Centerspace Reports Third Quarter 2021 Financial Results and Increases Financial Outlook
MINNEAPOLIS, Nov. 1, 2021 /PRNewswire/ -- Centerspace (NYSE: CSR) announced today its financial and operating results for the three and nine months ended September 30, 2021. The tables below show Net Income, Funds from Operations ("FFO")1, and Core FFO1, all on a per share basis, for the three and nine months ended September 30, 2021; 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 September 30, 2021, June 30, 2021, and September 30, 2020.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
Per Share | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net Income - diluted | $ | (0.81) | $ | 1.38 | $ | 0.12 | $ | 0.33 | ||||||||
FFO - diluted | $ | 0.60 | $ | 0.90 | $ | 2.44 | $ | 2.49 | ||||||||
Core FFO - diluted | $ | 0.98 | $ | 0.94 | $ | 2.91 | $ | 2.76 | ||||||||
Year-Over-Year Comparison | Sequential Comparison | YTD Comparison | |||||||
Same-Store Results | Q3 2021 vs. Q3 2020 | Q3 2021 vs. Q2 2021 | 2021 vs. 2020 | ||||||
Revenues | 6.2 | % | 3.7 | % | 3.3 | % | |||
Expenses | 4.4 | % | 3.6 | % | 2.9 | % | |||
NOI | 7.5 | % | 3.8 | % | 3.6 | % | |||
Three months ended | |||||||||
Same-Store Results | September 30, 2021 | June 30, 2021 | September 30, 2020 | ||||||
Weighted Average Occupancy | 94.3 | % | 94.9 | % | 94.3 | % | |||
(1) | NOI, FFO, Core FFO, and same-store results 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" below. |
Highlights
- Net Loss was
$(0.81) per diluted share for the third quarter of 2021, compared to Net Income of$1.38 per diluted share for the same period of 2020; - Core FFO increased
4.3% to$0.98 per diluted share for the three months ended September 30, 2021, compared to$0.94 for the three months ended September 30, 2020 and5.4% to$2.91 per diluted share for the nine months ended September 30, 2021, compared to$2.76 for the nine months ended September 30, 2020; - Same-store revenues increased by
6.2% for the third quarter of 2021 compared to the third quarter of 2020; - Same-store new lease over lease rates were
10.8% for the third quarter of 2021, compared to0.0% in the same period of the prior year. Same-store renewal lease over lease rates were7.2% for the third quarter of 2021, compared to0.6% for the same period the prior year. Same-store blended lease over lease rates were9.0% for the third quarter of 2021, compared to0.4% for the same period the prior year; - Full year earnings per share mid-point outlook of
$(0.30) resulting in a3% increase in Core FFO from our prior outlook; - Continued to grow the portfolio through the strategic portfolio acquisition comprised of 14 communities in Minneapolis, Minnesota and three communities in St. Cloud, Minnesota totaling 2,696 apartment homes for an aggregate acquisition cost of
$359.9 million ; - Issued
$125.0 million of unsecured notes with a weighted average interest rate of2.6% and weighted average maturity of 10.5 years with tranches of$35.0 million in 2030,$50.0 million in 2031,$25.0 million in 2032 and$15.0 million in 2034; - Improved and extended
$250.0 million revolving credit facility with an accordion feature for up to$400.0 million which matures in September 2025; and - Continued to strengthen the balance sheet by issuing 199,000 common shares under the ATM program for net proceeds of
$19.6 million .
Acquisitions and Dispositions
On September 1, 2021, Centerspace closed on its strategic portfolio acquisition in Minneapolis and St. Cloud, Minnesota for an aggregate acquisition cost of
Subsequent to the end of the quarter, Centerspace sold its sole remaining commercial property Minot IPS located in Minot, North Dakota on October 18th for an aggregate sale price of
Balance Sheet
At the end of the third quarter, Centerspace had
In the three months ended September 30, 2021, Centerspace issued
During the quarter, Centerspace amended and extended our existing
Revised 2021 Financial Outlook
Centerspace revised its 2021 financial outlook, which includes the acquisition of KMS on September 1, 2021. For additional information, see S-16 of the Supplemental Financial and Operating Data for the quarter ended September 30, 2021 included at the end of this release. These ranges should be considered in their entirety. The revised outlook is:
Previous Outlook for 2021 | Updated Outlook for 2021 | |||||||||||
Low | High | Low | High | |||||||||
Earnings per Share – diluted | $ | 0.58 | $ | 0.76 | $ | (0.36) | $ | (0.24) | ||||
Same-Store Revenue | 2.0 | % | 3.5 | % | 3.5 | % | 4.0 | % | ||||
Same-Store Expenses | 4.0 | % | 6.0 | % | 4.5 | % | 5.0 | % | ||||
Same-Store NOI | 0.5 | % | 2.0 | % | 3.0 | % | 3.5 | % | ||||
FFO per Share – diluted | $ | 3.64 | $ | 3.83 | $ | 3.40 | $ | 3.52 | ||||
Core FFO per Share – diluted | $ | 3.78 | $ | 3.94 | $ | 3.92 | $ | 4.02 | ||||
COVID-19 Developments
The COVID-19 pandemic, including the associated economic disruptions, has continued to impact business and operations since March 2020. The company continues to prioritize the health and well-being of its residents, team members, and the communities it serves.
A discussion of the ongoing and potential effects of the COVID-19 pandemic on financial condition, results of operations, and cash flows can be found in "Management's Discussion and Analysis of Financial Conditions and Results of Operations" presented in the company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 22, 2021. For a more detailed description of the risks and uncertainties affecting business, see the risk factors presented in Item 1A in the company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 22, 2021.
Upcoming Events
Centerspace is scheduled to participate in the upcoming National Association of Real Estate Investment Trusts ("Nareit") REITworld 2021 Annual Conference, which will be held virtually November 9-11.
Earnings Call
Live webcast and replay: https://ir.centerspacehomes.com | ||||
Live Conference Call | Conference Call Replay | |||
Tuesday, November 2, 2021, at 10:00 AM ET | Replay available until November 16, 2021 | |||
USA Toll Free Number | 1-877-509-9785 | USA Toll Free Number | 1-877-344-7529 | |
International Toll Free Number | 1-412-902-4132 | International Toll Free Number | 1-412-317-0088 | |
Canada Toll Free Number | 1-855-669-9657 | Canada Toll Free Number | 1-855-669-9658 | |
Conference Number | 10160003 | |||
Supplemental Information
Supplemental Operating and Financial Data for the quarter ended September 30, 2021 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 September 30, 2021, Centerspace owned 79 apartment communities consisting of 14,275 apartment homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Centerspace was named a Top Workplace for 2021 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. 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. 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, 2020, 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
Emily Miller
Phone: 701-837-7104
IR@centerspacehomes.com
Marketing & Media
Kelly Weber
Phone: 701-837-7104
kweber@centerspacehomes.com
Supplemental Financial and Operating Data | |
Table of Contents | |
September 30, 2021 | |
Page | |
Common Share Data | S-1 |
Key Financial Data | |
Condensed Consolidated Statements of Operations | S-2 |
Condensed Consolidated Balance Sheets | S-3 |
Non-GAAP Financial Measures and Reconciliations | |
Net Operating Income | S-4 |
Same-Store Controllable Expenses | S-5 |
Funds From Operations and Core Funds From Operations | S-6 |
Adjusted EBITDA | S-9 |
Debt and Capital Analysis | |
Debt Analysis | S-10 |
Capital Analysis | S-11 |
Portfolio Analysis | |
Same-Store Comparison | S-12 |
Portfolio Summary | S-15 |
Capital Expenditures | S-16 |
2021 Financial Outlook | S-17 |
Common Share Data (NYSE: CSR) | ||||||||||||||||||||
3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | ||||||||||||||||
2021 | 2021 | 2021 | 2020 | 2020 | ||||||||||||||||
High closing price | $ | 105.42 | $ | 79.71 | $ | 73.42 | $ | 74.55 | $ | 73.53 | ||||||||||
