|
$1,650,284
|
$0
|
||||
|
Unearned
discounts
|
-392
|
||||||
|
Allowance
for loan losses
|
-120,314
|
||||||
|
$ 1,529,578
|
|
|
|
|
|
MORTGAGE
LOANS RECEIVABLE, BEGINNING OF YEAR
|
$10,721,214
|
$3,438,308
|
|
New participations
in and advances on mortgage loans
|
607,375
|
7,655,061
|
|
$11,328,589
|
$11,093,369
|
|
|
Collections
|
-9,678,305
|
-372,155
|
|
Write-off
through allowance
|
0
|
0
|
|
MORTGAGE
LOANS RECEIVABLE, END OF YEAR
|
$1,650,284
|
$10,721,214
|
F - 35
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
SELECTED
FINANCIAL DATA
|
|
|
|
|
|
|
|
Consolidated
Income Statement Data
|
|||||
|
Revenue
|
$55,445,193
|
$39,927,262
|
$ 32,407,545
|
$23,833,981
|
$18,659,665
|
|
Income before gain/loss on properties and minority interest
|
9,867,874
|
6,401,676
|
4,691,198
|
3,499,443
|
3,617,807
|
|
Gain on repossession/ Sale of properties
|
1,754,496
|
1,947,184
|
465,499
|
398,424
|
994,163
|
|
Loss on Impairment of Properties
|
-1,319,316
|
0
|
0
|
0
|
0
|
|
Minority interest of portion of operating partnership
income
|
-1,495,209
|
-744,725
|
-141,788
|
-18
|
0
|
|
Net income
|
8,807,845
|
7,604,135
|
5,014,909
|
3,897,849
|
4,611,970
|
|
Consolidated
Balance Sheet Data
|
|||||
|
Total real estate investments
|
$418,216,516
|
$280,311,442
|
$213,211,369
|
$177,891,168
|
$122,377,909
|
|
Total assets
|
432,978,299
|
291,493,311
|
224,718,514
|
186,993,943
|
131,355,638
|
|
Shareholders' equity
|
109,920,591
|
85,783,294
|
68,152,626
|
59,997,619
|
50,711,920
|
|
Consolidated
Per Share Data
(basic and diluted) |
|||||
|
Income before gain/loss on properties and
minority interest |
$ .47
|
$
.37
|
$
.30
|
$
.25
|
$
.30
|
|
Net Income
|
.42
|
.44
|
.32
|
.28
|
.38
|
|
Dividends
|
.51
|
.47
|
.42
|
.39
|
.37
|
|
CALENDAR
YEAR
|
|
|
|
|
|
|
Tax status
of dividend
|
|||||
|
Capital gain
|
30.3%
|
6.3%
|
2.9%
|
21.0%
|
1.6%
|
|
Ordinary income
|
69.7%
|
76.0%
|
97.1%
|
79.0%
|
98.4%
|
|
Return of capital
|
0%
|
17.7%
|
0.0%
|
0.0%
|
0.0%
|
F - 36
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000, 1999 and 1998
GAIN FROM PROPERTY DISPOSITIONS
|
Original Gain(Loss) |
04/30/00 |
04/30/00 |
04/30/99 |
04/30/98 |
|
|
Brooklyn
Addition - Minot, ND*
|
$25,000
|
$0
|
$1,000
|
$1,000
|
$1,000
|
|
Superpumper
- Grand Forks, ND
|
86,479
|
0
|
86,479
|
0
|
0
|
|
Superpumper
- Crookston, ND
|
89,903
|
0
|
89,903
|
0
|
0
|
|
Superpumper
- Langdon, ND
|
64,352
|
0
|
64,352
|
0
|
0
|
|
Superpumper
- Sidney, MT
|
17,161
|
0
|
17,161
|
0
|
0
|
|
Mandan
Apartments - Mandan, ND
|
75,612
|
0
|
75,612
|
0
|
0
|
|
Sweetwater
Apts., - Devils Lake, ND
|
335,303
|
0
|
335,303
|
0
|
0
|
|
Hutchinson
Technology - Hutchinson, MN
|
1,109,003
|
0
|
1,109,003
|
0
|
0
|
|
Jenner
18-Plex - Devils Lake, ND
|
-14,009
|
0
|
-14,009
|
0
|
0
|
|
Virginia
Apartments - Minot, ND
|
-10,308
|
0
|
-10,308
|
0
|
0
|
|
1302
South 19 ½ - Minot, ND*
|
87,699
|
0
|
0
|
0
|
15,713
|
|
Fairfield
Apts - Marshall, MN
|
80,121
|
0
|
0
|
80,121
|
0
|
|
Superpumper
- Emerado, ND
|
158,146
|
0
|
0
|
158,146
|
0
|
|
Park
Place Apts - Waseca, MN
|
366,018
|
0
|
0
|
366,018
|
0
|
|
Bison
Properties - Jamestown, ND
|
1,341,899
|
0
|
0
|
1,341,899
|
0
|
|
Scottsbluff
Estates - Scottsbluff, NE
|
326,138
|
0
|
0
|
0
|
326,138
|
|
Superpumper
- Bottineau, ND
|
83,579
|
0
|
0
|
0
|
83,579
|
|
Superpumper
- New Town, ND
|
25,417
|
0
|
0
|
0
|
25,417
|
|
Other
gains
|
13,652
|
0
|
0
|
0
|
13,652
|
|
$0
|
$1,754,496
|
$1,947,184
|
$
465,499
|
* The gain from the sale of these properties is being realized based on the installment method. The amount of deferred gain realized was $1,000, $1,000 and $16,713 for the years ended April 30, 2000, 1999 and 1998, respectively.
