Centerspace Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brad Heffern - RBC Capital Markets - Analyst : Hey, everybody, thanks for taking the question. You said in the prepared comments that operations are trending, and it's expected. But I think the Midwest apartment market as a whole seems to be having a really strong start. Your occupancy is at record levels. So I'm just wondering, are you being conservative and modest early in the year or is there something that I'm missing because it just seems like things are actually ahead of plan? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 5:00PM, CSR.N - Q1 2025 Centerspace Earnings Call

Question: Brad Heffern - RBC Capital Markets - Analyst : Okay, got it. And then I think with last earnings you said the guidance included flat occupancy for '25. I think you said it's up 120 basis points in the first quarter. So, are you planning for that to give away a lot of that occupancy in the peak season in favor of of rate. And then, and you mentioned you would tell us what you're going to do for the weekend, so I want to hear that too.

Question: Brad Heffern - RBC Capital Markets - Analyst : Great, enjoy that. Thanks.

Question: Ami Probandt - UBS - Analyst : Hi, thanks. There was some lumpiness in the OpEx this quarter, particularly with elevated increases in real estate taxes and utilities. Understand that real estate taxes, some of that was due to a tough comp last year, but how should be thinking about growth for the remainder of the year in these two lines and should we expecting the additional lumpiness?

Question: Ami Probandt - UBS - Analyst : Got it, thanks. And retention came down in the quarter, so can you talk through some of the moving pieces that might be leading to you seeing a little bit higher turnover?

Question: Ami Probandt - UBS - Analyst : Great, thank you. Have a good weekend.

Question: Jamie Feldman - Wells Fargo - Analyst : Great, thank you. I was hoping you could talk more about Denver. With the lowest new and renewal rate growth in your portfolio year-to-date, how do you see that market playing out over the rest of the year? When do you think we might see an inflection in rents there, particularly new rate growth? And do you think Denver stay weak in the 26th?

Question: Jamie Feldman - Wells Fargo - Analyst : Okay, thank you for that. And then just thinking about North Dakota, which is continues to be one of your strongest markets with the highest new and renewal rate year to date. Does this change your view at all on capital recycling there in the more institutional markets? Can you consider weaker fundamentals in markets like Denver and probably much more competitive pricing on transactions?

Question: Jamie Feldman - Wells Fargo - Analyst : Okay, thank you very much.

Question: Rob Stevenson - Janney Montgomery - Analyst : Good afternoon, guys. And Anne or Grant, page 20 of the slide deck has supply in second quarter spiking back up in your markets. Can you talk about what markets or submarkets where you still have significant supply to deal with over the remainder of the year and any markets where you're not yet on the backside of the supply wave?

Question: Rob Stevenson - Janney Montgomery - Analyst : Okay. And then in the deck where you were showing the second quarter to date of same store leasing update, the 2.4% on new lease growth, what percentage you guys done with second quarter sitting here on May 2? Is that 50% or 66% or more given that leases are signed well in advance of move in?

Question: Rob Stevenson - Janney Montgomery - Analyst : Of second quarter, for April, May, June?

Question: Rob Stevenson - Janney Montgomery - Analyst : Okay, so there's 80% of the leases left to deal with at this point?

Question: Rob Stevenson - Janney Montgomery - Analyst : Okay. And then last one for me, what drove the 220 basis points sequential decline in Omaha occupancy? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 5:00PM, CSR.N - Q1 2025 Centerspace Earnings Call

Question: Rob Stevenson - Janney Montgomery - Analyst : Okay, all right. Thanks, guys, have a good weekend.

Question: Alexander Goldfarb - Piper Sandler - Analyst : Hey, good afternoon out there. One, I have to say, always love the strong North Dakota. That's been -- those markets have been good over the years. But my first question sort of goes against that. Given we're all learning about trade tariffs and roughly 17% of agriculture exports go to China. Just sort of curious how you know -- outside of Denver and Minneapolis I'm talking, how agriculture affects sort of the local economies and the markets that you're in? Is it a big impact where there's some pullback in exports that would ripple through those other upper Midwestern markets or it's pretty far away from the employment centers that drive your properties?

Question: Alexander Goldfarb - Piper Sandler - Analyst : I will add that to my weekend, list of activities. Going back to retention, looking historically, I appreciate that you said it jumped up to 58% in April. But over the past year, it's been sort of in the 54%. So it's been -- it seems to be trending below what your other peer REITS are. So just sort of curious, are you seeing like, either uncompetitive housing, so people can't find a house or economic nervousness as to -- it doesn't seem to be something that's in your portfolio. I'm just trying to understand the slight difference more than just a few properties in Nebraska, why your retention rates are sort of a different level than what we're seeing in the coastal and Sunbelt rates.

Question: Alexander Goldfarb - Piper Sandler - Analyst : So the housing market, the dynamics that you're experiencing and the unaffordability, same in your markets that we're seeing in the other markets, is that right?

Question: Alexander Goldfarb - Piper Sandler - Analyst : Wow, okay, thank you.