Centerspace (NYSE:CSR) Q1 2023 Earnings Conference Call May 2, 2023 10:00 AM ET

Company Participants

Joe McComish - VP, Finance

Anne Olson - President & CEO

Bhairav Patel - EVP & CFO

Conference Call Participants

Brad Heffern - RBC Capital Markets

Barry Oxford - Colliers

Robert Stevenson - Janney

Buck Horne - Raymond James

Operator

Thank you all for joining. I would like to welcome you to Centerspace Q1 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. And after the speakers’ remarks, we will conduct a question-and-answer session. [Operator Instructions] Thank you.

I would now like to hand the conference over to your host, Joe McComish. Please go ahead, Joe.

Joe McComish

Centerspace's Form 10-Q for the quarter ended March 31, 2023 was filed with the SEC yesterday after the market closed. Additionally, our earnings release and supplemental disclosure package have been posted to our website at centerspacehomes.com and filed on Form 8-K.

It's important to note that today's remarks will include statements about our business outlook and other forward-looking statements that are based on management's current views and assumptions. These statements are subject to risks and uncertainties discussed in our filings under the section titled Risk Factors and in our other filings with the SEC.

We cannot guarantee that any forward-looking statement will materialize, and you are cautioned not to place undue reliance on these forward-looking statements. Please refer to our earnings release for reconciliations of any non-GAAP information which may be discussed on today's call.

I'll now turn it over to Anne Olson for the company's prepared remarks.

Anne Olson

Good morning, everyone, and thank you for joining our call. With me this morning is Bhairav Patel, our Chief Financial Officer. Notably missing this morning is, Mark Decker, who led Centerspace for the last six years and transitioned out of the CEO role at the end of March. Mark is a tremendous leader, who was key in building the foundation of our culture and drove a strategy that provided our team opportunities to learn and grow. Mark's accomplishments over the last six years are many, and I know Mark and the Board have confidence in the opportunity ahead for CSR. I share that confidence and I'm both humbled and excited to lead the company into its next chapter. We will miss Mark and wish him the best.

Today, I have great results to share for our company. The first quarter was very strong. The stability of our markets and operations resulted in core FFO growth of 9% over the same period last year. Revenue growth is still the highlight as we capture the loss to lease from large rental increases throughout 2022. Same-store revenue growth was 10.5%, driven by increases in scheduled rent leading to NOI growth of 11% over the prior comparable quarter. The expense pressure we experienced in 2022 is leveling off. The first quarter same-store expenses were flat over Q4 of 2022, a sign of easing inflation and efficacy of our cost control measures. Our positive operational results, coupled with the impact of the CEO transition and associated reduction of G&A, give us confidence that we can reiterate our guidance for this year. Bhairav will provide more detail in his remarks.