SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~(701)~~ (701) 837-4738

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 the filing requirements for at least the past 90 days.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated ~~filer”,~~filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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).

Securities registered pursuant to Section 12(b) of the Exchange Act:

The number of common shares of beneficial interest outstanding as of ~~August~~July 31, ~~2018,~~2019, was ~~119,507,149.~~11,624,590.

~~ITEM~~Item 1. ~~FINANCIAL STATEMENTS - FIRST QUARTER - FISCAL 2019~~Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except per share data)
July 31, 2018 April 30, 2018
ASSETS
Real estate investments
Property owned $ 1,636,233
$ 1,669,764
Less accumulated depreciation (326,772 ) (311,324 )
1,309,461
1,358,440
Unimproved land 7,926
11,476
Mortgage loans receivable 10,530
10,329
Total real estate investments 1,327,917
1,380,245
Cash and cash equivalents 16,261
11,891
Restricted cash 4,103
4,225
Other assets 27,885
30,297
TOTAL ASSETS $ 1,376,166
$ 1,426,658
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses 28,112
29,018
Revolving line of credit 130,000
124,000
Term loan, net of unamortized loan costs of $460 and $486, respectively
69,540
69,514
Mortgages payable, net of unamortized loan costs of $1,998 and $2,221, respectively
464,557
509,919
TOTAL LIABILITIES $ 692,209
$ 732,451
COMMITMENTS AND CONTINGENCIES (NOTE 6)

REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES 6,230
6,644
EQUITY
Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $25 per share liquidation preference, 4,118 shares issued and outstanding at July 31, 2018 and April 30, 2018, aggregate liquidation preference of $102,971)
99,456
99,456
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 119,507 shares issued and outstanding at July 31, 2018 and 119,526 shares issued and outstanding at April 30, 2018)
899,708
900,097
Accumulated distributions in excess of net income (402,190 ) (395,669 )
Accumulated other comprehensive income $ 1,987
$ 1,779
Total shareholders’ equity 598,961
605,663
Noncontrolling interests – Operating Partnership (13,895 units at July 31, 2018 and 14,099 units at April 30, 2018)
71,390
73,012
Noncontrolling interests – consolidated real estate entities 7,376
8,888
Total equity $ 677,727
$ 687,563
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY $ 1,376,166
$ 1,426,658

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

~~INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)~~

(in thousands, except per share data)
Three Months Ended
July 31,
2018 2017
REVENUE $ 45,946
$ 40,978
EXPENSES
Property operating expenses, excluding real estate taxes 14,459
12,874
Real estate taxes 5,070
4,653
Property management expense 1,367
1,356
Casualty loss 225
485
Depreciation and amortization 18,612
25,338
Impairment of real estate investments —
256
General and administrative expenses 3,870
4,002
TOTAL EXPENSES $ 43,603
$ 48,964
Operating income (loss) 2,343
(7,986 )
Interest expense (8,385 ) (8,131 )
Loss on extinguishment of debt (552 ) (199 )
Interest income 481
21
Other income 35
207
Loss before gain on sale of real estate and other investments and income from discontinued operations (6,078 ) (16,088 )
Gain on sale of real estate and other investments 9,224
124
Income (loss) from continuing operations 3,146
(15,964 )
Income (loss) from discontinued operations 570
2,685
NET INCOME (LOSS) $ 3,716
$ (13,279 )
Net (income) loss attributable to noncontrolling interests – Operating Partnership (135 ) 1,644
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities (665 ) 371
Net income (loss) attributable to controlling interests 2,916
(11,264 )
Dividends to preferred shareholders (1,705 ) (2,286 )
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 1,211
$ (13,550 )
Earnings (loss) per common share from continuing operations – basic and diluted $ 0.01
$ (0.13 )
Earnings per common share from discontinued operations – basic and diluted —
$ 0.02
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC & DILUTED $ 0.01
$ (0.11 )
DIVIDENDS PER COMMON SHARE $ 0.07
$ 0.07

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

~~INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(unaudited)~~

(in thousands)
Three months ended July 31,
2018 2017
Net income (loss) $ 3,716
$ (13,279 )
Other comprehensive income:
Unrealized gain from derivative instrument 208
—
Loss on derivative instrument reclassified into earnings 29
—
Total comprehensive income (loss) $ 3,953
$ (13,279 )
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership (157 ) 1,644
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities (665 ) 371
Comprehensive income (loss) attributable to controlling interests $ 3,131
$ (11,264 )



	(in thousands, except per share data)
	June 30, 2019			December 31, 2018
ASSETS
Real estate investments
Property owned	$	1,663,539		$	1,627,636
Less accumulated depreciation	(380,321		)	(353,871		)
	1,283,218			1,273,765
Unimproved land	1,746			5,301
Mortgage loans receivable	10,140			10,410
Total real estate investments	1,295,104			1,289,476
Cash and cash equivalents	17,406			13,792
Restricted cash	4,672			5,464
Other assets	30,626			27,265
TOTAL ASSETS	$	1,347,808		$	1,335,997
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses	$	44,766		$	40,892
Revolving lines of credit	177,939			57,500
Term loans, net of unamortized loan costs of $918 and $1,009, respectively	144,082			143,991
Mortgages payable, net of unamortized loan costs of $1,490 and $1,777, respectively	370,461			444,197
TOTAL LIABILITIES	$	737,248		$	686,580
COMMITMENTS AND CONTINGENCIES (NOTE 6)
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES	—			$	5,968
SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $100 par value, 166 units issued and outstanding at June 30, 2019 and no units issued and outstanding at December 31, 2018, aggregate liquidation preference of $16,560)	$	16,560		—
EQUITY
Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $25 per share liquidation preference, 4,118 shares issued and outstanding at June 30, 2019 and December 31, 2018, aggregate liquidation preference of $102,971)	99,456			99,456
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 11,656 shares issued and outstanding at June 30, 2019 and 11,942 shares issued and outstanding at December 31, 2018)	888,541			899,234
Accumulated distributions in excess of net income	(450,433		)	(429,048		)
Accumulated other comprehensive income	(7,598		)	(856		)
Total shareholders’ equity	$	529,966		$	568,786
Noncontrolling interests – Operating Partnership (1,224 units at June 30, 2019 and 1,368 units at December 31, 2018)	57,902			67,916
Noncontrolling interests – consolidated real estate entities	6,132			6,747
Total equity	$	594,000		$	643,449
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY	$	1,347,808		$	1,335,997

See accompanying Notes to Condensed Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

PREFERRED
SHARES
NUMBER
OF
COMMON
SHARES

COMMON
SHARES

ACCUMULATED
DISTRIBUTIONS
IN EXCESS OF
NET INCOME
ACCUMULATED OTHER COMPREHENSIVE INCOME
NONREDEEMABLE
NONCONTROLLING
INTERESTS

TOTAL
EQUITY
Balance April 30, 2017 $ 111,357
121,199
$ 908,905
$ (466,541 ) —
$ 82,437
$ 636,158
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests (11,264 ) (1,844 ) (13,108 )
Distributions – common shares and units (8,444 ) (1,065 ) (9,509 )
Distributions – Series B preferred shares (2,286 ) (2,286 )
Shares issued and share-based compensation
75
469
469
Redemption of units for cash

(5,735 ) (5,735 )
Shares repurchased
(682 ) (3,936 )
(3,936 )
Distributions to nonredeemable noncontrolling interests – consolidated real estate entities (20 ) (20 )
Other (5 ) (29 )

(29 )
Balance July 31, 2017 $ 111,357
120,587
$ 905,409
$ (488,535 ) —
$ 73,773
$ 602,004

Balance April 30, 2018 $ 99,456
119,526
$ 900,097
$ (395,669 ) $ 1,779
$ 81,900
$ 687,563
Cumulative adjustment upon adoption of ASC 606 and ASC 610-20 627
627
Balance on May 1, 2018 $ 99,456
119,526
$ 900,097
$ (395,042 ) $ 1,779
$ 81,900
$ 688,190
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests 2,916
964
3,880
Other comprehensive income - derivative instrument 208
208
Distributions – common shares and units (8,359 ) (987 ) (9,346 )
Distributions – Series C preferred shares (1,705 ) (1,705 )
Shares issued and share-based compensation
24
320
320
Redemption of units for common shares

114
291
(291 ) —
Redemption of units for cash

(479 ) (479 )
Shares repurchased

(119 ) (615 )
(615 )
Partial acquisition of noncontrolling interests - consolidated real estate entities (178 ) 150
(28 )
Distributions to nonredeemable noncontrolling interests – consolidated real estate entities (2,099 ) (2,099 )
Conversion to equity of notes receivable from nonredeemable noncontrolling interests - consolidated real estate entities (392 ) (392 )
Other
(38 ) (207 )
(207 )
Balance July 31, 2018 $ 99,456
119,507
$ 899,708
$ (402,190 ) $ 1,987
$ 78,766
$ 677,727



	(in thousands, except per share data)
	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
REVENUE	$	46,934		$	46,197		$	92,542		$	89,232
EXPENSES
Property operating expenses, excluding real estate taxes	13,942			13,934			28,746			28,180
Real estate taxes	5,574			5,003			10,806			10,024
Property management expense	1,445			1,444			2,999			2,821
Casualty loss	92			—			733			50
Depreciation and amortization	18,437			19,132			36,548			39,648
Impairment of real estate investments	—			17,809			—			17,809
General and administrative expenses	3,549			4,348			7,355			7,967
TOTAL EXPENSES	$	43,039		$	61,670		$	87,187		$	106,499
Operating income (loss)	3,895			(15,473		)	5,355			(17,267		)
Interest expense	(7,590		)	(8,562		)	(15,486		)	(16,858		)
Loss on extinguishment of debt	(407		)	(12		)	(409		)	(133		)
Interest income	402			429			809			1,102
Other income	66			31			83			47
Income (loss) before gain (loss) on sale of real estate and other investments, gain (loss) on litigation settlement, and income (loss) from discontinued operations	(3,634		)	(23,587		)	(9,648		)	(33,109		)
Gain (loss) on sale of real estate and other investments	615			—			669			2,304
Gain (loss) on litigation settlement	6,286			—			6,286			—
Income (loss) from continuing operations	3,267			(23,587		)	(2,693		)	(30,805		)
Income (loss) from discontinued operations	—			238			—			14,120
NET INCOME (LOSS)	$	3,267		$	(23,349	)	$	(2,693	)	$	(16,685	)
Dividends to preferred unitholders	(160		)	—			(217		)	—
Net (income) loss attributable to noncontrolling interests – Operating Partnership	(148		)	2,580			595			2,000
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	154			595			730			1,115
Net income (loss) attributable to controlling interests	3,113			(20,174		)	(1,585		)	(13,570		)
Dividends to preferred shareholders	(1,706		)	(1,706		)	(3,411		)	(3,411		)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	1,407		$	(21,880	)	$	(4,996	)	$	(16,981	)
Earnings (loss) per common share from continuing operations – basic and diluted	$	0.11		$	(1.85	)	$	(0.43	)	$	(2.48	)
Earnings (loss) per common share from discontinued operations – basic and diluted	—			0.02			—			1.06
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	0.11		$	(1.83	)	$	(0.43	)	$	(1.42	)

See accompanying Notes to Condensed Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

See accompanying Notes to Condensed Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES



	(in thousands, except per share data)
	PREFERRED SHARES		NUMBER OF COMMON SHARES		COMMON SHARES			ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME			ACCUMULATED OTHER COMPREHENSIVE INCOME			NONREDEEMABLE NONCONTROLLING INTERESTS			TOTAL EQUITY
Balance December 31, 2017	$	99,456	12,004		$	902,305		$	(374,365	)	$	(539	)	$	87,186		$	714,043
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests								(13,570		)				(2,728		)	(16,298		)
Change in fair value of derivatives											2,287						2,287
Distributions - common shares and units ($1.40 per share and unit)								(16,763		)				(1,977		)	(18,740		)
Distributions – Series C preferred shares ($0.8281 per Series C share)								(3,411		)							(3,411		)
Shares issued and share-based compensation			5		611												611
Redemption of units for common shares			3		34									(34		)	—
Redemption of units for cash														(2,747		)	(2,747		)
Shares repurchased			(67	)	(3,415		)										(3,415		)
Cumulative adjustment upon adoption of ASC 606 and ASC 610-20								627									627
Other			(6	)	(55		)							(519		)	(574		)
Balance June 30, 2018	$	99,456	11,939		$	899,480		$	(407,482	)	$	1,748		$	79,181		$	672,383


Balance December 31, 2018	$	99,456	11,942		$	899,234		$	(429,048	)	$	(856	)	$	74,663		$	643,449
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests								(1,585		)				(1,151		)	(2,736		)
Change in fair value of derivatives											(6,742		)				(6,742		)
Distributions – common shares and units ($1.40 per share and unit)								(16,389		)				(1,816		)	(18,205		)
Distributions – Series C preferred shares ($0.8281 per Series C share)								(3,411		)							(3,411		)
Shares issued and share-based compensation			3		981												981
Redemption of units for common shares			8		(521		)							521			—
Redemption of units for cash														(8,124		)	(8,124		)
Shares repurchased			(290	)	(15,677		)										(15,677		)
Acquisition of redeemable noncontrolling interests					4,529												4,529
Other			(7	)	(5		)							(59		)	(64		)
Balance June 30, 2019	$	99,456	11,656		$	888,541		$	(450,433	)	$	(7,598	)	$	64,034		$	594,000

See accompanying Notes to Condensed Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

(in thousands)
Three Months Ended
July 31,
2018 2017
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Operating partnership units converted to shares $ 291
$ —
Decrease to accounts payable included within real estate investments (806 ) (1,377 )
Notes and accounts receivable converted to equity 670
—
Construction debt reclassified to mortgages payable —
23,300

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest $ 8,014
$ 8,125



	(in thousands, except per share data)
	PREFERRED SHARES		NUMBER OF COMMON SHARES		COMMON SHARES			ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME			ACCUMULATED OTHER COMPREHENSIVE INCOME			NONREDEEMABLE NONCONTROLLING INTERESTS			TOTAL EQUITY
Balance March 31, 2018	$	99,456	11,979		$	901,312		$	(377,871	)	$	1,283		$	84,287		$	708,467
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests								(20,174		)				(3,009		)	(23,183		)
Change in fair value of derivatives											465						465
Distributions - common shares and units ($0.70 per share and unit)								(8,358		)				(987		)	(9,345		)
Distributions – Series C preferred shares ($0.4140625 per Series C share)								(1,706		)							(1,706		)
Shares issued and share-based compensation			3		187												187
Redemption of units for cash														(510		)	(510		)
Shares repurchased			(37	)	(1,973		)										(1,973		)
Cumulative adjustment upon adoption of ASC 606 and ASC 610-20								627									627
Other			(6	)	(46		)							(600		)	(646		)
Balance June 30, 2018	$	99,456	11,939		$	899,480		$	(407,482	)	$	1,748		$	79,181		$	672,383


Balance March 31, 2019	$	99,456	11,768		$	895,381		$	(443,661	)	$	(3,139	)	$	72,355		$	620,392
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests								3,113						(6		)	3,107
Change in fair value of derivatives											(4,459		)				(4,459		)
Distributions – common shares and units ($0.70 per share and unit)								(8,179		)				(859		)	(9,038		)
Distributions – Series C preferred shares ($0.4140625 per Series C share)								(1,706		)							(1,706		)
Shares issued and share-based compensation			3		565												565
Redemption of units for common shares			8		(521		)							521			—
Redemption of units for cash														(7,968		)	(7,968		)
Shares repurchased			(116	)	(6,863		)										(6,863		)
Other			(7	)	(21		)							(9		)	(30		)
Balance June 30, 2019	$	99,456	11,656		$	888,541		$	(450,433	)	$	(7,598	)	$	64,034		$	594,000

See accompanying Notes to Condensed Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES



	(in thousands)
	Six Months Ended June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(2,693	)	$	(16,685	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization, including amortization of capitalized loan costs	37,136			40,345
(Gain) loss on sale of real estate, other investments, and discontinued operations	(669		)	(16,133		)
(Gain) loss on litigation settlement	(2,286		)	—
Share-based compensation expense	981			611
Impairment of real estate investments	—			17,809
Other, net	1,350			1,255
Changes in other assets and liabilities:
Other assets	(1,745		)	4,741
Accounts payable and accrued expenses	(3,468		)	(2,789		)
Net cash provided by (used by) operating activities	$	28,606		$	29,154
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in notes receivable	(159		)	(7,509		)
Proceeds from sale of real estate and other investments	9,882			34,831
Payments for acquisitions of real estate assets	(29,918		)	(129,737		)
Payments for improvements of real estate assets	(6,317		)	(7,747		)
Other investing activities	282			690
Net cash provided by (used by) investing activities	$	(26,230	)	$	(109,472	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages payable	(74,614		)	(60,757		)
Proceeds from revolving lines of credit	146,439			99,000
Principal payments on revolving lines of credit	(26,000		)	(169,000		)
Principal payments on construction debt	—			(21,689		)
Payments for acquisition of noncontrolling interests – consolidated real estate entities	(1,260		)	—
Repurchase of common shares	(15,677		)	(3,415		)
Repurchase of partnership units	(8,124		)	(2,747		)
Distributions paid to common shareholders	(16,583		)	(16,764		)
Distributions paid to preferred shareholders	(1,705		)	(3,410		)
Distributions paid to preferred unitholders	(57		)	—
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership	(1,914		)	(1,977		)
Distributions paid to noncontrolling interests – consolidated real estate entities	(59		)	(244		)
Net cash provided by (used by) financing activities	$	446		$	(181,003	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	2,822			(261,321		)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	19,256			286,226
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	22,078		$	24,905



SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures	$	499	$	1,569
Distributions declared but not paid to common shareholders	9,038		8,358
Distributions declared but not paid to preferred shareholders	1,706		1,706
Distributions declared but not paid to preferred unitholders	160		—
Gain on litigation settlement	2,286		—
Property acquired through issuance of Series D preferred units	16,560		—

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	15,044	$	15,367

See accompanying Notes to Condensed Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited)

for the ~~three~~six months ended ~~July 31,~~June 30, 2019 and 2018 ~~and 2017~~

NOTE 1 • ORGANIZATION

Investors Real Estate Trust, collectively with our consolidated subsidiaries (“IRET,” “we,” “us,” or “our”), is a real estate investment trust (“REIT”) focused on the ownership, management, acquisition, redevelopment, and development of apartment ~~communities.~~communities, primarily in Midwest markets. As of ~~July 31, 2018,~~June 30, 2019, we owned interests in 8788 apartment communities consisting of ~~13,703~~13,975 apartment homes.

