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Item 9A. Controls and Procedures

2021-02-22 compared with 2020-02-19 · 533 added, 642 removed, 944 unchanged (55% of the section changed)

1 unchanged sentence

Disclosure Controls and Procedures :

As of December 31, 2019 , the end of the period covered by this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act).

As of December 31, 2020, the end of the period covered by this Report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act).

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

15 unchanged sentences

Trustees, Executive Officers and Corporate Governance

The information required by this Item regarding Trustees is incorporated by reference to the information under “Election of Trustees,” “Information About Our Executive Officers,” “Code of Conduct and Code of Ethics for Senior Financial Officers,” and “Board Committees” in our definitive proxy statement for our 2020 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Annual Report on Form 10-K.

The information required by this Item regarding Trustees is incorporated by reference to the information under “Election of Trustees,” “Information About Our Executive Officers,” “Code of Conduct and Code of Ethics for Senior Financial Officers,” and “Board Committees” in our definitive proxy statement for our 2021 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Report.

Executive Compensation

The information required by this Item is incorporated by reference to the information under “Trustee Compensation,” “Compensation Discussion and Analysis” and “Executive Officer Compensation Tables” in our definitive proxy statement for our 2020 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Annual Report on Form 10-K.

The information required by this Item is incorporated by reference to the information under “Trustee Compensation,” “Compensation Discussion and Analysis” and “Executive Officer Compensation Tables” in our definitive proxy statement for our 2021 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Report.

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The information required by this Item is incorporated by reference to the information under “Securities Authorized for Issuance Under Equity Compensation Plans” and “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for our 2020 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Annual Report on Form 10-K.

The information required by this Item is incorporated by reference to the information under “Securities Authorized for Issuance Under Equity Compensation Plans” and “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for our 2021 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Report.

Certain Relationships and Related Transactions, and Trustee Independence

The information required by this Item is incorporated by reference to the information under “Relationships and Related Party Transactions” and “Corporate Governance and Board Matters” in our definitive proxy statement for our 2020 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Annual Report on Form 10-K.

The information required by this Item is incorporated by reference to the information under “Relationships and Related Party Transactions” and “Corporate Governance and Board Matters” in our definitive proxy statement for our 2021 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Report.

Principal Accounting Fees and Services

The information required by this Item is incorporated by reference to the information under “Accounting and Audit Committee Matters” in our definitive proxy statement for our 2020 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Annual Report on Form 10-K.

The information required by this Item is incorporated by reference to the information under “Accounting and Audit Committee Matters” in our definitive proxy statement for our 2021 Annual Meeting of Shareholders to be filed with the SEC no later than 120 days after the end of the year covered by this Report.

Exhibits, Financial Statement Schedules

1 unchanged sentence

Financial Statements

See the “Table of Contents” to our consolidated financial statements on page F-1 of this Annual Report on Form 10-K.

See the “Table of Contents” to our consolidated financial statements on page F-1 of this Report.

Financial Statement Schedules

See the “Table of Contents” to our consolidated financial statements on page F-1 of this Annual Report on Form 10-K.

The following financial statement schedules should be read in conjunction with the financial statements referenced in Part II, Item 8 of this Annual Report on Form 10-K:

See the “Table of Contents” to our consolidated financial statements on page F-1 of this Report.

The following financial statement schedules should be read in conjunction with the financial statements referenced in Part II, Item 8 of this Report:

Schedule III Real Estate and Accumulated Depreciation

See the Exhibit Index set forth in part (b) below.

The Exhibit Index below lists the exhibits to this Annual Report on Form 10-K.

The Exhibit Index below lists the exhibits to this Report.

We will furnish a printed copy of any exhibit listed below to any security holder who requests it upon payment of a fee of 15 cents per page.

All Exhibits are either contained in this Annual Report on Form 10-K or are incorporated by reference as indicated below.

All Exhibits are either contained in this Report or are incorporated by reference as indicated below.

EXHIBIT INDEX

3 unchanged sentences

Articles of Amendment and Third Restated Declaration of Trust of Investors Real Estate Trust adopted on September 23, 2003, as amended on September 18, 2007 (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed with the Commission on June 30, 2014).

Sixth Restated Trustee’s Regulations (Bylaws) of Investors Real Estate Trust, adopted on September 20, 2018 (incorporated by reference to Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q filed on December 10, 2018).

Articles Supplementary to the Company’s Articles of Amendment and Third Restated Declaration of Trust designating the Company’s 6.625% Series C Cumulative Redeemable Preferred Shares, no par value per share (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form 8-A filed with the SEC on September 28, 2017).

3.2 Seventh Restated Trustee’s Regulations (Bylaws) of Investors Real Estate Trust, adopted on April 27, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 1, 2020).

3.3 Articles Supplementary to the Company’s Articles of Amendment and Third Restated Declaration of Trust designating the Company’s 6.625% Series C Cumulative Redeemable Preferred Shares, no par value per share (incorporated by reference to Exhibit 3.

2 of the Company’s Registration Statement on Form 8-A filed with the SEC on September 28, 2017).

4.1 Note Purchase and Private Shelf Agreement, dated as of September 13, 2019, by and among IRET Properties, a North Dakota Limited Partnership, as the Issuer, Investors Real Estate Trust, as the Parent, IRET, Inc., as the General Partner, certain subsidiaries of the Parent, PGIM, Inc., an affiliate of Prudential Financial, Inc., certain affiliates of PGIM, Inc., and the Purchasers of the Series A Notes (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 17, 2019).

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4.4 Form of Guaranty Agreement under the Note Agreement (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the Commission on September 17, 2019).

Description of Securities.

4.5 Description of Securities (incorporated by reference to Exhibit 4.5 to the Company 's Annual Report on Form 10-K filed wi th the Commission on February 19, 2020) .

4.6 Amendment to Note Purchase and Private Shelf Agreement, dated as of September 13, 2019, by and among Centerspace, LP, a North Dakota Limited Partnership, as the Issuer, Investors Real Estate, as the Parent, Centerspace, Inc., as the General Partner, certain subsidiaries of the Parent, PGIM Inc., an affiliate of Prudential Financial, Inc., certain affiliates of PGIM, Inc., and the Purchasers of the Series A Notes (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Commission on January 7, 2021).

4.7 Form of Series C Notes under Note Agreement (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed with the Commission on January 7, 2021).

2015 Incentive Plan dated June 23, 2015 (incorporated herein by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Commission on August 3, 2015).

10.2** Amendment to 2015 Incentive Plan dated April 19, 2016 (incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K filed with the Commission on June 29, 2016).

10.3** Amendment to 2015 Incentive Plan dated March 13, 2020 (incorporated herein by reference to Appendix B to the Company's Proxy Statement on Schedule 14A filed with the Commission on April 6, 2020).

10.4** Form of Trustee Stock Award Agreement under the 2015 Incentive Plan dated June 22, 2016 (incorporated herein by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed with the Commission on June 29, 2016).

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10.12 Second Amended and Restated Credit Agreement and related Annex I attached thereto, dated as of August 31, 2018, by and among IRET Properties, a North Dakota Limited Partnership, as the Borrower, the Guarantors party thereto, the several financial institutions party thereto, as Lenders, and the Bank of Montreal, as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on September 6, 2018).

First Amendment to Second Amended and Restated Credit Agreement and related Annex I attached thereto, by and among IRET Properties, a North Dakota Limited Partnership, as the Borrower, the Guarantors party thereto, the several financial institutions party thereto, as Lenders, and the Bank of Montreal, as Administrative Agent.

10.13 First Amendment to Second Amended and Restated Credit Agreement and related Annex I attached thereto, by and among IRET Properties, a North Dakota Limited Partnership, as the Borrower, the Guarantors party thereto, the several financial institutions party thereto, as Lenders, and the Bank of Montreal, as Administrative Agent (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on From 10-K filed with the Commission on February 19, 2020).

10.14 Second Amendment to Second Amended and Restated Credit Agreement and related Annex I attached thereto, by and among IRET Properties, a North Dakota Limited Partnership, as the Borrower, the Guarantors party thereto, the several financial institutions party thereto, as Lenders, and the Bank of Montreal, as Administrative Agent (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on September 17, 2019).

2 unchanged sentences

10.17 Fourth Amendment to the Amended and Restated Agreement of Limited Partnership of IRET Properties, A North Dakota Limited Partnership, dated as of February 26, 2019 (incorporated by reference to Exhibit 10.32 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on February 27, 2019).

Subsidiaries of Investors Real Estate Trust

Subsidiaries of Centerspace

Consent of Independent Registered Public Accounting Firm

10 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

February 19, 2020

Investors Real Estate Trust

February 22, 2021 Investors Real Estate Trust dba Centerspace

President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature Title Date

/s/ Jeffrey P.

Trustee & Chairman

February 19, 2020

Caira Trustee & Chairman February 22, 2021

President & Chief Executive Officer

(Principal Executive Officer);

February 19, 2020

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

February 19, 2020

Trustee February 22, 2021

Kirchmann Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer) February 22, 2021

/s/ Michael T.

February 19, 2020

Dance Trustee February 22, 2021

/s/ Emily Nagle Green

Emily Nagle Green

February 19, 2020

Emily Nagle Green Trustee February 22, 2021

Hall Trustee February 22, 2021

/s/ Terrance P.

February 19, 2020

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

Maxwell Trustee February 22, 2021

Schissel Trustee February 22, 2021

Twinem Trustee February 22, 2021

CENTERSPACE AND SUBSIDIARIES

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Investors Real Estate Trust (a North Dakota real estate investment trust) and subsidiaries (the “Company”) as of December 31, 2019 and 2018, and April 30, 2018, the related consolidated statements of operations, comprehensive income, equity, and cash flows for the year ended December 31, 2019, eight month period ended December 31, 2018, and the years ended April 30, 2018 and 2017, and the related notes and financial statement schedule in Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and April 30, 2018, and the results of its operations and its cash flows for the year ended December 31, 2019, eight month period ended December 31, 2018 and the years ended April 30, 2018 and 2017, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Investors Real Estate Trust (a North Dakota real estate investment trust) and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for the years ended December 31, 2020 and 2019, eight month period ended December 31, 2018, and the year ended April 30, 2018, and the related notes and financial statement schedule included under Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years ended December 31, 2020 and 2019, eight month period ended December 31, 2018, and the year ended April 30, 2018, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 22, 2021 expressed an unqualified opinion

7 unchanged sentences

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

1 unchanged sentence

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Mortgage Loans Receivable and Notes Receivable

As described in Note 2 to the consolidated financial statements, in December 2019, the company originated a $29.9 million construction loan and a $15.3 million mezzanine loan to an unconsolidated variable interest entity ("unconsolidated VIE"), for the development of a multifamily development located in Minneapolis, Minnesota.

The loans are secured by mortgages and mature on December 31, 2023, and the agreement provides the Company with an option to purchase the development.

The Company concluded it is not the primary beneficiary of the unconsolidated VIE as the Company does not have the power to direct the activities which most significantly impact its economic performance nor do they have significant influence over the unconsolidated VIE.

We identified the Company's VIE determination for the unconsolidated VIE transaction as a critical audit matter.

The principal consideration for our determination that the VIE determination for the unconsolidated VIE transaction is a critical audit matter is that it involves a high degree of judgment in assessing management's conclusions that the Company does not exert

control over the activities that are most significant in impacting the economics of the unconsolidated VIE and therefore is not the primary beneficiary and does not consolidate the VIE.

Our audit procedures related to the VIE determination for the unconsolidated VIE transaction included the following, among others.

We tested the design and operating effectiveness of management's internal controls over their VIE determination, including controls over the evaluation and application of the appropriate accounting principles.

We inspected the construction and mezzanine loan agreements to identify and understand the provisions relevant to management's conclusion.

We evaluated those relevant provisions to determine whether management's conclusions were consistent with the relevant accounting guidance, specifically whether the protective rights granted to the Company through the loan agreements gave the Company the power to direct the activities most significant to the unconsolidated VIE.

We consulted our national office regarding the appropriateness of management’s conclusions that the Company was not the primary beneficiary of the VIE as the Company does not exert control over the activities that are most significant in impacting the economics of the VIE.

