Earnings Release Centerspace's Q1 2024 earnings report details financial performance, revised outlook, and key operational activities Overview and Highlights Centerspace reported its first quarter 2024 financial results, showing a net loss but significant year-over-year increases in Core FFO and Same-Store NOI. Key operational activities included the sale of non-core assets and share repurchases Q1 2024 Key Financial Performance | Per Common Share | 2024 | 2023 | | :----------------------- | :--- | :--- | | Net income (loss) - diluted | $(0.37) | $2.76 | | FFO - diluted | $1.16 | $0.89 | | Core FFO - diluted | $1.23 | $1.07 | Q1 2024 Same-Store Results (Year-Over-Year Comparison) | Same-Store Results | Q1 2024 vs. Q1 2023 | | :----------------- | :------------------ | | Revenues | 3.5% | | Expenses | (2.2)% | | NOI | 7.5% | - Core FFO per diluted share increased 15.0% to $1.23 for Q1 2024 compared to $1.07 for Q1 20234 - Centerspace successfully executed the sale of two non-core apartment communities for an aggregate sales price of $19.0 million4 - Centerspace repurchased 87,722 common shares for total consideration of $4.7 million at an average price of $53.62 per share4 Balance Sheet Summary At the end of the first quarter, Centerspace maintained a strong liquidity position, primarily supported by available lines of credit and cash reserves - Total liquidity on the balance sheet was $228.3 million at the end of Q1 20245 - Liquidity consisted of $215.6 million available under lines of credit and $12.7 million in cash and cash equivalents5 Revised 2024 Financial Outlook Centerspace revised its 2024 financial outlook, narrowing the ranges for net income and FFO per diluted share, and raising the mid-point for Core FFO per diluted share, reflecting updated expectations for same-store revenues and expenses Revised 2024 Financial Outlook Comparison | Metric | Previous Outlook (Low) | Previous Outlook (High) | Updated Outlook (Low) | Updated Outlook (High) | | :----------------------- | :--------------------- | :---------------------- | :-------------------- | :--------------------- | | Net income per Share – diluted | $(1.31) | $(0.99) | $(1.34) | $(1.10) | | Same-Store Revenue | 3.00 % | 5.00 % | 3.00 % | 4.50 % | | Same-Store Expenses | 5.50 % | 7.00 % | 4.00 % | 5.50 % | | Same-Store NOI | 1.50 % | 3.50 % | 2.50 % | 4.00 % | | FFO per Share – diluted | $4.54 | $4.80 | $4.57 | $4.76 | | Core FFO per Share – diluted | $4.68 | $4.92 | $4.74 | $4.92 | Company Information and Forward-Looking Statements Centerspace, established in 1970, operates 70 apartment communities across six states. The release includes a standard disclaimer regarding forward-looking statements, highlighting inherent risks and uncertainties - Centerspace was founded in 1970 and as of March 31, 2024, owned interests in 70 apartment communities10 - The company's portfolio consists of 12,883 apartment homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota10 - The press release contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially11 Upcoming Events and Supplemental Information Access Centerspace announced its participation in several upcoming investor conferences and provided details for accessing the Q1 2024 earnings call webcast and supplemental financial data - Centerspace is scheduled to participate in the BTIG 4th Annual Housing Ecosystem Conference (May 6-7, 2024), BMO 2024 Real Estate conference (May 8, 2024), and Nareit REITweek: 2024 Investor Conference (June 4-5, 2024)9 - The Q1 2024 Earnings Call was scheduled for Tuesday, April 30, 2024, at 10:00 AM ET, with a live webcast and replay available8 - Supplemental Operating and Financial Data is available in the Investors section of Centerspace's website9 Supplemental Financial and Operating Data This section provides detailed financial statements, non-GAAP reconciliations, debt analysis, and portfolio performance metrics Common Share Data This section provides a detailed overview of Centerspace's common share and unit data, including historical closing prices, dividend yields, and outstanding share/unit counts across the last five quarters Common Share Data (Three Months Ended March 31, 2024) | Metric | Value | | :------------------------------------ | :------ | | High closing price | $58.00 | | Low closing price | $52.65 | | Average closing price | $55.68 | | Closing price at end of quarter | $57.14 | | Common share distributions – annualized | $3.00 | | Closing dividend yield – annualized | 5.3 % | | Closing common shares outstanding (thousands) | 14,912 | | Total closing common shares, limited partnership