IRET - Earnings call transcript Q2 2019

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Operator

Good morning. And welcome to the Investors Real Estate Trust Second Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today’s event is being recorded. to CEO. conference like Decker, to now and President would turn over the Mark I Mr. go please Decker, ahead.

Mark Decker

XXXX the and XX-Q closed. quarter year for you, the filed Thank good second of morning. our the yesterday after SEC IRET’s Form was market with fiscal

our X-K. disclosure have on and been and filed supplemental at Web site iretapartments.com release yesterday earnings posted Additionally, package our on Form

are we’ll subsequent measures. during with our to non-GAAP expectations including this refer used assumptions GAAP, and our this other begin Any assumptions. to respect I statement statements need to uncertainties on These and With opinions and that obligation call, and any SEC. made current and reasons statements our supplement business call management’s assumes represent Company reconciliation discussed due you discuss measures release in management in Form will the non-GAAP remarks the Please based XX-Q morning, subject our making statements the the measures we forward-looking and we update forma on inherent and forward-looking uses untrue use Before to remind with become these pro or supplement to forma respect for the a measures their that call on filings events pro certain these recent about be to today’s risks to outlook limitations. events. we and no to future current earnings

Chief me Officer. Chief Officer Joining Financial and Anne John are Operating Olson, our this morning our Kirchmann,

and two activity quarter of for October of straight the results store in the comparable sure X.X% industry release headline many in supplemental, same press growth fourth management, XX lead is our and years the of last for multifamily quarter NOI I'm our After you the second transactional compelling. saw ending period. NOI the heavy changed our As of were outstanding and

earnings. on quality of focused the our are We

employed us. methods expense there, continued and achieved encourages the specifically and we So the to across top get line portfolio the what balance demonstrable are growth us discipline

business, care by and of our has by As markets in easier are progressing rise expenses. of XX of grow XX XX reduction margins simplified of eight task X%. our in revenues as in our mine gotten our growth we expense our With customers, care towards people, goal revenue five, markets, our take we increasing well; take to

producing make continues embedded of quarter, opportunities that XXX so points, remains portfolio in compelling gain a year-over-year basis IRET even to there large a our opportunity. a This investment organic

though our XX X% the of and first share dispose comes sequentially NOI XX% core just of from our things assets. of Today, that produced XXX,XXX underway. our shy million we're value-add improve begin day-to-day we expect from initiatives in results to Also were the commented past, to our we even noteworthy, In to quarter, non-core by over grow quarters. we addition to doing margin of in of multifamily FFO able the we the per next assets sold seeing few we NOI properties. add operations, are to in And continued value as in

these which sheet excellent importantly, Most structure play detail, changes John and balance levels is our how evidence can our Our and of the power of happening. further In the as to us full which to speed as that planned. are harness offense. quarter, our And a call, this is at changes the the would condition, going operations we advance will in position this last quarter just this in our put we discussed business. team, provides earnings before beginning debt occurred

about continue to results. our and hear from improve constant to to improvement our committed We initiatives will me are you portfolio

St. our XX.X% all Cloud Minnesota clear our NOI with growth; Rochester and producing strategy makes is others It Twin sense; combined that capital Dakota same X% North Turning in for X.X%. and allocation markets. our store Cities to markets,

rent North and see to absorption in growth continue our of Dakota markets. lack We marginal

population However, markets. that on customers balance, largest portfolio we in potential see gains coming of out and B of our the serves the B+

Focusing XX markets very operators flow to competitors in top that our the for us promise and believe have Denver Cities other Twin two owner we great on provides from differentiates exposure public growth. little cash

for progressing. Cities our portfolio, non-same at Denver assets, our how third Twin we’re store exposure are and our pleased Looking accounts of which all the around with of we

well new On destination documented is the immigration for the supply. as both supply side, and Denver

our of is due to fairly a in concentrated ups strong most to continues traffic. in healthy their seasonal be of to lease not that market incomes are prospects decrease there. at and with few one these offered concession and competitors immune are on free to a market seeing Denver market be in and assets to and employment continues months being submarkets long-term exclusively we average A-assets. driven the and to Minneapolis almost the a We supply either rent of confident two and remain and a

We our continue to supply and monitor its closely on effect the investments.

economy, the we So a good and a quarter, a for good everything improving ingredients to good from last our can middle Anne, sound a happen. team the and we business. we in great When environment balance and the on these that continue sheet, and of operations offer ingredients operations. can the focused details our markets, customer attracts put take theme more mix retains do, these things you people few perhaps best are in