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

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 consolidated subsidiary entities. The accompanying condensed 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~~On September 20, 2018, our Board of Trustees approved a change in our fiscal ~~year ends~~year-end from April 30 to December 31, beginning on ~~April 30.~~January 1, 2019. We filed a transition report on Form 10-KT for the transition period ended December 31, 2018, in accordance with SEC rules and regulations. Beginning on January 1, 2019, all fiscal years will be from January 1 to December 31.

On December 14, 2018, the Board approved a reverse stock split of our outstanding common shares, no par value per share, and limited partnership units ("Units") at a ratio of 1-for-10. The reverse stock split was effective as of the close of trading on December 27, 2018, with trade commencing on a split-adjusted basis on December 28, 2018. We have adjusted all shares and Units and per share and Unit data for all periods presented.

The condensed consolidated financial statements also reflect the Operating Partnership's ownership of certain joint venture entities in which the Operating Partnership has a general partner or controlling interest. These entities are consolidated into our operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses.

~~PRIOR PERIOD FINANCIAL STATEMENT CORRECTION OF AN IMMATERIAL MISSTATEMENT~~

During the first quarter of fiscal year 2019, we identified certain adjustments required to correct balances within total equity related to noncontrolling interests in our joint venture entities. Related to our acquisition of additional ownership interest in the joint venture entities, noncontrolling interest - consolidated real estate entities was understated and common shares of beneficial interest was overstated beginning in fiscal year 2017. The adjustments did not impact total assets, total liabilities, revenue, net income, net income available to common shareholders, number of common shares, or earnings per share.

Based on an analysis of Accounting Standards Codification (“ASC”) 250 - “Accounting Changes and Error Corrections” (“ASC 250”), Staff Accounting Bulletin 99 - “Materiality” (“SAB 99”) and Staff Accounting Bulletin 108 - "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" (“SAB 108”), we determined that these errors were immaterial to the previously-issued financial statements. The misstatement was corrected in the condensed consolidated balance sheets as of April 30, 2018 and the condensed consolidated statements of equity as of April 30, 2018 and 2017 and July 31, 2017.

~~The effect of these revisions on our condensed consolidated balance sheet is as follows:~~

(in thousands)
As previously reported at April 30, 2018 Adjustment As revised at April 30, 2018
Common shares of beneficial interest $ 907,843
$ (7,746 ) $ 900,097
Noncontrolling interests - consolidated real estate entities 1,078
7,810
8,888
Redeemable noncontrolling interests - consolidated real estate entities 6,708
(64 ) 6,644

~~The effect of these revisions on our condensed consolidated statements of equity is as follows:~~

(in thousands)
As previously reported at April 30, 2018 Adjustment As revised at April 30, 2018
Common shares of beneficial interest $ 907,843
$ (7,746 ) $ 900,097
Nonredeemable noncontrolling interests 74,090
7,810
81,900

(in thousands)
As previously reported at April 30, 2017 Adjustment As revised at April 30, 2017
Common shares of beneficial interest $ 916,121
$ (7,216 ) $ 908,905
Nonredeemable noncontrolling interests 75,157
7,280
82,437

(in thousands)
As previously reported at July 31, 2017 Adjustment As revised at July 31, 2017
Common shares of beneficial interest $ 912,625
$ (7,216 ) $ 905,409
Nonredeemable noncontrolling interests 66,493
7,280
73,773

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Our interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“~~U.S.~~ GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with ~~U.S.~~ GAAP are omitted. The year-end balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by ~~U.S.~~ GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows for the interim periods, have been included.

The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim condensed consolidated financial statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in our ~~Annual~~Transition Report on Form ~~10-K~~10-KT for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018, as filed with the SEC on ~~June 28, 2018.~~February 27, 2019.

The preparation of financial statements in conformity with ~~U.S.~~ 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.

~~TAX CUTS AND JOBS ACT OF 2017~~

The Tax Cuts and Jobs Act of 2017 was passed on December 22, 2017. This Act includes a number of changes to the corporate income tax system, including (1) a reduction in the statutory federal corporate income tax rate from 35% to 21% for non-REIT “C” corporations, (2) changes to deductions for certain pass-through business income, and (3) potential limitations on interest expense, depreciation, and the deductibility of executive compensation. As a REIT, we generally will not be subject to federal income tax on our taxable income at the corporate level and do not believe that any of the changes from the 2017 Tax Cut and Jobs Act of 2007 will have a material impact on our consolidated financial statements. However, the impact of this Act is not yet fully known, and there can be no assurance that it will not have an adverse impact on our results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

The following table provides a brief description of recent accounting standards updates (“ASUs”).



Standard	Description	Date of Adoption	Effect on the Financial Statements or Other Significant Matters
~~ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~	This ASU 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.	~~This ASU is effective for annual reporting periods beginning after December 15, 2017, as a result of a deferral of the effective date arising from the issuance of ASU 2015-14,~~ ~~Revenue from Contracts with Customers - Deferral of the Effective Date. Early adoption is permitted. We adopted the new standard effective May 1, 2018 using the modified retrospective approach.~~	~~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 were 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. Refer to the Revenues section below for information regarding the impact of adopting the standard on our condensed consolidated financial statements.
ASU 2016-02, Leases; ASU 2018-10, Codification Improvements to Topic 842, Leases; ASU 2018-11, Leases: Targeted Improvements; ASU 2018-20, Leases (Topic 842) - Narrow-Scope Improvements for Leases	~~This ASU amends~~These ASUs amend 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.	~~This ASU is~~These ASUs are effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We adopted these standards using the modified retrospective approach effective January 1, 2019.	~~We expect our~~Our residential leases, where we are the lessor, will continue to be accounted for as operating leases under the new ~~standard.~~standards. As a result ~~we do not expect~~of adopting these standards, there were no significant changes in the accounting for lease revenue. For leases where we are the lessee, we ~~will recognize~~recognized a right of use asset and ~~related~~ lease liability of $889,000 and $1.0 million, respectively, on our consolidated balance ~~sheets upon adoption. We~~sheets. There are ~~continuing~~also additional disclosures required under the new standard. Refer to ~~evaluate~~the Leases section below for more information regarding the impact of adopting the ~~new standard may have~~standards on our condensed consolidated financial statements.
ASU ~~2016-15,~~ ~~Classification~~2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of ~~Certain Cash Receipts and Cash Payments~~Credit Losses on Financial Instruments; ASU 2018-19, Codification Improvements to Topic 326; ASU 2019-05, Financial Instruments - Credit Losses - Targeted Transition Relief	~~This~~These ASUs require entities to estimate a lifetime expected credit loss for most financial assets, such as loans and other financial instruments, and to present the net amount expected to be collected. In 2018, another ASU ~~addresses eight specific cash flow issues with~~was issued to amend ASU 2016-13, which clarifies that it does not apply to operating lease receivables. In 2019, an additional ASU was issued to provide transition relief in which an entity is allowed to elect the ~~objective~~fair value option on an instrument-by-instrument basis for eligible instruments, upon adoption of ~~reducing diversity in practice. The cash flow issues include debt prepayment or debt extinguishment costs and proceeds from the settlement of insurance claims.~~Topic 326.	~~This ASU is~~These ASUs are effective for ~~fiscal years~~annual reporting periods beginning after December 15, ~~2017, and interim periods within those fiscal years.~~ 2019. Early adoption is permitted.	We ~~adopted~~are currently evaluating the impact the new ~~standard effective May 1, 2018.~~	~~The standard requires we present combined inflows~~standards will have on our mortgage and ~~outflows of cash, cash equivalents, and restricted cash in the consolidated statement of cash flows. See additional disclosures regarding the required change below.~~note receivables.
ASU ~~2017-05,~~ ~~Other Income – Gains and Losses from~~2018-13, Fair Value Measurements (Topic 820) - Disclosure Framework - Changes to the ~~Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting~~Disclosure Requirement for ~~Partial Sales of Nonfinancial Assets~~Fair Value Measurements	This ASU ~~clarifies the definition~~eliminates certain disclosure requirements affecting all levels of ~~an in-substance nonfinancial asset~~measurement, and ~~changes the accounting~~modifies and adds new disclosure requirements for partial sales of nonfinancial assets to be more consistent with the accounting for a sale of a business pursuant to ASU 2017-01. This ASU allows for either a retrospective or modified retrospective approach.Level 3 measurements.	This ASU is effective for annual reporting periods beginning after December 15, ~~2017, including interim reporting periods within that reporting period. We adopted the new standard effective May 1, 2018 using the modified retrospective approach.~~	~~Refer to the Revenues section below for information regarding the impact of adopting the standard on our condensed consolidated financial statements.~~
~~ASU 2018-10,~~ ~~Codification Improvements to Topic 842, Leases~~	~~This ASU was issued to increase shareholders' awareness of narrow aspects of the guidance issued in the amendments and to expedite the improvements under ASU 2016-02.~~	~~This ASU is effective for annual reporting periods beginning after December 15, 2018.~~2019. Early adoption is permitted.	We are currently evaluating the impact the new standard may have on our ~~consolidated financial statements.~~disclosures.
ASU ~~2018-11,~~ ~~Leases: Targeted Improvements~~2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract	This ASU ~~allows lessors to account~~reduces the complexity for ~~lease and non-lease components, by class~~the accounting for costs of ~~underlying assets, as~~implementing a ~~single lease component is certain criteria are met.~~cloud computing service arrangement. The ~~new~~ standard also indicates that companies are permitted to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption in lieu of the modified retrospective approach and provides other practical expedients.aligns various requirements for capitalizing implementation costs.	This ASU is effective for annual reporting periods beginning after December 15, ~~2018.~~2019. Early adoption is permitted.	We are currently evaluating the impact the new standard may have on our condensed consolidated financial statements.
ASU 2019-01, Leases (Topic 842) - Codification Improvements	This ASU provides clarification on various lease related issues and provides for reduced transition disclosure requirements.	This ASU has two effective dates. The various lease issues are effective for annual reporting periods beginning after December 15, 2019. The transition disclosures are effective with the ASU 2016-02, Leases. We adopted this standard using the modified retrospective approach effective January 1, 2019.	The adoption of the standard did not have a material impact on our condensed consolidated financial statements. Refer to the Leases section below for transition disclosures.

~~RECLASSIFICATIONS~~

Certain previously reported amounts have been reclassified to conform to the current financial statement presentation. These reclassifications had no impact on net income as reported in the condensed consolidated statement of operations, total assets, liabilities, or equity as reported in the condensed consolidated balance sheets and total shareholders' equity. We report in discontinued operations the results of operations and the related gains or losses of properties that have either been disposed or classified as held for sale and for which the disposition represents a strategic shift that has or will have a major effect on our operations and financial results.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

~~Effective May 1, 2018, we adopted ASU 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments~~ which affects the presentation and disclosure of the statements of cash flows. Previously our consolidated statements of cash flows presented transfers between restricted cash and unrestricted cash as operating, financing, and investing cash activities based upon the required or intended purpose for the restricted cash. We have revised our condensed consolidated statements of cash flows for the three months ended July 31, 2017 to conform to this presentation, and the effect of the revisions to net cash flows from operating and investing activities as previously reported for the three months ended July 31, 2017 are summarized in the following table:



	(in thousands)
Balance sheet description	June 30, 2019		June 30, 2018
Cash and cash equivalents	$	17,406	$	20,451
Restricted cash	4,672		4,454
Total cash, cash equivalents and restricted cash	$	22,078	$	24,905

(in thousands)
As previously reported Impact of ASU As adjusted and currently reported
July 31, 2017 2016-15 July 31, 2017
Net cash provided by operating activities $ 15,828
$ (81 ) $ 15,747
Net cash provided by investing activities (44,544 ) (24,054 ) (68,598 )
Net cash provided by financing activities 23,698
(133 ) 23,565

Net increase (decrease) in cash, cash equivalents (5,018 ) 5,018
—
Net increase (decrease) in cash, cash equivalents, and restricted cash —
(29,286 ) (29,286 )

Cash and cash equivalents at beginning of period 28,819
(28,819 ) —
Cash, cash equivalents, and restricted cash at beginning of period —
56,800
56,800
Cash and cash equivalents at end of period $ 23,801

Cash, cash equivalents, and restricted cash at end of period $ 3,713
$ 27,514

(in thousands)
Balance sheet description July 31, 2018 July 31, 2017
Cash and cash equivalents 16,261
23,801
Restricted cash 4,103
3,713
Total cash, cash equivalents and restricted cash 20,364
27,514

As of ~~July 31, 2018,~~June 30, 2019, restricted cash consisted primarily of ~~$4.1 million of~~loan application deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

LEASES

Effective January 1, 2019, we adopted ASUs 2016-02, 2018-10, 2018-11, 2018-20, and 2019-01 related to leases using the modified retrospective approach. We elected to adopt the package of practical expedients permitted under the transition guidance, which permits us to not reassess prior conclusions about lease identification, classification, and initial direct costs under the new standard, and the practical expedient related to land easements, which allows us to not evaluate existing or expired land easements that were not previously accounted for under ASC 840. We made an accounting policy election to exclude leases in which we are a lessee with a term of 12 months or less from the balance sheet.

As a lessor, we primarily lease multifamily apartment homes which qualify as operating leases with terms that are generally one year or less. Rental revenues are recognized in accordance with ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 98.0% of our total revenues and includes gross market rent less adjustments for concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 2.0% of our total revenues and are primarily driven by other fee income, which is typically recognized at a point in time.

Some of our apartment communities have commercial spaces available for lease. Lease terms for these spaces typically range from three to fifteen years. The leases for commercial spaces generally include options to extend the lease for additional terms.

Many of our leases contain non-lease components for utility reimbursement from our residents and common area maintenance from our commercial tenants. We have elected the practical expedient to combine lease and non-lease components for all asset classes. The combined components are included in lease income and are accounted for under ASC 842.

The aggregate amount of future scheduled lease income on our operating leases for commercial spaces, excluding any variable lease income and non-lease components, as of June 30, 2019, was as follows:



	(in thousands)
2019 (remainder)	$	1,672
2020	3,014
2021	3,017
2022	3,021
2023	2,895
Thereafter	7,501
Total scheduled lease income - operating leases	$	21,120

REVENUES

We adopted ASU 2014-09, Revenue from Contracts with Customers, as of May 1, ~~2018.~~2018, using the modified retrospective approach. We elected to apply the new standard to contracts that ~~are~~were not complete as of May 1, 2018. We also elected to omit disclosing the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Under the new standard, revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration to which the company expects to be entitled for those goods and services.

