D/b/a Centerspace · NYSE:CSR
D/b/a Centerspace — Investors Real Estate Trust — BMO Real Assets Conference 2020
26 slides from D/b/a Centerspace's conference presentation, Sep 1, 2020
Slide 1: BMO Real Assets Conference 2020
BMO Real Assets Conference 2020 September 2-3, 2020
Slide 2: Safe Harbor Statement and Legal Disclosure
SAFE HARBOR STATEMENT AND LEGAL DISCLOSURE Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on our current expectations and assumptions, and are “forward- looking statements” within the meaning of Section 27A of the Securities Act of 1
Slide 3: Company Snapshot
COMPANY SNAPSHOT Focused on Growth In Multifamily Increased exposure in Differentiated Minneapolis and Denver Markets Nashville a new target market Internal Growth Enhanced operating platforms Opportunity with minimal capital needs PORTFOLIO SUMMARY Value-Add . Founded in 1970, celebrating 50 Years
Slide 4: Portfolio Overview
PORTFOLIO OVERVIEW Differentiated Portfolio- Strong Midwest Markets Percent of 2020 NOI by State Avg. Rev Region Homes per Occ. Mino (1) GrandMinot Grand Forks Home t Mino Target Markets Billings t Forks Minneapolis, MN 2,537 $1,627 5% Bismarck 18% Billings Rochester, MN 1,711 $1,303 Bismarck Bismar
Slide 5: Same-Store Trends and Metrics
SAME-STORE TRENDS AND METRICS Strong Expense Control Keeps NOI Growing Second Quarter Comparison by Region Sequential Quarter % Change Wtd Avg Wtd Avg Wtd Avg QoQ Controllable Noncontrollable Occupancy(1) Rent(2) Rent Growth Region % of NOI Homes Revenue Expenses NOI Expense Expense Minneapolis, 23.
Slide 6: COVID-19 Update
COVID-19 UPDATE Focusing Efforts to Maintain Collections and Retain Occupancy Impact by State July & July & August July & August Q2 2020 Bad August 2020 2019 Bad State Communities Homes 2020 % of Debt % of Bad Debt % Debt % of Total Revenue Revenue of Revenue Revenue Minnesota 32 5,438 51.0% -1.9% -
Slide 7: Leasing Activity
Leasing Activity Traffic Rebounds in June & July YoY New Leases 600 500 2019 Total Leases 2020 Total Leases 400 New Leases Signed 300 January February March April May June July YoY Traffic Performance 1,100 1,000 900 800 2019 Total Traffic 700 2020 Total Traffic 600 Pieces of New Traffic 500 400 Jan
Slide 8: Operational and Margin-Enhancing Initiatives
OPERATIONAL AND MARGIN-ENHANCING INITIATIVES Focusing Efforts to Harvest Organic Growth Opportunity from Operational Initiatives Same-Store Gross Margin (1) Same-Store NOI Margin 73% 72% 74% 60% 59% 61% 71% 75% 58% 62% 70% 76% 57% 63% 6.0% 69% 77% 3.6% increase in 64% 56% increase in gross NOI margi
Slide 9: Value-Add Opportunity
VALUE-ADD OPPORTUNITY Enhancing Portfolio Through Value-Add Projects Highlights New SouthFork Clubhouse . For 2020, 13 communities have been completed or are in the process of value add projects . Value-add opportunities across the portfolio feature unit renovations, common areas, and adding ameniti
Slide 10: Value-Add Case Study
VALUE-ADD CASE STUDY Enhancing Portfolio Through Value-Add Projects Opportunity . SouthFork, a value orientated multifamily community located in a south Before metro suburb of Minneapolis, was acquired in February 2019 for $44 million. . Rents were optimized before value-add initiative to redevelop
Slide 11: Capital Recycling
CAPITAL RECYCLING Significantly Improved the Quality and Multifamily Focus of Our Portfolio • $1.1B of dispositions since August 2016 • Used disposition proceeds to purchase three multifamily communities in Denver, five multifamily communities in Minneapolis, fund three multifamily development mezza
Slide 12: Margin Analysis
MARGIN ANALYSIS Margin Improvement since CY 2017 Same-Store Margin Improvement Acquisitions and Dispositions (1) Same-Store 2017 2018 2019 2020 YTD(1) T12 Acquisitions Gross NOI CapEx NCF Average Revenue 112,585,166 117,546,478 121,981,887 72,487,857 Margin % Margin % per Unit Margin % Rent Controll