F - 37
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000
MORTGAGE LOANS PAYABLE
|
Rate |
Maturity Date |
Payment Terms |
of Mortgage |
Amount of Mortgage |
Principal or Interest |
|
|
1112
32nd Ave SW - Minot, ND
|
9.00%
|
|
|
$
425,000
|
$
331,490
|
$
0
|
|
177
10th Ave East - Dickinson, ND
|
7.50%
|
|
|
250,963
|
216,192
|
0
|
|
4301
9th Ave Sunchase II - Fargo, ND
|
9.04%
|
|
|
364,765
|
76,192
|
0
|
|
4313
9th Ave Sunchase II - Fargo, ND
|
7.75%
|
|
|
370,000
|
288,820
|
0
|
|
America's
Best Furniture - Boise, ID
|
9.75%
|
|
|
3,750,000
|
3,382,026
|
0
|
|
Ameritrade
- Omaha, NE
|
7.25%
|
|
|
6,150,000
|
6,007,919
|
0
|
|
Arrowhead
Shopping Center - Minot, ND
|
8.25%
|
|
|
1,325,000
|
1,318,413
|
0
|
|
Barnes
& Noble Stores - ND & NE
|
7.98%
|
|
|
4,900,000
|
4,001,233
|
0
|
|
Candlelight
Apts. - Fargo, ND
|
7.50%
|
|
|
578,000
|
444,065
|
0
|
|
Carmike
- Grand Forks, ND
|
7.75%
|
|
|
1,750,000
|
1,897,054
|
0
|
|
Castle
Rock - Billings , ND
|
6.66%
|
|
|
3,950,000
|
3,903,474
|
0
|
|
Century
Apts. - Dickinson, ND
|
8.38%
|
|
|
1,595,000
|
1,437,073
|
0
|
|
Century
Apts. - Williston , ND
|
8.38%
|
|
|
2,700,000
|
2,432,662
|
0
|
|
Chateau
Apts. - Minot, ND
|
8.38%
|
|
|
1,674,350
|
1,576,726
|
0
|
|
Clearwater
Apts. - Boise , ID
|
6.47%
|
|
|
2,660,000
|
2,622,317
|
0
|
|
Colton
Heights - Minot, ND
|
8.75%
|
|
|
730,000
|
286,335
|
0
|
|
Cottonwood-Phase
I - Bismarck, ND
|
6.59%
|
|
|
2,800,000
|
2,761,222
|
0
|
|
Cottonwood-Phase
II - Bismarck, ND
|
7.55%
|
|
|
2,850,000
|
2,839,397
|
0
|
|
Country
Meadows - Billings, MT
|
7.51%
|
|
|
2,660,000
|
2,567,670
|
0
|
|
Creekside
- Billings, MT
|
7.375%
|
|
|
1,250,000
|
1,160,384
|
0
|
|
Crestview
Apts. - Bismarck , ND
|
6.91%
|
|
|
3,400,000
|
3,305,256
|
0
|
|
CompUSA
- Kentwood, MI
|
7.75%
|
|
|
1,565,361
|
1,412,841
|
0
|
|
Corner
Express - East Grand Forks, MN
|
7.52%
|
|
|
885,000
|
835,734
|
0
|
|
Crown
Colony Apts. - Topeka, KS
|
7.55%
|
|
