CSR - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the Centerspace Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Mark Decker, Chief Executive Officer. sir. ahead, go Please

Mark Decker

and everyone. operator, good you, morning, Thank

full As as New Centerspace know, yesterday we after for York the closed. filed doing business are now the XX-K and Form Exchange the CSR. you XXXX SEC as was with may Stock The year trading market on the

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

were will Trust the during or that non-GAAP I-R-E-T discuss assumptions and our and this the to The we're to Real pro heritage changed morning, simple. name business I is inherent call to today's was for of the Decker, Centerspace’s filings begin quick call, be statements we forma the CEO, the respect in update or on call, Olson, that reasons have we based on With a subsequent Mark measures we’ll Financial Kirchmann, statements we Officer. these our this change. I’m our remarks that a to and Chief IREIT, Anne asked on assumptions. current made Before forward-looking morning and and management our or events. our and with their recent expectations Estate reconciliation XX to that subject We a measures measures management's built respect no John our use supplement uncertainties Investors supplement about our years start pro other risks forma the are events I'll please become of. limitations. and statements remind obligation forward-looking me IRET was current opinions to including outlook and discussed these represent business uses Operating GAAP. used proud called assumes any for need Any Chief and Lots certain or release and with a company in to and with explanation XX-K you untrue business. this We about to Officer; due making rationale measures, statements we and These future earnings refer SEC. non-GAAP people with Form

to of addition business are we XX are diversified owned agree apartments landlord a could and many the customer on heritage and Today, Centerspace but in team that name, we of was However, we centric you years a with us, housing a having among proud other things. one are taking now that company.

few fact, years. In a been Centerspace we've for

to good as chapter name the change passionate joked and opportunity a the felt about. confidence no so us And listen, mission needs transition to is I've on coaching or our so helps close was and to a spell important. name our around on Centerspace. powerful just on say is one which And Simplicity rally balance who'll any we where talent, attract with anyone how

in XXXX. We and but social all have COVID and of pain back light in name other the approved this and difficulty held ready unrest of May,

am, if are know I'm are to financial more our real and results. of that Leadership this And I our XX% of kept was owners positive. our oldest customers to this something and came it know by and team team. our net I'd as eager NOI the growing some couldn't resonated per a operating demonstrated that Conference. that improvement. most and safe, but to and companies. company and these a are be year grew year where continued especially XXX stellar of apartment because real owners talk on to highlights to added a for income. partners. best more to XXX. team year-over-year following at Small-Cap to We and the high last were among XXXX, honored which I to about same-store public sure however, nearly XXXX there to delivered I'm we call, quality our X.X%, in the assets our markets fellow assets a In inefficient with members be take a I And excited week's Denver, people a the congrats FFO you some exited part focused We exposure team As is great year. expected business than like grew our of of last proactive future above recall We to after to Inaugural our it was new added those core felt S&P banner resilience prices flexible they close, XXXX I went with end year's fun minute the X.X%. Centerspace over our Minneapolis of and and beyond share earned and excellent be

And X.X%, a with among at Pointe, XX-year to We bringing in exceeding year another points also is remains closed basis all positioned was X.X our credit. XXXX lastly, Denver make targets. in work allow spread in future. to five to to of completed while work for live us us now we which money XXXX corporate a private in and as January, the million $XX in estate well across the it a XXX add of Union Pointe believe Colorado, how strong hitting in connection executions we from Longmont, We to budget early assets progress and endorsement and shifts benefit continue done best the a spectrum, the of real underwriting our direct asset, the while placement Union value-add, the we Denver. over In priced

may long that capital, lean make backdrop the as sacrifices occurred this residents we of pricing to lower made some COVID, revenue lockdown time to In systems against the build and and growth our transition chills on team on revamp with as codify, that this control. position to one The our the normalcy, as to our course and are will as All from and Most downside year consistently this upside for. all case embarking a present. we And of possible. out. operating accountability our the levels. the normal our customer the work hope I we company of that's through of which as expect fall for make a deliver we we're will but is to experience to great expense fruit to bear homes to us importantly, invest grow enable which great In investments going for conservative for the always the takes figure to forecast pandemic XXXX, believe case, to we fundamentals and we is power easiest us investors’ of economy capabilities fall the need build this future. the we return and beyond. our a We out returned we our of view prove in to continue as We it's occur year one to revenues. efficiently improve the prepare scenario now

distributable will are per North it XXXX to that it. lot the well operations, balance us the John's investments ahead, distributable and important confident over us beyond, produces worth in talked the for Star discipline We the and capital about amounts is cash cash the roughly flow table and years a believe moment, which flow. sheet for of a share, flat allocation speak we're thing. our going setting position core and while to lower growth we the to years And positions guidance FFO, most and in the be year-over-year will growth We've being that our

market. I'd Lastly, thoughts some the like our to the and offer opportunities for brief investment on outlook

