Financial Performance - Net Income was $138 per diluted share for Q3 2020, compared to $254 per diluted share for the same period in 2019[4] - Core FFO increased 33% to $094 per diluted share for Q3 2020, compared to $091 for Q2 2020[4] - Total collections were 988% of expected residential revenue for Q3 2020, compared to 996% for the same period of 2019[4] Portfolio and Operations - Physical occupancy for same-store communities was 953% for Q3 2020, compared to 943% for the same period of 2019[4] - Same-store controllable expenses decreased 20% for the nine months ended September 30, 2020, contributing to NOI growth of 10%[4] - Same-store new lease rates remained flat for Q3 2020, compared to a decline of (12%) in Q2 2020[4] - As of September 30, 2020, the company owned interests in 67 apartment communities consisting of 11,910 apartment homes[18] Acquisitions and Dispositions - Acquired Parkhouse Apartment Homes, a 465-home apartment community in Thornton, Colorado for $1448 million[5] - Disposed of four apartment communities in Grand Forks, North Dakota and a commercial property for $430 million[5] Balance Sheet and Liquidity - Total liquidity at the end of Q3 2020 was $1318 million, consisting of $1150 million available under the line of credit and $168 million in cash and cash equivalents[6]

Part I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements detail the company's financial position and performance [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and equity increased, driven by real estate investments and common share issuance Balance Sheet Summary | Metric | Sep 30, 2020 (in thousands) | Dec 31, 2019 (in thousands) | Change (vs. Dec 31, 2019) | | :-------------------------- | :-------------------------- | :-------------------------- | :------------------------ | | Total Assets | $1,478,934 | $1,392,418 | +$86,516 | | Total Liabilities | $775,863 | $695,956 | +$79,907 | | Total Equity | $686,511 | $679,902 | +$6,609 | | Property owned (net) | $1,424,998 | $1,293,956 | +$131,042 | | Revolving lines of credit | $135,000 | $50,079 | +$84,921 | | Common Shares | $968,436 | $917,400 | +$51,036 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income declined significantly due to lower gains on real estate sales and reduced overall revenue Operations Summary | Metric | 3 Months Ended Sep 30, 2020 (in thousands) | 3 Months Ended Sep 30, 2019 (in thousands) | 9 Months Ended Sep 30, 2020 (in thousands) | 9 Months Ended Sep 30, 2019 (in thousands) | | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Revenue | $44,138 | $47,436 | $132,454 | $139,978 | | Total Expenses | $42,136 | $43,840 | $125,924 | $131,027 | | Operating Income | $2,002 | $3,596 | $6,530 | $8,951 | | Gain (loss) on sale of real estate | $25,676 | $39,105 | $25,486 | $39,774 | | Net Income (Loss) | $21,184 | $34,718 | $9,415 | $32,025 | | Net Income (Loss) Available to Common Shareholders | $18,021 | $29,891 | $4,195 | $24,895 | | Basic EPS | $1.40 | $2.57 | $0.33 | $2.11 | | Diluted EPS | $1.38 | $2.54 | $0.33 | $2.11 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income decreased significantly due to lower net income and unrealized derivative losses Comprehensive Income Summary | Metric | 3 Months Ended Sep 30, 2020 (in thousands) | 3 Months Ended Sep 30, 2019 (in thousands) | 9 Months Ended Sep 30, 2020 (in thousands) | 9 Months Ended Sep 30, 2019 (in thousands) | | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net Income (Loss) | $21,184 | $34,718 | $9,415 | $32,025 | | Unrealized gain (loss) from derivative instrument | $(210) | $(2,251) | $(11,314) | $(8,963) | | Total Comprehensive Income (Loss) | $22,067 | $32,523 | $(234) | $23,088 | | Comprehensive income (loss) attributable to controlling interests | $20,608 | $29,771 | $414 | $22,321 | [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity increased, driven by net income and common share sales, partially offset by distributions Equity Summary | Metric | Dec 31, 2019 (in thousands) | Sep 30, 2020 (in thousands) | Change (vs. Dec 31, 2019) | | :----------------------------------------- | :-------------------------- | :-------------------------- | :------------------------ | | Total Equity | $679,902 | $686,511 | +$6,609 | | Common Shares | $917,400 | $968,436 | +$51,036 | | Accumulated distributions in excess of net income | $(390,196) | $(412,577) | -$(22,381) | | Accumulated other comprehensive income (loss) | $(7,607) | $(17,256) | -$(9,649) | - Sale of common shares, net: **$58,204 thousand** for the nine months ended September 30, 2020[22](index=22&type=chunk) - Distributions - common shares and units: **$(26,576) thousand** for the nine months ended September 30, 2020[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased while financing cash flow increased from credit lines and share issuance Cash Flow Summary | Metric | 9 Months Ended Sep 30, 2020 (in thousands) | 9 Months Ended Sep 30, 2019 (in thousands) | Change (YoY) | | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------- | | Net cash provided by operating activities | $47,258 | $51,642 | -8.5% | | Net cash provided by (used by) investing activities | $(148,572) | $(74,618) | -99.1% | | Net cash provided by (used by) financing activities | $74,200 | $15,559 | +376.9% | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $(27,114) | $(7,417) | -265.6% | | Cash, cash equivalents, and restricted cash at end of period | $19,003 | $11,839 | +60.5% | - Payments for acquisitions of real estate assets: **$(168,411) thousand** for the nine months ended September 30, 2020, compared to $(156,650) thousand in 2019[27](index=27&type=chunk) - Proceeds from issuance of common shares: **$58,204 thousand** for the nine months ended September 30, 2020, compared to $0 in 2019[27](index=27&type=chunk) - Proceeds from revolving lines of credit: **$126,578 thousand** for the nine months ended September 30, 2020, compared to $223,643 thousand in 2019[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures cover accounting policies, recent pronouncements, and specific financial instrument details [NOTE 1 • ORGANIZATION](index=10&type=section&id=NOTE%201%20%E2%80%A2%20ORGANIZATION) IRET is a REIT focused on owning, managing, and developing apartment communities - IRET is a REIT focused on apartment communities[32](index=32&type=chunk) - As of September 30, 2020, IRET owned interests in **67 apartment communities**, comprising **11,910 apartment homes**[32](index=32&type=chunk) [NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%202%20%E2%80%A2%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines accounting policies and highlights the risks of the COVID-19 pandemic - Financial statements are prepared in accordance with GAAP for interim information and SEC rules, consolidating IRET and its controlled subsidiaries, including the Operating Partnership[33](index=33&type=chunk)[34](index=34&type=chunk)[37](index=37&type=chunk) - The COVID-19 pandemic is a significant risk, but it did not have a material adverse impact on IRET's financial condition, results of operations, and cash flows for the nine months ended September 30, 2020[35](index=35&type=chunk)[36](index=36&type=chunk) - IRET elected the fair value option for all mortgages and notes receivable at January 1, 2020, as allowed by ASU 2019-05, avoiding the application of ASU 2016-13 on credit losses[42](index=42&type=chunk) - Rental revenues from multifamily apartment homes (operating leases, generally one year or less) represent approximately **98.4% of total revenues**[45](index=45&type=chunk) - Rent deferrals for multifamily residents and abatements for commercial tenants due to COVID-19 were recognized as variable lease payments; approximately **$59,000 in rent deferrals remained outstanding** as of September 30, 2020[48](index=48&type=chunk)[49](index=49&type=chunk) - **No impairment charges** were recorded for long-lived assets during the three and nine months ended September 30, 2020 and 2019[57](index=57&type=chunk) - As of September 30, 2020, IRET had funded **$18.0 million** of a **$29.9 million** construction