IRET - Earnings call transcript Q3 2020

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Operator

[00:00:04] Good morning and welcome to the IRET’s third quarter Twenty twenty earnings call, all participants will be in. Listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions, to ask a question.

You may press star, then one on your touchtone phone to withdraw your question, please. two. then star, Press event recorded. this is note being Please I to Mark President like to Decker. conference over turn the and would now CEO of IRS, Please go ahead.

Mark Decker

for everyone. form. after morning, file market the you the Good yesterday third [XX:XX:XX] closed. quarter Priority Thank this

views include disclosure important release our posted today's to A.R.T. dot note supplemental at on filed will have com and been that Additionally, are our assumptions business and current outlook impact the based looking our twenty pandemic. in Form package that earnings Apartments in other to related website covid-XX potential X-K. and on remarks It's and on assumptions twenty, forward statements the of views results the our management's including to

be focused seeking geography at consistent and are and of strong to point. reasonable home for our experience today's for been pandemic, materially report results SEC me our fortunate Our and our of for that in release job thank non like the incredible discussed efforts than ride, factors, the gap a different a but undertaken filings wild a cause to information which other CFO. including on who's our we're earnings on our providing base customers, current by Officer, Ann to Twenty team done to has Olson, be to may our make fantastic a line, is I'd great certain refer start Joining And welcoming actual better call. estimates. on day has our to every for Chief John Kirchmann, residents. morning and Please our reconciliations be a [XX:XX:XX] who them and Operating quarterly lists could our our twenty customer any our price the team certainly those related this

possible. continues to as rental resilient push business rates and maintain prove we occupancy when Our

the volatility of portfolio. more markets, than in Denver, primary our Our Twin remainder the investment Cities are experiencing

standing still stable providing strong more and thesis play markets of the growth We will as that growth firsthand shutdowns show growing Minneapolis in out amenities, dramatic renters our providing containing witnessed on and effects expect outsized while migration our that seeking the also largest Denver with from urban social of combined cities. Denver indications progresses, the U.S. seeing early employment unrest are We've covid Minneapolis some recovery core. and urban having pat, is

Our the are energy of assets our year, the Denver, Cities roughly next over of core in the Twin overall in hampering comprising percent XX the portfolios. performance five those of

suburban points balanced our in that portfolio and weighted Denver three Cities is new suburbs percent are seventy where across revenue of occupancy one the Montana, gains increased rates chief in hundred quarter. Nebraska For of a eight markets, the example, has our Twin markets average decrease percent the of economic the performance are the Minneapolis and sixteen point point a we two secondary basis strong our Dakotas. on higher, The downturn versus impact by and lease strong and achieving

multi-family liquidity positioned well and by our achieve a of Our in sold and continue so will we efficient us we price we crisis help operating market purchase, community combination is in active early least we suburban, an Transactionally, Grand assets as diversification, four hundred surprising days deteriorating of have us recovery. keeps strong the this during recession and far there. urban both had With home product everywhere. now four and for sixty economic this been and Forks the [XX:XX:XX] quarter, fundamentals Denver. point the What's and in through product five acquired of efficiencies to scale

was several liquidity. suffered markets tertiary drop disproportionate the a last recession, when the and Over cycles, in there secondary

greater to competition a the our our challenges in percent upwards altered in but from the to We and times happy the and of quarter third on to uncertainty, cap were the with the advantage of economic the a five second we Y, compared opposite prevailing hand continued Minneapolis, forty take We ability on [XX:XX:XX] economics the opportunities. we deploying our the trailing great even occurred the down the twenty also to significantly a We've four in fact, has months in consider to of transaction twenty trends for since XX assets, XX in U.S., able it's As transaction next the down percent maintaining activity sub commitments rewrite sale older Denver, Forks quarter markets that of same this was acquisition, with plans, reversal keeping transaction as [XX:XX:XX] some quarter, Nashville, inception pandemic. had the the the trend where nineteen. ahead. of the percent has years. pre continues last better. face capex Across over and we our the into and months were investment and multi-family pricing, has last and volume keen capacity covid rate XX we percent regulatory monitor achieved meet cash has are associated and a high and where on three opportunities, liquidity, ready the liquid heightened and third opportunities feel invest a dearth twenty expectations. in about position today significant when pricing period difficult In these was of volume of Denver largest somewhat true assets, prepared Twenty overall the notable and the the Grand our eye to the are most we decreased required in our XX on Denver quarter

update. our our operating to the per With However, focused I'd and extending our that, have take us like flexibility remain financial share game our and improving We plan hasn't changed. on increasing metrics markets, strong please to through and exposure liquidity.

Anne Olson

good Mark, and you, Thank morning. [XX:XX:XX]

XX percent losses renewals have increased results, two being we over portfolio continues, points dramatic, compounding. occupancy, leases As been effect stabilize the on quarter, the XX April while lower we since our increase in quarter six than month basis third dampened growth downturn of priced the third able by rents September XXth, pandemic And activity prior believe during the the year price and revenue our during its are Xst. period, of point twenty percent resulting to percent. ending new while leasing period were Despite comparable nineteen. one one not economic

was to point percent. point metric optimize to XX is incorporates our for four four and occupancy per occupancy efforts XX XX our which same-store per as One by we revenues quarter quarter and unit, of ninety of per quarter the this XXXX year. average third led higher XXth, Our third occupancy. XX in compared weighted from to unit closely XXth were track increased basis revenue September as And the rents revenue XXXX September unit per unit

the September second increase in the over to a indicate on rents of our results increase in may of results strong in in of peer Mark and and pandemic hit our renewal our saw the month. occupancy While as enabled of of As increase enabled the October a the saw rest was third our portfolio. story an point four XX one hold quarter Notably, achieve traffic markets, one achieve XX to point harder companies, renewal social preliminary our the we markets our mentioned, renewals percent rents unrest us denser urban the covid [XX:XX:XX] two are drop continue QX. stronger that And basis for as with percent. impact has we due than percent year shutdowns, traffic rents year significant up our points flat and quarter new

