CSR - Earnings call transcript Q3 2021

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Operator

Good morning, and welcome to the Centerspace Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mark Decker, Chief Executive Officer. Please go ahead.

Mark Decker

Good morning, everyone. the SEC September closed. yesterday for filed XXXX XX-Q the with after Form quarter XX, ending was Centerspace's the market

are the I team joined our of line, there Chief Financial many by Anne call. Officer; John results. year our our centerspacehomes.com start based earnings today's for to members supplemental to will shareholders cautioned is and to that day. and note endeavor assumptions cannot X-K. earnings are be that to materialize, to have time business as remarks fantastic a we is important and Additionally, whom posted and will other our discussed my like the are we reliance morning been am by company. every and statements Kirchmann, housing Olson, incredible statement an these and effort getting this non-GAAP refer you reconciliations to welcoming current include It statements. out outstanding views and disclosure be is any on Officer. not any our the our in outlook Centerspace It's giving and guarantee which for filed and Operating create team thanking Chief on the and undue the package release XXXX at management's that big place Please on better business Form forward-looking website may of release efforts information, forward-looking forward-looking to on for them on our I'd

our resident new team and system operating to implemented communities, XXX team XX our members this enable year, growing experience, we've that over new far a So welcomed integrated deliver a consistent providing integrated will and and refinance to financial our one this greater jobs. considerable our flexibility and duration debt outstanding, portfolio in of certainty addition and lowering day of rates, adding all by third XX% over

of quarter, us position improved. and We Centerspace so remains steps key efficiency. The Meanwhile, our the our by notable these and discussed calls that and a the our serve outlook markets to markets broad of business We these have Twin across that a year driven fruition. in would strength foundational in for for gear we're fortunate Cities an in expectation further this past Denver. second coming our shareholders, is resilient. outstanding team are bit growth As based improvement results all posted and to with has as

them days for to platform XX So just left recent XXXX we focus towards where investments, it and year, to turn using we'll our the the deepen value began on taking proposition residents. in our

also continue will term the witnessed capital. a to of never same or higher we've grow We true long stream earnings more climate better cost to communities It's our and our that quality we've power. invest a time, quality portfolio had investment and earnings at never the competitive in of

see want And maintaining housing will and able are across to in are here and is are an and can this prevail ballots. of be One industry restrictive come that benefits council we providing to that control and St. respect years rent we This voters the their day do rent should initiatives opportunistic, Paul, for an Minneapolis influence cities where the In compensation in have challenges one to to sense. we in allow makes the the that as focus believe and to a insurance, these, Of address ballot these largest rents. out months thrive that and more is both an the over for pressure the competitive is measures very or issue control. by the specific property are our difficult important tools fundamentals critical control rent ourselves Balancing our be includes assets like markets. regulatory the labor, headwinds ahead. here. team also Minneapolis, years environment. and not in and to give those strong we taxes, labor. most on portfolio regulate for working on our communities actively and determine always in the environment area with ahead than we're a Paul, more So whether have the authority we've We're city the people U.S. underwriting We far to industry offering we St. in have seen anywhere to residential Minnesota we

Paul The closely. initiatives control these XXX contains X.X% homes, X.X% NOI. rent In St. potential approximately measures could communities Minneapolis, representing impact monitoring one of four passage the NOI. would XXX of with and of are initiative our affect We our of homes, community that our

us know homes know So is We'll operating of and tomorrow. easier an opposing cities add we supply. NOI. in And communities improve total, approximately inhibits more restrictive five that would this to way Anne XXX both the housing please the supported make of affordability expected update. because and X.X% in you to quality provide with Adding that, it investment. initiatives We've regulations to efforts with

