10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the quarterly period ended March 31, 2022

or 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-35624

CENTERSPACE

(Exact name of registrant as specified in its charter)

North Dakota				45-0311232
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)
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)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.

Yes ☑ No ☐

    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☑ No ☐

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large Accelerated Filer	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller Reporting Company	☐	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. ☐

    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Securities registered pursuant to Section 12(b) of the Exchange Act:

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
Series C Cumulative Redeemable Preferred Shares	CSR-PRC	New York Stock Exchange

    The number of common shares of beneficial interest outstanding as of April 25, 2022, was 15,365,272.

TABLE OF CONTENTS

	Page
Part I. Financial Information
Item 1. Financial Statements - First Quarter - 2022:	3
Condensed Consolidated Balance Sheets March 31, 2022 (unaudited) and December 31, 2021	3
Condensed Consolidated Statements of Operations (unaudited) For the Three Months ended March 31, 2022 and 2021	4
Condensed Consolidated Statements of Comprehensive Income (unaudited) For the Three Months ended March 31, 2022 and 2021	5
Condensed Consolidated Statements of Equity (unaudited) For the Three Months ended March 31, 2022 and 2021	6
Condensed Consolidated Statements of Cash Flows (unaudited) For the Three Months ended March 31, 2022 and 2021	7
Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	30
Part II. Other Information
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3. Defaults Upon Senior Securities	31
Item 4. Mine Safety Disclosures	31
Item 5. Other Information	31
Item 6. Exhibits	32
Signatures	33

2

PART I

Item 1. Financial Statements.

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	(in thousands, except per share data)
	March 31, 2022		December 31, 2021
ASSETS
Real estate investments
Property owned	$	2,390,952	$	2,271,170
Less accumulated depreciation	(465,752)		(443,592)
	1,925,200		1,827,578
Mortgage loans receivable at fair value	—		43,276
Total real estate investments	1,925,200		1,870,854
Cash and cash equivalents	13,313		31,267
Restricted cash	2,409		7,358
Other assets	24,651		30,582
TOTAL ASSETS	$	1,965,573	$	1,940,061
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses	$	50,360	$	62,403
Revolving lines of credit	46,000		76,000
Notes payable, net of unamortized loan costs of $641 and $656, respectively	299,359		299,344
Mortgages payable, net of unamortized loan costs of $3,648 and $3,187, respectively	521,536		480,703
TOTAL LIABILITIES	$	917,255	$	918,450
COMMITMENTS AND CONTINGENCIES (NOTE 10)
SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $100 par value, 166 units issued and outstanding at March 31, 2022 and December 31, 2021, aggregate liquidation preference of $16,560)	$	22,412	$	25,331
EQUITY
Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $25 per share liquidation preference, 3,881 shares issued and outstanding at March 31, 2022 and December 31, 2021, aggregate liquidation preference of $97,036)	93,530		93,530
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 15,366 shares issued and outstanding at March 31, 2022 and 15,016 shares issued and outstanding at December 31, 2021)	1,203,685		1,157,255
Accumulated distributions in excess of net income	(495,732)		(474,318)
Accumulated other comprehensive income (loss)	(2,550)		(4,435)
Total shareholders’ equity	$	798,933	$	772,032
Noncontrolling interests – Operating Partnership and Series E preferred units	226,302		223,600
Noncontrolling interests – consolidated real estate entities	671		648
Total equity	$	1,025,906	$	996,280
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY	$	1,965,573	$	1,940,061

See accompanying Notes to Condensed Consolidated Financial Statements.

3

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	(in thousands, except per share data)
	Three Months Ended March 31,
	2022		2021
REVENUE	$	60,314	$	46,648
EXPENSES
Property operating expenses, excluding real estate taxes	19,014		13,449
Real estate taxes	6,859		5,792
Property management expense	2,253		1,767
Casualty (gain) loss	598		101
Depreciation and amortization	31,001		19,992
General and administrative expenses	4,500		3,906
TOTAL EXPENSES	$	64,225	$	45,007
Operating income (loss)	(3,911)		1,641
Interest expense	(7,715)		(7,231)
Interest and other income (loss)	1,063		431
NET INCOME (LOSS)	$	(10,563)	$	(5,159)
Dividends to Series D preferred unitholders	(160)		(160)
Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units	2,157		469
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	(23)		(17)
Net income (loss) attributable to controlling interests	(8,589)		(4,867)
Dividends to preferred shareholders	(1,607)		(1,607)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	(10,196)	$	(6,474)
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC	$	(0.68)	$	(0.49)
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED	$	(0.68)	$	(0.49)

See accompanying Notes to Condensed Consolidated Financial Statements.

4

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

	(in thousands)
	Three Months Ended March 31,
	2022		2021
Net income (loss)	$	(10,563)	$	(5,159)
Other comprehensive income:
Unrealized gain (loss) from derivative instrument	1,581		2,011
(Gain) loss on derivative instrument reclassified into earnings	304		1,095
Total comprehensive income (loss)	$	(8,678)	$	(2,053)
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units	2,480		261
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	(23)		(17)
Comprehensive income (loss) attributable to controlling interests	$	(6,221)	$	(1,809)

See accompanying Notes to Condensed Consolidated Financial Statements.

5

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited)

	(in thousands, except per share data)
Three Months Ended March 31, 2021	PREFERRED SHARES		NUMBER OF COMMON SHARES	COMMON SHARES		ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME		ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		NONCONTROLLING INTERESTS		TOTAL EQUITY
Balance December 31, 2020	$	93,530	13,027	$	968,263	$	(427,681)	$	(15,905)	$	54,616	$	672,823
Net income (loss) attributable to controlling interests and noncontrolling interests						(4,867)				(452)		(5,319)
Change in fair value of derivatives								3,107				3,107
Distributions - common shares and units ($0.70 per share and unit)						(9,254)				(665)		(9,919)
Distributions – Series C preferred shares ($0.414063 per Series C share)						(1,607)						(1,607)
Share-based compensation, net of forfeitures			3	810								810
Sale of common shares, net			164	11,782								11,782
Redemption of units for common shares			26	(220)						220		—
Other			—	(182)						(43)		(225)
Balance March 31, 2021	$	93,530	13,220	$	980,453	$	(443,409)	$	(12,798)	$	53,676	$	671,452
Three Months Ended March 31, 2022
Balance December 31, 2021	$	93,530	15,016	$	1,157,255	$	(474,318)	$	(4,435)	$	224,248	$	996,280
Net income (loss) attributable to controlling interests and noncontrolling interests						(8,589)				(2,134)		(10,723)
Change in fair value of derivatives								1,885				1,885
Distributions - common shares and units ($0.73 per share and unit)						(11,218)				(728)		(11,946)
Distributions – Series C preferred shares ($0.414063 per Series C share)						(1,607)						(1,607)
Distributions - Series E preferred units ($0.968750 per unit)										(1,757)		(1,757)
Share-based compensation, net of forfeitures			19	719								719
Sale of common shares, net			321	31,684								31,684
Issuance of Units				13,023						9,859		22,882
Redemption of units for common shares			10	(388)						388		—
Redemption of units for cash										(2,903)		(2,903)
Change in value of Series D preferred units				2,919								2,919
Shares withheld for taxes				(1,274)								(1,274)
Other			—	(253)						—		(253)
Balance March 31, 2022	$	93,530	15,366	$	1,203,685	$	(495,732)	$	(2,550)	$	226,973	$	1,025,906

See accompanying Notes to Condensed Consolidated Financial Statements.

6

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	(in thousands)
	Three Months Ended March 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(10,563)	$	(5,159)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization, including amortization of capitalized loan costs	31,096		20,245
Share-based compensation expense	719		810
(Gain) loss on interest rate swap termination, amortization, and mark-to-market	(613)		—
Other, net	416		836
Changes in other assets and liabilities:
Other assets	1,316		(533)
Accounts payable and accrued expenses	(10,773)		(1,244)
Net cash provided by (used by) operating activities	$	11,598	$	14,955
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in mortgages and notes receivable	—		(5,445)
Payments for acquisitions of real estate investments	(9,545)		(77,585)
Payments for improvements of real estate investments	(3,474)		(2,165)
Other investing activities	288		160
Net cash provided by (used by) investing activities	$	(12,731)	$	(85,035)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages payable	(2,154)		(3,566)
Proceeds from revolving lines of credit	13,000		105,716
Principal payments on revolving lines of credit	(43,000)		(77,044)
Net proceeds from notes payable	—		49,940
Payment for termination of interest rate swap	(3,209)		—
Net proceeds from issuance of common shares	31,684		11,782
Redemption of partnership units	(2,903)
Distributions paid to common shareholders	(10,812)		(9,119)
Distributions paid to preferred shareholders	(1,607)		(1,607)
Distributions paid to preferred unitholders	(160)		(160)
Distributions paid to noncontrolling interests – Operating Partnership and Series E preferred units	(2,356)		(683)
Other financing activities	(253)		(63)
Net cash provided by (used by) financing activities	$	(21,770)	$	75,196
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(22,903)		5,116
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	38,625		7,310
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	15,722	$	12,426

SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures	$	2,656	$	2,418
Operating partnership units converted to shares	(388)		(220)
Distributions declared but not paid to common shareholders	11,944		9,919
Retirement of shares withheld for taxes	1,273		—
Real estate assets acquired through assumption of debt	41,623		—
Fair value adjustment to debt	1,224		—
Note receivable exchanged through real estate acquisition	43,276		—
Real estate assets acquired through issuance of operating partnership units	22,882		—
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	7,182	$	6,787

	(in thousands)
Balance sheet description	March 31, 2022		December 31, 2021		March 31, 2021
Cash and cash equivalents	$	13,313	$	31,267	$	10,816
Restricted cash	2,409		7,358		1,610
Total cash, cash equivalents and restricted cash	$	15,722	$	38,625	$	12,426

See accompanying Notes to Condensed Consolidated Financial Statements.

7

CENTERSPACE AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

for the three months ended March 31, 2022 and 2021

NOTE 1 • ORGANIZATION 

Centerspace, collectively with its consolidated subsidiaries (“Centerspace,” “the Company,” “we,” “us,” or “our”), is a North Dakota real estate investment trust (“REIT”) focused on the ownership, management, acquisition, redevelopment, and development of apartment communities. As of March 31, 2022, Centerspace owned interests in 83 apartment communities consisting of 14,838 apartment homes.

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES 

BASIS OF PRESENTATION

Centerspace conducts a majority of its business activities through a consolidated operating partnership, Centerspace, LP (f/k/a IRET Properties), a North Dakota limited partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities. The accompanying Condensed Consolidated Financial Statements include the Company’s accounts and the accounts of all its subsidiaries in which it maintains a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation.

The Condensed Consolidated Financial Statements also reflect the Operating Partnership’s ownership of a joint venture entity in which the Operating Partnership has a general partner or controlling interest. This entity is consolidated into the Company’s operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses.

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Centerspace’s interim Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of financial position, results of operations, and cash flows for the interim periods, have been included.

The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim Condensed Consolidated Financial Statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022.

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

As of March 31, 2022 and December 31, 2021, restricted cash consisted primarily of real estate deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

LEASES

As a lessor, Centerspace primarily leases multifamily apartment homes which qualify as operating leases with terms that are generally one year or less. Rental revenues are recognized in accordance with ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 98.1% of total revenues and includes gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 1.9% of total revenues and are primarily driven by other fee income, which is typically recognized when earned, at a point in time.

8

Some of the Company’s apartment communities have commercial spaces available for lease. Lease terms for these spaces typically range from three to fifteen years. The leases for commercial spaces generally include options to extend the lease for additional terms.

Many of the leases contain non-lease components for utility reimbursement from residents and common area maintenance from commercial tenants. Centerspace has elected the practical expedient to combine lease and non-lease components for all asset classes. The combined components are included in lease income and are accounted for under ASC 842.

The aggregate amount of future scheduled lease income on commercial operating leases, excluding any variable lease income and non-lease components, as of March 31, 2022, was as follows:

	(in thousands)
2022 (remainder)	$	1,958
2023	2,627
2024	2,577
2025	2,528
2026	1,935
Thereafter	1,548
Total scheduled lease income - commercial operating leases	$	13,173

REVENUES

Revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration to which the Company expects to be entitled for those goods and services.

Revenue streams that are included in revenues from contracts with customers include:

•Other property revenue: Centerspace recognizes revenue for rental related income not included as a component of a lease, such as application fees, as earned.

•Gains or losses on sales of real estate: A gain or loss is recognized when the criteria for derecognition of an asset are met, including when (1) a contract exists and (2) the buyer obtained control of the nonfinancial asset that was sold.

The following table presents the disaggregation of revenue streams for the three months ended March 31, 2022 and 2021:

		(in thousands)
		Three Months Ended March 31,
Revenue Stream	Applicable Standard	2022		2021
Fixed lease income - operating leases	Leases	$	56,673	$	43,840
Variable lease income - operating leases	Leases	2,523		1,969
Other property revenue	Revenue from contracts with customers	1,118		839
Total revenue		$	60,314	$	46,648

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates long-lived assets, including investments in real estate, for impairment indicators at least quarterly. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each property, and legal and environmental concerns. If indicators exist, the Company compares the expected future undiscounted cash flows for the property against the carrying amount of that property. If the sum of the estimated undiscounted cash flows is less than the carrying amount, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount. If the anticipated holding period for properties, the estimated fair value of properties, or other factors change based on market conditions or otherwise, the evaluation of impairment charges may be different and such differences could be material to the consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates, and capital requirements that could differ materially from actual results. Reducing planned property holding periods may increase the likelihood of recording impairment losses.

During the three months ended March 31, 2022 and 2021, the Company recorded no impairment charges.

9

MORTGAGE LOANS RECEIVABLE AND NOTES RECEIVABLE

In March 2020, in connection with the acquisition of Ironwood, an apartment community in New Hope, Minnesota, the Company acquired a tax increment financing note receivable (“TIF”) with a principal balance of $6.1 million and $6.4 million at March 31, 2022 and December 31, 2021, respectively, which appears within other assets in the Condensed Consolidated Balance Sheets. The note bears an interest rate of 4.5% with payments due in February and August of each year.

In December 2019, Centerspace originated a $29.9 million construction loan and a $15.3 million mezzanine loan for the development of a multifamily community located in Minneapolis, Minnesota. During the three months ended September 30, 2021, construction on the project was completed and the lease-up phase began. The construction and mezzanine loans bore and accrued interest at 4.5% and 11.5%, respectively. During the three months ended March 31, 2022, the Company exercised its option to purchase the apartment community in exchange for the loans and cash. As of March 31, 2022, the loans had no remaining balance. As of December 31, 2021, the Company had fully funded the $29.9 million construction loan and $13.4 million of the mezzanine loan, both of which appear within mortgage loans receivable in the Condensed Consolidated Balance Sheets.

VARIABLE INTEREST ENTITIES

Centerspace has determined that its Operating Partnership and each of its less-than-wholly owned real estate partnerships are VIEs, as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights. The Company is the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on the balance sheet because the Company has a controlling financial interest in the VIEs and has both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because the Operating Partnership is a VIE, all of the Company’s assets and liabilities are held through a VIE.

NOTE 3 • EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares of beneficial interest (“common shares”) outstanding during the period. Centerspace has issued restricted stock units (“RSUs”) and incentive stock options (“ISOs”) under the 2015 Incentive Plan, Series D Convertible Preferred Units (“Series D preferred units”), and Series E Convertible Preferred Units (“Series E preferred units”), which could have a dilutive effect on the earnings per share upon exercise of the RSUs or ISOs or upon conversion of the Series D or Series E preferred units (refer to Note 4 for further discussion of the Series D and the Series E preferred units). Other than the issuance of RSUs, ISOs, Series D preferred units, and Series E preferred units, there are no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their limited partnership units (“Units”) any time following the first anniversary of the date they acquired such Units (“Exchange Right”). Upon the exercise of Exchange Rights, and in Centerspace’s sole discretion, it may issue common shares in exchange for Units on a one-for-one basis.

For the three months ended March 31, 2022 and 2021, performance-based RSUs of 33,000 and 46,000, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three months ended March 31, 2022, operating partnership units of 965,000, Series D preferred units of 228,000, Series E preferred units of 2.2 million, time-based RSUs of 14,000, and weighted average stock options of 52,000, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three months ended March 31, 2021, Series D preferred units of 228,000, time-based RSUs of 19,000, and weighted average stock options of 44,000, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the Condensed Consolidated Financial Statements for the three months ended March 31, 2022 and 2021:  

10

	(in thousands, except per share data)
	Three Months Ended March 31,
	2022		2021
NUMERATOR
Net income (loss) attributable to controlling interests	$	(8,589)	$	(4,867)
Dividends to preferred shareholders	(1,607)		(1,607)
Numerator for basic earnings (loss) per share – net income available to common shareholders	(10,196)		(6,474)
Noncontrolling interests – Operating Partnership and Series E preferred units	(2,157)		(469)
Dividends to preferred unitholders	160		160
Numerator for diluted earnings (loss) per share	$	(12,193)	$	(6,783)
DENOMINATOR
Denominator for basic earnings per share weighted average shares	15,097		13,078
Effect of redeemable operating partnership units	—		957
Denominator for diluted earnings per share	15,097		14,035
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC	$	(0.68)	$	(0.49)
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED	$	(0.68)	$	(0.49)

NOTE 4 • EQUITY AND MEZZANINE EQUITY

Operating Partnership Units. The Operating Partnership had 997,000 and 832,000 outstanding Units at March 31, 2022 and December 31, 2021, respectively. During the three months ended March 31, 2022, we issued 209,000 Units as partial consideration for the acquisition of three apartment communities.

Exchange Rights. Centerspace redeemed Units in exchange for common shares in connection with Unitholders exercising their exchange rights during the three months ended March 31, 2022 and 2021 as detailed in the table below.

	(in thousands)
Three Months Ended March 31,	Number of Units	Net Book Basis
2022	10	$	(388)
2021	26	$	(220)

Pursuant to the exercise of exchange rights, the Company redeemed Units for cash during the three months ended March 31, 2022 and 2021 as detailed in the table below.

	(in thousands)
Three Months Ended March 31,	Number of Units	Aggregate Cost		Average Price Per Unit
2022	31	$	2,903	$	93.14
2021	—	$	9	$	71.55

Series E Preferred Units (Noncontrolling Interests). On September 1, 2021, Centerspace issued 1.8 million Series E preferred units with a par value of $100 per Series E preferred unit as partial consideration for the acquisition of 17 apartment communities. The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year. Each Series E preferred unit is convertible, at the holder’s option, into 1.2048 Units. The Series E preferred units have an aggregate liquidation preference of $181.4 million. The holders of the Series E preferred units do not have voting rights and are required to hold the units for one year before they may elect to convert.

Common Shares and Equity Awards. Common shares outstanding on March 31, 2022 and December 31, 2021, totaled 15.4 million and 15.0 million, respectively. There were 18,759 and 2,801 shares issued upon the vesting of equity awards under the 2015 Incentive Plan during the three months ended March 31, 2022 and 2021, respectively, with a total grant-date fair value of $1.5 million and $164,000, respectively. These shares vested based on performance and service criteria.