Slide 13: Capital Recycling: Improved Portfolio Metrics
CAPITAL RECYCLING Improved Portfolio Metrics We focus our energy and capital on improving Multifamily portfolio quality has improved since 2017 3 Long-Term Metrics 2017(1) Today Communities Communities 100 66 Portfolio Quality Homes Homes 13,212 11,445 Homes per Community Homes per Community NAV per
Slide 14: Capital Structure
June 30, 2020 CAPITAL STRUCTURE Stable and Flexible Balance Sheet $1.7B Total Capitalization Debt Summary Amount % of Wtd Avg Wtd Avg Total Int Rate Maturity $976M Total Secured Debt 325,230,330 49% 4.01% 5.33 Common $658M Total Debt Equity Secured Line of Credit 63,000,000 10% 2.97% 2.17 Debt 19% T
Slide 15: Recent Acquisitions
RECENT ACQUISITIONS Focus on Expanding Our Portfolio In Target Markets of Minneapolis and Denver Ironwood Lugano at FreightYard Apartments Cherry Creek Townhomes and Flats Minneapolis, MN Denver, CO Minneapolis, MN $46.3 million $99.3 million $26.0 million . A 182‐unit community built in 2018; first
Slide 16: Minneapolis
MINNEAPOLIS Our Largest Market – On-Strategy Capital Allocation Remains as Market Continues to Perform MARKET HIGHLIGHTS . Culturally vibrant and economically diverse metro driven by major employment in health and life sciences, food and water, consumer retail, financial services, and manufacturing;
Slide 17: Denver
DENVER Maintaining Growth – Robust In-Migration Continues, We Seek Additional Scale, Our Portfolio Performing Well MARKET HIGHLIGHTS . Highly desirable quality of life and recreational amenities with strong appeal for millennials and outdoor enthusiasts . Diverse economy and major hub of technology,
Slide 18: Nashville
NASHVILLE New Target Market – A National Growth Leader in Household Income, Jobs and Millennial Population MARKET HIGHLIGHTS . True live-work-play community with a lively cultural scene boasting the highest concentration of music industry establishments in the nation and a diverse and growing econom
Slide 19: Focused Secondary Market Presence
FOCUSED SECONDARY MARKET PRESENCE These Four Markets, Plus Minneapolis-St. Paul and Denver Make Up 81% of Pro Forma NOI Rochester, MN Omaha, NE Grand Forks, ND St. Cloud, MN Population 223,750 962,160 102,343 203,191 Median Household Income $70,749 $56,780 $47,871 $46,854 June 2020 Unemployment Rate
Slide 20: Best in Class Governance
BEST IN CLASS GOVERNANCE High Caliber Leadership Focused on High Quality Governance Executive Management Team Mark O. Decker, Jr. John A. Kirchmann Anne M. Olson PRESIDENT AND CEO EVP AND CFO EVP AND COO IRET rated ISS’s top score of 1 - indicating highest quality corporate governance practices and
Slide 21: ESG Report Highlights
ESG REPORT HIGHLIGHTS Strong Focus on Environmental, Social, and Corporate Governance Completed LED lighting upgrades at 25 communities Energy Efficiency Only ENERGY STAR rated appliances used for replacement Provide shared cost water services encouraging lower consumption Serving the broader commun
Slide 22: Investment Highlights
INVESTMENT HIGHLIGHTS Differentiated Market Exposure Internal Growth Opportunities Value-Add Opportunities Flexible Balance Sheet Best in Class Governance www.iretapartments.com 22
Slide 23: Appendix
Appendix www.iretapartments.com 23
Slide 24: Reconciliation to Non-GAAP Measures
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”). Nareit defines FFO as n
Slide 25: Reconciliation to Non-GAAP Measures
RECONCILIATION TO NON-GAAP MEASURES www.iretapartments.com 25
Slide 26: Reconciliation to Non-GAAP Measures: Adjusted EBITDA
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 real estate investments, g
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