Anne Olson

Thank you, Mark, and morning. good

with the leverage quarter on capitalize strong XXXX. to fundamentals providing third Our demonstrate our results operating to platform of that improvements are the us

quarter occupancy the year, last of driving NOI store third period X.X% same compared performing the increase well revenue is same stable with year-over-year and growth to X.X%. a portfolio in in Our

rent the strong lease-over-lease increases X% our XX% Our renewal XX.X% comprising activity exposure. increases of of very of our average an revenue quarter, in growth average increases effective lease the same effective total store resulted with This third portfolio. X.X% is across blended effective of leasing result in

programs and and gained been Minnesota Minneapolis the has Minneapolis is in we X.X% same the our have our of NOI assistance all experienced quarter, portfolio our sequential we moratorium markets growth. the revenue third While market, Denver. encouraged markets largest slower XX.X% store rental by our a growth recovery progress have eviction Across are given growth trend revenue and seeing in experienced positive momentum. This within as expired

Our average per rate collections With per basis the quarter our unit XX.X%, a increase a were this to occupancy, quarter XX $X,XXX over rental X.X% strong same grew the year. monthly unit point we $XX second second over or improvement this quarter. of store

head XXXX saw effective we increased fourth the results our increases positive. and same store we average rent and lease-over-lease renewal over quarter traffic initial achieved significantly average October are into effective In As portfolio X.X% increases. X%

leases of right take systems expect increases Our throughout just XX% be we while current same and our with quarter, rent store occupancy the right in fourth and the occupancy to the These is able capture to results boosting XX% quarter. the expiring people.

on on and communities that team hard new we September. tremendously XXX Minnesota teams and boarded Our XX top have of worked year over new in this members

store while are on our opportunities We results in new in forefront. We're days and by communities systems, going for great execute as to XX to expect these growth we at new keeping to our focus our move opportunities brings. we portfolio remain the the our homes experience non provide and some same on volatility our mission optimistic we the that on about customer

Our [indiscernible] commitment. margin improvement program demonstrates this

focus value improvements. XXXX to been add a and stack technology platform single Our transition has our on

These the invested. anticipated expense the non and of costs of implementation expecting we're expense new are plan our all XXX,XXX to XX We live adoption assessing The the recurring recurring this systems of by on to third advantage we related to our each working offer. our our due we full take the that of across and the most end. higher year ensure portfolio non dollar new to spend was are it XXX,XXX than we're in has originally project across make results and now expansion communities and carefully additional implementation to quarter

and and to improved rising inflation our headwind areas the felt of XXX to premium all remainder The year the disruption business we're add for expense for With are monitoring company. of ROI better On together. the and day add achieving we million an across renovations approximate better per planning truly the XXXX of Each our supply units and across our and individual quest one into cost of fronts be value is spending XX%. every in renovated $X.X third margin. and labor to we chain will I'm our are approximately in teams in of being contributing $XXX unit averaging respect a and the both so grateful XXXX the materials. effects deliver value quarter

which efforts results now show our Our for John positively discuss. to in I our residents financial will each other for and ask

John Kirchmann

Anne. you, Thank

change As Anne of Mark and have emerged has discussed, a as we been the pandemic. from year XXXX have

technology XXXX filling our open some where our left versus from ensure we corporate made XXXX included resulting in initiatives management form XXXX, decisions to start open Before changing the we a we cash. not support and minimize filling have off decrease property include success. Those in compensation, forward and XXXX positions, in decisions to conserve pressed with incentive and G&A costs of XXXX. would In which to I its context positions like X% with expenses

During rate resulted the we senior years, quarter's financings and our facility with and while extending and of that X.XX% of debt rate $XXX.X increased investors of weighted a undertook line four sheet, bond improved of weighted to also maturity credit, secured credit and reduced average cost issuing capital, to average the XX.X $XXX third entering maturity. one improving average refinance our weighted a Fannie average in this acquisition, of and from weighted balance initiatives quarter, X.X notes interest and of million interest Mae our maturity X.XX% expanding into which group million average existing our our weighted investor included, These several associated of with years. unsecured a portfolio

which and up the XXXX During million authorized ATM to $XXX allows the program, shares. offer common of also quarter, us we to sell

issued an we at net average $XX.XX. price quarter the During shares of XXX,XXX

common million. we for average nine of total an X.X consideration of have $XX.XX September shares issued ended the months $XX million During at net price XX,

