Centerspace (CSR) Q3 2024 Earnings Call Highlights: Strong Occupancy and Revenue Growth Amid ...

In This Article:

  • Earnings per Share (Core FFO): $1.18 for the third quarter.

  • Same Store Revenue Growth: Increased by 3% compared to the same period in 2023.

  • Occupancy Rate: Increased to 95.3%, a 70 basis point improvement year-over-year.

  • Blended Lease Increases: 1.5% for the quarter.

  • Resident Retention: Over 58% for the quarter.

  • Core FFO Guidance: Raised midpoint to $4.86 per share for the full year.

  • Same Store Expense Growth: Increased by 3.2% year-over-year.

  • Interest Expense: Expected to range between $37.3 million to $37.6 million for the year.

  • Shares Issued: Approximately 1.5 million shares issued, raising $105 million.

  • Debt Assumed: $35 million at a 3.72% interest rate for the Lydian acquisition.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Centerspace (NYSE:CSR) reported earnings of $1.18 per share of core FFO for the third quarter, driven by stable revenue growth and expense control initiatives.

  • Same store revenue increased by 3% over the same period in 2023, with occupancy rising to 95.3%, a 70 basis point improvement over last year.

  • The company expanded its presence in the Denver market with the acquisition of the Lydian, which is expected to generate an NOI yield in the mid to high 5% range.

  • Centerspace (NYSE:CSR) raised the midpoint of its full-year core FFO guidance by a penny to $4.86 per share, reflecting positive NOI growth.

  • The company successfully issued approximately 1.5 million shares, raising $105 million to redeem its series C preferred shares, simplifying its capital structure and improving cash flow.

Negative Points

  • Market rent softened more than expected, impacting revenue growth projections for the remainder of the year.

  • Same store expenses increased by 3.2% year-over-year, driven by higher non-controllable expenses such as insurance premiums.

  • The company anticipates increased interest expenses due to debt assumed in conjunction with the Lydian acquisition.

  • Revenue growth guidance implies a substantial drop from Q3 to Q4, attributed to market rent softening and seasonal trends.

  • Bad debt levels are trending towards the high end of expectations, with no significant improvement anticipated in the near term.

Q & A Highlights

Q: You mentioned market rent softening more than expected. Is that also a greater softening than the normal seasonal trend? A: Bhairav Patel, CFO: It is more than we expected and more than the seasonal expectation, just slightly more. We attribute it mostly to the supply-demand dynamics, which were against our expectations. Our expectations for the year were just a little bit higher.

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