IRET Reports Strong Second Quarter 2019 Financial Results and Raises 2019 Guidance – iCrowdNewswire
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Aug 8, 2019 6:25 AM ET

IRET Reports Strong Second Quarter 2019 Financial Results and Raises 2019 Guidance


IRET Reports Strong Second Quarter 2019 Financial Results and Raises 2019 Guidance

iCrowd Newswire - Aug 8, 2019

MINOT, N.D.,-IRET (NYSE: IRET) announced today its second quarter 2019 financial and operating results.  Net Income (Loss), Funds from Operations (“FFO” and Core FFO per share for the three and six months ended June 30, 2019, are detailed below.

   

Three Months Ended June 30,

 

Six Months Ended June 30,

Per Share

 

2019

 

2018

 

2019

 

2018

Net Income (Loss)

 

$

0.11

   

$

(1.83)

   

$

(0.43)

   

$

(1.42)

 

FFO

 

$

1.45

   

$

0.87

   

$

2.22

   

$

1.55

 

Core FFO

 

$

1.00

   

$

0.91

   

$

1.77

   

$

1.62

 
   

Year-Over-Year
Comparison

 

Sequential
Comparison

 

YTD 
Comparison

Same-Store Results

 

2Q19 vs. 2Q18

 

2Q19 vs. 1Q19

 

CY19 vs. CY18

Revenues

 

3.1

%

 

1.0

%

 

3.6

%

Expenses

 

3.8

%

 

(4.7)

%

 

3.7

%

NOI

 

2.6

%

 

5.7

%

 

3.6

%

   

Three months ended

Same-Store Results

 

June 30, 2019

 

March 31, 2019

 

June 30, 2018

Weighted Average Occupancy

 

94.3

%

 

95.6

%

 

94.2

%

                   

Second Quarter 2019 Highlights

“Our Core FFO growth per share of 9.9% and same-store revenue growth of 3.1% are built on strong performance across our markets and operational enhancements that continue to create value,” said Mark O. Decker, Jr., IRET’s President and CEO.

Acquisitions and Dispositions

During the second quarter, we sold a multi-tenant property that currently houses our Minot corporate office for $6.5 million and purchased an office building in Minot for $2.1 million, which will become our new Minot corporate office.  We also sold one parcel of unimproved land for $725,000.

Balance Sheet

At the end of the second quarter, we had $89.5 million of total liquidity on our balance sheet, including $72.1 millionavailable under our corporate revolver.

2019 Financial Overview

We are raising our earnings guidance for calendar year 2019 based on actual results through June 30, 2019 and expected results through the remainder of the calendar year as specified below.

 

2019 Revised

 

2019 Guidance

 

Range

 

Current Midpoint

 

Prior Midpoint

 

Change

Net income (loss) per share

$(1.27) to $(1.17)

 

$(1.22)

 

$(1.66)

 

$0.44

Core FFO per share

$3.62 to $3.72

 

$3.67

 

$3.62

 

$0.05

               

Same-Store Growth

             

Revenue

3.00% to 4.00%

 

3.50%

 

3.25%

 

0.25%

Expenses

2.75% to 3.75%

 

3.25%

 

3.25%

 

NOI

3.00% to 4.00%

 

3.50%

 

3.25%

 

0.25%

Recent Developments

Subsequent to quarter-end, we sold a 21-unit multifamily community in Billings, Montana for approximately $1.7 millionand a vacant parcel of land in Weston, Wisconsin for approximately $600,000.

Between July 1, 2019 and July 31, 2019, we repurchased approximately 39,000 common shares at an average price of $59.57 per share, including commissions. Between January 1, 2019 and July 31, 2019, we have repurchased approximately 329,000 shares at an average price of $54.69, including commissions, and approximately 135,000 operating units at an average price of $60.00. Since authorization of the share repurchase program in December 2016, we have repurchased approximately 627,000 common shares at an average price of $55.20.  As of July 31, 2019, the remaining authorization under our share repurchase program is approximately $15.4 million. In all, we have reduced our share count by 5.2%.

On August 6, 2019, we closed a $59.9 million mortgage loan.  This mortgage loan is secured by four multifamily communities and is priced at a fixed rate of 3.88% for the full twelve-year term of the loan.  Proceeds from this loan will be used to pay down balances under our line of credit.

Upcoming Events

On October 1, 2019, we will be holding a 2019 shareholder event at the Minot Country Club (Elevation restaurant) in Minot, North Dakota. This gathering will include food, a presentation from management, and an opportunity for shareholders to ask questions of management.  Further details on this event will be provided to all shareholders of record and will be posted on the Company’s website at www.iretapartments.com when it becomes available.

Quarterly Distributions

Effective June 5, 2019, IRET’s Board of Trustees declared a regular quarterly distribution of $0.70 per share/unit payable on July 1, 2019, to common shareholders and unitholders of record on June 17, 2019.  IRET has paid cash dividends to common shareholders and unitholders every quarter since its initial dividend payment in 1971.

Effective June 5, 2019, IRET’s Board of Trustees also declared a distribution of $0.4140625 per share on the 6.625% Series C Cumulative Redeemable Preferred Shares (NYSE: IRET PRC) payable on July 1, 2019, to holders of record on June 17, 2019.  Series C preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.65625per share.

Earnings Call

Live webcast and replay:  http://ir.iretapartments.com

     

Live Conference Call

 

Conference Call Replay

Thursday, August 8, 2019, at 10:00 AM ET

 

Replay available until August 22, 2019

USA Toll Free Number

1-877-509-9785

 

USA Toll Free Number

1-877-344-7529

International Toll Free Number

1-412-902-4132

 

International Toll Free Number

1-412-317-0088

Canada Toll Free Number

1-855-669-9657

 

Canada Toll Free Number

1-855-669-9658

     

Conference Number

10133436

Supplemental Information

Supplemental Operating and Financial Data for the quarter ended June 30, 2019 included herein (“Supplemental Information”), is available in the Investors section on IRET’s website at www.iretapartments.com or by calling Investor Relations at 701-837-7104.  FFO, Core FFO, NOI, and Adjusted EBITDA are non-GAAP financial measures.  These measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Information that accompanies this earnings release.

About IRET

IRET is a real estate company focused on the ownership, management, acquisition, redevelopment, and development of apartment communities.  As of June 30, 2019, we owned interests in 88 apartment communities consisting of 13,975 apartment homes.  IRET’s common shares and Series C preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: “IRET” and “IRET PRC,” respectively).

