Investors Real Estate Trust
Annual Report 2017

Plain-text annual report

Progress on Portfolio Transformation President & CEO Mark O. Decker, Jr. Fellow Shareholders, Fiscal Year 2017 was a year of significant transformation and accomplishment for IRET as we continue to execute on our plans to become a focused multifamily company. This transformation is not without challenges, but we believe the changes underway are putting us on the right path forward to drive strong and predictable growth over time and unlock the value within our portfolio. Let me review the milestones we achieved in FY 2017 and provide my thoughts on our strategic direction: Improved Portfolio & Earnings Quality During FY 2017, we largely exited the senior housing sector, having completed the sale of 32 of 34 properties, and sold seven additional non-core properties for an aggregate sale price of $287 million. We completed development of two apartment properties representing total investment of $103 million. These efforts reduced risk to our company by lowering our reliance on a large single-tenant senior housing operator and improved our portfolio quality with market-leading multifamily rental product. As a result of these efforts, multifamily revenue increased by more than 10%. “ We continue to make significant headway on our strategic initiatives to transform IRET to a focused multifamily company. Our portfolio is more efficient, we removed uncertainty from our investment profile, and our balance sheet has meaningful flexibility for targeted growth. As we enter FY 2018, IRET is a stronger and beeer company, and we believe we are well-positioned to drive growth and create long-term value for our investors. “ New Mission, Vision, & Values As we move through this transition, we are committed to focusing on our core business and identifying our priorities for our portfolio and operations. As a central part of this effort, we adopted a new mission statement and added a vision and core values. We reflected on our business and priorities and found that our residents are at the very heart of everything we do. Unlike many companies, our customers live with us. Every morning, over 12,000 households – over 30,000 people – wake up in an IRET home, and every day our people have thousands of interactions that define the IRET experience. Our commitment to our residents as an integrated teteam will drive our financial performance, our overall brand, and value for our stakeholders. Mission: To provide great homes - for our residents, our employees, and our investors. This mission puts the customer and our product at the center of what we do, empowers our people to do the right thing by our residents and each other, and recognizes that, in being the best, we will achieve results for our investors. Vision: To be the premier provider of apartment homes in vibrant communities by focusing on integrity and serving others. Guiding Principles: Do the Right Thing • Be One Team • Serve Others Dare to Win • Embrace Change • Take Action We believe these enduring tenets are core in support of the mission and vision. We are using the mission, vision, and values to guide our actions as we focus on building a sustainable and growing company. I believe the results will be powerful. I look forward to updating you next year. I thank the entire IRET team for their hard work and dedication throughout the year, our Board of Trustees for their guidance and encouragement, and our loyal shareholders for their trust and support. Sincerely, Mark O. Decker, Jr. President & CEO 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 fiscal year ended April 30, 2017 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 (State or other jurisdiction of incorporation or organization) 45-0311232 (IRS Employer Identification No.) 1400 31st Avenue SW, Suite 60 Post Office Box 1988 Minot, ND 58702-1988 (Address of principal executive offices) (Zip code) 701-837-4738 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Common Shares of Beneficial Interest (no par value) - New York Stock Exchange 7.95% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest (no par value) - New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  No Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes  No Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  No Indicate by checkmark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  Yes  No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes  No Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  Large accelerated filer  Non-accelerated filer  Accelerated filer  Smaller reporting company  Emerging growth company If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No The aggregate market value of the Registrant’s outstanding common shares of beneficial interest held by non-affiliates of the Registrant as of October 31, 2016 was $726,914,604 based on the last reported sale price on the New York Stock Exchange on October 31, 2016. For purposes of this calculation, the Registrant has assumed that its trustees and executive officers are affiliates. The number of common shares of beneficial interest outstanding as of June 22, 2017, was 120,622,114. References in this Annual Report on Form 10-K to the “Company,” “IRET,” “we,” “us,” or “our” include consolidated subsidiaries, unless the context indicates otherwise. Documents Incorporated by Reference: Portions of IRET’s definitive Proxy Statement for its 2017 Annual Meeting of Shareholders to be held on September 19, 2017 are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14) hereof. INVESTORS REAL ESTATE TRUST INDEX PART I Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART III Item 10. Trustees, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 13. Certain Relationships and Related Transactions, and Trustee Independence . . . . . . . . . . . . . . . . . . . . . Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART IV PAGE 4 7 21 22 31 31 32 35 36 64 66 66 66 68 68 68 68 68 68 Item 15. Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reports of Independent Registered Public Accounting Firm and Financial Statements . . . . . . . . . . . . . . . . . . . . 68 69 72 F-2 2 Special Note Regarding Forward-Looking Statements Certain statements included in this Annual Report on Form 10-K and the documents incorporated into this document by reference are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements include statements about our plans and objectives, including among other things, our future financial condition, anticipated capital expenditures, anticipated distributions and our belief that we have the liquidity and capital resources necessary to meet our known obligations and to make additional real estate acquisitions and capital improvements when appropriate to enhance long term growth. Forward-looking statements are typically identified by the use of terms such as “believe,” “expect,” “intend,” “project,” “plan,” “anticipate,” “potential,” “may,” “will,” “designed,” “estimate,” “should,” “continue” and other similar expressions. These statements indicate that we have used assumptions that are subject to a number of risks and uncertainties that could cause our actual results or performance to differ materially from those projected. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include: • uncertainties related to the national economy, the real estate industry in general and the economic health of the markets in which we own and operate multifamily and commercial properties, in particular the states of Minnesota and North Dakota, and other markets in which we may invest in the future; • • the economic health of our multifamily and commercial tenants; rental conditions in our markets, including occupancy levels and rental rates, for multifamily and commercial properties; • our inability to renew tenants or obtain new tenants upon expiration of existing leases; • our ability to identify and secure additional properties that meet our criteria for investment; • our ability to complete construction and lease-up of our development projects on schedule and on budget; • our ability to sell our non-core properties on terms that are acceptable; • the level and volatility of prevailing market interest rates; • changes in our operating expenses; • financing risks, such as our inability to obtain debt or equity financing on favorable terms, or at all; the need to fund tenant improvements or other capital expenditures out of operating cash flow; • • our qualification as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and the risk of changes in laws affecting REITs; • • risks associated with complying with applicable laws, including those concerning the environment and access by persons with disabilities; and the availability and cost of casualty insurance for losses. Readers should carefully review our financial statements and the notes thereto, as well as the section entitled “Risk Factors” in Item 1A of this Annual Report on Form 10-K and the other documents we file from time to time with the Securities and Exchange Commission (“SEC”). In light of these uncertainties, the events anticipated by our forward-looking statements might not occur. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause our actual results to differ materially from those contemplated in any forward-looking statements included in this Annual Report on Form 10-K should not be construed as exhaustive. 3 Item 1. Business Overview PART I Investors Real Estate Trust (“we,” “us,” “IRET” or the “Company”) is a self-advised equity REIT, organized under the laws of North Dakota. Since our formation in 1970, our business has consisted of owning and operating income- producing real estate properties. We are structured as an Umbrella Partnership Real Estate Investment Trust, or UPREIT, and we conduct our day-to-day business operations through our operating partnership, IRET Properties, a North Dakota Limited Partnership (“IRET Properties” or the “Operating Partnership”). Our investments mainly consist of multifamily and healthcare properties located primarily in the Midwest states of Minnesota and North Dakota. For the fiscal year ended April 30, 2017, our real estate investments in these two states accounted for 75.4% of our total gross revenue. Our principal executive office is located in Minot, North Dakota. We also have corporate offices in Minneapolis and St. Cloud, Minnesota, and additional property management offices located in the states where we own properties. As of April 30, 2017, we owned interests in 129 properties that were held for investment, consisting of: (1) 87 multifamily properties, containing 12,885 apartment units and having a total real estate investment amount, net of accumulated depreciation of $1.0 billion, and (2) 42 commercial properties, including 29 healthcare properties, and office, retail and industrial properties containing a total of approximately 2.6 million net rentable square feet, and having a total real estate investment amount net of accumulated depreciation of $309.1 million. We held for sale 13 multifamily properties consisting of 327 units, 2 healthcare properties, and 2 retail properties as of April 30, 2017. Our multifamily leases are generally for a one-year term. Our commercial properties are typically leased to tenants under long-term lease arrangements. As of April 30, 2017, no individual tenant accounted for more than 10% of our total real estate rentals. Structure We were organized under the laws of North Dakota on July 31, 1970, and have operated as a REIT under Sections 856- 858 of the Internal Revenue Code since our formation. On February 1, 1997, we were restructured as an UPREIT, and have conducted our daily business operations primarily through IRET Properties. IRET Properties was organized under the laws of North Dakota pursuant to an Agreement of Limited Partnership dated January 31, 1997. IRET Properties is principally engaged in acquiring, owning, operating and leasing real estate. The sole general partner of IRET Properties is IRET, Inc., a North Dakota corporation and our wholly-owned subsidiary. All of our assets (except for qualified REIT subsidiaries) and liabilities were contributed to IRET Properties, through IRET, Inc., in exchange for the sole general partnership interest in IRET Properties. As of April 30, 2017, IRET, Inc. owned an 88.6% interest in IRET Properties. The remaining interest in IRET Properties is held by individual limited partners. Investment Strategy Our business objective is to increase shareholder value by employing a disciplined investment strategy. This strategy is implemented by growing income-producing multifamily assets in desired geographical markets we believe will provide a consistent return on investment for our shareholders. We generally use available cash or our line of credit to acquire real estate. In appropriate circumstances, we also may acquire one or more properties in exchange for our common shares of beneficial interest (“common shares”) or for limited partnership units of IRET Properties (“limited partnership units” or “units”), which are redeemable, at the option of the holder, into cash or, at our sole discretion, our common shares on a one-to-one basis. Our investment strategy focuses on multifamily properties located throughout the Midwest. In June 2016, we announced our intention to transition toward becoming a pure play multifamily REIT and our intention to sell our remaining commercial properties, which consist primarily of healthcare properties. We operate mainly within the states of North Dakota and Minnesota, although we also own properties in Iowa, Kansas, Montana, Nebraska, South Dakota and Wisconsin. 4 Other Activities Distributions to shareholders and holders of limited partnership units. One of the requirements of the Internal Revenue Code for a REIT is that it distribute 90% of its net taxable income, excluding net capital gains, to its shareholders. There is a separate requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. We have distributed, and intend to continue to distribute, enough of our taxable income to satisfy these requirements. Our general practice has been to make cash distributions to our common shareholders and the holders of limited partnership units of approximately 65.0% to 90.0% of our funds from operations and to use the remaining funds for capital improvements or the purchase of additional properties. Distributions to our common shareholders and unitholders in fiscal years 2017 and 2016 totaled approximately 115.0% and 68.4%, respectively, on a per share and unit basis of our funds from operations. See Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for information regarding funds from operations. Issuing senior securities. Depending on future interest rates and market conditions, we may issue additional preferred shares or other senior securities which would have dividend and liquidation preference over our common shares. On April 26, 2004, we issued 1,150,000 shares of 8.25% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series A preferred shares”), and on August 7, 2012, we issued 4,600,000 shares of 7.95% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series B preferred shares”). All of the outstanding Series A preferred shares were redeemed on December 2, 2016. Borrowing money. We rely on borrowed funds in pursuing our investment objectives and goals. We access the debt market either directly or through intermediaries, when necessary, to ensure advantageous financing. We generally use fixed rate debt with terms of 5 to 10 years; however, we have increased the use of variable rate debt, including a new unsecured credit facility, as we align our debt policy to focus on balance sheet flexibility. Target leverage for property- level financings range from 50% to 70% of value with a higher leverage ratio sought when financing a joint venture project. We remain focused on deleveraging in order to help support several key measures including: improving our fixed charge and leverage ratios, freeing assets from leverage for sale purposes, and working towards a stronger, more flexible balance sheet. As of April 30, 2017, our ratio of total indebtedness to total real estate investments 45.1%. Offering securities in exchange for property. Our organizational structure allows us to issue shares and limited partnership units of IRET Properties in exchange for real estate. The limited partnership units generally are redeemable, at the option of the holder, for cash, or, at our option, common shares on a one-for-one basis. Generally, limited partnership units receive the same per unit cash distributions as the per share dividends paid on common shares Our Declaration of Trust, as amended (our “Declaration of Trust”), does not contain any restrictions on our ability to offer limited partnership units of IRET Properties in exchange for property. As a result, any decision to do so is vested solely in our Board of Trustees. For the three most recent fiscal years ended April 30, we have issued the following limited partnership units of IRET Properties in exchange for properties: (in thousands) Limited partnership units issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Value at issuance, net of issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2016 2017 — — $ 18,226 $ 2,559 2015 89 800 Acquiring or repurchasing shares and units. It is our intention to invest only in real estate assets. Our Declaration of Trust does not prohibit the acquisition or repurchase of our common or preferred shares or other securities so long as such activity does not prohibit us from operating as a REIT under the Internal Revenue Code. On December 2, 2016, we completed the redemption of all of our outstanding Preferred A Shares at a redemption price of $25.00 per share plus any accrued but unpaid dividends through the redemption date, for an aggregate redemption price of $29.2 million. Such shares are no longer outstanding as of such date and were delisted from trading on the New York Stock Exchange (“NYSE”). During fiscal year 2017, our Board of Trustees authorized a share repurchase program of up to $50.0 million worth of our common shares and/or Series B preferred shares, under which we repurchased approximately 778,000 common shares on the open market at an average price of $5.77 per share during fiscal year 2017. We did not repurchase any of 5 our Series B preferred shares. Subsequent to April 30, 2017, we repurchased approximately 649,000 common shares at an average price of $5.75 per share through June 22, 2017. During fiscal year 2017, we redeemed for cash approximately 165,000 units held by limited partners at an average price of $5.84 per unit. Subsequent to April 30, 2017, we redeemed approximately 409,000 units for cash at an average price of $5.92 per unit through June 22, 2017. Information about Segments We currently operate in two reportable real estate segments: multifamily and healthcare. For further information on these segments and other related information, see Note 11 of our consolidated financial statements as well as Item 2 Properties and Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K. Employees As of April 30, 2017, we had 523 employees, of which 465 were full-time and 58 were part-time. Environmental Matters and Government Regulation Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances released at a property, and may be held liable to a governmental entity or to third parties for property damage, personal injuries and investigation and clean-up costs incurred in connection with any contamination. In addition, some environmental laws create a lien on a contaminated site in favor of the government for damages and costs it incurs in connection with the contamination. These laws often impose liability without regard to whether the current owner was responsible for, or even knew of, the presence of such substances. It is generally our policy to obtain from independent environmental consultants a “Phase I” environmental audit (which involves visual inspection but not soil or groundwater analysis) on all properties that we seek to acquire. We do not believe that any of our properties are subject to any material environmental contamination. However, no assurances can be given that: • a prior owner, operator or occupant of the properties we own or the properties we acquire did not create a material environmental condition not known to us, which might have been revealed by more in-depth study of the properties; and • future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations) will not result in the imposition of environmental liability upon us. In addition to laws and regulations relating to the protection of the environment, many other laws and governmental regulations are applicable to our properties, and changes in the laws and regulations, or in their interpretation by agencies and the courts, occur frequently. Under the Americans with Disabilities Act of 1990 (the “ADA”), all places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. In addition, the Fair Housing Amendments Act of 1988 (the “FHAA”) requires apartment communities first occupied after March 13, 1990, to be accessible to the handicapped. Non-compliance with the ADA or the FHAA could result in the imposition of fines or an award of damages to private litigants. We believe that those of our properties to which the ADA and/or FHAA apply are substantially in compliance with present ADA and FHAA requirements. Competition Investing in and operating real estate is a competitive business. We compete with other owners and developers of multifamily and commercial properties to attract tenants to our properties. Ownership of competing properties is diversified among other REITs, financial institutions, individuals and public and private companies who are actively engaged in this business. Our multifamily properties compete directly with other rental apartments, as well as with condominiums and single-family homes that are available for rent or purchase in the areas in which our properties are located. Our commercial properties compete with other commercial properties for tenants. Additionally, we compete with other real estate investors, including other REITs, pension and investment funds, partnerships and investment 6 companies, to acquire properties. This competition affects our ability to acquire properties we want to add to our portfolio and the price we pay for acquisitions. Corporate Governance Our Board of Trustees has adopted various policies and initiatives to strengthen our corporate governance practices and increase the transparency of financial reporting, including Corporate Governance Guidelines. Each of the committees of our Board of Trustees operates under written charters, and our independent trustees meet regularly in executive sessions at which only the independent trustees are present. The Board of Trustees has adopted a Code of Conduct applicable to trustees, officers and employees; adopted a Code of Ethics for Senior Financial Officers; and has established processes for shareholders and interested parties to communicate with our Board of Trustees. Additionally, our Audit Committee has established procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by our employees of concerns regarding accounting or auditing matters. The Audit Committee also maintains a policy requiring Audit Committee approval of all audit and non-audit services provided to us by our independent registered public accounting firm. We will disclose any amendment to our Code of Ethics for Senior Financial officers on our website. In the event we waive compliance with the Code of Ethics or Code of Conduct by any of our trustees or officers, we will disclose such waiver in a Form 8-K. Website and Available Information Our internet address is www.iret.com. We make available, free of charge, through the “SEC filings” tab under the Investor Relations/Financial Reporting section of our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such reports are filed with or furnished to the SEC. Current copies of our Code of Conduct; Code of Ethics for Senior Financial Officers; and Charters for the Audit, Compensation, Executive and Nominating and Governance Committees of our Board of Trustees are also available on our website under the “Corporate Governance” tab under the Investor Relations/Corporate Overview section of our website. Copies of these documents are also available to shareholders upon request addressed to the Secretary at Investors Real Estate Trust, P.O. Box 1988, Minot, North Dakota 58702-1988. Information on our website does not constitute part of this Annual Report on Form 10-K. Item 1A. Risk Factors Risks Related to Our Properties and Business Our performance and share value are subject to risks associated with the real estate industry. Our results of operations and financial condition, the value of our real estate assets, and the value of an investment in us are subject to the risks normally associated with the ownership and operation of real estate properties. These risks include, but are not limited to, the following factors which, among others, may adversely affect the income generated by our properties: • downturns in national, regional and local economic conditions (particularly increases in unemployment); • competition from other multifamily, healthcare and other commercial properties; • local real estate market conditions, such as oversupply or reduction in demand for multifamily and commercial space; • changes in interest rates and availability of attractive financing; • declines in the economic health and financial condition of our tenants and our ability to collect rents from our tenants; 7 • vacancies, changes in market rental rates and the need periodically to repair, renovate and re-lease space; • increased operating costs, including real estate taxes, state and local taxes, insurance expense, utilities, and security costs; • significant expenditures associated with each investment, such as debt service payments, real estate taxes and insurance and maintenance costs, which are generally not reduced when circumstances cause a reduction in revenues from a property; • weather conditions, civil disturbances, natural disasters, cyber-attacks, any type of flu or disease-related pandemics, terrorist acts or acts of war which may result in uninsured or underinsured losses; and • decreases in the underlying value of our real estate. The federal conservatorship of Fannie Mae and Freddie Mac and related efforts, along with any changes in laws and regulations affecting the relationship between Fannie Mae and Freddie Mac and the U.S. Government, may adversely affect our business. We depend on the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) for financing for many of our multifamily properties. Fannie Mae and Freddie Mac are U.S. Government-sponsored entities, or GSEs, but their guarantees are not backed by the full faith and credit of the United States. In September 2008, Fannie Mae and Freddie Mac were placed in federal conservatorship. The problems faced by Fannie Mae and Freddie Mac resulting in their being placed into federal conservatorship stirred debate among some federal policy makers regarding the continued role of the U.S. Government in providing liquidity for the residential mortgage market. It is unclear how future legislation may impact Fannie Mae and Freddie Mac’s involvement in multifamily financing. The scope and nature of the actions that the U.S. Government may undertake with respect to the future of Fannie Mae and Freddie Mac are unknown and will continue to evolve. It is possible that each of Fannie Mae and Freddie Mac could be dissolved and the U.S. Government could decide to stop providing liquidity support of any kind to the multifamily mortgage market. Future legislation could further change the relationship between Fannie Mae and Freddie Mac and the U.S. Government, and could also nationalize or eliminate such GSEs entirely. Any law affecting these GSEs may create market uncertainty and have the effect of reducing the credit available for financing multifamily properties. The loss or reduction of this important source of credit would be likely to result in higher loan costs for us, and could result in inability to borrow or refinance maturing debt, all of which could materially adversely affect our business, operations and financial condition. Our property acquisition activities subject us to various risks which could adversely affect our operating results. We have acquired in the past and intend to continue to pursue the acquisition of properties and portfolios of properties, including large portfolios that could increase our size and result in alterations to our capital structure. Our acquisition activities and their success are subject to numerous risks, including, but not limited to: • even if we enter into an acquisition agreement for a property, it is subject to customary closing conditions, including completion of due diligence investigations, and we may be unable to complete that acquisition after making a non-refundable deposit and incurring other acquisition-related costs; • we may be unable to obtain financing for acquisitions on favorable terms or at all; • acquired properties may fail to perform as expected; • the actual costs of repositioning or redeveloping acquired properties may be greater than our estimates; and • we may be unable to quickly and efficiently integrate new acquisitions into our existing operations. These risks could have an adverse effect on our results of operations and financial condition and the amount of cash available for payment of distributions. Acquired properties may subject us to unknown liabilities which could adversely affect our operating results. We may acquire properties subject to liabilities without any recourse, or with only limited recourse, against prior owners or other third parties with respect to unknown liabilities. As a result, if liability were asserted against us based upon ownership of 8 these properties, we might have to pay substantial sums to settle or contest it, which could adversely affect our results of operations and cash flows. Unknown liabilities with respect to acquired properties might include liabilities for clean-up of undisclosed environmental contamination; claims by tenants, vendors or other persons against the former owners of the properties; liabilities incurred in the ordinary course of business; and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties. Our geographic concentration in Minnesota and North Dakota may result in losses due to our significant exposure to the effects of economic and real estate conditions in those markets. For the fiscal year ended April 30, 2017, we received approximately 75.4% of our gross revenue from properties in Minnesota and North Dakota. As a result of this concentration, we are subject to substantially greater risk than if our investments were more geographically dispersed. Specifically, we are more significantly exposed to the effects of economic and real estate conditions in those particular markets, such as building by competitors, local vacancy and rental rates and general levels of employment and economic activity. To the extent that weak economic or real estate conditions affect Minnesota and/or North Dakota more severely than other areas of the country, our financial performance could be negatively impacted. If we are not able to renew leases or enter into new leases on favorable terms or at all as our existing leases expire, our revenue, operating results and cash flows will be reduced. We may be unable to renew leases with our existing tenants or enter into new leases with new tenants due to economic and other factors as our existing leases expire or are terminated prior to the expiration of their current terms. As a result, we could lose a significant source of revenue while remaining responsible for the payment of our obligations. In addition, even if we were able to renew existing leases or enter into new leases in a timely manner, the terms of those leases may be less favorable to us than the terms of expiring leases, because the rental rates of the renewal or new leases may be significantly lower than those of the expiring leases, or tenant installation costs, including the cost of required renovations or concessions to tenants, may be significant. If we are unable to enter into lease renewals or new leases on favorable terms or in a timely manner for all or a substantial portion of space that is subject to expiring leases, our revenue, operating results and cash flows will be adversely affected. As a result, our ability to make distributions to the holders of our shares of beneficial interest may be adversely affected. As of April 30, 2017, approximately 916 of our 13,212 apartment units, or 6.9%, were vacant. Approximately 95,000 square feet, or 7.2% of our healthcare property square footage, was vacant. As of April 30, 2017, leases covering approximately 6.8% of our healthcare properties net rentable square footage will expire in fiscal year 2018, 5.8% in fiscal year 2019, 7.6% in fiscal year 2020, 7.8% in fiscal year 2021 and 6.2% in fiscal year 2022, assuming that none of the tenants exercise future renewal options and excluding the effect of early renewals completed on existing leases. We face potential adverse effects from commercial tenant bankruptcies or insolvencies. The bankruptcy or insolvency of our commercial tenants may adversely affect the income produced by our properties. If a tenant defaults, we may experience delays and incur substantial costs in enforcing our rights as landlord. If a tenant files for bankruptcy, we cannot evict the tenant solely because of such bankruptcy. A court, however, may authorize the tenant to reject and terminate its lease with us. In such a case, our claim against the tenant for unpaid future rent would be subject to a statutory cap that might be substantially less than the remaining rent actually owed under the lease, and it is unlikely that a bankrupt tenant would pay in full amounts it owes us under a lease. This shortfall could adversely affect our cash flow and results of operations. If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely rental payments. Under some circumstances, we may agree to partially or wholly terminate the lease in advance of the termination date in consideration for a lease termination fee that is less than the agreed rental amount. Additionally, without regard to the manner in which a lease termination occurs, we are likely to incur additional costs in the form of tenant improvements and leasing commissions in our efforts to lease the space to a new tenant, as well as possibly lower rental rates reflective of declines in market rents. Because real estate investments are generally illiquid, and various factors limit our ability to dispose of assets, we may not be able to sell properties when appropriate. Real estate investments are relatively illiquid and, therefore, we have limited ability to change our portfolio of properties quickly in response to our strategic plan and changes in economic or other conditions. In addition, the prohibitions under the federal income tax laws on REITs holding property for sale and related regulations may affect our ability to sell properties. Under certain circumstances, the Internal Revenue Code imposes certain penalties on a REIT that sells property held for less than two years and limits the number of properties it can sell in a given year. Our ability to dispose of assets may also be limited by constraints on our ability to utilize disposition proceeds to make acquisitions on financially attractive terms, and the requirement that we take additional impairment charges on certain assets. More specifically, we are required to distribute or pay tax on all capital gains generated from the sale of assets, and, in addition, a significant number of our properties were acquired using limited 9 partnership units of IRET Properties, our operating partnership, and are subject to certain agreements which restrict our ability to sell such properties in transactions that would create current taxable income to the former owners. As a result, we are motivated to structure the sale of these assets as tax-free exchanges. To accomplish this, we must identify attractive re-investment opportunities. These considerations impact our decisions on whether or not to dispose of certain of our assets. The restrictive terms of indebtedness may cause acceleration of debt payments and constrain our ability to conduct certain transactions. At April 30, 2017, we and our Operating Partnership had outstanding borrowings of approximately $794.0 million. Some of this indebtedness contains financial covenants as to fixed charge coverage ratios, maximum secured debt, maintenance of unencumbered asset value, and total debt to gross assets, among others. In addition, some covenants present new constraints as we navigate investments and dispositions with respect to our ability to invest in smaller markets, add incremental secured and recourse debt and add overall leverage. In the event that an event of default occurs, our lenders may declare borrowings under the loan agreements to be due and payable immediately, which could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt. Our real estate assets may be subject to impairment charges. We periodically evaluate the recoverability of the carrying value of our real estate assets under accounting principles generally accepted in the United States of America (“GAAP”). Factors considered in evaluating impairment of our real estate assets held for investment include significant declines in net operating income, recurring net operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Generally, a real estate asset held for investment is not considered impaired if the estimated undiscounted future cash flows of the asset over its estimated holding period are in excess of the asset’s net book value at the balance sheet date. Assumptions used to estimate annual and residual cash flow and the estimated holding period of such assets require the judgment of management. There can be no assurance that we will not take charges in the future related to the impairment of our assets. Any future impairment charges could have a material adverse effect on our results of operations. We face risks associated with land holdings and related activities. We hold land for future development and may in the future acquire additional land holdings. Real estate markets are highly uncertain and, as a result, the value of undeveloped land may fluctuate significantly. If there are subsequent changes in the fair value of our land holdings which we determine is less than the carrying basis of our land holdings reflected in our financial statements, we may be required to take future impairment changes which could have a material adverse effect on our results of operations. Capital markets and economic conditions can materially affect our financial condition and results of operations, the value of our equity securities, and our ability to sustain payment of our distribution at current levels. Many factors affect the value of our equity securities and our ability to make or maintain at current levels distributions to the holders of our shares of beneficial interest, including the state of the capital markets and the economy, which in recent years have negatively affected substantially all businesses, including ours. Demand for office, industrial, and retail space has declined nationwide due to bankruptcies, downsizing, layoffs and cost cutting. The availability of credit has been and may in the future again be adversely affected by illiquid credit markets. Regulatory pressures and the burden of troubled and uncollectible loans led some lenders and institutional investors to reduce, and in some cases, cease to provide funding to borrowers. If these market conditions recur, they may limit our ability and the ability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs, which may materially affect our financial condition and results of operations and the value of our equity securities. Declining rental revenues from our properties due to persistent negative economic conditions may have a material adverse effect on our ability to make distributions to the holders of our shares of beneficial interest. In fiscal years 2017 and 2016, distributions to our common shareholders and unitholders of IRET Properties in cash and common shares pursuant to our Distribution Reinvestment and Share Purchase Plan (DRIP) totaled approximately 89.8% and 107.2%, respectively, of our net cash provided by operating activities. 10 Inability to manage rapid growth effectively may adversely affect our operating results. We have experienced significant growth at various times in the past, principally through the acquisition of additional real estate properties. Subject to our ability to raise equity capital and issue limited partnership units of IRET Properties and identify suitable investment properties, we intend to continue our acquisition of real estate properties. Effective management of rapid growth presents challenges, including: • • • the need to expand our management team and staff; the need to enhance internal operating systems and controls; and the ability to consistently achieve targeted returns on individual properties. We may not be able to maintain similar rates of growth in the future or manage our growth effectively. Additionally, an inability to make accretive property acquisitions may adversely affect our ability to increase our net income per share. The acquisition of additional real estate properties is critical to our ability to increase our net income. If we are unable to make real estate acquisitions on terms that meet our financial and strategic objectives, whether due to market conditions, a changed competitive environment or unavailability of capital, our ability to increase our net income may be materially and adversely affected. Our failure to do so may have a material adverse effect on our financial condition and results of operations and ability to make distributions to the holders of our shares of beneficial interest. Competition may negatively impact our earnings. We compete with many kinds of institutions, including other REITs, private partnerships, individuals, pension funds and banks, for tenants and investment opportunities. Many of these institutions are active in the markets in which we invest and have greater financial and other resources that may be used to compete against us. With respect to tenants, this competition may affect our ability to lease our properties, the price at which we are able to lease our properties and the cost of required renovations or tenant improvements. With respect to acquisition and development investment opportunities, this competition may cause us to pay higher prices for new properties than we otherwise would have paid, or may prevent us from purchasing a desired property at all. We may be unable to successfully acquire or develop properties and expand our operations into new or existing markets. We intend to explore acquisitions or developments of properties in new and existing geographic markets. These acquisitions and developments could divert our attention from our existing properties, and we may be unable to retain key employees or attract highly qualified new employees. In addition, we may not possess familiarity with the dynamics and prevailing conditions of any new geographic markets which could adversely affect our ability to successfully expand into or operate within those markets. For example, new markets may have different insurance practices, reimbursement rates and local real estate, zoning and development regulations than those with which we are familiar. We may find ourselves more dependent on third parties in new markets because our distance could hinder our ability to directly and efficiently manage and otherwise monitor new properties in new markets. Our expansion into new markets could result in unexpected costs or delays as well as lower occupancy rates and other adverse consequences. We may not be successful in identifying suitable properties or other assets which meet our acquisition or development criteria or in consummating acquisitions or developments on satisfactory terms or at all for a number of reasons, including, among other things, unsatisfactory results of our due diligence investigations, failure to obtain financing for the acquisition or development on favorable terms or at all, and our misjudgment of the value of the opportunities. We may also be unable to successfully integrate the operations of acquired properties, maintain consistent standards, controls, policies and procedures, or realize the anticipated benefits of the acquisitions within the anticipated timeframe or at all. If we are unsuccessful in expanding into new or our existing markets, it could adversely affect our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares. High leverage on our overall portfolio may result in losses. The amount of leverage on our overall portfolio may expose us to cash flow problems if rental income decreases. Under those circumstances, in order to pay our debt obligations we might be required to sell properties at a loss or be unable to make distributions or decrease distributions to holders of our shares of beneficial interest. A failure to pay amounts due may result in a default on our obligations and the loss of the property through foreclosure. Additionally, our degree of leverage could adversely affect our ability to obtain additional financing and may have an adverse effect on the market price of our common shares. Our inability to renew, repay or refinance our debt may result in losses. We incur a significant amount of debt in the ordinary course of our business and in connection with acquisitions of real properties. In addition, because we have a 11 limited ability to retain earnings as a result of the REIT distribution requirements, we will generally be required to refinance debt that matures with additional debt or equity. We are subject to the normal risks associated with debt financing, including the risks that: • our cash flow will be insufficient to meet required payments of principal and interest; • we will not be able to renew, refinance or repay our indebtedness when due; and • the terms of any renewal or refinancing will be less favorable than the terms of our current indebtedness. These risks increase when credit markets are tight. In general, when the credit markets are constrained, we may encounter resistance from lenders when we seek financing or refinancing for properties or proposed acquisitions, and the terms of such financing or refinancing are likely to be less favorable to us than the terms of our current indebtedness. We anticipate that only a small portion of the principal of our debt will be repaid prior to maturity, and we will need to refinance a significant portion of our outstanding debt as it matures. We cannot guarantee that any refinancing of debt with other debt will be possible on terms that are favorable or acceptable to us. If we cannot refinance, extend or pay principal payments due at maturity with the proceeds of other capital transactions, such as new equity capital, our cash flows may not be sufficient in all years to repay debt as it matures. Additionally, if we are unable to refinance our indebtedness on acceptable terms, or at all, we may be forced to dispose of one or more of our properties on disadvantageous terms, which may result in losses to us. These losses could have a material adverse effect on us, our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments or refinance the debt at maturity, the mortgagee could foreclose upon the property, appoint a receiver and receive an assignment of rents and leases or pursue other remedies, including taking ownership of the property, all with a consequent loss of revenues and asset value. