Slide 1: Investor Presentation November 2024
INVESTOR PRESENTATION November 2024 The Lydian – Denver, CO
Slide 2: Safe Harbor Statement & Legal Disclosure
SAFE HARBOR STATEMENT & 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 result
Slide 3: Mission & Vision
MISSION & VISION 71 France – Edina, MN OUR MISSION OUR VISION To provide a great home— To be the premier provider for our residents, of apartment homes in vibrant our team members, communities by focusing on and our investors. integrity and serving others. centerspacehomes.com 3
Slide 4: Company Overview
COMPANY OVERVIEW Differentiated R ESULTS Multifamily Market Exposure NYSE: CSR I NNOVATION S ERVICE 13,012(1) E NGAGEMENT Apartments owned and operated $2.4 Billion(2) RISE is Centerspace’s commitment Total capitalization Key Indices to Results, Innovation, Service, and S&P SmallCap 600 Engagement.
Slide 5: Cash Flow Growth Focus
CASH FLOW GROWTH FOCUS TO EXECUTE THIS, WE FOCUS ON: Exceptional customer experience Diverse talent to enable a culture of engagement Enhancing efficiencies by scaling the business CENTERSPACE Managing the balance sheet to maximize financial flexibility Investing in high-quality and efficient rental
Slide 6: Results – 2024 Financial Outlook
RESULTS – 2024 FINANCIAL OUTLOOK 2023 -------------------2024 Guidance Range-------------------- Actual Low Mid-Point High Same-Store Growth Revenues 7.2% 3.00% 3.25% 3.50% Expenses 4.6% 2.50% 2.88% 3.25% NOI 9.0% 3.25% 3.50% 3.75% Per Share Net Income (Loss) $2.32 ($1.21) ($1.14) ($1.06) FFO $4.27
Slide 7: Results – Favorable Growth Profile
RESULTS – FAVORABLE GROWTH PROFILE Core FFO/sh Growth, Guidance Midpoint SS NOI Growth, Guidance Midpoint 2.0% 1.7% at Midpoint 4.0% 3.5% at Midpoint 1.5% 3.5% 1.0% 3.0% 0.5% 2.5% 0.0% 2.0% -0.5% 1.5% -1.0% 1.0% -1.5% 0.5% -2.0% 0.0% CSR SMID Cap Apt Non-coastal/Sunbelt All Multifamily CSR SMID Cap
Slide 8: Results – Renewals Holding Strong; Leasing Spreads Returning to Normal
RESULTS – RENEWALS HOLDING STRONG; LEASING SPREADS RETURNING TO NORMAL SEASONAL PATTERNS SAME STORE LEASING UPDATE New Renewal Blended 3.6% 3.5% 3.4% 3.5% 3.3% 3.2% 3.0% 1.6% 1.4% 0.2% 0.1% -0.1% -1.1% -3.3% -3.5% Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 QTD Oxbo – St. Paul, MN Note: Data represents
Slide 9: Results – Leasing Spreads Returning to Normal Seasonal Patterns
RESULTS – LEASING SPREADS RETURNING TO NORMAL SEASONAL PATTERNS Centerspace has grown average rents even in volatile economic times SAME STORE LEASING $1,580 8.00% $1,560 6.00% $1,540 4.00% $1,520 $1,500 2.00% $1,480 0.00% $1,460 -2.00% $1,440 $1,420 -4.00% Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1
Slide 10: Results – NOI Composition & Rental Rate Growth
RESULTS – NOI COMPOSITION & RENTAL RATE GROWTH Market % of Total NOI Minneapolis, MN 33.4% 2024 vs 2023 Year-To-Date RentalRental 2023 vs 2022 Year-to-Date RateRate Growth Growth Denver, CO 22.2% Blended 0.8% 1.4% 5.8% 4.2% 1.9% 1.3% 1.3% 2.0% Rent North Dakota 12.2% 8.0% Rochester, MN 9.5% Other Mo
Slide 11: Results – Balance Sheet Positioned for Growth
RESULTS – BALANCE SHEET POSITIONED FOR GROWTH Quarterly Net Debt / Annualized Trailing EBITDA(1) Diversified Permanent Capital Base 4-Quarter Moving Average Most Recent Quarter Pro forma $2.4B Pro Forma Total Capitalization 9.0x 8.5x 8.0x 7.5x 7.0x $962M 6.5x Total Debt Secured 6.0x Debt Q1 Q2 Q3 Q4
