D/B/A Centerspace

Good morning and welcome to today's Centerspace second quarter earnings conference call. My name is Candice and I will be your moderator for today's call. All lines have been placed on mute during the presentation portion of the call with an opportunity for question and answer at the end. If you'd like to ask a question, please press start followed by one on your telephone keypad. I would now like to pass the conference over to our host, Jo McCormick, Vice Principal of Finance to begin.

CenterSpace's Form 10-Q for the quarter ended June 30, 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 Form 10-K filed for the year ended December 31, 2021 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 our CEO, Mark Decker, for the company's prepared remarks.

Thanks, Joe, and good morning, everyone. Joining me this morning is Ann Olson, our Chief Operating Officer, and Bharat Patel, our Chief Financial Officer. It remains an incredible time to be in the housing business. While it appears clear that the industry's strong growth is primarily attributable to inflation, which we're witnessing on both revenues and expenses, the fundamentals of our business, Supply-demand, traffic, and the attractiveness of renting versus owning a home remain outstanding, and I've never been more optimistic about our business. In light of the current environment and our positive results for the quarter, we're increasing our outlook for the year. Our NOI growth will drive an increase of nearly 14% in core FFO, and we've now been able to grow same-store NOI and core FFO each consecutive year since 2018. This is a track record few can match and a testament to the resiliency of our portfolio. Turning to investments, as you can see, we spent over $1 million conducting due diligence on a significant pursuit that we abandoned. This was a roughly $2 billion portfolio that would have given us scale in several new markets and accelerated our strategy. We got almost all the way down the road. Alas, as some of the large portfolio deals got announced in December and January, Our counterpart looked into the white-hot market and concluded that selling things individually versus as a portfolio would result in the best outcome for their constituents, and they went in another direction just weeks before we got to an announcement. It was a great effort by our team, and we'll learn something and take that forward. We strive every day to improve the company, and while the current capital market environment is choppy, we're encouraged that these conditions may benefit lower-leverage, longer-term-oriented investors like CenterSpace and we remain active in our pursuit of opportunities large and small. Our key criteria remain portfolio improvement, per share earnings quality, greater distributable cash flow. Our team continues to deliver awesome results and foster a culture of improvement and team orientation. Two great highlights that bring this point home. First, for the third year in a row, we were named a top workplace in Minnesota by the Star Tribune. Congrats on that, as well as a big congratulations to our team for receiving the National Apartment Association's inaugural award for leading organization in diversity, equity, and inclusion. This national award recognizes our work to be a place where people can belong and take risks to improve. Our reach will always exceed our grasp, and it's never perfect, but as they say, it's the courage to continue that counts. Well done, team, and thank you. CenterSpace has considerable momentum as 2023 comes into focus. And now, Anne, would you please provide a quick ops update?

Thank you, Mark, and good morning. Revenues continue to drive growth, with second quarter revenues increasing 11.7% over the same period in 2021. During the second quarter, our same-store new lease rates increased 13% on average over prior leases, and same-store renewals achieved average increases of 7.3%. On a blended basis, our second quarter rental rate growth was 10.5%. These strong leasing trends continue through July. Our same store rated average occupancy was 94.8% on June 30th, 2022, an increase of 90 basis points over the first quarter. Significant growth nationwide in rental rates has raised the question of affordability, but in our Midwestern and Mountain West portfolio, we see average rent household income of 23.1% for those applicants in the second quarter, This gives us confidence in our tenant credit and with average monthly revenue per occupied home of $1,518, our communities are affordable to a wide segment of the renter population. While providing a tailwind for revenue growth, inflation is also affecting our expenses. The main driver of our increasing expenses are utilities, labor, and materials. Our increased revenue and expense guidance for the remainder of 2022 reflects the trends we are seeing in both leasing and the pressure on the expense side of the business. Our goals for the second half of the year include realization of efficiencies from our 2021 technology implementations to assist expense containment and enhancement of our customer experience to drive revenue. It has been a great first half of the year with the same store net operating income increase of 9.7% year-to-date, and we expect that growth to accelerate in the range of 10% to 12% growth for the full year. Now I'll turn it over to Bharat to discuss our financial results.

