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 several 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 December 31, 2024, after market close on February 18, 2025 [1]. - A conference call to discuss these results will be held on February 19, 2025, at 10:00 a.m. Eastern Time [1]. Conference Call Details - Interested parties can access the live conference call via a webcast link provided [1]. - Operator assisted dial-in numbers are available for the United States and Canada, with specific local and toll-free options listed [2]. - A replay of the conference call will be available until February 26, 2025, with dedicated dial-in numbers for replay access [2]. Recognition - Centerspace was recognized as a top workplace for the fifth consecutive year in 2024 by the Minneapolis Star Tribune [2].

Core Viewpoint - Centerspace (NYSE: CSR) announced the tax treatment for calendar year 2024 distributions on its common and preferred shares, advising shareholders to consult personal tax advisors for specific tax implications [1]. Distribution Summary - Common Shares distributions for 2024 include: - $0.730 per share on 12/29/23, payable on 01/12/24, with $0.3044544 as ordinary taxable dividend [2] - $0.750 per share on 03/28/24, payable on 04/08/24, with $0.3127957 as ordinary taxable dividend [2] - $0.750 per share on 06/28/24, payable on 07/10/24, with $0.3127957 as ordinary taxable dividend [2] - $0.750 per share on 09/30/24, payable on 10/10/24, with $0.3127957 as ordinary taxable dividend [2] - Total for the year: $2.980 per share, with $1.2428415 as ordinary taxable dividend [2] - Series C Preferred Shares distributions for 2024 include: - $0.4140625 per share on 03/15/24, payable on 03/28/24, fully as ordinary taxable dividend [2] - $0.4140625 per share on 06/14/24, payable on 06/28/24, fully as ordinary taxable dividend [2] - $0.4140625 per share on 09/16/24, payable on 09/30/24, fully as ordinary taxable dividend [2] - Total for the year: $1.2421875, fully as ordinary taxable dividend [2] Company Overview - Centerspace is an owner and operator of apartment communities, focusing on integrity and service, founded in 1970 [4] - The company currently owns 71 apartment communities with a total of 13,012 homes across several states including Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota [4] - Centerspace was recognized as a top workplace for the fifth consecutive year in 2024 by the Minneapolis Star Tribune [4]

Core Thesis - Centerspace (CSR) is a Midwest-focused apartment REIT trading at a discount compared to peers, with a market cap of approximately $1 billion and lower AFFO multiples and NAV [1][22]. Group 1: Financial Performance and Growth Prospects - CSR's markets have experienced less new supply, allowing for continued growth in AFFO/share for 2024 and 2025, while the broader sector remains flat or slightly down [2]. - The stock is trading at less than 80% of NAV and has a 3-turn discount to the sector average AFFO multiple, indicating that its near-term prospects are not fully priced in [2][30]. - Expected AFFO per share is projected at $4.21 for 2025 and $4.42 for 2026, reflecting strong growth [12][14]. Group 2: Acquisition Strategy - CSR employs a clever acquisition strategy, recently acquiring the Lydian, a 129-unit apartment building in Denver for $54 million, financed through debt assumption and OP unit issuance [5][6]. - The acquisition was structured to be accretive from day one, with a low cap rate typical for newly built properties in growth markets [5][10]. - The OP unit issuance allowed CSR to issue equity above market price, providing tax benefits to the seller and enhancing the company's capital structure [7][8]. Group 3: Market Position and Valuation - CSR has historically traded at a discount to peers, currently at 14.9X AFFO compared to the sector median of 18.7X, indicating potential for valuation improvement [22][24]. - The company has made significant improvements in size and leverage, with a market cap of $1.06 billion and healthy EBITDA coverage of interest expenses [24][25]. - CSR's portfolio is now primarily in major markets like Minneapolis and Denver, reducing the historical discount associated with smaller, less recognized markets [28][29]. Group 4: Regional Market Dynamics - Midwestern apartments are less volatile compared to coastal or sunbelt markets, with CSR's markets currently outperforming peers in same-store NOI growth [11][14]. - Despite facing a rental rate surge in 2021-2022, CSR's markets are expected to show better growth rates in the near term, benefiting from lower vacancy rates and rising rental rates [14][19]. - The company has a lower rent-to-tenant income ratio of 23.1%, suggesting room for significant rent growth [20].

