IRET Reports Second Quarter 2020 Financial and Operating Results

Rhea-AI Summary

IRET reported its financial results for Q2 2020, showing a net loss of $(0.44) per diluted share compared to a profit of $0.11 in Q2 2019. For the six months ended June 30, 2020, net loss was $(1.13) per diluted share versus $(0.43) in 2019. Core FFO for Q2 2020 was $0.91, down from $1.00 in Q2 2019, while same-store revenues increased by 1.4% year-over-year. The company maintained a high collection rate of 99.1%. IRET has $239.7 million in liquidity, including $52.7 million in cash. The impact of COVID-19 continues to pose challenges, leading to the withdrawal of the 2020 financial outlook.

Positive

• Core FFO increased by 2.3% to $1.81 for YTD 2020 compared to $1.77 in 2019.
• Same-store NOI showed growth of 1.1% YoY for Q2 2020.
• Total collections for Q2 2020 were 99.1%, demonstrating strong tenant payment reliability.
• Successfully raised $44.8 million through share issuance under the ATM Program.
• Recognized as a Minnesota Top Workplace for 2020.

Negative

• Net loss of $(0.44) per diluted share in Q2 2020 compared to net income of $0.11 per diluted share in Q2 2019.
• Core FFO decreased from $1.00 in Q2 2019 to $0.91 in Q2 2020.
• COVID-19 led to the withdrawal of the 2020 financial outlook, creating uncertainty.
• Potential impacts on rental income due to economic disruptions and rising unemployment.
• Physical occupancy reduced to 95.2% as of July 31, 2020, down from 96.1% in Q1 2020.

MINOT, N.D., Aug. 3, 2020 /PRNewswire/ -- IRET (NYSE: IRET) announced today its financial and operating results for the quarter ended June 30, 2020.  The tables below show Net Income (Loss), Funds from Operations ("FFO"), and Core FFO, all on a per share basis, for the three and six months ended June 30, 2020; Same-Store Revenues, Expenses, and Net Operating Income ("NOI") over comparable periods; and Same-Store Weighted-Average Occupancy for the three months ended June 30, 2020, March 31, 2020, and June 30, 2019.

		Three Months Ended June 30,								Six Months Ended June 30,
Per Share		2020				2019				2020				2019
Net Income (Loss) - diluted		$	(0.44)			$	0.11			$	(1.13)			$	(0.43)
FFO - diluted		$	0.93			$	1.45			$	1.58			$	2.22
Core FFO - diluted		$	0.91			$	1.00			$	1.81			$	1.77

 

		Year-Over-Year Comparison			Sequential Comparison			YTD Comparison
Same-Store Results		Q2 2020 vs. Q2 2019			Q2 2020 vs. Q1 2020			2020 vs. 2019
Revenues		1.4	%		(1.2)	%		2.6	%
Expenses		1.8	%		(7.3)	%		2.9	%
NOI		1.1	%		3.4	%		2.4	%

 

		Three months ended
Same-Store Results		June 30, 2020			March 31, 2020			June 30, 2019
Weighted Average Occupancy		94.6	%		95.4	%		94.3	%

NOI, FFO, and Core FFO are non-GAAP financial measures.  For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to "Non-GAAP Financial Measures and Reconciliations" below.

Second Quarter 2020 Highlights

• Our Net Loss was $(0.44) per diluted share for the second quarter of 2020, compared to Net Income of $0.11 per diluted share for the same period of 2019;
• Core FFO increased 2.3% to $1.81 per diluted share for the six months ended June 30, 2020, compared to $1.77 per diluted share for the same period of 2019;
• Core FFO increased 1.1% to $0.91 per diluted share for the three months ended June 30, 2020, compared to $0.90 for the three months ended March 31, 2020;
• Total collections were 99.1% for the second quarter of 2020, compared to 99.6% for the same period of 2019;
• Same-store controllable expenses (which exclude taxes and insurance) decreased 4.3% for the second quarter of 2020 as compared to the same period of 2019, resulting in NOI growth of 1.1% for the second quarter of 2020 compared to the same period of 2019;
• Same-store NOI increased 3.4% for the three months ended June 30, 2020, compared to the three months ended March 31, 2020;
• We continued to strengthen our balance sheet by issuing approximately 624,000 common shares under our 2019 ATM Program for net proceeds of $44.8 million;
• We announced that we will include Nashville as one of our target markets; and
• We were recognized as a Minnesota Top Workplace for 2020 by the Minneapolis Star Tribune, which is based on several factors, including employee engagement, company leadership, pay, benefits, and workplace flexibility.

Operations Update

Our operating results for the month ended July 31, 2020, included the following:

• Total collections for same-store communities for the month ended July 31, 2020 were 99.0%.
• We entered into eight deferrals agreements in July, representing 0.1% of revenue at all communities. As of July 31, 2020, a total of approximately $40,000 remained outstanding under resident repayment plans.
• Physical occupancy for same-store communities as of July 31, 2020 was 95.2%, compared to 93.8% as of July 31, 2019 and 96.1% as of March 31, 2020.

Acquisitions and Dispositions

During the quarter, we disposed of our sole remaining parcel of unimproved land for a total sale price of $1.3 million. We did not have any acquisitions during the quarter.

Balance Sheet

At the end of the second quarter, we had $239.7 million of total liquidity on our balance sheet, including $187.0 million available under our line of credit and cash and cash equivalents of $52.7 million.

2020 Financial Outlook

On March 27, 2020 we issued a press release indicating that in light of the impact of COVID-19 on our business and results of operations, we were withdrawing our 2020 Financial Outlook. Given the ongoing impact of COVID-19, we are not providing an updated 2020 Financial Outlook at this time.

Upcoming Events

IRET is scheduled to participate in the BMO 2020 Real Assets Conference, which will be held virtually on September 2-3, 2020.

COVID-19 Developments

The COVID-19 pandemic, including the associated economic disruptions, has continued to impact our business and operations since March 2020. Our first priority continues to be the health and well-being of our residents, team members, and the communities we serve. In the second quarter, we began to implement a re-opening plan in the common spaces in our communities and offices while continuing to adhere to state and local guidelines. We are prepared to suspend re-opening plans in any markets in which an increase in COVID-19 cases and other factors make it unsafe to do so in accordance with state and local guidelines.