Equity Distribution Agreement. Centerspace had an equity distribution agreement in connection with an at-the-market offering (“2019 ATM Program”) through which it could offer and sell common shares having an aggregate sales price of up to $150.0 million. In September 2021, the Company replaced the 2019 ATM Program with a new at-the-market offering (“2021 ATM Program”) through which it may offer and sell common shares having an aggregate sales price of up to $250.0 million, in amounts and at times determined by management. Under the 2021 ATM Program, the Company may enter into separate

11

forward sale agreements. The proceeds from the sale of common shares under the 2021 ATM Program are intended to be used for general purposes, which may include the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness. The table below provides details on the sale of common shares during the three months ended March 31, 2022 and 2021 under both the 2019 and 2021 ATM Programs. As of March 31, 2022, common shares having an aggregate offering price of up to $126.6 million remained available under the 2021 ATM Program.

	(in thousands, except per share amounts)
Three Months Ended March 31,	Number of Common Shares	Net Consideration(1)		Average Net Price Per Share
2022	321	$	31,732	$	98.89
2021	164	$	11,859	$	72.19

(1)Total consideration is net of $338 and $181 in commissions and issuance costs during the three months ended March 31, 2022 and 2021, respectively.

Series C Preferred Shares. Series C preferred shares outstanding were 3.9 million shares at March 31, 2022 and December 31, 2021. The Series C preferred shares are nonvoting and redeemable for cash at $25.00 per share at Centerspace’s option after October 2, 2022. Holders of these shares are entitled to cumulative distributions, payable quarterly (as and if declared by the Board of Trustees). Distributions accrue at an annual rate of $1.65625 per share, which is equal to 6.625% of the $25.00 per share liquidation preference ($97.0 million liquidation preference in the aggregate).

Series D Preferred Units (Mezzanine Equity). Series D preferred units outstanding were 165,600 preferred units at March 31, 2022 and December 31, 2021. The Series D preferred units have a par value price of $100 per preferred unit. The Series D preferred unit holders receive a preferred distribution at the rate of 3.862% per year. The Series D preferred units have a put option which allows the holder to redeem any or all of the Series D preferred units for cash equal to the issuance price. Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 Units. The Series D preferred units have an aggregate liquidation preference of $16.6 million. Changes in the redemption value are charged to common shares on the Condensed Consolidated Balance Sheets from period to period. The holders of the Series D preferred units do not have voting rights. Distributions to Series D unitholders are presented in the Condensed Consolidated Statements of Equity within net income (loss) attributable to controlling interests and noncontrolling interests.

NOTE 5 • DEBT

As of March 31, 2022, 49 apartment communities were not encumbered by mortgages and are available to provide credit support for the unsecured borrowings. The Company’s primary unsecured credit facility (“unsecured credit facility”) is a revolving, multi-bank line of credit, with the Bank of Montreal serving as administrative agent. The line of credit has total commitments and borrowing capacity of $250.0 million, based on the value of unencumbered properties. As of March 31, 2022, the additional borrowing availability was $204.0 million beyond the $46.0 million drawn. This unsecured credit facility was amended on September 30, 2021 to extend the maturity date to September 2025 and to provide for a $400.0 million accordion option.

The interest rates on the line of credit and term loans are based, at the Company’s option, on either the lender’s base rate plus a margin, ranging from 25-80 basis points, or the London Interbank Offered Rate (“LIBOR”), plus a margin that ranges from 125-180 basis points based on the consolidated leverage ratio, as defined under the Third Amended and Restated Credit Agreement. The unsecured credit facility and unsecured senior notes are subject to customary financial covenants and limitations. The Company believes that it is in compliance with all such financial covenants and limitations as of March 31, 2022.

In January 2021, Centerspace amended and expanded its private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc. (collectively, “PGIM”) to increase the aggregate amount available for issuance of unsecured senior promissory notes (“unsecured senior notes”) to $225.0 million. Under this agreement, the Company has issued $200.0 million unsecured senior notes with $25.0 million remaining available as of March 31, 2022. In September 2021, the Company entered into a note purchase agreement for the issuance of $125.0 million senior unsecured promissory notes, of which $25.0 million was under the private shelf agreement with PGIM. The following table shows the notes issued under both agreements.

12

	(in thousands)
	Amount		Maturity Date	Interest Rate
Series A	$	75,000	September 13, 2029	3.84	%
Series B	$	50,000	September 30, 2028	3.69	%
Series C	$	50,000	June 6, 2030	2.70	%
Series 2021-A	$	35,000	September 17, 2030	2.50	%
Series 2021-B	$	50,000	September 17, 2031	2.62	%
Series 2021-C	$	25,000	September 17, 2032	2.68	%
Series 2021-D	$	15,000	September 17, 2034	2.78	%

In September 2021, Centerspace entered into a $198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”) for the acquisition of 16 apartment communities. The FMCF is currently secured by mortgages on those apartment communities. The notes are interest-only, have varying maturity dates of 7, 10, and 12 years, and a blended, weighted average interest rate of 2.78%. As of March 31, 2022, the FMCF had a balance of $198.9 million. The FMCF is included within mortgages payable on the Condensed Consolidated Balance Sheets.

As of March 31, 2022, Centerspace owned 18 apartment communities that served as collateral for mortgage loans, in addition to the apartment communities secured by the FMCF. All of these mortgage loans were non-recourse to the Company other than for standard carve-out obligations. As of March 31, 2022, the Company believes that there are no material defaults or instances of noncompliance in regards to any of these mortgages payable.

Centerspace also has a $6.0 million operating line of credit. This operating line of credit is designed to enhance treasury management activities and more effectively manage cash balances. This operating line matures on November 29, 2022, with pricing based on a market spread plus the one-month LIBOR index rate.

The following table summarizes indebtedness:

	(in thousands)
	March 31, 2022			December 31, 2021			Weighted Average Maturity in Years at March 31, 2022
Lines of credit	$	46,000		$	76,000		3.75
Unsecured senior notes (1)	300,000			300,000			8.63
Unsecured debt	346,000			376,000			7.98
Mortgages payable - Fannie Mae credit facility	198,850			198,850			9.56
Mortgages payable - other	326,113			284,934			6.71
Total debt	$	870,963		$	859,784		7.14
Weighted average interest rate on lines of credit (rate with swap)(2)	2.56		%	2.74		%
Weighted average interest rate on unsecured senior notes	3.12		%	3.12		%
Weighted average interest rate on mortgages payable - Fannie Mae credit facility	2.78		%	2.78		%
Weighted average interest rate on mortgages payable - other	3.85		%	3.81		%
Weighted average interest rate on total debt	3.29		%	3.26		%

(1)Included within notes payable on the Condensed Consolidated Balance Sheets.

(2)The interest rate swap was terminated during the three months ended March 31, 2022.

The aggregate amount of required future principal payments on unsecured senior notes and mortgages payable as of March 31, 2022, was as follows:

	(in thousands)
2022 (remainder)	$	26,443
2023	45,988
2024	5,012
2025	79,850
2026	50,088
Thereafter	663,582
Total payments	$	870,963

13

NOTE 6 • DERIVATIVE INSTRUMENTS

Centerspace’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate fluctuations. To accomplish this objective, the Company primarily uses interest rate swap contracts to fix variable interest rate debt.

Changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (“OCI”) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for the interest rate swaps will be reclassified to interest expense as interest payments are incurred on the hedged variable rate debt. During the next twelve months, the Company estimates an additional $633,000 will be reclassified as an increase to interest expense.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements. Changes in fair value of derivatives not designated in hedging relationships are recorded directly to earnings within other income (loss) in the Condensed Consolidated Statement of Operations. During the three months ended March 31, 2022, the Company recorded a gain of $582,000 related to the interest rate swap not designated in a hedging relationship, prior to its termination.

During the three months ended March 31, 2022, the Company paid $3.2 million to terminate its $75.0 million interest rate swap and its $70.0 million forward swap. As of March 31, 2022 the Company had no remaining interest rate swaps.

As of December 31, 2021, Centerspace had one interest rate swap contract designated as a cash flow hedge of interest rate risk with a notional amount of $75.0 million to fix the interest rate on the line of credit. The Company also had one additional interest rate swap with an effective date of January 31, 2023 and a notional amount of $70.0 million which was not designated as a hedge in a qualifying hedging relationship.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021.

		(in thousands)
		March 31, 2022		December 31, 2021
	Balance Sheet Location	Fair Value		Fair Value
Total derivative instruments designated as hedging instruments - interest rate swaps	Accounts Payable and Accrued Expenses	$	—	$	4,610
Total derivative instruments not designated as hedging instruments - interest rate swaps	Accounts Payable and Accrued Expenses	$	—	$	1,097

The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of March 31, 2022 and 2021.

	(in thousands)
	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Gain (Loss) Reclassified from Accumulated OCI into Income
Three months ended March 31,	2022		2021			2022		2021
Total derivatives in cash flow hedging relationships - Interest rate contracts	$	1,581	$	2,011	Interest expense	$	(304)	$	(1,095)

The Company had agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

NOTE 7 • FAIR VALUE MEASUREMENTS

Cash and cash equivalents, restricted cash, accounts payable, accrued expenses, and other liabilities are carried at amounts that reasonably approximate their fair value due to their short-term nature. For variable rate line of credit debt that re-prices frequently, fair values are based on carrying values.

In determining the fair value of other financial instruments, Centerspace applies FASB ASC 820, “Fair Value Measurement and Disclosures.” Fair value hierarchy under ASC 820 distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting entity’s own assumptions

14

about market participant assumptions (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

Fair Value Measurements on a Recurring Basis

	(in thousands)
	Total		Level 1		Level 2	Level 3
March 31, 2022
Assets
Notes receivable	$	6,068	—		—	$	6,068
December 31, 2021
Assets
Mortgages and notes receivable	$	49,484	—		—	$	49,484
Liabilities
Derivative instruments - interest rate swaps	$	5,707	$	—	—	$	5,707

The fair value of the interest rate swaps was determined using the market standard methodology of netting discounted expected variable cash payments and receipts. The variable cash payments and receipts were based on an expectation of future interest rates (a forward curve) derived from observable market interest rate curves. The Company also considered both its own nonperformance risk and the counterparty’s nonperformance risk in the fair value measurement (Level 3).

Centerspace utilizes an income approach with Level 3 inputs based on expected future cash flows to value mortgages and notes receivable. The inputs include market transactions for similar instruments, management estimates of comparable interest rates (range of 3.75% to 10.75%), and instrument specific credit risk (range of 0.5% to 1.0%). Changes in the fair value of these receivables from period to period are reported in interest and other income on the Condensed Consolidated Statements of Operations.

	(in thousands)
	Fair Value Measurement at March 31,		Other Gains (Losses)		Interest Income		Total Changes in Fair Value Included in Current-Period Earnings
Three months ended March 31, 2022
Notes receivable	$	6,068	$	4	$	460	$	464
Three months ended March 31, 2021
Mortgage loans and notes receivable	$	36,443	$	4	$	407	$	411

As of March 31, 2022 and December 31, 2021, Centerspace has an investment of $890,000 and $903,000, respectively, in a real estate technology venture consisting of privately held entities that develop technology related to the real estate industry. This investment is measured at net asset value (“NAV”) as a practical expedient under ASC 820. As of March 31, 2022, the Company had unfunded commitments of $1.2 million.

Fair Value Measurements on a Nonrecurring Basis

There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2022 and December 31, 2021.

Financial Assets and Liabilities Not Measured at Fair Value

The fair value of unsecured senior notes and mortgages payable are estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates, excluding any prepayment penalties (Level 3).

15

The estimated fair values of the Company’s financial instruments as of March 31, 2022 and December 31, 2021, respectively, are as follows:

	(in thousands)
	March 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	13,313	$	13,313	$	31,267	$	31,267
Restricted cash	$	2,409	$	2,409	$	7,358	$	7,358
FINANCIAL LIABILITIES
Revolving lines of credit(1)	$	46,000	$	46,000	$	76,000	$	76,000
Unsecured senior notes	$	300,000	$	273,973	$	300,000	$	308,302
Mortgages payable - Fannie Mae	$	198,850	$	176,055	$	198,850	$	198,850
Mortgages payable - other	$	326,113	$	308,363	$	284,934	$	284,546

(1)Excluding the effect of interest rate swap agreements. Refer to Note 6 for discussion on the fair value of the interest rate swap agreements.

NOTE 8 • ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS

Centerspace acquired four new apartment communities for an aggregate acquisition cost of $116.9 million during the three months ended March 31, 2022 compared to acquisitions of $76.9 million in the three months ended March 31, 2021. The acquisitions during the three months ended March 31, 2022 and 2021 are detailed below.

Three Months Ended March 31, 2022

	Date Acquired	(in thousands)
		Total Acquisition Cost		Form of Consideration						Investment Allocation
Acquisitions				Cash		Units(1)		Other(2)		Land		Building		Intangible Assets		Other(3)
191 homes - Martin Blu - Minneapolis, MN	January 4, 2022	$	49,825	$	3,031	$	18,885	$	27,909	$	3,547	$	45,212	$	1,813	$	(747)
31 homes - Zest - Minneapolis, MN	January 4, 2022	9,066		1,290		1,748		6,028		941		7,853		335		(63)
45 homes - Elements - Minneapolis, MN	January 4, 2022	11,364		1,429		2,249		7,686		936		10,261		574		(407)
130 homes - Noko Apartments - Minneapolis, MN	January 26, 2022	46,619		3,343		—		43,276		1,915		42,754		1,950		—
Total Acquisitions		$	116,874	$	9,093	$	22,882	$	84,899	$	7,339	$	106,080	$	4,672	$	(1,217)

(1)Fair value of operating partnership units issued on acquisition.

(2)Assumption of seller's debt upon closing for Martin Blu, Zest, and Elements. Mezzanine and construction loans, financed by Centerspace, exchanged as partial consideration for the acquisition of Noko Apartments.

(3)Debt discount on assumed mortgage.

Three Months Ended March 31, 2021

	Date Acquired	(in thousands)
		Total Acquisition Cost		Form of Consideration		Investment Allocation
Acquisitions				Cash		Land		Building		Intangible Assets
256 homes - Union Pointe - Longmont, CO	January 6, 2021	$	76,900	$	76,900	$	5,727	$	69,966	$	1,207

DISPOSITIONS

During the three months ended March 31, 2022 and 2021, Centerspace disposed of no real estate.

16

NOTE 9 • SEGMENT REPORTING 

Centerspace operates in a single reportable segment which includes the ownership, management, development, redevelopment, and acquisition of apartment communities. Each of the operating properties is considered a separate operating segment because each property earns revenues, incurs expenses, and has discrete financial information. The chief operating decision-makers evaluate each property’s operating results to make decisions about resources to be allocated and to assess performance and do not group the properties based on geography, size, or type for this purpose. The apartment communities have similar long-term economic characteristics and provide similar products and services to residents. No apartment community comprises more than 10% of consolidated revenues, profits, or assets. Accordingly, the apartment communities are aggregated into a single reportable segment. “All other” includes non-multifamily components of mixed-use properties and apartment communities the Company has sold.

The members of the executive management team are the chief operating decision-makers. This team measures the performance of the reportable segment based on net operating income (“NOI”), which the Company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.

The following tables present NOI for the three months ended March 31, 2022 and 2021, respectively, along with reconciliations to net income in the Condensed Consolidated Financial Statements. Segment assets are also reconciled to total assets as reported in the Condensed Consolidated Financial Statements.

	(in thousands)
Three Months Ended March 31, 2022	Multifamily		All Other		Total
Revenue	$	59,398	$	916	$	60,314
Property operating expenses, including real estate taxes	25,544		329		25,873
Net operating income	$	33,854	$	587	$	34,441
Property management					(2,253)
Casualty gain (loss)					(598)
Depreciation and amortization					(31,001)
General and administrative expenses					(4,500)
Interest expense					(7,715)
Interest and other income					1,063
Net income (loss)					$	(10,563)

	(in thousands)
Three Months Ended March 31, 2021	Multifamily		All Other		Total
Revenue	$	44,241	$	2,407	$	46,648
Property operating expenses, including real estate taxes	17,874		1,367		19,241
Net operating income	$	26,367	$	1,040	$	27,407
Property management					(1,767)
Casualty gain (loss)					(101)
Depreciation and amortization					(19,992)
General and administrative expenses					(3,906)
Interest expense					(7,231)
Interest and other income					431
Net income (loss)					$	(5,159)

Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of March 31, 2022, and December 31, 2021, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:

17

	(in thousands)
As of March 31, 2022	Multifamily		All Other		Total
Segment assets
Property owned	$	2,364,167	$	26,785	$	2,390,952
Less accumulated depreciation	(457,985)		(7,767)		(465,752)
Total property owned	$	1,906,182	$	19,018	$	1,925,200
Cash and cash equivalents					13,313
Restricted cash					2,409
Other assets					24,651
Total Assets					$	1,965,573

	(in thousands)
As of December 31, 2021	Multifamily		All Other		Total
Segment assets
Property owned	$	2,244,250	$	26,920	$	2,271,170
Less accumulated depreciation	(436,004)		(7,588)		(443,592)
Total property owned	$	1,808,246	$	19,332	$	1,827,578
Mortgage loans receivable					43,276
Cash and cash equivalents					31,267
Restricted cash					7,358
Other assets					30,582
Total Assets					$	1,940,061

NOTE 10 • COMMITMENTS AND CONTINGENCIES

Litigation.  In the ordinary course of operations, Centerspace becomes involved in litigation. At this time, the Company knows of no material pending or threatened legal proceedings, or other proceedings contemplated by governmental authorities, that would have a material impact on it.

Environmental Matters.  Under various federal, state, and local laws, ordinances, and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around, or under the property. While the Company currently has no knowledge of any material violation of environmental laws, ordinances, or regulations at any of the properties, there can be no assurance that areas of contamination will not be identified at any of its properties or that changes in environmental laws, regulations, or cleanup requirements would not result in material costs.

Restrictions on Taxable Dispositions.  Thirty-seven properties, consisting of 6,770 apartment homes, are subject to restrictions on taxable dispositions under agreements entered into with certain of the sellers or contributors of the properties and are effective for varying periods. Centerspace does not believe that the agreements materially affect the conduct of its business or its decisions whether to dispose of restricted properties during the restriction period because it generally holds these and other properties for investment purposes rather than for sale. In addition, where the Company deems it to be in the shareholders’ best interests to dispose of such properties, it generally seeks to structure sales of such properties as tax-deferred transactions under Section 1031 of the Internal Revenue Code. Otherwise, the Company may be required to provide tax indemnification payments to the parties to these agreements.

NOTE 11 • SHARE-BASED COMPENSATION

Share-based awards are provided to officers, non-officer employees, and trustees under the 2015 Incentive Plan approved by shareholders on September 15, 2015, as amended and restated on May 18, 2021 (the “2015 Incentive Plan”) which allows for awards in the form of cash, unrestricted and restricted common shares, stock options, stock appreciation rights, and RSUs up to an aggregate of 775,000 shares over the ten-year period in which the plan is in effect. Under the 2015 Incentive Plan, officers and non-officer employees may earn share awards under a long-term incentive plan, which is a forward-looking program that measures long-term performance over the stated performance period. These awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year.

