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

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 June 30, 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 45-0311232 (St ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 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) (State or other jurisdic ...