Low closing price | $ | 78.42 | $ | 67.28 | $ | 68.00 | $ | 65.79 | $ | 61.87 | ||||||||||
Average closing price | $ | 94.10 | $ | 71.99 | $ | 71.37 | $ | 70.30 | $ | 70.15 | ||||||||||
Closing price at end of quarter | $ | 94.50 | $ | 78.90 | $ | 68.00 | $ | 70.64 | $ | 65.17 | ||||||||||
Common share distributions – annualized | $ | 2.88 | $ | 2.80 | $ | 2.80 | $ | 2.80 | $ | 2.80 | ||||||||||
Closing dividend yield – annualized | 3.1 | % | 3.6 | % | 4.1 | % | 4.0 | % | 4.3 | % | ||||||||||
Closing common shares outstanding (thousands) | 14,281 | 14,045 | 13,220 | 13,027 | 12,976 | |||||||||||||||
Closing limited partnership units outstanding (thousands) | 845 | 881 | 950 | 977 | 1,018 | |||||||||||||||
Closing Series E preferred units outstanding, as converted (thousands) | 2,186 | — | — | — | — | |||||||||||||||
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands) | $ | 1,635,984 | $ | 1,177,661 | $ | 963,560 | $ | 989,243 | $ | 911,989 | ||||||||||
CENTERSPACE | |||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | |||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||||||||||||
REVENUE | $ | 50,413 | $ | 46,656 | $ | 46,648 | $ | 45,540 | $ | 44,138 | $ | 143,717 | $ | 132,454 | |||||||||||||||
EXPENSES | |||||||||||||||||||||||||||||
Property operating expenses, excluding real estate taxes | 14,434 | 13,018 | 13,449 | 12,668 | 13,129 | 40,901 | 38,957 | ||||||||||||||||||||||
Real estate taxes | 5,916 | 5,742 | 5,792 | 5,256 | 5,402 | 17,450 | 16,277 | ||||||||||||||||||||||
Property management expense | 2,203 | 2,085 | 1,767 | 1,460 | 1,442 | 6,055 | 4,341 | ||||||||||||||||||||||
Casualty (gain) loss | (10) | (27) | 101 | 331 | 91 | 64 | 1,331 | ||||||||||||||||||||||
Depreciation/amortization | 22,447 | 19,308 | 19,992 | 20,282 | 18,995 | 61,747 | 55,311 | ||||||||||||||||||||||
General and administrative expenses | 4,279 | 3,797 | 3,906 | 3,733 | 3,077 | 11,982 | 9,707 | ||||||||||||||||||||||
TOTAL EXPENSES | $ | 49,269 | $ | 43,923 | $ | 45,007 | $ | 43,730 | $ | 42,136 | $ | 138,199 | $ | 125,924 | |||||||||||||||
Operating income | 1,144 | 2,733 | 1,641 | 1,810 | 2,002 | 5,518 | 6,530 | ||||||||||||||||||||||
Interest expense | (7,302) | (7,089) | (7,231) | (6,903) | (6,771) | (21,622) | (20,622) | ||||||||||||||||||||||
Interest and other income (loss) | (5,082) | 619 | 431 | 404 | 277 | (4,032) | (1,979) | ||||||||||||||||||||||
Income (loss) before gain (loss) on sale of real estate and other investments | (11,240) | (3,737) | (5,159) | (4,689) | (4,492) | (20,136) | (16,071) | ||||||||||||||||||||||
Gain (loss) on sale of real estate and other investments | — | 26,840 | — | 17 | 25,676 | 26,840 | 25,486 | ||||||||||||||||||||||
Net income (loss) | $ | (11,240) | $ | 23,103 | $ | (5,159) | $ | (4,672) | $ | 21,184 | $ | 6,704 | $ | 9,415 | |||||||||||||||
Dividends to Series D preferred unitholders | (160) | (160) | (160) | (160) | (160) | (480) | (480) | ||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interest – Operating Partnership and Series E preferred units | 1,930 | (1,386) | 469 | 460 | (1,387) | 1,013 | (248) | ||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities | (22) | (19) | (17) | (6) | (8) | (58) | 132 | ||||||||||||||||||||||
Net income (loss) attributable to controlling interests | (9,492) | 21,538 | (4,867) | (4,378) | 19,629 | 7,179 | 8,819 | ||||||||||||||||||||||
Dividends to preferred shareholders | (1,607) | (1,607) | (1,607) | (1,607) | (1,607) | (4,821) | (4,921) | ||||||||||||||||||||||
Discount (premium) on redemption of preferred shares | — | — | — | — | (1) | — | 297 | ||||||||||||||||||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | (11,099) | $ | 19,931 | $ | (6,474) | $ | (5,985) | $ | 18,021 | $ | 2,358 | $ | 4,195 | |||||||||||||||
Per Share Data - Basic | |||||||||||||||||||||||||||||
Net earnings (loss) per common share – basic | $ | (0.79) | $ | 1.49 | $ | (0.49) | $ | (0.46) | $ | 1.40 | $ | 0.17 | $ | 0.33 | |||||||||||||||
Per Share Data - Diluted | |||||||||||||||||||||||||||||
Net earnings (loss) per common share – diluted | $ | (0.81) | $ | 1.48 | $ | (0.49) | $ | (0.46) | $ | 1.38 | $ | 0.12 | $ | 0.33 | |||||||||||||||
CENTERSPACE | ||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Real estate investments | ||||||||||||||||||||
Property owned | $ | 2,203,606 | $ | 1,838,837 | $ | 1,883,407 | $ | 1,812,557 | $ | 1,805,390 | ||||||||||
Less accumulated depreciation | (426,926) | (407,400) | (408,014) | (399,249) | (380,392) | |||||||||||||||
1,776,680 | 1,431,437 | 1,475,393 | 1,413,308 | 1,424,998 | ||||||||||||||||
Mortgage loans receivable | 42,160 | 37,457 | 30,107 | 24,661 | 17,986 | |||||||||||||||
Total real estate investments | 1,818,840 | 1,468,894 | 1,505,500 | 1,437,969 | 1,442,984 | |||||||||||||||
Cash and cash equivalents | 20,816 | 5,194 | 10,816 | 392 | 16,804 | |||||||||||||||
Restricted cash | 2,376 | 8,444 | 1,610 | 6,918 | 2,199 | |||||||||||||||
Other assets | 34,919 | 17,218 | 18,427 | 18,904 | 16,947 | |||||||||||||||
TOTAL ASSETS | $ | 1,876,951 | $ | 1,499,750 | $ | 1,536,353 | $ | 1,464,183 | $ | 1,478,934 | ||||||||||
LIABILITIES, MEZZANINE EQUITY, AND EQUITY | ||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Accounts payable and accrued expenses | $ | 58,092 | $ | 52,413 | $ | 53,852 | $ | 55,609 | $ | 58,596 | ||||||||||
Revolving line of credit | 57,000 | 87,000 | 181,544 | 152,871 | 135,000 | |||||||||||||||
Notes payable, net of loan costs | 299,454 | 319,286 | 319,236 | 269,246 | 269,202 | |||||||||||||||
Mortgages payable, net of loan costs | 489,140 | 287,143 | 293,709 | 297,074 | 313,065 | |||||||||||||||
TOTAL LIABILITIES | $ | 903,686 | $ | 745,842 | $ | 848,341 | $ | 774,800 | $ | 775,863 | ||||||||||
SERIES D PREFERRED UNITS | $ | 21,585 | $ | 18,022 | $ | 16,560 | $ | 16,560 | $ | 16,560 | ||||||||||
EQUITY | ||||||||||||||||||||
Series C Preferred Shares of Beneficial Interest | 93,530 | 93,530 | 93,530 | 93,530 | 93,530 | |||||||||||||||
Common Shares of Beneficial Interest | 1,092,130 | 1,033,940 | 980,453 | 968,263 | 968,436 | |||||||||||||||
Accumulated distributions in excess of net income | (454,691) | (433,310) | (443,409) | (427,681) | (412,577) | |||||||||||||||
Accumulated other comprehensive income (loss) | (5,784) | (12,064) | (12,798) | (15,905) | (17,256) | |||||||||||||||
Total shareholders' equity | $ | 725,185 | $ | 682,096 | $ | 617,776 | $ | 618,207 | $ | 632,133 | ||||||||||
Noncontrolling interests – Operating Partnership and Series E preferred units | 225,850 | 53,133 | 53,007 | 53,930 | 53,669 | |||||||||||||||
Noncontrolling interests – consolidated real estate entities | 645 | 657 | 669 | 686 | 709 | |||||||||||||||
Total equity | $ | 951,680 | $ | 735,886 | $ | 671,452 | $ | 672,823 | $ | 686,511 | ||||||||||
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY | $ | 1,876,951 | $ | 1,499,750 | $ | 1,536,353 | $ | 1,464,183 | $ | 1,478,934 | ||||||||||
CENTERSPACE
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)
This release contains certain non-GAAP financial measures. The non-GAAP financial measures should not be considered a substitute for operating results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The definitions and calculations of these non-GAAP financial measures, as calculated by us, may not be comparable to non-GAAP financial measures reported by other REITs that do not define each of the non-GAAP financial measures exactly as Centerspace does.
The company provides certain information on a same-store and non-same-store basis. Same-store apartment communities are owned or in service for substantially all of the periods being compared, and, in the case of newly-constructed properties, have achieved a target level of physical occupancy of
Reconciliation of Operating Income to Net Operating Income
Net operating income, or NOI, is a non-GAAP financial measure which the company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.
