Hello everyone, and welcome to the Centerspace fourth quarter 2022 earnings call. My name is Daisy, and I'll be coordinating your call today. If you would like to register a question, please press Star followed by one on your telephone keypad. I would now like to hand the call over to your host, Joe McComish, VP of Finance, to begin. Joe, please go ahead. Centerspace's Form 10-K for the year ended December 31, 2022, 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 filing under the section titled Risk Factors and in our other filings with the SEC. We cannot guarantee that any forward-looking statements 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 Mark Decker for the company's prepared remarks. Thanks, Joe. Good morning, everyone, and thank you for joining us. With me this morning is Anne Olson, our Chief Operating Officer, and Bhairav Patel, our Chief Financial Officer. 2022 was an ambitious year for Centerspace. We had several large forces at work, multiple large integrations of communities, people, and systems from late in 2021, meaningful labor pressures, given that all of our communities are in highly employed markets, inflation, and the reset of the cost of capital. Yet we did continue to grow the quality of our portfolio, and we were able to grow Core FFO per share by 11%. I'm confident we're on the right track as I listen to the many earnings calls and speak to private peers. We're in good company as it relates to strong fundamentals and expense challenges, though we are different in terms of our Midwest and Mountain West market exposure. That's provided us with leading consistency in revenues and NOI growth since 2018. I get more excited when I consider that we've been able to find accretive ways to grow and our internal growth opportunity remains since we really are just a five-year-old owner operator. I'm sure Anne will have some depth to the operating commentary. I'll stop there. Before I move on, I want to say thank you to our teams in operations and support who continue to show incredible dedication to our residents and each other. Moving to capital allocation and balance sheet. We had a quiet first half as we pursued a large strategic portfolio that would have been funded with stock and units that didn't break our way. We got a little more active in the second half of the year, we deployed capital to continue to improve our portfolio, purchasing a newly built property in Denver, Lyra, for $95 million. We also took advantage of the dislocation in public markets to buy back some of our own shares at a significant discount to intrinsic value. In all, we deployed about $125 million. Our plan was to fund those investments with the equity from sales of some of our least efficient and most capital-intensive communities, as well as long-term fixed rate debt. That is what we expect will happen in the coming months, as we have 1,500 homes under contract today, and we've rate locked a $90 million mortgage for 12 years at just over 5%. We delayed our financing plan to let the market settle, and in so doing, took more variable rate exposure. This proved to be the right long-term thing to do, but did cost us in the short term, and that's reflected in our results for Q4, and to some extent, our 2023 guidance, where you can see that interest expense is eating its strong operating results. Asset sales may also hamper Core FFO per share growth. However, in our analysis, our cash flow and quality of earnings is improved, and that's a trade-off we like and will continue to seek. I'm pleased to say that we expect in the next 60 days to have long-term financing in place and have our line nearly back to zero. When it's all said and done, we'll have a robust and scalable operational system with numerous chances to improve resident and team experience while gaining efficiencies. A portfolio of communities with better long-term pricing power and ability to grow and distribute cash flow, and abundant liquidity with an untapped line, low blended rates, long maturities, and a formidable unsecured asset base. Looking forward and considering our overall outlook, we believe that our portfolio provides a strong value proposition to our residents, that our residents are economically strong, and our portfolio of communities are among some of the least exposed to new supply in the public markets. We're excited about the opportunities to continue to improve the company in 2023 and beyond. And with that, Anne, would you please provide a quick operations update? Thank you, Mark. Good morning. I'm happy to say that 2022 was a great year, and like Mark, I'm extremely grateful for our team and their hard work. We ended the year with 9% growth in our Same-Store Net Operating Income compared to 2021. Revenue was the highlight for the year, with our same-store growing at 9.3% in the fourth quarter compared to the same period in 2021, and 10% for the full year. During the fourth quarter, our same-store new lease rates increased 1.8% on average over the prior leases, and same-store renewals achieved average increases of 7.2%. On a blended basis, this is fourth quarter rental rate growth of 4.2%. During 2022 overall, our same-store portfolio achieved an average new lease increase of 8%, while renewals increased 8.4%. Renewals remain strong given the significant