XXXX. that, of of the remaining With reported $XXX look ATM. we there As core of for or at FFO XX ended results. September XXXX, $X.XX XXXX increase night, per XX, $X.XX under let's Last September quarter is the or the an increase These primarily million share our due fully $X.XX increases share, higher count. representing from offset diluted year. quarter per X.X% are the $X.XX from by NOI an share of core The to year-to-date prior FFO higher is X.X% third of

of nine in the XXXX G&A increased the $XX same incentive in by Looking expenses administrative prior costs million technology September is year. based in the $XXX,XXX XX, $X.X non-recurring primarily ended million period $X.X compensation million for $X.X attributable our year. to as compared This the the million as $X.X filling to $XXX,XXX XXXX and at months and non-recurring to increase expense in for of initiatives initiatives. technology prior Property to nine same the $X.X million September XX, of the management is in open The from months well $XXX,XXX positions. costs ended period million to to due increased compensation primarily compared general

$XXX our year primarily disposition of X.X% is of prior ended is XX of to which is This expenditures, unit, page same year period completion Turning Rochester September Same older at full assets XXXX, that from was CapEx XX capital which store $X.X during for and the unit lower million due year. than the $XXX beginning CapEx of guidance decrease the expected million same with spin quarter. is reduction second decrease of to months the supplemental. nine of of work to due of per timing $XXX the per on presented is $X.X the the midpoint which the the a to store be our to

same a in guidance of our page a our several of full outlook continued growth per team tremendous increase guidance. prior The over for the midpoint or full increase range our of achievement remainder supplemental, we range have X% our increase year year revised initiatives. operations guidance. our X% midpoint As in increasing guidance by strength has is outlook to FFO resulting financial driven of in S-XX core by XXXX, to our the been presented store The of have the X.X% year in from of as we X.XX% $X.XX a resulting our on core to an of $X.XX share, of in executed prior year NOI to on

communities is delivering new I our what team while we all outstanding advance sheet and We and it of team platform, our opportunity to balance thank as results. their demonstrating team. take our continue perform members this technology onboard fortify when possible to will one members our successfully for

Operator

first answer comes BMO Instructions] Markets. question Capital We will [Operator Our and question today ahead. the go Kim Please John begin now with from session.

John Kim

it's still kind rate peers that's growth the growth as in Thank this deceleration? it could I I in so quarter many markets high growth about if was which about any third lease your quarter you. seeing the Are during X% I but and a it ask wondering third market. there the then of of new in sounds well. realize was driving accelerating like looked like October, your decelerating are rate it's far

Anne Olson

morning. Yes, Good Anne. Hi, John. is This

those good And in have growth captured think Minnesota, we a in I that's exposure think and across high we I early. The really northern we in colder during are kind have little little really we of North bit little we But these have do October example, seen still in October deceleration and even months. that some down seasonality Dakota, a XX.X%. slow expirations really more we numbers in markets third rent the saw second and Denver, at quarter. our for like very where still, it's growth lease weather

those have been data in we from end pulled as well. those think we see month the through movement the the the may So XXth of There some some may of month. I

about been of NOI accelerating, which are little and So portions feel the an really we a have good larger portfolio basis. Minneapolis, on particularly and bit Denver

John Kim

fourth And of concession use first was of concessions third then in us of last rough you year? remind and last the quarter used can Pete how and in year third much when this percentages, year quarter and the quarter

Mark Decker

used ever been the ton haven't concessions, but we have peak probably mean, of a I would –

Anne Olson

of do the I'd and see starting we probably report keep management starting really the revenue this second we out quarter to were concessions to when when noted But rents, was our as affected were effective Yes, system. year, the point. up Mark probably are high ramp say we on we we try of

So pretty use. sparse

Mark Decker

employee discount. Yes. ran a includes concessions like XX% about we concessions, John, give in QX But that X.X%. employees our

So that's including everything.

So it's low number. a pretty

John Kim

can. if Okay, just one more question I

of the TMS Your this EBITDA leverage increase this related mismatch quarter timing to a with of with any acquisition, X.X Is times? that?

Mark Decker

John, TMS one to mean, debt we I remember in all got of of have the EBITDA. Yes. you month the

that on that's John. it forward trailing a be a So Is today. number basis would significantly ahead, so Go on lower.