Forward-Looking Statements

Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on our current expectations and assumptions, and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements.  Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved.  Such risks, uncertainties, and other factors that might cause such differences include, but are not limited to those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our Transition Report on Form 10-KT for the transition period ended December 31, 2018, in our subsequent quarterly reports on Form 10-Q, and in other public reports.  We assume no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

Contact Information 
Jonathan Bishop 
Vice President – Finance 
Phone: 701-837-7104 
E-mail: [email protected]  

Common Share Data (NYSE: IRET)

 
   

2nd Quarter

 

1st Quarter

 

4th Quarter

 

3rd Quarter

 

2nd Quarter

   

Calendar Year 
2019

 

Calendar Year 
2019

 

Calendar Year 
2018

 

Calendar Year 
2018

 

Calendar Year 
2018

High closing price

 

$

61.28

   

$

61.50

   

$

59.10

   

$

59.80

   

$

59.40

 

Low closing price

 

$

57.19

   

$

49.92

   

$

47.00

   

$

53.30

   

$

51.30

 

Average closing price

 

$

59.54

   

$

58.11

   

$

53.40

   

$

54.99

   

$

54.50

 

Closing price at end of quarter

 

$

58.67

   

$

59.91

   

$

49.07

   

$

59.80

   

$

55.30

 

Common share distributions – annualized

 

$

2.80

   

$

2.80

   

$

2.80

   

$

2.80

   

$

2.80

 

Closing dividend yield – annualized

 

4.8

%

 

4.7

%

 

5.7

%

 

4.7

%

 

5.1

%

Closing common shares outstanding (thousands)

 

11,656

   

11,768

   

11,942

   

11,961

   

11,939

 

Closing limited partnership units outstanding (thousands)

 

1,224

   

1,365

   

1,368

   

1,379

   

1,401

 

Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)

 

$

755,670

   

$

786,798

   

$

653,122

   

$

797,732

   

$

737,702

 

IRET

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands)

 
   

Three Months Ended

   

Six Months Ended

   

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

   

6/30/2019

 

6/30/2018

REVENUE

 

$

46,934

   

$

45,608

   

$

45,730

   

$

45,406

   

$

46,197

     

$

92,542

   

$

89,232

 

EXPENSES

                             

Property operating expenses, excluding real estate taxes

 

13,942

   

14,804

   

13,292

   

14,438

   

13,934

     

28,746

   

28,180

 

Real estate taxes

 

5,574

   

5,232

   

5,098

   

5,049

   

5,003

     

10,806

   

10,024

 

Property management expense

 

1,445

   

1,554

   

1,447

   

1,269

   

1,444

     

2,999

   

2,821

 

Casualty loss

 

92

   

641

   

540

   

225

   

     

733

   

50

 

Depreciation/amortization

 

18,437

   

18,111

   

18,812

   

19,164

   

19,132

     

36,548

   

39,648

 

Impairment of real estate investments

 

   

   

1,221

   

   

17,809

     

   

17,809

 

General and administrative expenses

 

3,549

   

3,806

   

3,769

   

3,147

   

4,348

     

7,355

   

7,967

 

TOTAL EXPENSES

 

$

43,039

   

$

44,148

   

$

44,179

   

$

43,292

   

$

61,670

     

$

87,187

   

$

106,499

 

Operating income (loss)

 

3,895

   

1,460

   

1,551

   

2,114

   

(15,473)

     

5,355

   

(17,267)

 

Interest expense

 

(7,590)

   

(7,896)

   

(7,682)

   

(8,193)

   

(8,562)

     

(15,486)

   

(16,858)

 

Loss on extinguishment of debt

 

(407)

   

(2)

   

(5)

   

(540)

   

(12)

     

(409)

   

(133)

 

Interest and other income

 

468

   

424

   

483

   

395

   

460

     

892

   

1,149

 

Income (loss) before gain (loss) on sale of real estate and other investments, gain (loss) on litigation settlement, and income (loss) from discontinued operations

 

(3,634)

   

(6,014)

   

(5,653)

   

(6,224)

   

(23,587)

     

(9,648)

   

(33,109)

 

Gain (loss) on sale of real estate and other investments

 

615

   

54

   

612

   

9,095

   

     

669

   

2,304

 

Gain (loss) on litigation settlement

 

6,286

   

   

   

   

     

6,286

   

 

Income (loss) from continuing operations

 

3,267

   

(5,960)

   

(5,041)

   

2,871

   

(23,587)

     

(2,693)

   

(30,805)

 

Income (loss) from discontinued operations

 

   

   

   

570

   

238

     

   

14,120

 

Net income (loss)

 

$

3,267

   

$

(5,960)

   

$

(5,041)

   

$

3,441

   

$

(23,349)

     

$

(2,693)

   

$

(16,685)

 

Dividends to preferred unitholders

 

(160)

   

(57)

   

   

   

     

(217)

   

 

Net (income) loss attributable to noncontrolling interest – Operating Partnership

 

(148)

   

743

   

665

   

(112)

   

2,580

     

595

   

2,000

 

Net (income) loss attributable to noncontrolling interests – consolidated real estate entities

 

154

   

576

   

270

   

(676)

   

595

     

730

   

1,115

 

Net income (loss) attributable to controlling interests

 

3,113

   

(4,698)

   

(4,106)

   

2,653

   

(20,174)

     

(1,585)

   

(13,570)

 

Dividends to preferred shareholders

 

(1,706)

   

(1,705)

   

(1,705)

   

(1,705)

   

(1,706)

     

(3,411)

   

(3,411)

 

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

 

$

1,407

   

$

(6,403)

   

$

(5,811)

   

$

948

   

$

(21,880)

     

$

(4,996)

   

$

(16,981)

 
                               

Per Share Data

                             

Earnings (loss) per common share from continuing operations – basic & diluted

 

$

0.11

   

$

(0.54)

   

$

(0.49)

   

$

0.04

   

$

(1.85)

     

$

(0.43)

   

$

(2.48)

 

Earnings (loss) per common share from discontinued operations – basic & diluted

 

   

   

   

0.04

   

0.02

     

   

1.06

 

Net earnings (loss) per common share – basic & diluted

 

$

0.11

   

$

(0.54)

   

$

(0.49)

   

$

0.08

   

$

(1.83)

     

$

(0.43)

   

$

(1.42)

 
                               

Percentage of Revenues

                             

Property operating expenses, excluding real estate taxes

 

29.7

%

 

32.5

%

 

29.1

%

 

31.8

%

 

30.2

%

   

31.1

%

 

31.6

%

General and administrative expenses

 

7.6

%

 

8.3

%

 

8.2

%

 

6.9

%

 

9.4

%

   

7.9

%

 

8.9

%

Interest

 

16.2

%

 

17.3

%

 

16.8

%

 

18.0

%

 

18.5

%

   

16.7

%

 

18.9

%

Income (loss) from discontinued operations

 

   

   

   

1.3

%

 

0.5

%

   

   

15.8

%

Net income (loss)

 

7.0

%

 

(13.1)

%

 

(11.0)

%

 

7.6

%

 

(50.5)

%

   

(2.9)

%

 

(18.7)

%

IRET

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands)

 
   

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

ASSETS

                   

Real estate investments

                   

Property owned

 

$

1,663,539

   

$

1,673,158

   

$

1,627,636

   

$

1,638,909

   

$

1,637,991

 

Less accumulated depreciation

 

(380,321)

   

(371,672)

   

(353,871)

   

(339,515)

   

(321,468)

 
   

1,283,218

   

1,301,486

   

1,273,765

   

1,299,394

   

1,316,523

 

Unimproved land

 

1,746

   

2,252

   

5,301

   

6,522

   

10,726

 

Mortgage loans receivable

 

10,140

   

10,260

   

10,410

   

10,530

   

10,955

 

Total real estate investments

 

1,295,104

   

1,313,998

   

1,289,476

   

1,316,446

   

1,338,204

 

Assets held for sale and assets of discontinued operations

 

   

   

   

   

33,840

 

Cash and cash equivalents

 

17,406

   

23,329

   

13,792

   

36,910

   

20,451

 

Restricted cash

 

4,672

   

4,819

   

5,464

   

4,669

   

4,454

 

Other assets

 

30,626

   

29,166

   

27,265

   

28,472

   

27,882

 

TOTAL ASSETS

 

$

1,347,808

   

$

1,371,312

   

$

1,335,997

   

$

1,386,497

   

