IRET - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to the Investors Real Estate Trust Second Quarter 2020 Earnings Conference Call. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mark Decker, Chief Executive Officer. Please go ahead.

Mark Decker

good and Alyssa, you, morning, everyone. Thank its after the filed Form XX-Q yesterday quarter second the market for IRET closed.

iretapartments.com to Form are COVID-XX outlook results views including in that Additionally, our that management's the posted impact views at been disclosure today's the package filed based earnings related release our of potential and and to the other remarks will our business to It's important X-K. forward-looking and supplemental current include have and pandemic. XXXX, and note on on statements assumptions our assumptions on website

quarterly list pandemic, those any non-GAAP Our release report actual different factors, call. and may cause Please which could information, current filings other results the earnings discussed certain refer to our reconciliations be on our today's materially SEC than for related of our be to including that estimates. to

day our in to relative To shown you this time. make portfolio the the our working Anne through since is our much Chief our for morning occurred has Chief this popping quarter. into listening together preparing of and and quarter, talking Officer. second come better Officer; our "unwavering." Kirchmann, change residents worst for that certainly for We call, to much I entire trying good our on It's Financial was head a me resilience customers Olson, incredible months, with up company the as how In thank X into months for we the has and X was my and an last we disruption challenging and team kept communities were prepared John headed really our team, our about ago, our the every so this this team the Joining basis. absolute of were and Operating call, first and to of word for summary

balance opportunistic. We'll That's in early that debt making our the markets systems rigorous and the that working it. solutions the expect and staying our campaign. the will holding our with gives sustainable the line With our of through virtual revenue capital striving in our growth of we from XX portfolio more significantly flows pricing improvement be we next consider whole, expense as To asset position our are quarter, and all residents year, comes driving to growth. equity simplifying to continue the working in of future. for the flexibility. expenses and Our on ATM in is the at X" side now economic sheet, who and of stifled in that $XX. of on our and we while also headwinds apartments an safe also issued as damage our that hold in energetic the end, asset fundamentals We're our price the to for insurance the of cash $XX pandemic, be maintaining million of by at XX "rise through into X" right under average maintain a sector. margin "rise long-term ability just operations, that are approximately and safety and remains investing This select to The beginning In Zooming markets. capital us. and as discipline the to and helping and focus due and by outlook financial are of in possible our but sales stronger and we for our the months us taxes pandemic assets means on with improving living management, extends positions overall to from this read, net our in are us company and through business steady the experience, weathering company with trend second well out off the customer as flows improvement noncontrollable more

We the Nashville. advantageous. XX markets to over large next be XX in of capital our of have our as should cost do a net announced and We to Cities, Twin expect opportunities pipeline in buyer remain the of a target months June, Denver,

improvement We expect to accelerate this environment our if continued portfolio holds.

real I'll estate Last quite are today achievement, and we our years team. Friday, of fortunate are XXXX IRET XX is on in P&L with One exciting celebrated an business. an unwavering. business as be Lastly, behalf milestone. And close in shareholders we since to positioned the

speed, However, with as any advantages. seen, special we've confer devastating all longevity not does

and team we With move the start-up as a we'll to here remain out that, thoughtful could provide spirit homes. needle. to operations is update? day, every and cautious carry bring you great our the Our please mission us We give Anne,

Anne Olson

Thank you, Mark, and good morning.

pandemic As operating and the and controllable of quarter period first second in for second quarter We areas our our is demonstrated that driven at expenses Notably, were the times. NOI sequentially we're we will when over period X.X% year benefit quarter second of growth X.X% a all of X.X% last positioned by platform a discussed quarter, XXXX, decrease for compared quarter NOI same X.X% our of our the portfolio achieved quarter NOI year-to-date, in well results XXXX. ahead end compared uncertain our first XXXX. COVID-XX the to of in impacts last that grew the our same-store the in strong to pleased vigilance same we even

rental revenue. expenses Our on discipline on was diligence matched with our

second the quarter XXXX. second compared Our of weighted average the XX.X% during to for quarter was XX.X% occupancy

second have strong, to compared point same the last just period been year. a decrease quarter, the XX.X% collections XX during Our basis

