Good day, and welcome to the Centerspace's First Quarter Earnings Conference Call. Today, all participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note that today's event is being recorded. I would now like to turn the conference over to Mr. Mark Decker, President and Chief Executive Officer. Please go ahead, sir.

Thank you, Chris, and good morning everyone. Centerspace's Form 10-Q for the quarter ended March 31, 2021 was filed with the SEC yesterday after the market closed, additionally, our earnings release and supplemental disclosure package have been posted on our Web site at centerspacehomes.com, and filed yesterday on Form 8-K. Before we begin our remarks this morning, I need to remind you that during the call, we will discuss our business outlook. And we'll be making certain forward-looking statements about future events based on current expectations and assumptions. These statements are subject to risks and uncertainties discussed in our release and Form 10-Q and in other recent filings with the SEC. With respect to non-GAAP measures we use on this call including pro forma measures, please refer to our earnings supplement for a reconciliation to GAAP, the reasons management uses these non-GAAP measures and the assumptions used with respect to any pro forma measures and their inherent limitations. Any forward-looking statements made on today's call represent management's current opinions. And the company assumes no obligation to update or supplement these statements that become untrue due to subsequent events. With me this morning is our Chief Operating Officer, Anne Olson; and our Chief Financial Officer, John Kirchmann who will each provide some commentary and then open the call for Q&A. I am excited to share our first quarter results for 2021, which reflect our business's strength and resilience enabled by outstanding teamwork and discipline on part of the Centerspace team. I continue to marvel at and appreciate my colleagues who are focused on taking care of our customers and each other. To all those from Centerspace who are listening many of whom are fellow owners of the business, thank you. It's also noteworthy to point out that on April 12th Centerspace paid its 200th consecutive quarter quarterly dividend; fifty years of focusing on distributable cash flow. Here's to our investors an other 50 years of dividend, may they be paid quarterly and grow. As we discussed in our last call, it's been humbling 18 months in the prediction and estimation business. And as most listeners here know, we raised our guidance significantly a few weeks ago by over 4% at the midpoint and notably taking the bottom end of our guidance above the previous midpoint. We did this to adjust for the recovery that's happening here sooner than we expected. We had based our guidance on two key assumptions. First, we wouldn't experience pricing power until the second-half of the year after most of our leases were signed. And second, caution around our ability to maintain efficiencies that we gained in 2020 through our proactive innovations during COVID. Our goal with guidance is to be pragmatic and thoughtful, to transparently articulate our best estimates of the range of outcomes. But this period has been one of extreme uncertainty. Now back to the business. Ass John and Anne will discuss further, we had an outstanding first quarter. And that strength is carrying into Q2 as we see high traffic in demand buttressed by our white-hot housing market moving rents upward. Our results are a testament to the capital allocation decisions we've made over the last few years and payoff on investments we've had and keep making in our people and technology. As we often say, it's about positioning the business with the best opportunity set and enchasing that opportunity with a great operating platform that sits atop of flexible balance sheet. In Q1, we demonstrated good progress. As disclosed in our press release, we are under contract and expect to close this month on the sale of six communities in Rochester for $60 million. Those proceeds which will be all cash will be applied to pay down our line of credit, closing up the funding of our January purchase of Union Pointe on a leverage neutral basis. This series of transactions exemplify what we love about our transformation. Sale of older lower margin, lower growth assets, purchase new higher margin, higher growth assets, financed with long term unsecured debt. We've been doing this for four years. What's different and exciting is to see it get to the bottom line on a per share basis. This is the best quarter per share result we've produced as a team. We will maintain a significant presence in Rochester. And this sale does not reflect a lack of confidence in the market. Like other asset management decisions that result in dispositions, these sales allow to optimize our portfolio in that market and overall. This has big positives for our team in terms of operating efficiently. And it helps us growth distributable cash flow. We look forward to reporting results in Rochester in the quarters to come. But we know the strategy has been affected in Bismarck, Grand Forks, and Minot, and you can see it in our same-store results today where we are growing NOI and operating margin well. Staying on the theme of transaction and the transaction market, we are reviewing opportunities primarily in the twin cities: Denver and Nashville. We announced last June that Nashville was a focused market and we don't own anything there yet. And now, that market has gotten a lot of positive attention. Cap rates are low and competition is high. Thematically, this is nothing new. The same comments could have been made about Denver before we got into that market. But of course, we didn't have the interruption of COVID in our early time there and that is a factor. The reality is that multi-family is a great product and a great business. It's easily financeable and well supported by the federal government through Fannie and Freddie. For a variety of reasons that have been accelerated by the pandemic, markets like ours have seen an uptick in demand from the consumer side and an [attended] [Ph] uptick in interest from investors as marginal dollars flow from costal markets. These are not secrets. But we know how to compete. We are focused, creative, and bring strong operating skills and an excellent cost of capital to any competitive situation. And we have been and will remain disciplined never forgetting who we work for, our mission, and how we measure success. With that, Anne, can you please take us through the first quarter and your outlook on operations?

