Revenue and Income - For the three months ended March 31, 2025, revenue increased by $2.6 million or 4.0% to $67.1 million, compared to $64.5 million for the same period in 2024[116]. - Same-store revenues increased by 3.5% for the three months ended March 31, 2025, driving a 2.1% increase in same-store NOI compared to the same period of the prior year[116]. - Total revenue for the three months ended March 31, 2025, was $67.1 million, up 4.0% from $64.5 million in the same period of 2024[124]. - Revenue from same-store communities increased by 3.5%, or $2.2 million, for the three months ended March 31, 2025, compared to the same period in the prior year[127]. - Operating income increased by $671,000 or 16.5% to $4.746 million for the three months ended March 31, 2025, compared to $4.075 million for the same period in 2024[122]. - Net operating income (NOI) increased by $925,000 or 2.3% to $40.362 million for the three months ended March 31, 2025, compared to $39.437 million for the same period in 2024[122]. - Net operating income (NOI) for same-store communities increased by $781,000 to $38.9 million for the three months ended March 31, 2025[127]. - Funds from Operations (FFO) applicable to common shares increased to $23.2 million for the three months ended March 31, 2025, a 10.9% increase from $20.9 million in the prior year[143]. - Core FFO applicable to common shares and units rose to $23.979 million in Q1 2025, compared to $22.046 million in Q1 2024, marking an increase of about 8.8%[145]. Loss and Expenses - Net loss was $0.22 per diluted share for the three months ended March 31, 2025, compared to a net loss of $0.37 per diluted share for the same period in 2024[116]. - Net loss available to common shareholders was $3.7 million for the three months ended March 31, 2025, compared to a net loss of $5.5 million in the same period of 2024, representing a 32.3% improvement[137]. - General and administrative expenses increased by $374,000 to $5.0 million in Q1 2025, primarily due to higher share-based compensation and consulting fees[133]. - Casualty loss decreased to $532,000 in Q1 2025 from $820,000 in the same period of 2024, reflecting less claim activity[131]. - Property operating expenses for same-store communities increased by 5.8%, or $1.4 million, in the three months ended March 31, 2025[127]. - Interest expense rose by 4.6% to $9.6 million for the three months ended March 31, 2025, compared to $9.2 million in the same period of 2024[135]. Assets and Liquidity - Property owned at historical cost was $2.5 billion as of March 31, 2025[112]. - The company owned interests in 71 apartment communities consisting of 13,012 apartment homes as of March 31, 2025[112]. - As of March 31, 2025, total liquidity was approximately $223.2 million, slightly down from $224.6 million as of December 31, 2024[153]. - Cash and cash equivalents decreased to $11.9 million as of March 31, 2025, from $12.0 million as of December 31, 2024[165]. - The company had a multibank revolving line of credit with total commitments of $250 million, with $46 million outstanding as of March 31, 2025, leaving $204 million available for borrowing[154]. - The weighted average interest rate on mortgage debt was 4.02% as of March 31, 2025, with mortgage loan indebtedness totaling $418.5 million[160]. Distributions - The company has paid quarterly distributions continuously since its first distribution in 1971[113]. - Distributions declared for common shares were $0.77 per share in Q1 2025, compared to $0.75 per share in Q1 2024[148]. - The company paid distributions on common shares, Series E preferred units, and Units totaling $14.7 million[173]. Capital and Investments - The company funded capital improvements for apartment communities amounting to approximately $5.0 million[173]. - The company repaid $1.9 million of mortgage principal during the reporting period[173]. - The company had no acquisitions or dispositions during the three months ended March 31, 2025[147]. - The company amended its equity distribution agreement to increase the maximum aggregate offering price of common shares available for sale from $250 million to $500 million[161]. Market and Economic Conditions - The company is facing supply chain challenges and inflationary pressures, which are likely to increase operating expenses, particularly in energy, labor, and construction materials[169]. - Rising interest rates could negatively impact the company's borrowing costs for variable rate borrowings or refinancing activities[170]. - The company's exposure to market risk is primarily related to fluctuations in interest rates on fixed and variable rate debt obligations[175]. - Future revenue and cash flows are dependent on prevailing market prices and interest rates[174]. - The company does not enter into derivative instruments for trading or speculative purposes[175]. Accounting and Compliance - There have been no significant changes to critical accounting policies during the three months ended March 31, 2025[172]. - As of March 31, 2025, the company had no significant off-balance sheet arrangements[171].

