EX-99.1 2 centerspace033124exhibit991.htm EX-99.1 Document

Exhibit 99.1
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Earnings Release
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Centerspace Reports First Quarter 2024 Financial Results and Raises Mid-Point for 2024 Core FFO per Share Guidance
MINNEAPOLIS, MN, April 29, 2024 – Centerspace (NYSE: CSR) announced today its financial and operating results for the three months ended March 31, 2024. The tables below show Net Income (Loss), Funds from Operations (“FFO”)1, and Core FFO1, all on a per diluted share basis, for the three months ended March 31, 2024; Same-Store Revenues, Expenses, and Net Operating Income (“NOI”)1 over comparable periods; and Same-Store Weighted-Average Occupancy for each of the three months ended March 31, 2024, December 31, 2023, and March 31, 2023.
 Three Months Ended March 31,
Per Common Share20242023
Net income (loss) - diluted
$(0.37)$2.76 
FFO - diluted(1)
$1.16 $0.89 
Core FFO - diluted(1)
$1.23 $1.07 
 Year-Over-Year
Comparison		Sequential
Comparison
Same-Store Results(2)
Q1 2024 vs. Q1 2023Q1 2024 vs. Q4 2023
Revenues3.5%0.5%
Expenses(2.2)%(0.1)%
NOI(1)
7.5%0.9%
Three months ended
Same-Store Results(2)
March 31, 2024December 31, 2023March 31, 2023
Weighted Average Occupancy94.6%94.8%94.9%
(1)NOI, FFO, and Core FFO are non-GAAP financial measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to “Non-GAAP Financial Measures and Reconciliations” and “Non-GAAP Financial Measures and Other Terms” in Supplemental and Financial Operating Data within.
(2)Same-store results are updated for disposition activity. Refer to “Non-GAAP Financial Measures and Reconciliations” in Supplemental and Financial Operating Data within.
Highlights
•During the three months ended March 31, 2024, Centerspace successfully executed the sale of two non-core apartment communities in Minnesota for an aggregate sales price of $19.0 million;
•Net loss decreased to $0.37 per diluted share for the first quarter of 2024, compared to Net income of $2.76 per diluted share for the same period of the prior year;
•Core FFO per diluted share increased 15.0% to $1.23 for the three months ended March 31, 2024, compared to $1.07 for the three months ended March 31, 2023;
•Same-store revenues increased by 3.5% for the first quarter of 2024 compared to the first quarter of 2023, driving a 7.5% increase in same-store NOI compared to the same period of the prior year;
•Centerspace repurchased 87,722 common shares for total consideration of $4.7 million and an average price of $53.62 per share; and
•Centerspace narrowed the 2024 financial outlook ranges for net income per diluted share and FFO per diluted share and raised the mid-point for Core FFO per diluted share. Refer to page S-15 in the Supplemental and Financial Operating Data within for additional detail.
1

Balance Sheet
At the end of the first quarter, Centerspace had $228.3 million of total liquidity on its balance sheet, consisting of $215.6 million available under the lines of credit and cash and cash equivalents of $12.7 million.
Revised 2024 Financial Outlook
Centerspace revised its 2024 financial outlook. For additional information, see S-15 of the Supplemental Financial and Operating Data for the quarter ended March 31, 2024 included at the end of this release. These ranges should be considered in their entirety. The table below reflects the revised outlook.
Previous Outlook for 2024
Updated Outlook for 2024
LowHighLowHigh
Net income per Share – diluted$(1.31)$(0.99)$(1.34)$(1.10)
Same-Store Revenue3.00 %5.00 %3.00 %4.50 %
Same-Store Expenses5.50 %7.00 %4.00 %5.50 %
Same-Store NOI1.50 %3.50 %2.50 %4.00 %
FFO per Share – diluted$4.54 $4.80 $4.57 $4.76 
Core FFO per Share – diluted$4.68 $4.92 $4.74 $4.92 
Additional assumptions:
•Same-store recurring capital expenditures of $1,075 per home to $1,150 per home
•Value-add expenditures of $25.0 million to $27.0 million
•Proceeds from dispositions of $19.0 million
Note: FFO and Core FFO are non-GAAP financial measures. For more information on their usage and presentation and a reconciliation to the most comparable GAAP measure, please refer to “2024 Financial Outlook” in the Supplemental Financial and Operating Data within.
Upcoming Events
Centerspace is scheduled to participate in the following conferences:
•BTIG 4th Annual Housing Ecosystem Conference which will be held in New York, NY, May 6-7, 2024;
•BMO 2024 Real Estate conference which will be held in New York, NY, May 8, 2024; and
•National Association of Real Estate Investment Trusts (“Nareit”) REITweek: 2024 Investor Conference which will be held in New York, NY, June 4-5, 2024.
Earnings Call
Live webcast and replay:  https://ir.centerspacehomes.com
 