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ GRANT THORNTON LLP

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Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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February 22, 2021

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CENTERSPACE AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

December 31, 2019

December 31, 2018

April 30, 2018

December 31, 2020 December 31, 2019

Real estate investments

1 unchanged sentence

Less accumulated depreciation ( 399,249 ) ( 349,122 )

1,413,308 1,293,956

Unimproved land — 1,376

3 unchanged sentences

Restricted cash 6,918 19,538

Other assets 18,904 34,829

TOTAL ASSETS $ 1,464,183 $ 1,392,418

LIABILITIES, MEZZANINE EQUITY, AND EQUITY

2 unchanged sentences

Notes payable, net of unamortized loan costs of $ 754 and $ 942 , respectively

269,246 269,058

Mortgages payable, net of unamortized loan costs of $ 1,371 and $ 1,712 , respectively

297,074 329,664

TOTAL LIABILITIES $ 774,800 $ 695,956

COMMITMENTS AND CONTINGENCIES (NOTE 14)

REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES

SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $100 par value, 165,600 units issued and outstanding at December 31, 2019 and no units issued and outstanding at December 31, 2018 and April 30, 2018, aggregate liquidation preference of $16,560,000)

Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,118,460 shares issued and outstanding at December 31, 2019, December 31, 2018, and April 30, 2018, aggregate liquidation preference of $102,971,475)

Common Shares of Beneficial Interest (Unlimited authorization, no par value, 12,098,379 shares issued and outstanding at December 31, 2019, 11,942,372 shares issued and outstanding at December 31, 2018, and 11,952,598 shares issued and outstanding at April 30, 2018)

SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $ 100 par value, 165,600 units issued and outstanding at December 31, 2020 and December 31, 2019, aggregate liquidation preference of $ 16,560,000 )

$ 16,560 $ 16,560

Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 3,881,453 shares issued and outstanding at December 31, 2020, aggregate liquidation preference of $ 97,036,325 and 4,118,460 shares issued and outstanding at December 31, 2019, aggregate liquidation preference of $ 102,971,475 )

93,530 99,456

Common Shares of Beneficial Interest (Unlimited authorization, no par value, 13,027,172 shares issued and outstanding at December 31, 2020 and 12,098,379 shares issued and outstanding at December 31, 2019)

968,263 917,400

Accumulated distributions in excess of net income ( 427,681 ) ( 390,196 )

1 unchanged sentence

Total shareholders’ equity $ 618,207 $ 619,053

Noncontrolling interests – Operating Partnership (1,058,142 units at December 31, 2019, 1,367,502 units at December 31, 2018, and 1,409,943 units at April 30, 2018)

Noncontrolling interests – Operating Partnership ( 976,516 units at December 31, 2020 and 1,058,142 units at December 31, 2019)

53,930 55,284

Noncontrolling interests – consolidated real estate entities 686 5,565

TOTAL EQUITY $ 672,823 $ 679,902

TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY $ 1,464,183 $ 1,392,418

See Notes to Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CENTERSPACE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

( in thousands, except per share data)

Year Ended December 31,

Eight Months Ended December 31,

Fiscal Years Ended April 30,

Year Ended December 31, Eight Months Ended December 31, Fiscal Year Ended April 30,

2020 2019 2018 2018

REVENUE $ 177,994 $ 185,755 $ 121,871 $ 169,745

Property operating expenses, excluding real estate taxes 51,625 57,249 37,198 54,292

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General and administrative expenses 13,440 14,450 9,812 14,254

Acquisition and investment related costs

TOTAL EXPENSES 169,654 174,338 116,786 193,449

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Loss on extinguishment of debt ( 23 ) ( 2,360 ) ( 556 ) ( 940 )

Interest and other income

Interest and other income (loss) ( 1,552 ) 2,092 1,233 1,508

Income (loss) before gain (loss) on sale of real estate and other investments, gain (loss) on litigation settlement, and income (loss) from discontinued operations ( 20,760 ) ( 19,388 ) ( 15,597 ) ( 57,314 )

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See Notes to Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CENTERSPACE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Eight Months Ended December 31,

Fiscal Years Ended April 30,

Year Ended December 31, Eight Months Ended December 31, Fiscal Year Ended April 30,

2020 2019 2018 2018

NET INCOME (LOSS) $ 4,743 $ 84,822 $ ( 5,320 ) $ 127,629

7 unchanged sentences

See Notes to Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CENTERSPACE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

DISTRIBUTIONS

NONREDEEMABLE

COMPREHENSIVE

NONCONTROLLING

(in thousands, except per share amounts)

NUMBER ACCUMULATED ACCUMULATED

OF DISTRIBUTIONS OTHER NONREDEEMABLE

PREFERRED COMMON COMMON IN EXCESS OF COMPREHENSIVE NONCONTROLLING TOTAL

SHARES SHARES SHARES NET INCOME INCOME INTERESTS EQUITY

Balance at April 30, 2017 $ 111,357 12,120 $ 908,905 $ ( 466,541 ) — $ 82,437 $ 636,158

Net income (loss) attributable to controlling interest and noncontrolling interests 116,788 11,582 128,370

Change in fair value of derivatives 1,779 1,779

Distributions – common shares and Units ($ 2.80 per share and Unit)

Distributions – Series A preferred shares (1.0312 per Series A share)

( 33,689 ) ( 4,096 ) ( 37,785 )

Distributions – Series B preferred shares ($ 0.9938 per Series B share)

Shares issued and share-based compensation

( 4,571 ) ( 4,571 )

Distributions – Series C preferred shares ($ 1.65625 per Series C share)

( 3,999 ) ( 3,999 )

Share-based compensation, net of forfeitures 10 1,663 1,663

Issuance of Series C preferred shares 99,456 99,456

Redemption of Units for common shares 3 34 ( 34 ) —

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Contributions from nonredeemable noncontrolling interests – consolidated real estate entities 619 619

Conversion of equity of notes receivable from noncontrolling interests - consolidated real estate entities

Acquisition of nonredeemable noncontrolling interests - consolidated real estate entities

Other ( 2 ) ( 570 ) 167 ( 403 )

Balance at April 30, 2018 $ 99,456 11,953 $ 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 11,953 900,097 ( 395,042 ) 1,779 81,900 688,190

Net income (loss) attributable to controlling interests and noncontrolling interests ( 4,398 ) ( 480 ) ( 4,878 )

1 unchanged sentence

Distributions – common shares and Units ($ 2.10 per share and Unit)

Distributions – Series B preferred shares ($0.9938 per Series B share)

( 25,060 ) ( 2,917 ) ( 27,977 )

Distributions – Series C preferred shares ($ 1.2422 per Series C share)

Shares issued and share-based compensation

Issuance of Series C preferred shares

( 4,548 ) ( 4,548 )

Share-based compensation, net of forfeitures 3 1,042 1,042

Redemption of Units for common shares 33 649 ( 649 ) —

1 unchanged sentence

Shares repurchased ( 42 ) ( 2,172 ) ( 2,172 )

Contributions from nonredeemable noncontrolling interests – consolidated real estate entities

Balance at April 30, 2018

Distributions to nonredeemable noncontrolling interests - consolidated real estate entities ( 2,432 ) ( 2,432 )

Conversion to equity of notes receivable from nonredeemable noncontrolling interests – consolidated real estate entities ( 392 ) ( 392 )

Acquisition of nonredeemable noncontrolling interests – consolidated real estate entities ( 175 ) 131 ( 44 )

Other ( 5 ) ( 207 ) ( 207 )

Balance at December 31, 2018 $ 99,456 11,942 $ 899,234 $ ( 429,048 ) ( 856 ) $ 74,663 $ 643,449

See Notes to Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CENTERSPACE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (continued)

(in thousands)

DISTRIBUTIONS

NONREDEEMABLE

COMPREHENSIVE

NONCONTROLLING

Balance at April 30, 2018

Cumulative adjustment upon adoption of ASC 606 and ASC 610-20

Balance on May 1, 2018

(in thousands, except per share amounts)

NUMBER ACCUMULATED ACCUMULATED

OF DISTRIBUTIONS OTHER NONREDEEMABLE

PREFERRED COMMON COMMON IN EXCESS OF COMPREHENSIVE NONCONTROLLING TOTAL

SHARES SHARES SHARES NET INCOME INCOME INTERESTS EQUITY

Balance at December 31, 2018 $ 99,456 11,942 $ 899,234 $ ( 429,048 ) $ ( 856 ) $ 74,663 $ 643,449

Net income (loss) attributable to controlling interests and noncontrolling interests 78,669 5,790 84,459

1 unchanged sentence

Distributions – common shares and Units ($ 2.10 per share and Unit)

( 32,996 ) ( 3,414 ) ( 36,410 )

Distributions – Series C preferred shares ($ 1.2422 per Series C share)

( 6,821 ) ( 6,821 )

Share-based compensation, net of forfeitures 11 1,905 1,905

Sale of common shares, net 308 22,019 22,019

Redemption of Units for common shares 173 7,823 ( 7,823 ) —

1 unchanged sentence

Shares repurchased ( 329 ) ( 18,023 ) ( 18,023 )

Acquisition of redeemable noncontrolling interests 4,529 4,529

Distributions to nonredeemable noncontrolling interests - consolidated real estate entities ( 220 ) ( 220 )

Conversion to equity of notes receivable from nonredeemable noncontrolling interests – consolidated real estate entities

Acquisition of nonredeemable noncontrolling interests – consolidated real estate entities

Other ( 7 ) ( 87 ) ( 87 )

Balance at December 31, 2019 $ 99,456 12,098 $ 917,400 $ ( 390,196 ) $ ( 7,607 ) $ 60,849 $ 679,902

2 unchanged sentences

Distributions – common shares and Units ($ 2.80 per common share and Unit)

( 35,695 ) ( 2,842 ) ( 38,537 )

Distributions – Series C preferred shares ($ 1.65625 per Series C share)

( 6,528 ) ( 6,528 )

Share-based compensation, net of forfeitures 20 2,106 2,106

3 unchanged sentences

Shares repurchased ( 5,926 ) — — 297 ( 5,629 )

Acquisition of redeemable noncontrolling interests

Distributions to nonredeemable noncontrolling interests – consolidated real estate entities

Acquisition of noncontrolling interests - consolidated real estate entities ( 7,584 ) ( 4,637 ) ( 12,221 )

Other ( 1 ) ( 761 ) ( 116 ) ( 877 )

Balance at December 31, 2020 $ 93,530 13,027 $ 968,263 $ ( 427,681 ) $ ( 15,905 ) $ 54,616 $ 672,823

See Notes to Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CENTERSPACE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

Eight Months Ended December 31,

Fiscal Year Ended April 30,

Year Ended December 31, Eight Months Ended December 31, Fiscal Year Ended April 30,

2020 2019 2018 2018

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

(Gain) loss on sale of real estate, land, other investments and discontinued operations ( 25,503 ) ( 97,624 ) ( 10,277 ) ( 183,687 )

Realized (gain) loss on marketable securities 3,378 — — —

(Gain) loss on extinguishment of debt and discontinued operations 23 2,360 482 6,839

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Impairment of real estate investments — — 1,221 18,065

Bad debt expense 2,332 1,050 592 1,423

Other, net 1,310 46 37 34

Changes in other assets and liabilities:

Other assets ( 4,818 ) 1,076 ( 1,145 ) ( 646 )

Accounts payable and accrued expenses 1,061 1,930 2,205 ( 7,851 )

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CASH FLOWS FROM INVESTING ACTIVITIES

Issuance of loans receivable

Proceeds from repayment of mortgage loans receivable 10,020 — — —

Proceeds from sale of marketable securities 3,856 — — —

Increase in mortgages and notes receivable ( 24,862 ) ( 6,279 ) ( 918 ) ( 15,480 )

Purchase of marketable securities ( 179 ) ( 6,942 ) — —

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Payments for acquisitions of real estate assets ( 168,696 ) ( 158,466 ) ( 977 ) ( 374,081 )

Payments for development of real estate assets

Payments for improvements of real estate assets ( 30,315 ) ( 20,954 ) ( 11,518 ) ( 17,980 )

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Proceeds from sale of common shares, net of issuance costs 58,852 22,019 — —

Additions to notes receivable from noncontrolling partner – consolidated real estate entities

Proceeds from noncontrolling partner – consolidated real estate entities

Payments for acquisition of noncontrolling interests – consolidated real estate entities ( 12,221 ) ( 1,260 ) — —

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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF YEAR $ 7,310 $ 46,117 $ 19,256 $ 16,116

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CENTERSPACE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Twelve Months Ended December 31,

Eight Months Ended December 31,

Fiscal Year Ended April 30,

Year Ended December 31, Eight Months Ended December 31, Fiscal Year Ended April 30,

2020 2019 2018 2018

SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

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Property acquired through issuance of Series D preferred units — 16,560 — —

Real estate assets acquired through exchange of note receivable 17,663 — — —

Note receivable exchanged through real estate acquisition ( 17,663 ) — — —

Conversion to equity of notes receivable from noncontrolling interests - consolidated real estate entities — — 670 —

Construction debt reclassified to mortgages payable — — — 23,300

Increase in mortgage notes receivable

Increase in mortgage notes receivable due to sale of real estate — — — 10,329

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest, net of amounts capitalized of $ 0 , $ 0 , $ 0 and $ 431 , respectively

26,051 28,679 24,135 35,758

(in thousands)

Balance sheet description December 31, 2020 December 31, 2019 December 31, 2018 April 30, 2018

Cash and cash equivalents $ 392 $ 26,579 $ 13,792 $ 11,891

Restricted cash 6,918 19,538 5,464 4,225

Total cash, cash equivalents and restricted cash $ 7,310 $ 46,117 $ 19,256 $ 16,116

See Notes to Consolidated Financial Statements.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CENTERSPACE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2019 , December 31, 2018, April 30, 2018 and 2017

December 31, 2020, 2019, 2018, and April 30, 2018

NOTE 1 • ORGANIZATION

Investors Real Estate Trust (“IRET,” “we” or “us”) is a real estate investment trust (“REIT”) focused on the ownership, management, acquisition, redevelopment and development of apartment communities.

Investors Real Estate Trust doing business as Centerspace (“Centerspace,” “we,” “our,” or “us”) is a real estate investment trust (“REIT”) focused on the ownership, management, acquisition, redevelopment and development of apartment communities.

As of December 31, 2020, we held for investment 67 apartment communities with 11,910 homes.

We conduct a majority of our business activities through our consolidated operating partnership, IRET Properties, a North Dakota Limited Partnership (the “Operating Partnership”), as well as through a number of other subsidiary entities.

All references to IRET, we, or us refer to Investors Real Estate Trust and its consolidated subsidiaries.

We conduct a majority of our business activities through our consolidated operating partnership, Centerspace, LP, (the “Operating Partnership”), as well as through a number of other subsidiary entities.

All references to Centerspace, we, or us refer to Centerspace and its consolidated subsidiaries.

