Good morning and welcome to Centerspace Quarter Day 2024 Earnings Call. My name is Kiki and I will be your conference call operator today. During the presentation, you will have the opportunity to ask a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I will now hand you over to your host, Josh Klaetsch, to begin. Josh, please go ahead. Good morning. Centerspace's Form 10-Q for the quarter ended 30 June 2024, 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 Centerspace's President and CEO, Anne Olson for the company's prepared remarks. Good morning, everyone and thank you for joining Centerspace's Q2 E arnings Call. With me this morning is Bhairav Patel, our Chief Financial Officer, and Grant Campbell, our Senior Vice President of Capital Markets. Before taking your questions, we will briefly cover our results and trends before discussing our outlook for the remainder of 2024. We have a lot of good news, starting with earnings of $1.27 per diluted share of core FFO for the Q2, driven by stable revenue growth and discipline on expenses. During and subsequent to the quarter, we issued shares on our ATM with proceeds of approximately $37 million at an average gross price of $69.60 per share, which we are using to reduce leverage. These sales are a positive contrast to our Q1 stock buybacks at an average of $53.60 per share. We further enhanced our balance sheet with a recast of our line of credit, moving the maturity out to 2028. In addition, we were very pleased to have welcomed Jay Rosenberg to our Board of Trustees at the beginning of July. As we sit today, we feel very well positioned to advance our vision to be a premier provider of apartment homes and vibrant communities, and to drive consistent earnings growth for our investors. Rob will further discuss our quarterly results, but first, let's talk about revenue with some detail on leasing trends. For the Q2, same-store revenue increased 3.4% over the same period in 2023. We are proud of this growth, which is on top of the 2023 growth we achieved, which was at the high end of the multifamily public peer group. This is strong evidence of the stability of our portfolio and earnings. Same-store new lease trade outs were 3.5% during the quarter, and renewals priced similarly, also averaging 3.5% for blended lease trade out increases of 3.5%. The new lease pricing peaked in May at just over 4% increases, while we continue to see momentum in renewal rates as we move through the quarter. As we look at July, we expected and are experiencing a leveling off of new lease pricing as we work through a significant amount of lease expirations, with indications of blended trade outs in the range of 2.8%. Tapering new lease rates is in line with our expectations and represents typical seasonality for our portfolio. Resident retention for the quarter and year to date has been in excess of our projections, which is helping us maintain occupancy, drive rental rates, and reduce turn expenses. Resident health remains strong, w hile this quarter, our bad debt was up quarter-over-quarter, year to date levels are in line with historical norms. Importantly, our early read on July suggests sequential improvement in the metric, and we do not believe that the Q2 results represent a trend towards higher bad debt for the remainder of the year. Rent to income levels remain sustainable at 21%, and renting, as compared to the increased cost of homeownership, remains a compelling value for our residents. These results and the current trends give us confidence in our position and prospects, and we are raising the midpoint of our full-year earnings guidance by $0.02 from $4.83- 4.85 per share. Well, we had no transaction activity in the Q2. There was activity nationally and specific to our markets that provided additional clarity as to pricing for multifamily communities, which in turn is leading to increased pipeline activity. The economic volatility and higher interest rates of the past 18 months limited our opportunities. We are more optimistic than we have ever been about our cost of capital and ability to execute on external growth. At this time, our guidance does not reflect any additional transactions in 2024. Now I'll turn it over to Bhairav to discuss our overall financial results and our outlook for the remainder of the year. Thanks, Anne and good morning, everyone. We are pleased to report another quarter of strong earnings growth with core FFO of $1.27 per diluted share for the second quarter, driven by a 2.4% year-over-year increase in same-store NOI. Revenues from same-store communities increased by 3.4% compared to the Q2 of 2023, with the increase driven by a 3.3% increase in revenue per occupied home and a 10 basis points year-over-year increase in weighted average occupancy, which stood at 95.3% for the quarter. Property operating expenses were up by 5.1% year-over-year, mainly driven by higher repairs and maintenance spend during the early part of the summer and higher insurance premiums. Although significant, the increase in repairs and maintenance costs was