Market Efficiency and Stock Price Movements - The market exhibits varying degrees of efficiency, particularly less efficient during erratic price movements, with recent intraday swings reaching up to 8 percentage points [1] - It is essential to differentiate between stocks that have declined for valid reasons and those that are merely affected by broader market movements [2] Categories of Stock Price Declines - Stock price declines can be categorized into two types: one where earnings decrease leading to a price drop, and another where multiples contract without a change in earnings [6] - The focus should be on investing in companies whose fundamentals remain intact despite a drop in multiples [2] Fundamental Impact on Stocks - Macro news tends to influence the entire market, often leading to mispricing, while individual stock news affects specific companies [3] - Companies like Apple (AAPL) are more susceptible to macroeconomic news, which can lead to a fundamental decline in earnings [4] Investment Opportunities in REITs - Centerspace (CSR), a midwestern apartment REIT, has seen a 13.7% decline in the last month, but its fundamentals remain strong due to decreasing apartment construction starts [5][11] - Broadstone Net Lease (BNL) has also experienced a 13% selloff, yet its long-term triple net lease structure ensures stable revenue growth [14][20] - Easterly Government Properties (DEA) faced a total drop of over 26% due to a dividend cut, but its earnings guidance remains unchanged, indicating a potential undervaluation [23][26] Market Reactions and Valuation - The market's reaction to dividend changes can lead to significant price drops that do not reflect the underlying fundamentals of the company [32] - The AFFO yield for DEA is now above 11%, suggesting it is undervalued compared to its reliable cash flows from long-term government leases [35] Conclusion on Investment Strategy - Market pricing inefficiencies create opportunities for investors to identify undervalued stocks that do not reflect their true fundamental value [36]

Company Overview - Centerspace (NYSE: CSR) is an owner and operator of apartment communities, focusing on providing quality homes with an emphasis on integrity and service [2] - Founded in 1970, the company currently owns 71 apartment communities comprising 13,012 homes across states including Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota [2] Upcoming Financial Results - Centerspace will release its operating results for the quarter ended March 31, 2025, after market close on May 1, 2025 [1] - A conference call to discuss these results is scheduled for May 2, 2025, at 1:00 p.m. Eastern Time [1] Recognition - Centerspace was recognized as a top workplace for the fifth consecutive year in 2024 by the Minneapolis Star Tribune [2]

Company Announcement - Centerspace announced the retirement of Jeff Caira from the Board of Trustees, effective at the conclusion of the 2025 Annual Meeting of Shareholders on May 14, 2025 [1] - Jeff Caira has been a member of the Board since 2015 and has held various leadership roles, including Board Chair and Chair of the Nominating and Governance Committee [2] Leadership Impact - Board Chair John Schissel acknowledged Caira's invaluable leadership and contributions, particularly in guiding the company's transition to a pure-play multifamily focus, which has positioned the company for operational excellence and growth [2] - President and CEO Anne Olson highlighted Caira's commitment to improvement, which has enhanced the management team, Board, and overall company [2] Board Refreshment - Centerspace has refreshed its Board of Trustees by adding new members in January and July 2024, alongside the retirement of another Trustee in May 2024 [2] Company Overview - Centerspace is an owner and operator of apartment communities, founded in 1970, currently owning 71 apartment communities with a total of 13,012 homes across several states including Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota [4] - The company was recognized as a top workplace for the fifth consecutive year in 2024 by the Minneapolis Star Tribune [4]

Group 1 - The article discusses the author's long-term investment approach, focusing on REITs, preferred stocks, and high-yield bonds, which began in high school in 2011 [1] - The author has recently combined long stock positions with covered calls and cash secured puts, indicating a strategy that balances risk and return [1] - The primary focus of the author's coverage on Seeking Alpha includes REITs and financials, with occasional insights on ETFs and macro-driven stock ideas [1]