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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The references in these notes to the consolidated financial statements to the terms listed below reflect the respective periods presented in the consolidated financial statements:

Financial Reporting Period

Year ended December 31, 2019

January 1, 2019 through December 31, 2019

Transition period ended December 31, 2018

May 1, 2018 through December 31, 2018

Fiscal year ended April 30, 2018

May 1, 2017 through April 30, 2018

Fiscal year ended April 30, 2017

May 1, 2016 through April 30, 2017

Our interest in the Operating Partnership was 92.0 % , 89.7 % , and 89.4 % , respectively, of the limited partnership units of the Operating Partnership (“Units”) as of December 31, 2019 , December 31, 2018, and April 30, 2018 , which includes 100 % of the general partnership interest.

On December 14, 2018, the Board approved a reverse stock split of our outstanding common shares and Units, no par value per share, at a ratio of 1-for-10.

The reverse stock split was effective as of the close of trading on December 27, 2018, with trading commencing on a split-adjusted basis on December 28, 2018.

The number of common shares and Units was reduced from 119.4 million to 11.9 million and 13.7 million to 1.4 million , respectively.

We have retroactively restated all shares and Units and per share and Unit data for all periods presented.

Term Financial Reporting Period

Year ended December 31, 2020 January 1, 2020 through December 31, 2020

Year ended December 31, 2019 January 1, 2019 through December 31, 2019

Transition period ended December 31, 2018 May 1, 2018 through December 31, 2018

Fiscal year ended April 30, 2018 May 1, 2017 through April 30, 2018

Our interest in the Operating Partnership as of December 31, 2020 and 2019 was 93.0 % and 92.0 %, respectively, of the limited partnership units of the Operating Partnership (“Units”), which includes 100 % of the general partnership interest.

The consolidated financial statements also reflect the ownership by the Operating Partnership of certain joint venture entities in which the Operating Partnership has a general partner’s or controlling interest.

These entities are consolidated into our other operations with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses.

SIGNIFICANT RISKS AND UNCERTAINTIES

The COVID-19 pandemic is a source of significant risk and uncertainty that could have an adverse impact on our business.

the COVID-19 pandemic has adversely impacted the global economy and financial markets, and multifamily residents and commercial tenants have experienced financial hardship or closure.

The extent to which the COVID-19 pandemic could have an adverse effect on our financial condition, results of operations, and cash flows is uncertain and will depend on future developments.

The COVID-19 pandemic has not had a material adverse impact on our financial condition, results of operations, and cash flows for the year ended December 31, 2020;

however, we continue to monitor the impact on all aspects of our business and cannot predict the impact it may have on our financial condition, results of operations, and cash flows in the future.

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

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

Date of Adoption

Effect on the Financial Statements or Other Significant Matters

Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters

ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

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Early adoption is permitted.

We will elect the fair value option, as allowed by ASU 2019-05, for our mortgages receivable and notes receivable at January 1, 2020.

The fair value option election is not expected to have a material impact on our consolidated financial statements but will require additional disclosures.

We elected the fair value option for all of our mortgages and notes receivable at January 1, 2020, as allowed by ASU 2019-05.

As a result, we do not have any receivables or other financial instruments to which we are applying this standard.

ASU 2018-13, Fair Value Measurements (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurements

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Early adoption is permitted.

The new standard will not have a material impact 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 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.

ASU 2019-07, Codification Updates to SEC Sections:

Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.

33-10532, Disclosure Update and Simplification, and Nos.

33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates

This ASU clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC's regulations, thereby eliminating redundancies and making the codification easier to apply.

This ASU was effective upon issuance.

The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and the related disclosures.

The new standard did not have a material impact on our consolidated financial statements.

ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting

This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives, and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

This ASU is optional and may be elected over time.

We are currently evaluating the practical expedients and the impact they may have on our consolidated financial statements.

ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts in an Entitiy's Own Equity

This ASU simplifies accounting for convertible instruments and removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception.

This ASU also simplifies the diluted earnings per share calculation in certain areas and provide updated disclosure requirements.

This ASU is effective for annual reporting periods beginning after December 31, 2021.

Early adoption is permitted.

We are currently evaluating the ASU and the impact it may have on our consolidated financial statements.

RECLASSIFICATIONS

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Real estate investments are recorded at cost less accumulated depreciation and an adjustment for impairment, if any.

Property, consisting primarily of real estate investments, totaled $ 1.3 billion , $ 1.3 billion , and $ 1.4 billion as of December 31, 2019 , December 31, 2018 , and April 30, 2018 , respectively.

Upon acquisitions of real estate, we assess the fair value of acquired

tangible assets (including land, buildings and personal property), which is determined by valuing the property as if it were vacant, and consider whether there were significant intangible assets acquired (for example, above- and below-market leases, the value of acquired in-place leases and resident relationships) and assumed liabilities, and allocate the purchase price based on these assessments.

Property, consisting primarily of real estate investments, totaled $ 1.4 billion and $ 1.3 billion as of December 31, 2020 and 2019, respectively.

Upon acquisitions of real estate, we assess the fair value of acquired tangible assets (including land, buildings and personal property), which is determined by valuing the property as if it were vacant, and consider whether there were significant intangible assets acquired (for example, above- and below-market leases, the value of acquired in-place leases and resident relationships) and assumed liabilities, and allocate the purchase price based on these assessments.

The as-if-vacant value is allocated to land, buildings, and personal property based on our determination of the relative fair values of these assets.

The estimated fair value of the property is the amount that would be recoverable upon the disposition of the property.

Techniques used to estimate fair value include discounted cash flow analysis and reference to recent sales of comparable properties.

Techniques used to estimate fair value include discounted cash flow analysis and reference to recent sales of comparable

Estimates of future cash flows are based on a number of factors, including the historical operating results, known trends, and market/economic conditions that may affect the property.

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General and administrative costs are expensed as incurred.

Interest of approximately $ 4,000 and $ 431,000 was capitalized in continuing and discontinued operations for the years ended April 30, 2018 and 2017 , respectively.

We did not capitalize interest during the year ended December 31, 2019 or the transition period ended December 31, 2018 .

Interest of approximately $ 4,000 was capitalized in continuing and discontinued operations for the fiscal year ended April 30, 2018.

We did not capitalize interest during the years ended December 31, 2020 and 2019, or the transition period ended December 31, 2018.

Expenditures for ordinary maintenance and repairs are expensed to operations as incurred.

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We periodically evaluate our long-lived assets, including real estate investments, for impairment indicators.

The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group, and legal and environmental concerns.

If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset.

If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group.

The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each property, and legal and environmental concerns.

If indicators exist, we compare the expected future undiscounted cash flows for the property against the carrying amount of that property.

If the sum of the estimated undiscounted cash flows is less than the carrying amount, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount.

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.

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Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

During the year ended December 31, 2019 , we did not incur a loss for impairment on real estate.

During the years ended December 31, 2020 and 2019, we did not incur a loss for impairment on real estate.

During the transition period ended December 31, 2018, we incurred a loss of $ 1.2 million due to impairment of a parcel of land in Bismarck, North Dakota.

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During the fiscal year ended April 30, 2018, we incurred a loss of $ 18.1 million due to impairment of one apartment community, three other commercial properties, and four parcels of land.

We recognized impairments of $ 12.2 million on one

apartment community in Grand Forks, North Dakota;

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;

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$ 1.5 million on a parcel of land in Grand Forks, North Dakota;

and $ 256,000 and $ 709,000 on two parcels of land in Bismarck, North Dakota.

$ 256,000 and $ 709,000 on two parcels of land in Bismarck, North Dakota.

These parcels were written down to estimated fair value based on independent appraisals and market data.

During the fiscal year ended April 30, 2017, we incurred a loss of $ 57.0 million due to impairment of 16 apartment communities and two parcels of unimproved land.

We recognized impairments of $ 40.9 million , $ 5.8 million , $ 4.7 million , and $ 2.8 million , respectively, on three apartment communities and one parcel of unimproved land in Williston, North Dakota, due to deterioration of this energy-impacted market, which resulted in poor leasing activity and declining rental rates, which should generally be a strong leasing period.

These properties were written down to estimated fair value based on an independent appraisal in the case of one property and management cash flow estimates and market data in the case of the remaining assets.

The properties impaired for $ 40.9 million , $ 4.7 million , and $ 2.8 million were owned by joint venture entities in which, at the time of impairment, we had an approximately 70 % , 60 % , and 70 % interest, respectively, but which were consolidated in our consolidated financial statements.

We recognized impairments of $ 2.9 million on 13 properties and one parcel of land in Minot, North Dakota.

These properties were written down to estimated fair value based on management cash flow estimates and market data and, in the case of the 13 properties, our intent to dispose of the properties.

CHANGE IN DEPRECIABLE LIVES OF REAL ESTATE ASSETS

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We generally consider these criteria met when the transaction has been approved by our Board of Trustees, there are no known significant contingencies related to the sale, and management believes it is probable that the sale will be completed within one year .

We had no properties classified as held for sale at December 31, 2019 , December 31, 2018 , and April 30, 2018 .

We had no properties classified as held for sale at December 31, 2020 and 2019.

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:

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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

(in thousands)

Balance sheet description

December 31, 2019

December 31, 2018

April 30, 2018

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash

Cash and cash equivalents include all cash and highly liquid investments purchased with maturities of three months or less.

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We have not experienced any losses in such accounts.

As of December 31, 2019 restricted cash consisted of $ 17.2 million of net tax-deferred exchange proceeds remaining from a portion of our dispositions and $ 2.3 million in escrows held by lenders for real estate taxes, insurance, and capital additions.

As of December 31, 2018 , and April 30, 2018 , restricted cash consisted primarily of escrows held by lenders for real estate taxes, insurance, and capital additions.

Tax, insurance, and other escrows include funds deposited with a lender for payment of real estate taxes and insurance and reserves for funds to be used for replacement of structural elements and mechanical equipment of certain projects.

As of December 31, 2020 restricted cash consisted of $ 5.0 million of real estate deposits for property acquisitions and $ 1.9 million in escrows held by lenders.

As of December 31, 2019, restricted cash consisted primarily of net tax-deferred exchange proceeds remaining from a portion of our dispositions and escrows held by lenders.

Escrows include funds deposited with a lender for payment of real estate taxes and insurance, and reserves to be used for replacement of structural elements and mechanical equipment at certain communities.

The funds are under the control of the lender.

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The leases for commercial spaces generally include options to extend the lease for additional terms.

Beginning in April 2020, we offered multifamily residents suffering from financial hardship related to the COVID-19 pandemic the option to apply for a rent deferral.

We elected to account for these accommodations as though enforceable rights and obligations for the accommodations existed without evaluating if such a right or obligation existed under the lease agreement, as allowed by the FASB Q&A released on April 10, 2020 related to lease modification guidance under ASC 842.

The accommodations were recognized as variable lease payments.

As of December 31, 2020, approximately $ 99,600 remained outstanding under the rent deferral agreements offered to multifamily residents.

We also abated rent, common area maintenance, and real estate taxes for commercial tenants that experienced government-mandated interruptions or closures of their businesses.

The accommodations were recognized as variable lease payments, as allowed by the FASB Q&A released on April 10, 2020.

During the year ended December 31, 2020, we recognized a reduction in revenue of $ 656,000 due to the abatement of amounts due from our commercial tenants.

Many of our leases contain non-lease components for utility reimbursement from our residents.

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(in thousands)

Thereafter 2,373

Total scheduled lease income - operating leases $ 13,371

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We elected to apply the new standard to contracts that 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 the company expects to be entitled for those goods and services.

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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 by $ 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 year ended December 31, 2019 and the transition period ended December 31, 2018 :

As a result of our adoption of the new standard, we

recorded a cumulative adjustment to retained earnings and increased the mortgage receivable by $ 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 years ended December 31, 2020 and 2019, and the transition period ended December 31, 2018:

(in thousands)

Transition period ended

Revenue Stream

Applicable Standard

December 31, 2019

December 31, 2018

Fixed lease income - operating leases

Variable lease income - operating leases

Non-lease components

Revenue from contracts with customers

Other property revenue

Revenue from contracts with customers

Year ended December 31, Transition period ended

Revenue Stream Applicable Standard 2020 2019 December 31, 2018

Fixed lease income - operating leases Leases $ 168,119 $ 176,706 $ 114,047

Variable lease income - operating leases Leases 7,068 5,586 3,528

Other property revenue Revenue from contracts with customers 2,807 3,463 4,296

Total revenue $ 177,994 $ 185,755 $ 121,871

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Under those sections, a REIT which distributes at least 90 % of its REIT taxable income, excluding capital gains, as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to shareholders.

For the year ended December 31, 2019 , the transition period ended December 31, 2018 and the fiscal years ended April 30, 2018 , and 2017 , we distributed in excess of 90 % of our taxable income and realized capital gains from property dispositions within the prescribed time limits.

For the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018 and the fiscal year ended April 30, 2018, we distributed in excess of 90 % of our taxable income and realized capital gains from property dispositions within the prescribed time limits.

Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements.

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In general, however, if we qualify as a REIT, no provisions for federal income taxes are necessary except for taxes on undistributed REIT taxable income and taxes on the income generated by a taxable REIT subsidiary (TRS).

We have one TRS, acquired during the second quarter of fiscal year 2014, which is subject to corporate federal and state income taxes on its taxable income at regular statutory rates.

For the year ended December 31, 2019 , we estimate that the TRS will have no taxable income.

