Centerspace(US:CSR)2023-02-22 19:33Financial Data and Key Metrics Changes - Centerspace reported core FFO for Q4 2022 of $1.17 per diluted share, bringing the full year core FFO to $4.43 per diluted share, an increase of 11% over the prior year [36][4] - The same-store portfolio achieved a 9% growth in net operating income compared to 2021, with revenue growth of 10% for the full year [34][4] - Total debt as of December 31, 2022, was $1 billion with a weighted average interest rate of 3.62% [15] Business Line Data and Key Metrics Changes - The same-store portfolio saw an average new lease increase of 8% and renewals increased by 8.4% during 2022 [12] - In Q4, same-store new lease rates increased by 1.8% on average, while same-store renewals achieved average increases of 7.2% [34] - The company experienced a 26% increase in utility expenses contributing to the overall same-store expense increase in 2022 [35] Market Data and Key Metrics Changes - The company noted that its portfolio is among the least exposed to new supply in the public markets, providing a strong value proposition to residents [10] - The financial health of residents remains strong, with a weighted average occupancy increase of 40 basis points to 94.9% in Q4 [12] Company Strategy and Development Direction - Centerspace plans to continue improving its portfolio and has deployed about $125 million in capital for acquisitions and share buybacks [8] - The company expects to close on the sale of 11 assets for approximately $155 million to $165 million, which will be used to pay down debt [17] - The management is focused on enhancing operational efficiencies and maintaining strong revenue growth despite inflationary pressures [14][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's fundamentals and the ability to navigate expense challenges, particularly in the Midwest and Mountain West markets [7] - The outlook for 2023 anticipates core FFO to be roughly flat compared to 2022 at $4.42 per share, with total expenses expected to grow by 5.5% [16][9] Other Important Information - The company closed on a $100 million unsecured term loan facility to enhance balance sheet flexibility during market volatility [15] - Management indicated that the majority of inflationary increases were realized in the second half of 2022, suggesting moderated expense growth moving forward [35] Q&A Session Summary Question: Can you walk through the asset dispositions and their impact? - Management detailed the locations of the assets being sold and estimated a dilutive impact of $0.08 to $0.10 on guidance [20][21] Question: What is the status of the RUBS program? - The RUBS program is expected to contribute to revenue growth, with utility expenses projected to remain flat due to residents being responsible for their own utilities [22][42] Question: What are the expectations for bad debt and occupancy in 2023? - Projections for bad debt in 2023 are about 40 basis points, with occupancy expected to remain around 95% [47] Question: How does the company view its dividend levels? - Management indicated that the dividend is considered secure, with a strong asset base providing financial security [49] Question: What is the acquisition pipeline looking like? - Management noted that while there are opportunities, the volume of transactions has decreased compared to previous years [71]