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

Rhea-AI Summary

Centerspace (NYSE: CSR) reported its Q2 2024 financial results and raised its 2024 Core FFO per share guidance. Key highlights include:

- Net loss of $0.19 per diluted share for Q2 2024, compared to $0.23 loss in Q2 2023
- Core FFO per diluted share increased 5.5% to $2.49 for H1 2024
- Same-store revenues up 3.4% and NOI up 2.4% in Q2 2024 vs Q2 2023
- Issued 110,000 common shares for $7.7 million in Q2 2024
- Total liquidity of $222.3 million at quarter-end
- Revised 2024 outlook: Core FFO per share guidance raised to $4.78-$4.92

The company also amended its Unsecured Credit Facility, extending maturity to July 2028, and sold additional shares post-quarter end.

Positive

• Core FFO per diluted share increased 5.5% to $2.49 for H1 2024 compared to $2.36 in H1 2023
• Same-store revenues increased by 3.4% in Q2 2024 compared to Q2 2023
• Same-store NOI increased by 2.4% in Q2 2024 compared to Q2 2023
• Raised and narrowed 2024 financial outlook for Core FFO per share to $4.78-$4.92
• Total liquidity of $222.3 million at quarter-end, including $208.0 million available under lines of credit

Negative

• Net loss of $0.19 per diluted share for Q2 2024, although improved from $0.23 loss in Q2 2023
• Same-store expenses increased by 5.1% in Q2 2024 compared to Q2 2023

Financial Analyst

Centerspace's Q2 2024 results show a mixed but generally positive picture. The company reported a net loss of $0.19 per diluted share, an improvement from the $0.23 loss in Q2 2023. However, the focus should be on the more relevant Core FFO metric for REITs, which remained relatively stable at $1.27 per diluted share compared to $1.28 in the prior year.

The company's same-store performance is noteworthy, with revenues increasing by 3.4% year-over-year. This growth outpaced the 5.1% increase in expenses, resulting in a 2.4% NOI growth. The sequential improvement in weighted average occupancy from 94.6% in Q1 to 95.3% in Q2 is also a positive indicator of demand strength.

Centerspace's decision to raise the mid-point of its 2024 Core FFO guidance suggests management's confidence in the company's performance for the remainder of the year. The revised outlook now projects Core FFO per share between $4.78 and $4.92, up from the previous range of $4.74 to $4.92.

The company's balance sheet appears solid with $222.3 million in total liquidity. The successful issuance of shares at an average price of $69.82 under the at-the-market offering program, compared to earlier repurchases at $53.60, indicates favorable market sentiment and efficient capital management.

Overall, while the net loss might raise some concerns, the strong Core FFO performance, positive same-store metrics and improved guidance paint a picture of a company navigating market challenges effectively.

Real Estate Market Analyst

Centerspace's Q2 results offer valuable insights into the multifamily real estate market trends. The 3.4% year-over-year increase in same-store revenues suggests a robust demand for rental properties in Centerspace's markets, which include Colorado, Minnesota, Montana, Nebraska, North Dakota and South Dakota.

The company's ability to maintain a high occupancy rate of 95.3% in Q2 2024, up from 94.6% in Q1, indicates a strong leasing environment. This is particularly noteworthy given the ongoing concerns about affordability and potential oversupply in some markets.

However, the 5.1% increase in same-store expenses outpacing revenue growth is a trend to watch. This could reflect inflationary pressures or increased costs in property management, which might squeeze margins if it continues.

The revised guidance for same-store metrics is intriguing. Centerspace narrowed its revenue growth expectation to 3.25%-4.25% from 3.00%-4.50%, while lowering the expense growth range to 3.50%-4.75% from 4.00%-5.50%. This suggests management anticipates better cost control in the second half of the year, which could lead to improved NOI growth.

The planned value-add expenditures of $23.0 million to $25.0 million indicate Centerspace's continued focus on property improvements to drive rent growth. This strategy appears to be paying off, given the positive revenue trends.

Overall, Centerspace's performance and outlook provide a positive signal for the multifamily market in its operating regions, suggesting continued strength in rental demand and the potential for further rent growth.

MINNEAPOLIS, July 29, 2024 /PRNewswire/ -- Centerspace (NYSE: CSR) announced today its financial and operating results for the three and six months ended June 30, 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 and six months ended June 30, 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 June 30, 2024, March 31, 2024, and June 30, 2023.

