Slide 1: Investor Presentation August 2021
Investor Presentation August 2021
Slide 2: Safe Harbor Statement and Legal Disclosure
centerspacehomes.com 2 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 tha
Slide 3: Strong Operating Results Driven by Consistent Occupancy and Accelerating Rent Growth
centerspacehomes.com 3 Strong Operating Results Driven by Consistent Occupancy and Accelerating Rent Growth ▪ Same-store lease over lease growth remained strong at 12.7% in July, up from 10.0% in Q2 2021 ▪ Same-store renewal lease growth accelerated to 6.5% in July up from 5.6% in Q2 2021 ▪ Same-sto
Slide 4: Company Snapshot: Focused on Growth in Multifamily
centerspacehomes.com 4 Differentiated Markets Strong Midwest markets led by Minneapolis and Denver Nashville a new target market Internal Growth Opportunity Enhanced operating platform Value-Add Opportunity Deep value-add pipeline Balance Sheet Flexibility Strong balance sheet with sufficient liquid
Slide 5: Portfolio Overview: Differentiated Portfolio - Strong Midwest Markets
centerspacehomes.com 5 Region Homes Avg. Rev per Occ. Home(1) Denver, CO 1,713 $1,846 Minneapolis, MN 2,537 $1,600 North Dakota 2,422 $1,144 Omaha, NE 1,370 $1,029 Rochester, MN 1,122 $1,462 St. Cloud, MN 1,192 $1,089 Other Mountain West(2) 1,223 $1,099 Total / Average 11,579 $1,356 Multifamily Acqu
Slide 6: Revised 2021 Financial Outlook
centerspacehomes.com 6 Range for 2021 2020 Actual Low High Mid-Point Earnings per Share $(0.15) $0.10 $0.50 $0.30 Revenue $167,807 0.0% 3.0% 1.5% Total Expenses $67,892 3.0% 5.0% 4.0% NOI $97,915 (1.5%) 1.5% 0.0% FFO per Share $3.47 $3.38 $3.62 $3.50 Core FFO per Share $3.78 $3.48 $3.72 $3.60 Range
Slide 7: Operations Update: Accelerating Rent Growth Into Leasing Season
centerspacehomes.com 7 0.6% -1.2% -4.2% 12.7% 10.0% 0.7% July Q2 Q1 Same Store New Lease Rate Growth 2020 2021 0.7% 3.2% 3.3% 6.5% 5.6% 4.0% July Q2 Q1 Same Store Renewal Rate Growth 2020 2021 0.7% 1.3% -1.4% 8.0% 7.5% 2.0% July Q2 Q1 Same Store Blended Rental Rate Growth 2020 2021 OPERATIONS UPDATE
Slide 8: KMS 2,696 Home Acquisition: Portfolio Acquisition Overview
centerspacehomes.com 8 Description Enterprise Highlights Community Highlights ▪ KMS communities well located within their submarkets with proximity to jobs, retail and amenities ▪ Rent level attainable to large pool of renters ▪ Majority of communities in portfolio are low density with attractive ga
Slide 9: KMS Acquisition Financing and Preferred Unit Terms
centerspacehomes.com 9 Preferred Units Current Property Debt Acq Cap Other Current property debt may be assumed or refinanced ▪ $126,500,000 in-place debt today ▪ Acquisition in leverage neutral to current capital stack Terms on Preferred Units are: ▪ 3.875% of par value per annum fixed dividend pay
Slide 10: KMS Property Summary
centerspacehomes.com 10 Property Market Homes Occupancy Average In-Place Rent (1) Palisades Minneapolis 330 94.8% $1,182 River Pointe Minneapolis 301 98.7% $1,061 Woodland Pointe Minneapolis 288 98.6% $1,211 Burgundy/Hillsboro Court Minneapolis 251 99.6% $1,034 Windsor Gates Minneapolis 200 97.5% $1
Slide 11: Minneapolis and St. Cloud Market Overview
