CORRECTING and REPLACING Investors Real Estate Trust Announces Second Quarter 2004 Financial Results.Business Editors CORRECTION CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. ...by Investors Real Estate Trust MINOT Minot (mī`nät), city (1990 pop. 34,544), seat of Ward co., NW N.Dak., on the Souris River; inc. 1887. It is a commercial and transportation center for an extensive agricultural, lignite-mining, and oil-producing region. , N.D.--(BUSINESS WIRE)--Dec. 16, 2003 In BW5968 issued Dec. 15, 2003: Headline HEADLINE Hybrid Electronic Access and Delivery in the Library Networked Environment of release dated Dec. 15, 2003 should read: Investors Real Estate Trust Announces Second Quarter 2004 Financial Results (sted Investors Real Estate Trust Announces First Quarter 2004 Financial Results). In addition, in the table CONSOLIDATED con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: STATEMENTS OF OPERATIONS (unaudited) under Three Months Ended October October: see month. 31, 2002, Real Estate Rentals should read $25,742,486 (sted $5,742,486). The corrected release reads: INVESTORS REAL ESTATE TRUST ANNOUNCES SECOND QUARTER 2004 FINANCIAL RESULTS Investors Real Estate Trust's (Nasdaq:IRETS IRETS Infantry Remoted Target System ) financial results for the first six months of its fiscal year 2004 are summarized below. For the full report, please access our website at www.iret.com to view the Form 10-Q Form 10-Q See 10-Q. quarterly report filed with the Securities and Exchange Commission for the quarter ended October 31, 2003 (click on "Investor relations Investor relations The process by which the corporation communicates with its investors. " and then on "SEC Filings"). For the three-month period ended October 31, 2003, as compared to the same period of the prior fiscal year: -- Revenues increased 16.1% (from $29,279,099 to $33,983,096). -- Net Income decreased 14.8% (from $3,068,222 to $2,615,052). -- Funds From Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. increased by 3.3% (from $8,826,235 to $9,118,445). -- Cash Distributions to shareholders and unit-holders increased by 1.9% (from 15.60 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. and unit to 15.90 cents per share and unit). For the six-month period ended October 31, 2003, as compared to the same period of the prior fiscal year: -- Revenues increased by 17.7% (from $56,878,157 to $66,965,914). -- Net Income decreased 7.7% (from $5,996,223 to $5,535,236). -- Funds From Operations increased by 9.2% (from $16,899,097 to $18,458,979). -- Cash Distributions to shareholders and unit-holders increased by 2.4% (from 31.00 cents per share and unit to 31.75 cents per share and unit). Net Income for the three months ended October 31, 2003 totaled 7 cents per share, compared to the year earlier figure of 10 cents per share, while Funds From Operations applicable to all shareholders and unit-holders were 18 cents per share of beneficial interest ("share") and operating partnership unit ("unit"), compared to the 21 cents per share and unit earned during the same period last year. Net income for the six months ended October 31, 2003 totaled 15 cents per share, compared to the year earlier figure of 19 cents per share, while Funds From Operations applicable to all shareholders and unit-holders were 38 cents per share and unit, compared to the 41 cents per share and unit earned during the same period last year. IRET continues to find the economic environment in which it operates to be a challenging one. As we experienced during the previous quarter, occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy levels across our portfolio continue to trend lower. During the second quarter of fiscal year 2004, vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. levels continued to increase throughout our entire portfolio. Our "stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. property" apartment vacancy increased to 8.2% from 7.6% for the three months ended October 31, 2003 and 2002, respectively. Stabilized properties are properties we have owned for the entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. of both periods being compared. Our stabilized property apartment vacancy increased to 8.9% from 8.0% for the six months ended October 31, 2003 and 2002, respectively. Likewise, vacancy levels at our stabilized property commercial properties increased to 5.6% from 2.9% for the three months ended October 31, 2003 and 2002, respectively, and increased to 5.5% from 2.9% for the six months ended October 31, 2003 and 2002, respectively. In response to rising vacancy rates, we have significantly increased the concessions, such as free rent, that we grant to attract new tenants to our residential properties. Our stabilized property apartment concessions were $651,439 and $278,393 for the three months ended October 31, 2003 and 2002, respectively, an increase of 134%. For