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Internal Revenue Code. As of April 30, 2017, approximately 8.4% of our mortgage debt, including mortgage debt on properties held for sale, is due for repayment in fiscal year 2018. As of April 30, 2017, we had approximately $57.4 million of principal payments and approximately $31.2 million of interest payments due in fiscal year 2018 on fixed and variable-rate mortgages secured by our real estate. Additionally, as of April 30, 2017, we had $57.1 million outstanding and a credit limit of $206.0 million under our multi-bank line of credit, which has a maturity date of January 31, 2021. The cost of our indebtedness may increase. Portions of our fixed-rate indebtedness incurred for past property acquisitions come due on a periodic basis. Rising interest rates could limit our ability to refinance this existing debt when it matures, and would increase our interest costs, which could have a material adverse effect on us, our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. In addition, we have incurred, and we expect to continue to incur, indebtedness that bears interest at a variable rate. As of April 30, 2017, $57.7 million, or approximately 8.4%, of the principal amount of our total mortgage indebtedness was subject to variable interest rates agreements, and all of our construction loan indebtedness was subject to variable interest rates. Additionally, our multi-bank line of credit bears interest at a rate based either on a margin percentage over the Lender’s Base Rate, ranging from 0.6% to 1.25%, or on a margin percentage over LIBOR, ranging from 1.6% to 2.25%, based on our total leverage ratio. If short-term interest rates rise, our debt service payments on adjustable rate debt would increase, which would lower our net income and could decrease our distributions to the holders of our shares of beneficial interest. Our current or future insurance may not protect us against possible losses. We carry comprehensive liability, fire, extended coverage and rental loss insurance with respect to our properties at levels that we believe to be adequate and comparable to coverage customarily obtained by owners of similar properties. However, the coverage limits of our current or future policies may be insufficient to cover the full cost of repair or replacement of all potential losses. Moreover, this level of coverage may not continue to be available in the future or, if available, may be available only at unacceptable cost or with unacceptable terms. Additionally, there may be certain extraordinary losses, such as those resulting from civil unrest, terrorism or environmental contamination, that are not generally, or fully, insured against because they are either uninsurable or not economically insurable. For example, we do not currently carry insurance against losses as a result of environmental 12 contamination. Should an uninsured or underinsured loss occur to a property, we could be required to use our own funds for restoration or lose all or part of our investment in, and anticipated revenues from, the property. In any event, we would continue to be obligated on any mortgage indebtedness on the property. Any loss could have a material adverse effect on us, our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. In addition, in most cases we have to renew our insurance policies on an annual basis and negotiate acceptable terms for coverage, exposing us to the volatility of the insurance markets, including the possibility of rate increases. Any material increase in insurance rates or decrease in available coverage in the future could adversely affect our business and financial condition and results of operations, which could cause a decline in the market value of our securities. We have significant investments in healthcare properties and adverse trends in healthcare provider operations may negatively affect our lease revenues from these properties. We own a significant number of specialty healthcare properties. As of April 30, 2017, our real estate portfolio held for investment included 29 healthcare properties, with a total real estate investment amount, net of accumulated depreciation, of $237.0 million, or approximately 17.7% of the total real estate investment amount, net of accumulated depreciation, of our entire real estate portfolio held for investment. Additionally, as of April 30, 2017, we held for sale two senior housing properties. The healthcare industry continues to experience changes in the demand for, and methods of delivery of, healthcare services; changes in third- party reimbursement policies; significant unused capacity in certain areas, which has created substantial competition for patients among healthcare providers in those areas; continuing pressure by private and governmental payors to reduce payments to providers of services; and increased scrutiny of billing, referral and other practices by federal and state authorities. Sources of revenue for our healthcare property tenants may include the federal Medicare program, state Medicaid programs, private insurance carriers and health maintenance organizations, among others. Efforts by such payors to reduce healthcare costs will likely continue, which may result in reductions or slower growth in reimbursement for certain services provided by some of our tenants. These factors may adversely affect the economic performance of some or all of our healthcare services tenants and, in turn, our lease revenues. In addition, if we or our tenants terminate the leases for these properties, or our tenants lose their regulatory authority to operate such properties, we may not be able to locate suitable replacement tenants to lease the properties for their specialized uses. Alternatively, we may be required to spend substantial amounts to adapt the properties to other uses. Any loss of revenues and/or additional capital expenditures occurring as a result could hinder our ability to make distributions to the holders of our shares of beneficial interest. New federal healthcare reform laws may adversely affect the operators and tenants of our healthcare (including senior housing) properties. On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act”) and the Health Care and Education Reconciliation Act of 2010, which amends the Affordable Care Act (collectively with other subsequently enacted federal health care laws and regulations, the “Health Reform Laws”). The Health Reform Laws contain various provisions that may directly impact us or the operators and tenants of our healthcare properties. Some provisions of the Health Reform Laws may have a positive impact on our operators’ or tenants’ revenues, by, for example, increasing coverage of uninsured individuals, while others may have a negative impact on the reimbursement of our operators or tenants by, for example, altering the market basket adjustments for certain types of health care facilities. The Health Reform Laws also enhance certain fraud and abuse penalty provisions that could apply to our operators and tenants, in the event of one or more violations of the federal health care regulatory laws. In addition, there are provisions that impact the health coverage that we and our operators and tenants provide to our respective employees. The Health Reform Laws also provide additional Medicaid funding to allow states to carry out the expansion of Medicaid coverage to certain financially-eligible individuals beginning in 2014, and have also permitted states to expand their Medicaid coverage to these individuals since April 1, 2010, if certain conditions are met. On June 28, 2012, the United States Supreme Court upheld the individual mandate of the Health Reform Laws but partially invalidated the expansion of Medicaid. The ruling on Medicaid expansion will allow states not to participate in the expansion—and to forego funding for the Medicaid expansion—without losing their existing Medicaid funding. Given that the federal government substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option. The participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues, through new patients, but could also further strain state budgets. While the federal government paid for approximately 100% of those additional costs from 2014 to 2016, states now are expected to pay for part of those additional costs. We currently cannot predict the impact that this far-reaching, landmark legislation will have on our business and the businesses and operations of our tenants. Any loss of revenues and/or additional expenditures incurred by us or by operators and tenants of our properties as a result of the Health Care Reform 13 Acts could adversely affect our cash flow and results of operations and have a material adverse effect on our ability to make distributions to the holders of our shares of beneficial interest. President Trump and leadership in Congress have publicly stated their intention to repeal and replace the Affordable Care Act. On January 20, 2017, President Trump issued an Executive Order stating that it is the administration’s official policy to repeal the Affordable Care Act and instructing the Secretary of Health and Human Services and the heads of all other executive departments and agencies with authority and responsibility under the Affordable Care Act to, among other matters, delay implementation of or grant an exemption from any provision of the Affordable Care Act that would impose a fiscal burden on any state or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, and others. We cannot predict the effect of this Executive Order on the Affordable Care Act, or whether any of these attempts to amend, modify, or repeal and replace the law will be successful. The House passed a new healthcare bill in May 2017 repealing much of the Affordable Care Act and Senate Republicans introduced a healthcare overhaul plan in June 2017. We cannot predict how the Affordable Care Act might be amended or modified, either through the legislative or judicial process, and how any such modification might impact our tenants’ operations or the net effect of this law on us. If the operations, cash flows or financial condition of our operators and tenants are materially adversely impacted by any repeal or modification of the law, our revenue and operations may be adversely affected as well. Our healthcare-related tenants may be subject to significant legal actions that could subject them to increased operating costs and substantial uninsured liabilities, which may affect their ability to pay their rent payments to us, and we could be subject to healthcare industry violations. As is typical in the healthcare industry, our tenants may become subject to claims that their services have resulted in patient injury or other adverse effects. Many of these tenants may have experienced an increasing trend in the frequency and severity of professional liability and general liability insurance claims and litigation asserted against them. The insurance coverage maintained by these tenants may not cover all claims made against them nor continue to be available at a reasonable cost, if at all. In some states, insurance coverage for the risk of punitive damages arising from professional liability and general liability claims and/or litigation may not, in certain cases, be available to these tenants due to state law prohibitions or limitations of availability. As a result, these types of tenants of our healthcare properties operating in these states may be liable for punitive damage awards that are either not covered or are in excess of their insurance policy limits. We also believe that there has been, and will continue to be, an increase in governmental investigations of certain healthcare providers, as well as an increase in enforcement actions resulting from these investigations. Insurance is not available to cover such losses. Any adverse determination in a legal proceeding or governmental investigation, any settlements of such proceedings or investigations in excess of insurance coverage, whether currently asserted or arising in the future, could have a material adverse effect on a tenant’s financial condition. If a tenant is unable to obtain or maintain insurance coverage, if judgments are obtained or settlements reached in excess of the insurance coverage, if a tenant is required to pay uninsured punitive damages, or if a tenant is subject to an uninsurable government enforcement action or investigation, the tenant could be exposed to substantial additional liabilities, which may affect the tenant’s ability to pay rent, which in turn could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our shareholders and the trading price of our common shares. We could also be subject to costly government investigations or other enforcement actions which could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our shareholders and the trading price of our common shares. Adverse changes in applicable laws may affect our potential liabilities relating to our properties and operations. Increases in real estate taxes and income, service and transfer taxes cannot always be passed through to all tenants in the form of higher rents. As a result, any increase may adversely affect our cash available for distribution, our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. Similarly, changes in laws that increase the potential liability for environmental conditions existing on properties, that increase the restrictions on discharges or other conditions or that affect development, construction and safety requirements may result in significant unanticipated expenditures that could have a material adverse effect on us, our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. In addition, future enactment of rent control or rent stabilization laws or other laws regulating multifamily properties may reduce rental revenues or increase operating costs. 14 Complying with laws benefiting disabled persons or other safety regulations and requirements may affect our costs and investment strategies. Federal, state and local laws and regulations designed to improve disabled persons’ access to and use of buildings, including the Americans with Disabilities Act of 1990, may require modifications to, or restrict renovations of, existing buildings. Additionally, these laws and regulations may require that structural features be added to buildings under construction. Legislation or regulations that may be adopted in the future may impose further burdens or restrictions on us with respect to improved access to, and use of these buildings by, disabled persons. Noncompliance could result in the imposition of fines by government authorities or the award of damages to private litigants. The costs of complying with these laws and regulations may be substantial, and limits or restrictions on construction, or the completion of required renovations, may limit the implementation of our investment strategy or reduce overall returns on our investments. This could have an adverse effect on us, our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. Our properties are also subject to various other federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. Additionally, in the event that existing requirements change, compliance with future requirements may require significant unanticipated expenditures that may adversely affect our cash flow and results of operations. We may be responsible for potential liabilities under environmental laws. Under various federal, state and local laws, ordinances and regulations, we, as a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, hazardous or toxic substances in, on, around or under that property. These laws may impose liability without regard to whether we knew of, or were responsible for, the presence of the hazardous or toxic substances. The presence of these substances, or the failure to properly remediate any property containing these substances, may adversely affect our ability to sell or rent the affected property or to borrow funds using the property as collateral. In arranging for the disposal or treatment of hazardous or toxic substances, we may also be liable for the costs of removal of, or remediation of, these substances at that disposal or treatment facility, whether or not we own or operate the facility. In connection with our current or former ownership (direct or indirect), operation, management, development and/or control of real properties, we may be potentially liable for removal or remediation costs with respect to hazardous or toxic substances at those properties, as well as certain other costs, including governmental fines and claims for injuries to persons and property. A finding of liability for an environmental condition as to any one or more properties could have a material adverse effect on us, our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. Environmental laws also govern the presence, maintenance and removal of asbestos, and require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos; notify and train those who may come into contact with asbestos; and undertake special precautions if asbestos would be disturbed during renovation or demolition of a building. Indoor air quality issues may also necessitate special investigation and remediation. These air quality issues can result from inadequate ventilation, chemical contaminants from indoor or outdoor sources, or biological contaminants such as molds, pollen, viruses and bacteria. Such asbestos or air quality remediation programs could be costly, necessitate the temporary relocation of some or all of the property’s tenants or require rehabilitation of an affected property. It is generally our policy to obtain a Phase I environmental study on each property that we seek to acquire. A Phase I environmental study generally includes a visual inspection of the property and the surrounding areas, an examination of current and historical uses of the property and the surrounding areas and a review of relevant state and federal documents, but does not involve invasive techniques such as soil and ground water sampling. If the Phase I indicates any possible environmental problems, our policy is to order a Phase II study, which involves testing the soil and ground water for actual hazardous substances. However, Phase I and Phase II environmental studies, or any other environmental studies undertaken with respect to any of our current or future properties, may not reveal the full extent of potential environmental liabilities. We currently do not carry insurance for environmental liabilities. We may be unable to retain or attract qualified management. We are dependent upon our senior officers for essentially all aspects of our business operations. Our senior officers have experience in the specialized business segments in which we operate, and the loss of them would likely have a material adverse effect on our operations, and could adversely impact our relationships with lenders, industry personnel and potential tenants. We do not have employment contracts with any of our senior officers. As a result, any senior officer may terminate his or her relationship with us at any time, 15 without providing advance notice. If we fail to manage effectively a transition to new personnel, or if we fail to attract and retain qualified and experienced personnel on acceptable terms, our business and prospects could be harmed. The level of oil and gas drilling in the Bakken Shale Formation has declined substantially from peak levels five years ago and has adversely impacted our apartments in western North Dakota. This condition could persist for an extended period of time. We have ownership interests in three apartment projects totaling 477 units in Williston, ND, the heart of the Bakken Shale Formation. The economy of Williston is significantly dependent on the oil and gas industry. During the fiscal year ended April 30, 2017, while we experienced increased occupancy compared to the prior fiscal year, it was offset by a material decrease in our rents. During the fiscal year ended April 30, 2017, we recognized impairment of $54.2 million on our three multifamily properties and one parcel of unimproved land in Williston, ND. We also have ownership interests in 1,039 units in Minot, ND that have been impacted to a lesser extent. Oil drilling and production are impacted by factors beyond our control, including: the demand for and prices of crude oil and natural gas; environmental regulation and enforcement; producers’ finding and development costs of reserves; producers’ desire and ability to obtain necessary permits in a timely and economic manner; oil and natural gas field characteristics and production performance; and transportation and capacity constraints on natural gas, crude oil and natural gas liquids pipelines from the producing areas. Oil field activity could decline further in North Dakota as a result of any or all of these factors, which could have a material adverse effect on our western North Dakota properties. In addition, we have various mortgage debt on assets in western North Dakota with various operating income covenant requirements. Compliance with such covenants may be at risk if the material reductions in rents and vacancies continue. We do not believe these mortgage loans to be material to our operations, but if we are unable to comply with such covenants, we could be required to pay down such loans or seek a remedy with an escrow to relieve debt service payments. Risks related to properties under construction or development may adversely affect our financial performance. Our development and construction activities involve significant risks that may adversely affect our cash flow and results of operations, and consequently our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. In connection with our renovation, redevelopment, development and related construction activities, we may be unable to obtain, or may suffer delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations. These denials or delays could result in increased costs or our abandonment of projects. In addition, we may not be able to obtain financing on favorable terms, which may prevent us from proceeding with our development activities, and we may not be able to complete construction and lease-up of a property on schedule, which could result in increased debt service expense or construction costs. Additionally, the time required for development, construction and lease-up means that we may have to wait years for significant cash returns. Because we are required to make cash distributions to our shareholders, if our cash flow from operations or refinancings is not sufficient, we may be forced to borrow additional money to fund such distributions. Newly developed properties may not produce the cash flow that we expect, which could adversely affect our overall financial performance. In deciding whether to develop a particular property, we make assumptions regarding the expected future performance of that property. In particular, we estimate the return on our investment based on expected occupancy and rental rates. If our financial projections with respect to a new property are inaccurate, and the property is unable to achieve the expected occupancy and rental rates, it may fail to perform as we had expected. Our estimate of the costs of repositioning or redeveloping an acquired property may also prove to be inaccurate, which may result in our failure to meet our profitability goals. Risks related to joint ventures may adversely affect our financial performance and results of operations. We have entered into, and may continue in the future to enter into, partnerships or joint ventures with other persons or entities. Joint venture investments involve risks that may not be present with other methods of ownership, including the possibility: that our partner might become insolvent, refuse to make capital contributions when due or otherwise fail to meet its obligations, which may result in certain liabilities to us for guarantees and other commitments; that our partner might at any time have economic or other business interests or goals that are or become inconsistent with our interests or goals; that we could become engaged in a dispute with our partner, which could require us to expend additional resources to resolve such disputes and could have an adverse impact on the operations and profitability of the joint venture; and that our partner may be in a position to take action or withhold consent contrary to our instructions or requests. In addition, our ability to transfer our interest in a joint venture to a third party may be restricted. In some instances, we and/or our partner may have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction. Our ability to 16 acquire our partner’s interest may be limited if we do not have sufficient cash, available borrowing capacity or other capital resources. In such event, we may be forced to sell our interest in the joint venture when we would otherwise prefer to retain it. Joint ventures may require us to share decision-making authority with our partners, which could limit our ability to control the properties in the joint ventures. Even when we have a controlling interest, certain major decisions may require partner approval, such as the sale, acquisition or financing of a property. We face risks associated with security breaches through cyber-attacks, cyber intrusions, or otherwise, which could pose a risk to our systems, networks and services. We face risks associated with security breaches or disruptions, whether through cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, or persons inside our organization. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. In the normal course of business, we and our service providers (including service providers engaged in providing web hosting, property management, leasing, accounting and/or payroll software/services) collect and retain certain personal information provided by our tenants, employees and vendors. We also rely extensively on computer systems to process transactions and manage our business. While we and our service providers employ a variety of data security measures to protect confidential information on our systems and periodically review and improve our data security measures, we cannot assure that we or our service providers will be able to prevent unauthorized access to this personal information. There can be no assurance that our efforts to maintain the security and integrity of the information we and our service providers collect and our and their computer systems will be effective or that attempted security breaches or disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not be detected and, in fact, may not be detected. Accordingly, we and our service providers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us and our service providers to entirely mitigate this risk. A security breach or other significant disruption involving computer networks and related systems could cause substantial costs and other negative measures including litigation, remediation costs, costs to deploy additional protection strategies, compromising of confidential information, and reputational damage adversely affecting investor confidence, which could adversely impact our financial condition. Risks Related to Our Tax Status We may incur tax liabilities as a consequence of failing to qualify as a REIT. Although our management believes that we are organized and have operated and are operating in such a manner to qualify as a “real estate investment trust,” as that term is defined under the Internal Revenue Code, we may not in fact have operated, or may not be able to continue to operate, in a manner to qualify or remain so qualified. Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which there are only limited judicial or administrative interpretations. Even a technical or inadvertent mistake could endanger our REIT status. The determination that we qualify as a REIT requires an ongoing analysis of various factual matters and circumstances, some of which may not be within our control. For example, in order to qualify as a REIT, at least 95% of our gross income in any year must come from certain passive sources that are itemized in the REIT tax laws, and we are prohibited from owning specified amounts of debt or equity securities of some issuers. Thus, to the extent revenues from non-qualifying sources, such as income from third-party management services, represent more than five percent of our gross income in any taxable year, we will not satisfy the 95% income test and may fail to qualify as a REIT, unless certain relief provisions contained in the Internal Revenue Code apply. Even if relief provisions apply, however, a tax would be imposed with respect to excess net income. We are also required to make distributions to the holders of our securities of at least 90% of our REIT taxable income, excluding net capital gains. The fact that we hold substantially all of our assets (except for qualified REIT subsidiaries) through IRET Properties, our operating partnership, and its subsidiaries, and our ongoing reliance on factual determinations, such as determinations related to the valuation of our assets, further complicates the application of the REIT requirements for us. Additionally, if IRET Properties or one or more of our subsidiaries is determined to be taxable as a corporation, we may fail to qualify as a REIT. Either our failure to qualify as a REIT, for any reason, or the imposition of taxes on excess net income from non-qualifying sources, could have a material adverse effect on us, our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. Furthermore, new legislation, regulations, administrative interpretations or court decisions could change the tax laws with respect to our qualification as a REIT or the federal income tax consequences of our qualification. 17 If we failed to qualify as a REIT, we would be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates, could be subject to increased state and local taxes and, unless entitled to relief under applicable statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year during which we lost our qualification, which would likely have a material adverse effect on us, our ability to make distributions to the holders of our shares of beneficial interest and our ability to pay amounts due on our debt. This treatment would reduce funds available for investment or distributions to the holders of our securities because of the additional tax liability to us for the year or years involved. In addition, we would no longer be able to deduct, and would not be required to make, distributions to holders of our securities. To the extent that distributions to the holders of our securities had been made in anticipation of qualifying as a REIT, we might be required to borrow funds or to liquidate certain investments to pay the applicable tax. Failure of our operating partnership to qualify as a partnership would have a material adverse effect on us. We believe that IRET Properties, our operating partnership, qualifies as a partnership for federal income tax purposes. No assurance can be given, however, that the Internal Revenue Service will not challenge its status as a partnership for federal income tax purposes or that a court would not sustain such a challenge. If the Internal Revenue Service were to be successful in treating IRET Properties as an entity that is taxable as a corporation (such as a publicly-traded partnership taxable as a corporation), we would cease to qualify as a REIT because the value of our ownership interest in IRET Properties would exceed 5% of our assets and because we would be considered to hold more than 10% of the voting securities and value of the outstanding securities of another corporation. Also, the imposition of a corporate tax on IRET Properties would reduce significantly the amount of cash available for distribution by it. Certain provisions of our Declaration of Trust may limit a change in control and deter a takeover. In order to maintain our qualification as a REIT, our Declaration of Trust provides that any transaction that would result in our disqualification as a REIT under Section 856 of the Internal Revenue Code, including any transaction that would result in (i) a person owning in excess of the ownership limit of 9.8%, in number or value, of our outstanding shares of beneficial interest, (ii) less than 100 people owning our shares of beneficial interest, (iii) our being “closely held” within the meaning of Section 856(h) of the Internal Revenue Code, or (iv) 50% or more of the fair market value of our shares of beneficial interest being held by persons other than “United States persons,” as defined in Section 7701(a)(30) of the Internal Revenue Code, will be void ab initio. If the transaction is not void ab initio, then the shares of beneficial interest in excess of the ownership limit, that would cause us to be closely held, that would result in 50% or more of the fair market value of our shares of beneficial interest to be held by persons other than United States persons or that otherwise would result in our disqualification as a REIT, will automatically be exchanged for an equal number of excess shares, and these excess shares will be transferred to an excess share trustee for the exclusive benefit of the charitable beneficiaries named by our Board of Trustees. These limitations may have the effect of preventing a change in control or takeover of us by a third party, even if the change in control or takeover would be in the best interests of the holders of our securities. In order to maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions. In order to maintain our REIT status, we may need to borrow funds on a short-term basis to meet the REIT distribution requirements even if the then-prevailing market conditions are not favorable for these borrowings. To qualify as a REIT, we generally must distribute to our shareholders at least 90% of our net taxable income each year, excluding net capital gains. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which certain distributions made by us with respect to the calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income for that year, and any undistributed taxable income from prior periods. We intend to make distributions to our shareholders to comply with the 90% distribution requirement and to avoid the nondeductible excise tax and will rely for this purpose on distributions from our operating partnership. However, we may need short-term debt or long-term debt or proceeds from asset sales or sales of common shares to fund required distributions as a result of differences in timing between the actual receipt of income and the recognition of income for federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments. The inability of our cash flows to cover our distribution requirements could have an adverse impact on our ability to raise short and long-term debt or sell equity securities in order to fund distributions required to maintain our REIT status. Complying with REIT requirements may force us to forego otherwise attractive opportunities or liquidate otherwise attractive investments. To qualify and maintain our status as a REIT, we must satisfy certain requirements with respect to the character of our assets. If we fail to comply with these requirements at the end of any quarter, we must correct 18 such failure within 30 days after the end of the quarter (by, possibly, selling assets notwithstanding their prospects as an investment) to avoid losing our REIT status. If we fail to comply with these requirements at the end of any quarter, and the failure exceeds a minimum threshold, we nonetheless may be able to preserve our REIT status if (a) the failure was due to reasonable cause and not to willful neglect, (b) we dispose of the assets causing the failure within six months after the last day of the quarter in which we identified the failure, (c) we file a schedule with the Internal Revenue Service describing each asset that caused the failure, and (d) we pay an additional tax of the greater of $50,000 or the product of the highest applicable tax rate multiplied by the net income generated on those assets. As a result, compliance with the REIT requirements may require us to liquidate or forego otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our shareholders. Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flow. Even if we qualify for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted a result of a foreclosure, and state or local income, property and transfer taxes, such as mortgage recording taxes. Any of these taxes would decrease cash available for distribution to our shareholders. The tax imposed on REITs engaging in prohibited transactions and our agreements entered into with certain contributors of our properties may limit our ability to engage in transactions that would be treated as sales for federal income tax purposes. The federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100% penalty tax. Under current law, unless a sale of real property qualifies for a safe harbor, the question of whether the sale of a property constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction. We may make sales that do not satisfy the requirements of the safe harbors or the IRS may successfully assert that one or more of our sales are prohibited transactions and, therefore we may be required to pay a penalty tax. To avert this penalty tax, we may hold some of our assets through a taxable REIT subsidiary (“TRS”). While the TRS structure would allow the economic benefits of ownership to flow to us, a TRS is subject to tax on its income at the federal and state level. In addition, we have entered into agreements with certain contributors of our properties that contain limitations on our ability to dispose of certain properties in taxable transactions. The restrictions on taxable dispositions are effective for varying periods. Such agreements may require that we make a payment to the contributor in the event that we dispose of a covered property in a taxable sale during the restriction period. Our ownership of TRSs is limited and our transactions with TRSs will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm's-length terms. A REIT may own up to 100% of the stock of one or more TRSs. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT, including gross operating income from health care properties. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 25% (or 20% for taxable years beginning after December 31, 2017) of the value of a REIT's assets may consist of stock or securities of one or more TRSs. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm's-length basis. Our TRS is subject to applicable federal, state and local income tax on its taxable income, and its after-tax net income will be available for distribution to us but is not required to be distributed to us. We believe that the aggregate value of the stock and securities of our TRS is and will continue to be less than 25% (or 20% beginning after December 31, 2017) of the value of our total assets (including our TRS stock and securities). Furthermore, we will monitor the value of our investments in our TRS for the purpose of ensuring compliance with TRS ownership limitations. In addition, we will scrutinize all of our transactions with our TRS to ensure that they are entered into on arm's-length terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the 25% (or 20%) limitation discussed above or to avoid application of the 100% excise tax discussed above. If we lease a healthcare property to our TRS, the rent will not be qualifying income unless the manager qualifies as an “eligible independent contractors.” Rent paid by a lessee that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs. Until its sale, we leased our Sartell, 19 Minnesota assisted living facility to our TRS and may in the future lease other healthcare properties to our TRS. A TRS will not be treated as a “related party tenant,” and will not be treated as directly operating a healthcare facility, which is prohibited, to the extent the TRS leases properties from us that are managed by an “eligible independent contractor.” Among other requirements, in order to qualify as an eligible independent contractor a manager must not own more than 35% of our outstanding shares (by value) and no person or group of persons can own more than 35% of our outstanding shares and the ownership interests of the manager, taking into account only owners of more than 5% of our shares and, with respect to ownership interests in such managers that are publicly traded, only holders of more than 5% of such ownership interests. Complex ownership attribution rules apply for purposes of these 35% thresholds. Although we do not currently lease any healthcare properties to our TRS, if we do so in the future, there can be no assurance that these ownership levels will not be exceeded or that the manager will qualify as an “eligible independent contractor.” We believe that the rent paid by our TRS was qualifying income for purposes of the REIT gross income tests and that our TRS qualifies to be treated as taxable REIT subsidiaries for federal income tax purposes, but there can be no assurance that the Internal Revenue Service, or the IRS, will not challenge this treatment or that a court would not sustain such a challenge. If the IRS successfully challenged this treatment, then the rents from such properties would not be qualifying income, which could have a material adverse effect on us and our qualification as a REIT. We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common shares. At any time, the federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. In addition, a top legislative priority of the Trump administration and Congress has been significant reform of the Code, including significant changes to taxation of business entities. There is a substantial lack of clarity around both the timing and the details of any such tax reform and the impact of any potential tax reform on an investment in us. Any of those new laws or interpretations may take effect retroactively and could adversely affect us or the market price of our common shares of beneficial interest. The U.S. federal income tax laws governing REITs are complex. We intend to operate in a manner that will qualify us as a REIT under the U.S. federal income tax laws. The REIT qualification requirements are extremely complex, however, and interpretations of the U.S. federal income tax laws governing qualification as a REIT are limited. Accordingly, we cannot be certain that we will continue to qualify as a REIT. At any time, new laws, interpretations or court decisions may change the federal tax laws or the U.S. federal income tax consequences of our qualification as a REIT. Our distributions are not eligible for the lower tax rate on dividends except in limited situations. The tax rate applicable to qualifying corporate dividends received by shareholders taxed at individual rates is a maximum rate of 20%. This special tax rate is generally not applicable to distributions paid by a REIT, unless such distributions represent earnings on which the REIT itself had been taxed. As a result, distributions (other than capital gain distributions) paid by us to shareholders taxed at individual rates will generally be subject to the tax rates that are otherwise applicable to ordinary income. Although the earnings of a REIT that are distributed to its shareholders are still generally subject to less federal income taxation than earnings of a non-REIT C corporation that are distributed to its shareholders net of corporate-level income tax, the treatment of qualifying corporate dividends may make an investment in our securities comparatively less attractive relative to an investment in the shares of other entities which pay dividends but are not formed as REITs. Our Board of Trustees may make changes to our major policies without approval of the holders of our shares of beneficial interest. Our operating and financial policies, including policies relating to development and acquisition of real estate, financing, growth, operations, indebtedness, capitalization and distributions, are exclusively determined by our Board of Trustees. Our Board of Trustees may amend or revoke those policies, and other policies, without advance notice to, or the approval of, the holders of our shares of beneficial interest. Accordingly, our shareholders do not control these policies, and policy changes could adversely affect our financial condition and results of operations. Risks Related to the Purchase of our Shares of Beneficial Interest Our future growth depends, in part, on our ability to raise additional equity capital, which will have the effect of diluting the interests of the holders of our common shares. Our future growth depends upon, among other things, our ability to raise equity capital and issue limited partnership units of IRET Properties. The issuance of additional common 20 shares, including the issuance of common shares in connection with redemption requests for limited partnership units, will dilute the interests of the current holders of our common shares. Additionally, sales of substantial amounts of our common or preferred shares in the public market, or substantial issuances of our common shares in connection with redemption requests for limited partnership units, or the perception that such sales or issuances might occur, could adversely affect the market price of our common shares. We may issue additional classes or series of our shares of beneficial interest with rights and preferences that are superior to the rights and preferences of our common shares. Without the approval of the holders of our common shares, our Board of Trustees may establish additional classes or series of our shares of beneficial interest, and such classes or series may have dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences or other rights and preferences that are superior to the rights of the holders of our common shares. Payment of distributions on our shares of beneficial interest is not guaranteed. Our Board of Trustees must approve our payment of distributions and may elect at any time, or from time to time, and for an indefinite duration, to reduce the distributions payable on our shares of beneficial interest or to not pay distributions on our shares of beneficial interest. Our Board of Trustees may reduce distributions for a variety of reasons, including, but not limited to, the following: • • • operating and financial results below expectations that cannot support the current distribution payment; unanticipated costs or cash requirements; or a conclusion that the payment of distributions would cause us to breach the terms of certain agreements or contracts, such as financial ratio covenants in our debt financing documents. Changes in market conditions could adversely affect the price of our securities. As is the case with any publicly-traded securities, certain factors outside of our control could influence the value of our common shares, Series B preferred shares and any other securities issued in the future. These conditions include, but are not limited to: • market perception of REITs in general; • market perception of REITs relative to other investment opportunities; • market perception of our financial condition, performance, distributions and growth potential; • • • • prevailing interest rates; general economic and business conditions; government action or regulation, including changes in the tax laws; and relatively low trading volumes in securities of REITS. Higher market interest rates may adversely affect the market price of our securities, and low trading volume on the NYSE may prevent the timely resale of our securities. One of the factors that investors may consider important in deciding whether to buy or sell shares of a REIT is the distribution with respect to such REIT’s shares as a percentage of the price of those shares, relative to market interest rates. If market interest rates rise, prospective purchasers of REIT shares may expect a higher distribution rate in order to maintain their investment. Higher market interest rates would likely increase our borrowing costs and might decrease funds available for distribution. Thus, higher market interest rates could cause the market price of our common shares to decline. In addition, although our common shares of beneficial interest are listed on the NYSE, the daily trading volume of our shares may be lower than the trading volume for other companies. As a result of lower trading volume, an owner of our common shares may encounter difficulty in selling our shares in a timely manner and may incur a substantial loss. Item 1B. Unresolved Staff Comments None. 21 Item 2. Properties We are organized as a REIT under Section 856-858 of the Internal Revenue Code and are structured as an UPREIT. We conduct the business of owning, leasing, developing and acquiring real estate properties through our Operating Partnership. These real estate investments are managed by our own employees and by third-party professional real estate management companies on our behalf. Total Real Estate Rental Revenue As of April 30, 2017, our real estate portfolio held for investment consisted of 87 multifamily, 29 healthcare and 13 other properties, comprising 76.9%, 17.7% and 5.4%, respectively, of our total real estate portfolio, based on the dollar amount of our original investment plus capital improvements, net of accumulated depreciation, through April 30, 2017. Gross annual rental revenue and percentages of total annual real estate rental revenue by property type for each of the three most recent fiscal years ended April 30, are as follows: Fiscal Year Ended April 30, Multifamily % Healthcare % All Other % Total 2017 . . . . . . . . . . . . . $ 144,743 70.4 % $ 49,856 24.2 % $ 11,139 5.4 % $ 205,738 2016 . . . . . . . . . . . . . $ 131,149 69.7 % $ 45,621 24.2 % $ 11,550 6.1 % $ 188,320 2015 . . . . . . . . . . . . . $ 118,526 66.1 % $ 44,153 24.6 % $ 16,642 9.3 % $ 179,321 (in thousands) Gross Revenue Average Effective Rent The table below sets out the average effective annual rent per unit or square foot at same-store properties for each of the last five fiscal years in each of our two segments. Same-store properties are properties owned or in service for the entirety of the periods being compared, and, in the case of development or re-development properties, which have achieved a target level of occupancy of 90% for multifamily properties and 85% for healthcare properties. As of April 30, Multifamily(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 883 $ 844 $ 829 $ 783 $ 744 Healthcare(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16 20 $ 17 $ 20 $ 16 $ 2013 (in dollars) Average Effective Rent per unit or square foot(1) 2017 2014 2015 2016 (1) Previously reported amounts are not revised for discontinued operations or changes in the composition of the same-store properties pool. (2) Monthly rent per unit, calculated as rental revenue, net of free rent, including rent abatements and rent credits, divided by the occupied units as of April 30. (3) Annual rental rate per square foot calculated as annualized contractual base rental income, net of free rent and excluding operating expense reimbursements, divided by the leased square footage as of April 30. Occupancy Rates Occupancy represents the actual number of units or square footage leased divided by the total number of units or square footage at the end of the period. Occupancy levels on a same-store property and all-property basis are shown below for each property type in each of the three most recent fiscal years ended April 30. In the case of multifamily properties, lease terms with individual tenants generally range from month-to-month to one-year leases. Lease terms on healthcare properties generally range from month-to-month to 20 years. Occupancy Levels on a Same-Store Property and All Property Basis: Segments All Properties Fiscal Year Ended April 30, 2015 2017 Multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.2 % 94.9 % 95.1 % 93.1 % 90.8 % 92.0 % 92.1 % 95.2 % 95.3 % 92.8 % 89.4 % 91.5 % Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Same-Store Properties Fiscal Year Ended April 30, 2017 2016 2016 2015 22 Certain Lending Requirements In certain instances, in connection with the financing of investment properties, the lender may require, as a condition of the loan, that the properties be owned by a “single asset entity.” Accordingly, we have organized a number of wholly- owned subsidiary entities for the purpose of holding title in an entity that complies with such lending conditions. All financial statements of these subsidiaries are consolidated into our financial statements. Management and Leasing of Our Real Estate Assets We conduct our corporate operations from offices in Minot, North Dakota and Minneapolis and St. Cloud, Minnesota. We also have property management offices located in the states where we own properties. The day-to-day management of our properties is carried out by our own employees and in certain cases by third-party property management companies. In markets where the amount of rentable square footage we own does not justify self-management, when properties acquired have effective pre-existing property management in place, or when for other reasons particular properties are in our judgment not attractive candidates for self-management, we utilize third-party professional management companies for day-to-day management. However, all decisions relating to purchase, sale, insurance coverage, capital improvements, approval of commercial leases, annual operating budgets and major renovations are made exclusively by our employees and implemented by the third-party management companies. Generally, our management contracts are for terms of one year or less and provide for compensation ranging from 2.5% to 5.0% of gross rent collections and, typically, we may terminate these contracts upon 60 days or less notice for cause or upon the property manager’s failure to meet certain specified financial performance goals. With respect to multi-tenant commercial properties, we rely almost exclusively on third-party brokers to locate potential tenants. As compensation, brokers may receive a commission that is generally calculated as a percentage of the net rent to be paid over the term of the lease. We believe that the broker commissions paid by us conform to market and industry standards and are commercially reasonable. Summary of Real Estate Investment Portfolio As of April 30, Real estate investments 2017 (in thousands, except percentages) % 2016 % 2015 % Property owned . . . . . . . . . . . . . . . . . . . $ 1,677,481 (340,417) Less accumulated depreciation . . . . . . $ 1,337,064 — 18,455 $ 1,681,471 (312,889) 98.6 % $ 1,368,582 51,681 Development in progress . . . . . . . . . . . 