centerspacehomes.com 11 Minneapolis ▪ Minneapolis MSA boasts a diversified economy being home to 17 Fortune 500 companies including UnitedHealth Group, Target and Best Buy ▪ The Twin Cities was well-positioned heading into the pandemic with a tight vacancy rate, strong demand, and solid rent growth
Slide 12: Minneapolis Community Map and Property List
centerspacehomes.com 12 Name Address City Built Units 1 Palisades 560 W Sandhurst Dr Roseville 1970 330 2 River Pointe 7855 E River Rd Fridley 1971 301 3 Woodland Pointe 6850 Ashwood Rd Woodbury 1974 288 4 Windsor Gates 7821 Zane Ave N Brooklyn Park 1970 200 5 Woodhaven 6045 Lyndale Ave S Minneapoli
Slide 13: KMS St. Cloud Adds to Strong Performing Team and Portfolio
centerspacehomes.com 13 Name Address City Built Units 1 Legacy 248 3rd St S Waite Park 1983 119 2 Pointe West 3225 Maine Prairie Rd Saint Cloud 1975 93 3 Gatewood 813 7th St S Waite Park 1987 120 KMS Total 332 A Park Meadows 408 Park Meadows Dr Waite Park 1982 360 B West Stonehill 690 Prosper Dr Wai
Slide 14: Strong Operating Platform: Margins Continue to Improve in Q2
centerspacehomes.com 14 68% 69% 70% 71% 72% 73% 74% 75% 76% 77% 78% Strong Operating Platform RISE BY 5 M a r g i n s C o n t i n u e t o I m p r o v e i n Q 2 Same-Store communities continue to see NOI and gross margin growth Buying Efficient Communities Communities acquired have a weighted average
Slide 15: Value-Add Renovation Program
centerspacehomes.com 15 Property Region Homes to Renovate Renovated Date Complete Avg. Cost per Unit (1) Achieved Premium(2) Estimated ROI(3) Park Place Minneapolis, MN 500 294 In process $18,505 $253 17.30% Connelly on Eleven Minneapolis, MN 240 202 In process $10,335 $138 18.60% SouthFork Minneapo
Slide 16: Balance Sheet as of June 30, 2021
centerspacehomes.com 16 $12,814 $120,028(1) $43,163 $70,000 $107,518 $54,198 $52,742 $50,000 $75,000 $50,000 $59,900 Term Loan Term Loan Private Placement Private Placement Private Placement 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Common Equity 59% Secured Debt 15% Unsecured Debt 20%
Slide 17: Pro Forma Balance Sheet with KMS Loan Financing
centerspacehomes.com 17 $12,814 $72,878 $43,163 $70,000 $107,518 $54,198 $52,742 $108,410 $95,000 $50,000 $118,310 $76,760 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Debt Summary Amount % of Total Wtd Avg Int Rate Wtd Avg Maturity Total Secured Debt 501,942,919 58% 3.48% 6.98 L
Slide 18: Capital Recycling: Improving Portfolio Metrics
centerspacehomes.com 18 Multifamily portfolio quality has improved since 2017 We focus our energy and capital on improving 3 long-term metrics CAPITAL RECYCLING I m p r o v i n g P o r t f o l i o M e t r i c s Portfolio Quality Distributable Cash Growth NAV per Share Our capital recycling program h
Slide 19: Recent Acquisitions
centerspacehomes.com 19 RECENT ACQUISITIONS F o c u s o n E x p a n d i n g o u r P o r t f o l i o i n T a r g e t M a r k e t s o f M i n n e a p o l i s a n d D e n v e r • A 256-home community built in 2019 • Conveniently located Longmont with close proximity to Boulder • Amenities include fitne
Slide 20: Midwest Has Strong Fundamentals: Lowest Unemployment Among Peers