We primarily lease multifamily apartments under operating leases generally with terms of one year or less. Rental revenues are recognized in accordance with ASC 840, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 94.7% of our total revenues and includes gross market rent less adjustments for

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concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 5.3% of our total revenue and are primarily driven by utility reimbursement from our residents, which is typically recognized at a point in time, and other fee revenue, which is primarily recognized at a point in time.

Revenue streams that are included in ASU 2014-09 include:

Other property revenues: We recognize revenue for new rental related income not included as a component of a lease, such as utility reimbursement and application fees, as earned, and have concluded that this is appropriate under the new standard.


•	Other property revenues: We recognize revenue for rental related income not included as a component of a lease, such as application fees, as earned, and have concluded that this is appropriate under the new standard.

Gains or losses on sales of real estate: Subsequent to the adoption of the new standard, a gain or loss is recognized when the criteria for derecognition of an asset are met, including when (1) a contract exists and (2) the buyer obtained

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control of the nonfinancial asset that was sold. As a result, we may recognize a gain on real estate disposition transactions that previously did not qualify as a sale or for full profit recognition under the previous accounting standard.

We concluded that the adoption of the new standard required a cumulative adjustment of $627,000 to the opening balance of retained earnings as of May 1, 2018 due to the sale of a group of properties in the prior fiscal year. The sale of properties was previously accounted for using the installment method. Under the installment method, we recorded a mortgage receivable net of the deferred gain on sale, which was to be recognized as payments were received. The gain on sale under the new revenue standard is recognized when control of the assets is transferred to the buyer. As a result of our adoption of the new standard, we recorded a cumulative adjustment to retained earnings and increased the mortgage receivable for $627,000 to recognize the previously deferred gain on sale.

The following table presents the disaggregation of revenue streams ~~of our rental income~~ for the three and six months ended ~~July 31, 2018:~~June 30, 2019:



		(in thousands)
		Three Months Ended June 30,				Six Months Ended June 30,
Revenue Stream	Applicable Standard	2019		2018		2019		2018
Fixed lease income - operating leases	Leases	$	44,342	$	43,193	$	88,084	$	83,314
Variable lease income - operating leases	Leases	1,548		—		2,632		—
Non-lease components	Revenue from contracts with customers	—		1,335		—		2,546
Other property revenue	Revenue from contracts with customers	1,044		1,669		1,826		3,372
Total revenue		$	46,934	$	46,197	$	92,542	$	89,232

(in thousands)
Three Months Ended July 31, 2018
Revenue Stream Applicable Standard Amount of Revenue Percent of Revenue
Rental revenue Leases 43,514
94.7 %
Other property revenue Revenue Recognition 2,432
5.3 %
45,946
100.0 %

IMPAIRMENT OF LONG-LIVED ASSETS

We periodically evaluate our long-lived assets, including 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. Reducing planned property holding periods may increase the likelihood of recording impairment losses.

During the ~~three~~six months ended ~~July 31, 2018,~~June 30, 2019, we recorded no impairment charges.

During the ~~three~~six months ended ~~July 31, 2017,~~June 30, 2018, we recognized $17.8 million of impairment charges on one apartment community, three commercial properties, and three parcels of ~~$256,000~~land. We recognized impairments of $12.2 million on one apartment community in Grand Forks, North Dakota; $1.4 million on an industrial property in Bloomington, Minnesota; $922,000 on an industrial property in Woodbury, Minnesota; and $630,000 on a ~~parcel of land~~retail property in ~~Bismarck, ND. This property was written down~~Minot, North Dakota. These properties were written-down to estimated fair value ~~during~~based on independent appraisals and market data or, in the ~~first quarter~~case of ~~fiscal year 2018 based on~~the retail property, receipt of a market offer to purchase and our intent to dispose of the property. We ~~disposed~~recognized impairments of ~~the property during the second quarter~~$428,000 on a parcel of ~~fiscal year 2018.~~

~~Table~~land in Williston, North Dakota; $1.5 million on a parcel of ~~Contents~~

~~CHANGE IN DEPRECIABLE LIVES OF REAL ESTATE ASSETS~~

~~We review the~~land in Grand Forks, North Dakota; and $709,000 on a parcel of land in Bismarck, North Dakota. These parcels were written down to estimated ~~useful lives of our real estate assets~~fair value based on ~~an ongoing basis. Prior to our strategic shift to become a multifamily-focused REIT, which began in fiscal year 2016, we operated in five segments (office, retail, industrial, healthcare~~independent appraisals and ~~multifamily). Accordingly, our estimated useful lives represented a blend of these segments.~~

During fiscal years 2016, 2017, and 2018, we disposed of the bulk of our office, retail, industrial, and healthcare portfolios. In the first quarter of fiscal year 2018, we determined it was appropriate to review and adjust our estimated useful lives to be specific to our remaining asset portfolio. Effective May 1, 2017, we changed the estimated useful lives of our real estate assets to better reflect the estimated periods during which they will be of economic benefit. Generally, the estimated lives of buildings and improvements that previously were 20-40 years have been decreased to 10-37 years, while those that were previously nine years were changed to 5-10 years. The effect of this change in estimate for the three months ended July 31, 2017, was to increase depreciation expense by approximately $14.4 million, decrease net income by $14.4 million, and decrease earnings per share by $0.11. Of the expense increase, $9.0 million, or $0.07 per share, represented depreciation on assets that were fully depreciated under the new estimated useful lives in the first quarter of fiscal year 2018.market data.

MORTGAGE RECEIVABLE AND NOTES RECEIVABLE

In August 2017, we sold 13 multifamily ~~properties~~communities in exchange for cash and aan $11.0 million note secured by a mortgage on the assets. As of ~~July 31, 2018,~~June 30, 2019, the balance of the note was $10.1 million, with 12 communities remaining ~~balance on~~in the ~~mortgage was $10.5 million.~~pool of assets used to secure the mortgage. The note bears an interest rate of 5.5% and matures in August 2020. Monthly payments are interest-only, with the principal balance payable at maturity. During the ~~three~~six months ended ~~July 31,~~June 30, 2019 and 2018, we received and recognized approximately ~~$202,000~~$285,000 and $305,000 of interest income. During the three months ended July 31, 2018, we received a payment of $425,000 to pay down the balance of the mortgage receivable and released one of the 13 properties from the assets used to secure the mortgage.income, respectively.

In July 2017, we originated a $16.2 million loan in a multifamily development located in New Hope, MN, a Minneapolis suburb. As of July 31, 2018, we had funded the full initial loan balance, which appears in other assets on our Condensed Consolidated Balance ~~Sheets.~~Sheets; however, we may fund additional amounts upon satisfaction of certain conditions set forth in the loan agreement. As of June 30, 2019, the balance of the note was $16.6 million. The note bears an interest rate of 6%6.0%, matures in July 2023, and provides us an option to purchase the development prior to the loan maturity date.

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VARIABLE INTEREST ~~ENTITY~~ENTITIES

We have determined that our Operating Partnership and each of our less-than-wholly owned real estate partnerships is a variable interest entity (“VIE”), as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights. ~~Certain of our less-than-wholly-owned real estate entities are also VIEs.~~ We are the primary beneficiary of the VIEs, and the VIEs 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 ~~VIEs'~~ economic performance of the VIEs 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 our Operating Partnership is a VIE, all of our assets and liabilities are held through a VIE.

GAIN ON LITIGATION SETTLEMENT

During the three months ended June 30, 2019, we recorded a gain on litigation settlement of $6.3 million from the settlement on a construction defect claim. The gain consisted of $4.0 million of cash received, $937,000 of cash receivable, and $1.4 million of liabilities waived under the terms of the settlement.

NOTE 3 • EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of our common shares of beneficial interest (“~~Common Shares”~~common shares”) outstanding during the period. We have issued restricted stock units (“RSUs”) under our 2015 Incentive Plan and Series D Convertible Preferred Units ("Series D preferred units"), which could have a dilutive effect on our earnings per share upon exercise of the ~~RSUs.~~RSUs or upon conversion of the Series D preferred units (refer to Note 4 for further discussion of the Series D preferred units). Other than the issuance of RSUs and Series D preferred units, we have no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. 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 limited partnership units (“Units”) any time following the first anniversary of the date they acquired such Units (“Exchange Right”). Upon the exercise of Exchange Rights, and in our sole discretion, we may issue ~~Common Shares~~common shares in exchange for Units on a one-for-one basis. ~~The following table presents a reconciliation~~

Performance-based restricted stock awards and RSUs of ~~the numerator~~37,625 and ~~denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements~~9,858 for the three months ended ~~July 31,~~June 30, 2019 and 2018, respectively, and ~~2017:~~

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(in thousands, except per share data)
Three Months Ended
July 31,
2018 2017
NUMERATOR

Income (loss) from continuing operations – controlling interests $ 2,405
$ (13,651 )
Income from discontinued operations – controlling interests 511
2,387
Net income (loss) attributable to controlling interests 2,916
(11,264 )
Dividends to preferred shareholders (1,705 ) (2,286 )
Redemption of preferred shares —
—
Numerator for basic earnings (loss) per share – net income available to common shareholders 1,211
(13,550 )
Noncontrolling interests – Operating Partnership 135
(1,644 )
Numerator for diluted earnings (loss) per share $ 1,346
$ (15,194 )
DENOMINATOR

Denominator for basic earnings per share weighted average shares 119,245
120,421
Effect of redeemable operating partnership units 14,026
15,128
Denominator for diluted earnings per share 133,271
135,549
Earnings (loss) per common share from continuing operations – basic and diluted $ 0.01
$ (0.13 )
Earnings per common share from discontinued operations – basic and diluted —
0.02
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC & DILUTED $ 0.01
$ (0.11 )

~~Performance-based restricted stock awards of 248,000~~37,625 and ~~115,000~~9,858, respectively, for the ~~three~~six months ended ~~July 31,~~June 30, 2019 and 2018 ~~and 2017, respectively,~~ were excluded from the calculation of diluted earnings per share because the assumed proceeds per share plus the average unearned compensation were greater than the average market price of the common stock for the periods presented and, therefore, were anti-dilutive. ~~Refer to Note 13 - Share-Based Compensation for discussion~~

The following table presents a reconciliation of the ~~terms~~numerator and denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements for ~~these awards.~~the three and six months ended June 30, 2019 and 2018:



	(in thousands, except per share data)
	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
NUMERATOR
Income (loss) from continuing operations – controlling interests	$	3,113		$	(20,386	)	$	(1,585	)	$	(26,200	)
Income (loss) from discontinued operations – controlling interests	—			212			—			12,630
Net income (loss) attributable to controlling interests	3,113			(20,174		)	(1,585		)	(13,570		)
Dividends to preferred shareholders	(1,706		)	(1,706		)	(3,411		)	(3,411		)
Numerator for basic earnings (loss) per share – net income available to common shareholders	1,407			(21,880		)	(4,996		)	(16,981		)
Noncontrolling interests – Operating Partnership	148			(2,580		)	(595		)	(2,000		)
Numerator for diluted earnings (loss) per share	$	1,555		$	(24,460	)	$	(5,591	)	$	(18,981	)
DENOMINATOR
Denominator for basic earnings per share weighted average shares	11,729			11,928			11,746			11,950
Effect of redeemable operating partnership units	1,226			1,407			1,306			1,416
Denominator for diluted earnings per share	12,955			13,335			13,052			13,366
Earnings (loss) per common share from continuing operations – basic and diluted	$	0.11		$	(1.85	)	$	(0.43	)	$	(2.48	)
Earnings (loss) per common share from discontinued operations – basic and diluted	—			0.02			—			1.06
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	0.11		$	(1.83	)	$	(0.43	)	$	(1.42	)

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NOTE 4 • EQUITYAND MEZZANINE EQUITY

Operating Partnership Units. ~~Outstanding Units in the~~ The Operating Partnership ~~were 13.9~~had 1.2 million and 1.4 million outstanding Units at ~~July~~June 30, 2019 and December 31, 2018, ~~and 14.1 million Units at April 30, 2018.~~respectively.

Common Shares and Equity Awards. Common ~~Shares~~shares outstanding on ~~July~~June 30, 2019 and December 31, 2018, ~~and April 30, 2018,~~ totaled ~~119.5~~11.7 million and ~~119.5~~11.9 million, respectively. There were ~~43,000~~6,511 shares issued upon the vesting of equity awards under our 2015 Incentive ~~Award~~ Plan during the three months ended ~~July 31, 2018,~~June 30, 2019, with a total grant-date fair value of ~~$264,000.~~$447,000. During the six months ended June 30, 2019, we issued 6,718 shares, with a total grant-date fair value $457,000. During the three and six months ended ~~July 31, 2017,~~June 30, 2018, we issued ~~75,000 restricted Common Shares,~~5,142 shares, with a total grant-date fair value of ~~$445,000. These~~$350,000 and 6,226 shares, ~~are issued~~with a total grant-date fair value of $412,000, respectively, under our 2015 Incentive ~~Award Plan for executive officer and trustee share-based compensation.~~Plan. These shares vest based on performance and service criteria.

Exchange Rights. Pursuant to the exercise of Exchange Rights, we redeemed Units during the ~~three~~six months ended ~~July 31,~~June 30, 2019 and 2018 weas detailed in the table below.



	(in thousands, except per Unit amounts)
Three Months Ended June 30,	Number of Units	Aggregate Cost⁽¹⁾		Average Price Per Unit
2019	133	$	7,968	$	60.01
2018	10	$	510	$	52.72

Six Months Ended June 30,
2019	135	$	8,118	$	60.00
2018	49	$	2,747	$	55.84


(1)	The redemption price is determined using the volume weighted average price for the ten trading days prior to the date a unitholder provides notification of their intent to redeem units.

We also redeemed 90,000 Units for an aggregate cost of $480,000, at an average price per Unit of $5.31. During the three months ended July 31, 2017, we redeemed 960,000 Units for an aggregate cost of $5.7 million, at an average price per Unit of $5.97. During the three months ended July 31, 2018, we redeemed 114,000 Units in exchange for common shares in connection with Unitholders exercising their Exchange Rights ~~with a total book value of $291,000. During~~during the ~~three~~six months ended ~~July 31, 2017, we redeemed no Units~~June 30, 2019 and 2018 as detailed in ~~exchange for common shares.~~the table below.



	(in thousands)
Three Months Ended June 30,	Number of Units	Total Book Value
2019	8	$	521
2018	—	—

Six Months Ended June 30,
2019	8	$	521
2018	3	$	34

Share Repurchase Program. On December ~~7, 2016, our Board of Directors authorized a share repurchase program to repurchase up to $50 million of our Common Shares over a one-year period. On December 5, 2017,~~14, 2018, our Board of Trustees reauthorized ~~this~~our $50 million share repurchase program for an additional one-year period. Under this program, we may repurchase ~~Common Shares~~common shares in open-market purchases, including pursuant to Rule 10b5-1 and Rule 10b-18 plans, as determined by management and in accordance with the requirements of the SEC. The extent to which we repurchase our shares, and the timing of repurchases, will depend on a variety of factors, including market conditions, regulatory requirements, and other corporate considerations, as determined by the executive management team. This program may be suspended or discontinued at any time. During the three months ended July 31, 2018, we repurchased and retired 118,000 common shares for an aggregate cost of $615,000, including commissions, at an average price per share of $5.20. During the three months ended July 31, 2017, we repurchased and retired 682,000 common shares for an aggregate cost of $3.9 million, including commissions, at an average

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~~price per share of $5.77.~~ As of ~~July 31, 2018, $34.9~~June 30, 2019, $17.7 million remained available under ~~the~~our $50 million authorized share repurchase program. Common shares repurchased during the six months ended June 30, 2019 and 2018 are detailed in the table below.



	(in thousands, except per share amounts)
Three Months Ended June 30,	Number of Shares	Aggregate Cost⁽¹⁾		Average Price Per Share⁽¹⁾
2019	116	$	6,862	$	59.12
2018	38	$	1,972	$	52.23

Six Months Ended June 30,
2019	290	$	15,667	$	54.03
2018	67	$	3,415	$	51.26


(1)	Amount includes commissions.

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Series C Preferred Shares. Series C preferred shares outstanding were 4.1 million shares at June 30, 2019 and December 31, 2018. The Series C preferred shares are nonvoting and redeemable for cash at $25.00 per share at our option after October 2, 2022. 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 $1.65625 per share, which is equal to 6.625% of the $25.00 per share liquidation preference ($103.0 million liquidation preference in the aggregate).

Series D Preferred Units (Mezzanine Equity). On February 26, 2019, we issued 165,600 newly created Series D preferred units at an issuance price of $100 per preferred unit as partial consideration for the acquisition of SouthFork Townhomes. The Series D preferred unit holders receive a preferred distribution at the rate of 3.862% per year. The Series D preferred units have a put option which allows the holder to redeem any or all of the Series D preferred units for cash equal to the issue price. Each Series D preferred unit is convertible, at the holder's option, into 1.37931 Units, representing a conversion exchange rate of $72.50 per unit. The holders of the Series D preferred units do not have any voting rights.

