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]

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]

Financial Performance - Centerspace (CSR) reported quarterly funds from operations (FFO) of $1.18 per share, exceeding the Zacks Consensus Estimate of $1.17 per share, but down from $1.20 per share a year ago, representing an FFO surprise of 0.85% [1] - The company posted revenues of $65.03 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2%, compared to $64.57 million in the same quarter last year [2] - Over the last four quarters, Centerspace has surpassed consensus FFO estimates four times but has not beaten consensus revenue estimates [2] Stock Performance and Outlook - Centerspace shares have increased approximately 20.9% since the beginning of the year, while the S&P 500 has gained 21.8% [3] - The future price movement of the stock will largely depend on management's commentary during the earnings call and the company's FFO outlook [4][6] - The current consensus FFO estimate for the upcoming quarter is $1.20 on revenues of $67 million, and for the current fiscal year, it is $4.83 on revenues of $262.9 million [7] Industry Context - The REIT and Equity Trust - Residential industry, to which Centerspace belongs, is currently ranked in the top 33% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in estimate revisions, which can impact Centerspace's stock performance [5]

[Earnings Release](index=2&type=section&id=Earnings%20Release) [Financial & Operating Highlights](index=2&type=section&id=Financial%20%26%20Operating%20Highlights) Centerspace reported a Q3 2024 net loss of $0.40 per diluted share, Core FFO of $1.18, 2.8% same-store NOI growth, and raised its 2024 Core FFO guidance Q3 & YTD 2024 Key Financial Metrics (Per Diluted Share) | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $(0.40) | $0.41 | $(0.96) | $2.96 | | FFO | $1.01 | $1.15 | $3.40 | $3.15 | | Core FFO | $1.18 | $1.20 | $3.68 | $3.56 | Q3 2024 Same-Store Performance vs. Prior Periods | Same-Store Metric | Q3 2024 vs Q3 2023 | Q3 2024 vs Q2 2024 | YTD 2024 vs YTD 2023 | | :--- | :--- | :--- | :--- | | Revenues | 3.0% | —% | 3.3% | | Expenses | 3.2% | 5.8% | 2.0% | | NOI | 2.8% | (3.7)% | 4.2% | - Weighted average occupancy for the same-store portfolio remained stable at **95.3%** in Q3 2024, up from 94.6% in Q3 2023[4](index=4&type=chunk) - The company raised the mid-point and narrowed the 2024 financial outlook for net loss and Core FFO per diluted share[5](index=5&type=chunk) - During Q3 2024, Centerspace issued approximately **1.5 million** common shares for **$105.1 million** and used the proceeds to redeem all outstanding Series C preferred shares for **$97.0 million**, which carried a 6.625% distribution rate[5](index=5&type=chunk) [Balance Sheet & Liquidity](index=3&type=section&id=Balance%20Sheet%20%26%20Liquidity) Centerspace maintained a solid liquidity position of $235.5 million at Q3 2024, comprising available lines of credit and cash equivalents - Total liquidity at the end of Q3 2024 stood at **$235.5 million**[7](index=7&type=chunk) Components of Liquidity (as of September 30, 2024) | Component | Amount (in millions) | | :--- | :--- | | Available under lines of credit | $221.0 | | Cash and cash equivalents | $14.5 | | **Total Liquidity** | **$235.5** | [Updated 2024 Financial Outlook](index=3&type=section&id=Updated%202024%20Financial%20Outlook) Centerspace updated its 2024 financial outlook, raising the Core FFO per share midpoint to $4.82-$4.90 and narrowing same-store NOI growth to 3.25%-3.75% Updated Full-Year 2024 Guidance | Metric | Previous Outlook | Updated Outlook | | :--- | :--- | :--- | | Net income per Share – diluted | $(1.21) - $(1.01) | $(1.21) - $(1.06) | | Same-Store Revenue Growth | 3.25% - 4.25% | 3.00% - 3.50% | | Same-Store Expense Growth | 3.50% - 4.75% | 2.50% - 3.25% | | Same-Store NOI Growth | 3.00% - 4.00% | 3.25% - 3.75% | | Core FFO per Share – diluted | $4.78 - $4.92 | $4.82 - $4.90 | - Additional assumptions for 2024 include same-store recurring capital expenditures of **$1,100 to $1,150 per home** and value-add expenditures of **$23.0 million to $25.0 million**[9](index=9&type=chunk) [Subsequent Events](index=3&type=section&id=Subsequent%20Events) Centerspace acquired The Lydian in Denver, CO, for $54.0 million on October 1, 2024, financed by assumed debt, operating partnership units, and cash - On October 1, 2024, Centerspace acquired The Lydian in Denver, CO, for **$54.0 million**[10](index=10&type=chunk) - The acquisition was funded by assuming mortgage debt, issuing common