QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices) | (Zip code) |
☑ | No | ☐ |
☑ | No | ☐ |
☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||||||||||
Smaller Reporting Company | Emerging growth company |
Yes | ☐ | No |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Page | |||||
(in thousands, except per share data) | |||||||||||
March 31, 2024 | December 31, 2023 | ||||||||||
ASSETS | (Unaudited) | ||||||||||
Real estate investments | |||||||||||
Property owned | $ | $ | |||||||||
Less accumulated depreciation | ( | ( | |||||||||
Total real estate investments | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Other assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES, MEZZANINE EQUITY, AND EQUITY | |||||||||||
LIABILITIES | |||||||||||
Accounts payable and accrued expenses | $ | $ | |||||||||
Revolving lines of credit | |||||||||||
Notes payable, net of unamortized loan costs of $ | |||||||||||
Mortgages payable, net of unamortized loan costs of $ | |||||||||||
TOTAL LIABILITIES | $ | $ | |||||||||
COMMITMENTS AND CONTINGENCIES (NOTE 10) | |||||||||||
SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $ | $ | $ | |||||||||
EQUITY | |||||||||||
Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $ | |||||||||||
Common Shares of Beneficial Interest (Unlimited authorization, no par value, | |||||||||||
Accumulated distributions in excess of net income | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total shareholders’ equity | $ | $ | |||||||||
Noncontrolling interests – Operating Partnership and Series E preferred units | |||||||||||
Noncontrolling interests – consolidated real estate entities | |||||||||||
TOTAL EQUITY | $ | $ | |||||||||
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY | $ | $ |
(in thousands, except per share data) | |||||||||||
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
REVENUE | $ | $ | |||||||||
EXPENSES | |||||||||||
Property operating expenses, excluding real estate taxes | |||||||||||
Real estate taxes | |||||||||||
Property management expense | |||||||||||
Casualty loss | |||||||||||
Depreciation and amortization | |||||||||||
General and administrative expenses | |||||||||||
TOTAL EXPENSES | $ | $ | |||||||||
Gain (loss) on sale of real estate and other investments | ( | ||||||||||
Operating income | |||||||||||
Interest expense | ( | ( | |||||||||
Interest and other income | |||||||||||
NET INCOME (LOSS) | $ | ( | $ | ||||||||
Dividends to Series D preferred unitholders | ( | ( | |||||||||
Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | ( | ||||||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | ( | ( | |||||||||
Net income (loss) attributable to controlling interests | ( | ||||||||||
Dividends to preferred shareholders | ( | ( | |||||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | ( | $ | ||||||||
NET INCOME (LOSS) PER COMMON SHARE – BASIC | $ | ( | $ | ||||||||
NET INCOME (LOSS) PER COMMON SHARE – DILUTED | $ | ( | $ | ||||||||
Weighted average shares - basic | |||||||||||
Weighted average shares - diluted |
(in thousands) | |||||||||||
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Net income (loss) | $ | ( | $ | ||||||||
Other comprehensive income (loss): | |||||||||||
Loss on derivative instrument reclassified into earnings | |||||||||||
Total comprehensive income (loss) | $ | ( | $ | ||||||||
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | ( | ||||||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | ( | ( | |||||||||
Comprehensive income (loss) attributable to controlling interests | $ | ( | $ |
(in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 | PREFERRED SHARES | NUMBER OF COMMON SHARES | COMMON SHARES | ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE LOSS | NONCONTROLLING INTERESTS | TOTAL EQUITY | |||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||
Net income attributable to controlling interests and noncontrolling interests | ||||||||||||||||||||||||||||||||||||||
Amortization of swap settlements | ||||||||||||||||||||||||||||||||||||||
Distributions - common shares and Units ($ | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Distributions - Series C preferred shares ($ | ( | ( | ||||||||||||||||||||||||||||||||||||
Distributions - Series E preferred units ($ | ( | ( | ||||||||||||||||||||||||||||||||||||
Share-based compensation, net of forfeitures | ||||||||||||||||||||||||||||||||||||||
Redemption of Units for common shares | ( | |||||||||||||||||||||||||||||||||||||
Redemption of Series E preferred units for common shares | ( | |||||||||||||||||||||||||||||||||||||
Shares repurchased | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Shares withheld for taxes | ( | ( | ||||||||||||||||||||||||||||||||||||
Other | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||
Net loss attributable to controlling interests and noncontrolling interests | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Amortization of swap settlements | ||||||||||||||||||||||||||||||||||||||
Distributions - common shares and Units ($ | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Distributions - Series C preferred shares ($ | ( | ( | ||||||||||||||||||||||||||||||||||||
Distributions - Series E preferred units ($ | ( | ( | ||||||||||||||||||||||||||||||||||||
Share-based compensation, net of forfeitures | ||||||||||||||||||||||||||||||||||||||
Redemption of Units for common shares | ( | |||||||||||||||||||||||||||||||||||||
Redemption of Series E preferred units for common shares | ( | |||||||||||||||||||||||||||||||||||||
Shares repurchased | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Shares withheld for taxes | ( | ( | ||||||||||||||||||||||||||||||||||||
Other | ( | — | ( | |||||||||||||||||||||||||||||||||||
Balance at March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ |
(in thousands) | |||||||||||
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income (loss) | $ | ( | $ | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation and amortization, including amortization of capitalized loan costs | |||||||||||
(Gain) loss on sale of real estate and other investments | ( | ||||||||||
Share-based compensation expense | |||||||||||
Other, net | |||||||||||
Changes in other assets and liabilities: | |||||||||||
Other assets | |||||||||||
Accounts payable and accrued expenses | ( | ( | |||||||||
Net cash provided by operating activities | $ | $ | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Increase in mortgages and real estate related notes receivable | ( | ||||||||||
Net proceeds from sale of real estate and other investments | |||||||||||
Proceeds from insurance | |||||||||||
Payments for improvements of real estate investments | ( | ( | |||||||||
Other investing activities | |||||||||||
Net cash provided by (used by) investing activities | $ | ( | $ | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Principal payments on mortgages payable | ( | ( | |||||||||
Proceeds from revolving lines of credit | |||||||||||
Principal payments on revolving lines of credit | ( | ( | |||||||||
Principal payments on notes payable | ( | ||||||||||
Repurchase of common shares | ( | ( | |||||||||
Distributions paid to common shareholders | ( | ( | |||||||||
Distributions paid to preferred shareholders | ( | ( | |||||||||
Distributions paid to Series D preferred unitholders | ( | ( | |||||||||
Distributions paid to noncontrolling interests – Operating Partnership and Series E preferred units | ( | ( | |||||||||
Other financing activities | ( | ( | |||||||||
Net cash used by financing activities | $ | ( | $ | ( | |||||||
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | |||||||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD | |||||||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $ | $ |
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||||||
Accrued capital expenditures | $ | $ | |||||||||
Operating partnership units converted to common shares | ( | ( | |||||||||
Distributions declared but not paid to common shareholders | |||||||||||
Series E preferred units converted to common shares | ( | ( | |||||||||
Retirement of shares withheld for taxes | |||||||||||
Involuntary conversion of assets | |||||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||||||
Cash paid for interest | $ | $ |
(in thousands) | |||||||||||||||||
Balance sheet description | March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||||||||
Restricted cash | |||||||||||||||||
Total cash, cash equivalents and restricted cash | $ | $ | $ |
(in thousands) | ||||||||
