News Release: IRET Announces Financial And Operating Results For The Quarter And Fiscal Year Ended April 30, 2017

Press Release

Company Release – 6/28/2017 4:15 PM ET

MINOT, N.D., June 28, 2017 /PRNewswire/ — IRET (NYSE: IRET) today reported its financial and operating results for the quarter and fiscal year ended April 30, 2017.

Chief Executive Officer Mark Decker commented, “During our fiscal fourth quarter, we continued to make substantial progress on our strategic transformation into a premier, focused multifamily REIT. Our total portfolio revenue and NOI increased by 12.0% and 14.3%, respectively, driven primarily by our developments which are performing strongly. Several of our legacy markets were still impacted by weakness in the oil sector and construction activity, however we recorded a year-over-year increase in same store revenue during the quarter, and with quarter-end occupancies still above 94%, we believe we are on track for further improvement. On the investment front, we are pleased with our recent acquisition of Oxbō Apartments, a brand new Class A multifamily community in St. Paul, Minnesota. We were able to efficiently redeploy a portion of the proceeds from our recent non-core property sales, and we continue to pursue additional investments which we believe will add the quality of our portfolio and enhance our long term growth profile. Finally, we added talent to our management team, bringing in executives with substantial public company and multifamily industry expertise. As we look ahead to fiscal 2018, we are motivated and energized as we continue to implement our strategic initiatives, and drive value for our shareholders.”

Fourth Quarter Fiscal Year 2017 Highlights

Total revenue was $54.3 million, up 12.0% from the fourth quarter of fiscal year 2016.
Net income available to common shareholders was $28.0 million compared to $8.1 million for the fourth quarter of fiscal year 2016. The increase was primarily due to an increase in gains on sale of discontinued operations.
Funds from Operations (“FFO”) was $10.2 million, or $0.07 per share/unit.
Excluding one-time items, including $3.2 million in lease termination fee income, a $3.2 million write off of development pursuit costs, $2.9 million in loss on debt extinguishment and $1.2 million in severance costs net of reduced share based compensation, FFO would have been $0.11 per share/unit.
Disposed of 22 properties, including 19 senior housing properties, 2 medical office properties and 1 multifamily property for a total sales price of $155.4 million with a gain on sale of $37.5 million, netting approximately $126.2 million in proceeds after repayment of debt.
Subsequent to quarter end, in May, acquired Oxbō Apartments, a 191-unit multifamily property in St. Paul, Minnesota for $61.5 million.
In April, implemented leadership transformation, promoting Mark O. Decker, Jr. to Chief Executive Officer in addition to President. Also, Jeffrey P. Caira was appointed Chairman of the Board of Trustees, John A. Kirchmann was named Executive Vice President, and Anne Olson was named Executive Vice President, General Counsel and Corporate Secretary. Subsequent to quarter end, in June, Susan J. Picotte was named Vice President of Asset Management.
Fiscal Year 2017 Highlights

Total revenue was $205.7 million, up 9.2% from fiscal year 2016.
Net income available to common shareholders was $31.4 million compared to $60.5 million for the prior fiscal year. The decrease was primarily due to net gain on extinguishment of debt in discontinued operations that was recognized in the prior period and an increase in non-cash impairment expense attributable to IRET, net of an increase in gains on sale of real estate.
FFO was $55.2 million, or $0.40 per share/unit.
Excluding one-time items, including $3.2 million in lease termination fee income, $4.9 million in loss on debt extinguishment, a $3.2 million write off of development pursuit costs, $2.6 million in severance costs and $1.4 million of redemption costs for the Series A Preferred Shares, FFO would have been $0.47 per share/unit.
Disposed of 38 properties, including 32 senior housing properties, 2 medical office properties, 1 multifamily property, 1 industrial property, 1 retail property and 2 parcels of vacant land for a total sales price of $286.9 million with a gain on sale of $74.9 million, netting approximately $229.7 million in proceeds after repayment of debt.
During the twelve months ended April 30, 2017, two development project were placed in service, containing a total of 443 units, and representing aggregate development costs of $102.9 million.
Adjusted the dividend to a level covered by operating cash flow, from an annualized $0.52 to $0.28 per share/unit.
Entered into a new $250.0 million line of credit providing for improved size, terms and flexibility.
Redeemed all the outstanding Series A preferred shares on December 2, 2016 for $29.2 million.
Authorized a one-year share repurchase program of up to $50 million worth of common shares and/or Series B preferred shares.
Financial Results for the Three and Twelve Months Ended April 30, 2017 Compared to the Prior Year Periods

Net income available to common shareholders for the quarter ended April 30, 2017 was $28.0 million compared to $8.1 million for the same period of the prior fiscal year. The increase of $19.9 million was primarily due to an increase in income from discontinued operations (including gains on sale) of $27.0 million, net of a decrease in gain on bargain purchase of $3.4 million and an increase in net income attributable to noncontrolling interests – Operating Partnership of $2.6 million. Net income available to common shareholders for the twelve months ended April 30, 2017 was $31.4 million compared to $60.5 million for the prior fiscal year. The decrease of $29.1 million was primarily due to net gain on extinguishment of debt in discontinued operations that was recognized in the prior period of $29.3 million and an increase in impairment expense attributable to IRET of $42.1 million, net of an increase in gains on sale of real estate (including discontinued operations) of $41.4 million.

FFO for the quarter ended April 30, 2017 was $10.2 million, or $0.07 per share/unit. FFO for the twelve months ended April 30, 2017 was $55.2 million, or $0.40 per share/unit.

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