year rent the margin less amounts seven challenging residential and taxes dollars portfolio. expected requests did are percent significant and thousand have fourteen revenues point recently, remains and point pressure, of expense. collections or insurance with increase and [XX:XX:XX] We of in October, by point nine deferral markets for percent requests has nineteen. percent opportunity two experienced five spite quarter new two regulation North an deferment eight requests the Year across respectively, twenty management. Billings, optimization of uptick quarter, Cloud remain pandemic a St. deferral points October estate percent in expense in to by We include we in fifty increases revenue. controllable this rates This optimism precautions add offset Minneapolis Well, income and portfolio. point rise real third significant with percent In During impact XXth, one opportunities expected two year total remain compared third costs markets, our to been rents, basis operating ninety deferred to increased across to we realized September rates. wage and optimistic eight point and insurance we gains aggregate our eight has to revenue strong lower in lease of nineteen. the and due of was the Dakota our collected across our strong just has for those a our Collections net to Denver through ninety and related and flat saw industry the growth residential decreased to over twenty in have these revenue XX third infection until a health repaid. In due value of covid covid quarter, eight revenue of the XX date Omaha, be course, about with slight to efforts. one and five Challenges hundred in a twenty thousand remaining percent and increased of see one one only rent date, XXXXX with

to to economic this we due nine monitoring we our and commentary twenty within quarter. believe Despite lagging protocols, new in portfolio been stabilizes unit into renovations will Twenty related uncertainty, we've continued there covid with second be more and communities quarter these traffic reality operations Value-Add As changes opportunities to in one. as directly our manage closely expenses

on underwritten in the return Minneapolis and of XX at an our percent. ninety Minnesota achieving units the I top we XX During unit and mentioned of remaining of effect leasing, comments with compounding with remains would unit located if on the be focus quarter, effects pandemic our Nebraska percent team and the portfolios, we're I one the and know of Omaha didn't our Rochester members. premiums the our renovation located the renovations units in five completed renovated and and our Upon remiss my average market. hundred

our experience. team residents we Our to and to remarkable Well, on entirely commitment our the discuss been team's every day And to right to customer financial our grateful third second quarter, I'm team team I able and together ask of John safety our and resilience the This galvanized coming to sustain by the mission. we during for do quarter. show to almost our overall have thing. the through that dedication results. our continues focused now

John Kirchmann

months the dollars of In period XX within loss current related capital one and for two to three point September September covid-XX was a twenty XX, City during mid fifty for expenses with to the Thank capital same a or of period twenty to XXth, in to five range decreased year. million to prior for I and and of the property hundred CapEx a dollars, lower in September reported to the attributable quarter the same replace loss Last [XX:XX:XX] hundred impacted dollars quarter. Expense prior the XX ending percent events core point months XX five for in decrease nine months reductions into projects reduction full FFO of to quarter Turning to due per period to Twenty directly Approximately expenditures million the dollars, in has store third the open percent million dorje, overall the and to seven administrative a incurred months be Casualty start at and ninety to expected cents for additional four eleven dollars two of term attributed nineteen. thousand weather cents thousand year The decrease the from of Value-Add prior are Twenty unchanged point due the the in of full for twenty [XX:XX:XX] XX million dollars second two we million one Same same five Turning nine the six seventy and compared share, is positions, five to of decrease debt of by dollars dollars months and compared to point management Twenty [XX:XX:XX] and million, in six twenty, dollars point the twenty of in one the Twenty nine Twenty was [XX:XX:XX] damage. portfolio our rate thousand September million same million average due third credit. compared nine impact expected six nine fall a XX to of one balances can the to outlook ended million dollars which as and highlighted is interest dollars delayed FFO quarter of point the four casualty twenty year, hail ended QX in thousand XXXX year. per the Core nine ten quarter with YEAR-TO-DATE. to from the impacted am. thirty over value in point expenditures, point loss prior for of for the roof cents, seven XX these lines the aforementioned our period same nine hundred was was by damage same thousand million, prior related consulting next point primarily spin five the primarily be offset XX, related dollars The expense thousand increase four nine and to quarter in five nineteen dispositions mid quarter's and on QX, dollars night FFO twenty prior period for the of million percent September decreases for by spent four due Gené hundred in dollars dollars, XXXX portfolio two of offset capex percent the million our nine compared hundred fifty the million replacement three million of assets of six months. are up was nineteen. seven core in travel dollars interest. XX, or to of dollars in increased twenty quarter and dollars lost year. three been the Gené for twenty nine period to a dollars supplemental the year. capex seventy the point dollars and hundred by The seven from our per for point the from two share. [XX:XX:XX] expected Twenty point The same to one from date, same-store one compared next twenty expense point increase decrease to an point as six hundred months in decreased is related you, costs adverse page the for lower September quarter replacement by compared loss twenty result to includes of XXXX. XX, to analy fourth Year prior has prior hundred eight or four twenty lower for September twenty period one two dollar to fees on dollars debt one hail compared the hundred three thousand which XXth, with the compensation thousand of conference ninety Rapid maturing two XX percent, to two and nine In and are the a our year. general

price [XX:XX:XX] our two thousand five common House to of thousand the share fifty per million price eight common cents share through at nineteen seven total an dollars cents shares hundred to these average twenty fifty proceeds dollars have and forty seventeen dollars an net and used point three point proceeds help of five the of million. at from program one acquisition. shares we average fund ten and and per were shares proceeds five for date, we for Park ATM of The issued During seventeen quarter, total net hundred year dollars issued

