Centerspace(US:CSR)2023-05-02 18:26Financial Data and Key Metrics Changes - The company reported core FFO growth of 9% year-over-year for Q1 2023, with same-store revenue growth of 10.5% and NOI growth of 11% compared to the prior year [20][24] - G&A expenses included one-time charges of $3.2 million related to the CEO transition, which were excluded from core FFO calculations [8][10] - The average monthly rental rate in Q1 was $1,450, with a portfolio rent-to-income ratio of just under 25% [21] Business Line Data and Key Metrics Changes - Same-store new lease trade outs increased by 2.5%, while same-store renewals increased by 5.8%, leading to a blended rent increase of 3.9% in Q1 [21] - The company disposed of nine communities with an average monthly revenue per unit of $944, compared to the post-sale portfolio average of $1,378 [22] Market Data and Key Metrics Changes - Revenue growth in Minneapolis and Denver was 9.5% and 10.5%, respectively, despite elevated supply levels [6] - Transaction volume in Metro Denver decreased significantly by 69% compared to Q1 2022, indicating a competitive market environment [6] Company Strategy and Development Direction - The company plans to focus on internal opportunities and portfolio construction improvements, rather than pursuing acquisitions at current market cap rates [7][34] - The strategy includes enhancing the quality of the portfolio through dispositions and value-add programs [22][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining guidance for same-store NOI and core FFO for 2023, despite the impact of the CEO transition [10][47] - The company is optimistic about the leasing trends and expects to see continued strength in rental growth as the year progresses [21][28] Other Important Information - The company has reduced its floating rate exposure significantly and has a total liquidity of approximately $230 million [46] - Bad debt was reported at 25 basis points, aligning with historical averages and showing improvement from the previous year [62] Q&A Session Summary Question: Can you discuss the vision for the company under new leadership? - The company aims to enhance execution standards and accountability while continuing the planned strategy from previous leadership [48] Question: What is the current state of market rents? - Market rents are running slightly ahead of expectations, with positive results in April indicating a good leasing season ahead [31] Question: What type of debt will be targeted for paydown? - The focus will be on paying down floating rate debt, particularly as more dispositions are expected throughout the year [33] Question: How does the company view acquisitions at the current cap rate? - The company does not see acquisitions as accretive at current levels and prefers to focus on internal investments [34] Question: What is the status of the redevelopment pipeline? - The company has a robust pipeline with about $25 million scheduled for value-add investments this year, focusing on smart home technology and unit renovations [36] Question: How is the company managing utility costs? - The rollout of the ratio utility billing system (RUBS) is expected to mitigate volatility in utility costs, with significant progress made in implementation [38]