Redeemable Noncontrolling Interests (Mezzanine Equity). Redeemable noncontrolling interests on our Condensed Consolidated Balance Sheets represent the noncontrolling interest in joint ventures 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. During the six months ended June 30, 2019, we acquired the remaining 34.5% noncontrolling interests in the real estate partnership that owns Commons and Landing at Southgate for $1.3 million. Below is a table reflecting the activity of the redeemable noncontrolling interests for the six months ended June 30, 2019.



	(in thousands)
Balance at December 31, 2018	$	5,968
Net income	(174		)
Acquisition of redeemable noncontrolling interests	(5,794		)
Balance at June 30, 2019	$	—

NOTE 5 • SEGMENT REPORTING

We operate in a single reportable segment which includes the ownership, management, development, redevelopment, and acquisition of apartment communities. Each of our operating properties is considered a separate operating segment because each property earns revenues, incurs expenses, and has discrete financial information. Our chief operating decision-makers evaluate each property's operating results to make decisions about resources to be allocated and to assess performance. We do not group our operations based on geography, size, or type. Our apartment communities have similar long-term economic characteristics and provide similar products and services to our residents. No apartment community comprises more than 10% of consolidated revenues, profits, or assets. Accordingly, our apartment communities are aggregated into a single reportable segment.

Prior to the third quarter of fiscal year 2018, we reported our results in two reportable segments: multifamily and healthcare. We sold substantially all of our healthcare portfolio during the third quarter of fiscal year 2018 and classified it as discontinued operations (see Note 7 for additional information). Healthcare no longer meets the quantitative thresholds for reporting as a separate reportable segment and therefore is included in “all other” with other non-multifamily properties. As of July 31, 2018, we no longer own any healthcare properties.

Our executive management team comprises our chief operating decision-makers. This team measures the performance of our reportable segment based on net operating income (“NOI”), which we define as total real estate revenues less property operating expenses, ~~and~~including real estate ~~tax expense combined (referred to as "real estate expenses").~~taxes. 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 operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative ~~expenses.~~expense. NOI does not represent cash generated by operating activities in accordance with ~~U.S.~~ 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 ~~revenues and~~following tables present NOI for the ~~multifamily reportable segment are summarized as follows for the three-month periods~~three and six months ended ~~July 31,~~June 30, 2019 and 2018, ~~and 2017,~~ respectively, along with reconciliations to net income in the condensed consolidated financial statements. Segment assets are also reconciled to total assets as reported in the condensed consolidated financial statements.

(in thousands)
Three Months Ended July 31, 2018 Multifamily
All Other
Total
Real estate revenue $ 43,089
$ 2,857
$ 45,946
Real estate expenses 18,486
1,043
19,529
Net operating income $ 24,603
$ 1,814
$ 26,417
Property management expenses (1,367 )
Casualty loss (225 )
Depreciation and amortization (18,612 )
General and administrative expenses (3,870 )
Interest expense (8,385 )
Loss on debt extinguishment (552 )
Interest and other income 516
Loss before gain on sale of real estate and other investments and income from discontinued operations (6,078 )
Gain on sale of real estate and other investments 9,224
Income (loss) from continuing operations 3,146
Income (loss) from discontinued operations 570
Net income (loss) $ 3,716

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(in thousands)
Three Months Ended July 31, 2017 Multifamily
All Other
Total
Real estate revenue $ 35,999
$ 4,979
$ 40,978
Real estate expenses 15,734
1,793
17,527
Net operating income $ 20,265
$ 3,186
$ 23,451
Property management expenses (1,356 )
Casualty loss (485 )
Depreciation and amortization (25,338 )
Loss on impairment (256 )
General and administrative expenses (4,002 )
Interest expense (8,131 )
Loss on debt extinguishment (199 )
Interest and other income 228
Loss before gain on sale of real estate and other investments and income from discontinued operations (16,088 )
Gain on sale of real estate and other investments 124
Income (loss) from continuing operations (15,964 )
Income (loss) from discontinued operations 2,685
Net income (loss) $ (13,279 )



	(in thousands)
Three Months Ended June 30, 2019	Multifamily		All Other		Total
Revenue	$	45,945	$	989	$	46,934
Property operating expenses, including real estate taxes	19,111		405		19,516
Net operating income	$	26,834	$	584	$	27,418
Property management					(1,445		)
Casualty gain (loss)					(92		)
Depreciation and amortization					(18,437		)
General and administrative expenses					(3,549		)
Interest expense					(7,590		)
Loss on debt extinguishment					(407		)
Interest and other income					468
Income (loss) before gain (loss) on sale of real estate and other investments and gain (loss) on litigation settlement					(3,634		)
Gain (loss) on sale of real estate and other investments					615
Gain (loss) on litigation settlement					6,286
Net income (loss)					$	3,267



	(in thousands)
Three Months Ended June 30, 2018	Multifamily		All Other		Total
Revenue	$	43,149	$	3,048	$	46,197
Property operating expenses, including real estate taxes	17,826		1,111		18,937
Net operating income	$	25,323	$	1,937	$	27,260
Property management					(1,444		)
Depreciation and amortization					(19,132		)
Loss on impairment					(17,809		)
General and administrative expenses					(4,348		)
Interest expense					(8,562		)
Loss on debt extinguishment					(12		)
Interest and other income					460
Income (loss) from continuing operations					(23,587		)
Income (loss) from discontinued operations					238
Net income (loss)					$	(23,349	)



	(in thousands)
Six Months Ended June 30, 2019	Multifamily		All Other		Total
Real estate revenue	$	90,759	$	1,783	$	92,542
Real estate expenses	38,799		753		39,552
Net operating income	$	51,960	$	1,030	$	52,990
Property management expenses					(2,999		)
Casualty gain (loss)					(733		)
Depreciation and amortization					(36,548		)
General and administrative expenses					(7,355		)
Interest expense					(15,486		)
Loss on debt extinguishment					(409		)
Interest and other income					892
Income (loss) before gain (loss) on sale of real estate and other investments and gain (loss) on litigation settlement					(9,648		)
Gain (loss) on sale of real estate and other investments					669
Gain (loss) on litigation settlement					6,286
Net income (loss)					$	(2,693	)

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	(in thousands)
Six Months Ended June 30, 2018	Multifamily		All Other		Total
Real estate revenue	$	83,203	$	6,029	$	89,232
Real estate expenses	35,954		2,250		38,204
Net operating income	$	47,249	$	3,779	$	51,028
Property management expenses					(2,821		)
Casualty gain (loss)					(50		)
Depreciation and amortization					(39,648		)
Impairment of real estate investments					(17,809		)
General and administrative expenses					(7,967		)
Interest expense					(16,858		)
Loss on debt extinguishment					(133		)
Interest and other income					1,149
Income (loss) before gain (loss) on sale of real estate and other investments and income (loss) from discontinued operations					(33,109		)
Gain (loss) on sale of real estate and other investments					2,304
Income (loss) from continuing operations					(30,805		)
Income (loss) from discontinued operations					14,120
Net income (loss)					$	(16,685	)

Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of ~~July~~June 30, 2019, and December 31, ~~2018, and April 30,~~ 2018, respectively, along with reconciliations to the condensed consolidated financial statements:


	(in thousands)									(in thousands)
As of July 31, 2018	Multifamily			All Other			Total
As of June 30, 2019										Multifamily			All Other			Total
Segment assets
Property owned	$	1,576,345		$	59,888		$	1,636,233		$	1,628,133		$	35,406		$	1,663,539
Less accumulated depreciation	(309,862		)	(16,910		)	(326,772		)	(371,213		)	(9,108		)	(380,321		)
Total property owned	$	1,266,483		$	42,978		$	1,309,461		$	1,256,920		$	26,298		$	1,283,218
Cash and cash equivalents							16,261									17,406
Restricted cash							4,103									4,672
Other assets							27,885									30,626
Unimproved land							7,926									1,746
Mortgage loans receivable							10,530									10,140
Total Assets							$	1,376,166								$	1,347,808


	(in thousands)									(in thousands)
As of April 30, 2018	Multifamily			All Other			Total
As of December 31, 2018										Multifamily			All Other			Total
Segment assets
Property owned	$	1,606,421		$	63,343		$	1,669,764		$	1,582,917		$	44,719		$	1,627,636
Less accumulated depreciation	(294,477		)	(16,847		)	(311,324		)	(340,081		)	(13,790		)	(353,871		)
Total property owned	$	1,311,944		$	46,496		$	1,358,440		$	1,242,836		$	30,929		$	1,273,765
Cash and cash equivalents							11,891									13,792
Restricted cash							4,225									5,464
Other assets							30,297									27,265
Unimproved land							11,476									5,301
Mortgage loans receivable							10,329									10,410
Total Assets							$	1,426,658								$	1,335,997

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NOTE 6 • COMMITMENTS AND CONTINGENCIES

Litigation. ~~We are subject to a variety of legal actions for personal injury or property damage arising in~~In the ordinary course of our ~~business, most~~operations, we become involved in litigation. At this time, we know of which are covered by liability insurance. Various resident claims are also brought periodically, most of which are covered by insurance. While resolution of these matters cannot be predicted with certainty, management believes that the final outcome of these claims andno material pending or threatened legal proceedings, ~~will not~~or other proceedings contemplated by governmental authorities, that would have a material ~~effect~~impact on ~~our liquidity, financial position, cash flows, or results~~us.

Table of ~~operations.~~Contents

Environmental Matters. Under various federal, state, and local laws, ordinances, and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around, or under the property. While we currently have no knowledge of any material violation of environmental laws, ordinances, or regulations at any of our properties, there can be no assurance that areas of contamination will not be identified at any of our properties or that changes in environmental laws, regulations, or cleanup requirements would not result in material costs to us.

Restrictions on Taxable Dispositions. Twenty-five of our properties, consisting of ~~4,195~~4,372 apartment ~~units,~~homes, are subject to restrictions on ~~our ability to resell in~~ taxable ~~transactions. These restrictions are contained in~~dispositions under agreements we entered into with some of the sellers or contributors of the properties and are effective for varying periods. ~~The real estate investment amount of these properties (net of accumulated depreciation) was $548.6 million at July 31, 2018.~~ We do not believe that ~~these~~the agreements materially 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 ~~sale~~sales of such properties as tax deferred transactions under Section 1031 of the Internal Revenue Code (the "Code").

~~If we decide to sell one or more of these properties and are unable to structure sales of such properties as tax deferred transactions under Section 1031 of the Code,~~ Otherwise, we may be required to provide tax indemnification payments to the parties to these agreements.

NOTE 7 • 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 new dispositions or properties held for sale as discontinued operations during the three and six months ended ~~July 31, 2018~~June 30, 2019 and ~~2017.~~

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2018.

The following information shows the effect on net income and the gains or losses from the sales of properties classified as discontinued operations for the three and six months ended ~~July 31,~~June 30, 2019 and 2018, ~~and 2017,~~ respectively:



	(in thousands)
	Three Months Ended June 30,			Six Months Ended June 30,
	2019	2018		2019	2018
REVENUE	—	$	157	—	$	353
EXPENSES
Property operating expenses, excluding real estate taxes	—	18		—	25
Real estate taxes	—	—		—	35
Depreciation and amortization	—	—		—	2
General and administrative	—	9		—	14
TOTAL EXPENSES	—	$	27	—	$	76
Operating income (loss)	—	130		—	277
Interest expense	—	—		—	(1		)
Other income	—	10		—	14
Income (loss) from discontinued operations before gain (loss) on sale of discontinued operations	—	140		—	290
Gain (loss) on sale of discontinued operations	—	98		—	13,830
INCOME (LOSS) FROM DISCONTINUED OPERATIONS	—	$	238	—	$	14,120

(in thousands)
Three Months Ended July 31,
2018 2017
REVENUE $ —
$ 11,955
EXPENSES

Property operating expenses, excluding real estate taxes —
2,257
Real estate taxes —
1,961
Property management —
72
Depreciation and amortization —
3,589
Impairment of real estate investments —
—
TOTAL EXPENSES $ —
$ 7,879
Operating income —
4,076
Interest expense —
(1,985 )
Loss on extinguishment of debt —
—
Interest income —
544
Other income —
50
Income from discontinued operations before gain on sale —
2,685
Gain on sale of discontinued operations 570
—
INCOME (LOSS) FROM DISCONTINUED OPERATIONS $ 570
$ 2,685

~~As of July 31, 2018 and April 30, 2018, we had no assets or liabilities classified as held for sale.~~

NOTE 8 • ACQUISITIONS AND DISPOSITIONS

~~PROPERTY~~ ACQUISITIONS

We added no$2.1 million of new real estate ~~property~~ to our portfolio ~~through property acquisitions~~ during the three months ended ~~July 31, 2018,~~June 30, 2019, compared to ~~$61.5 million~~no acquisitions in the three months ended ~~July 31, 2017.~~June 30, 2018. Our acquisitions during the ~~three~~six months ended ~~July 31, 2017~~June 30, 2019 and 2018 are detailed below.

~~Three~~

Table of Contents

Six Months Ended ~~July 31, 2017~~

June 30, 2019


	Date Acquired	(in thousands)											Date Acquired		(in thousands)
		Total Acquisition Cost			Investment Allocation										Total Acquisition Cost			Form of Consideration						Investment Allocation
Acquisitions				Land			Building			Intangible Assets				Cash					Units⁽¹⁾			Land			Building			Intangible Assets
Multifamily
191 unit - Oxbo - St. Paul, MN⁽¹⁾	May 26, 2017	$	61,500		$	5,809		$	54,910		$	781
272 homes - SouthFork Townhomes- Lakeville, MN													February 26, 2019			$	44,000		$	27,440		$	16,560		$	3,502		$	39,950		$	548

Total Property Acquisitions		$	61,500		$	5,809		$	54,910		$	781
Other
Minot 3100 10th St SW - Minot, ND⁽²⁾													May 23, 2019		2,112			2,112			—			246			1,866			—

Total Acquisitions															$	46,112		$	29,552		$	16,560		$	3,748		$	41,816		$	548

~~PROPERTY~~ Six Months Ended June 30, 2018



	Date Acquired	(in thousands)
		Total Acquisition Cost⁽¹⁾		Investment Allocation
Acquisitions		Total Acquisition Cost⁽¹⁾		Land		Building		Intangible Assets
390 homes - Westend - Denver, CO	March 28, 2018	$	128,700	$	25,525	$	102,101	$	1,074

Total Acquisitions		$	128,700	$	25,525	$	102,101	$	1,074

~~Three~~Six Months Ended ~~July 31, 2018~~

(in thousands)
Dispositions Date
Disposed Sales Price
Book Value
and Sale Cost
Gain/(Loss)
Multifamily
44 unit - Dakota Commons - Williston, ND July 26, 2018 $ 4,420
$ 3,878
$ 542

145 unit - Williston Garden - Williston, ND⁽¹⁾
July 26, 2018 12,310
11,313
997

288 unit - Renaissance Heights - Williston, ND⁽²⁾
July 26, 2018 24,770
17,856
6,914

41,500
33,047
8,453

Other
7,849 sq ft Minot Southgate Retail - Minot, ND July 12, 2018 $ 1,925
$ 2,056
$ (131 )
9,052 sq ft Fresenius - Duluth, MN July 27, 2018 1,900
1,078
$ 822

3,825
3,134
691

Unimproved Land
Grand Forks - Grand Forks, ND July 16, 2018 $ 3,000
$ 2,986
$ 14

Renaissance Heights - Williston, ND⁽³⁾
July 26, 2018 750
684
66

3,750
3,670
80

Total Property Dispositions $ 49,075
$ 39,851
$ 9,224



		(in thousands)
Dispositions	Date Disposed	Sales Price		Book Value and Sale Cost		Gain/(Loss)
Other
Minot 1400 31st Ave SW - Minot, ND⁽¹⁾	May 23, 2019	$	6,530	$	6,048	$	482

Unimproved Land
Creekside Crossing - Bismarck, ND	March 1, 2019	3,049		3,205		(156		)
Minot 1525 24th Ave SW - Minot, ND	April 3, 2019	725		593		132
		$	3,774	$	3,798	$	(24	)

Total Dispositions		$	10,304	$	9,846	$	458

Six Months Ended ~~July 31, 2017~~June 30, 2018



		(in thousands)
Dispositions	Date Disposed	Sale Price		Book Value and Sale Cost		Gain/(Loss)
Other
43,404 sq ft Garden View - St. Paul, MN	January 19, 2018	$	14,000	$	6,191	$	7,809
52,116 sq ft Ritchie Medical - St. Paul, MN	January 19, 2018	16,500		10,419		6,081
22,187 sq ft Bismarck 715 East Broadway - Bismarck, ND	March 7, 2018	5,500		3,215		2,285

Total Dispositions		$	36,000	$	19,825	$	16,175

(in thousands)
Dispositions
Date
Disposed
Sale Price
Book Value
and Sale Cost
Gain/(Loss)
Other
4,998 sq ft Minot Southgate Wells Fargo Bank - Minot, ND May 15, 2017 $ 3,440
$ 3,332
$ 108

Total Property Dispositions $ 3,440
$ 3,332
$ 108

NOTE 9 • DEBT

As of ~~July 31, 2018,~~June 30, 2019, we owned ~~94 properties,~~88 apartment communities, of which ~~53 multifamily and other properties (with a carrying amount of $593.7 million)~~39 served as collateral for mortgage loans. ~~The majority~~Substantially all of these mortgage loans were non-recourse to us other than for standard carve-out obligations.As of ~~July 31, 2018,~~June 30, 2019, we believe that there are no material defaults or ~~compliance issues with respect~~instances of noncompliance in regards to any of these mortgages payable.