COVID-19 continues to impact our residents, our team members, and the economy. The safety and health of people we serve and our team has remained our priority in these uncertain times. As the COVID-19 pandemic continues to unfold, we acknowledge the potential effects on our financial condition, results of operations, and cash flows, including the following:

• reductions in economic activity and rising unemployment that potentially could impact our residents' ability to pay rent on a timely basis or their desire to seek lease deferment payment plans or rent reductions, which in turn could result in increases in our uncollectible receivables and reductions in rental income and reduce our NOI and cash flow;
• the potential financial impact of the pandemic on the credit market and our future compliance with financial covenants contained in our credit facility and other debt agreements;
• weaker economic conditions that could cause us to recognize impairment in the value of our tangible or intangible assets; and
• rising costs related to our COVID-19 response that could cause us to record loss contingencies and increased expenses.

The extent to which the COVID-19 pandemic impacts our operations and those of our residents will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

For a more detailed description of the risks and uncertainties affecting our business, see the risk factors presented in  our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated under Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, and in our subsequent current and periodic reports filed with the Securities and Exchange Commission at www.sec.gov.

Quarterly Distributions

Effective June 5, 2020, IRET's Board of Trustees declared a regular quarterly distribution of $0.70 per share/unit, which was paid on July 10, 2020, to common shareholders and unitholders of record on June 30, 2020.  IRET has paid cash dividends to common shareholders and unitholders every quarter since its initial dividend payment in 1971.

Effective June 5, 2020, IRET's Board of Trustees also declared a distribution of $0.4140625 per share on the 6.625% Series C Cumulative Redeemable Preferred Shares (NYSE: IRET-PC), which was paid on June 30, 2020, to holders of record on June 15, 2020.  Series C preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.65625 per share.

Earnings Call

Live webcast and replay:  http://ir.iretapartments.com
Live Conference Call			Conference Call Replay
Tuesday, August 4, 2020, at 10:00 AM ET			Replay available until August 18, 2020
USA Toll Free Number	1-877-509-9785		USA Toll Free Number	1-877-344-7529
International Toll Free Number	1-412-902-4132		International Toll Free Number	1-412-317-0088
Canada Toll Free Number	1-855-669-9657		Canada Toll Free Number	1-855-669-9658
			Conference Number	10145476

Supplemental Information

Supplemental Operating and Financial Data for the quarter ended June 30, 2020 included herein ("Supplemental Information"), is available in the Investors section on IRET's website at www.iretapartments.com or by calling Investor Relations at 701-837-7104.

About IRET

IRET is a real estate company focused on the ownership, management, acquisition, redevelopment, and development of apartment communities.  As of June 30, 2020, we owned interests in 70 apartment communities consisting of 12,135 apartment homes. IRET's common shares and Series C preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: "IRET" and "IRET PC," respectively).

Forward-Looking Statements

Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on our current expectations and assumptions, and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements.  Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved.  Such risks, uncertainties, and other factors that might cause such differences include, but are not limited to those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2019, in our subsequent quarterly reports on Form 10-Q, including the COVID-19 risk factors set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, and in other public reports. We assume no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

Investor Relations Contact Information

Emily Miller
Investor Relations
Phone: 701-837-7104
E-mail: IR@iret.com

Common Share Data (NYSE: IRET)
		2nd Quarter				1st Quarter				4th Quarter				3rd Quarter				2nd Quarter
		2020				2020				2019				2019				2019
High closing price		$	76.82			$	84.68			$	78.91			$	74.67			$	61.28
Low closing price		$	44.36			$	52.55			$	71.74			$	59.22			$	57.19
Average closing price		$	63.91			$	71.62			$	74.67			$	66.83			$	59.54
Closing price at end of quarter		$	70.49			$	55.00			$	72.50			$	74.67			$	58.67
Common share distributions – annualized		$	2.80			$	2.80			$	2.80			$	2.80			$	2.80
Closing dividend yield – annualized		4.0		%		5.1		%		3.9		%		3.8		%		4.8		%
Closing common shares outstanding (thousands)		12,827				12,164				12,099				11,625				11,656
Closing limited partnership units outstanding (thousands)		1,022				1,044				1,058				1,223				1,224
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)		$	976,216			$	726,440			$	953,883			$	959,360			$	755,670

 

IRET
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands)
		Three Months Ended																					Six Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019					6/30/2020				6/30/2019
REVENUE		$	43,910			$	44,406			$	45,777			$	47,436			$	46,934				$	88,316			$	92,542
EXPENSES
Property operating expenses, excluding real estate taxes		12,360				13,468				14,018				14,485				13,942					25,828				28,746
Real estate taxes		5,410				5,465				4,835				5,425				5,574					10,875				10,806
Property management expense		1,345				1,554				1,634				1,553				1,445					2,899				2,999
Casualty loss		913				327				205				178				92					1,240				733
Depreciation/amortization		18,156				18,160				18,972				18,751				18,437					36,316				36,548
General and administrative expenses		3,202				3,428				3,647				3,448				3,549					6,630				7,355
TOTAL EXPENSES		$	41,386			$	42,402			$	43,311			$	43,840			$	43,039				$	83,788			$	87,187
Operating income (loss)		2,524				2,004				2,466				3,596				3,895					4,528				5,355
Interest expense		(6,940)				(6,911)				(7,357)				(7,694)				(7,590)					(13,851)				(15,486)
Loss on extinguishment of debt		(17)				—				(864)				(1,087)				(407)					(17)				(409)
Interest and other income (loss)		538				(2,777)				702				498				468					(2,239)				892
Income (loss) before gain (loss) on sale of real estate and other investments, and gain (loss) on litigation settlement		(3,895)				(7,684)				(5,053)				(4,687)				(3,634)					(11,579)				(9,648)
Gain (loss) on sale of real estate and other investments		(190)				—				57,850				39,105				615					(190)				669
Gain (loss) on litigation settlement		—				—				—				300				6,286					—				6,286
Net income (loss)		$	(4,085)			$	(7,684)			$	52,797			$	34,718			$	3,267				$	(11,769)			$	(2,693)
Dividends to preferred unitholders		(160)				(160)				(160)				(160)				(160)					(320)				(217)
Net (income) loss attributable to noncontrolling interest – Operating Partnership		447				692				(4,202)				(3,145)				(148)					1,139				595
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities		(5)				145				223				183				154					140				730
Net income (loss) attributable to controlling interests		(3,803)				(7,007)				48,658				31,596				3,113					(10,810)				(1,585)
Dividends to preferred shareholders		(1,609)				(1,705)				(1,705)				(1,705)				(1,706)					(3,314)				(3,411)
Discount on redemption of preferred shares		25				273				—				—				—					298				—
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS		$	(5,387)			$	(8,439)			$	46,953			$	29,891			$	1,407				$	(13,826)			$	(4,996)
Per Share Data - Basic
Net earnings (loss) per common share – basic		$	(0.44)			$	(0.69)			$	3.95			$	2.57			$	0.11				$	(1.13)			$	(0.43)
Per Share Data - Diluted
Net earnings (loss) per common share – diluted		$	(0.44)			$	(0.67)			$	3.89			$	2.54			$	0.11				$	(1.13)			$	(0.43)