the six months ended October 31, 2003 and 2002, respectively, our concessions were $1,208,264 and $589,939, an increase of 105%. As we have previously reported to our shareholders, we have yet to see an increase in demand for apartments or for commercial space, and for the balance of our fiscal year 2004 we consider that demand for both commercial space and apartments will be further reduced by a general decline in overall rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. activity due to winter. Our expectation is that demand in IRET's markets for both apartments and commercial space will continue to remain weak through the balance of fiscal 2004. As a result, we do not expect our occupancy levels to improve, or a reduction in the level of rent concessions to occur, during the remainder of our fiscal year 2004, which ends April 30, 2004. Acquisitions and Dispositions During the three months ended October 31, 2003, IRET acquired two commercial properties and one apartment complex. For the six months ended October 31, 2003, IRET has acquired in total four commercial properties and four apartment complexes, and has sold one commercial property:
Acquisition
Commercial Property Cost
------------------- -----------
30,464 sq. ft. - Benton Business Park - Sauk Rapids, MN $ 1,610,730
24,000 sq. ft. - West River Business Park - Waite Park, MN 1,509,276
213,271 sq. ft. - Buffalo Mall - Jamestown, ND 4,275,150
190,758 sq. ft. - Golden Hills Office Center - Golden
Valley, MN 27,500,000
-----------
34,895,156
Acquisition
Cost
-----------
Apartments
----------
240 units - Connelly Estates - Burnsville, MN $13,855,790
115 units - Remada Court Apartments - Eagan, MN 6,602,890
151 units - Winchester/Village Townhouses - Rochester, MN 8,903,810
160 units - Brookfield Village - Topeka, KS 7,252,607
36,615,097
-----------
Total Property Acquisitions $71,510,253
===========
The four commercial properties were acquired in exchange for the issuance of 85,472 UPREIT Units with an agreed value of $580,437, plus $34,314,719 of cash and cash equivalents. The four apartment complexes were acquired in exchange for the issuance of 1,372,183 UPREIT Units with an agreed value of $13,535,779 plus $23,079,318 cash and cash equivalents. Disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of On August 22, 2003, IRET sold a 6,225 square foot commercial building, known as Interstate in·ter·state adj. Involving, existing between, or connecting two or more states. n. One of a system of highways extending between the major cities of the 48 contiguous United States. Noun 1. Bakery, in St. Paul St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery , MN. The sales price was $420,000, with an approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. gain on sale of $103,000. Pending Acquisitions and Dispositions As of October 31, 2003, IRET was a party to purchase agreements to acquire two commercial properties for purchase prices totaling approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $25,932,000. The Company will finance approximately $16,855,000 of the total purchase price for these two properties with bank or other financial institution loans, and will require approximately $9,076,000 in cash to close these acquisitions. Also as of October 31, 2003, IRET was a party to contracts to sell four properties and a parcel of vacant land, for sale prices totaling $3,286,420. The Company expects to complete these pending acquisitions and dispositions over the next several months; however, the purchase or sale of each of these properties is subject to the Company's or the buyer's completion of due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. and the satisfaction of other customary closing conditions, and there can be no assurance that any or all of these pending acquisitions and dispositions will be completed.
Summary of Financial Information
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the Three Months and Six Months ended October 31, 2003 and 2002
Three Months Ended Six Months Ended
October 31 October 31
2003 2002 2003 2002
----------- ----------- ----------- -----------
REVENUE
Real Estate
Rentals $29,095,171 $25,742,486 $57,253,031 $50,110,157
Tenant
Reimbursements 4,832,420 3,477,477 9,599,999 6,645,030
Discounts and
Fees 55,505 59,136 112,884 122,970
----------- ----------- ----------- -----------
Total Revenue 33,983,096 29,279,099 66,965,914 56,878,157
----------- ----------- ----------- -----------
Three Months Ended Six Months Ended
October 31 October 31
2003 2002 2003 2002
----------- ----------- ----------- -----------
OPERATING EXPENSE
Interest 10,407,764 8,960,688 20,557,048 17,628,473
Depreciation 5,775,693 4,755,045 11,351,721 9,109,684
Utilities 2,300,003 1,883,244 4,256,128 3,493,047
Maintenance 3,524,623 2,966,086 7,017,802 5,670,644
Taxes 4,183,825 3,280,777 8,190,943 6,404,609
Insurance 724,319 522,946 1,396,962 1,016,422