Anne Olson

growth and second and quarter, we through increase quarter were February. we’ve the expanding growth revenue morning expiration point margin on achieved into first our our in headed is same and overall occupancy store our seasonality, we in mixture we both Mark do same We we second ended continue be motivation We second the we by their of of though over in us growth occupancy November the revenue occupancy have revenue of XX at the six not rigor lease well year-over-year, everyone. notable results concept our store NOI with our increasing of in quarter, and a to you, and low quarter, October adjustment expense and market. to XXX same mentioned seen growth about that we us a Last giving is expense a believe processes basis believe during Even XX.X%, six experienced which September traffic excess proof a increase operations. which success to markets are revenue to institutionalize the Thank NOI initiatives, results I increases reduction initiated other mentioned have we good our It months goal our practices of brought X.X% due quarter. that Drivers store our These same in have months. in that X.X% the decrease demonstrate measures, rent. and that quarter's and of the Mark store X%. of containment optimistic positions focus XX%. of X.X% and our over this an last X.X%

about We across continue to our optimistic portfolio. revenue opportunity our be

led really in accountability the on of reductions. Our during our performance fact eight and strong shape with that July having expense increased initiatives reduction reporting force Increased the expenses, to that results. a quarter second new have team, coupled discipline to focus requirements XX budget for with took the containment operations variance our markets year-over-year on on year-over-year expense

see our value are also favorably first our returns to margin of initiatives, the results projects that expect will and we starting add impact on initial our We projects.

live completed expected will monitoring achieved. and renewal our rents is asset XXX renovations to be units our have at we at We premium the and that new ensure

we retrofits three are completed previously units bidding and more discussed, have process. and currently XX the identified implementing of LED renovation portfolio. we And have the for As in the XXX process over in final within

we monitoring successfully markets and of execute our internal properties to pipeline thoughtfully add comparable Our on are opportunities capacity growing value-add is and value our our program. closely and

been through continue We team stemming are results provide bolstered are results to our motivate and by the positive that our from we innovation, financial implementing. has the to changes team

to IRET, for the that I'm Our of grateful Kirchmann teams initiatives every financial every and overall discussion reach turn sheet. in over it team day. effort John and our of across and every balance department a for bring results positivity I'll our one our members

John Kirchmann

of a year-to-date These we are non-core reduction per assets, FFO portfolio, period. $X.XX well second year the year-to-date FFO the of dividend period. multifamily you, XXXX is to from in $X.XX primarily NOI the in reported decreases as a prior Anne. prior our $X.XX of reduction sale quarter as from Core XXXX year the preferred and costs. for decrease Last of night, a fiscal due Thank core decrease $X.XX NOI growth from share, a offset fiscal share, of of the for from a interest by

The quarter, realignment and of period first officers. to quarter prior a compensation period short-term for related million year year the corporate $XXX,XXX prior expenses, expected a of fiscal including million Looking related total the the and compared our months plan. cost six at increase metrics certain prior from increase a from decrease is The our higher the our year quarter, of G&A the million from the due year achievement to primarily General financial Administrative $X.X $XXX,XXX under the fiscal 'XX. costs and $XXX,XXX G&A as in fiscal from for in was XXXX in of due the incentive prior to first first $X.X compensation the is quarter G&A year. $X.X to decrease severance to reduction same for was

million $X.X run quarter. to a per maintain G&A million to $X.X rate We expect future of

Moving expenditures. capital to

presented million, million, supplemental, the a $X.X XXXX the of was CapEx in of levels. the to CapEx the our for are This of projects from future a Same the from quarter. cost expected Lower decrease new of reduction reassessment $X be temporary costs the with months six the million result million planned of of to $X CapEx facility store As quarter, to current store and Page be year's prior historical closer should year. same first F-XX a in $X.X fiscal decrease reprioritizing was same period year prior team. CapEx addition due the management for a

Turning continue to we improve our to flexibility. our sheet, balance

million XXst, revolver. million on October our As available corporate of $XXX liquidity, in including total $XXX had we

and with As to XX% portfolio leverage debt of risk at future. ratio position total recourse on debt. portion unsecured our reducing Improving August, our include, opportunistic of of improving to credit the is and this of secured debt Highlights rate discussed to reduced during of end. continue in forward debt quarter focus of to at the Overall, we our X% we facility. fixed X.X% reduced EBITDA to interest our that in us X% is total our debt the volatility debt the that prior more a of believe amended metrics, improvement our with portion rate call we interest to under which expanded be

our continue liquidity further to financial sheet, improve balance investment of metrics. actions to goal increase and and our these obtain All grade flexibility

that out quarter earnings the is point to this Finally, final like IRET. I would call for fiscal

We our we months XXXX. will we year that, industry to as a questions. operator changing calendar December end ago, continuation of of the transparency to believe initiated With for will a the increase turn and be call XX, is change This the comparability peers. and will over to our I your XX transformation

Operator

[Operator Rob Instructions] today go question ahead. The Please from Janney. Stevenson with first comes

Rob Stevenson

Can as prospective? eke cost assets the the properties there savings automatically having done the talk I left same bit still over about underway you and which you what’s raises you’re sold But properties that have smaller at fewer at be what actually to just guys what the a from the margins? the some processes fee you assume a to of I more number cost the quarters, through savings done out mean, last are try getting little store a from margins.