Financial Data and Key Metrics Changes - The company reported core FFO of $1.21 per diluted share for Q4 2024, reflecting a 2.1% year-over-year increase in same-store NOI [24] - Same-store revenues increased by 3.1% compared to Q4 2023, driven by a 2.3% increase in revenue per occupied home and a 70 basis point year-over-year increase in weighted average occupancy, which stood at 95.5% for the quarter [24] - Same-store expenses rose by 4.6% year-over-year, primarily due to higher controllable expenses, particularly repairs and maintenance [25] Business Line Data and Key Metrics Changes - For Q4 2024, same-store new lease trade-outs decreased by 3.3%, while renewals increased by 3.2%, resulting in positive blended leasing spreads of 45 basis points [14] - The company achieved a same-store resident retention rate of 56.6% for the year, indicating strong resident satisfaction [9] Market Data and Key Metrics Changes - The majority of markets experienced lower supply, leading to more stable fundamentals, with North Dakota communities leading the portfolio with blended spreads of 4.4% [16] - In Minneapolis, blended spreads were up marginally, while in Denver, they were down 140 basis points, indicating varying market conditions [17] Company Strategy and Development Direction - The company aims to be a premier provider of apartment homes in vibrant communities across the Midwest and Mountain West, focusing on consistent earnings growth for investors [13] - The strategic direction for 2025 includes remaining vigilant about the cost of capital while leveraging the strong position of the current portfolio [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about apartment demand and economic growth remaining resilient in 2025, supported by a downward trend in new supply additions [18] - The company anticipates that the lack of new supply will lead to improved fundamentals in both Minneapolis and Denver markets [19] Other Important Information - The board of trustees announced an increase in the quarterly dividend to $0.77 per share, reflecting the company's strong performance [10] - The company successfully executed the acquisition of the Lydian in Denver and improved its leverage profile through various financial maneuvers [12] Q&A Session Summary Question: Comparison of Minneapolis and Denver market conditions - Management confirmed that supply pressure has eased in Minneapolis earlier than in Denver, with both markets showing strong absorption [34] Question: Expectations for 2025 performance in smaller markets - Management expects 2025 to resemble 2024 in smaller markets, with healthy blended spreads as Denver stabilizes [37] Question: Breakdown of blended spreads guidance - Management indicated that renewals are expected to lead new lease spreads, with renewals around 3% and new leases in the high 1% to 2% range [42] Question: Acquisition and disposition activity expectations - Management expressed a desire to be net acquirers, focusing on opportunities that enhance the portfolio while being mindful of cost of capital [54] Question: Factors driving same-store expense guidance - Key factors include centralization efforts and favorable insurance renewals, which are expected to keep expenses lower [58] Question: Retention rate differences by market - Higher retention rates were observed in smaller markets compared to larger markets like Denver and Minneapolis, where supply pressures exist [65] Question: Growth of non-rent revenue - Non-rent revenue is expected to grow in line with rental revenue, following the rollout of the reps program [68] Question: Timeline for achieving portfolio balance - Management acknowledged that the timeline for achieving a more optimal portfolio balance may extend beyond the previously anticipated 18 to 24 months due to market conditions [72] Question: Factors to bring bid-ask spread together - Stability in interest rates and improved rent growth expectations are seen as potential catalysts for narrowing the bid-ask spread [90][93]

Core Viewpoint - Centerspace (CSR) reported quarterly funds from operations (FFO) of $1.21 per share, exceeding the Zacks Consensus Estimate of $1.18 per share, but slightly down from $1.22 per share a year ago [1][2] Financial Performance - The company achieved revenues of $66.41 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.43% and up from $64.07 million year-over-year [2] - Over the last four quarters, Centerspace has exceeded consensus FFO estimates four times, while it has only topped consensus revenue estimates once [2] Stock Performance and Outlook - Centerspace shares have declined approximately 5.7% since the beginning of the year, contrasting with a 4% gain in the S&P 500 [3] - The future performance of the stock will largely depend on management's commentary during the earnings call and the outlook for FFO [3][4] Estimate Revisions - The current consensus FFO estimate for the upcoming quarter is $1.21 on revenues of $66.15 million, and for the current fiscal year, it is $4.94 on revenues of $268.09 million [7] - The estimate revisions trend for Centerspace is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The REIT and Equity Trust - Residential industry, to which Centerspace belongs, is currently ranked in the bottom 30% of over 250 Zacks industries, which may negatively impact stock performance [8]