operating partnership units, and using cash[10](index=10&type=chunk) [Supplemental Financial and Operating Data](index=6&type=section&id=Supplemental%20Financial%20and%20Operating%20Data) [Common Share Data](index=7&type=section&id=Common%20Share%20Data) Centerspace's common stock closed Q3 2024 at $70.47 with a 4.3% dividend yield, and total shares outstanding increased to 19.4 million Q3 2024 Common Share Performance (as of Sep 30, 2024) | Metric | Value | | :--- | :--- | | High closing price | $75.50 | | Low closing price | $67.04 | | Closing price at end of quarter | $70.47 | | Closing dividend yield – annualized | 4.3% | | Total closing common shares & units (thousands) | 19,415 | [Key Financial Data](index=8&type=section&id=Key%20Financial%20Data) This section presents unaudited consolidated statements of operations and balance sheets, detailing YTD 2024 revenues, net loss, and total assets [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Centerspace reported Q3 2024 revenue of $65.0 million and a net loss of $6.2 million, with YTD 2024 revenue at $194.6 million and a net loss of $14.6 million Statement of Operations Highlights (in thousands) | Line Item | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $65,025 | $64,568 | $194,574 | $197,241 | | Total Expenses | $58,675 | $58,408 | $176,380 | $179,746 | | Gain (loss) on sale of real estate | $0 | $11,235 | $(577) | $71,327 | | Net Income (Loss) Available to Common Shareholders | $(6,166) | $6,167 | $(14,581) | $44,661 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of Q3 2024, Centerspace's total assets were $1.89 billion and total liabilities $982.3 million, with Series C Preferred Shares redeemed during the quarter Balance Sheet Highlights (in thousands) | Line Item | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total real estate investments, net | $1,834,080 | $1,889,443 | | Cash and cash equivalents | $14,453 | $8,630 | | **Total Assets** | **$1,887,405** | **$1,926,361** | | Total Liabilities | $982,266 | $978,776 | | Series C Preferred Shares | $0 | $93,530 | | **Total Equity** | **$888,579** | **$931,025** | [Non-GAAP Financial Measures and Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section reconciles key non-GAAP metrics like NOI, FFO, Core FFO, and Adjusted EBITDA, used to evaluate core operational performance [Net Operating Income (NOI)](index=11&type=section&id=Net%20Operating%20Income%20%28NOI%29) Q3 2024 total NOI increased 1.4% to $38.4 million, driven by a 2.8% rise in same-store NOI, which grew 4.2% year-to-date Same-Store NOI Performance | Period | Revenue Growth | Expense Growth | NOI Growth | | :--- | :--- | :--- | :--- | | Q3 2024 vs Q3 2023 | 3.0% | 3.2% | 2.8% | | YTD 2024 vs YTD 2023 | 3.3% | 2.0% | 4.2% | [Same-Store Controllable Expenses](index=13&type=section&id=Same-Store%20Controllable%20Expenses) Q3 2024 same-store property operating expenses increased 3.2% year-over-year, primarily due to a 7.6% rise in non-controllable expenses, while controllable expenses grew 0.8% Q3 2024 vs Q3 2023 Same-Store Expense Growth | Expense Category | % Change YoY | | :--- | :--- | | Controllable Expenses | 0.8% | | Non-controllable Expenses | 7.6% | | - Real estate taxes | 1.1% | | - Insurance | 26.5% | | **Total Same-Store Expenses** | **3.2%** | [Funds From Operations (FFO) and Core FFO](index=14&type=section&id=Funds%20From%20Operations%20%28FFO%29%20and%20Core%20FFO) Q3 2024 FFO per diluted share was $1.01 and Core FFO was $1.18, with year-to-date Core FFO increasing 3.4% to $3.68 FFO and Core FFO Reconciliation Highlights (Per Diluted Share) | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $(0.40) | $0.41 | $(0.96) | $2.96 | | FFO | $1.01 | $1.15 | $3.40 | $3.15 | | Core FFO | $1.18 | $1.20 | $3.68 | $3.56 | [Adjusted EBITDA](index=15&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA for Q3 2024 was $31.8 million, a slight increase from Q3 2023, with year-to-date Adjusted EBITDA at $97.2 million Adjusted EBITDA Performance (in thousands) | Period | Adjusted EBITDA | | :--- | :--- | | Q3 2024 | $31,757 | | Q3 2023 | $31,692 | | YTD 2024 | $97,178 | | YTD 2023 | $96,773 | [Debt and Capital Analysis](index=16&type=section&id=Debt%20and%20Capital%20Analysis) This section details Centerspace's debt structure and capital position, showing $921.3 million in total debt at 3.59% weighted average interest and stable credit metrics [Debt Analysis](index=16&type=section&id=Debt%20Analysis) As of Q3 2024, Centerspace had $921.3 million in total debt at a 3.59% weighted average interest rate, with a well-structured