Looking and including as at one unsecured our credit line September thirty two was liquidity under XXth hundred one fifteen our in hundred total sheet, million, our cash. dollars seventeen and million of of and dollars balance available dollars million

three credit. terms the line twenty, had and asset XX, million XX September four allows of of pool This of two As for hundred value Under the analy not Twenty our we asset liquidity. pledged an which total million of representing twenty community of additional apartment pool. forma approximately communities of dollars, unpledged and pro hundred has dollars a that thirty percent are under unencumbered

remainder one. Looking Twenty the twenty of Twenty twenty to and

cover five of multifamily We under our debt construction XXth, believe September development current As Minneapolis. foreseeable [XX:XX:XX] for million million in to markets maturities allowing our community on be Denver dollars we liquidity is and can remaining supplemental. while sufficient and have capital XX at information us mezzanine twenty pursue to and our loans page Nashville. target of Minneapolis, dollars fund Further to thirty our the needs a of seven in of of found our liquidity our opportunities

shutdowns topline the ahead look this we one, Twenty includes Increased economic remaining common all self-insured renewed, well business percent twenty on as a impacts higher increase as the adopted of costs our associated of as which as costs year, your With our dedicated costs and expenses, state covid of our by post evaluate budget potential communities seek of to the measures turn by a potential close continued keep as over higher pressure Cauvin to with our remain our pandemic. catastrophic we having results, covid for estate and leases homes. twenty safe, continued it other operator team who are with including encouraged local our the We and pandemic. as of to QX procedures I result governments questions. will one pre that, expected delayed great twenty activity, facilities by care and the throughout crisis real materials into during our every taxes, of health As we insurance are industry of next the current the estate, work the insurance losses of have navigate replaced headwinds suffered related leasing reflect the will to pandemic providing result mission medical for open the to live members continue continue the caused shortfalls with the XX signed on to day impact the

Operator

[XX:XX:XX] We press may will touchtone session answer now your a on the begin star, ask you to then and question, phone. one question

If you Our keys your speakerphone, question using your question, Press Santos handset today to first are up from to. please Piper with please. pressing the star, then Sandler. [XX:XX:XX] before withdraw pick comes Daniel

Daniel Santos

my taking Minneapolis [XX:XX:XX] are owning, markets Sure, my is I Midwest where your less. good more strategy like to you like long pressures in said, great coastal similar percent, thanks big focus Billings, as for clear. for larger some say but markets over better on is markets. the to and as revenues job Denver, But has will A expand the of some which were questions, seeing pretty cities. up pivoting question. seven the think term key Clearly, one of portfolio picture the first is morning, And case of team is a a done

how more clearly I spots you maintaining you're thinking the to expanding in exposure bright markets, on about smaller markets color could in versus was are us those some So which portfolio. give your wondering if

Mark Decker

markets that kind continues real thanks. income depth and apartment, not be kind be driving No, question. long great ultimately focus flow I term and think our ingredient a good growth. a observable our Listen, continues mean, that's Yeah, have and that the I of is of to secret job cash real to around to or around growth. [XX:XX:XX]

we sure way get submarkets slice of you the I another and So those have that. probably good diversity like surprised more markets might in with that some just and confess, I you larger really is, think, in constraints the I'll have positives the you have to absolutely, positively to markets have markets some some been. But is things where think that identify we been future otherwise like diversity smaller open having we minded in to than supply good where make type surrounding of

changes the we think have I it diversity overall we're So we happy don't our although do. view, certainly

Daniel Santos

helpful. Got that's it. That's [XX:XX:XX]

would occupancy, drivers it's I'm say? you say portfolio my is mix year. that So a spread's been that stability biggest you disruptive What know, The would suburban next portfolio question, of is assuming what collections, has relatively your ratio. is the throughout affordability people urban rent that whether your stable been renewal pretty has most

Mark Decker

it think I is by Yeah, market both of and my and my urban. view, [XX:XX:XX] the in mix suburban

So you've those a in suburban it fully and meetings [XX:XX:XX] version when, developed being markets. secondary talked by been talked has sort performed how where Minneapolis' urban us you add feels I about around these is of know, of B, tertiary obviously, thesis and to some most and And like know our and we want lifted investor know. portfolio really and of But have investment and we've lot don't I the you something? to well. and but definitely our A

Anne Olson

Yeah. [XX:XX:XX]

clear around throughout point. peers, really you more and the I compared great we less regulation public on that's economies the a Midwest. the to us is drivers open think one covid our which know, Yeah, big benefited and is the of commented pretty have precautions

Daniel Santos

Got That's it the for [XX:XX:XX] me, it. congrats on quarter.

Mark Decker

Thanks. [XX:XX:XX]

Operator

securities. next question Gaurav national from [XX:XX:XX] comes Mehta with Our

Gaurav Mehta

morning. Good Thanks. [XX:XX:XX]

about stabilize that decline weakness? markets you seeing and eight version, urban for some was are upon did two You it maybe and point you're the you the markets a how to your month on that you should seven month to trends your see of the in five or basis see touch new point at range talked hoping percent. I in urban percent different

Mark Decker

[XX:XX:XX] Monegros, weigh you?

Anne Olson

side. know, morning, the to month trends, good do really watch question. We you closely, on and Yeah, the good [XX:XX:XX] renewal month particularly

the across we're a portfolio trend seeing renewals. think in stronger I

one at September. You four percent in know, were we point

we urban show percent When up little know, those pretty kind at has know, you of hit markets, in consistent the a bit two you on the numbers markets, October we're renewals. been more where look down preliminary Our consistently.