(in thousands, except percentages) | ||||||||||||||||||||||||||
Three Months Ended | Sequential | Year-Over-Year | ||||||||||||||||||||||||
9/30/2021 | 6/30/2021 | 9/30/2020 | $ Change | % Change | $ Change | % Change | ||||||||||||||||||||
Operating income | $ | 1,144 | $ | 2,733 | $ | 2,002 | $ | (1,589) | (58.1) | % | $ | (858) | (42.9) | % | ||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Property management expenses | 2,203 | 2,085 | 1,442 | 118 | 5.7 | % | 761 | 52.8 | % | |||||||||||||||||
Casualty (gain) loss | (10) | (27) | 91 | 17 | (63.0) | % | (101) | (111.0) | % | |||||||||||||||||
Depreciation and amortization | 22,447 | 19,308 | 18,995 | 3,139 | 16.3 | % | 3,452 | 18.2 | % | |||||||||||||||||
General and administrative expenses | 4,279 | 3,797 | 3,077 | 482 | 12.7 | % | 1,202 | 39.1 | % | |||||||||||||||||
Net operating income | $ | 30,063 | $ | 27,896 | $ | 25,607 | $ | 2,167 | 7.8 | % | $ | 4,456 | 17.4 | % | ||||||||||||
Revenue | ||||||||||||||||||||||||||
Same-store | $ | 42,034 | $ | 40,521 | $ | 39,571 | $ | 1,513 | 3.7 | % | $ | 2,463 | 6.2 | % | ||||||||||||
Non-same-store | 7,214 | 4,436 | 1,117 | 2,778 | 62.6 | % | 6,097 | 545.8 | % | |||||||||||||||||
Other properties | 1,120 | 646 | 833 | 474 | 73.4 | % | 287 | 34.5 | % | |||||||||||||||||
Dispositions | 45 | 1,053 | 2,617 | (1,008) | (95.7) | % | (2,572) | (98.3) | % | |||||||||||||||||
Total | 50,413 | 46,656 | 44,138 | 3,757 | 8.1 | % | 6,275 | 14.2 | % | |||||||||||||||||
Property operating expenses, including real estate taxes | ||||||||||||||||||||||||||
Same-store | 17,126 | 16,528 | 16,409 | 598 | 3.6 | % | 717 | 4.4 | % | |||||||||||||||||
Non-same-store | 2,940 | 1,439 | 491 | 1,501 | 104.3 | % | 2,449 | 498.8 | % | |||||||||||||||||
Other properties | 317 | 268 | 229 | 49 | 18.3 | % | 88 | 38.4 | % | |||||||||||||||||
Dispositions | (33) | 525 | 1,402 | (558) | (106.3) | % | (1,435) | (102.4) | % | |||||||||||||||||
Total | 20,350 | 18,760 | 18,531 | 1,590 | 8.5 | % | 1,819 | 9.8 | % | |||||||||||||||||
Net operating income | ||||||||||||||||||||||||||
Same-store | 24,908 | 23,993 | 23,162 | 915 | 3.8 | % | 1,746 | 7.5 | % | |||||||||||||||||
Non-same-store | 4,274 | 2,997 | 626 | 1,277 | 42.6 | % | 3,648 | 582.7 | % | |||||||||||||||||
Other properties | 803 | 378 | 604 | 425 | 112.4 | % | 199 | 32.9 | % | |||||||||||||||||
Dispositions | 78 | 528 | 1,215 | (450) | (100.0) | % | (1,137) | (93.6) | % | |||||||||||||||||
Total | $ | 30,063 | $ | 27,896 | $ | 25,607 | $ | 2,167 | 7.8 | % | $ | 4,456 | 17.4 | % | ||||||||||||
(in thousands, except percentages) | ||||||||||||||
Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | $ Change | % Change | |||||||||||
Operating income | $ | 5,518 | $ | 6,530 | $ | (1,012) | (15.5) | % | ||||||
Adjustments: | ||||||||||||||
Property management expenses | 6,055 | 4,341 | 1,714 | 39.5 | % | |||||||||
Casualty (gain) loss | 64 | 1,331 | (1,267) | (95.2) | % | |||||||||
Depreciation and amortization | 61,747 | 55,311 | 6,436 | 11.6 | % | |||||||||
General and administrative expenses | 11,982 | 9,707 | 2,275 | 23.4 | % | |||||||||
Net operating income | $ | 85,366 | $ | 77,220 | $ | 8,146 | 10.5 | % | ||||||
Revenue | ||||||||||||||
Same-store | $ | 122,555 | $ | 118,627 | $ | 3,928 | 3.3 | % | ||||||
Non-same-store | 15,892 | 2,319 | 13,573 | 585.3 | % | |||||||||
Other properties | 2,415 | 2,208 | 207 | 9.4 | % | |||||||||
Dispositions | 2,855 | 9,300 | (6,445) | (69.3) | % | |||||||||
Total | 143,717 | 132,454 | 11,263 | 8.5 | % | |||||||||
Property operating expenses, including real estate taxes | ||||||||||||||
Same-store | 50,032 | 48,631 | 1,401 | 2.9 | % | |||||||||
Non-same-store | 5,875 | 995 | 4,880 | 490.5 | % | |||||||||
Other properties | 873 | 759 | 114 | 15.0 | % | |||||||||
Dispositions | 1,571 | 4,849 | (3,278) | (67.6) | % | |||||||||
Total | 58,351 | 55,234 | 3,117 | 5.6 | % | |||||||||
Net operating income | ||||||||||||||
Same-store | 72,523 | 69,996 | 2,527 | 3.6 | % | |||||||||
Non-same-store | 10,017 | 1,324 | 8,693 | 656.6 | % | |||||||||
Other properties | 1,542 | 1,449 | 93 | 6.4 | % | |||||||||
Dispositions | 1,284 | 4,451 | (3,167) | (71.2) | % | |||||||||
Total | $ | 85,366 | $ | 77,220 | $ | 8,146 | 10.5 | % | ||||||
Reconciliation of Same-Store Controllable Expenses to Total Property Operating Expenses, Including Real Estate Taxes
Same-store controllable expenses exclude real estate taxes and insurance, in order to provide a measure of expenses that are within management's control, and is used for the purposes of budgeting, business planning, and performance evaluation. This is a non-GAAP financial measure and should not be considered an alternative to total expenses or total property operating expenses.
(in thousands, except percentages) | ||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2021 | 2020 | $ Change | % Change | 2021 | 2020 | $ Change | % Change | |||||||||||||||||||||||
Controllable expenses | ||||||||||||||||||||||||||||||
On-site compensation(1) | $ | 4,488 | $ | 4,362 | $ | 126 | 2.9 | % | $ | 13,182 | $ | 12,908 | $ | 274 | 2.1 | % | ||||||||||||||
Repairs and maintenance | 2,562 | 2,804 | (242) | (8.6) | % | 7,060 | 7,469 | (409) | (5.5) | % | ||||||||||||||||||||
Utilities | 2,941 | 2,609 | 332 | 12.7 | % | 8,239 | 7,689 | 550 | 7.2 | % | ||||||||||||||||||||
Administrative and marketing | 956 | 853 | 103 | 12.1 | % | 2,701 | 2,595 | 106 | 4.1 | % | ||||||||||||||||||||
Total | $ | 10,947 | $ | 10,628 | $ | 319 | 3.0 | % | $ | 31,182 | $ | 30,661 | $ | 521 | 1.7 | % | ||||||||||||||
Non-controllable expenses | ||||||||||||||||||||||||||||||
Real estate taxes | $ | 4,812 | $ | 4,795 | $ | 17 | 0.4 | % | $ | 14,665 | $ | 14,513 | $ | 152 | 1.0 | % | ||||||||||||||
Insurance | 1,367 | 986 | 381 | 38.6 | % | 4,185 | 3,457 | 728 | 21.1 | % | ||||||||||||||||||||
Total | $ | 6,179 | $ | 5,781 | $ | 398 | 6.9 | % | $ | 18,850 | $ | 17,970 | $ | 880 | 4.9 | % | ||||||||||||||
Property operating expenses, including real estate taxes - non-same-store | $ | 2,940 | $ | 491 | $ | 2,449 | 498.8 | % | $ | 5,875 | $ | 995 | $ | 4,880 | 490.5 | % | ||||||||||||||
Property operating expenses, including real estate taxes - other properties | 317 | 229 | 88 | 38.4 | % | 873 | 759 | 114 | 15.0 | % | ||||||||||||||||||||
Property operating expenses, including real estate taxes - dispositions | (33) | 1,402 | (1,435) | (102.4) | % | 1,571 | 4,849 | (3,278) | (67.6) | % | ||||||||||||||||||||
Total property operating expenses, including real estate taxes | $ | 20,350 | $ | 18,531 | $ | 1,819 | 9.8 | % | $ | 58,351 | $ | 55,234 | $ | 3,117 | 5.6 | % | ||||||||||||||
_________________ | |
(1) | On-site compensation for administration, leasing, and maintenance personnel. |
Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds From Operations and Core Funds From Operations
Centerspace believes that FFO, which is a non-GAAP financial measure used as a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding its operating performance, primarily because its calculation does not assume that the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation.
Centerspace uses the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. ("Nareit"). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding:
- depreciation and amortization related to real estate;
- gains and losses from the sale of certain real estate assets; and
- impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
The exclusion in Nareit's definition of FFO of gains and losses from the sale of real estate assets and impairment write-downs helps to identify the operating results of the long-term assets that form the base of the company's investments, and assists management and investors in comparing those operating results between periods.
Due to the limitations of the Nareit FFO definition, Centerspace has made certain interpretations in applying this definition. The company believes that all such interpretations not specifically identified in the Nareit definition are consistent with this definition. Nareit's FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT's main business are excluded from FFO and a REIT has the option to exclude impairment write-downs of assets that are incidental to its main business.