Thank you, Mark, and good morning. When we last talked in February, the weather was harrowing around freezing across the Midwest and the United States had less than 15% of the population vaccinated against COVID-19. As Mark mentioned, there is much uncertainty. As we sit today, the snow has gone and sun is out, and we're approaching 50% vaccination range. The optimism for our economy and for the resolution of the pandemic is palpable. And our confidence in our business has also improved as we have more clarity around leasing rates and expense projection. Both of which were favorable for our first quarter of 2021. Occupancy across our portfolio is holding steady. And we realized 40 basis points of increased revenue compared to Q1 2020. Strong leasing trends coupled with a 90 basis points decrease in expenses resulted in a 1.4% increase in NOI for the first quarter compared to the same quarter 2020. Our average monthly revenue per occupied home increased 80 basis points in the first quarter over Q1 2020, and our overall revenue per unit increased from $1190 in Q1 2020 to $1133 for 2021. Our renewal retention remained strong. And our first quarter collections were 99.1% of expected residential revenue which compares to pre-pandemic Q1 2020 of 99.8%. We continue to see strong revenue performance in our secondary markets where there were less COVID impacts to the economy and there continues to be very little if any supply. Revenues in Billings, Rapid City, Omaha, and across our North Dakota market, all increased between 3% and 6.5% over Q1 2020. If we bifurcated our portfolio into secondary markets coupled with suburban assets in our core markets of Minneapolis and Denver and compared them to our five assets that we are harder hit by COVID impacts and where there continues to be supply pressures, we would see positive trends in both. Our five urban assets located in Minneapolis and Denver which contribute approximately 14% of overall NOI, showed improvement in lease over lease rates for the quarter; starting January, a negative 7.9% and improving to negative 3.6% in March. Those assets also experienced flat renewal rates. In comparison, our secondary market combined with suburban assets showed the potential of increased rates with an average lease over lease increase for Q1 of 2.6%. The March showed lease over lease rate increases of 5.9%. Our non-urban portfolio realized first quarter renewal increases of 4.6%. In the first quarter, we achieved renewal increases of over 5% on average in St. Cloud, Rochester, Grand Forks, Bismarck, and Billings. This demonstrates the strength of our suburban portfolio and the balance that our secondary markets have brought to our results. Our preliminary April results show a continuation of this trend with our same-store replacement rent changes continuing to increase over March and renewal rates remaining strong. This is great news as we are heading into our heavy leasing season with 32% of our portfolio leases expiring in the second quarter. Last quarter, we discussed our desire to leverage operating efficiencies and changes that were made during 2020 that helped us reduce cost. Our 2021 first quarter controllable expenses decreased 2% compared to first quarter 2020. We are capturing operating efficiencies from resident self-service and other measures put into place during 2020. Our [Rise by 5] [Ph] initiative for 2021 are well underway as we expect to see continued benefits from the changeover of our RUBs provider and as we gain momentum on our technology implementation. During the first quarter, we deployed new collaborative tools and enhancements to our service and knowledge centers. The cost associated with our technology implementation was $413,000 in the first quarter. And we expect to invest approximately $1.1 million in 2021 as we changed over our base property management software systems to enhance efficiencies and reporting. We are right on track with our value add renovation program through the first quarter and will see a significant uptick in the number of homes renovated during the second and third quarters. We completed 90 homes at an average premium of $187 per month. We anticipate we are renovating approximately 725 homes in 2021. And between unit renovations and common area enhancements anticipate our full-year investments to be $15 and $20 million. With warming weather and positive financial results across our portfolio, we are looking forward to leveraging our success into the summer and having a little more fun than this time last year. Our business is about people, our residents, our team, and our investors. And I know our teams are looking for opportunities to connect as our nation reopens. Now I will ask John to discuss our overall financial results.