growth in rates we saw earlier in the year, and we're experiencing a return to normal seasonality in new lease pricing. During January, our new leases saw positive increases at 1.4%, while our renewal rents increased 6.5% over the prior lease. Our traffic has returned to pre-COVID trends and is currently up year-over-year. We feel good about the demand in our markets. The financial health of our residents is strong, and we increased weighted average occupancy 40 basis points during the fourth quarter to 94.9% while maintaining collections of 99.8%. Expenses came on quickly in the second half of the year. While we are experiencing our fair share of inflationary effects on labor and materials, utility increases contributed 26% of our overall same-store expense increase in 2022 over 2021. On a controllable expense basis, it was 32% of the total increase year-over-year. We are projecting utility expenses will remain relatively flat in 2023. As we look forward, we believe that the bulk of the inflationary increases were realized in the second half of 2022, and thus our expense growth will moderate. Of note, we had an increase in eviction and similar activity in Q3 and Q4, with 10% of our expirations attributable to evictions in Q4. These drive expenses related to legal and administrative fees and often correlate to higher turn costs. We believe that activity, which was driven by the mid-year lifting of the rental assistance programs in Minnesota, will taper this year. As we start 2023, we're focused on systems and processes that will gain efficiencies and contain expense growth. I'll turn it over to Bhairav to discuss our overall financial results in 2023 outlook. Thanks, Anne. Good morning, everyone. Last night we reported Core FFO for the quarter ending December 31, 2022 of $1.17 per diluted share, bringing our full year Core FFO to $4.43 per diluted share, which represents an increase of 11% over the prior year. The key driver of the increase was strong growth in Same-Store Net Operating Income. As Anne mentioned, although we felt expense pressure across the board during the second half of the year, Same-Store revenues established a strong foundation to sustain operating momentum as the impact of inflation and higher energy prices on expenses begins to moderate. I will discuss that in further detail when I cover our financial outlook for 2023. Turning to our financial position, we continue to take steps to further strengthen our balance sheet and broaden our capital options. During the fourth quarter, we repurchased 427,000 shares at an average purchase price of $67.25 per share, which we believe to be a significant discount to the value of our portfolio. Also, during the fourth quarter, we closed on an unsecured $100 million term loan facility with an initial term of one year with a 1-year extension option. The loan bears interest at SOFR plus a spread of 120-175 basis points based on our leverage ratio. The current spread on the loan is 130 basis points, which is roughly in line with the current spread on our unsecured line of credit. The term loan augmented capacity and provided balance sheet flexibility during a period of extreme volatility and uncertainty in the capital markets as we embarked on a plan to prune the portfolio, as Mark discussed in his remarks. As of December 31, 2022, we had total debt of $1 billion with a weighted average maturity of 5.8 years and a weighted average interest rate of 3.62%. I will discuss our financial outlook for 2023, which is presented on page S17 of the supplemental. At the midpoint, we expect Same-Store Net Operating Income growth to be 8% in 2023, driven by continued top line growth coupled with a moderation in expense growth. The key components of revenue growth are an earning of approximately 4% at year-end, projected blended rate growth of 4.5%, driven in part by value add spend, and the expansion of what we collect in RUBS across our portfolio. We expect total expenses to grow by 5.5% at the midpoint compared to 11.6% during 2022, as we anticipate key drivers of higher growth in 2022, such as utilities and R&M, to remain relatively flat in 2023. Almost two-thirds of the increase in expenses is driven by higher real estate taxes and insurance costs as assessed values and premiums continue to rise. We expect Core FFO for 2023 at the midpoint to be roughly flat compared to 2022 at $4.42 per share as the impact of higher interest expenses and the planned dispositions is expected to offset strong operating results. Approximately 21% of our total debt as of December 31, 2022 was variable rate debt, with short-term rates projected to be significantly higher in 2023. However, we expect to refinance approximately $90 million of our current floating rate debt with fixed rate secured debt at a coupon of 5.04% and a maturity of 12 years as we were able to rate lock during a brief window of time when the 10-year yield dipped slightly below 3.6%. We are pleased to have locked in those savings as Treasury yields have since risen by approximately 35 basis points. Lastly, as Mark mentioned in his remarks, our guidance assumes disposition proceeds of approximately $155 million-$165 million from the planned sale of 11 assets or approximately 1,900 units. We expect to close 9 assets for approximately $140 million