Thanks, Anne. Last night we reported core FFO for the quarter ending June 30th, 2022 of $1.12 per diluted share, an increase of 15 cents or 14.3% from the same period last year. The growth in our core FFO was primarily driven by strong same-store results with our same-store NOI increasing by 11.5% compared to the same period last year. G&A and property management expense were 5.2 million and 2.7 million respectively for a combined total of 7.9 million. Included in GNA is 1.1 million related to pursuit costs, as Mark discussed in his remarks earlier. Also included is 447,000 related to the Yardi implementation, which we expect will be completed by the end of this year. As a result, we have excluded the pursuit and implementation costs from our core FFO. Excluding these costs, our combined GNA and property management expense for the quarter was 6.4 million which is a better representation of our run rate. It represents an increase of $933,000, or 17% year-over-year, and is driven by an increase of $570,000 in compensation expenses and $230,000 in office expenses, mainly from an increase in IQ-related costs. The material increase year-over-year is in part related to our significant acquisition last fall of the KMS portfolio. Including that acquisition, since the same period last year, we have acquired a total of 22 properties, which has increased revenues by almost 25% on an annualized basis. Our balance sheet remains strong and provides us with ample flexibility. As of June 30, 2022, we had $196.2 million of total liquidity, including $183 million available on our lines of credits. At the end of the quarter, the weighted average maturity of our debt was seven years, and the weighted average interest rate was approximately 3.3%. Now, I will discuss our 2022 financial outlook, which is presented on page S17 of the supplemental. Following a strong second quarter, we are erasing our same-store NOI guidance to an increase of 10% to 12% year-over-year. As Ann mentioned, revenue growth was extremely strong in the second quarter, and the positive leasing trends continued through July, prompting us to raise our revenue guidance to an increase of 9.75% year-over-year at the midpoint. On the other side of the P&L, we saw continued expense pressure during the second quarter. While we do expect the year-over-year growth rate to moderate during the second half of 2022, we expect expenses to be higher relative to our prior expectations and are accordingly adjusting our guidance to a year-over-year increase of 8% at the midpoint. All of that translates to an increase in our core FFO guidance for 2022 to $4.45 to $4.61 per share, with a midpoint of $4.53 per share. And with that, I will turn it over to the operator to open it up for questions. Thank you.

If you'd like to ask a question, please press start followed by one on your telephone keypad. If for any reason you'd like to remove your question, please press start followed by two. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. Our first question comes from the line of John Kim of BMO. Your line is now open. Please go ahead.

Thank you. Mark, you mentioned on this portfolio that you pursued some interesting items, that it would put you into several new markets. I was wondering if you could provide any color to this. What does this mean in addition to Nashville? And also that the seller decided there's not a portfolio premium by selling this in its entirety. Just wanted to get your thoughts on this.

Sure. Sure. Thanks, John. It was... It was several markets. In fact, it didn't include Nashville. And as we've said, you know, we have focused markets that I'd say we spend 85 plus percent of our time on, and then we spend time on things that are opportunistic like this portfolio. And with respect to premium, because of all the other things that the seller was getting, uh and by that i mean uh you know we were going to collaborate with their team i.e not cut many of the folks on their team uh there were going to be some tax considerations so you know when you looked at the whole package it really wasn't about max price it was about a bunch of different objectives and i think thematically that's something we like when we're solving problems and not just paying the most money It's easy to pay the most money. It's hard to solve problems. So we had, I would say, a very sort of bespoke solution engineered, and in the end, they wanted a different solution.

Are you in the running for any parts of the portfolio that are for sale?

No, I don't believe so. I mean, I'd say, you know, it's like Lloyd from Dumb and Dumber. There's always a chance, but... Our willingness to, you know, our desire to take this charge is really a recognition that we don't think anything is going to happen with this portfolio. I mean, you know, the sum of the parts was worth more than all the parts to us. It's really about getting scale in markets. So we're probably not that interested in buying one-offs in markets that we're not currently in, unless they're strategic markets.

Got it. Okay. And then just wanted to ask about your current loss to lease and the earning you have for 2023. Sure.

Ann, you want to take that?

Yeah, I think right now we're looking at a loss to lease right around 12%. So, you know, if you kind of measure our earning as 50% of that, it would be right around six. We do think that there's, you know, potentially some moderation and in leases going forward, although our July results were really strong and we expect to, you know, the blended lease rate growth in July of right around 10. So, you know, still really, really strong. And with that loss to lease, we're hoping to keep capturing that.