While FFO is widely used by Centerspace as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO in the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash flow needs, including the ability to service indebtedness or make distributions to shareholders.
Core Funds from Operations ("Core FFO") is FFO as adjusted for non-routine items or items not considered core to business operations. By further adjusting for items that are not considered part of core business operations, the company believes that Core FFO provides investors with additional information to compare core operating and financial performance between periods. Core FFO should not be considered as an alternative to net income, or any other GAAP measurement of performance, but rather should be considered an additional supplemental measure. Core FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund the company's cash needs, including its ability to service indebtedness or make distributions to shareholders. Core FFO is a non-GAAP and non-standardized financial measure that may be calculated differently by other REITs and should not be considered a substitute for operating results determined in accordance with GAAP.
(in thousands, except per share amounts) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||||||||||||
Funds From Operations | |||||||||||||||||||||||||||||
Net income (loss) available to common shareholders | $ | (11,099) | $ | 19,931 | $ | (6,474) | $ | (5,985) | $ | 18,021 | $ | 2,358 | $ | 4,195 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||
Noncontrolling interests – Operating Partnership | (1,930) | 1,386 | (469) | (460) | 1,387 | (1,013) | 248 | ||||||||||||||||||||||
Depreciation and amortization | 22,447 | 19,308 | 19,992 | 20,282 | 18,995 | 61,747 | 55,311 | ||||||||||||||||||||||
Less depreciation – non real estate | (80) | (87) | (98) | (87) | (85) | (265) | (266) | ||||||||||||||||||||||
Less depreciation – partially owned entities | (24) | (24) | (24) | (33) | (31) | (72) | (346) | ||||||||||||||||||||||
(Gain) loss on sale of real estate | — | (26,840) | — | (17) | (25,676) | (26,840) | (25,486) | ||||||||||||||||||||||
FFO applicable to common shares and Units | $ | 9,314 | $ | 13,674 | $ | 12,927 | $ | 13,700 | $ | 12,611 | $ | 35,915 | $ | 33,656 | |||||||||||||||
Adjustments to Core FFO: | |||||||||||||||||||||||||||||
Casualty (gain) loss | — | — | — | 204 | 545 | — | 545 | ||||||||||||||||||||||
Loss on extinguishment of debt | 530 | 3 | — | 2 | 4 | 533 | 21 | ||||||||||||||||||||||
Rebranding costs | — | — | — | 402 | — | — | — | ||||||||||||||||||||||
Technology implementation costs | 625 | 447 | 413 | — | — | 1,485 | — | ||||||||||||||||||||||
(Gain) loss on marketable securities | — | — | — | — | — | — | 3,378 | ||||||||||||||||||||||
(Discount) premium on redemption of preferred shares | — | — | — | — | 1 | — | (297) | ||||||||||||||||||||||
Commercial lease termination proceeds | (450) | — | — | — | — | (450) | — | ||||||||||||||||||||||
Acquisition related costs | 140 | — | — | — | — | 140 | — | ||||||||||||||||||||||
Interest rate swap termination and amortization | 5,353 | — | — | — | — | 5,353 | — | ||||||||||||||||||||||
Amortization of assumed debt | (27) | — | — | — | — | (27) | — | ||||||||||||||||||||||
Other miscellaneous items | (3) | — | — | — | — | (3) | — | ||||||||||||||||||||||
Core FFO applicable to common shares and Units | $ | 15,482 | $ | 14,124 | $ | 13,340 | $ | 14,308 | $ | 13,161 | $ | 42,946 | $ | 37,303 | |||||||||||||||
Funds from operations applicable to common shares and Units | $ | 9,314 | $ | 13,674 | $ | 12,927 | $ | 13,700 | $ | 12,611 | $ | 35,915 | $ | 33,656 | |||||||||||||||
Dividends to preferred unitholders | 160 | 160 | 160 | 160 | 160 | 480 | 480 | ||||||||||||||||||||||
Funds from operations applicable to common shares and Units - diluted | $ | 9,474 | $ | 13,834 | $ | 13,087 | $ | 13,860 | $ | 12,771 | $ | 36,395 | $ | 34,136 | |||||||||||||||
Core funds from operations applicable to common shares and Units | $ | 15,482 | $ | 14,124 | $ | 13,340 | $ | 14,308 | $ | 13,161 | $ | 42,946 | $ | 37,303 | |||||||||||||||
Dividends to preferred unitholders | 160 | 160 | 160 | 160 | 160 | 480 | 480 | ||||||||||||||||||||||
Core funds from operations applicable to common shares and Units - diluted | $ | 15,642 | $ | 14,284 | $ | 13,500 | $ | 14,468 | $ | 13,321 | $ | 43,426 | $ | 37,783 | |||||||||||||||
Per Share Data | |||||||||||||||||||||||||||||
Earnings (loss) per share and Unit - diluted | $ | (0.81) | $ | 1.48 | $ | (0.49) | $ | (0.46) | $ | 1.38 | $ | 0.12 | $ | 0.33 | |||||||||||||||
FFO per share and Unit - diluted | $ | 0.60 | $ | 0.95 | $ | 0.92 | $ | 0.97 | $ | 0.90 | $ | 2.44 | $ | 2.49 | |||||||||||||||
Core FFO per share and Unit - diluted | $ | 0.98 | $ | 0.98 | $ | 0.95 | $ | 1.02 | $ | 0.94 | $ | 2.91 | $ | 2.76 | |||||||||||||||
Weighted average shares and Units - diluted | 15,922 | 14,514 | 14,282 | 14,222 | 14,143 | 14,917 | 13,704 | ||||||||||||||||||||||
Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of real estate investments, gain/loss on extinguishment of debt, gain/loss from involuntary conversion; and other non-routine items or items not considered core to business operations. The company considers Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, the cost of debt, or non-operating gains and losses. Adjusted EBITDA is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP.
(in thousands) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||||||||||||
Adjusted EBITDA | |||||||||||||||||||||||||||||
Net income (loss) available to common shareholders | $ | (9,492) | $ | 21,538 | $ | (4,867) | $ | (4,378) | $ | 19,629 | $ | 7,179 | $ | 8,819 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||
Dividends to preferred unitholders | 160 | 160 | 160 | 160 | 160 | 480 | 480 | ||||||||||||||||||||||
Noncontrolling interests – Operating Partnership | (1,930) | 1,386 | (469) | (460) | 1,387 | (1,013) | 248 | ||||||||||||||||||||||
Income (loss) before noncontrolling interests – Operating Partnership | $ | (11,262) | $ | 23,084 | $ | (5,176) | $ | (4,678) | $ | 21,176 | $ | 6,646 | $ | 9,547 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||
Interest expense | 7,287 | 7,075 | 7,216 | 6,888 | 6,756 | 21,578 | 20,446 | ||||||||||||||||||||||
Loss on extinguishment of debt | 530 | 3 | — | 2 | 4 | 533 | 21 | ||||||||||||||||||||||
Depreciation/amortization related to real estate investments | 22,423 | 19,284 | 19,969 | 20,250 | 18,964 | 61,676 | 54,965 | ||||||||||||||||||||||
Casualty (gain) loss | — | — | — | 204 | 545 | — | 545 | ||||||||||||||||||||||
Interest income | (769) | (583) | (407) | (328) | (256) | (1,759) | (1,184) | ||||||||||||||||||||||
(Gain) loss on sale of real estate and other investments | — | (26,840) | — | (17) | (25,676) | (26,840) | (25,486) | ||||||||||||||||||||||
Technology implementation costs | 625 | 447 | 413 | — | — | 1,486 | — | ||||||||||||||||||||||
(Gain) loss on marketable securities | — | — | — | — | — | — | 3,378 | ||||||||||||||||||||||