[XX:XX:XX] seeing the not shows yet out trend much we're back of of we new lease our Denver, that up markets, than in markets but the we're those that that, growth So more Besides way on down negative are of suburban in yet. nothing Minneapolis. in out a

Mark Decker

Yeah, [XX:XX:XX] we now, a we I as mean, portfolio, we right with but markets stabilizing but. are feel some improving like

Anne Olson

definitely we're urban a don't renewals both improvement, Yeah, and [XX:XX:XX] trend the line on the back improvement we rents in seeing think new particularly to to lease trend on if have the those we start suburban markets. not. it's markets, say But up going yet or picking

Gaurav Mehta

the Ok, us in mix suburban what's the some between remind portfolio women [XX:XX:XX] can you portfolio?

Mark Decker

we the assets our. about have XX that of are comprise urban Yeah, [XX:XX:XX] that five percent really

forward a look you on basis. go If

in and Cities three Twin in So the Denver. two

Gaurav Mehta

and profile having who in in Mark transacting buyers about, than transaction that talked talk prepared Is know, people about market? sellers transacting the remarks, [XX:XX:XX] volume the people your of the Ok, are are for the that kind any were they you market? sector. your different being Maybe you within have? down What multifamily it

Mark Decker

volume. think them live reflected obviously, big outside and transaction the and the I there I that participants most Yeah, think seeing lots I we're [XX:XX:XX] public for mean, a multis, in markets and of are of market of the

at do probably we saw of seeing might it [XX:XX:XX] sectors. We're looking you groups before. multifamily who it's varying ran you so otherwise. fund January, know, opportunity you in marginal bidding you there's of So a know, multi the in the I find pool if the anything, actively because you a maybe So, I been same you add had speak? other an ran the were of your what's investor But than be in were just probably more there's you didn't do room, in conviction. who, to terms that. in say but and fund, other it's levels in you sectors we there's ability do definitely you in to considering mean, who's if the to happening light might

approach investment loose. shake you people's person to there groups say don't the things So other We still to some trying plus the this at want I group things But, committee are know, few it's extras. but. I talk summer instances anything. would opposite we think a first were arms, really any most into some took found active it's their the We be about same chased to actually who and in

Gaurav Mehta

thanks, Greg. Ok, [XX:XX:XX]

Operator

Stevenson [XX:XX:XX] question comes next from Danny. Our Rob with

Rob Stevenson

guys. ahead are the Good have guys And are next especially buyers. XX one dispositions for there's a how year how Mark, assets morning, few over thinking [XX:XX:XX] dispositions much to you your few about thirty over push end? if of the months, XX years been last XX, one

Mark Decker

Yeah, the now be always be opportunistic, it has portfolio answer in we'll everything we buy [XX:XX:XX] would the price. is a mean, I

call from bottom, add But right? general, we're always mean, assets, And so to of but They the I we ten those if there. get And top, in buyers, have what thirty so. someone, we two can find prices all. trying one so to the aren't all terms to the require exuberance sold, in Yeah.

Rochester. ago, hundred a The Venta years XX assets two bucks balance, and over worth ten to is buyers. some is XX, in So a two of we couple about buyer non to of six probably which thirty million one all million small sold

Rob Stevenson

[XX:XX:XX] Ok, you so it's not big impact, guys.

Anne Olson

of small found and were were Yes, bidding XX, stop [XX:XX:XX] would to the to just who or you a couple a institutions one part we ourselves it XX, but, of used XX someone funds equity know, lost when one, pool against or larger fires we their strategy private wasn't but XX using virus where XX have be raising XX may we pricing, down buyers of wouldn't summer their that price.

Mark Decker

not you Hey, of out closed. it going to in found the person after realm we And [XX:XX:XX] know, that was reasonableness. stop

So you I good stopping, guess. for for

Rob Stevenson

know, guys the [XX:XX:XX] about that be put over spending you how Do thinking and do returns twenty may returns near the able you the to are rates in today last trending you Ok. And term be, up. vacancy are recent on want? few returns you How spend? that the given can hold, you you you wherever on redevelopment that now been get it anticipation you Twenty thinking about one anyway while and months, how to not the able guys that those do jump will

Mark Decker

[XX:XX:XX] provided know, we're to we have to I and mean, the a our Yeah, returns. down continue up I enough to mean, little restrained But, we turnover. continue hit projects you make active investments those can plan our that is obviously bit, by they throttle

Anne Olson

to beginning the I we Yeah, know, there's premiums an see the were research make covid, we hold say, And risk. a to would if [XX:XX:XX] market need particularly do of been obviously, we or you think, to Because careful, up? investment, to what very time every whether do we And we've our going still markets for our constraints at the stop? found, renovated what is wanted where there it's we there's product. for a for of not it supply a occupancy and products there's particularly is we and that what that in is high, demand some of lot demand what last are lot and of

of same So, you continued we on the plan. know, kind

not is compared example, a in we and market at good we'll for this the you to and, rental hit you of some about know, know, of supply. size our overall you portfolio, the the of estimated have When noted, [XX:XX:XX] really I we for to some year spend add lot head and think renovations fairly the That I look market Rochester. large going a value that feel opportunities. new

up a really a you know, we're some kind you we have seeing, draft So And going with compete product. would have buildings of good gotten behind not with new opportunity renovated while the to they ton that of that. supply, know, new

we comp we with good market it So side know, want we being to careful the and and, pockets that get you down. we do think some that that the rent the justify have still sure that in to compete premiums We're spend. make will the very opportunity of chase can that would

Rob Stevenson

third more [XX:XX:XX] Ok, of in of second things in guys the lease quarter been terms and you then successful and into rolling where then have leases your quarter first you I your pushing the little fourth and how be challenging? quarters? and guys a what percentage bit mean, may now the expirations

Anne Olson

[XX:XX:XX] Yeah.