relative stay-in-place positive portfolio. orders, specifically average total XXX deferral do than XX% from requests came in portfolio more We assistance for our believe rent. below Montana, continue lower, our Of debt due, to our across the requests in declining we our While bad for and second markets our XX% increases where performance is quarter, during price April. rent have average part, point those Billings, to the see is our regulated the we shutdowns of seen our rental insulation in in is where of

of we rent, of basis plans, under those As entered In we total of our have into collected X July points representing XXX charges. is $XXX,XXX plans. be entered which agreements, outstanding XX July, today, into rent to $XX,XXX representing deferral total payment

mind, rates portfolio of Traffic and the second place upon X.X% renewal peers, the signed of traffic the average have Our was across I experiencing second was our rate quarter up XX% lease would lease-over-lease. to would higher an July. with new end second expiration X.X% than XX.X% renewals increases provide towards of did leases pick in Traffic during significantly many also second during of these But some June quarter. We decreased lower been did did bring rates, quarter. for Like of many XXXX, averaging XX% over many challenges. effective quarter staying lease and XXXX. we are our our retention that pre-pandemic. of realize May, like our in on June residents color keep

increased average Our and in rate same-store XX%. XX portfolio, retention our was points July were And resident collections basis XX%. our renewal

per revenue lease average July's to in compared X.X% per XXXX. year-over-year, $X,XXX unit new lease-over-lease, at higher our Our revenue July unit and $X,XXX rates increased with is

result We that June, that rates of pent-up in the the increase believe some and new we lack of May. of As lease seeing the in XX, the traffic we traffic demand attribute July at occupied are increases we are to from which XX.X%. of were physically April in significant

XXXX. par had July with to off leveled on traffic be Our

as renewals we expect coincided with We growth rates impact flattening revenue and entered forward to of carry lease season. the line our our leasing this into slowdown, during QX slow top XXXX peak economic rent through which

exposure growth-oriented to us markets perform economy should Our our and as recovers. increasing operating platform well provide opportunity to revenue, will the help optimize an

occupancy, still We are for where desirable opportunities communities we certain add locations pricing in value power. high and seeing have

common and/or our average continued our have XX% the units, and during fully second renovations quarter. achieving XXX have portfolio, X with been of unit return Of we're value-add the renovated underwritten being within premiums an communities with renovated in We XX.X%. leased, units area to

Our of uncertainty may and resident what for back of enabled and the our bring communities. all are our to normal economy the We're offices new communities teams digitally future in used our of and service leasing our use getting distancing, the are and open. social

our these Our during Minneapolis over teams team overall team. members on factors, the great other. of and a distinction results. workplace being have a based workplace leadership, right survey ask of IRET employee shown values And a Tribune, our Star including Minnesota-based pay our I'll by each difficult remarkable the commitment flexibility. And times, and to doing others This our that in residents Top one benefits discuss being to key a and Workplace to in and third-party is named John now testament serving a resulted engagement, XX% thing, financial participated company

John Kirchmann

due we FFO $XXX,XXX attributed is casualty decrease million expenses. of commercial XXXX X% NOI the reduction NOI the acquisitions core of and night, to the as primarily additional million for $X.X net for G&A of to due new from quarter $X.XX be NOI Last our June quarter in a Lower loss the interest as reductions quarter can dispositions, a of NOI by decrease from well core Year-to-date, Anne. for second reported or is COVID-XX to X.X%. an the per you, of our $X.XX lower the FFO for per XXXX of $X.XX or to of $X.XX first share core offset quarter XX, FFO multifamily tenants. increase The $X.XX of increased months commercial from $X.X $XXX,XXX, the in impact on X and compared decrease of share, XXXX. XXXX, Thank of mixed-use in ending

administrative general our to and Turning expenses.

in the our same to compared decrease June XX, The $X.X period expenses our legal in of prior X million prior to a to XXXX the management in year. compensation the decrease the $XXX,XXX million decrease for million $XXX,XXX as For the in cost Interest $XX.X fees June costs. lower was a of to the related to claim same decreased months driven due maturing with the well of line decrease XXXX. by and prior compared the to a debt of increased to management expense construction and X.X% XX% G&A a third-party to This as balance The fees Property same debt ended $X.X June on the for the X a $X XXXX, to COVID-related year. $X.X period recovery of was months defect year. pursuit decreased lower months XXXX by average credit. was XX, million $XX.X ended lower million on control replacement attributed successful million X expenses XX, in ended compared period rate initiatives of