by the end of the first quarter, with the balance plan to be completed by the end of the third quarter. The proceeds from the dispositions will be used to pay down outstanding balances on the term loan and the line of credit. Pro forma for the refinancing and asset sales, a weighted average interest rate as of year-end would have been 3.5%. A weighted average maturity would have increased by over a year and a half to 7.5 years, and our variable rate exposure would decline by to approximately 1% of the total debt balance post the paydown. Additionally, our leverage would decline by about 1.1 term times and our capacity would be fully restored, further strengthening our balance sheet. To conclude, I would like to thank our entire team at Centerspace for their contribution in making 2022 one of the strongest years in the history of the company. While there are challenges ahead, we are extremely confident in our team's ability to execute our operating strategy and propel Centerspace to newer heights. With that, I will turn it over to the operator to open it up for questions. Thank you. As a reminder, if anyone would like to register a question, please press Star followed by one on your telephone keypad. If you would like to withdraw your question, please press Star followed by two. When preparing to ask your question, please ensure you are unmuted locally. Press Star followed by one on your telephone keypad to register a question. Our first question today comes from Brad Heffern from RBC Capital Markets. Brad, please go ahead. Your line is open. Thank you. Good morning, everyone. On the dispositions, can you walk through exactly where those assets are, the cap rate you expect, and what the dilutive impact was on the guide? Sure. Good morning, Brad. This is Mark. I'll start with that. The assets are two are in Nebraska, one in Lincoln, one in Omaha, five are in Saint Cloud, I think it's three in Minneapolis, Greater Twin Cities area. I think it's four in Saint Cloud. That was the first. That's where are they. What was the dilutive impact? I think probably $0.08-$0.10. What was the other part of the question? Sorry. Just the cap rate. Oh, cap rate. Yeah. low sixes on a trailing basis. It's probably higher than that on a forward basis. On an AFFO, you know, contribution, you know, below the line, I think it's actually going to be a net accretive or slick. Okay. Got it. On the utility front, can you give an update on the progress that you're making in having the residents be responsible for their own utilities? I guess, is that contributing at all to your expectation that utility expenses will be flat year-over-year? Anne, you wanna take that? Yeah. Good morning, Brad. First with respect to how we're going on rolling out the gas and heat utilities into the RUBS, we started that project in May and June, it takes about a year, a little bit over a year to get through all the lease roll. We're a little less than halfway because we hit some of the lower lease expiration months on that. That contributes to some of our revenue growth because that comes back to us on the revenue line. The expectation that the utilities will remain relatively flat is really based on, you know, a hard look into utility costs and where we think projections are going and a comparison to the fact that last year they increased so much. We really expect the increases to moderate, and then, that brings the year-over-year number down significantly. The expense line we do, you know, isn't impacted by the recovery that hits in revenue. Okay. Got it. Are you seeing, you know, price sensitivity around that? I know you sort of expected that as you know, make people responsible for their own utilities that they would become more rate sensitive and there would potentially be an offset. I guess, are you seeing, you know, a full offset to that, or are you still sort of recapturing, some uplift from it? Yeah. You know, we've had very little pushback. In fact, I check with the team pretty regularly to make sure that that isn't happening. You know, when you have renters looking at their full chunk rent, they're taking into account the utilities. We haven't had much pushback on it at all. In fact, you know, still feel really good about where our overall rental rate growth is, both from a new lease and renewal, given where we are right now in the season. Okay. Thank you. Thanks, Brad. Thank you. Our next question today comes from John Kim from BMO Capital Markets. John, your line is open. Please go ahead. Thank you. Good morning. Your Same-Store revenue guidance is noticeably higher than most of your peers. I guess you have a few weeks of additional data, given the timing you want to report. I wanted to focus on the 4.5% blended lease growth rate that's in your assumption. Can you break that down between market rental growth and renewal rate growth that you expect? Sure, John. This is Bhairav. With respect to the blended rate growth, I would say about 3% to 3.5% is projected market rent growth. The remainder comes from projected value add spend in 2023, plus some of the value add spend we've put into the portfolio in the second half of 2022, which, you know, will enable us to capture some of the premium as we go through the lease roll. Okay. You had a significant delta, I think, between renewal