John Kirchmann

high a On it's basis, the forward in Yes. sevens.

So forward it's the using comes actually quarter. measurement down from actually, NOI by our prior

John Kim

sevens, including preferred? High

John Kirchmann

preferred. excluding the No,

Mark Decker

will We club. debate save preferred for

John Kirchmann

eight, yes be would on mid It yes, the Yes. seven preferred. including

John Kim

it. get I

Thank Okay. you.

Mark Decker

Thanks, John.

Operator

is next Securities. with National question Please ahead. from The Gaurav go Mehta

Gaurav Mehta

Yes. Good morning.

Denver that's of Minneapolis. improving You portfolio urban Is about talked in improvement that the there? part and

Mark Decker

just fair Anne? I Is Cities, big I pretty they've base stabilized. The Yes. is particular, urban say, say had in a improvement snapback. the in I not Twin the would to would assets would broad say have that

Anne Olson

bit portfolio, Yes. the And I most think noted, I deceleration, of we've the across the steady. rest of seen but in growth as of little a the markets, has been pretty

we're across pretty growth mountain and seeing in strong So other still remained that's steady. West Omaha, the

deceleration we're So Dakota, [twin in market, North bit Minneapolis. Denver a and good across seeing and then acceleration city] little say of I would

Mark Decker

rate say that also of stronger growth off lower base. is I'd a

big last see downdraft didn't year. we So

Gaurav Mehta

color in basis Okay, occupancy let's some the on part Cloud in portfolio, for provide that say in that I market? your XXX that saw by the drop dropped points of portfolio St. Can for occupancy you XQ.

Anne Olson

Yes, sure. question. Great

the optimize is our really goal to So revenue. we're

growing when of a have way we occupancy. the been up the little so And bit they lease will give rates are

our quarter our over exposure, that portfolio expirations, have also third quarter. during rolls XX% lease amount of of the We during highest

in a of So bit we time trying the is have naturally revenue. what at occupancy do little and really, we're that optimize to dip

little bit So open and take to longer. the we the up rent resident leave push we higher to a will extent wait will that continue who it rents for can

Gaurav Mehta

Okay, I thank had. you. That's all

Mark Decker

Gaurav. Thanks

Operator

Please ahead. question next Stevenson is The Janney. Rob go from with

Rob Stevenson

Good morning, guys.

of hit on winner rental occupancy the did quarter of the pushing the on leasing down in more Just than here rental put keeping of XX, that of higher you is sort as any the to materially the continuing controls a the the terms mark the of in into fourth XXs guys down And of the it least I rather about of follow last at versus comments the mean, any for rental and number push about up leases of you rate. in driving getting anticipation given debate aggressively did rates your of slowing on in occupancy. have question you sort how sort that? measures,

Anne Olson

Yes.

have the we debate work. off in seen drop I a having respect management we So kind significant haven't that drop of a revenue optimizing of about let And really system kind mean expirations revenue, we traffic. with the of do to lower

was in example, traffic XXXX. for and almost So three October traffic October XXXX times

we confident so to we that feel traffic occupancy those the people And as of that and have leaving we many some expiring. that still have fill don't

passes strong portfolio, our prepared one see assets rent to authority in quarter X%. the expect actually the no respect fact would today to a measure small So has this control Minneapolis of in to assets. we for up. to the ballot. St. only our subject be if Minneapolis. with that noted would of would that it part grow set on it have But With in St. rent the one such City affects only Paul in and as really measures do occupancy Paul control of that comments, it's take increases There's Mark rates. our rate a just that Council actually measure

it we've just occupancy the is is pretty way has in always asset running well-positioned to-date and the So revenue we have and good been which that that. optimized strong

change really it. on limited we didn't exposure course have we So to based the

Rob Stevenson

feeling exposure of to assets heading a thinking about of in exposure? market upside And closed previously now, to some XXXX? for are Minnesota been you're you're of you've owned months market since additional How then portfolio into it's sell you that and assets the about taking are couple market you finding strong as acquisition. maybe Okay. Minnesota your here the reduce prior that Any advantage guys