2024 (remainder) | $ | |||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
Thereafter | ||||||||
Total scheduled lease income - commercial operating leases | $ |
(in thousands) | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
Revenue Stream | Applicable Standard | 2024 | 2023 | |||||||||||
Fixed lease income - operating leases | Leases | $ | $ | |||||||||||
Variable lease income - operating leases | Leases | |||||||||||||
Other property revenue | Revenue from contracts with customers | |||||||||||||
Total revenue | $ | $ |
(in thousands, except per share data) | |||||||||||
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
NUMERATOR | |||||||||||
Net income (loss) attributable to controlling interests | $ | ( | $ | ||||||||
Dividends to preferred shareholders | ( | ( | |||||||||
Numerator for basic income (loss) per share – net income (loss) available to common shareholders | ( | ||||||||||
Noncontrolling interests – Operating Partnership and Series E preferred units (1) | |||||||||||
Dividends to Series D preferred unitholders (2) | |||||||||||
Numerator for diluted income (loss) per share | $ | ( | $ | ||||||||
DENOMINATOR | |||||||||||
Denominator for basic income (loss) per share weighted average shares | |||||||||||
Effect of redeemable operating partnership units | |||||||||||
Effect of Series D preferred units | |||||||||||
Effect of Series E preferred units | |||||||||||
Effect of dilutive restricted stock units and stock options | |||||||||||
Denominator for diluted income (loss) per share | |||||||||||
NET INCOME (LOSS) PER COMMON SHARE – BASIC | $ | ( | $ | ||||||||
NET INCOME (LOSS) PER COMMON SHARE – DILUTED | $ | ( | $ |
(in thousands) | |||||||||||
Three Months Ended March 31, | Number of Units | Net Book Basis | |||||||||
2024 | $ | ( | |||||||||
2023 | $ | ( | |||||||||
(in thousands) | ||||||||||||||
Number of Series E | Number of | Total | ||||||||||||
Three Months Ended March 31, | Preferred Units Redeemed | Common Shares Issued | Value | |||||||||||
2024 | $ | |||||||||||||
2023 | $ | |||||||||||||
(in thousands, except per share amounts) | |||||||||||
Three Months Ended March 31, | Number of Common Shares | Aggregate Cost(1) | Average Price Per Share(1) | ||||||||
2024 | $ | $ | |||||||||
2023 | $ | $ | |||||||||
(in thousands) | ||||||||||||||||||||
March 31, 2024 | December 31, 2023 | |||||||||||||||||||
Carrying Amount | Weighted Average Interest Rate | Carrying Amount | Weighted Average Interest Rate | Weighted Average Maturity in Years at March 31, 2024 | ||||||||||||||||
Lines of credit (1) | $ | % | $ | % | ||||||||||||||||
Unsecured senior notes (2)(5) | % | % | ||||||||||||||||||
Unsecured debt | ||||||||||||||||||||
Mortgages payable - Fannie Mae credit facility (5) | % | % | ||||||||||||||||||
Mortgages payable - other (3)(5) | % | % | ||||||||||||||||||
Total debt (4) | $ | % | $ | % | ||||||||||||||||
(in thousands) | |||||||||||||||||
Amount | Maturity Date | Interest Rate | |||||||||||||||
Series A | $ | September 13, 2029 | % | ||||||||||||||
Series B | $ | September 30, 2028 | % | ||||||||||||||
Series C | $ | June 6, 2030 | % | ||||||||||||||
Series 2021-A | $ | September 17, 2030 | % | ||||||||||||||
Series 2021-B | $ | September 17, 2031 | % | ||||||||||||||
Series 2021-C | $ | September 17, 2032 | % | ||||||||||||||
Series 2021-D | $ | September 17, 2034 | % |
(in thousands) | |||||
2024 (remainder) | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total payments | $ |
(in thousands) | |||||||||||||||||||||||||||||
Gain Recognized in OCI | Location of Gain (Loss) Reclassified from Accumulated OCI into Income | Loss Reclassified from Accumulated OCI into Income (Loss) | |||||||||||||||||||||||||||
Three months ended March 31, | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||
Total derivatives in cash flow hedging relationships - Interest rate contracts | $ | $ | Interest expense | $ | ( | $ | ( | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Balance Sheet Location | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
March 31, 2024 | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Real estate related notes receivable | Other assets | $ | $ | |||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Real estate related notes receivable | Other assets | $ | $ | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Fair Value Measurement | Other Gains | Interest Income | Total Changes in Fair Value Included in Current-Period Earnings | ||||||||||||||||||||
Three months ended March 31, 2024 | |||||||||||||||||||||||
Notes receivable | $ | $ | $ | $ | |||||||||||||||||||
Three months ended March 31, 2023 | |||||||||||||||||||||||
Notes receivable | $ | $ | $ | $ |
(in thousands) | ||||||||||||||||||||||||||
Balance Sheet Location | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Real estate investments measured at fair value | Property owned | $ | $ | $ | $ |
(in thousands) | ||||||||||||||||||||||||||
March 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||
Balance Sheet Location | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||||
FINANCIAL ASSETS | ||||||||||||||||||||||||||
Cash and cash equivalents | Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||||
Restricted cash | Restricted cash | $ | $ | $ | $ | |||||||||||||||||||||
FINANCIAL LIABILITIES | ||||||||||||||||||||||||||
Revolving lines of credit | Revolving lines of credit | $ | $ | $ | $ | |||||||||||||||||||||
Unsecured senior notes | Notes payable | $ | $ | $ | $ | |||||||||||||||||||||
Mortgages payable - Fannie Mae credit facility | Mortgages payable | $ | $ | $ | $ | |||||||||||||||||||||
Mortgages payable - other | Mortgages payable | $ | $ | $ | $ |
(in thousands) | |||||||||||||||||||||||
Dispositions | Date Disposed | Sale Price | Net Book Value and Transaction Costs | Gain/(Loss) | |||||||||||||||||||
February 29, 2024 | $ | $ | $ | ( | |||||||||||||||||||
February 29, 2024 | $ | $ | $ | ( | |||||||||||||||||||
Total Dispositions | $ | $ | $ | ( |
(in thousands) | |||||||||||||||||||||||
Dispositions | Date Disposed | Sale Price | Net Book Value and Transaction Costs | Gain/(Loss) | |||||||||||||||||||
March 8, 2023 | $ | $ | $ | ||||||||||||||||||||
March 14, 2023 | $ | $ | $ | ||||||||||||||||||||
March 15, 2023 | $ | $ | $ | ||||||||||||||||||||
March 15, 2023 | $ | $ | $ | ( | |||||||||||||||||||
Total Dispositions | $ | $ | $ |
(in thousands) | |||||||||||||||||
Three Months Ended March 31, 2024 | Multifamily | All Other | Total | ||||||||||||||
Revenue | $ | $ | $ | ||||||||||||||
Property operating expenses, including real estate taxes | |||||||||||||||||
Net operating income | $ | $ | $ | ||||||||||||||
Property management expense | ( | ||||||||||||||||
Casualty loss | ( | ||||||||||||||||
Depreciation and amortization | ( | ||||||||||||||||
General and administrative expenses | ( | ||||||||||||||||
Loss on sale of real estate and other investments | ( | ||||||||||||||||
Interest expense | ( | ||||||||||||||||
Interest and other income | |||||||||||||||||
Net loss | $ | ( |
(in thousands) | |||||||||||||||||
Three Months Ended March 31, 2023 | Multifamily | All Other | Total | ||||||||||||||
Revenue | $ | $ | $ | ||||||||||||||
Property operating expenses, including real estate taxes | |||||||||||||||||
Net operating income | $ | $ | $ | ||||||||||||||
Property management expense | ( | ||||||||||||||||
Casualty loss | ( | ||||||||||||||||
Depreciation and amortization | ( | ||||||||||||||||
General and administrative expenses | ( | ||||||||||||||||
Gain on sale of real estate and other investments | |||||||||||||||||
Interest expense | ( | ||||||||||||||||
Interest and other income | |||||||||||||||||
Net income | $ |
(in thousands) | |||||||||||||||||
As of March 31, 2024 | Multifamily | All Other | Total | ||||||||||||||
Segment assets | |||||||||||||||||
Property owned | $ | $ | $ | ||||||||||||||
Less accumulated depreciation | ( | ( | ( | ||||||||||||||
Total real estate investments | $ | $ | $ | ||||||||||||||
Cash and cash equivalents | |||||||||||||||||
Restricted cash | |||||||||||||||||
Other assets | |||||||||||||||||
Total Assets | $ |
(in thousands) | |||||||||||||||||
As of December 31, 2023 | Multifamily | All Other | Total | ||||||||||||||
Segment assets | |||||||||||||||||
Property owned | $ | $ | $ | ||||||||||||||
Less accumulated depreciation | ( | ( | ( | ||||||||||||||
Total real estate investments | $ | $ | $ | ||||||||||||||
Cash and cash equivalents | |||||||||||||||||
Restricted cash | |||||||||||||||||
Other assets | |||||||||||||||||
Total Assets | $ |