Anne Olson

The measures two-fold. with us year-over-year of been our containment a still things We've cost list would that lessoning but had say expenses I year, really the cost in giving at, One, variance losses, long reporting its pay main to Xst, we’re our results rigorous reduction done and good start reassessment to the measures so our we’re container working maintenance planning viewing our to full really and really of staffing, hard was the expense on our July and part which try and off. controllable and we’re take are seeing flat look do looked do on think to We forth more we've we've talking does some had claims has a of some. hold which asked that and the of driver out help We everyone. everyone really some containment to expenses our expenses. there looking spending. more But at at is insurance of

think some and which seeing in We’re the increases industry. across taxes insurance, is I true

Rob Stevenson

to capacity the What’s that left the guys? be stuff that's biggest done impact still to you has

Anne Olson

our and process say cost. I vendor our would churn management

we So do the do of that between and disparity a have vendors has how quickly when it a we churn do an portfolio apartment, across with, pretty the it. that to much lot we we to wide cost and how used can

deep some As difficult can so of and know, act. you to our find little its vendors in markets aren’t who population

that those working prices quickly hard make the units. sure We’re good can work and be real we on consistent good process have to turn to vendors vendor done at that management

Rob Stevenson

did then sorry if And I in it. you you repurchased Did repurchase, missed guys stock and any the guys quarter?

Mark Decker

No.

Rob Stevenson

are Is that are repurchases, how thinking that pretty Seems high? et got you I going with with the to How existing deployment give to you leverage these returns Mark? days? board the aspect rate terms that implied share capital about of $X? thinking neutral stock and How is but cap down that, also in you've mean, about deal the -- is doing that cetera. the the like here of around on you better that's portfolio then

Mark Decker

you have, buyback reauthorized -- board We last the we the may on seen, as the did so table. much have very did still week

we I next you which I have in but we’ll can bought per do some XXX,XXX it quarter. of shares these at there. think we the that tool, at cap and se so wouldn’t quarter, neutral leverage table, a units of report OP don't our basis on in report levels it see it And look last we a on the but surprised be in couple on As

Rob Stevenson

intent the at do have point? contract of letter any And acquisitions under this you or currently

Mark Decker

not anything under contract. do We have

Operator

[Operator comes Drew Babin go Instructions] Please ahead. next The from Baird. question with

Drew Babin

the on rent composition revenue but the of revenue It same looks Question property X.X%. grew home grew occupied growth. X.X%, per about themselves

the about driven between whether talk could the that growth? might be there's difference fee and you something revenue that So driving elements

Mark Decker

I’d And revenue was Anne about but maximize are it, to trying per to we going foot. generally, ask yes. talk I to say

more why Anne, So talk don’t that. about

Anne Olson

from Yes, for additional we revenue I’d growth. list front portion looking a is say our And large other on that growth analyzing the long of is -- we’re that and initiatives. our too do revenue at

pushing I Over the slower X.X%. comment that’s, on did is, little about decrease do going new quarter, occupancy occupancy prepared and don’t increase a that rents we But into market. that remarks, what real a the as saw said think through We rents We our our push we is the we really in bit X.X%. renewal think month. the about see quarter my we're

decrease on occupancy to So us the set new decrease we push rents. well did in for traffic, so up heavy winter, in see a slight

Drew Babin

just quarter, And fourth on from in that down I the second leads quarter. the Was spread leasing my positive spreads negative leasing that what correctly? to slightly the during so new if that’s remember question second the X.X%

Anne Olson

half those, of Yes, yes. slightly

Drew Babin

now I decent sheet certain the And And on currently within of transaction then And what do guess put the opportunities? as the right Williston guess here. the I management some generally where sale constraints? capacity current lastly best balance you been with new place, does the measures see in a with market investment of have view liquidity amount leverage

Mark Decker

I think fair with at we could replace those fair leverage amount those $XX amount mean sold, roughly million, assets we which of that I funded minimum, sales. was are a of a a

bit of of So a I a the of softness today. be focused enthusiasm roughly buyer What a leverage the most as is, we’re which would probably quarter $XX market core the we’re little value where end add neutral at in market, transaction a first seeing say, would million. in is market, lot the in

OP where really we’re edge looking looked unit level opportunities some have a So deals. we where I few for we’ve mean at of

very bit things it’s a at a finding interesting we’re say of pretty trying to talk is we But pipeline. the a think underwriting stock our in competitive market. and things I little We’re lot off a But option really have folks to that and are out there lot point. this I always would reach, good out of

it about at call, looking but up, are would million, to what a talk we capacity be enough that’s But lever now team. have we as something right think a modest have which compelling. has is to million we it I to $XXX do, be $XX that to

Operator

concludes CEO, now back ahead. Real conference go to This Estate I Decker, like turn session. Mark Trust's please would question-and-answer our Investors Junior. Decker the to Mr. over

Mark Decker

in you company, a Anita. holiday. happy thank Thanks, interest your Well, everyone for have our and

Operator

is concluded. conference Thank now presentation. This attending you for today's

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Centerspace (CSR) 11 Dec 182019 Q2 Earnings call transcript