Live Conference CallConference Call Replay
Tuesday, April 30, 2024, at 10:00 AM ET
Replay available until May 14, 2024
USA Toll Free
1-833-470-1428
USA Toll Free
1-866-813-9403
International
1-929-526-1599
International
1-929-458-6194
Canada Toll Free
1-833-950-0062
Canada
1-226-828-7578
Access Code
748370
Access Code
274742
Supplemental Information
Supplemental Operating and Financial Data for the quarter ended March 31, 2024 included herein (“Supplemental Information”), is available in the Investors section on Centerspace’s website at www.centerspacehomes.com or by calling Investor Relations at 701-837-7104. Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Financial and Operating Data, which accompanies this earnings release.  
2

About Centerspace
Centerspace is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of March 31, 2024, Centerspace owned interests in 70 apartment communities consisting of 12,883 apartment homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. In 2022, Centerspace was named the National Apartment Association’s Leading Organization in Diversity, Equity, and Inclusion. For more information, please visit www.centerspacehomes.com.
Forward-Looking Statements
Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on the company's current expectations and assumptions, and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Forward-looking statements are typically identified by the use of terms such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “assumes,” “may,” “projects,” “outlook,” “future,” and variations of such words and similar expressions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although the company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond the company's control and could differ materially from actual results and performance. Such risks, uncertainties, and other factors that might cause such differences include, but are not limited to those risks and uncertainties detailed from time to time in Centerspace's filings with the Securities and Exchange Commission, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in its Annual Report on Form 10-K for the year ended December 31, 2023, in its subsequent quarterly reports on Form 10-Q, and in other public reports. The company assumes no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.
Contact Information
Investor Relations
Josh Klaetsch
Phone: 701-837-7104
Email: IR@centerspacehomes.com
Marketing & Media
Kelly Weber
Phone: 701-837-7104
Email: kweber@centerspacehomes.com
3

Supplemental Financial and Operating Data
Table of Contents
March 31, 2024


Common Share Data (NYSE: CSR)
Three Months Ended
 March 31, 2024December 31, 2023September 30, 2023June 30, 2023March 31, 2023
High closing price$58.00 $59.33 $66.57 $64.18 $71.07 
Low closing price$52.65 $47.82 $59.39 $53.98 $51.39 
Average closing price$55.68 $54.61 $62.52 $58.61 $61.68 
Closing price at end of quarter$57.14 $58.20 $60.26 $61.36 $54.63 
Common share distributions – annualized$3.00 $2.92 $2.92 $2.92 $2.92 
Closing dividend yield – annualized5.3 %5.0 %4.8 %4.8 %5.3 %
Closing common shares outstanding (thousands)
14,912 14,963 15,052 14,949 15,032 
Closing limited partnership units outstanding (thousands)
844 861 864 961 967 
Closing Series E preferred units outstanding, as converted (thousands)
2,062 2,078 2,087 2,094 2,103 
Total closing common shares, limited partnership units, and Series E preferred units, as converted, outstanding (thousands)
17,818 17,902 18,003 18,004 18,102 
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units and Series E preferred units, as converted (thousands)
$1,018,121 $1,041,896 $1,084,861 $1,104,725 $988,912 

