Centerspace

Centerspace reported second quarter Core FFO of $1.27 per diluted share. Same-store NOI increased 30 basis points year over year, with revenue flat year over year and expenses down 10 basis points year over year. The company updated full-year 2026 same-store NOI guidance to flat to down 1% year over year, with midpoint revenue growth of 50 basis points and expense growth of 2%. Full-year Core FFO midpoint was lowered to $4.63 per share. Management expects to use sale proceeds to fully repay the line of credit, end with about $100 million of cash on hand, and potentially make a $50 million to $60 million special distribution in the fourth quarter.

Anne Olson emphasized that the portfolio repositioning is intentional and aimed at creating a higher-quality portfolio with stronger growth potential, lower net debt to EBITDA, and more flexibility. She said operations were in line with expectations, with Denver softness offset by stronger results in North Dakota, Nebraska, Minnesota, and other non-Mountain West markets. Her tone was constructive, especially around Minneapolis and the longer-term opportunity as new supply diminishes in the Mountain West into 2027.

Bhairav Patel said Q2 Core FFO was $1.27 per share and that same-store NOI grew 30 basis points as revenues and expenses were relatively flat. He noted more than $240 million of liquidity at quarter end, about $1 billion of debt outstanding, a 3.6% weighted average rate, and 6.7 years of weighted average maturity. After dispositions, he expects total debt below $850 million and net debt to EBITDA in the mid-6x range, with approximately $450 million of total liquidity including proceeds and cash, and he cited an annualized G&A run-rate reduction of about $2 million.

Analysts focused on how the asset sales affect same-store results and FFO run rate, with management saying the recomposition of the same-store pool is the main driver of guidance changes and that the excluded 14 communities had been collectively up 7.5% NOI. Questions also centered on Denver, where management said the weakness is still mainly supply-driven, with July blends turning positive and portfolio occupancy/positioning better than the market. Management also said Minneapolis is performing at or slightly above expectations and that there are no plans for additional Minneapolis sales in 2026, while Salt Lake City remains attractive but not a near-term acquisition priority given the current cost of capital.