18

2022 LTIP Awards

Awards granted to employees on January 1, 2022, consist of an aggregate of 5,849 time-based RSU awards, 13,407 performance RSUs based on total shareholder return (“TSR”), and 30,002 stock options. The time-based awards vest as to one-third of the shares on each of January 1, 2023, January 1, 2024, and January 1, 2025. The stock options vest as to 25% on each of January 1, 2023, January 1, 2024, January 1, 2025, and January 1, 2026. The fair value of stock options was $17.094 per share and was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	2022
Exercise price	$	110.90
Risk-free rate	1.44		%
Expected term	6.25 years
Expected volatility	21.2		%
Dividend yield	2.597		%

The TSR performance RSUs are earned based on the Company’s TSR as compared to the FTSE Nareit Apartment Index over a forward looking three-year period. The maximum number of RSUs eligible to be earned is 26,814 RSUs, which is 200% of the RSUs granted. Earned awards (if any) will fully vest as of the last day of the measurement period. These awards have market conditions in addition to service conditions that must be met for the awards to vest. Compensation expense is recognized ratably based on the grant date fair value, as determined using the Monte Carlo valuation model, regardless of whether the market conditions are achieved and the awards ultimately vest. Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved. The Company based the expected volatility on a weighted average of the historical volatility of the Company’s daily closing share price and a select peer average volatility, the risk-free interest rate on the interest rates on U.S. treasury bonds with a maturity equal to the remaining performance period of the award, and the expected term on the performance period of the award. The assumptions used to value the TSR performance RSUs were an expected volatility of 22.40%, a risk-free interest rate of 0.97%, and an expected life of 3 years. The share price at the grant date, January 1, 2022, was $110.90 per share.

Awards granted to employees on February 1, 2022, consist of an aggregate of 1,295 time-based RSU awards which vest as to one-third of the RSUs on each of January 1, 2023, January 1, 2024, and January 1, 2025.

Share-Based Compensation Expense

Share-based compensation expense recognized in the consolidated financial statements for all outstanding share-based awards was $719,000 and $810,000 for the three months ended March 31, 2022 and 2021, respectively.

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited Condensed Consolidated Financial Statements included in this report on Form 10-Q for the quarter ended March 31, 2022 (the “Report”), the audited financial statements for the year ended December 31, 2021, which are included in Form 10-K filed with the SEC on February 28, 2022, and the risk factors in Item 1A, “Risk Factors,” of Form 10-K for the year ended December 31, 2021.

This discussion and analysis, and other sections of this Report contain 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 (the “Exchange Act”), with respect to the expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “assumes,” “may,” “projects,” “outlook,” “future,” and variations of those words and similar expressions are intended to identify forward-looking statements. 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 condition, or plans expressed or implied by the forward-looking statements. Although we believe the expectations reflected in these forward-looking statements are based upon reasonable assumptions, we can give no assurance that our 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 our control and could differ materially from actual results and performance.

19

The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:

•the COVID-19 pandemic and its ongoing effects on our employees, residents, and commercial tenants, third party vendors and suppliers, and apartment communities, as well as our cash flow, business, financial condition, and results of operation;

•the impact of the Russian invasion of Ukraine, including sanctions imposed on Russia by the U.S. and other countries, on inflation, trade, and general economic conditions;

•deteriorating economic conditions, including rising unemployment rates and inflation, in the markets where we own apartment communities or in which we may invest in the future;

•rental conditions in our markets, including occupancy levels and rental rates, potential inability to renew residents or obtain new residents upon expiration of existing leases, changes in tax and housing laws, or other factors, including the impact of the COVID-19-related governmental rules and regulations relating to rental rates, evictions, and other rental conditions;

•changes in operating costs, including real estate taxes, utilities, insurance costs, and expenses related to complying with COVID-19 restrictions or otherwise responding to the COVID-19 pandemic;

•timely access to material and labor required to renovate apartment communities;

•adverse changes in our markets, including future demand for apartment homes in those markets, barriers of entry into new markets, limitations on the ability to increase rental rates, inability to identify and consummate attractive acquisitions and dispositions on favorable terms, inability to reinvest sales proceeds successfully, and inability to accommodate any significant decline in the market value of real estate serving as collateral for mortgage obligations;

•reliance on a single asset class (multifamily) and certain geographic areas of the U.S.;

•inability to expand operations into new or existing markets successfully;

•failure of new acquisitions to achieve anticipated results or be efficiently integrated;

•inability to complete lease-up of projects on schedule and on budget;

•failure to reinvest proceeds from sales of properties into tax-deferred exchanges, which could necessitate special dividend and/or tax protection payments;

•inability to fund capital expenditures out of cash flow;

•inability to pay, or need to reduce, dividends on common shares;

•financing risks, including the potential inability to meet existing covenants in existing credit facilities or to obtain new debt or equity financing on favorable terms, or at all;

•level and volatility of interest or capitalization rates or capital market conditions;

•loss contingencies and the availability and cost of casualty insurance for losses;

•inability to continue to satisfy complex rules in order to maintain status as a REIT for federal income tax purposes, inability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal income tax purposes, and the risk of changes in laws affecting REITs;

•inability to attract and retain qualified personnel;

•cyber liability or potential liability for breaches of privacy or information security systems;

•inability to address catastrophic weather, natural events, and climate change;

•inability to comply with laws and regulations applicable to the business and any related investigations or litigation; and

•other risks identified in this Report, in other SEC reports, or in other documents that we publicly disseminate.

New factors may also arise from time to time that could have an adverse effect on our business and results of operations. Except as otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements to reflect events, circumstances, or changes in expectations after the date on which this Report is filed. Readers also should review the risks and uncertainties detailed from time to time in filings with the SEC, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

Executive Summary

We own, manage, acquire, redevelop, and develop apartment communities. We primarily focus on investing in markets characterized by stable and growing economic conditions, strong employment, and an attractive quality of life that we believe, in combination, lead to higher demand for apartment homes and retention of residents. As of March 31, 2022, we owned interests in 83 apartment communities consisting of 14,838 apartment homes. Property owned, as presented in our Condensed Consolidated Balance Sheets, was $2.4 billion at March 31, 2022, compared to $2.3 billion at December 31, 2021.

Renting apartment homes is our primary source of revenue, and our business objective is to provide great homes for our residents. We strive to maximize resident satisfaction and retention by investing in high-quality assets in desirable locations and

20

creating vibrant apartment communities through service-oriented operations. We believe that delivering superior resident experiences will enhance resident satisfaction while also driving profitability for our business and shareholders. We have paid quarterly distributions continuously since our first distribution in 1971.

COVID-19

The COVID-19 pandemic has affected our business since March 2020, when it spread to many of the markets in which we own properties. Our first priority continues to be the health and well-being of our residents, team members, and the communities we serve. Certain states and cities, including some of those in which our apartment communities are located, reacted to the COVID-19 pandemic by instituting quarantines, restrictions on travel, shelter-in-place or stay-at-home directives, restrictions on types of businesses that may continue to operate, and restrictions on the types of construction projects that may continue. The availability of vaccines has led many states and cities to lift restrictions; however, due to new variants of the virus, we cannot predict whether restrictions will be reinstated or if additional restrictions will be imposed in the future. We implemented a plan to safely re-open common spaces in our communities while adhering to state and local guidelines, but recognize that an increase in COVID-19 cases in these markets could cause us to close common spaces or take other preventive measures.

Despite our efforts to manage our response to the effects of the COVID-19 pandemic, the ultimate impact of the COVID-19 pandemic on rental revenue for 2022 and in future years cannot be determined at present. The situation surrounding the COVID-19 pandemic remains fluid, and we are actively managing our response in collaboration with residents, commercial tenants, government officials, and business partners and assessing potential impacts to financial position and operating results, as well as potential adverse impacts on our business. Our management remains committed to ensuring the safety of team members, residents, and communities, and to maintaining the financial stability of our business enterprise for the duration of the COVID-19 pandemic.

Overview of the Three Months Ended March 31, 2022

On January 4, 2022, we acquired a portfolio of three apartment communities located in Minneapolis, Minnesota for an aggregate purchase price of $70.3 million. The acquisition was financed through the assumption of $41.6 million in mortgage debt, the issuance of 209,000 Units, and cash.

On January 26, 2022, we acquired Noko Apartments located in Minneapolis, Minnesota for an aggregate purchase price of $46.6 million. We financed the development of Noko Apartments with a construction loan and a mezzanine loan, which were exchanged as partial consideration in the amount of $43.3 million for the acquisition with the remaining in cash.

See Note 8 of the Notes to Condensed Consolidated Financial Statements in this Report for a table detailing acquisitions and dispositions during the three months ended March 31, 2022 and 2021.

For the three months ended March 31, 2022, revenue increased by $13.7 million to $60.3 million, compared to $46.6 million for the three months ended March 31, 2021, primarily due to same-store and non-same-store communities, offset by dispositions. Total expenses increased by $19.2 million to $64.2 million for the three months ended March 31, 2022, compared to $45.0 million for the three months ended March 31, 2021 primarily due to increased property operating expenses, real estate taxes, depreciation and amortization, and general and administrative expenses. Funds from Operations (“FFO”) applicable to common shares and Units for the three months ended March 31, 2022 increased by $5.6 million to $18.5 million compared to $12.9 million for the three months ended March 31, 2021. This increase was primarily due to increased NOI from same-store and non-same-store communities and a gain on the mark to market adjustment for an interest rate swap contract, offset by increased property management and general and administrative expenses, and decreased NOI from dispositions. The drivers of these changes are discussed in more detail in the “Results of Operations” section below.

21

Results of Operations

Reconciliation of Operating Income (Loss) to Net Operating Income

The following table provides a reconciliation of operating income to net operating income (“NOI”) (non-GAAP), which is defined below.

	(in thousands, except percentages)
	Three Months Ended March 31,
	2022		2021		$ Change		% Change
Operating income (loss)	$	(3,911)	$	1,641	$	(5,552)	(338.3)	%
Adjustments:
Property management expenses	2,253		1,767		486		27.5	%
Casualty (gain) loss	598		101		497		492.1	%
Depreciation and amortization	31,001		19,992		11,009		55.1	%
General and administrative expenses	4,500		3,906		594		15.2	%
Net operating income	$	34,441	$	27,407	$	7,034	25.7	%

Consolidated Results of Operations

The following consolidated results of operations cover the three months ended March 31, 2022 and 2021.

	(in thousands, except percentages)
	Three Months Ended March 31,
	2022		2021		$ Change		% Change
Revenue
Same-store	$	46,891	$	43,194	$	3,697	8.6	%
Non-same-store	12,507		1,047		11,460		1,094.6	%
Other	916		668		248		37.1	%
Dispositions	—		1,739		(1,739)		(100.0)	%
Total	60,314		46,648		13,666		29.3	%
Property operating expenses, including real estate taxes
Same-store	19,215		17,529		1,686		9.6	%
Non-same-store	6,329		345		5,984		1,734.5	%
Other	329		264		65		24.6	%
Dispositions	—		1,103		(1,103)		(100.0)	%
Total	25,873		19,241		6,632		34.5	%
Net operating income
Same-store	27,676		25,665		2,011		7.8	%
Non-same-store	6,178		702		5,476		780.1	%
Other	587		404		183		45.3	%
Dispositions	—		636		(636)		(100.0)	%
Total	$	34,441	$	27,407	$	7,034	25.7	%
Property management expenses	(2,253)		(1,767)		486		27.5	%
Casualty gain (loss)	(598)		(101)		497		492.1	%
Depreciation and amortization	(31,001)		(19,992)		11,009		55.1	%
General and administrative expenses	(4,500)		(3,906)		594		15.2	%
Interest expense	(7,715)		(7,231)		484		6.7	%
Interest and other income (loss)	1,063		431		632		146.6	%
NET INCOME (LOSS)	$	(10,563)	$	(5,159)	$	(5,404)	104.7	%
Dividends to Series D preferred unitholders	(160)		(160)		—		—
Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units	2,157		469		1,688		359.9	%
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	(23)		(17)		(6)		35.3	%
Net income (loss) attributable to controlling interests	(8,589)		(4,867)		(3,722)		76.5	%
Dividends to preferred shareholders	(1,607)		(1,607)		—		—
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	(10,196)	$	(6,474)	$	(3,722)	57.5	%

22

	Three Months Ended March 31,
Weighted Average Occupancy(1)	2022		2021
Same-store	93.9	%	94.7	%
Non-same-store	94.5	%	90.3	%
Total	94.0	%	94.6	%

(1)Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rental revenue. Scheduled rental revenue represents the value of all apartment homes, with occupied homes valued at contractual rental rates pursuant to leases and vacant homes valued at estimated market rents. When calculating actual rents for occupied homes and market rents for vacant homes, delinquencies, and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes. Centerspace believes that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and the calculation of weighted average occupancy may not be comparable to that disclosed by other REITs.

Number of Apartment Homes	March 31, 2022	March 31, 2021
Same-store	11,319	11,319
Non-same-store	3,519	256
Total	14,838	11,575

NOI is a non-GAAP financial measure, which we define as total real estate revenues less property operating expenses, including real estate taxes. We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.

We have provided certain information on a same-store and non-same-store basis. Same-store apartment communities are owned or in service for the entirety of the periods being compared, and, in the case of newly-constructed properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, we determine the composition of our same-store pool for that year as well as adjust the previous year, which allows us to evaluate full period-over-period operating comparisons for existing apartment communities and their contribution to net income. We believe that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of communities are performing year-over-year. We use this measure to assess whether or not we have been successful in increasing NOI, raising average rental revenue, renewing the leases on existing residents, controlling operating costs, and making prudent capital improvements. The discussion below focuses on the main factors affecting real estate revenue and expenses from same-store apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store apartment communities are generally due to the addition of those properties to the real estate portfolio, and accordingly provide less useful information for evaluating ongoing operational performance of the real estate portfolio.

For the comparison of the three months ended March 31, 2022 and 2021, 23 apartment communities were non-same-store. Sold communities are included in “Dispositions,” while “Other” includes non-multifamily properties and the non-multifamily components of mixed-use properties.

Revenue.  Revenue increased by 29.3% to $60.3 million for the three months ended March 31, 2022, compared to $46.6 million in the three months ended March 31, 2021. Revenue from non-same-store communities and other properties increased by $11.5 million and $248,000, respectively, offset by a decrease of $1.7 million from dispositions. Revenue from same-store communities increased 8.6% or $3.7 million in the three months ended March 31, 2022, compared to the same period in the prior year. The increase was attributable to 9.5% growth in average rental revenue for the three months ended March 31, 2022, offset by a decrease of 0.8% in occupancy as weighted average occupancy decreased from 94.7% in the three months ended March 31, 2021 to 93.9% for the three months ended March 31, 2022.

Property operating expenses, including real estate taxes.  Property operating expenses, including real estate taxes, increased by 34.5% to $25.9 million in the three months ended March 31, 2022, compared to $19.2 million in the same period of the prior year. An increase of $6.0 million at non-same-store communities was offset by a decrease $1.1 million from dispositions. Property operating expenses, including real estate taxes, at same-store communities increased by 9.6% or $1.7 million in the three months ended March 31, 2022, compared to the same period in the prior year. At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $1.5 million, primarily due to increased utilities and repairs and maintenance costs. Non-controllable expenses at same-store communities increased by $187,000, primarily due to insurance costs.

23

Property management expenses. Property management expense, consisting of property management overhead and property management fees paid to third parties increased by 27.5% to $2.3 million in the three months ended March 31, 2022, compared to $1.8 million in the same period of the prior year. The increase is primarily due to $265,000 in compensation costs.

Casualty gain (loss). Casualty gain (loss) increased by 492.1% to a loss of $598,000 in the three months ended March 31, 2022, compared to a loss of $101,000 in the same period of the prior year. The increase is due to losses in the current year which did not occur in the prior year.

Depreciation and amortization. Depreciation and amortization increased by 55.1% to $31.0 million in the three months ended March 31, 2022, compared to $20.0 million in the same period of the prior year, attributable to an increase of $12.2 million from non-same-store properties, offset by decreases from same-store and sold properties.

General and administrative expenses.  General and administrative expenses increased by 15.2% to $4.5 million in the three months ended March 31, 2022, compared to $3.9 million in the same period of the prior year, primarily attributable to $473,000 in compensation costs and $273,000 in professional and consulting fees, offset by a decrease of $376,000 in technology costs.

Interest expense.  Interest expense increased by 6.7% to $7.7 million in the three months ended March 31, 2022, compared to $7.2 million in the same period of the prior year, primarily due to the addition of new unsecured senior notes and the Fannie Mae credit facility, offset by a lower weighted average interest rate.

Interest and other income (loss). Interest and other income increased to $1.1 million in the three months ended March 31, 2022, compared to $431,000 in the same period of the prior year. The increase was primarily due to a $582,000 gain on the mark to market adjustment for an interest rate swap contract.

Net income (loss) available to common shareholders. Net loss available to common shareholders decreased to a loss of $10.2 million for the three months ended March 31, 2022, compared to a net loss of $6.5 million in the three months ended March 31, 2021.

Funds from Operations and Core Funds from Operations.

We believe that Funds from Operations (“FFO”), which is a non-GAAP financial measures used as a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding operating performance, primarily because its calculation does not assume the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation.

We use the definition of Funds from Operations FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding:

•depreciation and amortization related to real estate;

•gains and losses from the sale of certain real estate assets; and

•impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

The exclusion in Nareit’s definition of FFO of impairment write-downs and gains and losses from the sale of real estate assets helps to identify the operating results of the long-term assets that form the base of investments, and assists management and investors in comparing those operating results between periods.

Due to limitations of the Nareit FFO definition, we have made certain interpretations in applying this definition. We believe that all such interpretations not specifically provided for in the Nareit definition are consistent with this definition. Nareit’s FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT’s main business are excluded from FFO and a REIT has the option to exclude impairment write-downs of assets that are incidental to the main business.

While FFO is widely used by us as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all of the our needs, including our ability to service indebtedness or make distributions to shareholders.

Core Funds from Operations (“Core FFO”), a non-GAAP measure, is FFO adjusted for non-routine items or items not considered core to business operations. By further adjusting for items that are not considered part of core business operations, the company believes that Core FFO provides investors with additional information to compare core operating and financial

24

performance between periods. Core FFO should not be considered as an alternative to net income or as any other GAAP measurement of performance, but rather should be considered an additional supplemental measure. Core FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders. Core FFO is a non-GAAP and non-standardized financial measure that may be calculated differently by other REITs and that should not be considered a substitute for operating results determined in accordance with GAAP.

FFO applicable to common shares and Units for the three months ended March 31, 2022, increased to $18.5 million compared to $12.9 million for the comparable period ended March 31, 2021, an increase of 43.3%. This increase was primarily due to increased NOI from same-store and non-same-store communities and a gain on the mark to market adjustment for an interest rate swap contract, offset by increased interest, property management, and general and administrative expenses, and decreased NOI from dispositions.