Mark Decker

say we wouldn't market selling of of well. would expected that, a run as believe of for some And lower selling and Twin we to but those market. lot and risk We I the better all which cash it. Rob. while we know in buy terms to for it them you a listen, bought assets probably proposition, can is you feel is, them. be, to about I consider Cities really exposure them very mean, there that credit because those we XYes. the We them we always for what in we flow. to credit the anything case very get everything within our get Good view opportunity flip is And morning, sanguine operating didn't

it always our by we'll the overall time so we're goal than lower adding things from related happy likely out NOI for it of And strength but and that the and percentage over comes plan to selling it make in is of decisions terms portfolio the Twin of more with now. we'll And things. grow Cities,

Rob Stevenson

And any the you're upside acquisition additional of finding this point? at out

Mark Decker

look fair additional amount mean, I we underwrote upside. of a

guess all haven't I with which that So you. we shared

I'll that then opportunity, so be the is underwrite on is kind a say guess is. densification there I of there. lot some it what we probably in of relates as something but may side more upside revenue there opportunities didn't believe time, So over much be it it could think embedded is which And we to really and

So that time, would different be over future. XXX years with all acres, we do XX old in units the something that but sits on that's might that's eight and that

Rob Stevenson

pressure a at expense, higher is when expenses things or now much for fours future? order the just same etc foreseeable you or, one, on we to the property an down and have into store the last you're drive pull versus right taxes, recurring of in me, that of sort of normalized upward back at to in where then midpoint temporary that the high environment and going John, X% how and sticky guidance wages, year, Okay revenues, are have other for for higher could the like a expense, a terms incremental technology take non Anne stuff or to investments in more that look

Mark Decker

start the I'll real then Anne. estate with taxes, let and

happening. taxes don't remember estate real down. I that. don't know I don't I So expect that go will

sticky. that's definitely So

is there's and out you significant comp the of there. asset inflation pretty know a As data lot

increases. there to to and years on had expect I bad So We've taxes. insurance pressure cost continue couple be a

but will I hearing once backwards. we're think it's mitigate is that that now somewhat again, going not what will

So and will last run as as rate operating? far we've large increases forward those years two had then the stick our and Anne

Anne Olson

Yes.

bit. I on to I do, side what that see think I difficult the that really think seeing think wage is you're I And going we a on do inflation. are inflation little

are it So of question answer things to think our both of some there keeping non-recurring. some meantime is and aren't do costs We at automatically necessarily well, increasing the the aimed technology systems are technology our running assets takes cost wage your real, it built and into that also to but committed the a and the recurring, yes, is is efficiencies, well have I and in of is translate the significant. lot people, and less inflation and that people initiatives in doesn't retention we

seeing are good we to makes it. for increases that more good hopefully pressure think is I than feel some really and news there So the a we're up rates going that the on

Rob Stevenson

it. guys. thanks, Okay, Appreciate

Mark Decker

Rob. Thanks

Operator

The next question is Please go Sweitzer Baird. from Amanda ahead. Amanda. with

Amanda Sweitzer

Good morning. Thanks.

Mark Decker

Good morning,

Amanda Sweitzer

home exceeded during rental related Are revenue in Minneapolis. growth initiatives that that occupied you Was will revenue -- other per think quarter other there that the in persist? particularly payments? any rental rate to driving Your assistant growth

Mark Decker

Yes.

I it And think you – right. got

Anne Olson

quarter. particularly to the of in had is. during out actually from There the payments was residents really very program. government to through it of come rental getting seen momentum, third in lot really assistance the Yes, that where we a The started little Minnesota

there. I So think big that driver a is

Amanda Sweitzer

you're about earlier your prioritizing I That thinking of And in the you've question, the the and following then today? think how target are it growth. close thinking talked on improving about an market and makes leverage up sense. your Is driving transaction? that still exposures about earnings you following how past, KMS

Mark Decker

as mean, It's up leveraging really a leveraged mean, John at outlined we this a ago, look don't moment neutral. just transaction. I I as Yes.

