Slide 1: Investor Presentation November 2022
INVESTOR PRESENTATION November 2022
Slide 2: Safe Harbor Statement and 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: Company Snapshot
centerspacehomes.com 3 Differentiated Markets Internal Growth Opportunity Balance Sheet Flexibility Experienced Leadership (1) See page 14 for breakdown 0% 100% 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 2
Slide 4: Better Every Day: Strong Foundation
centerspacehomes.com 4 BETTER EVERY DAYS STRONG FOUNDATION Same-store new lease over lease growth was 7.5% in Q3 compared to 13.0% in Q2 2022 and 5.7% in Q3 2021 Same-store renewal lease growth accelerated to 8.7% in Q3 compared to 7.8% in Q2 2022 and 7.4% in Q3 2021 Same-store revenue growth
Slide 5: Differentiated Portfolio
centerspacehomes.com 5 Region Homes Q3 Avg. Rev per Occ. Home(1) Denver, CO 2,104 $2,090 Minneapolis, MN (2) 5,293 $1,590 North Dakota 2,422 $1,257 Omaha, NE 1,370 $1,208 Rochester, MN 1,129 $1,721 St. Cloud, MN 1,524 $1,315 Other Mountain West(3) 1,222 $1,415 Total / Average 15,064 $1,539(4) MULTIF
Slide 6: Strong Fundamentals Throughout Midwest and Mountain West
centerspacehomes.com 6 STRONG FUNDAMENTALS THROUGHOUT MIDWEST AND MOUTAIN WEST Billings YTD Avg Annual Income: $86,370 YTD Rent-To-Income Ratio: 22.07% Denver YTD Avg Annual Income: $110,116 YTD Rent-To-Income Ratio: 23.70% Grand Forks YTD Avg Annual Income: $86,798 YTD Rent-To-Income Ratio: 20.34%
Slide 7: Our Portfolio Compares Favorably on Unemployment and Supply
centerspacehomes.com 7 OUR PORTFOLIO COMPARES FAVORABLY ON UNEMPLOYMENT AND SUPPLY Centerspace portfolio has the lowest weighted average unemployment rate among multifamily peers across its markets Low unemployment in our portfolio relative to all housing sectors- apartment, manufactured housing
Slide 8: Our Portfolio Compares Favorably on Unemployment and Supply
centerspacehomes.com 8 OUR PORTFOLIO COMPARES FAVORABLY ON UNEMPLOYMENT AND SUPPLY 0 10 20 30 40 50 60 70 80 90 100 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% M on th s S up pl y Va ca nc y + U nd er C on st ru ct io n an d 3- Ye ar A bs or pt io n R at e Vacancy + Under Construction Vs
Slide 9: Stable Underlying Portfolio = Consistent Earnings
centerspacehomes.com 9Graph above is based on Company's primary reported earnings statistic. CSR, MAA, AVB, ESS, IRT, NXRT, ELME, and VRE report Core FFO per share. UDR and CPT report AFFO per share. EQR reports normalized FFO per share. MAA reports AFFO per share in 2019-2022. MAA reports AFFO in p
Slide 10: Positive Leasing Trends Continue: Same Store Leasing Update
centerspacehomes.com 10 5.7% 5.5% 6.7% 5.8% 7.5% 3.3% 7.4% 7.6% 9.8% 7.8% 8.8% 8.5% 6.0% 6.2% 7.8% 10.9% 8.2% 5.6% Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Oct 2022 New Renewal Blended POSITIVE LEASING TRENDS CONTINUE SAME STORE LEASING UPDATE Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Oct 2022 Occupanc
Slide 11: Positive Leasing Trends Continue: Same Store Leasing Update
centerspacehomes.com 11 POSITIVE LEASING TRENDS CONTINUE SAME STORE LEASING UPDATE -10.0% -5.0% n/a 5.0% 10.0% 15.0% n/a $ 200 $ 400 $ 600 $ 800 $ 1,000 $ 1,200 $ 1,400 $ 1,600 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 New and Renewal Lease Changes by Quarter Avg Rent O
Slide 12: Optimizing Rents from 2021 Portfolio Acquisition
centerspacehomes.com 12 OPTIMIZING RENTS FROM 2021 PORTFOLIO ACQUSITION -1.2% 4.9% 8.4% 4.1% 2.1% -0.8% 6.7% 11.9% 7.8% 5.5% Q4 2022 Q1 2022 Q2 2022 Q3 2022 Oct 2022 Comparative New Lease Rate Growth SS MSP KMS 6.9% 4.7% 5.1% 4.7% 2.9% 3.9% 10.8% 9.0% 10.0% 9.5% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Oct 2
Slide 13: Enhancing Customer Experience Is a Core Goal
centerspacehomes.com 13 ENHANCING CUSTOMER EXPERIENCE IS A CORE GOAL 64.78 62.62 60 61 62 63 64 65 66 Centerspace ORA Score National Property Average ORA Score 2021 J Turner ORA Score ORA TOP PERFORMER Red 20 Apartments in Minneapolis was named as the highest scoring property in the state of Minneso
Slide 14: Value-Add Highlights: Accelerating Value-Add Opportunity
centerspacehomes.com 14 VALUE-ADD HIGHLIGHTS ACCELERATING VALUE-ADD OPPORTUNITY Value-add opportunities to drive maximum revenue across the portfolio include unit and common area renovations and adding amenities including clubhouses, fitness centers, dog park, outdoor kitchens, and package locker