units, and Series E preferred units, as converted, outstanding (thousands) | 17,818 | Key Financial Data This section presents Centerspace's condensed consolidated statements of operations and balance sheets, offering a comprehensive view of the company's financial performance and position over the past five quarters Condensed Consolidated Statements of Operations This section presents Centerspace's consolidated statements of operations, detailing revenues, expenses, and net income (loss) over recent quarters Condensed Consolidated Statements of Operations (in thousands) | Metric | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :------------------------------------ | :-------- | :--------- | :-------- | | REVENUE | $64,506 | $64,068 | $67,897 | | TOTAL EXPENSES | $59,854 | $64,490 | $65,459 | | Operating income (loss) | $4,075 | $(1,505) | $62,597 | | Net income (loss) | $(4,792) | $(9,885) | $52,327 | | NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $(5,512) | $(9,764) | $41,964 | | Net income (loss) per common share – diluted | $(0.37) | $(0.65) | $2.76 | Condensed Consolidated Balance Sheets This section outlines Centerspace's consolidated balance sheets, presenting assets, liabilities, and equity at key reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :------------------------------------ | :-------- | :--------- | :-------- | | Total real estate investments | $1,860,257 | $1,889,443 | $1,901,744 | | Cash and cash equivalents | $12,682 | $8,630 | $8,939 | | TOTAL ASSETS | $1,903,473 | $1,926,361 | $1,978,884 | | TOTAL LIABILITIES | $979,828 | $978,776 | $974,519 | | TOTAL EQUITY | $907,085 | $931,025 | $987,805 | Non-GAAP Financial Measures and Reconciliations This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including Net Operating Income (NOI), Funds From Operations (FFO), Core FFO, and Adjusted EBITDA. It also outlines the company's methodology for same-store comparisons, emphasizing their importance for evaluating operational performance - Non-GAAP financial measures like NOI, FFO, and Core FFO are provided as supplemental information and should not be considered substitutes for GAAP results25 - Same-store apartment communities are owned or in service for substantially all periods being compared and have achieved a target physical occupancy of 90%25 Net Operating Income (NOI) Reconciliation This section reconciles operating income to Net Operating Income (NOI), including same-store revenue and expense comparisons Net Operating Income Reconciliation (in thousands) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | Sequential % Change | Year-Over-Year % Change | | :------------------------------------ | :------ | :------ | :------ | :------------------ | :---------------------- | | Operating income (loss) | $4,075 | $(1,505) | $62,597 | (370.8)% | (93.5)% | | Net operating income | $39,437 | $38,970 | $38,974 | 1.2 % | 1.2 % | | Same-store Revenue | $61,536 | $61,230 | $59,439 | 0.5 % | 3.5 % | | Same-store Property operating expenses, including real estate taxes | $23,995 | $24,013 | $24,526 | (0.1)% | (2.2)% | | Same-store Net operating income | $37,541 | $37,217 | $34,913 | 0.9 % | 7.5 % | Same-Store Controllable Expenses Reconciliation This section details the breakdown and reconciliation of same-store controllable and non-controllable property operating expenses Same-Store Controllable Expenses (in thousands) | Metric | Q1 2024 | Q1 2023 | % Change | | :------------------------------------ | :------ | :------ | :------- | | Controllable expenses: | | | | | On-site compensation | $6,541 | $6,003 | 9.0 % | | Repairs and maintenance | $3,205 | $3,376 | (5.1)% | | Utilities | $4,053 | $4,884 | (17.0)% | | Administrative and marketing | $1,572 | $1,289 | 22.0 % | | Total Controllable expenses | $15,371 | $15,552 | (1.2)% | | Non-controllable expenses: | | | | | Real estate taxes | $6,008 | $6,775 | (11.3)% | | Insurance | $2,616 | $2,199 | 19.0 % | | Total Non-controllable expenses | $8,624 | $8,974 | (3.9)% | | Total property operating expenses, including real estate taxes | $25,069 | $28,923 | (13.3)% | Funds From Operations (FFO) and Core FFO Reconciliation This section provides a reconciliation of net income to FFO and Core FFO, presenting per-share amounts for key performance indicators FFO and Core FFO Reconciliation (in thousands, except per share amounts) | Metric | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :------------------------------------ | :-------- | :--------- | :-------- | | Net income (loss) available to common shareholders | $(5,512) | $(9,764) | $41,964 | | FFO applicable to