$

1,424,831

 
                     

LIABILITIES, MEZZANINE EQUITY, AND EQUITY

                   

LIABILITIES

                   

Liabilities held for sale and liabilities of discontinued operations

 

   

   

   

   

$

29,624

 

Accounts payable and accrued expenses

 

$

44,766

   

$

40,697

   

$

40,892

   

$

38,203

   

36,288

 

Revolving line of credit

 

177,939

   

118,677

   

57,500

   

71,000

   

145,500

 

Term loans payable, net of loan costs

 

144,082

   

144,036

   

143,991

   

143,937

   

69,531

 

Mortgages payable, net of loan costs

 

370,461

   

430,950

   

444,197

   

463,052

   

465,244

 

TOTAL LIABILITIES

 

$

737,248

   

$

734,360

   

$

686,580

   

$

716,192

   

$

746,187

 
                     

REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES

 

   

   

5,968

   

6,130

   

6,261

 

SERIES D PREFERRED UNITS

 

16,560

   

16,560

   

   

   

 

EQUITY

                   

Series C Preferred Shares of Beneficial Interest

 

99,456

   

99,456

   

99,456

   

99,456

   

99,456

 

Common Shares of Beneficial Interest

 

888,541

   

895,381

   

899,234

   

900,368

   

899,480

 

Accumulated distributions in excess of net income

 

(450,433)

   

(443,661)

   

(429,048)

   

(414,900)

   

(407,482)

 

Accumulated other comprehensive income

 

(7,598)

   

(3,139)

   

(856)

   

2,760

   

1,748

 

Total shareholders’ equity

 

$

529,966

   

$

548,037

   

$

568,786

   

$

587,684

   

$

593,202

 

Noncontrolling interests – Operating Partnership

 

57,902

   

66,060

   

67,916

   

69,578

   

71,066

 

Noncontrolling interests – consolidated real estate entities

 

6,132

   

6,295

   

6,747

   

6,913

   

8,115

 

Total equity

 

$

594,000

   

$

620,392

   

$

643,449

   

$

664,175

   

$

672,383

 

TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY

 

$

1,347,808

   

$

1,371,312

   

$

1,335,997

   

$

1,386,497

   

$

1,424,831

 

IRET
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)

This release contains certain non-GAAP financial measures. The non-GAAP measures should not be considered a substitute for operating results determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The definitions and calculations of these non-GAAP measures, as calculated by us, may not be comparable to non-GAAP measures reported by other REITs that do not define each of the non-GAAP measures exactly as we do.

We provide certain information on a same-store and non-same-store basis.  Same-store apartment communities are owned or in service for the entirety of the periods being compared, and, in the case of development properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, we determine the composition of our same-store pool for that year as well as adjust the previous year, which allows us to evaluate full period-over-period operating comparisons for existing apartment communities and their contribution to net income. We believe that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of our communities are performing year-over-year. We use this measure to assess whether or not we have been successful in increasing NOI, renewing the leases on existing residents, controlling operating costs, and making prudent capital improvements.

Reconciliation of Operating Income (Loss) to Net Operating Income

Net operating income, or NOI, is a non-GAAP measure which we define as total real estate revenues less property operating expenses, including real estate taxes.  We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses.  NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.

 

(in thousands, except percentages)

 

Three Months Ended June 30,

   

Six Months Ended June 30,

 

2019

 

2018

 

$ Change

 

% Change

   

2019

 

2018

 

$ Change

 

% Change

                                 

Operating income (loss)

$

3,895

   

$

(15,473)

   

$

19,368

   

(125.2)

%

   

$

5,355

   

$

(17,267)

   

$

22,622

   

(131.0)

%

Adjustments:

                               

Property management expenses

1,445

   

1,444

   

1

   

0.1

%

   

2,999

   

2,821

   

178

   

6.3

%

Casualty loss

92

   

   

92

   

100.0

%

   

733

   

50

   

683

   

1,366.0

%

Depreciation and amortization

18,437

   

19,132

   

(695)

   

(3.6)

%

   

36,548

   

39,648

   

(3,100)

   

(7.8)

%

Impairment

   

17,809

   

(17,809)

   

(100.0)

%

   

   

17,809

   

(17,809)

   

(100.0)

%

General and administrative expenses

3,549

   

4,348

   

(799)

   

(18.4)

%

   

7,355

   

7,967

   

(612)

   

(7.7)

%

Net operating income

$

27,418

   

$

27,260

   

$

158

   

0.6

%

   

$

52,990

   

$

51,028

   

$

1,962

   

3.8

%

                                 

Revenue

                               

Same-store

$

40,024

   

$

38,804

   

$

1,220

   

3.1

%

   

$

79,637

   

$

76,852

   

$

2,785

   

3.6

%

Non-same-store

5,921

   

4,345

   

1,576

   

36.3

%

   

11,122

   

6,351

   

4,771

   

75.1

%

Other properties and dispositions

989

   

3,048

   

(2,059)

   

(67.6)

%

   

1,783

   

6,029

   

(4,246)

   

(70.4)

%

Total

46,934

   

46,197

   

737

   

1.6

%

   

92,542

   

89,232

   

3,310

   

3.7

%

                                 

Property operating expenses, including real estate taxes

                               

Same-store

16,974

   

16,345

   

629

   

3.8

%

   

34,781

   

33,536

   

1,245

   

3.7

%

Non-same-store

2,137

   

1,481

   

656

   

44.3

%

   

4,018

   

2,418

   

1,600

   

66.2

%

Other properties and dispositions

405

   

1,111

   

(706)

   

(63.5)

%

   

753

   

2,250

   

(1,497)

   

(66.5)

%

Total

19,516

   

18,937

   

579

   

3.1

%

   

39,552

   

38,204

   

1,348

   

3.5

%

                                 

Net operating income

                               

Same-store

23,050

   

22,459

   

591

   

2.6

%

   

44,856

   

43,316

   

1,540

   

3.6

%

Non-same-store

3,784

   

2,864

   

920

   

32.1

%

   

7,104

   

3,933

   

3,171

   

80.6

%

Other properties and dispositions

584

   

1,937

   

(1,353)

   

(69.9)

%

   

1,030

   

3,779

   

(2,749)

   

(72.7)

%

Total

$

27,418

   

$

27,260

   

$

158

   

0.6

%

   

$

52,990

   

$

51,028

   

$

1,962

   

3.8

%

Same-Store Expense Comparison

 

(in thousands, except percentages)

 

Three Months Ended June 30,

   

Six Months Ended June 30,

 

2019

 

2018

 

$ Change

 

% Change

   

2019

 

2018

 

$ Change

 

% Change

                                 

Controllable expenses

                               

Compensation

$

4,712

   

$

4,949

   

$

(237)

   

(4.8)

%

   

$

9,236

   

$

9,803

   

$

(567)

   

(5.8)

%

Repairs and maintenance

3,176

   

3,196

   

(20)

   

(0.6)

%

   

6,596

   

6,033

   

563

   

9.3

%

Utilities

2,520

   

2,532

   

(12)

   

(0.5)

%

   

5,952

   

5,854

   

98

   

1.7

%

Administrative and marketing

937

   

910

   

27

   

3.0

%

   

1,901

   

1,712

   

189

   

11.0

%

Total

$

11,345

   

$

11,587

   

$

(242)

   

(2.1)

%

   

$

23,685

   

$

23,402

   

$

283

   

1.2

%

                                 

Non-controllable expenses

                               

Real estate taxes

$

4,611

   

$

4,400

   

$

211

   

4.8

%

   

$

9,103

   

$

8,805

   

$

298

   

3.4

%

Insurance

1,018

   

358

   

660

   

184.4

%

   

1,993

   

1,329

   

664

   

50.0

%

Total

5,629

   

4,758

   

871

   

18.3

%

   

11,096

   

10,134

   

962

   

9.5

%

                                 

Total

$

16,974

   

$

16,345

   

$

629

   

3.8

%

   

$

34,781

   

$

33,536

   

$

1,245

   

3.7

%

Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds From Operations and Core Funds From Operations

We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding:

Due to the limitations of the FFO definition adopted by Nareit, we have made certain interpretations in applying the definition. We believe that all such interpretations not specifically provided for in the Nareit definition are consistent with the definition. Nareit’s FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT’s main business are excluded from FFO and a REIT has the option to exclude impairment write-downs of assets that are incidental to the main business.