 

IRET
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
			6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019
ASSETS
Real estate investments
Property owned			$	1,694,033			$	1,687,436			$	1,643,078			$	1,720,352			$	1,663,539
Less accumulated depreciation			(383,917)				(366,307)				(349,122)				(370,492)				(380,321)
			1,310,116				1,321,129				1,293,956				1,349,860				1,283,218
Unimproved land			—				1,376				1,376				1,376				1,746
Mortgage loans receivable			10,961				16,775				16,140				10,140				10,140
Total real estate investments			1,321,077				1,339,280				1,311,472				1,361,376				1,295,104
Cash and cash equivalents			52,714				26,338				26,579				8,500				17,406
Restricted cash			2,535				2,344				19,538				3,339				4,672
Other assets			16,484				21,124				34,829				30,589				30,626
TOTAL ASSETS			$	1,392,810			$	1,389,086			$	1,392,418			$	1,403,804			$	1,347,808
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses			$	54,883			$	52,337			$	47,155			$	40,546			$	44,766
Revolving line of credit			63,000				83,000				50,079				103,143				177,939
Notes payable, net of loan costs			269,155				269,106				269,058				269,006				144,082
Mortgages payable, net of loan costs			323,705				328,367				329,664				360,886				370,461
TOTAL LIABILITIES			$	710,743			$	732,810			$	695,956			$	773,581			$	737,248
SERIES D PREFERRED UNITS			$	16,560			$	16,560			$	16,560			16,560				16,560
EQUITY
Series C Preferred Shares of Beneficial Interest			93,579				96,046				99,456				99,456				99,456
Common Shares of Beneficial Interest			958,292				912,653				917,400				886,598				888,541
Accumulated distributions in excess of net income			(421,515)				(407,150)				(390,196)				(428,680)				(450,433)
Accumulated other comprehensive income (loss)			(18,139)				(17,360)				(7,607)				(9,793)				(7,598)
Total shareholders' equity			$	612,217			$	584,189			$	619,053			$	547,581			$	529,966
Noncontrolling interests – Operating Partnership			52,558				54,777				55,284				60,169				57,902
Noncontrolling interests – consolidated real estate entities			732				750				5,565				5,913				6,132
Total equity			$	665,507			$	639,716			$	679,902			$	613,663			$	594,000
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY			$	1,392,810			$	1,389,086			$	1,392,418			$	1,403,804			$	1,347,808

IRET
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)

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

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

Reconciliation of Operating Income (Loss) to Net Operating Income

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

	(in thousands, except percentages)
	Three Months Ended													Sequential							Year-Over-Year
	6/30/2020				3/31/2020				6/30/2019					$ Change				% Change			$ Change				% Change
Operating income (loss)	$	2,524			$	2,004			$	3,895				$	520			25.9	%		$	(1,371)			(35.2)	%
Adjustments:
Property management expenses	1,345				1,554				1,445					(209)				(13.4)	%		(100)				(6.9)	%
Casualty loss	913				327				92					586				179.2	%		821				892.4	%
Depreciation and amortization	18,156				18,160				18,437					(4)				—			(281)				(1.5)	%
General and administrative expenses	3,202				3,428				3,549					(226)				(6.6)	%		(347)				(9.8)	%
Net operating income	$	26,140			$	25,473			$	27,418				$	667			2.6	%		$	(1,278)			(4.7)	%
Revenue
Same-store	$	39,335			$	39,820			$	38,794				$	(485)			(1.2)	%		$	541			1.4	%
Non-same-store	4,157				3,511				1,073					646				18.4	%		3,084				287.4	%
Other properties and dispositions	418				1,075				7,067					(657)				(61.1)	%		(6,649)				(94.1)	%
Total	43,910				44,406				46,934					(496)				(1.1)	%		(3,024)				(6.4)	%
Property operating expenses, including real estate taxes
Same-store	16,006				17,258				15,726					(1,252)				(7.3)	%		280				1.8	%
Non-same-store	1,515				1,320				477					195				14.8	%		1,038				217.6	%
Other properties and dispositions	249				355				3,313					(106)				(29.9)	%		(3,064)				(92.5)	%
Total	17,770				18,933				19,516					(1,163)				(6.1)	%		(1,746)				(8.9)	%
Net operating income
Same-store	23,329				22,562				23,068					767				3.4	%		261				1.1	%
Non-same-store	2,642				2,191				596					451				20.6	%		2,046				343.3	%
Other properties and dispositions	169				720				3,754					(551)				(76.5)	%		(3,585)				(95.5)	%
Total	$	26,140			$	25,473			$	27,418				$	667			2.6	%		$	(1,278)			(4.7)	%

 