centerspacehomes.com 20 MIDWEST HAS STRONG FUNDAMENTALS C e n t e r s p a c e L o w e s t U n e m p l o y m e n t R a t e A m o n g P e e r s a n d 2 8 % B e l o w t h e U S A v e r a g e ▪ Centerspace portfolio has lower unemployment among peers and the national average ▪ Low unemployment in our po
Slide 21: Midwest Has Strong Fundamentals: Lowest Under Construction Portfolio
centerspacehomes.com 21 MIDWEST HAS STRONG FUNDAMENTALS C e n t e r s p a c e M a i n t a i n s L o w e s t U n d e r C o n s t r u c t i o n P o r t f o l i o A m o n g P e e r s ▪ Centerspace’s markets have the lowest percentage of construction among multifamily peers ▪ Low supply in CSR portfolio
Slide 22: Minneapolis Market
centerspacehomes.com 22 MINNEAPOLIS MARKET C O M M U N I T I E S : 1 4 / H O M E S : 2 , 5 3 7 M A J O R E M P L O Y E R S ▪ Culturally vibrant and economically diverse metro driven by major employment in health and life sciences, food and water, consumer retail, financial services, and manufacturin
Slide 23: Denver Market
centerspacehomes.com 23 100% Asset Class Class A 42% 58% Location Urban Suburban DENVER MARKET C O M M U N I T I E S : 5 / H O M E S : 1 , 7 1 3 M A J O R E M P L O Y E R S ▪ Diverse economy and major hub of technology, energy, aviation and bioscience; 23 Fortune 1,000 companies have their headquart
Slide 24: Nashville Market: New Target Market
centerspacehomes.com 24 NASHVILLE MARKET N e w T a r g e t M a r k e t – A N a t i o n a l G r o w t h L e a d e r i n H o u s e h o l d I n c o m e , J o b s , a n d M i l l e n n i a l P o p u l a t i o n M A J O R E M P L O Y E R S ▪ True live-work-play community with a lively cultural scene boas
Slide 25: Focused Secondary Market Presence
centerspacehomes.com 25 FOCUSED SECONDARY MARKET PRESENCE T h e s e F o u r M a r k e t s , P l u s M i n n e a p o l i s - S t . P a u l a n d D e n v e r M a k e U p 8 0 % o f P r o - F o r m a N O I Rochester, MN Omaha, NE Grand Forks, ND St. Cloud, MN Population 118,935 478,192 69,451 68,462 Med
Slide 26: Best-in-Class Governance
centerspacehomes.com 26 BEST-IN-CLASS GOVERNANCE H i g h C a l i b e r L e a d e r s h i p F o c u s e d o n H i g h Q u a l i t y G o v e r n a n c e Executive Management Team Mark O. Decker, Jr. PRESIDENT AND CEO John A. Kirchmann EVP AND CFO Anne M. Olson EVP AND COO CSR rated ISS’s top score of
Slide 27: ESG Highlights
centerspacehomes.com 27 ESG HIGHLIGHTS S t r o n g F o c u s o n E n v i r o n m e n t a l , S o c i a l a n d C o r p o r a t e G o v e r n a n c e Energy Efficiency Completed installation of 3,323 LED light bulbs Only ENERGY STAR rated appliances used for replacement Water Conservation Provide sha
Slide 28: Investment Highlights: Best-In-Class Governance
centerspacehomes.com 28 INVESTMENT HIGHLIGHTS Best-In-Class Governance
Slide 29: Appendix
centerspacehomes.com 29 APPENDIX
Slide 30: Reconciliation to Non-GAAP Measures: FFO and Core FFO
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 We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”).
Slide 31: Reconciliation to Non-GAAP Measures
centerspacehomes.com 31 RECONCILIATION TO NON-GAAP MEASURES
Slide 32: Reconciliation to Non-GAAP Measures: Adjusted EBITDA
centerspacehomes.com 32 RECONCILIATION TO NON-GAAP MEASURES Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of re