						Three Months Ended June 30,				Six Months Ended June 30,
Per Common Share						2024		2023		2024		2023
Net income (loss) - diluted						$                         (0.19)		$                         (0.23)		$                   (0.56)		$                    2.55
FFO - diluted(1)						$                          1.23		$                          1.11		$                    2.39		$                    2.01
Core FFO - diluted(1)						$                          1.27		$                          1.28		$                    2.49		$                    2.36
								Year-Over-Year Comparison		Sequential Comparison		YTD Comparison
Same-Store Results(2)								Q2 2024 vs. Q2 2023		Q2 2024 vs. Q1 2024		2024 vs. 2023
Revenues								3.4 %		1.7 %		3.5 %
Expenses								5.1 %		1.8 %		1.4 %
NOI(1)								2.4 %		1.7 %		4.9 %
				Three months ended						Six months ended
Same-Store Results(2)				June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Weighted Average Occupancy				95.3 %		94.6 %		95.2 %		94.9 %		95.0 %

(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

• Centerspace raised the mid-point and narrowed the 2024 financial outlook ranges for net loss per diluted share, FFO per diluted share and Core FFO per diluted share. Refer to page S-17 in the Supplemental and Financial Operating Data within for additional detail.
• Net loss was $0.19 per diluted share for the second quarter of 2024, compared to Net loss of $0.23 per diluted share for the same period of the prior year;
• Core FFO per diluted share increased 5.5% to $2.49 for the six months ended June 30, 2024, compared to $2.36 for the six months ended June 30, 2023;
• Same-store revenues increased by 3.4% for the second quarter of 2024 compared to the second quarter of 2023, driving a 2.4% increase in same-store NOI compared to the same period of the prior year; and
• Centerspace issued approximately 110,000 common shares for gross consideration of $7.7 million, and an average gross price of $69.82 per share during the second quarter of 2024 under its at-the-market offering program, compared to approximately 88,000 of repurchases in the first quarter of 2024 at an average repurchase price of $53.60 per share, excluding commissions.

Balance Sheet

At the end of the second quarter, Centerspace had $222.3 million of total liquidity on its balance sheet, consisting of $208.0 million available under the lines of credit and cash and cash equivalents of $14.3 million.

Revised 2024 Financial Outlook

Centerspace revised its 2024 financial outlook. For additional information, see S-17 of the Supplemental Financial and Operating Data for the quarter ended June 30, 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	$(1.34)	$(1.10)	$(1.21)	$(1.01)
Same-Store Revenue	3.00 %	4.50 %	3.25 %	4.25 %
Same-Store Expenses	4.00 %	5.50 %	3.50 %	4.75 %
Same-Store NOI	2.50 %	4.00 %	3.00 %	4.00 %
FFO per Share – diluted	$4.57	$4.76	$4.61	$4.76
Core FFO per Share – diluted	$4.74	$4.92	$4.78	$4.92

Additional assumptions:

• Same-store recurring capital expenditures of $1,100 per home to $1,150 per home
• Value-add expenditures of $23.0 million to $25.0 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.

Subsequent Events

Through July 29, 2024, Centerspace sold 431,000 common shares under its 10b5-1 trading arrangement at an average gross price per share of 69.54, totaling $30.0 million.

On July 26, 2024, Centerspace amended its Unsecured Credit Facility to extend the maturity date to July 2028. The borrowing capacity remained at $250.0 million. 

Upcoming Events

Centerspace is scheduled to participate in the following conferences:

• NYSE Real Estate Investor Access Day which will be held virtually on August 8; and
• Bank of America Global Real Estate Conference which will be held in New York, NY, September 10-12.

Earnings Call

Live webcast and replay:  https://ir.centerspacehomes.com
Live Conference Call			Conference Call Replay
Tuesday, July 30, 2024, at 10:00 AM ET			Replay available until August 13, 2024
USA Toll Free	1-833-470-1428		USA Toll Free	1-866-813-9403
International	1-404-975-4839		International	1-929-458-6194
Access Code	811975		Access Code	732490

Supplemental Information

Supplemental Operating and Financial Data for the quarter ended June 30, 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 June 30, 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. Centerspace was named a top workplace for the fifth consecutive year in 2024 by the Minneapolis Star Tribune. 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: 952-401-6600
Email: IR@centerspacehomes.com

Marketing & Media
Kelly Weber
Phone: 952-401-6600
Email: kweber@centerspacehomes.com

 

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SOURCE Centerspace

FAQ

What was Centerspace's (CSR) Core FFO per share for Q2 2024?

Centerspace's Core FFO per diluted share was $1.27 for Q2 2024, compared to $1.28 in Q2 2023.

How did Centerspace's (CSR) same-store revenues perform in Q2 2024?

Centerspace's same-store revenues increased by 3.4% in Q2 2024 compared to Q2 2023.

What is Centerspace's (CSR) revised Core FFO guidance for 2024?

Centerspace raised its 2024 Core FFO per share guidance to a range of $4.78 to $4.92.

How many common shares did Centerspace (CSR) issue in Q2 2024?

Centerspace issued approximately 110,000 common shares for gross consideration of $7.7 million in Q2 2024.