													Six Months Ended June 30,
													2020				2019				$ Change				% Change
Operating income (loss)													$	4,528			$	5,355			$	(827)			(15.4)	%
Adjustments:
Property management expenses													2,899				2,999				(100)				(3.3)	%
Casualty loss													1,240				733				507				69.2	%
Depreciation and amortization													36,316				36,548				(232)				(0.6)	%
General and administrative expenses													6,630				7,355				(725)				(9.9)	%
Net operating income													$	51,613			$	52,990			$	(1,377)			(2.6)	%
Revenue
Same-store													$	79,155			$	77,122			$	2,033			2.6	%
Non-same-store													7,668				1,484				6,184				416.7	%
Other properties and dispositions													1,493				13,936				(12,443)				(89.3)	%
Total													88,316				92,542				(4,226)				(4.6)	%
Property operating expenses, including real estate taxes
Same-store													33,264				32,327				937				2.9	%
Non-same-store													2,835				647				2,188				338.2	%
Other properties and dispositions													604				6,578				(5,974)				(90.8)	%
Total													36,703				39,552				(2,849)				(7.2)	%
Net operating income
Same-store													45,891				44,795				1,096				2.4	%
Non-same-store													4,833				837				3,996				477.4	%
Other properties and dispositions													889				7,358				(6,469)				(87.9)	%
Total													$	51,613			$	52,990			$	(1,377)			(2.6)	%

Same-Store Property Operating Expense Comparison

	(in thousands, except percentages)
	Three Months Ended June 30,																Six Months Ended June 30,
	2020				2019				$ Change				% Change				2020				2019				$ Change				% Change
Controllable expenses
On-site compensation(1)	$	4,240			$	4,181			$	59			1.4	%			$	8,859			$	8,292			$	567			6.8	%
Repairs and maintenance	2,558				2,905				(347)				(11.9)	%			5,019				5,974				(955)				(16.0)	%
Utilities	2,262				2,397				(135)				(5.6)	%			5,293				5,699				(406)				(7.1)	%
Administrative and marketing	888				908				(20)				(2.2)	%			1,783				1,930				(147)				(7.6)	%
Total	$	9,948			$	10,391			$	(443)			(4.3)	%			$	20,954			$	21,895			$	(941)			(4.3)	%
Non-controllable expenses
Real estate taxes	$	4,756			$	4,456			$	300			6.7	%			$	9,666			$	8,740			$	926			10.6	%
Insurance	1,302				879				423				48.1	%			2,644				1,692				952				56.3	%
Total	$	6,058			$	5,335			$	723			13.6	%			$	12,310			$	10,432			$	1,878			18.0	%
Total	$	16,006			$	15,726			$	280			1.8	%			$	33,264			$	32,327			$	937			2.9	%

(1)  On-site compensation for administration, leasing, and maintenance personnel.

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

We believe that FFO, which is a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding our operating performance, primarily because its calculation does not assume that the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation.

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

• depreciation and amortization related to real estate;
• gains and losses from the sale of certain real estate assets; and
• impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

The exclusion in Nareit's definition of FFO of impairment write-downs and gains and losses from the sale of real estate assets helps to identify the operating results of the long-term assets that form the base of our investments, and assists management and investors in comparing those operating results between periods.

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

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

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

		(in thousands, except per share amounts)
		Three Months Ended																					Six Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019					6/30/2020				6/30/2019
Funds From Operations
Net income (loss) available to common shareholders		$	(5,387)			$	(8,439)			$	46,953			$	29,891			$	1,407				$	(13,826)			$	(4,996)
Adjustments:
Noncontrolling interests – Operating Partnership		(447)				(692)				4,202				3,145				148					(1,139)				(595)
Depreciation and amortization		18,156				18,160				18,972				18,751				18,437					36,316				36,548
Less depreciation – non real estate		(88)				(93)				(88)				(71)				(79)					(181)				(164)
Less depreciation – partially owned entities		(33)				(282)				(454)				(452)				(474)					(315)				(1,152)
(Gain) loss on sale of real estate		190				—				(57,850)				(39,105)				(615)					190				(669)
FFO applicable to common shares and Units		$	12,391			$	8,654			$	11,735			$	12,159			$	18,824				$	21,045			$	28,972
Adjustments to Core FFO:
Loss on extinguishment of debt		17				—				864				1,087				407					17				409
Gain on litigation settlement		—				—				—				(300)				(6,286)					—				(6,286)
(Gain) loss on marketable securities		(175)				3,553				(113)				—				—					3,378				—
Discount on redemption of preferred shares		(25)				(273)				—				—				—					(298)				—
Core FFO applicable to common shares and Units		$	12,208			$	11,934			$	12,486			$	12,946			$	12,945				$	24,142			$	23,095
Funds from operations applicable to common shares and Units		$	12,391			$	8,654			$	11,735			$	12,159			$	18,824				$	21,045			$	28,972
Dividends to preferred unitholders		160				160				160				160				160					320				217
Funds from operations applicable to common shares and Units - diluted		$	12,551			$	8,814			$	11,895			$	12,319			$	18,984				$	21,365			$	29,189
Core funds from operations applicable to common shares and Units		$	12,208			$	11,934			$	12,486			$	12,946			$	12,945				$	24,142			$	23,095
Dividends to preferred unitholders		160				160				160				160				160					320				217
Core funds from operations applicable to common shares and Units - diluted		$	12,368			$	12,094			$	12,646			$	13,106			$	13,105				$	24,462			$	23,312
Per Share Data
Earnings (loss) per share and Unit - diluted		$	(0.44)			$	(0.67)			$	3.89			$	2.54			$	0.11				$	(1.13)			$	(0.43)
FFO per share and Unit - diluted		$	0.93			$	0.66			$	0.90			$	0.93			$	1.45				$	1.58			$	2.22
Core FFO per share and Unit - diluted		$	0.91			$	0.90			$	0.96			$	0.99			$	1.00				$	1.81			$	1.77
Weighted average shares and Units - diluted		13,558				13,401				13,188				13,087				13,197					13,482				13,220