20,939 Unimproved land . . . . . . . . . . . . . . . . . Total real estate investments . . . . . . . . $ 1,355,519 100.0 % $ 1,441,202 — % 1.4 % $ 1,335,687 (279,417) 95.0 % $ 1,056,270 153,994 3.6 % 25,827 1.4 % 100.0 % $ 1,236,091 85.5 % 12.4 % 2.1 % 100.0 % 23 Summary of Individual Properties Owned as of April 30, 2017 The following table presents information regarding our 129 multifamily, healthcare and other properties held for investment, as well as unimproved land, development properties and properties held for sale as of April 30, 2017. We own the following interests in real estate either through our wholly-owned subsidiaries or by ownership of a controlling interest in an entity owning the real estate. We account for these interests on a consolidated basis. Additional information is included in Schedule III to our financial statements included in this Annual Report on Form 10-K. Property Name and Location MULTIFAMILY 71 France - Edina, MN(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alps Park - Rapid City, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arbors - S Sioux City, NE(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arcata - Golden Valley, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ashland - Grand Forks, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Avalon Cove - Rochester, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Boulder Court - Eagan, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brookfield Village - Topeka, KS(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Canyon Lake - Rapid City, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cardinal Point - Grand Forks, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cascade Shores - Rochester, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Castlerock - Billings, MT(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chateau I & II - Minot, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cimarron Hills - Omaha, NE(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Colonial Villa - Burnsville, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Colony - Lincoln, NE(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commons and Landing at Southgate - Minot, ND(2)(3) . . . . . . . . . . . . . . . . . . Cottage West Twin Homes - Sioux Falls, SD(2) . . . . . . . . . . . . . . . . . . . . . . . Cottonwood - Bismarck, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Country Meadows - Billings, MT(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Crestview - Bismarck, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Crown - Rochester, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Crown Colony - Topeka, KS(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Crystal Bay - Rochester, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cypress Court - St. Cloud, MN(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dakota Commons - Williston, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deer Ridge - Jamestown, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen - Isanti, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forest Park - Grand Forks, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . French Creek - Rochester, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gables Townhomes - Sioux Falls, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gardens - Grand Forks, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Grand Gateway - St. Cloud, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GrandeVille at Cascade Lake - Rochester, MN(2) . . . . . . . . . . . . . . . . . . . . . . Greenfield - Omaha, NE(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Heritage Manor - Rochester, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Homestead Garden - Rapid City, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Indian Hills - Sioux City, IA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kirkwood Manor - Bismarck, ND(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lakeside Village - Lincoln, NE(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Landmark - Grand Forks, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legacy - Grand Forks, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legacy Heights - Bismarck, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 (in thousands) Investment (initial cost plus improvements less Occupancy as of impairment) April 30, 2017 Units 241 $ 71 192 165 84 187 115 160 109 251 90 166 104 234 239 232 341 50 268 133 152 48 220 76 196 44 163 72 268 40 24 74 116 276 96 182 152 120 108 208 90 360 119 72,481 6,151 9,173 33,218 8,554 35,868 9,570 8,980 6,192 52,201 18,342 7,970 21,192 14,882 22,955 18,465 54,282 5,285 23,659 10,026 6,594 4,127 14,150 11,926 20,656 4,050 24,963 6,934 14,457 4,955 2,484 9,316 9,723 56,671 5,906 10,464 15,242 7,496 4,999 17,911 2,886 33,364 15,276 90.5% 98.6% 97.4% 98.2% 95.2% 95.7% 97.4% 96.9% 95.4% 95.2% 97.8% 91.0% 97.1% 98.7% 97.1% 95.7% 94.4% 96.0% 91.8% 94.0% 97.4% 89.6% 95.0% 97.4% 90.8% 97.7% 92.0% 98.6% 95.1% 100.0% 91.7% 95.9% 89.7% 73.6% 91.7% 95.6% 99.3% 92.5% 97.2% 94.2% 95.6% 86.1% 96.6% (in thousands) Investment (initial cost plus improvements less Occupancy as of impairment) April 30, 2017 96.3% 96.3% 87.6% 96.7% 100.0% 94.5% 91.2% 97.5% 97.5% 86.5% 94.3% 95.8% 91.4% 93.8% 90.5% 97.2% 97.8% 100.0% 91.7% 93.3% 98.5% 93.8% 62.2% 97.0% 96.2% 92.5% 96.9% 98.6% 97.3% 95.5% 94.2% 90.3% 95.8% 94.5% 92.5% 97.3% 95.2% 97.1% 94.4% 94.2% 90.8% 95.5% 73.8% 92.2% 95.5% 93.1% 6,335 6,949 30,526 5,206 873 5,509 8,531 6,422 7,973 15,339 9,592 7,210 19,615 962 1,177 16,425 5,695 5,384 2,606 34,268 28,874 13,068 18,602 7,102 5,785 26,050 7,851 6,014 20,621 2,858 3,805 15,006 10,616 8,916 16,367 15,850 8,271 18,774 3,603 18,724 4,048 28,928 11,811 8,882 9,522 1,260,541 Property Name and Location Mariposa - Topeka, KS(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Meadows - Jamestown, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monticello Crossings - Monticello, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monticello Village - Monticello, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Northern Valley - Rochester, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . North Pointe - Bismarck, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Northridge - Bismarck, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oakmont Estates - Sioux Falls, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oakwood Estates - Sioux Falls, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Olympic Village - Billings, MT(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Olympik Village - Rochester, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oxbow Park - Sioux Falls, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Park Meadows - Waite Park, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pebble Springs - Bismarck, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pinehurst - Billings, MT(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plaza - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pointe West - Rapid City, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ponds at Heritage Place - Sartell, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prairie Winds - Sioux Falls, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Quarry Ridge - Rochester, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Red 20 - Minneapolis, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Regency Park Estates - St. Cloud, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Renaissance Heights - Williston, ND(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ridge Oaks - Sioux City, IA(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rimrock West - Billings, MT(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . River Ridge - Bismarck, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rocky Meadows - Billings, MT(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rum River - Isanti, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sherwood - Topeka, KS(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sierra Vista - Sioux Falls, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Silver Springs - Rapid City, SD(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . South Pointe - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Southpoint - Grand Forks, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Southwind - Grand Forks, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sunset Trail - Rochester, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thomasbrook - Lincoln, NE(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valley Park - Grand Forks, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Villa West - Topeka, KS(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Village Green - Rochester, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . West Stonehill - Waite Park, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Westwood Park - Bismarck, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Whispering Ridge - Omaha, NE(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Williston Garden - Williston, ND(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Winchester - Rochester, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Woodridge - Rochester, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL MULTIFAMILY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Units 54 81 202 60 16 73 68 79 160 274 140 120 360 16 21 71 90 58 48 313 130 145 288 132 78 146 98 72 300 44 52 196 96 164 146 264 167 308 36 312 65 336 145 115 110 12,885 $ 25  Approximate Net Rentable Square Footage (in thousands) Investment (initial cost plus improvements less Occupancy as of impairment) April 30, 2017 Property Name and Location HEALTHCARE 2800 Medical Building - Minneapolis, MN(2) . . . . . . . . . . . . . . . . . . . . . . . 2828 Chicago Avenue - Minneapolis, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . Airport Medical - Bloomington, MN(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Billings 2300 Grant Road - Billings, MT . . . . . . . . . . . . . . . . . . . . . . . . . . Burnsville 303 Nicollet Medical (Ridgeview) - Burnsville, MN(2) . . . . . . Burnsville 305 Nicollet Medical (Ridgeview South) - Burnsville, MN(2) . Denfeld Clinic - Duluth, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eagan 1440 Duckwood Medical - Eagan, MN . . . . . . . . . . . . . . . . . . . . . . Edina 6363 France Medical - Edina, MN(1) . . . . . . . . . . . . . . . . . . . . . . . . . Edina 6405 France Medical - Edina, MN(1) . . . . . . . . . . . . . . . . . . . . . . . . Edina 6517 Drew Avenue - Edina, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . Edina 6525 France SMC II - Edina, MN(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . Edina 6545 France SMC I - Edina MN(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . Fresenius - Duluth, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Garden View - St. Paul, MN(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gateway Clinic - Sandstone, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Pointe Health Campus - Lake Elmo, MN(2) . . . . . . . . . . . . . . . . . . . . Lakeside Medical Plaza - Omaha, NE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mariner Clinic - Superior, WI(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minneapolis 701 25th Avenue Medical - Minneapolis, MN(1) . . . . . . . . . . Missoula 3050 Great Northern - Missoula, MT . . . . . . . . . . . . . . . . . . . . . Park Dental - Brooklyn Center, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pavilion I - Duluth, MN(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pavilion II - Duluth, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PrairieCare Medical - Brooklyn Park, MN . . . . . . . . . . . . . . . . . . . . . . . . . Ritchie Medical Plaza - St Paul, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . St Michael Clinic - St Michael, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trinity at Plaza 16 - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wells Clinic - Hibbing, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL HEALTHCARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,327,644 $ 53,603 $ 56,239 24,218 14,705 53,896 36,199 20,512 17,640 70,934 55,478 12,140 67,409 285,262 9,052 43,404 12,444 60,558 27,819 28,928 57,212 14,640 9,998 45,081 73,000 70,756 52,116 10,796 24,795 18,810 22,187 $ OTHER Bismarck 715 East Broadway - Bismarck, ND(2) . . . . . . . . . . . . . . . . . . . . Bloomington 2000 W 94th Street - Bloomington, MN . . . . . . . . . . . . . . . Dakota West Plaza - Minot , ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lexington Commerce Center - Eagan, MN(2) . . . . . . . . . . . . . . . . . . . . . . . Minot 1400 31st Ave - Minot, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minot 2505 16th Street SW - Minot, ND . . . . . . . . . . . . . . . . . . . . . . . . . . Minot Arrowhead - Minot, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minot IPS - Minot, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minot Southgate Retail - Minot, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plaza 16 - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roseville 3075 Long Lake Road - Roseville, MN . . . . . . . . . . . . . . . . . . . Urbandale 3900 106th Street - Urbandale, IA(2) . . . . . . . . . . . . . . . . . . . . . Woodbury 1865 Woodlane - Woodbury, MN . . . . . . . . . . . . . . . . . . . . . . . TOTAL OTHER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,270,247 $ SUBTOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,610,776 $ 100,850 16,921 90,260 48,960 15,000 81,594 27,698 7,849 50,610 220,557 518,161 69,600 26 10,002 17,425 4,729 1,865 10,306 7,080 3,099 2,624 16,061 12,568 2,436 15,668 85,201 1,572 8,583 1,776 14,133 6,113 4,104 9,499 1,971 2,967 10,534 19,325 24,457 13,913 2,883 9,593 2,661 323,148 2,806 7,552 615 6,906 11,573 2,318 8,899 6,368 2,705 9,597 13,099 15,555 5,799 93,792 1,677,481 89.5% 100.0% 100.0% 100.0% 100.0% 92.9% 100.0% 100.0% 100.0% 100.0% 100.0% 95.1% 83.1% 100.0% 96.6% 100.0% 75.5% 100.0% 100.0% 78.3% 100.0% 100.0% 100.0% 100.0% 100.0% 86.8% 100.0% 100.0% 100.0% 94.1% 100.0% 100.0% 64.7% 100.0% 76.3% 100.0% 96.7% 100.0% 39.1% 100.0% 83.7% 100.0% 100.0% 95.0% Property Name and Location UNIMPROVED LAND Badger Hills - Rochester, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bismarck 4916 - Bismarck, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bismarck 700 E Main - Bismarck, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . Creekside Crossing - Bismarck, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Grand Forks - Grand Forks, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Isanti Unimproved - Isanti, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minot 1525 24th Ave SW - Minot, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . Rapid City Unimproved- Rapid City, SD . . . . . . . . . . . . . . . . . . . . . . . . . Renaissance Heights - Williston, ND(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . Urbandale - Urbandale, IA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weston - Weston, WI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL UNIMPROVED LAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL UNITS - MULTIFAMILY . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL SQUARE FOOTAGE - COMMERCIAL . . . . . . . . . . . . . . . TOTAL REAL ESTATE HELD FOR INVESTMENT . . . . . . . . . . . (in thousands) Investment (initial cost plus improvements less impairment) 1,389 3,295 885 5,005 4,280 58 506 1,376 1,178 113 370 18,455 $ $ 12,885 2,610,776 $ 1,695,936 Property Name and Location HELD FOR SALE 4th Street 4 Plex - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11th Street 3 Plex - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 South Main - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Apartments on Main - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brooklyn Heights - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Colton Heights - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Edgewood Vista - Hermantown I, MN(2)(4) . . . . . . . . . . . . . . . . . . . . . . . . Edgewood Vista - Hermantown II, MN(4) . . . . . . . . . . . . . . . . . . . . . . . . . Fairmont - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First Avenue (Apartments) - Minot, ND(5) . . . . . . . . . . . . . . . . . . . . . . . . First Avenue (Office) - Minot, ND(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minot Southgate Wells Fargo Bank - Minot, ND . . . . . . . . . . . . . . . . . . . Pines - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Southview - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summit Park - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Temple - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Terrace Heights - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Westridge - Minot, ND(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL REAL ESTATE HELD FOR SALE . . . . . . . . . . . . . . . . . . . . TOTAL UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL SQUARE FOOTAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Approximate Net Rentable Square Footage or Units (in thousands) Investment improvements less (initial cost plus Occupancy as of impairment) April 30, 2017 4 $ 3 2,454 10 72 18 119,349 160,485 12 20 4,427 4,998 16 24 95 4 16 33 327 291,713 130 90 287 1,352 2,646 1,222 20,253 12,178 497 3,069 367 3,229 520 1,179 1,933 226 547 2,334 52,059 100.0% 100.0% 0.0% 70.0% 95.8% 94.4% 100.0% 100.0% 91.7% 100.0% 100.0% 100.0% 93.8% 91.7% 90.5% 100.0% 100.0% 90.9% (1) Real estate not owned in fee; all or a portion is leased under a ground or air rights lease. (2) Encumbered by mortgage debt. (3) Property owned by a joint venture entity and consolidated in our financial statements. We have an approximately 52.6% ownership in 71 France, 64.1% ownership in Commons & Landing at Southgate, 86.1% ownership in Cypress Court, 86.6% ownership in Renaissance Heights, 70% ownership in Renaissance Heights Unimproved and 69.6% ownership in Williston Garden. (4) Properties classified as discontinued operations. (5) Single multi-use property. 27 Mortgages Payable and Line of Credit As of April 30, 2017, mortgage loans on the above properties, including properties held for sale, totaled $687.2 million. Of this amount, on April 30, 2017, $57.7 million, or 8.4%, is represented by variable rate mortgage loans on which the future interest rate will vary based on changes in the interest rate index for each respective loan. As of April 30, 2017, we believe there are no material defaults or material compliance issues in regards to any of these mortgage loans. Principal payments due on our mortgage indebtedness are as follows: (in thousands) Mortgage Loans Mortgage Loans on Properties on Properties Fiscal Year Ended April 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Held for Investment 40,777 $ 75,918 93,678 136,390 87,654 231,023 665,440 $ Held for Sale 16,621 1,870 183 193 993 1,943 21,803 On January 31, 2017, our Operating Partnership entered into a credit agreement for a new unsecured, variable interest rate Line of Credit with BMO Harris Bank N.A. as lead agent bank and book runner (the “BMO Line of Credit”). The BMO Line of Credit contains a $250 million accordion option, which exercise is subject to the satisfaction of certain conditions. However, the maximum borrowing capacity of the BMO Line of Credit is based on the value of an unencumbered asset pool (“UAP”). The UAP may not consist of less than 15 properties that meet certain eligibility criteria, and eligible properties may be added and removed from the UAP subject to the satisfaction of certain conditions. The BMO Line of Credit is guaranteed, jointly and severally, by us, the general partner of our Operating Partnership and each subsidiary that owns a UAP property. Borrowings under the BMO Line of Credit accrue interest at a rate based either on a margin percentage over the Lender’s Base Rate, ranging from 0.6% to 1.25%, or on a margin percentage over LIBOR, ranging from 1.6% to 2.25%, based on our total leverage ratio. The BMO Line of Credit has a termination date of January 31, 2021, which may be extended for an additional one year period subject to the satisfaction of certain conditions. The line also requires the payment of customary fees and contains covenants, representations, warranties and events of default customary for credit facilities of this type, including a covenant on a fiscal quarterly-end basis that the consolidated leverage ratio will not be greater than 0.60 to 1.00. Participants, as of April 30, 2017, included the following financial institutions: BMO Harris Bank N.A., KeyBank, National Association, PNC Bank, National Association, Royal Bank of Canada, U.S. Bank National Association, Associated Bank, National Association, Bank of North Dakota and Raymond James Bank, N.A.; with KeyBank, National Association and PNC Bank, National Association as syndication agents and BMO Capital Markets Corp., Keybanc Capital Markets Inc. and PNC Capital Markets, LLC as joint lead arrangers and joint book runners. As of April 30, 2017, the line had a credit limit of $206.0 million, of which $57.1 million was drawn on the line at an interest rate of 2.74%. As of April 30, 2017, we believe we and our Operating Partnership were in compliance with the covenants contained in the BMO Line of Credit. 28 Future Minimum Lease Receipts The future minimum lease receipts to be received under leases in place as of April 30, 2017 at healthcare properties held for investment, assuming that no options to renew or buy out the leases are exercised, are as follows: Fiscal Year Ended April 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Lease Payments 25,922 24,250 22,695 21,386 19,601 120,772 234,626 (in thousands) Capital Expenditures Each year we review the physical condition of each property we own. In order for our properties to remain competitive, attract new tenants and retain existing tenants, we plan for a reasonable amount of capital improvements. For the year ended April 30, 2017, excluding discontinued operations, we spent approximately $42.3 million on capital improvements, tenant improvements and other capital expenditures. We define recurring capital expenditures as those made on a regular or recurring basis to maintain a property’s competitive position within its market, generally with a depreciable life of 5 to 12 years, but excluding (a) capital expenditures made in the year of acquisition and in subsequent periods until the property is classified as same-store (i.e., excluding capital expenditures on non-same-store properties), (b) improvements associated with the expansion or re- development of a building, (c) renovations to a building which change the underlying classification of the building or (d) capital improvements that represent the addition of something new to a property, rather than the replacement of an existing item. We believe that recurring capital expenditures is a useful measure of performance because it provides an indication of the expenses that we can expect to incur on an on-going basis. Non-recurring capital expenditures correspond to major capital expenditures for items such as roof replacements or items that result in something new being added to the property (for example, the addition of a new heating and air conditioning unit that is not replacing one previously there), generally with a depreciable life of 20 to 40 years, and include expenditures completed in the year of acquisition and in subsequent periods until the property is classified as same-store (i.e., including capital expenditures on non-same-store properties). The following table shows total and weighted average per square foot/unit recurring and non-recurring capital expenditures (excluding capital expenditures recoverable from tenants and capital expenditures at properties sold or classified as held for sale during the period), and, for our same-store healthcare segment, tenant improvements and leasing costs, for the three years ended April 30, 2017, 2016 and 2015. 29 (in thousands except per SF or Unit data) Years Ended April 30, 2016 2017 2015 Amount Cost/SF or Unit Amount Cost/SF or Unit Amount Cost/SF or Unit Multifamily Properties: Recurring capital expenditures . . . . . . . . . . . . . . . . $ 4,402 $ Non-recurring capital expenditures, excluding revenue generating expenditures . . . . . . . . . . . . . . . Total recurring and non-recurring capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,039 9,637 419 $ 5,553 $ 564 $ 5,444 $ 550 748 9,083 701 9,663 815 1,167 14,636 1,265 15,107 1,365 Revenue generating expenditures(1) . . . . . . . . . . . . . $ 16,782 $ 9,346 $ 4,463 $ 7,553 $ — $ — Healthcare Properties: Non-Recoverable Capital Expenditures Recurring capital expenditures . . . . . . . . . . . . . . . . $ Non-recurring capital expenditures . . . . . . . . . . . . . Tenant improvements at same-store properties . . . Leasing costs at same-store properties . . . . . . . . . . — $ 94 2,566 1,070 — $ 0.07 2.19 0.91 — $ 77 1,073 554 — $ 0.05 0.83 0.43 691 $ 821 1,427 353 0.24 0.28 0.50 0.12 (1) Amount represents total spent on completed and in-progress units during the period. Cost per unit represents the average amount spent on completed units during the period. Contracts or Options to Purchase We have granted options to purchase certain of our healthcare and industrial properties to tenants under their lease agreements. In general, these options grant the tenant the right to purchase the property at the greater of such property’s appraised value or an annual compounded increase of a specified percentage of the initial cost to us. As of April 30, 2017, our properties subject to purchase options are as follows: Property St. Michael Clinic - St. Michael, MN . . . . . . . . . . . . . . . . . . PrairieCare – Brooklyn Park, MN . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment Cost 2,883 $ 24,457 27,340 $ $ $ (in thousands) Gross Rental Revenue 2017 260 2,487 2,747 $ $ 2016 256 1,564 1,820 $ $ 2015 253 — 253 Properties by State The following table presents, as of April 30, 2017, the total amount of property held for investment, net of accumulated depreciation, by state: (in thousands) Multifamily Healthcare State 453,502 $ 216,595 Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,315 344,078 North Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,886 88,709 Nebraska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 53,372 South Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,087 — Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,404 28,991 Montana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,210 — Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,809 — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,027,949 $ 237,009 Other Total $ 25,933 $ 696,030 386,357 33,964 94,595 — 53,372 — 49,087 — 32,395 — 22,419 12,209 2,809 — $ 72,106 $ 1,337,064 % of Total 52.1 % 28.9 % 7.1 % 4.0 % 3.7 % 2.4 % 1.6 % 0.2 % 100.0 % 30 Item 3. Legal Proceedings In the ordinary course of our operations, we become involved in litigation. At this time, we know of no material pending or threatened legal proceedings, or other proceedings contemplated by governmental authorities, that would have a material impact upon us. Item 4. Mine Safety Disclosures Not Applicable 31 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Quarterly Share and Distribution Data Our common shares of beneficial interest trade on the NYSE under the symbol “IRET.” The following table shows the high and low sales prices for our common shares for the periods indicated, as reported by the NYSE, and the distributions per common share and limited partnership unit declared with respect to each period. Quarter Ended High Low April 30, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.61 $ 5.67 $ 5.81 January 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.67 October 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01 July 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.20 6.67 6.63 Distributions Declared (per share and unit) 0.07 0.13 0.13 0.13 Quarter Ended High Low April 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7.48 $ 5.97 $ 6.24 January 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.51 October 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.93 July 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.39 8.16 7.44 Distributions Declared (per share and unit) 0.13 0.13 0.13 0.13 We pay quarterly distributions to our common shareholders and unitholders, at the discretion of our Board of Trustees, based on our funds from operations, financial condition and capital requirements, annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as our Board of Trustees deems relevant. Since July 1, 1971, we have paid quarterly cash distributions in the months of January, April, July and October. Shareholders As of June 22, 2017, there were approximately 3,406 common shareholders of record. Unregistered Sales of Shares Under the terms of IRET Properties’ Agreement of Limited Partnership, limited partners have the right to require the IRET Properties to redeem their limited partnership units for cash generally any time following the first anniversary of the date they acquired such units (“Exchange Right”). When a limited partner exercises the Exchange Right, we have the right, in our sole discretion, to redeem such units by either making a cash payment or exchanging the units for our common shares, on a one-for-one basis. The Exchange Right is subject to certain conditions and limitations, including that the limited partner may not exercise the Exchange Right more than two times during a calendar year and the limited partner may not exercise for less than 1,000 units, or, if such limited partner holds less than 1,000 units, for less than all of the units held by such limited partner. IRET Properties and some limited partners have contractually agreed to a holding period of greater than one year, a greater number of redemptions during a calendar year or other limitations to their Exchange Right. During the fiscal years ended April 30, 2017, 2016 and 2015, respectively, we issued an aggregate of 304,709, 36,156 and 471,800 unregistered common shares to limited partners of IRET Properties upon exercise of their Exchange Rights for an equal number of units. All such issuances of our common shares were exempt from registration as private placements under Section 4(a)(2) of the Securities Act, including Regulation D promulgated thereunder. We have registered the resale of such common shares under the Securities Act. 32 Issuer Purchases of Equity Securities Period Average Price Purchased as Part of Total Number of Shares Purchased(1) Paid per Share Publicly Announced Plans or Programs Total Number of Shares Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plans or Programs(2) February 1 - 28, 2017 . . . . . . . . . . . . . . — $ March 1 - 31, 2017 . . . . . . . . . . . . . . . . April 1 - 30, 2017 . . . . . . . . . . . . . . . . . 777,362 5,990 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 783,352 $ — 5.77 6.07 5.77 — $ 777,362 190 777,552 50,000,000 45,499,769 45,498,663 (1) Includes 5,800 shares surrendered to us by employees in satisfaction of tax withholding obligations associated with the vesting of restricted shares. (2) As disclosed in our Form 10-Q for the fiscal quarter ended January 31, 2017, represents amounts outstanding under our $50,000,000 share repurchase program, which was authorized by our Board of Trustees on December 7, 2016 and expires after a one year period Comparative Stock Performance The information contained in this Comparative Stock Performance section shall not be deemed to be “soliciting material” or “filed” or incorporated by reference into our future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act or the Exchange Act. Set forth below is a graph that compares, for the five fiscal years commencing May 1, 2012 and ending April 30, 2017, the cumulative total returns for our common shares with the comparable cumulative total return of two indexes, the Standard & Poor’s 500 Index (“S&P 500”) and the FTSE NAREIT Equity REITs Index, the latter of which is an index prepared by the FTSE Group for the National Association of Real Estate Investment Trusts, which includes all tax- qualified equity REITs listed on the NYSE and the NASDAQ Market. The performance graph assumes that at the close of trading on April 30, 2012, the last trading day of fiscal year 2012, $100 was invested in our common shares and in each of the indexes. The comparison assumes the reinvestment of all distributions. Cumulative total shareholder returns for our common shares, the S&P 500 and the FTSE NAREIT Equity REITs Index are based on our fiscal year ending April 30. 33 Total Return Performance Investors Real Estate Trust S&P 500 Index FTSE NAREIT Equity REITs 200 180 160 140 120 e u l a V x e d n I 100 04/30/12 04/30/13 04/30/14 04/30/15 04/30/16 04/30/17 FY12 Investors Real Estate Trust . . . . . . . . . . . . . . . . . . . . . . . 100.00 143.35 136.63 119.72 108.21 114.26 S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 116.89 140.78 159.05 160.97 189.81 FTSE NAREIT Equity REITs . . . . . . . . . . . . . . . . . . . . 100.00 119.55 120.59 136.74 147.49 156.67 FY15 FY14 FY17 FY16 FY13 Source: S&P Global Market Intelligence 34 Item 6. Selected Financial Data Set forth below is selected financial data on a historical basis for the five most recent fiscal years ended April 30. This information should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this Annual Report on Form 10-K. Consolidated Income Statement Data (in thousands, except per share data) 2017 2016 2015 2014 2013 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . $ 205,738 $ 188,320 $ 179,321 $ 164,590 $ 149,572 Impairment of real estate investments in continuing and discontinued operations . . . . . . . . . . . . . . . . . . . . . $ 57,028 $ 44,426 $ 6,105 $ 5,983 $ — (Loss) gain on debt extinguishment in continuing and discontinued operations . . . . . . . . . . . . . . . . . . . . . $ Gain on sale of discontinued operations and real estate and other investments . . . . . . . . . . . . . . . . . . . . $ (Loss) income from continuing (4,889) $ 29,230 $ — $ — $ — 74,847 $ 33,422 $ 6,093 $ 6,948 $ — operations . . . . . . . . . . . . . . . . . . . . . $ (38,150) $ 17,105 $ 17,330 $ 4,136 $ 12,275 Income (loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . $ Net income (loss) . . . . . . . . . . . . . . . . . $ Net (income) loss attributable to noncontrolling interests – Operating Partnership . . . . . . . . . . . . . . . . . . . . $ Net income (loss) attributable to 68,675 $ 30,525 $ 59,497 $ 76,602 $ 11,354 $ (21,076) $ 28,684 $ (16,940) $ 17,697 29,972 (4,059) $ (7,032) $ (1,526) $ 4,676 $ (3,633) Investors Real Estate Trust . . . . . . . $ 43,347 $ 72,006 $ 24,087 $ (13,174) $ 25,530 Consolidated Balance Sheet Data Total real estate investments . . . . . . . . $ 1,355,519 $ 1,441,202 $ 1,236,091 $ 1,094,733 $ 1,046,933 Total assets . . . . . . . . . . . . . . . . . . . . . . $ 1,474,514 $ 1,755,022 $ 1,992,092 $ 1,862,990 $ 1,882,566 Mortgages payable . . . . . . . . . . . . . . . . $ 661,960 $ 812,393 $ 592,578 $ 600,147 $ 633,364 Revolving lines of credit . . . . . . . . . . . $ 10,000 Total Investors Real Estate Trust 60,500 $ 57,050 $ 22,500 $ 17,500 $ shareholders’ equity . . . . . . . . . . . . . $ 560,937 $ 618,758 $ 652,110 $ 592,184 $ 612,787 Consolidated Per Common Share Data (basic and diluted) Income (loss) from continuing operations – Investors Real Estate Trust . . . . . . . . . . . . . . . . . . . . . . . . . $ Income (loss) from discontinued operations – Investors Real Estate Trust . . . . . . . . . . . . . . . . . . . . . . . . . $ Net income (loss) . . . . . . . . . . . . . . . . . $ Distributions . . . . . . . . . . . . . . . . . . . . . $ CALENDAR YEAR Tax status of distributions (0.24) $ 0.06 $ 0.02 $ (0.06) $ 0.02 0.50 $ 0.26 $ 0.46 $ 0.43 $ 0.49 $ 0.52 $ 0.09 $ 0.11 $ 0.52 $ (0.17) $ (0.23) $ 0.52 $ 0.15 0.17 0.52 2016 2015 2014 2013 2012 Capital gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.57 % 11.99 % 23.09 % 3.09 % 2.41 % Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.43 % 36.28 % 25.74 % 28.41 % 23.17 % — % 51.73 % 51.17 % 68.50 % 74.42 % Return of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . For the fiscal year ended April 30, 2017, we recognized approximately $70 million of net capital gain for federal income tax purposes. We designate the entire $70 million of net capital gain as capital gain dividends. 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the consolidated financial statements included in this Annual Report on Form 10-K. We operate on a fiscal year ending on April 30. The following discussion and analysis is for the fiscal year ended April 30, 2017. Overview We are a self-advised equity REIT engaged in owning and operating income-producing real properties. Our investments include multifamily, healthcare and other properties located primarily in the Midwest states of Minnesota and North Dakota. In June 2016, we announced our intention to transition toward becoming a pure play multifamily REIT and our intention to sell our remaining commercial properties, which consist primarily of healthcare properties. As of April 30, 2017, we held for investment 87 multifamily properties containing 12,885 apartment units and having a total real estate investment amount net of accumulated depreciation of $1.0 billion, and 42 commercial properties, consisting of healthcare, industrial, office and retail, containing approximately 2.6 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $309.1 million. As of April 30, 2017, we held for sale 13 multifamily properties, consisting of 327 units, and 4 commercial properties. Our primary source of income and cash is rents associated with multifamily and commercial leases. Our business objective is to increase shareholder value by employing a disciplined investment strategy. This strategy is implemented by growing income-producing assets in desired geographical markets in real estate classes we believe will provide a consistent return on investment for our shareholders. We have paid quarterly distributions continuously since our first distribution in 1971. Critical Accounting Policies Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements included in this Annual Report on Form 10-K. Real Estate. Real estate is carried at cost, net of accumulated depreciation, less an adjustment for impairment, if any. Depreciation requires an estimate by management of the useful life of each property as well as an allocation of the costs associated with a property to its various components. As described further below, the process of allocating property costs to its components involves a considerable amount of subjective judgments to be made by management. If we do not allocate these costs appropriately or incorrectly estimate the useful lives of our real estate, depreciation expense may be misstated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. We use a 20-40 year estimated life for buildings and improvements and a 5-12 year estimated life for furniture, fixtures and equipment. Maintenance and repairs are charged to operations as incurred. Renovations and improvements that improve and/or extend the useful life of the asset are capitalized over their estimated useful life, generally five to ten years. Upon acquisitions of real estate, we assess the fair value of acquired tangible assets (including land, buildings and personal property), which is determined by valuing the property as if it were vacant, and consider whether there were significant intangible assets acquired (for example, above-and below-market leases, the value of acquired in-place leases and tenant relationships) and assumed liabilities, and allocate the purchase price based on these assessments. The as-if- vacant value is allocated to land, buildings and personal property based on management’s determination of the relative fair value of these assets. Techniques used to estimate fair value include discounted cash flow analysis and reference to recent sales of comparable properties. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and market/economic conditions that may affect the property. Land value is assigned based on the purchase price if land is acquired separately or based on a relative fair value allocation if acquired in a merger or in a portfolio acquisition. Other intangible assets acquired include amounts for in-place lease values that are based upon our evaluation of the specific characteristics of the leases. Factors considered in the fair value analysis include an estimate of carrying costs and foregone rental income during hypothetical expected lease-up periods, consideration of current market conditions and costs to execute similar leases. We also consider information about each property obtained during our pre- 36 acquisition due diligence, marketing and leasing activities in estimating the relative fair value of the tangible and intangible assets acquired. We follow the real estate project costs guidance in ASC 970, Real Estate – General in accounting for the costs of development and re-development projects. As real estate is undergoing development or redevelopment, all project costs directly associated with and attributable to the development and construction of a project, including interest expense and real estate tax expense, are capitalized to the cost of the real property. The capitalization period begins when development activities and expenditures begin and ends upon completion, which is when the asset is ready for its intended use. Generally, rental property is considered substantially complete and ready for its intended use upon completion of tenant improvements (in the case of commercial properties) or upon issuance of a certificate of occupancy (in the case of multifamily properties). General and administrative costs are expensed as incurred. Property sales or dispositions are recorded when title transfers, we receive sufficient consideration and we have no significant continuing involvement with the property sold. Real Estate Held For Sale. Properties are classified as held for sale when they meet the necessary criteria, which include: (a) management, having the authority to approve the action, commits to a plan to sell the asset and (b) the sale of the asset is probable and expected to be completed within one year. We generally consider these criteria met when the transaction has been approved by our Board of Trustees, there are no known significant contingencies related to the sale and management believes it is probable that the sale will be completed within one year. Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal costs. Depreciation is not recorded on assets classified as held for sale. We report in discontinued operations the results of operations and the related gains or losses on the sales of properties that have either been disposed of or classified as held for sale and meet the classification of a discontinued operation as described in ASC 205 - Presentation of Financial Statements and ASC 360 - Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this standard, a disposal (or classification as held for sale) of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Impairment. We periodically evaluate our long-lived assets, including our investments in real estate, for impairment indicators. The impairment evaluation is performed on assets by property such that assets for a property form an asset group. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group and legal and environmental concerns. If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset group. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset group, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. If our anticipated holding period for properties, the estimated fair value of properties or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. Allowance for Doubtful Accounts. We periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts (approximately $210,000 as of April 30, 2017) for estimated losses resulting from the inability of tenants to make required payments under their respective lease agreements. We also maintain an allowance for deferred rents receivable arising from the straight-lining of rents (approximately $340,000 as of April 30, 2017). The straight-lining of rents receivable arises from earnings recognized in excess of amounts currently due under lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. If estimates differ from actual results, reported results would be impacted. 37 Revenue Recognition. We have the following revenue sources and revenue recognition policies: • Base Rents - income arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis, which includes the effects of rent increases and abated rent under the leases. Certain leases provide for tenant occupancy during periods for which no rent is due or where minimum rent payments increase during the term of the lease. Rental revenue is recorded for the full term of each lease on a straight-line basis. Accordingly, we record a receivable from tenants for rents that we expect to collect over the remaining lease term as deferred rents receivable. When we acquire a property, the term of the existing leases is considered to commence as of the acquisition date for the purposes of this calculation. Revenue recognition is considered to be critical because the evaluation of the reliability of such deferred rents receivable involves management's assumptions relating to such tenant's viability. • Percentage Rents - income arising from healthcare tenant leases which are contingent upon the gross revenue of the tenant exceeding a defined threshold. These rents are recognized only after the contingency has been removed (i.e., gross revenue thresholds have been achieved). • Expense Reimbursement Income – revenue arising from tenant leases, which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred. Income Taxes. We operate in a manner intended to enable us to continue to qualify as a REIT under Sections 856-860 of the Internal Revenue Code. Under those sections, a REIT which distributes at least 90% of its REIT taxable income, excluding net capital gains, as a distribution to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We intend to distribute to our shareholders 100% of our taxable income. Therefore, no provision for Federal income taxes is required. If we fail to distribute the required amount of income to our shareholders, we would fail to qualify as a REIT and substantial adverse tax consequences may result. We have one TRS, acquired during fiscal year 2014, which is subject to corporate federal and state income taxes on its taxable income at regular statutory rates. For fiscal year 2017, we estimate that the TRS will have no taxable income. There were no income tax provisions or material deferred income tax items for our TRS for the fiscal years ended April 30, 2017, 2016 and 2015. Our taxable income is affected by a number of factors, including, but not limited to, the following: our tenants perform their obligations under their leases and our tax and accounting positions do not change. These factors, which impact our taxable income, are subject to change and many are outside of our control. If actual results vary, our taxable income may change. Recent Accounting Pronouncements For disclosure regarding recent accounting pronouncements and the anticipated impact they will have on our operations, please refer to Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. 38 Fiscal 2017 Significant Events and Transactions During fiscal year 2017, we have successfully completed the following significant transactions, including development, disposition and financing transactions, and experienced the following significant events: Implementation of our Strategic Plan: In June 2016, we announced our intention to transition toward becoming a pure play multifamily REIT and to sell our remaining commercial properties. During fiscal year 2017, we sold 32 of our 34 senior housing properties, 2 medical office properties, 1 retail property and 1 industrial property as part of our strategic plan. Acquisitions, Dispositions and Development Project Placed in Service: During fiscal year 2017, we purchased the remaining 41.41% noncontrolling interest in the joint venture entity that owns the Red 20 multifamily property for a purchase price of $4.9 million and we added approximately 443 apartment units to our multifamily portfolio, through the placement in service of our 71 France and Monticello Crossings multifamily development projects. 71 France is owned by a joint venture entity in which we currently have an approximately 52.6% interest. The joint venture is consolidated in our financial statements. During fiscal year 2017, we sold 1 multifamily property, 32 senior housing properties, 2 medical office properties, 1 retail property, 1 industrial property and 2 parcels of unimproved land for sales prices totaling $286.9 million. Share Repurchase Program: On December 7, 2016, our Board of Trustees authorized a share repurchase program to repurchase up to $50 million of our common shares and/or Series B preferred shares over a one year period. Under this program, we may repurchase the shares in open-market purchases including pursuant to Rule 10b5-1 plans, as determined by management and in accordance with federal securities law requirements. The extent to which we repurchase our shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by the executive management team. The program may be suspended or discontinued at any time. During the fiscal year ended April 30, 2017, we repurchased approximately 778,000 common shares through open market purchases for an aggregate total of approximately $4.5 million. Redemption of Series A Preferred Shares: On September 1, 2016, our Board of Trustees authorized the redemption of all of the Series A preferred shares. On November 1, 2016, we delivered notice to holders of the Series A preferred shares that we intended to redeem all 1,150,000 Series A preferred shares at a redemption price equal to $25.00 per share plus any accrued but unpaid distributions per share up to and including the redemption date of December 2, 2016. On December 2, 2016, we completed the redemption of the Series A preferred shares for an aggregate redemption price of $29.2 million, and such shares are no longer deemed outstanding as of such date and were delisted from trading on the NYSE. New Credit Agreement: In January 2017, our Operating Partnership entered into a credit agreement for a new unsecured, variable interest rate Line of Credit with BMO Harris Bank N.A. as lead agent bank and book runner (the “BMO Line of Credit”). The BMO Line of Credit contains a $250 million accordion option, which exercise is subject to the satisfaction of certain conditions. However, the maximum borrowing capacity of the BMO Line of Credit is based on the value of an unencumbered asset pool (“UAP”). The UAP may not consist of less than 15 properties that meet certain eligibility criteria, and eligible properties may be added and removed from the UAP subject to the satisfaction of certain conditions. The BMO Line of Credit is guaranteed, jointly and severally, by us, the general partner of our Operating Partnership and each subsidiary that owns a UAP property. Borrowings under the BMO Line of Credit accrue interest at a rate based either on a margin percentage over the Lender’s Base Rate, ranging from 0.6% to 1.25%, or on a margin percentage over LIBOR, ranging from 1.6% to 2.25%, based on our total leverage ratio. The BMO Line of Credit has a termination date of January 31, 2021, which may be extended for an additional one year period subject to the satisfaction of certain conditions. The line also requires the payment of customary fees and contains covenants, representations, warranties and 39 events of default customary for credit facilities of this type, including a covenant on a fiscal quarterly-end basis that the consolidated leverage ratio will not be greater than 0.60 to 1.00. Participants, as of April 30, 2017, included the following financial institutions: BMO Harris Bank N.A., KeyBank, National Association, PNC Bank, National Association, Royal Bank of Canada, U.S. Bank National Association, Associated Bank, National Association, Bank of North Dakota and Raymond James Bank, N.A.; with KeyBank, National Association and PNC Bank, National Association as syndication agents and BMO Capital Markets Corp., Keybanc Capital Markets Inc. and PNC Capital Markets, LLC as joint lead arrangers and joint book runners. As of April 30, 2017, the line had a credit limit of $206.0 million, of which $57.1 million was drawn on the line at an interest rate of 2.74%. Adjusted the Dividend: Our Board of Trustees adjusted the quarterly per share/unit dividend effective with the dividend paid on January 3, 2017 from $0.13 to $0.07. Changes in our Executive Officers: On August 1, 2016, Mark W. Reiling resigned as Executive Vice President and Chief Investment Officer. On August 8, 2016, the Board of Trustees appointed Mark O. Decker, Jr., as our President and Chief Investment Officer. On April 27, 2017, Timothy P. Mihalick resigned as Chief Executive Officer and Diane K. Bryantt resigned as Executive Vice President and Chief Operating Officer. Also on April 27, 2017, Ted E. Holmes, Executive Vice President and Chief Financial Officer and Michael A. Bosh, Executive Vice President, General Counsel and Assistant Secretary, notified the Board of their intention to resign their respective positions. The Company entered into separate retention arrangements with Mr. Holmes and Mr. Bosh pursuant to which they have agreed to remain with the Company until July 31, 2017, the end of the Company’s first fiscal quarter, to assist in transition matters. On April 27, 2017, the Board of Trustees appointed Mark O. Decker, Jr., our President and Chief Investment Officer, to the additional position of Chief Executive Officer, effective immediately. On April 27, 2017, the Board of Trustees appointed John A. Kirchmann as the Company’s Executive Vice President effective April 30, 2017. Mr. Kirchmann is expected to become the Company’s Chief Financial Officer following the departure of Mr. Holmes. On April 27, 2017, the Board of Trustees appointed Anne Olson as the Company’s Executive Vice President, General Counsel and Secretary effective April 30, 2017. Changes in our Board of Trustees: On June 22, 2016, trustee Stephen L. Stenehjem notified our Board of Trustees that he did not intend to stand for re- election at the Annual Shareholder Meeting on September 20, 2016. On January 20, 2017, Jeffrey K. Woodbury resigned from our Board of Trustees. On April 27, 2017, Jeffrey L. Miller stepped down from his position Chairman of the Board of Trustees. Mr. Miller will continue as a member of the Board of Trustees. The Board of Trustees appointed Jeffrey P. Caira to succeed Mr. Miller as Chairman of the Board of Trustees, effective immediately. Also on April 27, 2017, Timothy P. Mihalick resigned as a trustee and the Board of Trustees appointed Mark O. Decker, Jr. as a trustee. Market Conditions and Outlook The demand for investment and institutional quality real estate in our markets is strong. Investors have abundant equity and access to debt to facilitate acquisitions and developments, though anecdotally we sense that development capital, particularly debt capital, is moderating due, in part, to heightened supply concerns among lenders. Prices and sales volumes are strong. Fundamentals are favorable across property types. The exception for us is in various North Dakota markets where energy and commodity market weakness coupled with increased supply caused us to experience elevated vacancies and offer lower rents to attract residents. We experienced generally stable trends across most of our apartment investments during the quarter ended April 30, 2017, except in certain commodity and supply impacted markets. Our ability to maintain occupancy levels and raise rents remains dependent on continued healthy employment and wage growth. We continue to observe considerable 40 multifamily development activity in our markets, and as this new construction is completed, we will experience increased competition for residents. Many existing apartment owners of modestly older properties are making significant upgrades to their units and raising rents. Our healthcare segment consists of medical office properties. The same-store healthcare segment remains stable with occupancy at 92.1%. A significant portion of our medical office portfolio is on campus and located in the Minneapolis Metropolitan Statistical Area (“MSA”) which had an 8.8% on campus vacancy rate as of the fourth calendar quarter of 2016 according to Colliers International Same-Store and Non-Same-Store Properties Throughout this Annual Report on Form 10-K, we have provided certain information on a same-store and non-same- store properties basis. Information provided on a same-store properties basis includes the results of properties that we have owned and operated for the entirety of both periods being compared (except for properties for which significant redevelopment or expansion occurred during either of the periods being compared and properties classified as held for sale and development or re-development properties which have not achieved a target level of occupancy of 90% for multifamily properties and 85% for commercial properties). For the comparison of fiscal years ended April 30, 2017 and 2016, all or a portion of 52 properties were non-same-store, of which non-same-store properties 12 were redevelopment or in-service development properties. For the fiscal year 2017 to 2016 comparison, all or a portion of 18 properties were added to non-same-store, all or a portion of 8 properties were moved to same-store compared to the designations for the fiscal year 2016 to 2015 comparison and 18 non-same- store properties from the fiscal year 2016 to 2015 comparison were sold. For the comparison of fiscal years 2016 and 2015, all or a portion of 60 properties were non-same-store, of which non-same-store properties 16 were redevelopment or in-service development properties. While there are judgments to be made regarding changes in designation, we typically move properties from same-store to non-same-store when redevelopment has or is expected to have a significant impact on property net operating income within the fiscal year. Sold properties and properties designated as held for sale are moved to the non-same store category when so classified, and acquisitions are moved to same-store once we have owned the property for the entirety of comparable periods and the property is not under significant redevelopment or expansion. Our development projects in progress are not included in our non-same-store properties category until they are placed in-service, which occurs upon the substantial completion of a commercial property and when a multifamily development project is tenantable, generally upon receipt of a certificate of occupancy. They are then subsequently moved from non-same-store to same- store when the property has been in-service for the entirety of both periods being compared and has reached the target level of occupancy specified above. 