Commercial lease termination proceeds | (450) | — | — | — | — | (450) | — | ||||||||||||||||||||||
Acquisition related costs | 140 | — | — | — | — | 140 | — | ||||||||||||||||||||||
Interest rate swap termination | 5,361 | — | — | — | — | 5,361 | — | ||||||||||||||||||||||
Other miscellaneous items | (3) | — | — | — | — | (3) | — | ||||||||||||||||||||||
Adjusted EBITDA | $ | 23,882 | $ | 22,470 | $ | 22,015 | $ | 22,321 | $ | 21,513 | $ | 68,368 | $ | 62,232 | |||||||||||||||
CENTERSPACE | |||||||||||||||||||
DEBT ANALYSIS | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
Debt Maturity Schedule | |||||||||||||||||||
Annual Expirations | |||||||||||||||||||
Future Maturities of Debt | |||||||||||||||||||
Secured Fixed Debt | Unsecured Fixed Debt(1) | Total Debt | % of Total Debt | Weighted Average Interest | |||||||||||||||
2021 (remainder) | $ | — | $ | — | $ | — | — | — | |||||||||||
2022 | 29,822 | — | 29,822 | 3.5 | % | 4.07 | % | ||||||||||||
2023 | 42,875 | — | 42,875 | 5.1 | % | 4.02 | % | ||||||||||||
2024 | — | — | — | — | — | ||||||||||||||
2025 | 32,316 | 57,000 | 89,316 | 10.5 | % | 2.83 | % | ||||||||||||
Thereafter | 387,384 | 300,000 | 687,384 | 80.9 | % | 3.20 | % | ||||||||||||
Total debt | $ | 492,397 | $ | 357,000 | $ | 849,397 | 100.0 | % | 3.23 | % | |||||||||
__________________ | |
(1) | The line of credit is fixed with an interest rate swap. |
(2) | Weighted average interest rate of debt that matures during the year, including the effect of interest rate swaps on the term loans and line of credit. |
9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||||||||||||
Debt Balances Outstanding | ||||||||||||||||||||
Secured fixed rate - other mortgages | $ | 293,547 | $ | 288,363 | $ | 295,001 | $ | 298,445 | $ | 314,511 | ||||||||||
Secured fixed rate - Fannie Mae credit facility | 198,850 | — | — | — | — | |||||||||||||||
Unsecured fixed rate line of credit(1) | 57,000 | 50,000 | 50,000 | 50,000 | 50,000 | |||||||||||||||
Unsecured variable rate line of credit | — | 37,000 | 131,544 | 102,871 | 85,000 | |||||||||||||||
Unsecured term loans | — | 145,000 | 145,000 | 145,000 | 145,000 | |||||||||||||||
Unsecured senior notes | 300,000 | 175,000 | 175,000 | 125,000 | 125,000 | |||||||||||||||
Debt total | $ | 849,397 | $ | 695,363 | $ | 796,545 | $ | 721,316 | $ | 719,511 | ||||||||||
Other mortgages rate | 3.83 | % | 3.90 | % | 3.92 | % | 3.93 | % | 3.99 | % | ||||||||||
Fannie Mae Credit Facility rate | 2.78 | % | — | — | — | — | ||||||||||||||
Lines of credit rate (rate with swap) | 2.79 | % | 2.24 | % | 2.18 | % | 2.35 | % | 3.35 | % | ||||||||||
Term loan rate (rate with swap) | — | 4.19 | % | 4.11 | % | 4.18 | % | 4.18 | % | |||||||||||
Senior notes rate | 3.12 | % | 3.47 | % | 3.47 | % | 3.78 | % | 3.78 | % | ||||||||||
Total debt | 3.23 | % | 3.70 | % | 3.37 | % | 3.62 | % | 3.68 | % | ||||||||||
__________________ | |
(1) | A portion of the primary line of credit is fixed through an interest rate swap. |
CENTERSPACE | ||||||||||||||||||||
CAPITAL ANALYSIS | ||||||||||||||||||||
(in thousands, except per share and unit amounts) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||||||||||||
Equity Capitalization | ||||||||||||||||||||
Common shares outstanding | 14,281 | 14,045 | 13,220 | 13,027 | 12,976 | |||||||||||||||
Operating partnership units outstanding | 845 | 881 | 950 | 977 | 1,018 | |||||||||||||||
Series E preferred units (as converted) | 2,186 | — | — | — | — | |||||||||||||||
Total common shares and units outstanding | 17,312 | 14,926 | 14,170 | 14,004 | 13,994 | |||||||||||||||
Market price per common share (closing price at end of period) | $ | 94.50 | $ | 78.90 | $ | 68.00 | $ | 70.64 | $ | 65.17 | ||||||||||
Equity capitalization-common shares and units | $ | 1,635,984 | $ | 1,177,661 | $ | 963,560 | $ | 989,243 | $ | 911,989 | ||||||||||
Recorded book value of preferred shares | $ | 93,530 | $ | 93,530 | $ | 93,530 | $ | 93,530 | $ | 93,530 | ||||||||||
Total equity capitalization | $ | 1,729,514 | $ | 1,271,191 | $ | 1,057,090 | $ | 1,082,773 | $ | 1,005,519 | ||||||||||
Series D Preferred Units | $ | 21,585 | $ | 18,022 | $ | 16,560 | $ | 16,560 | $ | 16,560 | ||||||||||
Debt Capitalization | ||||||||||||||||||||
Total debt | $ | 849,397 | $ | 695,363 | $ | 796,545 | $ | 721,317 | $ | 719,511 | ||||||||||
Total capitalization | $ | 2,600,496 | $ | 1,984,576 | $ | 1,870,195 | $ | 1,820,650 | $ | 1,741,590 | ||||||||||
Total debt to total capitalization(1) | 33.1 | % | 35.0 | % | 43.1 | % | 39.6 | % | 41.3 | % | ||||||||||
________________________ | |
(1) | Total debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet, market value of common shares and operating partnership units, and book value of Series C preferred shares and Series D preferred units outstanding at the end of the period. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||||||||||||
Debt service coverage ratio(1) | 2.75 | x | 2.62 | x | 2.53 | x | 2.73 | x | 2.65 | x | 2.63 | x | 2.52 | x | |||||||||||||||
Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization | 2.32 | x | 2.21 | x | 2.14 | x | 2.28 | x | 2.21 | x | 2.22 | x | 2.08 | x | |||||||||||||||
Net debt/Adjusted EBITDA(2) | 8.67 | x | 7.68 | x | 8.92 | x | 8.07 | x | 8.17 | x | 9.09 | x | 8.47 | x | |||||||||||||||
Net debt and preferred equity/Adjusted EBITDA(2) | 9.88 | x | 8.92 | x | 10.17 | x | 9.31 | x | 9.45 | x | 10.35 | x | 9.80 | x | |||||||||||||||
Distribution Data | |||||||||||||||||||||||||||||
Common shares and Units outstanding at record date | 15,126 | 14,926 | 14,171 | 14,004 | 13,994 | 15,126 | 13,994 | ||||||||||||||||||||||
Total common distribution declared | $ | 10,890 | $ | 10,448 | $ | 9,919 | $ | 9,803 | $ | 9,796 | $ | 31,257 | $ | 28,735 | |||||||||||||||
Common distribution per share and Unit | $ | 0.72 | $ | 0.70 | $ | 0.70 | $ | 0.70 | $ | 0.70 | $ | 2.12 | $ | 2.10 | |||||||||||||||
Payout ratio (Core FFO per diluted share and unit basis)(3) | 73.5 | % | 71.4 | % | 73.7 | % | 68.6 | % | 74.5 | % | 72.9 | % | 76.1 | % | |||||||||||||||
_________________________________ | |
(1) | Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization. This term is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within the Non-GAAP Financial Measures and Reconciliations section. |
(2) | Net debt is the total debt balance less cash and cash equivalents and net tax deferred exchange proceeds (included within restricted cash). Adjusted EBITDA is annualized for periods less than one year. Net debt and adjusted EBITDA are non-GAAP financial measures and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within the Non-GAAP Financial Measures and Reconciliations section. |
(3) | Payout ratio (Core FFO per diluted share and unit basis) is the ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual Core FFO per diluted share and unit. This term is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP. |
CENTERSPACE | ||||||||||||||||||||||||||||||||||||
SAME-STORE THIRD QUARTER COMPARISONS | ||||||||||||||||||||||||||||||||||||
(in thousands, except property data amounts and percentages) | ||||||||||||||||||||||||||||||||||||
