D/B/A Centerspace

Good day and welcome to Centerspace Q4 2021 Earnings Call. My name is Brika and I'll be today's event specialist. You will have the opportunity to ask a question. To do so, please press star 1 on your telephone keypads. If you change your mind at any time, please press star 2. I would now like to hand the call over to Mark Decker, Centerspace's President and CEO. So Mark, you may begin.

Thank you, Operator, and good morning, everyone. The Form 10-K for the full year 2021 was filed with the SEC yesterday after the market closed. Additionally, our earnings release and supplemental disclosure package have been posted on our website at centerspacehomes.com and filed yesterday on Form 8-K. Before we begin our remarks this morning, I need to remind you that during the call, we will discuss our business outlook and will be making certain forward-looking statements about future events based on current expectations and assumptions. These statements are subject to risks and uncertainties discussed in our Form 10-K, including those under the section titled Risk Factors, and in other recent filings with the SEC. With respect to non-GAAP measures we use on this call, including pro forma measures, please refer to our earnings supplement for a reconciliation to GAAP and the reasons management uses these non-GAAP measures and the assumptions used with respect to any pro forma measures and their inherent limitations. Any forward-looking statements made on today's call represent management's current opinions, and the company assumes no obligation to update or supplement these statements that become untrue due to subsequent events. I'm grateful to be joined this morning by our Chief Operating Officer, Ann Olson, as well as our Chief Financial Officer, Bharat Patel. We also have a special guest, John Kirchman, who, as most of you know, is our former CFO and is helping with Bharat's transition. 2021 was an incredible year in the housing business and CenterSpace had a fantastic year as well. Our mantra is better every day, and we lived up to that, making meaningful progress in every respect. With outstanding operating results, record investment and financing activity, critical investments into our technology platform, as well as our team, as we pursue our mission to be a great place to live, work, and invest. We close the year with core FFO growth of 5.6% over 2020 and well above consensus. In 2022, the momentum should accelerate and our outlook is for core FFO growth per share of 11.5% at the midpoint versus 2021 and 3% over consensus. CenterSpace is one of just a few companies in the apartment space that was able to post year-over-year growth in operations and per share FFO in each of 2019, 2020, and 2021, an outcome that reflects the quality of our business. Looking to 2022, we expect to build on our fundamentals, characterized by consistency, growth, and relatively low new supply. We've made over $600 million of portfolio investments since January of 2021, improving our growth potential and quality of earnings, and we will continue to seek opportunities Our KMS investment, which we've owned for six months now, is on track, and the opportunity to be optimizing the lease role in those assets is just getting started as we head into our peak leasing season. We purchased KMS to grow faster, and it's working. In January and February, we are seeing nearly double the blended lease rate growth compared to our same-store portfolio in Minneapolis and St. Cloud. We're also beginning to consider the opportunities for value-add in that subset of the portfolio. Opportunities we did not underwrite or price into the purchase. The work we're doing there and elsewhere should help us continue to grow revenues at better than market as we did in 2021. Our balance sheet has never been better. We closed the year with average maturities over seven years, a blended rate in the low threes and seven times debt to forward EBITDA. Our access to the private placement market was expanded in 2021 and our spreads continue to narrow and are well in line with investment grade issuers. On the equity side, we were able to place shares through our ATM into a handful of active investors who understand our business and help us drive float and liquidity, two of which are now in our top 10 shareholders overall and top three among active investors. As always, I want to thank our outstanding team of professionals who show up every day for our residents and for each other. Anne, please give us an operating update.

Thank you, Mark, and good morning. 2021 was a year of stellar revenue growth for our company as we drove a 4.8% increase in same store net operating income for 2021 over 2020. And with 9.2% revenue growth in the fourth quarter compared to the same period in 2020, we believe we have a great runway for success into 2022. In the fourth quarter, our same store new lease rates were up 5.8% over the prior leases and same store renewals achieved increases of 7.8%. Given the seasonality of our business, it is important to note that in the fourth quarter of 2020, our new lease rates had declined 3.6%, and our renewals were 2.3%. Our fourth quarter spread is 9.4% on new leases and 5.5% on renewals compared to the same period in 2020. On a blended basis, this is fourth quarter rental rate growth of 6.5%. Solid rental rate increases continued in January, with new leases increasing 6.6% over prior leases, and renewals increasing 9.6% for a blended rate increase of 7.5%. Our same-store weighted average occupancy was 93.4% on December 31, 2021, a slight increase over the end of the third quarter, but lower than where we finished in 2020. Some of this is attributable to our value-add renovations, as well as higher turnover as we've come out of COVID and experienced increasing rental rates. Optimizing revenues is our goal. Through value-add renovations, revenue management, and enhancing our customer experience while we still closely monitor expenses. We expect that the current inflationary environment will create expense pressures, particularly in labor and materials. At this time last year, we were still monitoring our collections rate and bad debt expense while working through the eviction moratoriums and regulations. 2021 saw significant quarterly volatility in our collections, and we realized 101% of expected residential revenue in the fourth quarter. For the year, we collected 99.2% of expected residential revenue, which is what we are anticipating to be a normalized rate heading into 2022. The fourth quarter was also our first full quarter after the integration of the KMS portfolio. With respect to our acquisition capital expectations, we had begun to deploy capital to help drive the rental rates that Mark mentioned. Through December 31st, 2021, we have spent approximately $540,000 on common area cleanings, mechanical plumbing and HVAC upgrades, and we bid and contracted for some of our larger acquisition capital projects across that portfolio. In 2022, we expect to spend approximately 21 million of the 38 million allocated to acquisition capital improvements for the KMS assets. Given the strong results of 2021, we're confident that 2022 brings us many opportunities to continue to execute on our operating platform, including integrating our non-same store portfolio, capturing our loss to lease, and optimizing our property management technologies to enhance our customer experience. We're very proud of our team's demonstrated ability to execute on our vision and mission and are grateful for their contributions to making better everydays. I'll turn it over to Bharav to discuss our financial results.