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CENTERSPACE (CSR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered resilient operations: same-store revenues +3.1% YoY and +0.8% sequential; same-store NOI +2.1% YoY and +3.3% sequential, with weighted-average occupancy at 95.5% (+70 bps YoY) .
  • Profitability stabilized: Core FFO per diluted share was $1.21 (Q3: $1.18), FFO per diluted share $1.09 (Q3: $1.01); GAAP EPS was $(0.31) due to non-cash and non-core items .
  • 2025 guidance introduced: Core FFO/diluted share $4.86–$5.10 (midpoint $4.98); same-store revenue growth 1.5–3.5%; controllable expense growth 1–3%; non-controllable 3.5–5.5% .
  • Dividend increased: Board raised quarterly cash distribution to $0.77/share (from $0.75 in Dec), a visible stock catalyst alongside improved operating momentum and disciplined guidance .

What Went Well and What Went Wrong

What Went Well

  • Occupancy and blended pricing resilience: Q4 weighted-average occupancy reached 95.5% (+70 bps YoY); blended leasing spreads were positive (+0.4%) with renewals +3.2% offsetting new leases −3.3% .
  • Same-store NOI and Core FFO momentum: same-store NOI rose +2.1% YoY and +3.3% sequential; Core FFO/diluted share increased to $1.21 from $1.18 in Q3 .
  • Cost discipline and insurance tailwind: management highlighted 2025 benefit from centralization initiatives (~$0.5M) and 12% insurance premium reduction ($0.9M) supporting expense containment (guidance) .

Selected quotes:

  • “These excellent results have led to an increase in our distributable cash flow… announcing an increase to our quarterly dividend to $0.77 per share.” — Anne Olson, CEO .
  • “For the year, we expect core FFO of $4.98 at the midpoint… same-store NOI +2.25% at the midpoint.” — Bhairav Patel, CFO .

What Went Wrong

  • GAAP loss persisted: Q4 diluted EPS was $(0.31) (Q3: $(0.40); Q4’23: $(0.65)), reflecting depreciation, casualty items, and interest expense headwinds .
  • Expense pressure: same-store controllable expenses grew 9.6% YoY in Q4 (repairs & maintenance largest driver), with total same-store operating expenses up 4.6% YoY .
  • New lease pricing softness in supply-impacted markets: Q4 new lease trade-outs −3.3%; management cited lingering supply in Denver and Minneapolis pressuring near-term new lease rates .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD thousands)$64,068 $65,025 $66,409
Net income (loss) per share - diluted ($)$(0.65) $(0.40) $(0.31)
FFO per diluted share ($)$1.11 $1.01 $1.09
Core FFO per diluted share ($)$1.22 $1.18 $1.21
Operating income ($USD thousands)$(1,505) $6,350 $2,858
Adjusted EBITDA ($USD thousands)$32,091 $31,757 $32,633

Same-Store Performance (quarterly growth metrics):

MetricYoY (Q4’24 vs Q4’23)Seq (Q4’24 vs Q3’24)
Same-store Revenues+3.1% +0.8%
Same-store Expenses+4.6% −2.7%
Same-store NOI+2.1% +3.3%

KPIs:

KPIQ4 2023Q3 2024Q4 2024
Weighted Average Occupancy94.8% 95.3% 95.5%
New Lease Rate Growth−3.4% −1.2% −3.3%
Renewal Lease Rate Growth+3.6% +3.2% +3.2%
Blended Lease Rate Growth+0.2% +1.5% +0.4%
Retention Rate53.1% 58.9% 54.5%

Regional Same-Store Breakdown (Q4 2024 vs Q4 2023):

