D/B/A Centerspace

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, Ann Olson, for the company's prepared remarks.

Good morning, everyone, and thank you for joining CenterSpace's second quarter earnings call. With me this morning is Bharat 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 second quarter, 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 first quarter 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. And 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 second quarter, 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 tradeouts were 3.5% during the quarter, and renewals priced similarly, also averaging 3.5% for blended lease tradeout 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 expiration with indications of blended tradeouts in the range of 2.8%. Capering 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. While 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 second quarter's 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 2 cents from $4.83 to $4.85 per share. When we had no transaction activity in the second quarter, 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're 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 Barak 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 second quarter 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 rated average occupancy. which stood at 95.3% for the quarter. Property operating expenses were up by 5.1% yearly 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. We 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, seeing short NOI growth guidance to 3.5%. But our expectations of year-over-year revenue growth remained 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 to $27.9 million, and interest expense to range between $36.5 to $36.9 million. The 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. Inclusively, 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, the tax refund that equated to about $0.04 per share in the first quarter, and a refund in the second quarter 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&N 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 four-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.