D/B/A Centerspace

Good afternoon, and thank you for attending today's Center Space first quarter 2025 earnings call. My name is Jasmine, and I'll be your moderator today. All lines will be muted during the presentation portion of the call with the opportunity for questions and answers at the end. If you would like to ask a question, press star one on your telephone keypad. I would now like to pass the conference over to your host, Josh Clatch with Center Space. You may now proceed.

Good afternoon. Center Space's Form 10-Q for the quarter ended March 31, 2025, was filed with the SEC yesterday after the market closed. Additionally, our earnings relief and supplemental disclosure package, as well as an updated investor presentation, 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.

Hello, everyone, and thank you for joining us. With me today are Bharat Patel, our Chief Financial Officer, and Grant Campbell, SVP of Investments and Capital Markets. It is Friday, and I know you are all anxious to ask us questions about what our plans are for the weekend. But first, we'd like to provide some brief highlights for the quarter. Our first quarter demonstrated our team's ability to drive exceptional results, with strong occupancy and expense control bolstering our performance and setting us up well for the remainder of 2025. Multifamily fundamentals are strong, with sustained demand driving net absorption across the industry. For us, strong demand translated into our results in several ways, most notably the 120 basis point year-over-year improvement in our weighted average occupancy for our same store portfolio. As we sit today, our average physical occupancy is 96% with April renewal retention coming in around 57%. Our blended leasing spreads shown on page eight of the investor presentation filed in connection with our earnings release and supplemental were up 70 basis points in the first quarter and the positive trend continued into April. Renewal increases have remained steady at a high two to mid 3% level while new lease spreads are improving. After being down 3.5% in Q4, 2024, They increased sequentially to negative 1.1% in Q1, and in April they moved to a positive 2.4%. Resident health remains strong, with growth in income levels keeping the rent-to-income ratio at 21.6%. Bad debt remains in line with expectations at roughly 40 basis points, while low unemployment rates and healthy regional economies point to the continuation of this trend. Much of our footprint, with its differentiated focus on Midwest and Mountain West regions of the country, continues to benefit from a lack of new supply. Notably, North Dakota is again leading our portfolio with blended leasing spreads of 5.3% year to date, and Omaha has delivered similarly positive results. In our largest market of Minneapolis, leasing spreads are coming in ahead of our portfolio average, And while we are still seeing the impact of supply pressure in Denver, we're optimistic that the demand trend is strong enough to improve new lease rates as the year progresses. We feel great about the first quarter, even if it was uneventful. When considering the macroeconomic environment and its impact on our results in strategic direction, we are reaffirming our guidance for the full year. We're going to maintain discipline on all areas within our control and be ready to take advantage of opportunities to advance our platform. Grant will now share an overview of the state of the market and how it plays into our continued growth.