Property
Management
Expenses 2,219,118 1,904,743 4,293,134 3,859,795
Property
Management
Related Party 200,629 120,291 329,644 245,440
Administrative
Expense 586,672 452,031 1,215,864 898,163
Advisory and
Trustee Services 29,375 28,456 56,975 57,056
Operating
Expenses 383,065 245,267 531,393 489,848
Amortization 187,138 160,386 372,632 283,210
Amortization of
Related Party
Costs 19,353 7,142 33,463 12,587
----------- ----------- ----------- -----------
Total Operating
Expense 30,541,577 25,287,102 59,603,709 49,168,978
----------- ----------- ----------- -----------
Operating Income 3,441,519 3,991,997 7,362,205 7,709,179
Non-Operating
Income 92,867 239,723 185,473 538,480
Income Before
Gain/Loss on
Properties and
Minority Interest 3,534,386 4,231,720 7,547,678 8,247,659
Gain on Sale of
Investment 0 52,774 0 315,342
Minority Interest
Portion of Other
Partnerships'
Income (212,217) (180,291) (469,229) (462,777)
Minority Interest
Portion of
Operating
Partnership Income (811,241) (1,002,392) (1,652,291) (2,019,414)
----------- ----------- ----------- -----------
Income From
Continuing
Operations 2,510,928 3,101,811 5,426,158 6,080,810
Discontinued
Operations, net 104,124 (33,589) 109,078 (84,587)
----------- ----------- ----------- -----------
Net Income $ 2,615,052 $ 3,068,222 $ 5,535,236 $ 5,996,223
=========== =========== =========== ===========
Net Income Per
Share (basic and
diluted) $ .07 $ .10 $ .15 $ .19
=========== =========== =========== ===========
Reconciliation of Funds from Operations
The calculation of FFO and reconciliation to GAAP net income available
to common shareholders for the three and six months ended October 31,
2003 and 2002 are presented below:
Three Months Ended
October 31, 2003
-------------------------------
Per
Weighted Share
Avg Shares and
Amount and Units Unit
----------- ------------ -----
Net income $ 2,615,052 38,326,707 $ .07
Adjustments:
Minority interest in earnings of
Unit-holders 811,579 11,547,107
Depreciation and Amortization 5,794,859
(Earnings) loss from depreciable
property sales (103,045)
----------- ------------
Funds from operations applicable to
all shareholders and unit-holders $ 9,118,445 49,873,814 $ .18
=========== ============ =====
Total distributions paid to
shareholders/Unit-holders $ 7,633,423
===========
Three Months Ended
October 31, 2002
-------------------------------
Per
Weighted Share
Avg Shares and
Amount and Units Unit
----------- ------------ -----
Net income $ 3,068,222 31,885,130 $ .10
Adjustments:
Minority interest in earnings of
Unit-holders 991,558 10,562,792
Depreciation and Amortization 4,819,229
(Earnings) loss from depreciable
property sales (52,774)
----------- ------------
Funds from operations applicable to
all shareholders and unit-holders $ 8,826,235 42,447,922 $ .21
=========== ============ =====
Total distributions paid to
shareholders/Unit-holders $ 6,347,079
===========
Six Months Ended
October 31, 2003
-------------------------------
Per
Weighted Share
Avg Shares and
Amount and Units Unit
----------- ------------ -----
Net income $ 5,535,236 37,342,362 $ .15
Adjustments:
Minority interest in earnings of
Unit-holders 1,654,074 10,848,136
Depreciation and Amortization 11,372,714
(Earnings) loss from depreciable
property sales (103,045)
----------- ------------
Funds from operations applicable to
all shareholders and unit-holders $18,458,979 48,190,498 $ .38
=========== ============ =====
Total distributions paid to
shareholders/Unit-holders $14,983,877
===========
Six Months Ended
October 31, 2002
-------------------------------
Per
Weighted Share
Avg Shares and
Amount and Units Unit
----------- ------------ -----
Net income $ 5,996,223 31,141,311 $ .19
Adjustments:
Minority interest in earnings of
Unit-holders 1,991,239 9,901,272
Depreciation and Amortization 9,226,977
(Earnings) loss from depreciable
property sales (315,342)
----------- ------------
Funds from operations applicable to
all shareholders and unit-holders $16,899,097 41,042,583 $ .41
=========== ============ =====
Total distributions paid to
shareholders/Unit-holders $12,692,151
===========
This news release contains statements about future events and expectations, which are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ." Any statement in this release that is not a statement of historical fact, including but not limited to earnings forecasts and projections of financial results, may be deemed to be a forward-looking statement. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause our actual results to be materially different from any future results, performance or achievements expresses or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Specific factors that might cause such a difference include but are not limited to: the potential fluctuations in our operating results; 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. |
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