D/b/a Centerspace · NYSE:CSR
D/b/a Centerspace — Centerspace — Q3 2022 Earnings Presentation
30 slides from D/b/a Centerspace's earnings presentation, November 2022
Slide 1: Investor Presentation November 2022
INVESTOR PRESENTATION November 2022
Slide 2: Safe Harbor Statement and Legal Disclosure
SAFE HARBOR STATEMENT AND LEGAL DISCLOSURE Certain statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual resu
Slide 3: Company Snapshot
COMPANY SNAPSHOT Differentiated Markets Internal Growth Opportunity Balance Sheet Flexibility Experienced Leadership 1970 15,064 1997 Year founded Apartments owned Listed and operated NYSE: CSR Transformation to Focused Multifamily 2017-2019 $2.3 Billion(1) Key Indices Multifamily and Other % of Gro
Slide 4: Strong Foundation
STRONG FOUNDATION Strong Operating Results Driven by Rent Growth Opportunities Same-store new lease over lease growth was 7.5% in Q3 compared to 13.0% in Q2 2022 and 5.7% in Q3 2021 BETTER EVERY DAYS Same-store renewal lease growth accelerated to 8.7% in Q3 compared to 7.8% in Q2 2022 and 7.4% i
Slide 5: Differentiated Portfolio
DIFFERENTIATED PORTFOLIO PERCENT OF NOI BY STATE (4) Q3 Avg. Rev per Occ. Region Homes Home(1) Denver, CO 2,104 $2,090 5% Minot Grand Forks Minneapolis, MN (2) 5,293 $1,590 49% Billings Bismarck 14% St. Cloud North Dakota 2,422 $1,257 Omaha, NE 1,370 $1,208 Rapid City 3% Rochester Rochester, MN 1,12
Slide 6: Strong Fundamentals Throughout Midwest and Mountain West
STRONG FUNDAMENTALS THROUGHOUT MIDWEST AND MOUTAIN WEST Overall Portfolio YTD Avg Annual Income: $89,967 YTD Rent-To-Income Ratio: 22.30% Grand Forks Minot YTD Avg Annual Income: $77,828 YTD Avg Annual Income: $86,798 Bismarck/Jamestown YTD Rent-To-Income Ratio: 19.81% YTD Rent-To-Income Ratio: 20.3
Slide 7: Our Portfolio Compares Favorably on Unemployment and Supply
OUR PORTFOLIO COMPARES FAVORABLY ON UNEMPLOYMENT AND SUPPLY August 2022 Weighted Average Unemployment Rate Weighted Average Portfolio Under Construction % of Inventory State Unemployment Rate Weighted by Home Count 8.1% 4.0% 7.7% 3.9% 3.9% 7.4% 3.5% 3.7% 3.7% 3.4% 3.4% 3.5% 6.3% 3.3% 6.2% 5.8% 4.9%
Slide 8: Vacancy + Under Construction and 3-Year Absorption Rate
OUR PORTFOLIO COMPARES FAVORABLY ON UNEMPLOYMENT AND SUPPLY Vacancy + Under Construction Vs 3-Year Average Absorption 18.0% 100 Vacancy + Under Construction and 3-Year Absorption Rate 16.0% 90 14.0% 80 70 12.0% Months Supply 60 10.0% 50 8.0% 40 6.0% 30 4.0% 20 2.0% 10 0.0% 0 Vacancy + Under Construc
Slide 9: Stable Underlying Portfolio = Consistent Earnings
STABLE UNDERLYING PORFOLIO = CONSISTENT EARNINGS 2.00 Indexed FFO Growth NXRT 1.80 1.60 MAA IRT 1.40 CPT CSR 1.20 UDR ESS AIRC 1.00 EQR AVB 0.80 0.60 ELME 0.40 VRE 0.20 0.00 2018 FY 2019 FY 2020 FY 2021 FY 2022 Outlook (Midpoint) CSR UDR EQR CPT MAA AVB ESS AIRC IRT NXRT ELME VRE centerspacehomes.co
Slide 10: Same Store Leasing Update