RegionRevenues ($USD thousands)Expenses ($USD thousands)NOI ($USD thousands)
Denver, CO$13,531 vs $13,276 (+1.9%) $4,790 vs $4,584 (+4.5%) $8,741 vs $8,692 (+0.6%)
Minneapolis, MN$23,305 vs $23,029 (+1.2%) $10,718 vs $10,089 (+6.2%) $12,587 vs $12,940 (−2.7%)
North Dakota$7,463 vs $6,966 (+7.1%) $2,986 vs $2,653 (+12.6%) $4,477 vs $4,313 (+3.8%)
Omaha, NE$3,787 vs $3,597 (+5.3%) $1,042 vs $1,230 (−15.3%) $2,745 vs $2,367 (+16.0%)
Rochester, MN$6,046 vs $5,744 (+5.3%) $2,294 vs $2,134 (+7.5%) $3,752 vs $3,610 (+3.9%)
St. Cloud, MN$3,629 vs $3,461 (+4.9%) $1,479 vs $1,555 (−4.9%) $2,150 vs $1,906 (+12.8%)
Other Mountain West$5,366 vs $5,157 (+4.1%) $1,819 vs $1,768 (+2.9%) $3,547 vs $3,389 (+4.7%)
Same-Store Total$63,127 vs $61,230 (+3.1%) $25,128 vs $24,013 (+4.6%) $37,999 vs $37,217 (+2.1%)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core FFO per diluted shareFY 2025N/A (new)$4.86–$5.10 Introduced
FFO per diluted shareFY 2025N/A (new)$4.73–$4.97 Introduced
Net loss per share - dilutedFY 2025N/A (new)$(0.71)–$(0.45) Introduced
Same-store revenue growthFY 2025N/A (new)1.5%–3.5% Introduced
Same-store controllable expensesFY 2025N/A (new)1%–3% Introduced
Same-store non-controllable expensesFY 2025N/A (new)3.5%–5.5% Introduced
Same-store NOI growthFY 2025N/A (new)1.25%–3.25% Introduced
G&A + Property ManagementFY 2025N/A (new)$27.9M–$28.4M Introduced
Interest expenseFY 2025N/A (new)$38.8M–$39.4M Introduced
Interest & other incomeFY 2025N/A (new)$2.7M–$2.9M Introduced
Weighted avg shares - dilutedFY 2025N/A (new)19.900M–19.925M Introduced
Same-store recurring capex per homeFY 2025N/A (new)$1,125–$1,175 Introduced
Value-add expendituresFY 2025N/A (new)$16M–$18M Introduced
Common dividend per shareQ1 2025 → Q2 2025$0.75 (Dec 2024) $0.77 (Apr 8, 2025) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2–Q3)Current Period (Q4)Trend
Supply/Absorption in Minneapolis & DenverQ3: Past-peak deliveries; absorption expected to improve Minneapolis sooner; Denver tailwinds by 2026 Q4: New lease softness concentrated in Denver/Minneapolis; continued strong absorption expected tailwind Improving fundamentals; near-term pricing still cautious
Pricing/Leasing SpreadsQ3: Blended +1.5%; renewals +3.2%; new −1.2% Q4: Blended +0.4%; renewals +3.2%; new −3.3% Seasonally softer new leases; renewals underpin blended
Centralization/Tech EfficiencyQ3: Centralization and tech stack cost savings contemplated Q4: ~$0.5M centralization benefit and ~12% insurance premium reduction in 2025 Tangible opex savings flowing through
Balance Sheet Actions & ATMQ3: ~1.5M shares via ATM; redeemed Series C preferred Q4: Cumulative ~1.6M shares; preference redemption affirmed Simplified capital structure; improved leverage
External Growth (Denver Lydian)Q3: Lydian acquisition terms; mid–high 5% stabilized NOI yield Q4: Portfolio scale in Denver; pipeline smaller; creative OP unit deals favored Selective growth with capital discipline
Dividend PolicyQ3: No change disclosedQ4: Dividend increased to $0.77 Shareholder-friendly cash return

Management Commentary

  • Strategy and dividend: “Our Board of Trustees… announcing an increase to our quarterly dividend to $0.77 per share.” — Anne Olson .
  • 2025 earnings framework: “We expect core FFO of $4.98 at the midpoint… same-store revenue +2.5%, expenses +3%.” — Bhairav Patel .
  • Market dynamics: “Supply pressure has eased in Minneapolis earlier than Denver… both have good prospects for ’25 into ’26.” — Anne Olson .
  • Growth approach: “We want to be net acquirers… mindful of cost of capital… defined path to positive leverage via financing or OP unit transactions.” — Grant Campbell .

Q&A Highlights

  • Regional fundamentals: Minneapolis improving sooner; Denver softer near-term; both constructive over ’25–’26 as supply tapers .
  • 2025 leasing spreads: Blended ~2.4% with renewals ~3% and new leases ~1–2%; conservatism embedded given retention assumptions and supply digestion .
  • Acquisition appetite: Target positive leverage via attractive financing/OP units; desire to be net acquirers while preserving AFFO neutrality; pipeline ~$0.5B but muted market velocity given bid-ask spread and rate volatility .
  • Expense guidance drivers: Centralization ($0.5M) and insurance renewal ($0.9M) underpin opex range; recurring capex per home higher on project timing .
  • Non-rent revenue: Expected to grow in line with rental revenues post-RUBS rollout normalization .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/revenue/EBITDA and forward quarters was unavailable due to a data access limit at the time of request, so explicit beat/miss vs. estimates cannot be determined. We will update when S&P Global data access is restored.
  • Implication: Without formal consensus, trading narratives hinge on dividend increase, occupancy strength, renewal pricing resilience, and prudent 2025 guidance ranges .

Key Takeaways for Investors

  • Operating resilience: Occupancy at 95.5% and steady renewal growth supported Q4 Core FFO inflection; blended spreads positive despite supply-impacted markets .
  • Shareholder return: Dividend increase to $0.77 signals confidence in distributable cash flow; payout ratio remained disciplined in 2024 (Q4 ~62%) .
  • 2025 setup: Guidance midpoints imply modest Core FFO growth with expense control from centralization and insurance tailwinds; interest expense headwind manageable and laddered .
  • Growth lens: Expect selective external growth focused on positive leverage and OP unit creativity; acquisition pace gated by bid-ask spreads and rate volatility .
  • Regional skew: Minneapolis improving sooner; Denver tailwinds likely in 2026; smaller markets continue to provide stability and pricing power .
  • Watchlist catalysts: Further guidance updates, leasing season trajectory (renewals vs new), insurance/controllable opex execution, and potential strategic transactions .
  • Risk checks: New lease softness in supply pockets and repairs/maintenance pressures necessitate continued focus on retention, pricing optimization, and cost discipline .

Sources: Q4 2024 earnings 8-K and supplements ; Q4 2024 earnings call transcript ; Q3 and Q2 press releases .