Financial Performance - Net loss per diluted share for the year ended December 31, 2024, was $(1.27), compared to net income of $2.32 per diluted share for the year ended December 31, 2023[5] - Core FFO increased to $4.88 per diluted share for the year ended December 31, 2024, a 2.1% increase from $4.78 for the year ended December 31, 2023[5] - The company provided guidance for 2025, projecting a diluted net loss per share range of $(0.71) to $(0.45) and FFO per share range of $4.73 to $4.97[10] - Total revenue for the twelve months ended December 31, 2024, was $260,983,000, a slight decrease of $326,000 or 0.1% compared to the previous year[34] - The company reported a net income (loss) per common share of $(0.31) for the three months ended December 31, 2024, compared to $(0.40) in the previous quarter[24] - The company reported a significant decrease in operating income for the twelve months ended December 31, 2024, down to $20,475,000 from $84,453,000, a decline of $63,978,000 or 75.8%[34] - The company reported a net loss available to common shareholders for the twelve months ended December 31, 2024, was $(19,660) million, with a guidance range for 2025 between $(10,845) million and $(5,945) million[80] Revenue and Growth - Same-store revenue growth was 3.3% year-over-year, contributing to a 3.7% increase in same-store NOI[5] - Revenue for the three months ended December 31, 2024, was $66,409 million, a slight increase from $65,025 million in the previous quarter[24] - Revenue from same-store properties for the three months ended December 31, 2024, was $63,127,000, an increase of $517,000 or 0.8% sequentially and $1,897,000 or 3.1% year-over-year[33] - Same-store revenues for 2024 reached $249.872 million, a 3.3% increase from $241.989 million in 2023[64] - The company reported a 7.2% revenue growth in North Dakota, with revenues reaching $29.119 million in 2024[64] Expenses and Liabilities - Total expenses for the three months ended December 31, 2024, were $63,551 million, compared to $58,675 million in the previous quarter, reflecting a 8.5% increase[24] - Property operating expenses for the three months ended December 31, 2024, totaled $26,327,000, a decrease of $332,000 or 1.2% sequentially and an increase of $1,229,000 or 4.9% year-over-year[36] - Total liabilities as of December 31, 2024, were $1,014,704 million, compared to $982,266 million as of September 30, 2024, indicating a 3.7% increase[26] - Total debt as of December 31, 2024, is $966,623,000, with a total market capitalization of $2,280,054,000, resulting in a total debt to total market capitalization ratio of 42.4%[52] Capital Expenditures - Same-store capital expenditures ranged from $1,125 to $1,175 per home, with value-add expenditures estimated between $16.0 million and $18.0 million[14] - Total capital expenditures for all properties in 2024 amounted to $7.294 million, down from $23.759 million in 2023[72] - Recurring capital expenditures per apartment home for same-store properties decreased to $238, down from $476 in 2023[72] - The company plans to maintain a focus on capital expenditures for value-add projects, with total value-add expenditures for same-store properties at $3.093 million in 2024[72] Shareholder Information - Centerspace issued approximately 1.6 million common shares for net proceeds of $112.6 million, with an average price of $71.66 per share[6] - Closing common shares outstanding increased to 16,719 thousand as of December 31, 2024, from 14,963 thousand a year earlier[21] - The company reported dividends to Series D preferred unitholders totaling $640,000 for the twelve months ended December 31, 2024, consistent with the previous year[42] - Total common distribution declared for the twelve months ended December 31, 2024, was $49,911,000, compared to $46,442,000 for the previous year[54] Operational Metrics - The weighted average occupancy rate for the same-store portfolio improved to 95.5%, up from 94.8% in Q4 2023, marking a 0.7% growth[57] - Average monthly rental rates increased to $1,573, a 1.6% rise from $1,548 in Q4 2023[57] - The average monthly revenue per occupied apartment home for same-store properties was $1,751, an increase of 4.0% from $1,683 in 2023[68] - The company emphasizes the importance of Net Operating