Centerspace Q2 FY2025 Earnings Call

Good morning, everyone, and welcome to the Centerspace Second Quarter 2025 Earnings Call. My name is Elisa, and I will be your moderator today. I will now turn the conference over to our host, Josh Klaetsch with Centerspace. You may proceed.

Good morning, everyone. Centerspace's Form 10-Q for the quarter ended June 30, 2025, 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 filings 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're 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, Anne Olson, for the company's prepared remarks.

Good morning, everyone, and thank you for joining us. I'm joined today by our SVP of Investments and Capital Markets, Grant Campbell; and our CFO, Bhairav Patel. Last night, we reported strong results from our same-store portfolio with a 2.7% year-over-year increase in revenues, driving 2.9% year-over-year growth in NOI. However, due to our planned strategic transactions, we're lowering the midpoint of our guidance by $0.04 to account for the impact of capital recycling activities. While Bhairav will provide detail on the financial results and outlook, I want to spend a few minutes on the execution of our longer-term strategy. In June, we announced a series of transactions focused on accelerating capital recycling efforts with a focused goal of improving portfolio metrics, increasing exposure to institutional markets, and enhancing the overall growth profile while leveraging the stability of our strong Midwest portfolio. These strategic moves included acquisitions in both Colorado and Utah and dispositions that reduced our exposure to Minnesota. We entered a new market, Salt Lake City, and added to our existing base in Boulder and Fort Collins, while staying true to our differentiated footprint in the Midwest and Mountain West regions. Operationally, the results give us confidence that our platform is well prepared to undertake these repositioning efforts. Absorption remains at or near record levels in many of our markets, which led to 96.1% occupancy in the quarter. Combined with high retention of 16.2% and exceptional expense control, we are set up well for the remainder of the year. Leasing spreads are following a similar seasonal pattern to last year, and we saw second quarter same-store lease growth of 2.4% on a blended basis with new lease growth of 2.1% and renewal growth of 2.6%. These excellent results demonstrate the strength of our platform and provide a solid base to continue execution of our longer-term market repositioning while still growing earnings. Our Midwest focused markets continue to show their stability and consistency. In our largest market of Minneapolis, strong absorption and decreasing supply led to some of the nation's best market level occupancy gains. For Centerspace, this dynamic aided Minneapolis blended same-store leasing spreads where they increased 2.7% in the quarter, which consisted of new leases increasing 2.5% and renewals increasing 2.8%. In our Denver portfolio, we're still seeing the impact of record recent supply in that market, with leasing spreads remaining challenged even in the face of favorable absorption. That said, the anticipated supply drop-off, combined with expectations for a pickup in job growth in that market into 2026 and 2027 point to current headwinds becoming tailwinds. While our initial expectations of pricing power returning to Denver in the second half of the year may be delayed, we are optimistic about the market overall. Resident health remained strong with a rent-to-income ratio of 22.5% and same-store bad debt at roughly 40 basis points for the quarter. I mentioned that our retention rate was 60.2%, and that brings us to 56.8% for the year. This is a testament to our team members and their commitment to providing an exceptional customer experience. This commitment is also evidenced by continual improvement in our online review score which reached its highest point in the company's history during the second quarter. Before I turn it over to Grant to share an overview on the recent transactions, I want to reiterate our commitment to our strategy, which includes not only capital recycling to enhance our future growth profile, but maintaining best-in-class operations, driving shareholder results through continued year-over-year earnings growth, and staying nimble to take advantage of opportunities while keeping an eye on our balance sheet. While our stock price continues to be subject to macro volatility, we're excited about the path forward for Centerspace. Grant, I'll turn it over to you for a discussion of the transactions and current transaction market.