(in thousands, except percentages) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
Operating income | $ | 4,075 | $ | 62,597 | $ | (58,522) | (93.5) | % | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Property management expenses | 2,330 | 2,568 | (238) | (9.3) | % | ||||||||||||||||||
Casualty loss | 820 | 252 | 568 | 225.4 | % | ||||||||||||||||||
Depreciation and amortization | 27,012 | 25,993 | 1,019 | 3.9 | % | ||||||||||||||||||
General and administrative expenses | 4,623 | 7,723 | (3,100) | (40.1) | % | ||||||||||||||||||
(Gain) loss on sale of real estate and other investments | 577 | (60,159) | 60,736 | (101.0) | % | ||||||||||||||||||
Net operating income | $ | 39,437 | $ | 38,974 | $ | 463 | 1.2 | % |
(in thousands, except percentages) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Same-store | $ | 61,536 | $ | 59,439 | $ | 2,097 | 3.5 | % | |||||||||||||||
Non-same-store | 1,803 | — | 1,803 | N/A | |||||||||||||||||||
Other properties | 638 | 675 | (37) | (5.5) | % | ||||||||||||||||||
Dispositions | 529 | 7,783 | (7,254) | (93.2) | % | ||||||||||||||||||
Total | 64,506 | 67,897 | (3,391) | (5.0) | % | ||||||||||||||||||
Property operating expenses, including real estate taxes | |||||||||||||||||||||||
Same-store | 23,995 | 24,526 | (531) | (2.2) | % | ||||||||||||||||||
Non-same-store | 566 | — | 566 | N/A | |||||||||||||||||||
Other properties | 182 | 87 | 95 | 109.2 | % | ||||||||||||||||||
Dispositions | 326 | 4,310 | (3,984) | (92.4) | % | ||||||||||||||||||
Total | 25,069 | 28,923 | (3,854) | (13.3) | % | ||||||||||||||||||
Net operating income(1) | |||||||||||||||||||||||
Same-store | 37,541 | 34,913 | 2,628 | 7.5 | % | ||||||||||||||||||
Non-same-store | 1,237 | — | 1,237 | N/A | |||||||||||||||||||
Other properties | 456 | 588 | (132) | (22.4) | % | ||||||||||||||||||
Dispositions | 203 | 3,473 | (3,270) | (94.2) | % | ||||||||||||||||||
Total | $ | 39,437 | $ | 38,974 | $ | 463 | 1.2 | % | |||||||||||||||
Property management expenses | (2,330) | (2,568) | (238) | (9.3) | % | ||||||||||||||||||
Casualty loss | (820) | (252) | 568 | 225.4 | % | ||||||||||||||||||
Depreciation and amortization | (27,012) | (25,993) | 1,019 | 3.9 | % | ||||||||||||||||||
General and administrative expenses | (4,623) | (7,723) | (3,100) | (40.1) | % | ||||||||||||||||||
Gain (loss) on sale of real estate and other investments | (577) | 60,159 | (60,736) | (101.0) | % | ||||||||||||||||||
Interest expense | (9,207) | (10,319) | (1,112) | (10.8) | % | ||||||||||||||||||
Interest and other income | 340 | 49 | 291 | * | |||||||||||||||||||
NET INCOME (LOSS) | $ | (4,792) | $ | 52,327 | $ | (57,119) | (109.2) | % | |||||||||||||||
Dividends to Series D preferred unitholders | (160) | (160) | — | — | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | 1,079 | (8,566) | 9,645 | 112.6 | % | ||||||||||||||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | (32) | (30) | (2) | 6.7 | % | ||||||||||||||||||
Net income (loss) attributable to controlling interests | (3,905) | 43,571 | (47,476) | (109.0) | % | ||||||||||||||||||
Dividends to preferred shareholders | (1,607) | (1,607) | — | — | |||||||||||||||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | (5,512) | $ | 41,964 | $ | (47,476) | (113.1) | % |
Three Months Ended March 31, | |||||||||||
Weighted Average Occupancy(1) | 2024 | 2023 | |||||||||
Same-store | 94.6 | % | 94.9 | % | |||||||
Non-same-store | 96.6 | % | — | ||||||||
Total | 94.6 | % | 94.9 | % |
Number of Apartment Homes | as of March 31, 2024 | as of March 31, 2023 | |||||||||
Same-store | 12,580 | 12,580 | |||||||||
Non-same-store | 303 | — | |||||||||
Dispositions | — | 917 | |||||||||
Total | 12,883 | 13,497 |
(in thousands, except per share and unit amounts) | |||||||||||
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Funds from operations: | |||||||||||
Net income (loss) available to common shareholders | $ | (5,512) | $ | 41,964 | |||||||
Adjustments: | |||||||||||
Noncontrolling interests – Operating Partnership and Series E preferred units | (1,079) | 8,566 | |||||||||
Depreciation and amortization | 27,012 | 25,993 | |||||||||
Less depreciation – non real estate | (85) | (91) | |||||||||
Less depreciation – partially owned entities | (24) | (19) | |||||||||
(Gain) loss on sale of real estate and other assets | 577 | (60,159) | |||||||||
FFO applicable to common shares and Units | $ | 20,889 | $ | 16,254 | |||||||
Adjustments to Core FFO: | |||||||||||
Non-cash casualty loss | 702 | 13 | |||||||||
Interest rate swap amortization | 197 | 138 | |||||||||
Amortization of assumed debt | 263 | (116) | |||||||||
Severance and transition related costs | — | 3,199 | |||||||||
Loss on litigation settlement and associated trial costs(1) | 37 | — | |||||||||
Other miscellaneous items(2) | (42) | 54 | |||||||||
Core FFO applicable to common shares and Units | $ | 22,046 | $ | 19,542 | |||||||
FFO applicable to common shares and Units | $ | 20,889 | $ | 16,254 | |||||||
Dividends to Series D preferred unitholders | 160 | 160 | |||||||||
FFO applicable to common shares and Units - diluted | $ | 21,049 | $ | 16,414 | |||||||
Core FFO applicable to common shares and Units | $ | 22,046 | $ | 19,542 | |||||||
Dividends to Series D preferred unitholders | 160 | 160 | |||||||||
Core FFO applicable to common shares and Units - diluted | $ | 22,206 | $ | 19,702 | |||||||
Per Share Data | |||||||||||
Net income (loss) per common share - diluted(3) | $ | (0.37) | $ | 2.76 | |||||||
FFO per share and Unit - diluted | $ | 1.16 | $ | 0.89 | |||||||
Core FFO per share and Unit - diluted | $ | 1.23 | $ | 1.07 | |||||||
Weighted average shares - basic | 14,922 | 15,025 | |||||||||
Effect of redeemable operating partnership Units for FFO and Core FFO | 854 | 968 | |||||||||
Effect of Series D preferred units for FFO and Core FFO | 228 | 228 | |||||||||
Effect of Series E preferred units for FFO and Core FFO | 2,078 | 2,118 | |||||||||
Effect of dilutive restricted stock units and stock options for FFO and Core FFO | 20 | 20 | |||||||||
Weighted average shares and Units for FFO and Core FFO - diluted | 18,102 | 18,359 |
(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 thousands, except per share amounts) | |||||||||||
Three Months Ended March 31, | Number of Common Shares | Aggregate Cost(1) | Average Price Per Share(1) | ||||||||
2024 | 88 | $ | 4,703 | $ | 53.62 | ||||||
2023 | 19 | 1,022 | $ | 52.51 | |||||||
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(1) | Share and Unit(2) | Plans or Programs | Programs(3) | |||||||||||||
January 1 - 31, 2024 | 7,590 | $ | 53.96 | 7,590 | $ | 9,005,467 | |||||||||||
February 1 - 29, 2024 | 80,132 | 53.58 | 80,132 | 4,713,230 | |||||||||||||
March 1 - 31, 2024 | — | — | — | 4,713,230 | |||||||||||||
Total | 87,722 | $ | 53.62 | 87,722 |
Exhibit No. | Description | ||||
3.1 | |||||
3.2 | |||||
3.3 | |||||
10.1 | |||||
31.1* | |||||
31.2* | |||||
32.1* | |||||
32.2* | |||||
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 |
/s/ Anne Olson | |||||
Anne Olson | |||||
President and Chief Executive Officer | |||||
/s/ Bhairav Patel | |||||
Bhairav Patel | |||||
Executive Vice President and Chief Financial Officer | |||||
Date: April 29, 2024 |
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. |
By: | /s/ Anne Olson | |||||||
Anne Olson, President and Chief Executive Officer |
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. |
By: | /s/ Bhairav Patel | |||||||
Bhairav Patel, Executive Vice President and Chief Financial Officer | ||||||||
/s/ Anne Olson | |||||
Anne Olson | |||||
President and Chief Executive Officer | |||||
April 29, 2024 |
/s/ Bhairav Patel | |||||
Bhairav Patel | |||||
Executive Vice President and Chief Financial Officer | |||||
April 29, 2024 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
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) | 14,912 | 14,963 |
Common shares of beneficial interest, shares outstanding (in shares) | 14,912 | 14,963 |
Term Loans | ||
LIABILITIES | ||
Unamortized loan costs | $ 525 | $ 541 |
Mortgages | ||
LIABILITIES | ||
Unamortized loan costs | $ 3,342 | $ 3,427 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (4,792) | $ 52,327 |
Other comprehensive income (loss): | ||
Loss on derivative instrument reclassified into earnings | 197 | 138 |
Total comprehensive income (loss) | (4,595) | 52,465 |
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | 1,112 | (8,543) |
Net income attributable to noncontrolling interests – consolidated real estate entities | (32) | (30) |