|
7,350,000
|
7,322,656
|
0
|
|
Dakota
Hill - Irving TX
|
7.88%
|
|
|
25,550,000
|
25,514,754
|
0
|
|
Eastgate
- Moorhead, MN
|
7.19%
|
|
|
1,627,500
|
1,618,343
|
0
|
|
Edgewood
Vista - Missoula , MT
|
9.75%
|
|
|
647,500
|
582,852
|
0
|
|
Edgewood
Vista - East Grand Forks, MN
|
7.79%
|
|
|
650,000
|
577,894
|
0
|
|
Edgewood
Vista - Minot , ND
|
7.52%
|
& 10/01/12 |
|
4,075,553
|
4,040,219
|
0
|
|
Edgewood
Vista - Sioux Falls , SD
|
7.52%
|
|
|
720,000
|
679,919
|
0
|
|
Edgewood
Vista - Billings , MT
|
7.13%
|
|
|
720,000
|
676,544
|
0
|
|
Forest
Park Estates - Grand Forks, ND
|
7.33%
|
|
|
7,595,000
|
7,493,912
|
0
|
|
Great
Plains Software - Fargo, ND
|
7.08%
|
|
|
9,500,000
|
9,297,644
|
0
|
|
Heritage
Manor - Rochester , MN
|
6.80%
|
|
|
5,075,000
|
4,886,409
|
0
|
|
Hill
Park Properties - Bismarck, ND
|
8.38%
|
|
|
1,470,000
|
1,324,449
|
0
|
|
Ivy
Club Apts. - Vancouver, WA
|
7.355%
|
|
|
7,092,443
|
6,997,864
|
0
|
|
Jenner
Properties - Grand Forks, ND
|
7.75%
|
|
|
1,391,585
|
1,155,242
|
0
|
|
Kirkwood
Manor - Bismarck, ND
|
8.15%
|
|
|
2,293,900
|
2,293,900
|
0
|
|
Lancaster
Apts. - St. Cloud, MN
|
7.04%
|
|
|
1,769,568
|
1,765,640
|
0
|
|
Legacy
Apts. Phase I - Grand Forks, ND
|
7.07%
|
|
|
4,000,000
|
3,790,344
|
0
|
|
Legacy
Apts. Phase II - Grand Forks, ND
|
7.07%
|
|
|
2,575,000
|
2,501,388
|
0
|
|
Lexington
Commerce Center - Eagan, MN
|
8.09%
|
|
|
3,431,750
|
3,424,614
|
0
|
|
Lindberg
Bldg. - Eden Prairie, MN
|
7.625%
|
|
|
950,000
|
1,160,638
|
0
|
F - 38
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000
MORTGAGE LOANS PAYABLE (continued)
|
Rate |
Maturity Date |
Payment Terms |
of Mortgage |
Amount of Mortgage |
Principal or Interest |
|
|
Magic
City Apts. - Minot, ND
|
9.00%
|
|
|
$2,794,299
|
$2,350,016
|
$0
|
|
Maplewood
Square - Rochester, MN
|
6.90%
|
|
|
7,670,000
|
7,470,808
|
0
|
|
MedPark
Mall - Grand Forks, ND
|
8.75%
|
|
|
3,425,000
|
3,422,211
|
0
|
|
MiramontApts.