41 RESULTS OF OPERATIONS Consolidated Results of Operations The discussion that follows is based on our consolidated results of operations for the fiscal years ended April 30, 2017, 2016 and 2015. Real estate rentals . . . . . . . . . . . . . . . . . . . . . . . $ 186,837 $ 170,698 $ 159,969 $ 16,139 Tenant reimbursement . . . . . . . . . . . . . . . . . . . . 1,279 17,418 18,901 TOTAL REVENUE . . . . . . . . . . . . . . . . . . . 205,738 19,352 179,321 17,622 188,320 2017 vs. 2016 2016 vs. 2015 $ Change % Change $ Change % Change 6.7 % (8.9) % 5.0 % 9.5 % $ 10,729 7.3 % (1,730) 8,999 9.2 % (in thousands) Year Ended April 30, 2016 2015 2017 58,859 20,241 49,832 5,543 11,267 830 2,231 148,803 39,517 (35,768) (106) 81 317 53,535 19,602 42,784 4,663 11,824 362 1,647 134,417 44,904 (34,447) — 62 718 Property operating expenses, excluding real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . Impairment of real estate investments . . . . . . . . General and administrative expenses . . . . . . . . . Acquisition and investment related costs . . . . . . Other expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 64,768 23,587 55,009 57,028 12,075 3,276 3,796 TOTAL EXPENSES . . . . . . . . . . . . . . . . . . 219,539 Operating (loss) income . . . . . . . . . . . . . . . . . . (13,801) Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . (41,127) Loss on extinguishment of debt . . . . . . . . . . . . . (3,099) Interest income . . . . . . . . . . . . . . . . . . . . . . . . . 369 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . 807 (Loss) income before gain on sale of real estate and other investments and income from discontinued operations . . . . . . . . . . . . . . . . . . . (56,851) Gain on sale of real estate and other investments 18,701 Gain on bargain purchase . . . . . . . . . . . . . . . . . — (Loss) income from continuing operations . . . . (38,150) Income from discontinued operations . . . . . . . . 68,675 NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . 30,525 Net (income) loss attributable to noncontrolling interests – Operating Partnership . . . . . . . . . . . . Net loss (income) attributable to noncontrolling interests – consolidated real estate entities . . . . Net income attributable to Investors Real Estate Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,347 Dividends to preferred shareholders . . . . . . . . . (10,546) Redemption of Preferred Shares . . . . . . . . . . . . (1,435) NET INCOME AVAILABLE TO COMMON SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . $ 31,366 $ 60,492 $ 12,573 4,041 9,640 3,424 17,105 59,497 76,602 11,237 6,093 — 17,330 11,354 28,684 72,006 (11,514) — 24,087 (11,514) — 16,881 (3,071) (1,526) (4,059) (7,032) 2,436 5,909 3,346 5,177 51,485 808 2,446 1,565 70,736 (53,318) (5,359) (2,993) 288 490 5,324 10.0 % 639 16.5 % 7,048 10.4 % 880 928.8 % (557) 7.2 % 468 294.7 % 70.2 % 584 47.5 % 14,386 (135.0)% (5,387) 15.0 % (1,321) (106) 19 (401) 2,823.6 % 355.6 % 154.6 % (60,892) 9,061 (3,424) (55,255) 9,178 (46,077) 94.0 % (100.0)% (323.0)% (1,506.9)% (7,196) 3,547 3,424 (225) 15.4 % 48,143 (60.2)% 47,918 9.9 % 3.3 % 16.5 % 18.9 % (4.7) % 129.3 % 35.5 % 10.7 % (12.0) % 3.8 % — % 30.6 % (55.8) % (64.0) % 58.2 % — % (1.3) % 424.0 % 167.1 % 2,973 (42.3)% (5,506) 360.8 % 14,445 593.0 % 5,507 (179.3) % (28,659) 968 (1,435) (39.8)% 47,919 — — (8.4)% — % 198.9 % — % — % (29,126) (48.2)% 47,919 381.1 % 42 Revenues. Total revenues increased by 9.2% to $205.7 million in fiscal year 2017, compared to $188.3 million in fiscal year 2016. Total revenues increased by 5.0% to $188.3 million in fiscal year 2016, compared to $179.3 million in fiscal year 2015. These increases were primarily attributable to the addition of new income-producing real estate properties. For fiscal year 2017, the increase in revenue of $17.4 million resulted from: Revenue primarily from properties acquired and development projects placed in service in fiscal year 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in revenue primarily from properties acquired and development projects placed in service in fiscal year 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease in revenue from same-store properties, excluding straight line rent(1) . . . . . . . . . . . . . . . . . . Net change in straight line rent on same-store properties(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease in revenue from properties sold or classified as held for sale in fiscal years 2017 and 2016 Net increase in total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) See analysis of NOI by segment below for additional information. For fiscal year 2016, the increase in revenue of $9.0 million resulted from: Revenue primarily from properties acquired and development projects placed in service in fiscal year 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in revenue primarily from properties acquired and development projects placed in service in fiscal year 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in revenue from same-store properties, excluding straight line rent(1) . . . . . . . . . . . . . . . . . . Net change in straight line rent on same-store properties(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease in revenue from properties sold or classified as held for sale in fiscal years 2016 and 2015 Net increase in total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) See analysis of NOI by segment below for additional information. (in thousands) $ 1,131 19,999 (2,954) 1,073 (1,831) 17,418 $ (in thousands) $ 8,791 7,891 (210) (202) (7,271) 8,999 $ Property operating expenses, excluding real estate taxes. Property operating expenses, excluding real estate taxes, increased by 10.0% to $64.8 million in fiscal year 2017 compared to $58.9 million in fiscal year 2016. $3.5 million of the increase was attributable to non-same-store properties. Same-store properties accounted for $2.4 million of the increase, which was primarily driven by a $1.4 million increase in snow removal costs and other maintenance items and an increase of $713,000 in the provision for bad debts. Property operating expenses, excluding real estate taxes, increased by 9.9% to $58.9 million in fiscal year 2016 compared to $53.5 million in fiscal year 2015. $4.0 million of the increase was attributable to non-same-store properties. Same-store properties accounted for $1.3 million of the increase, which was primarily driven by increased labor costs in certain of our markets and general maintenance expense. Real Estate Taxes. Real estate taxes increased by 16.5% to $23.6 million in fiscal year 2017 compared to $20.2 million in fiscal year 2016. An increase of $2.5 million was attributable to the addition of new income-producing real estate properties, while same-store properties saw an increase of approximately $797,000 compared to the prior fiscal year. Real estate taxes increased by 3.3% to $20.2 million in fiscal year 2016 compared to $19.6 million in fiscal year 2015. An increase of $732,000 was attributable to the addition of new income-producing real estate properties, while same- store properties realized a decrease of $93,000 when compared to the prior fiscal year. Depreciation and Amortization. Depreciation and amortization increased by 10.4% to $55.0 million in fiscal year 2017, compared to $49.8 million in fiscal year 2016. This increase was primarily attributable to the addition of depreciable assets from acquisitions, development projects placed in service, capital improvements and tenant improvements during fiscal years 2017 and 2016. 43 Depreciation and amortization increased by 16.5% to $49.8 million in fiscal year 2016, compared to $42.8 million in fiscal year 2015. This increase was primarily attributable to the addition of depreciable assets from acquisitions, development projects placed in service, capital improvements and tenant improvements during fiscal years 2016 and 2015. Impairment of Real Estate Investments. During fiscal years 2017, 2016 and 2015, we incurred impairment losses of $57.0 million, $5.5 million and $4.7 million, respectively, in continuing operations. See Note 2 to our consolidated financial statements contained in this Annual Report on Form 10-K for additional information. General and Administrative Expenses. General and administrative expenses increased by 7.2% to $12.1 million in fiscal year 2017, compared to $11.3 million in fiscal year 2016. This increase is primarily a result of severance costs for departing officers and employees, net of a decrease in share based compensation expense due to forfeitures, as well as an increase in health insurance expense. General and administrative expenses decreased by 4.7% to $11.3 million in fiscal year 2016, compared to $11.8 million in fiscal year 2015, primarily due to a decrease in compensation expense. Acquisition and Investment Related Costs. Acquisition and investment related costs in fiscal years 2017, 2016 and 2015 were $3.3 million, $830,000 and $362,000, respectively. The increase between years was primarily due to the write-off of development pursuit costs. Other Expenses. Other expenses increased 70.2% to $3.8 million in fiscal year 2017, compared to $2.2 million in fiscal year 2016, primarily due to increased legal and consulting expenses. Other expenses increased 35.5% to $2.2 million in fiscal year 2016, compared to $1.6 million in fiscal year 2015, primarily due to increased legal and consulting expenses. Interest Expense. Interest expense increased 15.0% to $41.1 million in fiscal year 2017, compared to $35.8 million in fiscal year 2016, primarily due to an increase in mortgage interest net of a decrease in capitalized construction interest and a decrease in interest on construction loans. Interest expense increased 3.8% to $35.8 million in fiscal year 2016, compared to $34.4 million in fiscal year 2015, primarily due to an increase in mortgage interest and interest on construction loans net of a decrease in interest expense on our line of credit. Interest Income and Other Income. We recorded interest income in fiscal years 2017, 2016 and 2015 of approximately $369,000, $81,000 and $62,000, respectively. The increase in interest income from fiscal year 2016 to fiscal year 2017 was primarily due to interest earned on notes receivable from our joint venture partners. Other income consists of real estate tax appeal refunds and other miscellaneous income. We earned other income in fiscal years 2017, 2016 and 2015 of $807,000, $317,000 and $718,000, respectively. The higher amount of other income in fiscal years 2017 and 2015 was primarily due to an increase in real estate tax appeal and other refunds. Gain on Sale of Real Estate and Other Investments. In fiscal years 2017, 2016 and 2015, we recorded gains on sale of real estate and other investments in continuing operations of $18.7 million, $9.6 million and $6.1 million, respectively. Gain on Bargain Purchase. On March 22, 2016, we acquired a multifamily property in Rochester, MN, which had a fair value at acquisition of approximately $36.3 million, as appraised by a third party. The consideration exchanged for the property consisted of $15.0 million cash and approximately 2.5 million units, valued at approximately $17.8 million. The fair value of the units was based on the closing market price of our common stock on the acquisition date of $7.09 per share. The acquisition resulted in a gain on bargain purchase because the fair value of assets acquired exceeded the total of the fair value of the consideration paid by approximately $3.4 million. The seller accepted consideration below the fair value of the property in order to do a partial tax-deferred exchange for units. Income from Discontinued Operations. Income from discontinued operations in fiscal years 2017, 2016 and 2015 was $68.7 million, $59.5 million and $11.4 million, respectively. We realized a gain on sale of discontinued operations for 44 fiscal years 2017, 2016 and 2015 of $56.1 million, $23.8 million and $0, respectively. See Note 12 of the Notes to Consolidated Financial Statements in this report for further information on discontinued operations. Occupancy Occupancy as of April 30, 2017 compared to April 30, 2016 decreased 0.7% in our multifamily segment and decreased 3.1% in our healthcare segment on a same-store basis. Occupancy represents the actual number of units or square footage leased divided by the total number of units or square footage at the end of the period. Occupancy Levels on a Same-Store Properties and All Properties Basis: Same-Store Properties As of April 30, All Properties As of April 30, 2015 Segments Multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.2 % 94.9 % 95.1 % 93.1 % 90.8 % 92.0 % Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.1 % 95.2 % 95.3 % 92.8 % 89.4 % 91.5 % 2016 2015 2016 2017 2017 Net Operating Income Net Operating Income (“NOI”) is a non-GAAP measure which we define as total real estate revenues less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance, property management expenses and other property expenses). We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. 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. The following tables show real estate revenues, real estate operating expenses, and NOI by reportable operating segment for fiscal years 2017, 2016 and 2015. For a reconciliation of net operating income of reportable segments to net income as reported, see Note 11 to our consolidated financial statements contained in this Annual Report on Form 10-K. The tables also show net operating income by reportable operating segment on a same-store property and non-same-store property basis. Same-store properties are properties owned or in service for the entirety of the periods being compared, and, in the case of development or re-development properties, which have achieved a target level of occupancy of 90% for multifamily properties and 85% for commercial properties. This comparison allows us to evaluate the performance of existing properties and their contribution to net income. Management believes that measuring performance on a same- store property basis is useful to investors because it enables evaluation of how our properties are performing year over year. Management uses this measure to assess whether or not it has been successful in increasing net operating income, renewing the leases of existing tenants, controlling operating costs and appropriately handling capital improvements. The discussion below focuses on the main factors affecting real estate revenue and real estate expenses from same-store properties, since changes from one fiscal year to another in real estate revenue and expenses from non-same-store properties are due to the addition of those properties to our real estate portfolio, and accordingly provide less useful information for evaluating the ongoing operational performance of our real estate portfolio. 45 All Segments The following table of selected operating data reconciles NOI to net income and provides the basis for our discussion of NOI by segment in fiscal years 2017, 2016 and 2015. Year Ended April 30, 2017 vs 2016 2016 vs 2015 2017 2016 $ Change % Change 2016 2015 $ Change % Change All Segments Real estate revenue Same-store . . . . . . . . . . . . . . . . . . . . . . . . . . $ 157,560 $ 159,441 $ (1,881) Non-same-store(1) . . . . . . . . . . . . . . . . . . . . . . 28,879 19,299 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 205,738 $ 188,320 $ 17,418 48,178 (1.2)% $ 153,010 $ 153,422 $ 66.8 % 25,899 35,310 9.2 % $ 188,320 $ 179,321 $ (412) 9,411 8,999 Real estate expenses Same-store . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,608 $ 67,379 $ Non-same-store(1) . . . . . . . . . . . . . . . . . . . . . . 11,721 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88,355 $ 79,100 $ 17,747 3,229 6,026 9,255 4.8 % $ 63,897 $ 62,701 $ 51.4 % 10,436 15,203 11.7 % $ 79,100 $ 73,137 $ 1,196 4,767 5,963 Net operating income 30,431 Same-store . . . . . . . . . . . . . . . . . . . . . . . . . . $ 86,952 $ 92,062 $ (5,110) Non-same-store(1) . . . . . . . . . . . . . . . . . . . . . . 17,158 13,273 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 117,383 $ 109,220 $ 8,163 (49,832) (5,543) (11,267) (830) (2,231) (35,768) (106) 398 Depreciation/amortization . . . . . . . . . . . . . . . . . Impairment of real estate investments . . . . . . . . General and administrative expenses . . . . . . . . . Acquisition and investment related costs . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . Loss on debt extinguishment . . . . . . . . . . . . . . . Interest and other income . . . . . . . . . . . . . . . . (Loss) income before gain on sale of real estate and other investments and income from 4,041 discontinued operations . . . . . . . . . . . . . . . . . . (56,851) 9,640 18,701 Gain on sale of real estate and other investments 3,424 Gain on bargain purchase . . . . . . . . . . . . . . . . . — 17,105 (Loss) income from continuing operations . . . . . (38,150) Income from discontinued operations(2) . . . . . . . 59,497 68,675 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,525 $ 76,602 (55,009) (57,028) (12,075) (3,276) (3,796) (41,127) (3,099) 1,176 (5.6)% $ 89,113 $ 90,721 $ (1,608) 4,644 77.4 % 15,463 20,107 7.5 % $ 109,220 $ 106,184 $ 3,036 (42,784) (49,832) (4,663) (5,543) (11,824) (11,267) (362) (830) (1,647) (2,231) (34,447) (35,768) — (106) 780 398 4,041 9,640 3,424 17,105 59,497 11,237 6,093 — 17,330 11,354 $ 76,602 $ 28,684 (0.3)% 36.3 % 5.0 % 1.9 % 45.7 % 8.2 % (1.8)% 30.0 % 2.9 % (1) Non-same-store properties consist of the following properties for the comparative periods of fiscal years 2017 and 2016 (re-development and in- service development properties are listed in bold type): Held for Investment - Multifamily - Healthcare - Other - 71 France, Edina, MN; Arcata, Golden Valley, MN; Avalon Cove, Rochester, MN; Cardinal Point, Grand Forks, ND; Cascade Shores, Rochester, MN; Chateau II, Minot, ND; Crystal Bay, Rochester, MN; Deer Ridge, Jamestown, ND; French Creek, Rochester, MN; Gardens, Grand Forks, ND; GrandeVille at Cascade Lake, Rochester, MN; Legacy Heights, Bismarck, ND; Monticello Crossings, Monticello, MN; Red 20, Minneapolis, MN and Renaissance Heights, Williston, ND. Total number of units, 2,374. Edina 6525 Drew Ave, Edina, MN; Edina 6565 France SMC III, Edina, MN; Lakeside Medical Plaza, Omaha, NE and PrairieCare Medical, Brooklyn Park, MN. Total rentable square footage, 156,211. Minot Southgate Retail, Minot, ND and Roseville 3075 Long Lake Road, Roseville, MN. Total rentable square footage, 228,406. Held for Sale - Multifamily - Other - 11th Street 3 Plex, Minot, ND; 4th Street 4 Plex, Minot, ND; Apartments on Main, Minot, ND; Brooklyn Heights, Minot, ND; Colton Heights, Minot, ND; Fairmont, Minot, ND; First Avenue, Minot, ND; Pines, Minot, ND; Southview, Minot, ND; Summit Park, Minot, ND; Temple, Minot, ND; Terrace Heights, Minot, ND and Westridge, Minot, ND. Total number of units, 327. 17 South Main, Minot, ND; 1st Avenue Building, Minot, ND and Minot Southgate Wells Fargo Bank. Total rentable square footage, 11,879. Total NOI for held for sale properties for the fiscal years ended April 30, 2017 and 2016, respectively, $1,503 and $1,972. Sold - Multifamily - Campus Center, St. Cloud, MN; Campus Heights, St. Cloud, MN; Campus Knoll, St. Cloud, MN; Campus Plaza, St. Cloud, MN; Campus Side, St. Cloud, MN; Campus View, St. Cloud, MN; Cornerstone, St. Cloud, MN; Pinecone Villas, Sartell, MN and University Park Place, St. Cloud, MN. Healtheast St. John & Woodwinds, Maplewood and Woodbury, MN; Nebraska Orthopaedic Hospital, Omaha, NE and Sartell 2000 23rd St, Sartell, MN. Grand Forks Carmike, Grand Forks, ND; Minot Arrowhead First International, Minot, ND; Minot Plaza, Minot, ND; Stone Container, Healthcare - Other - 46 Fargo, ND and Thresher Square, Minneapolis, MN. Total NOI for sold properties for the fiscal years ended April 30, 2017 and 2016, respectively, $5,586 and $5,689. (2) Held for Investment - Non-same-store properties consist of the following properties for the comparative periods of fiscal years 2016 and 2015 (re-development and in- service development properties are listed in bold type): Multifamily - 71 France, Edina, MN; Arcata, Golden Valley, MN; Avalon Cove, Rochester, MN; Cardinal Point, Grand Forks, ND; Cascade Shores, Rochester, MN; Chateau II, Minot, ND; Colonial Villa, Burnsville, MN; Commons at Southgate, Minot, ND; Crystal Bay, Rochester, MN; Cypress Court I and II, St. Cloud, MN; Dakota Commons, Williston, ND; Deer Ridge, Jamestown, ND; French Creek, Rochester, MN; Gardens, Grand Forks, ND; GrandeVille at Cascade Lake, Rochester, MN; Homestead Garden, Rapid City, SD; Legacy Heights, Bismarck, ND; Northridge, Bismarck, ND; Red 20, Minneapolis, MN; Renaissance Heights, Williston, ND and Silver Springs, Rapid City, SD. Total number of units, 3,097. Edina 6565 France SMC III, Edina, MN; Lakeside Medical Plaza, Omaha, NE and PrairieCare Medical, Brooklyn Park, MN. Total rentable square footage, 156,199. Minot Southgate Retail, Minot, ND; Minot Southgate Wells Fargo Bank, Minot, ND and Roseville 3075 Long Lake Road, Roseville, MN. Total rentable square footage, 233,518. Healthcare - Other - Held for Sale - Multifamily - Healthcare - Other - Pinecone Villas, Sartell, MN. Total number of units, 24. Sartell 2000 23rd St, Sartell, MN. Total rentable square footage, 59,760. Stone Container, Fargo, ND. Total rentable square footage, 195,075. Sold - Total NOI for held for sale properties for the twelve months ended April 30, 2016 and 2015, respectively, $776 and $830. Healthcare - Other - Multifamily - Campus Center, St. Cloud, MN; Campus Heights, St. Cloud, MN; Campus Knoll, St. Cloud, MN; Campus Plaza, St. Cloud, MN; Campus Side, St. Cloud, MN; Campus View, St. Cloud, MN; Cornerstone, St. Cloud, MN; Lancaster, St. Cloud, MN and University Park Place, St. Cloud, MN. Jamestown Medical Office Building, Jamestown, ND and Nebraska Orthopaedic Hospital, Omaha, NE. 2030 Cliff Road, Eagan, MN; Burnsville Bluffs II, Burnsville, MN; Dewey Hill Business Center, Edina, MN; Eagan 2785 & 2795 Hwy 55, Eagan, MN; Fargo Express Community, Fargo, ND; Kalispell Retail Center, Kalispell, MT; Minot Arrowhead First International, Minot, ND; Minot Plaza, Minot, ND; Northgate I, Maple Grove, MN; Northgate II, Maple Grove, MN; Plymouth I, Plymouth, MN; Plymouth II, Plymouth, MN; Plymouth III, Plymouth, MN; Plymouth IV-V, Plymouth, MN; Southeast Tech, Eagan, MN; Thresher Square, Minneapolis, MN; Weston Retail and Walgreens, Weston, WI; Whitewater Plaza, Minnetonka, MN and Wirth Corporate Center, Golden Valley, MN. Total NOI for sold properties for the twelve months ended April 30, 2016 and 2015, respectively, $2,403 and $6,308. (3) Discontinued operations include gain on disposals and income from operations for: Held for Sale at April 30, 2017: EV Hermantown I and II. 2017 Dispositions: Casper 1930 E 12th St, Casper 3955 E 12th St, Cheyenne 4010 N College Dr, Cheyenne 4606 N College Dr, Edgewood Vista (“EV”) Belgrade, EV Billings, EV Bismarck, EV Brainerd, EV Columbus, EV East Grand Forks, EV Fargo, EV Fremont, EV Grand Island, EV Hastings, EV Kalispell, EV Minot, EV Missoula, EV Norfolk, EV Omaha, EV Sioux Falls, EV Spearfish, EV Virginia, Laramie 1072 N 22nd St, Legends at Heritage Place, Spring Creek (“SC”) American Falls, SC Boise, SC Eagle, SC Fruitland, SC Meridian, SC Overland, SC Soda Springs and SC Ustick. 2016 Dispositions: 610 Business Center, 7800 West Brown Deer Road, American Corporate Center, Ameritrade, Barry Pointe Office Park, Benton Business Park, Brenwood, Brook Valley I, Burnsville Strip Center, Champlin South Pond, Chan West Village, Corporate Center West, Crosstown Centre, Duluth 4615 Grand, Duluth Denfeld Retail, Eden Prairie 6101 Blue Circle Drive, Farnam Executive Center, Flagship Corporate Center, Forest Lake Auto, Forest Lake Westlake Center, Gateway Corporate Center, Golden Hills Office Center, Grand Forks Medpark Mall, Granite Corporate Center, Great Plains, Highlands Ranch I and II, Interlachen Corporate Center, Intertech Building, Jamestown Buffalo Mall, Jamestown Business Center, Lakeville Strip Center, Mendota Office Center I-IV, Minnesota National Bank, Miracle Hills One, Monticello C-Store, Northpark Corporate Center, Omaha 10802 Farnam Dr, Omaha Barnes & Noble, Pacific Hills, Pine City C-Store, Pine City Evergreen Square, Plaza VII, Plymouth 5095 Nathan Lane, Prairie Oak Business Center, Rapid City 900 Concourse Drive, Riverport, Rochester Maplewood Square, Spring Valley IV, V, X and XI, St. Cloud Westgate, Superior Office Building, TCA Building, Three Paramount Plaza, Timberlands, UHC Office, US Bank Financial Center, Wells Fargo Center, West River Business Park, Westgate and Woodlands Plaza IV. 47 An analysis of NOI by segment follows. Multifamily Real estate revenue from same-store properties in our multifamily segment decreased by 1.5% or $1.6 million in the twelve months ended April 30, 2017 compared to the same period in the prior fiscal year. A decrease of $2.0 million was attributable to increased vacancy, primarily in our energy impacted markets of Williston, North Dakota and Minot, North Dakota. This decrease in revenue was offset by an increase of $1.1 million that was the result of a ratio utility billings system implemented in the current year to recapture tenant utility expenses. Real estate expenses at same-store properties increased by 2.4% or $1.2 million in the twelve months ended April 30, 2017 compared to the same period in the prior fiscal year. The primary factors were increased administrative and maintenance expenses of $810,000 and $911,000, respectively, due to increased labor costs and snow removal. These increases were offset by a decrease in insurance expenses of $267,000, due to a decrease in insurance premiums as well as a decrease in deductibles paid on insurance claims. Real estate revenue from same-store properties in our multifamily segment decreased by 0.5% or $544,000 in the twelve months ended April 30, 2016 compared to the same period in the prior fiscal year. A decrease of $913,000 was attributable to increased vacancy, primarily in our energy impacted markets of Williston, North Dakota and Minot, North Dakota. This decrease in revenue was offset by an increase of $332,000 that was the result of a ratio utility billings system implemented in the current year to recapture tenant utility expenses. All other real estate revenue items combined increased by $37,000. 48 Real estate expenses at same-store properties increased by 5.3% or $2.4 million in the twelve months ended April 30, 2016 compared to the same period in the prior fiscal year. The primary factors were increased administrative expenses of $1.9 million and increased maintenance expenses of $987,000. These increases were offset by a decrease in insurance expenses of $611,000 while all other expenses combined increased by $132,000 when compared to the prior year. The increase in administrative expenses was due to increased internal property management and labor costs while the increase in maintenance expenses was due to more general maintenance items being completed when compared to the prior year. The decrease in insurance expenses was due to a decrease in insurance premiums as well as a decrease in deductibles paid on insurance claims. 2017 2016 2017 vs 2016 $ Change % Change 2016 2015 $ Change % Change 2016 vs 2015 Years Ended April 30 Multifamily Real estate revenue Same-store . . . . . . . . . . . . . $ 110,019 Non-same-store . . . . . . . . . . 34,724 Total . . . . . . . . . . . . . . . . . . $ 144,743 $ 111,644 19,505 $ 131,149 $ (1,625) 15,219 $ 13,594 (1.5)% $ 102,694 78.0 % 28,455 10.4 % $ 131,149 $ 103,238 $ 15,288 (544) 13,167 $ 118,526 $ 12,623 (0.5)% 86.1 % 10.6 % Real estate expenses(1) Same-store . . . . . . . . . . . . . $ 48,896 Non-same-store . . . . . . . . . . 14,396 Total . . . . . . . . . . . . . . . . . . $ 63,292 Net operating income Same-store . . . . . . . . . . . . . $ 61,123 Non-same-store . . . . . . . . . . 20,328 Total . . . . . . . . . . . . . . . . . . $ 81,451 $ $ $ $ 47,746 9,384 57,130 $ $ 1,150 5,012 6,162 2.4 % $ 44,226 53.4 % 12,904 10.8 % $ 57,130 $ 42,414 $ 6,254 $ 48,668 $ 1,812 6,650 8,462 4.3 % 106.3 % 17.4 % 63,898 10,121 74,019 $ (2,775) 10,207 7,432 $ 100.8 % (4.3)% $ 58,468 15,551 10.0 % $ 74,019 $ 60,824 $ (2,356) 6,517 4,161 9,034 $ 69,858 $ (3.9)% 72.1 % 6.0 % Occupancy . . . . . . . . . . . . . . . . Same-store . . . . . . . . . . . . . . . . Non-same-store . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . 2017 94.2 % 88.8 % 93.1 % 2016 94.9 % 73.7 % 90.8 % Number of Units . . . . . . . . . . . Same-store . . . . . . . . . . . . . . . . Non-same-store . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . 2017 10,511 2,701 13,212 2016 10,511 2,463 12,974 2016 94.8 % 78.4 % 90.8 % 2015 95.1 % 77.1 % 92.0 % 2016 9,853 3,121 12,974 2015 9,854 1,990 11,844 (1) Excludes offsite costs associated with property management and casualty-related amounts. Property management costs in fiscal 2017 increased by approximately $1.5 million compared to fiscal year 2016 and in fiscal year 2016, increased by $1.2 million compared to fiscal year 2015. Casualty-related costs in fiscal year 2017 increased by approximately $176,000 compared to fiscal year 2016, and in fiscal year 2016, decreased by approximately $310,000 compared to fiscal year 2015. Healthcare Real estate revenue from same-store properties in our healthcare segment was $38.6 million in both of the fiscal years ended April 30, 2017 and 2016. Real estate expense from same-store properties increased by 5.6% or $780,000 in the twelve months ended April 30, 2017 when compared to the same period of the prior fiscal year. The primary factors were increases in maintenance expenses of $364,000 and real estate taxes of $538,000. Real estate revenue from same-store properties in our healthcare segment decreased by 0.4% or $170,000 in the twelve months ended April 30, 2016 compared to the same period in the prior fiscal year. The decrease in revenue was attributable to a decrease in the straight-line rent receivable of $356,000. This decrease was offset by an increase in tenant reimbursements of $200,000 while all other real estate revenue items combined decreased by $14,000. Real estate expense from same-store properties decreased by 4.4% or $668,000 in the twelve months ended April 30, 2016 when compared to the same period of the prior fiscal year. The primary factors were decreases in other property expenses of $392,000 and real estate taxes of $248,000. The decrease in other property expenses, consisting of bad debt provision expenses, was due to a decrease in the estimated uncollectible accounts receivable. All other real estate expenses combined decreased by $28,000. 49 2017 2016 2017 vs 2016 $ Change % Change 2016 2015 2016 vs 2015 $ Change % Change Years Ended April 30 Healthcare Real estate revenue Same-store . . . . . . . . . . . . . $ Non-same-store . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . $ 38,648 11,208 49,856 Real estate expenses(1) Same-store . . . . . . . . . . . . . $ Non-same-store . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . $ 14,672 1,747 16,419 Net operating income Same-store . . . . . . . . . . . . . $ Non-same-store . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . $ 23,976 9,461 33,437 $ $ $ $ $ $ 38,550 7,071 45,621 $ 98 4,137 $ 4,235 0.3 % $ 58.5 % 9.3 % $ 40,715 4,906 45,621 13,892 1,547 15,439 $ $ 780 200 980 5.6 % $ 12.9 % 6.3 % $ 13,965 1,474 15,439 24,658 5,524 30,182 $ (682) 3,937 $ 3,255 (2.8) % $ 71.3 % 10.8 % $ 26,750 3,432 30,182 $ $ $ $ $ $ 40,885 3,268 44,153 $ (170) 1,638 $ 1,468 14,226 1,018 15,244 $ $ (261) 456 195 26,659 2,250 28,909 $ 91 1,182 $ 1,273 (0.4)% 50.1 % 3.3 % (1.8)% 44.8 % 1.3 % 0.3 % 52.5 % 4.4 % Occupancy . . . . . . . . . . . . . . . . Same-store . . . . . . . . . . . . . . . . Non-same-store . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . 2017 92.1 % 98.5 % 92.8 % 2016 95.2 % 69.1 % 89.4 % Rentable Square Footage . . . . 2017 Same-store . . . . . . . . . . . . . . . . 1,171,433 Non-same-store . . . . . . . . . . . . . 156,211 Total . . . . . . . . . . . . . . . . . . . . . 1,327,644 2016 1,171,433 333,706 1,505,139 2016 95.6 % 52.2 % 89.4 % 2015 95.3 % 50.8 % 91.5 % 2016 1,289,180 215,959 1,505,139 2015 1,289,209 121,518 1,410,727 (1) Excludes offsite costs associated with property management and casualty-related amounts, Property management costs in fiscal 2017 decreased by approximately $73,000 compared to fiscal year 2016 and in fiscal year 2016, decreased by approximately $350,000 compared to fiscal year 2015. There were no casualty-related costs in fiscal years 2017 and 2016. Casualty-related costs in fiscal year 2016 decreased by approximately $62,000 compared to fiscal year 2015. Comparison of Results from Multifamily, Healthcare and Other Properties The following table presents an analysis of the relative investment in (corresponding to “Property owned” on the balance sheet, i.e., cost), and net operating income of, our properties over the past three fiscal years: Fiscal Years Ended April 30 Real Estate Investments – (cost before depreciation) 2017 (in thousands, except percentages) 2016 % % 2015 % Multifamily . . . . . . . . . . . . . . . . . . . . $ 1,260,541 323,148 Healthcare . . . . . . . . . . . . . . . . . . . . . 93,792 Other . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,677,481 Net Operating Income 75.1 % $ 1,243,909 337,920 19.3 % 99,642 5.6 % 100.0 % $ 1,681,471 74.0 % $ 20.1 % 5.9 % 946,520 284,342 104,825 100.0 % $ 1,335,687 70.9 % 21.3 % 7.8 % 100.0 % Multifamily . . . . . . . . . . . . . . . . . . . . $ Healthcare . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . 81,451 33,437 2,495 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 117,383 69.4 % $ 28.5 % 2.1 % 74,019 30,182 5,019 100.0 % $ 109,220 67.8 % $ 27.6 % 4.6 % 100.0 % $ 69,858 28,909 7,417 106,184 65.8 % 27.2 % 7.0 % 100.0 % 50 Analysis of Commercial Credit Risk and Leases Credit Risk The following table lists our top ten commercial tenants on April 30, 2017, for all commercial properties owned by us, including those held for sale, measured by percentage of total commercial minimum rents as of April 1, 2017. Our results of operations are dependent on, among other factors, the economic health of our tenants. We attempt to mitigate tenant credit risk by working to secure creditworthy tenants that meet our underwriting criteria and monitoring our portfolio to identify potential problem tenants. We believe that our credit risk is also mitigated by the fact that no individual tenant accounts for more than 3% of our total real estate rentals. As of April 30, 2017, 13 of our 42 commercial properties held for investment, along with two held for sale properties, were leased under triple net leases under which the tenant pays a monthly lump sum base rent as well as all costs associated with the property, including property taxes, insurance, replacement, repair or restoration, in addition to maintenance. The failure by any of our triple net tenants to effectively conduct their operations or to maintain and improve our properties in accordance with the terms of their respective triple net leases could adversely affect their business reputations and ability to attract and retain residents and customers to our properties, which could have an indirect adverse effect on us. We regularly monitor the relative credit risk of our significant tenants, including our triple net tenants. The metrics we use to evaluate a significant tenant’s liquidity and creditworthiness depend on facts and circumstances specific to that tenant and to the industry in which it operates, and include the tenant’s credit history and economic conditions related to the tenant, its operations and the markets in which it operates, that may change over time. Prior to signing a lease with a tenant, we generally assess the prospective tenant’s credit quality through a review of its financial statements and tax returns, and the result of that review is a factor in establishing the rent to be charged (e.g., higher risk tenants will be charged higher rent). Over the course of a lease, our property management and asset management personnel have regular contact with tenants and tenant employees, and, where the terms of the lease permit, receive tenant financial information for periodic review, or review publicly-available financial statements, in the case of public company tenants or non-profit entities, such as hospital systems, whose financial statements are required to be filed with state agencies. Through these means we monitor tenant credit quality. % of Total Commercial Lessee Fairview Health Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . St. Luke's Hospital of Duluth, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Affiliates of Edgewood Vista . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PrairieCare Medical LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Quality Manufacturing Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Children's Hospitals & Clinics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allina Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noran Neurological Clinic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amerada Hess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Obstetrics and Gynecology Assc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . All Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Monthly Commercial Rent as of April 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minimum Rents as of April 2017 11.9 % 8.7 % 8.5 % 7.5 % 3.3 % 2.7 % 2.7 % 2.4 % 2.3 % 2.2 % 47.8 % 100.0 % 51 Healthcare Leasing Activity The total leasing activity for our same-store healthcare properties, expressed in square feet of leases signed during the period, and the resulting occupancy levels are as follows for the years ended April 30, 2017 and 2016 respectively. Segment Healthcare . . . . . . . . . . . . . . . . . Square Feet of New Leases(1) Square Feet of Leases Renewed(1) 2017 Occupancy 2016 2017 2016 2016 20,001 45,446 118,076 156,543 138,077 201,989 92.1 % 95.6 % 2017 2016 Total Square Feet of Leases Executed(1) 2017 (1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP. Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period. Healthcare New Leases The following table sets forth the average effective rents and the estimated costs of tenant improvements and leasing commissions, on a per square foot basis, that we are obligated to fulfill under the new leases signed for our same-store healthcare properties during the years ended April 30, 2017 and 2016, respectively: Leasing Commissions per Square Foot(1) 2016 Segment Healthcare . . . 20,001 45,446 7.6 6.6 $ 19.42 $ 19.97 $ 36.58 $ 12.99 $ 6.17 $ 3.24 Estimated Tenant Improvement Cost per Square Foot(1) 2017 Square Feet of Average Term New Leases(1) in Years Average Effective Rent(2) 2016 2017 2016 2016 2017 2017 2016 2017 (1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP. Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period. (2) Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net. Healthcare Lease Renewals The following table summarizes our lease renewal activity within our same-store healthcare segment for the years ended April 30, 2017 and 2016, respectively (square feet data in thousands): Estimated 2017 Segment Healthcare 118,076 156,543 87.8 % 92.2 % 5.5 2016 2017 2017 2017 1.5 % 5.7 % $ 2.10 $ Weighted Average Growth (Decline) in Effective Rents(3) 2016 Average Term in Years 2016 4.7 Tenant Improvement Leasing Cost per Square Commissions per Square Foot(1) 2016 9.40 $ 3.69 $ 2.65 Foot(1) 2017 2016 Square Feet of Percent of Expiring Leases Renewed(2) 2017 Leases Renewed(1) 2016 (1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP. Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period. (2) Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. The category of renewed leases does not include leases that have become month-to-month leases, as the month-to-month leases are considered lease amendments. (3) Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net. 52 Healthcare Lease Expirations Our ability to maintain and improve occupancy rates and base rents primarily depends upon our continuing ability to re- lease expiring space. The following table reflects the in-service portfolio lease expiration schedule of our healthcare properties held for investment, including square footage and annualized base rent for expiring leases, as of April 30, 2017. Fiscal Year of Lease Expiration 2018(1) . . . . . . . . . . . 2019 . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . 2023 . . . . . . . . . . . . . 2024 . . . . . . . . . . . . . 2025 . . . . . . . . . . . . . 2026 . . . . . . . . . . . . . 2027 . . . . . . . . . . . . . Thereafter . . . . . . . . . Totals . . . . . . . . . . . . $ Square Footage of Annualized Base Rent of Expiring Percentage of Total Healthcare Segment Percentage of Total Healthcare Segment # of Leases Expiring Leases(3) Leased Square Footage Leases at Expiration(2) Annualized Base Rent 6.8% 5.8% 7.2% 7.7% 5.2% 4.6% 15.6% 6.3% 5.6% 14.2% 21.1% 100.0% 1,826,287 1,551,836 1,922,802 2,059,840 1,380,789 1,239,754 4,178,414 1,688,381 1,509,909 3,797,245 5,656,970 26,812,228 96,307 70,862 93,521 95,575 75,819 65,379 179,460 76,691 84,368 176,652 216,299 1,230,933 7.8% 5.8% 7.6% 7.8% 6.2% 5.3% 14.6% 6.2% 6.9% 14.4% 17.6% 100.0% 26 16 16 20 16 15 29 5 8 13 14 178 $ Includes month-to-month leases. As of April 30, 2017, month-to-month leases accounted for 11,916 square feet. (1) (2) Annualized Base Rent is monthly scheduled rent as of April 1, 2017 multiplied by 12. (3) Assuming that none of the tenants exercise renewal or termination options, and including leases renewed prior to expiration. Also excludes 1,361 square feet of space occupied by us. Because of the dispersed locations of a substantial portion of the portfolio’s properties in secondary and tertiary markets, information on current market rents is difficult to obtain, is highly subjective and is often not directly comparable between properties. As a result, we believe that the increase or decrease in effective rent on our recent leases is the most objective and meaningful information available regarding rent trends and the relationship between rents on leases expiring in the near-term and current market rents across our markets. We believe that rents on our new and renewed leases generally approximate market rents. 53 Property Acquisitions We added no new real estate properties to our portfolio through property acquisitions during fiscal year 2017, compared to $143.5 million in fiscal year 2016. The fiscal year 2016 acquisitions are detailed below. Fiscal 2016 (May 1, 2015 to April 30, 2016) Acquisitions Multifamily Total Form of Consideration Investment Allocation Date Acquisition Cost Acquired Cash Units(1) Land Building Intangible Assets (in thousands) 74 unit - Gardens - Grand Forks, ND . . . . . . 2015-09-10 $ 276 unit - GrandeVille at Cascade Lake - Rochester, MN . . . . . . . . . . . . . . . . . . . . . . 2015-10-29 187 unit - Avalon Cove - Rochester, MN(2) . . 2016-03-22 90 unit - Cascade Shores - Rochester, MN . . 2016-03-22 76 unit - Crystal Bay - Rochester, MN . . . . . 2016-03-22 40-unit - French Creek - Rochester, MN . . . . 2016-03-22 9,250 $ 8,850 $ 400 $ 518 $ 8,672 $ 60 56,000 56,000 15,000 36,250 18,500 18,500 12,000 12,000 5,000 5,000 115,350 137,000 — 17,826 — — — 18,226 5,003 1,616 1,585 433 201 9,356 50,363 34,145 16,710 11,425 4,735 126,050 634 489 205 142 64 1,594 Healthcare 27,819 sq ft Lakeside Medical Plaza - Omaha, NE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-08-20 6,500 6,500 — 903 5,109 488 Total Property Acquisitions . . . . . . . . . . . . . $ 143,500 $ 121,850 $ 18,226 $10,259 $131,159 $ 2,082 (1) Value of limited partnership units of the Operating Partnership based on the closing market price of our common stock on the acquisition date. The number of Units issued were approximately 44,000 and 2.5 million, respectively, for the Gardens and Avalon Cove acquisitions. (2) Acquisition resulted in a gain on bargain purchase of approximately $3.4 million. See Note 2 of our consolidated financial statements for additional information. Development Projects Placed in Service We placed approximately $102.9 million of development projects in service during fiscal year 2017, compared to $211.8 million in fiscal year 2016. The fiscal year 2017 and 2016 development projects placed in service are detailed below. Fiscal 2017 (May 1, 2016 to April 30, 2017) Development Projects Placed in Service Multifamily Date Placed in Service Land Building Development Cost (in thousands) 241 unit - 71 France - Edina, MN(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 unit - Monticello Crossings - Monticello, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-05-01 $ 4,721 $ 67,641 $ 1,734 2017-03-01 28,782 72,362 30,516 Total Development Projects Placed in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,455 $ 96,423 $ 102,878 (1) Costs paid in prior fiscal years totaled $70.9 million. Additional costs incurred in fiscal year 2017 totaled $1.5 million, for a total project cost at April 30, 2017 of $72.4 million. The project is owned by a joint venture entity in which we currently have an approximately 52.6% interest. The joint venture is consolidated in our financial statements. (2) Costs paid in prior fiscal years totaled $15.5 million. Additional costs incurred in fiscal year 2017 totaled $15.0 million, for a total project cost at April 30, 2017 of $30.5 million. 54 Fiscal 2016 (May 1, 2015 to April 30, 2016) Development Projects Placed in Service (1) Multifamily Date Placed in Service Land Building Development Cost (in thousands) 72 unit - Chateau II - Minot, ND (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-06-01 $ 288 unit - Renaissance Heights - Williston, ND(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-07-27 163 unit - Deer Ridge - Jamestown, ND(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-02-22 251 unit - Cardinal Point - Grand Forks, ND(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-03-18 240 $ 14,408 $ 3,080 700 1,600 59,434 24,137 48,132 5,620 146,111 14,648 62,514 24,837 49,732 151,731 Healthcare 57,624 sq ft Edina 6565 France SMC III - Edina, MN(6) . . . . . . . . . . . . . . . . . . . . . . . 2015-06-01 70,756 sq ft PrairieCare Medical - Brooklyn Park, MN(7) . . . . . . . . . . . . . . . . . . . . . . 2015-09-08 — 2,610 33,041 21,830 2,610 54,871 Other 7,963 sq ft Minot Southgate Retail - Minot, ND(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-10-01 889 1,734 33,041 24,440 57,481 2,623 Total Development Projects Placed in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,119 $ 202,716 $ 211,835 (1) Development projects that are placed in service in phases are excluded from this table until the entire project has been placed in service. See Note 15 for additional information on the 71 France projects which was partially placed in service during the fiscal year ended April 30, 2016. (2) Costs paid in prior fiscal years totaled $12.3 million. Additional costs incurred in fiscal year 2016 totaled $2.3 million, for a total project cost at April 30, 2016 of $14.6 million. (3) Costs paid in prior fiscal years totaled $57.7 million. Additional costs incurred in fiscal year 2016 totaled $4.8 million, for a total project cost at April 30, 2016 of $62.5 million. The project is owned by a joint venture entity in which we currently have an approximately 86.6% interest. The joint venture is consolidated in our financial statements. (4) Costs paid in prior fiscal years totaled $14.3 million. Additional costs incurred in fiscal year 2016 totaled $10.5 million, for a total project cost at April 30, 2016 of $24.8 million. (5) Costs paid in prior fiscal years totaled $23.0 million. Additional costs incurred in fiscal year 2016 totaled $26.7 million, for a total project cost at April 30, 2016 of $49.7 million. (6) Costs paid in prior fiscal years totaled $20.8 million. Additional costs incurred in fiscal year 2016 totaled $12.2 million, for a total project cost at April 30, 2016 of $33.0 million. (7) Costs paid in prior fiscal years totaled $17.3 million. Additional costs incurred in fiscal year 2016 totaled $7.1 million, for a total project cost at April 30, 2016 of $24.4 million. (8) Costs paid in prior fiscal years totaled $2.1 million. Additional costs incurred in fiscal year 2016 totaled approximately $500,000, for a total project cost at April 30, 2016 of $2.6 million. 