And they're in your quotings on lease growth, right? Or is that things for revenue?

Right, on lease growth.

Okay. Great. Thank you. Thanks, John.

Thank you. Our next question comes from the line of Brad Hefferman of RBC Capital. Your line is now open. Please go ahead.

Hey, good morning, everybody. So the $2 billion deal, I guess, can you give any additional details about how similar it was to the current portfolio in terms of things like price point and geography. And I know you said it would have added a few new markets. Can you give any sort of broad strokes as to where those were? Were they Sunbelt markets, et cetera?

Yeah, sure. Good morning, Brad. Yeah, so similar product in terms of average rents and kind of value per home, if you will. No commonality with our existing markets. It was kind of South Sunbelt through Midwest, which again, we're not trying to accumulate a large Sunbelt presence unless we can find some opportunistic reason or way to get there, a portfolio being a good example.

Yeah. Okay. Got it. And then it sounded like this was a deal that was negotiated before sort of the broader market downturn. I guess, given the current cost of capital and cost of debt, are you seeing acquisition opportunities that still make sense?

They're making more sense. So yeah, that deal really was negotiated last fall. And then the Blackstone purchase of APTS, Blue Rock, and Resource all at kind of 300 a door and three handle cap rates was pretty motivating for our counterparty. And again, I think February was kind of the absolute tippy top of market in terms of leverage availability, good pricing on leverage, lots of product in the market. The levered buyer has much less conviction today. So I think, you know, I listened to the same calls you did, and we see the same things I think you're hearing from other folks, which is pricing's off, you know, plus or minus 10%, maybe as much as 15%, depending on the deal and the location. You know, as is almost always the case, strongest assets and strongest locations see the least amount of price diminution. But I do think the market is coming a little bit more our way because we're not you know, reliant on heavy leverage and or kind of three to seven year window to get in and get out.

Yeah, okay. And then I guess any thoughts on incremental cost of debt as we sit here today?

It's higher? No, I don't like it. I got lots of thoughts on that. But I think the mathematical reality is, you know, we did two pieces of debt that we can pretty reliably reprice today. We did the Fannie line and the three pieces of unsecured. Both had kind of a little bit more than 10 years of weighted average duration. Both were right around 2.7. The Fannie piece was I.O. Obviously, the unsecured is I.O. If we recreated that, you know, there was a lot of paper that came into the unsecured market early in the year. So I think the You know, when we talk to folks in that market, it's priced even a little bit wider than the just sort of general spreads would dictate because there was a lot of read paper that got done in the first half. So I think that unsecured paper has a five in front of it, you know, for similar duration. The Fannie paper, you know, similar terms, you know, which was a relatively high advance rate called 60%. is right around four and a half. So more than double, double or more than double, depending on which market you're in. You know, Fannie and Freddie are behind this year on their production goals. So my, you know, pricing might get a little bit better. But, but that's, that's the math today. Okay. Thank you. Thanks, Brad.

Thank you. Our next question comes from the line of Rob Stevenson of Jani. Your line is now open. Please go ahead.

Good morning, guys. With year-to-date same-store expense growth at 10.7, what changes to get you down into the low to mid-five growth rate in the second half to sort of put you in that sort of midpoint of the guidance range for the year?

Yeah, Anne, sure. Hey, Anne, I'll take that.

Yeah, good morning. Good morning. So, you know, really in the second half of the year, it's going to be about more about the comparison, although we are really monitoring expenses closely and have a keen eye on what we can do to improve it. But if you recall, the run up of particularly energy prices happened in the second half of last year. So our first half comparison was really tough because we had You know, additional, as we noted on our last call, we saw some increase in usage, but, you know, a significant increase in price. That increase in price happened in the second half of last year. So, you know, the growth rate will moderate just simply because of the comparison. We are undertaking a couple of changes to our ratio utility billing system, our bill backs to tenants to make sure we're capturing more of the cost and passing that on to tenants. Obviously being mindful of how that impacts, you know, kind of our ability to push rents. And our goal is to keep maximizing that revenue. And to the extent we can push some of those costs into other revenue, we will.