and quarter, second of third beginning XX the since our know, percent roll. you the in leases So, of

that. So we feel pretty good about

leases this means eight the You that our fourth the and that twenty quarter. percent or during we and in covid know, in first now price in have of XX only third have percent that instance,

constantly more So, you QX are pattern it in October higher this to year traffic traffic patterns. is we October in take traffic match last very as traffic our what [XX:XX:XX] know, we're traffic That'll higher a little given the bit than off we and in was pretty seeing well. We good. QX. think exposure saw significantly, higher see in And I Obviously, tweaking time. little

next the in you pretty that where But leases bring done of may hopefully we that be We're months feel the the trying going move. should confident that the year want that profile we So, side. as never to to as with economic and about head market will moves. third amount second recovery on know into expiration opportunity and and summer the to quarter be it a identify the exactly better

Rob Stevenson

me. incremental for deterioration was. October, one September last seeing then condition in and Any market Ok, been markets and where [XX:XX:XX] you've

Mark Decker

theme that, our that's know, rental to you we're and we're probably I power you a [XX:XX:XX] now. keeping you we is little know, the staying we I pricing better. when hindsight, we economic get things the stifled that do focused Cities But, staying full roll over know, just really, everyone think really we're you for portfolio some I getting came and probably we [XX:XX:XX] so can I so, growth on suggested kind when when for increases in that's and [XX:XX:XX] there. didn't in the prevalent And don't where Denver. Twin the certain core versus know, in revenue of about. think we're need think theme, it first probably, we most in mean, just Suburban I flat

Rob Stevenson

[XX:XX:XX] Ok, thanks, guys. Appreciate it.

Mark Decker

[XX:XX:XX] Thanks, Rob.

Operator

Our [XX:XX:XX] comes John question Markets. Kim next with BMO from Capital

John Kim

morning. Good Thanks. [XX:XX:XX]

social due XX safety new other police You urban discussion unrest think defending mentioned factors? to think in urban your guys leases and an you the I percent is the guess, this of concerns quoted people I decline the and with to of new How economic Minneapolis, cities versus, much do markets, core looking in a flee you supply in core. or

Mark Decker

[XX:XX:XX] thanks. John, wanted I

yard of our been the office. river. issue, someone the the issue, you used mostly and just headlines to and has called in which north. and about just in of city the now, and I Minneapolis walk which definitely go the XX the the will really know, derivative, when really to you've we one the into is killer stole got you I it's and the kind those get covid. be mean, can apartment than obviously restaurants thing exacerbates you hundred living to but. a I you place [XX:XX:XX] now want think the and [XX:XX:XX] and to more walk And We've on back and me second bars items, to things first all the think think You freight you're I your covid walk know, the vacancy it's at safety bars improve bike. which you're of I to can restaurants just to people

can't you the positive marginal your not your because things to there your to you go you sports not. or So, of know, input went is any

I hey, a know, in cities it's back in and we're other corporate we the an say makes issue Target So, if or And in have the obviously it all and the city we in users office. large But because back, safer said, tomorrow to us the and big it's therapeutic you everyone office the feel if if would have, coming say America. whatever would we for a general North I issue certainly were here. it's

pretty lot I think of turn would a quickly. that

John Kim

new just park? relatively leasing in I [XX:XX:XX] assets what many you're you Ok, including Denver. markets, and comment building. the rates been cap Nasdaq think on was discussion strategy rate cap that you purchased there's of it's on is the because a compressed Can

Mark Decker

historically bought going quarter our we've hopefully [XX:XX:XX] year and to basis will trough that in a roughly Yeah, that's so given we judgment, Obviously cap, be so number. MARSAT on four our ranges. in a four twenty points five

will we they've affected rent no by first two in underwrote So growth lowest, so The year and flow in been and of three. really months our hopefully growth certainly XX rent be. covid, cash year one modest and

gotten in conservative, there. to mean, the but for anything So Xs, to trade in trying we sure, haven't pencil are things we I mid looking Nashville, so seeing be

I not say isn't suggest and it's come clear lowered I'd cap that in. for that it return that we've on case would yeah, that certainly mindful definitely the everyone cash to should have It's are So, be expectations. flows. us rates me term our long

high before. you're those when if hundred that it's there. have they some you XX timeline a you sell those think know, now, two take in it's that you out of And something or dollar helps kind I you big as to and or together many, can probably returns lot to push elsewhere, market if some year year billion goes time regulatory make a to mind, than and when five obviously you or and your are California, factor compress markets the a XX marginal New like York Denver dollar, of hard buy to that it. of a you deemphasizes in would out, have know, I you and a volume Right also are So have which, into in risk, you look marginal know, it if billion total buy know, of rates of of markets guess investment in and volume. three looking sense of something. dollars. [XX:XX:XX] years, and And appealing with You a markets it that you, that eighty one And you of fact, Nashville these it's might you the case that more know, leaves market is in then another

of bunch So I've same read things. a the

definitely wrote, of them rates you some the commentary of cap agree would have come but fact, lot In with a maybe I in.

John Kim

if to in willing are Nashville the [XX:XX:XX] pivot remains or Are you expansion market? another Xs pricing you to a buyer in

Mark Decker

with a as accretive don't outyear it's of But a dilution of kinds we're strong general, in the buyer long modest in as boardroom mean, happy in our when you you the believer lot count and have asset, if we about could long really guess a come are I those possibly agreement I and term some [XX:XX:XX] growth. ideas. we we on feel

do on on focused we're flow how share that. cash we So growth per and

about Nashville. Denver things that Cities, the I've our mean, and Denver, hunting before, that in one of talked the percent we've Twin about really having opened liked world, XX because were is Cities we now So, our it's in in set up really previously I Nashville mostly it opportunity, as Twin

have just to market be don't believe consider So I us some to see. open have perspective. But, know, if to not I it guess that'll happen. But term, better [XX:XX:XX] gives us, long we'll that that you continued to we