maturity profile extending beyond 2028 - Total debt outstanding as of Q3 2024 was **$921.3 million**, with a weighted average interest rate of **3.59%**[35](index=35&type=chunk)[36](index=36&type=chunk) - The company has a staggered debt maturity profile, with **63.8%** of its debt maturing in 2029 or later[35](index=35&type=chunk) [Capital Analysis](index=17&type=section&id=Capital%20Analysis) At Q3 2024, Centerspace's total market capitalization was $2.31 billion, with a moderate leverage profile and a Core FFO payout ratio of 63.6% Key Capital & Credit Metrics (as of Sep 30, 2024) | Metric | Value | | :--- | :--- | | Total Market Capitalization | $2.31 billion | | Total Debt to Total Market Capitalization | 40.0% | | Net Debt / Adjusted EBITDA | 7.17x | | Payout Ratio (Core FFO basis) | 63.6% | [Portfolio Analysis](index=18&type=section&id=Portfolio%20Analysis) This section details Centerspace's portfolio performance, highlighting 2.8% Q3 same-store NOI growth, 95.3% occupancy, and $42.6 million in year-to-date capital expenditures [Same-Store Comparisons](index=18&type=section&id=Same-Store%20Comparisons) Q3 2024 same-store NOI grew 2.8% year-over-year, led by North Dakota's 10.6% growth, though sequential NOI decreased 3.7% due to higher expenses Q3 2024 vs Q3 2023 Same-Store NOI Growth by Region | Region | % of NOI Contribution | NOI % Change YoY | | :--- | :--- | :--- | | Denver, CO | 23.0% | 0.2% | | Minneapolis, MN | 34.4% | 2.5% | | North Dakota | 12.6% | 10.6% | | Omaha, NE | 5.9% | 6.2% | | **Same-Store Total** | **100.0%** | **2.8%** | - Sequentially, same-store NOI decreased by **3.7%** from Q2 2024 to Q3 2024, as revenues were flat while expenses increased by **5.8%**[45](index=45&type=chunk) - For the first nine months of 2024, same-store NOI increased by **4.2%** compared to the same period in 2023[48](index=48&type=chunk) [Portfolio Summary](index=21&type=section&id=Portfolio%20Summary) As of Q3 2024, Centerspace's portfolio comprised 12,883 homes with 95.3% weighted average occupancy and an average monthly rental rate of $1,577 Portfolio Metrics (All Communities, as of Sep 30, 2024) | Metric | Value | | :--- | :--- | | Number of Apartment Homes | 12,883 | | Weighted Average Occupancy | 95.3% | | Average Monthly Rental Rate | $1,577 | | Average Monthly Revenue per Occupied Home | $1,750 | [Capital Expenditures](index=22&type=section&id=Capital%20Expenditures) Year-to-date Q3 2024 capital expenditures totaled $42.6 million, including $10.3 million in recurring and $20.6 million in value-add investments for the same-store portfolio Capital Expenditures - YTD 2024 (in thousands) | Category (Same-Store) | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Recurring Capital Expenditures | $10,316 | $8,684 | | Total Value Add | $20,608 | $15,478 | | **Total Same-Store Capital Spend** | **$30,924** | **$24,162** | - Year-to-date recurring capital expenditures for the same-store portfolio were **$820 per apartment home**, up from $690 in the prior year period[52](index=52&type=chunk) [2024 Financial Outlook](index=23&type=section&id=2024%20Financial%20Outlook) Centerspace updated its 2024 financial outlook, raising Core FFO per diluted share guidance to $4.82-$4.90 and same-store NOI growth to 3.25%-3.75% Updated 2024 Full-Year Guidance Ranges | Metric | Updated Low | Updated High | | :--- | :--- | :--- | | Same-Store Revenue Growth | 3.00% | 3.50% | | Same-Store Total Expense Growth | 2.50% | 3.25% | | Same-Store NOI Growth | 3.25% | 3.75% | | FFO per diluted share | $4.50 | $4.59 | | Core FFO per diluted share | $4.82 | $4.90 | - The updated outlook for Net Loss per share is now **$(1.21) to $(1.06)**[56](index=56&type=chunk) [Non-GAAP Financial Measures and Other Terms](index=25&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Other%20Terms) This section defines key non-GAAP financial measures and operational terms, explaining their calculation and utility for evaluating company performance - Defines key non-GAAP metrics including Adjusted EBITDA, FFO, Core FFO, and NOI, explaining their calculation and utility for investors[60](index=60&type=chunk)[66](index=66&type=chunk)[73](index=73&type=chunk) - Provides definitions for operational terms such as Average Monthly Rental Rate, Blended Lease Rate Growth, and Weighted Average Occupancy[61](index=61&type=chunk)[63](index=63&type=chunk)[84](index=84&type=chunk) - Explains the components of capital expenditures, distinguishing between Recurring Capital Expenditures and Value Add investments[78](index=78&type=chunk)[83](index=83&type=chunk)