Centerspace Reports First Quarter 2024 Financial Results and Raises Mid-Point for 2024 Core FFO per Share Guidance

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Centerspace reported its first-quarter 2024 financial results, with a decrease in net loss and an increase in Core FFO per diluted share. The company successfully sold non-core assets, repurchased common shares, and revised its 2024 financial outlook, raising the mid-point for Core FFO per share. Centerspace also announced participation in upcoming conferences.

Positive

• Successful sale of non-core assets in Minnesota for $19.0 million.

• Core FFO per diluted share increased by 15.0% to $1.23 for Q1 2024 compared to Q1 2023.

• Same-store revenues increased by 3.5% for Q1 2024 compared to Q1 2023, driving a 7.5% increase in same-store NOI.

• Repurchased 87,722 common shares for $4.7 million at an average price of $53.62 per share.

• Revised 2024 financial outlook, raising the mid-point for Core FFO per diluted share.

Negative

• Net loss decreased to $0.37 per diluted share for Q1 2024 compared to net income of $2.76 per diluted share for Q1 2023.

• Previous outlook for 2024 shows lower ranges for net income per diluted share, which is a negative aspect.

Financial Analyst

Centerspace's report on the first quarter of 2024 provides a mixed financial picture: a dip in net income per share to $ (0.37) from the previous year's $2.76, alongside a robust increase in Core FFO per diluted share by 15% year-over-year. This disparity suggests a deeper look into non-operating factors that could influence net income, such as asset dispositions or non-recurring expenses. The uptick in Core FFO, a key metric for real estate investment trusts (REITs), could imply effective operational management and a positive response to market conditions. An investor should weigh this against the announced asset sales, which, while providing liquidity, also indicate a strategic shift or portfolio optimization. The company's revision of its financial outlook, particularly the increased mid-point for Core FFO, signals confidence in their operational strategy. The provided guidance appears conservative, with modest growth expectations on same-store revenues and NOI. This suggests a stable but cautious outlook, factoring in market conditions and their growth strategy. The share repurchase also reflects a management belief in undervaluation.

Real Estate Market Analyst

The same-store NOI growth of 7.5% year-over-year outpaces revenue growth, indicating effective expense management and operational efficiencies at Centerspace. The slight decline in sequential occupancy rates, albeit minimal, warrants monitoring as a potential early sign of turnover or market softness. The real estate market is sensitive to macroeconomic factors such as interest rates and employment figures, making these performance indicators important to understanding Centerspace's positioning. The company's decisions to dispose of non-core assets and narrow 2024 financial outlook ranges echo strategic recalibration to maintain a certain performance level amidst evolving market conditions. This could affect perceptions of the company's growth trajectory and risk profile, influencing investor sentiment. The modest increase in predicted Core FFO per share and the decrease in forecasted net income ranges suggest a conservative approach to their fiscal management and an orientation toward sustaining income rather than aggressive expansion.

MINNEAPOLIS, April 29, 2024 /PRNewswire/ -- Centerspace (NYSE: CSR) announced today its financial and operating results for the three months ended March 31, 2024. The tables below show Net Income (Loss), Funds from Operations ("FFO")¹, and Core FFO¹, all on a per diluted share basis, for the three months ended March 31, 2024; Same-Store Revenues, Expenses, and Net Operating Income ("NOI")¹ over comparable periods; and Same-Store Weighted-Average Occupancy for each of the three months ended March 31, 2024, December 31, 2023, and March 31, 2023.

Three Months Ended March 31,
Per Common Share				2024		2023
Net income (loss) - diluted				$                        (0.37)		$                          2.76
FFO - diluted(1)				$                          1.16		$                          0.89
Core FFO - diluted(1)				$                          1.23		$                          1.07
				Year-Over-Year Comparison		Sequential Comparison
Same-Store Results(2)				Q1 2024 vs. Q1 2023		Q1 2024 vs. Q4 2023
Revenues				3.5 %		0.5 %
Expenses				(2.2) %		(0.1) %
NOI(1)				7.5 %		0.9 %
		Three months ended
Same-Store Results(2)		March 31, 2024		December 31, 2023		March 31, 2023
Weighted Average Occupancy		94.6 %		94.8 %		94.9 %

(1)	NOI, FFO, and Core FFO are non-GAAP financial measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to "Non-GAAP Financial Measures and Reconciliations" and "Non-GAAP Financial Measures and Other Terms" in Supplemental and Financial Operating Data within.
(2)	Same-store results are updated for disposition activity. Refer to "Non-GAAP Financial Measures and Reconciliations" in Supplemental and Financial Operating Data within.

Highlights

• During the three months ended March 31, 2024, Centerspace successfully executed the sale of two non-core apartment communities in Minnesota for an aggregate sales price of $19.0 million;
• Net loss decreased to $0.37 per diluted share for the first quarter of 2024, compared to Net income of $2.76 per diluted share for the same period of the prior year;
• Core FFO per diluted share increased 15.0% to $1.23 for the three months ended March 31, 2024, compared to $1.07 for the three months ended March 31, 2023;
• Same-store revenues increased by 3.5% for the first quarter of 2024 compared to the first quarter of 2023, driving a 7.5% increase in same-store NOI compared to the same period of the prior year;
• Centerspace repurchased 87,722 common shares for total consideration of $4.7 million and an average price of $53.62 per share; and
• Centerspace narrowed the 2024 financial outlook ranges for net income per diluted share and FFO per diluted share and raised the mid-point for Core FFO per diluted share. Refer to page S-15 in the Supplemental and Financial Operating Data within for additional detail.