loans. and the other put So leverage table, our line more did at and to assets, those of cash proceeds while some take bank we applied unsecured on cash we these that

was in not, it's on our net with grow. pieces, leverage the on all posts different So with moving basis of spot us should and portfolio in roughly terms same that cash portfolio of and the did a flow we par

we're actually on happens, would down a it's our same leverage on if now, going percentage of the we everything XX months post leveraging be basis. have a lower leverage or assets will to less So look nothing transaction, else else at equal basis. And a as multiple that from

Amanda Sweitzer

That's fair. funding that going sense. it doesn't think assume Okay. around, activity to fair fund you about And a acquisition of is then, then And make as try that that on additional some you forward it to as stuck basis leveraged neutral well?

Mark Decker

about Yes. leverage everything of perfect like a The drive to world, in have, I I equities over we base a NAV we mean, and think also we growth of good equal the strong added keep mindful feel stream and expectations. I counterbalance leverage we'd when of investors earnings. focused we mean and both have investors definitely to our think really judgment, the I duration sort we I'd have we And consider down. in that and have it. we'd and pretty is our those we be say sets investor earnings rates. of of

about years lowered So rate. our duration the we've by and average lengthened three

due times mean, almost company. not Obviously, we're it an good Two years. worse expiring for quantity. very is it turns. composition tomorrow, they duration It's when feel refund A similar. of you debt. have we can't our less several So But Camden's eight at isn't all about the average rated years. XX I times than That's is

think in think it So fashion. it and about a balanced lot a we that about we

Amanda Sweitzer

the sense. make time. Appreciate That'll

Mark Decker

Barry is question from with Please next Oxford The go Colliers. Thanks. ahead.

Barry Oxford

guys. Great, thanks,

renovations are XX% number? into should your and think weigh good XX? about a costs on that at going ROI that to Looking we going labor Or number and getting look, materials as

Mark Decker

mean, good things XX%, monitor we're really not is a whether or one that looking more slow to down to we think Yes, that Yes. we the ‘XX. getting and I about number want is try we if really disciplined that of be into not continue. than

run historically, and XX% between XX%. and we So

So I think number. is good XX% a

Barry Oxford

over Okay, as been great, move type into get you you increases can you you XX in get those of the at have Or tenants able to look kind when kind maybe to And of continue ‘XX, that types rental year continue look increases, to guys rental given slow this you're down? your that those markets it absorb can to of of have increases? and great. we'll

Anne Olson

question. mean, I a that's great

supply is haven't amount now and be there XX seen secondary markets months. That's those those some the We won't announcing significant lot to of right supply opening there supply, of planned for or in a even and well multifamily is XX a on while planning side.

seen lot on We drive pretty family a portfolio single and also we coming rates haven't supply in to now. lease really loss the side, quick significant these the a to enough have quick, down of

and optimistic, in So we would year, the lease expect we're some rates rates growth the we've portfolio. and that pretty that's the given is lease embedded maybe that renewal two XXXX and new growth really the reset we've in last stay high but moderation into there had this and where

Barry Oxford

that's makes question are just a cap beginning year XX acquisitions where Nashville been of coming the compression? they at say, Or target Perfect. since XX gotten back even kind has and we, or Right, down from kind no, And know, cap I about rates away of That basis last have further points let's sense. market on of market as you great. you, talk then we're compression to XX seeing the of Nashville? do gone maybe rate think then you? it's because

John Kirchmann

the think I'd rate I basis to points. estimate XX. Barry, XX be question, cap XX compression more It's definitely than Good to

think closed Parkhouse, say, would we on A lot it's So those that's times on feels you're room plus which I lots say January, fall; oh, a we don't mean that will a our in do be to kind six. we and But consider three XX know then did But and points assumptions would we which to mean, exactly four those, how committee just, you're or I both I and disclosed four. were using. closed minus we forward the basis union last in like and forecasts, when or taxes it's calculating point I so that of it's or all of a just what and I all math minus on today. plus leave of whose those for XX growth math and as I think capitals quarter cap, more brokers right. three like, XX the looks it, general, three discrepancies.

Barry Oxford

Right.