Thank you, Anne. Last night, we reported core FFO for the quarter ending March 31st 2021, of $0.95 per share, an increase of $0.05 or 5.6% from the first quarter of 2020. The increase has attributed primarily to higher NOI offset by increased interest expense and a higher share count. Looking at our general and administrative expenses, total G&A was $3.9 million for the quarter. A $500,000 or 40% increase over the same quarter in 2020. The increase in G&A is due to nonrecurring technology implementation cost as well as higher long-term incentive compensation cost. Property management expense of $1.8 million increased 14% or $210,000 from the first quarter of 2020. The increase comes from nonrecurring tech implementation cost as well as an increase in compensation as a result of filling open positions. Interest expense of $7.2 million increased 4.6% or $320,000 from same period of the prior year. While our weighted average interest rates have declined over the year, the increase in expense is attributed to the expansion of our total capital base which includes higher levels of equity and debt. Moving to capital expenditures, as presented on page S13 of our supplemental, same-store CapEx was $1.5 million for the first quarter of 2021, which is in line with the first quarter of 2020. For the year, same-store CapEx spend is expected to be approximately $900 to $1000 per unit. Q1 value add spend of $2.6 million, increased $600,000 from the first quarter of 2020 as we continue to ramp up our value add activities. Turning to our balance sheet, as of March 31st, we had $79 million of total liquidity on our balance sheet consisting of $68 million available under our line of credit and $11 million in cash and cash equivalent. During the first quarter, we were able to expand our capital base by issuing 164,000 common shares under our ATM program for net proceeds of approximately $12 million. As mentioned earlier during the second quarter, we expect to close on the disposition of six assets in Rochester for proceeds of approximately $60 million. These proceeds when received will be used to reduce our outstanding line of credit balance and increase liquidity. In January, we amended and expanded our Shelf agreement with Prudential to increase the aggregate amount available from $150 million to $225 million, and issued $50 million in unsecured senior notes due June 6, 2030 at a rate of 2.7%. Under the agreement we have $50 million of remaining capacity. We believe that this financing demonstrates our ability to access all forms of capital and obtain investment grade pricing levels. In April, we issued a release announcing our revised financial outlook for 2021, which is presented in S-14 and S-15 of the supplemental, with strong first quarter results, acceleration of rent growth and lower than expected expense growth, we increased our full-year core FFO per share midpoint by 4.2% to $3.60. We have started the year with strong Q1 results, improving fundamentals, and an improved financial outlook for the rest of the year. It has been a strong start to the year and I'd like to thank our dedicated team for their work to make better every day. With that, I'll turn it back over to the Operator for your questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Gaurav Mehta with National Securities. Please go ahead.

Thanks, good morning.

Good morning, Gaurav.

First question on transactions, I was hoping that you would provide more color on why you decided to sell those six assets in Rochester. How was the buyer pool for those assets? And maybe some comments on pricing and cap rates?

Sure, thanks. We decided to sell them because we felt like we had opportunities to deploy the capital and better assets and better growth markets those, the Rochester portfolio is we have a great portfolio there, we have a large concentration in a very well located sub market that is on the Mayo Clinic's bus line, and has some pretty high rents, the assets we sold were either considerably older and had in our judgment, a lot of CapEx in front of them. And then we also sold some town home products, that was a little bit, it just was kind of off the beaten path and tougher our staff to really manage them efficiently. And the buyer pool was fantastic. We had several, I don't know how many CAs we signed, but we had three or four very strong competitors. And in the end, as we got to kind of best and final, the assets sold for a sub-five cap. So, we felt great about it. I think what we saw in terms of CapEx based on opportunity. I'm sure they'll be right. But we had, in our judgment better things to do with the capital.