55 Property Dispositions During fiscal year 2017 we sold 1 multifamily property, 32 senior housing properties, 2 medical office properties, 1 retail property, 1 industrial property and 2 parcels of unimproved land for a total sales price of $286.9 million, compared to dispositions totaling $536.7 million in fiscal year 2016. The fiscal year 2017 and 2016 dispositions are detailed below. Fiscal 2017 (May 1, 2016 to April 30, 2017) Dispositions Multifamily Date Disposed (in thousands) Book Value Sales Price and Sales Cost Gain/(Loss) 24 unit Pinecone Villas - Sartell, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017-04-20 $ 3,540 $ 2,732 $ 808 Healthcare 189,244 sq ft 9 Idaho Spring Creek Senior Housing Properties(1) . . . . . . . . . . . . . . . 2016-10-31 426,652 sq ft 5 Edgewood Vista Senior Housing Properties(2) . . . . . . . . . . . . . . . . . 2017-01-18 286,854 sq ft 5 Wyoming Senior Housing Properties(3) . . . . . . . . . . . . . . . . . . . . . . 2017-02-01 169,001 sq ft 9 Edgewood Vista Senior Housing Properties(4) . . . . . . . . . . . . . . . . . 2017-02-15 169,562 sq ft 4 Edgewood Vista Senior Housing Properties(5) . . . . . . . . . . . . . . . . . 2017-03-01 114,316 sq ft Healtheast St. John & Woodwinds - Maplewood & Woodbury MN . . 2017-03-06 59,760 sq ft Sartell 2000 23rd Street South - Sartell, MN . . . . . . . . . . . . . . . . . . . . 2017-03-31 98,174 sq ft Legends at Heritage Place - Sartell, MN . . . . . . . . . . . . . . . . . . . . . . . 2017-04-20 Other 195,075 sq ft Stone Container - Fargo, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-07-25 28,528 sq ft Grand Forks Carmike - Grand Forks, ND . . . . . . . . . . . . . . . . . . . . . . 2016-12-29 43,900 69,928 49,600 30,700 35,348 20,700 5,600 9,960 265,736 37,397 50,393 45,469 24,081 14,511 13,777 5,923 11,439 202,990 6,503 19,535 4,131 6,619 20,837 6,923 (323) (1,479) 62,746 13,400 4,000 17,400 4,418 1,563 5,981 8,982 2,437 11,419 Unimproved Land Georgetown Square Unimproved Land - Grand Chute, WI . . . . . . . . . . . . . . . . . . . 2016-05-06 250 274 (24) Total Property Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 286,926 $ 211,977 $ 74,949 (1) The properties included in this portfolio are: Spring Creek American Falls, Spring Creek Boise, Spring Creek Eagle, Spring Creek Fruitland, Spring Creek Fruitland Unimproved, Spring Creek Meridian, Spring Creek Overland, Spring Creek Soda Springs and Spring Creek Ustick. (2) The properties included in this portfolio are: Edgewood Vista Bismarck, Edgewood Vista Brainerd, Edgewood Vista East Grand Forks, Edgewood Vista Fargo, and Edgewood Vista Spearfish. (3) The properties included in this portfolio are: Casper 1930 E 12th Street (Park Place), Casper 3955 E 12th Street (Meadow Wind), Cheyenne 4010 N College Drive (Aspen Wind), Cheyenne 4606 N College Drive (Sierra Hills) and Laramie 1072 N 22nd Street (Spring Wind). (4) The properties included in this portfolio are: Edgewood Vista Belgrade, Edgewood Vista Billings, Edgewood Vista Columbus, Edgewood Vista Fremont, Edgewood Vista Grand Island, Edgewood Vista Minot, Edgewood Vista Missoula, Edgewood Vista Norfolk and Edgewood Vista Sioux Falls. (5) The properties included in this portfolio are: Edgewood Vista Hastings, Edgewood Vista Kalispell, Edgewood Vista Omaha and Edgewood Vista Virginia. 56 Fiscal 2016 (May 1, 2015 to April 30, 2016) Dispositions Multifamily Date Disposed (in thousands) Book Value Sales Price and Sales Cost Gain/(Loss) 391 unit - St. Cloud Student Housing Portfolio - St. Cloud, MN . . . . . . . . . . . . . . . 2016-03-24 $ 5,615 $ 5,647 $ (32) Healthcare 61,758 sq ft Nebraska Orthopaedic Hospital - Omaha, NE . . . . . . . . . . . . . . . . . . . 2016-04-01 24,494 16,512 7,982 Other 117,144 sq ft Thresher Square – Minneapolis, MN . . . . . . . . . . . . . . . . . . . . . . . . . 2015-05-18 2,549,222 sq ft Office Sale Portfolio(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-08-03 420,216 sq ft Mendota Office Center Portfolio – Mendota Heights, MN(2) . . . . . . . . 2015-08-12 1,027,208 sq ft Retail Sale Portfolio(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-09-30 48,700 sq ft Eden Prairie 6101 Blue Circle Drive – Eden Prairie, MN . . . . . . . . . . . 2015-10-19 8,526 sq ft Burnsville I Strip Center – Burnsville, MN . . . . . . . . . . . . . . . . . . . . . . 2015-12-23 4,800 sq ft Pine City C-Store – Pine City, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-01-08 11,003 sq ft Minot Plaza – Minot, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-01-19 937,518 sq ft 9-Building Office Portfolio(4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-01-29 3,702 sq ft Arrowhead First International Bank - Minot, ND . . . . . . . . . . . . . . . . . . 2016-04-06 7,000 250,000 40,000 78,960 2,900 1,300 300 1,854 122,610 (5) 1,675 506,599 7,175 231,908 41,574 72,000 2,928 913 355 393 86,154 (5) 1,255 444,655 (175) 18,092 (1,574) 6,960 (28) 387 (55) 1,461 36,456 (5) 420 61,944 Unimproved Land River Falls Unimproved Land - River Falls, WI . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-04-06 20 21 (1) Total Property Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 536,728 $ 466,835 $ 69,893 (1) The properties included in this portfolio disposition are: 610 Business Center, 7800 West Brown Deer Road, Ameritrade, Barry Pointe Office Park, Benton Business Park, Brenwood, Brook Valley I, Crosstown Centre, Golden Hills Office Center, Granite Corporate Center, Great Plains, Highlands Ranch I, Highlands Ranch II, Interlachen Corporate Center, Intertech Building, Minnesota National Bank, Northpark Corporate Center, Omaha 10802 Farnam Dr, Plaza VII, Plymouth 5095 Nathan Lane, Prairie Oak Business Center, Rapid City 900 Concourse Drive, Spring Valley IV, Spring Valley V, Spring Valley X, Spring Valley XI, Superior Office Building, TCA Building & vacant land, Three Paramount Plaza, UHC Office, US Bank Financial Center, Wells Fargo Center, West River Business Park and Westgate. (2) The properties included in this portfolio disposition are: Mendota Office Center I, Mendota Office Center II, Mendota Office Center III, Mendota Office Center IV and American Corporate Center. (3) The properties included in this portfolio disposition are: Champlin South Pond, Chan West Village, Duluth 4615 Grand, Duluth Denfeld Retail, Forest Lake Auto, Forest Lake Westlake Center, Grand Forks Medpark Mall, Jamestown Buffalo Mall, Jamestown Business Center, Lakeville Strip Center, Monticello C Store & vacant land, Omaha Barnes & Noble, Pine City Evergreen Square, Rochester Maplewood Square and St. Cloud Westgate. (4) The properties included in this portfolio disposition are: Corporate Center West, Farnam Executive Center, Flagship Corporate Center, Gateway Corporate Center, Miracle Hills One, Pacific Hills, Riverport, Timberlands, and Woodlands Plaza IV. (5) On January 29, 2016, we transferred ownership of nine properties to the mortgage lender on a $122.6 million non-recourse loan and removed the debt obligation and accrued interest from our balance sheet. The properties had an estimated fair value of $89.3 million on the transfer date. Upon completion of this transfer, we recognized a gain on extinguishment of debt of $36.5 million, representing the difference between the loan and accrued interest payable extinguished over the carrying value of the properties, cash, accounts payable and accounts receivable transferred as of the transfer date and related closing costs. 57 Development and Re-Development Projects The following tables provide additional detail, as of April 30, 2017 and 2016, on our in-service (completed) development and re-development projects and development and re-development projects in progress as of April 30, 2016. There were no development or re-development projects in progress as of April 30, 2017. All of these projects are excluded from the same-store pool. We measure initial yield on our development projects upon completion and achievement of target lease- up levels by measuring net operating income from the development against the cost of the project. Projects Placed in Service in Fiscal Year 2017 (in thousands) Project Name and Location 71 France I - Edina, MN (2) . . . . . . . . . . Multifamily 241 units Monticello Crossings - Monticello, MN Multifamily 202 units Segment of Units Committed Percentage Date Anticipated Number Leased or Anticipated Costs as of Cost per Placed in Same-Store Date Q1 2019 Q1 2019 Unit(1) Service 72,362 $ 300,278 Q1 2017 30,516 102,878 72,367 $ 32,134 104,501 Total Cost Apr 30, 2017 90.5 % $ 87.6 % 133,336 Q4 2017 (1) Excludes tenant improvements and leasing commissions. (2) The project is owned by a joint venture entity in which we currently have an approximately 52.6% interest. The anticipated total cost amount given is the total cost to the joint venture entity and includes approximately 20,955 square feet of retail space. Projects Placed in Service in Fiscal Year 2016 (in thousands) Project Name and Location Segment Chateau II - Minot, ND . . . . . . . . . Multifamily Edina 6565 France SMC III - Edina, MN . . . . . . . . . . . . . . . . . . . . . . . Healthcare Renaissance Heights - Williston, ND(2) . . . . . . . . . . . . . . . . . . . Multifamily Minot Southgate Retail - Minot, ND PrairieCare Medical - Brooklyn Park, MN . . . . . . . . . . . . . . . . . . . . . . . Healthcare Cardinal Point - Grand Forks, ND . . Multifamily Deer Ridge – Jamestown, ND . . . . . Multifamily Retail Square Feet or Number of Rentable Percentage Leased or Committed as Units of April 30, 2016 72 units 84.7 % $ Anticipated Total Cost(1) 14,711 $ Costs as of April 30, 2016(1) 14,648 $ Cost per Date Anticipated Square Foot Placed in Same-Store Date Q1 2019 or Unit(1) Service 204,319 Q1 2016 57,624 sq ft 24.5 % 33,281 33,041 578 Q1 2016 Q1 2019 288 units 7,963 sq ft 70,756 sq ft 251 units 163 units 43.8 % — % 62,514 2,923 62,514 2,623 217,063 Q1 2016 367 Q2 2016 Q1 2019 Q1 2019 100.0 % 44.2 % 50.9 % $ 24,536 52,344 24,837 215,146 $ 211,835 24,440 49,732 24,837 347 Q2 2016 208,542 Q4 2016 152,374 Q4 2016 Q1 2018 Q1 2019 Q1 2019 (1) Excludes tenant improvements and leasing commissions. (2) We are currently an approximately 86.6% partner in the joint venture entity constructing this project. The anticipated total cost amount given is the total cost to the joint venture entity. Projects in Progress at April 30, 2016 Project Name and Location 71 France I - Edina, MN (2) . . . . . . . . . . . . . . . . . . . Multifamily 241 units Monticello Crossing - Monticello, MN . . . . . . . . . . Multifamily 202 units n/a Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment n/a Percentage Leased or Number Committed as of April 30, 2016 of Units (in thousands) Anticipated Costs as of Total Cost April 30, 2016(1) 71,727 17,507 3,729 92,963 73,290 31,784 n/a 105,074 $ $ 49.4 % 5.5 % n/a Includes costs related to development projects that are placed in service in phases (71 France, $41.3 million). (1) (2) The project will be constructed in three phases by a joint venture entity in which we currently have an approximately 52.6% interest. The anticipated total cost amount given is the total cost to the joint venture entity. The anticipated total cost includes approximately 21,772 square feet of retail space. 58 Funds From Operations We consider Funds from Operations (“FFO”) a useful measure of performance for an equity REIT. We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). NAREIT defines FFO to mean “net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.” In addition, in October 2011, NAREIT clarified its computation of FFO so as to exclude impairment charges for all periods presented. Because of limitations of the FFO definition adopted by NAREIT, we have made certain interpretations in applying the definition. We believe all such interpretations not specifically provided for in the NAREIT definition are consistent with the definition. Our management considers that FFO, by excluding depreciation costs, the gains or losses from the sale of operating real estate properties and extraordinary items as defined by GAAP, is useful to investors in providing an additional perspective on our operating results. Historical cost accounting for real estate assets in accordance with GAAP assumes, through depreciation, that the value of real estate assets decreases predictably over time. However, real estate asset values have historically risen or fallen with market conditions. NAREIT’s definition of FFO, by excluding depreciation costs, reflects the fact that depreciation charges required by GAAP may not reflect underlying economic realities. Additionally, the exclusion in NAREIT’s FFO definition of gains and losses from the sales of previously depreciated operating real estate assets assists management and investors in identifying the operating results of the long-term assets that form the core of our investments and assists in comparing those operating results between periods. FFO is used by management and investors to identify trends in occupancy rates, rental rates and operating costs. While FFO is widely used by REITs 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 as determined in accordance with GAAP as a measure of our performance, but rather should be considered as an additional, supplemental measure, and should be viewed in conjunction with net income as presented in the consolidated financial statements included in this report. FFO 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. FFO applicable to common shares and limited partnership units for the fiscal year ended April 30, 2017 was $55.2 million, compared to $103.9 million and $86.6 million for the fiscal years ended April 30, 2016 and 2015, respectively. 59 Reconciliation of Net Income Attributable to Investors Real Estate Trust to Funds From Operations For the years ended April 30, 2017, 2016 and 2015: Fiscal Years Ended April 30, 2017 (in thousands, except per share and unit amounts) 2016 2015 Per Weighted Avg Share and Shares and Unit(2) Amount Units(1) Amount Per Per Weighted Avg Share and Shares and Unit(2) Amount Units(1) Weighted Avg Share Shares and and Unit(2) Units(1) to income Net income attributable to Investors Real Estate Trust . . . . . . . . . . . . . . . . . . . . . $ Less dividends to preferred shareholders . . Less redemption of preferred shares . . . . . Net common available shareholders . . . . . . . . . . . . . . . . . . . . . Adjustments: – Operating interests Noncontrolling Partnership . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . Impairment of real estate attributable to Investors Real Estate Trust . . . . . . . . . . . Gains on depreciable property sales attributable to Investors Real Estate Trust . Funds to from operations applicable common shares and Units . . . . . . . . . . . . $ 43,347 (10,546) (1,435) $ $ 72,006 (11,514) — $ $ 24,087 (11,514) — $ 31,366 121,169 0.26 60,492 123,094 0.49 12,573 118,004 0.11 16,130 4,059 52,564 42,065 (74,847) 7,032 63,789 5,983 (33,422) 14,278 16,594 1,526 70,450 6,105 (4,079) 55,207 137,299 $ 0.40 $ 103,874 137,372 $ 0.76 $ 86,575 134,598 $ 0.64 (1) Pursuant to Exchange Rights, limited partnership units of the Operating Partnership are redeemable for cash, or, at our discretion, may be exchangeable for common shares on a one-for-one basis. (2) Net income attributable to us is calculated on a per common share basis. FFO is calculated on a per common share and limited partnership unit basis. Cash Distributions The following cash distributions per common share/unit were paid to our common shareholders and unitholders during fiscal years 2017, 2016 and 2015: Quarter Ended April 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ January 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Fiscal Years 2017 0.07 $ 0.13 0.13 0.13 0.46 $ 2016 0.13 $ 0.13 0.13 0.13 0.52 $ 2015 0.13 0.13 0.13 0.13 0.52 Liquidity and Capital Resources Overview Our principal liquidity demands are maintaining distributions to the holders of our common and preferred shares and limited partnership units of IRET Properties, capital improvements and repairs and maintenance to our properties, acquisition of additional properties, property development, tenant improvements and debt service and repayments. We have historically met our short-term liquidity requirements through net cash flows provided by our operating activities, and, from time to time, through draws on our line of credit. Management considers our ability to generate cash from property operating activities and draws on our line of credit to be adequate to meet all operating requirements and to make distributions to our shareholders in accordance with the REIT provisions of the Internal Revenue Code. Budgeted expenditures for ongoing maintenance and capital improvements and renovations to our real estate portfolio are also generally expected to be funded from existing cash on hand, cash flow generated from property operations, draws on our line of credit and/or new borrowings, and we believe we will have sufficient cash to meet our commitments over the next twelve months. However, some of our real estate markets continue to experience challenges including reduced occupancies and rental rates as well as some restrictions on the availability of financing. In the event of deterioration in property operating results, we may need to consider additional cash preservation alternatives, including 60 reducing development activities, capital improvements and renovations. For the fiscal year ended April 30, 2017, we paid distributions of $63.4 million in cash to common shareholders and unitholders of IRET Properties, as compared to net cash provided by operating activities of $73.9 million and FFO of $55.2 million. To the extent we do not satisfy our long-term liquidity requirements, which consist primarily of maturities under our long-term debt, construction and development activities and potential acquisition opportunities, through net cash flows provided by operating activities and our credit facilities, we intend to satisfy such requirements through a combination of funding sources which we believe will be available to us, including the issuance of limited partnership units, additional common or preferred equity, proceeds from the sale of properties and additional long-term secured or unsecured indebtedness. However, our ability to raise funds through the sale of equity securities, the sale of properties and additional long-term secured or unsecured borrowings is dependent on, among other things, general economic conditions, general market conditions for REITs, our operating performance and the current trading price of our common shares. In addition, the capital and debt markets may not consistently be available at all or on terms that we consider attractive. As a result of general economic conditions in our markets, economic downturns affecting the ability to attract and retain tenants, unfavorable fluctuations in interest rates or our share price, unfavorable changes in the supply of competing properties, or our properties not performing as expected, we may not generate sufficient cash flow from operations or otherwise have access to capital on favorable terms, or at all. If we are unable to obtain capital from other sources, we may not be able to pay the distribution required to maintain our status as a REIT, make required principal and interest payments, make strategic acquisitions or make necessary routine capital improvements or undertake re- development opportunities with respect to our existing portfolio of operating assets. In addition, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the holder of the mortgage could foreclose on the property, resulting in loss of income and asset values. Sources and Uses of Cash On January 31, 2017, we repaid the FIB Line of Credit in full in the amount of $17.5 million, along with applicable fees, and terminated the FIB Line of Credit. On January 31, 2017, we obtained the BMO Line of Credit, which had, as of April 30, 2017, a credit limit of $206.0 million based on the unencumbered asset pool, of which $57.1 million was drawn on the line. During fiscal year 2017, credit markets continued to be stable, with credit availability relatively unconstrained and benchmark interest rates remaining at or near historic lows. While we continue to expect to be able to refinance our debt maturing in the next twelve months without significant issues, we also expect lenders to continue to employ conservative underwriting regarding asset quality, occupancy levels and tenant creditworthiness. Underwriting trends on commercial real estate have been more conservative compared to previous years and we continue to see recourse security being requested in select tertiary markets, lower amounts of proceeds available and lenders limiting the amount of financing available in an effort to manage capital allocations and credit risk. While to date there has been no material negative impact on our ability to borrow in our multifamily segment, we continue to monitor the roles of the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) in financing multifamily properties and their general capacity to lend given allocations set by the Federal Housing Finance Agency and their overall impact on credit availability. As of April 30, 2017, approximately 14.3%, or $5.6 million of our mortgage debt maturing in the next twelve months is placed on multifamily assets, and approximately 85.7%, or $33.6 million, is debt placed on commercial properties. Mortgage debt maturing in the first two quarters of fiscal year 2018 totals approximately $26.3 million. We expect to repay the $26.3 million in the first quarter of fiscal year 2018. We typically seek to refinance our maturing mortgage debt, although under certain circumstances we may choose to repay the debt rather than refinance, depending on the loan amount outstanding, our plans for the property securing the debt, interest rates and other loan terms available, and other factors specific to a particular property. Under present market conditions, we currently expect to be able to refinance our individual mortgage loans maturing in the next twelve months, should we choose to refinance rather than pay off some or all of these loans. During fiscal year 2017, we sold 1 multifamily property, 32 senior housing properties, 2 medical office properties, 1 retail property, 1 industrial property and 2 parcels of unimproved land for a total sales price of $286.9 million. There were no acquisitions of property in fiscal year 2017. During fiscal year 2016, we acquired properties with an investment cost totaling $143.5 million. In fiscal year 2016, we sold 8 multifamily properties, 40 office properties, 2 healthcare 61 properties, 18 retail properties and 3 parcels of unimproved land for a total sales price of $414.1 million and transferred ownership of 9 office properties pursuant to a deed in lieu transaction. Under our DRIP, common shareholders and unitholders have an opportunity to use their cash distributions to purchase additional common shares and to purchase additional shares through voluntary cash contributions. As permitted under the DRIP, starting on October 1, 2015, we changed the source from which common shares are purchased under the DRIP to open market transactions, which are not eligible for purchase price discounts. During fiscal year 2017, no shares were issued under the DRIP. During fiscal year 2016, approximately 821,000 shares at an average price of $6.85 per share, for total net proceeds of $5.6 million were issued under the DRIP. The issuance of limited partnership units for property acquisitions continues to be a source of financing for us. There were no units issued in fiscal year 2017. We issued 2.6 million units in connection with property acquisitions during fiscal year 2016, valued at issuance at $18.2 million. Under our previously announced share repurchase program, during fiscal year 2017, we repurchased approximately 778,000 common shares for approximately $4.5 million, and 1.2 million preferred A shares for approximately $28.8 million. During fiscal year 2016, we repurchased approximately 4.6 million common shares for approximately $35.0 million. Subsequent to April 30, 2017, from May 1, 2017 through June 22, 2017, we repurchased approximately 649,000 common shares at an average price of $5.75 and approximately 409,000 units at an average price of $5.92 per unit. Financial Condition Mortgage Loan Indebtedness. Mortgage loan indebtedness, including mortgages on properties held for sale, was $687.2 million on April 30, 2017 and $886.1 million on April 30, 2016. Approximately 91.6% of such mortgage debt is at fixed rates of interest, with staggered maturities. This limits our exposure to changes in interest rates, which minimizes the effect of interest rate fluctuations on our results of operations and cash flows. As of April 30, 2017, the weighted average rate of interest on our mortgage debt was 4.71% compared to 4.54% on April 30, 2016. Construction Loan Indebtedness. Construction loan indebtedness was $41.8 million on April 30, 2017 and $82.0 million on April 30, 2016. As of April 30, 2017, the weighted average rate of interest on construction loan indebtedness was 3.27%, compared to 2.74% on April 30, 2016. Revolving Unsecured Line of Credit. As of April 30, 2017, the BMO line of credit had a credit limit of $206.0 million based on the unencumbered asset pool, of which $57.1 million was drawn, at an interest rate of 2.74%. The multi-bank line of credit bears interest at grid pricing either at the Lender's Base Rate plus 60 to 125 basis points or of LIBOR plus 160 to 225 basis points, both of which are based on corporate leverage. The line of credit is utilized to refinance existing indebtedness, to finance property acquisitions, to finance capital expenditures and for general corporate purposes. Property Owned. Property owned was $1.7 billion at April 30, 2017 and 2016. Development placed in service partially offset dispositions during fiscal year 2017. Cash and Cash Equivalents. Cash and cash equivalents on April 30, 2017 totaled $28.8 million, compared to $66.7 million on April 30, 2016. The decrease in cash on hand on April 30, 2017, as compared to April 30, 2016, was due primarily to payments on mortgage and construction debt and repurchases of common and preferred shares, net of proceeds from sales of property. Other Investments. Other investments, consisting of bank certificates of deposit, was $50,000 on April 30, 2016. There were no other investments as of April 30, 2017. Operating Partnership Units. Outstanding limited partnership units in the Operating Partnership owned by limited partners decreased to 15.6 million units on April 30, 2017, compared to 16.3 million units on April 30, 2016. The decrease in units outstanding at April 30, 2017 as compared to April 30, 2016, resulted from the redemption of units for cash or shares. 62 Common and Preferred Shares. Common shares outstanding on April 30, 2017 totaled 121.2 million, compared to 121.1 million common shares outstanding on April 30, 2016. This increase in common shares outstanding from April 30, 2016 to April 30, 2017 was due to issuances of common shares, including in exchange for limited partnership units of our Operating Partnership, net of repurchased outstanding common shares under the share repurchase program. During fiscal years 2017 and 2016, respectively, approximately 503,000 and 273,000 Units were redeemed in exchange for common shares in connection with Unitholders exercising their Exchange Rights, with a total value of $875,000 and $1.5 million included in equity. During fiscal year 2017, we issued approximately 604,000 Common Shares, with a total grant-date value of $2.6 million, under our 2015 Incentive Award Plan, for executive officer and trustee share based compensation for future performance. We also issued approximately 59,000 Common Shares, with a total grant-date value of approximately $352,000, under our 2008 Incentive Award Plan, for trustee share based compensation for fiscal year 2016 performance. During fiscal year 2017, 274,000 common shares were forfeited under the 2015 Incentive Award Plan. During fiscal year 2016, we issued approximately 220,000 Common Shares, net of withholding, with a total grant-date value of approximately $1.6 million, under our 2008 Incentive Award Plan, for executive officer and trustee share based compensation for fiscal year 2015 performance. On December 7, 2016, our Board of Trustees authorized a share repurchase program to repurchase up to $50 million of our common shares and/or Series B preferred shares over a one year period. Under this program, we may repurchase the shares in open-market purchases including pursuant to Rule 10b5-1 plans, as determined by management and in accordance with the requirements of the Securities and Exchange Commission. The extent to which we repurchase our shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by the executive management team. The program may be suspended or discontinued at any time. During fiscal year 2017, we repurchased and retired approximately 778,000 common shares for an aggregate cost of $4.5 million, including commissions, at an average price per share of $5.77. During fiscal year 2016, we repurchased and retired approximately 4.6 million common shares for an aggregate cost of $35.0 million, including commissions, at an average price per share of $7.52. As of April 30, 2017, we had 4.6 million Series B preferred shares outstanding. On December 2, 2016, we completed the redemption of all of the outstanding 8.25% Series A Cumulative Redeemable Preferred Shares (“Preferred A Shares”) for an aggregate redemption price of $29.2 million, and such shares are no longer outstanding as of such date. Contractual Obligations and Other Commitments Our primary contractual obligations relate to our borrowings under the line of credit and mortgage notes payable. The line of credit matures in January 2021 and had $57.1 million in loans outstanding at April 30, 2017. The principal and interest payments on the mortgage notes payable, including mortgages on properties held for sale, for the years subsequent to April 30, 2017, are included in the table below as “Long-term debt.” Interest due on variable rate mortgage notes is calculated using rates in effect on April 30, 2017. The “Other Debt” category consists primarily of principal and interest payments on construction loans. As of April 30, 2017, we are the tenant under operating ground or air rights leases on seven of our properties. We pay a total of approximately $330,000 per year in rent under these leases, which have remaining terms ranging from 14 to 39 years, and expiration dates ranging from February 2031 to October 2055. Our purchase obligations represent those costs that we are contractually obligated to pay in the future. Our significant purchase obligations as of April 30, 2017, which we expect to finance through debt and operating cash, are summarized in the following table. The significant components in the purchase obligation category are costs for construction and expansion projects and capital improvements at our properties. Service orders or contracts for the provision of routine maintenance services at our properties, such as landscaping and grounds maintenance, are not included in the table below since these arrangements are generally based on current needs, are filled by our service providers within short time 63 horizons and may be cancelled without penalty. The expected timing of payment of the obligations discussed below is estimated based on current information. (in thousands) More than 5 Years Long-term debt (principal and interest) . . . . . . . . . . $ 813,213 $ 88,581 $ 222,491 $ 251,539 $ 250,602 Line of credit (principal and interest)(1) . . . . . . . . . . $ — — Other debt (principal and interest) . . . . . . . . . . . . . . $ 8,167 Operating lease obligations . . . . . . . . . . . . . . . . . . . . $ Purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . $ — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 934,813 $ 121,165 $ 244,303 $ 310,576 $ 258,769 63,143 $ 42,671 $ 24,689 $ 17,982 $ 665 $ — $ 1,612 $ 3,165 $ 58,366 $ — $ 671 $ — $ 9,834 $ 5,952 $ 331 $ 5,952 $ Less than 3-5 Years 1-3 Years 1 Year Total (1) The future interest payments on the line of credit were estimated using the outstanding principal balance and interest rate in effect as of April 30, 2017. Off-Balance-Sheet Arrangements As of April 30, 2017, we had no significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. Recent Developments Common and Preferred Share Distributions. On June 5, 2017, our Board of Trustees declared the following distributions: Class of shares/units Common shares and limited partnership units . . . . . . . . . . . . . . . . . . $ Preferred shares: Quarterly Amount per Share or Unit 0.0700 Record Date June 15, 2017 Payment Date July 3, 2017 Series B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.4968 June 15, 2017 July 3, 2017 Completed Acquisition. On May 26, 2017, we closed on the acquisition of a 191-unit multifamily property in St. Paul, MN for a purchase price of $61.5 million, paid in cash. The purchase price accounting is incomplete for this acquisition. Completed Disposition. On May 15, 2017, we sold a retail property in Minot, ND for a sales price of $3.4 million. Pending Disposition. On June 19, 2017, we signed an agreement to sell a healthcare property in Eagan, MN for a sales price of $2.1 million. This pending disposition is subject to various closing conditions and contingencies, and no assurances can be given that the transaction will be completed on the terms currently expected, or at all. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our exposure to market risk is limited primarily to fluctuations in the general level of interest rates on our current and future fixed and variable rate debt obligations, and secondarily to our deposits with and investments in certain products issued by various financial institutions. Variable interest rates. Approximately 91.6%, 77.8% and 92.8% of our mortgage debt, including mortgages on properties held for sale, as of April 30, 2017, 2016 and 2015, respectively, are at fixed interest rates. Therefore, we have little exposure to interest rate fluctuation risk on our existing mortgage debt. Even though our goal is to maintain a fairly low exposure to interest rate risk, we may become vulnerable to significant fluctuations in interest rates on any future repricing or refinancing of our fixed or variable rate debt and on future debt. 64 We primarily use long-term (more than nine years) and medium term (five to seven years) debt as a source of capital. We do not currently use derivative securities, interest-rate swaps or any other type of hedging activity to manage our interest rate risk. As of April 30, 2017, we had the following amounts of future principal and interest payments due on mortgages, including mortgages held for sale, secured by our real estate. Future Principal Payments (in thousands, except percentages) Mortgages 2018 Fixed Rate . . . . . . . . . . . . . . . . . $ 32,465 Avg Fixed Interest Rate . . . . . . . 4.64 % 2019 $ 74,838 2020 $ 63,209 2021 $ 136,362 4.43 % 4.23 % 3.73 % 2.86 % 2022 Thereafter Fair Value $ 231,023 $ 624,943 $ 640,444 Total $ 87,046 Variable Rate . . . . . . . . . . . . . . . $ 8,312 Avg Variable Interest Rate . . . . . 4.46 % $ 1,080 4.71 % $ 30,469 $ 5.10 % 28 $ 3.92 % 608 $ 3.97 % — $ 40,497 $ 40,497 Held for Sale . . . . . . . . . . . . . . . $ 16,621 Avg Fixed Interest Rate . . . . . . . 3.43 % $ 1,870 $ 5.11 % 183 $ 4.58 % 193 $ 4.55 % 993 $ 3.71 % 1,943 $ 21,803 $ 21,861 $ 687,243 $ 702,802 Future Interest Payments (in thousands) Mortgages Total 2019 Fixed Rate . . . . . . . . . . . . . . . . . . . . . . . . $ 29,013 $ 26,265 $ 21,901 $ 16,941 $ 9,086 $ 17,122 $ 120,328 4,095 Variable Rate . . . . . . . . . . . . . . . . . . . . Held for Sale . . . . . . . . . . . . . . . . . . . . 1,547 $ 125,970 1,805 365 1,517 265 2022 Thereafter — 514 6 109 25 142 742 152 2018 2021 2020 As of April 30, 2017, the weighted-average interest rate on our fixed rate and variable rate loans was 4.75% and 4.27%, respectively. The weighted-average interest rate on all of our mortgage debt as of April 30, 2017 was 4.71%. Any fluctuations in variable interest rates could increase or decrease our interest expenses. For example, an increase of one percent per annum on our $57.7 million of variable rate mortgage indebtedness would increase our annual interest expense by approximately $577,000. As of April 30, 2017, the BMO line of credit had a credit limit of $206.0 million, of which $57.1 million was drawn, at an interest rate of 2.74%. The line of credit bears interest at grid pricing either at the Lender's Base Rate plus 60 to 125 basis points or of LIBOR plus 160 to 225 basis points, both of which are based on corporate leverage. Any fluctuations in variable interest rates could increase or decrease our interest expenses. For example, an increase of one percent per annum on our outstanding balance of $57.1 million would increase our annual interest expense by approximately $571,000. Investments with Certain Financial Institutions. We have entered into a cash management arrangement with First Western Bank (the “Bank”) with respect to deposit accounts that exceed Federal Deposit Insurance Corporation (“FDIC”) coverage. On a daily basis, account balances are swept into a repurchase account. The Bank pledges fractional interests in US Government Securities owned by the Bank at an amount equal to the excess over the uncollected balance in the repurchase account. The amounts deposited by us pursuant to the repurchase agreement are not insured by FDIC. At April 30, 2017 and 2016, these amounts totaled $6.0 million and $36.7 million, respectively. Deposits exceeding FDIC insurance. We are potentially exposed to off-balance-sheet risk in respect of cash deposited with FDIC-insured financial institutions in accounts which, at times, may exceed federally insured limits. We have not experienced any losses in such accounts. 65 Item 8. Financial Statements and Supplementary Data Our consolidated financial statements and related notes, together with the Report of the Independent Registered Public Accounting Firm, are set forth beginning on page F-1 of this Annual Report on Form 10-K and are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. Item 9A. Controls and Procedures Disclosure Controls and Procedures: As of April 30, 2017, the end of the period covered by this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting: There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fourth quarter of the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 66 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for performing an assessment of the effectiveness of internal control over financial reporting as of April 30, 2017. Our internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with United States GAAP. As of April 30, 2017, management conducted an assessment of the effectiveness of our internal control over financial reporting, based on the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management has determined that our internal control over financial reporting as of April 30, 2017, was effective. Our internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions, acquisitions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with United States GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and the trustees; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Our internal control over financial reporting as of April 30, 2017 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report on page F-3 of our consolidated financial statements contained in our Annual Report on Form 10-K, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of April 30, 2017. (The remainder of this page has been intentionally left blank.) 67 Item 9B. Other Information None. PART III The information required in Item 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and Director Independence), and Item 14 (Principal Accountant Fees and Services) will be incorporated by reference to our definitive proxy statement for our 2017 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this report: 1. Financial Statements See the “Table of Contents” to our consolidated financial statements on page F-1 of this Annual Report on Form 10-K. 2. Financial Statement Schedules See the “Table of Contents” to our consolidated financial statements on page F-1 of this Annual Report on Form 10-K. The following financial statement schedules should be read in conjunction with the financial statements referenced in Part II, Item 8 of this Annual Report on Form 10-K: Schedule III Real Estate and Accumulated Depreciation 3. Exhibits See the Exhibit Index set forth in part (b) below. (b) The Exhibit Index below lists the exhibits to this Annual Report on Form 10-K. We will furnish a printed copy of any exhibit listed below to any security holder who requests it upon payment of a fee of 15 cents per page. All Exhibits are either contained in this Annual Report on Form 10-K or are incorporated by reference as indicated below. 68 EXHIBIT NO. 3.1. 3.2 3.3 10.1** 10.2** 10.3 10.4** 10.5** 10.6** 10.7** 10.8** 10.9** 10.10** 10.11** EXHIBIT INDEX DESCRIPTION Articles of Amendment and Third Restated Declaration of Trust of Investors Real Estate Trust adopted on September 23, 2003, as amended on September 18, 2007 (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed with the Commission on June 30, 2014). Fifth Restated Trustee’s Regulations (Bylaws) of Investors Real Estate Trust, adopted on March 15, 2017 (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-k filed on March 17, 2017). Agreement of Limited Partnership of IRET Properties dated January 31, 1997 (incorporated herein by reference to Exhibit 3(II) to the Company’s Registration Statement on Form S-11 filed with the Commission on February 18, 1997). 2015 Incentive Plan dated June 23, 2015 ((incorporated herein by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Commission on August 3, 2015). Amendment to 2015 Incentive Plan dated April 19, 2016 (incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K filed with the Commission on June 29, 2016). Form of Trustee Stock Award Agreement under the 2015 Incentive Plan dated June 22, 2016 (incorporated herein by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed with the Commission on June 29, 2016). Form of Performance Stock Award Agreement under the 2015 Incentive Plan dated June 22, 2016 (incorporated herein by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed with the Commission on June 29, 2016). Form of Stock Award Agreement under the 2015 Incentive Plan dated June 22, 2016 (incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K filed with the Commission on June 29, 2016). Form of Stock Award Agreement (one-year measurement period) under the 2015 Incentive Plan dated September 16, 2015 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on September 21, 2015). Form of Stock Award Agreement (two-year measurement period) under the 2015 Incentive Plan dated September 16, 2015 (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on September 21, 2015). Form of Stock Award Agreement (three-year measurement period) under the 2015 Incentive Plan dated September 16, 2015 (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on September 21, 2015). Form of Change in Control Severance Agreement (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on July 7, 2015). Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 21, 2015). 2008 Incentive Award Plan of Investors Real Estate Trust and IRET Properties dated September 16, 2008 (incorporated herein by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the Commission on August 1, 2008). 69 EXHIBIT NO. 10.12** DESCRIPTION Short-Term Incentive Program dated May 1, 2012 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 4, 2012). 10.13** Long-Term Incentive Program dated May 1, 2012 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on June 4, 2012). 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 Amended and Restated Loan Agreement dated November 20, 2013 by and between IRET Properties, as borrower, and First International Bank & Trust, as lender (Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 25, 2013). First Amendment to Amended and Restated Loan Agreement dated October 29, 2014 by and between IRET Properties, as borrower, and First International Bank & Trust, as lender (Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 4, 2014). Construction Loan Agreement dated January 22, 2015 by and between IRET-71 France, LLC, as borrower, the lending institutions party thereto as lenders, PNC Bank, NA, as Administrative Agent, and PNC Capital Markets, LLC, as Lead Arranger (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 28, 2015). Credit Agreement, dated January 31, 2017, between IRET Properties, as borrower; Investors Real Estate Trust, IRET, Inc., and other subsidiaries as guarantors; lenders; KeyBank, NA and PNC Bank, NA as syndication agents; and Bank of Montreal as administrative Agent (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on March 13, 2017). Agreement for Sale and Purchase of Property – Wyoming Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties and LSREF Golden Property 14 (WY), LLC as sellers and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and LSREF Golden Ops 14 (WY), LLC as buyers (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on December 12, 2016). Agreement for Sale and Purchase of Property – Hermantown Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties as seller and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on December 12, 2016). Agreement for Sale and Purchase of Property – Edgewood Vista 1 Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties as seller and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on December 12, 2016). Agreement for Sale and Purchase of Property – Edgewood Vista 2 Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties and EVI Grand Cities, LLC as sellers and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10- Q filed with the Commission on December 12, 2016). Agreement for Sale and Purchase of Property – Edgewood Vista 3 Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties, EVI Billings, LLC, EVI Sioux Falls, LLC and IRET-Minot EV, LLC as sellers and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on December 12, 2016). 70 EXHIBIT NO. 10.23 10.24 10.25 DESCRIPTION Agreement for Sale and Purchase of Property – Sartell Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties and IRET-SH 1, LLC as sellers and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers (incorporated herein by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on December 12, 2016). Separation Agreement and Release dated August 1, 2016 between the Company and Mark W. Reiling (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on September 8, 2016). Stock Award Agreement under the 2015 Incentive Plan dated August 8, 2016 issued to Mark O. Decker, Jr (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on September 8, 2016). 10.26† Separation Agreement and Release dated April 27, 2017 between the Company and Timothy P. Mihalick. 10.27† Separation Agreement and Release dated April 27, 2017 between the Company and Diane K. Bryantt. 10.28**† Offer Letter dated April 27, 2017 between the Company and Anne Olson. 10.29**† Offer Letter dated April 27, 2017 between the Company and John Kirchmann. 10.30**† Offer Letter dated April 27, 2017 between the Company and Mark O. Decker, Jr. 12.1† 21.1† 23.1† 24.1† 31.1† 31.2† 32.1† 32.2† 101† Computation of Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Share Dividends Subsidiaries of Investors Real Estate Trust Consent of Independent Registered Public Accounting Firm Power of Attorney (included on the signature page to this Annual Report on Form 10-K and incorporated by reference herein). Section 302 Certification of President and Chief Executive Officer Section 302 Certification of Chief Financial Officer Section 906 Certification of the President and Chief Executive Officer Section 906 Certification of the Chief Financial Officer The following materials from our Annual Report on Form 10-K for the fiscal year ended April 30, 2017 formatted in eXtensible Business Reporting Language ("XBRL"): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Statements of Cash Flows, and (v) notes to these consolidated financial statements. † Filed herewith ** Indicates management compensatory plan, contract or arrangement. 71 Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: June 28, 2017 Investors Real Estate Trust By: /s/ Mark O. Decker, Jr. Mark O. Decker, Jr. President & Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature /s/ Jeffrey P. Caira Jeffrey P. Caira /s/ John D. Stewart John D. Stewart /s/ Mark O. Decker, Jr. Mark O. Decker, Jr. /s/ Ted E. Holmes Ted E. Holmes /s/ Nancy B. Andersen Nancy B. Andersen /s/ Michael T. Dance Michael T. Dance /s/ Linda J. Hall Linda J. Hall /s/ Terrance P. Maxwell Terrance P. Maxwell /s/ Jeffrey L. Miller Jeffrey L. Miller /s/ John A. Schissel John A. Schissel Title Date Trustee & Chairman June 28, 2017 Trustee & Vice Chairman June 28, 2017 President & Chief Executive Officer (Principal Executive Officer); Trustee Chief Financial Officer (Principal Financial Officer) June 28, 2017 June 28, 2017 Senior Vice President & Principal Accounting Officer (Principal Accounting Officer) June 28, 2017 June 28, 2017 June 28, 2017 June 28, 2017 June 28, 2017 June 28, 2017 Trustee Trustee Trustee Trustee Trustee 72 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES TABLE OF CONTENTS REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM . . . . . . . . . . . . . . . . . . . . . . . CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ADDITIONAL INFORMATION Schedule III - Real Estate and Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PAGE F-2 F-4 F-5 F-6 F-8 F-10 F-40 Schedules other than those listed above are omitted since they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes thereon. F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Trustees and Shareholders Investors Real Estate Trust We have audited the accompanying consolidated balance sheets of Investors Real Estate Trust (a North Dakota real estate investment trust) and subsidiaries (the “Company”) as of April 30, 2017 and 2016, and the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended April 30, 2017. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Investors Real Estate Trust and subsidiaries as of April 30, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended April 30, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of April 30, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated June 28, 2017 expressed an unqualified opinion thereon. /s/ GRANT THORNTON LLP Minneapolis, Minnesota June 28, 2017 F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Trustees and Shareholders Investors Real Estate Trust We have audited the internal control over financial reporting of Investors Real Estate Trust (a North Dakota real estate investment trust) and subsidiaries (the “Company”) as of April 30, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended April 30, 2017, and our report dated June 28, 2017 expressed an unqualified opinion on those consolidated financial statements. /s/ GRANT THORNTON LLP Minneapolis, Minnesota June 28, 2017 F-3 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) April 30, 2017 April 30, 2016 ASSETS Real estate investments Development in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimproved land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,677,481 (340,417) Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,337,064 — 18,455 Total real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,519 37,708 28,819 — 7,822 2,600 23,659 3,131 658 5,050 901 1,572 Assets held for sale and assets of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivable arising from straight-lining of rents, net of allowance of $340 and $333, respectively Accounts receivable, net of allowance of $210 and $97, respectively . . . . . . . . . . . . . . . . . . . . . . Real estate deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets, net of accumulated amortization of $5,444 and $6,230, respectively . . . . . . . . . Tax, insurance, and other escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property and equipment, net of accumulated depreciation of $1,199 and $1,058, respectively . