Good morning, and welcome to the Investors Real Estate Trust Second Quarter Fiscal 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Timothy Mihalick, President and CEO. Please go ahead, sir.

Thank you. Good morning and thank you for joining us today for IRET's second quarter fiscal 2015 earnings conference call. IRET's Form 10-Q was filed with the Securities and Exchange Commission yesterday December 10th, and our earnings release supplemental disclosure package was posted to our website at iret.com and also furnished yesterday on Form 8-K. Before we begin our remarks this morning, I want to remind you that during the call we will be making forward-looking statements which are predictions, projections, or other statements, about future events. These statements are based on current expectations and assumptions that are subject to risk and uncertainties. Our actual results could materially differ because of factors discussed in yesterday's Form 10-Q and the comments made during this conference call and in the risk factor sections of our annual and quarterly reports and other filings with the Securities and Exchange Commission. IRET does not undertake any duty to update any forward looking statements. With me today from management are Diane Bryantt, our Executive Vice President and Chief Financial Officer; and Tom Wentz, Executive Vice President and Chief Operating Officer. Now for my remarks. In the summer of July 2013, during both our earnings call and our investor analyst day, I laid out some specific strategies for IRET to improve operating and financial results and change the perception of IRET. Over the last 16 months, IRET has made tremendous strides to accomplish many of the strategic initiatives I laid out last summer, mainly disposing of non-core assets in our commercial segments, in order to focus on our multifamily residential and healthcare segments and in particular on development projects in those segments. As published in our earnings release last night, I believe investors are able to see the impact of the plan we implemented taking hold. The…

Thank you, Tim. Good morning everyone. This morning, I will provide a brief recap of items of note as reported in IRET's 8-K press release and 10-Q for the second quarter of fiscal year 2015 which ended on October 31, 2014. Let's start with operations in the three and six months ending October 31. In review of our financial statements, I would note in particular two significant items in the second quarter that each contributed to meeting our two main long term objective, AFFO dividend coverage and growth through deployment of sales proceeds. First let's discuss AFFO dividend coverage and results of operations in the second quarter. We had very strong operating performance in the second quarters in our real estate operations. As detailed on Page 8 of the supplemental data included in our 8-K earnings release, FFO and AFFO in the second quarter were significantly higher than reported in the previously two quarters. This increase in NOI from our developments placed in services and from our acquisition over the past year was 2.9 million. We have realized a fast lease up and strong market rents for our development properties when they have opened. Also important is that our overall total same-store NOI increased by 500,000. The same-store increase is primarily driven by our multifamily segment as continued high occupancy provides for the ability to increase rental rates in those markets. It leads us to AFFO and dividend coverage. As detailed on page 14 of the supplemental information for the six months ended October 31st, our AFFO payout ratio was 96.3%. Barring an extremely severe winter in our market that would affect snow removal and utility expenses or other unforeseen events, we anticipate this trend to obtaining coverage to continue for the remaining quarters of fiscal year 2015. Moving on…

Thank you, Diane. As a follow up on the comments so far, this past quarter continues to trend of improved operations primarily due to our plan to shift away from non-core segments and assets in order to focus on growing those segments and asset types where IRET is the market leader or has a good path to market leadership. We continue to grow our best segments of multifamily and healthcare primarily through development and while some individual development projects are behind schedule as it pertains to delivery dates, overall our development portfolio is on track in terms of cost and more importantly slightly ahead of projections in the area of revenue. Well nothing is ever certain when it comes to ground-up development, our expectation is that our commitment to development that was implemented approximately three years ago in combination with the other elements of our plan, will continue to drive improved results. While we are primarily focused on delivering the development projects that are currently in progress, as well as disposing of non-core assets, as the key element of our plan to continue to grow and improve operations. We still remain active in land acquisition to ensure our future foundation for growth through development as well as through a limited amount of acquisitions. To echo Tim's comments on oil activity in that region, I would note that our development focus in our energy impacted markets has been on what we view as the permanent resident created by the energy sector, as opposed to the man-camp type development. But again, we certainly prefer $90 oil as opposed to $60. However, we are only about 45 days into the current price decline and accordingly it is difficult to assess at this point, if oil prices are being driven totally by actual demand…

[Operator Instructions] The first question will come from Dave Rodgers of Robert W. Baird. Please go ahead.

Yes, good morning. I probably can't help myself on the energy topics, I'll have to ask a question to start there. With regard to your developments in Williston, I know you're active on delivering one in the quarter and it has additional phases to deliver. Can you dive in a little bit on any color regarding that particular property and the demand for additional units that you'll be bringing online? And any color around that would be really helpful?

