SOURCE: Investors Real Estate Trust

June 30, 2005 17:44 ET

Investors Real Estate Trust Announces Results for the Three and Twelve Months Ended April 30, 2005

MINOT, ND -- (MARKET WIRE) -- June 30, 2005 -- Investors Real Estate Trust (NASDAQ: IRETS) (NASDAQ: IRETP) reported the following results today:

                        (unaudited; in thousands, except per share amounts)
                             For the three months    For the twelve months
                               ended April 30,          ended April 30,
                              2005        2004         2005        2004
                           ----------  ----------   ----------  ----------

Revenues                   $   39,326  $   34,903   $  156,447  $  133,596
Net Income                 $    2,417  $    1,416   $   15,076  $    9,440
Net Income available to
 common shareholders       $    1,824  $    1,383   $   12,704  $    9,407
Net Income Per Share -
 Basic and Diluted         $      .04  $      .03   $      .30  $      .24
Funds from Operations
 ("FFO")                   $   10,943  $    9,090   $   42,314  $   36,638
FFO Per Share - Diluted    $      .19  $      .17   $      .76  $      .73
Total revenues for the three months ended April 30, 2005, were $39.3 million, compared to $34.9 million for the same period in 2004, a 12.6% increase. Total revenues were $156.4 million and $133.6 million for the twelve months ended April 30, 2005 and 2004, respectively, a 17.1% increase. The increase in revenue for the twelve months ended April 30, 2005, was due primarily to rent from properties acquired during fiscal year 2005, and to increases in rent from properties acquired in fiscal year 2004 in excess of that received in fiscal year 2004 from the same properties. This increase in revenue was partially offset by a decrease in rental income on existing properties, net of declining occupancy levels.

Net income available to common shareholders for the three months ended April 30, 2005, was $1.8 million, compared to $1.4 million for the same period in 2004, a 28.6% increase. Net income available to common shareholders was $12.7 million and $9.4 million for the twelve months ended April 30, 2005 and 2004, respectively, a 35.1% increase. The increase in net income available to common shareholders for the twelve months ended April 30, 2005, was due primarily to gains from the sale of real estate, and to increases in rental income, net of expenses, from property acquisitions in fiscal years 2005 and 2004.

Net income per fully diluted share for the three months ended April 30, 2005, was $.04, compared to $.03 for the same period in 2004, a 33.4% increase. Net Income per fully diluted share was $.30 and $.24 for the twelve months ended April 30, 2005 and 2004, respectively, a 25.0% increase. The year-to-date increase in net income per share was due to the factors discussed above affecting net income available to common shareholders.

Funds from Operations ("FFO"), a non-GAAP financial measure, was $10.9 million for the three months ended April 30, 2005, compared to $9.1 million for the same period in 2004, a 19.8% increase. FFO was $42.3 million and $36.6 for the twelve months ended April 30, 2005 and 2004, respectively, a 15.6% increase. FFO per fully diluted share, a non-GAAP financial measure, for the three months ended April 30, 2005, was $.19, representing a 11.8% increase from FFO per fully diluted share of $.17 for the three months ended April 30, 2004. FFO per fully diluted share for the twelve months ended April 30, 2005, was $.76, representing a 4.1% increase over FFO per fully diluted share of $.73 for the twelve months ended April 30, 2004. FFO and FFO per share for both the three and twelve months ended April 30, 2005, was impacted by the factors mentioned above affecting net income available to common shareholders, excluding the gain on sale of real estate and the increase in depreciation expense.

A reconciliation of net income to FFO is provided in the condensed consolidated statement of operations information below.

Thomas A. Wentz, Sr., President and Chief Executive Officer, stated, "economic conditions in our core markets appear to be improving, which should translate into decreasing vacancy rates and increased rental revenues in our current fiscal year. For example, we recently leased a 75,815 square foot office building in Rapid City, South Dakota, which had been vacant for more than two years, to General Electric Capital Corporation, under a six-year lease commencing June 1, 2005. We plan to continue to focus on reducing vacancy levels and improving operations at our properties, and we will continue to pursue the acquisition of quality multi-family residential, office, medical, industrial and retail properties."

Company Information: IRET is a self-advised equity real estate investment trust engaged in owning and operating income-producing properties located primarily in the upper Midwest. IRET owns a diversified portfolio of 211 properties, consisting of 65 multi-family residential properties, 50 office properties, 11 industrial properties (including miscellaneous commercial properties), 60 retail properties and 25 medical properties (including assisted living facilities).

IRET's cash distributions to common shareholders/unitholders during fiscal year 2005 increased to 64.5 cents per share/unit, compared to 63.7 cents paid in the prior fiscal year, an increase of 1.26%. In each of the last 34 calendar years, the annual distribution has increased over the amount paid in the preceding year.

