CSR - Centerspace cut to Neutral at Compass Point as higher expenses offset rent gains

• Centerspace ( NYSE: CSR ) stock dropped 3.7% in Wednesday trading after Compass Point analyst Merrill Ross downgraded the apartment REIT to Neutral as she sees higher interest expense and property operating expenses offsetting higher rental income.
• The company lowered its 2022 guidance for core FFO per share to $4.42-$4.50 from $4.45-$4.61 on higher expenses caused by inflation and higher interest.
• Ross also pointed to the the dilutive impact of an asset it acquired in Denver and higher capital expenditures due to older assets acquired in its KMS transaction.
• The analyst projects 2023 FFO growth will be limited to ~3% "despite 10% rent growth YoY as interest expense and property opex eat away at revenue gains."
• The Neutral rating jibes with the SA Quant rating of Hold and contrasts with the average Wall Street rating of Buy .
• For a look at Centerspace's ( CSR ) income statement, click here.

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