neutral just to accretive our we modest our is are we recycled better active beds. portfolio’s are have market sheds capital opportunities dollars to another. and of less historic see, margins our is Anne to wides long-term And but and always a pricing favor with in ATM. flow profile. and geography, to one markets. quality product that Pricing acquisitions, I'm most over with to for that cash our like This increasing Olson. and We metrics. at is happy find by you more always, tenure. for Chief possible. a Minneapolis priced, things our turn to as Denver sale rest or continues size from be combination Officer, of I'd of The the to as seeks more also and cost nationally that of measured debt improving it certainly to robust the investments and and parody capital story make The the marginal Operating growth like more all behind We markets, apartments notably remain coastal to cases, and dispositions in discuss growth investors’ expect Q&A, of our and funded liquidity, puts aggressively to now, sellers most Nashville accommodate As capital to motivations to today per sheet bullishness continues by in factors, relative driven in as as pipeline balance exposure larger in and share, need assumptions, we which

Anne Olson

quarter by spite on of from focusing were closely most able and Thank XXXX cautiously XXXX. fourth happy the quarter, to XX behind team basis XXXX that, our basics business, cleaning working by cautious leasing closures, occupancy to third from the and operational average of was of expenses perform rental impacted X% quarter In assistance that bring. residents holding our a occupancy on of In points optimize fourth good Like was is year XXXX reopenings, financially monitoring steady the quarantines, to of morning. well to people, cleaning, a regulations, and focusing the for changes over myriad was and over the you, home, XXXX, and forward our facilitating increased we by Mark, us our revenue, more to put the weighted looking collections. disrupted virtual opportunities will our and pandemic.

revenue X.X% markets, in average Our with a together XXXX, Dakota. XXXX XXXX for revenue and weighted North and was XX% billings of in particularly as City Omaha increase well Rapid across strong our in occupancy our performance driver in over as of

saw on the regulations, strong quarter, points portfolio over rental gains markets rates while Denver, leases. markets. in new larger developing we faced longer like eviction of decline. saw XX which the by maintain occupancy, As was able basis these of moratoriums, year-over-year headline decrease markets rates. and more blended Minneapolis impacted the the NOI course performance saw higher but were of our smaller our and renewal a to We're our unemployment year, we realized In We and fourth significant

large of in and the our closely as XXXX the for we which XXXX, In bad our monitored collections fourth we have quarter, debt. season. increased expired the we disclosure XX% Just highlights leases opportunity leasing

quarter, XX.X% expected with revenue residential collected. XX.X% collections realized For the with maintain collected. trend rental fourth of that collections expected we revenue strong January

in as rent period portfolio end Our a In decline of eviction the compared portfolio, burn XXXX. of to resistance deferred to same our X.X% just of $XXX,XXX across our revenue basis and amount our XX historical of remains XXXX. fourth basis of to on XXXX. bad pandemic of compared points quarter, impact in bad points debt we Despite revenue debt than returning deferment hold our saw XXXX, in same-store of by X% the were NOI moratoriums had through and outstanding, deferred expect total our off rental to revenues, negative XXXX, currently able was to norms XXXX, we in to see XX the our program $XX,XXX we that the less a margin

increased XX.X%. significantly particularly to our margin non-controllable margin year-over-year gross our While by taxes impacted NOI by X.X% expenses, insurance, and was our

momentum traffic across balance As are higher outlook negatively affect we the about expecting increasing and there types. levels our across we our continued costs ahead to But insurance bright to in and year-over-year Coupled the face. portfolio uncertainty we look in increasing XXXX, and markets revenue and our with expenses. our small strong occupancy, reflects challenges spots, pressure, large have wage healthcare growth, product value-add, we're

$XXX,XXX of In expense with We connection what and fourth rise in provider. and one-time continue we a one by our drove we can five and as a acquisition will characterized our that by increase initiatives our in billing to cycle quarter, of to the revenue new revenue RUBs RUBs shortened have activity. been efforts our a control, do optimization, conversion disposition strategic

rates contribute with quarter, Our renovated value-add common area the increased programs results unit revenue projects of our our suburban and we able common to and strong in renovation our assets fourth significant declining in the offset renovations, are Minneapolis, Omaha. urban progress in to positive seeing also Particularly, and units at the renovations were two area Minneapolis had we XX on portfolio. saw a

XXXX, going XXX ahead the we Looking learned we portfolio. to to as and what across expand efficiencies We're in our we expecting found. renovate we that seek XXXX, to maintain are approximately leverage units and by we each to striving day through of better little mantra the team things residents that day lives live members. every the constant for enhance We're And of fellow our improvement. going do our to

normal we will outcome our the is economic possible be And support for a teams I'm demonstrated that face. our of lot day. we best And forecast we to grateful better overall offices. new Our can every John contains the have to our uncertainty, control by across now given circumstances going for in while inspired and we our continually I'll financial results. and regions discuss our ask what