not unexpected, as the timing of these projects tends to vary throughout the year. This did not have an impact on our full-year expectations. Turning to guidance, w e updated our 2024 expectations in last night's press release. For 2024, we now expect Core FFO of $4.85 at the midpoint, which is an increase of $0.02 compared to our prior expectations and an increase of $0.07 versus last year's results. These improved expectations are driven by an increase of 0.25% in the midpoint of year-over-year Same-Store NOI growth guidance to 3.5%. While our expectations of year-over-year revenue growth remain unchanged at the midpoint, we did lower the projected increase in same-store total expense growth to 4.1% based on better than expected expense levels across the board during the first half of the year. Moving on to other components of guidance. We now expect G&A and property management expenses for the year to range between $27.4 million-27.9 million, and interest expense to range between $36.5 million-36.9 million. Lower interest expense is primarily driven by the use of equity issued under our ATM program to pay down debt on our line of credit. We expect to spend $2 million less on value-add initiatives during the year, while per unit capital expenditures are up slightly at the midpoint to 1,125 per unit. And lastly, we have, as of today, fully funded our $15.1 million mezzanine investment in a development project in the Minneapolis area. No additional acquisitions, dispositions, issuances, or borrowings are factored into our guidance. Implicitly, our full year guidance suggests that we'll see lower core FFO per share in the second half of the year than we did in the first. While we don't intend to introduce quarterly guidance, there are a few notable items during the first half of the year, such as lower utilities costs due to a milder winter, a tax refund that equated to about $0.04 per share in the first quarter, and a refund in the Q2 of $300,000 in health insurance costs affecting the comparison. In addition, we expect normal seasonality of repairs and maintenance costs, including return costs, leading to a higher expense for that line item in Q3, and we generally incur a higher level of our normal annual G&A and overhead costs during the second half of the year. On the capital front, we took a couple of steps during and subsequent to quarter end to further strengthen our balance sheet. We sold roughly 540,000 shares under our ATM program, raising over $37 million. About $30 million of the issuance occurred after the end of the quarter, and we have incorporated that within our full year guidance. We will always be mindful of the impact of issuance. Our previous guidance assumed that we would draw roughly $40 million on our line of credit this year. The recent opportunity to pay down that high 6% rate debt not only improves our balance sheet profile, but it has allowed us to do so without diluting earnings, and it did not have a material impact on our full year guidance. In fact, it is accretive on a cash flow basis and reduced our pro forma leverage to 6.7 times, the lowest it has ever been. Additionally, subsequent to quarter end, we completed the recast of our line of credit, which now matures in 2028, and we were able to do so without making any changes to our bank group, and on terms similar to the existing facility in a much more challenging lending environment relative to when it was initially established. We have a well-laddered debt maturity schedule that at quarter end, had a weighted average cost of 3.6% and a weighted average time to maturity of 5.7 years. To conclude, we are proud of the results we achieved in the quarter, and I commend our Centerspace team on providing us with an excellent first half of the year. We look forward to building upon these results in the rest of 2024, and with that, I will turn the line back to the operator for your questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. Please make sure your devices are unmuted locally when preparing to ask your question. The first question we received is from Brad Heffern from RBC Capital Markets. The line is now open. Please go ahead. Yeah, thanks. Good morning, everyone. You mentioned that these equity issuance or issuances are being used to reduce leverage. Do you plan to do more on that? And then what's kind of the underlying leverage target that you're thinking of when you're doing these equity issuances? Morning, Brad. Thanks. You know, we have used equity issuance to pay down the floating rate debt that we have on our line of credit. That's a little higher rate debt, mid to high 6s. We have potentially $10 or 20 million more to pay down on that line of credit to reduce that to zero. So we don't have an unlimited amount of accretive or, you know, non-dilutive uses for equity issuances, and we're not targeting a overall leverage rate. You know, we're trying to balance that with the ability and the opportunities that we have to grow, you know, for external growth. So we're really pleased with the equity issuances and