Reconciliation of Net Income Available to Common Shareholders to Funds from Operations and Core Funds from Operations

	(in thousands, except per share and unit amounts)
	Three Months Ended March 31,
	2022		2021
Net income (loss) available to common shareholders	$	(10,196)	$	(6,474)
Adjustments:
Noncontrolling interests – Operating Partnership and Series E preferred units	(2,157)		(469)
Depreciation and amortization	31,001		19,992
Less depreciation – non real estate	(101)		(98)
Less depreciation – partially owned entities	(21)		(24)
FFO applicable to common shares and Units	$	18,526	$	12,927
Adjustments to Core FFO:
Non-cash casualty (gain) loss	25		—
Technology implementation costs	103		413
Interest rate swap termination, amortization, and mark-to-market	(613)		—
Amortization of assumed debt	(115)		—
Other miscellaneous items	(4)		—
Core FFO applicable to common shares and units	$	17,922	$	13,340
FFO applicable to common shares and Units	$	18,526	$	12,927
Dividends to preferred unitholders	160		160
FFO applicable to common shares and Units - diluted	$	18,686	$	13,087
Core FFO applicable to common shares and units	$	17,922	$	13,340
Dividends to preferred unitholders	160		160
Core FFO applicable to common shares and Units - diluted	$	18,082	$	13,500
Per Share Data
Earnings (loss) per common share - diluted	$	(0.68)	$	(0.49)
FFO per share and Unit - diluted	$	1.01	$	0.92
Core FFO per share and Unit - diluted	$	0.98	$	0.95
Weighted average shares and Units - diluted	18,542		14,282

Acquisitions and Dispositions

On January 4, 2022, we acquired a portfolio of three apartment communities located in Minneapolis, Minnesota for an aggregate purchase price of $70.3 million. The acquisition was financed through the assumption of $41.6 million in mortgage debt, the issuance of 209,000 Units, and cash.

25

On January 26, 2022, we acquired Noko Apartments located in Minneapolis, Minnesota for an aggregate purchase price of $46.6 million. We financed the development of Noko Apartments with a construction loan and a mezzanine loan which were exchanged as partial consideration for the acquisition.

Distributions Declared

Distributions of $0.73 and $0.70 per common share and Unit were declared during the three months ended March 31, 2022 and 2021, respectively. Distributions of $0.4140625 per Series C preferred share were declared during the three months ended March 31, 2022 and 2021. Distributions of $0.9655 per Series D preferred unit were declared during the three months ended March 31, 2022 and 2021. Distributions of $0.968750 per Series E preferred unit were declared during the three months ended March 31, 2022.

Liquidity and Capital Resources

Overview

We strive to maintain a strong balance sheet and preserve financial flexibility, which we believe should enhance our ability to capitalize on appropriate investment opportunities as they may arise. We intend to continue to focus on core fundamentals, which include generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.

Our primary sources of liquidity are cash and cash equivalents on hand and cash flows generated from operations. Other sources include availability under the unsecured lines of credit, proceeds from property dispositions, including restricted cash related to net tax deferred proceeds, offerings of preferred and common shares under the shelf registration statement, including offerings of common shares under the 2021 ATM Program, and long-term unsecured debt and secured mortgages.

Our primary liquidity demands are normally-recurring operating and overhead expenses, debt service and repayments, capital improvements to communities, distributions to the holders of preferred shares, common shares, Series D and Series E preferred units, and Units, value-add redevelopment, common and preferred share buybacks and Unit redemptions, and acquisitions of additional communities.

Although we believe that our financial condition and liquidity are sufficient to meet our reasonably anticipated liquidity demands, factors that could impact our future liquidity include, but are not limited to, volatility in capital and credit markets, the ability to access capital and credit markets, the effects of the COVID-19 pandemic, including its potential impact on our ability to access the capital and credit markets on reasonable terms (or at all), the minimum REIT dividend requirements, and our ability to complete asset purchases, sales, or developments.

As of March 31, 2022, we had total liquidity of approximately $223.3 million, which included $210.0 million available on the lines of credit and $13.3 million of cash and cash equivalents. As of December 31, 2021, we had total liquidity of approximately $211.3 million, which included $180.0 million on the lines of credit and $31.3 million of cash and cash equivalents.

Debt

On September 30, 2021, we amended and restated our unsecured credit facility. The amended agreement provides for a revolving line of credit for $250.0 million, an accordion option to increase borrowing capacity up to $400.0 million, and extended the maturity date to September 2025. As of March 31, 2022, the line of credit had total commitments and borrowing capacity of $250.0 million, based on the value of unencumbered properties. As of March 31, 2022, the additional borrowing availability was $204.0 million beyond the $46.0 million drawn. At December 31, 2021, the line of credit borrowing capacity was $250.0 million based on the value of unencumbered properties, of which $76.0 million was drawn on the line.

In January 2021, we amended and expanded our private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc. (collectively, “PGIM”) to increase the aggregate amount available for issuance of unsecured senior promissory notes to $225.0 million. Under this agreement, we issued $200.0 million unsecured senior notes with $25.0 million remaining available. In September 2021, we entered into a note purchase agreement for the issuance of $125.0 million of senior unsecured promissory notes, of which $25.0 million was under the private shelf agreement with PGIM. The following table shows the notes issued under both agreements.

26

	(in thousands)
	Amount		Maturity Date	Interest Rate
Series A	$	75,000	September 13, 2029	3.84	%
Series B	$	50,000	September 30, 2028	3.69	%
Series C	$	50,000	June 6, 2030	2.70	%
Series 2021-A	$	35,000	September 17, 2030	2.50	%
Series 2021-B	$	50,000	September 17, 2031	2.62	%
Series 2021-C	$	25,000	September 17, 2032	2.68	%
Series 2021-D	$	15,000	September 17, 2034	2.78	%

In September 2021, we entered into a $198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”) for the financing of certain apartment communities. The FMCF is currently secured by mortgages on those apartment communities. The notes are interest-only, have varying maturity dates of 7, 10, and 12 years, and a blended, weighted average interest rate of 2.78%. As of March 31, 2022 and December 31, 2021, the FMCF had a balance of $198.9 million. The FMCF is included within mortgages payable on the Condensed Consolidated Balance Sheets.

Mortgage loan indebtedness, excluding the FMCF, was $326.1 million and $284.9 million at March 31, 2022 and December 31, 2021, respectively. All of our mortgage debt is at fixed rates of interest, with staggered maturities. This decreases the exposure to changes in interest rates, which reduces the effect of interest rate fluctuations on our results of operations and cash flows. As of March 31, 2022, the weighted average interest rate on mortgage debt was 3.85%, compared to 3.81% as of December 31, 2021.

We also have a $6.0 million operating line of credit. This operating line of credit is designed to enhance treasury management activities and more effectively manage cash balances. This operating line matures on November 29, 2022, with pricing based on a market spread plus the one-month LIBOR index rate.

Equity

We had an equity distribution agreement in connection with the 2019 ATM Program through which we could offer and sell common shares having an aggregate gross sales price of up to $150.0 million. We replaced the 2019 ATM Program with the 2021 ATM Program, through which we may offer and sell common shares having an aggregate sales price of up to $250.0 million, in amounts and at times determined by management. The proceeds from the sale of common shares under the 2021 ATM program are intended to be used for general corporate purposes, which may include the funding of acquisitions and the repayment of indebtedness. During the three months ended March 31, 2022, we issued 321,000 common shares under the 2021 ATM program at an average price of $98.89 per share, net of commissions. Total consideration, net of commissions and issuance costs, was $31.7 million. As of March 31, 2022, common shares having an aggregate offering price of up to $126.6 million remained available under the 2021 ATM Program.

On September 1, 2021, we issued 1.8 million Series E preferred units with a par value of $100 per Series E preferred unit as partial consideration for the acquisition of 17 apartment communities. The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year. Each Series E preferred unit is convertible, at the holder's option, into 1.2048 Units. The Series E preferred units have an aggregate liquidation preference of $181.4 million. The holders of the Series E preferred units do not have voting rights.

Changes in Cash, Cash Equivalents, and Restricted Cash

The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash which are presented in the Condensed Consolidated Statements of Cash Flows in Part I, Item 1 above.

In addition to cash flow from operations, during the three months ended March 31, 2022, we generated capital from various activities, including:

•Receiving $31.7 million in net proceeds from the issuance of 321,000 common shares under the 2021 ATM Program.

During the three months ended March 31, 2022, we used capital for various activities, including:

•Acquiring four apartment communities in Minneapolis, Minnesota for $9.1 million in cash with the remainder of the purchase price in issuance of Units, assumption of mortgage debt, and the exchange of mortgages receivable which we financed;

•Repaying $2.2 million of mortgage principal;

27

•Repaying $30.0 million on the line of credit;

•Paying $3.2 million for the termination of interest rate swaps; and

•Funding capital improvements for apartment communities of approximately $3.5 million.

Contractual Obligations and Other Commitments

Contractual obligations and other commitments were disclosed in our Form 10-K for the year ended December 31, 2021. There have been no material changes to our contractual obligations and other commitments since that report was filed.

Inflation

Our apartment leases generally have terms of one year or less, which means that, in an inflationary environment, we would have the ability, subject to market conditions, to increase rents upon the commencement of new leases or renewal of existing leases to manage the impact of inflation on our business. However, the cost to operate and maintain communities could increase at a rate greater than our ability to increase rents, which could adversely affect our results of operations. Extreme escalation of costs could have a negative impact on our residents and their ability to absorb rent increases. We also continue to monitor pressures surrounding supply chain challenges. A worsening of the current environment could contribute to delays in obtaining construction materials for maintenance or value add projects and result in higher than anticipated costs, which could prevent us from obtaining expected returns on value add projects.

Off-Balance Sheet Arrangements

As of March 31, 2022, we had no significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Critical Accounting Policies

In preparing the Condensed Consolidated Financial Statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. A summary of critical accounting policies is included in our Form 10-K for the year ended December 31, 2021, filed with the SEC on February 28, 2022 under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements in this report for additional information. There have been no other significant changes to the our critical accounting policies during the three months ended March 31, 2022.

28

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Centerspace’s exposure to market risk is primarily related to fluctuations in the general level of interest rates on the current and future fixed and variable rate debt obligations. The Company used interest rate swaps to offset the impact of interest rate fluctuations on variable-rate debt. During the three months ended March 31, 2022, Centerspace terminated its remaining interest rate swaps, which consisted of a swap with a notional amount of $75.0 million and a forward swap with a notional amount of $70.0 million. The Company does not enter into derivative instruments for trading or speculative purposes.

See our Annual Report on Form 10-K for the year ended December 31, 2021 under the heading “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for a more complete discussion of the Company’s interest rate sensitivity. As of March 31, 2022, the Company has increased its exposure to market risk by terminating interest rate swaps which synthetically fixed the variable rate on the line of credit.

29

Item 4. Controls and Procedures

Disclosure Controls and Procedures:  

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2022, such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting:  

In connection with the evaluation required by Rule 13a-15(d), management, with the participation of the Chief Executive Officer and Chief Financial Officer, has identified no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2022 and that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of the Company’s operations, the Company becomes involved in litigation. At this time, the Company knows of no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of the Company’s property is the subject.

Item 1A. Risk Factors

Inflation and price volatility in the global economy could negatively impact our business and results of operations.

General inflation in the United States has risen to levels not experienced in recent decades, including rising energy prices, prices for consumer goods, interest rates, wages, and currency volatility. These increases and any fiscal or other policy interventions by the U.S. government in reaction to such events could negatively impact our business by increasing our operating costs and our borrowing costs as well as decreasing the capital available to our residents and prospective residents who wish to rent in our communities. Although we are able to increase rent to combat inflation, the cost to operate and maintain communities could increase faster or at a rate greater than our ability to increase rents, which could adversely affect our results of operations.

Other than as described above, there have been no material changes to the Risk Factors previously disclosed in Item 1A in Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 

Sales of Securities

On January 31, 2022, the Company issued 2,500 unregistered Common Shares to limited partners of the Operating Partnership in exchange for their Units, in reliance on the private offering exemption under Section 4(a)(2) of the Securities Act of 1933, as amended.

Issuer Purchases of Equity Securities

				Maximum Dollar
			Total Number of Shares	Amount of Shares That
	Total Number of	Average Price	Purchased as Part of	May Yet Be Purchased
	Shares and Units	Paid per	Publicly Announced	Under the Plans or
Period	Purchased	Share and Unit(1)	Plans or Programs	Programs
January 1 - 31, 2022	—	—	—	—
February 1 - 28, 2022	31,168	93.03	—	—
March 1 - 31, 2022	—	—	—	—
Total	31,168	93.03	—

(1)Includes Units redeemed for cash pursuant to the exercise of exchange rights.

Item 3. Defaults Upon Senior Securities 

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

31

Item 6. Exhibits

The following exhibits are filed as part of this Report.

EXHIBIT INDEX

Exhibit No.	Description
3.1	Articles of Amendment and Third Restated Declaration of Trust of Investors Real Estate Trust adopted on September 23, 2003, as amended on September 18, 2007 (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed with the Commission on June 30, 2014).
3.2	Seventh Restated Trustee’s Regulations (Bylaws) of Investors Real Estate Trust, adopted on April 27, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 1, 2020).
3.3	Articles Supplementary to the Company’s Articles of Amendment and Third Restated Declaration of Trust designating the Company’s 6.625% Series C Cumulative Redeemable Preferred Shares, no par value per share (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form 8-A filed with the SEC on September 28, 2017).
10.1	Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on March 24, 2022).
31.1*	Section 302 Certification of Chief Executive Officer
31.2*	Section 302 Certification of Executive Vice President and Chief Financial Officer
32.1*	Section 906 Certifications of Chief Executive Officer
32.2*	Section 906 Certifications of Executive Vice President and Chief Financial Officer
101 INS**	INSTANCE DOCUMENT
101 SCH**	SCHEMA DOCUMENT
101 CAL**	CALCULATION LINKBASE DOCUMENT
101 LAB**	LABELS LINKBASE DOCUMENT
101 PRE**	PRESENTATION LINKBASE DOCUMENT
101 DEF**	DEFINITION LINKBASE DOCUMENT
104**	COVER PAGE INTERACTIVE DATA FILE - THE COVER PAGE XBRL TAGS ARE EMBEDDED WITHIN THE INLINE XBRL DOCUMENT

*    Filed herewith

**    Submitted electronically herewith. Attached as Exhibit 101 are the following materials from Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Statements of Equity; (iv) the Condensed Consolidated Statements of Cash Flows; (v) notes to these Condensed Consolidated Financial Statements; and (vi) the Cover Page to Quarterly Report on our Form 10-Q.

32

SIGNATURES

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, thereunto duly authorized.

Centerspace

(Registrant)

/s/ Mark O. Decker, Jr.

Mark O. Decker, Jr.

President and Chief Executive Officer

/s/ Bhairav Patel

Bhairav Patel

Executive Vice President and Chief Financial Officer

Date: May 2, 2022

33

EX-31.1

Exhibit 31.1

Certifications

I, Mark O.  Decker, Jr., certify that:

1 I have reviewed this quarterly report on Form 10-Q of Centerspace;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4 The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5 The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 2, 2022

By:	/s/ Mark O. Decker, Jr.
	Mark O. Decker, Jr.,  President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certifications

I, Bhairav Patel, certify that:

1 I have reviewed this quarterly report on Form 10-Q of Centerspace;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4 The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5 The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 2, 2022

By:	/s/ Bhairav Patel
	Bhairav Patel, Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Centerspace (the “Company”) on Form 10-Q for the quarter ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark O. Decker, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mark O. Decker, Jr.

Mark O. Decker, Jr.

President and Chief Executive Officer

May 2, 2022

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification is furnished, and shall not be deemed filed, as provided by Rule 13a-14(b) promulgated under the Securities Act of 1934 and Item 601(b) (32) (ii) of Regulation S-K.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Centerspace (the “Company”) on Form 10-Q for the quarter ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bhairav Patel, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Bhairav Patel

Bhairav Patel

Executive Vice President and Chief Financial Officer

May 2, 2022

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification is furnished, and shall not be deemed filed, as provided by Rule 13a-14(b) promulgated under the Securities Act of 1934 and Item 601(b) (32) (ii) of Regulation S-K.

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2022	Apr. 25, 2022
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	001-35624
Entity Registrant Name	CENTERSPACE
Entity Incorporation, State or Country Code	ND
Entity Tax Identification Number	45-0311232
Entity Address, Address Line One	3100 10th Street SW
Entity Address, Address Line Two	Post Office Box 1988
Entity Address, City or Town	Minot
Entity Address, State or Province	ND
Entity Address, Postal Zip Code	58702-1988
City Area Code	701
Local Phone Number	837-4738
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		15,365,272
Entity Central Index Key	0000798359
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false
Common Shares of Beneficial Interest, no par value
Entity Information [Line Items]
Title of 12(b) Security	Common Shares of Beneficial Interest, no par value
Trading Symbol	CSR
Security Exchange Name	NYSE
Series C Preferred Stock
Entity Information [Line Items]
Title of 12(b) Security	Series C Cumulative Redeemable Preferred Shares
Trading Symbol	CSR-PRC
Security Exchange Name	NYSE

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Real estate investments
Property owned	$ 2,390,952	$ 2,271,170
Less accumulated depreciation	(465,752)	(443,592)
Total property owned	1,925,200	1,827,578
Mortgage loans receivable at fair value	0	43,276
Total real estate investments	1,925,200	1,870,854
Cash and cash equivalents	13,313	31,267
Restricted cash	2,409	7,358
Other assets	24,651	30,582
TOTAL ASSETS	1,965,573	1,940,061
LIABILITIES
Accounts payable and accrued expenses	50,360	62,403
Revolving lines of credit	46,000	76,000
Notes payable, net of unamortized loan costs of $641 and $656, respectively	299,359	299,344
Mortgages payable, net of unamortized loan costs of $3,648 and $3,187, respectively	521,536	480,703
TOTAL LIABILITIES	917,255	918,450
COMMITMENTS AND CONTINGENCIES (NOTE 10)
SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $100 par value, 166 units issued and outstanding at March 31, 2022 and December 31, 2021, aggregate liquidation preference of $16,560)	22,412	25,331
EQUITY
Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $25 per share liquidation preference, 3,881 shares issued and outstanding at March 31, 2022 and December 31, 2021, aggregate liquidation preference of $97,036)	93,530	93,530
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 15,366 shares issued and outstanding at March 31, 2022 and 15,016 shares issued and outstanding at December 31, 2021)	1,203,685	1,157,255
Accumulated distributions in excess of net income	(495,732)	(474,318)
Accumulated other comprehensive income (loss)	(2,550)	(4,435)
Total shareholders’ equity	798,933	772,032
Noncontrolling interests – Operating Partnership and Series E preferred units	226,302	223,600
Noncontrolling interests – consolidated real estate entities	671	648
Total equity	1,025,906	996,280
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY	$ 1,965,573	$ 1,940,061