Thanks, Anne, and good morning, everyone. Our transaction initiatives include two recent acquisitions, both of which we have completed, and the disposition of 12 communities in St. Cloud and Minneapolis, Minnesota. We closed on the acquisition of Sugarmont, a 341-home community in Salt Lake City at the end of May for $149 million. The property was built in 2021 and is located in Sugar House, one of Salt Lake City's most desirable submarkets. Salt Lake City is a natural extension of our existing Mountain West footprint. Our team has been spending a lot of time in the market, and we have been actively pursuing opportunities there. That on-the-ground presence is what led to this off-market acquisition. The Salt Lake City Valley features a diverse and growing economic base with a large presence of jobs in technology, finance, education, and health care along with four large universities totaling approximately 145,000 students. While many other institutional markets have recently realized a slowdown in effective rents due to a period of peak lease-ups, Salt Lake City has the second highest level of momentum in the country across institutional markets when measuring year-over-year effective rent change from March to June. These variables, coupled with the high cost of housing, the state's business-friendly backdrop, robust outdoor amenities, and Utah ranking sixth nationally for forecasted growth in young adult population between 2023 and 2033 provide both near- and long-term tailwinds to the market as we execute our strategy. In conjunction with earnings last night, we also announced the acquisition of Railway Flats, a 420-home community in Loveland, Colorado, for total consideration of $132 million. This acquisition included the assumption of $76 million of long-term HUD debt at an average effective interest rate of 3.26%. The community is proximate to our 2023 acquisition, Lake Vista, and we expect operational synergies between our three communities located in the Boulder and Fort Collins market as well as with our broader Colorado portfolio. Fort Collins is a market that has displayed relative outperformance in annual rent growth and vacancy when compared to Metro Denver fundamentals. To fund these acquisitions, we are currently marketing for sale of 12 communities in Minnesota. Buyer interest has been strong for individual community offers and portfolio offers. We are under a letter of intent to sell the entirety of our St. Cloud portfolio, which includes five communities totaling 832 apartment homes. Closing of this sale is anticipated in September. In addition, we are currently in the marketing phase for seven communities in Minneapolis, totaling 679 apartment homes. First round bids for these Minneapolis communities will be received this week, and closing is anticipated in Q4. Pricing indications to date remain supportive of the $210 million to $230 million total sale price for dispositions we noted in early June, and this pricing results in individual community cap rates well inside of the mid- to high 7% implied cap rate that our stock currently trades at. Taken together, these acquisitions and planned dispositions improve our diversification, reducing Minneapolis NOI exposure in our portfolio by 300 basis points while adding exposure to a new institutional market in Salt Lake City. They improve our portfolio quality with pro forma average portfolio rent increasing $50 versus Q1 2025 levels, and they improve our portfolio margins with year one NOI margins on acquisitions projected to be between 65% and 70%, while the disposition communities are low 50%. Taking a step back, our transaction events also coincide with a broader swing in the transaction market. Capital allocators have recently been communicating and displaying more conviction to place capital as we move further into the year. While we don't expect the market to see transaction volumes like in 2021 and 2022, incrementally more transactions are happening at a cadence analogous to pre-COVID levels, and these should suggest favorable valuation marks for our portfolio and our stock price. With that, I'll turn it over to Bhairav to discuss our financial results and our guidance.

Thanks, Grant, and hello, everyone. Last night, we reported second quarter core FFO of $1.28 per diluted share, driven by a 2.9% year-on-year increase to same-store NOI. This NOI growth was driven by a 2.7% increase in same-store revenues with revenue growth composed of a 60 basis point increase in occupancy and a 2.1% increase in average monthly revenue per occupied home. On the same-store expense side, Q2 numbers were up 2.4% year-over-year, with controllable expenses up 3.2% and non-controllables up 1.2%. Please note that same-store results exclude the 12 communities that are currently being marketed for sale. These properties have been carved out of the same-store pool and included in the held-for-sale category on our balance sheet. Relatedly, we have booked an impairment charge of $14.5 million, with the shorter holding period for the properties driving the impairment assessment. To clarify, the impairment charge is based on our GAAP carrying value and like depreciation is excluded from our non-GAAP metrics. Turning to guidance. We now anticipate full year core FFO per share of $4.88 to $5 per share with expectations for 2025 same-store NOI growth to be 2.5% to 3.5%. As our second quarter results indicate, our operating performance remains solid. We are roughly in line with our initial revenue projections, allowing us to maintain our midpoint of revenue growth at 2.5% for the year. And as Anne alluded to in her remarks, we have maintained our focus and discipline on managing expenses and now expect nominal growth in controllable expenses for the year, leading to total same-store expense growth of 1% to 2.5% and NOI growth of 3% at the midpoint, an increase of 70 basis points above our previous expectations. Core FFO guidance is lower at the midpoint by $0.04 per share due to the expected impact of our announced transactions and the projected disposition that Grant discussed in his remarks. To reiterate collectively, they represent progress on the planned evolution of our portfolio. They will improve the quality of our portfolio and enhance our market exposure, thereby lifting margins and the long-term growth profile of the company, all while maintaining our differentiated footprint. And as we do so, we are still growing earnings, which at the midpoint of $4.94 per share represents a 1.2% increase over the prior year. Once again, as a reminder, the same-store pool excludes the 12 properties that are being marketed for sale. To help facilitate the announced transactions, we added to our balance sheet flexibility in the quarter by expanding our line of credit capacity by $150 million. This flexibility was used to fund the recent purchases, and we anticipate paying down the facility as our dispositions close later this year. We expect our net debt to EBITDA to trend back down to the low to mid 7x level by year-end as this occurs. Our transaction activity also helps extend our maturity profile; pro forma for the transactions, our debt has a weighted average rate of 3.6% and a weighted average time to maturity of 7.3 years. To conclude, Q2 was another good quarter for Centerspace with our results benefiting from continued occupancy growth, high retention, and continued expense controls, all of which set us up well into the back half of this year.

