D/B/A Centerspace

Good morning and thank you for attending today's Center Space Q1 2022 earnings call. My name is Jason and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to Emily Miller. Please proceed.

Good morning, everyone. Center Space's Form 10-Q for the quarter ended March 31, 2022 was filed with the SEC yesterday after the market closed. Additionally, our earnings release and supplemental disclosure package has 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 Form 10-K filed for the year ended December 31, 2021 under the section titled Risk Factors and in our other filings with 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. With me this morning is Mark Decker, our Chief Executive Officer, and Bharat Patel, our Chief Financial Officer. Mark, I will now turn it over to you.

Thank you, Emily, and good morning, everyone. Quick note, I'm going to cover Ann Olson's operating commentary this morning since she's a little under the weather. It was around this time a year ago that the housing business really took off and our portfolio with it. For the first quarter, we achieved NOI growth of 7.8% and core FFO growth of over 3%, despite some headwinds from the combination of a colder than average winter combined with a dramatic spike in energy prices. Even so, we remain on track, and we are reiterating our guidance for the full year. As we look forward, the health of our business and our customer are outstanding. We have a loss to lease of over 9%, strong employment, and relatively balanced supply. Our residents are earning more wages, and our homes remain affordable with rent-to-income ratios in the low to mid-20s. This is an excellent backdrop to continue our retooling of operations. After converting all of our systems in late 21, we are still training and optimizing in 22. These investments will yield easier to access and more actionable data, better compatibility with some of the new PropTech offerings, efficiency, and scalability. Turning to capital markets, it's been a volatile few months. We've seen our debt costs nearly double from high twos for 10-year money to high fours. Fortunately, we've been aggressively refinancing over the past few years, so we sit today with low maturities through 2025 and an outstanding ladder beyond that. The meaningful movement in debt costs has not changed the desirability of high-quality apartment asset pricing has not moved at this point. There are a lot of cash buyers who remain confident in light of strong underlying fundamentals in housing. We believe we may see better opportunities given our balance sheet strength through the rest of the year, In the meantime, we will continue to be opportunistic and maintain our focus on the balance between the quality of the portfolio and quality of earnings. Despite the competitiveness of the investment markets, CenterSpace has had our most active 12 months and enjoys more capacity than ever. Our debt-to-ebit dial on a forward-looking basis is now in the mid-sixes, and we are demonstrating our enhanced ability to compete on value versus price. Our first quarter OP unit purchase of the Min-3 assets and the no-code development financing round trip acquisition are perfect examples of our ability to get higher returns in an ultra-competitive market. To date, over 43 percent, or $580 million, of the investments we've made since 2017 included intelligent structuring that drove value to us and the seller in a manner that was superior to cash. Turning to operations, we continue to see strong revenue growth. During the first quarter, our same store new lease rates were up 6.9% over the prior leases and same store renewals achieved increases of 9.6%. On a blended basis, this is first quarter rental rate growth of 7.9%. Increases have continued in April with new leases increasing 12.3% and renewals increasing 8.8% for a blended rate increase of 11%. Our same-store weighted average occupancy was 93.9% on March 31 and continues to climb as we head into prime leasing season. As we progress with the integration of our non-same-store portfolio, consisting of 23 communities, we're pleased with the rental rate growth we're seeing. With respect to our KMS portfolio, new lease and rental rates have meaningfully outpaced our same-store portfolio in the Minneapolis market, where we grew at 8% for KMS versus 4.9%. on a blended basis. This is proving out our investment thesis that there was a significant opportunity in this portfolio. All of this good revenue and wage news comes at a cost, and we are also monitoring expense growth, which was 9.6% higher in the first quarter than the same period last year. Increased utility costs are driving the majority of this increase, but we are also seeing inflationary pressures on wages and materials. We realized utility expense increase of over 25% versus the same period last year due to both higher rates and increased usage as our Midwest markets experienced more severe weather than 2021. Our increased expense outlook for the remainder of 22 is primarily a reflection of these increased costs offset by better than expected revenue projections as we realize strong rental rate across the portfolio. Of course, all of these great results would not be possible without an incredible team and incredible teamwork. And I'm so grateful to work with our 450 dedicated associates. Thank you all for what you do towards better every days. And now I'll turn it over to Bharath to discuss our financial results.