loan for a multifamily development in Minneapolis[60](index=60&type=chunk) - IRET's Operating Partnership and less-than-wholly owned real estate partnerships are Variable Interest Entities (VIEs), with IRET as the primary beneficiary[62](index=62&type=chunk) - As of September 30, 2020, IRET had no marketable securities; a realized loss of **$3.4 million** from disposal of such securities was recorded during the nine months ended September 30, 2020[65](index=65&type=chunk) Revenue by Type (9 Months Ended Sep 30, 2020) | Revenue Stream | Amount (in thousands) | Percentage of Total | | :--------------------------------- | :-------------------- | :------------------ | | Fixed lease income - operating leases | $125,555 | 94.8% | | Variable lease income - operating leases | $4,811 | 3.6% | | Other property revenue | $2,088 | 1.6% | | Total Revenue | $132,454 | 100% | [NOTE 3 • EARNINGS PER SHARE](index=14&type=section&id=NOTE%203%20%E2%80%A2%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per share and anti-dilutive instruments - Performance-based RSUs (**27,506** for 9 months ended Sep 30, 2020), Series D preferred units (**228,000** for 9 months ended Sep 30, 2020), and stock options (**68,292** for 9 months ended Sep 30, 2020) were excluded from diluted EPS calculations as they were anti-dilutive[67](index=67&type=chunk)[68](index=68&type=chunk) EPS Calculation | Metric | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :----------------------------------------- | :-------------------------- | :-------------------------- | | Net income available to common shareholders | $4,195 (in thousands) | $24,895 (in thousands) | | Denominator for basic EPS (weighted average shares) | 12,424 | 11,705 | | Denominator for diluted EPS | 13,463 | 13,174 | | Basic EPS | $0.33 | $2.11 | | Diluted EPS | $0.33 | $2.11 | [NOTE 4 • EQUITY AND MEZZANINE EQUITY](index=15&type=section&id=NOTE%204%20%E2%80%A2%20EQUITY%20AND%20MEZZANINE%20EQUITY) This note details changes in equity, including share offerings, repurchases, and preferred units - Operating Partnership Units outstanding: **1.0 million** at Sep 30, 2020, down from 1.1 million at Dec 31, 2019[71](index=71&type=chunk) - Common Shares outstanding: **13.0 million** at Sep 30, 2020, up from 12.1 million at Dec 31, 2019[72](index=72&type=chunk) - Under the 2019 ATM Program, IRET issued **819 thousand common shares** for **$57.5 million net proceeds** during the nine months ended Sep 30, 2020; **$69.2 million remained available**[73](index=73&type=chunk)[74](index=74&type=chunk) - The share repurchase program had **$44.4 million remaining available** as of Sep 30, 2020; 237 Series C Preferred Shares were repurchased for **$5.6 million** during the nine months ended Sep 30, 2020[78](index=78&type=chunk)[79](index=79&type=chunk) - Series C Preferred Shares outstanding: **3.9 million** at Sep 30, 2020, with a **$97.0 million** aggregate liquidation preference[80](index=80&type=chunk) - Series D Preferred Units: **165,600 units** issued at $100 par value, with a **3.862% annual preferred distribution rate** and a holder's put option[81](index=81&type=chunk) [NOTE 5 • DEBT](index=16&type=section&id=NOTE%205%20%E2%80%A2%20DEBT) This note details IRET's debt structure, including credit facilities, term loans, and senior notes - Unsecured Credit Facility: **$250.0 million** revolving line of credit, with **$135.0 million drawn** and **$115.0 million available** as of Sep 30, 2020. Matures August 31, 2022[83](index=83&type=chunk) - Unsecured Term Loans: **$70.0 million** (matures Jan 15, 2024) and **$75.0 million** (matures Aug 31, 2025)[84](index=84&type=chunk) - Unsecured Senior Notes: **$125.0 million** issued under a $150.0 million private shelf agreement, with **$25.0 million remaining available**[86](index=86&type=chunk)[87](index=87&type=chunk) - IRET believes it is in compliance with all financial covenants and limitations as of September 30, 2020[85](index=85&type=chunk) Debt Summary (as of Sep 30, 2020) | Debt Type | Amount (in thousands) | Weighted Average Interest Rate | Weighted Average Maturity (Years) | | :------------------------ | :-------------------- | :----------------------------- | :-------------------------------- | | Lines of credit | $135,000 | 3.24% | 2.2 | | Term loans | $145,000 | 4.14% | 4.4 | | Unsecured senior notes | $125,000 | 3.78% | 8.8 | | Mortgages payable - fixed | $314,511 | 3.99% | 5.5 | | Total Debt | $719,511 | 3.68% | 5.2 | [NOTE 6 • DERIVATIVE INSTRUMENTS](index=17&type=section&id=NOTE%206%20%E2%80%A2%20DERIVATIVE%20INSTRUMENTS) IRET uses interest rate swap contracts as cash flow hedges to manage interest rate exposure - Interest rate derivatives are used to stabilize interest expense and manage interest rate exposure, primarily through interest rate swap contracts[90](index=90&type=chunk) - Fair Value of Derivative Instruments (Sep 30, 2020): **$17,256 thousand** (classified as Accounts Payable and Accrued Expenses)[94](index=94&type=chunk) - An estimated **$4.4 million** will be reclassified as an increase to interest expense over the next twelve months from accumulated other comprehensive income[91](index=91&type=chunk) [NOTE 7 • FAIR VALUE MEASUREMENTS](index=18&type=section&id=NOTE%207%20%E2%80%A2%20FAIR%20VALUE%20MEASUREMENTS) This note describes fair value measurement for financial instruments, including mortgage loans - Effective January 1, 2020, IRET elected the fair value option for mortgage loans receivable and notes receivable, valuing them using an income approach with **Level 3 inputs**[99](index=99&type=chunk) - Changes in the fair value of these receivables are reported in interest and other income on the consolidated statements of operations[101](index=101&type=chunk) - The estimated fair value of mortgages payable was **$331,423 thousand** (carrying amount $314,511 thousand) as of Sep 30, 2020, using discounted cash flows and Level 3 inputs[104](index=104&type=chunk)[105](index=105&type=chunk) Fair Value of Financial Instruments (as of Sep 30, 2020) | Asset/Liability | Fair Value (in thousands) | Level | | :-------------------------------- | :------------------------ | :---- | | Mortgages and notes receivable | $24,315 | 3 | | Derivative instruments - interest rate swaps | $17,256 | 3 | [NOTE 8 • ACQUISITIONS AND DISPOSITIONS](index=19&type=section&id=NOTE%208%20%E2%80%A2%20ACQUISITIONS%20AND%20DISPOSITIONS) IRET continued its portfolio management strategy with significant acquisitions and dispositions - Acquisitions (9 Months Ended Sep 30, 2020): Acquired Ironwood Apartments for **$46.3 million** and Parkhouse Apartment Homes for **$144.8 million**, totaling **$191.0 million**[108](index=108&type=chunk) - Dispositions (9 Months Ended Sep 30, 2020): Disposed of four apartment communities and one commercial property for **$42.5 million** (gain of $25.6 million), and unimproved land for **$1.3 million** (loss of $190 thousand), totaling **$44.3 million** with a net gain of **$25.5 million**[112](index=112&type=chunk) - Acquisitions (9 Months Ended Sep 30, 2019): Totaled **$171.4 million**, including SouthFork Townhomes, FreightYard Townhomes and Flats, and Lugano at Cherry Creek[109](index=109&type=chunk) - Dispositions (9 Months Ended Sep 30, 2019): Totaled **$95.3 million**, with a total gain of **$39.4 million**[113](index=113&type=chunk) [NOTE 9 • SEGMENT REPORTING](index=21&type=section&id=NOTE%209%20%E2%80%A2%20SEGMENT%20REPORTING) IRET operates in a single reportable segment focused on apartment communities - IRET operates in a single reportable segment: ownership, management, development, redevelopment, and acquisition of apartment communities[114](index=114&type=chunk) - Net Operating Income (NOI) is defined as total real estate revenues less property operating expenses, including real estate taxes[115](index=115&type=chunk)[162](index=162&type=chunk) - Segment assets (Sep 30, 2020): Total property owned (net) was **$1,424,998 thousand**, with multifamily assets at **$1,402,833 thousand**[124](index=124&type=chunk) Segment Performance (3 Months Ended Sep 30) | Metric | 3 Months