Core Insights - Centerspace published its 2024 ESG Report and inaugural TCFD report, emphasizing its commitment to sustainable practices in the multifamily industry [1][3] - The company met four out of five ESG goals two years ahead of schedule and improved its GRESB score from 63 to 70 [2] Group 1: ESG Commitment - Centerspace's 2024 ESG report aligns with GRI's 2024 Universal Standards and the United Nations Sustainable Development Goals [2] - The company established an ESG Committee in 2019 to lead sustainability initiatives [1] Group 2: Climate Risk Management - The inaugural TCFD report serves as a foundation for managing climate risk and aligns with industry-standard reporting frameworks [3] - Centerspace is focused on continuous improvement in disclosure and climate risk mitigation [3] Group 3: Operational Practices - The company is committed to responsible business practices, including resource stewardship, waste reduction, and energy and water conservation [4] - Centerspace operates 73 apartment communities with a total of 13,773 homes across several states [4]

Financial Data and Key Metrics Changes - The second quarter and first half results exceeded initial guidance, with revenue growth driven by higher occupancy and rental revenue [5][6] - Core FFO growth year-to-date was 3.3%, positioning the company towards the top of the sector [8] - Operating expense growth is now forecasted at 3.1%, 100 basis points better than original guidance, leading to higher NOI growth projected at 2.7% for 2025 [6][12] Business Line Data and Key Metrics Changes - Same store NOI growth is projected at 2.7%, reflecting a 30 basis points improvement from initial expectations, driven by reduced expense growth [12] - New development projects started in the first half of the year totaled $610 million, with a revised full-year target of $1.7 billion [8][12] Market Data and Key Metrics Changes - Total market occupancy in established regions is at 94.8%, while the Sunbelt region stands at 89.5% due to elevated standing inventory [9] - Economic occupancy in New York, New Jersey averaged 96.3% during Q2, and Seattle averaged 96.6% with over 3% rent change [17][19] Company Strategy and Development Direction - The company is focused on acquiring $900 million of assets this year, primarily funded by capital from dispositions [7] - Development projects are expected to generate differentiated external growth, with a focus on high-quality projects in attractive long-term markets [7][8] Management's Comments on Operating Environment and Future Outlook - Management noted that job growth expectations for the second half of the year are more muted, but demand remains healthy across most of the portfolio [6] - The company anticipates a continued decline in new supply in established regions, supporting healthy operating fundamentals [6][9] Other Important Information - The company raised $1.3 billion of capital year-to-date at an initial cost of 5%, which is attractive relative to yields on new development projects [8] - The CEO acknowledged the retirement of the VP of Investor Relations, Jason Reilley, after 21 years with the company [10] Q&A Session Summary Question: What is impacting the pace of leasing in Denver communities? - The leasing pace is averaging about 30 homes per month, which is expected for this time of year, but some delays are due to elevated concessions in competitive submarkets [28][30] Question: What gives confidence in achieving the same number of occupied units by year-end? - The company has had good leasing velocity, averaging around 30 units per month, and is optimistic about the performance of new lease-ups in strong markets [32][34] Question: What caused the leveling off in asking rent trends? - Demand has softened due to weaker job growth, with about 100,000 fewer jobs than originally projected impacting rent growth [38][39] Question: Why is bad debt running higher compared to peers? - The company charges for all amounts due under lease terms, including late fees and utilities, which may contribute to higher bad debt figures [40][41] Question: How is the Dallas acquisition performing? - The acquisition is trending as expected, with increased resources being invested in asset management to enhance performance [48][49] Question: What regions are expected to underperform in rent change? - The Mid Atlantic and Southern California are projected to underperform due to weaker job environments and pricing power [54][55] Question: What is the outlook for the pending DC asset sales? - The DC market is challenging for asset sales due to unique local laws, but recent recovery in rent rolls has made the company comfortable with transaction values [84][87]

Core Viewpoint - Centerspace has made significant acquisitions in the multifamily real estate sector, expanding its portfolio and geographic presence, particularly in the Mountain West region [2][3]. Acquisition Details - The company acquired a community in Salt Lake City, UT, for $149 million, consisting of 341 homes in the desirable Sugar House submarket [1][2]. - Centerspace has signed an agreement to acquire a 420-home community in Fort Collins, CO, for approximately $132 million, with the closing expected in mid-June 2025 [3]. Portfolio Management - Centerspace is marketing its five-community portfolio in Saint Cloud, MN, indicating a strategic exit from that market [4]. - The company plans to market several communities from its Minneapolis portfolio for sale as part of its portfolio optimization strategy [4]. Financial Strategy - To enhance financial flexibility during these transactions, Centerspace has expanded its line of credit by $150 million, increasing the total borrowing capacity to $400 million [5]. - The company’s previous earnings guidance did not account for these acquisitions or dispositions, and it plans to provide updated guidance with its second quarter 2025 earnings release [6]. Dividend Announcement - Centerspace's Board of Trustees declared a regular quarterly distribution of $0.77 per share/unit, payable on July 10, 2025, to shareholders and unitholders of record by June 27, 2025 [7]. Company Overview - Centerspace is an owner and operator of apartment communities, currently owning 72 communities with a total of 13,353 homes across several states, including Colorado, Minnesota, and Utah [8].

Core Viewpoint - AvalonBay Communities (AVB) reported a strong first-quarter 2025 performance with core funds from operations (FFO) per share of $2.83, exceeding expectations and showing a year-over-year increase of 4.8% [1] Financial Performance - Total revenues for the quarter were $745.9 million, slightly missing the consensus estimate but reflecting a 4.6% increase year-over-year [2] - Same-store residential revenues rose 3% year-over-year to $693.1 million, while same-store residential operating expenses increased by 4% to $214.76 million, resulting in a 2.6% rise in same-store residential NOI to $478.3 million [3] - The same-store average revenue per occupied home increased to $3,032, up 2.9% from $2,946 in the prior year, with economic occupancy at 96%, a rise of 10 basis points year-over-year [4] Development and Acquisitions - As of March 31, 2025, AvalonBay had 19 wholly owned development communities under construction, expected to contain 6,595 apartment homes and 69,000 square feet of commercial space, with a total estimated capital cost of $2.5 billion [5] - In February 2025, AVB entered agreements to acquire eight apartment communities in Texas, acquiring two communities in Austin for $187 million and six communities in Dallas-Fort Worth for $431.5 million [6] Dispositions - During the quarter, AVB sold a community in Wilton, CT, for $65.1 million, resulting in a GAAP gain of $56.48 million, marking its exit from the Connecticut market [7] Balance Sheet Position - As of March 31, 2025, AVB had $53.26 million in unrestricted cash and no borrowings under its unsecured revolving credit facility, with outstanding borrowings of $224.9 million under its commercial paper note program [8] - The annualized net debt-to-core EBITDAre ratio for the January-March period was 4.3 times, with an unencumbered NOI of 95% for the year ended March 31, 2025 [8] 2025 Outlook - AvalonBay reaffirmed its full-year 2025 core FFO per share guidance between $11.14 and $11.64, with the current consensus estimate at $11.41 [9] - The company expects same-store residential revenue growth of 2-4% and operating expense increases of 3-5.2%, projecting same-store residential NOI expansion of 1.3-3.5% [9] - For Q2 2025, core FFO per share is expected to be in the range of $2.72-$2.82, lower than the current consensus estimate of $2.85 [10] Performance of Other Residential REITs - Equity Residential reported first-quarter 2025 normalized FFO per share of 95 cents, exceeding estimates, while Mid-America Apartment Communities reported core FFO per share of $2.20, surpassing expectations but showing a slight year-over-year decline [11]