John Kirchmann

Thank $X.XX from core XXXX per increase or prior share, XX-month diluted period reported FFO ending X.X% the Last we XX, of you, night, $X.XX the Anne. year. for an of December

full from per year. lower interest, primarily in well an X.X% the diluted of as the core management ended, same-store NOI FFO XX, to expenses, COVID-XX of the quarter or XXXX, G&A property For prior NOI offset $X.XX FFO was partially by increase growth. $X.XX reducing financial due lower increase as year is dispositions recession, and to The due share, December core impact

compensation Looking for the claim the year, to $XXX,XXX related million of and from advertising. from other costs an primarily positions X.X%, decreases $XX.X the rebranding from unfilled was the Offsetting unfilled, full expense lower related costs of general and net our the Centerspace. from primarily COVID-XX The and positions non-recurring the year G&A open and these to left in the compensation decrease was is $XXX,XXX $XXX,XXX to to decrease travel, $X.X our travel and of $XXX,XXX expenses, decrease year. XXXX consulting X% prior reduction increase Property pursuit management lower costs defect a December million costs by prior successful costs a legal due was in reduction driven for a construction at pandemic. year, due driven total in administrative a of by

December Page SXX value-add supplemental. The costs expenditures Full-year CapEx from $XXX,XXX capital capital ended same-store $X.X was to on to related XXXX. hail same-store of by was Full-year XX, roof the as million an CapEx Moving was $XX.X and renovation. unit. million, presented of of CapEx for year our increase of $X,XXX acceleration per in a due to damaged increase replacement primarily undergoing assets the

our increased of since for million Page value-add spend Looking S-XX of at its XXXX supplemental. value-add to continued presented capital, $X.X expansion also the program the reboot. which million on has capital $XX.X We value-add XXXX, reflecting

to balance Turning sheet. our

had million As of December of XX, million our XXXX, we on of available $XX.X total $XX.X credit. liquidity, line including

four Dakota, of acquisition the $XX disposed communities price were in sales sales we from these parcel of Forks, million. property, Proceeds XXXX, used Grand of unimproved total land for During commercial apartment one Parkhouse North one of fund to Apartment. and

XXXX, cost yield call XXX,XXX During preferred shares retired we approximately XX-month The shares an was XX, to ended the on period XX%. aggregate repurchased for December $X.X Series million. these and C of

at a expansion $XX million notes June amended In of Program capacity aggregate shares share in We proceeds of ability financings. further total grade We have the new XXXX, to amended XXXX our with million. and we note Private at facility pricing all and of $XXX believe in of for shelf $XX Agreement to Purchase the also January senior including our approximately shelf net Note of capital, XXXX X.X%. investment remaining. Shelf unsecured Under January of of rate ATM $XX.XX on a access agreement, per pricing to available million issued and forms the million X, demonstrates due under this amount average we Prudential increase from million $XX common the $XXX XXX,XXX expanded issued price

an detailed to by NOI operating our decrease between toward XXXX X.X% financial a X.X% a same-store in NOI of S-XX expect and in to we X% supplemental, to decrease as in decrease revenue with same-store X.X%. increase come The X.X% same-store X.X% expenses XXXX. and reflects Looking XXXX between outlook expected increasing

other estate income XXXX estimated premiums with increasing is from come same-store insurance real expenses growth rent an on pressure XXXX. occupancy, continued offset increases taxes non-controllable lower revenue and from increase growth in XX% by costs expense to expect and We impacting initiatives over increased

We our in see carriers time insurance the market though to on continue expect market for XXXX renewals. policy we to premiums somewhat as exit the pressure stabilize

we the will On our that levels. expenses, projecting operating by the to is belief the side during we This facilities expenses controllable widespread shutdown pre-pandemic XXXX. not area are of common of impacted see return markets forecast will in lockdowns, including

maintenance $X repair expecting we're a area a and in common As result, increase costs. million

in PPE and with respond we compensation XXXX our and including of to other our compensation, see markets, On pressure inflation In institutionalized increasing for that recession, increasing same-store the though we costs we addition, healthcare have and operating nearly despite the from and utilization cost see expect we on wage benefits community costs costs return and healthcare safely. we wage costs, higher some lessons the experience pressures as pandemic, levels. to to compensation as X% continue levels pre-pandemic savings

with team top-performing Union net million the to not ATM to equity you XXXX results. XXXX with is the expanding another strong markets core $XX which looking delivering rebranding focused general for we operating increase estimated Now, to support into the as which costs filling our a as positions of decrease expected increase XXXX all would balance are who Offsetting a and dared plan estimated tech property over of worked with days costs the an combined to expected are challenging like is $X.X value-add million obstacles XX% expenses, includes expected anticipated costs efforts challenge, and $XXX,XXX $XXX the FFO. costs. administrative replacements back million are platform. to investment $X.X we $X,XXX January of over initiatives, deliver to develop but we used be well costs million of $XXX technology XX% the $X.X it XXXX, between the an our non-recurring million plan members expecting our from million activity on turn XXXX. in includes more our create same-store are XXXX. are a was in who expenditures to implementation to $XX as as we of higher tech disposition Pointe a are cost team questions. to acquisition being these and target we a million and incurred looking management could team, capital while increases to towards damaged make residents. under for to investing continue to pipeline. to active We costs. implementation for per million to the result as but incentive range for Pointe. year, I’d million, every long-term all open $XXX,XXX which $XX added operating $XX for by Compensation fund ranges that for back from our were non-recurring our acquisition. thank non-recurring in expected home, investment million pleased Union includes at I The our XXXX. our $XXX and value-add that, issuances million purposes year $XX for sheet, to XXXX, $XX best-in-class roof to in proceeds assume for results, the front, on to with made hailstorm expenditures assets last operator, continue with overcome wind better be wane improving for to proceeds to