Ended Sep 30, 2020 (in thousands) | 3 Months Ended Sep 30, 2019 (in thousands) | Change (YoY) | | :----------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------- | | Multifamily Revenue | $42,463 | $38,971 | +9.0% | | All Other Revenue | $1,675 | $8,465 | -80.2% | | Total Revenue | $44,138 | $47,436 | -7.0% | | Multifamily NOI | $24,553 | $22,928 | +7.1% | | All Other NOI | $1,054 | $4,598 | -77.1% | | Total NOI | $25,607 | $27,526 | -7.0% | Segment Performance (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2020 (in thousands) | 9 Months Ended Sep 30, 2019 (in thousands) | Change (YoY) | | :----------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------- | | Multifamily Revenue | $126,296 | $114,726 | +10.1% | | All Other Revenue | $6,158 | $25,252 | -75.6% | | Total Revenue | $132,454 | $139,978 | -5.4% | | Multifamily NOI | $73,893 | $67,339 | +9.7% | | All Other NOI | $3,327 | $13,177 | -74.8% | | Total NOI | $77,220 | $80,516 | -4.1% | [NOTE 10 • COMMITMENTS AND CONTINGENCIES](index=23&type=section&id=NOTE%2010%20%E2%80%A2%20COMMITMENTS%20AND%20CONTINGENCIES) IRET is not aware of any material pending legal or environmental issues - No material pending or threatened legal proceedings are known, other than ordinary routine litigation incidental to the business[125](index=125&type=chunk) - IRET has no knowledge of any material violation of environmental laws at its properties[126](index=126&type=chunk)[127](index=127&type=chunk) - Twenty properties are subject to restrictions on taxable dispositions, but IRET generally holds properties for investment and seeks tax-deferred transactions for sales[128](index=128&type=chunk) [NOTE 11 • SHARE-BASED COMPENSATION](index=24&type=section&id=NOTE%2011%20%E2%80%A2%20SHARE-BASED%20COMPENSATION) This note outlines share-based awards granted under the 2015 Incentive Plan - The 2015 Incentive Plan allows for awards in cash, unrestricted/restricted common shares, stock options, stock appreciation rights, and RSUs up to an aggregate of **425,000 shares**[129](index=129&type=chunk) - 2020 LTIP Awards include **8,806 time-based RSU awards** to officers, **141,000 stock options** to officers (fair value $7.255 per share), **8,272 time-based RSUs** to trustees, and **480 time-based RSUs** to employees[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Share-based compensation expense recognized was **$1.5 million** for the nine months ended September 30, 2020 and 2019, respectively[133](index=133&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and operational results, focusing on COVID-19 impacts [Executive Summary](index=26&type=section&id=Executive%20Summary) IRET is a REIT focused on apartment communities, with property value increasing to $1.8 billion - IRET owns, manages, acquires, redevelops, and develops apartment communities, focusing on markets with stable economic conditions and strong employment[142](index=142&type=chunk) - As of September 30, 2020, IRET owned interests in **67 apartment communities**, comprising **11,910 apartment homes**[142](index=142&type=chunk) - Property owned (net) increased to **$1.8 billion** at September 30, 2020, from **$1.6 billion** at December 31, 2019[142](index=142&type=chunk) [COVID-19 Developments](index=26&type=section&id=COVID-19%20Developments) The COVID-19 pandemic led to enhanced safety protocols, remote work, and rent accommodations - IRET implemented enhanced cleaning protocols, physical distancing in common spaces, and remote work guidelines[144](index=144&type=chunk) - Rent deferrals were provided to residents and rent abatements to commercial tenants financially impacted by COVID-19[144](index=144&type=chunk) - The expiration of **$600 per week** federal unemployment benefits on July 31, 2020, could impact residents' ability to pay rent[149](index=149&type=chunk) [Financial Impact of the COVID-19 Pandemic](index=27&type=section&id=Financial%20Impact%20of%20the%20COVID-19%20Pandemic) COVID-19 did not have a material impact, but future risks include reduced demand and rental payments - COVID-19 did not have a material impact on IRET's financial condition, operating results, or cash flows for the three months ended September 30, 2020[148](index=148&type=chunk) - Extended work-from-home directives resulted in decreased traffic and lower demand/rent increases for urban apartment communities[148](index=148&type=chunk) - Potential adverse impacts include reduced rental payments, restricted capital markets access, impact on third-party suppliers, potential dividend reductions, and asset impairment[150](index=150&type=chunk) - IRET has delayed capital projects, eliminated travel expenses, and moved Board meetings to virtual format to preserve cash flow[151](index=151&type=chunk) [Overview of the Three Months Ended September 30, 2020](index=27&type=section&id=Overview%20of%20the%20Three%20Months%20Ended%20September%2030%2C%202020) Revenue decreased due to dispositions, while Funds from Operations (FFO) increased by 3.7% - Revenue decreased by **$3.3 million** to **$44.1 million (7.0% YoY)** for the three months ended September 30, 2020[153](index=153&type=chunk) - Total expenses decreased by **$1.7 million** to **$42.1 million (3.9% YoY)** for the three months ended September 30, 2020[153](index=153&type=chunk) - **FFO applicable to common shares and Units increased to $12.6 million (3.7% YoY)** for the three months ended September 30, 2020[154](index=154&type=chunk) - Acquired Parkhouse Apartment Homes for **$144.8 million** and disposed of four apartment communities and one commercial property for **$43.0 million** during the third quarter of 2020[155](index=155&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section analyzes consolidated performance, including revenue, expenses, NOI, and FFO [Reconciliation of Operating Income to Net Operating Income](index=29&type=section&id=Reconciliation%20of%20Operating%20Income%20to%20Net%20Operating%20Income) Operating income and Net Operating Income (NOI) decreased due to changes in various expense categories Operating Income and NOI Reconciliation | Metric | 3 Months Ended Sep 30, 2020 (in thousands) | 3 Months Ended Sep 30, 2019 (in thousands) | % Change | 9 Months Ended Sep 30, 2020 (in thousands) | 9 Months Ended Sep 30, 2019 (in thousands) | % Change | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :------- | :----------------------------------------- | :----------------------------------------- | :------- | | Operating Income | $2,002 | $3,596 | (44.3)% | $6,530 | $8,951 | (27.0)% | | Net Operating Income (NOI) | $25,607 | $27,526 | (7.0)% | $77,220 | $80,516 | (4.1)% | [Consolidated Results of Operations (Revenue, Expenses, NOI)](index=29&type=section&id=Consolidated%20Results%20of%20Operations%20(Revenue%2C%20Expenses%2C%20NOI)) Total revenue and NOI decreased, while same-store revenue increased slightly - Casualty loss increased to **$1.3 million** for the nine months ended Sep 30, 2020, from $911 thousand in 2019, primarily due to weather-related losses and increased aggregate stop loss/deductible[173](index=173&type=chunk) - General and administrative expenses decreased by **10.1% to $9.7 million** for the nine months ended Sep 30, 2020, mainly due to lower legal fees, compensation, and travel costs[177](index=177&type=chunk) - Interest expense decreased by **11.0% to $20.6 million** for the nine months ended Sep 30, 2020, driven by replacement of maturing debt with lower rate debt and lower average balances on credit lines/mortgage loans[179](index=179&type=chunk) - Interest and other income (loss) recorded a **$2.0 million loss** for the nine months ended Sep 30, 2020, compared to $1.4 million income in prior year, primarily due to a **$3.4 million loss on marketable securities**[180](index=180&type=chunk) Revenue by Type (3 Months Ended Sep 30, 2020) | Revenue Type | 2020 (in thousands) | 2019 (in thousands) | $ Change | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | :------- | | Same-store | $38,043 | $37,627 | $416 | 1.1% | | Non-same-store | $4,420 | $1,344 | $3,076 | 228.9% | | Other properties and