- Ft. Collins, CO
|
8.25%
|
|
|
11,582,472
|
11,433,772
|
0
|
|
Neighborhood
Apts. - Colorado Springs, CO
|
7.98%
|
|
|
7,525,000
|
7,172,881
|
0
|
|
NorthGate
II - Maple Grove, MN
|
8.09%
|
|
|
1,576,750
|
1,573,471
|
0
|
|
North
Pointe - Bismarck, ND
|
7.12%
|
|
|
1,400,000
|
1,660,279
|
0
|
|
Oakwood
Estates - Sioux Falls, SD
|
8.38%
|
03/01/06 |
|
2,250,000
|
2,027,218
|
0
|
|
Oxbow
- Sioux Falls , SD
|
8.38%
|
|
|
3,565,000
|
3,212,015
|
0
|
|
Park
East Apts. - Fargo, ND
|
6.82%
|
|
|
3,500,000
|
3,427,168
|
0
|
|
Park
Meadows Phase I - Waite Park, MN
|
7.00%
|
|
|
3,022,500
|
3,005,494
|
0
|
|
Park
Meadows Phase II - Waite Park, MN
|
7.899%
|
|
|
2,214,851
|
2,094,661
|
0
|
|
Park
Meadows Phase III - Waite Park, MN
|
4.00%
|
|
|
3,235,000
|
3,105,000
|
0
|
|
PETCO
Warehouse - Fargo, ND
|
7.28%
|
|
|
1,100,000
|
982,755
|
0
|
|
Pinecone
- Ft. Collins, CO
|
7.125%
|
|
|
10,685,215
|
10,388,494
|
0
|
|
Pioneer
Building - Fargo, ND
|
8.00%
|
|
|
425,000
|
250,962
|
0
|
|
Pointe
West Apts. - Minot, ND
|
6.91%
|
|
|
2,400,000
|
2,333,122
|
0
|
|
Prairie
Winds Apts. - Sioux Falls, SD
|
7.04%
|
|
|
1,325,000
|
1,315,071
|
0
|
|
Rimrock
Apts. - Billing, MT
|
7.33%
|
|
|
2,625,000
|
2,636,747
|
0
|
|
Rocky
Meadows - Billings , MT
|
7.33%
|
|
|
3,780,000
|
3,746,956
|
0
|
|
RoseWood/Oakwood
- Sioux Falls, SD
|
8.38%
|
|
|
1,323,000
|
1,207,736
|
0
|
|
Sherwood
Apts. - Topeka, KS
|
7.55%
|
|
|
11,025,000
|
10,983,984
|
0
|
|
SouthEast
Tech Center - Eagan, MN
|
8.09%
|
|
|
4,266,500
|
4,257,628
|
0
|
|
South
Pointe - Minot, ND
|
7.12%
|
|
|
6,500,000
|
6,348,125
|
0
|
|
Southwind
Apts. - Grand Forks, ND
|
7.12%
|
|
|
3,780,000
|
4,004,202
|
0
|
|
Stone
Container - Fargo, ND
|
8.25%
|
|
|
3,300,000
|
2,732,568
|
0
|
|
Sweetwater
24 Plex - Grafton, ND
|
9.75%
|
|
|
270,000
|
53,527
|
0
|
|
Sweetwater
18 Plex - Grafton, ND
|
9.75%
|
|
|
198,000
|
72,995
|
0
|
|
Thomasbrook
- Lincoln, NE
|
7.22%
|
|
|
6,200,000
|
6,158,734
|
0
|
|
Valley
Park Manor - Grand Forks, ND
|
8.375%
|
|
|
2,122,200
|
2,074,754
|
0
|
|
Van
Mall Woods - Vancouver, WA
|
6.86%
|
|
|
4,070,426
|
3,947,992
|
0
|
|
VIROMED
- Eden Prairie, MN
|
6.98%
|
|
|
3,120,000
|
2,997,813
|
0
|
|
Wedgewood Retirement - Sweetwater, GA
|
8.4825%
|
|
|
1,566,720
|
1,462,257
|
0
|
|
West
Stonehill - St. Cloud, MN
|
7.93%
|
|
|
8,232,569
|
7,676,840
|
0
|
|
Westwood
Park - Bismarck, ND
|
7.88%
|
|
|
1,200,000
|
1,195,334
|
0
|
|
Woodridge
Apts. - Rochester, MN
|
7.85%
|
|
|
4,410,000
|
4,063,458
|
0
|
|
|
$274,753,740
|
$265,056,767
|
F - 39
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
April 30, 2000
SIGNIFICANT PROPERTY ACQUISITIONS
Acquisitions for cash, assumptions
of mortgages, and issuance of units in the operating partnership
|
COMMERCIAL
|
|
|
Maplewood
Square - Rochester, MN
|
$ 11,800,000
|
|
Great
Plains - Fargo, ND
|
15,000,000
|
|
Edgewood
Vista - Grand Island, NE
|
446,000
|
|
Edgewood
Vista - Columbus, NE
|
446,000
|
|
Edgewood
Vista - Belgrade, MT
|
446,000
|
|
Corner
C-Store - East Grand Forks, MN
|
1,385,000
|
|
Flying
Cloud Drive - Eden Prairie, MN
|
4,900,000
|
|
Lexington
Commerce Center - Eagan, MN
|
4,800,000
|