Operator

you. Instructions] ahead. will with Securities. today Please go Mehta And Guarav come [Operator our National first from Thank question

Guarav Mehta

morning. Good Thanks.

provide more we if technology the make some was expenses. the year? to First question on hoping investments on plan color you could I this

Mark Decker

let Anne I’ll Guarav. take please. morning, that Good

Anne Olson

Yes. Good morning.

platforms, what workplace infrastructure system investments investments to technology accounting our our into onto and MS digital from modern the core XXX our operating we with of So, platforms use call really like moving teams. range

to phased we approach and more make expect better data-driven a that efficiencies use good three happen gain data reporting, can over investments it’s will So, the to We years. some and decisions. and do

our implementation investment deployment And have so time. first moving stone. into of over implementation, implementation, we’re modern on started first and the which products. is the our that the just a digital good workplace And stack second we year is our we are Yardi’s return which and expecting stepping the is this of

Guarav Mehta

Okay.

and XXXX, well. investment the in about your for aggressive on Nashville in question remarks, guidance I think, talked Second as and Denver pricing you Minneapolis prepared

seeing more talk of are acquisition terms in what market. given guess capital in Nashville maybe, to I So about, kind And deploy of you the aggressive? remains expecting you’re that market, in opportunities Denver

Mark Decker

answer to have lots needs. honest priced with Yes. of Great what sure. not question. newer older capitals comes But pretty less generally we’re what is I being see We’ll way. seeing speaking are mean, our is that that assets capital the real we’re close to assets have

buy So, in our and us. just front towards us modern newer of capital more to tilts wanting – with right that assets less systems

about So newer example find in XX months a can The general, COVID. asset ago, wherever at stabilized products, Pointe probably months during Union we that we’re is great now, delivered essentially it. XX looking and was or

listen, off opportunity Cities the Twin if if in and well. the capital we’re Nashville we’re mind the Nashville; get probably in economy. but to between putting Twin capital Denver, as just and Cities equal, the ever the putting everything overall in if everything’s our do when things equal better if equal Denver, aren’t But in table be – is looking So, and we’ll better things is in

say So, market. we’re that way of wouldn’t I wide

to the you, to how when it’s get behind value portfolio just they We’re harder these very figure help – near-term. it’s how overall. in our easy add

these crazy; numbers. of think don’t wins don’t report when quarterly assets, we So, one have just someone they to they’re

sense us I think the the the for both for Good fronts. a in of think Good portfolio. medium good term. sense market. We on actual that a hopefully, measurable on the kind the some for find connect we’ll still And things way so And makes making to bed they’re on make we’re shareholders bet. –

Guarav Mehta

all Okay. had. I That’s Thank you.

Mark Decker

Thanks, Guarav.

Operator

Markets. come question Please And BMO Kim with our will Capital next John ahead. go from

John Kim

Thank you.

and share you blended in XX lease and rates what on renewal the So, couple it decline looks basis were rates the in like Can in the rate of on just that points the last January? the momentum you quarter lease quarter. of some growth also was blended months lost what new the

Mark Decker

morning, Good ahead. Yes. John. go Anne, please

Anne Olson

Yes. Hi, John.

fourth quarter down new our X.X%. were leases in So, the

Our held X.X%. were strong. renewals have They up

So fourth that leases of quarter. XX% our in basis again, the blended point And that expire was XX is decline. about the

January a which of about So, at portfolio. our even strong only sample is is small X% our had X.X%. leasing, fairly set, We smaller sample really renewals

Our negative new leasing remained X.X% for January. about blended a negative steady X.X% in at

Mark Decker

Yes.

I just to look in that, evident this. we’re think John, So this And at I a tack what I we year, hope spring momentum onto where forecasting this not our in mean, a was when our we of is prepared leasing the remarks, lot but work. season, lot of do

trends quarter that. the hoping big might And in shape more conservative fourth planning, and we’re – which felt pretty held, that’s question. we both better just we’re So, January, but in the if and year-over-year if that good, through we went about be the

John Kim

versus On rate phase change? of that lease concessions that how rate, is new the much

Anne Olson

all. at much not Yes,

at can really we comps. skew in rents concessions how systems. look concessions of the tried avoid effective to kind at and So, look Those our you

And so in numbers. concessions little there’s very those

John Kim

scenario supply the of that not a revenue. for markets, being why of Okay. just Is Mark, or on you mentioned and in being remarks; that prepared are or in on risk some elaborate there other the projecting you you also prepared moratorium, this answer your just lot Can factors? eviction discussed you’re your momentum cautious? you’re downside

Mark Decker

start? to do you Anne, want Yes.

