Centerspace : CSR 3Q24 Supplemental

CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 2024

CENTERSPACE

(Exact name of Registrant as specified in its charter)

North Dakota

001-35624

45-0311232

(State or Other Jurisdiction

(Commission File Number)

(I.R.S. Employer Identification No.)

of Incorporation or Organization)

3100 10th Street SW, Post Office Box 1988, Minot, ND 58702-1988

(Address of principal executive offices) (Zip code)

(701) 837-4738

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares of Beneficial Interest, no par value

CSR

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

Centerspace (the "Company") issued an earnings release on October 28, 2024, announcing certain financial and operational results for the three and nine months ended September 30, 2024. A copy of the press release is furnished as Exhibit 99.1 and incorporated herein by reference.

The information in this Item 2.02 and the earnings release furnished as Exhibit 99.1 under Item 9.01, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01 Financial Statements and Exhibits

Exhibit

Number Description

99.1 Earnings Release and Supplemental Operating and Financial Data, dated October 28, 2024.

104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL Document.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Centerspace

By

/s/ Anne Olson

Anne Olson

Date: October 28, 2024

President and Chief Executive Officer

Exhibit 99.1

Earnings Release

Centerspace Reports Third Quarter 2024 Financial Results and Raises Mid-Point for 2024 Core

FFO per Share Guidance

MINNEAPOLIS, MN, October 28, 2024 - Centerspace (NYSE: CSR) announced today its financial and operating results for the three and nine months ended September 30, 2024. The tables below show Net Income (Loss), Funds from Operations ("FFO")1, and Core FFO1, all on a per diluted share basis, for the three and nine months ended September 30, 2024; Same-Store Revenues, Expenses, and Net Operating Income ("NOI")1 over comparable periods; along with Same-StoreWeighted-Average Occupancy and leasing rates for each of the three and applicable nine months ended September 30, 2024, June 30, 2024, and September 30, 2023.

Three Months Ended September 30,

Nine Months Ended September 30,

Per Common Share

2024

2023

2024

2023

Net income (loss) - diluted

$

(0.40)

$

0.41

$

(0.96)

$

2.96

FFO - diluted(1)

$

1.01

$

1.15

$

3.40

$

3.15

Core FFO - diluted(1)

$

1.18

$

1.20

$

3.68

$

3.56

Year-Over-Year

Sequential

YTD Comparison

Same-Store Results(2)

Comparison

Comparison

Q3 2024 vs. Q3 2023

Q3 2024 vs. Q2 2024

2024 vs. 2023

Revenues

3.0%

-%

3.3%

Expenses

3.2%

5.8%

2.0%

NOI(1)

2.8%

(3.7)%

4.2%

Three months ended

Nine months ended

Same-Store Results(2)

September 30,

June 30, 2024

September 30,

September 30,

September 30,

2024

2023

2024

2023

Weighted Average Occupancy

95.3%

95.3%

94.6%

95.1%

94.9%

New Lease Rate Growth

(1.2)%

3.6%

2.0%

0.8%

3.1%

Renewal Lease Rate Growth

3.2%

3.6%

4.7%

3.3%

4.9%

Blended Lease Rate Growth (3)

1.5%

3.6%

3.6%

2.2%

4.0%

Highlights for the Third Quarter and Year-to-Date

1

Balance Sheet

At the end of the third quarter, Centerspace had $235.5 million of total liquidity on its balance sheet, consisting of $221.0 million available under the lines of credit and cash and cash equivalents of $14.5 million.

Updated 2024 Financial Outlook

Centerspace updated its 2024 financial outlook. For additional information, see S-17 of the Supplemental Financial and Operating Data for the quarter ended September 30, 2024 included at the end of this release. These ranges should be considered in their entirety. The table below reflects the updated outlook.