dispositions | $1,675 | $8,465 | $(6,790) | (80.2)% | | Total Revenue | $44,138 | $47,436 | $(3,298) | (7.0)% | Property Operating Expenses by Type (3 Months Ended Sep 30, 2020) | Expense Type | 2020 (in thousands) | 2019 (in thousands) | $ Change | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | :------- | | Same-store | $16,198 | $15,493 | $705 | 4.6% | | Non-same-store | $1,712 | $550 | $1,162 | 211.3% | | Other properties and dispositions | $621 | $3,867 | $(3,246) | (83.9)% | | Total Expenses | $18,531 | $19,910 | $(1,379) | (6.9)% | NOI by Type (3 Months Ended Sep 30, 2020) | NOI Type | 2020 (in thousands) | 2019 (in thousands) | $ Change | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | :------- | | Same-store | $21,845 | $22,134 | $(289) | (1.3)% | | Non-same-store | $2,708 | $794 | $1,914 | 241.1% | | Other properties and dispositions | $1,054 | $4,598 | $(3,544) | (77.1)% | | Total NOI | $25,607 | $27,526 | $(1,919) | (7.0)% | Occupancy by Type (3 Months Ended Sep 30) | Occupancy Type | 2020 | 2019 | | :------------- | :------ | :------ | | Same-store | 94.4% | 93.5% | | Non-same-store | 93.9% | 96.3% | | Total | 94.3% | 93.6% | [Net Income (Loss) Available to Common Shareholders](index=32&type=section&id=Net%20Income%20(Loss)%20Available%20to%20Common%20Shareholders) Net income available to common shareholders decreased significantly due to lower gains on real estate sales - Net income available to common shareholders was **$18.0 million** for the three months ended Sep 30, 2020 (vs. $29.9 million in 2019) and **$4.2 million** for the nine months ended Sep 30, 2020 (vs. $24.9 million in 2019)[184](index=184&type=chunk) - Gain on sale of real estate and other investments was **$25.7 million** for the three months ended Sep 30, 2020 (vs. $39.1 million in 2019) and **$25.5 million** for the nine months ended Sep 30, 2020 (vs. $39.8 million in 2019)[182](index=182&type=chunk)[183](index=183&type=chunk) [Funds from Operations (FFO)](index=32&type=section&id=Funds%20from%20Operations%20(FFO)) FFO increased for the quarter but decreased for the nine-month period due to a prior-year gain - FFO is defined as net income (GAAP) excluding real estate depreciation/amortization, gains/losses from real estate sales, and impairment write-downs of certain real estate assets[186](index=186&type=chunk) - **FFO applicable to common shares and Units increased to $12.6 million (3.7% YoY)** for the three months ended Sep 30, 2020, but decreased to **$33.7 million (18.2% YoY)** for the nine months ended Sep 30, 2020[189](index=189&type=chunk) - The nine-month FFO decrease was primarily due to a non-recurring **$6.6 million litigation settlement gain in 2019**, a **$3.4 million loss on marketable securities in 2020**, decreased NOI from sold properties, and increased casualty loss[189](index=189&type=chunk) FFO Per Share | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | FFO per share and Unit - diluted | $0.90 | $0.93 | $2.49 | $3.15 | [Acquisitions and Dispositions](index=33&type=section&id=Acquisitions%20and%20Dispositions) IRET acquired $144.8 million in new real estate and disposed of five properties for $43.0 million - Third quarter 2020 acquisitions totaled **$144.8 million**, compared to $125.3 million in the same period of the prior year[192](index=192&type=chunk) - Third quarter 2020 dispositions included five properties for an aggregate sale price of **$43.0 million**, compared to seven dispositions for $85.0 million in the prior year[192](index=192&type=chunk) [Distributions Declared](index=33&type=section&id=Distributions%20Declared) IRET declared consistent distributions per common and preferred share/unit - Distributions of **$0.70** and **$2.10** per common share and Unit were declared for the three and nine months ended September 30, 2020 and 2019, respectively[193](index=193&type=chunk) - Distributions of **$0.4140625** and **$1.2421875** per Series C preferred share were declared for the three and nine months ended September 30, 2020 and 2019, respectively[193](index=193&type=chunk) - Distributions of **$0.9655** and **$2.8965** per Series D preferred unit were declared for the three and nine months ended September 30, 2020 and 2019, respectively[193](index=193&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section outlines IRET's strategies for maintaining financial flexibility and managing liquidity [Overview](index=33&type=section&id=Overview) IRET aims to strengthen its balance sheet through positive cash flows and controlled overhead - Primary liquidity sources include cash and cash equivalents, cash flows from operations, unsecured lines of credit, proceeds from property dispositions, and offerings of preferred and common shares[195](index=195&type=chunk) - Primary liquidity demands include operating expenses, debt service, capital improvements, distributions, redevelopment, share buybacks, unit redemptions, and acquisitions[196](index=196&type=chunk) - Total liquidity as of September 30, 2020, was approximately **$131.8 million** ($115.0 million available on line of credit and $16.8 million cash)[199](index=199&type=chunk) - Total liquidity as of December 31, 2019, was approximately **$226.5 million** ($199.9 million on line of credit and $26.6 million cash)[199](index=199&type=chunk) - The decline in total liquidity since the end of the second quarter is primarily a result of funding the acquisition of Parkhouse Apartment Homes[199](index=199&type=chunk) [COVID-19-Related Impacts on Liquidity](index=34&type=section&id=COVID-19-Related%20Impacts%20on%20Liquidity) COVID-19 could reduce cash flows and make future financing terms less favorable - Cash flows may be reduced due to lower monthly rent collections, potential lower occupancy, or reduced rental rates during and after the COVID-19 pandemic[201](index=201&type=chunk) - The terms of future debt and equity issuances may not be as favorable for the foreseeable future due to COVID-19-related economic disruption[201](index=201&type=chunk) - Contractual obligations include no debt maturities remaining in 2020 and **$35.3 million** of debt maturities in 2021[201](index=201&type=chunk) - Approximately **$27.2 million** remains to be funded, primarily over the next 12 months, under construction and mezzanine loans[201](index=201&type=chunk) [Debt](index=34&type=section&id=Debt) IRET's debt structure includes unsecured credit facilities, senior notes, and fixed-rate mortgage debt - IRET has an unsecured credit facility for **$395.0 million**, allocated to a **$250.0 million** revolving line of credit and **$145.0 million** in two term loans[202](index=202&type=chunk) - As of September 30, 2020, the revolving line of credit had **$135.0 million drawn** and **$115.0 million** additional borrowing availability[203](index=203&type=chunk) - A private shelf agreement allows for the issuance of up to **$150.0 million** of unsecured senior promissory notes, with **$125.0 million issued** and **$25.0 million remaining available**[204](index=204&type=chunk) - Mortgage loan indebtedness was **$314.5 million** at September 30, 2020, all at fixed rates with a weighted average interest rate of **3.99%**[206](index=206&type=chunk) [Potential Impact of COVID-19-Related Effects on Continuing Debt Availability](index=35&type=section&id=Potential%20Impact%20of%20COVID-19-Related%20Effects%20on%20Continuing%20Debt%20Availability) The COVID-19 pandemic could impact future debt covenant compliance or access to funds - IRET may be unable to obtain advances under its credit facility if it cannot make certain representations and warranties (e.g., no material adverse change), if property NOI or capitalization rates reduce availability, or if properties become ineligible for the borrowing base[208](index=208&type=chunk) - Lender non-performance due to credit market deterioration or transfer of commitments could also limit credit facility availability[208](index=208&type=chunk) - As of the filing date, IRET has not experienced any restrictions or limitations on credit availability[208](index=208&type=chunk) [Equity](index=35&type=section&id=Equity) IRET