There were no income tax provisions or material deferred income tax items for our TRS for the year ended December 31, 2019 , the transition period ended December 31, 2018 and the fiscal years ended April 30, 2018 , and 2017 .

We have one TRS, which is subject to corporate federal and state income taxes on its taxable income at regular statutory rates.

There were no income tax provisions or material deferred income tax items for our TRS for the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018.

We conduct our business activity as an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) through our Operating Partnership.

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Tax status of distributions

Capital gain 13.62 % 38.53 % 100.00 %

Ordinary income 7.91 % 23.43 % —

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Because our Operating Partnership is a VIE, all of our assets and liabilities are held through a VIE.

As of December 31, 2019 , December 31, 2018 , and April 30, 2018 , other assets consisted of the following amounts:

December 31, 2019

December 31, 2018

April 30, 2018

As of December 31, 2020 and 2019, other assets consisted of the following amounts:

December 31, 2020 December 31, 2019

Receivable arising from straight line rents $ 336 $ 785

Accounts receivable, net of allowance

Fair value of interest rate swaps

Loans receivable

Real estate related loans receivable 6,332 16,557

Marketable securities — 7,055

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Property and equipment, net of accumulated depreciation

Goodwill 986 1,086

Deferred charges and leasing costs 1,201 1,837

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PROPERTY AND EQUIPMENT

Property and equipment consists primarily of office equipment located at our headquarters in Minot, North Dakota and corporate office in Minneapolis, Minnesota.

Property and equipment consists primarily of office equipment located at our corporate offices in Minot, North Dakota and in Minneapolis, Minnesota.

The consolidated balance sheets reflects these assets at cost, net of accumulated depreciation, and are included within Other Assets.

As of December 31, 2019 , December 31, 2018 , and April 30, 2018 , property and equipment cost was $ 2.9 million , $ 2.2 million , and $ 2.1 million , respectively.

Accumulated depreciation was $ 1.7 million , $ 1.4 million , and $ 1.3 million as of December 31, 2019 , December 31, 2018 , and April 30, 2018 , respectively, and are included within other assets in the consolidated balance sheets.

As of December 31, 2020 and 2019, property and equipment cost was $ 4.7 million and $ 2.9 million, respectively.

Accumulated depreciation was $ 2.0 million and $ 1.7 million as of December 31, 2020 and 2019, respectively, and are included within other assets in the consolidated balance sheets.

MORTGAGE LOANS RECEIVABLE AND NOTES RECEIVABLE

In August 2017, we sold 13 apartment communities in exchange for cash and an $ 11.0 million note secured by a mortgage on the assets.

As of December 31, 2019 , December 31, 2018 , and April 30, 2018 the remaining balance on the mortgage was $ 10.0 million , $ 10.4 million , and $ 11.0 million , respectively.

As of December 31, 2019 , 12 communities remained in the 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.

We received and recognized approximately $ 570,000 , $ 448,000 , and $ 372,000 of interest income during the year ended December 31, 2019 , the transition period ended December 31, 2018 , and the fiscal year ended April 30, 2018 , respectively.

In July 2017, we originated a $ 16.2 million loan in a multifamily development located in New Hope, MN, a Minneapolis suburb.

We funded an additional $ 341,000 upon satisfaction of certain conditions set forth in the loan agreement.

The note bears an interest rate of 6 % , matures in July 2023, and provides us an option to purchase the development prior to the loan maturity date.

Interest payments are due when the note matures.

As of December 31, 2019 , the balance of the note, including accrued interest, was $ 16.6 million , which appears in other assets on our consolidated balance sheets.

I n March 2020, in connection with our acquisition of Ironwood, an apartment community in New Hope, Minnesota, we acquired a tax increment financing note receivable (“TIF”) with a principal balance of $ 6.6 million, which appears within Other Assets in our consolidated balance sheets.

The note bears an interest rate of 4.5 % with payments due in February and August of each year.

I n December 2019, we originated a $ 29.9 million construction loan and a $ 15.3 million mezzanine loan for the development of a multifamily development located in Minneapolis, Minnesota.

The construction and mezzanine loans bear interest at 4.5 % and 11.5 %, respectively.

As of December 31, 2019 , we had funded $ 6.2 million of the construction loan, which appears within mortgages receivable in our consolidated balance sheets.

As of December 31, 2020 and 2019, we had funded $ 24.7 million and $ 6.2 million, respectively, of the construction loan, which appears within mortgages receivable in our consolidated balance sheets.

The loans are secured by mortgages and mature on December 31, 2023, and the agreement provides us with an option to purchase the development.

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We are not the primary beneficiary of the VIE as we do not have the power to direct the activities which most significantly impact the entity’s economic performance nor do we have significant influence over the entity.

In August 2017, we sold 13 apartment communities in exchange for cash and an $ 11.0 million note secured by a mortgage on the assets.

As of December 31, 2020, the note was paid in full.

As of December 31, 2019 the remaining balance on the mortgage was $ 10.0 million.

The note had an interest rate of 5.5 %.

Monthly payments were interest-only, with the principal balance payable at maturity.

We received and recognized approximately $ 279,000 , $ 570,000 , $ 448,000 , and $ 372,000 of interest income during the years ended December 31, 2020 and 2019, the transition period ended December 31, 2019, and the fiscal year ended April 30, 2018, respectively.

In July 2017, we originated a $ 16.2 million loan in a multifamily development located in New Hope, Minnesota, a Minneapolis suburb.

We funded an additional $ 341,000 upon satisfaction of certain conditions set forth in the loan agreement.

The note had an interest rate of 6 %.

During the year ended December 31, 2020, we executed the purchase option for the apartment community (refer to Note 9 for details on acquisition).

The note was paid in full as part of our acquisition of this apartment community.

MARKETABLE SECURITIES

As of December 31, 2019 , marketable securities consisted of equity securities.

Marketable securities consisted of equity securities.

We report equity securities at fair value based on quoted market prices (Level 1 inputs).

Any unrealized gains or losses are included in interest and other income on the consolidated statements of operations.

Any unrealized gains or losses are included in interest and other income (loss) on the consolidated statements

of operations.

As of December 31, 2020, we had no marketable securities.

As of December 31, 2019, the cost basis of marketable securities was $ 6.9 million, the gross unrealized gain was $ 113,000 , and the carrying value was $ 7.1 million.

During the year ended December 31, 2020, we had a realized loss of $ 3.4 million arising from the disposal of such securities.

GAIN ON LITIGATION SETTLEMENT

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Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period.

We have 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 or upon conversion of the Series D preferred units (refer to Note 4 for further discussion of the 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 common shares that would result in a dilution of earnings.

We have issued restricted stock units (“RSUs”) and incentive stock options (“ISOs”) 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, ISOs, or upon conversion of the Series D preferred units (refer to Note 4 for further discussion of the preferred units).

Other than the issuance of RSUs, ISOs, and Series D preferred units, we have no outstanding options, warrants, convertible stock, or other contractual obligations requiring issuance of additional common shares that would result in a dilution of earnings.

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 in exchange for Units on a one -for-one-basis.

For the year ended December 31, 2019 , performance-based restricted stock awards of 37,822 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 shares for the periods presented and, therefore, were anti-dilutive.

For the years ended December 31, 2020 and 2019, and the transition period ended December 31, 2018, performance-based restricted stock awards of 26,994 , 37,822 , and 25,300 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 shares for the periods presented and, therefore, were anti-dilutive.

Refer to Note 16 - Share-Based Compensation for discussion of the terms for these awards.

The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the consolidated financial statements for the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal years ended April 30, 2018 and 2017 :

For the year ended December 31, 2020, Series D preferred units of 228,000 and time-based RSUs of 13,000 were excluded from the calculation of diluted earnings per shares because they were anti-dilutive because including these items would have improved earnings per share.

For the year ended December 31, 2020, weighted average stock options of 86,000 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 common shares for the period and were, therefore, anti-dilutive.

The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the consolidated financial statements for the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018:

(in thousands, except per share data)

For Year Ended

For Period Ended

For Year Ended

December 31, 2019

December 31, 2018

April 30, 2018

April 30, 2017

Year Ended December 31, Period Ended Fiscal Year Ended

2020 2019 December 31, 2018 April 30, 2018

Income (loss) from continuing operations – controlling interests $ 4,441 $ 78,669 $ ( 4,908 ) $ ( 30,266 )

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Redemption of preferred shares 297 — — ( 3,657 )

Numerator for basic earnings per share – net income available to common shareholders

Numerator for basic earnings per share – net income (loss) available to common shareholders ( 1,790 ) 71,848 ( 8,945 ) 104,562

Noncontrolling interests – Operating Partnership ( 212 ) 6,752 ( 1,032 ) 12,702

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Operating Partnership Units.

Outstanding Units in the Operating Partnership were 1.1 million Units at December 31, 2019 , 1.4 million Units at December 31, 2018, and 1.4 million Units at April 30, 2018 .

Outstanding Units in the Operating Partnership were 1.0 million Units at December 31, 2020 and 1.1 million Units at December 31, 2019.

Exchange Rights.

Pursuant to the exercise of Exchange Rights, we redeemed Units during the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018 as detailed in the table below.

Pursuant to the exercise of Exchange Rights, we redeemed Units for cash during the years ended December 31, 2020 and 2019 as detailed in the table below.

(in thousands, except per Unit amounts)

Average Price

Number of Aggregate Average Price

Units Cost Per Unit

Year Ended December 31, 2020 1 $ 50 $ 70.10

Transition Period Ended December 31, 2018

Fiscal Year Ended April 30, 2018

We also redeemed Units in exchange for common shares during the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018 as detailed in the table below.

Year Ended December 31, 2019 136 $ 8,142 $ 60.02

We also redeemed Units in exchange for common shares during the years ended December 31, 2020 and 2019 as detailed in the table below.

(in thousands)

Number of Total Book

Year Ended December 31, 2020 81 $ ( 1,750 )

Transition Period Ended December 31, 2018

Fiscal Year Ended April 30, 2018

Year Ended December 31, 2019 174 $ 7,823

Common Shares and Equity Awards .

Common shares outstanding on December 31, 2019 , December 31, 2018, and April 30, 2018 , totaled 12.1 million , 11.9 million , and 12.0 million , respectively.

During the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018 , we issued approximately 18,000 , 5,600 , and 9,300 common shares, respectively, with a total grant-date value of $ 1.1 million , $ 347,000 , and $ 536,000 , respectively, under our 2015 Incentive Plan, for officer and trustee share-based compensation for future performance.

During the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018 , approximately 3,300 , 200 , and 3,200 common shares were forfeited under the 2015 Incentive Plan, respectively.

Common shares outstanding on December 31, 2020 and 2019, totaled 13.0 million and 12.1 million, respectively.

During the years ended December 31, 2020 and 2019, we issued approximately 21,000 and 18,000 common shares, respectively, with a total grant-date value of $ 1.0 million and $ 1.1 million, respectively, under our 2015 Incentive Plan, as share-based compensation for employees and trustees.

During the years ended December 31, 2020 and 2019, approximately 2,400 and 3,300 common shares were forfeited under the 2015 Incentive Plan, respectively.

Equity Distribution Agreement.

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The proceeds from the sale of common shares under the 2019 ATM Program are intended to be used for general corporate purposes, which may include the funding of future acquisitions, community renovations, and the repayment of indebtedness.

During the year ended December 31, 2019 , we issued 308,444 common shares under the 2019 ATM Program at an average price of $ 72.29 per share, net of commissions.

Total consideration, net of commissions and issuance costs, was approximately $ 22.0 million .

As of December 31, 2020, we had common shares having an aggregate offering price of up to $ 68.5 million remaining available under the 2019 ATM Program.

The table below provides details on the sale of common shares during the years ended December 31, 2020 and 2019.

(in thousands, except per share amounts)

Number of Common Shares Total Consideration (1)

Average Price Per Share (1)

Year ended December 31, 2020 829 $ 59,187 $ 71.39

Year ended December 31, 2019 308 $ 22,019 $ 72.29

(1) Total consideration is net of $ 901,000 and $ 310,000 in commissions for the years ended December 31, 2020 and 2019, respectively.

Share Repurchase Program .

On December 7, 2016, our Board of Trustees authorized a share repurchase program to repurchase up to $ 50 million of our common shares over a one year period.

On December 5, 2017, our Board of Trustees reauthorized this share repurchase program for an additional one year period.

On December 5, 2018, our Board of Trustees reauthorized this share repurchase program for a third one -year period.

This program was reauthorized for two additional one year periods.

On December 5, 2019, our Board of Trustees terminated this share repurchase program and authorized a new share purchase program to repurchase up to $ 50 million of our common or preferred shares over a one-year period.

Under this new repurchase program, we may repurchase common or preferred 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 such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements, and other corporate considerations, as determined by our executive management team.

The program may be suspended or discontinued at any time.

As of December 31, 2019 , $ 50.0 million remained available under our repurchase program.

Common shares repurchased during the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018 are detailed in the table below.

Under this new repurchase program, we could repurchase common or preferred 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.

This program expired on December 5, 2020.

Shares repurchased during the years ended December 31, 2020 and 2019 are detailed in the table below.

(in thousands, except per share amounts)

Number of Shares

Aggregate Cost (1)

Number of Common Shares Number of Preferred Shares Aggregate Cost (1)

Average Price Per Share (1)

Year ended December 31, 2020 — 237 $ 5,629 $ 23.75

Transition period ended December 31, 2018

Fiscal year ended April 30, 2018

Year ended December 31, 2019 (2)

329 — $ 18,023 $ 54.69

(1) Amount includes commissions.