Anne Olson

those winter third from are the and projecting what quarter. forecasting advisors flat us next budgeting revenue into declining trends year, Axiometrics, through other resources, data of CoStar months, and into to for project and use the the particularly we when watch future. kind And until the were even and fall the or we our help doing we’re and most so, Yes. of

the we we our those But led start not those our quarter. that really conservative and outperformed ramping going trends, projections revenue So, our on We conclusion and be we’ve revenue once that we extrapolated that third onto how past. were in us to up took portfolio the it hit follow to exactly. with experience and

As we’ve quarter time the leases leasing get of discussed we third ruled. majority by are the our to the season, have our

really, strong that’s third is the pretty from our an beginning the to profile second exposure and it those, expiration is quarter of So, what’s standpoint. really impacting quarter

So, going in don’t a the market, if leases pickup flat to those a the in be get lacking at fairly early we’re year then season, we revenues. in for

Mark Decker

Yes. that’s what she said.

John Kim

you you at And just expecting as occupancy or to far trying as are year? expect are Anne, what you to check Do up occupancy XX.X%last maintain?

Anne Olson

Yes.

it on goes or the we’re really year. really basis really that go But pushing be view tight focused think, during maintaining that would of points to in our I that’s expect we it might opportunity occupancy, see down, to XX revenue We that up. might time we we’d that a range rents be. so. this think given like where manage, our conservative down

occupancy looking bandwidth to We’re manage our in a tight pretty this year.

John Kim

premiums increasing Okay. And the XX%. my final question insurance on is

saying. with pretty I consistent your what been have peers think that's

lot in it big you risks you or a to it can also a locations lot seems, just elaborate and on you’re which so of increase natural moderate expecting the XXXX? of expect have not You're disaster in that

Mark Decker

Yes.

generally think insurance things speaking they insurance people things Number habitational I is smoke about and live right and hours, do and office excited going there in just there's the on. sorts don't that that is John, market one cigarettes building. because So do they of XX couple all have not parties and now leak a of water

lot from away the only that. you're real mean, like cat world. there's things balloon, a of step or also several And a it's losses, particular money like seen right. really hurricanes seen for have have insurance. much it, in I years a We've And world so we our of issue, tough So across then don't the generally We that.

And expect it hail our which included is own to other all it big was of our XXXX biggest But hit. thing. natural a peril, rider, we're pretty based to hail. an probably do have meaning that We in policy Hail from its what having from general went market. moderate sort we in was being hearing on

John Kim

you. thank Great,

Mark Decker

Thanks, John.

Operator

will go Please our next with Baird. come from Amanda And ahead. Sweitzer question

Amanda Sweitzer

in occupancy that urban fundamentals, Denver pricing a at Calling morning. your up improve areas quarter. the in Good Thanks. nice of this you you all Have had sequential market? in power seen on uptick

Mark Decker

Anne. ahead, go Yes,

Anne Olson

Yes, – are kind bottom. the think – we at There we're haven't we've some I price of points. holding

of starting there, new some area. some assets and assets are power but renewals that looking have still feeling effective, particularly stronger, those but the to pricing are We suburbs unrest. in the non-same-store in social the get are urban urban Our pressure still leasing do pretty is supply

Mark Decker

Amanda, me, in that's RiNo, so Weston, or in Yes, RiNo Dylan Weston. excuse

Amanda Sweitzer

about level where you your comfortable find capital and market And a That's to opportunities is portfolio those your think Nashville. you expand Minneapolis then exposure on where you as list? you allocation, expanding don't helpful. of target then kind there And attractive higher construction, point in are Denver,

Mark Decker

that markets The Nashville, to in we're are those a for we we markets push I might opportunities this hand, I energy. of and that went expand terms reasonably for on – talked and we've markets the could push will, could don't time, if but markets – watchful us was of as to transformational, with one three really I about we imagine defined find us always we're comfortable are lot and other good I we lot list be are we're the opportunities, they'd having in is is three on have there. say these by, into markets, I’d go Because mean, that these a lift think two mean, to each opportunity of holding to higher we sooner we're somewhat us we liked. but or I know. greater in connect from think I But at in here from not to answer hard with set. a exposure big

done market work. of we've So lot a

now, list. market have it's miss, XX we'll we Nashville. really reevaluate, a but only than been for And year. focused then if we're top But continue in to We less a

Amanda Sweitzer

for enough. Fair time. Thanks the

Mark Decker

Thanks, Amanda.

Operator

And our will from with come next question Please Stevenson ahead. go Janney. Rob

Rob Stevenson

Good morning, to expecting did you much be say guys. John, were how up? property taxes you

John Kirchmann

think X%. be on nearly they I me. gave that there. Excuse But are don't up going to I

Rob Stevenson

Okay.