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred charges and leasing costs, net of accumulated amortization of $4,275 and $3,719, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,075 TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,474,514 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY LIABILITIES $ 1,681,471 (312,889) 1,368,582 51,681 20,939 1,441,202 220,537 66,698 50 7,179 1,524 — 2,937 1,858 5,450 1,011 1,680 4,896 $ 1,755,022 Liabilities held for sale and liabilities of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . $ Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revolving line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mortgages payable, net of unamortized loan costs of $3,480 and $4,931, respectively . . . . . . . . . Construction debt and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . COMMITMENTS AND CONTINGENCIES (NOTE 15) REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EQUITY Investors Real Estate Trust shareholders’ equity 30,062 40,350 57,050 661,960 41,817 831,239 $ 77,488 39,727 17,500 812,393 82,130 1,029,238 7,181 7,522 Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, no shares issued and outstanding at April 30, 2017 and 1,150,000 issued and outstanding at April 30, 2016, aggregate liquidation preference of $28,750,000) . . . . . . . . . . . . . . . . . . . . . . . . . Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 shares issued and outstanding at April 30, 2017 and April 30, 2016, aggregate liquidation preference of $115,000,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Common Shares of Beneficial Interest (Unlimited authorization, no par value, 121,199,299 shares issued and outstanding at April 30, 2017 and 121,091,249 shares issued and outstanding at April 30, 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated distributions in excess of net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Investors Real Estate Trust shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests – Operating Partnership (15,617,216 units at April 30, 2017 and 73,233 16,285,239 units at April 30, 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,924 Noncontrolling interests – consolidated real estate entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636,094 TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY . . . $ 1,474,514 916,121 (466,541) 560,937 111,357 — 27,317 111,357 922,084 (442,000) 618,758 78,484 21,020 718,262 $ 1,755,022 See Notes to Consolidated Financial Statements. F-4 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS REVENUE (in thousands, except per share data) Years Ended April 30, 2017 2016 2015 Real estate rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 186,837 $ 170,698 $ 159,969 19,352 Tenant reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,321 18,901 TOTAL REVENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205,738 EXPENSES 17,622 188,320 58,859 20,241 49,832 5,543 11,267 830 2,231 148,803 39,517 (35,768) (106) 81 317 53,535 19,602 42,784 4,663 11,824 362 1,647 134,417 44,904 (34,447) — 62 718 Property operating expenses, excluding real estate taxes . . . . . . . . . . . . . . . . . . Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment of real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition and investment related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,768 23,587 55,009 57,028 12,075 3,276 3,796 TOTAL EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219,539 Operating (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,801) (41,127) Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,099) Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 807 (Loss) income before gain on sale of real estate and other investments, gain on bargain purchase and income from discontinued operations . . . . . . . . . . . . . . . . (56,851) 18,701 Gain on sale of real estate and other investments . . . . . . . . . . . . . . . . . . . . . . . . . Gain on bargain purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (Loss) income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38,150) 68,675 Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,525 NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income attributable to noncontrolling interests – Operating Partnership . . . (4,059) Net loss (income) attributable to noncontrolling interests – consolidated real (3,071) 16,881 estate entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,087 43,347 Net income attributable to Investors Real Estate Trust . . . . . . . . . . . . . . . . . . . . . (11,514) Dividends to preferred shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,546) Redemption of preferred shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1,435) NET INCOME AVAILABLE TO COMMON SHAREHOLDERS . . . . . . . . . . $ 31,366 $ 60,492 $ 12,573 (Loss) earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NET INCOME PER COMMON SHARE – BASIC & DILUTED . . . . . . . . . . . $ 4,041 9,640 3,424 17,105 59,497 76,602 (7,032) 11,237 6,093 — 17,330 11,354 28,684 (1,526) 2,436 72,006 (11,514) — 0.50 0.26 $ 0.43 0.49 $ 0.09 0.11 (0.24) $ 0.06 $ 0.02 See Notes to Consolidated Financial Statements. F-5 BALANCE APRIL 30, 2014 . . . . . . . . . . . . . . . . Net income attributable to Investors Real Estate Trust and noncontrolling interests . . . . . . . . . . . . . Distributions – common shares and units . . . . . . . Distributions – Series A preferred shares . . . . . . . Distributions – Series B preferred shares . . . . . . . . Distribution reinvestment and share purchase plan Shares issued and share-based compensation. . . . . Partnership units issued . . . . . . . . . . . . . . . . . . . . Redemption of units for common shares . . . . . . . . Contributions from nonredeemable noncontrolling interests – consolidated real estate entities . . . . . . . Distributions to nonredeemable noncontrolling interests – consolidated real estate entities . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BALANCE APRIL 30, 2015 . . . . . . . . . . . . . . . . Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests . Distributions – common shares and units . . . . . . . Distributions – Series A preferred shares . . . . . . . Distributions – Series B preferred shares . . . . . . . . Distribution reinvestment and share purchase plan Shares issued and share-based compensation. . . . . Partnership units issued . . . . . . . . . . . . . . . . . . . . Redemption of units for common shares . . . . . . . . Shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . Distributions to nonredeemable noncontrolling interests – consolidated real estate entities . . . . . . . Adjustments to prior year redemption of units for common shares . . . . . . . . . . . . . . . . . . . . . . . . . . BALANCE APRIL 30, 2016 . . . . . . . . . . . . . . . . INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (in thousands) NUMBER OF ACCUMULATED DISTRIBUTIONS NONREDEEMABLE NUMBER OF PREFERRED PREFERRED COMMON COMMON SHARES SHARES SHARES 138,674 109,019 $ SHARES 5,750 $ 843,268 $ IN EXCESS OF NONCONTROLLING TOTAL INTERESTS EQUITY NET INCOME 128,362 $ 720,546 (389,758) $ 24,087 (61,247) (2,372) (9,142) (438,432) $ 72,006 (64,060) (2,372) (9,142) 8,102 151 64,856 2,626 7,183 41,264 5,750 $ 138,674 124,455 $ (146) 951,868 $ 821 185 5,619 1,728 273 (4,643) 1,477 (35,000) 5,750 $ 138,674 121,091 $ (3,608) 922,084 $ (442,000) $ See Notes to Consolidated Financial Statements. 28,519 4,432 (8,607) (69,854) (2,372) (9,142) 64,856 2,626 800 — 800 (41,264) 8,909 8,909 (3,926) 138 (3,926) (8) 88,844 $ 740,954 76,568 4,562 (7,230) (71,290) (2,372) (9,142) 5,619 1,728 18,226 — (35,000) 18,226 (1,477) (7,029) (7,029) 3,608 — 99,504 $ 718,262 F-6 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (continued) (in thousands) BALANCE APRIL 30, 2016 . . . . . . . . . . . . . . . . . . Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests . . . . . . . Distributions – common shares and units . . . . . . . . . Distributions – Series A preferred shares . . . . . . . . . Distributions – Series B preferred shares . . . . . . . . . . Share-based compensation, net of forfeitures . . . . . . Redemption of units for common shares . . . . . . . . . . Redemption of units for cash . . . . . . . . . . . . . . . . . . Shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . Contributions from nonredeemable noncontrolling interests – consolidated real estate entities . . . . . . . . . Distributions to nonredeemable noncontrolling interests – consolidated real estate entities . . . . . . . . . Conversion to equity of notes receivable from nonredeemable noncontrolling interests – consolidated real estate entities . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of nonredeemable noncontrolling interests – consolidated real estate entities . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BALANCE APRIL 30, 2017 . . . . . . . . . . . . . . . . . . NUMBER OF ACCUMULATED DISTRIBUTIONS NONREDEEMABLE NUMBER OF PREFERRED PREFERRED COMMON COMMON SHARES 5,750 $ SHARES SHARES SHARES NET INCOME 138,674 121,091 $ 922,084 $ IN EXCESS OF NONCONTROLLING TOTAL INTERESTS EQUITY 99,504 $ 718,262 (442,000) $ 43,347 (55,907) (1,403) (9,143) 389 503 358 875 (1,150) (27,317) (778) (4,501) (1,435) 4,600 $ 111,357 121,199 $ 916,121 $ (466,541) $ (6) (2,677) (18) See Notes to Consolidated Financial Statements. (12,400) (7,453) (875) (966) 30,947 (63,360) (1,403) (9,143) 358 — (966) (33,253) 7,188 7,188 (174) (174) (7,366) (7,366) (2,261) (40) (4,938) (58) 75,157 $ 636,094 F-7 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended April 30, 2017 2016 2015 30,525 $ 76,602 $ 28,684 CASH FLOWS FROM OPERATING ACTIVITIES Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gain on sale of real estate, land, other investments and discontinued operations. . . . . . . . . . . . . . Loss (gain) on extinguishment of debt and discontinued operations . . . . . . . . . . . . . . . . . . . . . . . Gain on bargain purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment of real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bad debt expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Write off of development pursuit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in other assets and liabilities: Receivable arising from straight-lining of rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax, insurance and other escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred charges and leasing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts payable, accrued expenses and other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from real estate deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments for real estate deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease in other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease in lender holdbacks for improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in lender holdbacks for improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from sale of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from sale of real estate and other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Insurance proceeds received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments for acquisitions of real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments for development and re-development of real estate assets . . . . . . . . . . . . . . . . . . . . . . . . Payments for improvements of real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments for improvements of real estate assets from discontinued operations . . . . . . . . . . . . . . . . . Net cash provided (used) by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from mortgages payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Principal payments on mortgages payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from revolving lines of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Principal payments on revolving lines of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from construction debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Principal payments on construction debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from sale of common shares under distribution reinvestment and share purchase program . . Additions to notes receivable from noncontrolling partner – consolidated real estate entities . . . . . . Proceeds from noncontrolling partner – consolidated real estate entities . . . . . . . . . . . . . . . . . . . . . . Payments for acquisition of noncontrolling interests – consolidated real estate entities . . . . . . . . . . . Repurchase of common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase of preferred shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase of partnership units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributions paid to common shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributions paid to preferred shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership . . . . . . . . . Distributions paid to noncontrolling interests – consolidated real estate entities . . . . . . . . . . . . . . . . . Net cash (used) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,525 87 (74,847) 1,041 — 6 57,028 499 3,161 (662) 930 (244) (123) (2,430) 2,434 73,930 1,370 (25,029) 50 2,665 (903) 237,135 47,354 88 — (18,274) (42,193) — 202,263 84,150 (295,136) 246,000 (206,450) 19,341 (49,080) — (9,211) 9,749 (4,938) (4,501) (28,752) (966) (55,907) (10,744) (7,453) (174) (314,072) (37,879) 66,698 28,819 50,978 14,477 (33,423) (35,552) (3,424) 2,256 5,983 651 — (437) 1,815 762 1,463 (1,366) (14,292) 66,493 5,203 (2,714) 279 4,347 (1,136) 365,845 40,306 1,320 (121,821) (122,801) (28,976) (5,600) 134,252 143,574 (234,885) 82,000 (125,000) 94,142 (24,754) 1,493 — 1,120 — (35,000) — — (60,063) (11,514) (7,101) (7,029) (183,017) 17,728 48,970 66,698 $ 43,762 28,316 (6,093) — — 2,215 6,105 967 — (64) 4,058 (150) 1,445 (2,300) 7,234 114,179 1,168 (3,512) — 10,738 (1,204) — 73,835 2,678 (38,704) (189,091) (21,327) (10,988) (176,407) 90,749 (127,622) 55,000 (17,000) 93,643 (12,685) 48,701 — 2,284 — — — — (45,728) (11,514) (7,971) (3,926) 63,931 1,703 47,267 48,970 $ See Notes to Consolidated Financial Statements. F-8 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (in thousands) Year Ended April 30, 2017 2016 2015 SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Distribution reinvestment plan – shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Operating partnership distribution reinvestment plan – shares issued . . . . . . . . . . Operating partnership units converted to shares . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate assets acquired through the issuance of operating partnership units . Real estate assets acquired through assumption of indebtedness and accrued — costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Decrease) increase to accounts payable included within real estate investments (1,851) Real estate assets contributed by noncontrolling interests – consolidated real estate entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conversion to equity of notes receivable from noncontrolling interests – consolidated real estate entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,846 Construction debt reclassified to mortgages payable . . . . . . . . . . . . . . . . . . . . . . . 10,549 Decrease in real estate assets in connection with transfer of real estate assets in settlement of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease in debt in connection with transfer of real estate assets in settlement of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — $ — 875 — 3,997 $ 15,519 636 41,264 800 130 1,477 18,226 — (10,420) 12,169 5,116 — 6,624 123,553 87,213 122,610 — — — SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest, net of amounts capitalized of $431, $4,396 and $4,903, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,432 $ 39,668 $ 51,283 See Notes to Consolidated Financial Statements. F-9 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2017, 2016, and 2015 NOTE 1 • ORGANIZATION Investors Real Estate Trust (“IRET”, “we” or “us”) is a self-advised equity real estate investment trust engaged in acquiring, owning and leasing real estate. We have elected to be taxed as a real estate investment trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended. As a REIT, we are subject to a number of organizational and operational requirements, including a requirement to distribute 90% of ordinary taxable income to shareholders, and, generally, are not subject to federal income tax on net income, except for taxes on undistributed REIT taxable income and taxes on the income generated by our taxable REIT subsidiary (“TRS”). Our TRS is subject to corporate federal and state income tax on its taxable income at regular statutory rates. We have considered estimated future taxable income and have determined that there were no material income tax provisions or material net deferred income tax items for our TRS for the years ended April 30, 2017, 2016 and 2015. Our properties are located mainly in the states of North Dakota and Minnesota, but also in the states of Idaho, Iowa, Kansas, Montana, Nebraska, South Dakota, Wisconsin and Wyoming. As of April 30, 2017, we held for investment 87 multifamily properties with 12,885 apartment units and 42 commercial properties, consisting of healthcare, industrial, office and retail, totaling 2.6 million net rentable square feet. As of April 30, 2017, we held for sale 13 multifamily properties consisting of 327 units, and 4 commercial properties. We conduct a majority of our business activities through our consolidated operating partnership, IRET Properties, a North Dakota Limited Partnership (the “Operating Partnership”), as well as through a number of other subsidiary entities. All references to IRET, we or us refer to Investors Real Estate Trust and its consolidated subsidiaries. NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying consolidated financial statements include our accounts and the accounts of all our subsidiaries in which we maintain a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation. Our fiscal year ends April 30th. Our interest in the Operating Partnership was 88.6% and 88.1%, respectively, of the limited partnership units of the Operating Partnership (“Units”) as of April 30, 2017 and 2016, which includes 100% of the general partnership interest. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their Units for cash any time following the first anniversary of the date they acquired such Units (“Exchange Right”). When a limited partner exercises the Exchange Right, we have the right, in our sole discretion, to acquire such Units by either making a cash payment or exchanging the Units for our common shares of beneficial interest (“Common Shares”), on a one-for-one basis. The Exchange Right is subject to certain conditions and limitations, including the limited partner may not exercise the Exchange Right more than two times during a calendar year and the limited partner may not exercise for less than 1,000 Units, or, if such limited partner holds less than 1,000 Units, for less than all of the Units held by such limited partner. The Operating Partnership and some limited partners have contractually agreed to a holding period of greater than one year, a greater number of redemptions during a calendar year or other limitations to their Exchange Right. The consolidated financial statements also reflect the ownership by the Operating Partnership of certain joint venture entities in which the Operating Partnership has a general partners or controlling interest. These entities are consolidated into our other operations with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income and expenses. F-10 RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014- 09, Revenue from Contracts with Customers and in August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers-Deferral of the Effective Date, which defers the effective date of the new revenue recognition standard until fiscal years beginning after December 15, 2017. Subsequently, the FASB has issued multiple ASUs clarifying ASU 2014-09 and ASU 2015-14. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current GAAP and replace it with a principle based approach for determining revenue recognition. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. The majority of our revenue is derived from rental income, which is scoped out from this standard and will be accounted for under ASC 840, Leases. Our other revenue streams, which are being evaluated under this ASU, include but are not limited to other income from residents determined not to be within the scope of ASC 840 and gains and losses from real estate dispositions. We will continue to assess the impact of the new standard and anticipate adoption as of May 1, 2018 using the modified retrospective approach. In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with variable interest entities, and (iv) provide a scope exception for certain entities. The ASU is effective for fiscal years beginning after December 15, 2015. We adopted the guidance in ASU 2015-02 as of May 1, 2016, as more fully described in the Variable Interest Entity section below. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability to which they relate, consistent with debt discounts, as opposed to being presented as assets. The ASU is effective for fiscal years beginning after December 15, 2015. We adopted the guidance in ASU 2015-03 as of May 1, 2016. In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Under ASU 2015-05, if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The ASU is effective for fiscal years beginning after December 15, 2015. Our adoption of the guidance in ASU 2015-05 did not have a material impact on our operating results or financial position. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We do not expect adoption of this update to have a material impact on our operating results or financial position. In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amends existing accounting standards for lease accounting, including by requiring lessees to recognize most leases on the balance sheet and making certain changes to lessor accounting. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. We are currently evaluating the impact the new standard may have on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, accrual of compensation cost, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. We are currently evaluating the impact the new standard may have on our consolidated financial statements. F-11 In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice. The cash flow issues include debt prepayment or debt extinguishment costs and proceeds from the settlement of insurance claims. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We are currently evaluating the impact the new standard may have on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business and provides further guidance for evaluating whether a transaction will be accounted for as an acquisition of an asset or a business. ASU 2017-01 is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. Under the ASU, we believe most of our future acquisitions of operating properties will qualify as asset acquisitions and most future transaction costs associated with these acquisitions will be capitalized. USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RECLASSIFICATIONS Certain previously reported amounts have been reclassified to conform to the current financial statement presentation. On the Consolidated Balance Sheets, we reclassified assets and liabilities related to properties classified as held for sale and we reclassified debt issuance costs from deferred charges and leasing costs to mortgages payable, as part of our adoption of ASU 2015-03, as described above in Recent Accounting Pronouncements. REVISION During the fourth quarter of fiscal year 2017 we identified an error pertaining to the reporting for interest income related to two properties that were classified as discontinued operations at April 30, 2016. Accounting guidance in ASC 205-20, Discontinued Operations, indicates that interest income should be allocated to discontinued operations. This error resulted in an overstatement of interest income and income from continuing operations and an understatement of income from discontinued operations of $2.2 million for the fiscal year ended April 30, 2016. This non-cash error did not impact net income, our consolidated balance sheets or statements of cash flows for any period. In accordance with accounting guidance found in ASC 250-10, Materiality, we assessed the materiality of the error and concluded the error was not material to any of the Company’s previously issued financial statements. In accordance with accounting guidance found in ASC 250-10, Considering the Effects of Prior Year Misstatement when Quantifying Misstatements in Current Year Financial Statements, we revised our previously issued consolidated statement of operations to correct the effect of this error. We will revise amounts pertaining to each of the fiscal year 2017 quarters from May 1, 2016 through January 31, 2017 in future quarterly filings on Form 10-Q. F-12 The following table presents the effect of this correction on our Consolidated Statement of Operations for the period affected: (in thousands, except per share data) Year Ended April 30, 2016 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Income before gain on sale of real estate and other investments, gain on bargain purchase and income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings per common share from continuing operations - Investors Real Estate Trust - basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Earnings per common share from discontinued operations - Investors Real Estate Trust - basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . REAL ESTATE INVESTMENTS As Previously Reported Adjustment 2,256 $ (2,175) $ As Revised 81 6,216 19,280 57,322 (2,175) (2,175) 2,175 4,041 17,105 59,497 0.08 $ (0.02) $ 0.06 0.41 0.02 0.43 Real estate investments are recorded at cost less accumulated depreciation and an adjustment for impairment, if any. Acquisitions of real estate are recorded based upon preliminary allocations of the purchase price which are subject to adjustment as additional information is obtained, but in no case more than one year after the date of acquisition. We allocate the purchase price based on the relative fair values of the tangible and intangible assets of an acquired property (which includes the land, building and personal property) which are determined by valuing the property as if it were vacant and fair value of the intangible assets (which include in-place leases.) The as-if-vacant value is allocated to land, buildings and personal property based on management’s determination of the relative fair values of these assets. The estimated fair value of the property is the amount that would be recoverable upon the disposition of the property. Techniques used to estimate fair value include discounted cash flow analysis and reference to recent sales of comparables. A land value is assigned based on the purchase price if land is acquired separately or based on estimated fair value if acquired in a merger or in a single or portfolio acquisition. Acquired above- and below-market lease values are recorded as the difference between the contractual amounts to be paid pursuant to the in-place leases and management’s estimate of fair market value lease rates for the corresponding in- place leases. The capitalized above- and below-market lease values are amortized as adjustments to rental revenue over the remaining terms of the respective leases, which includes fixed rate renewal options for below-market leases if it is determined probable the tenant will execute a bargain renewal option. Other intangible assets acquired include amounts for in-place lease values that are based upon our evaluation of the specific characteristics of the leases. Factors considered in the fair value analysis include an estimate of carrying costs and foregone rental income during hypothetical expected lease-up periods, considering current market conditions, and costs to execute similar leases. We also consider information about each property obtained during pre-acquisition due diligence, marketing and leasing activities in estimating the relative fair value of the tangible and intangible assets acquired. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. We use a 20-40 year estimated life for buildings and improvements and a 5-12 year estimated life for furniture, fixtures and equipment. We follow the real estate project costs guidance in ASC 970, Real Estate – General, in accounting for the costs of development and re-development projects. As real estate is undergoing development or redevelopment, all project costs directly associated with and attributable to the development and construction of a project, including interest expense and real estate tax expense, are capitalized to the cost of the real property. The capitalization period begins when development activities and expenditures begin and are identifiable to a specific property and ends upon completion, which is when the asset is ready for its intended use. Generally, rental property is considered substantially complete and ready for its intended use upon completion of tenant improvements (in the case of commercial properties) or upon issuance of a certificate of occupancy (in the case of multifamily properties). General and administrative costs are expensed as incurred. F-13 Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. Renovations and improvements that improve and/or extend the useful life of the asset are capitalized and depreciated over their estimated useful life, generally five to ten years. Property sales or dispositions are recorded when title transfers, we have received sufficient consideration and we have no significant involvement with the property sold. We periodically evaluate our long-lived assets, including real estate investments, for impairment indicators. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group and legal and environmental concerns. If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. If our anticipated holding period for properties, the estimated fair value of properties or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. During fiscal year 2017, we incurred a non-cash loss of $57.0 million due to impairment of 16 multifamily properties and two parcels of unimproved land. We recognized impairments of $40.9 million, $5.8 million, $4.7 million, and $2.8 million, respectively, on three multifamily properties and one parcel of unimproved land in Williston, North Dakota, due to deterioration of this energy-impacted market, which resulted in poor leasing activity and declining rental rates during the three months ended July 31, 2016, which should generally be a strong leasing period. These properties were written-down to estimated fair value based on an independent appraisal in the case of one property and management cash flow estimates and market data in the case of the remaining assets. The properties impaired for $40.9 million, $4.7 million, and $2.8 million are owned by joint venture entities in which, at the time of impairment, we had an approximately 70%, 60% and 70% interest, respectively, but which are consolidated in our consolidated financial statements. We recognized impairments of $2.9 million on 13 properties and one parcel of land in Minot, North Dakota. These properties were written-down to estimated fair value based on management cash flow estimates and market data and, in the case of the 13 properties, our intent to dispose of the properties. During fiscal year 2016, we incurred a non-cash loss of $6.0 million due to impairment of one office property, one healthcare property, two parcels of land and eight multifamily properties of which approximately $440,000 is reflected in discontinued operations. See Note 12 for additional information on discontinued operations. We recognized impairments of approximately $440,000 on an office property in Eden Prairie, Minnesota; $1.9 million on a healthcare property in Sartell, Minnesota; $1.6 million on a parcel of land in Grand Chute, Wisconsin; $1.9 million on eight multifamily properties in St. Cloud, Minnesota; and $162,000 on a parcel of land in River Falls, Wisconsin. These properties were written-down to estimated fair value during fiscal year 2016 based on receipt of individual market offers to purchase and our intent to dispose of the properties or, in the case of the Grand Chute, Wisconsin, the sale listing price and our intent to dispose of the property. The Sartell, Minnesota property is classified as held for sale at April 30, 2016. During fiscal year 2015, we incurred a non-cash loss of $6.1 million due to impairment of four commercial properties and two parcels of unimproved land of which $1.4 million is reflected in discontinued operations. See Note 12 for additional information on discontinued operations. We recognized impairments of $2.1 million on a retail property in Kalispell, Montana; approximately $183,000 on an office property in Golden Valley, Minnesota; $1.8 million on an office property in Minneapolis, Minnesota; $1.4 million on an office property in Boise, Idaho; approximately $98,000 on unimproved land in Eagan, Minnesota; and approximately $442,000 on unimproved land in Weston, Wisconsin. These properties were written-down to estimated fair value during fiscal year 2015 based on receipt of individual market offers to purchase and our intent to dispose of the properties or, in the case of the Boise and Weston properties, an independent appraisal. The Kalispell and Golden Valley properties were sold in the second quarter of fiscal year 2015. The Minneapolis property was classified as held for sale at April 30, 2015. REAL ESTATE HELD FOR SALE Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal costs. Our determination of fair value is based on inputs management believes are consistent with those that market participants would use. Estimates are significantly impacted by estimates of sales price, selling velocity and other factors. Due to F-14 uncertainties in the estimation process, actual results could differ from such estimates. Depreciation is not recorded on assets classified as held for sale. We classify properties as held for sale when they meet the GAAP criteria, which include: (a) management commits to and initiates a plan to sell the asset (disposal group), (b) the sale is probable and expected to be completed within one year under terms that are usual and customary for sales of such assets (disposal groups), and (c) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. We generally consider these criteria met when the transaction has been approved by our Board of Trustees, there are no known significant contingencies related to the sale and management believes it is probable that the sale will be completed within one year. Thirteen multifamily properties, two healthcare properties, and two retail properties were classified as held for sale at April 30, 2017. Thirty-five healthcare properties, one multifamily property, one industrial property, and three parcels of unimproved land were classified as held for sale at April 30, 2016. We report in discontinued operations the results of operations and the related gains or losses on the sales of properties that have either been disposed of or classified as held for sale and meet the classification of a discontinued operation as described in ASC 205 - Presentation of Financial Statements and ASC 360 - Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this standard, a disposal (or classification as held for sale) of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES AND GOODWILL Upon acquisition of real estate, we record the intangible assets and liabilities acquired (for example, if the leases in place for the real estate property acquired carry rents above the market rent, the difference is classified as an intangible asset) at their estimated fair value separate and apart from goodwill. We amortize identified intangible assets and liabilities that are determined to have finite lives based on the period over which the assets and liabilities are expected to affect, directly or indirectly, the future cash flows of the real estate property acquired (generally the life of the lease). We added no new intangible assets or liabilities in the twelve months ended April 30, 2017. In the twelve months ended April 30, 2016, we added $2.2 million of new intangible assets and approximately $101,000 of new intangible liabilities. The weighted average lives of the intangible assets acquired in the twelve months ended April 30, 2016 was 0.7 years. Amortization of intangibles related to above or below-market leases is recorded in real estate rentals in the Consolidated Statements of Operations. Amortization of other intangibles is recorded in depreciation/amortization related to real estate investments in the Consolidated Statements of Operations. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its estimated fair value. The excess of the cost of an acquired business over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Our goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill book value as of April 30, 2017 and 2016 was $1.6 million and $1.7 million, respectively. The annual reviews of goodwill compared the fair value of the reporting units that have been assigned goodwill to their carrying value (investment cost less accumulated depreciation), with the results for these periods indicating no impairment. In fiscal year 2017, we disposed of four commercial properties that had goodwill assigned, and as a result, approximately $103,000 of goodwill was derecognized. In fiscal year 2016, we disposed of eight commercial properties that had goodwill assigned, and as a result, approximately $196,000 of goodwill was derecognized. PROPERTY AND EQUIPMENT Property and equipment consists primarily of office equipment contained at our headquarters in Minot, North Dakota, corporate offices in Minneapolis and St. Cloud, Minnesota, and additional property management offices located in the states where we own properties. The Consolidated Balance Sheets reflects these assets at cost, net of accumulated depreciation. As of April 30, 2017 and 2016, property and equipment cost was $2.1 million and $2.1 million, respectively. Accumulated depreciation was $1.2 million and $1.1 million as of April 30, 2017 and 2016, respectively. F-15 CASH AND CASH EQUIVALENTS Cash and cash equivalents include all cash and highly liquid investments purchased with maturities of three months or less. Cash and cash equivalents consist of our bank deposits and short-term investment certificates acquired subject to repurchase agreements, and our deposits in a money market mutual fund. At times, these deposits may exceed the FDIC limit. LENDER HOLDBACKS We have a number of mortgage loans under which the lender retains a portion of the loan proceeds or requires a deposit for the payment of construction costs or tenant improvements. The decrease of $2.7 million in lender holdbacks for improvements reflected in the Consolidated Statements of Cash Flows for the fiscal year ended April 30, 2017 is due primarily to the release of loan proceeds to us upon completion of these construction and tenant improvement projects, while the increase of $903,000 represents additional amounts retained by lenders for new projects. ALLOWANCE FOR DOUBTFUL ACCOUNTS Management evaluates the appropriate amount of the allowance for doubtful accounts by assessing the recoverability of individual real estate mortgage loans and rent receivables, through a comparison of their carrying amount with their estimated realizable value. Management considers tenant financial condition, credit history and current economic conditions in establishing these allowances. Receivable balances are written off when deemed uncollectible. Recoveries of receivables previously written off, if any, are recorded when received. A summary of the changes in the allowance for doubtful accounts including properties held for sale for fiscal years ended April 30, 2017, 2016 and 2015 is as follows: Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Write-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance at close of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ TAX, INSURANCE, AND OTHER ESCROW (in thousands) 2017 946 $ 499 (895) 550 $ 2016 1,156 $ 651 (861) 946 $ 2015 1,044 967 (855) 1,156 Tax, insurance and other escrow includes funds deposited with a lender for payment of real estate tax and insurance, and reserves for funds to be used for replacement of structural elements and mechanical equipment of certain projects. The funds are under the control of the lender. Disbursements are made after supplying written documentation to the lender. REAL ESTATE DEPOSITS Real estate deposits consist of funds held in escrow to be applied toward the purchase of real estate, including from Internal Revenue Code Section 1031 exchanges, and the payment of debt costs associated with debt placement or refinancing. Real estate deposits at April 30, 2017 consisted of $23.7 million held in escrow from Internal Revenue Code Section 1031 exchanges. We had no real estate deposits at April 30, 2016. DEFERRED CHARGES AND LEASING COSTS Costs incurred in obtaining a line of credit are amortized to interest expense over the term of the line of credit using the straight-line method, which approximates the effective interest method. Costs and commissions incurred in obtaining tenant leases are amortized on the straight-line method over the terms of the related leases. INCOME TAXES We operate in a manner intended to enable us to continue to qualify as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income, excluding capital gains, as a dividend to its shareholders each year and which meets certain other conditions will F-16 not be taxed on that portion of its taxable income which is distributed to shareholders. For the fiscal years ended April 30, 2017, 2016 and 2015, we distributed in excess of 90% of our taxable income and realized capital gains from property dispositions within the prescribed time limits. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even as a REIT, we may be subject to certain state and local income and property taxes, and to federal income and excise taxes on undistributed taxable income. In general, however, if we qualify as a REIT, no provisions for federal income taxes are necessary except for taxes on undistributed REIT taxable income and taxes on the income generated by a taxable REIT subsidiary (TRS). We have one TRS, acquired during the second quarter of fiscal year 2014, which is subject to corporate federal and state income taxes on its taxable income at regular statutory rates. For the fiscal year ended April 30, 2017, we estimate that the TRS will have no taxable income. There were no income tax provisions or material deferred income tax items for our TRS for the fiscal years ended April 30, 2017, 2016 and 2015. We conduct our business activity as an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) through our Operating Partnership. UPREIT status allows us to accept the contribution of real estate in exchange for Units. Generally, such a contribution to a limited partnership allows for the deferral of gain by an owner of appreciated real estate. Distributions for the calendar year ended December 31, 2016 were characterized, for federal income tax purposes, as 12.43% ordinary income and 87.57% capital gain. Distributions for the calendar year ended December 31, 2015 were characterized, for federal income tax purposes, as 36.28% ordinary income, 11.99% capital gain and 51.73% return of capital. REVENUE RECOGNITION Multifamily rental properties are leased under operating leases with terms generally of one year or less. Commercial properties are leased under operating leases to tenants for various terms generally exceeding one year. Lease terms often include renewal options. Rental revenue is recognized on the straight-line basis, which averages minimum required rents over the terms of the leases. Rents recognized in advance of collection are reflected as receivable arising from straight- lining of rents, net of allowance for doubtful accounts. Rent concessions, including free rent, are amortized on a straight- line basis over the terms of the related leases. Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as revenue in the period the applicable expenditures are incurred. We receive payments for these reimbursements from substantially all of our tenants at multi-tenant commercial properties throughout the year. A number of the commercial leases provide for a base rent plus a percentage rent based on gross sales in excess of a stipulated amount. These percentage rents are recorded once the required sales level is achieved. NET INCOME PER SHARE Basic net income per share is computed as net income available to common shareholders divided by the weighted average number of common shares outstanding for the period. We have no potentially dilutive financial interests. The potential issuance of Units in exchange for common shares pursuant to the Exchange Right will have no effect on net income per share because Unitholders and common shareholders effectively share ratably in the net income of the Operating Partnership. PROCEEDS FROM FINANCING LIABILITY During the first quarter of fiscal year 2014, we sold a senior housing property in exchange for $7.9 million in cash and a $29.0 million contract for deed which matures August 1, 2018. The buyer leased the property back to us, and also granted us an option to repurchase the property at a specified price at or prior to July 31, 2018. We accounted for the transaction as a financing due to our continuing involvement with the property and recorded the $7.9 million in sales proceeds within liabilities held for sale and liabilities from discontinued operations on the Consolidated Balance Sheets. The balance of the liability as of April 30, 2017 is $7.9 million. F-17 VARIABLE INTEREST ENTITY As discussed in the Recent Accounting Pronouncements section, effective May 1, 2016, we adopted the guidance in ASU 2015-02. As a result, the Operating Partnership and each of our less than wholly-owned real estate partnerships have been deemed to have the characteristics of a variable interest entity (“VIE”). However, we were not required to consolidate any previously unconsolidated entities or deconsolidate any previously consolidated entities as a result of the change in classification. Accordingly, there has been no change to the recognized amounts in our condensed consolidated balance sheets and statements of operations or amounts reported in our condensed consolidated statements of cash flows. We determined that an additional six consolidated partnerships, including the Operating Partnership, are VIEs under the new standard because the limited partners are not able to exercise substantive kick-out or participating rights. We are the VIEs primary beneficiary and the partnerships are required to be consolidated on our balance sheet because we have a controlling financial interest in the VIEs, and have both the power to direct the activities of the VIEs that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because the Operating Partnership is a VIE, all of our assets and liabilities are held through a VIE. GAIN ON BARGAIN PURCHASE During fiscal year 2016, we acquired a multifamily property in Rochester, MN, which had a fair value at acquisition of approximately $36.3 million, as appraised by a third party. The consideration exchanged for the property consisted of $15.0 million cash and approximately 2.5 million Units, valued at approximately $17.8 million. The fair value of the Units transferred was based on the closing market price of our common shares on the acquisition date of $7.09 per share. The acquisition resulted in a gain on bargain purchase because the fair value of assets acquired exceeded the total of the fair value of the consideration paid by approximately $3.4 million. The seller accepted consideration below the fair value of the property in order to do a partial tax-deferred exchange for Units. NOTE 3 • CREDIT RISK We are potentially exposed to credit risk for cash deposited with FDIC-insured financial institutions in accounts which, at times, may exceed federally insured limits. We have not experienced any losses in such accounts. We have entered into a cash management arrangement with First Western Bank (the “Bank”) with respect to deposit accounts that exceed FDIC Insurance coverage. On a daily basis, account balances are swept into a repurchase account. The Bank pledges fractional interests in U.S. Government Securities owned by the Bank at an amount equal to the excess over the uncollected balance in the repurchase account. The amounts deposited by us pursuant to the repurchase agreement are not insured by FDIC. At April 30, 2017 and 2016, these amounts totaled $6.0 million and $36.7 million, respectively. F-18 NOTE 4 • PROPERTY OWNED Property, consisting principally of real estate, is stated at cost less accumulated depreciation and totaled $1.3 billion and $1.4 billion as of April 30, 2017 and 2016, respectively. Construction period interest of approximately $431,000, $4.9 million and $4.9 million has been capitalized for the years ended April 30, 2017, 2016 and 2015, respectively. The future minimum lease receipts to be received under non-cancellable leases for commercial properties held for investment as of April 30, 2017, assuming that no options to renew or buy out the lease are exercised, are as follows: Year Ended April 30, (in thousands) 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,922 24,250 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,695 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,386 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,601 120,772 Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 234,626 See Real Estate Investments within Note 2 for information about impairment losses recorded during fiscal years 2017, 2016, and 2015. NOTE 5 • IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES Our identified intangible assets and intangible liabilities at April 30, 2017 and 2016 were as follows: (in thousands) April 30, 2017 April 30, 2016 Identified intangible assets (included in intangible assets): Gross carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,102 $ (5,444) 658 $ 8,088 (6,230) 1,858 Identified intangible liabilities (included in other liabilities): Gross carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 156 $ (76) 80 $ 159 (55) 104 Amortization of identified intangible assets (a component of depreciation and amortization expense) was $1.2 million, $1.7 million and $1.5 million for the twelve months ended April 30, 2017, 2016 and 2015, respectively. The estimated annual amortization of identified intangible assets for each of the five succeeding fiscal years is immaterial. NOTE 6 • NONCONTROLLING INTERESTS Interests in the Operating Partnership held by limited partners are represented by Units. The Operating Partnership’s income is allocated to holders of Units based upon the ratio of their holdings to the total Units outstanding during the period. Capital contributions, distributions and profits and losses are allocated to noncontrolling interests in accordance with the terms of the Operating Partnership’s Agreement of Limited Partnership. We reflect noncontrolling interests in consolidated real estate entities on the Balance Sheet for the portion of properties consolidated by us that are not wholly owned by us. The earnings or losses from these properties attributable to the noncontrolling interests are reflected as net income attributable to noncontrolling interests –-consolidated real estate F-19 entities in the Consolidated Statements of Operations. Our noncontrolling interests – consolidated real estate entities at April 30, 2017 and 2016 were as follows: IRET-71 France, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ IRET-Cypress Court Apartments, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IRET-RED 20, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IRET-Williston Garden Apartments, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IRET - WRH 1, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . WRH Holding, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests – consolidated real