Comprehensive income (loss) attributable to controlling interests | $ (3,515) | $ 43,892 |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited) (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Distributions - common shares and units (in dollars per share) | $ 0.75 | $ 0.73 |
Series C Preferred Stock | ||
Distributions - preferred shares and units (in dollars per share) | 0.4140625 | 0.4140625 |
Series E Preferred Units | ||
Distributions - preferred shares and units (in dollars per share) | $ 0.96875 | $ 0.96875 |
ORGANIZATION |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
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, 2024, Centerspace owned interests in 70 apartment communities consisting of 12,883 apartment homes. |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
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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, 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, 2023, as filed with the SEC on February 20, 2024. 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. RECLASSIFICATIONS Certain previously reported amounts have been reclassified to conform to the current financial statement presentation. These reclassifications had no impact on net income as reported in the Condensed Consolidated Statement of Operations, total assets, liabilities or equity as reported in the Condensed Consolidated Balance Sheets and the classifications within the Condensed Consolidated Statements of Cash Flows. Centerspace reclassified certain items within the disaggregated revenue table included in Note 2. CASH, CASH EQUIVALENTS, AND RESTRICTED CASH Cash and cash equivalents include all cash and highly liquid investments purchased with maturities of three months or less. Cash and cash equivalents consist of bank deposits and deposits in a money market mutual fund. The Company is potentially exposed to credit risk for cash deposited with FDIC-insured financial institutions in accounts which, at times, may exceed federally insured limits. Although past bank failures have increased the risk of loss in such accounts, the Company has not experienced any losses in such accounts. As of March 31, 2024 and December 31, 2023, restricted cash consisted of $1.1 million and $639,000, respectively, in escrows held by lenders. Escrows include funds deposited with a lender for payment of real estate taxes and insurance and reserves to be used for replacement of structural elements and mechanical equipment at certain communities. The funds are under the control of the lender. Disbursements are made after supplying written documentation to the lender. 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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. For the three months ended March 31, 2024 and 2023, rental income represented approximately 98.2% of total revenues, and included gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt. For the three months ended March 31, 2024 and 2023, other property revenues represented the remaining 1.8% of total revenues, and were 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 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, 2024, was as follows:
REVENUES AND GAINS ON SALE OF REAL ESTATE 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 revenues such as application fees and other miscellaneous items. Centerspace recognizes revenue for these rental related items not included as a component of a lease as earned. The following table presents the disaggregation of revenue streams for the three months ended March 31, 2024 and 2023:
In addition to lease income and other property revenue, the Company recognizes gains or losses on the sale of real estate 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. For the three months ended March 31, 2024 and 2023, the Company recognized a loss of $577,000 and a gain of $60.2 million, respectively, on the sale of real estate and other investments. Any gain or loss on real estate dispositions is net of certain closing and other costs associated with the disposition. MARKET CONCENTRATION RISK The Company is subject to increased exposure from economic and other competitive factors specific to markets where it holds a significant percentage of the carrying value of its real estate portfolio. As of March 31, 2024, Centerspace held more than 10% of the carrying value of its real estate portfolio in the Minneapolis, Minnesota and Denver, Colorado markets. IMPAIRMENT OF LONG-LIVED ASSETS The Company evaluates long-lived assets, including real estate investments, 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 estimated 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 generally 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 estimated 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. Plans to hold properties over longer periods decreases the likelihood of recording impairment losses. During the three months ended March 31, 2024 and 2023, the Company recorded no impairment charges. VARIABLE INTEREST ENTITIES Centerspace has determined that its Operating Partnership and each of its less-than-wholly owned real estate partnerships are variable interest entities (each, a “VIE”), 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. REAL ESTATE RELATED NOTES RECEIVABLE The Company has a tax increment financing note receivable (“TIF”) with a principal balance of $5.4 million and $5.7 million at March 31, 2024 and December 31, 2023, respectively, which appears within other assets in the Condensed Consolidated Balance Sheets at fair value. The note bears an interest rate of 4.5% with payments due in February and August of each year. In 2023, the Company originated a $15.1 million mezzanine loan for the development of an apartment community located in Inver Grove Heights, Minnesota. The mezzanine loan bears interest at 10.0% per annum. As of March 31, 2024 and December 31, 2023, the Company had funded $8.8 million and $1.6 million of the mezzanine loan, respectively. The loan matures in December 2027 unless extended to December 2028 in accordance with the terms of the mezzanine loan agreement. The loan is secured by a pledge of and first priority security interest against 100% of the membership interests in the mezzanine borrower and the agreement provides the Company with an option to purchase the development. The loan represents an investment in an unconsolidated variable interest entity. The Company is not the primary beneficiary of the VIE as Centerspace does not have the power to direct the activities which most significantly impact the entity’s economic performance nor does Centerspace have significant influence over the entity. The note receivable appears within other assets in the Condensed Consolidated Balance Sheets at fair value. ADVERTISING COSTS Advertising costs are expensed as incurred and reported on the Condensed Consolidated Statements of Operations within the property operating expenses, excluding real estate taxes line item. During the three months ended March 31, 2024 and 2023, total advertising expense was $738,000 and $702,000, respectively. SEVERANCE AND TRANSITION On March 23, 2023, the Company entered into a Separation and General Release Agreement (the “Separation Agreement”) in connection with the departure of former CEO, Mark Decker, Jr. During the three months ended March 31, 2023, the Company incurred total severance costs of $2.2 million for the cash severance and benefits for Mr. Decker, $737,000 in share-based compensation expense for the acceleration of certain equity awards, and $306,000 in other CEO transition related expenses. INVOLUNTARY CONVERSION OF ASSETS In April 2023, a portion of an apartment community was destroyed by fire. The Company recorded a write-down of the apartment community asset, in accordance with ASC 610-30 on involuntary conversion of non-monetary assets, totaling $1.3 million with an offsetting insurance receivable recorded within other assets on the Condensed Consolidated Balance Sheets. During the three months ended March 31, 2024, the claim was settled for $1.6 million, including remediation and other operating expenses. During the three months ended March 31, 2024, Centerspace recognized $618,000 in additional casualty loss resulting from updated loss estimates from four separate insurance events at apartment communities. Any insurance funds received will be recognized when received in accordance with ASC 610-30.