has an At-The-Market (ATM) program with $69.2 million remaining available - The 2019 ATM Program allows for the offer and sale of common shares with an aggregate gross sales price of up to **$150.0 million**[209](index=209&type=chunk) - During the nine months ended September 30, 2020, IRET issued approximately **819,082 common shares** under the ATM program for **$57.5 million net proceeds**[209](index=209&type=chunk) - As of September 30, 2020, common shares with an aggregate offering price of up to **$69.2 million** remained available under the 2019 ATM Program[209](index=209&type=chunk) [Changes in Cash, Cash Equivalents, and Restricted Cash](index=35&type=section&id=Changes%20in%20Cash%2C%20Cash%20Equivalents%2C%20and%20Restricted%20Cash) Capital was generated from share issuance and dispositions and used for acquisitions and debt repayment - Capital generated during the nine months ended Sep 30, 2020, included **$57.5 million** from common share issuance, **$10.0 million** from note receivable payoff, **$3.9 million** from marketable securities sales, and **$43.0 million** from property dispositions[211](index=211&type=chunk) - Capital used during the nine months ended Sep 30, 2020, included **$46.3 million** for Ironwood Apartments acquisition, **$144.8 million** for Parkhouse Apartment Homes acquisition, **$12.2 million** for noncontrolling interests, **$11.9 million** for mezzanine/construction loans, **$16.9 million** for mortgage principal repayment, **$5.6 million** for Series C preferred share repurchases, and **$20.4 million** for capital improvements[213](index=213&type=chunk) [Contractual Obligations and Other Commitments](index=36&type=section&id=Contractual%20Obligations%20and%20Other%20Commitments) No material changes to contractual obligations since the last annual report - There have been no material changes to contractual obligations and other commitments since the Form 10-K for the year ended December 31, 2019[214](index=214&type=chunk) [Off-Balance Sheet Arrangements](index=36&type=section&id=Off-Balance%20Sheet%20Arrangements) IRET had no significant off-balance sheet arrangements - As of September 30, 2020, IRET had no significant off-balance sheet arrangements[215](index=215&type=chunk) [Critical Accounting Policies](index=36&type=section&id=Critical%20Accounting%20Policies) No significant changes to critical accounting policies during the period - No significant changes to critical accounting policies during the nine months ended September 30, 2020[216](index=216&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) IRET's market risk exposure primarily relates to interest rate fluctuations on its debt - IRET's exposure to market risk is primarily related to fluctuations in interest rates on its current and future fixed and variable rate debt obligations[218](index=218&type=chunk) - Interest rate swaps are used to offset the impact of interest rate fluctuations on variable-rate term loans[218](index=218&type=chunk) - As of September 30, 2020, IRET's exposure to market risk has not changed materially since its Annual Report on Form 10-K for the year ended December 31, 2019[219](index=219&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and internal financial reporting controls [Disclosure Controls and Procedures](index=38&type=section&id=Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective - Disclosure controls and procedures were effective as of September 30, 2020[221](index=221&type=chunk) [Internal Control Over Financial Reporting](index=38&type=section&id=Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal controls over financial reporting occurred during the quarter - No material changes in internal controls over financial reporting occurred during the quarter ended September 30, 2020[222](index=222&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) IRET is not aware of any material pending or threatened legal proceedings - IRET knows of no material pending legal proceedings, other than ordinary routine litigation incidental to the business[225](index=225&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The COVID-19 pandemic has heightened existing risks related to finance, operations, and debt - The COVID-19 pandemic has heightened risks related to financial performance, property acquisitions, market concentration, asset illiquidity, debt refinancing, and dividend payments[226](index=226&type=chunk) - The COVID-19 pandemic could cause residents/tenants to defer/stop rent, reduce NOI/cash flows, increase borrowing, lead to debt covenant failures, restrict capital markets, impact suppliers, reduce dividends, and impair assets[228](index=228&type=chunk)[230](index=230&type=chunk) - The expiration of additional federal unemployment funding under the CARES Act on July 31, 2020, could adversely impact residents' ability to pay rent and IRET's results of operations[240](index=240&type=chunk) - Inability to renew, repay, or refinance debt may result in losses, especially in tight credit markets, potentially forcing property dispositions or foreclosure[236](index=236&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) - Disruptions to high-quality housing and consistent operation of apartment communities (e.g., due to social distancing, mechanical failure) could lead to lease terminations, rent deferrals, increased costs, or reputational damage[235](index=235&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the issuance of unregistered common shares and share repurchase activities [Sales of Securities](index=41&type=section&id=Sales%20of%20Securities) IRET issued 150 unregistered Common Shares to limited partners under a private offering exemption - Issued **150 unregistered Common Shares** to limited partners of the Operating Partnership in exchange for their Units on August 31, 2020, under a private offering exemption[241](index=241&type=chunk) [Issuer Purchases of Equity Securities](index=41&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) IRET repurchased 2,302 shares and units during the third quarter of 2020 - **$44.4 million remained available** under the $50 million share repurchase program as of September 30, 2020[243](index=243&type=chunk) Share Repurchase Activity | Period | Total Shares and Units Purchased | Average Price Paid per (1) Share and Unit | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Amount of Shares That May Yet Be Purchased Under the Plans or (2) Programs | | :------------------------- | :------------------------------- | :------------------------------------ | :--------------------------------------------------------------------- | :--------------------------------------------------------------------- | | (3) July 1 - 31, 2020 | 1,932 | $25.48 | 1,932 | $44,371,577 | | (4) August 1 - 31, 2020 | 250 | $71.50 | — | $44,371,577 | | (4) September 1 - 30, 2020 | 120 | $71.55 | — | $44,371,577 | | Total | 2,302 | $32.88 | 1,932 | | [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[244](index=244&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to IRET's operations - Not Applicable[244](index=244&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item - None[245](index=245&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and signatures [Exhibit Index](index=43&type=section&id=Exhibit%20Index) This section lists the exhibits filed as part of the report, including certifications and iXBRL documents - Includes Section 302 and 906 Certifications of Chief Executive Officer and Executive Vice President and Chief Financial Officer[247](index=247&type=chunk) - Includes iXBRL formatted Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Equity, Statements of Cash Flows, notes, and the Cover Page[250](index=250&type=chunk) [Signatures](index=44&type=section&id=Signatures) The report was signed by the principal executive and financial officers on November 2, 2020 - Report signed by Mark O. Decker, Jr., President and Chief Executive Officer, and John A. Kirchmann, Executive Vice President and Chief Financial Officer[253](index=253&type=chunk) - Date of signing: **November 2, 2020**[253](index=253&type=chunk)