reducing both the overall leverage and the exposure to floating rate debt that we had. Okay, got it a nd that took me to my next one. You said in the prepared remarks that you're seeing more acquisition opportunities, and I think you said you're more excited about your cost of capital than ever. I guess, can you just talk about specifically what opportunities you're seeing, and if the pricing on those makes sense, just with this current cost of capital? Yeah. Good morning, Brad. This is Grant. Transaction volume remains down 65%-70% from 2022 levels, so, there does remain a general lack of transactions, but we have seen an uptick here over recent months, in activity, pricing generally in the 5%-5.25% cap range, that is consistent with our experiences in Denver. In Minneapolis, kind of a tale of two stories. Some recent urban trades, really driven by discount to replacement cost thesis with in-place cap rates there, mid-4s to low 5s. Newer vintage Minneapolis suburban is pricing at mid-5s today. You know, we have lines in the water on what I'll call kind of Straight Acquisitions, OP Unit Transactions, and Mez Funding. We're casting a wide net and cautiously optimistic that there's gonna be some opportunities here in the second half of the year. Okay, got it. And then, Bhairav, you said that the equity didn't affect the guidance. I'm just curious why only the low end went up and not the high end, if that's the case. And then, and that's it for me. Thanks. Morning, Brad. Yeah, I mean, the equity issuance was, you know, mostly neutral. It impacted our core projections by about $0.005, so it didn't really have a material impact. On our guidance, with respect to lifting the low end, it's just based on de-risking. You know, a lot of, you know, the lower end by, you know, leasing performance during the first half of leasing season, we expect to kind of continue along the midpoint of our initial projection. So what we ended up, you know, with was a lower probability of hitting the previous lower end. With respect to the high end, given where the leasing performance was, we just kept the high end in place, but it really wasn't impacted by the equity issuance. As I said, that was roughly neutral from an earnings perspective, given it's only impacting the second half of the year. Thank you. Thank you. The next question is from Rob Stevenson from Janney. The line is now open. Please go ahead. Good morning, guys. Can you talk a little bit about where you're facing the biggest supply issues in the portfolio today? Yeah. Morning, Rob. This is Grant. Portfolio-wide, our supply profile remains muted. We continue to see tapering of the under construction pipeline. Denver is our market with the highest levels of supply at 6.7% of existing stock under construction today, which represents about 20,000 apartment homes. These numbers have been reducing over the past two quarters, and next twelve-month deliveries in that market in Denver are forecasted at 11,000 apartment homes. That is consistent with the 2022 and 2023 delivery levels in that market. Minneapolis, to touch on our other larger institutional market, supply pipeline continues to taper here, and has been tapering over recent quarters. Currently, we're at 3.6% of existing stock under construction. That's down from 6% in mid-year 2023. Again, next twelve-month deliveries in Minneapolis, 6,900 apartment homes. That's approximately 2/3 of the 2019 to 2023 five-year annual average. And then to touch on our secondary Midwest markets, really little to no supply in those markets. Pipeline would range from 0.5% to 4.5% of existing stock. So thematically, a very muted supply profile, and we continue to see that pipeline taper. Okay a nd then Omaha occupancy trended lower again, quarter-over-quarter and down, I think it's 160 basis points year-over-year. What's driving that, and what are you guys doing in that market to address that? Well, Omaha is one of the markets where we're just finishing up some value add projects, so some of the vacancy is driven by renovation. And we typically, Okay see that if you, if you look kind of comparatively, St. Cloud had that same kind of deceleration in occupancy and then a pickup. So we do expect that to pick up again, you know, as we finish out the last bit of renovation and really focus on, you know, pushing occupancy up past that 95 level post, you know, post completion of the renovations. I guess, Bhairav, a question on that is that how much of the revenue in the back half of the year is based off of some of these projects? I mean, you gave some great guidance in terms of the utilities and the expense side, 'cause I think that you're 1.4 year to date, and the guidance is 3.5-4.75. But you're sitting there at 3.5 on the revenue side, and the guidance is 3.25-4.25. The revenues in the back half of the year, last year were, on a same store basis, pretty strong. Just curious as to where you're getting the acceleration, given the commentary about new lease rate earlier, as we head into the back half of the year? Sure, Rob. So, you know, from