Annual Meeting of Shareholders: IRET's 35th Annual Meeting of Shareholders will be held on Tuesday, September 20, 2005, at 7:00 p.m. CST at the International Inn, 1505 North Broadway, Minot, North Dakota.

A full description and discussion of IRET's results of operations for fiscal year 2005 will be contained in IRET's Annual Report on Form 10-K, which will be filed with the Securities and Exchange Commission no later than July 14, 2005, and mailed to shareholders in August. IRET's press releases are available on the company website at www.iret.com or by contacting Investor Relations at 701-837-4738.

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risk, uncertainties and other factors include, but are not limited to: potential fluctuations in our operating results; the need for additional capital; the direction of interest rates and their subsequent effect on our business; competition; our ability to attract and retain skilled personnel; and those risks and uncertainties discussed in filings made by us with the Securities and Exchange Commission.

Fiscal 2005 Acquisition and Disposition Summary

Property Acquisitions

IRET Properties added $146.4 million of real estate investments to its portfolio during fiscal year 2005, compared to $170.3 million added in fiscal 2004. The fiscal year 2005 additions are detailed below.

                   INVESTORS REAL ESTATE TRUST
               CONDENSED CONSOLIDATED BALANCE SHEET
              (in thousands, except per share data)
                          (Unaudited)

Condensed Balance Sheet

                                            (unaudited, in thousands)
                                             04-30-05       04-30-04
                                            ----------     ----------
Assets
Cash                                        $   23,538     $   31,704
Marketable Securities                            2,459          2,336
Receivables & Other Assets                      57,816         50,354
Real Estate Owned                            1,185,238      1,085,953
  Less Accumulated Depreciation               (118,512)       (98,923)
Mortgage Receivables                               619          4,893
                                            ----------     ----------
Total Assets                                $1,151,158     $1,076,317
                                            ==========     ==========
Liabilities
  Mortgages Payable                         $  708,558     $  633,124
  Investment Certificates Payable                4,636          7,074
  Other                                         23,761         48,482
                                            ----------     ----------
Total Liabilities                           $  736,955     $  688,680
                                            ==========     ==========
Minority Interest in Operating Partnership  $   15,860     $   16,386
                                            ----------     ----------
Minority Interest in Partnerships           $  103,171     $   92,622
                                            ----------     ----------
Shareholders' Equity
  Preferred Shares of Beneficial Interest   $   27,317     $   27,343
   1,150,000 Shares 04-30-05
   1,150,000 Shares 04-30-04
  Common Shares of Beneficial Interest         324,180        292,400
   45,187,676 Shares 04-30-05
   41,693,256 Shares 04-30-04
  Accumulated Distribution and Other Losses    (56,303)       (41,083)
  Accumulated Other Comprehensive
   Income/Loss                                     (22)           (31)
                                            ----------     ----------
  Total Shareholders' Equity                $  295,172     $  278,629
                                            ----------     ----------
Total Liabilities & Shareholders' Equity    $1,151,158     $1,076,317
                                            ==========     ==========


                   INVESTORS REAL ESTATE TRUST
         CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                  FOR THE QUARTER AND YEAR ENDED
                     APRIL 30, 2005 and 2004
               (in thousands, except per share data)
                           (Unaudited)

Results from Operations
For the Three-Month and Twelve-Month Periods ended April 30, 2005 and
2004 (unaudited)

                              (in thousands, except per share amounts)
                                 3 Months Ended       12 Months Ended
                              04-30-05   04-30-04   04-30-05   04-30-04
                              --------   --------   --------   --------
Revenues                      $ 39,326   $ 34,903   $156,447   $133,596
                              ========   ========   ========   ========

Net Income                       2,417      1,416     15,076      9,440
Preferred stock dividends         (593)       (33)    (2,372)       (33)
                              --------   --------   --------   --------
Net income applicable to
 common shares                $  1,824   $  1,383   $ 12,704   $  9,407
Minority interest in
 earnings of unitholders            19        399      3,873      2,752
                              --------   --------   --------   --------
Fully Diluted Net Income      $  1,843   $  1,782   $ 16,577   $ 12,159
                              ========   ========   ========   ========

  Net income per common share:
    Basic                     $    .04   $    .03   $    .30   $    .24
                              ========   ========   ========   ========
    Diluted                   $    .04   $    .03   $    .30   $    .24
                              ========   ========   ========   ========
    Average number of common
     shares and share
     equivalents outstanding:
    Basic                       44,662     41,226     43,214     39,257
                              ========   ========   ========   ========
    Diluted                     57,523     52,650     55,835     50,433
                              ========   ========   ========   ========

FFO applicable to
 common shares                $ 10,943   $  9,090   $ 42,314   $ 36,638
                              ========   ========   ========   ========