Balance Sheet

At the end of the first quarter, Centerspace had $228.3 million of total liquidity on its balance sheet, consisting of $215.6 million available under the lines of credit and cash and cash equivalents of $12.7 million.

Revised 2024 Financial Outlook

Centerspace revised its 2024 financial outlook. For additional information, see S-15 of the Supplemental Financial and Operating Data for the quarter ended March 31, 2024 included at the end of this release. These ranges should be considered in their entirety. The table below reflects the revised outlook.

	Previous Outlook for 2024		Updated Outlook for 2024
	Low	High	Low	High
Net income per Share – diluted	$                        (1.31)	$                        (0.99)	$                        (1.34)	$                        (1.10)
Same-Store Revenue	3.00 %	5.00 %	3.00 %	4.50 %
Same-Store Expenses	5.50 %	7.00 %	4.00 %	5.50 %
Same-Store NOI	1.50 %	3.50 %	2.50 %	4.00 %
FFO per Share – diluted	$                          4.54	$                          4.80	$                          4.57	$                          4.76
Core FFO per Share – diluted	$                          4.68	$                          4.92	$                          4.74	$                          4.92

Additional assumptions:

• Same-store recurring capital expenditures of $1,075 per home to $1,150 per home
• Value-add expenditures of $25.0 million to $27.0 million
• Proceeds from dispositions of $19.0 million

Note: FFO and Core FFO are non-GAAP financial measures. For more information on their usage and presentation and a reconciliation to the most comparable GAAP measure, please refer to "2024 Financial Outlook" in the Supplemental Financial and Operating Data within.

Upcoming Events

Centerspace is scheduled to participate in the following conferences:

• BTIG 4th Annual Housing Ecosystem Conference which will be held in New York, NY, May 6-7, 2024;
• BMO 2024 Real Estate conference which will be held in New York, NY, May 8, 2024; and
• National Association of Real Estate Investment Trusts ("Nareit") REITweek: 2024 Investor Conference which will be held in New York, NY, June 4-5, 2024.

Earnings Call

Live webcast and replay:  https://ir.centerspacehomes.com
Live Conference Call			Conference Call Replay
Tuesday, April 30, 2024, at 10:00 AM ET			Replay available until May 14, 2024
USA Toll Free	1-833-470-1428		USA Toll Free	1-866-813-9403
International	1-929-526-1599		International	1-929-458-6194
Canada Toll Free	1-833-950-0062		Canada	1-226-828-7578
Access Code	748370		Access Code	274742

Supplemental Information

Supplemental Operating and Financial Data for the quarter ended March 31, 2024 included herein ("Supplemental Information"), is available in the Investors section on Centerspace's website at www.centerspacehomes.com or by calling Investor Relations at 701-837-7104. Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Financial and Operating Data, which accompanies this earnings release.  

About Centerspace

Centerspace is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of March 31, 2024, Centerspace owned interests in 70 apartment communities consisting of 12,883 apartment homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. In 2022, Centerspace was named the National Apartment Association's Leading Organization in Diversity, Equity, and Inclusion. For more information, please visit www.centerspacehomes.com.

Forward-Looking Statements

Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on the company's current expectations and assumptions, and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Forward-looking statements are typically identified by the use of terms such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "assumes," "may," "projects," "outlook," "future," and variations of such words and similar expressions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although the company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond the company's control and could differ materially from actual results and performance. Such risks, uncertainties, and other factors that might cause such differences include, but are not limited to those risks and uncertainties detailed from time to time in Centerspace's filings with the Securities and Exchange Commission, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" contained in its Annual Report on Form 10-K for the year ended December 31, 2023, in its subsequent quarterly reports on Form 10-Q, and in other public reports. The company assumes no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

Contact Information

Investor Relations
Josh Klaetsch
Phone: 701-837-7104
Email: IR@centerspacehomes.com  

Marketing & Media
Kelly Weber
Phone: 701-837-7104
Email: kweber@centerspacehomes.com

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SOURCE Centerspace

FAQ

What were Centerspace's financial results for the first quarter of 2024?

Centerspace reported financial and operating results for the three months ended March 31, 2024, including a decrease in net loss and an increase in Core FFO per diluted share.

What were the highlights of Centerspace's first-quarter performance in 2024?

During Q1 2024, Centerspace executed the sale of non-core assets, decreased net loss, increased Core FFO per diluted share, and saw growth in same-store revenues leading to increased NOI.

What conferences is Centerspace scheduled to participate in?

Centerspace is scheduled to participate in the BTIG 4th Annual Housing Ecosystem Conference, BMO 2024 Real Estate conference, and Nareit REITweek: 2024 Investor Conference.

Where can I find more information about Centerspace's financial data?

Supplemental Operating and Financial Data for the quarter ended March 31, 2024, is available on Centerspace's website or by contacting Investor Relations.