and new lease, I think in January, that Anne had mentioned. Do you think that's going to continue throughout the year? I do. I think that it's gonna take a while to burn that off. You know, our new lease rates are still, you know, significantly higher than our renewal rates. We had several months last year where our new lease rates were really growing, and it just takes time to catch up there. We have seen. You know, we are, I think, gonna see that moderate down. They just lag those new lease rates by a couple of months. You know, we should see that come down a little bit as the year continues, but then be bolstered up as we, as we see new lease rates accelerate up to that, you know, what we're projecting 3.5%-4.5% in the prime leasing season. Have you disclosed your bad debt in 2022? If not, can you say what that is and also what you're expecting as far as bad debt in 2023 as well as your occupancy assumptions for the year? Yeah. For bad debt in 2023, our projections incorporate about 40 basis points of bad debt. With respect to 2022, you were right about that Mark. I think we had about 30 basis points of bad debt for 2022. With respect to occupancy, you know, we expect to stay around 95%, as we go through 2023. Obviously, there's gonna be some volatility as we go through peak leasing season, but overall, we expect to maintain my occupancy around the 95% mark. Okay. Last question from me. How do you feel about your dividend levels these days? On our numbers, your payout ratio is above 90. I know consensus is below that. Given the cost of debt and maybe some attractive use of proceeds, are you satisfied with your dividend level where it is today, or is there a possibility that you could reassess this? Presumably you're including all capital, like value-add capitals to get to that number. That's a very high payout number. Correct. How do you get to that number, John? Revenue enhancing CapEx, we typically deduct. Got it. Yeah. I mean, obviously the revenue enhancing capital is discretionary in our view. We would peg our payout closer to something in the high 70s. You know, it's been our goal to continue to work that payout ratio down, ideally to kind of that minimum in the 60%-65% level. While also continuing to grow it a little bit, I mean, I don't think we're getting well compensated for it on the one hand, on the other hand, you know, part of our structure and what we're all about is getting cash flow in increasing levels to our shareholders. It's a board call. I'm on the board. In my mind, the dividend is at no risk. I think we have 50 assets that have about 20% leverage on them if you look at sort of our unencumbered base versus our unsecured debt. We've got lots of financial security in my view, and that's how I look at it. I think the board has a pretty similar point of view. Okay. Appreciate it. Thank you. Thanks, John. Thank you. Our next question comes from Alexander Goldfarb from Piper Sandler. Alexander, please go ahead. Your line is open. Hey, good morning. Morning out there. First question, in response to, the dilution from the asset sales Mark, I think you mentioned $0.08-$0.10, or is that inclusive of the debt pay down, or is that just on the asset side? Obviously with the debt pay down, the dilutive impact is much less. Yeah. This is Bhairav. Hey, Bhairav. ... that $0.08 number is inclusive of the impact of the debt pay down. You know, with respect to 2023, you know, we had some growth from a Core FFO perspective program for those assets. When you kind of consider that and then net it down with the impact of the pay down, that's the number that Mark was referencing. Okay. The $0.08-$0.10 is inclusive of the associated debt pay down. That's correct. Okay. The next question is, Anne, you mentioned on the RUBS, you know, that you started basically middle of last year, takes about a year to fully implement. Is this the entire portfolio, or are there assets in the portfolio that you're unable to implement RUBS, in which case you'll still be exposed to utilities in those assets? No, this is the entire portfolio. Okay. There will be no assets that will be sort of free floating, if you will. There may be a few, you know, kind of one-off unique situations, but we don't have any. There's no geography that we operate in where there's, you know, regulation that would limit our ability to do it. To the extent we can and it makes sense, we're doing it. Okay. Just the final question. You know, you guys put out a Nareit FFO, you put out Core FFO. In looking at your Core FFO, it's seems to be a lot of recurring items that seem to be just part of running the business. Just sort of curious, you know, why not merge just to Nareit FFO, especially as these don't seem like one-off items, they seem to happen every year. I mean, fair comment. We'll take it under consideration. Alex. Okay. Thank you, Mark. Thanks, Alex. Thank you. Our next question is from Rob Stevenson from Janney. Rob, please go ahead. Your line is open. Good morning, guys. Mark, what's the acquisition pipeline looking like today? Lots of talk in the sector about merchant developer stress coming and positioning to step in as a capital source. Are you guys seeing any of that yet? Are you guys seeing any attractive acquisition opportunities to redeploy capital into? How would you