The first question comes from Brad Heffern with RBC.

On the capital recycling program, can you talk about any guardrails you have around how much you would allow dilution to offset organic growth in any given year?

Yes, Brad, it's good to have you on the call. I think as we look at the strategic plan to recycle capital and get into more institutional markets, we are thinking of guardrails in a couple of ways. One, we're really keeping an eye on the balance sheet. So to the extent we have, like we did in this quarter, temporary upticks in leverage, we really want to make sure that we match fund those with dispositions to bring that leverage back down in line. And then I think we've stated and shown in this guidance that we do want to continue to grow earnings year-over-year. So while we may be willing to take some dilution off of the growth, we really do want to continue to show progress year-over-year in growing earnings.

Okay. Got it. And then do you have any July leasing stats you could quote?

Brad, with respect to July, I think the trends that we saw in June have continued, with Denver actually turning the corner a little bit. What we saw in late Q2 in Denver was a spike in concessions which kind of impacted occupancy as well as rent growth. We are seeing that reverse a little bit. We're not out of the woods yet, but the rest of the portfolio is offsetting that and chugging along through the rest of the leasing season.

Yes. And Brad, right now, where we sit today, we really only have about 17% of the leases to lock in for the rest of the year. So renewals are being pushed out into kind of October. We're still seeing really healthy renewal rents across the portfolio. And those renewal rents are just barely off of market rent. So I think the loss to lease as we get to this end of the year, we feel good about shrinking that and being in a really good position for pricing power as we head into the winter and look forward to 2026.

Okay. And then just one more little accounting thing, Bhairav, can you just give the net impact of the acquisition and disposition activity on the guidance?

Sure. It's about $0.06 to $0.08 of dilution as a result of the transaction. There's a lot of moving parts there. The biggest being the timing of the dispositions. We expect some of the dispositions to close in late Q3, some of them to close in early to mid-Q4, so that can change the number eventually based on the actual closing date. The two things, we've closed the acquisition, so that's no longer a factor in terms of the impact on the range. But in addition to the timing of the dispositions, there's some friction with respect to holdback of proceeds to complete the reverse 1031 that we've set up. So all of that combined results in about $0.06 to $0.08 of a range from a disposition standpoint.

The next question comes from Jamie Feldman with Wells Fargo.

Great. I just want to focus on rents. Many of your peers have adjusted their projections for top line growth or new lease growth. Have your expectations changed at all in any of the markets, whether positively or negatively, for the second half of the year?

Yes. As we look ahead to the second half of the year, our expectations for Denver have been adjusted downward slightly. At the start of the year, we anticipated that strong absorption in that market would allow us to see improvements sooner than what we're currently experiencing. While there are some positive signs, as Brad mentioned, they come with several concessions. Therefore, we've revised our revenue expectations for Denver, but this has been balanced by the exceptionally strong performance in the tertiary markets. For instance, North Dakota is demonstrating remarkable growth, with these areas facing limited supply showing good rent increases. We are still dealing with high housing costs, elevated mortgage rates, and significant retention rates. Ultimately, we are confident in our revenue outlook, though we are reaching our initial projections through a different path. So, while conditions are softer in Denver, the overall performance of the rest of the portfolio is better.