We believe that FFO, which is a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, thereby providing an additional perspective on our operating results. We believe that GAAP historical cost depreciation of real estate assets is not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. The exclusion in Nareit’s definition of FFO of impairment write-downs and gains and losses from the sale of real estate assets helps to identify the operating results of the long-term assets that form the base of our investments, and assists management and investors in comparing those operating results between periods.

While FFO is widely used by us as a primary 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. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, and is not necessarily indicative of sufficient cash flow to fund all of our needs or our ability to service indebtedness or make distributions.

Core Funds from Operations (“Core FFO”) is FFO as adjusted for non-routine items or items not considered core to our business operations. By further adjusting for items that are not considered part of our core business operations, we believe that Core FFO provides investors with additional information to compare our core operating and financial performance between periods. Core FFO should not be considered as an alternative to net income as an indication of financial performance, or as an alternative to cash flows from operations as a measure of liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions to shareholders. Core FFO is a non-GAAP and non-standardized measure that may be calculated differently by other REITs and that should not be considered a substitute for operating results determined in accordance with GAAP.

   

(in thousands, except per share amounts)

   

Three Months Ended

   

Six Months Ended

   

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

   

6/30/2019

 

6/30/2018

Funds From Operations

                             

Net income (loss) available to common shareholders

 

$

1,407

   

$

(6,403)

   

$

(5,811)

   

$

948

   

$

(21,880)

     

$

(4,996)

   

$

(16,981)

 

Adjustments:

                             

Noncontrolling interests – Operating Partnership

 

148

   

(743)

   

(665)

   

112

   

(2,580)

     

(595)

   

(2,000)

 

Depreciation and amortization

 

18,437

   

18,111

   

18,812

   

19,164

   

19,132

     

36,548

   

39,650

 

Less depreciation – non real estate

 

(79)

   

(85)

   

(76)

   

(76)

   

(76)

     

(164)

   

(155)

 

Less depreciation – partially owned entities

 

(474)

   

(678)

   

(680)

   

(673)

   

(719)

     

(1,152)

   

(1,442)

 

Impairment of real estate

 

   

   

1,221

   

   

17,809

     

   

17,809

 

Gain on sale of real estate

 

(615)

   

(54)

   

(612)

   

(8,499)

   

(98)

     

(669)

   

(16,134)

 

FFO applicable to common shares and Units

 

$

18,824

   

$

10,148

   

$

12,189

   

$

10,976

   

$

11,588

     

$

28,972

   

$

20,747

 
                               

FFO per share and unit – basic and diluted

 

$

1.45

   

$

0.77

   

$

0.92

   

$

0.82

   

$

0.87

     

$

2.22

   

$

1.55

 
                               

Adjustments to Core FFO:

                             

Casualty loss write off

 

   

   

43

   

   

     

   

 

Loss on extinguishment of debt

 

407

   

2

   

5

   

540

   

12

     

409

   

133

 

Gain on litigation settlement

 

(6,286)

   

   

   

   

     

(6,286)

   

 

Severance and transition costs

 

   

   

   

   

586

     

   

811

 

Core FFO applicable to common shares and Units

 

$

12,945

   

$

10,150

   

$

12,237

   

$

11,516

   

$

12,186

     

$

23,095

   

$

21,691

 
                               

Core FFO per share and unit – basic and diluted

 

$

1.00

   

$

0.77

   

$

0.92

   

$

0.86

   

$

0.91

     

$

1.77

   

$

1.62

 
                               

Weighted average shares and units

 

12,955

   

13,130

   

13,317

   

13,318

   

13,335

     

13,052

   

13,366

 

Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA

Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of real estate investments, gain/loss on extinguishment of debt, and gain/loss from involuntary conversion. We consider Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, the cost of debt, or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP. Adjusted EBITDA as calculated by us may not be comparable to Adjusted EBITDA reported by other REITs that do not define Adjusted EBITDA exactly as we do.

   

(in thousands)

   

Three Months Ended

   

Six Months Ended

   

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

   

6/30/2019

 

6/30/2018

Adjusted EBITDA

                             

Net income (loss) available to common shareholders

 

$

3,113

   

$

(4,698)

   

$

(4,106)

   

$

2,653

   

$

(20,174)

     

$

(1,585)

   

$

(13,570)

 

Adjustments:

                             

Dividends to preferred unitholders

 

160

   

57

   

   

   

     

217

   

 

Noncontrolling interests – Operating Partnership

 

148

   

(743)

   

(665)

   

112

   

(2,580)

     

(595)

   

(2,000)

 

Income (loss) before noncontrolling interests – Operating Partnership

 

$

3,421

   

$

(5,384)

   

$

(4,771)

   

$

2,765

   

$

(22,754)

     

$

(1,963)

   

$

(15,570)

 

Adjustments:

                             

Interest expense

 

7,343

   

7,558

   

7,336

   

7,828

   

8,148

     

14,901

   

16,029

 

Loss on extinguishment of debt

 

407

   

2

   

4

   

541

   

11

     

409

   

132

 

Depreciation/amortization related to real estate investments

 

17,963

   

17,433

   

18,133

   

18,491

   

18,413

     

35,396

   

38,208

 

Impairment of real estate investments

 

   

   

1,221

   

   

17,809

     

   

17,809

 

Interest income

 

(402)

   

(407)

   

(465)

   

(366)

   

(429)

     

(809)

   

(1,102)

 

Gain (loss) on sale of real estate and other investments

 

(615)

   

(54)

   

(611)

   

(8,499)

   

(98)

     

(669)

   

(16,134)

 

Gain on litigation settlement

 

(6,286)

   

   

   

   

     

(6,286)

   

 

Adjusted EBITDA

 

$

21,831

   

$

19,148

   

$

20,847

   

$

20,760

   

$

21,100

     

$

40,979

   

$

39,372

 
                               

Ratios

                             

Adjusted EBITDA/Interest expense

 

2.88

x

 

2.43

x

 

2.71

x

 

2.53

x

 

2.46

x

   

2.65

x

 

2.34

x

Adjusted EBITDA/Interest expense plus preferred distributions

 

2.31

x

 

1.98

x

 

2.22

x

 

2.10

x

 

2.05

x

   

2.14

x

 

1.94

x

IRET

DEBT ANALYSIS

(in thousands)

 

Debt Maturity Schedule

Annual Expirations

 
   

Future Maturities of Debt

   

Secured Fixed
Debt

 

Unsecured 
Fixed
Debt(1)

 

Secured 
Variable 
Debt(2)

 

Unsecured 
Variable Debt

 

Total
Debt

 

% of
Total Debt

 

Weighted
Average 
Interest Rate(3)

2019 (remainder)

 

$

6,926

   

$

   

$

   

$

   

$

6,926

   

1.0

%

 

5.59

%

2020

 

35,122

   

   

   

4,589

   

39,711

   

5.7

%

 

5.26

%

2021

 

95,394

   

   

   

   

95,394

   

13.7

%

 

5.17

%

2022

 

38,343

   

50,000

   

15,000

   

108,350

   

211,693

   

30.5

%

 

3.91

%

2023

 

48,808

   

   

   

   

48,808

   

7.0

%

 

4.02

%

Thereafter

 

147,358

   

145,000

   

   

   

292,358

   

42.1

%

 

3.90

%

Total debt

 

$

371,951

   

$

195,000

   

$

15,000

   

$

112,939

   

$

694,890

   

100.0

%

 

4.18

%

   

(1)

Term loans have variable interest rates that are fixed with interest rate swaps and $50.0 million of our variable interest, primary line of credit is fixed with an interest rate swap.