  FFO per diluted share       $    .19   $    .17   $    .76   $    .73
                              ========   ========   ========   ========
  Average number of common
   shares and share
   equivalents outstanding
   used for determining
   funds from operations per
   diluted share                57,523     52,650     55,835     50,433
                              ========   ========   ========   ========


Reconciliation of Net Income to Funds From Operations
For the Three-Month and Twelve-Month Periods ended April 30, 2005 and
2004 (unaudited)

                                (in thousands, except per share amounts)
                                            3 Months Ended
                                 04-30-05                  04-30-04
                                 Weighted                  Weighted
                                 Average    Per            Average    Per
                         Amount   Shares   Share   Amount   Shares   Share
                        -------   ------   ----   -------   ------   ----
Net Income              $ 2,417                   $ 1,416
Less distributions to
 preferred shareholders    (593)                      (33)
                        -------   ------   ----   -------   ------   ----
Net Income Available
 For Common Shares      $ 1,824   44,662   $.04   $ 1,383   41,226   $.03
Add back:
  Minority interest
   in earnings
   of unitholders            19   12,861              399   11,424
                        -------   ------   ----   -------   ------   ----
Fully Diluted Net
 Income                 $ 1,843   57,523   $.04   $ 1,782   52,650   $.03
                        -------   ------   ----   -------   ------   ----
Adjustments:
  Depreciation and
   Amortization         $ 9,531                   $ 7,392
  (Earnings)loss from
   depreciable property
   sales/impairment        (431)                      (84)
                        -------   ------   ----   -------   ------   ----
Fully Diluted Funds
 From Operations        $10,943   57,523   $.19   $ 9,090   52,650   $.17
                        =======   ======   ====   =======   ======   ====


                                (in thousands, except per share amounts)
                                            12 Months Ended
                                 04-30-05                  04-30-04
                                 Weighted                  Weighted
                                 Average    Per            Average    Per
                         Amount   Shares   Share   Amount   Shares   Share
                        -------   ------   ----   -------   ------   ----
Net Income              $15,076                   $ 9,440
Less distributions to
 preferred shareholders  (2,372)                      (33)
                        -------   ------   ----   -------   ------   ----
Net Income Available
 For Common Shares      $12,704   43,214   $.30   $ 9,407   39,257   $.24
Add back:
  Minority interest
   in earnings
   of unitholders         3,873   12,621            2,752   11,176
                        -------   ------   ----   -------   ------   ----
Fully Diluted Net
 Income                 $16,577   55,835   $.30   $12,159   50,433   $.24
                        -------   ------   ----   -------   ------   ----
Adjustments:
  Depreciation and
   Amortization         $34,342                   $25,079
  (Earnings)loss from
   depreciable property
   sales/impairment      (8,605)                     (600)
                        -------   ------   ----   -------   ------   ----
Fully Diluted Funds
 From Operations        $42,314   55,835   $.76   $36,638   50,433   $.73
                        =======   ======   ====   =======   ======   ====


1.  The National Association of Real Estate Investment Trusts ("NAREIT")
defines FFO as net income (computed in accordance with generally accepted
accounting principles) excluding gains (or losses) from sales of property
plus real estate depreciation and amortization. IRET management considers
that FFO is a useful supplemental measure for equity real estate
investment trusts. Historical cost accounting for real estate assets in
accordance with GAAP assumes, through depreciation, that the value of real
estate assets decreases predictably over time. However, real estate asset
values have historically risen or fallen with market conditions. FFO, by
excluding depreciation costs, reflects the fact that real estate, as an
asset class, generally appreciates over time and that depreciation charges
required by GAAP may not reflect underlying economic realities. FFO is
used by investors to compare the performance of real estate investment
trusts. However, while FFO is widely used by real estate investment trusts
as a performance metric, not all real estate companies use the same
definition of FFO or calculate FFO in the same way. Accordingly, FFO
presented here is not necessarily comparable to FFO presented by other
real estate companies.
Fiscal 2005 Acquisition and Disposition Summary

Property Acquisitions

IRET Properties added $146.4 million of real estate investments to its portfolio during fiscal year 2005, compared to $170.3 million added in fiscal 2004. The fiscal year 2005 additions are detailed below.