Apartment | Revenues | Expenses | NOI | |||||||||||||||||||||||||||||||||
Regions | Q3 2021 | Q3 2020 | % Change | Q3 2021 | Q3 2020 | % Change | Q3 2021 | Q3 2020 | % Change | |||||||||||||||||||||||||||
Denver, CO | 992 | $ | 5,565 | $ | 5,372 | 3.6 | % | $ | 1,899 | $ | 1,916 | (0.9) | % | $ | 3,666 | $ | 3,456 | 6.1 | % | |||||||||||||||||
Minneapolis, MN | 2,355 | 11,361 | 10,547 | 7.7 | % | 4,548 | 4,462 | 1.9 | % | 6,813 | 6,085 | 12.0 | % | |||||||||||||||||||||||
North Dakota | 2,422 | 8,183 | 7,852 | 4.2 | % | 3,378 | 3,146 | 7.4 | % | 4,805 | 4,706 | 2.1 | % | |||||||||||||||||||||||
Omaha, NE | 1,370 | 4,166 | 3,884 | 7.3 | % | 1,933 | 1,790 | 8.0 | % | 2,233 | 2,094 | 6.6 | % | |||||||||||||||||||||||
Rochester, MN | 1,122 | 4,874 | 4,577 | 6.5 | % | 1,924 | 2,064 | (6.8) | % | 2,950 | 2,513 | 17.4 | % | |||||||||||||||||||||||
St. Cloud, MN | 1,192 | 3,683 | 3,548 | 3.8 | % | 1,750 | 1,603 | 9.2 | % | 1,933 | 1,945 | (0.6) | % | |||||||||||||||||||||||
Other Mountain West | 1,223 | 4,202 | 3,791 | 10.8 | % | 1,694 | 1,428 | 18.6 | % | 2,508 | 2,363 | 6.1 | % | |||||||||||||||||||||||
Same-Store Total | 10,676 | $ | 42,034 | $ | 39,571 | 6.2 | % | $ | 17,126 | $ | 16,409 | 4.4 | % | $ | 24,908 | $ | 23,162 | 7.5 | % | |||||||||||||||||
% of NOI | Weighted Average Occupancy (1) | Average Monthly | Average Monthly | |||||||||||||||||||||||||||||||
Regions | Q3 2021 | Q3 2020 | Growth | Q3 2021 | Q3 2020 | % Change | Q3 2021 | Q3 2020 | % Change | |||||||||||||||||||||||||
Denver, CO | 14.7 | % | 94.5 | % | 93.4 | % | 1.1 | % | $ | 1,779 | $ | 1,750 | 1.7 | % | $ | 1,978 | $ | 1,932 | 2.5 | % | ||||||||||||||
Minneapolis, MN | 27.3 | % | 94.6 | % | 93.1 | % | 1.5 | % | 1,558 | 1,504 | 3.6 | % | 1,699 | 1,603 | 6.2 | % | ||||||||||||||||||
North Dakota | 19.3 | % | 94.2 | % | 95.5 | % | (1.3) | % | 1,107 | 1,054 | 5.0 | % | 1,195 | 1,131 | 5.5 | % | ||||||||||||||||||
Omaha, NE | 9.0 | % | 94.6 | % | 93.8 | % | 0.8 | % | 962 | 913 | 5.4 | % | 1,072 | 1,008 | 6.5 | % | ||||||||||||||||||
Rochester, MN | 11.8 | % | 93.2 | % | 93.8 | % | (0.6) | % | 1,462 | 1,385 | 5.6 | % | 1,554 | 1,450 | 7.1 | % | ||||||||||||||||||
St. Cloud, MN | 7.8 | % | 91.5 | % | 94.4 | % | (2.9) | % | 1,063 | 963 | 10.4 | % | 1,125 | 1,051 | 6.7 | % | ||||||||||||||||||
Other Mountain West | 10.1 | % | 96.6 | % | 97.1 | % | (0.5) | % | 1,080 | 970 | 11.3 | % | 1,185 | 1,064 | 11.3 | % | ||||||||||||||||||
Same-Store Total | 100.0 | % | 94.3 | % | 94.3 | % | — | $ | 1,279 | $ | 1,215 | 5.3 | % | $ | 1,392 | $ | 1,311 | 6.2 | % | |||||||||||||||
______________________ | |
(1) | Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rent. Scheduled rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes. |
(2) | Average monthly rental rate is scheduled rent divided by the total number of apartment homes. |
(3) | Average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period. |
CENTERSPACE | ||||||||||||||||||||||||||||||||||||
SAME-STORE SEQUENTIAL QUARTER COMPARISONS | ||||||||||||||||||||||||||||||||||||
(in thousands, except property data amounts and percentages) | ||||||||||||||||||||||||||||||||||||
Apartment | Revenues | Expenses | NOI | |||||||||||||||||||||||||||||||||
Regions | Q3 2021 | Q2 2021 | % Change | Q3 2021 | Q2 2021 | % Change | Q3 2021 | Q2 2021 | % Change | |||||||||||||||||||||||||||
Denver, CO | 992 | $ | 5,565 | $ | 5,486 | 1.4 | % | $ | 1,899 | $ | 1,837 | 3.4 | % | $ | 3,666 | $ | 3,649 | 0.4 | % | |||||||||||||||||
Minneapolis, MN | 2,355 | 11,361 | 10,538 | 7.8 | % | 4,548 | 4,649 | (2.2) | % | 6,813 | 5,889 | 15.7 | % | |||||||||||||||||||||||
North Dakota | 2,422 | 8,183 | 8,078 | 1.3 | % | 3,378 | 3,199 | 5.6 | % | 4,805 | 4,879 | (1.5) | % | |||||||||||||||||||||||
Omaha, NE | 1,370 | 4,166 | 4,037 | 3.2 | % | 1,933 | 1,885 | 2.5 | % | 2,233 | 2,152 | 3.8 | % | |||||||||||||||||||||||
Rochester, MN | 1,122 | 4,874 | 4,709 | 3.5 | % | 1,924 | 1,937 | (0.7) | % | 2,950 | 2,772 | 6.4 | % | |||||||||||||||||||||||
St. Cloud, MN | 1,192 | 3,683 | 3,634 | 1.3 | % | 1,750 | 1,582 | 10.6 | % | 1,933 | 2,052 | (5.8) | % | |||||||||||||||||||||||
Other Mountain West | 1,223 | 4,202 | 4,039 | 4.0 | % | 1,694 | 1,439 | 17.7 | % | 2,508 | 2,600 | (3.5) | % | |||||||||||||||||||||||
Same-Store Total | 10,676 | $ | 42,034 | $ | 40,521 | 3.7 | % | $ | 17,126 | $ | 16,528 | 3.6 | % | $ | 24,908 | $ | 23,993 | 3.8 | % | |||||||||||||||||
% of NOI | Weighted Average Occupancy | Average Monthly Rental Rate | Average Monthly Revenue per Occupied Home | |||||||||||||||||||||||||||||||
Regions | Q3 2021 | Q2 2021 | Growth | Q3 2021 | Q2 2021 | % Change | Q3 2021 | Q2 2021 | % Change | |||||||||||||||||||||||||
Denver, CO | 14.7 | % | 94.5 | % | 94.2 | % | 0.3 | % | $ | 1,779 | $ | 1,727 | 3.0 | % | $ | 1,978 | $ | 1,957 | 1.1 | % | ||||||||||||||
Minneapolis, MN | 27.3 | % | 94.6 | % | 94.2 | % | 0.4 | % | 1,558 | 1,510 | 3.2 | % | 1,699 | 1,584 | 7.4 | % | ||||||||||||||||||
North Dakota | 19.3 | % | 94.2 | % | 95.9 | % | (1.7) | % | 1,107 | 1,078 | 2.7 | % | 1,195 | 1,159 | 3.0 | % | ||||||||||||||||||
Omaha, NE | 9.0 | % | 94.6 | % | 95.5 | % | (0.9) | % | 962 | 927 | 3.8 | % | 1,072 | 1,029 | 4.1 | % | ||||||||||||||||||
Rochester, MN | 11.8 | % | 93.2 | % | 94.5 | % | (1.3) | % | 1,462 | 1,403 | 4.2 | % | 1,554 | 1,480 | 4.8 | % | ||||||||||||||||||
St. Cloud, MN | 7.8 | % | 91.5 | % | 92.7 | % | (1.2) | % | 1,063 | 1,005 | 5.8 | % | 1,125 | 1,097 | 2.5 | % | ||||||||||||||||||
Other Mountain West | 10.1 | % | 96.6 | % | 98.1 | % | (1.5) | % | 1,080 | 1,014 | 6.5 | % | 1,185 | 1,122 | 5.5 | % | ||||||||||||||||||
Same-Store Total | 100.0 | % | 94.3 | % | 94.9 | % | (0.6) | % | $ | 1,279 | $ | 1,233 | 3.7 | % | $ | 1,392 | $ | 1,333 | 4.4 | % | ||||||||||||||
CENTERSPACE | ||||||||||||||||||||||||||||||||||||
SAME-STORE YEAR-TO-DATE COMPARISONS | ||||||||||||||||||||||||||||||||||||
(in thousands, except property data amounts and percentages) | ||||||||||||||||||||||||||||||||||||
Apartment | Revenues | Expenses | NOI | |||||||||||||||||||||||||||||||||
Regions | 2021 | 2020 | % Change | 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||||||||||||||
Denver, CO | 992 | $ | 16,459 | $ | 16,170 | 1.8 | % | $ | 5,604 | $ | 5,332 | 5.1 | % | $ | 10,855 | $ | 10,838 | 0.2 | % | |||||||||||||||||
Minneapolis, MN | 2,355 | 32,365 | 32,024 | 1.1 | % | 13,627 | 13,125 | 3.8 | % | 18,738 | 18,899 | (0.9) | % | |||||||||||||||||||||||
North Dakota | 2,422 | 24,209 | 23,331 | 3.8 | % | 9,848 | 9,791 | 0.6 | % | 14,361 | 13,540 | 6.1 | % | |||||||||||||||||||||||
Omaha, NE | 1,370 | 12,229 | 11,536 | 6.0 | % | 5,580 | 5,199 | 7.3 | % | 6,649 | 6,337 | 4.9 | % | |||||||||||||||||||||||
Rochester, MN | 1,122 | 14,227 | 13,910 | 2.3 | % | 5,847 | 5,922 | (1.3) | % | 8,380 | 7,988 | 4.9 | % | |||||||||||||||||||||||
St. Cloud, MN | 1,192 | 10,972 | 10,705 | 2.5 | % | 4,967 | 4,883 | 1.7 | % | 6,005 | 5,822 | 3.1 | % | |||||||||||||||||||||||
Other Mountain West | 1,223 | 12,094 | 10,951 | 10.4 | % | 4,559 | 4,379 | 4.1 | % | 7,535 | 6,572 | 14.7 | % | |||||||||||||||||||||||