Okay. That's helpful. And then the comments about the disposition market heating up. Can you talk more about the types of buyers that are out there? The pipeline of buyers for the assets you're trying to sell? I mean, is it multiple bids? Or are you working with single buyers? And then what kind of returns are people looking for? And how are they underwriting and financing these projects?

Jamie, this is Grant. From a bid sheet or bid depth perspective, multiple offers are certainly there. There's been a whole host of interested parties for both of the offerings that we have in the market ranging from local capital that may be interested in one specific community to national platform capital that may be interested in an entire portfolio or a sub-portfolio of the offering. So it really runs the gamut and there is a lot of depth there that we're seeing currently. From an underwriting and pricing perspective, in the case of St. Cloud, folks generally are looking for, call it, mid-6 NOI cap rate. In the case of Minneapolis, as we said in our prepared remarks, too early to tell from an offer perspective, we'll have more visibility this week, but we expect that portfolio, broadly speaking, to be in the mid-5s. And then just anecdotally, if you look at our other secondary market locations throughout the Midwest, really the status of the financing markets at any moment in time is going to drive pricing there as folks are looking for neutral to positive leverage day one.

Okay. And this is on what forward NOI or trailing NOI, these cap rates?

That would be on pro forma year 1.

Okay. And then I appreciate the comments about getting back to low 7x leverage by year-end. Just what's the long-term plan again in terms of where you'd like leverage to be and how long does it take you to get there?

Yes, we aim to reduce leverage to below 7 in the long term, ideally getting into the 5s over time. There are several steps involved. First, we need to optimize our cost of capital, and our efforts in capital recycling are intended to demonstrate the value in our portfolio and close the gap between our current trading value and our portfolio's actual worth. The sales will enhance our standing, and we plan to focus acquisitions in markets where we have clear insights into cap rates, valuations, and market trends. Deleveraging will happen in a couple of ways: by using excess proceeds from sales as we continue recycling and by naturally reducing leverage as we grow larger. We are committed to this goal. Last year, we took the opportunity to raise equity in the market, which allowed us to eliminate $110 million of our preferred shares, consequently lowering our overall leverage. We are always looking for ways to reduce leverage while simultaneously repositioning the company's market exposure. However, this process will require time and will benefit from greater scale.

The next question comes from Connor Mitchell with Piper Sandler.

First off, maybe I missed it, but can you just remind us what the cap rates were on the recent acquisitions for the Colorado asset, Salt Lake City? And then what's the timeline? Or what's the inflection point that you're expecting for these acquisitions, especially maybe the Denver and Colorado markets to turn accretive? I know you mentioned that some of the rent pricing is a little softer than expected in the back half of the year. And I think, Anne, you had a few comments on maybe the job growth for the market. Anything we can think about for maybe the timeline for when these lower cap rate acquisitions will turn more accretive for the overall portfolio?

Connor, this is Grant. To your first question, from a cap rate perspective on the recent acquisitions, high force. In the case of Railway, it was an unlevered 4.8%. In the case of Sugarmont and Salt Lake City, 4.65%, 4.7%. As we alluded to in our remarks related to Railway, there was debt that we assumed there at a 3.26% effective interest rate. So the profile of accretion there, if you will, looks obviously much better, much different than something that we're buying unencumbered or something that we would have to place new debt on today. In the case of Salt Lake, you also alluded to jobs. And when you look at the job growth profile of Salt Lake, it's been a clear outperformer for a very long period of time. Also, this asset is located in a submarket that is highly, highly desirable. So when we put those variables alongside the physical quality of the asset, we do think the growth potential is there. And as you move into years two and three of the pro forma, start to think that we'll see some healthy growth on cash flows.

Okay. Yes, that's helpful. So I guess just how much can we split it between maybe supply tempering and some healthy job gains for the market. And then also just bringing the assets onto your platform to boost the accretion as well, maybe a year or two out.