What is your utility's

exposure at this point in terms of how much are you getting back versus how much you're exposed to uh well it widely is pretty very uh varies pretty widely by market so i would say in you know in denver and minneapolis we're we're capturing probably 70 to 80 percent and and in our smaller markets you know in some markets it's it's very very low percentages so um That's a product of a lot of things, whether or not the market will take it and, you know, comparable properties when people are shopping, if they can get their heat paid for next door, you know, they'll either pay less rent in order to pay their heat bill or they want it paid for. So it varies pretty widely.

Okay. And then what's left for you guys in terms of all of the smart homes, self-touring, operating efficiency, maintenance apps, et cetera, in terms of both upfront spending and also reaping the future gains in same store?

Yeah, I'm going to jump in front of this one and on this one, Rob. I'd say almost all of it. I mean, we have employed some technology on the maintenance side, but as we've talked about over the last couple of quarters, that implementing that single-stack technology solution, Yardi, really allows us to integrate a lot of those different things, smart rent being a good example, in a way that we were not able to before. Not to go overly tech on you, and I can't kick very deep on this, but we essentially had a self-hosted, virtually bespoke MRI solution that no one could really hook into. So because of our heritage, you know, as a multi-property type owner. So that really sets the table well for us, and that is kind of stabilized this year. So that's something we're really looking at as we go forward.

What's left in terms of what you expect to spend on those type of programs over the next couple of years?

Yeah, so... that's a great question I think it's going to it's not going to hit expenses in the way that you know the technology implementation has so I mean on what we have left it's most likely replacing current software as a service with different software as a service or replacing one solution that we've had that's historically so I'm not expecting a massive amount of investment in in technology spends I think probably a general run rate of technology investment would be a couple hundred thousand dollars a year, which is pretty close to what our historical was. And we have invested as we've gone along the way. We have really great online leasing presence. We have Matterport tours of 100% of our properties online. We do online leasing. In some markets, that's a pretty high percentage of what we do. But to Mark's point, we still have a long way to go. We've just started using some AI solutions on prospects with leads. That's working out really well. So we're just in the beginning of stages of implementing them and really the beginning stages of optimizing them so that we can start tracking what efficiencies they are creating in the portfolio.

And at what point do you get the greatest savings in terms of headcount? and labor costs there. Has that already occurred or is that still to come when you can operate with fewer people, et cetera?

Yeah, I think that comes when we really, when we continue to move. It's not only the technology solutions at the community level that allow that. It's really how these technology solutions may enable centralization of some services so that rather than having, you know, a position that only services 300 units because it needs to be on site, we can house that position anywhere in the country really on the support side, and maybe they can support 1,500 units given the technology and ability to kind of focus. So that's where I think we're really going to see the headcount reductions is when we can leverage some of these in order to identify how we might take certain positions and have them support across the portfolio in a centralized way.

And is that more of a 23 event?

Yeah, Rob, I'd also say a lot of that is you see when assets are clustered. I mean, for all the talk about technology, which is real, I mean, that is a lot about customer preference and experience and making it easy for the resident to access different services or shop your apartments. And I think it's also about increasing the quality of work for the team. But when you kind of cut through it all, scale, you know, adjacencies and scale, you know, proximate to one another is what I think drives the most efficiencies from a headcount perspective.

Yeah, and to answer your question, I do think that we're going to really, you know, we're hoping to really accelerate, start, you know, figuring out what these efficiencies are and mapping what potential additional centralized services look like for us. and implementing those in 23. So, yes, 23 is when we'd like to start really tracking some of the metrics that show efficiency other than, you know, obviously we're looking at margin and things like that in the meantime.

Okay. Thanks, guys. Appreciate it. Thanks, Rob.

Thank you. Our next line comes from the line of Connor Mitchell of Piper Sandler. Your line is now open. Please go ahead.

Hi, good morning. Thank you for taking my question. Just following along with the technology implementation costs, it was mentioned that going forward, it might be a run rate of a couple hundred thousand per year. So just making sure I understand, will there be any more kind of larger costs such as this past quarter or in 2021 where it was a little bit more? Or is that run rate starting in 2023 and beyond?

Yeah, I don't know that we were trying to give you expense guidance there, but Anne, you want to take that?