Full XXXX XX, was of expenditures, CapEx compared same $X.X million Page value-add million, for in increase capital for highlighted capital period million In which QX Year-to-date, X at increase prior year expected line the period $XXX a ended earlier projects QX, year spend million prior spend with are XX% is on $X.X same-store $X.X in same value-add related to was of Looking $XXX to value-add The CapEx the supplemental, versus replacement XXXX. the CapEx same-store in our occurring to is per of $X.X the $X.X in June remain million $XXX,XXX. timing from door. the the at XXXX spend of XXXX. as year. to months was S-XX for

The shares program million. balance for proceeds average of our were loan liquidity XXX,XXX $XX.XX sheet second used under issued these an share, our draws fund spend net and through shares quarter, total well capital as and we our as per flexibility. increase common at the from construction our of proceeds ATM price $XX value-add to to During

to balance Turning sheet. our

approximately information $XX million, supplemental. As of on Page June XX, available credit cash. under of on and of was our can million in be our our $XXX S-XX liquidity Further $XXX liquidity including line our total found million

and operations, into in debt us mezzanine sufficient allowing indicating $XX release our in Looking press withdrawing markets. to liquidity community on we $XX XX, of issued capital believe XXXX XXXX, cover on were in a On our our loans of and million business needs target our XXXX, Minneapolis. is fund COVID-XX for our and to construction we XXXX foreseeable have development our of of the to invest financial as a well of as March results million the multifamily outlook. we to current impact remainder light that We maturities and of remaining the

enhanced the rents We which the COVID-XX to uncertainty monitor on to ongoing federal of there including XX. of our July impact occupancy. remains great closely, continue a And continuation deal expired benefit, unemployment of and the the on impact as

updated an the financial time. XXXX from of not are uncertainty we ongoing the Given COVID-XX, impact outlook providing at this

to and our demonstrate QX to are results core of environment. team team questions. our responding mission work It With the call who confidence the business by the while our of to over your current members presented residents Our proactively great IRET reflect challenges homes here that, at great results the is for strong and the encouraging our the provide work investment the I will and that instills in community. delivers dedicated turn operator

Operator

[Operator of National comes Gaurav from Mehta Securities. Instructions] The first today question

Gaurav Mehta

First question is that I transactions. the have on

any on in think, remarks, could that I timing what select sell expect should consider assets. and your the mentioned seeing asset if you're some prepared you sales. in we of what would you was color hoping you I you to if provide market were kind

Mark Decker

Rav. Good Yes. This morning, is Mark. Yes.

opened that, disruption a of our mind same in pandemic asset I or has pretty better a of over sales the of a little we some weren't stayed up that unusual to So a Pricing markets, do. as set actually of consider little in last tertiary circumstances. I with months, And what's held mean, the would the I of the lot talked has a pricing. kind few combination pretty bit lot deterioration, say to is up has with which of exceptional liquidity, bit a combined likely window the think combined been forward-looking we've

we where about can, And consider I it past. in we've like done sales. the you should So think we'll think

better pruning things higher portfolio, be So newer, in that's of to ourselves did et portfolios better I -- we'll where we more some could a sold and ourselves Bismarck cetera. to we portfolios, work Minot, and we that rents, likely, into on think but which older went margins, from kind product a efficient, to opportunistic be portfolio more get like

Gaurav Mehta

Okay.

same-store Cloud you is the growth. in St. provide saw where Can The have market. revenue X those markets and markets? X you're I that seeing negative some on color that second question Denver I have what you were seen on

Mark Decker

talk Yes, Anne, to want do that? about you

Anne Olson

Yes. Good This Yes. Anne. is morning. Sure.