(2) Repurchases during the year were under the prior repurchase program.

Issuance of Preferred Shares and Redemption of Series B Preferred Shares .

In the year ended April 30, 2018, we issued 4,118,460 shares of our 6.625 % Series C Cumulative Redeemable Preferred Shares ("Series C preferred shares") and redeemed all 4,600,000 shares of our 7.95 % Series B Cumulative Redeemable Preferred Shares.

Issuance of Series C Preferred Shares .

In the fiscal year ended April 30, 2018, we issued 4.1 million shares of our 6.625 % Series C Cumulative Redeemable Preferred Shares ("Series C preferred shares").

As of December 31, 2020 and 2019, we had 3.9 million and 4.1 million Series C preferred shares outstanding, respectively.

The Series C preferred shares are nonvoting and redeemable for cash at $ 25.00 per share at our option on or 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).

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 ($ 97.0 million and $ 103.0 million liquidation preference in the aggregate, as of December 31, 2020 and 2019, respectively).

Series D Preferred Units (Mezzanine Equity).

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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.

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.

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During the year ended December 31, 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.

Activity of the redeemable noncontrolling interests is detailed in the table below.

(in thousands)

Year ended December 31,

Transition period ended December 31,

Years ended April 30,

Balance at beginning of fiscal year $ 5,968

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The earnings or losses from these properties attributable to the noncontrolling interests are reflected as net income attributable to noncontrolling interests – consolidated real estate entities in the consolidated statements of operations.

Our noncontrolling interests – consolidated real estate entities at December 31, 2019 , December 31, 2018 , and April 30, 2018 were as follows:

During the year ended December 31, 2020, we acquired the 47.4 % noncontrolling interests in the real estate partnership that owns 71 France for $ 12.2 million.

Our noncontrolling interests – consolidated real estate entities at December 31, 2020 and 2019 were as follows:

(in thousands)

December 31, 2019

December 31, 2018

April 30, 2018

December 31, 2020 December 31, 2019

IRET - 71 France, LLC $ — $ 4,817

IRET - Cypress Court Apartments, LLC 686 748

IRET - Williston Garden Apartments, LLC

IRET - WRH 1, LLC

WRH Holding, LLC

Noncontrolling interests – consolidated real estate entities $ 686 $ 5,565

NOTE 6 • DEBT

As of December 31, 2019 , we owned 69 apartment communities, of which 24 served as collateral for mortgage loans.

All of these mortgage loans were non-recourse to us other than for standard carve-out obligations.

Interest rates on mortgage loans range from 3.47 % to 5.73 % , and the mortgage loans have varying maturity dates from November 1, 2020 , through September 1, 2031 .

As of December 31, 2019 , we believe there are no material defaults or instances of material noncompliance in regards to any of these mortgage loans.

During the year ended December 31, 2019 , we closed on a $ 59.9 million mortgage loan.

This mortgage is secured by four apartment communities, is interest only, and is priced at a fixed rate of 3.88 % for the full twelve-year term of the loan.

Proceeds from this loan were used to pay down balances under our line of credit.

During the year ended December 31, 2019 , we entered into a private shelf agreement for the issuance of up to $ 150.0 million of unsecured senior promissory notes ("unsecured senior notes").

Under this agreement, we issued $ 75.0 million of Series A notes due September 13, 2029, bearing interest at a rate of 3.84 % annually, and $ 50.0 million of Series B notes due September 30, 2028, bearing interest at a rate of 3.69 % annually.

We have $ 25.0 million remaining available under the private shelf agreement.

As of December 31, 2019 , we owned 45 apartment communities that were not encumbered by mortgages, with all of these apartment communities providing credit support for our unsecured borrowings.

As of December 31, 2020, 47 of our apartment communities were not encumbered by mortgages, with 34 of those apartment communities providing credit support for our unsecured borrowings.

Our primary unsecured credit facility (“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 $ 250.0 million , with borrowing capacity based on the value of properties contained in the unencumbered asset pool (“UAP”).

The UAP provided for a borrowing capacity of $ 250.0 million at December 31, 2019 , providing additional borrowing availability of $ 199.9 million beyond the $ 50.1 million drawn, including the balance on our operating line of credit (discussed below), priced at an interest rate of 3.81 % , including the impact of our interest rate swap.

Our line of credit has total commitments and borrowing capacity of $ 250.0 million, based on the value of properties contained in the unencumbered asset pool (“UAP”).

As of December 31, 2020, we had additional borrowing availability of $ 97.1 million beyond the $ 152.9 million drawn, including the balance on our operating line of credit (discussed below), priced at an interest rate of 2.85 %, including the impact of our interest rate swap.

This credit facility matures on August 31, 2022, with one 12 -month option to extend the maturity date at our election.

At December 31, 2019, the line of credit borrowing capacity was $ 250.0 million based on the UAP, of which $ 50.1 million was drawn on the line.

At April 30, 2018 , the line of credit borrowing capacity was $ 300.0 million based on the UAP, of which $ 124.0 million was drawn on the line.

Under our unsecured credit facility, we also have unsecured term loans of $ 70.0 million and $ 75.0 million, included within notes payable on the consolidated balance sheets, which mature on January 15, 2024 and August 31, 2025, respectively.

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We believe that we are in compliance with all such financial covenants and limitations as of December 31, 2020.

We have a private shelf agreement for the issuance of up to $ 150.0 million of unsecured senior promissory notes (“unsecured senior notes”).

We have $ 25.0 million remaining available under the private shelf agreement.

As of December 31, 2020, we owned 20 apartment communities that served as collateral for mortgage loans.

All of these mortgage loans were non-recourse to us other than for standard carve-out obligations.

Interest rates on mortgage loans range from 3.47 % to 5.73 %, and the mortgage loans have varying maturity dates from June 1, 2021, through September 1, 2031.

As of December 31, 2020, we believe there are no material defaults or instances of material noncompliance in regards to any of these mortgage loans.

We also have a $ 6.0 million operating line of credit.

3 unchanged sentences

(in thousands)

December 31, 2019

December 31, 2018

April 30, 2018

Weighted Average Maturity in Years

December 31, 2020 December 31, 2019 Weighted Average Maturity in Years

Lines of credit $ 152,871 $ 50,079 1.62

Term loans (1)

145,000 145,000 3.88

Unsecured senior notes (1)

125,000 125,000 8.33

Unsecured debt 422,871 320,079 4.38

Mortgages payable - fixed 298,445 331,376 5.23

Mortgages payable - variable

Total debt $ 721,316 $ 651,455 4.73

Annual Weighted Average Interest Rates

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Mortgages payable 3.93 % 4.02 %

Total debt 3.62 % 3.97 %

(1) Included within notes payable on our consolidated balance sheets.

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(in thousands)

2021 $ 25,665

Thereafter 354,211

Total payments $ 568,445

NOTE 7 • DERIVATIVE INSTRUMENTS

Our objective in using an interest rate derivatives is to add stability to interest expense and to manage our exposure to interest rate fluctuations.

Our objective in using interest rate derivatives is to add stability to interest expense and to manage our exposure to interest rate fluctuations.

To accomplish this objective, we primarily use interest rate swap contracts to fix the variable rate interest on our term loans and a portion of our primary line of credit.

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At December 31, 2020, 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, 2023 with a notional amount of $ 70.0 million.

The table below presents the fair value of our derivative financial instruments as well as their classification on our consolidated balance sheets as of December 31, 2019 , December 31, 2018 , and April 30, 2018 .

(in thousands)

The fair value of our derivative financial instruments as well as their classification on our consolidated balance sheets as of December 31, 2020 and 2019 is detailed below.

(in thousands)

December 31, 2019

December 31, 2018

April 30, 2018

December 31, 2019

December 31, 2018

April 30, 2018

Balance Sheet Location

Total derivative instruments designated at hedging instruments - interest rate swaps

Accounts Payable and Accrued Expenses

The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations as of December 31, 2019 , December 31, 2018, and April 30, 2018 .

December 31, 2020 December 31, 2019

Balance Sheet Location Fair Value Fair Value

Total derivative instruments designated at hedging instruments - interest rate swaps Accounts Payable and Accrued Expenses $ 15,905 $ 7,607

The effect of the Company's derivative financial instruments on the consolidated statements of operations as of December 31, 2020, December 31, 2019, December 31, 2018, and April 30, 2018 is detailed below.

(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

Year Ended December 31,

Transition Period Ended December 31,

Year Ended April 30,

Year Ended December 31,

Transition Period Ended December 31,

Year Ended April 30,

Total derivatives in cash flow hedging relationships - interest rate swaps

Interest expense

Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from Accumulated OCI into Income Gain (Loss) Reclassified from Accumulated OCI into Income

Year Ended December 31, Transition Period Ended December 31, Fiscal Year Ended April 30, Year Ended December 31, Transition Period Ended December 31, Fiscal Year Ended April 30,

2020 2019 2018 2018 2020 2019 2018 2018

Total derivatives in cash flow hedging relationships - interest rate swaps $ ( 11,068 ) $ ( 7,040 ) $ ( 2,794 ) $ 1,627 Interest expense $ ( 2,770 ) $ ( 289 ) $ ( 159 ) $ ( 152 )

NOTE 8 • FAIR VALUE MEASUREMENTS

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Fair Value Measurements on a Recurring Basis

(in thousands)

Total Level 1 Level 2 Level 3

December 31, 2020

Mortgages and notes receivable $ 30,994 $ — $ — $ 30,994

Derivative instruments - interest rate swaps $ 15,905 $ — $ — $ 15,905

December 31, 2019

Derivative instruments - interest rate swaps $ 7,607 $ — $ — $ 7,607

The fair value of our interest rate swaps is determined using the market standard methodology of netting discounted expected variable cash payments and receipts.

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We consider both our own nonperformance risk and the counterparty’s nonperformance risk in the fair value measurement.

Fair Value Measurements on a Nonrecurring Basis

Non-financial assets measured at fair value on a nonrecurring basis at December 31, 2018 and April 30, 2018, consisted of real estate investments that were written-down to estimated fair value during the transition period ended December 31, 2018 and the fiscal year ended April 30, 2018 , respectively.

We had no non-financial assets measured at fair value on a nonrecurring basis at December 31, 2019 .

The aggregate fair value of these assets by their levels in the fair value hierarchy are as follows:

Effective January 1, 2020, we elected the fair value option for our mortgage loans receivable and notes receivable, as allowed under ASU 2019-05 which provided transition relief upon adoption of ASU 2016-13, "Financial Instruments - Credit Losses." We utilize an income approach with level 3 inputs based on expected future cash flows to value these instruments.

The inputs include market transactions for similar instruments, management estimates of comparable interest rates (range of 3.75 % to 5.00 %), and instrument specific credit risk (range of 0.5 % to 1.0 %).

Changes in fair value of these receivables from period to period are reported in interest and other income on our consolidated statements of operations.

(in thousands)

December 31, 2018

Real estate investments valued at fair value

April 30, 2018

Real estate investments valued at fair value

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

Fair Value Measurement Other Gains (Losses) Interest Income Total Changes in Fair Value Included in Current Period Earnings

Year ended December 31, 2020 $ 30,994 $ 12 $ 1,442 $ 1,454

Fair Value Measurements on a Nonrecurring Basis

There were no non-financial assets measured at fair value on a nonrecurring basis at December 31, 2020 and 2019.

Financial Assets and Liabilities Not Measured at Fair Value

For mortgages payable, the fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates (Level 3).

The estimated fair values of our financial instruments as of December 31, 2019 , December 31, 2018, and April 30, 2018 are as follows:

The fair value of mortgages payable and unsecured senior notes is estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates (Level 3).

The estimated fair values of our financial instruments as of December 31, 2020 and 2019 are as follows:

(in thousands)

December 31, 2020 December 31, 2019

Amount Fair Value Amount Fair Value

FINANCIAL ASSETS

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Mortgage and note receivables (1)

— — 32,810 32,810

FINANCIAL LIABILITIES

Revolving lines of credit (2)

Notes payable (1)

152,871 152,871 50,079 50,079

Term loans (2)

145,000 145,000 145,000 145,000

Unsecured senior notes 125,000 133,181 125,000 126,816

Mortgages payable 298,445 308,855 331,376 332,471

(1) As of January 1, 2020, we elected the fair value option, as allowed under ASU 2019-05.

Fair value for these instruments is discussed within the Fair Value Measurements on a Recurring Basis section above.

(2) Excluding the effect of the interest rate swap agreement.

NOTE 9 • ACQUISITIONS AND DISPOSITIONS

We acquired $ 171.4 million of new real estate during the year ended December 31, 2019 , none in the transition period ended December 31, 2018 , and $ 373.1 million during the fiscal year ended April 30, 2018 .

We acquired $ 191.0 million and $ 171.4 million of new real estate during the years ended December 31, 2020 and 2019, respectively.

Our acquisitions during the years ended December 31, 2020 and 2019 are detailed below.

Year Ended December 31, 2020

(in thousands)

Form of Consideration

Investment Allocation

Total Form of Consideration Investment Allocation

Date Acquisition Intangible

Acquisitions Acquired Cost Cash Other (1)

Land Building Assets Other (2)

182 homes - Ironwood Apartments - New Hope, MN

March 5, 2020 $ 46,263 $ 28,600 $ 17,663 $ 2,165 $ 36,869 $ 824 $ 6,405

465 homes - Parkhouse Apartments - Thornton, CO

September 22, 2020 144,750 144,750 — 10,474 132,105 2,171 —

Total Acquisitions $ 191,013 $ 173,350 $ 17,663 $ 12,639 $ 168,974 $ 2,995 $ 6,405

(1) Payoff of note receivable and accrued interest by seller at closing.