~~Table of Contents~~

~~The aggregate amount of required future principal payments on mortgages payable as of July 31, 2018, is as follows:~~

(in thousands)
Year Ended April 30, Mortgage Loans
2019 $ 7,442
2020 86,400
2021 92,179
2022 70,506
2023 27,494
Thereafter 182,534
Total payments $ 466,555

As ~~noted above, as~~ of ~~July 31, 2018,~~June 30, 2019, we owned ~~41 multifamily and other properties~~49 apartment communities that were not encumbered by mortgages, with 3035 of those properties providing credit support for our unsecured borrowings. Our primary unsecured credit facility is a revolving, multi-bank line of credit, with the Bank of Montreal serving as administrative agent. Our line of credit has total commitments of ~~$300.0~~$250.0 million, with borrowing capacity based on the value of properties contained in the unencumbered asset pool ("UAP"). ~~The~~As of June 30, 2019, the UAP ~~currently provides~~provided for a borrowing capacity of ~~$300.0~~$250.0 million, ~~providing~~with additional borrowing availability of ~~$170.0~~$72.1 million beyond the ~~$130.0~~$177.9 million drawn, asincluding the balance on our operating line of ~~July 31, 2018.~~credit (discussed below). This credit facility matures on ~~January~~August 31, ~~2021,~~2022, with one twelve-month option to extend the maturity date at our election.

~~Subsequent to quarter-end, we amended our existing~~We have unsecured term ~~loan and line~~loans of ~~credit and added a new term loan. Refer to "Note 15 - Subsequent Events" for further information.~~

~~During the fiscal year ended April 30, 2018, we entered into a~~ $70.0 million ~~unsecured term loan,~~and $75.0 million, which ~~matures~~mature on January 15, 2024 and on August 31, ~~2023. We maintain a $200.0 million option that can be accessed by increasing lending commitments under the current agreement.~~2025, respectively.

The interest rates on the line of credit and term ~~loan~~loans are based, at our option, on either the lender's base rate plus a margin, ranging from ~~60-125~~35-85 basis points, or the London Interbank Offered Rate ("LIBOR"), plus a margin that ranges from ~~160-225~~135-190 basis points based on our consolidated leverage. Our line of credit and term ~~loan~~loans are subject to customary financial covenants and limitations. We believe that we are in compliance with all such financial covenants and limitations as of ~~July 31, 2018.~~June 30, 2019.

We also have a $6.0 million operating line of credit. This operating line of credit is ~~designated~~designed to enhance treasury management activities and more effectively manage cash balances. This operating line has a one-year term, with pricing based on a market spread plus the one-month LIBOR index rate. As of ~~July 31, 2018 and April~~June 30, ~~2018,~~2019, we ~~have~~had $4.6 million outstanding on this operating line compared to no outstanding balance ~~on this operating line.~~as of December 31, 2018.

The following table summarizes our indebtedness at ~~July 31, 2018:~~June 30, 2019:



	(in thousands)
	June 30, 2019			December 31, 2018			Weighted Average Maturity in Years at June 30, 2019
Unsecured lines of credit⁽¹⁾	$	162,939		$	57,500		3.1
Term loans	145,000			145,000			5.4
Unsecured debt	307,939			202,500
Secured line of credit⁽¹⁾	15,000			—			3.2
Mortgages payable - fixed	371,951			445,974			4.2
Total debt	$	694,890		$	648,474		4.2
Weighted average interest rate on primary line of credit (rate with swap)	3.94		%	3.72		%
Weighted average interest rate on operating line of credit	4.39		%	—
Weighted average interest rate on term loans (rate with swap)	4.14		%	4.01		%
Weighted average interest rate on mortgages payable	4.37		%	4.58		%

(in thousands)
July 31, 2018 April 30, 2018 Weighted Average Maturity in Years
Unsecured line of credit $ 130,000
$ 124,000
3.0
Term loan 70,000
70,000
4.0
Unsecured debt 200,000
194,000

Mortgages payable - fixed 466,555
489,401
5.4
Mortgages payable - variable —
22,739

Total debt $ 666,555
$ 706,140
4.9
Weighted average interest rate on unsecured line of credit 3.83 % 3.35 %
Weighted average interest rate on term loan (rate with swap) 3.86 % 3.86 %
Weighted average interest rate on mortgages payable 4.65 % 4.69 %


(1)	Our revolving line of credit consists primarily of unsecured borrowings. A portion of the line was secured in connection with our acquisition of SouthFork Townhomes, under an agreement that allowed us to offer the seller tax protection upon purchase.

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The aggregate amount of required future principal payments on mortgages payable and term loans as of June 30, 2019, was as follows:



	(in thousands)
2019 (remainder)	$	10,896
2020	42,093
2021	97,137
2022	40,741
2023	48,359
Thereafter	277,725
Total payments	$	516,951

NOTE 10 • DERIVATIVE ~~INSTRUMENT~~INSTRUMENTS

Our objective in using an interest rate ~~derivative~~derivatives is to ~~hedge~~add stability to interest expense and to manage our exposure to ~~the variability in cash flows of our floating-rate debt.~~interest rate fluctuations. To accomplish this objective, we ~~entered into an~~primarily use interest rate swap ~~contract~~contracts to fix the variable interest rate on our term ~~loan.~~loans and a portion of our revolving line of credit. The interest rate swap ~~had a $70.0 million notional amount and qualified~~contracts qualify as a cash flow ~~hedge.~~hedges.

Under ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, ~~which we adopted on November 1, 2017,~~ the ineffective portion of a hedging instrument is ~~no longer~~not required to be recognized currently in earnings or disclosed. Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for our interest rate swap will be reclassified to interest expense as interest expense is incurred on our term ~~loan.~~loans. During the next twelve months, we estimate an additional $1.0 million will be reclassified as an increase to interest expense.

~~The gain recognized in other comprehensive income for~~During the three months ended ~~July~~June 30, 2019, we entered into a $50.0 million interest rate swap to fix the interest rate on a portion of our primary line of credit.

At June 30, 2019, we had three interest rate swap contracts in effect with a notional amount of $195.0 million and one additional interest rate swap that becomes effective on January 31, ~~2018, was $208,000, and the~~2023, with a notional amount ~~reclassified from accumulated other comprehensive income into interest expense during this period was $29,000. At July 31, 2018 and April 30, 2018,~~of $70.0 million.

The table below presents the fair value of our ~~interest rate swap included in other assets~~derivative financial instruments as well as their classification on our Condensed Consolidated Balance Sheets ~~was $2.0 million~~as of June 30, 2019 and ~~$1.8 million, respectively.~~December 31, 2018.

(in thousands)

June 30, 2019

December 31, 2018

June 30, 2019

December 31, 2018

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Total derivative instruments designated as hedging instruments - interest rate swaps

Other Assets

—

818

Accounts Payable and Accrued Expenses

7,598

1,675

The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of June 30, 2019 and 2018.



	(in thousands)
	Gain (Loss) Recognized in OCI					Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Gain (Loss) Reclassified from Accumulated OCI into Income
Three months ended June 30,	2019			2018			2019			2018
Total derivatives in cash flow hedging relationships - Interest rate contracts	$	(4,430	)	$	438	Interest expense	$	(29	)	$	27

Six months ended June 30,
Total derivatives in cash flow hedging relationships - Interest rate contracts	$	(6,712	)	$	2,158	Interest expense	$	(30	)	$	129

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NOTE 11 • FAIR VALUE MEASUREMENTS

Cash and cash equivalents, restricted cash, accounts payable, accrued expenses, and other liabilities are carried at amounts that reasonably approximate their fair value due to their short-term nature. For variable rate line of credit debt that re-prices frequently, fair values are based on carrying values. ~~The fair values of our financial instruments approximate their carrying amount in the consolidated financial statements except for fixed rate debt.~~

In determining the fair value of other financial instruments, we apply FASB ASC 820, "Fair Value Measurement and ~~Disclosures~~,Disclosures." ~~or ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.~~ Fair value hierarchy under ASC 820 distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting entity’s own assumptions about market participant assumptions (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

Fair Value Measurements on a Recurring Basis

~~During the fiscal year ended April 30, 2018, we entered into an interest rate swap to manage our interest rate risk.~~ The fair value of our interest rate ~~swap~~swaps is determined using the market standard methodology of netting discounted expected variable cash payments and receipts. The variable cash payments and receipts are based on an expectation of future interest rates (a forward curve) derived from observable market interest rate curves. We also consider both our own nonperformance risk and the counterparty's nonperformance risk in the fair value ~~measurement. The fair value of the derivative by its level in the fair value hierarchy is as follows:~~

(in thousands)
Balance Sheet Location Total
Level 1
Level 2
Level 3
July 31, 2018
Derivative instrument - interest rate swap Other Assets $ 1,987
—
$ 1,987
—

April 30, 2018

Derivative instrument - interest rate swap Other Assets $ 1,779
—
$ 1,779
—

~~Table of Contents~~

measurement (Level 3).

Fair Value Measurements on a Nonrecurring Basis

There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at ~~July 31, 2018.~~June 30, 2019. Non-financial assets measured at fair value on a nonrecurring basis at ~~April 30,~~December 31, 2018, consisted of real estate investments that were written-down to estimated fair value during ~~fiscal year 2018. See Note 2 for additional information on impairment losses recognized during fiscal year~~the transition period ended December 31, 2018. The aggregate fair value of these assets by their levels in the fair value hierarchy is as follows:



	(in thousands)
	Total		Level 1	Level 2	Level 3
December 31, 2018
Real estate investments valued at fair value	$	3,049	—	—	$	3,049

(in thousands)
Total
Level 1
Level 2
Level 3
April 30, 2018

Real estate investments $ 52,145
—
—
$ 52,145

As of ~~April 30,~~December 31, 2018, we estimated the fair value of our real estate investments using ~~appraisals,~~ a market offer to ~~purchase, market comparisons, and other market data.~~purchase.

Financial Assets and Liabilities Not Measured at Fair Value

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). For~~ mortgages payable ~~the fair value of fixed rate loans is~~and mortgage and notes receivable are 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 ~~July~~June 30, 2019, and December 31, ~~2018, and April 30,~~ 2018, respectively, are as follows:


	(in thousands)								(in thousands)
	July 31, 2018				April 30, 2018				June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	16,261	$	16,261	$	11,891	$	11,891	$	17,406	$	17,406	$	13,792	$	13,792
Mortgage and note receivable									$	26,697	$	26,697	$	26,809	$	26,809
FINANCIAL LIABILITIES
Other debt, including other debt related to assets held for sale	—		—		$	—	$	—
Revolving line of credit	$	130,000	$	130,000	$	124,000	$	124,000
Term loan⁽¹⁾	$	70,000	$	70,000	$	70,000	$	70,000
Revolving lines of credit⁽¹⁾									$	177,939	$	177,939	$	57,500	$	57,500
Term loans⁽¹⁾									$	145,000	$	145,000	$	145,000	$	145,000
Mortgages payable	$	466,555	$	465,445	$	509,919	$	510,803	$	371,951	$	375,698	$	445,974	$	444,241

NOTE 12 ~~• REDEEMABLE NONCONTROLLING INTERESTS~~

Redeemable noncontrolling interests on our Condensed Consolidated Balance Sheets represent the noncontrolling interest in joint ventures 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. Below is a table reflecting the activity of the redeemable noncontrolling interests.

(in thousands)
Balance at April 30, 2018 $ 6,708
Net income (478 )
Balance at July 31, 2018 $ 6,230

~~NOTE 13~~ • 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, unrestricted and restricted common shares, and ~~RSUs~~restricted stock units ("RSUs") up to an aggregate of ~~4,250,000~~425,000 shares over the ten-year period in which the plan will be in effect. Under our 2015 Incentive Plan, officers and non-officer employees may earn share awards under a ~~revised~~ long-term incentive plan, which is a forward-looking program that measures long-term performance over the stated performance period. These

to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year.

~~Fiscal Year~~ 2019 LTIP Awards

Awards granted to ~~trustees~~officers on ~~July 20, 2018, consist of 64,972 time-based RSU awards. All of these awards are classified as equity awards. The time-based RSUs vest on July 20, 2019.~~

~~Awards granted to management on July 20, 2018,~~March 8, 2019, consist of time-based RSU awards for ~~74,920~~6,391 shares and ~~performance~~performance-based RSU awards based on relative total shareholder return (“TSR”), for ~~149,846~~12,781 shares. All of these awards are classified as equity awards. The time-based RSU awards vest as to one-third of the shares on each of ~~July 20, 2019, April 30,~~March 8, 2020, March 8, 2021, and ~~April 30, 2021.~~March 8, 2022.

The ~~TSR performance~~performance-based RSU awards are earned based on our TSR as compared to the MSCI U.S. REIT Index over a forward-looking three-year period. The maximum number of RSUs eligible to be earned under this ~~performance based~~performance-based award is ~~299,692~~25,562 RSUs, which is 200% of the RSUs 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, regardless of whether the market conditions are achieved and the 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, 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, and the expected term on the performance period of the award. The assumptions used to value the performance RSU awards were an expected volatility of ~~28.6%~~25.5%, a risk-free interest rate of ~~2.66%~~2.43%, and an expected life of ~~2.78~~2.82 years. The share price at the grant date, ~~July 20, 2018,~~March 8, 2019, was ~~$5.36~~$58.06 per share.

Awards granted to trustees on May 17, 2019, consist of 812 RSUs which vested immediately and awards granted on June 13, 2019 consist of 7,521 time-based RSU awards which vest on June 13, 2020. All of these awards are classified as equity awards.

Total Compensation Expense

Share-based compensation expense recognized in the consolidated financial statements for all outstanding share-based awards was ~~$265,000~~$981,000 and ~~$376,000~~$611,000 for the ~~three~~six months ended ~~July 31,~~June 30, 2019 and 2018, ~~and 2017,~~ respectively.

~~NOTE 14 • RELATED PARTY TRANSACTIONS~~

~~Transactions with BMO Capital Markets~~

~~We have an historical and ongoing relationship with BMO Capital Markets (“BMO”). On July 17, 2017, we engaged BMO~~ The increase in expense was primarily due to ~~provide financial advisory services~~the timing of award grants in connection with the ~~proposed disposition of~~change in our ~~healthcare property portfolio. A family member of Mark O. Decker, Jr., our President~~fiscal year end, additional officers included in award grants, and ~~Chief Executive Officer, is an employee of BMO and could have an indirect material interest~~a decrease in ~~any such engagement and related transaction(s). The Board pre-approved~~forfeitures in the ~~engagement of BMO. During~~current period compared to the ~~quarter ended January 31, 2018, we completed the disposition of 27 healthcare properties and paid BMO a transaction fee of $1.8 million in connection with this engagement.~~prior period.

NOTE 1513 • SUBSEQUENT EVENTS

~~Subsequent to quarter end,~~On August 6, 2019, we ~~amended our primary unsecured credit facility (see Note 9 - Debt) to:~~

~~extend the maturity of the revolving line of credit to August 2022;~~

We also entered into a swap agreement for the entire $75.0 million and full term loan of the new unsecured 7-year loan in our ongoing effort to reduce floating interest rate exposure. We continue to maintain a $200.0 million accordion option that can be accessed by increasing lending commitments.

~~ITEM~~Item 2. ~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Management's Discussion and Analysis of Financial Conditions and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements included in this report, our audited financial statements for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018, which are included in our Form ~~10-K~~10-KT filed with the SEC on ~~June 28, 2018,~~February 27, 2019, and the risk factors in Item 1A., “Risk Factors,” of our Form ~~10-K~~10-KT for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018.