Okay. Second question on your same-store revenue guidance for 2021, I was hoping if you could provide more color on which markets are you seeing largest improvements, I know you talked about suburban secondary markets outperforming urban. But I guess in terms of rate of change, are you still seeing more better improvement in suburbs or you seeing improvements in your urban portfolio as well?

Yes, I'll ask Anne. I made a comment on investor call a few weeks ago that Billings is the best department market in the world right now which was half kidding, but and maybe you could talk about that.

Yes, I think we're seeing improvement in both urban and suburban portfolio. We're seeing a lot of strength in our secondary market. So markets like Billing and Rapid City which in our supplemental are categorized as kind of other markets. Omaha, Nebraska has been particularly strong across North Dakota. The hallmark of those markets is really no supply, they have very little if any supply and that's been a pattern for a couple of years. They also had much less economic impacts from the COVID pandemic in those secondary markets. So we're seeing really strong results there. We are seeing really great improvement in our urban assets. So, Downtown Minneapolis, Downtown Denver. The lease rates are really improving and kind of rebounding, we feel like we're well past the bottom there. Concessions are starting to come in a little bit. So those were highly concession markets, and we're seeing that really taper off. So we have a lot of optimism across the entire portfolio.

Great. And maybe lastly, I think on the last call, you've talked about expectation of maybe 70 basis points declining occupancy in 2021. And you guys are looking to focus on rent growth, with the guidance, and are you still expecting to focus on rent in lieu of occupancy, including '21?

Yes, I think our job, our goal when we look at revenue management is really to optimize the revenue overall. So with a large lease expiration kind of hurdle in front of us in Q2, and Q3 and the lease rates, so lease or lease rates, improving the way they have been, we really will push those lease rates to get the highest lease rate and give up some occupancy to do that. So we think we'll see a little bit of a dip as we see the rising lease rates, and that's pretty natural in our portfolio, particularly given the expiration curve.

Okay, thank you.

The next question is from Rob Stevenson with Janney.

Thank you. Good morning. What does this leave you guys in Rochester in terms of number of assets and number of units going forward?

Great question. I'm going to go off the top of my head and tell you something like 1,100, 1,200 units and properties, it's 1,200, yes 1,200 units.

It's something like five or six properties?

Yes, that's right.

Okay. And I mean from your standpoint, is this a market that you'll continue to add to, is this basically, sort of, you're happy to maintain what you have going, what you'll wind up having going forward? And maybe look to trim some of that, at some point in the future? How do you think about Rochester to strategically longer-term?

I mean, we have a fantastic team down there, we've got a great regional, it is a market that is anchored by one of the most innovative healthcare providers in the world. And I mean, that's not an exaggeration, The Mayo Clinic. So we like the market, because it is a great market to rent, we have considerable value-add opportunities there in the portfolio that we have remaining, there have been some very strong A product addition. So the top of the world there in rents was just below $2, two or three years ago, today there's some very compelling new product that's very well located, Type 1 construction, concrete, high rise, where rents are into the mid-2s, there's even some studios that are in the $3 a foot range. So that's great news for us, because that that lifts the market up and we can draft behind that. So we like Rochester long-term. We'll always be I guess mercenary about our capital allocation, but we're committed to that market, we believe in it. And we're very happy to own the portfolio as we own it now. It's just much more efficient. I mean, what we've seen, Rob, just to expand what you didn't ask me to, but I'm going to anyway, because I have a bet on who can make the call the longest. What we've seen is when we do these selected dispositions, what our team tells us afterwards, when we tell them, we're doing it, they're not happy. And then we do it now I've gotten and that was great, because I was spending so much time on that older asset or whatever the case may be. And so it really helps us run things better.

Okay. And then I mean, from the standpoint of the trying to get into Nashville, I mean, how long do you guys sit here and look at acquisitions versus trying to find some partner and do a development that even if it's somewhere between a normal development return and an acquisition that at least starts getting you into that market, if you really want to be in that market longer-term? I mean, how creative do you guys get or is it just need to be for initial entry into Nashville just needs to be of a fully functioning asset at this point?

I'd say, we're willing to be creative there or anywhere else, but I mean, it's got to be a developer we have confidence in, it's got to be a location we really like. I mean, as we say to developers, we're alignment freaks not control freaks. So, if we can find a good site, and we can feel good about our Counterparty, we're absolutely open-minded to that. And listen, I think the other fact is with between COVID and some pretty significant tax changes, the market really there has been pretty low volume and we expect there to be more now there's a lot of dollars there. So, that may or may not help but we expect to see more volume there in the back-half of the year than we've seen for the last 12 months.