Group 1 - The article discusses the author's journey into investing, starting in high school in 2011, focusing on REITs, preferred stocks, and high-yield bonds, indicating a long-standing interest in markets and the economy [1] - The author has recently adopted a strategy that combines long stock positions with covered calls and cash secured puts, emphasizing a fundamental long-term investment approach [1] - The author primarily covers REITs and financials on Seeking Alpha, with occasional articles on ETFs and other stocks influenced by macro trade ideas [1]

Financial Data and Key Metrics Changes - The company reported core FFO of $1.18 per diluted share for Q3 2024, reflecting a 2.8% year-over-year increase in same-store NOI [17] - Same-store revenue increased by 3% compared to Q3 2023, driven by a 2.2% increase in revenue per occupied home and a 70 basis point year-over-year increase in weighted average occupancy, which stood at 95.3% for the quarter [17][18] - The midpoint of full-year core FFO guidance was raised by $0.01 to $4.86 per share, an increase of $0.06 versus initial guidance [9][19] Business Line Data and Key Metrics Changes - Same-store new lease trade-outs decreased by 1.2%, while renewal leases increased by 3.2%, resulting in a 1.5% blended lease increase for the quarter [6] - North Dakota communities led the portfolio with blended spreads of 5.4%, while Nebraska communities saw blended growth at 3.3% [8] - Minneapolis recognized a 1.2% blended rent increase, maintaining its position as a strong absorption market nationally [8] Market Data and Key Metrics Changes - The company noted that much of its portfolio experienced lower supply than national averages, benefiting its results during the quarter [7] - The Denver market, where the company expanded its presence, is seeing a decline in new deliveries, with current construction at about 4.8% of existing stock [63] Company Strategy and Development Direction - The company aims to be a premier provider of apartment homes and vibrant communities, focusing on consistent earnings growth for investors [11] - The acquisition of the Lydian in Denver is part of the strategy to leverage geographically proximate operating platforms and enhance portfolio scale [12][13] - The company is actively looking for growth opportunities in various markets while maintaining a balanced exposure to any single market [51] Management's Comments on Operating Environment and Future Outlook - Management commented on the softening of market rents, attributing it to supply and demand dynamics, with expectations for future rent growth being conservative [25][58] - Despite some increases in bad debt, management believes that overall tenant health remains stable, with rent-to-income levels at 23% [9][58] - The company anticipates that as markets move into the net absorption phase with tapering deliveries, it will create a favorable environment for future growth [15][59] Other Important Information - The company issued approximately 1.5 million shares under its ATM program, raising $105 million, which was used to redeem Series C preferred shares [11][21] - Bad debt for the third quarter was reported at 45 to 50 basis points, which is at the high end of the expected range [45] Q&A Session Summary Question: Is the market rent softening greater than the normal seasonal trend? - Management acknowledged that the softening is more than expected and attributed it to supply/demand dynamics [25] Question: What leads to the large drop in revenue growth guidance from Q3 to Q4? - Management explained that the drop is due to expectations of higher utility costs and fewer concessions in Q4 [26] Question: What are the preliminary October leasing stats? - Management indicated that it is early in the month, but new leases remain slightly negative while renewals are slightly positive [28] Question: What components are driving the lower new lease rates? - Management expects renewals to average in the mid-2s and new leases to average a negative mid-rate [32] Question: How long will it take to stabilize the Lydian acquisition? - Management estimates it will take about 12 to 18 months to fully implement operational best practices [34] Question: What is driving the higher retention rates? - Management noted that the drop in home-buying interest due to high costs is contributing to higher retention rates [38] Question: What is the expected growth for insurance renewal? - Management indicated that early indications were favorable, but recent weather events may impact the renewal [44] Question: What is the bad debt level for the quarter? - Bad debt was reported at 45 to 50 basis points, consistent with expectations [45] Question: How is the new lease growth distributed across markets? - Management noted strength in North Dakota and Nebraska, but declines in Denver and Minneapolis [47]

