Center Reports Q4 2025 Earnings: A Year of Progress and Strategic Focus

Center delivered a strong performance in Q4 2025, showcasing resilience in its multifamily portfolio and a commitment to maximizing shareholder value. The earnings call highlighted key metrics such as a 4.8% year-over-year increase in same-store net operating income (NOI) and strategic initiatives aimed at enhancing profitability and market positioning. With management optimistic about the future, Center's strategic review process is expected to further bolster its operational strength.

Financial Performance

In the fourth quarter, Center reported core funds from operations (FFO) of $1.25 per diluted share, reflecting a solid year of financial discipline. Key highlights from the quarter include:

• Same-store NOI growth: Increased by 4.8% year-over-year, indicating strong operational health.
• Revenue from same-store communities: Saw a 1% increase compared to Q4 2024, primarily driven by a 1.5% rise in average monthly revenue per occupied home.
• Occupancy rates: Occupancy experienced a slight decline of 40 basis points, yet the company maintained strong performance in other areas.
• Expense management: Same-store expenses decreased by 5.1% year-over-year, aided by reductions in both controllable expenses like repairs and maintenance, as well as favorable tax assessments.

These metrics demonstrate the company's ability to navigate the competitive multifamily landscape effectively, sustaining profitability while managing costs.

Strategic Initiatives

Center has taken significant steps to enhance its market presence and operational efficiency. Among the strategic initiatives discussed during the earnings call were:

• Transaction activity: The company executed $493 million in transactions throughout 2025, including entering the Salt Lake City market and expanding in Fort Collins. The strategic pruning of holdings in the St. Cloud, Minnesota market demonstrates a focus on optimizing its portfolio.
• Balance sheet management: Center expanded its unsecured credit facility by $150 million, showcasing a robust liquidity position while enhancing its debt profile through the assumption of $76 million in attractively priced long-term debt.
• Share repurchase program: In a clear show of confidence in its stock, Center repurchased $3.5 million worth of common shares, indicating a commitment to unlocking shareholder value during the ongoing strategic review process.

Focus on Resident Experience

The company emphasized its commitment to the resident experience, which has contributed to a 55.2% retention rate in Q4, slightly down from previous quarters but still indicative of a stable resident base. Management highlighted the importance of maintaining affordability, with retention for the full year reaching 58.2%. This focus on resident satisfaction is crucial in a competitive market environment.

Future Outlook

Looking ahead to 2026, Center's management provided a favorable outlook, anticipating continued momentum across several markets. Key points from the guidance include:

• Core FFO per diluted share: Expected to remain stable year-over-year at $4.93 at midpoint guidance.
• Same-store NOI growth: Projected to increase by 75 basis points, with revenues expected to rise by 88 basis points.
• Occupancy expectations: Anticipated to stabilize in the mid 95% range, indicating a positive outlook for demand.
• Blended leasing spreads: Expected to be approximately 2%, with the strongest performance anticipated in North Dakota communities.

“We expect this year to be a year of stability and growth,” noted management, reflecting confidence in the operational fundamentals and market dynamics.

Market Positioning Challenges

However, challenges remain, particularly in the Denver market, where new construction deliveries have put downward pressure on rents. Management acknowledged that while absorption rates remain strong, the volume of new deliveries may create short-term headwinds.

The company is proactively managing these dynamics, with expectations for improved conditions as 2026 progresses, particularly as new construction starts are projected to decline significantly in the following years.

Concluding Assessment

Overall, Center's Q4 2025 earnings call highlighted a year characterized by strong financial performance, strategic initiatives aimed at enhancing shareholder value, and a positive outlook for the future. The company’s commitment to operational excellence and financial discipline has positioned it well for 2026, despite the challenges presented by market dynamics. Investors can look forward to seeing how the ongoing strategic review unfolds and its potential impact on Center's long-term growth trajectory.

As the company continues to focus on optimizing its portfolio and enhancing resident experiences, it remains well-positioned to navigate the evolving multifamily landscape effectively.