POSITIVE LEASING TRENDS CONTINUE SAME STORE LEASING UPDATE New Renewal Blended 5.8% 10.9% 9.8% 8.8% 8.5% 8.2% 7.6% 7.8% 7.8% 7.5% 7.4% 6.7% 6.0% 6.2% 5.7% 5.5% 5.6% 3.3% Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Oct 2022 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Oct 2022 Occupancy 94.3% 93.4% 93.9% 94.8
Slide 11: Same Store Leasing Update
POSITIVE LEASING TRENDS CONTINUE SAME STORE LEASING UPDATE New and Renewal Lease Changes by Quarter $ 1,600 15.0% $ 1,400 10.0% $ 1,200 $ 1,000 5.0% $ 800 n/a $ 600 $ 400 -5.0% $ 200 n/a -10.0% Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Avg Rent Occupied Units Avg Replac
Slide 12: Optimizing Rents from 2021 Portfolio Acquisition
OPTIMIZING RENTS FROM 2021 PORTFOLIO ACQUSITION Comparative New Lease Rate Growth Comparative Blended Rental Rate Growth SS MSP KMS SS MSP KMS 11.9% 10.1% 9.1% 8.4% 8.3% 7.8% 7.8% 6.7% 6.8% 5.5% 4.9% 4.1% 4.5% 4.5% 2.1% 2.5% 1.5% 0.8% -1.2%-0.8% Q4 2022 Q1 2022 Q2 2022 Q3 2022 Oct 2022 Q4 2021 Q1 20
Slide 13: Enhancing Customer Experience Is a Core Goal
ENHANCING CUSTOMER EXPERIENCE IS A CORE GOAL 2021 J Turner ORA Score LIFETIME AVERAGE REPUTATION SCORES* (Overall Scale of 5.0) 3.65 3.62 3.6 3.56 National Property Average ORA Score 62.62 3.55 3.52 3.5 3.45 3.41 3.4 3.35 Centerspace ORA Score 64.78 3.35 3.3 3.25 60 61 62 63 64 65 66 01/01/2019 01/0
Slide 14: Accelerating Value-Add Opportunity
ACCELERATING VALUE-ADD OPPORTUNITY VALUE-ADD HIGHLIGHTS IN-UNIT VALUE-ADD RESULTS Value-add opportunities to drive maximum revenue across the portfolio include unit and common area renovations and adding amenities including clubhouses, fitness 2019 2020 2021 2022 (YTD) centers, dog park, outdoor k
Slide 15: 2022 Financial Outlook
2022 FINANCIAL OUTLOOK ------------Forecasted Range------------- Low Mid-Point High SS Growth Revenue 9.75% 10.00% 10.25% Total Expenses 9.50% 9.75% 10.00% NOI 9.75% 10.25% 10.75% Per Share Earnings per Share $(0.50) $(0.46) $(0.41) FFO per Share $4.30 $4.35 $4.39 Core FFO per Share $4.42 $4.46 $4.5
Slide 16: Balance Sheet Positioned for Growth
BALANCE SHEET POSITIONED FOR GROWTH Quarterly Net Debt / Annualized Forward Adjusted EBITDA (1) Large Permanent Capital Base 9.5x ($2.3B Total Capitalization) 9.0x 8.5x 8.0x 7.5x Secured 7.0x Debt $971M 21% 6.5x Total Debt 6.0x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 $110M 2018 2018
Slide 17: Improvement in Portfolio
IMPROVEMENT IN PORTFOLIO Improvement since 2017 driven by thoughtful capital allocation and creative deal structuring 2017 Today (1) Acquisition Structure 100 84 ($ in thousands) Communities $92,667 Homes 13,212 15,064 $488,080 $877,950 Homes per Community 132 179 Buildings 709 520 Cash OP Unit Deve
Slide 18: Recent Acquisitions
RECENT ACQUISITIONS LYRA APARTMENTS NOKO APARTMENTS CIVIC LOFTS CENTENNIAL, CO | $95.0 MILLION MINNEAPOLIS, MN | $46.4 MILLION DENVER, CO | $63.0 MILLION • A 215-home community built in 2022 • A 130-home community built in 2021 • A 176-home community built in 2019 • Located in southeastern suburb of
Slide 19: Minneapolis Market
