Q2 2026 Centerspace Earnings Call Transcript
Key Points
- Portfolio repositioning improved quality and reduced leverage, with 14 communities sold for ~$320 million in 2026, exiting tertiary markets like Rapid City and Bismarck.
- Same-store NOI grew 30 basis points year-over-year in Q2 2026, driven by disciplined expense management, with expenses down 10 basis points.
- Strong resident retention at 61.3% and renewal rate growth of 3.4%, with blended lease growth of 1.8% and steady performance into July.
- Minneapolis delivered strong results with 3.4% blended rent growth and 65% retention, indicating market recovery from supply pressures.
- Balance sheet strengthened significantly, with net debt to EBITDA down to 7.3x from 8.2x in Q1, and expected to settle in mid-6x range after dispositions.
- Dispositions priced inside the implied portfolio cap rate, and share buybacks of $2.5 million at an average price of $55.54 per share were executed.
- Same-store revenue was flat year-over-year, primarily due to concessions in the Denver market, which remains soft with new supply absorption.
- Full-year 2026 same-store NOI growth guidance was lowered to flat to down 1%, reflecting the reconstituted same-store pool excluding strong-performing assets.
- Core FFO guidance midpoint was reduced to $4.63 per share, impacted by the sale of high-performing communities like those in Bismarck and Minneapolis.
- Denver new lease rate growth was negative 60 basis points, though improved from Q1, and the market faces high vacancy at 10% versus portfolio average of 5%.
- The company expects a $0.25 per share net headwind in the second half of 2026 from dispositions, partially offset by G&A savings and organic growth.
- Cost of capital remains a constraint for new investments, limiting ability to scale in markets like Salt Lake City despite favorable long-term outlook.
Hello, everyone. Thank you for joining us, and welcome to the Centerspace Q2 2026 earnings call. (Operator Instructions) The presentation will now begin.
Thank you, and good morning.
Centerspace's Form 10-Q for the quarter ended June 30, 2026, was filed with the SEC yesterday after market close. Our earnings release and supplemental disclosure package are available on centerspacehomes.com and were filed on Form 8-K.
Today's remarks include forward-looking statements based on management's current views and assumptions. These statements are subject to risks and uncertainties discussed in our risk factors and other SEC filings. We cannot guarantee these statements will materialize, and you should not place undue reliance on them. Please refer to our earnings release for reconciliations of any non-GAAP measures discussed on today's call.
Joining me today are Bhairav Patel, our Chief Financial Officer; and Graham Campbell, Senior Vice President of
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