Post Earnings Coverage as Investors Real Estate Trust’s Quarterly Revenue Increased 5.7%; NOI Grew 1.1%

Upcoming AWS Coverage on CyrusOne Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 24, 2017 / Active Wall St. announces its post-earnings coverage on Investors Real Estate Trust (NYSE: IRET) as the Company reported its financial results for its third quarter fiscal 2017 on March 13, 2017. The Minot, North Dakota based real estate investment trust missed markets FFO estimates. Register with us now for your free membership at:

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One of Investors Real Estate Trust’s competitors within the REIT – Diversified space, CyrusOne Inc. (NASDAQ: CONE), reported on February 22, 2017, its Q4 and full year 2016 earnings. AWS will be initiating a research report on CyrusOne in the coming days.

Today, AWS is promoting its earnings coverage on IRET; touching on CONE. Get our free coverage by signing up to:

http://www.activewallst.com/register/

Earnings Reviewed

For the quarter ended January 31, 2017, IRET’s total revenue was $51.17 million, up 5.7% from Q3 FY16 revenue of $48.41 million.

IRET’s net operating income (NOI) from all properties increased by approximately $296,000, or 1.1%, for Q3 FY17 compared to the same period one year ago. Non-same-store properties, primarily multifamily developments, provided for an increase in NOI of $1.6 million while same-store NOI dropped by $1.3 million for the reported quarter.

For Q3 FY17, IRET’s net income available to common shareholders was $19.2 million compared to $36.9 million for Q3 FY16. The decrease of $17.7 million was primarily due to net gain on extinguishment of debt in discontinued operations that was recognized in the comparable period of $36.5 million, net of an increase in gains on sale of discontinued operations of $19.2 million.

IRET’s reported Funds from Operations (“FFO”) for the quarter ending January 31, 2017, was $12.66 million, or $0.09 per share/unit. Excluding one-time items, including a $1.9 million loss on extinguishment of debt primarily related to the new line of credit and $1.4 million of redemption costs for the Series A preferred shares, FFO would have been $0.12 per share/unit. The Company’s FFO numbers came in below market estimates for FFO of $0.13 per share.

Occupancy

As of January 31, 2017, IRET reported that Occupancy decreased in the multifamily and healthcare segments by 2.3% and 2.6%, respectively, on a same-store basis.

Development Project in Progress

IRET noted that its Monticello Crossings is a 202 unit, $32.1 million multifamily development project in Monticello, MN. As of January 31, 2017, 82.7% of the units were leased or committed. Subsequent to quarter end, the final phase of development was open for tenancy as of March 01, 2017. Stabilization at 90% occupancy is expected to be reached in Q1 FY18. During the reported quarter, no development projects were placed in service.

Value Add Program

IRET stated that for its value add program, the Company is committing an estimated $3.5 million per quarter to rehab approximately 1,500 units in FY17. Apartments will be remodeled as the leases expire and upgrades will include a variety of new appliances, flooring, lighting, kitchen cabinets, and bathroom upgrades. During Q3 FY17, IRET completed the remodeling of 267 units at an average cost of $9,983, bringing the total units renovated during the fiscal year to 726, which are achieving average rental rate increases of 12.8%.

Disposition Activity

During Q3 FY17, IRET disposed of five senior housing properties for a sale price of $69.9 million and a retail property for a sale price of $4.0 million, netting proceeds of $58.8 million. Subsequent to quarter end, IRET disposed of 18 senior housing properties for a total sale price of $115.6 million with a gain on sale of approximately $31.6 million, netting approximately $100.0 million in proceeds. Also subsequent to quarter end, IRET disposed of one medical office property for a sale price of $20.7 million with a gain on sale of approximately $6.2 million, netting approximately $20.0 million in proceeds, including a lease termination fee of $3.2 million.

Liquidity

At January 31, 2017, IRET had $57.0 million cash on hand and its operating partnership had funds available of $17.0 million from the $174.0 million credit limit on its line of credit, which matures January 31, 2021.

Quarterly Distributions

On January 17, 2017, IRET paid a quarterly distribution in the aggregate amount of $0.13 per common share and unit of IRET Properties. The distribution consisted of a regular quarterly distribution of $0.07 per share/unit and a special distribution of $0.06 per share/unit associated with capital gains from property disposition transactions. This was IRET’s 183rd consecutive distribution. Additionally, IRET’s Board of Trustees has declared quarterly distributions in the aggregate amount of $0.07 per share/unit, payable on April 03, 2017, to common shareholders and unit-holders of record at the close of business on March 20, 2017.

Outlook

For the fiscal year ending April 30, 2017, IRET’s management revised its estimate of FFO to a range of $0.41 to $0.43 per share/unit from the prior range of $0.48 to $0.52 per share/unit. This guidance revision reflects management’s view of current market conditions, and its assumption of Same-Store multifamily NOI growth of (4.0) % to (6.0) %, which is a revision from the prior range of (1.0) % to (3.0) %.

Stock Performance

At the close of trading session on Thursday, March 23, 2017, Investors Real Estate Trust’s stock price rose 1.23% to end the day at $5.74. A total volume of 448.96 thousand shares were exchanged during the session. The stock currently has a market cap of $699.82 million and has a dividend yield of 4.88%.

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