So let's start with Denver.

shutdown fairly So cities saw of Denver, portfolio, assets core. density, coming that our and had and -- it's obviously, pandemic our of there the kind one the larger of slowest with are our within fastest higher given the out

considered projects the entered So are heavy as pressure X be more then downtown we have assets lot in but the there. that lease-up Denver and And concessions, a and assets suburban. pricing with in that in, close would given experiencing many still is we one they of supply pandemic,

also of also those a We is -- in provider short-term only away, have of receivership. at our that leases rental rental. gone short-term had obviously a Denver one assets, to exposure set leases, about And have in XX and our

really our if St. expect that we're Cloud. So year, think rents they have that push Cloud, holding Denver went we're significant down. well so see over lease-over-lease issues, which time, and you St. very last continue you In into flattening But renewals pricing there. we it back our some supplementals, increases see through having would had do in bring and occupancy overall, I to and in working negative to

at of had, this increased as our time by also X" bill-backs. we our year ratio initiative, part We "rise utility last

there. And significant more hit a sewer so for have through St. residents units, because was charges effort expensive got particularly to in the bit optimize cities our that to it our water was they live our an and Cloud hard and revenue. little

there. think I bit so a rolling And is what of we're little that seeing through

pressure students St. seeing also there. with on schools uncertainty university just university, a the heavy it's think So we're population, and there I pricing around is And the Cloud. in so some

little St. about confluence and in education the bit Cloud. pandemic bill-backs, a of with events utility a uncertainty So of the

Operator

from The comes Rob next of Stevenson Janney. question

Rob Stevenson

forward this notices looking September-ish, move-out October trending, guess, the I over into it, and how believe are availability Any or about talk at the reason you to next, for weeks? good point? X much out, can call that early change bad Anne, operations

Anne Olson

think Yes. I don't so.

going steady. think to we're I pretty stay

is to know going to work, happen, We people back are people home their what's are not, going stable don't to back-to-school going or kids be that or going or their working if if of seeing a are not. So uncertain, job right? from if they're lot

see if retention but to leading XX%, not retention do people That was we are but decisions. to rate, make retention So still rates. you it our saw was is looking to rate are ready And quarter XX%. our second yet maybe move higher who above July

on So With did it think July par it I we lot touring resident throughout of been to a expect are and kind into markets a we fall, do still enabled the to operations. little off not level of with offices our are open, where that services. retention in-person change Midwest, in we're bit historically. the see digitally higher going doing taking And has real we're tours, and our much virtual traffic, rates in

people expecting or So don't that starting part in a around, I has to increase a and big traffic normalized kind move drop-off a business. But pretty of our become we're historical either. of are think significant

Rob Stevenson

and And your under to fee you're pressure markets? stream rent the would fees to total fees, it today hold it's stream mean, so XXXX versus these amount remainder and characterize the of Is rent? relative of your as the rent? would -- when sort at not same of look looking how under fee the the able the some you the picture, over out we Okay. how you same characterize of Is in I

Anne Olson

Yes.

We're the the under think amount down looking of -- I at historical. X% our is around pressure. it's same fee stream from

are right? the -- optimization, And some appealing waiving lease them at have fight we people a that of about are financial waiving or fees. we fees. have on fees application have gives been we we're so in rather so look amount. the somewhere, those That's -- some back Instead concession, when with to the or we uncertainty than might revenue break be as large -- And cases waiving fees sometimes, give price something total the of

kind of So move letting people we're on.

the yes, mentioned, I as of is same down and around pressure So X%. under amount it

Rob Stevenson

Okay. capital And then spending? Is what's is Rochester, and up about like City, that the driving that driving Is X% which that? Billings, those the year-to-date and XX%, expense about taxes What's growth same, Rapid in in markets? specifically.

Anne Olson

Yes.

So that our got going there we got of significant renewal, in the we our were pretty expenses expenses. markets down. and and year, controllable But insurance a end in At our are really realized take it's insurance. the last most to noncontrollable of taxes and hit taxes our

we overall saw rate about and that the given taxes increase with so the expense particularly, pretty feel And good very And was big insurance. growth hard taxes. pretty we in hit Rochester

Rob Stevenson

Okay. your last didn't did last years one to what And the or that you Nashville when then ran Mark, for it X last brings this exercise today time? screen ago me. why exercise, today what have you versus whenever versus on radar