(2)

Our primary revolving line of credit consists primarily of unsecured borrowings. A portion of the line was secured in connection with our acquisition of SouthFork Townhomes, under an agreement which allowed us to offer the seller tax protection upon purchase.

(3)

Weighted average interest rate of debt that matures during the year, including the effect of interest rate swaps on the term loans and line of credit. 

   

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

Debt Balances Outstanding(1)

                   

Secured fixed rate

 

$

371,951

   

$

432,588

   

$

445,974

   

$

464,964

   

$

473,546

 

Secured variable rate mortgage

 

   

   

   

   

22,620

 

Unsecured fixed rate line of credit(2)

 

50,000

   

   

   

   

 

Secured line of credit(3)

 

15,000

   

15,000

   

   

   

 

Unsecured variable rate line of credit

 

112,939

   

103,677

   

57,500

   

71,000

   

145,500

 

Unsecured term loans

 

145,000

   

145,000

   

145,000

   

145,000

   

70,000

 

   Debt total

 

$

694,890

   

$

696,265

   

$

648,474

   

$

680,964

   

$

711,666

 
                     

Mortgage Debt Weighted Average Interest Rate

 

4.37

%

 

4.54

%

 

4.58

%

 

4.65

%

 

4.67

%

Primary Line of Credit Rate – Fixed (rate with swap)

 

3.42

%

 

   

   

   

 

Primary Line of Credit Rate – Variable

 

3.99

%

 

3.89

%

 

3.72

%

 

3.67

%

 

3.76

%

Operating Line of Credit Rate

 

4.39

%

 

4.40

%

 

   

   

 

Term Loan Rate (rate with swap)

 

4.14

%

 

3.99

%

 

4.01

%

 

3.97

%

 

4.11

%

   

(1)

Includes mortgages on properties held for sale.

(2)

A portion of our primary line of credit is fixed through an interest rate swap.

(3)

Our revolving line of credit consists primarily of unsecured borrowings. A portion of the line was secured in connection with our acquisition of SouthFork Townhomes, under an agreement which allowed us to offer the seller tax protection upon purchase.

IRET

CAPITAL ANALYSIS

(in thousands, except per share and unit amounts)

 
   

Three Months Ended

   

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

Equity Capitalization

                   

Common shares outstanding

 

11,656

   

11,768

   

11,942

   

11,961

   

11,939

 

Operating partnership units outstanding

 

1,224

   

1,365

   

1,368

   

1,379

   

1,401

 

Total common shares and units outstanding

 

12,880

   

13,133

   

13,310

   

13,340

   

13,340

 

Market price per common share (closing price at end of period)

 

$

58.67

   

$

59.91

   

$

49.07

   

$

59.80

   

$

55.30

 

Equity capitalization-common shares and units

 

$

755,670

   

$

786,798

   

$

653,122

   

$

797,732

   

$

737,702

 

Recorded book value of preferred shares

 

$

99,456

   

$

99,456

   

$

99,456

   

$

99,456

   

$

99,456

 

Total equity capitalization

 

$

855,126

   

$

886,254

   

$

752,578

   

$

897,188

   

$

837,158

 
                     

Series D Preferred Units

 

$

16,560

   

$

16,560

   

   

   

 
                     

Debt Capitalization

                   

Total debt

 

$

694,889

   

$

696,265

   

$

648,474

   

$

680,964

   

$

711,666

 

Total capitalization

 

$

1,566,575

   

$

1,599,079

   

$

1,401,052

   

$

1,578,152

   

$

1,548,824

 
                     

Total debt to total capitalization(1)

 

0.44:1

   

0.44:1

   

0.46:1

   

0.43:1

   

0.46:1

 
   

(1)

Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet plus the market value of common shares, operating partnership units, Series C preferred shares, and Series D preferred units outstanding at the end of the period.

   

Three Months Ended

   

Six Months Ended

   

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

   

6/30/2019

 

6/30/2018

Debt service coverage ratio(1)

 

2.24

x

 

1.86

x

 

2.07

x

 

1.96

x

 

1.83

x

   

2.04

x

 

1.58

x

                               

Distribution Data

                             

Common shares and Units outstanding at record date

 

12,914

   

13,135

   

13,276

   

13,340

   

13,340

     

12,914

   

13,340

 

Total common distribution declared

 

$

9,039

   

$

9,195

   

$

9,293

   

$

9,339

   

$

9,345

     

$

18,234

   

$

18,740

 

Common distribution per share and Unit

 

$

0.70

   

$

0.70

   

$

0.70

   

$

0.70

   

$

0.70

     

$

1.40

   

$

1.40

 

Payout ratio (FFO per share and Unit basis)(2)

 

48.3

%

 

90.9

%

 

76.1

%

 

85.4

%

 

80.5

%

   

63.1

%

 

90.3

%

Payout ratio (Core FFO per share and Unit basis)(3)

 

70.0

%

 

90.9

%

 

76.1

%

 

81.4

%

 

76.9

%

   

79.1

%

 

86.4

%

   

(1)

Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization.

(2)

Payout ratio (FFO per share and unit basis) is the ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual FFO per share and unit.  This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP.

(3)

Payout ratio (Core FFO per share and unit basis) is the ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual Core FFO per share and unit.  This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP.

IRET

SAME-STORE SECOND QUARTER COMPARISONS

(in thousands, except property data amounts and percentages)

 
   

Apartment 
Homes 
Included

 

Revenues

 

Expenses

 

NOI

Regions

   

CY19Q2

 

CY18Q2

 

% Change

 

CY19Q2

 

CY18Q2

 

% Change

 

CY19Q2

 

CY18Q2

 

% Change

Minneapolis, MN

 

1,796

   

$

7,835

   

$

7,287

   

7.5

%

 

$

3,171

   

$

2,958

   

7.2

%

 

$

4,664

   

$

4,329

   

7.7

%

Rochester, MN

 

1,711

   

6,291

   

6,086

   

3.4

%

 

2,450

   

2,292

   

6.9

%

 

3,841

   

3,794

   

1.2

%

Omaha, NE

 

1,370

   

3,705

   

3,700

   

0.1

%

 

1,635

   

1,606

   

1.8

%

 

2,070

   

2,094

   

(1.1)

%

Grand Forks, ND

 

1,555

   

4,218

   

4,227

   

(0.2)

%

 

1,909

   

1,912

   

(0.2)

%

 