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) 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 net income (loss) per share upon vesting of the RSUs, upon exercising of 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). The Company calculates diluted net income (loss) per share using the treasury stock method for RSUs and ISOs and the if converted method for Series D preferred units and 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 common shares that would result in a dilution of net income (loss). 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. The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted net income (loss) per share reported in the Condensed Consolidated Financial Statements for the three months ended March 31, 2024 and 2023.
(1)For the three months ended March 31, 2024, the impact of Units and Series E preferred units was excluded from the calculation of net income (loss) per common share - diluted as they were anti-dilutive. (2)For the three months ended March 31, 2024, dividends to preferred unitholders are excluded in the calculation of net income (loss) per common share - diluted as they were anti-dilutive. For the three months ended March 31, 2024, operating partnership units of 854,000, Series D preferred units of 228,000, as converted, Series E preferred units of 2.1 million, as converted, time-based RSUs of 20,000, and performance-based RSUs of 41,000 were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive as including these items would have improved net loss per share. For the three months ended March 31, 2023, performance-based RSUs of 36,000 were excluded from the calculation of diluted net income per share because they were anti-dilutive as including these items would have improved net income per share.
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EQUITY AND MEZZANINE EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY AND MEZZANINE EQUITY | EQUITY AND MEZZANINE EQUITY Operating Partnership Units. The Operating Partnership had 844,000 and 861,000 outstanding Units at March 31, 2024 and December 31, 2023, respectively. 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, 2024 and 2023 as detailed in the table below.
Series E Preferred Units (Noncontrolling Interests). Centerspace had 1.7 million Series E preferred units outstanding on March 31, 2024 and December 31, 2023. Each Series E preferred unit has a par value of $100. 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. Centerspace has the option, at its sole election, to convert Series E preferred units into Units if its stock has traded at or above $83 per share for 15 of 30 consecutive trading days and it has made at least three consecutive quarters of distributions with a rate of at least $0.804 per Unit. The Series E preferred units have an aggregate liquidation preference of $171.2 million as of March 31, 2024. The holders of the Series E preferred units do not have voting rights.
Common Shares and Equity Awards. Common shares outstanding on March 31, 2024 and December 31, 2023, totaled 14.9 million and 15.0 million, respectively. During the three months ended March 31, 2024 and 2023, Centerspace issued approximately 3,742 and 11,877 common shares, respectively, with a total grant-date fair value of $445,000 and $1.1 million, respectively, under its 2015 Incentive Plan, as share-based compensation for employees and trustees. These shares vested based on performance and service criteria. Refer to Note 11 for additional details on share-based compensation. Equity Distribution Agreement. Centerspace has an equity distribution agreement in connection with an 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 may be used for general corporate purposes, including the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness. There were no sales of common shares under the 2021 ATM Program during the three months ended March 31, 2024 and 2023. As of March 31, 2024, common shares having an aggregate offering price of up to $126.6 million remained available under the 2021 ATM Program. Share Repurchase Program. On March 10, 2022, the Board of Trustees approved a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $50.0 million of the Company’s outstanding common shares. Under the Share Repurchase Program, the Company is authorized to repurchase common shares through open market purchases, privately-negotiated transactions, block trades or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities and Exchange Act of 1934, as amended. The repurchases have no time limit and may be suspended or discontinued completely at any time. The specific timing and amount of repurchases will vary based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors. The table below provides details on the shares repurchased during the three months ended March 31, 2024 and 2023. As of March 31, 2024, the Company had $4.7 million remaining authorized for purchase under this program.
(1)Amount includes commissions. Series C Preferred Shares. Series C preferred shares outstanding were 3.9 million shares at March 31, 2024 and December 31, 2023. The Series C preferred shares are nonvoting and redeemable for cash at $25.00 per share at Centerspace’s option. 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, 2024 and December 31, 2023. 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 value of $16.6 million. Changes in the redemption value are based on changes in the trading value of common shares and are charged to common shares on the Condensed Consolidated Balance Sheets each quarter. 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.
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DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT The following table summarizes the Company’s secured and unsecured debt at March 31, 2024 and December 31, 2023.
(1)Interest rates on lines of credit are variable and exclude any unused facility fees and amounts reclassified from accumulated other comprehensive income (loss) into interest expense from terminated interest rate swaps. (2)Included within notes payable on the Condensed Consolidated Balance Sheets. (3)Represents apartment communities encumbered by mortgages; 14 at March 31, 2024 and December 31, 2023. (4)Excludes deferred financing costs and premiums or discounts. (5)Interest rate is fixed. As of March 31, 2024, 45 apartment communities were not encumbered by mortgages and were available to provide credit support for the unsecured borrowings. The Company’s primary unsecured credit facility (“Unsecured Credit Facility” or “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, 2024, there was $40.0 million outstanding on this line of credit, therefore the additional borrowing availability was $210.0 million. This unsecured credit facility matures in September 2025, with an option to extend maturity for up to two additional six-month periods and has an accordion option to increase borrowing capacity up to $400.0 million. On May 31, 2023, the Unsecured Credit Facility was amended to replace the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) as the benchmark alternative reference rate under the Facility. The interest rates on the line of credit are based on the consolidated leverage ratio, at the Company’s option, on either the lender’s base rate plus a margin, ranging from 25-80 basis points, or daily or term SOFR, plus a margin that ranges from 125-180 basis points with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended. Prior to the amendment, interest rates on the line of credit were based on the consolidated leverage ratio applying the same margins to LIBOR. The unsecured credit facility and unsecured senior notes are subject to customary financial covenants and limitations. The Company believes that it was in compliance with all such financial covenants and limitations as of March 31, 2024. Centerspace also has a $6.0 million operating line of credit. As of March 31, 2024, there was $357,000 outstanding on this line of credit. As of December 31, 2023, there was no outstanding balance on this 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 September 30, 2024, with pricing based on SOFR. Centerspace has a private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc. (collectively, “PGIM”) under which the Company has issued $200.0 million in unsecured senior promissory notes (“unsecured senior notes”). The Company also has a separate note purchase agreement for the issuance of $125.0 million senior unsecured promissory notes, of which $25.0 million was issued under the private shelf agreement with PGIM. The following table shows the notes issued under both agreements as of March 31, 2024 and December 31, 2023.