Yes. I'll try that one. So I think on Salt Lake City, we're not expecting any boost from bringing it onto our platform. In fact, during this first year, it's going to continue to be managed while we build some additional scale. It will continue to be managed by Cottonwood Residential on their platform. So not anything immediate from that standpoint. And then I'd say the impact of tapering supply in Salt Lake City is going to be very positive, and that's going to be exacerbated by the strong job growth. So I think the fundamental change is going to be that supply is diminishing in Salt Lake City, and they have very, very high absorption given the strong underlying fundamentals of population and jobs. So I'd say there is probably 50-50 on which one of those drives movement into territory where we think that's really a cash flow accretive acquisition.

The next question comes from Rob Stevenson with Janney.

Can you talk about how much of a drag Denver was on the 2.6% renewal lease rate growth? And were there any other markets that had an outsized impact on that number?

Yes. I think Denver really is the only market that had an impact on that lease rate growth, and it probably brought it in 20 to 30 basis points overall given the weighting. Denver renewals on the renewal side, we're just above flat, so 0.6% on renewals relative to the other markets where we were really seeing North Dakota in the 5s, Minneapolis in the high 2s, Rochester, Nebraska in that same range, high 2s, low 3s. So not a huge impact, but some.

Yes. We factored into our guidance, which is approximately $1,175 at the midpoint, a shift in capital expenditure from the assets we plan to sell to our now smaller same-store portfolio. Moving forward, we expect our capital expenditures to be much more efficient due to the exchange of twelve assets for two. This will reduce maintenance needs significantly, although we anticipate a slight increase in turnover capital expenditures because the new assets are of higher quality. Overall, the decrease in maintenance costs will more than compensate for these increases. Therefore, we expect our portfolio to be more efficient in terms of capital expenditures going forward.

Okay. And then a clarification. The $0.06 to $0.08 of dilution that you talked about earlier in terms of the asset recycling program, is that just 2025? Or is that an annualized number?

That is the impact in 2025. As I mentioned, there are many factors at play in 2025, including when disposals will occur and some proceeds holdback. It's challenging to annualize that figure due to these components, which also involve other transaction-related costs resulting from the plan. Therefore, for a full year, you cannot simply annualize that number. We anticipate that the dilution will be around $0.15 as you look at the full-year outlook moving forward.

That's correct. St. Cloud is expected to close in September with Minneapolis in November. That's the expectation that we factored into the guidance. The next question comes from indiscernible with UBS.

I think your previous expectation was that occupancy comps were going to be getting a bit more challenging in the second quarter of 2025 and then remain challenging through the remainder of the year. So what your markets changed to allow you to achieve both sequential and a really strong year-over-year increase in occupancy in the quarter? And then do you expect occupancy to fall off in the back half of the year?

No, we expect to maintain our momentum in occupancy. In the first half, despite some pressure from blended lease trade-outs in Denver, our occupancy levels are exceeding our expectations. We anticipate sustaining this momentum into the second half of the year. Overall, we do not expect significant changes in lease trade-outs across our portfolio, and we aim to keep occupancy rates high. This consistent performance has allowed us to keep the midpoint of our revenue range steady. Year-to-date results have aligned with our expectations, even though the mix has varied and we've faced challenges in Denver, we have managed these effectively across the rest of our portfolio and expect to continue in this manner in the latter half of the year.

Okay. So I guess I'm just curious if you're seeing this really strong occupancy, why isn't there a little bit more pricing power on the rate side as well? Are you seeing some price sensitivity? Is this something that other operators are doing in the market, which is making a little bit more challenging conditions there? Or is there something else going on? Or is this maybe a decision to not push as hard to really boost occupancy?

Yes, Amy, the key factor lies in the mix of our portfolio. Our strongest occupancies are also where we are experiencing the highest rent growth, particularly in markets like North Dakota, Omaha, and Rochester. However, when we report the overall figures, they include Denver, which constitutes a significant part of our portfolio and has seen slightly softer occupancy rates. As Bhairav mentioned, we are facing a considerable amount of concessions, resulting in increased competition for residents that exerts pressure on rental rates. Therefore, in areas where we have the highest occupancy, we do possess genuine pricing power, which is reflected in the revenue growth in markets such as North Dakota and Omaha. Although these tertiary markets have shown strong performance, they are somewhat balanced out by the challenges in Denver.

Got it. That's helpful context. And then I guess my second question is regarding your focus on scaling in Salt Lake City. I'm curious about the opportunities you are observing there.