Dave this is Tom. That project is slightly behind on delivery. Obviously, we’ve delivered the first several buildings of that project. Lease up is on track, very robust. We are not offering concessions. I guess we have not seen any material backup and demand or activity in the energy impacted markets at this point. And I guess we're not really expecting it just given the viability price point for energy development in North Dakota. I think it's pretty much an established fact that in the United States and even worldwide, this is the lowest cost energy producing area with the highest quality oil. And so I think there is a lot of room to go to the downside before there is a backup in activity. And at this point we have not seen anything that would cause us to change our opinion.

This is Tim, just on the follow up. I guess as I stated I did pull out a couple of quotes regarding the activity in the region, but if you go out, and I'm sure you’ll have the opportunity to and talk to your energy guys. But the indications we continue to get is the productivity from those four counties that I mentioned earlier as Tom, just touched on are so strong that they expect they will continue that drilling with those larger company.

On the flipside of that, we are also hearing manufacturing sales companies like Titan lowered sales guidance in terms of maybe some of the land moving equipment. I mean, are you seeing less competitive supply up there? Or any slowdown or pause from potential developers in that area related to the oil pressure?

Not, still not at this point. We are not thus far into it and maybe as we get a little close to the spring, we'll see a shift on that. But right now, we're in the – I don’t want to say the dead part of the season, but the concrete is in and buildings are being built and maybe a little better indication come spring when the ground begins to thaw and the need for that kind of equipment comes more relevant.

Okay.

And David, it may have an impact in the long term. I think again we've really focused on operating with very disciplined wide ranging strategy. And we did not ignore the other good markets. I mean it wasn't probably only a year or two ago we were questioned why we weren't investing more in Williston. And why were we putting money into Rochester, Minnesota or Minneapolis, Minnesota or South Dakota or some of those markets. But again, we've employed a very wide ranging strategy and did not ignore other markets. And so we'll see where energy goes but so far so good at this point for us.

All right. Switching to the capital. Thanks for the color. Switching to the capital recycling. You put nine additional assets and then a total 10 assets in the held-for-sale bucket. The nine office assets, are those all related to the MR9 assets that you’re talking about and the mark-to-market I guess on the write-down? I guess maybe then, second part of that question would be, can you talk about what the plan is in terms of monetizing additional assets, if in fact those are all the MR9 assets. What you'll do going forward in terms of monetizing additional assets that aren't in that bucket?

Dave, this is Tim. Those assets that we did put on the market are not the MR9 portfolio.

Okay, so those are completely separate?

Right.

So the timing and the plan for monetizing those 10, I think nine office and one retail asset, is that this quarter? Next quarter? Is it a function of development? How are you thinking about that?

It's certainly within long term, within a year, but we expect it that those will move quicker than that. That they’re out to market, there is a lot of demand as we’ve seen and we expect we'll be able to move those quicker, still probably within this fiscal year and to allow us continue to fund the development. Looking forward, we made it very clear that we’re going to continue down this path to sell additional assets. As we mentioned in the past, they’re a retail portfolio and continued to look at other assets and other product segments and we are not giving up on that plan and we intend to continue down that path.

That's good to hear. Last question for me and then I'll get back in the queue. With regard to the dividend coverage, I think by our estimates dividend coverage was positive in the quarter, but I think at the end of your release there was a comment that you're still on track for your prior expectation, which I think was sometime by the end of this year. So, a little bit of color would be helpful around do we go, do we take one step back and go two steps forward later this year? How are you thinking about the dividend coverage for the remainder of the year?

No, I think the expectation is we've outlined - going back as I mentioned early, and it was July of 2013 expectations and plans would have full year dividend coverage by the end of fiscal year 2015 and we still intend to accomplish that.

Okay. Great. Thank you.

[Operator Instructions] And at this time, I'm showing no additional questions in the queue. So we will conclude the question-and-answer session. I would like to hand the conference back over to Tim Mihalick, for his closing remarks.

Well thanks everybody for taking the time to listen in on the update on IRET. As I mentioned earlier in the beginning of the call, I'm very excited about the implementation, the progress we’ve made on our strategic plan, certainly pleased but not satisfied. We'll continue to move forward and accomplish what needs to be done to make IRET relevant in the REIT world. Thanks again and happy holidays to everybody. Thank you.

Ladies and gentlemen, the conference has now concluded. We thank for attending today's presentation. You may now disconnect your lines.