Centerspace (CSR) came out with quarterly funds from operations (FFO) of $1.18 per share, beating the Zacks Consensus Estimate of $1.17 per share. This compares to FFO of $1.20 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of 0.85%. A quarter ago, it was expected that this real estate investment trust would post FFO of $1.20 per share when it actually produced FFO of $1.27, delivering a surprise of 5.83%.Over the last four quarters, ...

Exhibit 99.1 | --- | --- | --- | --- | |--------------------------------------------------------|-------|-------|-------| | | | | | | | | | | | 3rd Quarter 2024 // Quarter Ended September 30, 2024 | | | | | EARNINGS RELEASE AND SUPPLEMENTAL | | | | | OPERATING & FINANCIAL DATA | | | | | | | | | | | | | | | | | | | | The Lydian // Denver, CO ප්‍රි centerspace | | | | Earnings Release Centerspace Reports Third Quarter 2024 Financial Results and Raises Mid-Point for 2024 Core FFO per Share Guidance MINNEAPOLIS ...

MINNEAPOLIS, Oct. 28, 2024 /PRNewswire/ -- Centerspace (NYSE: CSR) announced today its financial and operating results for the three and nine months ended September 30, 2024. The tables below show Net Income (Loss), Funds from Operations ("FFO")1, and Core FFO1, all on a per diluted share basis, for the three and nine months ended September 30, 2024; Same-Store Revenues, Expenses, and Net Operating Income ("NOI")1 over comparable periods; along with SameStore Weighted-Average Occupancy and leasing rates for ...