|
Northgate
II - Maple Grove, MN
|
2,300,000
|
|
Southeast
Tech Center - Eagan, MN
|
6,050,000
|
|
MedPark
Mall - Grand Forks, ND
|
5,300,000
|
|
Edgewood
Vista - Hermantown, MN
|
4,800,000
|
|
$ 57,673,000
|
|
|
RESIDENTIAL
|
|
|
Rimrock
West - Billings, MT
|
3,750,000
|
|
Valley
Park Manor - Grand Forks, ND
|
4,400,000
|
|
The Meadows
I - Jamestown, ND ***
|
247,700
|
|
Thomasbrook
- Lincoln, NE
|
9,188,470
|
|
Pebble
Creek - Bismarck, ND
|
720,000
|
|
Country
Meadows II - Billings, MT***
|
3,010,325
|
|
Crown
Colony - Topeka, KS
|
10,500,000
|
|
Sherwood
- Topeka, KS
|
15,750,000
|
|
Sunset
Trail - Rochester, MN**
|
1,500,000
|
|
Legacy
IV - Grand Forks, ND
|
4,301,250
|
|
Dakota
Hill - Irving, TX
|
36,500,000
|
|
The Meadows
II - Jamestown, ND
|
1,845,000
|
|
Lancaster
Place - St. Cloud, MN
|
3,200,000
|
|
The Meadows
III - Jamestown, ND**
|
68,000
|
|
Cottonwood
Lake III - Bismarck, ND**
|
2,631,000
|
|
$97,611,745
|
|
|
TOTAL
|
$155,284,745
|
**Property not placed in service
at April 30, 2000. Additional costs are still to be incurred.
***Represents costs to complete a project started
in year ending April 30, 1999.
F - 40
INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (unaudited)
|
|
||||
|
|
|
|
|
|
|
Revenues
|
$11,201,913
|
$12,900,697
|
$14,054,660
|
$17,287,923
|
|
Income
before gain(loss) on properties and minority interest
|
1,801,322
|
2,478,912
|
2,390,868
|
3,196,772
|
|
Net gain(loss)
on sale of properties
|
257,895
|
1,519,918
|
0
|
-23,317
|
|
Loss
on Impairment of Properties
|
0
|
0
|
0
|
-1,319,316
|
|
Minority
interest of unitholders in operating partnership
|
-235,935
|
-579,625
|
-369,028
|
-310,621
|
|
Net Income
|
1,823,282
|
3,419,205
|
2,021,840
|
1,543,518
|
|
Per share
(basic and diluted)
|
||||
|
Income before gain/loss on properties and minority interest
|
.10
|
.12
|
.11
|
.14
|
|
Net Income
|
.09
|
.16
|
.11
|
.06
|
|
|
||||
|
|
|
|
|
|
|
Revenues
|
$ 9,102,179
|
$ 9,836,370
|
$10,236,797
|
$10,151,916
|
|
Income
before gain on properties and minority interest
|
1,327,851
|
1,760,067
|
1,732,928
|
1,580,830
|
|
Net gain
on sale of properties
|
366,017
|
1,341,899
|
80,122
|
158,146
|
|
Minority
interest of unitholders in operating partnership
|
-133,863
|
-287,579
|
-158,820
|
-164,463
|
|
Net Income
|
1,560,005
|
2,814,387
|
1,654,228
|
1,575,515
|
|
Per share
(basic and diluted)
|
||||
|
Income before gain on properties and minority interest
|
.07
|
.09
|
.09
|
.08
|
|
Net Income
|
.09
|
.17
|
.09
|
.09
|
|
|
||||
|
|
|
|
|
|
|
Revenues
|
$7,183,761
|
$7,996,262
|
$8,440,393
|
$8,787,129
|
|
Income
before gain on properties and minority interest
|
894,045
|
1,233,451
|
1,358,752
|
1,204,950
|
|
Net gain
on sale of properties
|
36,096
|
83,579
|
326,138
|
16,713
|
|
Minority
interest of unitholders in operating partnership
|
-9
|
-9,423
|
-64,006
|
-68,350
|
|
Net Income
|
933,105
|
1,307,607
|
1,620,884
|
1,153,313
|
|
Per share
(basic and diluted)
|
||||
|
Income before gain on properties and minority interest
|
.06
|
.08
|
.08
|
.07
|
|
Net Income
|
.06
|
.09
|
.10
|
.07
|
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.
F - 41
|
|