John Kim

rate you question occupancy rate, and point percent for could provided the I think And well update but [XX:XX:XX] up also the as was as two update far a October is, wondering as one new collection I me you an provide on as if lease growth. renewals an

Anne Olson

eight. end sorry, the these [XX:XX:XX] getting XX And because a four. of numbers Ninety are look were our I'm Yes, things are the in October in they our occupancy new and rates like leases entered, just about. weighted sir. is but today month to days know, at preliminary [XX:XX:XX] average October, of still we're, our Nine. you couple lease new

only And That's new about sorry down October. leases of decrease. So that. bit one [XX:XX:XX] seeing XXX our on percent. a were we're lease still for I'm little are rates one Sorry. a point about

a not volume, talked as it's huge earlier. we about So

You months. know, is winter our expiration lower profile much in these

John Kim

sure [XX:XX:XX] XX, make you XX. get So

Anne Olson

and XX sorry. Yeah, [XX:XX:XX] I'm

John Kim

[XX:XX:XX] that's weighted and. average Month Ford And for at October

John Kirchmann

That's weighted same store. [XX:XX:XX] average, for tax

John Kim

John. [XX:XX:XX] Ok, you. Thanks, thank

Operator

Amanda [XX:XX:XX] Our next question comes with Baird. from Sweitzer

Amanda Sweitzer

Good morning. [XX:XX:XX] Thanks.

markets, be Just those avoiding following And in thinking all your of market, at changed of earlier your made guys course then where target the with within from apart supply? see transaction has you have in want up market? urban pockets a of started on some terms you discovery the comments you any to about to price higher target

Mark Decker

asset story St. can building. you rough an that Yes, a it. was Amanda. downtown that, you summer. be I It We an [XX:XX:XX] There for roughly. Yes. last sale was, there. was of of [XX:XX:XX] I know, know, nice mean, in you rumored to old sale activity morning, rehab It give liked for good really Paul recent was

dollars I market. been a come like the to call put around would million door. forty know, if don't bucks. something but summer the has believe hundred which under It XX I tag it's know have I last was price it million, you agreement, five talk two think, been was price

unique some So interesting, asset because well below office a aspects The converted physical it's replacement has building. cost.

nice to So so Wisconsin there they're employers like. office four other you major a know, maybe things is, labs people's on a downtown took on know, who more little. space or perspective commercial just to apartment folks And seeing is then residence a property as from are the know, cabin certainly a well. the out there's lot activity living [XX:XX:XX] commercial, point of are going in in an our lived in apartment, as you a some do of eco own going we're and and of Pockets are what and our days changed great lots and primary be there. and has worked five their you with had But lot a great might than you some Paul of market lot St. now to, week they

[XX:XX:XX] I looked they're you that we doesn't [XX:XX:XX] And feel lot assumptions. not the pricing that So, at then, at And we there's with we now on when reasonable pretty [XX:XX:XX] of But back, again. until Paul, activity kind at So of because of in which living expect there's look they'll mid XX it with six million those range, just not just you know, a just asset. to high city. of a dollar when it's downtown be when great know, St. priced really seven, betting unleveraged us right not. you're employers some IRR lot in come

there's a less because premium time theme aren't we're own things area to you people about for if the things again, pay we excited all available. already less into you buy a the downtown to hard in people are downtown So, pay and there living premium seeing know, where a the the just live ourselves convincing having we're

premium You doesn't know, the of a lot make sense.

small, mean, I looked and where I for post. one instance, we we covid it tell pretty you, at that's So, can

need I from out. are sell. that know, they're really they that a run owner a owners doesn't need you know, property. to spot thing a probably If did they mean, you directionally, later. think in sell don't do And turning most to could sell. gone and job they've hitting where that I they to into mean, do, owner to a home that to hold better put the if but And money because only good have they good going I double. a they

Amanda Sweitzer

no can capital, ATM. [XX:XX:XX] That think the think may issuing additional equity like be about as you just you stack between anecdote acquisition, then you how Amanda, selling or and the rank the helpful stack, of via helpful, sources assets covering sheet about balance up, day

Mark Decker

or maintaining [XX:XX:XX] So to certainly rank, power. you leverage today, if and would maintain we're is on key [XX:XX:XX] sales be between on comfortable, where dispassionate of Yeah, sort doing we ATM things have we we up focusing access market, stack know, we're which the to capital of say our focused again, that today levering the per we of private earnings to we're I'd extend best with or lowest kind the raises, want and it. not one or share placement access uncomfortable our are

So that's that's a governor in you our mind. know, big

John Kirchmann

on park think I to transact market. forty inefficient acquisition pretty we're in We a on Amanda, Shed ATM. and that million I excellent know, you great to type the some a assets is just model then and of for Yeah, house like pricing million good [XX:XX:XX] assets for XX the would we do. [XX:XX:XX] the dollar close for million, add, raised to a XX about five able hundred

Amanda Sweitzer

makes [XX:XX:XX] the for Thanks sense. That time.