(2) Consists of TIF note acquired.

Refer to Note 2 for further discussion.

Year Ended December 31, 2019

(in thousands)

Total Form of Consideration Investment Allocation

Date Acquisition Intangible

Acquisitions Acquired Cost Cash Units (1)

Land Building Assets

272 homes - SouthFork Townhomes - Lakeville, MN

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September 26, 2019 99,250 99,250 — 7,679 89,365 1,781

$ 169,250 $ 152,690 $ 16,560 $ 13,070 $ 152,930 $ 2,825

Minot 3100 10th St SW - Minot, ND (2)

May 23, 2019 $ 2,112 $ 2,112 — $ 246 $ 1,866 —

Total Acquisitions $ 171.362 $ 154,802 $ 16,560 $ 13,316 $ 154,796 $ 2,825

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(3) Investment allocation excludes a $ 425 acquisition credit related to retail space lease-up.

Fiscal 2018 ( May 1, 2017 to April 30, 2018 )

During the year ended December 31, 2020, we continued our portfolio transformation by disposing of four apartment communities, one commercial property and one parcel of unimproved land for a total sales price of $ 44.3 million.

T he dispositions for the years ended December 31, 2020 and 2019 are detailed below.

Year Ended December 31, 2020

(in thousands)

Form of Consideration

Investment Allocation

191 homes - Oxbo - St.

500 homes - Park Place - Plymouth, MN

September 13, 2017

274 homes - Dylan - Denver, CO

November 28, 2017

390 homes - Westend - Denver, CO

March 28, 2018

Total Acquisitions

Property includes 11,477 square feet of retail space.

During the year ended December 31, 2019 , we continued our portfolio transformation by disposing of our portfolios and certain communities in tertiary and secondary markets.

We sold our portfolios in Topeka, Kansas, Sioux Falls, South Dakota, and Sioux City, Iowa.

We also sold certain apartment communities in Bismarck, North Dakota.

We sold 21 apartment communities, two commercial properties and three parcels of unimproved land for a total sales price of $ 203.1 million .

Dispositions totaled $ 63.4 million and $ 515.1 million in the transition period ended December 31, 2018 and the fiscal year ended April 30, 2018 , respectively.

The dispositions for the year ended December 31, 2019 , the transition period ended December 31, 2018 , and the fiscal year ended April 30, 2018 are detailed below.

Date Book Value

Dispositions Disposed Sales Price and Sale Cost Gain/(Loss)

268 homes - Forest Park - Grand Forks, ND

August 18, 2020 $ 19,625 $ 6,884 $ 12,741

90 homes - Landmark - Grand Forks, ND

August 18, 2020 3,725 1,348 2,377

164 homes - Southwind - Grand Forks, ND

August 18, 2020 10,850 4,573 6,277

168 homes - Valley Park - Grand Forks, ND

August 18, 2020 8,300 4,059 4,241

$ 42,500 $ 16,864 $ 25,636

Dakota West August 7, 2020 $ 500 $ 474 $ 26

Unimproved Land

Rapid City Land - Rapid City, SD June 29, 2020 $ 1,300 $ 1,490 $ ( 190 )

Total Dispositions $ 44,300 $ 18,828 $ 25,472

Year Ended December 31, 2019

(in thousands)

and Sale Cost

Date Book Value

Dispositions Disposed Sales Price and Sale Cost Gain/(Loss)

21 homes - Pinehurst - Billings, MT

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December 12, 2019 3,178 2,292 886

Minot 1400 31st Ave SW - Minot, ND (1)

Woodbury 1865 Woodland - Woodbury, MN

November 1, 2019

Unimproved Land

Creekside Crossing - Bismarck, ND

March 1, 2019

Minot 1525 24th Ave SW - Minot, ND

April 3, 2019

Weston - Weston, WI

July 31, 2019

Total Dispositions

This property currently houses our Minot corporate office.

During the second quarter of 2019, we purchased an office building which will become our Minot corporate office after renovations are completed.

We will lease space in the Minot 1400 31st Ave SW building until the new office is placed in service.

Transition Period Ended December 31, 2018 ( May 1, 2018 to December 31, 2018 )

(in thousands)

and Sale Cost

44 unit - Dakota Commons - Williston, ND

July 26, 2018

145 unit - Williston Garden - Williston, ND (1)

July 26, 2018

288 unit - Renaissance Heights - Williston, ND (2)

July 26, 2018

7,849 sq ft Minot Southgate Retail - Minot, ND

July 12, 2018

9,052 sq ft Fresenius - Duluth, MN

July 27, 2018

15,000 sq ft Minot 2505 16th St SW - Minot, ND

October 12, 2018

81,594 sq ft Minot Arrowhead - Minot, ND

November 30, 2018

100,850 sq ft Bloomington 2000 W 94th Street - Bloomington, MN

December 19, 2018

Unimproved Land

Grand Forks - Grand Forks, ND

July 16, 2018

Renaissance Heights - Williston, ND (3)

July 26, 2018

Badger Hills Unimproved - Rochester, MN

August 29, 2018

Total Property Dispositions

This apartment community was owned by a joint venture entity in which we had an interest of approximately 74.11 % .

This apartment community was owned by a joint venture entity in which we had an interest of approximately 87.14 % .

This parcel of land was owned by a joint venture entity in which we had an interest of approximately 70.00 %

Fiscal 2018 ( May 1, 2017 to April 30, 2018 )

(in thousands)

and Sales Cost

327 homes - 13 apartment communities - Minot, ND (1)(2)

August 22, 2017

48 homes - Crown - Rochester, MN

December 1, 2017

16 homes - Northern Valley - Rochester, MN

December 1, 2017

4,998 sq ft Minot Southgate Wells Fargo Bank - Minot, ND

90,260 sq ft Lexington Commerce Center - Eagan, MN

August 22, 2017

17,640 sq ft Duckwood Medical - Eagan, MN

August 24, 2017

279,834 sq ft Edgewood Vista Hermantown I & II - Hermantown, MN

October 19, 2017

518,161 sq ft Urbandale - Urbandale, IA

November 22, 2017

36,053 sq ft 3075 Long Lake Road - Roseville, MN

November 28, 2017

1,205,432 sq ft 25 Healthcare properties

December 29, 2017

43,404 sq ft Garden View - St.

January 19, 2018

52,116 sq ft Ritchie Medical - St.

January 19, 2018

22,187 sq ft Bismarck 715 East Broadway and Unimproved Land - Bismarck, ND

March 7, 2018

$ 186,424 $ 91,514 $ 94,910

Minot 1400 31st Ave SW - Minot, ND May 23, 2019 $ 6,530 $ 6,048 $ 482

Woodbury 1865 Woodland - Woodbury, MN November 1, 2019 5,765 4,079 1,686

$ 12,295 $ 10,127 $ 2,168

Unimproved Land

Bismarck 4916 Unimproved Land - Bismarck, ND

August 8, 2017

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

Weston - Weston, WI July 31, 2019 600 427 173

$ 4,374 $ 4,225 $ 149

Total Dispositions $ 203,093 $ 105,866 $ 97,227

These communities include:

4th Street 4 Plex, 11th Street 3 Plex, Apartments on Main, Brooklyn Heights, Colton Heights, Fairmont, First Avenue (Apartments and Office), Pines, Southview, Summit Park, Temple (includes 17 South Main Retail), Terrace Heights, and Westridge.

The properties included:

2800 Medical, 2828 Chicago Avenue, Airport Medical, Billings 2300 Grand Road, Burnsville 303 Nicollet Medical, Burnsville 305 Nicollet Medical, Duluth Denfeld Clinic, Edina 6363 France Medical, Edina 6405 France Medical, Edina 6517 Drew Avenue, Edina 6225 France SMC II, Edina 6545 France SMC I, Gateway Clinic, High Pointe Health Campus, Lakeside Medical Plaza, Mariner Clinic, Minneapolis 701 25th Avenue Medical, Missoula 3050 Great Northern, Park Dental, Pavilion I, Pavilion II, PrairieCare Medical, St.

Michael Clinic, Trinity at Plaza 16 and Wells Clinic.

NOTE 10 • DISCONTINUED OPERATIONS

3 unchanged sentences

We determined that our strategic decision to exit our healthcare segment met the criteria for discontinued operations, and we consequently classified 27 property dispositions as discontinued operations during the fiscal year ended April 30, 2018.

We classified no dispositions as discontinued operations during the year ended December 31, 2019 , the transition period ended December 31, 2018 and the fiscal year ended April 30, 2017 .

During the fiscal year ended April 30, 2017 , we determined that our strategic plan to exit the office and retail segments met the criteria for discontinued operations.

Accordingly, 48 office properties, 17 retail properties, and 1 healthcare property were classified as discontinued operations and subsequently sold during the fiscal year ended April 30, 2017 .

The following information shows the effect on net income and the gains or losses from the sale of properties classified as discontinued operations for the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal years ended April 30, 2018 and 2017 .

We classified no dispositions as discontinued operations during the years ended December 31, 2020 and 2019, and the transition period ended December 31, 2018.

We had no gains or losses from the sale of properties classified as discontinued operations for the years ended December 31, 2020 and 2019.

The following information shows the effect on net income and the gains or losses from the sale of properties classified as discontinued operations for the transition period ended December 31, 2018 and the fiscal year ended April 30, 2018.

(in thousands)

Eight Months Ended

December 31, 2019

December 31, 2018

April 30, 2018

April 30, 2017

Transition Period Ended Fiscal Year Ended

December 31, 2018 April 30, 2018

Real estate rentals $ — $ 19,744

Tenant reimbursement — 11,650

TRS senior housing revenue

TOTAL REVENUE — 31,394

3 unchanged sentences

Depreciation and amortization — 8,445

TRS senior housing expenses

TOTAL EXPENSES — 20,192

3 unchanged sentences

Interest income — 661

Other income — 73

Income (loss) from discontinued operations before gain on sale — 1,256

1 unchanged sentence

INCOME (LOSS) FROM DISCONTINUED OPERATIONS $ 570 $ 164,823

All other $ 570 $ 164,823

Total $ 570 $ 164,823

(in thousands)

Eight Months Ended

December 31, 2019

December 31, 2018

April 30, 2018

April 30, 2017

Transition Period Ended Fiscal Year Ended

December 31, 2018 April 30, 2018

Property Sale Data

Sales price $ — $ 437,652

Net book value and sales costs — ( 274,085 )

Gain on sale of discontinued operations $ — $ 163,567

As of December 31, 2019 , December 31, 2018, and April 30, 2018 , we had no assets or liabilities classified as held for sale.

As of December 31, 2020 and 2019, we had no assets or liabilities classified as held for sale.

NOTE 11 • SEGMENTS

13 unchanged sentences

We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, and general and administrative expense.

NOI does not represent cash generated by

operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.

The following tables present NOI for the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal years ended April 30, 2018 and 2017 from our reportable segment and reconcile net operating income to net income as reported in the consolidated financial statements.

NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.

The following tables present NOI for the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018 from our reportable segment and reconcile net operating income to net income as reported in the consolidated financial statements.

Segment assets are also reconciled to total assets as reported in the consolidated financial statements.

(in thousands)

Year ended December 31, 2019

Year ended December 31, 2020 Multifamily All Other Total

Revenue $ 171,231 $ 6,763 $ 177,994

Property operating expenses, including real estate taxes 70,044 3,114 73,158

6 unchanged sentences

Loss on debt extinguishment ( 23 )

Interest and other income

Income (loss) before gain (loss) on sale of real estate and other investments, gain (loss) on litigation settlement, and income (loss) from discontinued operations

Interest and other income (loss) ( 1,552 )

Income (loss) before gain (loss) on sale of real estate and other investments ( 20,760 )

Gain (loss) on sale of real estate and other investments 25,503

Gain (loss) on litigation settlement

Gain (loss) from continuing operations

Income (loss) from discontinued operations

Net income (loss) $ 4,743

(in thousands)

Transition period ended December 31, 2018

Year ended December 31, 2019 Multifamily All Other Total

Revenue $ 155,635 $ 30,120 $ 185,755

Property operating expenses, including real estate taxes 63,909 14,406 78,315

3 unchanged sentences

Depreciation and amortization ( 74,271 )

Impairment of real estate investments

General and administrative expenses ( 14,450 )

2 unchanged sentences

Interest and other income 2,092

Income (loss) before gain on sale of real estate and other investments and income (loss) from discontinued operations

Income (loss) before gain on sale of real estate and other investments and gain (loss) on litigation settlement ( 19,388 )

Gain (loss) on sale of real estate and other investments 97,624

Gain (loss) from continuing operations

Income (loss) from discontinued operations

Gain (loss) on litigation settlement 6,586

Net income (loss) $ 84,822

(in thousands)

Year ended April 30, 2018

Multifamily (1)

All Other (1)

Transition period ended December 31, 2018 Multifamily All Other Total

Revenue $ 96,234 $ 25,637 $ 121,871

Property operating expenses, including real estate taxes 39,360 11,359 50,719

5 unchanged sentences

General and administrative expenses ( 9,812 )

Acquisition and investment related costs

Interest expense ( 21,359 )

6 unchanged sentences

Net income (loss) $ ( 5,320 )

Revenue, property operating expenses, including real estate taxes, and net operating income for the year ended April 30, 2018 have not been updated for properties sold during the year ended 2019.