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

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

		(in thousands)
		Three Months Ended																					Six Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019					6/30/2020				6/30/2019
Adjusted EBITDA
Net income (loss) available to common shareholders		$	(3,803)			$	(7,007)			$	48,658			$	31,596			$	3,113				$	(10,810)			$	(1,585)
Adjustments:
Dividends to preferred unitholders		160				160				160				160				160					320				217
Noncontrolling interests – Operating Partnership		(447)				(692)				4,202				3,145				148					(1,139)				(595)
Income (loss) before noncontrolling interests – Operating Partnership		$	(4,090)			$	(7,539)			$	53,020			$	34,901			$	3,421				$	(11,629)			$	(1,963)
Adjustments:
Interest expense		6,926				6,764				7,112				7,448				7,343					13,690				14,901
Loss on extinguishment of debt		17				—				864				1,087				407					17				409
Depreciation/amortization related to real estate investments		18,123				17,878				18,518				18,299				17,963					36,001				35,396
Interest income		(331)				(597)				(415)				(402)				(402)					(928)				(809)
(Gain) loss on sale of real estate and other investments		190				—				(57,850)				(39,105)				(615)					190				(669)
Gain on litigation settlement		—				—				—				(300)				(6,286)					—				(6,286)
(Gain) loss on marketable securities		(175)				3,553				(113)				—				—					3,378				—
Adjusted EBITDA		$	20,660			$	20,059			$	21,136			$	21,928			$	21,831				$	40,719			$	40,979

 

IRET
DEBT ANALYSIS
(in thousands)
Debt Maturity Schedule
Annual Expirations
		Future Maturities of Debt
		Secured Fixed Debt				Unsecured Fixed Debt(1)				Unsecured Variable Debt				Total Debt				% of Total Debt			Weighted Average Interest Rate(2)
2020 (remainder)		$	9,406			$	—			$	—			$	9,406			1.4	%		4.85	%
2021		35,556				—				—				35,556				5.4	%		5.36	%
2022		33,987				50,000				13,000				96,987				14.7	%		3.28	%
2023		44,266				—				—				44,266				6.7	%		4.02	%
2024		—				70,000				—				70,000				10.7	%		3.62	%
Thereafter		202,015				200,000				—				402,015				61.1	%		3.89	%
Total debt		$	325,230			$	320,000			$	13,000			$	658,230			100.0	%		3.87	%

(1)	Term loans have variable interest rates that are fixed with interest rate swaps and $50.0 million of our variable interest, line of credit is fixed with an interest rate swap.
(2)	Weighted average interest rate of debt that matures during the year, including the effect of interest rate swaps on the term loans and line of credit.

 

		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019
Debt Balances Outstanding
Secured fixed rate		$	325,230			$	329,988			$	331,376			$	362,731			$	371,951
Unsecured fixed rate line of credit(1)		50,000				50,000				50,000				50,000				50,000
Secured line of credit(2)		—				—				—				—				15,000
Unsecured variable rate line of credit		13,000				33,000				79				53,143				112,939
Unsecured term loans		145,000				145,000				145,000				145,000				145,000
Unsecured senior notes		125,000				125,000				125,000				125,000				—
Debt total		$	658,230			$	682,988			$	651,455			$	735,874			$	694,890
Mortgage debt weighted average interest rate		4.01		%		4.01		%		4.02		%		4.15		%		4.37		%
Lines of credit rate (rate with swap)		2.97		%		3.18		%		3.52		%		3.73		%		3.91		%
Term loan rate (rate with swap)		4.12		%		4.13		%		4.19		%		4.14		%		4.14		%
Senior notes rate		3.78		%		3.78		%		3.78		%		3.78		%		—

(1)	A portion of our primary line of credit is fixed through an interest rate swap.
(2)	Our revolving line of credit consists primarily of unsecured borrowings. A portion of the line was secured in connection with our acquisition of SouthFork Townhomes, under an agreement which allowed us to offer the seller tax protection upon purchase.

 

IRET
CAPITAL ANALYSIS
(in thousands, except per share and unit amounts)
		Three Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019
Equity Capitalization
Common shares outstanding		12,827				12,164				12,099				11,625				11,656
Operating partnership units outstanding		1,022				1,044				1,058				1,223				1,224
Total common shares and units outstanding		13,849				13,208				13,157				12,848				12,880
Market price per common share (closing price at end of period)		$	70.49			$	55.00			$	72.50			$	74.67			$	58.67
Equity capitalization-common shares and units		$	976,216			$	726,440			$	953,883			$	959,360			$	755,670
Recorded book value of preferred shares		$	93,579			$	96,046			$	99,456			$	99,456			$	99,456
Total equity capitalization		$	1,069,795			$	822,486			$	1,053,339			$	1,058,816			$	855,126
Series D Preferred Units		$	16,560			$	16,560			$	16,560			$	16,560			$	16,560
Debt Capitalization
Total debt		$	658,230			$	682,988			$	651,455			$	735,874			$	694,889
Total capitalization		$	1,744,585			$	1,522,034			$	1,721,354			$	1,811,250			$	1,566,575
Total debt to total capitalization(1)		37.7		%		44.9		%		37.8		%		40.6		%		44.4		%

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

 

		Three Months Ended																					Six Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019					6/30/2020				6/30/2019
Debt service coverage ratio(1)		2.48		x		2.42		x		2.39		x		2.26		x		2.24		x			2.45		x		2.04		x
Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization		2.05		x		1.97		x		1.98		x		1.90		x		1.88		x			2.01		x		1.73		x
Net debt/Adjusted EBITDA(2)		7.33		x		8.18		x		7.19		x		8.29		x		7.76		x			7.44		x		8.27		x
Net debt and preferred equity/Adjusted EBITDA(2)		8.66		x		9.59		x		8.56		x		9.62		x		9.09		x			8.86		x		9.48		x
Distribution Data
Common shares and Units outstanding at record date		13,849				13,208				13,157				12,848				12,914					13,849				12,914
Total common distribution declared		$	9,694			$	9,245			$	9,210			$	8,994			$	9,039				$	18,939			$	18,234
Common distribution per share and Unit		$	0.70			$	0.70			$	0.70			$	0.70			$	0.70				$	1.40			$	1.40
Payout ratio (Core FFO per share and unit basis) (3)		76.9		%		77.8		%		72.9		%		70.7		%		70.0		%			77.3		%		79.1		%

(1)	Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization. This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within the Non-GAAP Financial Measures and Reconciliations section.
(2)	Net debt is the total debt balance less cash and cash equivalents and net tax deferred exchange proceeds (included within restricted cash). Adjusted EBITDA is annualized for periods less than one year. Net debt and adjusted EBITDA are non-GAAP measures and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within the Non-GAAP Financial Measures and Reconciliations section.
(3)	Payout ratio (Core FFO per share and unit basis) is the ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual Core FFO per share and unit.  This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP.