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
EQUITY
Preferred units, par value (in dollars per share)	$ 100	$ 100
Preferred units, shares issued (in shares)	166	166
Preferred units, shares outstanding (in shares)	166	166
Preferred units, liquidation preference	$ 16,560	$ 16,560
Preferred shares, liquidation preference (in dollars per share)	$ 25	$ 25
Preferred shares of beneficial interest, shares issued (in shares)	3,881	3,881
Preferred shares of beneficial interest, shares outstanding (in shares)	3,881	3,881
Preferred shares of beneficial interest, liquidation preference	$ 97,036	$ 97,036
Common shares of beneficial interest, shares issued (in shares)	15,366	15,016
Common shares of beneficial interest, shares outstanding (in shares)	15,366	15,016
Term Loans
LIABILITIES
Unamortized loan costs	$ 641	$ 656
Mortgages
LIABILITIES
Unamortized loan costs	$ 3,648	$ 3,187

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
REVENUE	$ 60,314	$ 46,648
EXPENSES
Property operating expenses, excluding real estate taxes	19,014	13,449
Real estate taxes	6,859	5,792
Property management expense	2,253	1,767
Casualty (gain) loss	598	101
Depreciation and amortization	31,001	19,992
General and administrative expenses	4,500	3,906
TOTAL EXPENSES	64,225	45,007
Operating income (loss)	(3,911)	1,641
Interest expense	(7,715)	(7,231)
Interest and other income (loss)	1,063	431
NET INCOME (LOSS)	(10,563)	(5,159)
Dividends to Series D preferred unitholders	(160)	(160)
Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units	2,157	469
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	(23)	(17)
Net income (loss) attributable to controlling interests	(8,589)	(4,867)
Dividends to preferred shareholders	(1,607)	(1,607)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$ (10,196)	$ (6,474)
NET EARNINGS (LOSS) PER COMMON SHARE - BASIC (in dollars per share)	$ (0.68)	$ (0.49)
NET EARNINGS (LOSS) PER COMMON SHARE - DILUTED (in dollars per share)	$ (0.68)	$ (0.49)

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (10,563)	$ (5,159)
Other comprehensive income:
Unrealized gain (loss) from derivative instrument	1,581	2,011
(Gain) loss on derivative instrument reclassified into earnings	304	1,095
Total comprehensive income (loss)	(8,678)	(2,053)
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units	2,480	261
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities	(23)	(17)
Comprehensive income (loss) attributable to controlling interests	$ (6,221)	$ (1,809)

XML

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Series C Preferred Stock	Series E Preferred Units	PREFERRED SHARES	COMMON SHARES	ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME	ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME Series C Preferred Stock	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	NONCONTROLLING INTERESTS	NONCONTROLLING INTERESTS Series E Preferred Units
Beginning balance at Dec. 31, 2020	$ 672,823			$ 93,530	$ 968,263	$ (427,681)		$ (15,905)	$ 54,616
Beginning balance (in shares) at Dec. 31, 2020					13,027
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to controlling interests and noncontrolling interests	(5,319)					(4,867)			(452)
Change in fair value of derivatives	3,107							3,107
Distributions - common shares and units	(9,919)					(9,254)			(665)
Distributions - Series C preferred shares	(1,607)	$ (1,607)					$ (1,607)
Share-based compensation, net of forfeitures (in shares)					3
Share-based compensation, net of forfeitures	810				$ 810
Sale / issuance of stock, net (in shares)					164
Sale / issuance of stock	11,782				$ 11,782
Redemption of units for common shares (in shares)					26
Redemption of units for common shares	0				$ (220)				220
Other	(225)				(182)				(43)
Ending balance at Mar. 31, 2021	671,452			93,530	$ 980,453	(443,409)		(12,798)	53,676
Ending balance (in shares) at Mar. 31, 2021					13,220
Beginning balance at Dec. 31, 2021	996,280			93,530	$ 1,157,255	(474,318)		(4,435)	224,248
Beginning balance (in shares) at Dec. 31, 2021					15,016
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to controlling interests and noncontrolling interests	(10,723)					(8,589)			(2,134)
Change in fair value of derivatives	1,885							1,885
Distributions - common shares and units	(11,946)					(11,218)			(728)
Distributions - Series C preferred shares	(1,607)	$ (1,607)					$ (1,607)
Distributions - Series E preferred stock			$ (1,757)							$ (1,757)
Share-based compensation, net of forfeitures (in shares)					19
Share-based compensation, net of forfeitures	719				$ 719
Sale / issuance of stock, net (in shares)					321
Sale / issuance of stock	31,684				$ 31,684
Issuance of Units	22,882				$ 13,023				9,859
Redemption of units for common shares (in shares)					10
Redemption of units for common shares	0				$ (388)				388
Redemption of units for cash	(2,903)								(2,903)
Change in value of Series D preferred units	2,919				2,919
Shares withheld for taxes	(1,274)				(1,274)
Other	(253)				(253)
Ending balance at Mar. 31, 2022	$ 1,025,906			$ 93,530	$ 1,203,685	$ (495,732)		$ (2,550)	$ 226,973
Ending balance (in shares) at Mar. 31, 2022					15,366

XML

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Distributions - common shares and units (in dollars per share)	$ 0.73	$ 0.70
Series C Preferred Stock
Distributions - preferred shares and units (in dollars per share)	0.414063	$ 0.414063
Series E Preferred Units
Distributions - preferred shares and units (in dollars per share)	$ 0.968750

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (10,563)	$ (5,159)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization, including amortization of capitalized loan costs	31,096	20,245
Share-based compensation expense	719	810
(Gain) loss on interest rate swap termination, amortization, and mark-to-market	(613)	0
Other, net	416	836
Changes in other assets and liabilities:
Other assets	1,316	(533)
Accounts payable and accrued expenses	(10,773)	(1,244)
Net cash provided by (used by) operating activities	11,598	14,955
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in mortgages and notes receivable	0	(5,445)
Payments for acquisitions of real estate investments	(9,545)	(77,585)
Payments for improvements of real estate investments	(3,474)	(2,165)
Other investing activities	288	160
Net cash provided by (used by) investing activities	(12,731)	(85,035)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages payable	(2,154)	(3,566)
Proceeds from revolving lines of credit	13,000	105,716
Principal payments on revolving lines of credit	(43,000)	(77,044)
Net proceeds from notes payable	0	49,940
Payment for termination of interest rate swap	(3,209)	0
Net proceeds from issuance of common shares	31,684	11,782
Redemption of partnership units	(2,903)
Distributions paid to common shareholders	(10,812)	(9,119)
Distributions paid to preferred shareholders	(1,607)	(1,607)
Distributions paid to preferred unitholders	(160)	(160)
Distributions paid to noncontrolling interests – Operating Partnership and Series E preferred units	(2,356)	(683)
Other financing activities	(253)	(63)
Net cash provided by (used by) financing activities	(21,770)	75,196
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(22,903)	5,116
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	38,625	7,310
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	15,722	12,426
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures	2,656	2,418
Operating partnership units converted to shares	(388)	(220)
Distributions declared but not paid to common shareholders	11,944	9,919
Retirement of shares withheld for taxes	1,273	0
Real estate assets acquired through assumption of debt	41,623	0
Fair value adjustment to debt	1,224	0
Note receivable exchanged through real estate acquisition	43,276	0
Real estate assets acquired through issuance of operating partnership units	22,882	0
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	7,182	6,787
Cash and cash equivalents	13,313	10,816
Restricted cash	2,409	1,610
Total cash, cash equivalents and restricted cash	$ 15,722	$ 12,426

XML

ORGANIZATION	3 Months Ended
	Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION	ORGANIZATION Centerspace, collectively with its consolidated subsidiaries (“Centerspace,” “the Company,” “we,” “us,” or “our”), is a North Dakota real estate investment trust (“REIT”) focused on the ownership, management, acquisition, redevelopment, and development of apartment communities. As of March 31, 2022, Centerspace owned interests in 83 apartment communities consisting of 14,838 apartment homes.

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES 

BASIS OF PRESENTATION

Centerspace conducts a majority of its business activities through a consolidated operating partnership, Centerspace, LP (f/k/a IRET Properties), a North Dakota limited partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities. The accompanying Condensed Consolidated Financial Statements include the Company’s accounts and the accounts of all its subsidiaries in which it maintains a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation.

The Condensed Consolidated Financial Statements also reflect the Operating Partnership’s ownership of a joint venture entity in which the Operating Partnership has a general partner or controlling interest. This entity is consolidated into the Company’s operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses.

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Centerspace’s interim Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of financial position, results of operations, and cash flows for the interim periods, have been included.

The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim Condensed Consolidated Financial Statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022.

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

As of March 31, 2022 and December 31, 2021, restricted cash consisted primarily of real estate deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

LEASES

As a lessor, Centerspace primarily leases multifamily apartment homes which qualify as operating leases with terms that are generally one year or less. Rental revenues are recognized in accordance with ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 98.1% of total revenues and includes gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 1.9% of total revenues and are primarily driven by other fee income, which is typically recognized when earned, at a point in time.

Some of the Company’s apartment communities have commercial spaces available for lease. Lease terms for these spaces typically range from three to fifteen years. The leases for commercial spaces generally include options to extend the lease for additional terms.

Many of the leases contain non-lease components for utility reimbursement from residents and common area maintenance from commercial tenants. Centerspace has elected the practical expedient to combine lease and non-lease components for all asset classes. The combined components are included in lease income and are accounted for under ASC 842.

The aggregate amount of future scheduled lease income on commercial operating leases, excluding any variable lease income and non-lease components, as of March 31, 2022, was as follows:

	(in thousands)
2022 (remainder)	$	1,958
2023	2,627
2024	2,577
2025	2,528
2026	1,935
Thereafter	1,548
Total scheduled lease income - commercial operating leases	$	13,173

REVENUES

Revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration to which the Company expects to be entitled for those goods and services.

Revenue streams that are included in revenues from contracts with customers include:

•Other property revenue: Centerspace recognizes revenue for rental related income not included as a component of a lease, such as application fees, as earned.

•Gains or losses on sales of real estate: A gain or loss is recognized when the criteria for derecognition of an asset are met, including when (1) a contract exists and (2) the buyer obtained control of the nonfinancial asset that was sold.

The following table presents the disaggregation of revenue streams for the three months ended March 31, 2022 and 2021:

		(in thousands)
		Three Months Ended March 31,
Revenue Stream	Applicable Standard	2022		2021
Fixed lease income - operating leases	Leases	$	56,673	$	43,840
Variable lease income - operating leases	Leases	2,523		1,969
Other property revenue	Revenue from contracts with customers	1,118		839
Total revenue		$	60,314	$	46,648

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates long-lived assets, including investments in real estate, for impairment indicators at least quarterly. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each property, and legal and environmental concerns. If indicators exist, the Company compares the expected future undiscounted cash flows for the property against the carrying amount of that property. If the sum of the estimated undiscounted cash flows is less than the carrying amount, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount. If the anticipated holding period for properties, the estimated fair value of properties, or other factors change based on market conditions or otherwise, the evaluation of impairment charges may be different and such differences could be material to the consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates, and capital requirements that could differ materially from actual results. Reducing planned property holding periods may increase the likelihood of recording impairment losses.

During the three months ended March 31, 2022 and 2021, the Company recorded no impairment charges.

MORTGAGE LOANS RECEIVABLE AND NOTES RECEIVABLE

In March 2020, in connection with the acquisition of Ironwood, an apartment community in New Hope, Minnesota, the Company acquired a tax increment financing note receivable (“TIF”) with a principal balance of $6.1 million and $6.4 million at March 31, 2022 and December 31, 2021, respectively, which appears within other assets in the Condensed Consolidated Balance Sheets. The note bears an interest rate of 4.5% with payments due in February and August of each year.

In December 2019, Centerspace originated a $29.9 million construction loan and a $15.3 million mezzanine loan for the development of a multifamily community located in Minneapolis, Minnesota. During the three months ended September 30, 2021, construction on the project was completed and the lease-up phase began. The construction and mezzanine loans bore and accrued interest at 4.5% and 11.5%, respectively. During the three months ended March 31, 2022, the Company exercised its option to purchase the apartment community in exchange for the loans and cash. As of March 31, 2022, the loans had no remaining balance. As of December 31, 2021, the Company had fully funded the $29.9 million construction loan and $13.4 million of the mezzanine loan, both of which appear within mortgage loans receivable in the Condensed Consolidated Balance Sheets.

VARIABLE INTEREST ENTITIES

Centerspace has determined that its Operating Partnership and each of its less-than-wholly owned real estate partnerships are VIEs, as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights. The Company is the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on the balance sheet because the Company has a controlling financial interest in the VIEs and has both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because the Operating Partnership is a VIE, all of the Company’s assets and liabilities are held through a VIE.

XML

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares of beneficial interest (“common shares”) outstanding during the period. Centerspace has issued restricted stock units (“RSUs”) and incentive stock options (“ISOs”) under the 2015 Incentive Plan, Series D Convertible Preferred Units (“Series D preferred units”), and Series E Convertible Preferred Units (“Series E preferred units”), which could have a dilutive effect on the earnings per share upon exercise of the RSUs or ISOs or upon conversion of the Series D or Series E preferred units (refer to Note 4 for further discussion of the Series D and the Series E preferred units). Other than the issuance of RSUs, ISOs, Series D preferred units, and Series E preferred units, there are no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their limited partnership units (“Units”) any time following the first anniversary of the date they acquired such Units (“Exchange Right”). Upon the exercise of Exchange Rights, and in Centerspace’s sole discretion, it may issue common shares in exchange for Units on a one-for-one basis.

For the three months ended March 31, 2022 and 2021, performance-based RSUs of 33,000 and 46,000, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three months ended March 31, 2022, operating partnership units of 965,000, Series D preferred units of 228,000, Series E preferred units of 2.2 million, time-based RSUs of 14,000, and weighted average stock options of 52,000, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three months ended March 31, 2021, Series D preferred units of 228,000, time-based RSUs of 19,000, and weighted average stock options of 44,000, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the Condensed Consolidated Financial Statements for the three months ended March 31, 2022 and 2021:  

	(in thousands, except per share data)
	Three Months Ended March 31,
	2022		2021
NUMERATOR
Net income (loss) attributable to controlling interests	$	(8,589)	$	(4,867)
Dividends to preferred shareholders	(1,607)		(1,607)
Numerator for basic earnings (loss) per share – net income available to common shareholders	(10,196)		(6,474)
Noncontrolling interests – Operating Partnership and Series E preferred units	(2,157)		(469)
Dividends to preferred unitholders	160		160
Numerator for diluted earnings (loss) per share	$	(12,193)	$	(6,783)
DENOMINATOR
Denominator for basic earnings per share weighted average shares	15,097		13,078
Effect of redeemable operating partnership units	—		957
Denominator for diluted earnings per share	15,097		14,035
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC	$	(0.68)	$	(0.49)
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED	$	(0.68)	$	(0.49)

XML

EQUITY AND MEZZANINE EQUITY

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

EQUITY AND MEZZANINE EQUITY

EQUITY AND MEZZANINE EQUITY

Operating Partnership Units. The Operating Partnership had 997,000 and 832,000 outstanding Units at March 31, 2022 and December 31, 2021, respectively. During the three months ended March 31, 2022, we issued 209,000 Units as partial consideration for the acquisition of three apartment communities.

Exchange Rights. Centerspace redeemed Units in exchange for common shares in connection with Unitholders exercising their exchange rights during the three months ended March 31, 2022 and 2021 as detailed in the table below.

	(in thousands)
Three Months Ended March 31,	Number of Units	Net Book Basis
2022	10	$	(388)
2021	26	$	(220)

Pursuant to the exercise of exchange rights, the Company redeemed Units for cash during the three months ended March 31, 2022 and 2021 as detailed in the table below.

	(in thousands)
Three Months Ended March 31,	Number of Units	Aggregate Cost		Average Price Per Unit
2022	31	$	2,903	$	93.14
2021	—	$	9	$	71.55

Series E Preferred Units (Noncontrolling Interests). On September 1, 2021, Centerspace issued 1.8 million Series E preferred units with a par value of $100 per Series E preferred unit as partial consideration for the acquisition of 17 apartment communities. The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year. Each Series E preferred unit is convertible, at the holder’s option, into 1.2048 Units. The Series E preferred units have an aggregate liquidation preference of $181.4 million. The holders of the Series E preferred units do not have voting rights and are required to hold the units for one year before they may elect to convert.

Common Shares and Equity Awards. Common shares outstanding on March 31, 2022 and December 31, 2021, totaled 15.4 million and 15.0 million, respectively. There were 18,759 and 2,801 shares issued upon the vesting of equity awards under the 2015 Incentive Plan during the three months ended March 31, 2022 and 2021, respectively, with a total grant-date fair value of $1.5 million and $164,000, respectively. These shares vested based on performance and service criteria.

Equity Distribution Agreement. Centerspace had an equity distribution agreement in connection with an at-the-market offering (“2019 ATM Program”) through which it could offer and sell common shares having an aggregate sales price of up to $150.0 million. In September 2021, the Company replaced the 2019 ATM Program with a new at-the-market offering (“2021 ATM Program”) through which it may offer and sell common shares having an aggregate sales price of up to $250.0 million, in amounts and at times determined by management. Under the 2021 ATM Program, the Company may enter into separate

forward sale agreements. The proceeds from the sale of common shares under the 2021 ATM Program are intended to be used for general purposes, which may include the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness. The table below provides details on the sale of common shares during the three months ended March 31, 2022 and 2021 under both the 2019 and 2021 ATM Programs. As of March 31, 2022, common shares having an aggregate offering price of up to $126.6 million remained available under the 2021 ATM Program.

	(in thousands, except per share amounts)
Three Months Ended March 31,	Number of Common Shares	Net Consideration(1)		Average Net Price Per Share
2022	321	$	31,732	$	98.89
2021	164	$	11,859	$	72.19

(1)Total consideration is net of $338 and $181 in commissions and issuance costs during the three months ended March 31, 2022 and 2021, respectively.

Series C Preferred Shares. Series C preferred shares outstanding were 3.9 million shares at March 31, 2022 and December 31, 2021. The Series C preferred shares are nonvoting and redeemable for cash at $25.00 per share at Centerspace’s option after October 2, 2022. Holders of these shares are entitled to cumulative distributions, payable quarterly (as and if declared by the Board of Trustees). Distributions accrue at an annual rate of $1.65625 per share, which is equal to 6.625% of the $25.00 per share liquidation preference ($97.0 million liquidation preference in the aggregate).

Series D Preferred Units (Mezzanine Equity). Series D preferred units outstanding were 165,600 preferred units at March 31, 2022 and December 31, 2021. The Series D preferred units have a par value price of $100 per preferred unit. The Series D preferred unit holders receive a preferred distribution at the rate of 3.862% per year. The Series D preferred units have a put option which allows the holder to redeem any or all of the Series D preferred units for cash equal to the issuance price. Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 Units. The Series D preferred units have an aggregate liquidation preference of $16.6 million. Changes in the redemption value are charged to common shares on the Condensed Consolidated Balance Sheets from period to period. The holders of the Series D preferred units do not have voting rights. Distributions to Series D unitholders are presented in the Condensed Consolidated Statements of Equity within net income (loss) attributable to controlling interests and noncontrolling interests.