John Kirchmann

but they big still than Less XXXX increase. what went up a for

Rob Stevenson

Okay. And guys? you is across or is for that certain the that board markets

John Kirchmann

same-store we to couple just I in the with for the of or across Denver really the that got for mean, we are price wise from from getting going shift hit properties them. it’s timing definitely Yes, non-same-store board. purchase hits, paid now example, adjustment a it

do Denver but hit getting it's will it. we year, to kinds this of some we have underwrote be So, of really those hard where

pretty speaking that all but So much markets. no, outside generally it'll it's of just across look,

Mark Decker

recall a you'll really we much had is and year, Rochester And in hit kind of big last year uneven. this more

Rob Stevenson

next same-store forward Okay. mean, in I is roll And my you how Denver? you to concentrated here? just addressing is question. portfolio that And the John, additions the as primarily substantial were

John Kirchmann

Yes.

Denver two on have in and We assets Minneapolis. coming one from

three of so larger it Denver. assets bigger see impact, but are total a they So really make in assets, and they'll a you'll

Rob Stevenson

range And same-store – is the the portfolio? the of revenue of end that one drivers into addition low same-store the of the as that of those the is reasons one of assets

John Kirchmann

low end of driver I revenue the The guess… range,

Rob Stevenson

or growth more plus upper negative at that XX If range be Midwest the same-store instead excluded of XX portfolio, revenue growth still flat basis I without three would low basis pressure from the you're under So in those than were same-store XXXX. of assets. those? negative XX revenue basis points would points your end assume same-store the points for assets those

Mark Decker

To bringing say those it new Is are asking? assets in growth? you're our way, that what revenue another down

Rob Stevenson

Yes.

Mark Decker

think don't Yes, so. I

John Kirchmann

a that should point have we And have I don't is front it's which in suburban I have up. suburban In bring so. suburban, that actually smaller might to Denver, don't it is from we a asset, down, coming me, think but two Minneapolis. lift assets but in of also urban a it One asset then market. a one your

think thing, going of the XXXX, those it's other assets. baseline and I So – we be all, the to have

I a the they going XXXX asset growth met is hard comp to comp not compete from in perspective. against their extent the urban mean, to XXXX, a be were to same-store for we at So revenue

Mark Decker

Yes. And just clarify, actually not Minne, two to one. assets it’s from

John Kirchmann

Yes, yes.

Mark Decker

are and in which FreightYard, assets that small three Lugano, value are a core the is Minneapolis; is So asset that add-on; been is the urban suburban a Denver. a we've of suburban-be which that undergoing which SouthFork, in in is some coming good

Rob Stevenson

high did amount come going or Okay. here? to what's major the of when where you end whether And expectations at the the had together or the were the the than – not mean, – same-store put of stuff guidance, least in low then, John, in confidence revenue other you was I the end you growth, places your

John Kirchmann

revenue a so it. area portfolio data recovery If to would our be a I same getting us Yes, for in the get I think there XXXX, that out for Anne XXXX, year were think it coming – in that happened revenue's of positive I like mentioned, think lot be will would an always we but after is later especially a that of part of year. sooner, as be very the

there so it some them weren't and the work that normally were for the think property, lot things I we they on in to would had team responded ops well a are uncertainties of as there. do They to do to lockdowns there stepping there – really our contractors expense side, because do.

we the needle to back are of entire permanent bounce open which So to XXXX, on returning to how savings properties thread do be the capture which and able trying make norm. be the in year, will we will assuming those and

Mark Decker

mean, you year Yes. we're on mean, comfortable expense. about, our business. a expense guidance prediction as guiding and I the our And Rob, it talked conservative I on humbling we've forecasting was we're and the nervously feel we in revenue watching with as side. we're know, revenues

some we're lots dryer going going go might things. And to get twice, they're last forecasts to we are they're inflation reasonable portfolio to for side, they human of and this didn't didn't on John's and again, do and then I lot year, healthcare, year. a them to do them twice, done going get that staffed to Things or those our Now, in very have to pay again again, well But but going last open didn't can everything's this we're your to XXXX. vents, year, point, we're done we it performed whatever, so go. year. months capital And and going doctor not have people again, we utilization of of but six where go to do them mean, for going the the and

of those we'll all have we So see. to happen things underwritten and sort

Rob Stevenson

basis fees, but there, is a diversion? talk many like last quarter per GAAP I the wise also Okay. home third anything same-store And you for the one sequential the up revenue else points And of quarter XX from rate driving for sequential the to that the about assume magnitude? cause on was XX the number occupied average jump rental but in can your levels, down sheet, fourth of that basis Anne, there then what was is points. monthly me. in peers mostly you're seeing here fee

Anne Olson

Yes.

had the cycle a the of quarter provider. we in new think a unique, to converted related one-time shortening and RUBs revenue I jump fourth pulling on billing our forward $XXX,XXX the as to we

of So that that's quarter. fourth the the driver in really revenue

Rob Stevenson

Okay.

