D/b/a Centerspace · NYSE:CSR
D/b/a Centerspace — Investors Real Estate Trust — NAREIT REITworld 2018
25 slides from D/b/a Centerspace's conference presentation, Nov 6, 2018
Slide 1: Investor Presentation – NAREIT REITworld, November 2018
Investor Presentation NAREIT REITworld | San Francisco, CA November 2018
Slide 2: Safe Harbor Statement and Legal Disclosure
SAFE HARBOR STATEMENT AND LEGAL DISCLOSURE Certain statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual resu
Slide 3: Company Snapshot
COMPANY SNAPSHOT We are a premier multifamily company delivering exposure to strong Midwest markets Minot Grand Forks % of Q1 Average Bismarck Billings (1) Region FY19 NOI Homes Rent St. Cloud Revenue Growth CAGR Minneapolis, MN 20.0% 1,988 $1,441 Minneapolis For communities built since 2010 Rapid C
Slide 4: Proforma Capital Structure as of 10/31/18
PROFORMA CAPITAL STRUCTURE AS OF 10/31/18 $ in thousands, except where noted $1.5B Total Capitalization % of Weighted Weighted Debt Summary(1) Amount Total Avg. Rate Avg. Maturity $99M $664M Total Secured Debt $449,451 68% 4.59% 4.5 Years Preferred Total Debt Equity Secured Debt Unsecured LOC Balanc
Slide 5: Portfolio Scale and Quality Improving
PORTFOLIO SCALE AND QUALITY IMPROVING Total Multifamily NOI Average Revenue / Home $90M $1,774 $1,061 $41M $724 FY 2012 FY 2018 FY 2012 Current Current Non (1) (1) Same-Store Same-Store Multifamily Homes Market Improvement 13,703 % of Multifamily NOI 27% 34% 33% 32% 29% 9,161 36% 20% 26% 30% 36% 10%
Slide 6: Operations Improving
OPERATIONS IMPROVING Focus on expense containment and revenue generating strategies is starting to bear fruit... YoY Same-Store NOI % Change 5.8% 4.7% 2.8% 0.1% (2.3%) (3.8%) (3.3%) (3.4%) (5.1%) (5.5%) (5.5%) (7.4%) (10.8%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY16 FY17 FY18 FY19 ...with more pot
Slide 7: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Prudent capital allocation provides greater opportunities to reinvest in and grow our business Continue Disciplined Investment Strategy • Improve portfolio efficiency and quality through targeted redevelopment of existing assets and new acquisitions • Continue active po
Slide 8: Capital Recycling Since 5/1/17
CAPITAL RECYCLING SINCE 5/1/17 Significantly improved the quality of our portfolio since the beginning of FY18 • Used disposition proceeds to purchase two multifamily communities in Denver, two multifamily communities in Minneapolis, originate two multifamily loans, reduce debt, repurchase shares, a
Slide 9: Minneapolis & Denver vs. Other Top MSAs
MINNEAPOLIS & DENVER VS. OTHER TOP 25 MSAs Targeted geography has strong market fundamentals DENVER 2010-2017 Population CAGR 1.77% Unemployment Rate 3.3% Median Household Income $76,643 Median Home Price $462,900 TWIN CITIES Multifamily % of Housing Stock(1) 26.8% 2010-2017 Population CAGR 1.01% 20
Slide 10: Understanding Secondary Markets
UNDERSTANDING SECONDARY MARKETS These five markets plus Minneapolis and Denver are expected to make up 78% of proforma FY19 NOI Rochester, MN Omaha, NE Grand Forks, ND St. Cloud, MN Bismarck, ND Population 218,280 933,316 102,414 197,759 132,142 Median Household Income $71,985 $65,619 $48,609 $61,94
Slide 11: Recent Investment Highlights
RECENT INVESTMENT HIGHLIGHTS Oxbo Park Place Dylan Westend Location St. Paul, MN Plymouth, MN Denver, CO Denver, CO Homes 191 (11,500 retail sf) 500 274 390 Constructed 2017 1985 2016 2015 Purchase Price $61.5M $92.3M $90.6M $128.7M Located in Target Market - Minneapolis Located in Target Market
Slide 12: Value Add Opportunity
VALUE ADD OPPORTUNITY Highlights • We are moving forward to deliberately mine the opportunities in our portfolio • Approximately 5,600 apartment homes have not been renovated since before 2008 • Inventorying entire portfolio for value add opportunities • Launching in strategic markets first • Opport
Slide 13: Value Add Case Study – Park Place