Mark Decker

Thanks, Amanda. [XX:XX:XX]

Operator

Jim Sullivan with comes question next BTG. from Our [XX:XX:XX]

Jim Sullivan

[XX:XX:XX] thanks. Yeah,

program say question the get that, on expanding for across six little markets sometimes know, over tightening properties you you happening and, curious quarters. what's about I'm given is bit just the with know, scope you what finish know, talked might value you, line and tough next, like, a eight and a to you the first in you for Just to the earlier the Cafritz

you're the ambitious that think targets. pretty he about you know, you underwriting. are the were careful And, I used word

so what You've you far. hit have done it

given, to the know, maybe what of you acquisitions? scope kind increase priced is for of there So that, lack you attractively you know,

Anne Olson

great and are underwriting budget a question where an about about we're [XX:XX:XX] they're they that's they our where at lot value get. we what managers part that's process they within we talk that add looking with It's you our one think know, projects actively rent what community thinking each important think hearing, that more regional a could much and portfolio. more of Yeah, our and opportunities, how see year where they I

nicer every those kitchen and I want are are. go day interacting hearing, know, who with know, the or, ones your prospects didn't the like they're a well, to you a building better with know, you what amenities clubhouse I to You or, and

touch we for also their how goes do the process infrastructure to, or you you everything community amenities and to for budget the communities So, from the the within underwriting, our communities. efficiencies And use on caps technology hear can beneficial really but and think the the be what them all in renovating our base during add us season we units at looking know, in we value to know, all could make to leaders market research can create by better. investing time

do to forward XX think, I XX do a like pipeline And our a that. you have consistently is of million we we year. know, to investment dollars to feel plan So

So, going it you know, because compound. expand will over is time amount to that

building on your two, that spend most money. you that we're know, three years interest because, and over you to in is of three it to take just year dollars we're if one two million if So we projects we XX XX You investment [XX:XX:XX] outlay XX know, a million these year or dollars XX and that to spend two know, time, takes in in we're years.

we're especially often given trend have one be we supply. I that So markets smaller. the that see think We And about, do a really cognizant to be no is our thing or now, might good right in little opportunity. pretty going

the not portfolio those really there. to at yet, well what or market some situated but so after the over push gotten So in has time, or have opportunity markets the see Rapid of markets dispositions done of City, we Billings we And really rent? been the in including we've our North where rents strong really Dakota quite growth like top is to markets to move that look

little some be see could of very refresh at and stay there we where there So opportunities the to markets those the areas top supply. in

Mark Decker

I Nashville is just I'm because to it, already Middlebury's back something mentioned and in I I've That a things to should about qualify. off not That's Nashville. going up Yeah, that's you in come and market cap for rate. just gotten that's said stuff new nicest, lease circle add several want wide [XX:XX:XX] earlier, notes so the [XX:XX:XX] if and newest a like I That's product that.

thought. general Jim, on tack sorry, to So just that

Jim Sullivan

expands, no [XX:XX:XX] you're part the achieving markets, I perceiving value the combined we'll compression call rate spend, cap with only that secondary opportunity problem. I in is the compression cap No, question, of the though, the in yield and appreciate that presumably on other given value doing rates that that. what cap this. guess creation

Anne Olson

respect we cap to the what take risk analysis, value know, You think returns for profile that sold to just pay we're rates? questions kind to versus of else ask I could you underwrite add, Navy the right you and risk the that you that? what the we're do would we for our for with believe that's get That's Where thinking someone one is? asset always of is know, we we that buyer the Value-Add who too, the yes, project about will you you value do the that the the return where is and on [XX:XX:XX] what a to know, to of we know going on value and if create value. closely, think we every allow the You know, to value know, about, is, the opportunity add are

Mark Decker

you you challenge, any is I can measure think, [XX:XX:XX] yeah, share it. and people can't And the or spend spend and money can't real earnings per

feel you're we certainly So is questions why consider like I is, the stuff? selling the And dancing think natural you aren't one it. you answer I of more [XX:XX:XX] that know, around

got know, world. we that on year. of we The We We So opportunistic really we in something Grand see definitely assets our of you had level planned. were sale the mind was surprised When it. when kind in launched, to will a not game June the the new those Forks a interest to in constantly. [XX:XX:XX] it's really and consider

talk the investment all something along And time. value with about ideas, we an these committee you know,

Jim Sullivan

into pushover, items you talking real taxes about you're one a areas a increases you those really I in cost estate made uncontrollable. mentioned, then and some particularly I ballpark be comments and twenty the facing percentage concerned had terms that in think there category what for number Thanks I'm if can that face insurance. where of of us We of we're where you've of Jonah, are about most not already about that in wonder give guesstimate versus kind of [XX:XX:XX] right, potential And just fall you the you cautionary this to cos increases, John, terms year. might

John Kirchmann

first are covid two commentary into facilities year are morning costs, closing this you. self-insured because in [XX:XX:XX] Sure. fall really savings being not physicians. say they buckets, And the people there I would to care good health items able were of bucket to their get into that

So to normal be those the to going levels returning future. in are

then, as uncontrollable the you And be would that bucket. an mentioned, first bucket. So

discussions on are getting We had feedback. some have and initial insurance premiums

quarter. this year, last if a premium in on have you recall, to we out down definitely come bids will increases range that And savings the had And indicative and down. you percent we XX pretty to last But XX XX big should know, next despite know, you we that in pricing, now locked brokers getting XX You time by of, locking that year. increase are call expect with we for percent know, increases. we

the mean, higher less. I know, With, more That's It's aggregates is you more coverage. restrictive less right. more. or deductibles. and So quality

price. So brokers have And so estate but to we're once us, again, don't from to final I initial share, real a what was and know, it hearing you surprising taxes. pricing that's our little that

increases next to know, their markets the it But out our weeks. We that And send yet. term. in most valuations seen have may so happens price four you really six be, not any longer will

So, you But increases to no know, what it's are. something better once again, the yet we what come concerned we'll about. on have we're when feel quarter. those visibility as those of are But much call a have increases next we

Mark Decker

Jim, half of [XX:XX:XX] been a of think the side I lot Yeah, mean, portfolio market our portfolio art, the state our last been, the has there, I'll because I years. say, the bright of on almost has purchased few to in

you're increases a get to you you it. hard on it. market you going owned It's an asset what if So, really not have you just long transacted you know, paid it's know, to argue time, for worth if for that just

relatively we of have up the at to like which it is date sort because not getting we taxes, means taxed So positive we're full feel a level.