amma iret BMO Real Assets Conference 2020 September 2-3, 2020 SAFE HARBOR STATEMENT AND LEGAL DISCLOSURE Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on our current expectations and assumptions, and are "forwardlooking 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, u ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Investors Real Estate Trust (IRET) as of June 30, 2020, show a net loss of $4.1 million for the second quarter, a significant shift from a net income of $3.3 million in the prior-year period, with total assets remaining stable at approximately $1.39 billion [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2020, total assets were $1.392 billion, nearly unchanged from December 31, 2019, while total liabilities increased slightly to $710.7 million and total equity decreased to $665.5 million, with cash and cash equivalents doubling to $52.7 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$1,392,810** | **$1,392,418** | | Total real estate investments | $1,321,077 | $1,311,472 | | Cash and cash equivalents | $52,714 | $26,579 | | **Total Liabilities** | **$710,743** | **$695,956** | | Mortgages payable, net | $323,705 | $329,664 | | Revolving lines of credit | $63,000 | $50,079 | | **Total Equity** | **$665,507** | **$679,902** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2020, the company reported a net loss of $4.1 million, compared to a net income of $3.3 million in the same period of 2019, driven by decreased revenue and the absence of a prior-year litigation settlement gain, widening the six-month net loss to $11.8 million Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$43,910** | **$46,934** | **$88,316** | **$92,542** | | Total Expenses | $41,386 | $43,039 | $83,788 | $87,187 | | Operating Income | $2,524 | $3,895 | $4,528 | $5,355 | | **Net Income (Loss)** | **($4,085)** | **$3,267** | **($11,769)** | **($2,693)** | | Net Income (Loss) Available to Common Shareholders | ($5,387) | $1,407 | ($13,826) | ($4,996) | | **Net Earnings (Loss) Per Common Share – Diluted** | **($0.44)** | **$0.11** | **($1.13)** | **($0.43)** | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive loss for the three months ended June 30, 2020, was $4.9 million, compared to a loss of $1.2 million in the prior-year period, primarily due to the net loss from operations and an unrealized loss from derivative instruments Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | ($4,085) | $3,267 | ($11,769) | ($2,693) | | Unrealized gain (loss) from derivative instrument | ($1,696) | ($4,430) | ($11,105) | ($6,712) | | **Total comprehensive income (loss)** | **($4,864)** | **($1,192)** | **($22,301)** | **($9,435)** | [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity decreased from $679.9 million at December 31, 2019, to $665.5 million at June 30, 2020, driven by a net loss of $12.1 million, distributions of $18.9 million, and a $10.5 million negative change in derivative fair value, partially offset by $48.1 million from common share sales - Key drivers for the decrease in total equity during the first six months of 2020 included the net loss attributable to controlling and noncontrolling interests (**$12.1M**), distributions to common and preferred shareholders (**$22.2M**), and an unrealized loss on derivatives (**$10.5M**)[23](index=23&type=chunk) - The company raised **$48.1 million** through the net sale of **674,000** common shares during the six months ended June 30, 2020[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, net cash provided by operating activities was $25.3 million, a decrease from $28.6 million in the prior year, while net cash used in investing activities was $30.7 million, and net cash provided by financing activities was $14.5 million Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $25,276 | $28,606 | | Net cash used by investing activities | ($30,689) | ($26,230) | | Net cash provided by financing activities | $14,545 | $446 | | **Net increase in cash** | **$9,132** | **$2,822** | | Cash at end of period | $55,249 | $22,078 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's organization as a REIT focused on apartment communities, accounting policies, and the initial impact of COVID-19, including rent deferrals and abatements, with key details on debt, equity, derivatives, acquisitions, dispositions, and aggregated segment performance - As of June 30, 2020, IRET owned interests in **70 apartment communities** consisting of **12,135 apartment homes**[35](index=35&type=chunk) - Due to COVID-19, the company recognized a revenue reduction of **$402,000** from rent abatements to commercial tenants in Q2 2020, with **$68,000** remaining outstanding under rent deferral agreements with multifamily residents as of June 30, 2020[38](index=38&type=chunk)[51](index=51&type=chunk) - During the six months ended June 30, 2020, the company acquired Ironwood Apartments for **$46.3 million** and disposed of one parcel of unimproved land for **$1.3 million**, resulting in a loss of **$190,000**[111](index=111&type=chunk)[115](index=115&type=chunk) - The company operates as a single reportable segment focused on apartment communities, with Net Operating Income (NOI) for the multifamily portfolio at **$26.0 million** for Q2 2020, up from **$23.7 million** in Q2 2019[116](index=116&type=chunk)[122](index=122&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant uncertainty and potential adverse impacts of the COVID-19 pandemic, noting that while the financial impact was not material for Q2 2020, future results are uncertain, with revenue decreasing 6.4% to $43.9 million and FFO decreasing 34.2% to $12.4 million, while maintaining a strong liquidity position of $239.7 million - The COVID-19 pandemic is identified as a significant risk, with future impacts on financial condition, results, and cash flows being highly uncertain, and the expiration of additional federal unemployment benefits on July 31, 2020, is noted as a potential risk to residents' ability to pay rent[135](index=135&type=chunk)[147](index=147&type=chunk) Q2 2020 vs Q2 2019 Performance Highlights (in thousands) | Metric | Q2 2020 | Q2 2019 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $43,910 | $46,934 | ($3,024) | (6.4)% | | Net Operating Income (NOI) | $26,140 | $27,418 | ($1,278) | (4.7)% | | Net Income (Loss) | ($4,085) | $3,267 | ($7,352) | (225.0)% | | FFO | $12,391 | $18,824 | ($6,433) | (34.2)% | - Same-store communities saw a revenue increase of **1.4%** in Q2 2020, driven by a **1.1%** growth in average rental revenue and a **0.3%** increase in weighted average occupancy to **94.6%**[165](index=165&type=chunk) - As of June 30, 2020, the company had total liquidity of approximately **$239.7 million**, consisting of **$187.0 million** available on its line of credit and **$52.7 million** in cash and cash equivalents[198](index=198&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure relates to interest rate fluctuations on its debt obligations, which it mitigates using interest rate swaps on variable-rate term loans, with no material changes in market risk exposure since its 2019 Annual Report on Form 10-K - The primary market risk is from interest rate fluctuations on debt, which the company manages using interest rate swaps on variable-rate loans[216](index=216&type=chunk) - Exposure to market risk has not materially changed since the Annual Report on Form 10-K for the year ended December 31, 2019[217](index=217&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2020, with no material changes to internal control over financial reporting identified during the quarter - The CEO and CFO concluded that as of June 30, 2020, the company's disclosure controls and procedures were effective[219](index=219&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[220](index=220&type=chunk) [Part II. Other Information](index=45&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings outside of ordinary routine litigation incidental to its business - As of the report date, the company is not involved in any material