MINNEAPOLIS MARKET MARKET HIGHLIGHTS CSR HIGHLIGHTS (1) 32 CSR communities consisting of 5,292 homes Location Asset Class Same-Store vs Non Same-Store Rent Control (2) 16th largest MSA in the nation #6 on U.S. News best places to live in the U.S. 11% 1% 24% projected population increase by 2
Slide 20: Minneapolis Market
MINNEAPOLIS MARKET Population Growth Labor Force Growth 2% 4.00% 3.00% 1% 2.00% 1.00% 0% 0.00% 12 Mo Change 10 Yr Change 5 Yr Forecast 12 Mo Change 10 Yr Change 5 Yr Forecast Income Growth Inventory Growth 15% 6% 5% 10% 4% 3% 2% 5% 1% 0% 0% 2019 2020 2021 2022 2023 12 Mo Change 10 Yr Change 5 Year F
Slide 21: Denver Market
DENVER MARKET MARKET HIGHLIGHTS CSR HIGHLIGHTS (1) 6 CSR communities consisting of 1,889 homes Location Asset Class Same-Store vs Non Same-Store 19th largest MSA in the nation #2 on U.S. News best places to live in the U.S. 6th fast growing state between 2010 and 2020 31% 804,100 jobs to b
Slide 22: Denver Market
DENVER MARKET Population Growth Labor Force Growth 2% 3% 2% 2% 1% 1% 1% 0% 0% 12 Mo Change 10 Yr Change 5 Yr Forecast 12 Mo Change 10 Yr Change 5 Yr Forecast Income Growth Inventory Growth 15% 6% 5% 10% 4% 3% 2% 5% 1% 0% 0% 2019 2020 2021 2022 2023 12 Mo Change 10 Yr Change 5 Year Forecast (proj) (p
Slide 23: Our Secondary Markets Have Strong Fundamentals
OUR SECONDARY MARKETS HAVE STRONG FUNDAMENTALS % of Market Median HH Unemployment 3-Month Avg Median T12 Market Market Rent Under Region Population NOI (1) Units (2) Income Rate (3) Job Growth (3) Home Value Deliveries (4) Vacancy (5) Growth (5) Construction (4) Minneapolis 33.2% 3,690,512 259,004 $
Slide 24: Environmental Social Governance
ESG HIGHLIGHTS ENVIRONMENTAL SOCIAL GOVERNANCE • Created ENERGY Star portfolios at • Contributed to more than 25 charitable • Maintain a Supermajority Independent each property in the portfolio organizations in 2021 through the Board with 87.5% of board members Centerspace Cares program being indepe
Slide 25: Best-In-Class Governance
BEST-IN-CLASS GOVERNANCE EXECUTIVE MANAGEMENT TEAM CSR rated ISS’s top score of 1 - indicating highest quality corporate governance practices and lowest governance risk Mark O. Decker, Jr. Bhairav Patel Anne Olson President and CEO EVP and CFO EVP and COO BOARD OF TRUSTEES Jeffrey P. Caira Michael T
Slide 26: Investment Highlights
INVESTMENT HIGHLIGHTS Differentiated Market Exposure Internal Growth Opportunities Flexible Balance Sheet Best-In-Class Governance centerspacehomes.com 26
Slide 27: Appendix
APPENDIX centerspacehomes.com 27
Slide 28: Reconciliation to Non-GAAP Measures
RECONCILIATION TO NON-GAAP MEASURES Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds From Operations and Core Funds From Operations We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit defines FFO as n
Slide 29: Reconciliation to Non-GAAP Measures
RECONCILIATION TO NON-GAAP MEASURES centerspacehomes.com 29
Slide 30: Reconciliation to Non-GAAP Measures
RECONCILIATION TO NON-GAAP MEASURES Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of real estate investments, g