Income (NOI) as a supplemental measure of operating performance, excluding various non-operational costs[99] Guidance and Projections - The guidance for 2025 indicates a continued focus on revenue growth and occupancy improvement strategies[75] - Revenue for the twelve months ended December 31, 2024, was $252,269 million, with same-store growth projected between 1.50% and 3.50% for 2025[77] - Total NOI for the same period was $157,739 million, with a guidance range for 2025 between $161,300 million and $164,800 million[77] - Core FFO applicable to common shares and Units for the twelve months ended December 31, 2024, was $91,319 million, with a projected range for 2025 between $96,800 million and $101,625 million[80]

Employee and Training Information - As of December 31, 2024, the company had 404 employees, with an average tenure of 4.27 years[45][46] - Team members completed over 2,700 volunteer hours during the year ended December 31, 2024[47] - A total of approximately 24,700 training courses were completed by team members, along with 3,965 live training events in 2024[49] - As of December 31, 2024, 74.5% of team members self-identified as white, 7.7% as Hispanic and/or Latino, and 5.7% as Black or African American[51] Market and Economic Risks - The company faces competition from various housing alternatives, which could adversely affect rental and occupancy rates[55] - Economic conditions, including inflation and unemployment rates, significantly impact the company's financial performance[60][68] - The company is concentrated in the multifamily housing sector, making it vulnerable to downturns in this asset class[67] - The company intends to explore acquisitions or developments in new and existing geographic markets, which introduces various risks[65] - The company faces significant risks related to inflation, which has risen to levels not seen in decades, potentially increasing operating costs and limiting rent increases[70] - Catastrophic weather events and climate change pose risks to the company's properties, potentially leading to damages that exceed insurance coverage[71] - The company may be subject to rent stabilization regulations, which could limit its ability to raise rents and increase operating costs, impacting rental revenues[75] - Competition from various institutions in the real estate market may limit the company's ability to acquire attractive investment opportunities, adversely affecting profitability[77] Compliance and Regulatory Risks - Compliance with government regulations and potential liabilities under environmental laws could affect the company's costs and investment strategies[57] - Increased scrutiny from regulators regarding anti-competitive practices in the residential real estate industry could lead to legal challenges and increased compliance costs[76] - Changes in federal or state laws regarding climate change could increase capital expenditures without a corresponding increase in revenue, adversely impacting financial results[74] - Compliance with laws benefiting disabled persons may require unexpected expenditures, impacting investment strategies and overall returns[96] Cybersecurity and Information Security Risks - The company has experienced a ransomware attack previously, which did not materially impact operations, but future cyber-attacks remain a risk[86] - The costs associated with mitigating cybersecurity risks are expected to increase, including expenses for expert services and compliance with regulations[85] - The company faces significant information security risks, with potential breaches leading to legal claims, regulatory penalties, and damage to reputation, which could materially harm financial condition and cash flows[87] Financial and Debt Management Risks - The company anticipates needing to refinance a significant portion of its outstanding debt, totaling approximately $966.6 million as of December 31, 2024, which may not be possible on favorable terms[103] - Mortgage debt obligations expose the company to foreclosure risks, which could result in the loss of properties and adversely affect the overall portfolio value[104] - Conditions in capital and credit markets, including higher interest rates, may limit the company's access to financing and increase the cost of capital, adversely affecting business activities and earnings[106] - The company has incurred additional indebtedness that bears interest at variable rates, which could adversely affect cash flow and shareholder distributions if interest rates rise[107] - The company maintains cash and cash equivalents at insured financial institutions, but there is a concentration of credit risk due to balances exceeding FDIC insurance coverage of $250,000[109] - Interest rate hedging