D/b/a Centerspace · NYSE:CSR
D/b/a Centerspace — Centerspace — Investor Presentation (May 2024)
31 slides from D/b/a Centerspace's investor presentation, May 31, 2024
Slide 1: Investor Presentation June 2024
INVESTOR PRESENTATION June 2024 Lake Vista – Fort Collins, CO
Slide 2: Safe Harbor Statement & Legal Disclosure
centerspacehomes.com 2 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 results to differ materi
Slide 3: 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 4: Company Overview: Differentiated Multifamily Market Exposure
centerspacehomes.com 4 1. As of March 31, 2024 2. See page 11 for breakdown Differentiated Multifamily Market Exposure 12,883(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 Centerspace’s commitment to Resu
Slide 5: 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 6: Results – 2024 Financial Outlook
centerspacehomes.com 6 2023 -------------------2024 Guidance Range-------------------- Actual Low Mid-Point High Revenues 7.2% 3.0% 3.8% 4.5% Expenses 4.6% 4.0% 4.8% 5.5% NOI 9.0% 2.5% 3.3% 4.0% Net Income $2.32 ($1.34) ($1.22) ($1.10) FFO $4.27 $4.57 $4.67 $4.76 Core FFO $4.78 $4.74 $4.83 $4.92 Sam
Slide 7: Results – Favorable Growth Profile
centerspacehomes.com RESULTS – FAVORABLE GROWTH PROFILE 7Note: Data is based on midpoint of guidance ranges provided by noted peers with Q1 2024 earnings. SMID Cap Apt group includes ELME, IRT, and NXRT. Non-coastal/Sunbelt group includes CPT, ELME, IRT, MAA, and NXRT. All multifamily group includes
Slide 8: Results – Leasing Spreads Accelerating into Leasing Season
centerspacehomes.com 8 Note: Data represents 2024 Same Store pool. QTD leasing spreads are through May 28, 2024 RESULTS – LEASING SPREADS ACCELERATING INTO LEASING SEASON Oxbo – St. Paul, MN 4.7% 2.0% -3.2% 0.0% 3.9% 4.7% 4.7% 3.6% 3.4% 3.2% 4.7% 3.6% 0.3% 1.5% 3.6% Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q
Slide 9: Results – Portfolio Stability & Resiliency
centerspacehomes.com 9 -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% $1,300 $1,350 $1,400 $1,450 $1,500 $1,550 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 QTD SAME STORE LEASING Avg Rent Occupied New % Change Renewal % Change Blended % Change Q2 2023 Q3
Slide 10: Results – NOI Composition & Rental Rate Growth
centerspacehomes.com 10 -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 2023 vs 2022 Year-to-Date Rental Rate Growth New Lease Rents Renewal Rents Market % of Total NOI Minneapolis, MN 35.0% Denver, CO 22.6% North Dakota 10.4% Rochester, MN 9.8% Other Mountain West 8.4% Omaha, NE 5.4% St. Cloud, MN 5.2% Fort Collins
Slide 11: Diversified Permanent Capital Base
centerspacehomes.com 11 Common Equity 49% Secured Debt 29% Unsecured Debt 16% Series C Preferred 5% Series D Preferred 1%*Share price $57.14 as of 3/30/2024 Diversified Permanent Capital Base $2.1B Total Capitalization $929M Total Debt $1,018M Common Equity $110M Preferred Equity % of Total Maturing
Slide 12: Innovation – 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 ▪ Sold 66 communities for $599 million as we have reduced our exposure to less efficient communities in lower- growth markets 2017 Today
Slide 13: Innovation – Recent Capital Recycling
centerspacehomes.com SEPTEMBER 2023 & FEBRUARY 2024 DISPOSITIONS MINOT, ND & MINNEAPOLIS, MN Communities 6 Homes 917+ 50k SF office Avg. Monthly Rent/Home $1,072 Homes/Community 153 Avg Community Age 30 Years NOI Margin 52.1% OCTOBER 2023 ACQUISITION LAKE VISTA APARTMENT HOMES, FORT COLLINS, CO Comm
Slide 14: Innovation – 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: Innovation – Geographic Differentiation