Anne Olson

So allow all – is more it RUBs we assessing fourth over increased in think by collect part I driver us time. this one-time the fees, as a rise was our but of RUBs do think five, revenue of $XXX,XXX one the to constantly initiative that and are we the time, will quarter.

Rob Stevenson

percentage And than is billing RUBs of utilities? what for on individual rather the portfolio

Anne Olson

I mean, it. almost all of

Rob Stevenson

stuff? door Even the in

Anne Olson

Yes. Yes.

Rob Stevenson

Thanks, Okay. guys.

Operator

with will come our next go from James. ahead. Buck Horne question Raymond And Instructions] [Operator Please

Buck Horne

morning. seen in just questions going characterization to Minneapolis one Paul, difference performance different are in area. slightly you've property good relative just just of market. different suburban? or core in ask the performance if for But locations how any a in I'm Thank terms you, Or any pricing urban recently the Minneapolis/St. Amanda's on of the to performing

Mark Decker

for perspective. much that morning, sledding a urban from that. There's Good question Buck. Thanks operational tougher power is no pricing a Yes. and core

from bars we're that finals the normally called is X.X we solid of awesome. normally and right going. bunch Center, there's in that is on right a there's would getting state be It's assets which – weeks affected Ecolab just place most really Xcel operational right is are, I are of the of I would have the the be a it's mean, So Oxbow, in and that not hockey X,XXX Paul. St. submarket are there. jobs head vibrant all hospital And bought that for to now. one things kind And make urban very a is place. right three restaurants booked which really mean, whole core close there, them

weekend, need that the or our their apartment – is our One it's it two space Ecolab executive need which been several those up. weekends lives are but really in because hockey So we and or it's it's The have doing wild from in there who and whatever. their struggling, don't has best, your year when when bars one They came they need of it. rental didn't the didn't music closed. if apartment this at is you're and they an cabin, not

are assets on dynamic adjacencies what just urban and So food, Red All right have two in the et is a in music, benefit both about which the FreightYard, are similar and we cities, office. core those from great of Minneapolis, hold is XX people, cetera, to which things kind just also sports, now.

think the were able add, down may don't we're I be about seeing I seeing, we last but specific there. So have to and and we XX% this quarter talked lease-on-lease

is if occupied, you look three I points, holding kind are where until it five assets more six three going And different continue I but those suburbs, again, versus back story. it's In or assets in occupied really look suffer. to to submarkets, market, the think be say, to occupancy. would totally fun to than We the we’re in city the of at we are are a more those

more call, there, product we're that's somewhat is, that would I a again, product tested. full. staying But Our supply

rents. or We’re execute we're flat modest seeing some suburban modest, pricing seeing a positive, continued value-add. power on then really in to to negative and And B, we've

hopefully please at guess I not, keep it. if the question, So that answers

Buck Horne

you Yes. great that Thank color. you. No, very all transparency. Thank you for That's thank much.

ATM the throughout the just the thoughts issuance, to issuance the over the switch Let's on year. equity –

Is coincide Just, we to this year? transactions of that? should timing part the you over the or anticipate potential of capital as How the course with of to come about how it about are a process the they thinking of ratable thinking raise you structured you're more year? Do be just issuance ATM up? kind going

Mark Decker

mean, I Yes. we're listen, price sensitive.

now enjoy access on right thinking that something – and we So we we'd basis. ratable we keep. that's to have I to that. we're fundamentally guess I private be that with really it going placement But about to mean kind want lead market – a of

So watch. to have we

back with usually the of kind in line to that we lot equity capital. dispose Our lots a point, us leverage ratio more union leverage there ourselves raise either But have might and and opportunities ATM than We have see is opportunities. put there you perspective. from or a of about listen,

And that's so the other governor.

think me it's got you're kind if So jump spot four I've in, They question. question, on it asking and balance our it's and quarters. I it's just overall if this – let ratably would over a don't price, answer of model you If sheet managing modeling were opportunity, exposure. I John wrong,

you John, confirm So want do that? to

John Kirchmann

I that. confirm will

Buck Horne

guys. That's Thanks, great. Great.

Operator

ahead. from Daniel And question come Sandler. go Please Santos will our Piper with next

Daniel Santos

would question for the about a morning. talk seems be bit my little little dividend Thanks Good guidance. payout, we just on, expected taking might you questions. My was have could anticipated? given wondering flow cash first lower a than was maybe It like tighter I than if the and payout

Mark Decker

dividend number expect we've healthily, XXXX cover conservative, we’d XXXX in how you to reasonably in AFFO the which in at cases Yes. think at it I on don't it differently. looks suppose basis. Street noticed I an covered we everyone, both and look when – we it is AAFO, report as on we a count based We and the XX-month

dividend the it. cutting one of So, in and trustee, I be – raising of don’t think I risk favor at we’re wouldn’t I as

Daniel Santos

then Got some you South markets if well, outlook of could their wondering have those to your XXXX? just it. That’s some in give like sort those color really like, strength that what’s I is North naming on on helpful. us markets was And given the Dakota Dakota smaller of performed

Mark Decker

efficient pruning with start capital a generally has There ourselves saying, we we’ve – from human left assets call of guess, speaking pruning kind lot basis. Yes. generally and by I’ll is on speaking assets. what I a we’ve the done more higher helped portfolio are what of that where a rent younger,

specifically there, So, it’s operations. maybe, the kind you started could talk of then, but Anne about

Anne Olson

Yes.