S-1


CENTERSPACE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands)
 Three Months Ended
 3/31/202412/31/20239/30/20236/30/20233/31/2023
REVENUE$64,506 $64,068 $64,568 $64,776 $67,897 
EXPENSES
Property operating expenses, excluding real estate taxes18,764 18,237 19,602 17,872 21,342 
Real estate taxes6,305 6,861 7,143 7,174 7,581 
Property management expense2,330 2,341 2,197 2,247 2,568 
Casualty loss
820 853 937 53 252 
Depreciation and amortization27,012 26,617 24,697 24,371 25,993 
Impairment of real estate investments— 5,218 — — — 
General and administrative expenses4,623 4,363 3,832 4,162 7,723 
TOTAL EXPENSES$59,854 $64,490 $58,408 $55,879 $65,459 
Gain (loss) on sale of real estate and other investments
(577)(83)11,235 (67)60,159 
Loss on litigation settlement— (1,000)— (2,864)— 
Operating income (loss)
4,075 (1,505)17,395 5,966 62,597 
Interest expense(9,207)(8,913)(8,556)(8,641)(10,319)
Interest and other income
340 533 330 295 49 
Net income (loss)
$(4,792)$(9,885)$9,169 $(2,380)$52,327 
Dividends to Series D preferred unitholders(160)(160)(160)(160)(160)
Net (income) loss attributable to noncontrolling interest – Operating Partnership and Series E preferred units
1,079 1,917 (1,204)712 (8,566)
Net income attributable to noncontrolling interests – consolidated real estate entities
(32)(29)(31)(35)(30)
Net income (loss) attributable to controlling interests
(3,905)(8,157)7,774 (1,863)43,571 
Dividends to preferred shareholders(1,607)(1,607)(1,607)(1,607)(1,607)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$(5,512)$(9,764)$6,167 $(3,470)$41,964 
Per Share Data - Basic
Net income (loss) per common share – basic
$(0.37)$(0.65)$0.41 $(0.23)$2.79 
Per Share Data - Diluted
Net income (loss) per common share – diluted
$(0.37)$(0.65)$0.41 $(0.23)$2.76 
S-2

CENTERSPACE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
3/31/202412/31/20239/30/20236/30/20233/31/2023
ASSETS
Real estate investments
Property owned$2,413,488 $2,420,146 $2,326,408 $2,434,138 $2,420,911 
Less accumulated depreciation(553,231)(530,703)(516,673)(543,264)(519,167)
Total real estate investments1,860,257 1,889,443 1,809,735 1,890,874 1,901,744 
Cash and cash equivalents12,682 8,630 29,701 9,745 8,939 
Restricted cash1,066 639 22,496 566 48,903 
Other assets29,468 27,649 16,349 18,992 19,298 
TOTAL ASSETS$1,903,473 $1,926,361 $1,878,281 $1,920,177 $1,978,884 
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses$54,614 $62,754 $62,674 $56,713 $56,639 
Revolving lines of credit40,357 30,000 — 18,989 143,469 
Notes payable, net of unamortized loan costs299,475 299,459 299,443 299,428 299,412 
Mortgages payable, net of unamortized loan costs585,382 586,563 539,245 563,079 474,999 
TOTAL LIABILITIES$979,828 $978,776 $901,362 $938,209 $974,519 
SERIES D PREFERRED UNITS$16,560 $16,560 $16,560 $16,560 $16,560 
EQUITY
Series C Preferred Shares of Beneficial Interest93,530 93,530 93,530 93,530 93,530 
Common Shares of Beneficial Interest1,160,492 1,165,694 1,169,025 1,169,501 1,176,059 
Accumulated distributions in excess of net income(564,951)(548,273)(527,586)(522,796)(508,420)
Accumulated other comprehensive loss(922)(1,119)(1,434)(1,758)(1,917)
Total shareholders’ equity$688,149 $709,832 $733,535 $738,477 $759,252 
Noncontrolling interests – Operating Partnership and Series E preferred units218,255 220,544 226,205 226,294 227,920 
Noncontrolling interests – consolidated real estate entities681 649 619 637 633 
TOTAL EQUITY$907,085 $931,025 $960,359 $965,408 $987,805 
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY$1,903,473 $1,926,361 $1,878,281 $1,920,177 $1,978,884 
S-3

