D/b/a Centerspace · NYSE:CSR
D/b/a Centerspace — Centerspace — Investor Presentation (June 2022)
28 slides from D/b/a Centerspace's investor presentation, June 2022
Slide 1: Investor Presentation June 2022
INVESTOR PRESENTATION June 2022
Slide 2: Safe Harbor Statement and Legal Disclosure
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 that may cause actual resu
Slide 3: Company Snapshot
COMPANY SNAPSHOT Differentiated Markets Internal Growth Opportunity Value-Add Opportunity Balance Sheet Flexibility 1970 14,838 1997 Experienced Leadership Year founded Apartments owned First publicly traded and operated NYSE: CSR Transformation to Focused Multifamily 2017-2019 $2.7 Billion(1) Key I
Slide 4: Strong Foundation
STRONG FOUNDATION Strong Operating Results Driven by Consistent Occupancy and Accelerating Rent Growth Same-store lease over lease growth was 6.9% in Q1 compared to 5.8% in Q4 2021 and 0.7% in Q1 2021 BETTER EVERY DAYS Same-store renewal lease growth accelerated to 9.6% in Q1 compared to 7.8% in
Slide 5: Differentiated Portfolio
DIFFERENTIATED PORTFOLIO PERCENT OF NOI BY STATE (4) Q1 Avg. Rev per Occ. Region Homes Home(1) Denver, CO 1,888 $2,002 5% Minot Grand Forks Minneapolis, MN (2) 5,293 $1,487 50% Billings Bismarck 13% St. Cloud North Dakota 2,421 $1,185 Omaha, NE 1,370 $1,118 Rapid City 3% Rochester Rochester, MN 1,12
Slide 6: Strong Fundamentals Throughout Midwest and Mountain West
STRONG FUNDAMENTALS THROUGHOUT MIDWEST AND MOUTAIN WEST Minot Grand Forks 2022 YTD lease trade-out: 1.3% 2022 YTD lease trade-out: 1.5% Bismarck Apr 2022 rent-to-income: 13.6% Apr 2022 rent-to-income: 15.2% 2022 YTD lease trade-out: 7.3% Apr 2022 rent-to-income: 15.5% St. Cloud Billings 2022 YTD lea
Slide 7: Our Portfolio Compares Favorably on Unemployment and Supply
OUR PORTFOLIO COMPARES FAVORABLY ON UNEMPLOYMENT AND SUPPLY March 2022 Weighted Average Unemployment Rate Weighted Average Portfolio Under Construction % state unemployment rate weighted by unit count 4.8% 5.2% 5.3% 4.5% 4.5% 4.1% 4.7% 4.8% 3.8% 3.9% 3.9% 3.9% 4.0% 4.6% 3.5% 3.5% 3.6% 3.6% 3.7% 3.7%
Slide 8: Same Store Leasing Update
POSITIVE LEASING TRENDS CONTINUE SAME STORE LEASING UPDATE New Renewal Blended 15.5% 11.5% 11.9% 10.8% 10.8% 10.0% 9.6% 9.5% 9.0% 7.5% 7.8% 7.9% 7.9% 7.2% 6.9% 6.5% 5.6% 5.8% 4.0% 2.0% 0.7% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Apr-22 May-22 Occupancy Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 April
Slide 9: Optimizing Rents from 2021 Portfolio Acquisition
OPTIMIZING RENTS FROM 2021 PORTFOLIO ACQUSITION Same Store New Lease Rate Growth Same Store Blended Rental Rate Growth SS MSP KMS SS MSP KMS 15.5% 13.3% 15.4% 10.1% 7.1% 10.2% 6.6% 8.7% 4.9% 8.0% 6.5% 4.9% 0.7% 0.9% -1.0% -1.3% Q4 2021 Q1 2022 Apr May Q4 2021 Q1 2022 Apr May Same Store Renewal Rate
Slide 10: Buying Efficient Communities, Selling Inefficient Communities
RISE BY 5 BUYING EFFICIENT COMMUNITIES Communities acquired since 2018 have a weighted average margin of 56.7% Strong Operating Platform Same-Store communities continue to see NOI margin growth T12(2) 60% Acquisitions(3) NOI CapEx NCF Average 59% 61% Margin % per Unit Margin % Rent 58% 62% Weighted
Slide 11: Rise By 5 Enhances Customer Experience
RISE BY 5 ENHANCES CUSTOMER EXPERIENCE 2021 J Turner ORA Score Lifetime Average Online Reputation Scores (Overall Scale of 5.0) 3.65 3.6 3.56 3.58 National Property Average ORA Score 62.62 3.55 3.52 3.5 3.45 3.41 3.4 3.35 Centerspace ORA Score 64.78 3.35 3.3 3.25 60 61 62 63 64 65 66 01/01/2019 01/0
Slide 12: Accelerating Value-Add Opportunity
ACCELERATING VALUE-ADD OPPORTUNITY VALUE-ADD HIGHLIGHTS IN-UNIT VALUE-ADD RESULTS Value-add opportunities to drive maximum revenue across the portfolio include unit and common area renovations and adding amenities including clubhouses, fitness 2019 2020 2021 2022 (forecast) centers, dog park, outd
Slide 13: 2022 Financial Outlook