Mark Decker

engaged Yes. of a question. to a little it instances, and I process answer an That's there consultant I think our to Denver, of mean see their and were to bit was adjacency third-party great ran kind starting, to -- was somewhat an got then we both When work. when in we a internal of kind get geography. we existing

beachhead So One, market. -- for we best what to believe, wouldn't I we now. now we're critical we've sort be our in X the say have, we reasons. Near-West looking or at of And that there mass as view Denver, we but completed Midwest Nashville

going just Twin Nashville attractive some in won't Cities. growth Denver, the characteristics. so going keep in -- And has we'll keep And we'll we very

bunch dimension on, a them up in out ranked were Every every We markets. top. every XX -- on of way of way. on it at ways, we Nashville looked kind came we focused that and whole not So top came

Rob Stevenson

products -- as other of given own that NFL that well to would you looking characterize of relative of -- and Minneapolis would there market and terms to as you would How I been the that announcement. competition how want pricing depth in assume And Denver? characterize cities the you've you your

Mark Decker

X/X to is I same the of Minneapolis, Denver interesting Xx is does as the mean Nashville of Yes. tend the volume. and X size. about, the -- is about thing. Both to an it smaller have And little about market. we've Denver It's thinner. are a kind size, a talked volume just but it's

there merchant to seem lot a the thematically, a volume, those should believe less whole we Denver, And Twin although a me, and of just the didn't that spend I including is Cities mean, to work secret. aside amount demand there's secret, Nashville going a work, of lot York assets in Pricing-wise, of that so was favor. elsewhere. priced least at huge I all do there's a activity rent mean, we capital is for control, which the kind pretty there as our of the as New the factors market much in play capital similarly -- Nashville, there had lot is at there's setting of or of to going we we pandemic, around regulations people do because which wasn't did to market, weren't data

I anyone think, doing So who's identify Nashville as will work markets, on play. a strong

early that Denver. So to be what who tough. of guys they're of going yes, they're in to in group We are growth, to is were you XXX mean something get in you I oh, saying Denver, about really that's about when time. have the who's it, went done still the buy I people be think believe some they can still value in very you're it's and of And and we number should cash that. I both over flows of And going to talking pricing remember they're we those form meetings, And Denver. like, like competitive, obviously, going felt broker our it. like, XXX now

so market Having by chosen kind I opportunity a at of really we've to focused said expand mean, be XX%. time. does set one And that, our this on

it's opportunity good expensive. be is to going But And bit It's going short smaller. of to version little competitive. So that's look at a us values. the kind relative be for a exciting and to

Rob Stevenson

all Or loan-to-own the of the have are table, you opportunities? or those type at a market entering options JV that of looking or taken off mezz any whether nature? it that for of you a And anything be

Mark Decker

would on Yes. table. And say is the everything I

Operator

from Alex comes Baird. question Kubicek of next The

Alex Kubicek

sitting want questions. It's would more you're for how kind today asset but I to to Nashville ahead quick deploy market? like comfortable a longer-term a guys, with market comfortable opportunity Rob's follow-up to looking, where just before the on entering know need Is the time quite one you opportunity feel you while? get on you still of a to for set much this at that wide have them a guys a of set if are you Or go aggressive front? and you capital

Mark Decker

a got measured. call portfolio you But if your me. in pocket, Alex, look, I be think we'll

most think, thematically cash your to cash-flowing well-trafficked. lease-up. is I would your is the have we're the months, February. if mean the price always seller area leverage a the a they case, you gone in are market over greater have than last in strong, that's in as take so rate. is in is where lower a let's but the to at is asset, that bid find of say, that willing were thinnest down, imagine opportunities probably seen kind mortgage forward these deals trying Because that's flows will best world I what expecting, price I very a January we've rate's the or be gone the down

have to think harder can said, NAV decision could mean all-cash where of lease-up sort is we a So about, that over we next but good obviously I FFO, your is really time. something are differentiate those to XX-month buyer of be the kind in XX- as ourselves area that an on which space.

