Centerspace(US:CSR)2020-11-03 19:55Financial Data and Key Metrics Changes - Core FFO for Q3 2020 was reported at 94 cents per share, a decrease of 5 cents or 5.1% from Q3 2019 [12] - Year-to-date core FFO remained unchanged at $2.76 per share compared to the prior year [13] - General and administrative expenses decreased by 10% or $1.1 million to $9.7 million for the nine months ended September 30, 2020 [14] - Interest expense decreased by 11% or $2.6 million for the nine months ended September 30, 2020, primarily due to lower rate term debt [14] Business Line Data and Key Metrics Changes - Revenue growth of 1.1% over Q3 2019 was achieved despite the pandemic's impact [9] - New lease rates in Minneapolis and Denver decreased by 7.2% and 8.9% respectively compared to Q3 2019 [10] - Revenue per unit increased from $1,028 per unit as of September 30, 2019, to $1,104 per unit as of September 30, 2020 [9] Market Data and Key Metrics Changes - The economic downturn affected the Twin Cities and Denver markets, but secondary markets like Montana, Nebraska, and the Dakotas showed strong revenue gains [5] - Multi-family transaction volume was down 68% in Q2 and 50% in Q3 compared to the same period in 2019 [7] - Strong collections were reported with 98.8% of expected residential revenue collected [10] Company Strategy and Development Direction - The company remains focused on increasing exposure to strong markets and improving per share metrics while maintaining financial flexibility [8] - The strategy includes monitoring investment opportunities in Minneapolis, Denver, and Nashville, with a focus on markets with strong job and income growth [21] - The company plans to continue value-add renovations and unit upgrades, targeting $10 to $15 million in investments annually [71] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to increase margins despite challenges such as flat revenue growth and rising operational costs [11] - The impact of COVID-19 and social unrest on urban markets was acknowledged, with expectations for recovery as conditions stabilize [49] - Future challenges include potential headwinds from increased insurance costs and real estate taxes due to budget shortfalls from COVID-related shutdowns [18] Other Important Information - The company sold four least efficient assets and acquired a 465-home community in Denver, enhancing operational efficiencies [5] - Total liquidity as of September 30, 2020, was $132 million, including $115 million available under an unsecured line of credit [17] Q&A Session Summary Question: How is the company thinking about expanding in larger markets versus maintaining exposure to smaller markets? - The company remains focused on markets with real depth and observable job growth, while also being open to maintaining a slice of diversity in smaller markets [21] Question: What are the biggest drivers of stability in the portfolio? - The stability is attributed to a mix of urban and suburban markets, with less regulation around COVID precautions benefiting the Midwest [22][23] Question: Can you comment on the decline in new lease rates and month-to-month trends? - Month-to-month trends are closely monitored, with stronger renewal trends observed, but urban markets continue to show consistent declines [26][27] Question: How does the company view dispositions and the impact of 1031 buyers? - The company remains opportunistic regarding dispositions, with a focus on pricing and market conditions [34] Question: What is the company's strategy regarding redevelopment spending? - The company plans to continue investments in redevelopment as long as they meet return expectations, with a focus on high-demand renovated products [40][41] Question: What is the current occupancy and new lease rate growth? - Preliminary October results indicate a weighted average occupancy of 94% and new lease rates down 1.1% [56]