2022 FINANCIAL OUTLOOK ------------Forecasted Range------------- Low Mid-Point High SS Growth Revenue 7.00% 8.00% 9.00% Total Expenses 5.50% 6.50% 7.50% NOI 8.00% 9.00% 10.00% Per Share Earnings per Share $(0.37) $(0.24) $(0.11) FFO per Share $4.26 $4.39 $4.52 Core FFO per Share $4.33 $4.45 $4.57 Ot
Slide 14: Balance Sheet Positioned for Growth
BALANCE SHEET POSITIONED FOR GROWTH Large Permanent Capital Base Access to Unsecured Debt at Investment Grade Pricing ($2.7B Total Capitalization) Amount % of Wtd Avg Wtd Avg Debt Summary (in thousands) Total Int Rate Maturity Total Secured Debt $524,963 60% 3.45% 6. 75 Total Unsecured Debt $346,000
Slide 15: Improvement in Portfolio
IMPROVEMENT IN PORTFOLIO Improvement since 2017 driven by thoughtful capital allocation and creative deal structuring 2017 Today (1) Acquisition Structure (in thousands) Communities 100 83 $92,667 Homes 13,212 14,838 $488,080 $782,950 Homes per Community 132 179 Buildings 709 519 Cash OP Unit Develo
Slide 16: Recent Acquisitions
RECENT ACQUISITIONS NOKO APARTMENTS CIVIC LOFTS MARTIN BLU APARTMENTS MINNEAPOLIS, MN / $46.4 MILLION DENVER, CO / $63.0 MILLION MINNEAPOLIS, MN / $48.0 MILLION • A 130-home community built in 2021 • A 176-home community built in 2019 • A 191‐home community built in 2015 • Conveniently located adjac
Slide 17: Minneapolis Market
MINNEAPOLIS MARKET MARKET HIGHLIGHTS CSR HIGHLIGHTS (1) 32 CSR communities consisting of 5,293 homes Location Asset Class NOI as % of Market NOI Subject to Rent Control (2) 16th largest MSA in the nation 11% 1% #6 on U.S. News best places to live in the U.S. 44% 43% 32% 56% 57% 57% 24% proje
Slide 18: Minneapolis Market
MINNEAPOLIS MARKET Population Growth Labor Force Growth 2% 2% 1% 1% 0% 0% 12 Mo Change 10 Yr Change 5 Yr Forecast 12 Mo Change 10 Yr Change 5 Yr Forecast Income Growth Inventory Growth 15% 5% 4% 10% 3% 2% 5% 1% 0% 0% 2019 2020 2021 2022 2023 12 Mo Change 10 Yr Change 5 Year Forecast (proj) (proj) ce
Slide 19: Denver Market
DENVER MARKET MARKET HIGHLIGHTS CSR HIGHLIGHTS (1) 6 CSR communities consisting of 1,888 homes Location Asset Class NOI as % of Market 19th largest MSA in the nation 21% #2 on U.S. News best places to live in the U.S. 47% 53% 6th fast growing state between 2010 79% and 2020 100% 804,100 jo
Slide 20: Denver Market
DENVER MARKET Population Growth Labor Force Growth 2% 2% 1% 1% 0% 0% 12 Mo Change 10 Yr Change 5 Yr Forecast 12 Mo Change 10 Yr Change 5 Yr Forecast Income Growth Supply Growth 15% 5% 4% 10% 3% 2% 5% 1% 0% 0% 2019 2020 2021 2022 2023 12 Mo Change 10 Yr Change 5 Year Forecast (proj) (proj) centerspac
Slide 21: Secondary Markets Have Strong Fundamentals
SECONDARY MARKETS HAVE STRONG FUNDAMENTALS % of Market Median HH Unemployment 3-Month Avg Median T12 Market Market Rent Under Region Population NOI(1) Units(2) Income Rate(3) Job Growth(3) Home Value Deliveries(4) Vacancy(5) Growth(5) Construction(4) Minneapolis 34.1% 3,640,043 343,552 $83,698 2.4%
Slide 22: Environmental Social Governance
ESG HIGHLIGHTS ENVIRONMENTAL SOCIAL GOVERNANCE • Created ENERGY Star portfolios at • Contributed to more than 25 charitable • Maintain a Supermajority Independent each property in the portfolio organizations in 2021 through the Board with 87.5% of board members Centerspace Cares program being indepe
Slide 23: Best-in-Class Governance
BEST-IN-CLASS GOVERNANCE EXECUTIVE MANAGEMENT TEAM CSR rated ISS’s top score of 1 - indicating highest quality corporate governance practices and lowest governance risk Mark O. Decker, Jr. Bhairav Patel Anne Olson President and CEO EVP and CFO EVP and COO BOARD OF TRUSTEES Jeffrey P. Caira Michael T
Slide 24: Investment Highlights
INVESTMENT HIGHLIGHTS Differentiated Market Exposure Internal Growth Opportunities Value-Add Opportunities Flexible Balance Sheet Best-In-Class Governance centerspacehomes.com 24
Slide 25: Appendix
APPENDIX centerspacehomes.com 25
Slide 26: 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 27: Reconciliation to Non-GAAP Measures
RECONCILIATION TO NON-GAAP MEASURES 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 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