CENTERSPACE
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)
This release contains certain non-GAAP financial measures. The non-GAAP financial measures should not be considered a substitute for operating results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The definitions and calculations of these non-GAAP financial measures, as calculated by the company, may not be comparable to non-GAAP financial measures reported by other REITs that do not define each of the non-GAAP financial measures exactly as Centerspace does. The non-GAAP financial measures are defined and further explained on pages S-17 through S-20, “Non-GAAP Financial Measures and Other Terms.”
The company provides certain information on a same-store and non-same-store basis. Same-store apartment communities are owned or in service for substantially all of the periods being compared, and, in the case of newly-constructed properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, Centerspace determines the composition of its same-store pool for that year as well as adjusts the previous year, which allows the company to evaluate the performance of existing apartment communities and their contribution to net operating income. The company believes that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of its communities are performing year-over-year. Centerspace uses this measure to assess whether or not the company has been successful in increasing NOI (defined and reconciled below), raising average rental revenue, renewing leases on existing residents, controlling operating costs, and making prudent capital improvements.
For the comparison of the three months ended March 31, 2024 and 2023, one apartment community was non-same-store. Sold communities are included in “Dispositions,” while “Other properties” includes non-multifamily properties and the non-multifamily components of mixed-use properties.
S-4

CENTERSPACE
RECONCILIATIONS OF OPERATING INCOME TO NET OPERATING INCOME (1)
 (in thousands, except percentages)
 Three Months EndedSequentialYear-Over-Year
 3/31/202412/31/20233/31/2023$ Change% Change$ Change% Change
Operating income (loss)$4,075 $(1,505)$62,597 $5,580 (370.8)%$(58,522)(93.5)%
Adjustments:
Property management expenses2,330 2,341 2,568 (11)(0.5)%(238)(9.3)%
Casualty loss
820 853 252 (33)(3.9)%568 225.4 %
Depreciation and amortization27,012 26,617 25,993 395 1.5 %1,019 3.9 %
Impairment— 5,218 — (5,218)(100.0)%— N/A
General and administrative expenses4,623 4,363 7,723 260 6.0 %(3,100)(40.1)%
(Gain) loss on sale of real estate and other investments
577 83 (60,159)494 *60,736 (101.0)%
Loss on litigation settlement— 1,000 — (1,000)(100.0)%— — 
Net operating income(1)
$39,437 $38,970 $38,974 $467 1.2 %$463 1.2 %
Revenue
Same-store$61,536 $61,230 $59,439 $306 0.5 %$2,097 3.5 %
Non-same-store1,803 1,526 — 277 18.2 %1,803 N/A
Other properties638 587 675 51 8.7 %(37)(5.5)%
Dispositions529 725 7,783 (196)(27.0)%(7,254)(93.2)%
Total64,506 64,068 67,897 438 0.7 %(3,391)(5.0)%
Property operating expenses, including real estate taxes
Same-store23,995 24,013 24,526 (18)(0.1)%(531)(2.2)%
Non-same-store566 449 — 117 26.1 %566 N/A
Other properties182 251 87 (69)(27.5)%95 109.2 %
Dispositions326 385 4,310 (59)(15.3)%(3,984)(92.4)%
Total25,069 25,098 28,923 (29)(0.1)%(3,854)(13.3)%
Net operating income(1)
Same-store37,541 37,217 34,913 324 0.9 %2,628 7.5 %
Non-same-store1,237 1,077 — 160 14.9 %1,237 N/A
Other properties456 336 588 120 35.7 %(132)(22.4)%
Dispositions203 340 3,473 (137)(40.3)%(3,270)(94.2)%
Total$39,437 $38,970 $38,974 $467 1.2 %$463 1.2 %
* Not a meaningful percentage
(1)Net Operating Income is a non-GAAP measure. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.

S-5

CENTERSPACE
RECONCILIATIONS OF SAME-STORE CONTROLLABLE EXPENSES TO TOTAL PROPERTY OPERATING EXPENSES, INCLUDING REAL ESTATE TAXES (1)
 (in thousands, except percentages)
 Three Months Ended March 31,
 20242023$ Change% Change
Controllable expenses
On-site compensation(2)
$6,541 $6,003 $538 9.0 %
Repairs and maintenance3,205 3,376 (171)(5.1)%
Utilities4,053 4,884 (831)(17.0)%
Administrative and marketing1,572 1,289 283 22.0 %
Total$15,371 $15,552 $(181)(1.2)%
Non-controllable expenses
Real estate taxes$6,008 $6,775 $(767)(11.3)%
Insurance2,616 2,199 417 19.0 %
Total$8,624 $8,974 $(350)(3.9)%
Property operating expenses, including real estate taxes - non-same-store$566 $— $566 N/A
Property operating expenses, including real estate taxes - other properties182 87 95 109.2 %
Property operating expenses, including real estate taxes - dispositions326 4,310 (3,984)(92.4)%
Total property operating expenses, including real estate taxes$25,069 $28,923 $(3,854)(13.3)%
(1)Same-store controllable expenses is a non-GAAP measure. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.
(2)On-site compensation for administration, leasing, and maintenance personnel.
S-6