2,309

   

2,315

   

(0.3)

%

Bismarck, ND

 

1,259

   

3,595

   

3,607

   

(0.3)

%

 

1,491

   

1,596

   

(6.6)

%

 

2,104

   

2,011

   

4.6

%

St. Cloud, MN

 

1,190

   

3,584

   

3,389

   

5.8

%

 

1,524

   

1,651

   

(7.7)

%

 

2,060

   

1,738

   

18.5

%

Topeka, KS

 

1,042

   

2,558

   

2,514

   

1.8

%

 

1,206

   

1,065

   

13.2

%

 

1,352

   

1,449

   

(6.7)

%

Sioux Falls, SD

 

969

   

2,544

   

2,470

   

3.0

%

 

1,222

   

1,050

   

16.4

%

 

1,322

   

1,420

   

(6.9)

%

Billings, MT

 

770

   

2,178

   

2,080

   

4.7

%

 

773

   

581

   

33.0

%

 

1,405

   

1,499

   

(6.3)

%

Minot, ND

 

712

   

2,145

   

2,100

   

2.1

%

 

1,036

   

1,031

   

0.5

%

 

1,109

   

1,069

   

3.7

%

Rapid City, SD

 

474

   

1,371

   

1,344

   

2.0

%

 

557

   

603

   

(7.6)

%

 

814

   

741

   

9.9

%

Same-Store Total

 

12,848

   

$

40,024

   

$

38,804

   

3.1

%

 

$

16,974

   

$

16,345

   

3.8

%

 

$

23,050

   

$

22,459

   

2.6

%

   

Apartment 
Homes 
Included

 

Weighted Average Occupancy (1)

 

Weighted Average Monthly 
Rental Rate (2)

 

Weighted Average Monthly 
Revenue per Occupied Home (3)

Regions

   

CY19Q2

 

CY18Q2

 

Growth

 

CY19Q2

 

CY18Q2

 

% Change

 

CY19Q2

 

CY18Q2

 

% Change

Minneapolis, MN

 

1,796

   

93.4

%

 

91.7

%

 

1.7

%

 

$

1,439

   

$

1,391

   

3.5

%

 

$

1,557

   

$

1,474

   

5.8

%

Rochester, MN

 

1,711

   

95.4

%

 

94.7

%

 

0.7

%

 

1,233

   

1,211

   

1.8

%

 

1,285

   

1,252

   

2.7

%

Omaha, NE

 

1,370

   

93.3

%

 

95.5

%

 

(2.2)

%

 

884

   

869

   

1.7

%

 

966

   

942

   

2.3

%

Grand Forks, ND

 

1,555

   

93.5

%

 

94.0

%

 

(0.5)

%

 

912

   

916

   

(0.4)

%

 

967

   

964

   

0.3

%

Bismarck, ND

 

1,259

   

92.8

%

 

94.7

%

 

(1.9)

%

 

953

   

954

   

(0.1)

%

 

1,026

   

1,008

   

1.6

%

St. Cloud, MN

 

1,190

   

95.4

%

 

95.3

%

 

0.1

%

 

951

   

918

   

3.6

%

 

1,053

   

996

   

5.7

%

Topeka, KS

 

1,042

   

95.6

%

 

95.5

%

 

0.1

%

 

818

   

804

   

1.7

%

 

856

   

842

   

1.7

%

Sioux Falls, SD

 

969

   

94.4

%

 

94.2

%

 

0.2

%

 

858

   

832

   

3.1

%

 

927

   

902

   

2.8

%

Billings, MT

 

770

   

95.6

%

 

93.0

%

 

2.6

%

 

921

   

908

   

1.4

%

 

986

   

968

   

2.1

%

Minot, ND

 

712

   

95.0

%

 

95.8

%

 

(0.8)

%

 

1,000

   

998

   

0.2

%

 

1,057

   

1,026

   

2.9

%

Rapid City, SD

 

474

   

95.0

%

 

95.9

%

 

(0.9)

%

 

945

   

916

   

3.2

%

 

1,015

   

986

   

2.9

%

Same-Store Total

 

12,848

   

94.3

%

 

94.2

%

 

0.1

%

 

$

1,028

   

$

1,009

   

1.9

%

 

$

1,101

   

$

1,069

   

3.0

%

   

(1)

Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rent.

(2)

Weighted average monthly rental rate is scheduled rental revenue divided by the total number of apartment homes. Scheduled rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account.  Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.

(3)

Weighted average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment units for the period.

IRET

SAME-STORE SEQUENTIAL QUARTER COMPARISONS

(in thousands, except property data amounts and percentages)

 
   

Apartment 
Homes 
Included

 

Revenues

 

Expenses

 

NOI

Regions

   

CY19Q2

 

CY19Q1

 

% Change

 

CY19Q2

 

CY19Q1

 

% Change

 

CY19Q2

 

CY19Q1

 

% Change

Minneapolis, MN

 

1,796

   

$

7,835

   

$

7,689

   

1.9

%

 

$

3,172

   

$

3,148

   

0.8

%

 

$

4,664

   

$

4,541

   

2.7

%

Rochester, MN

 

1,711

   

6,291

   

6,225

   

1.1

%

 

2,450

   

2,454

   

(0.2)

%

 

3,841

   

3,771

   

1.9

%

Omaha, NE

 

1,370

   

3,705

   

3,754

   

(1.3)

%

 

1,635

   

1,774

   

(7.8)

%

 

2,070

   

1,980

   

4.5

%

Grand Forks, ND

 

1,555

   

4,218

   

4,141

   

1.9

%

 

1,909

   

2,166

   

(11.9)

%

 

2,309

   

1,975

   

16.9

%

Bismarck, ND

 

1,259

   

3,595

   

3,602

   

(0.2)

%

 

1,491

   

1,717

   

(13.2)

%

 

2,104

   

1,885

   

11.6

%

St. Cloud, MN

 

1,190

   

3,584

   

3,474

   

3.2

%

 

1,525

   

1,808

   

(15.7)

%

 

2,060

   

1,666

   

23.6

%

Topeka, KS

 

1,042

   

2,558

   

2,556

   

0.1

%

 

1,206

   

1,105

   

9.1

%

 

1,352

   

1,451

   

(6.8)

%

Sioux Falls, SD

 

969

   

2,544

   

2,529

   

0.6

%

 

1,222

   

1,193

   

2.4

%

 

1,322

   

1,336

   

(1.0)

%

Billings, MT

 

770

   

2,178

   

2,156

   

1.0

%

 

773

   

858

   

(9.9)

%

 

1,405

   

1,298

   

8.2

%

Minot, ND

 

712

   

2,145

   

2,118

   

1.3

%

 

1,036

   

1,007

   

2.9

%

 

1,109

   

1,111

   

(0.2)

%

Rapid City, SD

 

474

   

1,371

   

1,367

   

0.3

%

 

557

   

576

   

(3.3)

%

 

814

   

791

   

2.9

%

Same-Store Total

 

12,848

   

$

40,024

   

$

39,611

   

1.0

%

 

$

16,976

   

$

17,806

   

(4.7)

%

 

$

23,050

   

$

21,805

   

5.7

%

   

Apartment 
Homes 
Included

 

Weighted Average Occupancy

 

Weighted Average Monthly
Rental Rate

 

Weighted Average Monthly
Revenue per Occupied Home

Regions

   

CY19Q2

 

CY19Q1

 

Growth

 

CY19Q2

 

CY19Q1

 

% Change

 