Fiscal 2005 (May 1, 2004 to April 30, 2005)
                                                            (in thousands)
                                                            --------------
2005 Acquisitions                                           Purchase Price
-----------------                                           --------------
Multi-Family Residential
  54-unit Southbrook Court and Mariposa Lane
   Townhomes - Topeka, KS                                       $    5,500
  36-unit Legacy 5 - Grand Forks, ND                                 2,738
  36-unit Legacy 6 - Grand Forks, ND                                 2,607
  140-unit Olympik Village - Rochester, MN                           7,100
                                                                ----------
                                                                $   17,945
                                                                ----------
Commercial Property - Office
  26,186 sq. ft. Plymouth I Office Building - Plymouth, MN      $    1,864
  26,186 sq. ft. Plymouth II Office Building - Plymouth, MN          1,748
  26,186 sq. ft. Plymouth III Office Building - Plymouth, MN         2,214
  79,377 sq. ft. Northgate I Office Building - Maple Grove, MN       8,175
  185,000 sq. ft. Crosstown Circle Office Building -
   Eden Prairie, MN                                                 22,000
  81,173 sq. ft. Highlands Ranch II Office Building -
   Highlands Ranch, CO                                              12,800
  86,428 sq. ft. Wells Fargo Center - St. Cloud, MN                  9,201
  153,947 sq. ft. US Bank - Bloomington, MN                         20,300
                                                                ----------
                                                                $   78,302
                                                                ----------
Commercial Property - Medical
  52,300 sq. ft. Nebraska Orthopaedic Hospital Expansion
   Project - Omaha, NE                                          $   20,597
  45,081 sq. ft. Pavilion I Clinic - Duluth, MN                     10,900
  60,294 sq. ft. High Pointe Health Campus Phase I
   (East Metro Medical Building) - Lake Elmo, MN                    13,050
                                                                ----------
                                                                $   44,547
                                                                ----------
Commercial Property - Retail
  46,720 sq. ft. Sleep Inn Hotel - Brooklyn Park, MN            $    2,750
  4,000 sq. ft. single tenant retail building
   (former Payless building) - Fargo, ND                               375
                                                                ----------
                                                                $    3,125
                                                                ----------
Undeveloped Property
  * Legacy VII - Grand Forks, ND                                $    2,443
                                                                ----------
                                                                $    2,443
                                                                ----------
Total Fiscal 2005 Property Acquisitions                         $  146,362
                                                                ==========

* = Property not placed in service at April 30, 2005. Additional costs
    were still to be incurred
Property Dispositions

During fiscal year 2005, IRET Properties disposed of 17 properties and one undeveloped property for an aggregate sale price of $48.9 million, compared to six properties and two parcels of undeveloped land sold for $4.4 million in total during fiscal year 2004. Real estate assets sold by IRET properties during fiscal year 2005 were as follows:

                                              (in thousands)
                                                   Book Value
                                       Sales          and
                                       Price       Sales Cost     Gain/Loss
                                      --------      --------       --------
2005 Dispositions
Multi-Family Residential
  204-unit Ivy Club
   Apartments - Vancouver, WA         $ 12,250      $ 12,070       $   180
  26-unit Beulah Condominiums -
   Beulah, ND                               96            96             0
  36-unit Parkway Apartments -
   Beulah, ND                              159           159             0
  18-unit Dakota Arms
   Apartments - Minot, ND                  825           566           259
  100-unit Van Mall Woods
   Apartments - Vancouver, WA            6,900         5,625         1,275
  192-unit Century Apartments -
   Williston, ND                         4,599         2,658         1,941
  18-unit Bison Apartments -
   Carrington, ND                          215           161            54
  17-unit Bison Apartments -
   Cooperstown, ND                         185           135            50
Commercial - Office
 62,585 sq. ft. Flying Cloud
  Building - Eden Prairie, MN            5,750         5,750             0
Commercial - Medical (assisted
 living facility)
  97,821 sq. ft. Edgewood Vista -
   Minot, ND                             7,210         5,676         1,534
  5,100 sq. ft. Edgewood Vista -
   Belgrade, MT                            509           433            76
  5,100 sq. ft. Edgewood Vista -
   Columbus, NE                            509           435            74
  5,100 sq. ft. Edgewood Vista -
   Grand Island, NE                        509           434            75
  16,392 sq. ft. Edgewood Vista -
   East Grand Forks, MN                  1,639         1,312           327
Commercial - Retail
  30,000 sq. ft. Barnes & Noble
   Store - Fargo, ND                     4,590         2,916         1,674
  18,040 sq. ft. Petco Store -
   Fargo, ND                             2,160         1,209           951
  4,800 sq. ft. single tenant retail
   building (former Tom Thumb
   store) - Ham Lake, MN                   650           518           132
Undeveloped Property
  205,347 sq. ft. parcel of vacant
   land - Libby, MT                        151           151             0
                                      --------      --------       --------
Total Fiscal 2005 Property
 Dispositions                         $ 48,906      $ 40,304       $  8,602
                                      ========      ========       ========

PO Box 1988
12 South Main Street
Minot, North Dakota 58701
701.837.4738 phone
701.838.8875 fax
info@iret.com email

Contact Information