XML

DEBT

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

DEBT

DEBT

As of March 31, 2022, 49 apartment communities were not encumbered by mortgages and are available to provide credit support for the unsecured borrowings. The Company’s primary unsecured credit facility (“unsecured credit facility”) is a revolving, multi-bank line of credit, with the Bank of Montreal serving as administrative agent. The line of credit has total commitments and borrowing capacity of $250.0 million, based on the value of unencumbered properties. As of March 31, 2022, the additional borrowing availability was $204.0 million beyond the $46.0 million drawn. This unsecured credit facility was amended on September 30, 2021 to extend the maturity date to September 2025 and to provide for a $400.0 million accordion option.

The interest rates on the line of credit and term loans are based, at the Company’s option, on either the lender’s base rate plus a margin, ranging from 25-80 basis points, or the London Interbank Offered Rate (“LIBOR”), plus a margin that ranges from 125-180 basis points based on the consolidated leverage ratio, as defined under the Third Amended and Restated Credit Agreement. The unsecured credit facility and unsecured senior notes are subject to customary financial covenants and limitations. The Company believes that it is in compliance with all such financial covenants and limitations as of March 31, 2022.

In January 2021, Centerspace amended and expanded its private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc. (collectively, “PGIM”) to increase the aggregate amount available for issuance of unsecured senior promissory notes (“unsecured senior notes”) to $225.0 million. Under this agreement, the Company has issued $200.0 million unsecured senior notes with $25.0 million remaining available as of March 31, 2022. In September 2021, the Company entered into a note purchase agreement for the issuance of $125.0 million senior unsecured promissory notes, of which $25.0 million was under the private shelf agreement with PGIM. The following table shows the notes issued under both agreements.

	(in thousands)
	Amount		Maturity Date	Interest Rate
Series A	$	75,000	September 13, 2029	3.84	%
Series B	$	50,000	September 30, 2028	3.69	%
Series C	$	50,000	June 6, 2030	2.70	%
Series 2021-A	$	35,000	September 17, 2030	2.50	%
Series 2021-B	$	50,000	September 17, 2031	2.62	%
Series 2021-C	$	25,000	September 17, 2032	2.68	%
Series 2021-D	$	15,000	September 17, 2034	2.78	%

In September 2021, Centerspace entered into a $198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”) for the acquisition of 16 apartment communities. The FMCF is currently secured by mortgages on those apartment communities. The notes are interest-only, have varying maturity dates of 7, 10, and 12 years, and a blended, weighted average interest rate of 2.78%. As of March 31, 2022, the FMCF had a balance of $198.9 million. The FMCF is included within mortgages payable on the Condensed Consolidated Balance Sheets.

As of March 31, 2022, Centerspace owned 18 apartment communities that served as collateral for mortgage loans, in addition to the apartment communities secured by the FMCF. All of these mortgage loans were non-recourse to the Company other than for standard carve-out obligations. As of March 31, 2022, the Company believes that there are no material defaults or instances of noncompliance in regards to any of these mortgages payable.

Centerspace also has a $6.0 million operating line of credit. This operating line of credit is designed to enhance treasury management activities and more effectively manage cash balances. This operating line matures on November 29, 2022, with pricing based on a market spread plus the one-month LIBOR index rate.

The following table summarizes indebtedness:

	(in thousands)
	March 31, 2022			December 31, 2021			Weighted Average Maturity in Years at March 31, 2022
Lines of credit	$	46,000		$	76,000		3.75
Unsecured senior notes (1)	300,000			300,000			8.63
Unsecured debt	346,000			376,000			7.98
Mortgages payable - Fannie Mae credit facility	198,850			198,850			9.56
Mortgages payable - other	326,113			284,934			6.71
Total debt	$	870,963		$	859,784		7.14
Weighted average interest rate on lines of credit (rate with swap)(2)	2.56		%	2.74		%
Weighted average interest rate on unsecured senior notes	3.12		%	3.12		%
Weighted average interest rate on mortgages payable - Fannie Mae credit facility	2.78		%	2.78		%
Weighted average interest rate on mortgages payable - other	3.85		%	3.81		%
Weighted average interest rate on total debt	3.29		%	3.26		%

(1)Included within notes payable on the Condensed Consolidated Balance Sheets.

(2)The interest rate swap was terminated during the three months ended March 31, 2022.

The aggregate amount of required future principal payments on unsecured senior notes and mortgages payable as of March 31, 2022, was as follows:

	(in thousands)
2022 (remainder)	$	26,443
2023	45,988
2024	5,012
2025	79,850
2026	50,088
Thereafter	663,582
Total payments	$	870,963

XML

DERIVATIVE INSTRUMENTS

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

Centerspace’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate fluctuations. To accomplish this objective, the Company primarily uses interest rate swap contracts to fix variable interest rate debt.

Changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (“OCI”) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for the interest rate swaps will be reclassified to interest expense as interest payments are incurred on the hedged variable rate debt. During the next twelve months, the Company estimates an additional $633,000 will be reclassified as an increase to interest expense.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements. Changes in fair value of derivatives not designated in hedging relationships are recorded directly to earnings within other income (loss) in the Condensed Consolidated Statement of Operations. During the three months ended March 31, 2022, the Company recorded a gain of $582,000 related to the interest rate swap not designated in a hedging relationship, prior to its termination.

During the three months ended March 31, 2022, the Company paid $3.2 million to terminate its $75.0 million interest rate swap and its $70.0 million forward swap. As of March 31, 2022 the Company had no remaining interest rate swaps.

As of December 31, 2021, Centerspace had one interest rate swap contract designated as a cash flow hedge of interest rate risk with a notional amount of $75.0 million to fix the interest rate on the line of credit. The Company also had one additional interest rate swap with an effective date of January 31, 2023 and a notional amount of $70.0 million which was not designated as a hedge in a qualifying hedging relationship.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021.

		(in thousands)
		March 31, 2022		December 31, 2021
	Balance Sheet Location	Fair Value		Fair Value
Total derivative instruments designated as hedging instruments - interest rate swaps	Accounts Payable and Accrued Expenses	$	—	$	4,610
Total derivative instruments not designated as hedging instruments - interest rate swaps	Accounts Payable and Accrued Expenses	$	—	$	1,097

The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of March 31, 2022 and 2021.

	(in thousands)
	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Gain (Loss) Reclassified from Accumulated OCI into Income
Three months ended March 31,	2022		2021			2022		2021
Total derivatives in cash flow hedging relationships - Interest rate contracts	$	1,581	$	2,011	Interest expense	$	(304)	$	(1,095)

The Company had agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

XML

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Cash and cash equivalents, restricted cash, accounts payable, accrued expenses, and other liabilities are carried at amounts that reasonably approximate their fair value due to their short-term nature. For variable rate line of credit debt that re-prices frequently, fair values are based on carrying values.

In determining the fair value of other financial instruments, Centerspace applies FASB ASC 820, “Fair Value Measurement and Disclosures.” Fair value hierarchy under ASC 820 distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting entity’s own assumptions

about market participant assumptions (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

Fair Value Measurements on a Recurring Basis

	(in thousands)
	Total		Level 1		Level 2	Level 3
March 31, 2022
Assets
Notes receivable	$	6,068	—		—	$	6,068
December 31, 2021
Assets
Mortgages and notes receivable	$	49,484	—		—	$	49,484
Liabilities
Derivative instruments - interest rate swaps	$	5,707	$	—	—	$	5,707

The fair value of the interest rate swaps was determined using the market standard methodology of netting discounted expected variable cash payments and receipts. The variable cash payments and receipts were based on an expectation of future interest rates (a forward curve) derived from observable market interest rate curves. The Company also considered both its own nonperformance risk and the counterparty’s nonperformance risk in the fair value measurement (Level 3).

Centerspace utilizes an income approach with Level 3 inputs based on expected future cash flows to value mortgages and notes receivable. The inputs include market transactions for similar instruments, management estimates of comparable interest rates (range of 3.75% to 10.75%), and instrument specific credit risk (range of 0.5% to 1.0%). Changes in the fair value of these receivables from period to period are reported in interest and other income on the Condensed Consolidated Statements of Operations.

	(in thousands)
	Fair Value Measurement at March 31,		Other Gains (Losses)		Interest Income		Total Changes in Fair Value Included in Current-Period Earnings
Three months ended March 31, 2022
Notes receivable	$	6,068	$	4	$	460	$	464
Three months ended March 31, 2021
Mortgage loans and notes receivable	$	36,443	$	4	$	407	$	411

As of March 31, 2022 and December 31, 2021, Centerspace has an investment of $890,000 and $903,000, respectively, in a real estate technology venture consisting of privately held entities that develop technology related to the real estate industry. This investment is measured at net asset value (“NAV”) as a practical expedient under ASC 820. As of March 31, 2022, the Company had unfunded commitments of $1.2 million.

Fair Value Measurements on a Nonrecurring Basis

There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2022 and December 31, 2021.

Financial Assets and Liabilities Not Measured at Fair Value

The fair value of unsecured senior notes and mortgages payable are estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates, excluding any prepayment penalties (Level 3).

The estimated fair values of the Company’s financial instruments as of March 31, 2022 and December 31, 2021, respectively, are as follows:

	(in thousands)
	March 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	13,313	$	13,313	$	31,267	$	31,267
Restricted cash	$	2,409	$	2,409	$	7,358	$	7,358
FINANCIAL LIABILITIES
Revolving lines of credit(1)	$	46,000	$	46,000	$	76,000	$	76,000
Unsecured senior notes	$	300,000	$	273,973	$	300,000	$	308,302
Mortgages payable - Fannie Mae	$	198,850	$	176,055	$	198,850	$	198,850
Mortgages payable - other	$	326,113	$	308,363	$	284,934	$	284,546

(1)Excluding the effect of interest rate swap agreements. Refer to Note 6 for discussion on the fair value of the interest rate swap agreements.

XML

ACQUISITIONS AND DISPOSITIONS

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS

Centerspace acquired four new apartment communities for an aggregate acquisition cost of $116.9 million during the three months ended March 31, 2022 compared to acquisitions of $76.9 million in the three months ended March 31, 2021. The acquisitions during the three months ended March 31, 2022 and 2021 are detailed below.

Three Months Ended March 31, 2022

	Date Acquired	(in thousands)
		Total Acquisition Cost		Form of Consideration						Investment Allocation
Acquisitions				Cash		Units(1)		Other(2)		Land		Building		Intangible Assets		Other(3)
191 homes - Martin Blu - Minneapolis, MN	January 4, 2022	$	49,825	$	3,031	$	18,885	$	27,909	$	3,547	$	45,212	$	1,813	$	(747)
31 homes - Zest - Minneapolis, MN	January 4, 2022	9,066		1,290		1,748		6,028		941		7,853		335		(63)
45 homes - Elements - Minneapolis, MN	January 4, 2022	11,364		1,429		2,249		7,686		936		10,261		574		(407)
130 homes - Noko Apartments - Minneapolis, MN	January 26, 2022	46,619		3,343		—		43,276		1,915		42,754		1,950		—
Total Acquisitions		$	116,874	$	9,093	$	22,882	$	84,899	$	7,339	$	106,080	$	4,672	$	(1,217)

(1)Fair value of operating partnership units issued on acquisition.

(2)Assumption of seller's debt upon closing for Martin Blu, Zest, and Elements. Mezzanine and construction loans, financed by Centerspace, exchanged as partial consideration for the acquisition of Noko Apartments.

(3)Debt discount on assumed mortgage.

Three Months Ended March 31, 2021

	Date Acquired	(in thousands)
		Total Acquisition Cost		Form of Consideration		Investment Allocation
Acquisitions				Cash		Land		Building		Intangible Assets
256 homes - Union Pointe - Longmont, CO	January 6, 2021	$	76,900	$	76,900	$	5,727	$	69,966	$	1,207

DISPOSITIONS

During the three months ended March 31, 2022 and 2021, Centerspace disposed of no real estate.

XML

SEGMENT REPORTING

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING 

Centerspace operates in a single reportable segment which includes the ownership, management, development, redevelopment, and acquisition of apartment communities. Each of the operating properties is considered a separate operating segment because each property earns revenues, incurs expenses, and has discrete financial information. The chief operating decision-makers evaluate each property’s operating results to make decisions about resources to be allocated and to assess performance and do not group the properties based on geography, size, or type for this purpose. The apartment communities have similar long-term economic characteristics and provide similar products and services to residents. No apartment community comprises more than 10% of consolidated revenues, profits, or assets. Accordingly, the apartment communities are aggregated into a single reportable segment. “All other” includes non-multifamily components of mixed-use properties and apartment communities the Company has sold.

The members of the executive management team are the chief operating decision-makers. This team measures the performance of the reportable segment based on net operating income (“NOI”), which the Company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.

The following tables present NOI for the three months ended March 31, 2022 and 2021, respectively, along with reconciliations to net income in the Condensed Consolidated Financial Statements. Segment assets are also reconciled to total assets as reported in the Condensed Consolidated Financial Statements.

	(in thousands)
Three Months Ended March 31, 2022	Multifamily		All Other		Total
Revenue	$	59,398	$	916	$	60,314
Property operating expenses, including real estate taxes	25,544		329		25,873
Net operating income	$	33,854	$	587	$	34,441
Property management					(2,253)
Casualty gain (loss)					(598)
Depreciation and amortization					(31,001)
General and administrative expenses					(4,500)
Interest expense					(7,715)
Interest and other income					1,063
Net income (loss)					$	(10,563)

	(in thousands)
Three Months Ended March 31, 2021	Multifamily		All Other		Total
Revenue	$	44,241	$	2,407	$	46,648
Property operating expenses, including real estate taxes	17,874		1,367		19,241
Net operating income	$	26,367	$	1,040	$	27,407
Property management					(1,767)
Casualty gain (loss)					(101)
Depreciation and amortization					(19,992)
General and administrative expenses					(3,906)
Interest expense					(7,231)
Interest and other income					431
Net income (loss)					$	(5,159)

Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of March 31, 2022, and December 31, 2021, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:

	(in thousands)
As of March 31, 2022	Multifamily		All Other		Total
Segment assets
Property owned	$	2,364,167	$	26,785	$	2,390,952
Less accumulated depreciation	(457,985)		(7,767)		(465,752)
Total property owned	$	1,906,182	$	19,018	$	1,925,200
Cash and cash equivalents					13,313
Restricted cash					2,409
Other assets					24,651
Total Assets					$	1,965,573

	(in thousands)
As of December 31, 2021	Multifamily		All Other		Total
Segment assets
Property owned	$	2,244,250	$	26,920	$	2,271,170
Less accumulated depreciation	(436,004)		(7,588)		(443,592)
Total property owned	$	1,808,246	$	19,332	$	1,827,578
Mortgage loans receivable					43,276
Cash and cash equivalents					31,267
Restricted cash					7,358
Other assets					30,582
Total Assets					$	1,940,061

XML

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Litigation.  In the ordinary course of operations, Centerspace becomes involved in litigation. At this time, the Company knows of no material pending or threatened legal proceedings, or other proceedings contemplated by governmental authorities, that would have a material impact on it.

Environmental Matters.  Under various federal, state, and local laws, ordinances, and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around, or under the property. While the Company currently has no knowledge of any material violation of environmental laws, ordinances, or regulations at any of the properties, there can be no assurance that areas of contamination will not be identified at any of its properties or that changes in environmental laws, regulations, or cleanup requirements would not result in material costs.

Restrictions on Taxable Dispositions.  Thirty-seven properties, consisting of 6,770 apartment homes, are subject to restrictions on taxable dispositions under agreements entered into with certain of the sellers or contributors of the properties and are effective for varying periods. Centerspace does not believe that the agreements materially affect the conduct of its business or its decisions whether to dispose of restricted properties during the restriction period because it generally holds these and other properties for investment purposes rather than for sale. In addition, where the Company deems it to be in the shareholders’ best interests to dispose of such properties, it generally seeks to structure sales of such properties as tax-deferred transactions under Section 1031 of the Internal Revenue Code. Otherwise, the Company may be required to provide tax indemnification payments to the parties to these agreements.

XML

SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATIONShare-based awards are provided to officers, non-officer employees, and trustees under the 2015 Incentive Plan approved by shareholders on September 15, 2015, as amended and restated on May 18, 2021 (the “2015 Incentive Plan”) which allows for awards in the form of cash, unrestricted and restricted common shares, stock options, stock appreciation rights, and RSUs up to an aggregate of 775,000 shares over the ten-year period in which the plan is in effect. Under the 2015 Incentive Plan, officers and non-officer employees may earn share awards under a long-term incentive plan, which is a forward-looking program that measures long-term performance over the stated performance period. These awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year.

2022 LTIP Awards

Awards granted to employees on January 1, 2022, consist of an aggregate of 5,849 time-based RSU awards, 13,407 performance RSUs based on total shareholder return (“TSR”), and 30,002 stock options. The time-based awards vest as to one-third of the shares on each of January 1, 2023, January 1, 2024, and January 1, 2025. The stock options vest as to 25% on each of January 1, 2023, January 1, 2024, January 1, 2025, and January 1, 2026. The fair value of stock options was $17.094 per share and was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	2022
Exercise price	$	110.90
Risk-free rate	1.44		%
Expected term	6.25 years
Expected volatility	21.2		%
Dividend yield	2.597		%

The TSR performance RSUs are earned based on the Company’s TSR as compared to the FTSE Nareit Apartment Index over a forward looking three-year period. The maximum number of RSUs eligible to be earned is 26,814 RSUs, which is 200% of the RSUs granted. Earned awards (if any) will fully vest as of the last day of the measurement period. These awards have market conditions in addition to service conditions that must be met for the awards to vest. Compensation expense is recognized ratably based on the grant date fair value, as determined using the Monte Carlo valuation model, regardless of whether the market conditions are achieved and the awards ultimately vest. Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved. The Company based the expected volatility on a weighted average of the historical volatility of the Company’s daily closing share price and a select peer average volatility, the risk-free interest rate on the interest rates on U.S. treasury bonds with a maturity equal to the remaining performance period of the award, and the expected term on the performance period of the award. The assumptions used to value the TSR performance RSUs were an expected volatility of 22.40%, a risk-free interest rate of 0.97%, and an expected life of 3 years. The share price at the grant date, January 1, 2022, was $110.90 per share.

Awards granted to employees on February 1, 2022, consist of an aggregate of 1,295 time-based RSU awards which vest as to one-third of the RSUs on each of January 1, 2023, January 1, 2024, and January 1, 2025.

Share-Based Compensation Expense

Share-based compensation expense recognized in the consolidated financial statements for all outstanding share-based awards was $719,000 and $810,000 for the three months ended March 31, 2022 and 2021, respectively.

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

Centerspace conducts a majority of its business activities through a consolidated operating partnership, Centerspace, LP (f/k/a IRET Properties), a North Dakota limited partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities. The accompanying Condensed Consolidated Financial Statements include the Company’s accounts and the accounts of all its subsidiaries in which it maintains a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation.

The Condensed Consolidated Financial Statements also reflect the Operating Partnership’s ownership of a joint venture entity in which the Operating Partnership has a general partner or controlling interest. This entity is consolidated into the Company’s operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses.