I think, yeah, the couple hundred thousand is just to kind of indicate that we are going to continue to make advancements. And there won't be anything nearly as significant as this yardie implementation that we did. I mean, this has been 18 months, it's changing really the back office system. So there's no immediate kind of value add proposition there. I would say as we look towards our future technology implementations, how we are assessing those right now is we are expecting a return on those investments. So, you know, those will be invested dollars instead of expense dollars. our next kind of value-add project or implementation is part of a value-add project where we really do expect to get a return on that investment. This was just to set the stage. I mean, not that we don't think it's going to give us returns. We do.

No one looks at your back office and says, this is awesome. My experience has been better. I'm paying more rent. I mean, you know, it's really about making it easier for our team to spend time on things that our residents do care about. because we have a more efficient back office. Whereas the go-forward will. They, residents, should feel it and be willing to pay for it. I think if you look at, again, smart rent, which has been talked about by a lot of our larger peers, there really is a value proposition there, both from the customer side in terms of having greater functionality and from the operations side in terms of leak detection and being able to change out locks automatically and instantly. Those are value drivers for us.

But we truly are at the tail end of the expense on the YARDI implementation, and we are not expecting that next quarter repeats the same expense.

Okay. That's helpful. Thank you. And then going back to the operating expenses, you touched base on that really the comparison is the first half or second half of this year, last year, um, with utilities rising, but even looking further into the future in 2023, do you guys expect that to, um, stay about flat or is there any way that you guys might be able to even lower that slightly or in comparison to Connor, are you trying to get 23 guidance?

Uh, Rob, why don't you take that one?

Yeah. I mean, uh, from uh you know from a utilities perspective yeah as ann said the second half is really driven by you know comps we did see utilities increase in the second half of last year so from a year-over-year perspective that's moderating in terms of usage and per unit cost we have seen that stabilize a little bit recently so you know if that trend continues we should be back hopefully in the same range as it was before. But again, you know, if the costs keep increasing, you know, we'll have to kind of just wait and watch.

Thank you. So with the operating expenses, you guys mentioned that it's mostly utilities and labor. Is there anything else driving the increase or keeping the level where it is?

No, I mean, the bulk of it. Sorry, go ahead, Ann.

I think one thing to think about is, you know, so there are some expense increases that do drive revenue. So, you know, when we're seeing, you know, really strong lease growth and turnover and, you know, a little bit higher turnover at some of our properties, you know, that does drive turnover expense and some of the repairs and maintenance lines. Those are good expenses to have. Obviously, our commissions are higher given the higher lease rates. So, you know, some of those things are positive because you really want the revenue. But, Rob, do you want to comment on some others?

Yeah, just to piggyback, I mean, I think, you know, from a first half standpoint, it was really utilities driving it as we look to the Second half, the impact of utilities would moderate, but from a compensation standpoint, we do see the year-over-year increase kind of sustain as we go into the second half. But to Ann's point, some of these expenses that are driving growth are expenses that are also driving revenue.

Very helpful.

That's all for me. Thank you.

Thank you. As a reminder, if you'd like to ask a question, please press start followed by one on your telephone keypad. Our next question comes from the line of Bookhorn of Raymond James. Your line is now open. Please go ahead.

Hey, thanks. Good morning. Curious if you could share your supply outlook for particularly for Denver and for Minneapolis, just how you're thinking about how the back half of the year and maybe going into 2023, how competitive supply is. and the delivery schedule is going to affect your portfolio or may affect either suburban versus urban core. You know, just, you know, are you still seeing a healthy absorption of the new units or any change in the vacancy rates of new supply out there?

Yeah, good morning. Thanks, Buck. I would say anything that's underway is probably is going to get finished, and we're not seeing any cause for concern there in terms of absorption. In fact, we've seen some pretty strong absorption in some of the projects we've been tracking. It does seem pretty clear that the debt markets are tightening. And probably 65 LTV seems like it's trending lower. The banks seem to be pulling some of their risk off for a whole host of reasons. So, you know, that probably speaks to supply that's, you know, 18, 24 months away, but, uh, we're not seeing any, uh, slow down in demand. Um, and we're not, I mean, I think, you know, here in the twin cities, and I'd say this is probably true in Denver as well. The, the in town, you know, in, in city proper assets are still not experiencing quite as much pricing power as the suburbs. And, um, and I expect that that could continue for a while based on work from home and things like that. But, but having said that, we're still seeing good demand in those markets, you know, on an absolute and relative basis. So I don't, we're not concerned about, uh, or unduly concerned. I mean, I'd say we're always watching it, but, uh, we're not concerned about supply. And as we've talked about, I think a lot in our investor decks and meetings, excuse me, um, our portfolio has some of the lowest supply coming, you know, on a relative basis.