Centerspace has a $198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”). The FMCF is secured by mortgages on 11 apartment communities. The notes are interest-only, with varying maturity dates of 7, 10, and 12 years, and a blended, weighted average interest rate of 2.78%. As of March 31, 2024 and December 31, 2023, 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, 2024, Centerspace owned 14 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, 2024, the Company believes that there were no material defaults or instances of material noncompliance in regard to any of these mortgage loans. The aggregate amount of required future principal payments on lines of credit, notes payable, and mortgages payable as of March 31, 2024, was as follows:
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DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS Centerspace used interest rate derivatives to stabilize interest expense and to manage its exposure to interest rate fluctuations. To accomplish this objective, the Company primarily used interest rate swap contracts to fix variable interest rate debt. Changes in the fair value of derivatives designated and that qualified as cash flow hedges were recorded in accumulated other comprehensive income (loss) (“OCI”) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income (loss) will be reclassified to interest expense in the periods in which interest payments are incurred on variable rate debt. During the next twelve months, the Company estimates an additional $690,000 will be reclassified as an increase to interest expense. In February 2022, the Company terminated its interest rate swaps. As of March 31, 2024 and December 31, 2023 the Company had no remaining interest rate swaps. The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of March 31, 2024 and 2023.
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FAIR VALUE MEASUREMENTS |
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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
Centerspace utilizes an income approach with Level 3 inputs based on expected future cash flows to value the notes receivable. The unobservable inputs include market transactions for similar instruments, management estimates of comparable interest rates (range of 5.00% to 9.00%), 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.
As of March 31, 2024 and December 31, 2023, Centerspace had investments totaling $2.1 million in real estate technology venture funds consisting of privately held entities that develop technology related to the real estate industry. These investments appear within other assets on our Condensed Consolidated Balance Sheets. The investments are measured at net asset value (“NAV”) as a practical expedient under ASC 820. As of March 31, 2024, the Company had total unfunded commitments of $1.0 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, 2024. Non-financial assets measured at fair value on a nonrecurring basis at December 31, 2023 consisted of real estate investments that were written-down to estimated fair value during the year ended December 31, 2023.
As of December 31, 2023, the Company estimated the fair value of real estate investments using market offers to purchase and other market data. 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, 2024 and December 31, 2023, respectively, are as follows:
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ACQUISITIONS AND DISPOSITIONS |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS AND DISPOSITIONS | ACQUISITIONS AND DISPOSITIONS ACQUISITIONS Centerspace did not acquire new real estate during the three months ended March 31, 2024 and 2023. DISPOSITIONS During the three months ended March 31, 2024, Centerspace disposed of two apartment communities in two exchange transactions for an aggregate sales price of $19.0 million. During the three months ended March 31, 2023, Centerspace disposed of nine apartment communities, in four exchange transactions for an aggregate sales price of $144.3 million. The dispositions for the three months ended March 31, 2024 and 2023 are detailed below. Three Months Ended March 31, 2024
Three Months Ended March 31, 2023
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SEGMENTS |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS | SEGMENTS 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 disposed or designated as held for sale. During the three months ended March 31, 2024, two sold apartment communities were reclassified from the multifamily segment to all other for all periods presented. 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”), a non-GAAP measure, 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 excludes gain (loss) on the sale of real estate and other assets, impairment, 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 (loss), net income (loss) 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, 2024 and 2023, respectively, along with reconciliations to net income (loss) in the Condensed Consolidated Financial Statements. Segment assets are also reconciled to total assets as reported in the Condensed Consolidated Financial Statements.
Segment assets are summarized as follows as of March 31, 2024, and December 31, 2023, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation. Centerspace was the named defendant in a lawsuit where the owner of a neighboring property claims a retaining wall at one of its properties is causing water damage to the neighboring property. The claim was for damage to the property and monetary losses. The original judgment was ordered on October 9, 2023 for $2.9 million which the Company immediately paid. In November 2023, the claimant filed motions requesting additional interest on the judgment and trial costs. During the three months ended March 31, 2024, the claimant was awarded an additional $1.0 million in a judgment related interest and costs. The additional $1.0 million was a recognizable subsequent event for the year ended December 31, 2023 so was recorded as a loss during the year ended December 31, 2023. The Company cannot, with any level of certainty, predict or estimate if there will be additional costs incurred as a result of the lawsuit as the matter is ongoing. Centerspace is involved in various lawsuits arising in the normal course of business and believes that such matters will not have a material adverse effect on the condensed consolidated financial statements. 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. Limitations on Taxable Dispositions. Twenty-seven properties, consisting of 5,033 apartment homes, are subject to limitations 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 these properties during the limitation 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. Unfunded Commitments. Centerspace has unfunded commitments of $1.0 million in two real estate technology venture funds. Refer to Note 7 - Fair Value Measurements for additional information regarding these investments.
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SHARE-BASED COMPENSATION |
3 Months Ended |
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Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | 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 (“LTIP”), 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. Through March 31, 2024, awards under the 2015 Incentive Plan consisted of restricted and unrestricted common shares, RSUs, and stock options. The Company accounts for forfeitures of restricted and unrestricted common shares, RSUs, and stock options when they occur instead of estimating the forfeitures. 2024 LTIP Awards Awards granted to employees on January 1, 2024, consisted of an aggregate of 21,059 time-based RSU awards and 18,876 performance RSUs based on total shareholder return (“TSR”). The time-based awards vest as to one-third of the shares on each of January 1, 2025, January 1, 2026, and January 1, 2027. The performance RSUs are earned based on the Company’s TSR as compared to the FTSE Nareit Equity Index over a forward looking three-year period. The maximum number of performance RSUs eligible to be earned is 37,752 RSUs, which is 200% of the performance 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 U.S. treasury bond rates 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 27.21%, a risk-free interest rate of 4.01%, and an expected life of 3 years. The share price at the grant date, January 1, 2024, was $58.20 per share. Share-Based Compensation Expense Share-based compensation expense recognized in the condensed consolidated financial statements for all outstanding share-based awards was $749,000 and $1.5 million for the three months ended March 31, 2024 and 2023, respectively. On March 31, 2023, the Company accelerated the vesting of all unvested time-based RSUs and stock options in connection with the Separation Agreement with Mr. Decker. This resulted in the acceleration of share-based compensation expense for those awards resulting in an additional $737,000 in expense for the three months ended March 31, 2023.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
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Pay vs Performance Disclosure | ||
Net income (loss) attributable to controlling interests | $ (3,905) | $ 43,571 |
Insider Trading Arrangements |
3 Months Ended |
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Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
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Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION Centerspace conducts a majority of its business activities through a consolidated operating partnership, Centerspace, LP, 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.