CY19Q2

 

CY19Q1

 

% Change

Minneapolis, MN

 

1,796

   

93.4

%

 

94.8

%

 

(1.4)

%

 

$

1,439

   

$

1,408

   

2.2

%

 

$

1,557

   

$

1,505

   

3.3

%

Rochester, MN

 

1,711

   

95.4

%

 

96.5

%

 

(1.1)

%

 

1,233

   

1,207

   

2.2

%

 

1,285

   

1,257

   

2.2

%

Omaha, NE

 

1,370

   

93.3

%

 

95.3

%

 

(2.0)

%

 

884

   

875

   

1.0

%

 

966

   

959

   

0.7

%

Grand Forks, ND

 

1,555

   

93.5

%

 

93.8

%

 

(0.3)

%

 

912

   

903

   

1.0

%

 

967

   

946

   

2.2

%

Bismarck, ND

 

1,259

   

92.8

%

 

96.4

%

 

(3.6)

%

 

953

   

942

   

1.2

%

 

1,026

   

990

   

3.4

%

St. Cloud, MN

 

1,190

   

95.4

%

 

95.7

%

 

(0.3)

%

 

951

   

939

   

1.3

%

 

1,053

   

1,016

   

3.5

%

Topeka, KS

 

1,042

   

95.6

%

 

96.7

%

 

(1.1)

%

 

818

   

810

   

1.0

%

 

856

   

846

   

1.2

%

Sioux Falls, SD

 

969

   

94.4

%

 

95.3

%

 

(0.9)

%

 

858

   

850

   

0.9

%

 

927

   

913

   

1.5

%

Billings, MT

 

770

   

95.6

%

 

96.2

%

 

(0.6)

%

 

921

   

902

   

2.1

%

 

986

   

971

   

1.6

%

Minot, ND

 

712

   

95.0

%

 

95.8

%

 

(0.8)

%

 

1,000

   

993

   

0.7

%

 

1,057

   

1,035

   

2.1

%

Rapid City, SD

 

474

   

95.0

%

 

96.9

%

 

(1.9)

%

 

945

   

931

   

1.5

%

 

1,015

   

991

   

2.2

%

Same-Store Total

 

12,848

   

94.3

%

 

95.6

%

 

(1.3)

%

 

$

1,028

   

$

1,013

   

1.5

%

 

$

1,101

   

$

1,075

   

2.3

%

IRET

SAME-STORE YEAR-TO-DATE COMPARISONS

(in thousands, except property data amounts and percentages)

 
   

Apartment 
Homes 
Included

 

Revenues

 

Expenses

 

NOI

Regions

   

CY19

 

CY18

 

% Change

 

CY19

 

CY18

 

% Change

 

CY19

 

CY18

 

% Change

Minneapolis, MN

 

1,796

   

$

15,525

   

$

14,472

   

7.3

%

 

$

6,321

   

$

5,921

   

6.8

%

 

$

9,204

   

$

8,551

   

7.6

%

Rochester, MN

 

1,711

   

12,516

   

12,124

   

3.2

%

 

4,904

   

4,841

   

1.3

%

 

7,612

   

7,283

   

4.5

%

Omaha, NE

 

1,370

   

7,459

   

7,332

   

1.7

%

 

3,409

   

3,232

   

5.5

%

 

4,050

   

4,100

   

(1.2)

%

Grand Forks, ND

 

1,555

   

8,359

   

8,417

   

(0.7)

%

 

4,075

   

3,953

   

3.1

%

 

4,284

   

4,464

   

(4.0)

%

Bismarck, ND

 

1,259

   

7,197

   

7,089

   

1.5

%

 

3,207

   

3,164

   

1.4

%

 

3,990

   

3,925

   

1.7

%

St. Cloud, MN

 

1,190

   

7,059

   

6,700

   

5.4

%

 

3,333

   

3,266

   

2.1

%

 

3,726

   

3,434

   

8.5

%

Topeka, KS

 

1,042

   

5,114

   

4,932

   

3.7

%

 

2,311

   

2,057

   

12.3

%

 

2,803

   

2,875

   

(2.5)

%

Sioux Falls, SD

 

969

   

5,073

   

4,912

   

3.3

%

 

2,415

   

2,324

   

3.9

%

 

2,658

   

2,588

   

2.7

%

Billings, MT

 

770

   

4,334

   

4,057

   

6.8

%

 

1,630

   

1,407

   

15.8

%

 

2,704

   

2,650

   

2.0

%

Minot, ND

 

712

   

4,263

   

4,161

   

2.5

%

 

2,043

   

2,218

   

(7.9)

%

 

2,220

   

1,943

   

14.3

%

Rapid City, SD

 

474

   

2,738

   

2,656

   

3.1

%

 

1,133

   

1,153

   

(1.7)

%

 

1,605

   

1,503

   

6.8

%

Same-Store Total

 

12,848

   

$

79,637

   

$

76,852

   

3.6

%

 

$

34,781

   

$

33,536

   

3.7

%

 

$

44,856

   

$

43,316

   

3.6

%

   

Apartment 
Homes 
Included

 

Weighted Average Occupancy

 

Weighted Average Monthly
Rental Rate

 

Weighted Average Monthly
Revenue per Occupied Home

Regions

   

CY19

 

CY18

 

Growth

 

CY19

 

CY18

 

% Change

 

CY19

 

CY18

 

% Change

Minneapolis, MN

 

1,796

   

94.1

%

 

92.1

%

 

2.0

%

 

$

1,424

   

$

1,379

   

3.3

%

 

$

1,531

   

$

1,459

   

5.3

%

Rochester, MN

 

1,711

   

95.9

%

 

94.6

%

 

1.3

%

 

1,220

   

1,214

   

0.5

%

 

1,271

   

1,248

   

1.9

%

Omaha, NE

 

1,370

   

94.3

%

 

95.5

%

 

(1.2)

%

 

879

   

863

   

1.9

%

 

963

   

934

   

2.9

%

Grand Forks, ND

 

1,555

   

93.7

%

 

94.5

%

 

(0.8)

%

 

907

   

912

   

(0.5)

%

 

957

   

955

   

0.1

%

Bismarck, ND

 

1,259

   

94.6

%

 

94.0

%

 

0.6

%

 

947

   

957

   

(1.0)

%

 

1,007

   

999

   

0.9

%

St. Cloud, MN

 

1,190

   

95.6

%

 

95.1

%

 

0.5

%

 

945

   

911

   

3.7

%

 

1,035

   

987

   

4.9

%

Topeka, KS

 

1,042

   

96.1

%

 

95.0

%

 

1.1

%

 

814

   

801

   

1.6

%

 

851

   

831

   

2.6

%

Sioux Falls, SD

 

969

   

94.8

%

 

94.9

%

 

(0.1)

%

 

854

   

824

   

3.6

%

 

920

   

890

   

3.4

%

Billings, MT

 

770

   

95.9

%

 

91.7

%

 

4.2

%

 

912

   

907

   

0.6

%

 

978

   

958

   

2.6

%

Minot, ND

 

712

   

95.4

%

 

95.9

%

 

(0.5)

%

 

997

   

997

   

%

 

1,046

   

1,016

   

3.0

%

Rapid City, SD

 

474

   

95.9

%

 

96.2

%

 

(0.3)

%

 

938

   

908

   

3.3

%

 

1,003

   

971

   

3.4

%

Same-Store Total

 

12,848

   

94.9

%

 

94.2

%

 