Yep. No, appreciate that. Just, just hopefully did get the whole channel check there. Appreciate that. Um, and it's going back to the, uh, the portfolio, um, you know, uh, contemplated transaction. Uh, how were you guys thinking about funding that, that deal? And did, you know, a portion of disposition, were you planning on, uh, you know, a segment of the existing portfolio and accelerating dispositions on that? And should we possibly anticipate, you know, some additional disposition activity later this year?

We were going to issue a ton of equity on an NAV to NAV basis. So it would have worked pretty well. It would have been balance sheet, you know, neutral day one and probably positive, yeah, I think from the from the lending markets perspective, particularly the corporate lending markets perspective, you know, that exercise and diversity would have probably uptiered us a bit in pricing. So, um, it would have been a positive there from a debt to EBITDA and secure percentage and things like that. It would have been, uh, there would have been a little bit of work in the early days to kind of keep, get us to where we are now. But, you know, we entered the unsecured market at, something north of eight times debt to EBITDA, and we're sort of tracking on a forward-looking basis into the mid-sixes. So, you know, we're very comfortably in that market. When people ask us about how do we think about debt, you know, we frequently say we think a lot about maintaining that access to the unsecured market in the form of the direct placement or insurance company market, which we, you know, we're comfortably have access there. As I said earlier, when Brad asked the question, We don't love the pricing of that market right now, but we're certainly not alone in that camp.

Okay. That's helpful. I appreciate that, Collin. Thank you very much. Thanks, Buck.

Thank you. Our final question comes from the line of Wes Golladay of Baird. Your line is now open. Please go ahead.

Hey, good morning to everyone. Looking at the supplement, it looks like revenue growth meaningfully outpaced rent growth this quarter. Can you talk about what is driving the other revenue growth? Sure. Good morning, Wes. Annie, you want to take that?

Yeah. I mean, some of that is the lag in collecting the ratio utility billing, so the billbacks from the tenants. You know, when we experienced those rising expenses last quarter, then it gets filled out. So I think a big driver there in the growth and other revenue is the collection on the REBS.

Okay, so I guess maybe for modeling purposes, this looks like a good run rate as long as utilities are high.

Rob, what do you think about that?

Sorry, I missed that. Wes, can you repeat the second part?

Yeah, when we look at the other revenues, is it just like a multi-quarter true-up, or are we looking at the current other revenue for the quarter being a good run rate going forward as long as utility expenses are high?

Yeah, so, you know, the one thing on the revenue side, in addition to what Ann said, is from a collection standpoint, you know, we were over 100% this quarter. So that's really driving some of the differential as well. So after adjusting for that, you know, it gives you a pretty good sense of what the run rate will look like. You know, we collected about 100.2% of revenues this quarter. So on a normalized basis going forward, you know, we would anticipate something closer to like 99 point, 5% ish. So, you know, that's adding to some of the differences as well.

Okay. Can you talk about the revenue management strategy for the back half of the year? Are you looking to push rate for the balance of the year, maybe build occupancy later in the year? Can you just give it a little bit more cover there?

Yeah, I think we really do try to build occupancy going into the fourth quarter. We have lower lease expirations and so our goal, we feel good about the sequential increase in occupancy. We went up 90 basis points between end of the third quarter or end of the first quarter to end of the second quarter. We want to keep building that. There's always the balance of pushing the rate and being able to capture that loss to lease versus occupancy. So we do hope that the occupancy can continue to grow and that we can continue to capture really great increases.

That's all for me. Thank you.

Thanks, Wes.

Thank you. As there are no more questions registered at this time, I'd like to hand the conference call over to the management team for closing remarks.

Super. Thanks, Candice. Well, we just want to thank everyone for your continued interest in CenterSpace and enjoy the rest of your summer, everyone. Thanks.