estate entities . . . . . . . . . . . . . . . . . . . . . . . . . $ (in thousands) April 30, 2017 April 30, 2016 8,070 1,042 2,410 3,014 5,266 1,195 23 21,020 7,425 $ 986 — 1,057 (7,904) 360 — 1,924 $ NOTE 7 • LINE OF CREDIT During the fiscal year ended April 30, 2017, we had a revolving, multi-bank line of credit with First International Bank and Trust, Watford City, North Dakota, as lead bank, which had lending commitments of $100.0 million (“FIB Line of Credit”). On January 31, 2017, we repaid the FIB Line of Credit in full in the amount of $17.5 million, along with other fees, and terminated the FIB Line of Credit. On January 31, 2017, our Operating Partnership entered into a credit agreement for the unsecured, variable interest rate BMO Line of Credit. The BMO Line of Credit contains a $250 million accordion option, which exercise is subject to the satisfaction of certain conditions. However, the maximum borrowing capacity of the BMO Line of Credit will be based on the value of an unencumbered asset pool (“UAP”). The UAP may not consist of less than 15 properties that meet certain eligibility criteria, and eligible properties may be added and removed from the UAP subject to the satisfaction of certain conditions. The BMO Line of Credit is guaranteed, jointly and severally, by us, the general partner of our Operating Partnership and each subsidiary that owns a UAP property. It will accrue interest at a rate based either on a margin percentage over the Lender’s Base Rate, ranging from 0.6% to 1.25%, or on a margin percentage over LIBOR, ranging from 1.6% to 2.25%, based on our total leverage ratio. The BMO Line of Credit has a termination date of January 31, 2021, which may be extended for an additional one year period subject to the satisfaction of certain conditions. The line also requires the payment of customary fees and contains covenants, representations, warranties and events of default customary for credit facilities of this type, including a covenant on a fiscal quarterly-end basis that the consolidated leverage ratio will not be greater than 0.60 to 1.00. Participants, as of April 30, 2017, included the following financial institutions: BMO Harris Bank N.A., KeyBank, National Association, PNC Bank, National Association, Royal Bank of Canada, U.S. Bank National Association, Associated Bank, National Association, Bank of North Dakota and Raymond James Bank, N.A.; with KeyBank, National Association and PNC Bank, National Association as syndication agents and BMO Capital Markets Corp., Keybanc Capital Markets Inc. and PNC Capital Markets, LLC as joint lead arrangers and joint book runners. As of April 30, 2017, the line of credit availability was $206.0 million based on the UAP, of which $57.1 million was drawn on the line, priced at an interest rate of 2.74%. As of April 30, 2017, we believe we and our Operating Partnership were in compliance with the covenants contained in the BMO Line of Credit. Financial Institution (in thousands) Amount Outstanding Applicable Interest Rate Amount as of April 30, as of April 30, as of April 30, 2017 Amount Outstanding 2016 2017 Available Weighted Average Int. Rate on Borrowings Maturity during fiscal year 2017 Date First International Bank & Trust . . . . . . . . . . . . . . . . . . $ — $ BMO Harris Bank N.A. . . . $ 206,000 $ — $ 57,050 $ 17,500 — n/a n/a 2.74 % 1/31/2021 n/a 2.67% F-20 NOTE 8 • MORTGAGES PAYABLE AND CONSTRUCTION DEBT Most of our properties serve as collateral for separate mortgage loans on single properties or groups of properties. The majority of these mortgage loans are non-recourse to us, other than for standard carve-out obligations such as fraud, waste, failure to insure, environmental conditions and failure to pay real estate taxes. Interest rates on mortgage loans range from 3.28% to 6.66%, and the mortgage loans have varying maturity dates from May 28, 2017 through July 1, 2036. As of April 30, 2017, we believe there are no material defaults or material compliance issues in regards to any of these mortgage loans. Including mortgage loans on properties held for sale, the balance of fixed rate mortgage loans totaled $629.5 million and $689.3 million at April 30, 2017 and 2016, respectively, and the balance of variable rate mortgage loans totaled $57.7 million and $196.8 million as of April 30, 2017, and 2016, respectively. We do not utilize derivative financial instruments to mitigate our exposure to changes in market interest rates. Most of the fixed rate mortgage loans have substantial pre-payment penalties. As of April 30, 2017, the weighted-average rate of interest on our mortgage debt was 4.71%, compared to 4.54% on April 30, 2016. The aggregate amount of required future principal payments on mortgage loans payable as of April 30, 2017, is as follows: Year Ended April 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Held for Investment (in thousands) Mortgage Loans Mortgage Loans on Properties on Properties Held for Sale 16,621 1,870 183 193 993 1,943 21,803 40,777 $ 75,918 93,678 136,390 87,654 231,023 665,440 $ In addition to mortgage loans comprising our $687.2 million of mortgage indebtedness, our revolving, multi-bank unsecured line of credit is discussed in Note 7. This line of credit is not included in our mortgage indebtedness total. As of April 30, 2017, we had 56 unencumbered properties. Our construction debt totaled $41.7 million and $82.0 million on April 30, 2017 and 2016, respectively. The weighted average rate of interest on the construction debt as of April 30, 2017 was 3.27%, compared to 2.74% as of April 30, 2016. The total available to be drawn on the construction loans was $4.8 million at April 30, 2017. NOTE 9 • TRANSACTIONS WITH RELATED PARTIES BANKING SERVICES – FIRST INTERNATIONAL BANK AND TRUST We have an ongoing banking relationship with First International Bank. Prior to his declination to stand for reelection on September 19, 2016, Stephen L. Stenehjem, was a member of our Board of Trustees. Mr. Stenehjem is the Chief Executive Officer and Chairman of First International Bank and the Chief Executive Officer of Watford City BancShares, Inc., its bank holding company, and the bank holding company is owned by Mr. Stenehjem and members of his family. We had two mortgage loans outstanding with First International Bank as of April 30, 2017, with original principal balances of $43.0 million (Renaissance Heights I) and $27.0 million (Commons and Landing at Southgate), respectively, and bearing variable interest at 5.24% per annum and fixed interest at 4.04% per annum. We paid interest on these loans of approximately $1.7 million and $579,000 in fiscal year 2017, respectively. Prior to January 31, 2017, we had a multi- bank line of credit with a capacity of $100.0 million, of which First International Bank was the lead bank and a participant with an $11.0 million commitment. In fiscal year 2017, we paid First International Bank a total of approximately $106,000 in interest on First International Bank’s portion of the outstanding balance of this credit line, and paid fees of approximately $56,000. In connection with this multi-bank line of credit, we maintained compensating F-21 balances with First International Bank totaling $6.0 million, of which $1.5 million is held in a non-interest bearing account, and $4.5 million was held in an account that paid us interest on the deposited amount of 0.20% per annum. We also maintained checking accounts with First International Bank. In fiscal year 2017, we paid less than $900 in total in various bank service and other fees charged on these checking accounts. In fiscal years 2016 and 2015, we paid interest and fees on outstanding mortgage and construction loans of approximately $2.2 million and $1.7 million respectively. In fiscal years 2016 and 2015, respectively, we paid First International Bank $186,000 and $245,000 in interest on First International Bank’s portion of the multi-bank line of credit and paid fees of $77,000 and $40,000. Also in both fiscal years 2016 and 2015, we paid under $500 in total in various bank service and other fees charged on checking accounts maintained with First International Bank. Total payments of interest and fees from us to First International Bank were approximately $2.4 million, $2.5 million and $2.0 million in fiscal years 2017, 2016 and 2015, respectively. NOTE 10 • ACQUISITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE AND DISPOSITIONS PROPERTY ACQUISITIONS We added no new real estate properties to our portfolio through property acquisitions during the fiscal year ended April 30, 2017, compared to $143.5 million in fiscal year ended April 30, 2016. We expensed approximately $253,000 of transaction costs related to the acquisitions in fiscal year 2016. The fiscal year 2016 acquisitions are detailed below. Fiscal 2016 (May 1, 2015 to April 30, 2016) Acquisitions Multifamily Total Form of Consideration Investment Allocation Date Acquisition Cost Acquired Cash Units(1) Land Building Intangible Assets (in thousands) 74 unit - Gardens - Grand Forks, ND . . . . . . 2015-09-10 $ 276 unit - GrandeVille at Cascade Lake - Rochester, MN . . . . . . . . . . . . . . . . . . . . . . 2015-10-29 187 unit - Avalon Cove - Rochester, MN(2) . . 2016-03-22 90 unit - Cascade Shores - Rochester, MN . . 2016-03-22 76 unit - Crystal Bay - Rochester, MN . . . . . 2016-03-22 40-unit - French Creek - Rochester, MN . . . . 2016-03-22 9,250 $ 8,850 $ 400 $ 518 $ 8,672 $ 60 56,000 56,000 15,000 36,250 18,500 18,500 12,000 12,000 5,000 5,000 115,350 137,000 — 17,826 — — — 18,226 5,003 1,616 1,585 433 201 9,356 50,363 34,145 16,710 11,425 4,735 126,050 634 489 205 142 64 1,594 Healthcare 27,819 sq ft Lakeside Medical Plaza - Omaha, NE . . . . . . . . . . . . . . . . . . . . . . . . . 2015-08-20 6,500 6,500 — 903 5,109 488 Total Property Acquisitions . . . . . . . . . . . . $ 143,500 $ 121,850 $ 18,226 $10,259 $131,159 $ 2,082 (1) Value of Units of the Operating Partnership based on the closing market price of our common shares on the acquisition date. The number of Units issued were approximately 44,000 and 2.5 million, respectively, for the Gardens and Avalon Cove acquisitions. (2) Acquisition resulted in a gain on bargain purchase of approximately $3.4 million. See Note 2 for additional information. F-22 There were no acquisitions during fiscal year 2017. Acquisitions in fiscal year 2016 are immaterial to our real estate portfolio both individually and in the aggregate, and consequently no proforma information is presented. The results of operations from acquired properties are included in the Consolidated Statements of Operations as of their acquisition date. The revenue and net income of our fiscal year 2017 and 2016 acquisitions are detailed below. Year Ended April 30, Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (in thousands) 2017 2016 — $ 4,094 (366) — $ DEVELOPMENT PROJECTS PLACED IN SERVICE We placed approximately $102.9 million of development projects in service during fiscal year 2017, compared to $211.8 million in fiscal year 2016. The fiscal year 2017 and 2016 development projects placed in service are detailed below. Fiscal 2017 (May 1, 2016 to April 30, 2017) Development Projects Placed in Service Multifamily Date Placed in Service Land Building Development Cost (in thousands) 241 unit - 71 France - Edina, MN(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 unit - Monticello Crossings - Monticello, MN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-05-01 $ 4,721 $ 67,641 $ 1,734 2017-03-01 28,782 72,362 30,516 Total Development Projects Placed in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,455 $ 96,423 $ 102,878 (1) Costs paid in prior fiscal years totaled $70.9 million. Additional costs incurred in fiscal year 2017 totaled $1.5 million, for a total project cost at April 30, 2017 of $72.4 million. The project is owned by a joint venture entity in which we currently have an approximately 52.6% interest. The joint venture is consolidated in our financial statements. (2) Costs paid in prior fiscal years totaled $15.5 million. Additional costs incurred in fiscal year 2017 totaled $15.0 million, for a total project cost at April 30, 2017 of $30.5 million. F-23 Fiscal 2016 (May 1, 2015 to April 30, 2016) Development Projects Placed in Service (1) Multifamily Date Placed in Service Land Building Development Cost (in thousands) 72 unit - Chateau II - Minot, ND (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-06-01 $ 288 unit - Renaissance Heights - Williston, ND(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-07-27 163 unit - Deer Ridge - Jamestown, ND(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-02-22 251 unit - Cardinal Point - Grand Forks, ND(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-03-18 240 $ 14,408 $ 3,080 700 1,600 59,434 24,137 48,132 5,620 146,111 14,648 62,514 24,837 49,732 151,731 Healthcare 57,624 sq ft Edina 6565 France SMC III - Edina, MN(6) . . . . . . . . . . . . . . . . . . . . . . . 2015-06-01 70,756 sq ft PrairieCare Medical - Brooklyn Park, MN(7) . . . . . . . . . . . . . . . . . . . . . . 2015-09-08 — 2,610 33,041 21,830 2,610 54,871 Other 7,963 sq ft Minot Southgate Retail - Minot, ND(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-10-01 889 1,734 33,041 24,440 57,481 2,623 Total Development Projects Placed in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,119 $ 202,716 $ 211,835 (1) Development projects that are placed in service in phases are excluded from this table until the entire project has been placed in service. See Note 15 for additional information on the 71 France project, which was partially placed in service during the fiscal year ended April 30, 2016. (2) Costs paid in prior fiscal years totaled $12.3 million. Additional costs incurred in fiscal year 2016 totaled $2.3 million, for a total project cost at April 30, 2016 of $14.6 million. (3) Costs paid in prior fiscal years totaled $57.7 million. Additional costs incurred in fiscal year 2016 totaled $4.8 million, for a total project cost at April 30, 2016 of $62.5 million. The project is owned by a joint venture entity in which we currently have an approximately 86.6% interest. The joint venture is consolidated in our financial statements. (4) Costs paid in prior fiscal years totaled $14.3 million. Additional costs incurred in fiscal year 2016 totaled $10.5 million, for a total project cost at April 30, 2016 of $24.8 million. (5) Costs paid in prior fiscal years totaled $23.0 million. Additional costs incurred in fiscal year 2016 totaled $26.7 million, for a total project cost at April 30, 2016 of $49.7 million. (6) Costs paid in prior fiscal years totaled $20.8 million. Additional costs incurred in fiscal year 2016 totaled $12.2 million, for a total project cost at April 30, 2016 of $33.0 million. (7) Costs paid in prior fiscal years totaled $17.3 million. Additional costs incurred in fiscal year 2016 totaled $7.1 million, for a total project cost at April 30, 2016 of $24.4 million. (8) Costs paid in prior fiscal years totaled $2.1 million. Additional costs incurred in fiscal year 2016 totaled approximately $500,000, for a total project cost at April 30, 2016 of $2.6 million. F-24 PROPERTY DISPOSITIONS During the fiscal year ended April 30, 2017, we sold 1 multifamily property, 32 senior housing properties, 2 medical office properties, 1 retail property, 1 industrial property and 2 parcels of unimproved land for a total sales price of $286.9 million. Dispositions totaled $536.7 million in fiscal year 2016. The fiscal year 2017 and 2016 dispositions are detailed below. Fiscal 2017 (May 1, 2016 to April 30, 2017) Dispositions Multifamily Date Disposed (in thousands) Book Value Sales Price and Sales Cost Gain/(Loss) 24 unit Pinecone Villas - Sartell, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017-04-20 $ 3,540 $ 2,732 $ 808 Healthcare 189,244 sq ft 9 Idaho Spring Creek Senior Housing Properties(1) . . . . . . . . . . . . . . . 2016-10-31 426,652 sq ft 5 Edgewood Vista Senior Housing Properties(2) . . . . . . . . . . . . . . . . . 2017-01-18 286,854 sq ft 5 Wyoming Senior Housing Properties(3) . . . . . . . . . . . . . . . . . . . . . . 2017-02-01 169,001 sq ft 9 Edgewood Vista Senior Housing Properties(4) . . . . . . . . . . . . . . . . . 2017-02-15 169,562 sq ft 4 Edgewood Vista Senior Housing Properties(5) . . . . . . . . . . . . . . . . . 2017-03-01 114,316 sq ft Healtheast St. John & Woodwinds - Maplewood & Woodbury MN . . 2017-03-06 59,760 sq ft Sartell 2000 23rd Street South - Sartell, MN . . . . . . . . . . . . . . . . . . . . 2017-03-31 98,174 sq ft Legends at Heritage Place - Sartell, MN . . . . . . . . . . . . . . . . . . . . . . . 2017-04-20 Other 195,075 sq ft Stone Container - Fargo, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-07-25 28,528 sq ft Grand Forks Carmike - Grand Forks, ND . . . . . . . . . . . . . . . . . . . . . . 2016-12-29 43,900 69,928 49,600 30,700 35,348 20,700 5,600 9,960 265,736 37,397 50,393 45,469 24,081 14,511 13,777 5,923 11,439 202,990 6,503 19,535 4,131 6,619 20,837 6,923 (323) (1,479) 62,746 13,400 4,000 17,400 4,418 1,563 5,981 8,982 2,437 11,419 Unimproved Land Georgetown Square Unimproved Land - Grand Chute, WI . . . . . . . . . . . . . . . . . . . 2016-05-06 250 274 (24) Total Property Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 286,926 $ 211,977 $ 74,949 (1) The properties included in this portfolio are: Spring Creek American Falls, Spring Creek Boise, Spring Creek Eagle, Spring Creek Fruitland, Spring Creek Fruitland Unimproved, Spring Creek Meridian, Spring Creek Overland, Spring Creek Soda Springs and Spring Creek Ustick. (2) The properties included in this portfolio are: Edgewood Vista Bismarck, Edgewood Vista Brainerd, Edgewood Vista East Grand Forks, Edgewood Vista Fargo, and Edgewood Vista Spearfish. (3) The properties included in this portfolio are: Casper 1930 E 12th Street (Park Place), Casper 3955 E 12th Street (Meadow Wind), Cheyenne 4010 N College Drive (Aspen Wind), Cheyenne 4606 N College Drive (Sierra Hills) and Laramie 1072 N 22nd Street (Spring Wind). (4) The properties included in this portfolio are: Edgewood Vista Belgrade, Edgewood Vista Billings, Edgewood Vista Columbus, Edgewood Vista Fremont, Edgewood Vista Grand Island, Edgewood Vista Minot, Edgewood Vista Missoula, Edgewood Vista Norfolk and Edgewood Vista Sioux Falls. (5) The properties included in this portfolio are: Edgewood Vista Hastings, Edgewood Vista Kalispell, Edgewood Vista Omaha and Edgewood Vista Virginia. F-25 Fiscal 2016 (May 1, 2015 to April 30, 2016) Dispositions Multifamily Date Disposed (in thousands) Book Value Sales Price and Sales Cost Gain/(Loss) 391 unit - St. Cloud Student Housing Portfolio - St. Cloud, MN . . . . . . . . . . . . . . . 2016-03-24 $ 5,615 $ 5,647 $ (32) Healthcare 61,758 sq ft Nebraska Orthopaedic Hospital - Omaha, NE . . . . . . . . . . . . . . . . . . . 2016-04-01 24,494 16,512 7,982 Other 117,144 sq ft Thresher Square – Minneapolis, MN . . . . . . . . . . . . . . . . . . . . . . . . . 2015-05-18 2,549,222 sq ft Office Sale Portfolio(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-08-03 420,216 sq ft Mendota Office Center Portfolio – Mendota Heights, MN(2) . . . . . . . . 2015-08-12 1,027,208 sq ft Retail Sale Portfolio(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015-09-30 48,700 sq ft Eden Prairie 6101 Blue Circle Drive – Eden Prairie, MN . . . . . . . . . . . 2015-10-19 8,526 sq ft Burnsville I Strip Center – Burnsville, MN . . . . . . . . . . . . . . . . . . . . . . 2015-12-23 4,800 sq ft Pine City C-Store – Pine City, MN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-01-08 11,003 sq ft Minot Plaza – Minot, ND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-01-19 937,518 sq ft 9-Building Office Portfolio(4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-01-29 3,702 sq ft Arrowhead First International Bank - Minot, ND . . . . . . . . . . . . . . . . . . 2016-04-06 7,000 250,000 40,000 78,960 2,900 1,300 300 1,854 122,610 (5) 1,675 506,599 7,175 231,908 41,574 72,000 2,928 913 355 393 86,154 (5) 1,255 444,655 (175) 18,092 (1,574) 6,960 (28) 387 (55) 1,461 36,456 (5) 420 61,944 Unimproved Land River Falls Unimproved Land - River Falls, WI . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016-04-06 20 21 (1) Total Property Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 536,728 $ 466,835 $ 69,893 (1) The properties included in this portfolio disposition are: 610 Business Center, 7800 West Brown Deer Road, Ameritrade, Barry Pointe Office Park, Benton Business Park, Brenwood, Brook Valley I, Crosstown Centre, Golden Hills Office Center, Granite Corporate Center, Great Plains, Highlands Ranch I, Highlands Ranch II, Interlachen Corporate Center, Intertech Building, Minnesota National Bank, Northpark Corporate Center, Omaha 10802 Farnam Dr, Plaza VII, Plymouth 5095 Nathan Lane, Prairie Oak Business Center, Rapid City 900 Concourse Drive, Spring Valley IV, Spring Valley V, Spring Valley X, Spring Valley XI, Superior Office Building, TCA Building & vacant land, Three Paramount Plaza, UHC Office, US Bank Financial Center, Wells Fargo Center, West River Business Park and Westgate. (2) The properties included in this portfolio disposition are: Mendota Office Center I, Mendota Office Center II, Mendota Office Center III, Mendota Office Center IV and American Corporate Center. (3) The properties included in this portfolio disposition are: Champlin South Pond, Chan West Village, Duluth 4615 Grand, Duluth Denfeld Retail, Forest Lake Auto, Forest Lake Westlake Center, Grand Forks Medpark Mall, Jamestown Buffalo Mall, Jamestown Business Center, Lakeville Strip Center, Monticello C Store & vacant land, Omaha Barnes & Noble, Pine City Evergreen Square, Rochester Maplewood Square and St. Cloud Westgate. (4) The properties included in this portfolio disposition are: Corporate Center West, Farnam Executive Center, Flagship Corporate Center, Gateway Corporate Center, Miracle Hills One, Pacific Hills, Riverport, Timberlands, and Woodlands Plaza IV. (5) On January 29, 2016, we transferred ownership of nine properties to the mortgage lender on a $122.6 million non-recourse loan and removed the debt obligation and accrued interest from our balance sheet. The properties had an estimated fair value of $89.3 million on the transfer date. Upon completion of this transfer, we recognized a gain on extinguishment of debt of $36.5 million, representing the difference between the loan and accrued interest payable extinguished over the carrying value of the properties, cash, accounts payable and accounts receivable transferred as of the transfer date and related closing costs. NOTE 11 • OPERATING SEGMENTS We report our results in two reportable segments, which are aggregations of similar properties: multifamily and healthcare. Segment information in this report is presented based on net operating income (“NOI”), which we define as total real estate revenues less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance, property management expenses and other property expenses). We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. 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. The following tables present real estate revenues and net operating income for the fiscal years ended April 30, 2017, 2016 and 2015 from our two reportable segments, and reconcile net operating income of reportable segments to net income as reported in the consolidated financial statements. Segment assets are also reconciled to Total Assets as reported in the consolidated financial statements. F-26 Year Ended April 30, 2017 Real estate revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 144,743 $ 49,856 $ 11,139 Real estate expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,024 Net operating income (loss) . . . . . . . . . . . . . . . . . . . . . . $ 81,451 $ 33,437 $ 8,115 Multifamily Healthcare All Other 16,419 63,292 Depreciation and amortization . . . . . . . . . . . . . . . . . . . Impairment of real estate investments . . . . . . . . . . . . . General and administrative expenses . . . . . . . . . . . . . . Acquisition and investment related costs . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . Interest and other income . . . . . . . . . . . . . . . . . . . . . . . Loss before gain on sale of real estate and other investments and income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gain on sale of real estate and other investments . . . . Loss from continuing operations . . . . . . . . . . . . . . . . . Income from discontinued operations . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . Impairment of real estate investments . . . . . . . . . . . . . General and administrative expenses . . . . . . . . . . . . . . Acquisition and investment related costs . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . Interest and other income . . . . . . . . . . . . . . . . . . . . . . . Income before gain on sale of real estate and other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gain on sale of real estate and other investments . . . . Gain on bargain purchase . . . . . . . . . . . . . . . . . . . . . . . Income from continuing operations . . . . . . . . . . . . . . . Income from discontinued operations . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (in thousands) Amounts Not Allocated To Segments(1) 5,620 (5,620) Total — $ 205,738 88,355 117,383 (55,009) (57,028) (12,075) (3,276) (3,796) (41,127) (3,099) 1,176 (56,851) 18,701 (38,150) 68,675 $ 30,525 (in thousands) Amounts Not Allocated To Segments(1) Total — $ 188,320 79,100 109,220 (49,832) (5,543) (11,267) (830) (2,231) (35,768) (106) 398 4,041 9,640 3,424 17,105 59,497 $ 76,602 Year Ended April 30, 2016 Real estate revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 131,149 $ 45,621 $ 11,550 $ Real estate expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,031 Net operating income (loss) . . . . . . . . . . . . . . . . . . . . . . $ 74,019 $ 30,182 $ 9,050 $ (4,031) Multifamily Healthcare All Other 15,439 57,130 2,500 (1) Consists of offsite costs associated with property management and casualty-related amounts, which are excluded in our assessment of segment performance. F-27  Multifamily Healthcare All Other Year Ended April 30, 2015 Real estate revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 118,526 $ 44,153 $ 16,642 $ Real estate expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . $ 69,858 $ 28,909 $ 11,382 $ 15,244 48,668 5,260 (in thousands) Amounts Not Allocated To Segments(1) Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . Impairment of real estate investments . . . . . . . . . . . . . . . General and administrative expenses . . . . . . . . . . . . . . . . Acquisition and investment related costs . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest and other income . . . . . . . . . . . . . . . . . . . . . . . . . Income before loss on sale of real estate and other investments and loss from discontinued operations . . . . Gain on sale of real estate and other investments . . . . . . Income from continuing operations . . . . . . . . . . . . . . . . . Income from discontinued operations . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total — $ 179,321 73,137 3,965 (3,965) 106,184 (42,784) (4,663) (11,824) (362) (1,647) (34,447) 780 11,237 6,093 17,330 11,354 $ 28,684 (1) Consists of offsite costs associated with property management and casualty-related amounts, which are excluded in our assessment of segment performance. Segment Assets and Accumulated Depreciation As of April 30, 2017 Segment assets Multifamily Healthcare All Other Total (in thousands) Property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,260,541 $ 323,148 $ 93,792 $ 1,677,481 (340,417) Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . Total property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,027,949 $ 237,009 $ 72,106 $ 1,337,064 37,708 28,819 52,468 18,455 $ 1,474,514 Assets held for sale and assets from discontinued operations Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . Unimproved land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (232,592) (86,139) (21,686) As of April 30, 2016 Segment assets Multifamily Healthcare All Other Total (in thousands) Property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,243,909 $ 337,920 $ 99,642 $ 1,681,471 (312,889) Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . Total property owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,034,753 $ 254,362 $ 79,467 $ 1,368,582 220,537 66,698 50 26,535 51,681 20,939 $ 1,755,022 Assets held for sale and assets from discontinued operations Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . Development in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimproved land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (209,156) (83,558) (20,175) F-28 NOTE 12 • DISCONTINUED OPERATIONS We report in discontinued operations the results of operations and the related gains or losses on the sales of properties that have either been disposed of or classified as held for sale and meet the classification of a discontinued operation as described in ASC 205 - Presentation of Financial Statements and ASC 360 - Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under this standard, a disposal (or classification as held for sale) of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. We classified no dispositions as discontinued operations during the fiscal year ended April 30, 2017. During the fiscal year ended April 30, 2016, we determined that our strategic plan to exit the office and retail segments met the criteria for discontinued operations. Accordingly, 48 office properties, 17 retail properties and 1 healthcare property were classified as discontinued operations and subsequently sold during the fiscal year ended April 30, 2016. Additionally, we determined that our strategic decision to exit senior housing, which was a subset of our healthcare segment, met the criteria for discontinued operations and we classified 34 senior housing properties as held for sale and discontinued operations at April 30, 2016. Thirty-two of these senior housing properties were subsequently sold during the fiscal year ended April 30, 2017. We classified no dispositions as discontinued operations during the fiscal year ended April 30, 2015. The following information shows the effect on net income and the gains or losses from the sale of properties classified as discontinued operations for the fiscal years ended April 30, 2017, 2016 and 2015. REVENUE (in thousands) Year Ended April 30, 2017 2016 2015 Real estate rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,405 $ 43,544 $ 75,883 24,466 Tenant reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520 TRS senior housing revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,869 226 3,218 TOTAL REVENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,849 EXPENSES 8,684 3,955 56,183 23,517 75 Property operating expenses, excluding real estate taxes . . . . . . . . . . . . . . . . . . . . . 14,343 — Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,823 16 Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,442 — Impairment of real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,997 3,113 TRS senior housing expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 — Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,123 TOTAL EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,204 33,746 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,645 Interest expense(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,815) (24,573) Gain/loss on extinguishment of debt(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,790) — 2,176 2,176 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 11,354 Income from discontinued operations before gain on sale . . . . . . . . . . . . . . . . . . . . . 12,529 Gain on sale of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,146 — INCOME FROM DISCONTINUED OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . $ 68,675 $ 59,497 $ 11,354 Segment Data 10,252 5,777 14,166 440 3,366 — 34,001 22,182 (18,406) 29,336 2,176 427 35,715 23,782 Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,362 $ All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,008 2,346 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,675 $ 59,497 $ 11,354 8,101 $ 51,396 313 (1) Interest expense includes $4.7 million and approximately $528,000 for fiscal years ended April 30, 2016 and 2015, respectively, of default interest related to a $122.6 million non-recourse loan. Gain on extinguishment of debt in the fiscal year ended April 30, 2016 includes $36.5 million of gain on extinguishment of debt recognized in connection with our transfer of ownership to the mortgage lender of the nine properties serving as collateral for the $122.6 million non-recourse loan and the removal of the debt obligation and accrued interest from our balance sheet. F-29 Property Sale Data Sales price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net book value and sales costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gain on sale of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239,436 $ 373,460 $ (183,290) (349,678) 56,146 $ 23,782 $ — — — The following information reconciles the carrying amounts of major classes of assets and liabilities of the discontinued operations to assets and liabilities held for sale that are presented separately on the Condensed Consolidated Balance Sheets: (in thousands) 2017 2016 2015 (in thousands) April 30, 2017 April 30, 2016 Carrying amounts of major classes of assets included as part of discontinued operations Property owned and intangible assets, net of accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Receivable arising from straight-lining of rents . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax, insurance and other escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total major classes of assets of the discontinued operations . . . . . . . . . . . . . . . . . . Other assets included in the disposal group classified as held for sale . . . . . . . . . . Total assets of the disposal group classified as held for sale on the balance sheet . $ Carrying amounts of major classes of liabilities included as part of discontinued operations Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Mortgages payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total major classes of liabilities of the discontinued operations . . . . . . . . . . . . . . . Other liabilities included in the disposal group classified as held for sale . . . . . . Total liabilities of the disposal group classified as held for sale on the balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,332 $ 2,283 — — — — 14 23,629 14,079 37,708 $ 189,900 9,805 1,707 43 670 479 18 202,622 17,915 220,537 52 $ 16,226 7,900 24,178 5,884 810 67,940 7,900 76,650 838 30,062 $ 77,488 F-30 NOTE 13 • EARNINGS PER SHARE Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. We have no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional common shares that would result in a dilution of earnings. Pursuant to the exercise of Exchange Rights, Units may be tendered for redemption for cash or, at our option, for common shares on a one-for-one basis. The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the consolidated financial statements for the fiscal years ended April 30, 2017, 2016 and 2015: For Year Ended April 30, (in thousands, except per share data) 2017 2016 2015 53,355 72,006 (11,514) — NUMERATOR (Loss) income from continuing operations – Investors Real Estate Trust . . . . . . . . $ (17,340) $ 18,651 $ 60,687 Income from discontinued operations – Investors Real Estate Trust . . . . . . . . . . . . Net income attributable to Investors Real Estate Trust . . . . . . . . . . . . . . . . . . . . . . . 43,347 Dividends to preferred shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,546) (1,435) Redemption of preferred shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Numerator for basic earnings per share – net income available to common shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests – Operating Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . Numerator for diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,425 $ 67,524 $ DENOMINATOR Denominator for basic earnings per share weighted average shares . . . . . . . . . . . . 121,169 Effect of redeemable operating partnership units . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,130 Denominator for diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,299 (Loss) earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NET INCOME PER COMMON SHARE – BASIC & DILUTED . . . . . . . . . . . . . $ 123,094 14,278 137,372 0.43 0.49 $ 0.50 0.26 $ 60,492 7,032 31,366 4,059 (0.24) $ 0.06 $ 14,083 10,004 24,087 (11,514) — 12,573 1,526 14,099 118,004 16,594 134,598 0.02 0.09 0.11 NOTE 14 • RETIREMENT PLANS We sponsor a defined contribution 401(k) plan to provide retirement benefits for employees that meet minimum employment criteria. We currently match, dollar for dollar, employee contributions to the 401(k) plan in an amount equal to up to 4.0% of the eligible wages of each participating employee. 401(k) matching contributions are fully vested when made. We recognized expense of approximately $565,000, $836,000 and $1.0 million in fiscal years 2017, 2016 and 2015, respectively. The expense decreased from fiscal year 2016 to fiscal year 2017 because fiscal year 2016 included a 3.5% discretionary employer contribution. The decrease in cost from fiscal year 2015 to fiscal year 2016 was due to a decrease in discretionary employer contribution. F-31 NOTE 15 • COMMITMENTS AND CONTINGENCIES Ground Leases. As of April 30, 2017, we are a tenant under operating ground or air rights leases on seven of our properties. We pay a total of approximately $330,000 per year in rent under these ground leases, which have remaining terms ranging from 14 to 39 years, and expiration dates ranging from February 2031 to October 2055. We have renewal options for three of the seven ground leases, and rights of first offer or first refusal for the remainder. The expected timing of ground and air rights lease payments as of April 30, 2017 is as follows: Fiscal Year Ended April 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (in thousands) Lease Payments 331 332 333 335 336 8,167 9,834 Legal Proceedings. We are involved in various lawsuits arising in the normal course of business. We believe that such matters will not have a material adverse effect on our consolidated financial statements. Environmental Matters. It is generally our policy to obtain a Phase I environmental assessment of each property that we seek to acquire. Such assessments have not revealed, nor are we aware of, any environmental liabilities that we believe would have a material adverse effect on our financial position or results of operations. We own properties that contain or potentially contain (based on the age of the property) asbestos or lead, or have underground fuel storage tanks. For certain of these properties, we estimated the fair value of the conditional asset retirement obligation and chose not to book a liability because the amounts involved were immaterial. With respect to certain other properties, we have not recorded any related asset retirement obligation as the fair value of the liability cannot be reasonably estimated due to insufficient information. We believe we do not have sufficient information to estimate the fair value of the asset retirement obligations for these properties because a settlement date or range of potential settlement dates has not been specified by others and, additionally, there are currently no plans or expectation of plans to demolish these properties or to undertake major renovations that would require removal of the asbestos, lead and/or underground storage tanks. These properties are expected to be maintained by repairs and maintenance activities that would not involve the removal of the asbestos, lead and/or underground storage tanks. Also, a need for renovations caused by tenant changes, technology changes or other factors has not been identified. Tenant Improvements. In entering into leases with tenants, we may commit to fund improvements or build-outs of the rented space to suit tenant requirements. These tenant improvements are typically funded at the beginning of the lease term, and we are accordingly exposed to some risk of loss if a tenant defaults prior to the expiration of the lease term, and the rental income that was expected to cover the cost of the tenant improvements is not received. As of April 30, 2017, we are committed to fund $4.3 million in tenant improvements within approximately the next 12 months. Purchase Options. Under certain lease agreements, we have granted options to the tenants of properties to purchase such properties. In general, these options grant the tenant the right to purchase the property at the greater of such property’s appraised value or an annual compounded increase of a specified percentage of the initial cost to us. As of April 30, 2017, two of our properties were subject to purchase options, and the total investment cost, plus improvements, of all such properties was $27.3 million with total gross rental revenues in fiscal year 2017 of $2.7 million. Insurance. We carry insurance coverage on our properties in amounts and types that we believe are customarily obtained by owners of similar properties and are sufficient to achieve our risk management objectives. Restrictions on Taxable Dispositions. Approximately 30 of our properties, consisting of approximately 431,000 square feet of our combined commercial properties and 3,285 apartment units, are subject to restrictions on taxable dispositions under agreements entered into with some of the sellers or contributors of the properties. The real estate investment amount of these properties (net of accumulated depreciation) was approximately $286.7 million at April 30, 2017. The restrictions on taxable dispositions are effective for varying periods. We do not believe that the agreements materially F-32 affect the conduct of our business or our decisions whether to dispose of restricted properties during the restriction period because we generally hold these and our other properties for investment purposes rather than for sale. In addition, where we deem it to be in our shareholders’ best interests to dispose of such properties, we generally seek to structure sales of such properties as tax deferred transactions under Section 1031 of the Internal Revenue Code. Otherwise, we may be required to provide tax indemnification payments to the parties to these agreements. Redemption Value of Units. Pursuant to a Unitholder’s exercise of its Exchange Rights, we have the right, in our sole discretion, to acquire such Units by either making a cash payment or acquiring the Units for our common shares, on a one-for-one basis. All Units receive the same per Unit cash distributions as the per share dividends paid on common shares. Units are redeemable for an amount of cash per Unit equal to the average of the daily market price of our common shares for the ten consecutive trading days immediately preceding the date of valuation of the Unit. As of April 30, 2017 and 2016, the aggregate redemption value of the then-outstanding Units owned by limited partners, as determined by the ten-day average market price for our common shares, was approximately $95.1 million and $109.3 million, respectively. Joint Venture Buy/Sell Options. Several of our joint venture agreements contain buy/sell options in which each party under certain circumstances has the option to acquire the interest of the other party, but do not generally require that we buy our partners’ interests. However, from time to time, we have entered into joint venture agreements which contain options compelling us to acquire the interest of the other parties. We currently have one such joint venture, which owns Commons and Landing at Southgate in Minot, North Dakota, in which our joint venture partner can, for the four-year period from February 6, 2016 through February 5, 2020, compel us to acquire the partner’s interest for a price to be determined in accordance with the provisions of the joint venture agreement. The joint venture partner’s interest is reflected as a redeemable noncontrolling interest on the Consolidated Balance Sheets. Pending Dispositions. We currently have signed sales agreements for the disposition of our two remaining senior housing properties for a total sales price of $36.9 million and a parcel of unimproved land for a sales price of $3.6 million. These pending dispositions are subject to various closing conditions and contingencies, and no assurances can be given that the transactions will be completed on the terms currently proposed, or at all. F-33 NOTE 16 • FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurement and Disclosures defines and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels, as follows: Level 1: Quoted prices in active markets for identical assets Level 2: Significant other observable inputs Level 3: Significant unobservable inputs There were no transfers in and out of Level 1, Level 2 and Level 3 fair value measurements during fiscal years 2017 and 2016. Fair value estimates may be different than the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities. Fair Value Measurements on a Recurring Basis We had no assets or liabilities recorded at fair value on a recurring basis at April 30, 2017 and 2016. Fair Value Measurements on a Nonrecurring Basis Non-financial assets measured at fair value on a nonrecurring basis at April 30, 2017 and 2016 consisted of real estate investments and real estate held for sale that were written-down to estimated fair value during fiscal year 2017 and 2016, respectively. The aggregate fair value of these assets by their levels in the fair value hierarchy are as follows: (in thousands) Total Level 1 Level 2 Level 3 April 30, 2017 506 Real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Real estate held for sale(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,891 $ — $ — $ 10,891 506 $ — $ — $ April 30, 2016 Real estate held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,650 $ — $ — $ 6,650 (1) Represents only the portion of real estate held for sale at April 30, 2017 that was written-down to estimated fair value. We estimated the fair value of our real estate held for sale using an income approach, including management estimates, and cash flow calculations. We estimated the fair value of our real estate investments using market comparisons and a broker opinion of value. As of April 30, 2017, we estimated fair value on a group of our properties using projected net operating income and an estimated capitalization rate to estimate fair value. Significant unobservable quantitative inputs used in determining the fair value of each investment includes capitalization rates based on the location, type and nature of each property, and current and anticipated market conditions. Significant unobservable quantitative inputs used in determining the fair value of these real estate investments at April 30, 2017, was a capitalization rate of 7.0%. Financial Assets and Liabilities Not Measured at Fair Value The following methods and assumptions were used to estimate the fair value of each class of financial assets and liabilities. The fair values of our financial instruments approximate their carrying amount in our consolidated financial statements except for debt. Cash and Cash Equivalents. The carrying amount approximates fair value because of the short maturity. Other Investments. The carrying amount, or cost plus accrued interest, of the certificates of deposit approximates fair value. F-34 Other Debt. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using relevant treasury interest rates plus credit spreads (Level 2). Lines of Credit. The carrying amount approximates fair value because the variable rate debt re-prices frequently. Mortgages Payable. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates (Level 3). The estimated fair values of our financial instruments as of April 30, 2017 and 2016 are as follows: FINANCIAL ASSETS (in thousands) 2017 2016 Amount Fair Value Amount Fair Value Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,819 $ 28,819 $ 66,698 $ 50 Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 66,698 50 FINANCIAL LIABILITIES 82,026 Other debt, including other debt related to assets held for sale . . . . . . . . Lines of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,500 Mortgages payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665,440 680,941 817,324 866,649 78,690 Mortgages payable related to assets held for sale . . . . . . . . . . . . . . . . . . . 82,026 17,500 49,637 57,050 49,637 57,050 68,824 21,803 21,861 NOTE 17 • SHAREHOLDERS’ EQUITY Distribution Reinvestment and Share Purchase Plan. During fiscal year 2017 no shares were issued pursuant to our Distribution Reinvestment and Share Purchase Plan (“DRIP”). During fiscal years 2016 and 2015, we issued approximately 821,000 and 8.1 million common shares, respectively, under the DRIP, at a total value at issuance of $5.6 million and $64.9 million, respectively. The shares issued under the DRIP during fiscal year 2016 consisted of approximately 610,000 shares valued at issuance at $4.1 million that were purchased with reinvested distributions and approximately 211,000 shares valued at $1.5 million at issuance that were purchased with voluntary cash contributions. Participation in the DRIP is available to existing common shareholders and Unitholders as well as new investors. Under the DRIP, participants may purchase additional common shares by reinvesting their cash distributions and making voluntary cash contributions. Exchange of Units for Common Shares. During fiscal years 2017 and 2016, respectively, approximately 503,000 and 273,000 Units were redeemed in exchange for common shares in connection with Unitholders exercising their Exchange Rights, with a total value of $875,000 and $1.5 million included in equity. Equity Awards. During fiscal year 2017, we issued approximately 604,000 Common Shares, with a total grant-date value of $2.6 million, under our 2015 Incentive Award Plan, for executive officer and trustee share based compensation for future performance. We also issued approximately 59,000 Common Shares, with a total grant-date value of approximately $352,000, under our 2008 Incentive Award Plan, for trustee share based compensation for fiscal year 2016 performance. During fiscal year 2017, 274,000 common shares were forfeited under the 2015 Incentive Award Plan. During fiscal year 2016, we issued approximately 220,000 Common Shares, net of withholding, with a total grant- date value of approximately $1.6 million, under our 2008 Incentive Award Plan, for executive officer and trustee share based compensation for fiscal year 2015 performance. Share Repurchase Program. On December 7, 2016, our Board of Trustees authorized a share repurchase program to repurchase up to $50 million of our common shares and/or Series B preferred shares over a one year period. Under this program, we may repurchase the shares in open-market purchases including pursuant to Rule 10b5-1 plans, as determined by management and in accordance with the requirements of the Securities and Exchange Commission. The extent to which we repurchase our shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by the executive management team. The program may be suspended or discontinued at any time. During fiscal year 2017, we repurchased F-35 and retired approximately 778,000 common shares for an aggregate cost of $4.5 million, including commissions, at an average price per share of $5.77. During fiscal year 2016, we repurchased and retired approximately 4.6 million common shares for an aggregate cost of $35.0 million, including commissions, at an average price per share of $7.52. ATM Program. During the second quarter of fiscal year 2014, we and our Operating Partnership entered into an At the Market sales agreement (“ATM”) with Robert W. Baird & Co. Incorporated as sales agent, pursuant to which we may from time to time sell common shares having an aggregate offering price of up to $75 million. On June 1, 2016, we and our Operating Partnership terminated the ATM sales agreement with Baird according to its terms. We did not issue any shares under the ATM. Issuance of Preferred Shares. On August 7, 2012, we completed the public offering of 4.6 million 7.95% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest (“Series B preferred shares”) at a price of $25.00 per share for net proceeds of approximately $111.2 million after underwriting discounts and estimated offering expenses. These shares are nonvoting and redeemable for cash at $25.00 per share at our option on or after August 7, 2017. Holders of these shares are entitled to cumulative distributions, payable quarterly (as and if declared by the Board of Trustees). Distributions accrue at an annual rate of $1.9875 per share, which is equal to 7.95% of the $25.00 per share liquidation preference ($115 million liquidation preference in the aggregate). We contributed the net proceeds from the issuance to the Operating Partnership in exchange for 4.6 million Series B preferred units, which carry terms that are substantially the same as the Series B preferred shares. Redemption of Preferred A. On December 2, 2016, we completed the redemption of all of the outstanding 8.25% Series A Cumulative Redeemable Preferred Shares (“Preferred A Shares”) for an aggregate redemption price of $29.2 million, and such shares are no longer outstanding as of such date. NOTE 18 • QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (unaudited) (in thousands, except per share data) July 31, 2016 October 31, 2016 50,609 $ January 31, 2017 April 30, 2017 54,344 51,174 $ QUARTER ENDED Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Net (loss) income attributable to Investors Real Estate Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (21,643) $ Net (loss) income available to common shareholders . . $ (24,522) $ (0.20) $ Net (loss) income per common share - basic & diluted $ 49,611 $ 11,600 $ 8,722 $ 0.07 $ 23,110 $ 19,172 $ 0.16 $ 30,280 27,994 0.23 QUARTER ENDED Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,045 $ 4,540 $ Net income attributable to Investors Real Estate Trust . . . $ 1,661 $ Net income available to common shareholders . . . . . . . . . $ 0.01 $ Net income per common share - basic & diluted . . . . . . . $ (in thousands, except per share data) July 31, 2015 October 31, 2015 January 31, 2016 April 30, 2016 48,523 11,003 8,125 0.07 48,406 $ 39,797 $ 36,918 $ 0.30 $ 46,346 $ 16,666 $ 13,788 $ 0.11 $ The above financial information is unaudited. In the opinion of management, all adjustments (which are of a normal recurring nature) have been included for a fair presentation. NOTE 19 • REDEEMABLE NONCONTROLLING INTERESTS Redeemable noncontrolling interests on our Consolidated Balance Sheets represent the noncontrolling interest in a joint venture in which our unaffiliated partner, at its election, could require us to buy its interest at a purchase price to be determined by an appraisal conducted in accordance with the terms of the agreement, or at a negotiated price. Redeemable noncontrolling interests are presented at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to common shares on our Consolidated Balance Sheets. We currently have one joint venture, which owns Commons and Landing at Southgate in Minot, North Dakota, in which our joint venture partner can, for the four-year period from February 6, 2016 through February 5, 2020, compel us to acquire its interest for a price to be determined in accordance with the provisions of the joint venture agreement. F-36 As of April 30, 2017 and 2016, the estimated redemption value of the redeemable noncontrolling interests was $7.2 million and $7.5 million, respectively. Below is a table reflecting the activity of the redeemable noncontrolling interests. 