VALUE ADD CASE STUDY – PARK PLACE Opportunity • Redevelop up to 488 homes at Park Place Apartments, a Class B BEFORE multifamily community located in a highly desirable suburb of Minneapolis • Take advantage of significant disparity between current rents and rents on newer, Class A product and other
Slide 14: Value Add Case Study – Red 20
VALUE ADD CASE STUDY – RED 20 Opportunity • Upgrade 130 homes at Red 20 Apartments, a Class A multifamily BEFORE community located near downtown in the highly desirable Northeast Minneapolis submarket • Take advantage of the gap in rents at newer assets in the immediate vicinity of Red 20, and maint
Slide 15: Investment Highlights
INVESTMENT HIGHLIGHTS Stronger Balance Sheet Operational Enhancements Stronger Markets Value Add Opportunities Best in Class Governance www.iretapartments.com NAREIT REITworld | November 2018 15
Slide 16: Investor Relations Contact
Investor Relations Contact: Jon Bishop ir@iret.com 952.401.4827
Slide 17: Minneapolis–St. Paul Is Strong
APPENDIX: MINNEAPOLIS–ST. PAUL IS STRONG Economic Drivers 19 Fortune 500 Companies • The Minneapolis–St. Paul economy is supported by large Rank Company Rank Company corporations in diverse industries that generate stable job 5 United Health Group 216 Land O' Lakes growth. Nineteen Fortune 500 compa
Slide 18: Denver's Economy Is Thriving
APPENDIX: DENVER’S ECONOMY IS THRIVING Economic Drivers 130 Total Nonfarm Payrolls (SA 2010-present) Indexed to Jan 2010 = 100 +27% • Denver’s advantageous location, livability, skilled workforce, 125 and attractiveness for doing business have prompted job creation throughout the metro area as emplo
Slide 19: Competitive with Coastal Markets
APPENDIX: COMPETITIVE WITH COASTAL MARKETS The Twin Cities and Denver boast extremely tight job markets, characterized by a highly educated workforce % of Adult Population with Bachelor's Degree or Higher Unemployment Rate (1) Washington-Arlington-Alexandria, DC-VA-MD-WV 50.8% 3.5% San Francisco-Oak
Slide 20: Recent Investments – Oxbo
APPENDIX: RECENT INVESTMENTS – OXBO New construction acquired off-market at 44% leased occupancy and 27% physical occupancy IRET EDGE: • IRET initiated dialogue based on relationship with developer and equity partner • Ability to acquire in midstream lease-up outside of a process • Understanding and
Slide 21: Recent Investments – Ironwood
APPENDIX: RECENT INVESTMENTS – IRONWOOD New development project structured as mezzanine lender with purchase option IRET EDGE: • IRET’s current exposure to development is as a capital provider; positioning us to dialogue with various developers and review a wide array of opportunities • Provide deve
Slide 22: Recent Investments – Park Place
APPENDIX: RECENT INVESTMENTS – PARK PLACE Class B, value-add project in a well-developed and highly desirable inner ring suburb of Twin Cities IRET EDGE: • Community was sold as part of a fully-marketed offering (only IRET purchase in past 18 months as part of a fully-marketed offering) • Larger dea
Slide 23: Recent Investments – Westend
APPENDIX: RECENT INVESTMENTS – WESTEND One-of-a-kind garden style product in Downtown Denver acquired in a non-traditional process IRET EDGE: • Identified community as one-of-a-kind in downtown Denver • Developed a direct dialogue with ownership • Positioned ourselves with the ability to execute a f
Slide 24: Recent Investments – Dylan
APPENDIX: RECENT INVESTMENTS – DYLAN New construction acquired in limited, non-traditional marketing process at 79% occupancy IRET EDGE: • Developer, equity partner and brokerage advisor identified four potential preferred buyers in a targeted sale approach • Spent time with developer discussing inv
Slide 25: Recent Investments – Dylan (cont.)
APPENDIX: RECENT INVESTMENTS – DYLAN (CONT.) INVESTMENT THESIS • High-end unit finishes not replicated by RiNo competitive set – gas ranges, wine fridges, artistic design and details • Early entry in an area where valuation is increasing: • 4.6 acre site adjacent to Dylan purchased for $30M ($150 ps