Slide 12: Innovation – Portfolio Improvement Since 2017
INNOVATION – PORTFOLIO IMPROVEMENT SINCE 2017 Improvement since 2017 driven by disciplined capital While similar in total number of homes, investment and disposition activity allocation and creative deal structuring has resulted in a more efficient and higher quality portfolio Acquisition Structure
Slide 13: Innovation – Approach to Investments & Dispositions
INNOVATION – APPROACH TO INVESTMENTS & DISPOSITIONS DEMOGRAPHIC AND ECONOMIC MULTIFAMILY FUNDAMENTALS OTHER CONSIDERATIONS CONSIDERATIONS CONSIDERATIONS Population Trends Rents Focused In-market Relationships Population Characteristics Occupancy Capital Access and Deal Structure Labor Force Health M
Slide 14: Innovation – Geographic Differentiation
INNOVATION – GEOGRAPHIC DIFFERENTIATION PUBLIC MULTIFAMILY REIT MARKET OVERVIEW GEOGRAPHIC FOCUS (% OF UNITS) 25% 75% 43% 7% 18% 30% 4% 53% 5% 18% 19% 4% 86% 7% 100% 27% 34% 21% 17% 5% 14% 71% 11% 4% 21% 74% 5% 95% 25% 75% 24% 76% 6% 92% 3% Mountain West Midwest West Southeast & Texas Mid-Atlantic N
Slide 15: Innovation – Competitive Advantage in Minneapolis
INNOVATION – COMPETITIVE ADVANTAGE IN MINNEAPOLIS MARKET HIGHLIGHTS CSR HIGHLIGHTS CSR Portfolio NOI % 33.4% ▪ 27 CSR communities, 4,711 homes, scaled Location by % of NOI Asset Class by % of NOI portfolio with opportunities via OP unit, CSR Minneapolis Portfolio mezzanine financing and development
Slide 16: Innovation – Growth in Denver
INNOVATION – GROWTH IN DENVER MARKET HIGHLIGHTS CSR HIGHLIGHTS CSR Portfolio NOI % 22.2% Location by % of NOI Asset Class by % of NOI ▪ 8 CSR communities, 2,233 homes, entered CSR Denver Portfolio Denver Q4 2017 and achieved critical mass Average Rent $1,983 ▪ 19th largest MSA, 3.0M population 38% C
Slide 17: Innovation – Providing Differentiated Exposure
INNOVATION INNOVATION––PROVIDING PROVIDINGDIFFERENTIATED DIFFERENTIATEDEXPOSURE EXPOSURE Portfolio hallmarks include low unemployment rates, affordability of rents, resident financial strength, and diversified economies Forecasted Next Median Median Trailing 12-Month 12-Month Net Homes Under CSR YTD
Slide 18: Rental Affordability vs Homeownership & Income Growth
INNOVATION – RENTAL AFFORDABILITY VS HOMEOWNERSHIP & INCOME GROWTH Income Growth Has Outpaced Rent Growth in CSR Markets Median Household Income Growth Minus Rent Growth: 2017 Q3 to 2024 Q3 Rent Vs. Own Affordability Gap in CSR Markets 11% $3,500 10% 9% 9% $3,000 8% 8% 7% Monthly Payment $2,500 $2,0
Slide 19: Demographics vs Housing Deliveries Are Attractive
INNOVATION – DEMOGRAPHICS VS HOUSING DELIVERIES ARE ATTRACTIVE US Housing is Structurally Undersupplied US Housing Starts (SAAR) Suggest New Supply to Decrease 2,500 6,000 1,900 Formantions/Completions (000s) Cumulative Housing Shortfall (000s) 2,000 5,000 1,800 1,500 4,000 1,700 Starts (000s) 1,000
Slide 20: Innovation – Supply/Demand Dynamic Expected to Become a Tailwind
INNOVATION – SUPPLY/DEMAND DYNAMIC EXPECTED TO BECOME A TAILWIND Net Deliveries, Combined CSR Markets Net Deliveries, Minneapolis 12,000 5,000 4,500 10,000 4,000 8,000 3,500 3,000 Units Units 6,000 2,500 2,000 4,000 1,500 2,000 1,000 500 0 0 2025 2Q 2025 1Q 2025 3Q 2026 1Q 2026 2Q 2021 4Q 2022 4Q 20