Previous Outlook for 2024

Updated Outlook for 2024

Low

High

Low

High

Net income per Share - diluted

$(1.21)

$(1.01)

$(1.21)

$(1.06)

Same-Store Revenue

3.25%

4.25%

3.00%

3.50%

Same-Store Expenses

3.50%

4.75%

2.50%

3.25%

Same-Store NOI

3.00%

4.00%

3.25%

3.75%

FFO per Share - diluted

$4.61

$4.76

$4.50

$4.59

Core FFO per Share - diluted

$4.78

$4.92

$4.82

$4.90

Additional assumptions:

Note: FFO and Core FFO are non-GAAP financial measures. For more information on their usage and presentation and a reconciliation to the most comparable GAAP measure, please refer to "2024 Financial Outlook" in the Supplemental Financial and Operating Data within.

Subsequent Events

On October 1, 2024, Centerspace closed on the acquisition of The Lydian in Denver, CO, for total consideration of $54.0 million. The acquisition was financed through the assumption of mortgage debt, issuance of common operating partnership units, and cash.

Upcoming Events

Centerspace is scheduled to participate in Nareit's REITworld conference in Las Vegas, NV, November 18-21.

Earnings Call

Live webcast and replay: https://ir.centerspacehomes.com

Live Conference Call

Conference Call Replay

Tuesday, October 29, 2024, at 10:00 AM ET

Replay available until November 12, 2024

USA Toll Free

1-833-470-1428

USA Toll Free

1-866-813-9403

International

1-404-975-4839

International

1-929-458-6194

Canada Toll Free

1-833-950-0062

Access Code

050510

Access Code

581939

Supplemental Information

Supplemental Operating and Financial Data for the quarter ended September 30, 2024 included herein ("Supplemental Information"), is available in the Investors section on Centerspace's website at www.centerspacehomes.com or by calling Investor Relations at 952-401-6600.Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Financial and Operating Data, which accompanies this earnings release.

2

About Centerspace

Centerspace is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of September 30, 2024, Centerspace owned interests in 70 apartment communities consisting of 12,883 apartment homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Centerspace was named a top workplace for the fifth consecutive year in 2024 by the Minneapolis Star Tribune. For more information, please visit www.centerspacehomes.com.

Forward-Looking Statements

Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on the company's current expectations and assumptions, and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Forward-looking statements are typically identified by the use of terms such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "assumes," "may," "projects," "outlook," "future," and variations of such words and similar expressions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although the company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond the company's control and could differ materially from actual results and performance. Such risks, uncertainties, and other factors that might cause such differences include, but are not limited to those risks and uncertainties detailed from time to time in Centerspace's filings with the Securities and Exchange Commission, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" contained in its Annual Report on Form 10-K for the year ended December 31, 2023, in its subsequent quarterly reports on Form 10-Q, and in other public reports. The company assumes no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

Contact Information

Investor Relations

Josh Klaetsch

Phone: 952-401-6600

Email: IR@centerspacehomes.com

Marketing & Media

Kelly Weber

Phone: 952-401-6600

Email: kweber@centerspacehomes.com

3

Supplemental Financial and Operating Data

Table of Contents

September 30, 2024

Page

Common Share Data

S-1

Key Financial Data

Condensed Consolidated Statements of Operations

S-2

Condensed Consolidated Balance Sheets

S-3

Non-GAAP Financial Measures and Reconciliations

Net Operating Income

S-5

Same-Store Controllable Expenses

S-7

Funds From Operations and Core Funds From Operations

S-8

Adjusted EBITDA

S-9

Debt and Capital Analysis

Debt Analysis

S-10

Capital Analysis

S-11

Portfolio Analysis

Same-Store Comparisons

S-12

Portfolio Summary

S-15

Capital Expenditures

S-16

2024 Financial Outlook

S-17

Non-GAAP Financial Measures and Other Terms

S-19

Common Share Data (NYSE: CSR)

Three Months Ended

September 30,

June 30, 2024

March 31, 2024

December 31,

September 30,

2024

2023

2023

High closing price

$

75.50

$

70.93

$

58.00

$

59.33

$

66.57

Low closing price

$

67.04

$

55.48

$

52.65

$

47.82

$

59.39

Average closing price

$

71.91

$

65.88

$

55.68

$

54.61

$

62.52

Closing price at end of quarter

$

70.47

$

67.63

$

57.14

$

58.20

$

60.26

Common share distributions - annualized

$

3.00

$

3.00

$

3.00

$

2.92

$

2.92

Closing dividend yield - annualized

4.3 %

4.4 %

5.3 %

5.0 %

4.8 %

Closing common shares outstanding (thousands)