2015 Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,522 $ 6,368 $ 6,203 — Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 Balance at close of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,181 $ 7,522 $ 6,368 1,120 34 81 (422) 2017 (in thousands) 2016 NOTE 20 • SHARE BASED COMPENSATION Share based awards are provided to officers, non-officer employees and trustees under our 2015 Incentive Plan approved by shareholders on September 15, 2015, which allows for awards in the form of cash and unrestricted and restricted Common Shares up to an aggregate of 4,250,000 shares over the ten year period in which the plan will be in effect. Through April 30, 2017, awards under the 2015 Incentive Plan consisted of restricted and unrestricted Common Shares. Long-Term Incentive Plan Under the 2015 Incentive Plan, our officers and non-officer employees may earn share awards under a long-term incentive plan which is a forward-looking program that measures long-term performance over the stated performance period. Such awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the program may vary from year to year. Fiscal Year 2017 LTIP Awards Awards granted on June 22, 2016 consist of time-based restricted share awards and performance restricted share awards for 45,651 and 273,901 shares, respectively, that are classified as equity awards. The 45,651 time-based restricted share awards vest as to one-third of the shares on each June 22, 2017, May 1, 2018 and May 1, 2019. We recognize compensation expense associated with the time-based restricted share awards ratably over the requisite service periods. The 273,901 performance restricted share awards are earned based on our TSR as compared to the MSCI US REIT Index over a forward looking three-year period. The maximum number of shares that are eligible to be earned are the shares that were granted. Earned awards (if any) will fully vest as of the last day of the measurement period. These awards have market conditions in addition to service conditions that must be met for the awards to vest. We recognize compensation expense ratably based on the grant date fair value, as determined using the Monte Carlo valuation model, and regardless of whether the market conditions are achieved and the performance restricted share awards ultimately vest. Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved. We based the expected volatility on the historical volatility of our daily closing share price. We based the risk-free interest rate on the interest rates on U.S. treasury bonds with a maturity equal to the remaining performance period of the award. We based the expected term on the performance period of the performance restricted share award. The assumptions used to value the performance restricted share awards were an expected volatility of 23.8%, a risk-free interest rate of 0.86% and an expected life of 2.85 years. The share price at the grant date, June 22, 2016, was $6.24. Awards granted on August 8, 2016 consist of time-based restricted share awards and performance restricted share awards for 43,549 and 77,243 shares, respectively, that are classified as equity awards. Of the time-based awards, 12,874 vest as to one-third of the shares on each August 8, 2017, May 1, 2018 and May 1, 2019. The remaining 30,675 time-based awards vest as to one-third of the shares on each August 8, 2017, August 8, 2018 and August 8, 2019. The assumptions used to value the performance restricted awards granted on August 8, 2016 were an expected volatility of 24.0%, a risk-free interest rate of 0.83% and an expected life of 2.72 years. We based the expected volatility on the historical volatility of our daily closing price. The share price at the grant date, August 8, 2016, was $6.57. Awards granted on April 30, 2017 consist of time-based restricted share awards for 56,203 shares that vest as to one- third of the shares on each April 30, 2017, April 30, 2018 and April 30, 2019 and 49,342 shares that vest as to one-third of the shares on each of April 30, 2018, April 30, 2019 and April 30, 2020. F-37 Trustee Awards Awards granted on June 22, 2016 consist of restricted shares that vest May 1, 2017. The value of share awards at grant date for non-management trustees was approximately $365,000, $352,000 and $274,000 for each of the fiscal years ended April 2017, 2016, and 2015, respectively. Total Compensation Expense Total share based compensation expense recognized in the consolidated financial statements for the three years ended April 30, 2017 for all share-based awards was as follows (in thousands): Year Ended April 30, 2016 2015 2017 Share based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6 $ 2,256 $ 2,215 Share based compensation expense decreased due to forfeitures during the fiscal year ended April 30, 2017. Restricted Share Awards with Service Conditions The activity for the three years ended April 30, 2017 related to our restricted share awards, excluding those subject to market conditions, was as follows. Unvested at April 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wtd Avg Grant- Shares Date Fair Value 8.72 7.17 8.72 8.72 104,855 $ 107,536 (79,181) (25,674) Unvested at April 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unvested at April 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unvested at April 30, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,536 (107,536) — 253,263 (21,308) (36,817) 195,138 7.17 7.17 6.16 5.95 6.24 6.17 The total fair value of share grants vested during the fiscal years ended April 30, 2017, 2016 and 2015 was approximately $127,000, $647,000 and $568,000. As of April 30, 2017, the total compensation cost related to non-vested share awards not yet recognized was approximately $485,000, which we expect to recognize over a weighted average period of 1.7 years. Restricted Share Awards with Market Conditions Share based awards with market conditions were granted under the LTIP during fiscal year 2017 with a fair market value, as determined using a Monte Carlo simulation, of $1.0 million. The unamortized value of awards with market conditions as of April 30, 2017 was approximately $300,000. NOTE 21 • SUBSEQUENT EVENTS Common and Preferred Share Distributions. On June 5, our Board of Trustees declared the following distributions: Class of shares/units Common shares and limited partnership units . . . . . . . . . . . . . . . . . . . $ Preferred shares: Quarterly Amount per Share or Unit Record Date 0.0700 June 22, 2017 Payment Date July 3, 2017 Series B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.4968 June 22, 2017 June 30, 2017 F-38 Completed Acquisition. On May 26, 2017, we closed on the acquisition of a 191-unit multifamily property in St. Paul, MN for a purchase price of $61.5 million, paid in cash. The purchase price accounting is incomplete for this acquisition. Completed Disposition. On May 15, 2017, we sold a retail property in Minot, ND for a sales price of $3.4 million. Pending Disposition. On June 19, 2017, we signed an agreement to sell a healthcare property in Eagan, MN for a sales price of $2.1 million. This pending disposition is subject to various closing conditions and contingencies, and no assurances can be given that the transaction will be completed on the terms currently expected, or at all. F-39 h c i h w n o e f i L n i n o i t a i c e r p e d e m o c n i t s e t a l s i t n e m e t a t s d e t u p m o c f o e t a D n o i t c u r t s n o C n o i t i s i u q c A r o d e t a l u m u c c A n o i t a i c e r p e D l a t o T s t n e m e v o r p m I d n a L & s g n d i l i u B n o i t i s i u q c a o t t n e u q e s b u s d e z i l a t i p a c s t s o C & s g n d i l i u B s t n e m e v o r p m I d n a L ) 1 ( s e c n a r b m u c n E t a d e i r r a c h c i h w t a t n u o m a s s o r G d o i r e p f o e s o l c y n a p m o C o t t s o C l a i t i n I S E I R A I D I S B U S D N A T S U R T E T A T S E L A E R S R O T S E V N I 7 1 0 2 , 0 3 l i r p A ) s d n a s u o h t n i ( N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R - I I I e l u d e h c S s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 - 3 3 0 4 - 4 2 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 - 4 2 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 - 2 1 0 4 6 1 0 2 3 1 0 2 6 0 0 2 5 1 0 2 2 1 0 2 6 1 0 2 3 0 0 2 3 0 0 2 1 0 0 2 3 1 0 2 6 1 0 2 8 9 9 1 3 1 0 2 1 0 0 2 3 0 0 2 2 1 0 2 5 1 0 2 1 1 0 2 7 9 9 1 5 9 9 1 4 9 9 1 0 1 0 2 9 9 9 1 6 1 0 2 2 1 0 2 5 1 0 2 3 1 0 2 8 0 0 2 3 9 9 1 6 1 0 2 1 1 0 2 5 1 0 2 2 1 0 2 5 1 0 2 7 0 0 2 8 9 9 1 5 1 0 2 7 0 0 2 7 9 9 1 2 1 0 2 ) 0 4 6 ( ) 5 8 6 , 2 ( ) 1 0 5 , 2 ( ) 4 2 5 , 2 ( ) 0 3 1 , 1 ( ) 7 5 0 , 1 ( ) 2 8 8 , 2 ( ) 3 4 7 , 2 ( ) 9 5 1 , 2 ( ) 5 3 2 , 2 ( ) 0 4 5 ( ) 9 9 1 , 3 ( ) 1 8 0 , 2 ( ) 2 9 4 , 5 ( ) 6 4 7 , 6 ( ) 1 6 3 , 2 ( ) 0 9 4 , 4 ( ) 9 1 6 ( ) 0 3 1 , 8 ( ) 8 7 3 , 4 ( ) 6 6 2 , 3 ( ) 9 9 6 ( ) 7 4 3 ( ) 8 4 2 , 5 ( ) 9 0 9 , 1 ( ) 8 5 ( ) 2 1 3 , 1 ( ) 4 8 0 , 1 ( ) 2 3 2 , 6 ( ) 9 3 1 ( ) 6 0 3 ( ) 3 0 4 ( ) 2 6 3 , 1 ( ) 1 8 1 , 2 ( ) 4 7 2 , 1 ( ) 5 4 3 , 4 ( ) 8 5 1 , 1 ( ) 3 0 8 , 1 ( ) 9 3 0 , 2 ( ) 4 9 2 , 2 ( $ 1 8 4 , 2 7 $ 0 6 7 , 7 6 $ 1 2 7 , 4 $ 1 5 1 , 6 3 7 1 , 9 4 5 5 , 8 8 1 2 , 3 3 8 6 8 , 5 3 0 7 5 , 9 0 8 9 , 8 2 9 1 , 6 1 0 2 , 2 5 2 4 3 , 8 1 0 7 9 , 7 2 9 1 , 1 2 2 8 8 , 4 1 5 5 9 , 2 2 5 6 4 , 8 1 2 8 2 , 4 5 5 8 2 , 5 9 5 6 , 3 2 6 2 0 , 0 1 4 9 5 , 6 7 2 1 , 4 0 5 1 , 4 1 6 2 9 , 1 1 6 5 6 , 0 2 0 5 0 , 4 3 6 9 , 4 2 4 3 9 , 6 7 5 4 , 4 1 5 5 9 , 4 4 8 4 , 2 6 1 3 , 9 3 2 7 , 9 1 7 6 , 6 5 6 0 9 , 5 4 6 4 , 0 1 2 4 2 , 5 1 6 9 4 , 7 9 9 9 , 4 1 1 9 , 7 1 8 1 8 , 5 2 5 1 , 8 3 6 7 , 7 9 2 1 , 1 3 0 5 2 , 4 3 7 7 1 , 8 2 5 1 , 8 5 9 7 , 5 7 9 5 , 0 5 6 5 7 , 6 1 8 4 9 , 6 5 7 8 , 0 2 5 6 4 , 3 1 5 7 0 , 0 2 3 1 8 , 6 1 8 8 0 , 8 4 9 2 2 , 4 5 5 1 , 2 2 9 5 4 , 9 7 3 0 , 6 8 5 8 , 3 8 0 1 , 3 1 0 9 4 , 1 1 7 5 0 , 9 1 7 2 2 , 3 0 4 2 , 4 2 1 5 8 , 5 7 0 0 , 3 1 8 4 7 , 4 1 0 1 , 2 8 8 7 , 8 7 8 7 , 8 7 2 6 , 1 5 3 6 0 , 5 9 5 8 , 9 2 5 0 , 7 1 0 4 , 4 9 2 5 , 4 1 9 0 6 , 6 1 3 3 3 1 2 0 , 1 9 8 0 , 2 1 9 7 8 1 6 , 1 3 9 3 , 1 8 2 8 7 9 3 4 0 6 , 1 6 8 5 , 1 2 2 0 , 1 7 1 3 7 1 4 , 1 0 8 8 , 2 2 5 6 , 1 4 9 1 , 6 6 5 0 , 1 4 0 5 , 1 7 6 5 7 5 5 9 6 2 6 3 4 2 4 0 , 1 9 9 5 , 1 3 2 8 3 2 7 3 8 0 , 1 0 5 4 , 1 7 0 2 3 8 3 8 2 5 6 3 9 4 4 0 5 , 3 4 8 5 0 6 3 1 7 4 4 4 8 9 5 2 0 3 , 1 9 1 1 3 1 3 8 9 1 , 2 4 9 4 4 2 8 7 1 5 0 0 , 3 3 7 7 , 1 9 2 9 , 1 7 4 5 9 9 0 7 3 , 2 3 3 8 8 8 5 , 4 9 3 0 , 9 0 2 2 , 1 5 2 8 5 5 5 1 3 2 , 5 6 2 7 , 1 9 6 0 , 2 7 7 5 4 7 5 , 3 8 6 4 9 1 7 1 3 2 1 9 3 3 9 1 4 1 2 6 9 8 6 0 , 8 3 2 8 , 1 5 0 3 , 1 6 0 2 , 1 3 9 0 , 3 8 4 4 9 5 8 1 8 2 , 4 5 2 8 , 1 1 5 5 , 5 5 2 6 , 6 9 6 5 , 7 6 3 0 , 1 3 4 7 0 , 4 3 8 9 4 , 5 8 9 6 , 6 8 5 9 , 3 6 0 6 , 9 4 0 1 7 , 6 1 4 6 8 , 4 8 8 5 , 9 8 5 0 , 0 2 5 1 5 , 1 1 0 3 7 , 5 1 2 1 5 , 7 4 2 6 7 , 3 2 7 3 , 7 1 9 0 8 , 7 0 9 2 , 4 9 8 2 , 3 6 5 9 , 9 5 2 4 , 1 1 9 7 8 , 8 1 0 1 2 , 3 9 2 1 , 4 2 4 2 5 , 5 9 7 5 , 5 5 3 7 , 4 1 2 9 , 1 2 0 7 , 8 6 8 0 , 7 2 2 1 , 4 8 6 9 , 6 3 6 3 , 0 5 1 2 9 , 2 5 2 7 , 2 9 3 1 , 4 1 7 3 8 , 5 1 7 8 2 0 5 3 1 4 7 8 8 0 , 2 6 1 6 , 1 7 6 0 , 1 9 0 5 5 0 3 0 0 6 , 1 5 8 5 , 1 6 3 7 1 0 3 6 0 7 1 0 4 , 2 5 1 5 , 1 5 4 9 , 5 8 6 9 6 5 0 , 1 1 9 4 5 3 2 1 6 2 0 2 6 3 3 4 3 8 5 , 1 3 2 8 1 1 7 1 7 0 , 1 0 1 8 1 0 2 9 4 3 8 1 5 4 1 8 3 0 0 , 5 8 7 5 3 0 4 5 5 6 4 9 2 9 4 4 5 1 2 , 1 0 0 0 8 2 7 , 3 0 6 6 , 3 6 0 3 , 5 0 5 2 0 , 5 5 3 7 , 2 7 4 3 , 6 0 0 4 , 1 1 0 2 6 5 , 4 0 8 4 7 , 2 1 1 5 7 , 6 2 7 5 4 , 3 1 1 1 , 5 1 0 3 0 3 , 6 0 7 6 , 3 3 4 4 , 2 0 8 7 , 7 6 6 6 , 2 1 0 5 8 8 , 3 5 7 2 , 7 0 9 4 , 1 1 0 9 9 3 , 1 0 0 1 5 4 , 3 8 5 5 , 3 4 2 0 , 3 0 0 0 , 6 3 0 5 4 1 , 3 3 9 5 , 2 1 $ 1 4 6 , 7 6 $ 1 2 7 , 4 $ 0 0 0 , 6 5 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N M , a n i d E - e c n a r F 1 7 . D S , y t i C d i p a R - k r a P s p l A . E N , y t i C x u o i S S - s r o b r A . N M , y e l l a V n e d l o G - a t a c r A . D N , s k r o F d n a r G - d n a l h s A N M , r e t s e h c o R - e v o C n o l a v A . . N M , n a g a E - t r u o C r e d l u o B . S K , a k e p o T - e g a l l i V d l e i f k o o r B . . D S , y t i C d i p a R - e k a L n o y n a C . D N , s k r o F d n a r G - t n i o P l a n i d r a C . . . . . . N M , r e t s e h c o R - s e r o h S e d a c s a C . . . . . . . . . . . . . . . T M , s g n i l l i B - k c o r e l t s a C . D N , t o n i M - I I & I u a e t a h C . E N , a h a m O - s l l i H n o r r a m C i N M , e l l i v s n r u B - a l l i V l a i n o l o C . . . . . . . . E N , n l o c n i L - y n o l o C D N , t o n i M - e t a g h t u o S t a g n i d n a L d n a s n o m m o C n o i t p i r c s e D y l i m a f i t l u M F-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D S , s l l a F x u o i S - s e m o H n i w T t s e W e g a t t o C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D N , k c r a m s i B - d o o w n o t t o C T M , s g n i l l i B - s w o d a e M y r t n u o C . . . . . . . . . . . . . . . . . . D N , k c r a m s i B - w e i v t s e r C . . N M , r e t s e h c o R - n w o r C . S K , a k e p o T - y n o l o C n w o r C N M , r e t s e h c o R - y a B l a t s y r C N M , d u o l C . t S - t r u o C s s e r p y C D N , n o t s i l l i W - s n o m m o C a t o k a D . . . . . . . . . . . . . . D N , n w o t s e m a J - e g d i R r e e D . . . . . N M , i t n a s I - n e e r g r e v E D N , s k r o F d n a r G - k r a P t s e r o F N M , r e t s e h c o R - k e e r C h c n e r F D S , s l l a F x u o i S - s e m o h n w o T s e l b a G . . . . . . . . . . . D N , s k r o F d n a r G - s n e d r a G N M , d u o l C . t S - y a w e t a G d n a r G N M , r e t s e h c o R - . e k a L e d a c s a C t a e l l i V e d n a r G . . . . E N , a h a m O - d l e i f n e e r G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D S , y t i C d i p a R - n e d r a G d a e t s e m o H . . . . . . . . . . . A I , y t i C x u o i S - s l l i H n a i d n I . D N , k c r a m s i B - r o n a M d o o w k r i K . . . E N , n l o c n i L - e g a l l i V e d i s e k a L N M , r e t s e h c o R - r o n a M e g a t i r e H s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y 0 4 0 4 - 4 2 7 9 9 1 5 0 0 2 - 5 9 9 1 ) 7 1 2 , 1 ( ) 0 7 9 , 1 1 ( 0 4 0 4 0 4 0 4 0 4 0 4 5 1 0 2 4 0 0 2 8 9 9 1 7 1 0 2 4 0 0 2 0 1 0 2 0 4 - 4 2 1 1 0 2 - 5 9 9 1 0 4 0 4 0 4 0 4 0 4 0 4 - 4 2 0 4 0 4 0 4 0 4 0 4 - 4 2 0 4 0 4 - 4 2 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 - 4 2 0 4 0 4 - 4 2 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 5 1 0 2 2 0 0 2 3 9 9 1 0 0 0 2 5 0 0 2 4 9 9 1 7 9 9 1 9 9 9 1 2 0 0 2 9 0 0 2 4 9 9 1 2 1 0 2 3 9 9 1 6 0 0 2 5 1 0 2 1 1 0 2 3 1 0 2 1 0 0 2 9 9 9 1 8 0 0 2 5 9 9 1 7 0 0 2 9 9 9 1 1 1 0 2 5 1 0 2 5 9 9 1 3 1 0 2 5 9 9 1 9 9 9 1 9 9 9 1 9 9 9 1 2 1 0 2 3 0 0 2 5 9 9 1 8 9 9 1 2 1 0 2 2 1 0 2 3 0 0 2 7 9 9 1 ) 7 5 7 ( ) 7 7 7 , 1 ( ) 6 8 4 , 2 ( ) 2 0 4 ( ) 2 5 1 ( ) 9 8 4 , 1 ( ) 4 4 5 ( ) 3 3 7 , 1 ( ) 6 9 0 , 2 ( ) 0 4 6 , 3 ( ) 2 6 6 , 5 ( ) 9 7 5 , 2 ( ) 1 9 1 , 3 ( ) 3 5 1 , 7 ( ) 1 0 4 ( ) 8 5 3 ( ) 6 7 6 ( ) 5 8 2 , 3 ( ) 4 8 6 , 2 ( ) 7 5 3 , 1 ( ) 8 7 3 , 6 ( ) 1 7 2 , 2 ( ) 5 4 9 , 1 ( ) 9 7 2 ( ) 4 8 5 , 2 ( ) 6 6 0 , 2 ( ) 2 7 0 , 3 ( ) 5 9 4 , 3 ( ) 4 1 3 , 1 ( ) 7 3 6 , 7 ( ) 2 3 4 ( ) 1 7 2 ( ) 4 3 9 ( ) 1 5 3 , 6 ( ) 9 2 0 , 4 ( ) 4 7 3 , 6 ( ) 2 2 3 , 5 ( ) 7 0 1 , 3 ( ) 7 6 3 , 2 ( ) 6 0 1 , 1 ( ) 7 0 8 , 7 ( ) 1 8 6 , 1 ( ) 1 6 1 , 3 ( ) 0 9 1 ( ) 2 7 6 , 2 ( ) 7 8 0 , 4 ( 6 8 8 , 2 4 6 3 , 3 3 6 7 2 , 5 1 5 3 3 , 6 9 4 9 , 6 6 0 2 , 5 6 2 5 , 0 3 3 7 8 9 0 5 , 5 1 3 5 , 8 2 2 4 , 6 3 7 9 , 7 9 3 3 , 5 1 2 9 5 , 9 0 1 2 , 7 5 1 6 , 9 1 2 6 9 7 7 1 , 1 5 2 4 , 6 1 5 9 6 , 5 4 8 3 , 5 6 0 6 , 2 8 6 2 , 4 3 4 7 8 , 8 2 8 6 0 , 3 1 2 0 6 , 8 1 2 0 1 , 7 5 8 7 , 5 1 5 8 , 7 4 1 0 , 6 0 5 0 , 6 2 1 2 6 , 0 2 8 5 8 , 2 5 0 8 , 3 6 0 0 , 5 1 6 1 6 , 0 1 6 1 9 , 8 7 6 3 , 6 1 0 5 8 , 5 1 1 7 2 , 8 4 7 7 , 8 1 3 0 6 , 3 4 2 7 , 8 1 8 4 0 , 4 8 2 9 , 8 2 1 1 8 , 1 1 2 8 8 , 8 2 2 5 , 9 1 3 5 , 2 2 1 1 , 1 3 1 1 0 , 4 1 1 0 9 , 5 4 6 2 , 6 5 7 5 , 4 2 9 7 , 8 2 1 5 7 8 4 1 , 5 2 7 5 , 7 5 2 7 , 5 3 1 1 , 7 3 5 3 , 8 8 3 2 , 6 9 2 5 , 3 1 3 2 7 , 7 1 5 0 9 9 0 0 , 1 7 2 4 , 5 1 9 8 2 , 5 4 7 9 , 4 2 0 3 , 2 7 6 8 , 1 3 4 7 9 , 6 2 9 1 1 , 2 1 6 1 5 , 5 1 5 9 7 , 6 9 0 3 , 5 9 5 0 , 7 0 5 1 , 5 7 8 2 , 5 2 2 8 5 , 2 8 6 5 , 3 3 8 7 , 8 1 6 3 6 , 3 1 4 9 9 , 9 4 0 1 , 8 0 8 6 , 5 1 0 2 4 , 4 1 5 8 0 , 7 0 9 6 , 6 1 4 4 2 , 3 9 0 0 , 7 1 1 6 7 , 3 5 2 5 , 6 2 9 9 3 , 0 1 8 3 8 , 7 1 8 7 , 8 5 5 3 2 5 2 , 2 5 6 2 , 1 4 3 4 5 8 6 4 3 7 , 1 1 3 6 2 2 1 1 6 3 9 5 9 7 9 6 0 6 8 0 1 8 , 1 9 3 2 , 1 2 7 9 2 9 8 , 1 7 5 8 6 1 8 9 9 6 0 4 0 1 4 4 0 3 9 4 9 1 0 4 , 2 0 0 9 , 1 6 8 0 , 3 7 0 3 6 7 4 3 6 7 2 9 7 4 6 8 6 7 2 7 3 2 8 3 8 , 1 0 7 3 , 1 2 2 6 2 1 8 7 8 6 0 3 4 , 1 6 8 1 , 1 4 8 0 , 2 9 5 3 5 1 7 , 1 7 8 2 3 0 4 , 2 2 1 4 , 1 4 4 0 , 1 1 4 7 8 8 1 , 1 5 7 2 , 0 1 7 2 3 6 2 8 0 4 8 , 1 1 4 6 0 6 9 3 5 1 2 3 1 9 4 2 , 1 2 6 1 , 1 6 4 6 , 4 4 3 7 , 3 9 4 4 , 2 4 5 6 , 3 3 7 3 , 9 7 0 2 8 1 4 4 7 7 , 2 7 1 9 , 1 5 2 4 6 4 6 3 3 3 0 9 9 , 1 8 6 1 , 2 3 3 1 1 5 8 , 2 6 6 9 , 1 4 0 8 9 6 4 , 1 8 4 3 5 9 7 , 4 0 2 5 3 8 5 7 4 1 8 0 9 , 4 2 8 4 , 3 7 1 2 , 3 4 4 9 , 4 0 4 8 , 3 4 2 4 , 1 3 7 0 , 1 8 1 6 , 7 3 2 0 , 2 5 6 3 , 1 1 1 2 2 1 5 , 2 4 2 1 , 3 4 1 5 , 1 7 2 7 , 1 2 2 4 7 , 3 1 0 1 1 , 5 9 1 5 , 4 6 5 7 , 3 1 5 1 , 8 2 0 1 6 7 5 9 , 3 5 1 5 , 7 8 3 8 , 4 4 8 7 , 2 1 4 4 , 0 1 9 0 1 , 6 2 5 1 , 3 9 9 0 , 9 8 4 7 7 8 6 8 3 5 , 3 4 6 5 , 4 6 1 8 , 1 4 8 7 , 2 1 4 2 0 , 0 3 1 4 6 , 6 2 8 9 1 , 0 1 9 8 3 , 5 1 3 7 0 , 4 9 8 4 , 3 0 7 6 , 4 2 6 2 7 , 5 3 2 8 , 4 4 8 6 , 4 1 7 9 0 , 2 7 0 0 , 3 8 4 5 , 9 3 9 8 , 9 4 3 0 , 5 4 1 8 , 2 1 6 0 3 , 0 1 7 3 1 , 4 0 6 7 , 5 1 6 9 2 , 2 7 6 1 , 0 1 9 0 9 , 1 4 2 4 , 5 2 0 0 2 , 0 1 2 2 6 , 5 8 2 0 , 6 4 8 1 2 6 3 , 1 7 0 2 , 1 9 9 3 0 9 5 4 3 7 , 1 0 9 4 0 1 1 3 0 3 4 8 8 2 2 4 3 4 5 4 6 1 , 1 4 3 0 , 1 4 0 4 3 4 1 , 1 7 2 7 7 6 8 0 4 2 5 9 3 4 4 1 4 5 2 , 2 0 0 9 , 1 2 0 7 0 8 0 , 3 8 7 1 0 3 3 6 7 5 6 5 6 3 4 8 2 4 1 , 1 1 4 2 5 1 2 0 5 5 6 7 5 0 0 4 6 3 3 0 0 6 4 9 2 0 0 0 0 6 1 8 , 2 1 5 7 , 4 1 0 3 5 8 , 2 4 7 2 , 3 6 8 9 , 5 0 0 3 , 2 9 4 7 , 3 8 5 1 , 0 1 8 2 1 , 4 1 6 6 , 3 5 9 1 , 8 6 1 7 1 2 1 8 6 0 , 5 4 0 5 , 2 1 4 6 , 3 9 4 3 , 1 9 1 2 , 6 2 3 5 9 , 2 2 6 7 1 , 8 9 3 4 , 3 2 0 4 2 , 3 0 6 1 , 3 0 9 9 8 , 4 0 8 3 , 3 6 8 6 , 1 1 3 2 3 , 1 6 5 1 , 2 9 2 2 , 8 0 9 5 2 , 5 2 3 7 , 7 7 8 6 , 5 3 8 6 , 3 0 9 5 , 1 9 2 7 , 1 1 4 3 2 9 3 9 6 1 1 9 3 1 , 2 0 0 4 , 1 8 4 7 0 7 3 0 2 7 0 , 8 9 7 8 , 1 1 4 5 , 7 7 5 2 , 1 2 0 0 2 9 , 5 ) 2 9 5 , 2 3 2 ( $ 1 4 5 , 0 6 2 , 1 $ 4 1 3 , 9 5 1 , 1 $ 7 2 2 , 1 0 1 $ 4 2 3 , 4 7 1 $ 6 9 0 , 4 0 0 , 1 $ 1 2 1 , 2 8 $ 1 0 4 , 8 4 5 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D N , s k r o F d n a r G - k r a m d n a L . . D N , s k r o F d n a r G - y c a g e L D N , k c r a m s i B - s t h g i e H y c a g e L . . . . . . . . . . S K , a k e p o T - a s o p i r a M D N , n w o t s e m a J - s w o d a e M N M , o l l e c i t n o M - s g n i s s o r C o l l e c i t n o M N M , o l l e c i t n o M - e g a l l i V o l l e c i t n o M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N M , r e t s e h c o R - y e l l a V n r e h t r o N . . . . . . D N , k c r a m s i B - e t n i o P h t r o N . . D N , k c r a m s i B - e g d i r h t r o N D S , s l l a F x u o i S - s e t a t s E t n o m k a O D S , s l l a F x u o i S - s e t a t s E d o o w k a O . . T M , s g n i l l i B . N M , r e t s e h c o R - - e g a l l i V c i p m y l O e g a l l i V k i p m y l O . . . . . . . . . . . . D S , s l l a F x u o i S - k r a P w o b x O N M , k r a P e t i a W . D N , k c r a m s i B - - s w o d a e M k r a P s g n i r p S e l b b e P . . . . . . . . . . . . . . T M , s g n i l l i B - t s r u h e n i P . . . . D N , t o n i M - a z a l P D S , y t i C d i p a R - t s e W e t n i o P N M , l l e t r a S - e c a l P e g a t i r e H t a s d n o P . . . . . . . . . . . . D S , s l l a F x u o i S - s d n i W e i r i a r P . . N M , r e t s e h c o R - e g d i R y r r a u Q . . . N M , s i l o p a e n n i M - 0 2 d e R N M , d u o l C . t S - s e t a t s E k r a P y c n e g e R D N , n o t s i l l i W - s t h g i e H e c n a s s i a n e R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A I , y t i C x u o i S - s k a O e g d i R T M , s g n i l l i B - t s e W k c o r m R i . D N , k c r a m s i B - e g d i R r e v i R T M , s g n i l l i B - s w o d a e M y k c o R . . . . . . . . . . . . . . N M , i t n a s I - r e v i R m u R S K , a k e p o T - d o o w r e h S D S , s l l a F x u o i S - a t s i V a r r e i S D S , y t i C d i p a R - s g n i r p S r e v l i S . . . . . . . . . D N , t o n i M - e t n i o P h t u o S D N , s k r o F d n a r G D N , s k r o F d n a r G - - t n i o p h t u o S d n i w h t u o S . . N M , r e t s e h c o R - l i a r T t e s n u S . E N , n l o c n i L - k o o r b s a m o h T . D N , s k r o F d n a r G - k r a P y e l l a V . . . . . . S K , a k e p o T - t s e W a l l i V . N M , r e t s e h c o R - n e e r G e g a l l i V N M , k r a P e t i a W - l l i h e n o t S t s e W . . D N , k c r a m s i B - k r a P d o o w t s e W E N , a h a m O - e g d i R g n i r e p s i h W D N , n o t s i l l i W - n e d r a G n o t s i l l i W . . . . . . . . . . . . N M , r e t s e h c o R N M , r e t s e h c o R - - r e t s e h c n i W e g d i r d o o W . . . . . . . y l i m a f i t l u M l a t o T F-41 S E I R A I D I S B U S D N A T S U R T E T A T S E L A E R S R O T S E V N I 7 1 0 2 , 0 3 l i r p A ) s d n a s u o h t n i ( N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R - I I I e l u d e h c S h c i h w n o e f i L n i n o i t a i c e r p e d e m o c n i t s e t a l s i t n e m e t a t s d e t u p m o c f o e t a D n o i t c u r t s n o C n o i t i s i u q c A r o d e t a l u m u c c A n o i t a i c e r p e D t a d e i r r a c h c i h w t a t n u o m a s s o r G d o i r e p f o e s o l c & s g n i d l i u B l a t o T s t n e m e v o r p m I d n a L y n a p m o C o t t s o C l a i t i n I n o i t i s i u q c a o t t n e u q e s b u s d e z i l a t i p a c s t s o C & s g n i d l i u B s t n e m e v o r p m I d n a L ) 1 ( s e c n a r b m u c n E e r a c h t l a e H n o i t p i r c s e D S E I R A I D I S B U S D N A T S U R T E T A T S E L A E R S R O T S E V N I 7 1 0 2 , 0 3 l i r p A ) s d n a s u o h t n i ( N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R - I I I e l u d e h c S s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 5 0 0 2 7 0 0 2 2 0 0 2 0 1 0 2 8 0 0 2 8 0 0 2 4 0 0 2 8 0 0 2 8 0 0 2 8 0 0 2 2 0 0 2 3 0 0 2 1 0 0 2 4 0 0 2 2 0 0 2 4 0 0 2 4 0 0 2 5 1 0 2 4 0 0 2 8 0 0 2 0 1 0 2 2 0 0 2 4 0 0 2 4 0 0 2 5 1 0 2 5 0 0 2 7 0 0 2 1 1 0 2 4 0 0 2 ) 5 1 7 , 3 ( ) 3 0 2 , 5 ( ) 7 6 9 , 1 ( ) 7 0 2 ( ) 0 4 2 , 2 ( ) 6 8 4 , 1 ( ) 7 4 8 ( ) 5 2 8 ( ) 9 7 1 , 5 ( ) 3 6 8 , 3 ( ) 7 7 2 ( ) 7 1 8 , 6 ( ) 6 4 7 , 1 2 ( ) 6 9 4 ( ) 4 5 5 ( ) 8 9 2 , 3 ( ) 7 2 2 ( ) 2 9 6 , 4 ( ) 4 9 2 , 1 ( ) 1 6 5 , 2 ( ) 6 2 2 ( ) 3 1 0 , 1 ( ) 5 1 9 , 2 ( ) 6 7 6 , 6 ( ) 4 0 1 , 1 ( ) 2 8 9 , 3 ( ) 7 3 6 ( ) 8 7 2 , 1 ( ) 4 1 8 ( $ 2 0 0 , 0 1 5 2 4 , 7 1 9 2 7 , 4 5 6 8 , 1 6 0 3 , 0 1 0 8 0 , 7 9 9 0 , 3 4 2 6 , 2 1 6 0 , 6 1 8 6 5 , 2 1 6 3 4 , 2 8 6 6 , 5 1 1 0 2 , 5 8 2 7 5 , 1 3 8 5 , 8 6 7 7 , 1 3 3 1 , 4 1 3 1 1 , 6 4 0 1 , 4 9 9 4 , 9 1 7 9 , 1 7 6 9 , 2 4 3 5 , 0 1 5 2 3 , 9 1 7 5 4 , 4 2 3 1 9 , 3 1 3 8 8 , 2 3 9 5 , 9 1 6 6 , 2 8 1 7 , 4 6 1 2 , 1 5 0 1 , 9 4 0 8 , 6 8 9 5 , 2 3 0 1 , 2 1 6 0 , 6 1 8 6 5 , 2 1 7 7 4 , 1 8 2 6 , 4 1 1 2 7 , 1 8 2 2 5 , 1 7 5 5 , 8 9 9 6 , 1 7 2 6 , 2 1 0 1 2 , 5 8 5 0 , 4 9 9 4 , 9 1 3 3 , 1 7 6 7 , 2 9 8 2 , 9 0 1 6 , 6 1 7 4 8 , 1 2 6 6 2 , 2 1 4 3 5 , 2 9 1 9 , 8 9 9 4 , 2 $ 3 7 7 , 9 6 9 6 , 6 1 $ 9 2 2 9 2 7 1 1 9 4 6 1 0 2 , 1 6 7 2 1 0 5 1 2 5 — — 0 5 6 2 7 7 9 5 9 0 4 0 , 1 0 8 4 , 3 3 0 9 6 0 5 , 1 6 4 — 0 4 6 0 0 2 5 4 2 , 1 5 1 7 , 2 0 1 6 , 2 7 4 6 , 1 9 4 3 4 7 6 2 6 1 $ 1 5 — 3 6 6 , 2 0 8 3 , 5 3 9 3 , 2 4 6 7 , 1 1 6 5 5 6 8 3 , 3 7 6 3 5 3 0 , 1 9 5 8 , 6 6 4 4 , 8 1 2 — 5 7 1 , 1 0 0 3 , 2 — 3 2 3 6 2 6 , 1 — 5 1 — 1 9 3 7 3 9 , 1 6 9 2 7 4 4 , 4 2 6 1 8 7 6 , 4 6 1 2 , 1 2 4 8 , 6 7 2 1 , 5 7 9 5 , 2 7 4 5 , 1 5 7 6 , 2 1 1 0 2 , 2 1 0 6 6 4 5 0 , 8 5 7 2 , 3 6 0 2 5 , 1 8 0 4 , 7 9 9 6 , 1 8 2 5 , 0 1 0 1 2 , 5 1 8 7 , 3 3 7 8 , 7 1 3 3 , 1 7 6 7 , 2 8 9 8 , 8 3 7 6 , 4 1 7 4 8 , 1 2 1 5 8 , 7 9 5 2 , 2 9 0 0 , 9 7 9 4 , 2 $ 5 3 1 , 7 9 1 3 , 1 1 $ 4 0 2 6 2 7 — 9 4 6 1 7 0 , 1 $ 9 8 1 1 0 5 1 2 5 — — 1 4 7 5 5 7 0 5 — 7 7 0 8 4 , 3 3 0 9 5 0 3 , 1 — — 0 4 6 5 8 1 5 4 2 , 1 5 1 7 , 2 0 1 6 , 2 5 1 6 , 1 8 2 3 8 6 5 2 6 1 8 5 3 , 7 8 0 5 , 1 1 0 — 5 0 7 , 7 3 2 8 , 4 0 8 1 , 1 0 0 — — 4 9 3 , 9 1 3 3 , 8 2 0 0 0 3 8 6 8 7 2 , 7 4 9 4 , 1 0 0 — 7 3 9 , 3 5 4 2 , 7 0 0 0 0 3 4 , 4 2 4 0 , 1 ) 9 3 1 , 6 8 ( $ 8 4 1 , 3 2 3 $ 2 0 7 , 0 0 3 $ 6 4 4 , 2 2 $ 1 3 4 , 5 5 $ 7 7 4 , 6 4 2 $ 0 4 2 , 1 2 $ 8 0 4 , 6 9 $ $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N M , s i l o p a e n n i M - g n i d l i u B l a c i d e M 0 0 8 2 . . . N M , s i l o p a e n n i M - e u n e v A o g a c i h C 8 2 8 2 . . . . . N M , n o t g n i m o o l B - l a c i d e M t r o p r i A T M , s g n i l l i B - d a o R t n a r G 0 0 3 2 s g n i l l i B . N M , e l l i v s n r u B - ) w e i v e g d i R ( l a c i d e M t e l l o c i N 3 0 3 e l l i v s n r u B N M , e l l i v s n r u B - ) h t u o S w e i v e g d i R ( l a c i d e M t e l l o c i N 5 0 3 e l l i v s n r u B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N M , h t u l u D - c i n i l C d l e f n e D . N M , n a g a E - l a c i d e M d o o w k c u D 0 4 4 1 n a g a E . . . . . . . . . . . . . . . . . . . . . . . . . N M , a n i d E - l a c i d e M e c n a r F 3 6 3 6 a n i d E N M , a n i d E - l a c i d e M e c n a r F 5 0 4 6 a n i d E . . . . . . . . . . . . . N M , a n i d E - e u n e v A w e r D 7 1 5 6 a n i d E N M , a n i d E - I I C M S e c n a r F 5 2 5 6 a n i d E . . . . N M a n i d E - I C M S e c n a r F 5 4 5 6 a n i d E . . . . . . . . . . . . . . . . . . . . . . N M , h t u l u D - s u i n e s e r F . N M , l u a P . t S - w e i V n e d r a G N M , e n o t s d n a S - c i n i l C y a w e t a G N M l , o m E e k a L - s u p m a C h t l a e H e t n i o P h g i H . . . . . . . . . . . . . E N , a h a m O - a z a l P l a c i d e M e d i s e k a L . . . . . . . I W , r o i r e p u S - c i n i l C r e n i r a M . * N M , s i l o p a e n n i M - l a c i d e M e u n e v A h t 5 2 1 0 7 s i l o p a e n n i M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . T M , a l u o s s i M - n r e h t r o N t a e r G 0 5 0 3 a l u o s s i M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N M , r e t n e C n y l k o o r B - l a t n e D k r a P . . . . . . . . . . . . . . . . . N M , h t u l u D - I n o i l i v a P N M , h t u l u D - I I n o i l i v a P N M , k r a P n y l k o o r B - l a c i d e M e r a C e i r i a r P . . . . . . . . . . . . . . . . . . . . . N M , l u a P t S - a z a l P l a c i d e M e i h c t i R . . . . N M , l e a h c i M t S - c i n i l C l e a h c i M t S . . . . . . . . . D N , t o n i M - 6 1 a z a l P t a y t i n i r T . . . . . . N M , g n i b b i H - c i n i l C s l l e W . . . . . . . e r a c h t l a e H l a t o T F-42 h c i h w n o e f i L n i n o i t a i c e r p e d e m o c n i t s e t a l s i t n e m e t a t s s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y s r a e y 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 0 4 d e t u p m o c n o i t i s i u q c A r o n o i t a i c e r p e D l a t o T s t n e m e v o r p m I d n a L f o e t a D n o i t c u r t s n o C d e t a l u m u c c A & s g n i d l i u B n o i t i s i u q c a o t t n e u q e s b u s d e z i l a t i p a c s t s o C & s g n d i l i u B s t n e m e v o r p m I d n a L ) 1 ( s e c n a r b m u c n E 8 0 0 2 ) 0 3 6 ( 6 0 8 , 2 3 6 3 , 2 6 0 0 2 6 0 0 2 9 9 9 1 0 1 0 2 9 0 0 2 3 7 9 1 2 1 0 2 5 1 0 2 9 0 0 2 1 0 0 2 7 0 0 2 7 0 0 2 ) 9 4 1 ( ) 8 7 8 , 1 ( ) 9 0 2 , 3 ( ) 1 2 5 , 3 ( ) 7 2 4 ( ) 0 4 7 , 2 ( ) 4 7 ( ) 9 9 6 ( ) 5 7 6 , 2 ( ) 3 4 0 , 1 ( ) 7 4 3 , 3 ( ) 4 9 2 , 1 ( ) 6 8 6 , 1 2 ( ) 7 1 4 , 0 4 3 ( $ $ 5 1 6 2 5 5 , 7 6 0 9 , 6 3 7 5 , 1 1 8 1 3 , 2 9 9 8 , 8 8 6 3 , 6 5 0 7 , 2 7 9 5 , 9 9 9 0 , 3 1 5 5 5 , 5 1 9 9 7 , 5 2 9 7 , 3 9 9 0 5 1 1 3 , 5 4 9 3 , 6 5 3 5 , 0 1 0 2 0 , 2 3 2 7 , 8 2 5 9 , 5 6 1 8 , 1 9 9 9 , 8 9 8 2 , 2 1 2 9 6 , 1 1 7 9 4 , 4 3 4 4 1 4 2 , 2 6 0 1 2 1 5 8 3 0 , 1 8 9 2 6 7 1 6 1 4 9 8 8 8 9 5 0 1 8 3 6 8 , 3 2 0 3 , 1 4 3 1 1 , 0 3 2 2 3 , 1 1 0 1 , 2 4 0 4 , 4 6 9 2 3 8 5 , 5 — 8 6 4 6 7 , 3 5 4 0 , 2 2 8 9 , 1 3 6 0 , 2 1 8 4 , 7 7 6 , 1 $ 6 1 1 , 1 4 5 , 1 $ 5 6 3 , 6 3 1 $ 7 4 5 , 4 5 2 $ 0 0 1 , 1 8 $ 2 9 6 , 2 1 $ 2 9 7 , 4 2 $ $ 3 8 2 1 , 3 9 4 7 9 0 , 4 2 5 3 , 4 3 4 1 , 6 4 2 7 , 1 6 1 2 , 3 2 5 9 , 5 8 4 7 , 1 4 4 4 , 5 3 9 8 , 9 8 2 6 , 2 4 4 2 , 0 1 7 1 2 , 7 5 0 9 7 , 7 0 3 , 1 9 8 3 3 3 1 , 2 2 9 3 5 4 6 2 0 , 1 8 9 2 0 0 1 6 1 4 9 8 8 9 8 3 0 1 8 0 8 6 3 , 8 0 1 , 1 4 7 9 1 , 0 8 2 3 9 9 3 , 1 — — — — — 6 2 7 , 6 — — 2 0 1 0 1 , $ $ 3 8 7 , 1 1 $ 9 2 5 , 0 2 4 4 1 , 5 1 1 $ 8 3 3 , 5 6 6 $ $ . D N , k c r a m s i B - y a w d a o r B t s a E 5 1 7 k c r a m s i B n o i t p i r c s e D r e h t O . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D N . , . . . . . . . N M , n o t g n i m o o l B t o n i M - a z a l P t s e W a t o k a D N M , n a g a E - r e t n e C e c r e m m o C n o t g n i x e L - t e e r t S h t 4 9 W 0 0 0 2 n o t g n i m o o l B . . . . . . . . . . . . . . . . . D N , t o n i M - e v A t s 1 3 0 0 4 1 t o n i M D N , t o n i M - W S t e e r t S h t 6 1 5 0 5 2 t o n i M . . . . . . . . . . . . . . . . . . . . D N , t o n i M . . . . . . . . . . . . . . . - . D N , t o n i M - S P I t o n i M l i a t e R e t a g h t u o S t o n i M . D N , t o n i M - 6 1 a z a l P D N , t o n i M - d a e h w o r r A t o n i M . . . . . . . . . . . . . A I , e l a d n a b r U . - . N M , y r u b d o o W . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N M t e e r t S h t 6 0 1 0 0 9 3 e l a d n a b r U - . e n a l d o o W 5 6 8 1 y r u b d o o W . . . . . . . . . . . r e h t O l a t o T , e l l i v e s o R - d a o R e k a L g n o L 5 7 0 3 e l l i v e s o R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . l a t o t b u S F-43 t a d e i r r a c h c i h w t a t n u o m a s s o r G d o i r e p f o e s o l c y n a p m o C o t t s o C l a i t i n I S E I R A I D I S B U S D N A T S U R T E T A T S E L A E R S R O T S E V N I 7 1 0 2 , 0 3 l i r p A ) s d n a s u o h t n i ( N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R - I I I e l u d e h c S f o e t a D n o i t c u r t s n o C n o i t i s i u q c A r o d e t a l u m u c c A n o i t a i c e r p e D 2 1 0 2 3 1 0 2 8 0 0 2 5 1 0 2 2 1 0 2 4 1 0 2 5 1 0 2 4 1 0 2 2 1 0 2 9 0 0 2 6 0 0 2 — — — — — — — — — — — — ) 7 1 4 , 0 4 3 ( $ $ $ l a t o T 9 8 3 , 1 5 9 2 , 3 5 8 8 5 0 0 , 5 0 8 2 , 4 8 5 6 0 5 6 7 3 , 1 8 7 1 , 1 3 1 1 0 7 3 $ 5 5 4 , 8 1 $ t a d e i r r a c h c i h w t a t n u o m a s s o r G d o i r e p f o e s o l c y n a p m o C o t t s o C l a i t i n I S E I R A I D I S B U S D N A T S U R T E T A T S E L A E R S R O T S E V N I 7 1 0 2 , 0 3 l i r p A ) s d n a s u o h t n i ( N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R - I I I e l u d e h c S & s g n i d l i u B s t n e m e v o r p m I d n a L n o i t i s i u q c a o t t n e u q e s b u s d e z i l a t i p a c s t s o C & s g n d i l i u B s t n e m e v o r p m I d n a L ) 1 ( s e c n a r b m u c n E d n a L d e v o r p m i n U n o i t p i r c s e D 6 3 9 , 5 9 6 , 1 $ 6 1 1 , 1 4 5 , 1 $ 0 2 8 , 4 5 1 $ 1 3 3 , 6 5 2 — — — — — — — — — — — — $ 9 8 3 , 1 5 9 2 , 3 5 8 8 5 0 0 , 5 0 8 2 , 4 8 5 6 0 5 6 7 3 , 1 8 7 1 , 1 3 1 1 0 7 3 $ 9 3 3 5 4 1 7 5 9 1 7 2 — — — — — 8 0 1 5 5 4 , 8 1 $ 4 8 7 , 1 $ $ $ — — — — — — — — — — — — 0 9 7 , 7 0 3 , 1 $ $ $ 5 1 8 , 1 3 1 $ 8 3 3 , 5 6 6 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . l a t o T 0 5 0 , 1 0 5 2 , 3 4 1 3 6 8 2 , 4 8 7 2 , 4 8 5 6 0 5 6 7 3 , 1 8 7 1 , 1 5 0 7 3 $ 1 7 6 , 6 1 $ — — — — — — — — — — — — $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N M , r e t s e h c o R - s l l i H r e g d a B . D N , k c r a m s i B - 6 1 9 4 k c r a m s i B . D N , k c r a m s i B - n i a M E 0 0 7 k c r a m s i B . . . . . . D N , k c r a m s i B - g n i s s o r C e d i s k e e r C . . . . . . D N , s k r o F d n a r G - s k r o F d n a r G . N M , i t n a s I - d e v o r p m i n U i t n a s I D N , t o n i M - W S e v A h t 4 2 5 2 5 1 t o n i M . D S , y t i C d i p a R - d e v o r p m i n U y t i C d i p a R . . . . . . . . . . . . . D N , n o t s i l l i W - s t h g i e H e c n a s s i a n e R . . . . . . . . . . . . . . . . . . . . . . . . A I , e l a d n a b r U - e l a d n a b r U . . . . . I W , n o t s e W - n o t s e W d n a L d e v o r p m i n U l a t o T F-44 h c i h w n o e f i L n i n o i t a i c e r p e d e m o c n i t s e t a l s i t n e m e t a t s d e t u p m o c f o e t a D n o i t c u r t s n o C n o i t i s i u q c A r o d e t a l u m u c c A n o i t a i c e r p e D t a d e i r r a c h c i h w t a t n u o m a s s o r G d o i r e p f o e s o l c & s g n i d l i u B l a t o T s t n e m e v o r p m I d n a L y n a p m o C o t t s o C l a i t i n I n o i t i s i u q c a o t t n e u q e s b u s d e z i l a t i p a c s t s o C & s g n i d l i u B s t n e m e v o r p m I d n a L ) 1 ( s e c n a r b m u c n E $ 5 1 9 , 3 $ 8 2 5 , 4 1 $ $ 9 5 9 , 2 $ s r a e y s r a e y s r a e y 0 4 0 4 0 4 s r a e y 0 4 - 4 2 s r a e y 0 4 - 2 1 s r a e y s r a e y s r a e y s r a e y s r a e y 0 4 0 4 0 4 0 4 0 4 s r a e y s r a e y s r a e y 0 4 0 4 0 4 s r a e y 0 4 - 3 3 s r a e y s r a e y s r a e y 0 4 0 4 0 4 s r a e y 0 4 - 4 2 8 0 0 2 8 0 0 2 0 0 0 2 7 8 9 1 7 9 9 1 4 8 9 1 0 0 0 2 5 0 0 2 8 0 0 2 3 1 0 2 1 8 9 1 4 1 0 2 7 9 9 1 4 9 9 1 7 9 9 1 6 0 0 2 6 0 0 2 8 0 0 2 ) 6 2 ( ) 6 1 ( ) 6 0 2 ( ) 2 9 2 ( ) 5 3 0 , 1 ( ) 5 2 8 ( ) 1 3 9 , 7 ( ) 8 6 1 , 3 ( ) 1 0 1 ( ) 3 7 2 ( ) 4 5 ( ) 9 3 1 ( ) 1 5 1 ( ) 7 0 4 ( ) 7 5 ( ) 7 8 1 ( ) 4 9 4 ( ) 2 8 3 , 1 ( $ 0 3 1 0 9 7 8 2 2 5 3 , 1 6 4 6 , 2 2 2 2 , 1 3 5 2 , 0 2 8 7 1 , 2 1 7 9 4 9 6 0 , 3 7 6 3 0 2 5 9 2 2 , 3 9 7 1 , 1 3 3 9 , 1 6 2 2 7 4 5 4 3 3 , 2 $ ) 4 4 7 , 6 1 ( $ 9 5 0 , 2 5 $ 4 0 1 0 7 0 7 2 7 5 1 , 1 1 1 4 , 2 9 9 0 , 1 5 6 9 , 9 1 9 5 4 , 1 1 1 4 4 9 6 0 , 3 7 3 3 7 3 2 , 2 1 7 4 8 2 9 8 3 1 , 1 6 2 2 7 0 5 5 5 2 , 2 4 4 1 , 8 4 $ 6 2 0 2 7 1 5 9 1 5 3 2 3 2 1 8 8 2 9 1 7 6 5 — 0 3 9 4 2 9 9 1 5 2 5 9 7 — 0 4 9 7 $ 1 4 6 2 1 7 7 9 1 0 7 4 1 5 0 , 1 4 9 0 , 0 1 2 4 9 2 3 1 4 2 — — 0 7 2 5 2 5 ) 6 2 1 ( 6 2 2 6 0 2 9 7 3 $ 4 7 3 5 5 7 $ 3 2 1 , 1 0 5 4 , 1 2 7 6 1 7 8 , 9 7 1 5 , 0 1 7 3 3 5 4 0 , 3 7 3 3 7 3 2 , 2 5 1 2 9 6 4 — 2 1 3 8 9 8 , 1 7 8 8 , 1 2 7 5 , 4 3 5 1 1 1 5 1 8 5 1 5 4 1 0 8 8 8 2 9 1 7 8 2 — 0 3 5 3 2 9 9 5 8 1 1 6 1 — 9 2 8 6 $ 0 9 7 7 9 6 0 9 5 3 7 5 3 2 3 3 3 2 , 6 1 $ 0 5 0 3 — — — 2 9 8 7 9 5 9 7 9 6 3 3 1 5 7 4 , 1 2 0 8 , 1 2 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D N , t o n i M - x e l P 4 t e e r t S h t 4 D N , t o n i M - x e l P 3 t e e r t S h t 1 1 . . . D N , t o n i M - n i a M h t u o S 7 1 D N , t o n i M - n i a M n o s t n e m t r a p A . . . . D N , t o n i M - s t h g i e H n y l k o o r B . . D N , t o n i M - s t h g i e H n o t l o C . N M , I n w o t n a m r e H N M , I I n w o t n a m r e H - - a t s i V d o o w e g d E a t s i V d o o w e g d E . . . . . . . . . . . . . D N , t o n i M - t n o m r i a F ) 2 ( D N , t o n i M - ) s t n e m t r a p A ( e u n e v A t s r i F . . . . ) 2 ( D N , t o n i M - ) e c i f f O ( e u n e v A t s r i F D N , t o n i M - k n a B o g r a F s l l e W e t a g h t u o S t o n i M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D N , t o n i M - s e n i P . D N , t o n i M - w e i v h t u o S D N , t o n i M - k r a P t i m m u S . . . . D N , t o n i M - e l p m e T . D N , t o n i M - s t h g i e H e c a r r e T . . . . . . . . . . D N , t o n i M - e g d i r t s e W . e l a S r o f d l e H l a t o T e l a S r o f d l e H n o i t p i r c s e D F-45 s ’ y n a p m o C e h t r e d n u r o t i d e r c f o e n i l k n a b - i t l u m s ’ y n a p m o C e h t r e d n u g n i w o s t n u o m a e d u l c n i t o n o d s t n u o m a e s e h T . 7 1 0 2 , 0 3 l i r p A f o s a s e c n a l a b e l b a y a p s e g a g t r o m e h t e r a n m u l o c s i h t n i s t n u o m A ) 1 ( . y t r e p o r p e s u - i t l u m e l g n i S ) 2 ( . s n a o l n o i t c u r t s n o c S E I R A I D I S B U S D N A T S U R T E T A T S E L A E R S R O T S E V N I 7 1 0 2 , 0 3 l i r p A ) s d n a s u o h t n i ( N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R - I I I e l u d e h c S 5 1 0 2 6 1 0 2 ) s d n a s u o h t n i ( 7 1 0 2 5 9 1 , 1 4 2 , 1 $ 7 8 6 , 5 3 3 , 1 $ 1 7 4 , 1 8 6 , 1 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . r a e y f o g n i n n i g e b t a e c n a l a B — 3 2 2 , 2 1 6 0 0 , 1 2 4 1 1 , 3 8 1 5 0 6 , 3 6 3 2 6 , 2 9 1 6 , 4 3 7 5 4 , 2 8 2 8 3 5 , 7 5 4 , 1 1 9 9 , 8 1 7 , 1 ) 6 6 5 , 1 ( ) 4 0 9 , 7 1 ( ) 1 8 8 ( ) 6 7 6 , 3 ( ) 4 2 8 , 7 9 ( — — ) 5 0 3 , 1 ( ) 7 7 7 , 3 ( ) 8 3 4 , 2 3 ( — — 5 6 5 , 1 6 1 9 2 , 2 4 7 2 3 , 5 8 7 , 1 ) 8 1 7 , 1 2 ( ) 1 0 4 , 1 5 ( ) 4 4 1 , 7 ( ) 6 5 1 , 4 2 ( ) 7 2 4 , 3 ( 7 8 6 , 5 3 3 , 1 $ 1 7 4 , 1 8 6 , 1 $ 1 8 4 , 7 7 6 , 1 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . y l i m a f i t l u M . e r a c h t l a e H . . . . . r e h t O r e h t O d n a s t n e m e v o r p m I r a e y g n i r u d s n o i t i d d A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . d l o s e t a t s e l a e r f o t s o C . . . e g r a h c t n e m r i a p m I s t e s s a d e r i a p m i n o n o i t a i c e r p e d d e t a l u m u c c a d n a t e s s a f o n w o d e t i r W . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . r a e y e h t g n i r u d e l a s r o f d l e h s a d e i f i s s a l c s e i t r e p o r P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) 1 ( r e h t O r a e y f o e s o l c t a e c n a l a B r a e y g n i r u d s n o i t c u d e D F-46 : s w o l l o f s a e r a , 5 1 0 2 d n a , 6 1 0 2 , 7 1 0 2 , 0 3 l i r p A d e d n e s r a e y e e r h t e h t r o f n o i t a z i t r o m a / n o i t a i c e r p e d d e t a l u m u c c a f o s n o i t a i l i c n o c e R 5 1 0 2 6 1 0 2 ) s d n a s u o h t n i ( 7 1 0 2 4 3 9 , 3 7 2 $ 7 1 4 , 9 7 2 $ 9 8 8 , 2 1 3 $ . . . . . . . . . . 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e l a e r n o n o i t a i c e r p e d d e t a l u m u c c A . . . . . . . . . . s t e s s a d e r i a p m i n o n o i t a i c e r p e d d e t a l u m u c c a d n a t e s s a f o n w o d e t i r W . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) 1 ( r e h t O r a e y f o e s o l c t a e c n a l a B S E I R A I D I S B U S D N A T S U R T E T A T S E L A E R S R O T S E V N I 7 1 0 2 , 0 3 l i r p A : s w o l l o f s a e r a 5 1 0 2 d n a , 6 1 0 2 , 7 1 0 2 , 0 3 l i r p A d e d n e s r a e y e e r h t e h t r o f d e n w o y t r e p o r p l a t o t f o e u l a v g n i y r r a c e h t f o s n o i t a i l i c n o c e R ) s d n a s u o h t n i ( N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R - I I I e l u d e h c S 5 1 0 2 6 1 0 2 ) s d n a s u o h t n i ( 7 1 0 2 9 0 6 , 4 0 1 $ 4 9 9 , 3 5 1 $ 1 8 6 , 1 5 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . r a e y f o g n i n n i g e b t a e c n a l a B r a e y g n i r u d s n o i t i d d A 5 1 0 , 7 7 4 6 , 2 1 6 0 3 , 9 8 1 — 4 3 7 , 1 3 5 7 , 6 9 — — 3 9 8 , 7 ) 5 ( — 4 9 9 , 3 5 1 $ 1 8 6 , 1 5 $ — — ) 8 7 5 , 9 5 1 ( ) 0 0 8 , 0 0 2 ( ) 4 7 5 , 9 5 ( $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . s n o i t i s i u q c a d n a l d e v o r p m i n U . s s e r g o r p n i t n e m p o l e v e d o t d e v o m d n a l d e v o r p m i n U . . . . . . . . . . . . . . . . . . . . . . . . . r e h t o d n a s t n e m e v o r p m I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) 2 ( e c i v r e s n i d e c a l p t n e m p o l e v e D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) 3 ( r e h t O r a e y f o e s o l c t a e c n a l a B r a e y g n i r u d s n o i t c u d e D 5 1 0 2 6 1 0 2 7 1 0 2 ) s d n a s u o h t n i ( : s w o l l o f s a e r a 5 1 0 2 d n a , 6 1 0 2 , 7 1 0 2 , 0 3 l i r p A d e d n e s r a e y e e r h t e h t r o f d n a l d e v o r p m i n u f o s n o i t a i l i c n o c e R F-47 4 6 8 , 2 2 $ 7 2 8 , 5 2 $ 9 3 9 , 0 2 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . r a e y f o g n i n n i g e b t a e c n a l a B r a e y g n i r u d s n o i t i d d A 3 3 5 , 1 7 8 4 , 0 1 ) 9 7 ( ) 0 7 6 ( ) 3 9 2 , 1 ( ) 5 1 0 , 7 ( 7 2 8 , 5 2 — 5 0 2 ) 2 4 4 ( ) 5 8 2 , 1 ( ) 2 3 6 , 1 ( ) 4 3 7 , 1 ( — 4 2 0 , 1 — — — ) 8 0 5 , 3 ( $ 9 3 9 , 0 2 $ 5 5 4 , 8 1 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . s n o i t i s i u q c a d n a l d e v o r p m i n U . . . . . . r e h t o d n a s t n e m e v o r p m I . . . . . . . . . . . . . . d l o s e t a t s e l a e r f o t s o C . . . e g r a h c t n e m r i a p m I r a e y g n i r u d s n o i t c u d e D . r a e y e h t g n i r u d e l a s r o f d l e h s a d e i f i s s a l c s e i t r e p o r P . s s e r g o r p n i t n e m p o l e v e d o t d e v o m d n a l d e v o r p m i n U . . . . . . . . . . . . . . . . . . . . . . . . . . r a e y f o e s o l c t a e c n a l a B 1 9 0 , 6 3 2 , 1 $ 2 0 2 , 1 4 4 , 1 $ 9 1 5 , 5 5 3 , 1 $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) 4 ( s t n e m t s e v n i e t a t s e l a e r l a t o T , 5 1 0 2 d n a 6 1 0 2 , 7 1 0 2 , 0 3 l i r p A t a n o i l l i b 7 . 1 $ d n a n o i l l i b 6 . 1 $ , n o i l l i b 4 . 1 $ s a w s e s o p r u p x a T e m o c n I l a r e d e F r o f , s e i t r e p o r p e l a s r o f d l e h g n i d u l c n i , s t n e m t s e v n i e t a t s e l a e r s ’ y n a p m o C e h t f o s i s a b t e n e h T . y l e v i t c e p s e r . s e s a h p n i e c i v r e s n i d e c a l p e r a t a h t s t c e j o r p t n e m p o l e v e d s e d u l c n I . s t e s s a d e s s a l c - e r s u o e n a l l e c s i m f o s t s i s n o C . s t e s s a d e s o p s i d s u o e n a l l e c s i m f o s t s i s n o C ) 1 ( ) 2 ( ) 3 ( ) 4 ( S E I R A I D I S B U S D N A T S U R T E T A T S E L A E R S R O T S E V N I 7 1 0 2 , 0 3 l i r p A : s w o l l o f s a e r a , 5 1 0 2 d n a , 6 1 0 2 , 7 1 0 2 , 0 3 l i r p A d e d n e s r a e y e e r h t e h t r o f s s e r g o r p n i t n e m p o l e v e d f o s n o i t a i l i c n o c e R ) s d n a s u o h t n i ( N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R - I I I e l u d e h c S (This page has been left blank intentionally.) Exhibit 31.1 Certification I, Mark O. Decker, Jr., certify that: 1. I have reviewed this Annual Report on Form 10-K of Investors Real Estate Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: June 28, 2017 By: /s/ Mark O. Decker, Jr. Mark O. Decker, Jr., President & CEO Exhibit 31.2 Certification I, Ted E. Holmes, certify that: 1. I have reviewed this Annual Report on Form 10-K of Investors Real Estate Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: June 28, 2017 By: /s/ Ted E. Holmes Ted E. Holmes, Chief Financial Officer Certification The following certification is furnished as provided by Rule 13a-14(b) promulgated under the Securities Act of 1934 and Item 601(b) (32) (ii) of Regulation S-K. Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Investors Real Estate Trust (the “Company”) on Form 10-K for the year ended April 30, 2017, as filed with the Securities and Exchange Commission on June 28, 2017, (the “Report”), I, Mark O. Decker, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Mark O. Decker, Jr. Mark O. Decker, Jr. President and Chief Executive Officer June 28, 2017 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Certification The following certification is furnished as provided by Rule 13a-14(b) promulgated under the Securities Act of 1934 and Item 601(b) (32) (ii) of Regulation S-K. Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Investors Real Estate Trust (the “Company”) on Form 10-K for the year ended April 30, 2017, as filed with the Securities and Exchange Commission on June 28, 2017, (the “Report”), I, Ted E. Holmes, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Ted E. Holmes Ted E. Holmes Chief Financial Officer June 28, 2017 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Executive Leadership Mark O. Decker, Jr. President & Chief Executive Officer Mr. Decker was appointed Chief Executive Officer of IRET in April 2017 and as President and Chief Investment Officer of IRET when he joined the company in August 2016. Prior to that, he served as Managing Director and US Group Head of Real Estate Investment & Corporate Banking at BMO Capital Markets, where he helped grow the platform into an active participant in real estate debt, equity and M&A transactions. John A. Kirchmann Executive Vice President & Chief Financial Officer Mr. Kirchmann was appointed Chief Financial Officer in June 2017 and as Executive Vice President in April 2017. Previously he served as Vice President of Operations Support at Essex Property Trust, a NYSE-listed multifamily REIT, until July 2016 where he was responsible for the oversight of revenue management and ancillary income, procurement, and other functions. From 2007 to 2011, he served as Corporate Controller & Corporate Treasurer at Essex, where he oversaw property and corporate accounting functions, treasury management, and re-engineered and implemented new technology and systems. Andrew Martin Executive Vice President - Property Operations Mr. Martin was appointed Executive Vice President of Property Operations in May 2017. Previously, he served as Executive Vice President – Asset Management from September 2016 to May 2017 and as Senior Vice President, Residential Property Management from May 2011 to September 2016. Mr. Martin joined the Company in December 2009 to lead its Residential Property Management division, and he has over 22 years of experience in the commercial and multifamily property management industry. Anne Olson Executive Vice President, General Counsel & Secretary Ms. Olson was appointed General Counsel of IRET in April 2017. She has been in the private practice of law since 2011, recently as a Partner in Dorsey & Whitney LLP's Real Estate Practice Group, where she focused on development and investment real estate for publicly traded and publicly registered REITs, including IRET, as well as private equity funds and national developers and owners. Prior to 2011, Ms. Olson served as Director of Investment Operations and in-house counsel for Welsh Companies, LLC and its affiliates. 150354AR_r5_AnnualReport.indd 5 7/31/17 6:04 PM Board of Trustees Jeffrey P. Caira | Chair • Former Director - Co-Portfolio Manager of the North American Diversified Strategy at AEW Capital Management • Former Vice President - Portfolio Manager and Senior Analyst for Pioneer Investment Management, Inc. • IRET Board of Trustees Member since 2015 John D. Stewart | Vice Chair • Former President of the Glacial Holdings group of companies • Director of the Command Center, Inc. • Former Certified Public Accountant at Arthur Anderson & Co. and Brady, Martz, and Associates, P.C. • IRET Board of Trustees Member since 2004 Mark O. Decker, Jr. | President & Chief Executive Officer • Chief Investment Officer of IRET • Former Managing Director and US Group Head of Real Estate Investment & Corporate Banking at BMO Capital Markets • IRET Board of Trustees Member since 2017 Michael T. Dance • Former Executive Vice President and Chief Financial Officer of Essex Property Trust, Inc. • Former Adjunct Professor for the University of California at Berkeley, Haas School of Business • IRET Board of Trustees Member since 2016 Linda J. Hall • Entreprenuer-in-Residence at the Carlson School of Management, University of Minnesota • Former Chief Executive Officer of MinuteClinic • IRET Board of Trustees Member since 2011 Terrance P. Maxwell • Chief Financial Officer and a Managing Director of Robert W. Baird & Co. Inc. • Former Co-Chief Executive officer of The Art Commission, LLC • Former lecturer at the University of Wisconsin - Madison • IRET Board of Trustees Member since 2013 Jeffrey L. Miller • Managing Partner of Miller Properties, LLP • Former President of M&S Concessions, Inc. • Former President of Coca-Cola Bottling Franchise in Minot, ND • IRET Board of Trustees Member since 1985 John A. Schissel • President and Chief Financial Officer for Carr Properties, LLC • Former Executive Vice President and Chief Financial Officer of Invitation Homes • Former Executive Vice President and Chief Financial Officer of BRE Properties, Inc. • IRET Board of Trustees Member since 2016 Stock Exchange Listing Our common shares of beneficial interest trade on the New York Stock Exchange (NYSE) under the symbol IRET, and our 7.95% Series B Cumulative Redeemable Preferred Shares trade under the symbol IRET PRB. Independent Accountants Grant Thornton LLP Minneapolis, Minnesota Legal Counsel Hunton & Williams, LLP Transfer Agent American Stock Transfer & Trust Company, LLC 6201 15th Avenue Brooklyn, NY 11219 www.amstock.com (888) 200-3167 Annual Meeting The Annual Meeting of Shareholders for the Company will be held at 9:00 a.m. CT on Tuesday, September 19, 2017 at the Grand Hotel, 1505 North Broadway, Minot, North Dakota. Financial Information The Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2017 forms part of the Annual Report. Additional copies of the Form 10-K are available free of charge upon written request to the Company at 1400 31st Avenue SW, Suite 60, PO Box 1988, Minot, North Dakota 58702. The Form 10-K is also posted on the Company’s website at iretapartments.com or may be obtained from the SEC’s website at www.sec.gov. Investor Relations Contact Lynn Jehlicka Telephone Number: (701) 837-4738 ir@iret.com 

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