Okay. And so something along the lines of mess loan to own transaction wouldn't be off the table at this point?

No, if you got any ideas send on my way, Rob. We are happy to be that.

Okay. And then last one for me, John. When do you work on the 2022 debt explorations? And what are you thinking now? I mean, that's awfully low rate part of that, I guess, is the line, but I mean is that that's not exactly 5% or 6% yielding debt there. What are you thinking? The tradeoff winds are being when you do get that termed out and refinance? Does it basically sort of flattish rate wise? Are you actually looking at an increase rate wise?

Yes, so you are right, Rob on that. That's primarily the line that you're seeing. And we are in the market talking to banks. And really, what we're seeing now are spread on pricing that are pretty consistent with what we have now. So I would not expect that that facility to get refinanced at a significantly different rate than we have now.

And then what about the other sort of $80 some million, a lot of that, which is swapped from a rates standpoint?

Yes, so on those term loans, we have flexibility with those as far as the timing coming up, but we just price on the private placement market, which is a more attractive market than that bank find that bank debt, that the term loans are on. We despite some in January, and we feel pretty good about the pricing today of where 10-year money is in the private placement market, relative to that term debt. So we feel good about being able to get some upside and refinancing that. Now rates are can do a lot between now and when we refinance.

Okay. Thanks, guys. Appreciate it.

Thanks.

The next question comes from Daniel Santos with Piper Sandler.

Hey, good morning. Thanks for taking my question. So my first question is kind of going back to the staffing deficiencies and that you talked about earlier? Did you maybe walk us through some more specifics on what those moves to virtual services have been? And do you feel like you're sort of able to take advantage of these staffing efficiencies more than peers would? Because you're not necessarily an owner of a product and therefore don't have to offer such high touch service there. Maybe just offer some thoughts on that?

Yes, great question. So a few of the things that we implemented in 2020, which I think industry wide really were adapted -- were a lot of virtual leasing much more information on our Web site, fewer office hours, and therefore, more correspondence with residents via email, phone, or through self-service portals, more online payments. And those things really have evolved into 2021 in a way that that's been great for our staff. So while our offices are now open, there is kind of less traffic there. And our prospective residents are able to get much further along in the process than they had been previously with respect to leasing. So the time efficiency really comes from the people who come to tour in person, if they're interested in in-person tour, are very interested in the property. So we have some secondary markets, as across North Dakota, it might not have been uncommon in the past for someone to still look for an apartment by driving around and pulling up and asking to see apartments. We don't get as many of that as many of those people coming anymore. And people who are coming usually now have an appointment, have done a lot of work online, have probably -- have their application in. And we did a lot of 3D videos. In fact, well before 2020, we had started uploading virtual floor plans that you could move around. So, about halfway through last year, I think we were all the way done with what's called Matterport videos, which are where you can kind of manipulate the 3D version of floor plans online. So, we were a little bit ahead there. And really, I think the move towards self-service, one of the things that we think about with respect to our resident experiences, you can't just continue to do this everything the way you had done before. And 2021 or 2020 really pushed us to think differently and to meet the resident where they are. And our residents are a younger generation, and also have their own interruptions from the pandemic, and their own desires. And so, we're really trying to find that space where the resident where we can make it easy to sound the resident and communicate with them in the way that they want to. That's much more mobile, it's much more Internet-based. And they don't want to see people as much as they used to in the past. So I think as we move forward, we're going to try to leverage those capabilities and the efficiencies that we put in place there to the goal is to have overall, either reductions and staffing, but really what we're seeing right now is just more efficient time, so that we can spend more time on work orders, resident communication, enhancing the resident experience, and focus on renewals, which help us drive the rates.