(in thousands)

Year ended April 30, 2017

Multifamily (1)

Fiscal Year ended April 30, 2018 Multifamily (1)

All Other (1)

Revenue $ 159,983 $ 9,762 $ 169,745

Property operating expenses, including real estate taxes 70,460 2,574 73,034

14 unchanged sentences

Net income (loss) $ 127,629

Revenue, property operating expenses, including real estate taxes, and net operating income for the year ended April 30, 2017 have not been updated for properties sold during the year ended 2019.

(1) Revenue, property operating expenses, including real estate taxes, and net operating income for the year ended April 30, 2018 have not been updated for properties sold during the years ended December 31, 2020 and 2019.

Segment Assets and Accumulated Depreciation

(in thousands)

As at December 31, 2019

Segment assets

Property owned

Less accumulated depreciation

Total property owned

Cash and cash equivalents

Restricted cash

Unimproved land

Mortgage loans receivable

(in thousands)

As at December 31, 2018

As of December 31, 2020 Multifamily All Other Total

Segment assets

4 unchanged sentences

Restricted cash 6,918

Unimproved land

Other assets 18,904

Mortgage loans receivable 24,661

Total Assets $ 1,464,183

(in thousands)

As at April 30, 2018

As of December 31, 2019 Multifamily All Other Total

Segment assets

4 unchanged sentences

Restricted cash 19,538

Other assets 34,829

Unimproved land 1,376

Mortgage loans receivable 16,140

Segment assets as of April 30, 2018 have not been updated for properties sold during the year ended 2019.

Total Assets $ 1,392,418

NOTE 12 • RETIREMENT PLANS

2 unchanged sentences

401(k) matching contributions are fully vested when made.

We recognized expense of approximately $ 738,000 , $ 476,000 , $ 838,000 , and $ 565,000 in the year ended December 31, 2019 , the transition period ended December 31, 2018 , and the fiscal years ended April 30, 2018 and 2017 , respectively.

We recognized expense of approximately $ 875,000 , $ 738,000 , $ 476,000 , and $ 838,000 in the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018, respectively.

NOTE 13 • TRANSACTIONS WITH RELATED PARTIES

21 unchanged sentences

Restrictions on Taxable Dispositions.

Twenty-four of our apartment communities, consisting of approximately 4,443 homes, are subject to restrictions on taxable dispositions under agreements entered into with some of the sellers or contributors of the properties and are effective for varying periods.

Twenty of our apartment communities, consisting of approximately 4,032 homes, are subject to restrictions on taxable dispositions under agreements entered into with some of the sellers or contributors of the properties and are effective for varying periods.

We do not believe that 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.

5 unchanged sentences

Units are redeemable for an amount of cash per Unit equal to the average of the daily market price of our common shares for the ten consecutive trading days immediately preceding the date of valuation of the Unit.

As of December 31, 2019 , December 31, 2018, and April 30, 2018 , the aggregate redemption value of the then-outstanding Units owned by limited partners, as determined by the ten -day average market price for our common shares, was approximately $ 76.6 million , $ 68.4 million , and $ 74.7 million , respectively.

As of December 31, 2020 and 2019, the aggregate redemption value of the then-outstanding Units owned by limited partners, as determined by the ten-day average market price for our common shares, was approximately $ 69.0 million and $ 76.6 million, respectively.

NOTE 15 • QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (unaudited)

(in thousands, except per share data)

QUARTER ENDED

March 31, 2019

June 30, 2019

September 30, 2019

December 31, 2019

QUARTER ENDED March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020

Revenues $ 44,406 $ 43,910 $ 44,138 $ 45,540

Net income (loss) attributable to controlling interests $ ( 7,007 ) $ ( 3,803 ) $ 19,629 $ ( 4,378 )

3 unchanged sentences

(in thousands, except per share data)

TRANSITION PERIOD

First Quarter

Second Quarter

Two Months Ended December 31, 2018

Net income (loss) attributable to controlling interest

Net income (loss) available to common shareholders

Net income (loss) per common share - basic & diluted

(in thousands, except per share data)

QUARTER ENDED

July 31, 2017

October 31, 2017

January 31, 2018

April 30, 2018

QUARTER ENDED March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019

Revenues $ 45,608 $ 46,934 $ 47,436 $ 45,777

Net income (loss) attributable to controlling interests $ ( 4,698 ) $ 3,113 $ 31,596 $ 48,658

Net income (loss) available to common shareholders $ ( 6,403 ) $ 1,407 $ 29,891 $ 46,953

Net income (loss) per common share - basic & diluted

Net income (loss) per common share - basic $ ( 0.54 ) $ 0.11 $ 2.57 $ 3.95

Net income (loss) per common share - diluted $ ( 0.54 ) $ 0.11 $ 2.54 $ 3.89

The above financial information is unaudited.

1 unchanged sentence

NOTE 16 • 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 restricted stock units ("RSUs") up to an aggregate of 425,000 shares over the ten -year period in which the plan will be in effect.

Share-based awards are provided to officers, non-officer employees, and trustees under our 2015 Incentive Plan approved by shareholders on September 15, 2015, as amended and restated on May 19, 2020 which allows for awards in the form of cash, unrestricted, and restricted common shares, stock options, stock appreciation rights, and restricted stock units ("RSUs") up to an aggregate of 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 long-term incentive plan, which is a forward-looking program that measures long-term performance over the stated performance period.

1 unchanged sentence

The terms of the long-term incentive awards granted under the program may vary from year to year.

Through December 31, 2019, awards under the 2015 Incentive Plan consisted of restricted and unrestricted common shares and RSUs.

Through December 31, 2020, awards under the 2015 Incentive Plan consisted of restricted and unrestricted common shares, RSUs, and stock options.

We account for forfeitures of restricted and unrestricted common shares and RSUs when they occur instead of estimating the forfeitures.

Year Ended December 31, 2020 LTIP Awards

Awards granted to trustees on May 17, 2019 consisted of 812 RSUs, which vested immediately, awards granted to trustees on June 13, 2019 consisted of 7,521 time-based RSU awards, which vest on June 13, 2020, and an award granted to a trustees on November 25, 2019 consisted of 49 RSUs, which vested immediately.

Awards granted to trustees on May 19, 2020 consisted of 8,272 RSUs, which vest on May 19, 2021.

All of these awards are classified as equity awards.

We recognize compensation expense associated with the time-based awards ratably over the requisite service period.

The fair value of share awards at grant date for non-management trustees was approximately $ 505,000 , $ 348,000 , $ 389,000 , and $ 365,000 for the year ended December 31, 2019 , the transition period ended December 31, 2018, and each of the fiscal years ended April 30, 2018 and 2017 , respectively.

Awards granted to management on March 8, 2019, consist of time-based RSUs for 6,391 shares and performance RSUs based on total shareholder return ("TSR") for 12,781 shares.

The fair value of share awards at grant date for non-employee trustees was approximately $ 533,000 , $ 505,000 , $ 348,000 , and $ 389,000 for the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018, respectively.

Awards granted to employees on March 13, 2020, consist of an aggregate of 8,806 time-based RSU awards.

The time-based RSUs vest as to one-third of the shares on each of March 13, 2021, March 13, 2022, and March 13, 2023.

Awards granted to management on June 15, 2019, consist of 169 time-based RSUs that vest on June 15, 2020.

Awards granted on August 10, 2019, consist of 100 time-based RSUs that vest on August 10, 2020.

Awards granted on August 29, 2019, consist of 98 time-based awards that vest as to one-third on each of March 8, 2020, March 8, 2021, and March 8, 2022;

197 performance RSUs based on TSR;

and 444 time-based RSUs that vest as to one-third on each of August 29, 2020, August 29, 2021, and August 29, 2022.

All of these awards are classified as equity awards.

The TSR performance RSU awards are earned based on our TSR as compared to the MSCI US REIT Index over a forward looking three -year period.

The maximum number of RSUs eligible to be earned is 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 TSR performance RSU awards were an expected volatility of 25.5 % , a risk-free interest rate of 2.43 % , and an expected life of 2.82 years .

The share price at the grant date, March 8, 2019, was $ 58.06 per share.

Awards granted to employees on August 12, 2020 consist of 480 time-based RSUs, which vest on August 12, 2021.

Awards granted to employees on November 19, 2020 and November 30, 2020 consist of 281 and 142 time-based RSUs, respectively.

These awards vest as to 50% on each the first and second anniversary of the grant date.

These awards are classified as equity awards.

Awards granted to employees on May 21, 2020, consist of 141,000 stock options which vest as to 25 % on each of May 21, 2021, January 1, 2022, January 1, 2023 and January 1, 2024 and expire 10 years after grant date.

The fair value of stock options was $ 7.255 per share and was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Exercise price $ 66.36

Risk-free rate 0.978 %

Expected term 6.25 years

Expected volatility 21.08 %

Dividend Yield 3.974 %

Share-Based Compensation Expense

Total share-based compensation expense recognized in the consolidated financial statements for the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal years ended April 30, 2018 and 2017 , for all share-based awards was as follows:

Total share-based compensation expense recognized in the consolidated financial statements for the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018, for all share-based awards was as follows:

(in thousands)

Year Ended December 31,

Transition Period Ended

Fiscal Year Ended April 30,

Year Ended December 31, Transition Period Ended Fiscal Year Ended April 30,

2020 2019 December 31, 2018 2018

1 unchanged sentence

Restricted Share Awards

The total fair value of time-based share grants vested during the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal years ended April 30, 2018 and 2017 was $ 310,000 , $ 147,000 , $ 1.1 million , and $ 127,000 , respectively.

The activity for the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal years ended April 30, 2018 and 2017 , related to our restricted share awards was as follows:

The total fair value of time-based share grants vested during the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018 was $ 136,000 , $ 310,000 , $ 147,000 , and $ 1.1 million, respectively.

The activity for the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018, related to our restricted share awards was as follows:

Awards with Service Conditions

Wtd Avg Grant-

Date Fair Value

Unvested at April 30, 2016

Shares Date Fair Value

Unvested at April 30, 2017 19,511

Granted 9,136 $ 57.55

Vested ( 18,545 ) $ 59.89

Forfeited ( 202 ) $ 62.40

Unvested at April 30, 2018 9,900

Vested ( 2,709 ) $ 63.21

Unvested at December 31, 2018 7,191

Vested ( 4,999 ) $ 61.06

Unvested at December 31, 2019 2,192 59.20

Vested ( 2,192 ) $ 59.20

Unvested at December 31, 2020 —

Restricted Stock Units

2 unchanged sentences

The fair value of the time-based RSUs granted during the year ended December 31, 2020 was $ 1,227,000 .

The total compensation cost

related to non-vested time-based RSUs not yet recognized is $ 547,000 , which we expect to recognize over a weighted average period of 1.3 years .

RSUs with market conditions were granted under the LTIP during the year ended December 31, 2019 with a fair market value, as determined using a Monte Carlo simulation, of $ 1.0 million .

The unamortized value of awards and RSUs with market conditions as of December 31, 2019 , December 31, 2018, and April 30 2018, was approximately $ 1.3 million , $ 1.1 million , and $ 448,000 , respectively.

The activity for the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal years ended April 30 2018 and 2017 , related to our RSUs was as follows:

RSUs with Service Conditions

RSUs with Market Conditions

Wtd Avg Grant-

Date Fair Value

The total compensation cost related to non-vested time-based RSUs not yet recognized is $ 644,000 , which we expect to recognize over a weighted average period of 1.4 years.

The unamortized value of awards and RSUs with market conditions as of December 31, 2020, December 31, 2019, December 31, 2018, and April 30 2018, was approximately $ 487,000 , $ 1.3 million, $ 1.1 million, and $ 448,000 respectively.

The activity for the years ended December 31, 2020 and 2019, the transition period ended December 31, 2018, and the fiscal year ended April 30, 2018, related to our RSUs was as follows:

RSUs with Service Conditions RSUs with Market Conditions

Wtd Avg Grant- Wtd Avg Grant-

Shares Date Fair Value Shares Date Fair Value

Unvested at April 30, 2017 — — — —

Granted 6,994 $ 60.54 11,538 $ 70.90

Vested ( 207 ) $ 50.30 — —

Forfeited — — — —

Unvested at April 30, 2018 6,787 $ 60.85 11,538 $ 70.90

Granted 14,878 $ 53.60 15,461 $ 57.70

Vested ( 2,943 ) $ 60.83 — —

Forfeited ( 462 ) $ 53.60 ( 1,680 ) $ 70.90

Unvested at December 31, 2018 18,260 $ 55.13 25,319 $ 62.84

Granted 16,084 $ 59.76 12,978 $ 79.49

Vested ( 11,633 ) $ 55.35 — —

Forfeited ( 365 ) $ 51.73 ( 475 ) $ 57.70

Unvested at December 31, 2019 22,346 $ 58.41 37,822 $ 68.62

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

Granted 17,981 $ 68.25 — $ —

Vested ( 14,991 ) $ 59.10 ( 13,357 ) $ 74.68

Change in awards (1)

Forfeited ( 508 ) $ 62.99 ( 1,907 ) $ 63.92

Unvested at December 31, 2020 24,828 $ 65.03 26,994 $ 67.87

(1) Represents the change in the number of restricted stock units earned at the end of the measurement period.

Stock Options

During the year ended December 31, 2020, we issued 141,000 stock options to employees.

The stock options vest over a four -year period.

The fair value of the stock options granted during the year ended December 31, 2020 was $ 7.255 per share.

The total compensation costs related to non-vested stock options not yet recognized is $ 629,000 , which we expect to recognize over a weighted average period of 3.0 years.