 

IRET
COVID-19 UPDATE
(in thousands, except property data amounts and percentages)
Collections by State
					Three Months Ended June 30, 2020
State	Number of Communities		Number of Homes		% of Total Revenue		Bad Debt(1) as % of Total Revenue
Minnesota	32		5,438		48.7	%	1.1	%
Colorado	3		992		12.4	%	1.2	%
Nebraska	6		1,370		9.2	%	0.6	%
North Dakota	19		3,112		21.5	%	0.2	%
South Dakota	5		474		3.2	%	0.7	%
Montana	5		749		5.0	%	2.3	%
Total	70		12,135		100.0	%	0.9	%

(1)	Bad debt is reported as a reduction of revenue.

 

Operating Statistics
		Month Ended				Three Months Ended
		July 31, 2020		July 31, 2019		June 30, 2020		March 31, 2020		June 30, 2019
Bad debt as a % of total revenue		1.0	%	0.6	%	0.9	%	0.2	%	0.4	%
Percent of rent deferrals to total revenue		0.1	%	N/A		0.5	%	N/A		N/A
Same-Store Communities
New lease rates		1.1	%	0.7	%	(1.2)	%	(4.3)	%	4.3	%
Renewal rates		0.1	%	4.9	%	3.3	%	2.9	%	5.9	%
Weighted average occupancy		94.3	%	93.1	%	94.6	%	95.4	%	94.3	%
Physical occupancy, at end of period		95.2	%	93.8	%	94.8	%	96.1	%	94.0	%

 

Liquidity and Near-Term Funding Obligations
Liquidity Profile	June 30, 2020			March 31, 2020
Unsecured credit facility - committed	$	250,000		$	250,000
Balance outstanding	63,000			83,000
Amount available on line of credit	$	187,000		$	167,000
Cash and cash equivalents	52,714			26,338
Total liquidity	$	239,714		$	193,338
Near-Term Funding Obligations
Unfunded construction loan and mezzanine loan commitments - 2020 and 2021	$	34,272		$	38,479
2020  and 2021 Debt maturities	44,962			45,297
Total	$	79,234		$	83,776
Ratio of liquidity to near-term funding obligations	3.0			2.3

 

IRET
SAME-STORE SECOND QUARTER COMPARISONS
(in thousands, except property data amounts and percentages)
		Apartment Homes Included			Revenues											Expenses											NOI
Regions					Q2 2020				Q2 2019				% Change			Q2 2020				Q2 2019				% Change			Q2 2020				Q2 2019				% Change
Minneapolis, MN		1,987			$	9,068			$	8,904			1.8	%		$	3,485			$	3,636			(4.2)	%		$	5,583			$	5,268			6.0	%
Rochester, MN		1,711			6,370				6,290				1.2	%		2,802				2,450				14.4	%		3,568				3,840				(7.1)	%
Denver, CO		664			3,701				3,780				(2.1)	%		1,095				1,195				(8.4)	%		2,606				2,585				0.8	%
Grand Forks, ND		1,555			4,344				4,218				3.0	%		1,823				1,909				(4.5)	%		2,521				2,309				9.2	%
Omaha, NE		1,370			3,838				3,705				3.6	%		1,783				1,635				9.1	%		2,055				2,070				(0.7)	%
St. Cloud, MN		1,190			3,546				3,585				(1.1)	%		1,524				1,525				(0.1)	%		2,022				2,060				(1.8)	%
Bismarck, ND		845			2,766				2,671				3.6	%		1,053				1,031				2.1	%		1,713				1,640				4.5	%
Billings, MT		749			2,139				2,125				0.7	%		838				752				11.4	%		1,301				1,373				(5.2)	%
Minot, ND		712			2,161				2,145				0.7	%		969				1,036				(6.5)	%		1,192				1,109				7.5	%
Rapid City, SD		474			1,402				1,371				2.3	%		634				557				13.8	%		768				814				(5.7)	%
Same-Store Total		11,257			$	39,335			$	38,794			1.4	%		$	16,006			$	15,726			1.8	%		$	23,329			$	23,068			1.1	%

 

		% of NOI Contribution			Weighted Average Occupancy (1)									Average Monthly Rental Rate (2)											Average Monthly Revenue per Occupied Home (3)
Regions					Q2 2020			Q2 2019			Growth			Q2 2020				Q2 2019				% Change			Q2 2020				Q2 2019				% Change
Minneapolis, MN		23.9	%		94.0	%		93.3	%		0.7	%		$	1,494			$	1,471			1.6	%		$	1,619			$	1,600			1.1	%
Rochester, MN		15.3	%		95.3	%		95.4	%		(0.1)	%		1,248				1,233				1.2	%		1,303				1,285				1.3	%
Denver, CO		11.2	%		92.9	%		94.5	%		(1.6)	%		1,827				1,828				(0.1)	%		2,001				2,008				(0.5)	%
Grand Forks, ND		10.8	%		94.6	%		93.5	%		1.1	%		906				912				(0.7)	%		985				967				1.9	%
Omaha, NE		8.8	%		94.9	%		93.3	%		1.6	%		904				884				2.3	%		984				966				2.0	%
St. Cloud, MN		8.7	%		93.7	%		95.4	%		(1.7)	%		955				951				0.4	%		1,060				1,053				0.6	%
Bismarck, ND		7.3	%		96.2	%		93.6	%		2.6	%		1,053				1,044				0.9	%		1,134				1,126				1.0	%
Billings, MT		5.6	%		94.4	%		95.6	%		(1.2)	%		944				924				2.2	%		1,008				989				1.9	%
Minot, ND		5.1	%		97.0	%		95.0	%		2.0	%		992				1,000				(0.8)	%		1,043				1,057				(1.3)	%
Rapid City, SD		3.3	%		94.3	%		95.0	%		(0.7)	%		966				945				2.2	%		1,046				1,015				3.0	%
Same-Store Total		100.0	%		94.6	%		94.3	%		0.3	%		$	1,142			$	1,132			0.9	%		$	1,232			$	1,219			1.1	%

(1)	Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rent.
(2)	Average monthly rental rate is scheduled rent divided by the total number of apartment homes. Scheduled rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account.  Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.
(3)	Average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period.