Amy, I would say a couple of thoughts. One, Sugarmont was really a continuation of pipeline for us. This was not the first opportunity that came across our desk, and we jumped at it. We've been spending a lot of time in the market. We've been building a good pipeline and seeing opportunities. A few of the things that we really liked were just a bit outside from where we needed to be from an underwriting and math perspective. We feel confident that we'll continue to build pipeline and continue to see opportunities in that market moving forward.

The next question comes from Mason Guell with Baird.

Just curious what you're sending renewals out today for August and September and then maybe what you expect blended rates to be in the second half of the year?

Mason, yes, so renewals continue to be healthy with all the renewals that we've sent out to date, which takes us all the way to October in the high 2s to close to 3% range. For the second half of the year, as I mentioned earlier, we do expect blended rate growth to be in line with what we saw in the first half with renewals leading rent growth. And as Anne mentioned, there's some softness in Denver, so we expect renewals to outpace new lease trade-outs. But overall, the expectation in the second half versus the first half is not that different.

I appreciate all the color on rate growth by market so far. I was just wondering if you could provide some numbers around maybe the new rates and the blended rates in some of your tertiary markets?

In the second quarter, we experienced approximately 6% to 7% rent growth in Nebraska and North Dakota. Most of our markets showed positive results, including Minneapolis, which saw growth around 3%, except for Denver, where we faced overall declines. The blended rent growth for these markets was in the single digits, with some instances reaching high single digits. The main challenge remains in Denver, where we encountered some concessions related to new lease agreements, but we are noticing changes that suggest we are starting to recover. We are improving occupancy rates, which should positively impact rent growth in the future. We faced some difficulties in June but addressed them quickly in July, and I believe trends are now moving in the right direction as we approach August and the rest of the year.

We have a follow-up from Jamie Feldman with Wells Fargo.

Great. I had some discussions with investors during the call, so I thought I would ask you the question. How are you considering the timing of capital allocation? It seems that buying back your stock today could result in a much less dilutive outcome compared to acquiring lower cap rate assets than what you are selling. Do you feel like you are racing against time to get everything done, or why not take a more measured approach and target opportunities when they arise rather than risking dilution to earnings?

Yes, I think timing is something we're considering carefully. I don’t feel like we’re under pressure to act quickly. The opportunity in Salt Lake City, as Grant pointed out, was significant for us. It was an off-market deal, and we had explored various options there. Similarly, with the Railway property, we had been monitoring it for a long time and managed to acquire it with the existing debt in place. We're taking advantage of these opportunities. Our history shows we have been effective in doing so; for example, we bought back stock at the end of '23 at 54% and then reissued it at 75%. We’ve reduced our leverage as well. We are on the lookout for these opportunities, but we also want to be cautious since we’re not receiving credit for the strong results from our tertiary markets. We want to clearly communicate our strategy and show that we're making progress. When considering the timing of our acquisitions, the stock price was around 70% when we finalized those deals, not as low as it is today.

Would you consider being more aggressive with share buybacks in the future? How should we think about the various factors involved as you do this?

Yes, we are continuously evaluating our buyback levels and balancing them with overall float and leverage. As you know, we increased our leverage in the second quarter, but we want to ensure we're prepared to execute buybacks when we believe it's the right moment. Given the current trading price of our stock, we are carefully considering our options. Every dollar we have to use is being thoughtfully allocated; we are weighing whether it should go toward debt repayment, new acquisitions, or stock buybacks, as these strategies often compete with one another. We want to be in a position to take advantage of stock buybacks, and with our earnings just released, we are now coming out of our blackout period, making it a good time to act. We have not been able to do so in the last 30 days.

There are no additional questions at this time. So I would like to pass the conference back over to Anne Olson for any closing remarks.

Thanks, everyone, for joining us today and for the really great questions and the interest in Centerspace. We're excited about the results we're putting up. We're also being carefully optimistic about execution of our strategic plan and happy with the progress we've made to date. And I especially want to thank all our team for all the hard work that they put in to the recent transactions expected to lead to greater growth for our portfolio overall. So thank you very much, and have a great day.

That will conclude the Centerspace Second Quarter 2025 Earnings Call. Thank you so much for your participation. You may now disconnect your lines.