I not smaller having smaller the see of have particularly, some markets from those our advantage – that think of on of supply the have Billings in some markets, that markets, benefited the we larger the – we and in in-migration. we have and City Rapid

into that may So, accelerated expected in XXXX growth continue population that and wasn’t XXXX.

what markets. will in somewhat the given North City been historical out and slower in Rapid Dakota across of those have and conservative Billings we We growth forecasting happen think

that a see year we increase I saw moving did more this last people good So, around. we think

in lease Minneapolis We’re January. quarter and markets those in been as the and in think kind the even fourth push stronger markets. in able that portfolio, we to those of than the markets I and those strong – rents spots know outperform, have Denver bright as particularly, suburban and market the to to going they’re But smaller we perform don’t are suburban think going just

Mark Decker

place, Yes. I a which And based just broker in live and do business setting easier mean, a out I that interesting. well. do who’s And where a listen, can mean, of open. catalyst judgment been powerful we’re you we and to it’s very has things. as I it’s think strong I there’s would hey, work mean, with Bismarck, aside, she say,

Daniel Santos

Got detail and I on strong all a makes it. That quarter. the appreciate congrats sense.

Mark Decker

Thank you.

John Kirchmann

Thank you.

Operator

with John And will from BMO ahead. Markets. Capital Kim our question Please next come go

John Kim

Hey, thanks.

Just on guidance. questions your follow to up

the year? improve to guidance guys that your the debt contemplating for mentioned bad during you year. You same-store Is that expect revenue

Mark Decker

Yes.

around I to I a Anne’s think normal year. it’s if it think had are but because our a we year-over-year, works end the flat, on by for really and year-over-year we be the year, bad improvement it’s contemplated, our to out that yes, debt you flat. going we’re where about be talking remember, of basis, didn’t almost but is – comments in QX, the

John Kim

million realistic is the given midpoint, this repositioning Okay. $XX how Just potential disposition efforts. of guidance at figure? And your

Mark Decker

I year acquisition disposition it’s mean, realistic. and this our I say giving I’d think pretty guidance. first is

less question, I younger lot I a better serious So yes, of because capitals. and have beginning the because at like they’re we’re had more generally what do kind before, I rent it. of have we we out just now, sometimes pointed efficient, mean, mean, they’re so in higher Dakota’s as speaking than and the about the was last that the portfolios we mean,

you’re and make Forks. said nervous off when the going a million of often And the the great. And road like, that of so at don’t Grand to happens, talked time fall, teams lot ah, it’s this difference. like really does the our And our got were sell we when and – We best the upset, out have pleased that And little applying thing to before very We on in $XX get all that we – things that we do it. we ability and all this spending; last to these that rule. we Then they or to that. more keep the problems. lens were people. think we to were XX/XX because is is were teams something work you and have spending a they’re that the on all talk the they’re you We sales they

So, certainly the that, we I make it’s record mean, believe to have efficient to portfolio in a we and to trying track that. more for we’re going continue do

long-winded to way say really So, it. mean we

John Kim

your So, go markets does other exposure your NOI, market that XX% if $XX million, are of other where same-store to? sell you

Mark Decker

from. Well, we’re not market we’re going to selling comment on which

to to other market. opportunities not have doesn’t it’s We probably trying of and you, the I’m with that but coming necessarily that be every John. out improve flipped mean market, in portfolio

John Kim

out those be there of is the our and And all more Okay. or have, of going $XXX,XXX. to FFO? all core cost you all that then you’re rebranding had to is in of Is going to XXXX – back costs

Mark Decker

be it uniform, will in sort just – That’s expenses. uniforms now kind the the of we’ll for budget. be so of Yes. mean, I just else is slowly everything it’s

John Kirchmann

total. add the be Yes. was there that won’t backs, future

John Kim

those the fourth quarter? in Were in some NOI, of the in costs G&A or

John Kirchmann

all G&A. were in They

John Kim

Okay, great. Thank you.

Mark Decker

Thanks, John.

Operator

to And our for management closing I’d back to this over conference the session. any question-and-answer like will conclude remarks. the turn

Mark Decker

And Thanks And interest to in much. talk in we’ll very you of your Centerspace. Thanks very everybody, months. a much. and couple time we appreciate

Operator

now conference concluded. today’s you Thank The is presentation. attending for

disconnect time. You now this your at may lines

Centerspace (CSR) 23 Feb 212020 Q4 Earnings call transcript