The stock option activity for the year ended December 31, 2020 was as follows:

Number of Shares Weighted Average Exercise Price

Outstanding at beginning of year — —

Granted 141,000 $ 66.36

Exercised — —

Forfeited ( 1,952 ) $ 66.36

Outstanding at end of year 139,048 $ 66.36

Exercisable at end of year — —

The intrinsic value of a stock option represents the amount by which the current price of the underlying stock exceeds the exercise price of the option.

As of December 31, 2020, stock options outstanding had an aggregate intrinsic value of $ 595,000 with a weighted average remaining contractual term of 9.39 years.

NOTE 17 • SUBSEQUENT EVENTS

On January 6, 2021, we acquired Union Pointe Apartment Homes, a 256 home apartment community located in Longmont, Colorado, for an aggregate purchase price of $ 76.9 million.

On January 6, 2021, we also issued $ 50.0 million of 2.7 % unsecured Series C notes due on June 6, 2030.

In concert with the issuance, we amended and expanded our Note Purchase Private Shelf Agreement (the “Agreement”) with Prudential to increase the aggregate amount available under the agreement from $ 150.0 million to $ 225.0 million.

After the close of the Series C Notes, we have $ 175.0 million outstanding with an additional $ 50.0 million of capacity remaining under the Agreement.

CENTERSPACE AND SUBSIDIARIES

December 31, 2020

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

Gross amount at which carried at

Life on which

Initial Cost to Company

close of period

depreciation in

Costs capitalized

latest income

subsequent to

Encumbrances (1)

or Acquisition

Gross amount at which carried at Life on which

Initial Cost to Company close of period depreciation in

Costs capitalized Date of latest income

Buildings & subsequent to Buildings & Accumulated Construction statement is

Description Encumbrances (1)

Land Improvements acquisition Land Improvements Total Depreciation or Acquisition computed

71 France - Edina, MN $ 53,324 $ 4,721 $ 61,762 $ 446 $ 4,801 $ 62,128 $ 66,929 $ ( 14,312 ) 2016 30 - 37

17 unchanged sentences

Cypress Court - St.

Cloud, MN 11,641 1,583 18,879 474 1,625 19,311 20,936 ( 5,409 ) 2012 30 - 37

Deer Ridge - Jamestown, ND — 711 24,129 322 785 24,377 25,162 ( 6,224 ) 2013 30 - 37

Dylan - Denver, CO — 12,155 77,215 1,030 12,241 78,159 90,400 ( 8,205 ) 2018 30 years

Evergreen - Isanti, MN — 1,129 5,524 569 1,159 6,063 7,222 ( 2,041 ) 2008 30 - 37

Forest Park - Grand Forks, ND

French Creek - Rochester, MN — 201 4,735 256 212 4,980 5,192 ( 809 ) 2016 30 - 37

1 unchanged sentence

Grand Gateway - St.

Cloud, MN — 814 7,086 2,064 970 8,994 9,964 ( 3,480 ) 2012 30 - 37

GrandeVille at Cascade Lake - Rochester, MN 36,000 5,003 50,363 2,089 5,188 52,267 57,455 ( 10,304 ) 2015 30 - 37

3 unchanged sentences

Lakeside Village - Lincoln, NE 11,489 1,215 15,837 1,850 1,476 17,426 18,902 ( 5,230 ) 2012 30 - 37

Landmark - Grand Forks, ND

Legacy - Grand Forks, ND 13,072 1,362 21,727 11,044 2,474 31,659 34,133 ( 18,730 ) 1995-2005 30 - 37

3 unchanged sentences

Monticello Village - Monticello, MN — 490 3,756 1,234 655 4,825 5,480 ( 2,434 ) 2004 30 - 37

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CENTERSPACE AND SUBSIDIARIES

December 31, 2020

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

Gross amount at which carried at

Life on which

Initial Cost to Company

close of period

depreciation in

Costs capitalized

latest income

subsequent to

Encumbrances (1)

or Acquisition

Gross amount at which carried at Life on which

Initial Cost to Company close of period depreciation in

Costs capitalized Date of latest income

Buildings & subsequent to Buildings & Accumulated Construction statement is

Description Encumbrances (1)

Land Improvements acquisition Land Improvements Total Depreciation or Acquisition computed

Northridge - Bismarck, ND $ — $ 884 $ 7,515 $ 278 $ 1,048 $ 7,629 $ 8,677 $ ( 1,641 ) 2015 30 - 37

1 unchanged sentence

Olympik Village - Rochester, MN — 1,034 6,109 3,459 1,450 9,152 10,602 ( 4,136 ) 2005 30 - 37

Oxbo - St Paul, MN — 5,809 51,586 214 5,822 51,787 57,609 ( 7,107 ) 2018 30 years

Park Meadows - Waite Park, MN — 1,143 9,099 10,277 2,140 18,379 20,519 ( 12,605 ) 1997 30 - 37

Park Place - Plymouth, MN

Park Place - Plymouth, MN — 10,609 80,781 10,433 10,819 91,004 101,823 ( 11,303 ) 2018 30 years

Plaza - Minot, ND — 867 12,784 3,128 1,011 15,768 16,779 ( 5,734 ) 2009 30 - 37

4 unchanged sentences

Regency Park Estates - St.

Cloud, MN 7,400 702 10,198 3,337 1,179 13,058 14,237 ( 4,394 ) 2011 30 - 37

Rimrock West - Billings, MT — 330 3,489 2,157 568 5,408 5,976 ( 3,250 ) 1999 30 - 37

5 unchanged sentences

Southpoint - Grand Forks, ND — 576 9,893 236 663 10,042 10,705 ( 2,293 ) 2013 30 - 37

Southwind - Grand Forks, ND

Sunset Trail - Rochester, MN — 336 12,814 3,560 826 15,884 16,710 ( 9,024 ) 1999 30 - 37

Thomasbrook - Lincoln, NE 13,100 600 10,306 5,686 1,710 14,882 16,592 ( 8,563 ) 1999 30 - 37

Valley Park - Grand Forks, ND

Village Green - Rochester, MN — 234 2,296 1,083 361 3,252 3,613 ( 1,682 ) 2003 30 - 37

West Stonehill - Waite Park, MN 16,425 939 10,167 8,171 1,912 17,365 19,277 ( 12,060 ) 1995 30 - 37

Westend - Denver, CO — 25,525 102,180 605 25,532 102,778 128,310 ( 9,952 ) 2018 30 years

Whispering Ridge - Omaha, NE 19,664 2,139 25,424 2,992 2,551 28,004 30,555 ( 7,850 ) 2012 30 - 37

3 unchanged sentences

Non-Same-Store

Dylan - Denver, CO

FreightYard Townhomes & Flats - Minneapolis, MN

Lugano at Cherry Creek - Denver, CO

Oxbo - St Paul, MN

SouthFork Townhomes - Lakeville, MN

Westend - Denver, CO

FreightYard Townhomes & Flats - Minneapolis, MN — 1,889 23,616 877 1,895 24,487 26,382 ( 1,171 ) 2019 30 years

Ironwood - Minneapolis, MN — 2,165 36,874 84 2,167 36,956 39,123 ( 1,187 ) 2020 30 years

Lugano at Cherry Creek - Denver, CO — 7,679 87,766 635 7,679 88,401 96,080 ( 4,330 ) 2019 30 years

Parkhouse - Thornton, CO — 10,474 132,105 228 10,484 132,323 142,807 ( 1,722 ) 2020 30 years

SouthFork Townhomes - Lakeville, MN 21,675 3,502 40,153 7,122 3,583 47,194 50,777 ( 3,638 ) 2019 30 years

Total Non-Same-Store $ 21,675 $ 25,709 $ 320,514 $ 8,946 $ 25,808 $ 329,361 $ 355,169 $ ( 12,048 )

Total Multifamily $ 298,445 $ 145,289 $ 1,464,272 $ 169,817 $ 163,058 $ 1,616,320 $ 1,779,378 $ ( 387,990 )

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CENTERSPACE AND SUBSIDIARIES

December 31, 2020

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

Gross amount at which carried at

Life on which

Initial Cost to Company

close of period

depreciation in

Costs capitalized

latest income

subsequent to

Encumbrances (1)

or Acquisition

Gross amount at which carried at Life on which

Initial Cost to Company close of period depreciation in

Costs capitalized Date of latest income

Buildings & subsequent to Buildings & Accumulated Construction statement is

Description Encumbrances (1)

Land Improvements acquisition Land Improvements Total Depreciation or Acquisition computed

Other - Mixed Use

71 France - Edina, MN — $ — $ 5,879 $ 867 $ — $ 6,746 $ 6,746 $ ( 1,151 ) 2016 30 - 37

Lugano at Cherry Creek - Denver, CO

Oxbo - St Paul, MN

Lugano at Cherry Creek - Denver, CO — — 1,600 206 — 1,806 1,806 ( 72 ) 2019 30 years

Oxbo - St Paul, MN — — 3,472 54 — 3,526 3,526 ( 436 ) 2015 30 years

Plaza - Minot, ND — 389 5,444 3,845 607 9,071 9,678 ( 4,305 ) 2009 30 - 37

2 unchanged sentences

Other - Commercial

3100 10th St SW - Minot, ND

Dakota West Plaza - Minot , ND

3100 10th St SW - Minot, ND — $ 246 $ 1,866 $ ( 1 ) $ 246 $ 1,865 $ 2,111 $ ( 103 ) 2019 30 years

Minot IPS - Minot, ND — 416 5,952 — 416 5,952 6,368 ( 4,509 ) 2012 30 - 37

Total Other - Commercial — $ 662 $ 7,818 $ ( 1 ) $ 662 $ 7,817 $ 8,479 $ ( 4,612 )

Unimproved Land

Rapid City - Rapid City, SD

Total Unimproved Land

Total $ 298,445 $ 146,340 $ 1,491,010 $ 175,207 $ 164,327 $ 1,648,230 $ 1,812,557 $ ( 399,249 )

(1) Amounts in this column are the mortgages payable balance as of December 31, 2020.

These amounts do not include amounts owing under the Company's multi-bank line of credit or term loans.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

December 31, 2019

These amounts do not include amounts owing under the Company's multi-bank line of credit, term loans, or unsecured senior notes.

CENTERSPACE AND SUBSIDIARIES

December 31, 2020 and 2019

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

Reconciliations of the carrying value of total property owned for the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal years ended April 30, 2018 and 2017 are as follows:

Reconciliations of the carrying value of total property owned for the years ended December 31, 2020 and 2019 are as follows:

(in thousands)

Transition Period Ended

Year Ended April 30,

December 31, 2019

December 31, 2018

Year Ended December 31,

Balance at beginning of year $ 1,643,078 $ 1,627,636

2 unchanged sentences

Improvements and Other 27,460 21,868

1,852,309 1,818,008

Deductions during year

Cost of real estate sold ( 38,111 ) ( 171,112 )

Impairment charge

Write down of asset and accumulated depreciation on impaired assets

Properties classified as held for sale during the year

( 1,641 ) ( 3,818 )

Balance at close of year $ 1,812,557 $ 1,643,078

Reconciliations of accumulated depreciation/amortization for the year ended December 31, 2019 , the transition period ended December 31, 2018, and the fiscal years ended April 30, 2018 and 2017 , are as follows:

Reconciliations of accumulated depreciation/amortization for the years ended December 31, 2020 and 2019 are as follows:

(in thousands)

Transition Period Ended

Year Ended April 30,

December 31, 2019

December 31, 2018

Year Ended December 31,

Balance at beginning of year $ 349,122 $ 353,871

4 unchanged sentences

Write down of asset and accumulated depreciation on impaired assets — —

Balance at close of year

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

December 31, 2019

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

Reconciliations of development in progress for the year ended December 31, 2019 , the transition period ended December 31, 2018 and the fiscal years ended April 30, 2018 and 2017 , are as follows:

(in thousands)

Transition Period Ended

Year Ended April 30,

December 31, 2019

December 31, 2018

Balance at beginning of year

Additions during year

Unimproved land moved to development in progress

Improvements and other

Deductions during year

Development placed in service (2)

( 484 ) ( 3,778 )

Balance at close of year $ 399,249 $ 349,122

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

December 31, 2019

CENTERSPACE AND SUBSIDIARIES

December 31, 2020 and 2019

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

Reconciliations of unimproved land for the year ended December 31, 2019 , the transition period ended December 31, 2018 and the fiscal years ended April 30, 2018 and 2017 are as follows:

Reconciliations of unimproved land for the years ended December 31, 2020 and 2019 are as follows:

(in thousands)

Transition Period Ended

Year Ended April 30,

December 31, 2019

December 31, 2018

Year Ended December 31,

Balance at beginning of year $ 1,376 $ 5,301

Additions during year

Improvements and other

Deductions during year

Cost of real estate sold ( 1,376 ) ( 3,925 )

Impairment charge

Properties classified as held for sale during the year

Unimproved land moved to development in progress

Balance at close of year — 1,376

Total real estate investments, excluding mortgage notes receivable (2)

$ 1,413,308 $ 1,295,332

(1) Consists of miscellaneous disposed assets.

Includes development projects that are placed in service in phases.

The net basis, including held for sale properties, for Federal Income Tax purposes was $ 1.3 billion , $ 1.2 billion , $ 1.5 billion and $ 1.4 billion at December 31, 2019 , December 31, 2018, April 30, 2018 , and April 30, 2017 , respectively.

(2) The net basis, including held for sale properties, for Federal Income Tax purposes was $ 1.4 billion and $ 1.3 billion at December 31, 2020 and December 31, 2019, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures