D/b/a Centerspace · NYSE:CSR
D/b/a Centerspace — Centerspace — Investor Presentation (November 2023)
31 slides from D/b/a Centerspace's investor presentation, Nov 13, 2023
Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION November 2023 Civic Lofts – Denver, CO
Slide 2: Mission & Vision
OUR MISSION To provide a great home— for our residents, our team members, and our investors. OUR VISION To be the premier provider of apartment homes in vibrant communities by focusing on integrity and serving others. 71 France – Edina, MN MISSION & VISION 3centerspacehomes.com
Slide 3: Company Overview
centerspacehomes.com 4 (1) Adjusts for October 2023 acquisition of Lake Vista (2) See page 11 for breakdown Differentiated Multifamily Market Exposure 13,088(1) Apartments owned and operated NYSE: CSR $2.1 Billion(2) Total capitalizationKey Indices S&P SmallCap 600 MSCI US REIT Russell 2000 RISE is
Slide 4: Cash Flow Growth Focus
TO EXECUTE THIS, WE FOCUS ON: CENTERSPACE is guided by the north star of increasing distributable cash flow Exceptional customer experience Diverse talent to enable a culture of engagement Enhancing efficiencies by scaling the business Managing the balance sheet to maximize financial flexibility Inv
Slide 5: Attractive Valuation Relative to Private Market
centerspacehomes.com Source: S&P Capital IQ, Compass Point Research & Trading, LLC 1. Based on Q3 2023 balance sheet adjusted for Lake Vista transaction CSR Share price is based upon market close on November 6, 2023 Trading at ~30% discount to consensus NAV per share ~$151,300 implied value per home
Slide 6: 2023 Financial Outlook
centerspacehomes.com 7 Q3 YTD 2023 -------------------2023 Guidance Range-------------------- Actual Low Mid-Point High Revenues 8.3% 7.00% 7.25% 7.50% Expenses 6.6% 4.00% 4.25% 4.50% NOI 9.5% 9.00% 9.25% 9.50% Net Income $2.96 $2.90 $3.23 $3.56 FFO $3.15 $4.20 $4.24 $4.27 Core FFO $3.56 $4.63 $4.67
Slide 7: Portfolio Stability & Resiliency
centerspacehomes.com 8 Q4 2022 Q1 2023 Q2 2023 Q3 2023 QTD 2023 Occupancy 94.5% 94.8% 95.1% 94.4% 94.2% Expirations 15.0% 16.4% 30.1% 36.2% 7.9% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% $1,200 $1,250 $1,300 $1,350 $1,400 $1,450 $1,500 $1,550 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Slide 8: Renewal Leasing Spreads Continue to Hold
centerspacehomes.com 9 SAME STORE LEASING UPDATE Note: QTD leasing spreads are through October 31, 2023 RESULTS – RENEWAL LEASING SPREADS CONTINUE TO HOLD 1.5% 2.3% 5.0% 2.2% -3.0% 7.4% 5.8% 4.7% 4.8% 4.9% 4.0% 3.8% 4.8% 3.8% 0.7% Q4 2022 Q1 2023 Q2 2023 Q3 2023 QTD 2023 New Renewal Blended Oxbo – S
Slide 9: NOI Composition & Rental Rate Growth
centerspacehomes.com 10 -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2023 vs 2022 Year-to-Date Rental Rate Growth New Lease Rents Renewal Rents Market % of Total NOI Minneapolis, MN 34.1% Denver, CO 22.6% North Dakota 11.2% Rochester, MN 9.5% Other Mountain West 8.6% Omaha, NE 5.4% St. Cloud, MN 5.4%
Slide 10: Diversified Permanent Capital Base
centerspacehomes.com 11 Common Equity 52% Secured Debt 29% Unsecured Debt 14% Series C Preferred 4% Series D Preferred 1%*Share price $60.26 as of 9/30/2023 Diversified Permanent Capital Base $2.1B Total Capitalization (1) $895M Total Debt $1.1B Common Equity $110M Preferred Equity % of Total Maturi
Slide 11: Portfolio Improvement Since 2017
centerspacehomes.com 12 Acquired 34 communities for $1.5 billion through unique deal structuring which has provided a competitive advantage in transaction market $580 million of dispositions as we have reduced our exposure to less efficient communities in lower-growth markets 2017 Today(1) Commu
Slide 12: Recent Capital Recycling Continues Upgrade of Portfolio Quality
centerspacehomes.com MARCH 2023 DISPOSITIONS MINNEAPOLIS, MN; ST. CLOUD, MN; OMAHA, NE; LINCOLN, NE Communities 9 Homes 1,567 Avg. Monthly Rent/Home $1,002 Homes/Community 174 Avg Age (Years) 48 NOI Margin 38.8% SEPTEMBER 2022 ACQUISITION DENVER, CO Communities 1 Homes 215 Avg. Monthly Rent/Home $2,
Slide 13: Recent Capital Recycling Continues Upgrade of Portfolio Quality
centerspacehomes.com SEPTEMBER 2023 DISPOSITIONS MINOT, ND Communities 4 Homes 712+ 50k SF office Avg. Monthly Rent/Home $1,071 Homes/Community 178 Avg Age (Years) 23 NOI Margin 59.0% OCTOBER 2023 ACQUISITION FORT COLLINS, CO Communities 1 Homes 303 Avg. Monthly Rent/Home $1,866 Homes/Community 303
Slide 14: Approach to Investments & Dispositions
centerspacehomes.com DEMOGRAPHIC AND ECONOMIC CONSIDERATIONS MULTIFAMILY FUNDAMENTALS CONSIDERATIONS OTHER CONSIDERATIONS Population Trends Population Characteristics Labor Force Health Employment Economic Composition Rents Occupancy Market Size and Liquidity Supply and Demand General Housing Enviro
Slide 15: Geographic Differentiation: Public Multifamily REIT Market Overview
centerspacehomes.com 16Regency Park – St Cloud, MN GEOGRAPHIC FOCUS (% OF UNITS) 24% 3% 5% 9% 6% 76% 21% 6% 43% 54% 4% 100% 27% 15% 31% 22% 7% 5% 86% 34% 70% 20% 72% 25% 78% 91% 18% 19% 7% 21% 11% 24% 5% 75% 3% 30% 19% 17% 15% 95% Mountain West Midwest West Southeast & Texas Mid-Atlantic Northeast S
Slide 16: Minneapolis Market Highlights
centerspacehomes.com 17 29 CSR communities, 4,916 homes, scaled portfolio with opportunities in operating partnership unit transactions, mezzanine financing and development participation, and capital recycling 16th largest MSA, 3.7M population 15 Fortune 500 companies headquartered Diversifi
Slide 17: Growth in Denver
centerspacehomes.com 18 7 CSR communities, 2,104 homes, entered Denver Q4 2017 and achieved critical mass 19th largest MSA, 3.0M population 21 Fortune 1,000 companies headquartered in Colorado Diversified economy with large presence of aviation/aerospace, healthcare, telecommunications and t
Slide 18: Market Data by Region
centerspacehomes.com 19 Region % of NOI(1) Population Market Homes Median Household Income Unemployment Rate 3-Month Avg Job Growth Median Single-Family Home Value Trailing 12- Month Deliveries(4) Market Vacancy(4) YoY Market Rent Growth(4) Homes Under Construction / % of Stock(4) Centerspace YTD Av
Slide 19: Low Unemployment and Limited New Supply
centerspacehomes.com 20 Low unemployment in our portfolio relative to all housing sectors- apartment, manufactured housing, and single-family rentals, is leading to strong collection rates Centerspace’s portfolio has the lowest weighted average unemployment rate among public multifamily companie
Slide 20: Value Add Spend and Returns
centerspacehomes.com 0 20 40 60 80 100 120 140 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 2018 2019 2020 2021 2022 2023 Thru September 2018-2023 Value Add Spend Actual Spend 2023 Reforecast Achieved Premium U/W Cumulative Premium 1. Includes unit renovation
Slide 21: Value Add Pipeline
centerspacehomes.com VALUE ADD PIPELINE (UNITS)(1) UNIT RENOVATIONS COMMON AREAS RENOVATIONS ($ IN MILLIONS) CURRENT IDENTIFIED PIPELINE CURRENT IDENTIFIED PIPELINE REMAINING SMART HOME PIPELINE TOTAL PROJECTS FOR LONGER TERM CONSIDERATION UNITS IMPACTED 4,166 1,531 5,998 25 properties 3,092 18 prop
Slide 22: Technology & Operating Platform Initiatives
centerspacehomes.com * BEGINNING MIDDLE END *Illuminate by Nancy Duarte and Patti Sanchez Beginning the journey Training in new methods and developing Standard Operating Procedures Starting to see initial results Accelerating knowledge Approaching steady state and evaluating how we maximize the bene
Slide 23: Smart Home and AI Initiatives
centerspacehomes.com Smart home solutions and connectivity platform that includes integrated smart locks, connected thermostats, leak sensors, and app access from resident smartphones granting in-home control Piloted at ten communities to date with positive results Phase 2 implementation in process
Slide 24: Enhancing Customer Experience Is a Core Goal
centerspacehomes.com 25 69.49 63.3 58 60 62 64 66 68 70 Centerspace ORA Score National Property Average ORA Score 2023 J Turner ORA Score (As of 11/1/2023) ORA TOP PERFORMERS Red 20 Apartments in Minneapolis, MN and Ironwood Apartments in New Hope, MN were named to the 2022 Elite 1% in the J Turner
Slide 25: Environmental, Social, Governance
centerspacehomes.com 26 ENVIRONMENTAL SOCIAL GOVERNANCE • Established formal ESG targets and published them for the first time in the 2022 annual report • Participated in the GRESB annual assessment to identify risks and opportunities and benchmark performance amongst real estate peers • Created ENE
Slide 26: Executive Management Team
centerspacehomes.com 27 EXECUTIVE MANAGEMENT TEAM Anne Olson President & CEO Bhairav Patel EVP & CFO ISS rated top score of 1 - indicating highest quality corporate governance practices and lowest governance risk SENIOR LEADERSHIP TEAM Susan Picotte SVP, Asset Management & Operations Support Jim Mit
Slide 27: Key Takeaways
centerspacehomes.com GEOGRAPHIC DIFFERENTIATION VALUE KEY TAKEAWAYS PROVEN EXECUTION 28
Slide 28: Appendix
centerspacehomes.com 29 APPENDIX
Slide 29: Reconciliation to Non-GAAP Measures
centerspacehomes.com 30 RECONCILIATION TO NON-GAAP MEASURES Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds From Operations and Core Funds From Operations Centerspace believes that FFO, which is a non-GAAP financial measure used as a standard supplemental measure for eq
Slide 30: Reconciliation to Non-GAAP Measures
centerspacehomes.com 31 RECONCILIATION TO NON-GAAP MEASURES UpdatedRECONCILIATION TO NON-GAAP MEASURESRECONCILIATION TO NON-GAAP MEASURES (1) Costs are related to a two-year implementation (2) Consists of a $2.9 million loss on litigation settlement for a trial judgment entered against the Company a
Slide 31: Reconciliation to Adjusted EBITDA
centerspacehomes.com 32 Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain or loss on sale of real estate and other investments, impairment of real estate investments, gain or lo