 

IRET
SAME-STORE SEQUENTIAL QUARTER COMPARISONS
(in thousands, except property data amounts and percentages)
		Apartment Homes Included			Revenues											Expenses											NOI
Regions					Q2 2020				Q1 2020				% Change			Q2 2020				Q1 2020				% Change			Q2 2020				Q1 2020				% Change
Minneapolis, MN		1,987			$	9,068			$	9,112			(0.5)	%		$	3,485			$	3,911			(10.9)	%		$	5,583			$	5,201			7.3	%
Rochester, MN		1,711			6,370				6,539				(2.6)	%		2,802				2,824				(0.7)	%		3,568				3,715				(4.0)	%
Denver, CO		664			3,701				3,927				(5.8)	%		1,095				1,258				(13.0)	%		2,606				2,669				(2.4)	%
Grand Forks, ND		1,555			4,344				4,337				0.2	%		1,823				2,225				(18.1)	%		2,521				2,112				19.4	%
Omaha, NE		1,370			3,838				3,814				0.6	%		1,783				1,626				9.7	%		2,055				2,188				(6.1)	%
St. Cloud, MN		1,190			3,546				3,611				(1.8)	%		1,524				1,756				(13.2)	%		2,022				1,855				9.0	%
Bismarck, ND		845			2,766				2,735				1.1	%		1,053				1,169				(9.9)	%		1,713				1,566				9.4	%
Billings, MT		749			2,139				2,179				(1.8)	%		838				826				1.5	%		1,301				1,353				(3.8)	%
Minot, ND		712			2,161				2,125				1.7	%		969				1,011				(4.2)	%		1,192				1,114				7.0	%
Rapid City, SD		474			1,402				1,441				(2.7)	%		634				652				(2.8)	%		768				789				(2.7)	%
Same-Store Total		11,257			$	39,335			$	39,820			(1.2)	%		$	16,006			$	17,258			(7.3)	%		$	23,329			$	22,562			3.4	%

 

		% of NOI Contribution			Weighted Average Occupancy									Average Monthly Rental Rate											Average Monthly Revenue per Occupied Home
Regions					Q2 2020			Q1 2020			Growth			Q2 2020				Q1 2020				% Change			Q2 2020				Q1 2020				% Change
Minneapolis, MN		23.9	%		94.0	%		94.2	%		(0.2)	%		$	1,494			$	1,485			0.6	%		$	1,619			$	1,624			(0.3)	%
Rochester, MN		15.3	%		95.3	%		97.1	%		(1.8)	%		1,248				1,239				0.7	%		1,303				1,312				(0.8)	%
Denver, CO		11.2	%		92.9	%		95.1	%		(2.2)	%		1,827				1,845				(1.0)	%		2,001				2,072				(3.6)	%
Grand Forks, ND		10.8	%		94.6	%		95.4	%		(0.8)	%		906				900				0.7	%		985				975				1.0	%
Omaha, NE		8.8	%		94.9	%		94.3	%		0.6	%		904				893				1.2	%		984				984				—
St. Cloud, MN		8.7	%		93.7	%		94.9	%		(1.2)	%		955				945				1.1	%		1,060				1,066				(0.6)	%
Bismarck, ND		7.3	%		96.2	%		96.4	%		(0.2)	%		1,053				1,044				0.9	%		1,134				1,119				1.3	%
Billings, MT		5.6	%		94.4	%		95.8	%		(1.4)	%		944				935				1.0	%		1,008				1,012				(0.4)	%
Minot, ND		5.1	%		97.0	%		95.1	%		1.9	%		992				990				0.2	%		1,043				1,046				(0.2)	%
Rapid City, SD		3.3	%		94.3	%		96.9	%		(2.6)	%		966				951				1.6	%		1,046				1,045				(0.1)	%
Same-Store Total		100.0	%		94.6	%		95.4	%		(0.8)	%		$	1,142			$	1,135			0.6	%		$	1,232			$	1,237			(0.4)	%

 

IRET
SAME-STORE YEAR-TO-DATE COMPARISONS
(in thousands, except property data amounts and percentages)
		Apartment Homes Included			Revenues											Expenses											NOI
Regions					2020				2019				% Change			2020				2019				% Change			2020				2019				% Change
Minneapolis, MN		1,987			$	18,180			$	17,684			2.8	%		$	7,395			$	7,275			1.6	%		$	10,785			$	10,409			3.6	%
Rochester, MN		1,711			12,908				12,516				3.1	%		5,625				4,905				14.7	%		7,283				7,611				(4.3)	%
Denver, CO		664			7,628				7,479				2.0	%		2,354				2,417				(2.6)	%		5,274				5,062				4.2	%
Grand Forks, ND		1,555			8,682				8,359				3.9	%		4,048				4,075				(0.7)	%		4,634				4,284				8.2	%
Omaha, NE		1,370			7,652				7,459				2.6	%		3,409				3,409				—			4,243				4,050				4.8	%
St. Cloud, MN		1,190			7,157				7,059				1.4	%		3,281				3,333				(1.6)	%		3,876				3,726				4.0	%
Bismarck, ND		845			5,501				5,335				3.1	%		2,222				2,162				2.8	%		3,279				3,173				3.3	%
Billings, MT		749			4,317				4,230				2.1	%		1,664				1,575				5.7	%		2,653				2,655				(0.1)	%
Minot, ND		712			4,287				4,263				0.6	%		1,980				2,043				(3.1)	%		2,307				2,220				3.9	%
Rapid City, SD		474			2,843				2,738				3.8	%		1,286				1,133				13.5	%		1,557				1,605				(3.0)	%
Same-Store Total		11,257			$	79,155			$	77,122			2.6	%		$	33,264			$	32,327			2.9	%		$	45,891			$	44,795			2.4	%

 