expect we've now X That's would all. would one-off done Denver, at look see In we'll what -- unfold. So you deals. I

continue buy we that and Denver to the raise we did things I sell is of that Denver, think difference into helps flow. what that's And side. make which Obviously, do, same, spread we stay dilutive. can it equity, know, work it years whole has would as into a we sense. primary didn't we there's that. to we things the our to to per-share in on now Or to a basis, we to us do the the a went would it's mean went I company to go on we had you and we how bunch But market we the and grow are when here, X how really potentially to costs. like into positive have do, between tool And anything. ago helps if went do has Denver. circumstances can It

Alex Kubicek

an Anne, Yes. line. looking been maintenance at has color and repairs That's expense there. operations, really helpful

You Can in themselves? guys you seen that there's this on repairs the of any kind ton apartments the deferred pieces have to worry that through savings? spend time their is year. of numbers through the are done willing there eventually savings in moving more have a walk people maintenance as And come will driving some units their and more

Anne Olson

Yes.

really I a things. of is the lot retention. think lower there One savings what's driving as X is turn costs we have higher

off-site expensive normal. people really those or really what really a spend And that ways of additional savings the for but we haven't some more lot we is work yet But to work we offset trend more we on some work little that any forced typical. to time, be by costs. than might maintenance seeing as -- and are So in of And bit orders found were -- than less second, then turn teams long time were a differently. our that was a seen

and we're events, and events So resident aren't require food that and resident of entertainment aren't in-person -- sorts events of all happening. still weren't just instead for in-person that and months virtual things having happening resident

the place working adapt be want the can build say really OpEx future biggest the a in the trying where really ways to as those of of we the people new would do So live. as is is turn to have to what I we're many still while it into But driver trying savings of costs. community and

Alex Kubicek

help helpful. bad then How for you guys' I And would far debt. collectability into you guys quick pretty appreciated. kind one was be hoping any a debt done do me. like thus from your one have people you paid more that philosophy. job good greatly here? could John, looks bad judge share haven't It attributing Just That's of just of

John Kirchmann

Alex. Sure,

that We pretty policy regard. in a have easy

So balance anything the of end of that, an the has that AR we XXX%. month, at reserve

So anything month our bad that essentially didn't that is debt we we build collect.

Operator

Sullivan question next comes of The BTIG. from Jim

Jim Sullivan

controllable related maybe margin? part aggressive for the by about Or great you and a made, some "rise of expenses. spending, that achieving job question X?" you're think you've know comp to curious, have the I year-over-year. on do A you in about you more of X," the whether to strategy but just progress accelerate going "rise Obviously, is expanding And a as post-COVID, that at I'm the the of as operating of your it RM timing terms by target think

Anne Olson

going I to is think our the same. remain target

we've the, call, done And low-hanging really us, lot also what program. of really including in some and and initiatives I is value-add fruit items. by some are significant to needs our changing front we of be but of So a pretty technology have the to connected the heavy-lift of X" part would "rise

value-add bit to extent might that a be to an portfolio's soften slower. the our opportunity see that as big look So we at the a opportunities, continues -- there little we market or don't

large who portfolios our and through. to run with operating true little bit front it some As bit may have have of a be if we us markets. take Mark the a or what their time or off -- But well indicated, in of have position going to is prune really time-consuming CapEx inefficient within able to accelerate we on lower side, sales some we that margins our opportunistic assets little can to

in. X track we're I and right X our years on So years, with think we're

Jim Sullivan

Okay.

comments, program whether a Second follow low-hanging is, cited you impressive. the point, is wanted again, comment I have in return prepared you guess the your on And pretty just -- which I achieved, that I question of about the the have return is fruit. up value-add In product low-hanging fruit. to whether your partly

value-add think The first program Or think you or in the that to assets as upside. maintain were or to ROI with markets of most be program? you you're going two, number value-add saw going able the do spend forward, where level in we

Mark Decker

the really that's certainly and years. last Yes. specific is to specific X been we X mean And weren't I think the play a great the first Mark. this properties. Jim, for or game. I submarkets I value-add mean it's about ones

think and really what -- potential is project success. on be where them lot we're to mean forward have based success well chance and markets in prioritize upgraded, we where go I properties that with. we really we that we So which of of where of thought terms in chose could the best markets having a we the had we

I continue so hit, we'll to don't opportunities. we'll returns the think just stop. And if have those And

these of which turn. generally add with exception do think a like really value, doing so the -- we're lot And we're of the on we things clubhouses,

do have we ability to up to you I mean, back. So pretty throttle want or to at a Anne, good that all? add