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Centerspace’s interim Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of financial position, results of operations, and cash flows for the interim periods, have been included.

The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim Condensed Consolidated Financial Statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022.

USE OF ESTIMATES

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

As of March 31, 2022 and December 31, 2021, restricted cash consisted primarily of real estate deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

LEASES

LEASES

As a lessor, Centerspace primarily leases multifamily apartment homes which qualify as operating leases with terms that are generally one year or less. Rental revenues are recognized in accordance with ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 98.1% of total revenues and includes gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 1.9% of total revenues and are primarily driven by other fee income, which is typically recognized when earned, at a point in time.

Some of the Company’s apartment communities have commercial spaces available for lease. Lease terms for these spaces typically range from three to fifteen years. The leases for commercial spaces generally include options to extend the lease for additional terms. Many of the leases contain non-lease components for utility reimbursement from residents and common area maintenance from commercial tenants. Centerspace has elected the practical expedient to combine lease and non-lease components for all asset classes. The combined components are included in lease income and are accounted for under ASC 842.

REVENUES

REVENUES

Revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration to which the Company expects to be entitled for those goods and services.

Revenue streams that are included in revenues from contracts with customers include:

•Other property revenue: Centerspace recognizes revenue for rental related income not included as a component of a lease, such as application fees, as earned.

•Gains or losses on sales of real estate: A gain or loss is recognized when the criteria for derecognition of an asset are met, including when (1) a contract exists and (2) the buyer obtained control of the nonfinancial asset that was sold.

IMPAIRMENT OF LONG-LIVED ASSETS

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates long-lived assets, including investments in real estate, for impairment indicators at least quarterly. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each property, and legal and environmental concerns. If indicators exist, the Company compares the expected future undiscounted cash flows for the property against the carrying amount of that property. If the sum of the estimated undiscounted cash flows is less than the carrying amount, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount. If the anticipated holding period for properties, the estimated fair value of properties, or other factors change based on market conditions or otherwise, the evaluation of impairment charges may be different and such differences could be material to the consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates, and capital requirements that could differ materially from actual results. Reducing planned property holding periods may increase the likelihood of recording impairment losses.

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

Centerspace has determined that its Operating Partnership and each of its less-than-wholly owned real estate partnerships are VIEs, as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights. The Company is the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on the balance sheet because the Company has a controlling financial interest in the VIEs and has both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because the Operating Partnership is a VIE, all of the Company’s assets and liabilities are held through a VIE.

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Future Scheduled Lease Income for Operating Leases

The aggregate amount of future scheduled lease income on commercial operating leases, excluding any variable lease income and non-lease components, as of March 31, 2022, was as follows:

	(in thousands)
2022 (remainder)	$	1,958
2023	2,627
2024	2,577
2025	2,528
2026	1,935
Thereafter	1,548
Total scheduled lease income - commercial operating leases	$	13,173

Schedule of Disaggregation of Revenue

The following table presents the disaggregation of revenue streams for the three months ended March 31, 2022 and 2021:

		(in thousands)
		Three Months Ended March 31,
Revenue Stream	Applicable Standard	2022		2021
Fixed lease income - operating leases	Leases	$	56,673	$	43,840
Variable lease income - operating leases	Leases	2,523		1,969
Other property revenue	Revenue from contracts with customers	1,118		839
Total revenue		$	60,314	$	46,648

XML

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Reconciliation of Numerator and Denominator Used To Calculate Basic and Diluted EPS

The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the Condensed Consolidated Financial Statements for the three months ended March 31, 2022 and 2021:  

	(in thousands, except per share data)
	Three Months Ended March 31,
	2022		2021
NUMERATOR
Net income (loss) attributable to controlling interests	$	(8,589)	$	(4,867)
Dividends to preferred shareholders	(1,607)		(1,607)
Numerator for basic earnings (loss) per share – net income available to common shareholders	(10,196)		(6,474)
Noncontrolling interests – Operating Partnership and Series E preferred units	(2,157)		(469)
Dividends to preferred unitholders	160		160
Numerator for diluted earnings (loss) per share	$	(12,193)	$	(6,783)
DENOMINATOR
Denominator for basic earnings per share weighted average shares	15,097		13,078
Effect of redeemable operating partnership units	—		957
Denominator for diluted earnings per share	15,097		14,035
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC	$	(0.68)	$	(0.49)
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED	$	(0.68)	$	(0.49)

XML

EQUITY AND MEZZANINE EQUITY (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Schedule of Conversions of Stock

Centerspace redeemed Units in exchange for common shares in connection with Unitholders exercising their exchange rights during the three months ended March 31, 2022 and 2021 as detailed in the table below.

	(in thousands)
Three Months Ended March 31,	Number of Units	Net Book Basis
2022	10	$	(388)
2021	26	$	(220)

Pursuant to the exercise of exchange rights, the Company redeemed Units for cash during the three months ended March 31, 2022 and 2021 as detailed in the table below.

	(in thousands)
Three Months Ended March 31,	Number of Units	Aggregate Cost		Average Price Per Unit
2022	31	$	2,903	$	93.14
2021	—	$	9	$	71.55

Schedule of Sale of Common Shares

The table below provides details on the sale of common shares during the three months ended March 31, 2022 and 2021 under both the 2019 and 2021 ATM Programs. As of March 31, 2022, common shares having an aggregate offering price of up to $126.6 million remained available under the 2021 ATM Program.

	(in thousands, except per share amounts)
Three Months Ended March 31,	Number of Common Shares	Net Consideration(1)		Average Net Price Per Share
2022	321	$	31,732	$	98.89
2021	164	$	11,859	$	72.19

(1)Total consideration is net of $338 and $181 in commissions and issuance costs during the three months ended March 31, 2022 and 2021, respectively.

XML

DEBT (Tables)

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of Debt

The following table shows the notes issued under both agreements.

	(in thousands)
	Amount		Maturity Date	Interest Rate
Series A	$	75,000	September 13, 2029	3.84	%
Series B	$	50,000	September 30, 2028	3.69	%
Series C	$	50,000	June 6, 2030	2.70	%
Series 2021-A	$	35,000	September 17, 2030	2.50	%
Series 2021-B	$	50,000	September 17, 2031	2.62	%
Series 2021-C	$	25,000	September 17, 2032	2.68	%
Series 2021-D	$	15,000	September 17, 2034	2.78	%

The following table summarizes indebtedness:

	(in thousands)
	March 31, 2022			December 31, 2021			Weighted Average Maturity in Years at March 31, 2022
Lines of credit	$	46,000		$	76,000		3.75
Unsecured senior notes (1)	300,000			300,000			8.63
Unsecured debt	346,000			376,000			7.98
Mortgages payable - Fannie Mae credit facility	198,850			198,850			9.56
Mortgages payable - other	326,113			284,934			6.71
Total debt	$	870,963		$	859,784		7.14
Weighted average interest rate on lines of credit (rate with swap)(2)	2.56		%	2.74		%
Weighted average interest rate on unsecured senior notes	3.12		%	3.12		%
Weighted average interest rate on mortgages payable - Fannie Mae credit facility	2.78		%	2.78		%
Weighted average interest rate on mortgages payable - other	3.85		%	3.81		%
Weighted average interest rate on total debt	3.29		%	3.26		%

(1)Included within notes payable on the Condensed Consolidated Balance Sheets.

(2)The interest rate swap was terminated during the three months ended March 31, 2022.

Aggregate Amount of Required Future Principal Payments on Mortgages Payable

The aggregate amount of required future principal payments on unsecured senior notes and mortgages payable as of March 31, 2022, was as follows:

	(in thousands)
2022 (remainder)	$	26,443
2023	45,988
2024	5,012
2025	79,850
2026	50,088
Thereafter	663,582
Total payments	$	870,963

XML

DERIVATIVE INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Fair Value of Derivative Instruments

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021.

		(in thousands)
		March 31, 2022		December 31, 2021
	Balance Sheet Location	Fair Value		Fair Value
Total derivative instruments designated as hedging instruments - interest rate swaps	Accounts Payable and Accrued Expenses	$	—	$	4,610
Total derivative instruments not designated as hedging instruments - interest rate swaps	Accounts Payable and Accrued Expenses	$	—	$	1,097

Schedule of Derivative Instruments

The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of March 31, 2022 and 2021.

	(in thousands)
	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Gain (Loss) Reclassified from Accumulated OCI into Income
Three months ended March 31,	2022		2021			2022		2021
Total derivatives in cash flow hedging relationships - Interest rate contracts	$	1,581	$	2,011	Interest expense	$	(304)	$	(1,095)

XML

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Estimated Fair Values of Financial Instruments

Fair Value Measurements on a Recurring Basis

	(in thousands)
	Total		Level 1		Level 2	Level 3
March 31, 2022
Assets
Notes receivable	$	6,068	—		—	$	6,068
December 31, 2021
Assets
Mortgages and notes receivable	$	49,484	—		—	$	49,484
Liabilities
Derivative instruments - interest rate swaps	$	5,707	$	—	—	$	5,707

The estimated fair values of the Company’s financial instruments as of March 31, 2022 and December 31, 2021, respectively, are as follows:

	(in thousands)
	March 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	13,313	$	13,313	$	31,267	$	31,267
Restricted cash	$	2,409	$	2,409	$	7,358	$	7,358
FINANCIAL LIABILITIES
Revolving lines of credit(1)	$	46,000	$	46,000	$	76,000	$	76,000
Unsecured senior notes	$	300,000	$	273,973	$	300,000	$	308,302
Mortgages payable - Fannie Mae	$	198,850	$	176,055	$	198,850	$	198,850
Mortgages payable - other	$	326,113	$	308,363	$	284,934	$	284,546

(1)Excluding the effect of interest rate swap agreements. Refer to Note 6 for discussion on the fair value of the interest rate swap agreements.

Changes in Fair Value Receivables

Changes in the fair value of these receivables from period to period are reported in interest and other income on the Condensed Consolidated Statements of Operations.

	(in thousands)
	Fair Value Measurement at March 31,		Other Gains (Losses)		Interest Income		Total Changes in Fair Value Included in Current-Period Earnings
Three months ended March 31, 2022
Notes receivable	$	6,068	$	4	$	460	$	464
Three months ended March 31, 2021
Mortgage loans and notes receivable	$	36,443	$	4	$	407	$	411

XML

ACQUISITIONS AND DISPOSITIONS (Tables)

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of Acquisitions

The acquisitions during the three months ended March 31, 2022 and 2021 are detailed below.

Three Months Ended March 31, 2022

	Date Acquired	(in thousands)
		Total Acquisition Cost		Form of Consideration						Investment Allocation
Acquisitions				Cash		Units(1)		Other(2)		Land		Building		Intangible Assets		Other(3)
191 homes - Martin Blu - Minneapolis, MN	January 4, 2022	$	49,825	$	3,031	$	18,885	$	27,909	$	3,547	$	45,212	$	1,813	$	(747)
31 homes - Zest - Minneapolis, MN	January 4, 2022	9,066		1,290		1,748		6,028		941		7,853		335		(63)
45 homes - Elements - Minneapolis, MN	January 4, 2022	11,364		1,429		2,249		7,686		936		10,261		574		(407)
130 homes - Noko Apartments - Minneapolis, MN	January 26, 2022	46,619		3,343		—		43,276		1,915		42,754		1,950		—
Total Acquisitions		$	116,874	$	9,093	$	22,882	$	84,899	$	7,339	$	106,080	$	4,672	$	(1,217)

(1)Fair value of operating partnership units issued on acquisition.

(2)Assumption of seller's debt upon closing for Martin Blu, Zest, and Elements. Mezzanine and construction loans, financed by Centerspace, exchanged as partial consideration for the acquisition of Noko Apartments.

(3)Debt discount on assumed mortgage.

Three Months Ended March 31, 2021

	Date Acquired	(in thousands)
		Total Acquisition Cost		Form of Consideration		Investment Allocation
Acquisitions				Cash		Land		Building		Intangible Assets
256 homes - Union Pointe - Longmont, CO	January 6, 2021	$	76,900	$	76,900	$	5,727	$	69,966	$	1,207

XML

SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Revenues and Net Operating Income for Reportable Segments

The following tables present NOI for the three months ended March 31, 2022 and 2021, respectively, along with reconciliations to net income in the Condensed Consolidated Financial Statements. Segment assets are also reconciled to total assets as reported in the Condensed Consolidated Financial Statements.

	(in thousands)
Three Months Ended March 31, 2022	Multifamily		All Other		Total
Revenue	$	59,398	$	916	$	60,314
Property operating expenses, including real estate taxes	25,544		329		25,873
Net operating income	$	33,854	$	587	$	34,441
Property management					(2,253)
Casualty gain (loss)					(598)
Depreciation and amortization					(31,001)
General and administrative expenses					(4,500)
Interest expense					(7,715)
Interest and other income					1,063
Net income (loss)					$	(10,563)

	(in thousands)
Three Months Ended March 31, 2021	Multifamily		All Other		Total
Revenue	$	44,241	$	2,407	$	46,648
Property operating expenses, including real estate taxes	17,874		1,367		19,241
Net operating income	$	26,367	$	1,040	$	27,407
Property management					(1,767)
Casualty gain (loss)					(101)
Depreciation and amortization					(19,992)
General and administrative expenses					(3,906)
Interest expense					(7,231)
Interest and other income					431
Net income (loss)					$	(5,159)

Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of March 31, 2022, and December 31, 2021, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:

	(in thousands)
As of March 31, 2022	Multifamily		All Other		Total
Segment assets
Property owned	$	2,364,167	$	26,785	$	2,390,952
Less accumulated depreciation	(457,985)		(7,767)		(465,752)
Total property owned	$	1,906,182	$	19,018	$	1,925,200
Cash and cash equivalents					13,313
Restricted cash					2,409
Other assets					24,651
Total Assets					$	1,965,573

	(in thousands)
As of December 31, 2021	Multifamily		All Other		Total
Segment assets
Property owned	$	2,244,250	$	26,920	$	2,271,170
Less accumulated depreciation	(436,004)		(7,588)		(443,592)
Total property owned	$	1,808,246	$	19,332	$	1,827,578
Mortgage loans receivable					43,276
Cash and cash equivalents					31,267
Restricted cash					7,358
Other assets					30,582
Total Assets					$	1,940,061

XML

SHARE-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Schedule of Fair Value of Stock Options

The fair value of stock options was $17.094 per share and was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	2022
Exercise price	$	110.90
Risk-free rate	1.44		%
Expected term	6.25 years
Expected volatility	21.2		%
Dividend yield	2.597		%

XML

ORGANIZATION (Details) - Residential Real Estate	Mar. 31, 2022 apartmentHome apartmentCommunity
Real Estate Properties [Line Items]
Number of real estate properties | apartmentCommunity	83
Number of apartment units | apartmentHome	14,838

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Lessor, Operating Lease, Payments, Fiscal Year Maturity [Abstract]
2022 (remainder)	$ 1,958
2023	2,627
2024	2,577
2025	2,528
2026	1,935
Thereafter	1,548
Total scheduled lease income - commercial operating leases	$ 13,173
Minimum
Lessor, Lease, Description [Line Items]
Lease terms	3 years
Maximum
Lessor, Lease, Description [Line Items]
Lease terms	15 years
Rental Income | Revenue | Product Concentration Risk
Lessor, Lease, Description [Line Items]
Concentration risk	98.10%
Fee Income | Revenue | Product Concentration Risk
Lessor, Lease, Description [Line Items]
Concentration risk	1.90%

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Accounting Policies [Abstract]
Fixed lease income - operating leases	$ 56,673	$ 43,840
Variable lease income - operating leases	2,523	1,969
Revenue from contracts with customers	1,118	839
Total revenue	$ 60,314	$ 46,648

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Impairment of Long-Lived Assets (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Accounting Policies [Abstract]
Impairment of real estate investments	$ 0	$ 0

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Mortgage Receivable and Notes Receivable (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Dec. 31, 2019	Mar. 31, 2022	Dec. 31, 2021
MORTGAGE RECEIVABLE AND NOTES RECEIVABLE
Mortgage loans receivable at fair value		$ 0	$ 43,276
Multi Family Same-Store | Ironwood Apartments - New Hope, MN | Tax Increment Financing
MORTGAGE RECEIVABLE AND NOTES RECEIVABLE
Loan commitment		$ 6,100	6,400
Multi-Family Residential | Ironwood Apartments - New Hope, MN | Tax Increment Financing
MORTGAGE RECEIVABLE AND NOTES RECEIVABLE
Interest rate		4.50%
Multi-Family Residential | Minneapolis, Minnesota | Construction Loans
MORTGAGE RECEIVABLE AND NOTES RECEIVABLE
Interest rate	4.50%
Mortgage loans receivable at fair value	$ 29,900		29,900
Multi-Family Residential | Minneapolis, Minnesota | Mezzanine Loan
MORTGAGE RECEIVABLE AND NOTES RECEIVABLE
Interest rate	11.50%
Mortgage loans receivable at fair value	$ 15,300		$ 13,400

XML

EARNINGS PER SHARE - Narrative (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2022 shares	Mar. 31, 2021 shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Ratio of units exchanged for shares	1
Performance-based RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded (in shares)	33	46
Operating Partnership Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded (in shares)	965
Series D Preferred Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded (in shares)	228	228
Series E Preferred Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded (in shares)	2,200
TIme-based RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded (in shares)	14	19
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded (in shares)	52	44

XML

EARNINGS PER SHARE - Reconciliation of Numerator and Denominator Used To Calculate Basic and Dilutes EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
NUMERATOR
Net income (loss) attributable to controlling interests	$ (8,589)	$ (4,867)
Dividends to preferred shareholders	(1,607)	(1,607)
Numerator for basic earnings (loss) per share – net income available to common shareholders	(10,196)	(6,474)
Noncontrolling interests – Operating Partnership and Series E preferred units	(2,157)	(469)
Dividends to preferred unitholders	160	160
Numerator for diluted earnings (loss) per share	$ (12,193)	$ (6,783)
DENOMINATOR
Denominator for basic earnings per share weighted average shares (in shares)	15,097	13,078
Effect of redeemable operating partnership units (in shares)	0	957
Denominator for diluted earnings per share (in shares)	15,097	14,035
NET EARNINGS (LOSS) PER COMMON SHARE - BASIC (in dollars per share)	$ (0.68)	$ (0.49)
NET EARNINGS (LOSS) PER COMMON SHARE - DILUTED (in dollars per share)	$ (0.68)	$ (0.49)