pending legal proceedings[223](index=223&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) The report highlights that the COVID-19 pandemic heightens many existing risks and introduces new ones, including potential adverse effects on business and financial results from reduced rental payments, limited access to capital markets, a broader economic slowdown, and the expiration of federal unemployment benefits - The COVID-19 pandemic is expected to heighten existing risks related to real estate ownership, property acquisitions, investment concentration, and debt financing[224](index=224&type=chunk) - Specific pandemic-related risks include residents deferring or stopping rent payments, reduced access to capital markets, impairment of asset values, and the potential for a prolonged recession affecting demand for apartment communities[226](index=226&type=chunk)[228](index=228&type=chunk) - The expiration of additional federal unemployment funding under the CARES Act on July 31, 2020, is identified as a risk that could adversely affect residents' ability to pay rent and the company's results of operations[239](index=239&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the second quarter of 2020, the company did not issue any unregistered Common Shares, but purchased a total of 98,830 shares and units at an average price of $24.80 under its share repurchase program, with approximately $44.4 million remaining available as of June 30, 2020 Issuer Purchases of Equity Securities (Q2 2020) | Period | Total Shares and Units Purchased | Average Price Paid per Share/Unit | Amount Remaining in Program | | :--- | :--- | :--- | :--- | | April 2020 | 54,777 | $24.69 | $45,510,888 | | May 2020 | 43,308 | $24.88 | $44,438,657 | | June 2020 | 745 | $28.08 | $44,420,795 | | **Total** | **98,830** | **$24.80** | **$44,420,795** | [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[243](index=243&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[244](index=244&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[244](index=244&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and financial data formatted in iXBRL - Exhibits filed include CEO and CFO certifications and iXBRL instance documents for the financial statements[245](index=245&type=chunk)[248](index=248&type=chunk)

Investors Real Estate Trust (IRET) Q1 2020 Earnings Conference Call May 12, 2020 11:00 AM ET Company Participants Mark Decker - CEO Anne Olson - COO John Kirchmann - CFO Conference Call Participants John Kim - BMO Capital Markets Gaurav Mehta - National Securities Alex Kubicek - Baird Rob Stevenson - Janney Buck Horne - Raymond James Operator Good morning, and welcome to the Investors Real Estate Trust First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note, this event is being reco ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission File Number 001-35624 INVESTORS REAL ESTATE TRUST (Exact name of registrant as specified in its charter) North Dakota 45-0311232 (S ...

Investors Real Estate Trust (IRET) Q4 2019 Earnings Conference Call February 20, 2020 10:00 AM ET Company Participants Jonathan Bishop - VP, Finance Mark Decker - President, CEO, CIO & Trustee Anne Olson - EVP, COO, General Counsel & Secretary John Kirchmann - EVP & CFO Conference Call Participants Gaurav Mehta - National Securities Corporation Robert Stevenson - Janney Montgomery Scott Barry Oxford - D.A. Davidson & Co. Marisa Jones - BMO Capital Markets Ami Probandt - BTIG Buck Horne - Raymond James & Ass ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number 001-35624 INVESTORS REAL ESTATE TRUST (Exact name of Registrant as specified in its charter) North Dakota 4 ...

Financial Data and Key Metrics Changes - Core FFO per diluted share increased by 15% year-over-year to $0.99, with year-to-date core FFO at $2.76, up 11% from $2.49 in the same period last year [28][29] - Same-store NOI growth for the third quarter was 5.3%, with year-to-date same-store NOI growth reaching 4.4% [17][19] - Average cost of debt decreased by 40 basis points from September 2018 to September 2019 [12] Business Line Data and Key Metrics Changes - The Rise by 5 initiative contributed to a 70 basis point margin increase year-over-year, with a target of over 60.5% NOI margins [9] - Average rents increased from $810 to $1,730, reflecting a significant improvement in asset quality [11] - Same-store controllable expenses decreased by 2.1% year-over-year, contributing to overall NOI growth [19][21] Market Data and Key Metrics Changes - The Twin Cities market showed strong occupancy levels, with cap rate compression observed despite increased supply [14] - Denver's market maintained a 96% occupancy rate, driven by positive population and job growth trends [15] - Over 40% of NOI is expected to come from top 20 markets in 2020, focusing on innovation-driven growth [15] Company Strategy and Development Direction - The company aims to transition from a good operator to a market leader through the Rise by 5 initiative, focusing on operational efficiencies and strategic investments [9][17] - The strategy includes opportunistic acquisitions in core markets while divesting from slower growth markets like Topeka and Bismarck [10][16] - The company plans to maintain a strong balance sheet while improving per share metrics and exploring new growth markets [17][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth opportunities, citing strong operational performance and effective expense management [7][8] - The company anticipates challenges from rising non-controllable expenses, particularly real estate taxes and insurance costs [20] - Management remains optimistic about the impact of ongoing initiatives on revenue growth and margin expansion [19][49] Other Important Information - The company entered into a $150 million at-the-market equity distribution program to support general corporate purposes [13] - A new requirement for residents to obtain renters insurance is expected to generate over $1 million in annual revenue [22] - The company is focused on capitalizing on value-add opportunities within its portfolio, with ongoing renovations expected to drive revenue growth [25][80] Q&A Session Summary Question: Can you provide details on the exit cap rates for Topeka and Bismarck? - Topeka was exited at a cap rate of 6% to 6.25%, while Bismarck was at 6.25% to 6.5%. The acquisitions had a cap rate of approximately 4.58% to 4.78% [40][41] Question: What are the long-term growth prospects of the markets you are exiting versus those you are entering? - Management evaluates each asset quarterly, focusing on market growth prospects and expected cash flows. The decision to exit Topeka was based on increased interest and better pricing in the market [42][43] Question: Will other income growth continue to be a tailwind for overall revenue growth next year? - Yes, management expects other income to continue growing as initiatives are rolled out, with ongoing adjustments to market fees [47][49] Question: How does the asset quality compare between sold and remaining Bismarck properties? - The remaining assets in Bismarck are of better quality compared to those sold, with a focus on larger, higher-rent properties [52][53] Question: What is the outlook for same-store expense growth in the fourth quarter? - The fourth quarter is expected to see higher expense growth due to tough comparisons from the previous year and non-controllable expense increases [56] Question: How does the company view the potential impact of rent control measures in Minneapolis? - Management does not see rent control as a significant threat, citing ongoing developments that may increase supply and improve affordability [67][69] Question: What are the plans for debt refinancing in the near term? - The company has opportunities to refinance approximately $60 million to $70 million of debt at a weighted average rate of 5.2% [89]