We consider this and other sections of this Report to contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of those words and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance.

The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:

New factors may also arise from time to time that could have a material adverse effect on our business and results of operations. Except as otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements to reflect events, circumstances, or changes in expectations after the date on which this Report is filed. Readers also should review the risks and uncertainties detailed from time to time in our filings with the SEC, including the “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our ~~Annual~~Transition Report on Form ~~10-K~~10-KT for the ~~fiscal year~~transition period ended ~~April 30,~~December 31, 2018.

We own, manage, acquire, redevelop, and develop apartment communities. We primarily focus on investing in markets characterized by stable and growing economic conditions, strong employment, and an attractive quality of life that we believe, in combination, lead to higher demand for our apartment homes and retention of our residents. As of ~~July 31, 2018,~~June 30, 2019, we owned interests in 8788 apartment communities consisting of ~~13,703~~13,975 apartment homes. Property owned, as presented in the condensed consolidated balance sheets, was $1.7 billion at June 30, 2019, compared to $1.6 billion at ~~July~~December 31, ~~2018, compared to $1.7 billion at April 30,~~ 2018.

Overview of the Three Months Ended ~~July 31, 2018~~June 30, 2019

For the three months ended ~~July 31, 2018, we generated revenues of $45.9~~June 30, 2019, revenue increased by $737,000 to $46.9 million, compared to ~~$41.0~~$46.2 million for the three months ended ~~July 31, 2017. Expenses~~June 30, 2018. Total expenses decreased by $18.6 million to ~~$43.6~~$43.0 million for the three months ended ~~July 31, 2018,~~June 30, 2019, compared to ~~$49.0~~$61.7 million for the three months ended ~~July 31, 2017.~~June 30, 2018. Funds from Operations ("FFO") applicable to common shares and Units for the three months ended June 30, 2019 increased to $18.8 million compared to $11.6 million for the comparable period ended June 30, 2018, primarily due to a $6.3 million gain on litigation settlement. The drivers of these changes are discussed in more detail in the “Results of Operations” section below.

~~Summarized below are significant~~In our ongoing efforts to improve the quality of our portfolio and balance sheet, we completed the following transactions ~~that occurred~~ during the ~~first~~second quarter of ~~our fiscal year~~ 2019:

We sold oneparcel of land in Minot, North Dakota, for a total sale price of $725,000.

~~Subsequent to quarter-end, we engaged in the following transaction:~~

On$250.0 million primary line of credit. This credit facility matures on August 31, ~~2018, we amended our primary unsecured credit facility to:~~

See Note 8 of the ~~revolving line of credit~~Notes to ~~August 2022;~~Condensed Consolidated Financial Statements in this Report for a table detailing our acquisitions and dispositions during the three-month periods ended June 30, 2019 and 2018.

~~extend the existing $70.0 million unsecured term loan maturity to January 2024;~~

In addition, the amended unsecured credit facility will provide additional lending capacity through changes to the calculation of the unencumbered asset pool ("UAP"). We also entered into a swap agreement for the entire $75.0 million and full term loan of the new unsecured 7-year loan in our ongoing effort to reduce floating interest rate exposure. We continue to maintain a $200.0 million accordion option that can be accessed by increasing lending commitments.

~~RESULTS OF OPERATIONS~~

~~Consolidated~~ Results of Operations ~~for the Three Months Ended July 31, 2018 and 2017~~

The discussion that follows is based on our consolidated results of operations for the three and six months ended ~~July 31,~~June 30, 2019 and 2018.

Consolidated Results of Operations for the Three and Six Months Ended June 30, 2019 and 2018 ~~and 2017. Information about our same-store property results is contained in the Net Operating Income section below.~~



	(in thousands, except percentages)
	Three Months Ended											Six Months Ended
	June 30,						2019 vs. 2018					June 30,						2019 vs. 2018
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Revenue
Same-store	$	40,024		$	38,804		$	1,220		3.1	%	$	79,637		$	76,852		$	2,785		3.6	%
Non-same-store	5,921			4,345			1,576			36.3	%	11,122			6,351			4,771			75.1	%
Other properties and dispositions	989			3,048			(2,059		)	(67.6	)%	1,783			6,029			(4,246		)	(70.4	)%
Total	46,934			46,197			737			1.6	%	92,542			89,232			3,310			3.7	%
Property operating expenses, including real estate taxes
Same-store	16,974			16,345			629			3.8	%	34,781			33,536			1,245			3.7	%
Non-same-store	2,137			1,481			656			44.3	%	4,018			2,418			1,600			66.2	%
Other properties and dispositions	405			1,111			(706		)	(63.5	)%	753			2,250			(1,497		)	(66.5	)%
Total	19,516			18,937			579			3.1	%	39,552			38,204			1,348			3.5	%
Net operating income
Same-store	23,050			22,459			591			2.6	%	44,856			43,316			1,540			3.6	%
Non-same-store	3,784			2,864			920			32.1	%	7,104			3,933			3,171			80.6	%
Other properties and dispositions	584			1,937			(1,353		)	(69.9	)%	1,030			3,779			(2,749		)	(72.7	)%
Total	$	27,418		$	27,260		$	158		0.6	%	$	52,990		$	51,028		$	1,962		3.8	%
Property management expenses	(1,445		)	(1,444		)	1			0.1	%	(2,999		)	(2,821		)	178			6.3	%
Casualty gain (loss)	(92		)	—			92			100.0	%	(733		)	(50		)	683			1,366.0	%
Depreciation and amortization	(18,437		)	(19,132		)	(695		)	(3.6	)%	(36,548		)	(39,648		)	(3,100		)	(7.8	)%
Impairment of real estate investments	—			(17,809		)	(17,809		)	—		—			(17,809		)	(17,809		)	—
General and administrative expenses	(3,549		)	(4,348		)	(799		)	(18.4	)%	(7,355		)	(7,967		)	(612		)	(7.7	)%
Interest expense	(7,590		)	(8,562		)	(972		)	(11.4	)%	(15,486		)	(16,858		)	(1,372		)	(8.1	)%
Loss on extinguishment of debt	(407		)	(12		)	395			3,291.7	%	(409		)	(133		)	276			207.5	%
Interest income	402			429			(27		)	(6.3	)%	809			1,102			(293		)	(26.6	)%
Other income	66			31			35			112.9	%	83			47			36			76.6	%
Income (loss) before gain (loss) on sale of real estate and other investments, gain (loss) on litigation settlement, and income (loss) from discontinued operations	(3,634		)	(23,587		)	19,953			84.6	%	(9,648		)	(33,109		)	23,461			70.9	%
Gain (loss) on sale of real estate and other investments	615			—			615			100.0	%	669			2,304			(1,635		)	(71.0	)%
Gain (loss) on litigation settlement	6,286			—			6,286			100.0	%	6,286			—			6,286			100.0	%
Income (loss) from continuing operations	3,267			(23,587		)	26,854			(113.9	)%	(2,693		)	(30,805		)	28,112			(91.3	)%
Income (loss) from discontinued operations	—			238			(238		)	(100.0	)%	—			14,120			(14,120		)	(100.0	)%
NET INCOME (LOSS)	$	3,267		$	(23,349	)	$	26,616		(114.0	)%	$	(2,693	)	$	(16,685	)	$	13,992		(83.9	)%
Dividends to preferred unitholders	(160		)	—			160			100.0	%	(217		)	—			217			100.0	%
Net (income) loss attributable to noncontrolling interests – Operating Partnership	(148		)	2,580			(2,728		)	(105.7	)%	595			2,000			(1,405		)	(70.3	)%
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	154			595			(441		)	(74.1	)%	730			1,115			(385		)	(34.5	)%
Net income (loss) attributable to controlling interests	3,113			(20,174		)	23,287			(115.4	)%	(1,585		)	(13,570		)	11,985			(88.3	)%
Dividends to preferred shareholders	(1,706		)	(1,706		)	—			—		(3,411		)	(3,411		)	—			—
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	1,407		$	(21,880	)	$	23,287		(106.4	)%	$	(4,996	)	$	(16,981	)	$	11,985		(70.6	)%

(in thousands, except percentages)
Three Months Ended
July 31, 2018 vs. 2017
2018 2017 $ Change % Change
REVENUE $ 45,946
$ 40,978
$ 4,968
12.1 %
Property operating expenses, excluding real estate taxes 14,459
12,874
1,585
12.3 %
Real estate taxes 5,070
4,653
417
9.0 %
Property management expenses 1,367
1,356
11
0.8 %
Casualty loss 225
485
(260 ) (53.6 )%
Depreciation and amortization 18,612
25,338
(6,726 ) (26.5 )%
Impairment of real estate investments —
256
(256 ) n/a
General and administrative expenses 3,870
4,002
(132 ) (3.3 )%
TOTAL EXPENSES $ 43,603
$ 48,964
$ (5,361 ) (10.9 )%
Operating income (loss) 2,343
(7,986 ) 10,329
(129.3 )%
Interest expense (8,385 ) (8,131 ) (254 ) 3.1 %
Loss on extinguishment of debt (552 ) (199 ) (353 ) 177.4 %
Interest income 481
21
460
2,190.5 %
Other income 35
207
(172 ) (83.1 )%
Loss before gain on sale of real estate and other investments and income from discontinued operations (6,078 ) (16,088 ) 10,010
(62.2 )%
Gain on sale of real estate and other investments 9,224
124
9,100
7,338.7 %
Income (loss) from continuing operations 3,146
(15,964 ) 19,110
(119.7 )%
Income (loss) from discontinued operations 570
2,685
(2,115 ) (78.8 )%
NET INCOME (LOSS) $ 3,716
$ (13,279 ) $ 16,995
(128.0 )%
Net (income) loss attributable to noncontrolling interests – Operating Partnership (135 ) 1,644
(1,779 ) (108.2 )%
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities (665 ) 371
(1,036 ) (279.2 )%
Net income (loss) attributable to controlling interests 2,916
(11,264 ) 14,180
(125.9 )%
Dividends to preferred shareholders (1,705 ) (2,286 ) 581
(25.4 )%
Redemption of Preferred Shares —
—
—
— %
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 1,211
$ (13,550 ) $ 14,761
(108.9 )%



	Three Months Ended June 30,				Six Months Ended June 30,
Weighted Average Occupancy⁽¹⁾	2019		2018		2019		2018
Same-store	94.3	%	94.2	%	94.9	%	94.2	%
Non-same-store	94.8	%	87.3	%	94.8	%	81.0	%
Total	94.4	%	93.5	%	94.9	%	93.2	%

~~Revenues.~~ Revenues for the three months ended July 31, 2018, were $45.9 million, compared to $41.0 million in the three months ended July 31, 2017, an increase of $5.0 million or 12.1%. The increase in revenue for the three months ended July 31, 2018, resulted primarily from properties acquired in fiscal year 2018 and same-store properties, as shown in the table below.

(in thousands)
Increase in Total Revenue Three Months Ended
July 31, 2018
Increase in revenue from non-same-store apartment communities $ 6,021
Increase in revenue from same-store apartment communities 1,069
Decrease in revenue from other properties and dispositions (2,122 )
Net increase in total revenue $ 4,968

~~Property operating expenses, excluding real estate taxes~~. Property operating expenses, excluding real estate taxes, increased by 12.3% to $14.5 million in the three months ended July 31, 2018, compared to $12.9 million in the same period of the prior fiscal year. ~~An increase of $1.3 million was attributable to non-same-store properties, while expenses at same-store properties increased by $329,000.~~

~~Real Estate Taxes.~~ Real estate taxes increased by 9.0% to $5.1 million in the three months ended July 31, 2018, compared to $4.7 million in the same period of the prior fiscal year. An increase of $231,000 was attributable to non-same store properties, while same-store properties increased by $186,000.

~~Property management expenses. Property management expense was $1.4 million in each of the~~ ~~three months ended July 31, 2018 and 2017.~~

~~Depreciation and Amortization.~~ Depreciation and amortization decreased by 26.5% to $18.6 million in the three months ended July 31, 2018, compared to $25.3 million in the same period of the prior fiscal year. This decrease was primarily due to a change in the estimated useful lives of our assets in the prior fiscal year. In the three months ended July 31, 2017, we recognized an additional $9.0 million in depreciation expense due to a one-time adjustment for assets that were fully depreciated under the new estimated useful lives. See Note 2 of the Notes to the Condensed Consolidated Financial Statements in this report for additional information.

~~Impairment of Real Estate Investments.~~ We recognized no impairment in the three months ended July 31, 2018 compared to $256,000 in the same period of the prior fiscal year. See Note 2 of the Notes to the Condensed Consolidated Financial Statements in this report for additional information.

~~General and Administrative Expenses.~~ General and administrative expenses decreased by 3.3% to $3.9 million in the three months ended July 31, 2018, compared to $4.0 million in the same period of the prior fiscal year. The three months ended July 31, 2018 and 2017, included $510,000 and $464,000, respectively, of severance and transition costs.

~~Interest Expense.~~ Interest expense increased by 3.1% to $8.4 million in the three months ended July 31, 2018, compared to $8.1 million in the same period of the prior fiscal year, due primarily to changes in variable rates.

~~Gain on Sale of Real Estate and Other Investments.~~ We recorded net gains of $9.2 million and $124,000 in continuing operations in the three months ended July 31, 2018 and 2017, respectively. Properties sold in the three months ended July 31, 2018 and 2017, are detailed below in the section captioned “Property Acquisitions and Dispositions.”

~~Income from Discontinued Operations.~~ We recorded income from discontinued operations of $570,000 and $2.7 million, respectively, in the three months ended July 31, 2018 and 2017, respectively. See Note 7 of the Notes to the Condensed Consolidated Financial Statements in this report for further information on discontinued operations.

Net Operating Income, ~~(“NOI”)~~or NOI, is a ~~non-U.S. GAAP~~non-GAAP measure, which we define as total real estate revenues less property operating expenses, ~~and~~including real estate ~~tax expense combined (referred to as "real estate expense").~~taxes. 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 operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with ~~U.S.~~ 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 table shows real estate revenue, real estate operating expenses, and NOI for the three months ended July 31, 2018 and 2017, respectively, for our multifamily properties. For a reconciliation of NOI to net income as reported, see Note 5 of the Notes to the Condensed Consolidated Financial Statements in this report.

~~The table also shows NOI~~We have provided certain information on a same-store and non-same-store ~~properties~~ basis. Same-store ~~properties~~apartment communities are ~~properties~~ owned or in service for the entirety of the periods being compared, and, in the case of development ~~or re-development~~ properties, ~~those that~~ have achieved a target level of physical occupancy of 90%. ~~For comparison~~On the first day of each calendar year, we determine the ~~three months ended July 31, 2018 and 2017, 4 apartment communities were non-same-store.~~

~~This comparison~~composition of our same-store pool for that year as well as adjust the previous year, which allows us to evaluate ~~the performance of~~full period-over-period operating comparisons for existing ~~properties~~apartment communities and their contribution to net income. ~~Management believes~~We believe that measuring performance on a same-store ~~property~~ basis is useful to investors because it enables evaluation of how a fixed pool of our ~~properties~~communities are performing year-over-year. ~~Management uses~~We use this measure to assess whether or not ~~it has~~we have been successful in increasing NOI, ~~and~~renewing the leases on existing residents, controlling operating ~~costs.~~costs, and making prudent capital improvements. The discussion below focuses on the main factors affecting real estate revenue and ~~real estate~~ expenses from same-store ~~properties.~~apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store apartment communities are generally due to the addition of those properties to our real estate portfolio, and accordingly provide less useful information for evaluating ongoing operational performance of our real estate portfolio.