Slide 15: 2022 Financial Outlook
centerspacehomes.com 15 2022 FINANCIAL OUTLOOK ------------Forecasted Range------------- Low Mid-Point High Revenue 9.75% 10.00% 10.25% Total Expenses 9.50% 9.75% 10.00% NOI 9.75% 10.25% 10.75% Earnings per Share $(0.50) $(0.46) $(0.41) FFO per Share $4.30 $4.35 $4.39 Core FFO per Share $4.42 $4.46
Slide 16: Balance Sheet Positioned for Growth
centerspacehomes.com 16 $0 $41,722 $202,990 $52,395 $51,241 $116,000 $105,086 $85,000 $198,022 $25,000 $78,850 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Common Equity 54% Secured Debt 21% Unsecured Debt 20% Series C Preferred 4% Series D Preferred 1% *Share price $67.32 as of
Slide 17: Improvement in Portfolio Since 2017
centerspacehomes.com 17 Improvement since 2017 driven by thoughtful capital allocation and creative deal structuring IMPROVEMENT IN PORTFOLIO Homes per Community Buildings Avg Monthly Rent Communities % of NOI in Top-50 MSA Homes 132 709 $980 100 13% 2017 13,212 179 520 $1,392 84 55% 15,064 (1) Prof
Slide 18: Recent Acquisitions: Lyra Apartments and Civic Lofts
centerspacehomes.com 18 • A 215-home community built in 2022 • Located in southeastern suburb of Centennial, Colorado and Denver’s Southeast Business Corridor home to more than 240,000 jobs • Amenities include resort-style outdoor pool with terrace, fitness center, clubroom, game room, entertainment
Slide 19: Minneapolis Market
centerspacehomes.com 19 32 CSR communities consisting of 5,292 homes 16th largest MSA in the nation #6 on U.S. News best places to live in the U.S. 24% projected population increase by 2035 442,000 jobs to be added to the region by 2050 18 Fortune 500 companies headquartered in Minnesota
Slide 20: Minneapolis Market
centerspacehomes.com 20 0% 5% 10% 15% 12 Mo Change 10 Yr Change 5 Year Forecast Income Growth 0% 1% 2% 12 Mo Change 10 Yr Change 5 Yr Forecast Population Growth MINNEAPOLIS MARKET 0.00% 1.00% 2.00% 3.00% 4.00% 12 Mo Change 10 Yr Change 5 Yr Forecast Labor Force Growth 0% 1% 2% 3% 4% 5% 6% 2019 2020
Slide 21: Denver Market
centerspacehomes.com 21 6 CSR communities consisting of 1,889 homes 19th largest MSA in the nation #2 on U.S. News best places to live in the U.S. 6th fast growing state between 2010 and 2020 804,100 jobs to be added to the region by 2050 23 Fortune 1,000 companies headquartered in Color
Slide 22: Denver Market
centerspacehomes.com 22Source: CoStar Multifamily Market Report 0% 1% 2% 12 Mo Change 10 Yr Change 5 Yr Forecast Population Growth DENVER MARKET 0% 1% 2% 3% 4% 5% 6% 2019 2020 2021 2022 (proj) 2023 (proj) Inventory Growth 0% 5% 10% 15% 12 Mo Change 10 Yr Change 5 Year Forecast Income Growth 0% 1% 1%
Slide 23: Our Secondary Markets Have Strong Fundamentals
centerspacehomes.com 23 OUR SECONDARY MARKETS HAVE STRONG FUNDAMENTALS Region % of NOI (1) Population Market Units (2) Median HH Income Unemployment Rate (3) 3-Month Avg Job Growth (3) Median Home Value T12 Deliveries (4) Market Vacancy (5) Market Rent Growth (5) Under Construction (4) Minneapolis 3
Slide 24: ESG Highlights
centerspacehomes.com 24 ESG HIGHLIGHTS ENVIRONMENTAL SOCIAL GOVERNANCE • Created ENERGY Star portfolios at each property in the portfolio • Utilize WasteX waste management across the portfolio • Participate in GRESB annual assessment to identify risks and opportunities and benchmark performance • Pr
Slide 25: Best-in-Class Governance
centerspacehomes.com 25 BEST-IN-CLASS GOVERNANCE EXECUTIVE MANAGEMENT TEAM Mark O. Decker, Jr. President and CEO Bhairav Patel EVP and CFO Anne Olson EVP and COO CSR rated ISS’s top score of 1 - indicating highest quality corporate governance practices and lowest governance risk Jeffrey P. Caira Sin
Slide 26: Investment Highlights
centerspacehomes.com 26 INVESTMENT HIGHLIGHTS Best-In-Class Governance Differentiated Market Exposure Internal Growth Opportunities Flexible Balance Sheet
Slide 27: Appendix
centerspacehomes.com 27 APPENDIX
Slide 28: Reconciliation to Non-GAAP Measures
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 We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”).
Slide 29: Reconciliation to Non-GAAP Measures
centerspacehomes.com 29 RECONCILIATION TO NON-GAAP MEASURES
Slide 30: Reconciliation of Net Income 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/loss on sale of real estate and other investments, impairment of real estate investments, gain/loss on