Anne Olson

of XX.X% mentioned there north Yes. our expectation is unit just on XX%. the is say, our our I expectation so renovation, on I unit the would full renovations,

continue in So to I we do think that we that to how want and are use. opportunities, we'll and expectations identify what best high return our the for capital put

Jim Sullivan

for X programmed being are quarters? many units Could you of remind us, how kind next over the the value-add just Anne,

Anne Olson

a XXX. That's close question. to Probably good

Jim Sullivan

Okay. comfortable question was access where And your capital in to rating equity talking in I with your have of me. update for price if respect. rating. then able obviously, terms could equity enhances into think, Maybe position share agencies just us doing on you at markets Very good. fair that investment-grade it Obviously, the about pricing, with so. And final tapped being you thoughts

Mark Decker

certainly more -- caution. are guess, We Yes. for and openers, we I focused on certainly safety

for and weather to be on side. want So to I that opportunistic putting we bad mean, the we're because prepared we on acquisition want cash be

think have we'll until to will several be, which and quarters I'm we with relates we discussions, now. an to. to it again, if think the respect couldn't bias, run that and today, index-eligible deal As I bond $XXX IG But towards say, from can of which is safety is we our wanted to that continue outstanding sure, current we I liquidity would the leaner total debt to million, XX% -- get

true. that's small, So on relative we're tell us the rating agencies and basis, a

trying about, our as private near for we're with term, in we've deal. are one of has And partnership buyer we talked work. Prudential, been They we they're underwriting. on the and of which context to desktop buyers beyond and largest groups September maintaining estate a the think focused placements. a a year last of a kind that ratings with agencies, is lot relationship private focused placement Bloomberg discussion that's in largest product Where of an IG-rated of of the ability market. are or the or great expanding use few was the I to the and to real one of on not So deal did And the of very get too specifically really that does

with be broaden So to to work time. in to would to like do it's over market great them. access continue that that We

which investment-grade-like so that to well And on we've positioned on we metrics. doing, called what do provided we've it, think been to, doing I is hold keep we're as today,

So increasing to and the sit a investment-grade. can as be ultimately, larger. the in going spot quality a they That's of factor maintaining to metrics we'd go or where love getting be today we of

the for Sorry long-winded answer.

Jim Sullivan

final-final could No. In context having a quarters. us next that maybe the of and particularly the where you to comments stalling about the be Okay. to likely kind That's of are may in if one development me. you or in question And for okay. X conversation out or go for give market the -- deals X concessions about problems, Denver just think sense over that

Mark Decker

I reasonably now. to I listen, I I they're heavy. Yes. add that's COVID going right think don't stay want but going mean transcripts in, to the to supply. I and whammy reports. you say our read -- jump and Anne to most concession-heavy to I other all affected of I think when to sort mean mean they're double know, do Anne, I'll would -- ask we we of that? it's mean listen market, these I

Anne Olson

we're projects their X that leasing. X to Yes. the there I mean out from seeing months need lease-up to already that and in finish were

know just won't stayed to as And end many be there any stable. don't season I where in given, the that but... gets relatively occupancy leasing heavier I has we're of coming market if So think, that around, people moving

Mark Decker

Yes.

things there lot we people I of there a that, facilitating costs define thing be that the a continue, in happening long-term I would are add that's somewhere, that that. but which as because to people true foothills So cost in continue. and is Jim, that's I the a and of happening do do and market jobs frictional to believe today, I their they and for in there there. Denver, mountains, and in moving commuting companies think, of everything time frictional trend believe is world to given and we live are which And because about like like move place other will being the lot that's your if important you think I and what's or what of today, those of taxes And really people in strength, that living the really going would they think can lower do accelerates can want will there, to also

Operator

The Santos next Daniel question of from Piper comes Sandler.