0.7

%

 

$

1,020

   

$

1,005

   

1.5

%

 

$

1,088

   

$

1,059

   

2.9

%

IRET

PORTFOLIO SUMMARY(1)

 
   

Three Months Ended

   

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

Number of Apartment Homes

                   

Same-Store

 

12,848

   

12,848

   

12,847

   

12,847

   

12,848

 

Non-Same-Store

 

1,127

   

1,127

   

855

   

855

   

855

 

All Communities

 

13,975

   

13,975

   

13,702

   

13,702

   

13,703

 
                     

Average Scheduled Rent(2) per Apartment Home

                   

Same-Store

 

$

1,028

   

$

1,013

   

$

1,018

   

$

1,027

   

$

1,009

 

Non-Same-Store

 

1,692

   

1,772

   

1,797

   

1,796

   

1,797

 

All Communities

 

$

1,081

   

$

1,064

   

$

1,066

   

$

1,075

   

$

1,058

 
                     

Average Revenue per Occupied Apartment Home(3)

                   

Same-Store

 

$

1,101

   

$

1,075

   

$

1,082

   

$

1,092

   

$

1,069

 

Non-Same-Store

 

1,848

   

1,943

   

1,939

   

1,956

   

1,941

 

All Communities

 

$

1,161

   

$

1,134

   

$

1,136

   

$

1,146

   

$

1,123

 
                     

Weighted Average Occupancy(4)

                   

Same-Store

 

94.3

%

 

95.6

%

 

94.4

%

 

92.0

%

 

94.2

%

Non-Same-Store

 

94.8

%

 

94.9

%

 

92.7

%

 

93.4

%

 

87.3

%

All Communities

 

94.4

%

 

95.5

%

 

94.2

%

 

92.2

%

 

93.5

%

                     

Operating Expenses as a % of Scheduled Rent

                   

Same-Store

 

42.8

%

 

45.6

%

 

42.4

%

 

42.9

%

 

42.0

%

Non-Same-Store

 

37.4

%

 

37.6

%

 

30.5

%

 

36.8

%

 

32.1

%

All Communities

 

42.2

%

 

44.7

%

 

41.1

%

 

42.3

%

 

41.0

%

                     

Capital Expenditures

                   

Total Capital Expenditures per Apartment Home – Same-Store

 

$

192

   

$

80

   

$

254

   

$

274

   

$

201

 
   

(1)

Previously reported amounts are not revised for changes in the composition of the same-store properties pool.

(2)

Scheduled rent represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account.  Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes. Average scheduled rent is scheduled rent divided by the total number of units.

(3)

Total revenues divided by the weighted average occupied units for the period.

(4)

Weighted average occupancy is the percentage resulting from dividing actual rental revenue by scheduled rent.  We believe that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy and our calculation of weighted average occupancy may not be comparable to that disclosed by other REITs.

IRET

SAME-STORE CAPITAL EXPENDITURES

($ in thousands, except per home amounts)

 
   

Three Months Ended

   

6/30/2019

 

6/30/2018

Total Same-Store Apartment Homes

 

12,848

   

12,848

 
         

Turnover

 

$

1,141

   

$

1,183

 

Furniture & Equipment

 

119

   

104

 

Building – Interior

 

80

   

139

 

Building – Exterior

 

498

   

770

 

Landscaping & Grounds

 

624

   

387

 

Capital Expenditures

 

$

2,462

   

$

2,583

 

Capital Expenditures per Apartment Home

 

$

192

   

$

201

 
 
   

Six Months Ended

   

6/30/2019

 

6/30/2018

Total Same-Store Apartment Homes

 

12,848

   

12,846

 
         

Turnover

 

$

1,752

   

$

1,884

 

Furniture & Equipment

 

179

   

148

 

Building – Interior

 

158

   

206

 

Building – Exterior

 

715

   

1,369

 

Landscaping & Grounds

 

688

   

420

 

Capital Expenditures

 

$

3,492

   

$

4,027

 

Capital Expenditures per Apartment Home

 

$

272

   

$

313

 

IRET
2019 Calendar Year Financial Outlook
(in thousands, except per share amounts)

The table below provides revised 2019 calendar year guidance for Net income (loss) available to shareholders, EPS, same-store performance, Core FFO, and Core FFO per share. Our 2019 calendar year revised guidance, along with our actual results of the six months ended June 30, 2019, is described in the table below.  Please note that FFO, Core FFO, and NOI are non-GAAP measures.  Refer to Non-GAAP Financial Measures and Reconciliations in this release for additional information on the use and presentation of these non-GAAP measures and for reconciliation to the most directly comparable GAAP measures.

 

Six Months Ended

 

Range for 12 Months Ended December 31, 2019

 

June 30, 2019

 

Full Year Revised 
Guidance

 

Prior Guidance

 

Change from Prior 
Midpoint

 

Actual Results

 

Amount

 

Amount

 

Amount

Net income (loss) available to common shareholders

$(4,996)

 

$(15,100) to $(13,800)

 

$(24,491) to $(19,224)

 

$7,445

Net income (loss) per share(1)

$(0.43)

 

$(1.27) to $(1.17)

 

$(1.86) to $(1.46)

 

$0.44

               

Same-Store Growth

             

Revenue

3.60%

 

3.00% to 4.00%

 

2.50% to 4.00%

 

0.25%

Expenses

3.70%

 

2.75% to 3.75%

 

2.50% to 4.00%

 

NOI

3.60%

 

3.00% to 4.00%

 

2.00% to 4.50%

 

0.25%

               

Core FFO

$23,095

 

$46,800 to $48,100

 

$46,348 to 48,981

 

$(201)

Core FFO per Share

$1.77

 

$3.62 to $3.72

 

$3.52 to $3.72

 

$0.05

Weighted Average Shares and Units

13,052

 

12,933

 

13,167

 

(234)

   

(1)

Earnings per share excludes net income attributable to noncontrolling interests.

Reconciliation of Net Income Available to Common Shareholders to Funds From Operations and Core Funds From Operations

The following table presents reconciliations of Net income (loss) available to common shareholders to FFO and Core FFO.  FFO and Core FFO are non-GAAP measures.  FFO and Core FFO should not be considered as alternatives to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, and is not necessarily indicative of sufficient cash flow to fund all of our needs or our ability to service indebtedness or make distributions.  The outlook and projections provided below are based on current expectations and are forward-looking.

     

Revised Midpoint of Outlook for

 

Six Months Ended

 

12 Months Ended

 

June 30, 2019

 

December 31, 2019

 

Amount

 

Per Share

 

Amount

 

Per Share

Net income (loss) available to common shareholders

$

(4,996)

   

$

(0.43)

   

$

(14,412)

   

$

(1.22)

 

Noncontrolling interests – Operating Partnership

(595)

       

(1,339)

     

Depreciation and amortization

36,548

       

72,543

     

Less depreciation-non real estate

(164)

       

(286)

     

Less depreciation-partially owned entities

(1,152)

       

(2,494)

     

Gain on sale of real estate attributable to controlling interests

(669)

       

(669)

     

FFO applicable to common shares and Units

$

28,972

   

$

2.22

   

$

53,343

   

$

4.12

 
               

Adjustments to Core FFO:

             

Loss on extinguishment of debt

409

       

409

     

Gain on litigation settlement

(6,286)

       

(6,286)

     

Core FFO applicable to common shares and Units

$

23,095

   

$

1.77

   

$

47,466

   

$

3.67

 


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IRET








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