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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, 2023, as filed with the SEC on February 20, 2024.
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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.
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Reclassifications | RECLASSIFICATIONS Certain previously reported amounts have been reclassified to conform to the current financial statement presentation. These reclassifications had no impact on net income as reported in the Condensed Consolidated Statement of Operations, total assets, liabilities or equity as reported in the Condensed Consolidated Balance Sheets and the classifications within the Condensed Consolidated Statements of Cash Flows. Centerspace reclassified certain items within the disaggregated revenue table included in Note 2.
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Cash, Cash Equivalents, and Restricted Cash | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH Cash and cash equivalents include all cash and highly liquid investments purchased with maturities of three months or less. Cash and cash equivalents consist of bank deposits and deposits in a money market mutual fund. The Company is potentially exposed to credit risk for cash deposited with FDIC-insured financial institutions in accounts which, at times, may exceed federally insured limits. Although past bank failures have increased the risk of loss in such accounts, the Company has not experienced any losses in such accounts.
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Restricted Cash | Escrows include funds deposited with a lender for payment of real estate taxes and insurance and reserves to be used for replacement of structural elements and mechanical equipment at certain communities. The funds are under the control of the lender. Disbursements are made after supplying written documentation to the lender. |
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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. For the three months ended March 31, 2024 and 2023, rental income represented approximately 98.2% of total revenues, and included gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt. For the three months ended March 31, 2024 and 2023, other property revenues represented the remaining 1.8% of total revenues, and were 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 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.
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Revenues and Gains On Sale Of Real Estate | REVENUES AND GAINS ON SALE OF REAL ESTATE 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 revenues such as application fees and other miscellaneous items. Centerspace recognizes revenue for these rental related items not included as a component of a lease as earned. In addition to lease income and other property revenue, the Company recognizes gains or losses on the sale of real estate 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. For the three months ended March 31, 2024 and 2023, the Company recognized a loss of $577,000 and a gain of $60.2 million, respectively, on the sale of real estate and other investments. Any gain or loss on real estate dispositions is net of certain closing and other costs associated with the disposition.
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Market Concentration Risk | MARKET CONCENTRATION RISK The Company is subject to increased exposure from economic and other competitive factors specific to markets where it holds a significant percentage of the carrying value of its real estate portfolio. As of March 31, 2024, Centerspace held more than 10% of the carrying value of its real estate portfolio in the Minneapolis, Minnesota and Denver, Colorado markets.
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Impairment Of Long-Lived Assets | IMPAIRMENT OF LONG-LIVED ASSETS The Company evaluates long-lived assets, including real estate investments, 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 estimated 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 generally 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 estimated 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. Plans to hold properties over longer periods decreases the likelihood of recording impairment losses.
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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 variable interest entities (each, a “VIE”), 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.
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Advertising Costs | ADVERTISING COSTS Advertising costs are expensed as incurred and reported on the Condensed Consolidated Statements of Operations within the property operating expenses, excluding real estate taxes line item.
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future 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, 2024, was as follows:
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Schedule of Disaggregation of Revenue | The following table presents the disaggregation of revenue streams for the three months ended March 31, 2024 and 2023:
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NET INCOME (LOSS) PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Numerator and Denominator Used To Calculate Basic and Diluted Net Income (Loss) per Share | The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted net income (loss) per share reported in the Condensed Consolidated Financial Statements for the three months ended March 31, 2024 and 2023.
(1)For the three months ended March 31, 2024, the impact of Units and Series E preferred units was excluded from the calculation of net income (loss) per common share - diluted as they were anti-dilutive. (2)For the three months ended March 31, 2024, dividends to preferred unitholders are excluded in the calculation of net income (loss) per common share - diluted as they were anti-dilutive.
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EQUITY AND MEZZANINE EQUITY (Tables) |
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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, 2024 and 2023 as detailed in the table below.
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Schedule of Repurchased Shares | The table below provides details on the shares repurchased during the three months ended March 31, 2024 and 2023. As of March 31, 2024, the Company had $4.7 million remaining authorized for purchase under this program.
(1)Amount includes commissions.
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DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The following table summarizes the Company’s secured and unsecured debt at March 31, 2024 and December 31, 2023.
(1)Interest rates on lines of credit are variable and exclude any unused facility fees and amounts reclassified from accumulated other comprehensive income (loss) into interest expense from terminated interest rate swaps. (2)Included within notes payable on the Condensed Consolidated Balance Sheets. (3)Represents apartment communities encumbered by mortgages; 14 at March 31, 2024 and December 31, 2023. (4)Excludes deferred financing costs and premiums or discounts. (5)Interest rate is fixed. The following table shows the notes issued under both agreements as of March 31, 2024 and December 31, 2023.
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Schedule of Aggregate Amount of Required Future Principal Payments on Mortgages Payable | The aggregate amount of required future principal payments on lines of credit, notes payable, and mortgages payable as of March 31, 2024, was as follows:
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DERIVATIVE INSTRUMENTS (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2024 and 2023.
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FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Fair Values of Financial Instruments | Fair Value Measurements on a Recurring Basis
The estimated fair values of the Company’s financial instruments as of March 31, 2024 and December 31, 2023, respectively, are as follows:
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Schedule of 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.
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Schedule of Fair Value Measurements on a Nonrecurring Basis | Non-financial assets measured at fair value on a nonrecurring basis at December 31, 2023 consisted of real estate investments that were written-down to estimated fair value during the year ended December 31, 2023.
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ACQUISITIONS AND DISPOSITIONS (Tables) |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Dispositions | The dispositions for the three months ended March 31, 2024 and 2023 are detailed below. Three Months Ended March 31, 2024
Three Months Ended March 31, 2023
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SEGMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenues and Net Operating Income for Reportable Segments | The following tables present NOI for the three months ended March 31, 2024 and 2023, respectively, along with reconciliations to net income (loss) in the Condensed Consolidated Financial Statements. Segment assets are also reconciled to total assets as reported in the Condensed Consolidated Financial Statements.