Mark Decker

that mean it year probably one fraught I instances, unlevered is about end, XX. have one on also rates, many back think in basis, thing, year cap they're doesn't to think which a the we those IRR I of mean sort with returns levered XX XX assumptions, the come And down

down rates the people's to levered XX if to up capital cap But years has gone is the get cost it, low. your you're front in in XX growth the IRR five read down your solving a basis points promote rate, for end early So your opinion. gone be pretty of and my isn't probably assumption and

Barry Oxford

feeling And you Right. about Nashville? then Correct. how are

Mark Decker

I love Nashville.

I think it's fantastic market.

Barry Oxford

How you Nashville? feeling bad pricing in

Mark Decker

by I year bit. market. the underwriting we No, white discipline listen, quite And below drawing sucks. now. line we're, at we're do metrics competitive very still a somewhere bridesmaid X.X% on so are not still our we have are It We that, things and between line But our and really frequently a to we're much. the X% becoming we and first to but No, is whale. just right are great have missing where think hold Nashville, looking somewhere draw and we the I actively we by mean, there. are clearing where

Barry Oxford

Okay.

Mark Decker

trading be we're at it, excited we can of in XXX, are about and hunt. for ink not if running we're If we were XX. assets It’s out the

Barry Oxford

great. Okay,

for all Thanks, That's color. helpful me. that's guys. Now

Mark Decker

Barry. Thanks

Barry Oxford

Yes.

Operator

The next go Sandler. from with Please question Piper ahead. Daniel Santos is

Daniel Santos

I'll there up say, you and of Hey, any Midwest and just kind on sort on expected that Barry's was for sort interest question follow good morning. of Thank the like maybe list? It are outperformance you. Thank have broad. questions. than markets stronger seems in up the that performed and that my taking of your pretty moved Sunbelt the

Mark Decker

we mean you aren't in? Yes. like, markets

Daniel Santos

Yes.

Anne Olson

say for it markets I of I focus the we're really it's basis. not our Yes. part, one mean on an at most if looking would opportunistic

looks probably oh, some something off that saying, not Salt it there's asset it's portfolio, So Lake well, City we're in great. to one

maybe we, asset your turn has we with opportunistic. us been say head. market just be of don't that to I our strength I broad it. do But It that we're has just based. just broadly, the for to not Let's more an point would mean, than kind we agree

Daniel Santos

Your grown? market having

Mark Decker

our say work I I discussion trustees little bit. meeting, would had on these about last of we the lot with scope we of markets. mean, team not. a land we're I do to a a kind has long in considering. board It broaden mean, and the that We should maybe

where say, markets. say hey, to have name yes, to our list it's from we this go is, of the pretty mean, may call XX would But work to So hunt. say, we a fair did for we their the sure reevaluate work going board heard and we've of I high a view markets. should first go did few will investors, more a as to three it standard have is I like, more we're say would and we places amount I

Daniel Santos

of there sort sort focused? truly you're suburban some that and of portfolio and now of guess, the I making of out thoughts maybe then urban And Is have it. cycling stabilized. them assets sort Got

Mark Decker

portfolio something say today And I cities. a we number. not same I XX% in believe, like store term long that's is our urban would off, mean total No, that's number, a taking

actually depressed, relative I basis. and find we cash So less a on interest we a the there's because mean, things flows like might in city are

not I seeking no, kind of So this say, that alter at the would mix we're we time. have to there

Daniel Santos

Thank it. for Got it me. you. That's

Mark Decker

Thanks.

Operator

go BTIG. Please question with next Amy Your [indiscernible] is from ahead.

Unidentified Analyst

I hoping everyone. little bit to morning, was just the good Hi, back to traffic. a October come

was about that I'm cited that times ‘XX seasonality? wondering typical to how XXXX XXXX. or But compares three your October You

Mark Decker

Yes.

little I year-over-year. October. at a XX. look over If We better. It's consistent XXXX been That's we look in I'd traffic traffic better. definitely also has year think it's this say better.

Anne Olson

I track markets asset had and some are think us some made to has it technology kind to of Yes, difficult secondary XXXX strength, stronger over we particularly of the But for transition traffic. in has seeing the asset XXXX.