arrangements may lead to losses, particularly if the hedging instruments are not indexed to the same rates as the indebtedness[110] REIT Compliance and Tax Risks - The company must make distributions of at least 90% of its REIT taxable income, limiting its ability to retain cash for growth and increasing reliance on raising additional equity capital[114] - The Board of Trustees has the authority to reduce or suspend distributions on common shares, which could adversely affect shareholder returns[112] - The company’s qualification as a REIT is contingent on meeting specific income and asset tests, with potential tax liabilities if it fails to qualify[117] - If the operating partnership is treated as a corporation for tax purposes, it would significantly reduce cash available for distribution to shareholders[120] - Dividends paid by REITs may be taxed at higher rates than those of non-REIT corporations, potentially making REIT investments less attractive to investors[121] Environmental and Liability Risks - The company may incur substantial liabilities under environmental laws for hazardous substances, which could adversely affect property sales, rentals, and borrowing capabilities[88] - The company does not carry insurance for environmental liabilities, and any encountered liabilities could negatively impact operational results and financial condition[91] - The company has tax protection agreements in place on twenty-eight properties, which could trigger material obligations if sold in a taxable transaction[123] Development and Growth Risks - The company may face challenges in managing growth effectively, particularly through acquisitions of additional real estate properties[80] - The company may face risks related to properties under development, including delays in obtaining necessary permits, which could lead to increased costs or project abandonment[93] - The company has entered into joint ventures, which may involve risks that could conflict with its interests and affect financial performance[97] Market Conditions and Future Outlook - The COVID-19 pandemic has previously impacted the company's business, and future outbreaks of infectious diseases may disrupt operations and financial condition[100] - Financial disruptions in the multifamily property sector could jeopardize financing from Fannie Mae and Freddie Mac, impacting liquidity and credit availability for acquisitions[108] - The company’s exposure to market risk is primarily related to fluctuations in interest rates, which could significantly affect future revenue and cash flows[254] - Legislative changes, such as the Inflation Reduction Act of 2022, could adversely impact the company and its shareholders, particularly through its taxable REIT subsidiaries[130]

Core Insights - Centerspace reported a net loss of $1.27 per diluted share for the year ended December 31, 2024, compared to a net income of $2.32 per diluted share for the year ended December 31, 2023 [8] - Core Funds from Operations (Core FFO) increased to $4.88 per diluted share for 2024, a 2.1% increase from $4.78 in 2023 [8] - Same-store Net Operating Income (NOI) grew by 3.7% year-over-year, driven by a 3.3% increase in same-store revenues [8] Financial Performance - For the three months ended December 31, 2024, diluted net income (loss) per share was $(0.31), an improvement from $(0.65) in the same period of 2023 [2] - Funds from Operations (FFO) for the twelve months ended December 31, 2024, was $4.49 per diluted share, compared to $4.27 in 2023, reflecting a year-over-year increase [2] - Core FFO for the three months ended December 31, 2024, was $1.21 per diluted share, slightly down from $1.22 in the same period of 2023 [2] Operational Metrics - Same-store revenues increased by 3.1% in Q4 2024 compared to Q4 2023, while expenses rose by 4.6% [2] - The weighted average occupancy rate for the three months ended December 31, 2024, was 95.5%, up from 94.8% in the same period of 2023 [2] - Renewal lease rate growth was 3.2% for Q4 2024, consistent with the previous quarter, while new lease rate growth was negative at (3.3)% [2] Balance Sheet and Liquidity - As of December 31, 2024, Centerspace had total liquidity of $224.6 million, including $212.6 million available on lines of credit [5] - The company issued approximately 1.6 million common shares for net proceeds of $112.6 million, using the funds to redeem outstanding Series C preferred shares [8] Dividend Information - Centerspace's Board of Trustees announced a quarterly distribution of $0.77 per share/unit, payable on April 8, 2025, to shareholders of record as of March 28, 2025 [6] Future Outlook - Centerspace provided guidance for 2025, indicating expectations for continued growth in Core FFO and NOI [7]