characterize that today? Well, good morning, Rob. Thanks. I would say we are seeing opportunities. I do think thematically there will be merchant developers who give up the ghost by the end of the year and I think end up taking profits, but less profits than they probably were expecting. We're in discussions on some of those. We have a few OP Unit type discussions going, which we always have. I would say that volume has yet to really come. I think I read there was something like $40 billion done in the fourth quarter, which would be a pretty good quarter for most quarters, but it's certainly down over the last couple of years of activity. You know, the talk at NMHC as has been commented on in some of the other calls was, you know, people were, kind of looking to the back half of the year, from the buy side. There's definitely still a disconnect and, you know, when the treasurers are moving around like they are, that certainly, throws cold water on folks, I think to some extent. Okay I expect there to be. I would say we expect there to be activity. I would think it comes more towards the second half of the year, you know, with our stock in the mid-60s and debt at, you know, today probably mid-5s for secured debt and unsecured debt is probably six and a quarter. You know, we're probably not a very vibrant participant, unless it has some sort of structure to it. How would you gauge your aggressiveness today on starting new revenue enhancing CapEx projects today, given what you're seeing in the markets and your outlook for, you know, this year, next year internally? You know, is it more or less the same as what you would have been sitting here a year ago? Is it a little bit more cautious? How would you characterize that in terms of the, you know, the dollar amounts that you're willing to greenlight at this point, and those hurdle rates? Yeah. I moan, a year ago was a lot more fun, Rob, with free money or the end of free money. Yeah, no, I think our view of this hasn't changed a whole lot, which is, you know, this is capital we really have to put in and get returns over the next couple of years. We do it if we think it enhances the product for the resident. I mean, it is the case, if you look at our rents, they're in the, you know, $1.50 a foot range, $1.60 a foot range on a portfolio basis for renewal rents. There's still a pretty good gap between where those rents are and where new product is, and people like nice stuff. You know, when there continues to be a business case, we're gonna continue to make those investments. I would say we are certainly putting more pressure on the business case, because the, you know, sort of startup costs, if you will, or funding costs are much higher. I just say it gives us a little bit more discipline, but that implies we weren't disciplined before, and I don't think that's true. Okay. Last one to me. You guys talked about the utilities and the natural gas. Are you guys, you know, hedging any of that at this point? How big is the dollar value sort of tied to natural gas? Yeah. Bhairav, go ahead. I mean, yeah, from a hedging standpoint, no. I think as Mark Decker, Jr. mentioned, we are with the RUBS program being rolled out, you know, we will be able to capture most of that back through the revenue line item. It's gonna dramatically reduce our exposure to the fluctuation in prices from a utility standpoint. I believe overall that accounts for about 40% of the total utilities expense, the gas prices. Again, with the rollout, you know, the exposure on a net basis will be a lot lower going forward once it's fully implemented. Okay. Once this is fully out, there's not gonna be that much of a delta between if you're talking about natural gas prices that average out to six something per million BTUs like last year or the $2-$3 that you saw from basically 2015 to 2020? That's correct. 'Cause I would say about, you know, after providing for collections and just common area deductions, we would approximately cover 80%-85% of the exposure. Okay. Same in terms of water and other utility costs, or is that de minimis compared to natural gas? Yeah. In terms of water and sewer, I mean, we capture back a lot of that. Overall, that's already factored into the numbers. The exposure was on the gas side. Okay. Thanks, guys. Appreciate the time. Thanks, Rob. Thank you. Before we take our next question, I'd just like to remind everyone, if you would like to register a question, please press Star followed by one on your telephone keypad. Our next question is from Wes Golladay from Baird. Wes, please go ahead. Your line is open. Hey. Good morning, everyone. I just have a quick one. For the casualty loss, is that just a general placeholder for the guide or is that a known event at this point? I mean, that's. Are you talking about the 2023 guide? That's just. Yeah. I just think it's $1 million net. Yeah, $1 million net impact. Yeah. That's an estimate at this point in time. Okay. Thanks, everyone. Thanks, Wes. Thank you. We have no further questions. I'd like to hand back to the team for any closing remarks. Thanks very much, Daisy. Well, thanks everyone. We appreciate your continued interest. We look forward to seeing you next quarter. Thank you everyone for joining today's call. You may now disconnect your lines and have a lovely day.