		% of NOI Contribution			Weighted Average Occupancy									Average Monthly Rental Rate											Average Monthly Revenue per Occupied Home
Regions					2020			2019			Growth			2020				2019				% Change			2020				2019				% Change
Minneapolis, MN		23.6	%		94.1	%		94.1	%		—			$	1,490			$	1,457			2.3	%		$	1,621			$	1,577			2.8	%
Rochester, MN		15.9	%		96.2	%		95.9	%		0.3	%		1,243				1,220				1.9	%		1,307				1,271				2.8	%
Denver, CO		11.5	%		94.0	%		94.4	%		(0.4)	%		1,836				1,817				1.0	%		2,037				1,988				2.4	%
Grand Forks, ND		10.1	%		95.0	%		93.7	%		1.3	%		903				907				(0.4)	%		980				957				2.6	%
Omaha, NE		9.2	%		94.6	%		94.3	%		0.3	%		898				879				2.2	%		984				963				2.3	%
St. Cloud, MN		8.4	%		94.3	%		95.6	%		(1.3)	%		950				945				0.5	%		1,063				1,035				2.7	%
Bismarck, ND		7.1	%		96.3	%		95.3	%		1.0	%		1,048				1,037				1.1	%		1,126				1,104				2.1	%
Billings, MT		5.8	%		95.1	%		96.0	%		(0.9)	%		939				915				2.6	%		1,010				981				3.0	%
Minot, ND		5.0	%		96.1	%		95.4	%		0.7	%		991				997				(0.6)	%		1,044				1,046				(0.1)	%
Rapid City, SD		3.4	%		95.6	%		95.9	%		(0.3)	%		959				938				2.2	%		1,046				1,003				4.1	%
Same-Store Total		100.0	%		95.0	%		94.9	%		0.1	%		$	1,139			$	1,123			1.4	%		$	1,234			$	1,204			2.5	%

 

IRET
PORTFOLIO SUMMARY(1)
		Three Months Ended
		6/30/2020				3/31/2020				12/31/2019				9/30/2019				6/30/2019
Number of Apartment Homes at Period End
Same-Store		11,257				11,257				10,402				11,785				12,848
Non-Same-Store		878				878				1,551				1,551				1,127
All Communities		12,135				12,135				11,953				13,336				13,975
Average Monthly Rental Rate(2)
Same-Store		$	1,142			$	1,135			$	1,085			$	1,062			$	1,028
Non-Same-Store		1,594				1,572				1,722				1,742				1,692
All Communities		$	1,175			$	1,163			$	1,168			$	1,123			$	1,081
Average Monthly Revenue per Occupied Apartment Home(3)
Same-Store		$	1,232			$	1,237			$	1,169			$	1,141			$	1,101
Non-Same-Store		1,681				1,658				1,869				1,887				1,848
All Communities		$	1,264			$	1,263			$	1,260			$	1,210			$	1,161
Weighted Average Occupancy(4)
Same-Store		94.6		%		95.4		%		94.0		%		93.3		%		94.3		%
Non-Same-Store		93.9		%		93.3		%		93.0		%		94.2		%		94.8		%
All Communities		94.5		%		95.2		%		93.8		%		93.4		%		94.4		%
Operating Expenses as a % of Scheduled Rent
Same-Store		41.5		%		45.0		%		43.5		%		43.0		%		42.8		%
Non-Same-Store		36.1		%		37.0		%		33.8		%		38.1		%		37.4		%
All Communities		41.0		%		44.3		%		41.6		%		42.3		%		42.2		%
Capital Expenditures
Total Capital Expenditures per Apartment Home – Same-Store		$	262			$	151			$	427			$	178			$	192

(1)	Previously reported amounts are not revised for changes in the composition of the same-store properties pool.
(2)	Average monthly rental rate is scheduled rent divided by the total number of apartment homes. Scheduled rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.
(3)	Average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period.
(4)	Weighted average occupancy is the percentage resulting from dividing actual rental revenue by scheduled rent.  We believe that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy and our calculation of weighted average occupancy may not be comparable to that disclosed by other REITs.

 

IRET
CAPITAL EXPENDITURES
($ in thousands, except per home amounts)
		Three Months Ended									Six Months Ended
		6/30/2020				6/30/2019					6/30/2020				6/30/2019
Total Same-Store Apartment Homes		11,257				11,257					11,257				11,257
Turnover		$	893			$	908				$	1,580			$	1,422
Furniture & Equipment		112				107					241				160
Building – Interior		69				100					218				178
Building – Exterior		1,505				394					2,219				603
Landscaping & Grounds		367				539					383				545
Capital Expenditures - Same-Store		$	2,946			$	2,048				$	4,641			$	2,908
Capital Expenditures per Apartment Home - Same-Store		$	262			$	182				$	412			$	258
Value Add		$	2,604			$	701				$	4,166			$	989
Total Capital Spend - Same-Store		$	5,550			$	2,749				$	8,807			$	3,897
Total Capital Spend per Apartment Home - Same-Store		$	493			$	244				$	782			$	346
All Properties - Weighted Average Apartment Homes		12,135				13,975					12,074				13,975
Capital Expenditures		$	3,373			$	2,571				$	5,183			$	3,727
Capital Expenditures per Apartment Home		$	277			$	184				$	429			$	267
Value Add		4,165				747					6,196				1,119
Acquisition Capital(1)		(943)				66					535				254
Total Capital Spend		6,595				3,384					11,914				5,100
Total Capital Spend per Apartment Home		$	544			$	242				$	987			$	365

(1)	Negative amounts consist of balances originally classified as acquisition capital and subsequently reclassified to capital expenditures.

 

 

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SOURCE IRET

FAQ

What were IRET's Q2 2020 financial results?

IRET reported a net loss of $(0.44) per diluted share for Q2 2020 compared to a net income of $0.11 per diluted share in Q2 2019.

How did IRET's Core FFO perform in Q2 2020?

IRET's Core FFO for Q2 2020 was $0.91, down from $1.00 in the same quarter of 2019.

What is IRET's collection rate for Q2 2020?

IRET maintained a collection rate of 99.1% for the second quarter of 2020.

What liquidity does IRET have as of June 30, 2020?

IRET had $239.7 million in total liquidity, including $52.7 million in cash.

How has COVID-19 impacted IRET?

COVID-19 led to the withdrawal of IRET's 2020 financial outlook and has raised concerns about rental income and tenant payments.