XML

EQUITY AND MEZZANINE EQUITY - Additional Information (Details)			3 Months Ended
	Sep. 01, 2021 USD ($) apartmentCommunity $ / shares shares	Feb. 26, 2019 USD ($) $ / shares	Mar. 31, 2022 USD ($) apartmentCommunity $ / shares shares	Mar. 31, 2021 USD ($) shares	Dec. 31, 2021 USD ($) $ / shares shares	Sep. 30, 2021 USD ($)	Dec. 31, 2019 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Noncontrolling interests , operating partnership, outstanding (in shares)			997,000		832,000
Noncontrolling interests , operating partnership, issued (in shares)			209,000
Preferred shares, shares issued (in shares)			3,881,000		3,881,000
Preferred shares liquidation preference | $			$ 97,036,000		$ 97,036,000
Common stock outstanding (in shares)			15,366,000		15,016,000
Sale / issuance of stock | $			$ 31,684,000	$ 11,782,000
Preferred shares of beneficial interest, shares outstanding (in shares)			3,881,000		3,881,000
Preferred shares, liquidation preference (in dollars per share) | $ / shares			$ 25		$ 25
Preferred units, shares issued (in shares)			166,000		166,000
Preferred units, par value (in dollars per share) | $ / shares			$ 100		$ 100
Preferred units, liquidation preference | $			$ 16,560,000		$ 16,560,000
2022 Acquisitions, Three Apartment Communities
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of properties acquired | apartmentCommunity			3
2021 Acquisitions
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of properties acquired | apartmentCommunity	17
Series E Preferred Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Preferred shares, shares issued (in shares)	1,800,000
Preferred units, par value (in dollars per share) | $ / shares	$ 100
Preferred units, conversion ratio	1.2048
Preferred shares liquidation preference | $	$ 181,400,000
Preferred shares, dividend rate	0.03875%
Series C Preferred Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Preferred shares liquidation preference | $			$ 97,000,000
Preferred shares of beneficial interest, shares outstanding (in shares)			3,900,000		3,900,000
Preferred shares, liquidation preference (in dollars per share) | $ / shares			$ 25.00
Preferred shares, annual distribution accrual rate (in dollars per share) | $ / shares			$ 1.65625
Preferred shares, dividend rate			6.625%
Series D Preferred Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Preferred units, shares issued (in shares)			165,600		165,600
Preferred units, par value (in dollars per share) | $ / shares		$ 100
Distribution rate		3.862%
Units converted, ratio		1.37931
Preferred units, liquidation preference | $		$ 16,600,000
At-The-Market Offering
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate gross sales price of common shares, authorized amount | $						$ 250,000,000	$ 150,000,000
Aggregate gross sales price of common shares, remaining authorized amount | $			$ 126,600,000
2015 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity awards issued (in shares)			18,759	2,801
Sale / issuance of stock | $			$ 1,500,000	$ 164,000

XML

EQUITY AND MEZZANINE EQUITY - Schedule of Conversions of Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Conversion of Stock [Line Items]
Net Book Basis	$ 0	$ 0
Aggregate Cost	$ 388	$ 220
Exercise of Exchange Rights
Conversion of Stock [Line Items]
Number of units redeemed (in shares)	10	26
Net Book Basis	$ (388)	$ (220)
Redemption Of Units For Cash
Conversion of Stock [Line Items]
Number of units converted (in shares)	31	0
Aggregate Cost	$ 2,903	$ 9
Average Price Per Unit (in dollars per share)	$ 93.14	$ 71.55

XML

EQUITY AND MEZZANINE EQUITY - Sale of Common Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Commissions	$ 338	$ 181
At-The-Market Offering
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common shares (in shares)	321	164
Net Consideration	$ 31,732	$ 11,859
Average Net Price Per Share (in dollars per share)	$ 98.89	$ 72.19

XML

DEBT - Narrative (Details)	3 Months Ended
	Mar. 31, 2022 USD ($) apartmentCommunity loan	Dec. 31, 2021 USD ($)	Sep. 30, 2021 USD ($) apartmentCommunity	Jan. 31, 2021 USD ($)
Line of Credit Facility [Line Items]
Number of real estate properties, unencumbered by mortgages | apartmentCommunity	49
Revolving lines of credit	$ 46,000,000	$ 76,000,000
Outstanding debt	$ 870,963,000	$ 859,784,000
Weighted average interest rate	3.29%	3.26%
Line of Credit | Base Rate | Minimum
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.25%
Line of Credit | Base Rate | Maximum
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.80%
Line of Credit | London Interbank Offered Rate (LIBOR) | Minimum
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.25%
Line of Credit | London Interbank Offered Rate (LIBOR) | Maximum
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.80%
Operating Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 6,000,000
BMO Line of Credit | Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	250,000,000
Remaining borrowing capacity	204,000,000
Revolving lines of credit	46,000,000
Accordion option			$ 400,000,000
Unsecured Senior Notes | Private Shelf Agreement
Line of Credit Facility [Line Items]
Debt available for issuance	$ 25,000,000			$ 225,000,000
Outstanding debt				$ 200,000,000
Amount			25,000,000
Unsecured Senior Notes | Note Purchase Agreement
Line of Credit Facility [Line Items]
Amount			125,000,000
Mortgages
Line of Credit Facility [Line Items]
Number of real estate properties, serving as collateral for mortgage loans | apartmentCommunity	18
Number of material defaults or instances of noncompliance | loan	0
Mortgages | Mortgages payable - Fannie Mae
Line of Credit Facility [Line Items]
Outstanding debt	$ 198,850,000	$ 198,850,000
Amount			$ 198,900,000
Weighted average interest rate	2.78%	2.78%
Mortgages | Mortgages payable - Fannie Mae | Interest Only Payment Date One
Line of Credit Facility [Line Items]
Term	7 years
Mortgages | Mortgages payable - Fannie Mae | Interest Only Payment Date Two
Line of Credit Facility [Line Items]
Term	10 years
Mortgages | Mortgages payable - Fannie Mae | Interest Only Payment Date Three
Line of Credit Facility [Line Items]
Term	12 years
Mortgages | Mortgages payable - Fannie Mae | 2021 Acquisitions
Line of Credit Facility [Line Items]
Number of apartment units | apartmentCommunity			16

XML

DEBT - September Note Purchase Agreement, Schedule of Debt (Details) - Unsecured Debt	Mar. 31, 2022 USD ($)
Series A
Line of Credit Facility [Line Items]
Amount	$ 75,000,000
Interest Rate	3.84%
Series B
Line of Credit Facility [Line Items]
Amount	$ 50,000,000
Interest Rate	3.69%
Series C
Line of Credit Facility [Line Items]
Amount	$ 50,000,000
Interest Rate	2.70%
Series 2021-A
Line of Credit Facility [Line Items]
Amount	$ 35,000,000
Interest Rate	2.50%
Series 2021-B
Line of Credit Facility [Line Items]
Amount	$ 50,000,000
Interest Rate	2.62%
Series 2021-C
Line of Credit Facility [Line Items]
Amount	$ 25,000,000
Interest Rate	2.68%
Series 2021-D
Line of Credit Facility [Line Items]
Amount	$ 15,000,000
Interest Rate	2.78%

XML

DEBT - Schedule of Debt (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total debt	$ 870,963	$ 859,784
Weighted average maturity (in years)	7 years 1 month 20 days
Weighted average interest rate	3.29%	3.26%
Mortgages payable - Fannie Mae | Mortgages
Debt Instrument [Line Items]
Total debt	$ 198,850	$ 198,850
Weighted average maturity (in years)	9 years 6 months 21 days
Weighted average interest rate	2.78%	2.78%
Mortgages payable - other | Mortgages
Debt Instrument [Line Items]
Total debt	$ 326,113	$ 284,934
Weighted average maturity (in years)	6 years 8 months 15 days
Weighted average interest rate	3.85%	3.81%
Unsecured Debt
Debt Instrument [Line Items]
Total debt	$ 346,000	$ 376,000
Weighted average maturity (in years)	7 years 11 months 23 days
Unsecured Debt | Line of Credit
Debt Instrument [Line Items]
Total debt	$ 46,000	76,000
Weighted average maturity (in years)	3 years 9 months
Unsecured Debt | Unsecured senior notes
Debt Instrument [Line Items]
Total debt	$ 300,000	$ 300,000
Weighted average maturity (in years)	8 years 7 months 17 days
Weighted average interest rate	3.12%	3.12%
Unsecured Debt | Primary Line Of Credit | Line of Credit
Debt Instrument [Line Items]
Weighted average interest rate	2.56%	2.74%

XML

DEBT - Schedule of future payments (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Debt Disclosure [Abstract]
2022 (remainder)	$ 26,443
2023	45,988
2024	5,012
2025	79,850
2026	50,088
Thereafter	663,582
Total payments	$ 870,963

XML

DERIVATIVE INSTRUMENTS - Additional Information (Details)	3 Months Ended
	Mar. 31, 2022 USD ($) derivativeInstrument	Mar. 31, 2021 USD ($)	Jan. 31, 2023 USD ($) derivativeInstrument	Dec. 31, 2021 USD ($) derivativeInstrument
Derivative [Line Items]
Cash flow hedge gain (loss) to be reclassified within twelve months	$ 633,000
Payments to terminate derivative	$ 3,209,000	$ 0
Interest Rate Swap
Derivative [Line Items]
Number of instruments held | derivativeInstrument	0
Interest Rate Swap | Designated as Hedging Instrument
Derivative [Line Items]
Payments to terminate derivative	$ 3,200,000
Notional amount	75,000,000			$ 75,000,000
Number of instruments held | derivativeInstrument				1
Interest Rate Swap | Not Designated as Hedging Instrument
Derivative [Line Items]
Gain on derivative	582,000
Interest Rate Swap | Not Designated as Hedging Instrument | Scenario, Forecast
Derivative [Line Items]
Notional amount			$ 70,000,000
Number of instruments held | derivativeInstrument			1
Forward Swap | Designated as Hedging Instrument
Derivative [Line Items]
Notional amount	$ 70,000,000

XML

DERIVATIVE INSTRUMENTS - Fair Value of Derivative Financial Instruments (Details) - Interest Rate Swap - Accounts Payable and Accrued Expenses - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Designated as Hedging Instrument
Derivative [Line Items]
Total derivative instruments	$ 0	$ 4,610
Not Designated as Hedging Instrument
Derivative [Line Items]
Total derivative instruments	$ 0	$ 1,097

XML

DERIVATIVE INSTRUMENTS - Derivative Instruments on Statement of Operations (Details) - Interest Rate Contract - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Derivative [Line Items]
Gain (Loss) Recognized in OCI	$ 1,581	$ 2,011
Interest Expense
Derivative [Line Items]
Gain (Loss) Reclassified from Accumulated OCI into Income	$ (304)	$ (1,095)

XML

FAIR VALUE MEASUREMENTS - Fair Value Measurements on a Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Receivables	$ 6,068	$ 49,484	$ 36,443
Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative instruments - interest rate swaps		5,707
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Receivables	0	0
Level 1 | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative instruments - interest rate swaps		0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Receivables	0	0
Level 2 | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative instruments - interest rate swaps		0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Receivables	$ 6,068	49,484
Level 3 | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative instruments - interest rate swaps		$ 5,707

XML

FAIR VALUE MEASUREMENTS - Narrative (Details) - Fair Value, Recurring $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate investment, unfunded commitments	$ 1,200
Level 3 | Interest Rate | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Receivables, measurement input	0.0375
Level 3 | Interest Rate | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Receivables, measurement input	0.1075
Level 3 | Credit Risk | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Receivables, measurement input	0.005
Level 3 | Credit Risk | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Receivables, measurement input	0.010
Fair Value Measured at Net Asset Value Per Share
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate investment, fair value disclosure	$ 890	$ 903

XML

FAIR VALUE MEASUREMENTS - Changes in Fair Value of Receivables (Details) - Fair Value, Recurring - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans and notes receivable	$ 6,068	$ 36,443	$ 49,484
Change in fair value of receivables	464	411
Other Gains (Losses)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of receivables	4	4
Interest Income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of receivables	$ 460	$ 407

XML

FAIR VALUE MEASUREMENTS - Financial Assets and Liabilities Not Measured at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
FINANCIAL LIABILITIES
Unsecured senior notes	$ 299,359	$ 299,344
Mortgages payable	870,963
Carrying Amount
FINANCIAL ASSETS
Cash and cash equivalents and restricted cash	13,313	31,267
FINANCIAL LIABILITIES
Revolving lines of credit	46,000	76,000
Unsecured senior notes	300,000	300,000
Carrying Amount | Mortgages | Mortgages payable - Fannie Mae
FINANCIAL LIABILITIES
Mortgages payable	198,850	198,850
Carrying Amount | Mortgages | Mortgages payable - other
FINANCIAL LIABILITIES
Mortgages payable	326,113	284,934
Carrying Amount | Restricted cash
FINANCIAL ASSETS
Cash and cash equivalents and restricted cash	2,409	7,358
Fair Value
FINANCIAL ASSETS
Cash and cash equivalents and restricted cash	13,313	31,267
FINANCIAL LIABILITIES
Revolving lines of credit	46,000	76,000
Unsecured senior notes	273,973	308,302
Fair Value | Mortgages | Mortgages payable - Fannie Mae
FINANCIAL LIABILITIES
Mortgages payable	176,055	198,850
Fair Value | Mortgages | Mortgages payable - other
FINANCIAL LIABILITIES
Mortgages payable	308,363	284,546
Fair Value | Restricted cash
FINANCIAL ASSETS
Cash and cash equivalents and restricted cash	$ 2,409	$ 7,358

XML

ACQUISITIONS AND DISPOSITIONS - Acquisitions (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) apartmentCommunity apartmentHome	Mar. 31, 2021 USD ($) apartmentHome	Sep. 01, 2021 apartmentCommunity
Acquisitions and development projects placed in service [Abstract]
Total acquisition cost	$ 116,874
Form of Consideration
Cash	9,093
Units	22,882
Other	84,899
Investment Allocation
Land	7,339
Building	106,080
Intangible Assets	4,672
Other	$ (1,217)
2022 Acquisitions
Acquisitions and development projects placed in service [Abstract]
Number of properties acquired | apartmentCommunity	4
Total acquisition cost	$ 116,900
Martin Blu - Minneapolis, MN
Acquisitions and development projects placed in service [Abstract]
Number of properties acquired | apartmentHome	191
Total acquisition cost	$ 49,825
Form of Consideration
Cash	3,031
Units	18,885
Other	27,909
Investment Allocation
Land	3,547
Building	45,212
Intangible Assets	1,813
Other	$ (747)
Zest - Minneapolis, MN
Acquisitions and development projects placed in service [Abstract]
Number of properties acquired | apartmentHome	31
Total acquisition cost	$ 9,066
Form of Consideration
Cash	1,290
Units	1,748
Other	6,028
Investment Allocation
Land	941
Building	7,853
Intangible Assets	335
Other	$ (63)
Elements - Minneapolis, MN
Acquisitions and development projects placed in service [Abstract]
Number of properties acquired | apartmentHome	45
Total acquisition cost	$ 11,364
Form of Consideration
Cash	1,429
Units	2,249
Other	7,686
Investment Allocation
Land	936
Building	10,261
Intangible Assets	574
Other	$ (407)
Noko Apartments - Minneapolis, MN
Acquisitions and development projects placed in service [Abstract]
Number of properties acquired | apartmentHome	130
Total acquisition cost	$ 46,619
Form of Consideration
Cash	3,343
Units	0
Other	43,276
Investment Allocation
Land	1,915
Building	42,754
Intangible Assets	1,950
Other	$ 0
2021 Acquisitions
Acquisitions and development projects placed in service [Abstract]
Number of properties acquired | apartmentCommunity			17
Total acquisition cost		$ 76,900
Union Pointe Apartment Homes - Longmont, CO
Acquisitions and development projects placed in service [Abstract]
Number of properties acquired | apartmentHome		256
Total acquisition cost		$ 76,900
Form of Consideration
Cash		76,900
Investment Allocation
Land		5,727
Building		69,966
Intangible Assets		$ 1,207

XML

ACQUISITIONS AND DISPOSITIONS - Dispositions (Details) - apartmentProperty	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties sold	0	0

XML

SEGMENT REPORTING - Revenues and Net Operating Income for Reportable Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) segment	Mar. 31, 2021 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment	1
Segment revenues and net operating income [Abstract]
Revenue	$ 60,314	$ 46,648
Property operating expenses, including real estate taxes	25,873	19,241
Net operating income	34,441	27,407
Property management	(2,253)	(1,767)
Casualty gain (loss)	(598)	(101)
Depreciation and amortization	(31,001)	(19,992)
General and administrative expenses	(4,500)	(3,906)
Interest expense	(7,715)	(7,231)
Interest and other income (loss)	1,063	431
Net income (loss)	(10,563)	(5,159)
Multifamily
Segment revenues and net operating income [Abstract]
Revenue	59,398	44,241
Property operating expenses, including real estate taxes	25,544	17,874
Net operating income	33,854	26,367
All Other
Segment revenues and net operating income [Abstract]
Revenue	916	2,407
Property operating expenses, including real estate taxes	329	1,367
Net operating income	$ 587	$ 1,040

XML

SEGMENT REPORTING - Segment Assets and Accumulated Depreciation (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
Segment Reporting Information [Line Items]
Property owned	$ 2,390,952	$ 2,271,170
Less accumulated depreciation	(465,752)	(443,592)
Total property owned	1,925,200	1,827,578
Mortgage loans receivable	0	43,276
Cash and cash equivalents	13,313	31,267	$ 10,816
Restricted cash	2,409	7,358	$ 1,610
Other assets	24,651	30,582
Total Assets	1,965,573	1,940,061
Multifamily
Segment Reporting Information [Line Items]
Property owned	2,364,167	2,244,250
Less accumulated depreciation	(457,985)	(436,004)
Total property owned	1,906,182	1,808,246
All Other
Segment Reporting Information [Line Items]
Property owned	26,785	26,920
Less accumulated depreciation	(7,767)	(7,588)
Total property owned	$ 19,018	$ 19,332

XML

COMMITMENTS AND CONTINGENCIES (Details) - Subject to Restrictions on Taxable Dispositions	Mar. 31, 2022 apartmentHome apartmentProperty
Real Estate Properties [Line Items]
Number of properties | apartmentProperty	37
Number of apartment units | apartmentHome	6,770

XML

SHARE-BASED COMPENSATION - Additional Information (Details) $ / shares in Units, $ in Thousands					3 Months Ended
	Feb. 01, 2022 shares	Jan. 01, 2022 $ / shares shares	Jan. 01, 2021 $ / shares shares	Sep. 15, 2015 shares	Mar. 31, 2022 USD ($)	Mar. 31, 2021 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares (in shares)				775,000
Term of award				10 years	3 years
Stock-based compensation expense | $					$ 719	$ 810
Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)		30,002
Fair value of stock options (in dollars per share) | $ / shares		$ 17.094
TIme-based RSUs | Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)	1,295	5,849
Restricted shares vesting percentage	0.33%
Performance-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares eligible to be earned (in shares)			26,814
Shares eligible to be earned, percentage of awards granted			2
Expected volatility					22.40%
Risk-free rate					0.97%
Expected term					3 years
Exercise price (in dollars per share) | $ / shares			$ 110.90
Performance-based RSUs | Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)		13,407
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares vesting percentage		25.00%
Stock Options | Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares vesting percentage	33.00%

XML

SHARE-BASED COMPENSATION - Schedule of Assumptions Used in Black-Scholes Pricing Model (Details) - Stock Options - 2022 LTIP Awards	3 Months Ended
	Mar. 31, 2022 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share)	$ 110.90
Risk-free rate	1.44%
Expected term	6 years 3 months
Expected volatility	21.20%
Dividend yield	2.597%