Financial Performance - For the three months ended September 30, 2024, revenue increased by $457,000 or 0.7% to $65.0 million compared to $64.6 million for the same period in 2023[128]. - Same-store revenues increased by 3.0% for the three months ended September 30, 2024, contributing to a 2.8% increase in same-store NOI[129]. - Non-GAAP Core Funds from Operations (Core FFO) for the three months ended September 30, 2024, increased by $245,000 or 1.1% to $22.0 million compared to $21.7 million for the same period in 2023[132]. - The net loss was $0.40 per diluted share for the three months ended September 30, 2024, compared to net income of $0.41 per diluted share for the same period in the prior year[131]. - Net operating income (NOI) for the three months ended September 30, 2024, was $38.4 million, reflecting a 1.4% increase from $37.8 million in the same period of 2023[138]. - Total revenue for the three months ended September 30, 2024, was $65.025 million, a 0.7% increase from $64.568 million in Q3 2023[141]. - Net income (loss) for Q3 2024 was $(1.951) million, a decrease of 121.3% compared to net income of $9.169 million in Q3 2023[141]. - Net loss available to common shareholders decreased to $14.6 million for the nine months ended September 30, 2024, compared to net income of $44.7 million in the same period in the prior year[165]. - FFO applicable to common shares for the nine months ended September 30, 2024, increased to $61.7 million, representing an increase of 8.0% compared to the prior year[173]. - Core FFO applicable to common shares and units for the three months ended September 30, 2024, was $21,969 thousand, slightly up from $21,724 thousand in 2023[175]. Property Management and Operations - The company owned interests in 70 apartment communities consisting of 12,883 apartment homes, with property valued at $2.4 billion[126]. - The company disposed of two apartment communities consisting of 205 apartment homes during the nine months ended September 30, 2024, compared to thirteen communities with 2,279 homes in the same period of 2023[136]. - Property management expenses for the three months ended September 30, 2024, were $2.2 million, a 2.0% increase from $2.2 million in the same period of 2023[138]. - General and administrative expenses increased by 7.0% to $4.1 million for the three months ended September 30, 2024, compared to $3.8 million for the same period in 2023[138]. - Same-store revenue increased by 3.0%, or $1.8 million, for the three months ended September 30, 2024, compared to the same period in the prior year[144]. - Weighted average occupancy for same-store properties rose to 95.3% in Q3 2024 from 94.6% in Q3 2023[143]. - Property operating expenses for same-store communities increased by 3.2%, or $807,000, in Q3 2024 compared to Q3 2023[144]. - Same-store net operating income (NOI) increased by $1.0 million to $36.8 million for the three months ended September 30, 2024, compared to $35.8 million in the same period of the prior year[144]. Revenue and Expenses - Revenue from same-store communities increased by 3.3%, or $6.0 million, for the nine months ended September 30, 2024, compared to the same period in the prior year[145]. - Same-store NOI increased by $4.5 million to $112.5 million for the nine months ended September 30, 2024, compared to $108.0 million in the same period of the prior year[145]. - Revenue from non-same-store communities increased by $5.5 million for the nine months ended September 30, 2024, compared to the same period in the prior year[147]. - NOI at non-same-store communities increased by $3.8 million for the nine months ended September 30, 2024, compared to the same period in the prior year[147]. - Revenue from dispositions decreased by $13.9 million for the nine months ended September 30, 2024, compared to the same period in the prior year[150]. - General and administrative expenses decreased by 17.7% to $12.9 million for the nine months ended September 30, 2024, compared to $15.7 million in the same period of the prior year[158]. - Interest expense was comparable at $27.5 million for the nine months ended September 30, 2024, and 2023[162]. - Casualty loss decreased to $918,000 for the nine months ended September 30, 2024, compared to $1.2 million in the same period of the prior year[154]. Capital and Financing - The company issued approximately 1.5 million common shares for $105.1 million under its at-the-market offering program, using proceeds to redeem all outstanding Series C preferred shares for $97.0 million[130]. - Total liquidity as of September 30, 2024, was approximately $235.5 million, including $221.0 million available on lines of credit and $14.5 million in cash[183]. - The company had $39.0 million outstanding on its revolving line of credit, with additional borrowing availability of $211.0 million[184]. - The company had a multibank revolving line of credit with total commitments of $250.0 million, which matures in July 2028[184]. - The company issued $175.0 million in unsecured senior promissory notes, with an amended shelf agreement extending borrowing capacity to $300.0 million[187]. - The company has a $198.9 million Fannie Mae Credit Facility Agreement, secured by mortgages on 11 apartment communities, with a blended average interest rate of 2.78%[188]. - Mortgage loan indebtedness, excluding the FMCF, was $387.3 million as of September 30, 2024, down from $392.3 million at December 31, 2023[189]. - The company redeemed all 3.9 million Series C preferred shares for an aggregate price of $97.0 million on September 30, 2024[190]. - The company amended its equity distribution agreement to increase the maximum aggregate offering price of common shares from $250.0 million to $500.0 million[191]. - During the nine months ended September 30, 2024, the company generated $112.2 million in net proceeds from the issuance of common shares[196]. - The company has a share repurchase program authorized for up to $50.0 million, with $4.7 million remaining as of September 30, 2024[193]. - The company funded capital improvements for apartment communities of approximately $47.4 million during the nine months ended September 30, 2024[196]. - The weighted average interest rate on mortgage debt was 4.05% as of September 30, 2024[189]. Market and Operational Challenges - The company continues to monitor supply chain challenges and inflationary pressures that may increase operating expenses[200]. - The Company is currently not involved in any material pending legal proceedings, aside from ordinary routine litigation incidental to its business operations[212].

Investors interested in REIT and Equity Trust - Residential stocks are likely familiar with Centerspace (CSR) and American Homes 4 Rent (AMH) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look. Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targ ...