16,568

15,057

14,912

14,963

15,052

Closing limited partnership units outstanding (thousands)

809

828

844

861

864

Closing Series E preferred units outstanding, as converted

2,038

2,053

2,062

2,078

2,087

(thousands)

Total closing common shares, limited partnership units,

and Series E preferred units, as converted, outstanding

19,415

17,938

17,818

17,902

18,003

(thousands)

Closing market value of outstanding common shares, plus

imputed closing market value of outstanding limited

partnership units and Series E preferred units, as

$

1,368,175

$

1,213,147

$

1,018,121

$

1,041,896

$

1,084,861

converted (thousands)

S-1

CENTERSPACE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands)

Three Months Ended

Nine Months Ended

9/30/2024

6/30/2024

3/31/2024

12/31/2023

9/30/2023

9/30/2024

9/30/2023

REVENUE

$

65,025

$

65,043

$

64,506

$

64,068

$

64,568

$

194,574

$

197,241

EXPENSES

Property operating expenses, excluding

19,628

18,108

18,764

18,237

19,602

56,500

58,816

real estate taxes

Real estate taxes

7,031

7,081

6,305

6,861

7,143

20,417

21,898

Property management expense

2,242

2,222

2,330

2,341

2,197

6,794

7,012

Casualty (gain) loss

(412)

510

820

853

937

918

1,242

Depreciation and amortization

26,084

25,714

27,012

26,617

24,697

78,810

75,061

Impairment of real estate investments

-

-

-

5,218

-

-

-

General and administrative expenses

4,102

4,216

4,623

4,363

3,832

12,941

15,717

TOTAL EXPENSES

$

58,675

$

57,851

$

59,854

$

64,490

$

58,408

$

176,380

$

179,746

Gain (loss) on sale of real estate and

-

-

(577)

(83)

11,235

(577)

71,327

other investments

Loss on litigation settlement

-

-

-

(1,000)

-

-

(2,864)

Operating income (loss)

6,350

7,192

4,075

(1,505)

17,395

17,617

85,958

Interest expense

(8,946)

(9,332)

(9,207)

(8,913)

(8,556)

(27,485)

(27,516)

Interest and other income

645

477

340

533

330

1,462

674

Net income (loss)

$

(1,951)

$

(1,663)

$

(4,792)

$

(9,885)

$

9,169

$

(8,406)

$

59,116

Dividends to Series D preferred unitholders

(160)

(160)

(160)

(160)

(160)

(480)

(480)

Net (income) loss attributable to

noncontrolling interest - Operating

1,095

561

1,079

1,917

(1,204)

2,735

(9,058)

Partnership and Series E preferred units

Net income attributable to noncontrolling

(32)

(34)

(32)

(29)

(31)

(98)

(96)

interests - consolidated real estate entities

Net income (loss) attributable to controlling

(1,048)

(1,296)

(3,905)

(8,157)

7,774

(6,249)

49,482

interests

Dividends to preferred shareholders

(1,607)

(1,607)

(1,607)

(1,607)

(1,607)

(4,821)

(4,821)

Redemption of preferred shares

(3,511)

-

-

-

-

(3,511)

-

NET INCOME (LOSS) AVAILABLE

$

(6,166)

$

(2,903)

$

(5,512)

$

(9,764)

$

6,167

$

(14,581)

$

44,661

TO COMMON SHAREHOLDERS

Per Share Data - Basic

Net income (loss) per common share -

$

(0.40)

$

(0.19)

$

(0.37)

$

(0.65)

$

0.41

$

(0.96)

$

2.98

basic

Per Share Data - Diluted

Net income (loss) per common share -

$

(0.40)

$

(0.19)

$

(0.37)

$

(0.65)

$

0.41

$

(0.96)

$

2.96

diluted

S-2

Disclaimer

Centerspace published this content on October 28, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on October 28, 2024 at 20:52:36.233.