(in thousands, except percentages)
Three Months Ended July 31,
2018 2017 $ Change % Change

Real estate revenue
Same-store $ 36,737
$ 35,668
$ 1,069
3.0 %
Non-same-store 6,352
331
6,021
1,819.0 %
Other properties and dispositions 2,857
4,979
(2,122 ) (42.6 )%
Total $ 45,946
$ 40,978
$ 4,968
12.1 %

Real estate expenses
Same-store $ 16,093
$ 15,578
$ 515
3.3 %
Non-same-store 2,393
156
2,237
1,434.0 %
Other properties and dispositions 1,043
1,793
(750 ) (41.8 )%
Total $ 19,529
$ 17,527
$ 2,002
11.4 %

Net operating income
Same-store $ 20,644
$ 20,090
$ 554
2.8 %
Non-same-store 3,959
175
3,784
2,162.3 %
Other properties and dispositions 1,814
3,186
(1,372 ) (43.1 )%
Total $ 26,417
$ 23,451
$ 2,966
12.6 %

Property management $ (1,367 ) $ (1,356 )
Casualty loss (225 ) (485 )
Depreciation/amortization (18,612 ) (25,338 )
Impairment of real estate investments —
(256 )
General and administrative expenses (3,870 ) (4,002 )
Interest expense (8,385 ) (8,131 )
Loss on debt extinguishment (552 ) (199 )
Interest and other income 516
228

Loss before gain on sale of real estate and other investments and income from discontinued operations (6,078 ) (16,088 )
Gain on sale of real estate and other investments 9,224
124

Income (loss) from continuing operations 3,146
(15,964 )
Income (loss) from discontinued operations 570
2,685

Net income (loss) $ 3,716
$ (13,279 )

Occupancy⁽¹⁾
July 31, 2018 July 31, 2017
Same-store 94.0 % 94.5 %
Non-same-store 90.3 % 83.9 %
Total 93.6 % 93.7 %

~~(1) Occupancy represents~~For the ~~actual number of units leased divided by the total number of units at the end~~comparison of the ~~period.~~six months ended June 30, 2019 and 2018, four apartment communities were non-same-store. Sold communities are included in "Other," which also includes non-multifamily properties and the non-multifamily components of mixed-use properties.

Number of Units July 31, 2018 July 31, 2017
Same-store 12,348
12,336

Non-same-store 1,355
1,067

Total 13,703
13,403

~~Real estate revenue from same-store properties~~Revenues. Revenue increased by ~~3.0% or $1.1~~1.6% to $46.9 million for the three months ended June 30, 2019, compared to $46.2 million in the three months ended ~~July 31, 2018,~~June 30, 2018. Non-same-store communities contributed $1.6 million to the increase, offset by a $2.1 million decrease from dispositions and other properties. Revenue from same-store communities increased 3.1% or $1.2 million in the three months ended June 30, 2019, compared to the same period in the prior ~~fiscal~~ year. ~~Approximately 2.4% of the~~The increase was ~~due~~attributable to 3.0% growth in average rental revenue and ~~0.6% of the increase was due~~0.1% growth in occupancy as weighted average occupancy increased to ~~higher average occupancy.~~

~~Real estate expenses at same-store properties increased by 3.3% or $515,000 in~~94.3% from 94.2% for the three months ended ~~July 31,~~June 30, 2019 and 2018, respectively.

Revenue increased by 3.7% to $92.5 million for the six months ended June 30, 2019, compared to $89.2 million in the six months ended June 30, 2018. Non-same-store communities contributed $4.8 million to the increase, offset by a $4.2 million decrease from dispositions and other properties. Revenue from same-store communities increased 3.6% or $2.8 million in the six months ended June 30, 2019, compared to the same period in the prior ~~fiscal~~ year. The increase was ~~primarily~~ attributable to ~~utilities, severance costs,~~2.9% growth in average rental revenue, including approximately $291,000 from an adjustment in our estimation of bad debt allowance in the comparable period of the prior year and an0.7% growth in occupancy as weighted average occupancy increased to 94.9% from 94.2% for the six months ended June 30, 2019 and 2018, respectively.

Property operating expenses, including real estate taxes. Property operating expenses, including real estate taxes, increased by 3.1% to $19.5 million in the three months ended June 30, 2019, compared to $18.9 million in the same period of the prior year. An increase ~~in levy rates in select markets. The increase~~of $656,000 at non-same-store communities was ~~partially~~ offset by a decrease of $706,000 from other properties and dispositions. Property operating expenses, including real estate taxes, at same-store communities increased by 3.8% or $629,000 in ~~insurance premiums and favorable claims experience~~the three months ended June 30, 2019, compared to the same period in the prior ~~fiscal~~ year. At same-store communities, real estate taxes increased by $211,000 and insurance expense increased by $660,000, of which $324,000 was due to an adjustment in the prior year comparable period from the favorable resolution of insurance claims with remainder due to an increase in premiums. These same-store increases were partially offset by a decrease in controllable operating expenses (which exclude insurance and real estate taxes) of $241,000, primarily due to lower compensation costs as a result of a reduction in employee headcount.

Property operating expenses, including real estate taxes, increased by 3.5% to $39.6 million in the six months ended June 30, 2019, compared to $38.2 million in the same period of the prior year. An increase of $1.6 million at non-same-store communities was offset by a decrease of $1.5 million from other properties and dispositions. Property operating expenses, including real estate taxes, at same-store communities increased by 3.7% or $1.2 million in the six months ended June 30, 2019, compared to the same period in the prior year. At same-store communities, real estate taxes increased by $298,000 and insurance expenses increased by $663,000, of which $324,000 was due to an adjustment in the prior comparable period from the favorable resolution of insurance claims with the remainder due to an increase in premiums. Controllable expenses increased by $283,000 primarily due to higher snow removal costs as a result of historically high levels of snowfall during the winter, landscaping and other maintenance costs, and partially offset by lower compensation costs as a result of a reduction in employee headcount.

~~PROPERTY ACQUISITIONS AND DISPOSITIONS~~Property management expenses. Property management expense, consisting of property management overhead and property management fees paid to third parties, was $1.4 million in the three months ended June 30, 2019 and 2018.

Property management expense increased by 6.3% to $3.0 million in the six months ended June 30, 2019, compared to $2.8 million in the same period of the prior year. The increase in property management expense is primarily due to technology initiatives and compensation costs, including severance.

Casualty gain (loss). Casualty loss was $92,000 in the three months ended June 30, 2019 and was the result of uninsured losses. The same period of the prior year had no casualty loss.

Casualty loss was $733,000 in the six months ended June 30, 2019, an increase of $683,000 from the same period of the prior year. During the ~~first quarter~~six months ended June 30, 2019, many of ~~fiscal~~our markets were impacted by a series of adverse weather-related events. These events included extreme cold and record-setting snowfall, which caused excess ice and snow accumulation, resulting in water damage to some of our apartment communities. We believe that the damages will be covered by insurance and have recorded casualty losses of $641,000 during the period, representing the aggregate annual stop loss under our insurance coverage. The remaining increase is a result of uninsured water intrusion damage at one apartment community. In the same period of the prior year, we recorded only $50,000 in aggregate annual stop loss under our insurance coverage as a result of favorable claims experience.

Depreciation and amortization. Depreciation and amortization decreased by 3.6% to $18.4 million in the three months ended June 30, 2019, wecompared to $19.1 million in the same period of the prior year, primarily due to certain intangible assets becoming fully amortized.

Depreciation and amortization decreased by 7.8% to $36.5 million in the six months ended June 30, 2019, compared to $39.6 million in the same period of the prior year, primarily attributable to certain intangible assets becoming fully amortized and an adjustment in the prior comparable period from shortening the estimated useful life of a non-multifamily property, which elevated depreciation expense in the six months ended June 30, 2018.

General and administrative expenses. General and administrative expenses decreased by 18.4% to $3.5 million in the three months ended June 30, 2019, compared to $4.3 million in the same period of the prior year, primarily attributable to decreases of $581,000 in legal fees related to our pursuit of recovery on a construction defect claim, $453,000 in severance-related costs, and $136,000 in real estate taxes on vacant land. These decreases were partially offset by an increase in compensation costs as a result of a decrease in open positions and higher incentive compensation related to expanding the participant pool in the long-term incentive plan.

General and administrative expenses decreased by 7.7% to $7.4 million in the six months ended June 30, 2019, compared to $8.0 million in the same period of the prior year, primarily attributable to decreases of $558,000 in severance-related costs, $265,000 in legal costs, and $200,000 in real estate tax on sold properties. These decreases were partially offset by increases in

compensation costs as a result of a decrease in open positions and higher incentive compensation related to expanding the participant pool in the long-term incentive plan.

Interest expense. Interest expense decreased by 11.4% to $7.6 million in the three ~~apartment communities, two commercial properties~~months ended June 30, 2019, compared to $8.6 million in the same period of the prior year, primarily due to a decrease in the average balance of our outstanding indebtedness and ~~two parcels~~the replacement of ~~unimproved land~~maturing debt with term loans at lower rates.

Interest expense decreased by 8.1% to $15.5 million in the six months ended June 30, 2019, compared to $16.9 million in the same period of the prior year, primarily due to a decrease in the average balance of our outstanding indebtedness and the replacement of maturing debt with term loans at lower rates.

Interest and other income. We recorded interest and other income in the three months ended June 30, 2019 and 2018 of $468,000 and $460,000, respectively.

We recorded interest and other income in the six months ended June 30, 2019 and 2018 of $892,000 and $1.1 million, respectively. The decrease for the six months ended June 30, 2019 compared to the same period of the prior year was due to a ~~total~~lower cash balance as proceeds received in December 2017 from the disposition of our medical office portfolio were not deployed until the end of March 2018.

Gain (loss) on sale ~~price~~ of ~~$49.1 million. During~~real estate and other investments. We recorded net gains of $615,000 in continuing operations in the ~~first quarter~~three months ended June 30, 2019, and no gain or loss in the same period of ~~fiscal year~~the prior year. We recorded net gains of $669,000 and $2.3 million in the six months ended June 30, 2019 ~~we had~~and 2018, respectively.

Gain (loss) on litigation settlement. We recorded a gain on litigation settlement of $6.3 million in the three and six months ended June 30, 2019 from a construction defect claim.

Income from discontinued operations. We recorded no ~~acquisitions~~income from discontinued operations in the three months ended June 30, 2019, compared to $238,000 in the same period of ~~properties.~~the prior year. We recorded no income from discontinued operations in the six months ended June 30, 2019, compared to $14.1 million in the same period of the prior year. See Note 87 of the Notes to the Condensed Consolidated Financial Statements in this report for further information on discontinued operations.

Net income (loss) available to common shareholders. Net income available to common shareholders was $1.4 million for the three months ended June 30, 2019, compared to net loss of $21.9 million in the three months ended June 30, 2018. The increase in net income available to common shareholders was driven by a ~~table detailing our acquisitions~~decrease in impairment charges and ~~dispositions during~~an increase in gain on litigation settlement.

Net loss available to shareholders was $5.0 million for the ~~three-month periods~~six months ended ~~July 31, 2018~~June 30, 2019, compared to net loss of $17.0 million in the six months ended June 30, 2018. The decrease in net loss available to shareholders was driven by a decrease in impairment charges and ~~2017.~~depreciation expense and increases in gain on litigation settlement and revenue, but was partially offset by a decrease in gains on sale of real estate.

~~FUNDS FROM OPERATIONS~~

~~We consider~~ Funds from Operations ~~(“FFO”) to be a useful measure of performance for an equity REIT.~~. We use the definition of ~~FFO~~Funds from Operations ("FFO") adopted by the National Association of Real Estate Investment Trusts, Inc. (“~~NAREIT”~~Nareit”). ~~NAREIT currently~~Nareit defines FFO as net income or loss ~~attributable to common shareholders computed~~calculated in accordance with GAAP, ~~adjusted for:~~excluding:

Due to limitations of the FFO definition adopted by ~~NAREIT,~~Nareit, we have made certain interpretations in applying the definition. We believe that all such interpretations not specifically provided for in the ~~NAREIT~~Nareit definition are consistent with the definition. ~~Effective for~~Nareit's FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT's main business are excluded from FFO and a REIT has the ~~third quarter~~option to exclude impairment write-downs of ~~fiscal year 2018, we included impairment charges for nondepreciable~~ assets ~~in FFO.~~that are incidental to the main business.

We believe that FFO, which is a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, thereby providing an additional perspective on our operating results. We believe that GAAP historical cost depreciation of real estate assets ~~generally~~ is not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. The exclusion in ~~NAREIT’s~~Nareit’s definition of FFO of impairment ~~write-downs~~write-

downs and gains and losses from the sale of ~~previously depreciated operating~~ real estate assets helps to identify the operating results of the long-term assets that form the base of our investments, and assists management and investors in comparing those operating results between periods. ~~FFO is also used by our management and investors to identify trends in occupancy rates, rental rates, and operating costs.~~

While FFO is widely used by us as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with ~~U.S.~~ 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~~common shares and Units for the three months ended ~~July 31, 2018, decreased~~June 30, 2019, increased to ~~$10.6~~$18.8 million compared to ~~$13.1~~$11.6 million for the comparable period ended ~~July 31, 2017, a reduction~~June 30, 2018, an increase of ~~19.2%,~~62.4%. This increase was primarily due to ~~lower net operating~~a $6.3 million gain on litigation settlement, as well as higher NOI at same-store and non-same store communities and reductions in interest expense and general and administrative expenses. The increase was partially offset by a decrease in NOI from sold properties and an increase in loss on debt extinguishment. FFO applicable to common shares and Units for the six months ended June 30, 2019, increased to $29.0 million, compared to $20.7 million for the comparable period ended June 30, 2018, an increase of 39.6%. This increase was primarily due to a $6.3 million gain on litigation settlement, as well as higher NOI at same-store and non-same-store communities and reductions in interest expense and general and administrative expenses. The increase in FFO was partially offset by decreases in NOI from sold properties and interest income ~~as a result~~and increases in weather-related casualty loss and loss on debt extinguishment.

Reconciliation of ~~property dispositions.~~

~~RECONCILIATION OF NET INCOME ATTRIBUTABLE TO~~

~~INVESTORS REAL ESTATE TRUST TO FUNDS FROM OPERATIONS~~Net Income Available to Common Shareholders to Funds from Operations

(in thousands, except per share and unit amounts)
Three Months Ended July 31, 2018 2017
Amount
Weighted Avg
Shares and
Units⁽¹⁾

Per Share
and
Unit⁽²⁾
Amount
Weighted Avg
Shares and
Units⁽¹⁾

Per Share
and
Unit⁽²⁾
Net income (loss) attributable to controlling interests $ 2,916

$ (11,264 )

Less dividends to preferred shareholders (1,705 )
(2,286 )

Less redemption of preferred shares —

Net income (loss) available to common shareholders 1,211
119,245
$ 0.01
(13,550 ) 120,421
$ (0.11 )
Adjustments:

Noncontrolling interests – Operating Partnership 135
14,026
(1,644 ) 15,128

Depreciation and amortization 17,837

28,119

Impairment of real estate attributable to Investors Real Estate Trust —
256

Gains on depreciable property sales attributable to Investors Real Estate Trust (8,628 )
(124 )

Funds from operations applicable to common shares and Units $ 10,555
$ 133,271
$ 0.08
$ 13,057
$ 135,549
$ 0.10



	(in thousands, except per share and unit amounts)
Three Months Ended June 30,	2019						2018
	Amount			Weighted Avg Shares and Units⁽¹⁾	Per Share and Unit⁽²⁾		Amount			Weighted Avg Shares and Units⁽¹⁾	Per Share and Unit⁽²⁾
Net income (loss) available to common shareholders	$	1,407		11,729	$	0.12	$	(21,880	)	11,928	$	(1.83	)
Adjustments:
Noncontrolling interests – Operating Partnership	148			1,226			(2,580		)	1,407
Depreciation and amortization	18,437						19,132
Less depreciation – non real estate entities	(79		)				(76		)
Less depreciation – partially owned entities	(474		)				(719		)
Impairment of real estate	—						17,809
Gains on sale of real estate	(615		)				(98		)
Funds from operations applicable to common shares and Units	$	18,824		12,955	$	1.45	$	11,588		13,335	$	0.87

(1) ~~Upon the exercise of~~Pursuant to Exchange Rights, Units of the Operating Partnership are ~~exchangeable~~redeemable for cash or, at our discretion, for ~~Common Shares~~common shares on a one-for-one basis.

~~DISTRIBUTIONS~~Acquisitions and Dispositions

During the second quarter of 2019, we acquired an office building that will be used as our Minot corporate office for $2.1 million, compared to no acquisitions in the same period of the prior year. During the second quarter of 2019, we sold one parcel of unimproved land and one commercial property for an aggregate sale price of $7.3 million, compared to no dispositions in the

second quarter of 2018. See Note 8 of the Notes to Condensed Consolidated Financial Statements in this report for a table detailing our acquisitions and dispositions during the six-month periods ended June 30, 2019 and 2018.

Distributions Declared

Distributions of ~~$0.07~~$0.70 and $1.40 per ~~Common Share~~common share and Unit were ~~paid~~declared during the three and six months ended ~~July 31,~~June 30, 2019 and 2018, respectively. Distributions of $0.4140625 and ~~2017.~~$0.8281 per Series C preferred share were declared during the three and six months ended June 30, 2019 and 2018, respectively. Distributions of $0.9655 and $1.3088 per Series D preferred unit were declared in the three and six months ended June 30, 2019, respectively.