a midpoint of revenue guidance, yes, it's, it's not conservative. During the first half, our blended rates were around 3%. We expect to perform similarly in the second half as well, and July is a great start, with blends close to 3%, as Anne stated. Second, you know, in the second half, we are projecting, a better occupancy relative to the second half of last year, with lesser use of concessions. Last year was heavy on concessions, especially in the fourth quarter, as we were trying to bolster occupancy. Third, we have, like, RUBS revenue, which we expect to be higher in the second half compared to the second half of last year, there's a couple of components to it. We have a slightly higher utilities projection, which runs through the RUBS revenue line item. Plus, we have more units on RUBS in the second half of this year versus last year, because we just finished a rollout of the RUBS program during the last year, second half. And then lastly, we do expect some better performance on bad debt. As Anne mentioned, you know, the slight uptick, we don't think is a trend. But on a relative basis, we think that will contribute to a slightly better comparison year-over-year. Okay, that's incredibly helpful. Thank you, guys. Have a great day. Thank you. The next question is from Connor Mitchell from Piper Sandler. The line is now open. Please go ahead. Hey, good morning. Thanks for taking my question. In your opening remarks, you discussed kind of seeing some more activity nationwide. I was just wondering if you could narrow down to maybe some of your markets, where you're seeing some more increased activity in transactions, acquisitions, dispositions. And then maybe with the pricing along with that, where you guys are seeing opportunities, not necessarily in the near term, but maybe more medium or even long term as well. Yeah, thanks, Connor, and good morning. There was, you know, some very large transactions nationally, portfolio transactions that did have communities located in our markets. And I'll ask Grant to talk a little bit about, you know, where we saw those trade and what that has meant for pricing and overall velocity in the transaction market. Yeah, thanks, Anne. Good morning, Connor. The Lennar portfolio, 19 markets in total, about 11,400 units. Within that, there were three communities in Denver and three communities in Minneapolis that were part of that portfolio. There's a, you know, KKR, as we know, has acquired 18 of those communities. Pricing on their portfolio transaction on a forward basis, nominal cap rate was a 5.1, kind of on our math and our discussions. Really, Denver has been the leader in terms of markets within our portfolio for a rebound in transaction activity. We've seen both urban and suburban transactions, where buyers and sellers are incrementally getting more constructive on agreeing to asset value. Minneapolis, as I mentioned earlier, some urban trades that really high net worth, private individuals and platforms have been most aggressive in pricing on those urban discount to replacement costs, thesis acquisitions. And then in the suburban market, overall in Minneapolis, still a lack of suburban trades, but you know, really, after 12-18 months of no activity in the suburban space, we have seen a handful here over the past 3-6 months that have transacted. Okay, that's helpful. Then you also mentioned that you guys fully funded your mezz investment in Denver. I think you also mentioned that you're constantly looking at other opportunities to put some capital to work in some other mezz investments. Is it possible that you guys could use this type of capital allocation investment to maybe venture into other markets? Or are you really focused on just your core markets that you're currently in? Yeah, thanks, Connor. You know, that mezzanine investment of $15.1 million that is now fully funded, that's in Minneapolis, in our Minneapolis market. You know, we are looking to use the Mezzanine Financing as a way to get into other markets and look at, have access to development, a development pipeline. However, you know, it has been limited to Minneapolis because of just the competitive advantage that we have in Minneapolis, that's also growing for us in Denver, given our scale there. You know, this is where we have the deepest relationships, we have the largest team. So we definitely are starting to see opportunities in other markets. And, on our radar, for sure, as a creative way to help us, you know, boost some earnings and really get access to new product at a discount to, you know, market value with those purchase options on the back end. So we like this structure, and certainly are pursuing every opportunity we can. Okay, appreciate it. That's all for me. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star, followed by one on your telephone keypad now. The next question is from John Kim, from BMO. The line is now open. Please go ahead. Thank you. Anne, I just wanted to follow up on your commentary that the new lease pricing peaked in May, which looks like it's about a month and a half earlier than the peak of last year. I was wondering what you'd attribute that to. Is it a stretched consumer, or is it supply pressure in some of your markets? I think it's a little bit of the supply pressure, particularly in Denver and Minneapolis. And I'm not sure that we're seeing a lot of, a ton of stress in our portfolio on the consumer. You know, our rent-to-income level remains really healthy at 21%. But we have seen, you know, a strong uptick in retention rates. And so I think that partially is also driving, you know, an earlier peak because we have been able to stabilize occupancy a little bit sooner with respect to, you know, really locking in those, in those renewal rates. So while it allows you to drive some of that new lease rates, there's not as many, you know, apartments open to, to achieve that new lease rate on. So, I think the retention trend is something that's been really interesting this year and has changed the curve of our, the pricing on timing, timing for us. We saw it really flatten out in June, and I think July, we're starting to see slight deceleration, but those blended rates are still coming in. You know, 2.8% is our initial indication. You know, we won't know for another 10 days or so here, how July really shakes out. That deceleration in blended, is that primarily driven by renewal rates as you're looking to grow occupancy? Yeah, it's really driven by, I think, the dropping of new lease rates. Our renewal rates are holding in there pretty strong, but we have seen the deceleration is more pronounced in the new lease rates than in the renewal rates. Okay. And then, on your value add CapEx, it looks like you scaled down the expected spend in your guidance, which came down about $2 million. Can you just comment on where you're seeing returns on the value add CapEx versus the 15.3% you've gotten historically? And if you've seen some moderation in those returns and, you know, therefore, the reason why it's come down. Hey, John, this is Bhairav. Good morning. Yeah, so the reduction in the midpoint of our value add spend was driven by a couple of projects that we pushed or reassessed. Now, those are in markets that are pressured slightly on a relative basis by occupancy. So one of them was in the Minneapolis market, the other one was in the Denver market. Overall, from a return perspective, we have been able to achieve the threshold returns that we put in place when we do these value add spend, but we continually reassess. So in markets where we feel like it's gonna be a little more challenging to achieve those thresholds, we reassess. But so far, we have been able to achieve threshold returns that we put in place before we initiate a project. And John, you know, one of the things about this year's value add is to keep in mind is that it's a lot of projects related to technology implementations at the site. So quite a bit of our value add is the SmartRent Rollout, and w e have been able to get the premiums on that, and we're also experiencing some pretty significant cost savings on those. So we feel great about those, and it's really turned out to be a good year, given, you know, the pressure on leasing spreads and less acceleration of new rents to not have as many, you know, unit renovation or common area renovations in our pipeline. Appreciate the color. Thank you. Thank you. The next question is from Mason Guell from Baird. The line is now open. Please go ahead. Hey, good morning, everyone. Do you see a better opportunity in acquisitions or lending? And how big would you be willing to take your loan book? Good morning, Mason. That's a great question, and one that we do debate. You know, I think we see a better opportunity coming in front of us right now in the acquisitions arena, just given that it's very hard to make development deals pencil out. The construction costs are still very high. You know, capital looking to be deployed into development is a little bit tighter. Those new construction lending costs for the underlying loans are high. With respect to how large we would take the loan portfolio, you know, we're really trying to balance a pipeline of that loan because when those communities, when that interest higher interest rate rolls into, you know, the stabilized acquisition of that, there is a drop-off that can be dilutive to earnings. Really, we're trying to manage, not necessarily size, but having a pipeline to maintain, you know, some quality of earnings with that higher interest rate. That's it for me. Thank you. Thank you. As we currently have no other further questions, I will now hand back to Anne Olson, President and CEO, for closing remarks. Thank you, and I'd like to thank our teams for their outstanding efforts year to date, including maintaining our culture of better every days, which resulted not only in our great performance this quarter, but also in June, being named a top workplace for the fifth time. So, thank you all for joining, and have a great Tuesday. This concludes today's conference call. You may now disconnect your lines. Thank you.