common shares and Units | $20,889 | $20,129 | $16,254 | | Core FFO applicable to common shares and Units | $22,046 | $22,105 | $19,542 | | FFO per share and Unit - diluted | $1.16 | $1.11 | $0.89 | | Core FFO per share and Unit - diluted | $1.23 | $1.22 | $1.07 | Adjusted EBITDA Reconciliation This section reconciles net income to Adjusted EBITDA, a non-GAAP measure used to assess operational profitability Adjusted EBITDA Reconciliation (in thousands) | Metric | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :------------------------------------ | :-------- | :--------- | :-------- | | Net income (loss) available to controlling interests | $(3,905) | $(8,156) | $43,571 | | Adjusted EBITDA | $32,351 | $32,091 | $31,588 | Debt and Capital Analysis This section provides a detailed analysis of Centerspace's debt structure, including maturity schedules and outstanding balances, alongside key capital ratios such as total debt to total capitalization, debt service coverage, and payout ratio Debt Analysis This section details Centerspace's debt maturity schedule, outstanding balances, and weighted average interest rates Debt Maturity Schedule (as of 3/31/2024, in thousands) | Year | Total Debt | % of Total Debt | Weighted Average Interest Rate | | :--- | :--------- | :-------------- | :----------------------------- | | 2024 (remainder) | $357 | — | 7.72 % | | 2025 | $70,193 | 7.6 % | 5.39 % | | 2026 | $99,527 | 10.7 % | 3.59 % | | 2027 | $49,353 | 5.3 % | 3.47 % | | 2028 | $115,810 | 12.5 % | 3.14 % | | Thereafter | $593,841 | 63.9 % | 3.48 % | | Total debt | $929,081 | 100.0 % | 3.59 % | Debt Balances Outstanding and Rates (in thousands) | Metric | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :------------------------------------ | :-------- | :--------- | :-------- | | Secured fixed rate - mortgages payable - other | $389,874 | $391,140 | $279,340 | | Secured fixed rate - Fannie Mae credit facility | $198,850 | $198,850 | $198,850 | | Unsecured variable rate lines of credit | $40,357 | $30,000 | $143,469 | | Unsecured senior notes | $300,000 | $300,000 | $300,000 | | Debt total | $929,081 | $919,990 | $921,659 | | Mortgages payable - other rate | 4.05 % | 4.05 % | 3.85 % | | Fannie Mae Credit Facility rate | 2.78 % | 2.78 % | 2.78 % | | Lines of credit rate | 6.68 % | 6.74 % | 6.19 % | | Unsecured senior notes rate | 3.12 % | 3.12 % | 3.12 % | | Total debt rate | 3.59 % | 3.54 % | 3.71 % | Capital Analysis This section analyzes Centerspace's capital structure, including equity, debt capitalization, and key debt service ratios Equity and Debt Capitalization (in thousands) | Metric | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :------------------------------------ | :-------- | :--------- | :-------- | | Total equity capitalization | $1,111,651 | $1,135,426 | $1,082,442 | | Total debt | $929,081 | $919,990 | $921,659 | | Total capitalization | $2,057,292 | $2,071,976 | $2,020,661 | | Total debt to total capitalization | 45.2 % | 44.4 % | 45.6 % | Debt Service and Distribution Data | Metric | 3/31/2024 | 12/31/2023 | 3/31/2023 | | :------------------------------------ | :-------- | :--------- | :-------- | | Debt service coverage ratio | 3.02 x | 3.09 x | 2.70 x | | Net debt/Adjusted EBITDA | 7.08 x | 7.10 x | 7.22 x | | Common distribution per share and Unit | $0.75 | $0.73 | $0.73 | | Payout ratio (Core FFO per diluted share and unit basis) | 61.0 % | 59.8 % | 68.2 % | Portfolio Analysis This section offers a comprehensive analysis of Centerspace's apartment portfolio, including detailed same-store comparisons (year-over-year and sequential), occupancy and rental rate trends, and a breakdown of capital expenditures across various categories Same-Store Comparisons (Year-Over-Year) This section provides a year-over-year comparison of same-store revenues, expenses, NOI, occupancy, and rental rates Same-Store Performance (Q1 2024 vs Q1 2023, in thousands) | Metric | Q1 2024 | Q1 2023 | % Change | | :------------------------------------ | :------ | :------ | :------- | | Revenues | $61,536 | $59,439 | 3.5 % | | Expenses | $23,995 | $24,526 | (2.2)% | | NOI | $37,541 | $34,913 | 7.5 % | | Weighted Average Occupancy | 94.6 % | 94.9 % | (0.3)% | | Average Monthly Rental Rate | $1,547 | $1,499 | 3.2 % | | Average Monthly Revenue per Occupied Home | $1,724 | $1,660 | 3.9 % | - St. Cloud, MN region showed the highest year-over-year NOI growth at 21.2%, driven by an 8.2% increase in revenues and a 4.6% decrease in expenses51 Same-Store Comparisons (Sequential Quarter) This section presents a sequential quarter comparison of same-store