Yes, I mean, Dan, I'll just to add to that, if you consider a market like Denver, where you have every large institutional owner, every merchant builder, lots of new A, it's very hard to differentiate yourself on a technology package. If you get to some of our smaller markets, we really are frequently the tip of the spear there, because we're bringing in those practices. And that's been the case with revenue management, with rubs with a bunch of these virtual leasing and things like that. And it's not that the people in those markets aren't smart, or hardworking, or talented or thoughtful. But they may not have needed to do it, and they may not have decided to make those investments in technology. So I mean, it's really on the margin. But I mean, this is a game that gets played on the margin. So we think that does help us a little bit, be a little bit more tech friendly to those customers. And that's a benefit.

Got it. That is very helpful. My next question is on inflation, which seems to be on everyone's mind both in terms of materials and labor. I mean, as a team, you don't do a ton of ground up development. Though it sounds like you might be more open to it in Nashville, but maybe talk a bit about, how you see inflation playing out in your markets, and how that might impact your strategy?

Yes, I mean, we're definitely listen -- we aren't developers, but we talk to them a lot, because we endeavor to potentially finance them. And we are absolutely hearing what I think you heard dramatically on that. I listen to the same calls I suspect you did. I mean, for sure there are some real supply chain pressures, there's some real materials cost pressures that are affecting development. So, we got a watchful eye on that. I mean, that's one of the reasons we love the apartment business is. We get a chance to reset our rents every year that that hasn't been fun for the last 12 months it might become more fun over the next 24 to 48 months. And for sure what we're seeing I mean, I think one of the comments that we've heard a lot is that we have people who are moving out to buy homes. Well, if anyone knows anyone who's trying to buy a home recently, you better have your cash in a pretty written escalation clause, because it's really vibe around there. And so that's probably keeping people with us a little bit longer.

Perfect, thank you, and congrats on a great quarter.

Thanks, Daniel.

The next question is from Amanda Sweitzer with Baird.

Thanks. Good morning, guys. Going back to capital allocation, your guidance now assumes lower expected accretion from investments and capital markets activity. Is that a comment or reduction on changing cap rate assumptions for your potential buys and sells or is there another variable in there?

Yes, good morning, Amanda. Let's John have that.

Sure. Good morning, Amanda. That's a reflection of the Union Pointe acquisition sliding into the different side of the ledger where we've actually executed on it. So that NOI from Union Pointe which would have been in that net accretion line is now in our NOI forecast number. So what you're seeing on the net accretion being negative it's really the dilution from the Rochester disposition, netting against the other activities we're guiding on. But that's really the driver as far as flipping that to a negative from a positive as Union Pointe coming out and Rochester being left there alone.

That's helpful. And then higher level on top allocation, can you talk more about how you're thinking about your cost of equity today just relative to declining cap rates in the market? Have you changed your hurdle price for equity issuances at all?

Yes. Well, we appreciate that teaser in your note, Amanda. I mean, we think about it every day, and we think about it on a long-term and a short-term and a spot basis than a relative basis. And I guess, listen, we feel like we've done a lot of things to help engineer a favorable cost of capital. When we think about this and consider it kind of over the last couple of years, our early years of this transformation were really defined by the need to fund things with our own assets. So funding purchases with asset sales, and I would say that episodically, we have had access to equity capital that we like. And very occasionally we've had access to equity that we love. So I guess I'll say my perspective is which I think the team shares is that the investment community is very focused on FFO and AFFO per share. And then there is a subject sub group there that's very focused on NAV. And that group frankly is shrinking to some extent. I mean, that was one in, it was 45% of the world 15 years ago. And I think it's 15% of the world today, but we got to be mindful of both. So when we sell equity as we did last quarter, what was it, 72, 50 a year -- in the low 70s. We do that because we think we can take a little bit of NAV dilution and grow our cash flow for sharing and eventually and long-term grow that business in a manner that meets both needs. So that's a long-winded answer probably more detailed than you wanted, but we're constantly walking the line between what is a great NAV play and what is a good earnings play? The two obviously live together over time, but if you want to buy something in Nashville at a three and three quarter cap rate, that could be a great real estate decision, that looks terrible in your FFO for the next three to six quarters. And those are the trade-offs we have to make. So, we're just trying to stay very disciplined there. We have a lot of discipline I think at our own table. And I can tell you without any equivocation that we have that discipline at the board level. So it's a constant back and forth on what's the best thing. And over time we've talked about sort of the three things we focus on markets, metrics, leverage, and what are the priorities, I mean today, as has been the case for I would say the last 12 to 18 months, it's really markets, metrics, and leverage. So people say, well, how do you feel about your leverage? We feel fine about it. I mean, we're really focused on trying to expand that market presence and do it in a way that help, where we can continue to grow our first year metrics, which is one of the reasons I'm so happy about this quarter, because this is our best per share first quarter as a team.