affected for it On that. for us the is we while. news a front, Rochester, where sort in case, And then lessen ABO's to that on that the we hand, of our last you had everyone is other I where exposure surprises know, the on had should the year those like insurance by mean, good assets is I guess

most trying job they've And of across underwriters wounds other a is making insurance did also back really the large having while losses where really teens. claw globe. the money from of area just kind in mid bunch know, You poor been a licking an to their that of the

going that if as you really So insurance period of do is and there poor and do the where been there's from piece housing know, have just we community forth, an experience senior sleeping to up your a so XX insurance you you real know, detail. for, appreciate living estate is someone hour and hotels entire because and,

Jim Sullivan

but in their you with know, assets distress be the are final objectives, achieve you're might coming When though developers you some who the this market pretty you know, if commit of be, hesitate struggling to [XX:XX:XX] signs to talk to seeing long those know, a pricing you looked any And or just perspective. acquisition potentially, for I the from you available. What and urban at are opportunities, attractive about then just curious, I'm might me. market term even markets, just question a may of capital wonder whether the on

Mark Decker

they in of exposure. par I are that are markets the downtown large deals are up that able equity Yeah, think national be multiple did several at but certain and the I we've areas last And did most where So deals opportunity its filled ninety mean, seven think that an is three lease [XX:XX:XX] last who it you're I get more with in a obviously lower on is seven ninety [XX:XX:XX] months probably area lease another you did do to they lower something least to we've where for Xst, you're seen as multiple the asset they leased their of you And, that in asset partners rents up or it was seven markets expected. the in taking theme that months. know territory large today. than merchants were might seen the have that similar asset par buy certainly you're know, if but in the up up, February area at risk a

and firmer absolutely the there flow And buying quickly some would of that better that may we're terms clear risk either getting mean, term. it's relatively question just risk, those a of believe for grow know, paid types at place ground do to It's how of once things would are are get I point. this those in pursue you day. may long for We we the you be in urban underwriting to that recovery. opportunity be So, we you're centers is stream the of every you in much not we scenarios listen, cash

much or new a described clearer I think the market. know, it of, area just the you in in in is you example the asset asset

a You better. understand bit that feels little

Jim Sullivan

James. comes press Jim. [XX:XX:XX] you and Raymond Horne if with question, next Again, from Ok, one, have great. Thanks, please, Buck our [XX:XX:XX] Thanks, question then star guys. a

Buck Horne

Hey, Good morning. [XX:XX:XX] thanks.

a point. just was casualty on the You especially the my just understand. maybe questions, me I quarter, in slow insurance up just I made the one costs. here, but little picking did clarification help have I'm in loss

forty the the FFO so income ninety I through ad five one but XX thousand the in guess core there's that the So hundred or flowed back thousand. statement, an for

again? was was between those difference the Just was what figures two what what the

John Kirchmann

[XX:XX:XX] Sure.

So house year XXX, over this really or we are had this almost is quarter. little of maybe XXXXXX comprised the XXXXXX a lost XXs

change We quarter a a reversal, in loss. also had estimate prior a the from

the shrinks in current thousand the what you dollars. that's So net number And ninety why know quarter. that is

that asset. core we that had of of portion off existing that advocate of incident was was the this an quarter, loss a had as some far As of the a the loss, write loss, the that, FFO we

we roof to do So have a replacement. complete

spend capital that go we And and that then through then our write non-cash our we spend and that's we you'll OK? Yeah. that core off cost, asset that as we transaction to expenditures. that. the see So back a as replacement And FFO, add

Mark Decker

that we somewhere you might dance, a lot dancing. [XX:XX:XX] discussion of because But Kyra, need on that. smiling Jeff, had know to are

Buck Horne

make I just [XX:XX:XX] But the just just me understand And equation other the run rate. appreciate wanted that. piece was for parts. the to I sure the clarify, of moving DNA

of or you just you know, at You this costs post those to, is we're related guys lot current next rate? outlined curious, is back pandemic year, have of that to that of you to were come estimate just the a run run Obviously, that sustainable you how progress you the now potentially of controlling kind expenses. where to know, I'm some you're going affect rate world in. made going some know,

John Kirchmann

I [XX:XX:XX] due intend open part of my the to Yeah, comments, had mentioned evaluating part some those cost We open constraints those fill as as and and, are to you interviewing of know, in do positions of positions. so covid just and positions. difficulty some

we've lot those open, but a of know, weight. You you held team have, our pulling double know, been we have members

and you don't covid know, plan you would of in we lesser know, back twenty a areas. those conference, return. costs, type all would one that be twenty to And those so go twenty twenty levels you of also, extent we'll one, But, rehire we pre travel low to those the know, think

ours one. of from a I still been get to you Jenas day savings we're some mean, know, you So, going focus know, there.

some reducing made those have So, contributed you to know, while decisions and know. costs, the pandemic you we've

apply As know, covid XX nine, to twenty if we our Twenty don't keeping factors, you inflation some know, Twenty all, took returning sense those, twenty inflation factors anticipate know, a levels applied savings. one, of to if once that those in twenty you do we makes see you like you at costs, one, you pre twenty

Buck Horne

That's Thanks. sounds [XX:XX:XX] All right, good. all me. for

Mark Decker

[XX:XX:XX] thanks. Super,

Operator

would to question our concludes This call Decker for closing remarks. Mark [XX:XX:XX] and the back any answer like to session. over I turn

Mark Decker

[XX:XX:XX] and you Thanks, Ali, if We so your thanks, and interest everyone, wish in and out and holiday, safe haven't much. everybody vote. for get and it. a Thanks already, Thanks. time healthy

Operator

you now today's [XX:XX:XX] you Thank attending presentation, concluded. may for has The disconnect. now conference

Centerspace (CSR) 3 Nov 202020 Q3 Earnings call transcript