Daniel Santos

through for portfolio? or that questions just university classes, on the given us rates been -- you Cloud, is reopen have to that market about on the academic next the of university of And but the year? across will could on-campus then give Most some fair the specifically you're pushing thinking comments versus from answered, universities lag comments on say if some thoughts St. how students, the high-level some occupancy pressure it doesn't

Anne Olson

good Cloud. we gone students will students people back. high from as vacancy be while going the as with in creates other That's believe, gives in We -- a percentage I'll projects don't question. the which the of really students of other right options. St. though a appears our start being have now, the it market, buildings, And

rent and have to occupancy feel then occupancy, this our you they're fine balance come to a to optimize bit. really going mean, rents. is I we that optimistic with to grow going I occupancy, that little the job you every So there to And some we're be we think back day. is a the can revenue. the that able push And walk and once And respect

the at high a to so we that keeping the push of opportunity. we pricing would heavily be So good on position the in had when pandemic focused beginning we occupancy the

seeing our assets. now We of at that are opportunity some

July. As I lease rates up new noted, in were our X.X%

leases months, whereas indicator. good And renewals that's was So go our and -- most those are of a within signed the lag. that same effective

So XX renewal effective, is ago. priced pricing it XX to days the was but

portfolio keep for So particularly still front when I positioned second probably to that about we're XX% starts. well we into opportunity us, months. of above pretty that traffic we sure leasing lower year order our we in to go do flat feel and think going expirations occupied to as We really would but like think next quarter months, some the in there's good be make the lower

to think of at to going post-COVID the our test real is opportunity first leasing be pricing I season be will that's next the beginning what year.

Operator

of Horne comes The next question James. from Buck Raymond

Buck Horne

go couple accounting just to back I a ones bad policy, to I quick Just of to sure understood to clarify. that. want debt the make

reserved, exactly? or of But past there ways work they've So is or How though even some AR been deposits you deposits? security are there's everything net an reserve does other past balance that balances those X is that or to reserved recover -- the month. --

John Kirchmann

Yes.

who residing they But occupying Anne, out, debt applied. by the residents deposit can't if can at would excludes The be our be middle deposits. the for the know, the the access they security the move was. anything reserve be move resident you So security would what there. considered currently else if in of When the a are add? security reserve in triggered not bad units. So That deposit had out. all when to that's I don't provision, question it's you

Anne Olson

the is amount truly owed. It Yes.

Buck Horne

sense? you of a Does with but where recover -- could the So theoretically, possibly deposit? reserve reverse that recoverability okay, make could you that's reserved, point that there's

John Kirchmann

That's Yes. right.

Buck Horne

Okay.

secondary by you Or do, raise? you advance about Nashville, powder in raising on a dry here And then be an of guys usage announced think probably if the anything structured for other in consider raise entering ATM mean, still Okay. equity issuance to of some Or a do just that from ATM, ATM one, the capital accompanied how more Nashville? thinking equity versus would something about in do would you typical Nashville? the more I in

Mark Decker

right now in of relative our firepower lot of a of size just to mean certainly have terms cash the enterprise. Yes. I we

again, with use tell of proceeds, that I been we little the would I towards in say people advance, over to flipped overall about seeking hand, prepared have So would buy, in advance. of little a past it, raise if the couple protecting years the think has leverage, liquidity. bit is, needed, answer get be yes, our on bit match a sale we raise our M.O. leverage-neutral. of back it kind capital, opportunities, to mean I cash

mean that. do running to continue I we'll in our cash balance, right of judgment. we're So our now kind terms rich in of

and in advance. And do that, so we continue would raise we would to

to a us felt follow-on, mean to we find from cost have that's way would get spending to to a had think those I of As it who the made I but do own get time like absolutely we a way that size today, weigh the the balance. well. like folks we with the is pricing and as together work we stock not those sense, stock for prospects. Obviously, There's the would We a we would to that. that. X institutions who a the we attract relates to lot and in if a to traditional be own feedback we volume, are people with would because don't directionally, big love consider that, things

Operator

like no Showing Mark back this to turn question-and-answer session. remarks. the questions, Instructions] any to further Decker for closing would over I conference our concludes [Operator

Mark Decker

We everybody. stay safe. Super. Thanks, be your Thanks, Alyssa. and appreciate IRET, interest in well and

Operator

now you for presentation. The concluded. conference has today's Thank attending

now You may disconnect.

Centerspace (CSR) 6 Aug 202020 Q2 Earnings call transcript