Same-Store Total | 10,676 | $ | 122,555 | $ | 118,627 | 3.3 | % | $ | 50,032 | $ | 48,631 | 2.9 | % | $ | 72,523 | $ | 69,996 | 3.6 | % | |||||||||||||||||
% of NOI | Weighted Average Occupancy | Average Monthly Rental Rate | Average Monthly Revenue per Occupied Home | |||||||||||||||||||||||||||||||
Regions | 2021 | 2020 | Growth | 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||||||||||||
Denver, CO | 15.0 | % | 94.4 | % | 93.6 | % | 0.8 | % | $ | 1,741 | $ | 1,772 | (1.7) | % | $ | 1,953 | $ | 1,935 | 1.0 | % | ||||||||||||||
Minneapolis, MN | 25.7 | % | 93.9 | % | 93.8 | % | 0.1 | % | 1,521 | 1,495 | 1.7 | % | 1,626 | 1,611 | 1.0 | % | ||||||||||||||||||
North Dakota | 19.8 | % | 95.4 | % | 95.9 | % | (0.5) | % | 1,082 | 1,045 | 3.5 | % | 1,164 | 1,116 | 4.3 | % | ||||||||||||||||||
Omaha, NE | 9.2 | % | 95.0 | % | 94.3 | % | 0.7 | % | 934 | 903 | 3.4 | % | 1,044 | 992 | 5.3 | % | ||||||||||||||||||
Rochester, MN | 11.6 | % | 94.4 | % | 95.5 | % | (1.1) | % | 1,413 | 1,383 | 2.2 | % | 1,493 | 1,443 | 3.4 | % | ||||||||||||||||||
St. Cloud, MN | 8.3 | % | 92.9 | % | 94.3 | % | (1.4) | % | 1,013 | 953 | 6.3 | % | 1,101 | 1,058 | 3.9 | % | ||||||||||||||||||
Other Mountain West | 10.4 | % | 97.5 | % | 95.9 | % | 1.6 | % | 1,026 | 954 | 7.5 | % | 1,127 | 1,037 | 8.8 | % | ||||||||||||||||||
Same-Store Total | 100.0 | % | 94.7 | % | 94.7 | % | — | $ | 1,242 | $ | 1,208 | 2.8 | % | $ | 1,347 | $ | 1,304 | 3.3 | % | |||||||||||||||
CENTERSPACE | ||||||||||||||||||||
PORTFOLIO SUMMARY(1) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||||||||||||
Number of Apartment Homes at Period End | ||||||||||||||||||||
Same-Store | 10,676 | 10,676 | 11,265 | 10,567 | 10,567 | |||||||||||||||
Non-Same-Store | 3,599 | 903 | 903 | 1,343 | 1,343 | |||||||||||||||
All Communities | 14,275 | 11,579 | 12,168 | 11,910 | 11,910 | |||||||||||||||
Average Monthly Rental Rate(2) | ||||||||||||||||||||
Same-Store | $ | 1,279 | $ | 1,233 | $ | 1,200 | $ | 1,177 | $ | 1,178 | ||||||||||
Non-Same-Store | 1,506 | 1,617 | 1,584 | 1,599 | 1,597 | |||||||||||||||
All Communities | $ | 1,293 | $ | 1,263 | $ | 1,229 | $ | 1,225 | $ | 1,210 | ||||||||||
Average Monthly Revenue per Occupied Apartment Home(3) | ||||||||||||||||||||
Same-Store | $ | 1,392 | $ | 1,333 | $ | 1,302 | $ | 1,282 | $ | 1,271 | ||||||||||
Non-Same-Store | 1,606 | 1,739 | 1,705 | 1,708 | 1,729 | |||||||||||||||
All Communities | $ | 1,397 | $ | 1,365 | $ | 1,332 | $ | 1,330 | $ | 1,307 | ||||||||||
Weighted Average Occupancy(4) | ||||||||||||||||||||
Same-Store | 94.3 | % | 94.9 | % | 94.9 | % | 95.0 | % | 94.4 | % | ||||||||||
Non-Same-Store | 95.1 | % | 94.2 | % | 91.8 | % | 92.3 | % | 93.9 | % | ||||||||||
All Communities | 94.4 | % | 94.8 | % | 94.6 | % | 94.6 | % | 94.3 | % | ||||||||||
Operating Expenses as a % of Scheduled Rent | ||||||||||||||||||||
Same-Store | 41.8 | % | 41.9 | % | 42.9 | % | 41.2 | % | 43.4 | % | ||||||||||
Non-Same-Store | 39.9 | % | 32.9 | % | 34.9 | % | 35.3 | % | 39.7 | % | ||||||||||
All Communities | 41.6 | % | 41.0 | % | 42.1 | % | 40.3 | % | 43.0 | % | ||||||||||
Capital Expenditures | ||||||||||||||||||||
Total Capital Expenditures per Apartment Home – Same-Store | $ | 255 | $ | 159 | $ | 131 | $ | 326 | $ | 293 | ||||||||||
___________________ | |
(1) | Previously reported amounts are not revised for changes in the composition of the same-store properties pool. |
(2) | Average monthly rental rate is scheduled rent divided by the total number of apartment homes. Scheduled rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes. |
(3) | Average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period. |
(4) | Weighted average occupancy is the percentage resulting from dividing actual rental revenue by scheduled rent. The company believes that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy and the calculation of weighted average occupancy may not be comparable to that disclosed by other REITs. |
CENTERSPACE | |||||||||||||||||
CAPITAL EXPENDITURES | |||||||||||||||||
($ in thousands, except per home amounts) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
9/30/2021 | 9/30/2020 | 9/30/2021 | 9/30/2020 | ||||||||||||||
Total Same-Store Apartment Homes | 10,676 | 10,676 | 10,676 | 10,676 | |||||||||||||
Building - Exterior | $ | 1,236 | $ | 707 | $ | 2,013 | $ | 2,796 | |||||||||
Building - Interior | 128 | 154 | 431 | 370 | |||||||||||||
Mechanical, Electrical, & Plumbing | 145 | — | 476 | — | |||||||||||||
Furniture & Equipment | 13 | 19 | 76 | 237 | |||||||||||||
Landscaping & Grounds | 211 | 727 | |||||||||||||||
Turnover | 989 | 1,071 | 2,371 | 2,553 | |||||||||||||
Capital Expenditures - Same-Store | $ | 2,722 | $ | 2,678 | $ | 5,737 | $ | 7,136 | |||||||||
Capital Expenditures per Apartment Home - Same-Store | $ | 255 | $ | 251 | $ | 537 | $ | 668 | |||||||||
Value Add | $ | 7,209 | $ | 4,118 | $ | 14,384 | $ | 10,267 | |||||||||
Total Capital Spend - Same-Store | $ | 9,931 | $ | 6,796 | $ | 20,121 | $ | 17,403 | |||||||||
Total Capital Spend per Apartment Home - Same-Store | $ | 930 | $ | 637 | $ | 1,885 | $ | 1,630 | |||||||||
All Properties - Weighted Average Apartment Homes | 12,475 | 11,600 | 12,140 | 11,456 | |||||||||||||
Capital Expenditures | $ | 2,827 | $ | 2,761 | $ | 5,939 | $ | 7,755 | |||||||||
Capital Expenditures per Apartment Home | $ | 227 | $ | 238 | $ | 489 | $ | 677 | |||||||||
Value Add | 7,209 | 4,118 | 14,396 | 10,267 | |||||||||||||
Acquisition Capital | 336 | 730 | 1,297 | 1,265 | |||||||||||||
Total Capital Spend | 10,372 | 7,609 | 21,632 | 19,287 | |||||||||||||
Total Capital Spend per Apartment Home | $ | 831 | $ | 656 | $ | 1,782 | $ | 1,684 | |||||||||
Value Add Capital Expenditures | |||||||||||||||||
Interior - Units | |||||||||||||||||
Same-Store | $ | 4,823 | $ | 2,228 | $ | 9,622 | $ | 4,581 | |||||||||
Non-Same-Store | — | — | 8 | — | |||||||||||||
Total Interior Units | $ | 4,823 | $ | 2,228 | $ | 9,630 | $ | 4,581 | |||||||||
Expected Year 1 Annual ROI | 16.0 | % | 17.3 | % | 16.3 | % | 17.0 | % | |||||||||
Common Areas and Exteriors | |||||||||||||||||
Same-Store | $ | 2,386 | $ | 1,890 | $ | 4,762 | $ | 5,686 | |||||||||
Non-Same-Store | — | — | 4 | — | |||||||||||||
Total Common Areas and Exteriors | $ | 2,386 | $ | 1,890 | $ | 4,766 | $ | 5,686 | |||||||||
Expected Year 1 Annual ROI | 8.6 | % | 11.7 | % | 8.4 | % | 11.8 | % | |||||||||
Total Value-Add Capital Expenditures | |||||||||||||||||
Same-Store | $ | 7,209 | $ | 4,118 | $ | 14,384 | $ | 10,267 | |||||||||
Non-Same-Store | — | — | 12 | — | |||||||||||||
Total Portfolio Value-Add | $ | 7,209 | $ | 4,118 | $ | 14,396 | $ | 10,267 | |||||||||
Expected Year 1 Annual ROI | 13.6 | % | 14.7 | % | 13.7 | % | 14.1 | % | |||||||||
CENTERSPACE | |||||||||||||||||||
2021 Financial Outlook | |||||||||||||||||||
(in thousands, except per share and per home amounts) | |||||||||||||||||||
Centerspace revised its outlook for 2021 in the table below. | |||||||||||||||||||
Nine Months Ended | 2021 Previous Outlook Range | 2021 Revised Outlook Range | |||||||||||||||||
September 30, 2021 | Low | High | Low | High | |||||||||||||||
YTD Actual | Amount | Amount | Amount | Amount | |||||||||||||||