revenues, expenses, NOI, occupancy, and rental rates Same-Store Performance (Q1 2024 vs Q4 2023, in thousands) | Metric | Q1 2024 | Q4 2023 | % Change | | :------------------------------------ | :------ | :------ | :------- | | Revenues | $61,536 | $61,230 | 0.5 % | | Expenses | $23,995 | $24,013 | (0.1)% | | NOI | $37,541 | $37,217 | 0.9 % | | Weighted Average Occupancy | 94.6 % | 94.8 % | (0.2)% | | Average Monthly Rental Rate | $1,547 | $1,548 | (0.1)% | | Average Monthly Revenue per Occupied Home | $1,724 | $1,711 | 0.8 % | - Minneapolis, MN region experienced a 4.8% sequential increase in NOI, despite a slight revenue decrease, due to a 6.7% reduction in expenses55 Portfolio Summary This section summarizes key metrics for Centerspace's apartment portfolio, distinguishing between same-store and non-same-store communities Portfolio Key Metrics (as of 3/31/2024) | Metric | Same-Store | Non-Same-Store | All Communities | | :------------------------------------ | :--------- | :------------- | :-------------- | | Number of Apartment Homes at Period End | 12,580 | 303 | 12,883 | | Average Monthly Rental Rate | $1,547 | $1,885 | $1,555 | | Average Monthly Revenue per Occupied Apartment Home | $1,724 | $2,053 | $1,732 | | Weighted Average Occupancy | 94.6 % | 96.6 % | 94.6 % | | Operating Expenses as a % of Scheduled Rent | 41.1 % | 33.0 % | 40.9 % | Capital Expenditures This section details Centerspace's capital expenditures, categorizing them into recurring, value-add, and acquisition-related spending Capital Expenditures (Q1 2024, in thousands) | Category | Same-Store | All Properties | | :------------------------------------ | :--------- | :------------- | | Recurring Capital Expenditures | $2,630 | $2,677 | | Recurring Capital Expenditures per Apartment Home | $209 | $208 | | Total Value Add | $9,525 | $9,958 | | Acquisition and Other Capital Expenditures | N/A | $2,581 | | Total Capital Spend | $12,155 | $15,216 | | Total Capital Spend per Apartment Home | $966 | $1,181 | - Total Capital Spend for all properties in Q1 2024 was $15.2 million, significantly higher than $9.2 million in Q1 202363 2024 Financial Outlook (Detailed) This section provides a comprehensive breakdown of Centerspace's revised 2024 financial outlook, detailing projections for same-store growth, components of NOI, interest expenses, and non-core income/expenses, along with key per-share metrics and additional assumptions 2024 Revised Financial Outlook Ranges | Metric | Low | High | | :------------------------------------ | :---- | :---- | | Same-store Revenue Growth | 3.00 % | 4.50 % | | Same-store Total Expenses Growth | 4.00 % | 5.50 % | | Same-store NOI Growth | 2.50 % | 4.00 % | | Total NOI (thousands) | $155,753 | $158,153 | | FFO per diluted share | $4.57 | $4.76 | | Core FFO per diluted share | $4.74 | $4.92 | | Net loss per share - diluted | $(1.34) | $(1.10) | - Additional assumptions for 2024 include same-store recurring capital expenditures of $1,075 to $1,150 per home, value-add expenditures of $25.0 million to $27.0 million, and proceeds from dispositions of $19.0 million67 Non-GAAP Financial Measures and Other Terms This section provides comprehensive definitions and explanations for various non-GAAP financial measures and other key terms used throughout the earnings release and supplemental data, including Adjusted EBITDA, FFO, Core FFO, NOI, and different capital expenditure categories, along with their reconciliations to GAAP measures - Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment, and other non-routine items, used to view income from operations without certain non-cash or non-operating effects74 - Funds From Operations (FFO) is a non-GAAP measure defined by Nareit, excluding depreciation and amortization related to real estate, gains/losses from real estate sales, and impairment write-downs, to help investors understand operating performance798081 - Core Funds from Operations (Core FFO) further adjusts FFO for non-routine items not considered core to business operations, providing additional information for comparing core operating performance84 - Net Operating Income (NOI) is defined as total real estate revenues less property operating expenses, including real estate taxes, providing a measure of operations unaffected by financing costs, depreciation, and general and administrative expenses87 - Recurring Capital Expenditures are necessary to preserve the value and maintain functionality of communities, while Value Add expenditures are expected to increase income generation or decrease expense growth9094
Centerspace(CSR) - 2024 Q1 - Quarterly Results