Unidentified Analyst

and you back just I trended how we've urban really continuing the various particularly strength in and suburban ground Or But coming in is just to area to along. centers? specifically within Are discussed factors. is what urban on in traffic to now? Minneapolis? and come this back the the has know taking market past urban this seeing the about was fumbling longer right people Okay, the how are

Anne Olson

urban post We particularly are I areas, in say more kind of the Day. strength Labor seeing

office Minneapolis is who road people and the more are there downtown, day starting every as So on occupants restaurants up. come downtown traffic more few more a open to back

music the We live are open. seeing are menus

going playing teams on. professional back There's in are Our lot person. a more sports

showing that numbers rates. our traffic translate and rental in up seen it's our have into we So

Mark Decker

driven and by are those mean, the where they're kind coming walk bars markets we And are then of in I are like be things to and walk back. your able and they entertainment, really, they're not, to less able office three being specific sub to to things downtown

positive. a that's So

Unidentified Analyst

Great, been thank other answered. my all you questions

Mark Decker

Amy. Thanks,

Operator

Instructions] Buck with go ahead. Raymond The Associates. question next is James Horne [Operator Please from &

Buck Horne

expecting the couple the kind into based and Hey, are on budget costs. initiatives tech like off thanks. on might How of a for could seems going drop some going the costs back incurred kind to fourth times just wondering want quickly you're additional next Good go morning. costs just to I year? and that XXXX? there. we've with of over what the those be of what It And gone quarter,

Anne Olson

Yes.

those things during but but look I the increased see on we're slightly Kirchmann very John costs he right doesn't laugh we've mindful could budget of. when face year a done you like budget, Buck we're over you now go would that that have but because couple the If over

of phases. first we The forward our did pull being one

plan did there. portfolio pretty the assets And really something Minneapolis we some That that increased in XX to of significantly. adding So expand then XXXX new costs into do the pulled project we XXXX.

those to decrease XXXX. I see think cost, very rapidly the in going we're

on in So We're XXXX, the the new plan, tight adaption system and fully sorry, off. now. I'm to we're working right drop live going they're

have for fourth but enhancements we that quarter, up So be XXX,XXX the to last of should moving this efficiencies year, recurring really end this at we is tail next and the XXX,XXX, how use non be really, on fees. kind we this wrapped technology other towards goal platform looking the really of our might to expect in

Mark Decker

the Buck XX extra a it those for lift entire portfolio just big team. but work and acquisition, Yes. the communities, was for I'll add only was not the that with

additional we some consultants So on to workload internally we the kind doing focus so could took we of some the some originally we of were that onboarding. relieve things and brought

Buck Horne

signs All any earlier tack just if right. you're Very you with helpful economic can color seeing provide applicants incoming color, data guys. you those the or wondering, the to a see are any to of Appreciate rent up? tick seeing? kind you that terms continue keep or that. rent you're can on higher of metrics strength I'm that on income Thank or in of or customers seeing that to coming you levels questions ratios driving seeing with of your extra you. that are in have And tenants up starting increases to income different kind start

Mark Decker

Yes.

So would still speaking the we require in say I times rental to low XX, we're three generally income.

So –

Unidentified Analyst

haven't qualified seen drop applicants. And any we off and

and or see think on qualifications So we the inflation that I see mean, it would to wages. the first denials really good feeling extent rents people we're increases do more haven't are also that rental there is is the applications thing that be in I seeing the based started we to lot started their yet. less in that that that would a

deterioration really metrics any we those seen haven't So to-date. of

Buck Horne

That's helpful. all for all. you. me. very It's Thank It's

Operator

Decker would This conference to the concludes turn back Mark any our over question and for Decker closing remarks. answer session. like to I

Mark Decker

next much. everyone your out some wish and today. look [indiscernible]. and We at and meeting time vote healthy a forward so Centerspace. Everyone to interest get holiday Hope you And you in season. with thanks. of safe week appreciate We Thanks

Operator

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

You may now disconnect.

Centerspace (CSR) 2 Nov 212021 Q3 Earnings call transcript