Slide 21: Innovation – Portfolio Compares Favorably on Unemployment & Supply
INNOVATION – PORTFOLIO COMPARES FAVORABLY ON UNEMPLOYMENT & SUPPLY Creditworthiness of residents produces strong rent collection Measured supply pipeline in Centerspace portfolio markets rates; low unemployment in Centerspace portfolio markets can allows the ability to drive rent growth and retain o
Slide 22: Innovation – Historical Value-Add Growth
INNOVATION – HISTORICAL VALUE-ADD GROWTH Centerspace’s past and current projects have generated a 15.3% return on investment, resulting in over $195 million of incremental value creation(1) 2018-2024 Value Add Spend $35,000,000 160 Spend increased from $2.7mm in 2018 to $29.4mm in 2023, with $24.0mm
Slide 23: Service – Enhancing Customer Experience Is a Core Goal
SERVICE – ENHANCING CUSTOMER EXPERIENCE IS A CORE GOAL LIFETIME AVERAGE REPUTATION SCORES 2024 J Turner ORA Score (As of 10/1/2024) (As of 10/1/2024) 4 3.91 3.9 3.81 National Property Average ORA Score 62.02 3.8 3.7 3.61 3.56 3.6 3.52 3.5 3.38 Centerspace ORA Score 71.52 3.4 3.3 3.2 54 56 58 60 62 6
Slide 24: Engagement – ESG Highlights
ENGAGEMENT – ESG HIGHLIGHTS ENVIRONMENTAL SOCIAL GOVERNANCE • Published fifth annual ESG report, • Donated $75,710 to national, regional, and • Maintain a Supermajority Independent prepared in alignment with GRI 2024 diversity-promoting charities in 2023 Board with 88% of board members Universal Sta
Slide 25: Engagement – Best-in-Class Governance
ENGAGEMENT – BEST-IN-CLASS GOVERNANCE EXECUTIVE ISS rated top score of 1 - indicating highest quality MANAGEMENT corporate governance practices and lowest TEAM governance risk Anne Olson Bhairav Patel President & CEO EVP & CFO SENIOR LEADERSHIP TEAM Brad Abel Grant Campbell Jean Denn Julie Ellis Jul
Slide 26: Key Takeaways
KEY TAKEAWAYS VALUE GEOGRAPHIC PROVEN DIFFERENTIATION EXECUTION centerspacehomes.com 26
Slide 27: Appendix
APPENDIX centerspacehomes.com 27
Slide 28: 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 Centerspace believes that FFO, which is a non-GAAP financial measure used as a standard supplemental measure for equity real estate investm
Slide 29: Reconciliation to Non-GAAP Measures
RECONCILIATION RECONCILIATIONTOTO RECONCILIATION TONON-GAAP NON-GAAP NON-GAAP MEASURES MEASURES MEASURES Updated (in thousands) Three Months Ended Nine Months Ended 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 9/30/2024 9/30/2023 Funds From Operations Net (loss) income available to common
Slide 30: Reconciliation to Non-GAAP Measures
RECONCILIATIONTOTONON-GAAP RECONCILIATION NON-GAAPMEASURES MEASURES (in thousands) Three Months Ended Nine Months Ended 3/31/2024 12/31/2023 9/30/2023 9/30/2023 Reconciliation of Net Income (Loss) 9/30/2024 6/30/2024 9/30/2024 Adjusted EBITDA Available to Common Shareholders to Net income (loss)
Slide 31: Reconciliation to Non-GAAP Measures
RECONCILIATIONTOTONON-GAAP RECONCILIATION NON-GAAPMEASURES MEASURES Reconciliations of Operating Income to Net Operating Income Revised Outlook Net operating income, or NOI, is a non-GAAP financial Nine Months Ended 12 Months Ended measure which the Company defines as total real estate (in thousands