Good morning, and welcome to the Investors Real Estate Trust Third Quarter 2017 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Stephen Swett, Investor Relations. Please go ahead.

Thank you, and good morning. IRET's Form 10-Q was filed with the SEC yesterday after the close. Additionally, our earnings release and supplemental disclosure package have been posted on our website at www.iret.com and filed 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 about future events based on current expectations and assumptions. These statements are subject to risks and uncertainties due to factors discussed in yesterday's Form 10-Q, during this conference call, and in the Risk Factors section of our annual report and other filings with the SEC. Actual results may differ materially, and we do not undertake any duty to update any forward-looking statements. Please note that our conference call today will contain references to financial measures, such as funds from operations, or FFO; and net operating income or NOI, that are non-GAAP measures. Reconciliations of non-GAAP financial measures are contained in yesterday's press release, and definitions of such non-GAAP financial measures can be found in our most recent supplemental operating and financial data, both of which are available in the Investor Relations section of our website at www.iret.com. With me today from management are Tim Mihalick, IRET's Chief Executive Officer; Mark Decker Jr., President and Chief Investment Officer; and Ted Holmes, Executive Vice President and Chief Financial Officer. I will now turn the call over to Tim Mihalick. Tim?

Thank you, Steve, and good morning, everyone. During the fiscal third quarter, we continued to make significant progress on our strategic plan to transform IRET into a leading Midwest-focused multifamily REIT. During the quarter and subsequent to quarter-end, we completed $210 million of asset sales, further simplifying our portfolio, and using proceeds to delever our balance sheet. In addition, we put in place a new $250 million unsecured revolver, which further enhances our financial flexibility. While we are pleased with these accomplishments, we are not satisfied. The performance of our existing portfolio remains a challenge and our operating results were well below our expectations. We are continuing to seek stability in our energy-impacted markets and face new supply in several areas. Compounding these factors, we suffered near-record snowfall in North Dakota this winter, which impacted both revenue and expenses during the quarter. Ted will more fully review our operating results for the quarter and our updated guidance for the year later in the call. Over the past 3 years, we have made monumental progress in our effort to transform this company. We invested, either through acquisition or development, more than $607 million in newer or brand-new high-quality apartment communities. We have sold more than $756 million of noncore commercial and senior housing properties and achieved good execution and pricing, utilizing proceeds to fund our new investments and significantly delever the company. Long term, we believe these efforts to focus our company on multifamily will have significant benefits, including greater operator efficiency, simplified management and strong earnings and NAV growth. There's still work to be done but our team is energized as we move forward with our goal to drive long-term growth and create value for our shareholders. Turning to our fiscal 2017 third quarter results. In the quarter, we reported…

Thank you, Tim, and hello, everyone. Let me begin with a discussion of our improved capital structure. As Tim mentioned, we have nearly completed the sale of our senior housing portfolio, with only 3 senior housing properties remaining, all of which are under contractual agreement. During the fiscal third quarter, we sold 5 senior housing properties and 1 retail property for a total of $74 million. We used the proceeds to redeem all of the outstanding Series A 8.25% preferred stock for $29 million and repaid $13.5 million of debt with a weighted average interest cost of 3.5%. Subsequent to quarter-end, we sold 18 senior housing properties and 1 medical office building for $136 million and utilized proceeds to repay $21 million of outstanding debt at a weighted average interest rate of 5%. In addition, subsequent to quarter-end, we applied $91 million to our new line of credit to lower interest cost and increase availability. The importance of these efforts, which continued the accomplishments of the previous quarters was demonstrated with our new expanded and unsecured credit facility we announced in January. The new $250 million facility has a 4-year initial term and 1-year extension option and a $250 million accordion feature, which provides us with a lower cost and more flexible capital source. Our ability to access this larger and more flexible facility is a big step in allowing us to be opportunistic as we move forward, and we are thankful for the continued support of our bank group. Finally, as detailed in our release, we are sitting today with meaningful liquidity and lower leverage, which at quarter-end stood at 7.1x net debt to adjusted EBITDA. IRET has never had more firepower, and we are confident that with our reinvigorated focus on disciplined capital allocation, we will successfully grow…