~~LIQUIDITY AND CAPITAL RESOURCES~~Liquidity and Capital Resources

Liquidity and Financial Condition

We desire to create and maintain a strong balance sheet that offers financial flexibility and enables us to pursue and acquire ~~properties~~apartment communities that enhance our portfolio composition, operating metrics, and cash flow growth prospects. We intend to strengthen our capital and liquidity positions by continuing to focus on improving our core fundamentals, which include generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.

Our primary sources of liquidity are cash and cash equivalents on hand, our unsecured credit facility, and cash flows generated from operations. Other sources include availability under our unsecured lines of credit, proceeds from property dispositions, offerings of preferred and common stock under our shelf registration statement, offerings of preferred and common units under our limited partnership agreement, and unsecured term loans or long-term secured mortgages.

Our primary liquidity demands are normally-recurring operating and overhead expenses, debt service and repayments, capital improvements to our ~~properties,~~communities, distributions to the holders of our preferred shares, ~~Common Shares,~~common shares, and Units, value-add redevelopment, common share buybacks and ~~acquisition~~Unit redemptions, and acquisitions of additional ~~properties.~~communities.

We believe that our financial condition and liquidity are sufficient to meet our reasonably anticipated liquidity demands during ~~fiscal year~~ 2019 and ~~fiscal year~~ 2020. Factors that could increase or decrease our future liquidity include, but are not limited to, volatility in capital and credit markets, our ability to access capital and credit markets, the minimum REIT dividend requirements, and our ability to complete asset purchases, sales, or developments.

Capital Resources and Cash Flows

As of ~~July~~June 30, 2019, we had total liquidity of approximately $89.5 million, which included $72.1 million available on our line of credit and $17.4 million of cash and cash equivalents. As of December 31, 2018, we had total liquidity of approximately $192.3 million, which includes $170.0 million available on our line of credit, $16.3 million of cash and cash equivalents, and $6.0 million under an operating line of credit described below. As of April 30, 2018, we had total liquidity of approximately $193.9$188.8 million, which included ~~$176.0~~$175.0 million on our line of credit ~~$11.9~~and $13.8 million of cash and cash ~~equivalents, and $6.0 million under an operating line of credit.~~equivalents.

~~As of July 31, 2018, we~~We also had restricted cash of $4.7 million and $5.5 million as of June 30, 2019 and December 31, 2018, respectively, consisting primarily of ~~$4.1 million of escrows held by lenders for real estate taxes, insurance,~~loan application deposits and ~~capital additions. As of April 30, 2018, we had restricted cash consisting of $4.2 million of~~ escrows held by lenders for real estate taxes, insurance, and capital additions.

We have an unsecured credit facility for $395.0 million, with the commitment allocated to a revolving line of credit for $250.0 million and the remaining $145.0 million allocated between two term loans: a $70.0 million unsecured term loan that matures on January 15, 2024 and a $75.0 million unsecured term loan that matures on August 31, 2025.



	North Dakota				45-0311232
	(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

1400 31st31st Avenue SW	Suite 60	Post Office Box 1988	Minot	ND	58702-1988
(Address of principal executive offices) ~~(Zip~~					(Zip code)



Large accelerated filerþ	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller Reporting Company	☐	Emerging growth company	☐



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest, no par value	IRET	New York Stock Exchange
Series C Cumulative Redeemable Preferred Shares	IRET-C	New York Stock Exchange



	Page
Part I. Financial Information
Item 1. Financial Statements - ~~First~~Second Quarter - ~~Fiscal~~ 2019:	3
Condensed Consolidated Balance Sheets (unaudited) ~~July~~June 30, 2019, and December 31, 2018 ~~and April 30, 2018~~	3
Condensed Consolidated Statements of Operations (unaudited) For the Three and Six Months ended ~~July 31,~~June 30, 2019 and 2018 ~~and 2017~~	4
Condensed Consolidated Statements of Comprehensive Income (unaudited) ~~for~~For the Three and Six Months ended ~~July 31,~~June 30, 2019 and 2018 ~~and 2017~~	5
Condensed Consolidated Statements of Equity (unaudited) For the Three and Six Months ended ~~July 31,~~June 30, 2019 and 2018 ~~and 2017~~	6
Condensed Consolidated Statements of Cash Flows (unaudited) For the ~~Three~~Six Months ended ~~July 31,~~June 30, 2019 and 2018 ~~and 2017~~	78
Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2524
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	34

Part II. Other Information
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3. Defaults Upon Senior Securities	35
Item 4. Mine Safety Disclosures	35
Item 5. Other Information	35
Item 6. Exhibits	36
Signatures	37



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	(in thousands, except per share data)
	Three Months Ended July 31,
	2018			2017
REVENUE	$	45,946		$	40,978
EXPENSES
Property operating expenses, excluding real estate taxes	14,459			12,874
Real estate taxes	5,070			4,653
Property management expense	1,367			1,356
Casualty loss	225			485
Depreciation and amortization	18,612			25,338
Impairment of real estate investments	—			256
General and administrative expenses	3,870			4,002
TOTAL EXPENSES	$	43,603		$	48,964
Operating income (loss)	2,343			(7,986		)
Interest expense	(8,385		)	(8,131		)
Loss on extinguishment of debt	(552		)	(199		)
Interest income	481			21
Other income	35			207
Loss before gain on sale of real estate and other investments and income from discontinued operations	(6,078		)	(16,088		)
Gain on sale of real estate and other investments	9,224			124
Income (loss) from continuing operations	3,146			(15,964		)
Income (loss) from discontinued operations	570			2,685
NET INCOME (LOSS)	$	3,716		$	(13,279	)
Net (income) loss attributable to noncontrolling interests – Operating Partnership	(135		)	1,644
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	(665		)	371
Net income (loss) attributable to controlling interests	2,916			(11,264		)
Dividends to preferred shareholders	(1,705		)	(2,286		)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	1,211		$	(13,550	)
Earnings (loss) per common share from continuing operations – basic and diluted	$	0.01		$	(0.13	)
Earnings per common share from discontinued operations – basic and diluted	—			$	0.02
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	0.01		$	(0.11	)
DIVIDENDS PER COMMON SHARE	$	0.07		$	0.07



	(in thousands)
	Three months ended July 31,
	2018			2017
Net income (loss)	$	3,716		$	(13,279	)
Other comprehensive income:
Unrealized gain from derivative instrument	208			—
Loss on derivative instrument reclassified into earnings	29			—
Total comprehensive income (loss)	$	3,953		$	(13,279	)
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership	(157		)	1,644
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	(665		)	371
Comprehensive income (loss) attributable to controlling interests	$	3,131		$	(11,264	)



	(in thousands)
	As previously reported at April 30, 2018		Adjustment			As revised at April 30, 2018
Common shares of beneficial interest	$	907,843	$	(7,746	)	$	900,097
Noncontrolling interests - consolidated real estate entities	1,078		7,810			8,888
Redeemable noncontrolling interests - consolidated real estate entities	6,708		(64		)	6,644



	(in thousands)
	As previously reported at April 30, 2017		Adjustment			As revised at April 30, 2017
Common shares of beneficial interest	$	916,121	$	(7,216	)	$	908,905
Nonredeemable noncontrolling interests	75,157		7,280			82,437



	(in thousands)
	As previously reported at July 31, 2017		Adjustment			As revised at July 31, 2017
Common shares of beneficial interest	$	912,625	$	(7,216	)	$	905,409
Nonredeemable noncontrolling interests	66,493		7,280			73,773



	(in thousands)
	As previously reported			Impact of ASU			As adjusted and currently reported
	July 31, 2017			2016-15			July 31, 2017
Net cash provided by operating activities	$	15,828		$	(81	)	$	15,747
Net cash provided by investing activities	(44,544		)	(24,054		)	(68,598		)
Net cash provided by financing activities	23,698			(133		)	23,565

Net increase (decrease) in cash, cash equivalents	(5,018		)	5,018			—
Net increase (decrease) in cash, cash equivalents, and restricted cash	—			(29,286		)	(29,286		)

Cash and cash equivalents at beginning of period	28,819			(28,819		)	—
Cash, cash equivalents, and restricted cash at beginning of period	—			56,800			56,800
Cash and cash equivalents at end of period	$	23,801
Cash, cash equivalents, and restricted cash at end of period				$	3,713		$	27,514



		(in thousands)
		Three Months Ended July 31, 2018
Revenue Stream	Applicable Standard	Amount of Revenue	Percent of Revenue
Rental revenue	Leases	43,514	94.7	%
Other property revenue	Revenue Recognition	2,432	5.3	%
		45,946	100.0	%



	(in thousands)
Three Months Ended July 31, 2017	Multifamily		All Other		Total
Real estate revenue	$	35,999	$	4,979	$	40,978
Real estate expenses	15,734		1,793		17,527
Net operating income	$	20,265	$	3,186	$	23,451
Property management expenses					(1,356		)
Casualty loss					(485		)
Depreciation and amortization					(25,338		)
Loss on impairment					(256		)
General and administrative expenses					(4,002		)
Interest expense					(8,131		)
Loss on debt extinguishment					(199		)
Interest and other income					228
Loss before gain on sale of real estate and other investments and income from discontinued operations					(16,088		)
Gain on sale of real estate and other investments					124
Income (loss) from continuing operations					(15,964		)
Income (loss) from discontinued operations					2,685
Net income (loss)					$	(13,279	)


(1)	~~Property includes 11,477 square feet~~Value of ~~retail space.~~Series D preferred units at the acquisition date.


(2)	Acquired for use as our new Minot corporate office building after renovations have been completed.


~~(2)~~	~~This apartment community was owned by a joint venture entity in which we had an interest of approximately 87.14%. The joint venture is consolidated in our financial statements.~~


~~(3)~~	~~This parcel of land was owned by a joint venture entity in which we had an interest of approximately 70.00%. The joint venture is consolidated in our financial statements.~~service.



	(in thousands)
Year Ended April 30,	Mortgage Loans
2019	$	7,442
2020	86,400
2021	92,179
2022	70,506
2023	27,494
Thereafter	182,534
Total payments	$	466,555


(1)	Excluding the effect of ~~the~~ interest rate swap ~~agreement.~~agreements.



	(in thousands)
Balance at April 30, 2018	$	6,708
Net income	(478		)
Balance at July 31, 2018	$	6,230



	(in thousands, except percentages)
	Three Months Ended
	July 31,						2018 vs. 2017
	2018			2017			$ Change			% Change
REVENUE	$	45,946		$	40,978		$	4,968		12.1	%
Property operating expenses, excluding real estate taxes	14,459			12,874			1,585			12.3	%
Real estate taxes	5,070			4,653			417			9.0	%
Property management expenses	1,367			1,356			11			0.8	%
Casualty loss	225			485			(260		)	(53.6	)%
Depreciation and amortization	18,612			25,338			(6,726		)	(26.5	)%
Impairment of real estate investments	—			256			(256		)	n/a
General and administrative expenses	3,870			4,002			(132		)	(3.3	)%
TOTAL EXPENSES	$	43,603		$	48,964		$	(5,361	)	(10.9	)%
Operating income (loss)	2,343			(7,986		)	10,329			(129.3	)%
Interest expense	(8,385		)	(8,131		)	(254		)	3.1	%
Loss on extinguishment of debt	(552		)	(199		)	(353		)	177.4	%
Interest income	481			21			460			2,190.5	%
Other income	35			207			(172		)	(83.1	)%
Loss before gain on sale of real estate and other investments and income from discontinued operations	(6,078		)	(16,088		)	10,010			(62.2	)%
Gain on sale of real estate and other investments	9,224			124			9,100			7,338.7	%
Income (loss) from continuing operations	3,146			(15,964		)	19,110			(119.7	)%
Income (loss) from discontinued operations	570			2,685			(2,115		)	(78.8	)%
NET INCOME (LOSS)	$	3,716		$	(13,279	)	$	16,995		(128.0	)%
Net (income) loss attributable to noncontrolling interests – Operating Partnership	(135		)	1,644			(1,779		)	(108.2	)%
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	(665		)	371			(1,036		)	(279.2	)%
Net income (loss) attributable to controlling interests	2,916			(11,264		)	14,180			(125.9	)%
Dividends to preferred shareholders	(1,705		)	(2,286		)	581			(25.4	)%
Redemption of Preferred Shares	—			—			—			—	%
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	1,211		$	(13,550	)	$	14,761		(108.9	)%



	(in thousands)
Increase in Total Revenue	Three Months Ended July 31, 2018
Increase in revenue from non-same-store apartment communities	$	6,021
Increase in revenue from same-store apartment communities	1,069
Decrease in revenue from other properties and dispositions	(2,122		)
Net increase in total revenue	$	4,968



Number of Apartment Homes	June 30, 2019	June 30, 2018
Same-store	12,848	12,848
Non-same-store	1,127	855
Total	13,975	13,703



Occupancy⁽¹⁾	July 31, 2018		July 31, 2017
Same-store	94.0	%	94.5	%
Non-same-store	90.3	%	83.9	%
Total	93.6	%	93.7	%


(2)	Net income ~~attributable~~(loss) available to ~~Investors Real Estate Trust~~common shareholders is calculated on a per ~~Common Share~~common share basis. FFO is calculated on a per ~~Common Share~~common share and Unit basis.



	(in thousands, except for interest rates)
	Remaining Fiscal 2019			Fiscal 2020			Fiscal 2021			Fiscal 2022			Fiscal 2023			Thereafter		Total		Fair Value
Debt
Fixed Rate	$	7,442		$	86,401		$	92,179		$	70,506		$	27,494		$	182,534	$	466,556	$	465,445
Average Interest Rate⁽¹⁾	4.66		%	4.35		%	3.74		%	3.50		%	3.45		%
Variable Rate⁽²⁾	—			—			$	130,000		—			$	70,000		—		$	200,000	$	200,000
Average Interest Rate⁽¹⁾	—			—			3.83		%	—			3.86		%


~~(2)~~	~~Excludes the effect of the interest rate swap agreement.~~



					Maximum Dollar
				Total Number of Shares	Amount of Shares That
	Total Number of	Average Price		Purchased as Part of	May Yet Be Purchased
	Shares and Units	Paid per		Publicly Announced	Under the Plans or
Period	Purchased ⁽¹⁾	Share and Unit⁽²⁾		Plans or Programs	Programs⁽³⁾
April 1 - 30, 2019	144,020	$	59.86	15,078	$	23,705,362
May 1 - 31, 2019	24,263	59.26		24,263	22,267,567
June 1 - 30, 2019	80,561	59.22		76,731	17,724,778
Total	248,844	$	59.60	116,072


(1)	Includes a total of 132,772 Units redeemed for cash pursuant to the exercise of exchange rights.


(3)	Represents amounts outstanding under our $50 million share repurchase program, which was reauthorized by our Board of Trustees on December 14, 2018 for an additional one-year period.



Exhibit No.	Description
~~1.1~~	Underwriting Agreement, dated September 26, 2017, by and among Investors Real Estate Trust, IRET Properties, A North Dakota Limited Partnership, and the several Underwriters listed on Schedule I attached thereto, for whom BMO Capital Markets Corp. and Raymond James & Associates, Inc. are acting as representatives (incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on October 2, 2017).31.1
~~3.1~~ *	Articles Supplementary to the Registrant’s Articles of Amendment and Third Restated Declaration of Trust designating the Registrant’s 6.625% Series C Cumulative Redeemable Preferred Shares, no par value per share (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form 8-A filed on September 28, 2017).
~~3.2~~	Third Amendment to the Agreement of Limited Partnership of IRET Properties, A North Dakota Limited Partnership (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on October 2, 2017).
~~10.1~~	Second Amended and Restated Credit Agreement, dated as of August 31, 2018, among IRET Properties, A North Dakota Limited Partnership, as Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, KeyBank, National Association and PNC Bank, National Association, as Syndication Agents, and Bank of Montreal, as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on September 6, 2018).
31.1*	Section 302 Certification of Chief Executive Officer
31.2* 31.2*	Section 302 Certification of Executive Vice President and Chief Financial Officer
32.1* 32.1*	Section 906 Certifications of Chief Executive Officer
32.2* 32.2*	Section 906 Certifications of Executive Vice President and Chief Financial Officer
101 INS**	INSTANCE DOCUMENT
101 SCH**	SCHEMA DOCUMENT
101 CAL**	CALCULATION LINKBASE DOCUMENT
101 LAB**	LABELS LINKBASE DOCUMENT
101 PRE**	PRESENTATION LINKBASE DOCUMENT
101 DEF**	DEFINITION LINKBASE DOCUMENT
104**	COVER PAGE



/s/ Mark O. Decker, Jr.
Mark O. Decker, Jr.
President and Chief Executive Officer

/s/ John A. Kirchmann
John A. Kirchmann
Executive Vice President and Chief Financial Officer

Date: ~~September 10, 2018~~August 7, 2019