centerspacehomes.com 15Regency Park – St Cloud, MN GEOGRAPHIC FOCUS (% OF UNITS) Source: S&P Capital IQ Note: As of 5/15/24. Rounding may result in each row not adding to 100% INNOVATION – GEOGRAPHIC DIFFERENTIATION PUBLIC MULTIFAMILY REIT MARKET OVERVIEW 24% 4% 5% 8% 4% 76% 21% 6% 43% 53% 4% 100% 2
Slide 16: Minneapolis Market Highlights
centerspacehomes.com 16 ▪ 27 CSR communities, 4,711 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 in Twin Cit
Slide 17: Innovation – Growth in Denver
centerspacehomes.com 17 ▪ 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 18 Region % of NOI(1) Population Market Homes Median Household Income Unemployment Rate 3-Month Avg Job Growth Median Single-Family Home Value Market Vacancy YoY Market Rent Growth Trailing 12-Month Net Deliveries | % of Stock Forecasted Next 12-Month Net Deliveries | % of Stock
Slide 19: Rental Affordability vs Homeownership & Income Growth
centerspacehomes.com INNOVATION – RENTAL AFFORDABILITY VS HOMEOWNERSHIP & INCOME GROWTH PROVEN EXECUTION 19 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2019 2020 2021 2022 2023 2024YTD M on th ly P ay m en t Rent Vs. Own Affordability Gap in CSR Markets PITI (10% Down Pmt) PITI (20% Down Pmt)
Slide 20: Demographics vs Housing Deliveries Are Attractive
centerspacehomes.com GEOGRAPHIC DIFFERENTIATION INNOVATION – DEMOGRAPHICS VS HOUSING DELIVERIES ARE ATTRACTIVE PROVEN EXECUTION 20 ▪ New household formations exceed supply deliveries by over 5MM since 2011 ▪ Population demographics indicate continued strong demand of individuals in their primary ren
Slide 21: Portfolio Compares Favorably on Unemployment & Supply
centerspacehomes.com 21 ▪ 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 22: Innovation – Value-Add Investment Returns
centerspacehomes.com 0 20 40 60 80 100 120 140 160 $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 2024 YTD 2018-2024 Value Add Spend Actual Spend Achieved Premium U/W Cumulative Premium 1. Includes unit renovations, common area ren
Slide 23: Service – Enhancing Customer Experience Is a Core Goal
centerspacehomes.com 23 70.72 61.77 54 56 58 60 62 64 66 68 70 72 Centerspace ORA Score National Property Average ORA Score 2024 J Turner ORA Score (As of 5/1/2024) ORA TOP PERFORMER Red 20 Apartments in Minneapolis, MN was named to the 2023 Elite 1% in the J Turner Research 2023 ORA Power Rankings
Slide 24: Environmental Social Governance
centerspacehomes.com 24 ENVIRONMENTAL SOCIAL GOVERNANCE • Established formal ESG targets and published them for the first time in the 2022 annual report • Submitted our second annual GRESB submission and increased our score 15%, from 55 in year one to 63 in year two • Implemented smart home technolo
Slide 25: Engagement – Best-in-Class Governance
centerspacehomes.com 25 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 26: Value Key Takeaways
centerspacehomes.com GEOGRAPHIC DIFFERENTIATION VALUE KEY TAKEAWAYS PROVEN EXECUTION 26
Slide 27: Appendix
centerspacehomes.com 27 APPENDIX
Slide 28: Reconciliation to Non-GAAP Measures: FFO and Core FFO
centerspacehomes.com 28 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 29: Reconciliation to Non-GAAP Measures
centerspacehomes.com 29 RECONCILIATION TO NON-GAAP MEASURES UpdatedRECONCILIATION TO NON-GAAP MEASURESRECONCILIATION TO NON-GAAP MEASURES 1. Consists of $37,000 in associated trial costs related to the litigation matter for the three months ended March 31, 2024. Consists of a $3.9 million loss on li
Slide 30: Reconciliation to Adjusted EBITDA
centerspacehomes.com 30 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
Slide 31: Reconciliation of Operating Income to Net Operating Income
centerspacehomes.com 31 Reconciliations of Operating Income to Net Operating Income Net operating income, or NOI, is a non-GAAP financial measure which the Company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an