Part I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements for the period ended September 30, 2019, show a significant increase in Q3 net income to **$34.7 million**, driven by a **$39.1 million** real estate sale gain, with total assets growing to **$1.40 billion** [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2019, total assets increased to **$1.404 billion** from **$1.336 billion** at December 31, 2018, driven by real estate investments, while total liabilities rose to **$773.6 million** and total equity slightly decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Total real estate investments** | $1,361,376 | $1,289,476 | | **Total Assets** | **$1,403,804** | **$1,335,997** | | Revolving lines of credit | $103,143 | $57,500 | | Mortgages payable, net | $360,886 | $444,197 | | **Total Liabilities** | **$773,581** | **$686,580** | | **Total Equity** | **$613,663** | **$643,449** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 2019, net income surged to **$34.7 million** from **$3.4 million** in Q3 2018, primarily due to a **$39.1 million** gain on real estate sales, with diluted EPS reaching **$2.54** Key Operating Results (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $47,436 | $45,406 | $139,978 | $134,638 | | **Operating Income (Loss)** | $3,596 | $2,114 | $8,951 | ($15,153) | | **Gain on sale of real estate** | $39,105 | $9,095 | $39,774 | $11,399 | | **Net Income (Loss)** | **$34,718** | **$3,441** | **$32,025** | **($13,244)** | | **Net Earnings (Loss) Per Common Share – Diluted** | **$2.54** | **$0.08** | **$2.11** | **($1.34)** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2019, operating cash flow increased to **$51.6 million**, investing activities used **$74.6 million**, and financing activities provided **$15.6 million**, a significant shift from prior year Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $51,642 | $43,182 | | **Net cash used by investing activities** | ($74,618) | ($62,167) | | **Net cash provided by (used by) financing activities** | $15,559 | ($225,662) | | **Net (Decrease) in Cash** | ($7,417) | ($244,647) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) The notes detail the company's REIT focus on **84 apartment communities** in Midwest markets, key events like a **1-for-10 reverse stock split**, and significant Q3 2019 property acquisitions and dispositions - The company is a REIT focused on owning and managing **84 apartment communities** with **13,336 apartment homes**, primarily in Midwest markets[33](index=33&type=chunk) - A **1-for-10 reverse stock split** of common shares and limited partnership units was effective on December 27, 2018, with all share and per-share data adjusted[35](index=35&type=chunk) - The company operates in a single reportable segment, encompassing the ownership, management, and acquisition of apartment communities[81](index=81&type=chunk) - During Q3 2019, the company acquired two properties for **$125.3 million** and sold six apartment communities for **$85.0 million**[98](index=98&type=chunk)[102](index=102&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's focus on apartment communities, reporting a **4.5%** Q3 2019 revenue increase to **$47.4 million**, **5.3%** same-store NOI growth, and **$12.2 million** FFO, alongside active portfolio management [Consolidated Results of Operations](index=33&type=section&id=Consolidated%20Results%20of%20Operations) Q3 2019 total revenue rose **4.5%** to **$47.4 million**, driven by same-store growth and non-same-store contributions, with same-store NOI increasing **5.3%** and net income surging to **$29.9 million** Same-Store Performance (Three Months Ended Sep 30) | Metric | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $37,633 | $36,198 | 4.0% | | Property operating expenses | $16,147 | $15,795 | 2.2% | | **Net Operating Income (NOI)** | **$21,486** | **$20,403** | **5.3%** | - Same-store revenue growth in Q3 2019 was driven by a **2.6%** increase in average rental revenue and a **1.4%** increase in weighted average occupancy to **93.3%**[164](index=164&type=chunk) - Net income available to common shareholders for Q3 2019 was **$29.9 million**, a **3,053.1%** increase from **$0.9 million** in Q3 2018, largely due to a **$30.0 million** increase in gains from property sales[158](index=158&type=chunk)[184](index=184&type=chunk) [Funds from Operations (FFO)](index=37&type=section&id=Funds%20from%20Operations) FFO applicable to common shares and units for Q3 2019 increased **10.8%** to **$12.2 million**, or **$0.93** per diluted share/unit, driven by higher NOI, reduced interest expense, and a litigation settlement gain FFO Reconciliation and Per Share Data (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) available to common shareholders | $29,891 | $948 | $24,895 | ($16,033) | | **FFO applicable to common shares and Units** | **$12,159** | **$10,976** | **$41,131** | **$31,723** | | **FFO per share and Unit - diluted** | **$0.93** | **$0.82** | **$3.15** | **$2.38** | - The increase in FFO for the nine months ended Sep 30, 2019, was primarily due to a **$6.6 million** gain on litigation settlement, higher NOI, and reductions in interest and G&A expenses[190](index=190&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2019, total liquidity was **$155.4 million**, with **$146.9 million** available on the credit line, and the company issued **$125.0 million** in senior unsecured notes to enhance its capital structure - Total liquidity was approximately **$155.4 million** as of September 30, 2019, including **$146.9 million** available on the line of credit and **$8.5 million** of cash[201](index=201&type=chunk) - In Q3 2019, the company issued **$125.0 million** of senior unsecured notes with maturities in 2028 and 2029, carrying interest rates of **3.69%** and **3.84%** respectively[206](index=206&type=chunk)[211](index=211&type=chunk) - As of September 30, 2019, **49 apartment communities** were unencumbered, representing **56.0%** of third quarter 2019 multifamily NOI[207](index=207&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk on its debt through swaps and further reduced exposure in Q3 2019 by issuing **$125.0 million** in fixed-rate unsecured senior notes, lengthening debt maturity - The company uses interest rate swaps to manage exposure to interest rate fluctuations on its variable-rate term loans[218](index=218&type=chunk) - In Q3 2019, the company issued **$125.0 million** of fixed-rate senior notes, reducing exposure to interest rate fluctuations and lengthening average debt maturity[219](index=219&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting identified - The CEO and CFO concluded that as of September 30, 2019, the company's disclosure controls and procedures were effective[222](index=222&type=chunk) - No material changes in internal controls over financial reporting occurred during the quarter[223](index=223&type=chunk) Part II. Other Information [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings beyond routine litigation incidental to its business operations - As of the report date, there are no material pending legal proceedings[226](index=226&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Transition Report on Form 10-KT for the period ended December 31, 2018, were reported - No material changes to risk factors were reported for the period[227](index=227&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2019, the company repurchased **39,563 shares and units** at an average price of **$59.58**, with approximately **$15.4 million** remaining under its **$50 million** share repurchase program Issuer Purchases of Equity Securities (Q3 2019) | Period | Total Shares/Units Purchased | Average Price Paid | Purchased Under Program | | :--- | :--- | :--- | :--- | | Jul 1-31, 2019 | 39,441 | $59.57 | 39,381 | | Aug 1-31, 2019 | 30 | $60.40 | 0 | | Sep 1-30, 2019 | 92 | $64.68 | 0 | | **Total** | **39,563** | **$59.58** | **39,381** | - As of September 30, 2019, approximately **$15.4 million** remained available under the company's **$50 million** share repurchase program[228](index=228&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including agreements related to the new Note Purchase and Credit Agreement, CEO/CFO certifications, and XBRL data files