Yes. I'll just add there that. The ATM is -- we view that as a very efficient way to get all small capital. The cost is very low on there. So if we're selling on the ATM a little below NAV, we're doing it very efficiently for a great cost as opposed to relative to an overnight going off at our NAV, but then having to take a much larger commission as well as a discount to move it.

Yes, that's an excellent thought. And that's right on. So the way we think about it is, if the ATM is a point and a half of friction and no discount, a fully marketed equity deal or forward with options and all that sort of stuff is going to be kind of somewhere in the 6% to 8% all in cost range. So that's how we get our mind around it. Amanda, is that -- are we on the direction that you're asking about or -

Yes, that makes perfect sense. And I appreciate all your thoughts and you clearly have a lot that goes into it. The last one is for me, just to have you seen an increase in permits and some of those stronger secondary markets following that strength, are there any regulatory constraints either from a local municipality perspective that's driving some of that lower supply?

Yes, I think we haven't seen anything that's particularly notable Amanda. I mean, I think the, what is true nationally is true in these sub markets, which is permits, haven't dropped a ton. We'll see what happens with materials costs and rents, but markets like Nashville have a lot of supply. Denver has a lot of supply. Many is coming off of a couple of years of reasonably record supply. I mean, it's been the most since I think 1986, but there's nothing dramatic in any of those markets that is new or different or not well understood.

And with respect to the secondary markets, we haven't seen any increase in permitting there and there isn't any - there are no kind of physical barriers to entry where maybe billings, which is bordered by a large river and some mountains has had some physical barriers there, but we have seen a really big increase of kind of across the country, which won't surprise anybody of interested buyers. So we do get calls on those secondary market portfolios. And as Mark indicated, our Rochester portfolio had a very deep and strong bidding pool. So we haven't seen any increase in permits in those secondary markets as of yet, but with more people looking to buy there, it may lead to that.

Got it. Thanks. I appreciate all the time again.

[Operator Instructions] The next question comes from Buck Horne with Raymond James & Associates.

Hi, good morning guys. Quick one, in terms of technology costs just looking at the guidance here, it looks like you're expecting another 6 or $700,000 to be spent in terms of just kind of I guess one time technology. How should we think about the quarterly distribution of those costs? Will it still be more front-end loaded or how does that go forward the rest of the quarters of the year?

Yes, I do think it's more front end loaded. So we are really in the implementation right now. And I would say by the third quarter -- or by the fourth quarter will really be tapering off. So my estimate is that we will have spent most of that money in the next couple quarters with very little left in the fourth.

Got it. That's helpful. Thank you. And second question, just given how competitive the market is in Nashville and in some other places. I'm just wondering if you thought about some other potential growth markets just the emergence of new kind of new technology hubs and Mountain West areas like Boise or Salt Lake. Do those types of markets become more appealing or on your radar screen at this point?

Yes, I mean we like those markets in Salt Lake in particular, I saw -- I mean I went there in their earnings call, which I think is really smart. For us to get critical mass there it's four to six assets in our judgment. And you have to capture a lot of what comes for sale. So development would be ideal, but the answer to your bigger question, do we look at other markets? Yes, we consider other markets. I would say we're opportunistically interested in other markets. There is a list of 10 markets that go that start with Nashville and then have nine other names on them. And we were opportunistic with respect to those markets, but for now we're going to stay focused in Nashville for all the reasons that led us there in the first place. And if something changes, you'll be one of the personnel.

Great, thank you.

Thanks, Buck.

At this time, we are showing no further questionnaires in the queue, and this concludes the question-and-answer session. I would now like to turn the conference back over to Mark Decker for any closing remarks.

Thanks, Chris. I think from our perspective, we're happy for everyone's interest in, we look forward to talking to you next quarter, and we'll be at NAREIT taking meetings if anyone wants to talk to us there. Thanks very much everybody.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.