|
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Schedule of Segment Assets and Accumulated Depreciation | Segment assets are summarized as follows as of March 31, 2024, and December 31, 2023, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:
|
ORGANIZATION (Details) - Residential Real Estate |
Mar. 31, 2024
apartmentCommunity
apartmentHome
|
---|---|
Real Estate Properties [Line Items] | |
Number of real estate properties | apartmentCommunity | 70 |
Number of apartment units | apartmentHome | 12,883 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
---|---|---|---|
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | $ 1,066 | $ 639 | $ 48,903 |
Escrow Deposits | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | $ 1,100 | $ 639 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Lessor, Operating Lease, Payments, Fiscal Year Maturity [Abstract] | ||
2024 | $ 1,361 | |
2025 | 1,799 | |
2026 | 1,661 | |
2027 | 1,373 | |
2028 | 986 | |
Thereafter | 5,734 | |
Total scheduled lease income - commercial operating leases | $ 12,914 | |
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 | 98.20% | 98.20% |
Fee Income | Revenue | Product Concentration Risk | ||
Lessor, Lease, Description [Line Items] | ||
Concentration risk | 1.80% | 1.80% |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Accounting Policies [Abstract] | ||
Fixed lease income - operating leases | $ 60,034 | $ 63,169 |
Variable lease income - operating leases | 3,287 | 3,500 |
Other property revenue | 1,185 | 1,228 |
Total revenue | 64,506 | 67,897 |
(Loss) gain on sale of real estate and other investments | $ (577) | $ 60,159 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Impairment of Long-Lived Assets (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Accounting Policies [Abstract] | ||
Impairment of real estate investments | $ 0 | $ 0 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Real Estate Related Notes Receivable (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
Tax Increment Financing | ||
MORTGAGE RECEIVABLE AND NOTES RECEIVABLE | ||
Loan commitment | $ 5.4 | $ 5.7 |
Interest rate | 4.50% | |
Multi-Family Residential | Inver Grove Heights Minnesota | Mezzanine Loan | ||
MORTGAGE RECEIVABLE AND NOTES RECEIVABLE | ||
Interest rate | 10.00% | |
Mortgage loans receivable face amount | 15.1 | |
Mortgage loans receivable at fair value | $ 8.8 | $ 1.6 |
Percent of membership interest pledged as collateral | 100.00% |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Advertising Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Accounting Policies [Abstract] | ||
Advertising expense | $ 738 | $ 702 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Severance and Transition (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | $ 749 | $ 1,500 |
Former Chief Executive Officer | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Severance costs | 2,200 | |
Stock-based compensation expense | 737 | |
Transition related expenses | $ 306 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Involuntary Conversion of Assets (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Apr. 30, 2023
USD ($)
|
Mar. 31, 2024
USD ($)
apartmentCommunity
|
Mar. 31, 2023
USD ($)
|
|
Accounting Policies [Abstract] | |||
Involuntary conversion of assets | $ 1,300 | $ 160 | $ 0 |
Estimated insurance claim | 1,600 | ||
Casualty loss | $ 618 | ||
Number of apartment community assets subject to insurance recoveries | apartmentCommunity | 4 |
EQUITY AND MEZZANINE EQUITY - Schedule of Conversions of Common Stock (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Conversion of Stock [Line Items] | ||
Net Book Basis | $ 0 | $ 0 |
Exercise of Exchange Rights | ||
Conversion of Stock [Line Items] | ||
Number of units redeemed (in shares) | 17 | 4 |
Net Book Basis | $ (398) | $ (697) |
Series E Preferred Units | ||
Conversion of Stock [Line Items] | ||
Number of units converted (in shares) | 13 | 13 |
COMMON SHARES | ||
Conversion of Stock [Line Items] | ||
Number of common shares issued (in shares) | 16 | 16 |
Redemption Of Units For Common Shares | ||
Conversion of Stock [Line Items] | ||
Total value | $ 702 | $ 935 |
EQUITY AND MEZZANINE EQUITY - Schedule of Repurchased Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Equity [Abstract] | ||
Number of common shares (in shares) | 88 | 19 |
Aggregate cost | $ 4,703 | $ 1,022 |
Average price per share (in dollars per share) | $ 53.62 | $ 52.51 |
DEBT - Schedule of Private Shelf Agreement (Details) - Unsecured Debt |
Mar. 31, 2024
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% |
DEBT - Schedule of Future Payments (Details) $ in Thousands |
Mar. 31, 2024
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2024 (remainder) | $ 5,688 |
2025 | 76,290 |
2026 | 99,499 |
2027 | 48,666 |
2028 | 118,363 |
Thereafter | 580,575 |
Total payments | $ 929,081 |
DERIVATIVE INSTRUMENTS - Narrative (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024
USD ($)
derivativeInstrument
|
Dec. 31, 2023
derivativeInstrument
|
|
Derivative [Line Items] | ||
Cash flow hedge gain (loss) to be reclassified within twelve months | $ | $ 690 | |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Number of instruments held | derivativeInstrument | 0 | 0 |
DERIVATIVE INSTRUMENTS - Derivative Instruments on Statement of Operations (Details) - Interest Rate Contract - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Derivative [Line Items] | ||
Gain Recognized in OCI | $ 0 | $ 0 |
Interest Expense | ||
Derivative [Line Items] | ||
Loss Reclassified from Accumulated OCI into Income (Loss) | $ (197) | $ (138) |
FAIR VALUE MEASUREMENTS - Fair Value Measurements on a Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Receivables | $ 14,103 | $ 7,039 | $ 5,661 |
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Receivables | 0 | 0 | |
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Receivables | 0 | 0 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Receivables | $ 14,103 | $ 7,039 |
FAIR VALUE MEASUREMENTS - Changes in Fair Value of Receivables (Details) - Fair Value, Recurring - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Notes receivable | $ 14,103 | $ 5,661 | $ 7,039 |
Change in fair value of receivables | 213 | 72 | |
Other Gains | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Change in fair value of receivables | 5 | 5 | |
Interest Income | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Change in fair value of receivables | $ 208 | $ 67 |
FAIR VALUE MEASUREMENTS - Fair Value Measurements on a Nonrecurring Basis (Details) - Fair Value, Nonrecurring $ in Thousands |
Dec. 31, 2023
USD ($)
|
---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Real estate investments measured at fair value | $ 19,250 |
Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Real estate investments measured at fair value | 0 |
Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Real estate investments measured at fair value | 19,250 |
Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Real estate investments measured at fair value | $ 0 |
ACQUISITIONS AND DISPOSITIONS - Narrative (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024
USD ($)
transaction
acquisition
apartmentCommunity
|
Mar. 31, 2023
USD ($)
transaction
acquisition
apartmentCommunity
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of acquisitions during period | acquisition | 0 | 0 |
Number of exchange transactions | transaction | 2 | 4 |
Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of properties sold | apartmentCommunity | 2 | 9 |
Sale Price | $ | $ 19,000 | $ 144,255 |
SEGMENTS - Segment Assets and Accumulated Depreciation (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
---|---|---|---|
Segment Reporting Information [Line Items] | |||
Property owned | $ 2,413,488 | $ 2,420,146 | |
Less accumulated depreciation | (553,231) | (530,703) | |
Total real estate investments | 1,860,257 | 1,889,443 | |
Cash and cash equivalents | 12,682 | 8,630 | $ 8,939 |
Restricted cash | 1,066 | 639 | $ 48,903 |
Other assets | 29,468 | 27,649 | |
TOTAL ASSETS | 1,903,473 | 1,926,361 | |
Multifamily | |||
Segment Reporting Information [Line Items] | |||
Property owned | 2,396,195 | 2,381,461 | |
Less accumulated depreciation | (549,160) | (524,364) | |
Total real estate investments | 1,847,035 | 1,857,097 | |
All Other | |||
Segment Reporting Information [Line Items] | |||
Property owned | 17,293 | 38,685 | |
Less accumulated depreciation | (4,071) | (6,339) | |
Total real estate investments | $ 13,222 | $ 32,346 |
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Oct. 09, 2023
USD ($)
|
Mar. 31, 2024
USD ($)
realEstateTechnologyVentureFund
apartmentProperty
apartmentHome
|
Dec. 31, 2023
USD ($)
|
|
Real Estate Properties [Line Items] | |||
Payments for legal settlement | $ 2.9 | ||
Damages awarded, value | $ 1.0 | ||
Loss on litigation settlement | $ 1.0 | ||
Number of real estate technology venture funds with unfunded commitments | realEstateTechnologyVentureFund | 2 | ||
Fair Value, Recurring | |||
Real Estate Properties [Line Items] | |||
Real estate investment, unfunded commitments | $ 1.0 | ||
Subject to Restrictions on Taxable Dispositions | |||
Real Estate Properties [Line Items] | |||
Number of properties | apartmentProperty | 27 | ||
Number of apartment units | apartmentHome | 5,033 |
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