Same-store growth | |||||||||||||||||||
Revenue | $ | 122,555 | 2.0 | % | 3.5 | % | 3.5 | % | 4.0 | % | |||||||||
Controllable expenses | $ | 31,182 | 3.0 | % | 5.0 | % | 3.8 | % | 4.3 | % | |||||||||
Non-controllable expenses | $ | 18,850 | 5.5 | % | 7.5 | % | 6.3 | % | 6.8 | % | |||||||||
Total Expenses | $ | 50,032 | 4.0 | % | 6.0 | % | 4.5 | % | 5.0 | % | |||||||||
Same-store NOI | $ | 72,523 | 0.5 | % | 2.0 | % | 3.0 | % | 3.5 | % | |||||||||
Components of NOI | |||||||||||||||||||
Same-store NOI | $ | 72,523 | $ | 95,100 | $ | 96,300 | $ | 97,300 | $ | 97,800 | |||||||||
Non-same-store NOI | $ | 10,017 | $ | 11,800 | $ | 12,000 | $ | 17,200 | $ | 17,800 | |||||||||
Other Commercial NOI | $ | 1,542 | $ | 1,800 | $ | 1,900 | $ | 2,100 | $ | 2,200 | |||||||||
Other Sold NOI | $ | 1,284 | $ | 1,200 | $ | 1,200 | $ | 1,200 | $ | 1,200 | |||||||||
Total NOI | $ | 85,366 | $ | 109,900 | $ | 111,400 | $ | 117,800 | $ | 119,000 | |||||||||
Accretion (dilution) from investments and capital market activity, excluding impact from change in share count | $ | — | 4,350 | 4,500 | 30 | 40 | |||||||||||||
Interest expense | $ | (21,622) | (28,700) | (28,500) | (29,100) | (28,900) | |||||||||||||
Preferred dividends | $ | (4,821) | (6,430) | (6,430) | (6,430) | (6,430) | |||||||||||||
Recurring income and expenses | |||||||||||||||||||
Interest and other income | $ | (4,104) | 2,580 | 2,580 | (3,330) | (3,330) | |||||||||||||
General and administrative and property management | $ | (18,037) | (23,500) | (23,000) | (25,100) | (24,800) | |||||||||||||
Casualty losses | $ | (64) | (1,245) | (755) | (600) | (400) | |||||||||||||
Non-real estate depreciation and amortization | $ | (265) | (280) | (280) | (320) | (330) | |||||||||||||
Non-controlling interest | $ | (58) | (70) | (65) | (70) | (65) | |||||||||||||
Total recurring income and expenses | $ | (22,528) | (22,515) | $ | (21,520) | (29,420) | $ | (28,925) | |||||||||||
FFO | $ | 36,395 | $ | 56,605 | $ | 59,450 | $ | 52,880 | $ | 54,785 | |||||||||
Non-core income and expenses | |||||||||||||||||||
Casualty loss | $ | — | $ | 280 | $ | 120 | $ | 280 | $ | 120 | |||||||||
Technology implementation costs | 1,485 | 1,800 | 1,600 | 2,000 | 1,900 | ||||||||||||||
Interest rate swap termination and amortization | 5,353 | — | — | 5,400 | 5,400 | ||||||||||||||
Other miscellaneous items | 193 | — | — | 400 | 400 | ||||||||||||||
Total non-core income and expenses | $ | 7,031 | $ | 2,080 | $ | 1,720 | $ | 8,080 | $ | 7,820 | |||||||||
Core FFO | $ | 43,426 | $ | 58,685 | $ | 61,170 | $ | 60,960 | $ | 62,605 | |||||||||
EPS - Diluted | $ | 0.12 | $ | 0.58 | $ | 0.76 | $ | (0.36) | $ | (0.24) | |||||||||
FFO per diluted share | $ | 2.44 | $ | 3.64 | $ | 3.83 | $ | 3.40 | $ | 3.52 | |||||||||
Core FFO per diluted share | $ | 2.91 | $ | 3.78 | $ | 3.94 | $ | 3.92 | $ | 4.02 | |||||||||
Weighted average shares outstanding - diluted | 14,917 | 15,541 | 15,541 | 15,562 | 15,570 | ||||||||||||||
Additional Assumptions | |||||||||||||||||||
Same-store capital expenditures (per home) | $ | 537 | $ | 875 | $ | 925 | $ | 885 | 915 | ||||||||||
Value-add expenditures | $ | 14,396 | $ | 15,000 | $ | 20,000 | $ | 22,000 | $ | 23,000 | |||||||||
Investments | $ | 400,000 | $ | 400,000 | $ | 400,000 | $ | 401,000 | $ | 401,000 | |||||||||
Dispositions | $ | 60,000 | $ | 60,000 | $ | 60,000 | $ | 62,300 | $ | 62,300 | |||||||||
Equity issuance proceeds | $ | 86,127 | $ | 66,500 | $ | 66,500 | $ | 101,100 | $ | 111,100 | |||||||||
Reconciliation of Net Income (Loss) Available to Common Shareholders to FFO and Core FFO
The following table presents reconciliations of Net income (loss) available to common shareholders to FFO and Core FFO, which are non-GAAP financial measures described in greater detail under "Non-GAAP Financial Measures and Reconciliations." They should not be considered as alternatives to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO and Core FFO also do not represent cash generated from operating activities in accordance with GAAP, nor are they indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders. The outlook and projections provided below are based on current expectations and are forward-looking.
Previous Outlook | Revised Outlook | ||||||||||||||||||
Nine Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||
September 30, 2021 | December 31, 2021 | December 31, 2021 | |||||||||||||||||
Actual | Low | High | Low | High | |||||||||||||||
Net income (loss) available to common shareholders | $ | 2,358 | $ | 10,479 | $ | 13,324 | $ | (4,180) | $ | (2,270) | |||||||||
Noncontrolling interests - Operating Partnership and Series E preferred units | (1,013) | (1,456) | (1,456) | (6,518) | (6,518) | ||||||||||||||
Depreciation and amortization | 61,747 | 74,157 | 74,157 | 90,452 | 90,452 | ||||||||||||||
Less depreciation - non real estate | (265) | (280) | (280) | (320) | (330) | ||||||||||||||
Less depreciation - partially owned entities | (72) | (95) | (95) | (70) | (65) | ||||||||||||||
(Gain) loss on sale of real estate | (26,840) | (26,840) | (26,840) | (27,124) | (27,124) | ||||||||||||||
Dividends to preferred unitholders | 480 | 640 | 640 | 640 | 640 | ||||||||||||||
FFO applicable to common shares and Units | $ | 36,395 | $ | 56,605 | $ | 59,450 | $ | 52,880 | $ | 54,785 | |||||||||
Adjustments to Core FFO: | |||||||||||||||||||
Casualty loss write off | — | 280 | 120 | 280 | 120 | ||||||||||||||
Technology implementation costs | 1,485 | 1,800 | 1,600 | 2,000 | 1,900 | ||||||||||||||
Interest rate swap termination and amortization | 5,353 | — | — | 5,400 | 5,400 | ||||||||||||||
Other miscellaneous items | 193 | — | — | 400 | 400 | ||||||||||||||
Core FFO applicable to common shares and Units | $ | 43,426 | $ | 58,685 | $ | 61,170 | $ | 60,960 | $ | 62,605 | |||||||||
Earnings per share - diluted | $ | 0.12 | $ | 0.58 | $ | 0.76 | $ | (0.36) | $ | (0.24) | |||||||||
FFO per share - diluted | $ | 2.44 | $ | 3.64 | $ | 3.83 | $ | 3.40 | $ | 3.52 | |||||||||
Core FFO per share - diluted | $ | 2.91 | $ | 3.78 | $ | 3.94 | $ | 3.92 | $ | 4.02 | |||||||||
Reconciliation of Operating Income to Net Operating Income
Net operating income, or NOI, is a non-GAAP financial measure which the company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.
Previous Outlook | Revised Outlook | ||||||||||||||||||
Nine Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||
September 30, 2021 | December 31, 2021 | December 31, 2021 | |||||||||||||||||
Actual | Low | High | Low | High | |||||||||||||||
Operating income | $ | 5,518 | $ | 10,998 | $ | 13,488 | $ | 1,648 | $ | 3,348 | |||||||||
Adjustments: | |||||||||||||||||||
General and administrative and property management expenses | 18,037 | 23,500 | 23,000 | 25,100 | 24,800 | ||||||||||||||
Casualty loss | 64 | 1,245 | 755 | 600 | 400 | ||||||||||||||
Depreciation and amortization | 61,747 | 74,157 | 74,157 | 90,452 | 90,452 | ||||||||||||||
Net operating income | $ | 85,366 | $ | 109,900 | $ | 111,400 | $ | 117,800 | $ | 119,000 | |||||||||
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SOURCE Centerspace