Thank you, Mark, and good morning, everyone. Beginning with our financial results. For the fiscal quarter ended January 31, 2017, we reported net income available to shareholders of $19.2 million as compared to $36.9 million for the same period of the prior year. The decrease was primarily attributable to the impact of property sold during the year and a onetime gain related to debt forgiveness in the third quarter of last year, partially offset by gains of property sold during the quarter. Funds from operations or FFO for the fiscal third quarter was $12.7 million or $0.09 per share and unit as compared to $54.5 million or $0.40 per share and unit for the same period of the prior year. Adjusting for the impact of one-time gains and losses related to debt repayments, FFO would have been $0.12 per share in the fiscal third quarter of 2017 compared to $0.14 per share in the fiscal third quarter of last year. For the 9 months ended January 31 of 2017, net income available to shareholders was $3.4 million as compared to $52.4 million for the same period of the prior year. The decrease was due to the same reasons I just noted. FFO for the 9-month period ending January 31, 2017 was $45 million or $0.33 per share and unit as compared to $84.7 million or $0.61 per share and unit for the same period of the prior year. Adjusting for the impact of one-time gains and losses related to debt repayments, FFO per share would have been $0.35 per share for the 9-month period ending January 31 compared to $0.44 per share in the prior year-to-date period. Moving to our multifamily same-store performance. Our third quarter same-store multifamily revenue decreased by 1.8% year-over-year, driven primarily by a 2.3% reduction in…

[Operator Instructions] The first question comes from Rob Stevenson of Janney.

In your prepared comments, Tim, did you say that those 3 remaining senior housing was under contract for $50 million, 5-0, or for 1-5 million $15 million, it was breaking up during that part of the...

$50 million is the number.

Okay. And so when you take a look at that and the remaining commercial assets and the medical office, I mean, what's the sort of ballpark range in terms of additional dispositions to get you to a -- in terms of a dollar value to get you to a pure-play apartment REIT at this point?

I'm going to let Mark take that.

Sure. So just to make sure I understand the question, the question is how much more will you sell before you're out of all of your nonapartment assets?

Yes, if I had 50-plus some sort of ballpark range for the medical office plus whatever's left in the commercial and retail stuff, I mean what does that get me to? Is that an incremental sort of $400 million of assets? $600 million? I mean just trying to get an understanding as to what's sort of left from a dollar value after you've sold $136 million this quarter already.

Yes. So assuming the conclusion of Edgewood Vista we'll be out of senior housing and then we'll have a few office and retail and then predominantly medical office, and I'm going to give the other half of your answer, which is we'll have roughly $30 million plus of NOI, which I'd prefer not to throw a number on for you today. But most of that NOI would be NOI similar to some of the medical office REITs in terms of quality and character.

Okay. And then have you guys utilized the buyback program yet?

We did not, we were not in the market last quarter.

Okay. Or in -- since the end of January? I don't know when your blackout sort of started with earnings and stuff like that, but I guess the question in terms of the stock down here at these levels, is the buyback program a safety net in case the stock drops further? Or when you guys take a look at the stock price today and the implied cap rate and the value and what you could deploy into similar apartment assets, is the stock attractive to you at this point to be buying a bigger share, reinvesting into your own assets on the apartment side?

So the short answer is yes, we do look at the stock and we do look at it relative to other alternatives. We do put a premium on liquidity and having cash and growing. And to answer your question directly, we won't comment on that until the end of the quarter just because we don't want to tip our hand whether we are in market or not, but we do look at the stock. And as you know, we have $50 million of buying power that we're 3 months into and it is a real alternative that we consider.

Okay. And then when you're looking I mean at acquisitions these days in the apartment side, I mean, have you experienced enough of a pullback in pricing and/or any increased availability in terms of quality assets that you want to buy as you look forward to think that the acquisition environment is getting a little bit better? Or is it still as challenging as it's been over the last sort of 6, 9 months?

Yes. I'd say the biggest challenge so far, and we're spending most of our time in Minneapolis. The biggest challenge sort of postelection has been really only 1 large institutional asset, 1 or 2 assets have actually traded and there hasn't been a lot that's on market. So we are pursuing a lot of things on market and off-market. We do expect there's more that actually going to be listed here in the next 60 days. And the brokerage firms will tell you they think they'll do similar volumes this year as last year, but it's certainly going to be back weighted because almost nothing's launched.

Okay. And then one last one for Ted. You talked about a 7.1 net-debt-to-EBITDA at the end of the quarter, what is that pro forma for the $136 million of dispositions that you've already completed thus far this quarter?

If I'm understanding your question, you're asking whether that number will move, that ratio will move?

Well, I assume that you use the decent amount of the proceeds to pay down debt and so that your net-debt-to-EBITDA today should probably be lower than what it was at the quarter-end, I just was trying to figure out how much lower and if in fact, that's true.

It is lower. We'll report that figure at the end of the quarter, but I would tell you that it's meaningful. I don't know that whether it's a full percentage point, but it has certainly dropped since quarter-end.

[Operator Instructions] Seeing no further questions, this concludes the question-and-answer session. I would now like to turn the conference back over to management for any closing remarks.

Thank you. And thank you, everyone, for taking time out of your morning to get the update on IRET. We continue to move ahead and are excited about the future and we'll continue to work hard to search out the best investments for IRET and for our shareholders. And for those of you on the East Coast, hopefully, you can dig out of this upcoming snow that's on its way. Have a good day. Thanks.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.