CENTERSPACE
RECONCILIATIONS OF NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS TO FUNDS FROM OPERATIONS AND CORE FUNDS FROM OPERATIONS (1)
(in thousands, except per share amounts)
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Funds From Operations(1)
     
Net income (loss) available to common shareholders
$(5,512)$(9,764)$6,167 $(3,470)$41,964 
Adjustments:
Noncontrolling interests – Operating Partnership and Series E preferred units(1,079)(1,917)1,204 (712)8,566 
Depreciation and amortization27,012 26,617 24,697 24,371 25,993 
Less depreciation – non real estate(85)(85)(56)(89)(91)
Less depreciation – partially owned entities(24)(22)(20)(19)(19)
Impairment of real estate— 5,218 — — — 
(Gain) loss on sale of real estate and other assets
577 82 (11,235)71 (60,159)
FFO applicable to common shares and Units$20,889 $20,129 $20,757 $20,152 $16,254 
Adjustments to Core FFO(1):
Non-cash casualty (recovery) loss
702 535 854 (52)13 
Interest rate swap amortization197 315 324 159 138 
Amortization of assumed debt263 136 (116)(116)(116)
Severance and transition related costs— (10)— (19)3,199 
Loss on litigation settlement and associated trial costs(2)
37 1,035 34 3,201 — 
Other miscellaneous items(3)
(42)(35)(129)(22)54 
Core FFO applicable to common shares and Units$22,046 $22,105 $21,724 $23,303 $19,542 
FFO applicable to common shares and Units$20,889 $20,129 $20,757 $20,152 $16,254 
Dividends to Series D preferred unitholders160 160 160 160 160 
FFO applicable to common shares and Units - diluted$21,049 $20,289 $20,917 $20,312 $16,414 
Core FFO applicable to common shares and Units$22,046 $22,105 $21,724 $23,303 $19,542 
Dividends to Series D preferred unitholders160 160 160 160 160 
Core FFO applicable to common shares and Units - diluted$22,206 $22,265 $21,884 $23,463 $19,702 
Per Share Data
Net income (loss) per share and Unit - diluted$(0.37)$(0.65)$0.41 $(0.23)$2.76 
FFO per share and Unit - diluted$1.16 $1.11 $1.15 $1.11 $0.89 
Core FFO per share and Unit - diluted$1.23 $1.22 $1.20 $1.28 $1.07 
Weighted average shares - basic14,922 15,013 14,989 14,949 15,025 
Effect of redeemable operating partnership Units for FFO and Core FFO854 862 908 965 968 
Effect of Series D preferred units for FFO and Core FFO228 228 228 228 228 
Effect of Series E preferred units for FFO and Core FFO2,078 2,087 2,093 2,103 2,118 
Effect of dilutive restricted stock units and stock options for FFO and Core FFO20 31 28 24 20 
Weighted average shares and Units for FFO and Core FFO - diluted18,102 18,221 18,246 18,269 18,359 
(1)Funds from operations and Core funds from operations are non-GAAP measures. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.
(2)Consists of $37,000 in associated trial costs related to the litigation matter for the three months ended March 31, 2024. Consists of a $3.9 million loss on litigation settlement for a trial judgment entered against the Company and $406,000 in associated trial costs related to the litigation matter for the year ended December 31, 2023.
(3)Consists of (gain) loss on investments and pursuit costs.
S-7

CENTERSPACE
RECONCILIATIONS OF NET INCOME (LOSS) AVAILABLE TO CONTROLLING INTERESTS
TO ADJUSTED EBITDA(1)
(in thousands)
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Adjusted EBITDA
Net income (loss) available to controlling interests
$(3,905)$(8,156)$7,774 $(1,863)$43,571 
Adjustments:
Dividends to Series D preferred unitholders160 160 160 160 160 
Noncontrolling interests – Operating Partnership and Series E preferred units(1,079)(1,918)1,204 (712)8,566 
Income (loss) before noncontrolling interests – Operating Partnership and Series E preferred units
$(4,824)$(9,914)$9,138 $(2,415)$52,297 
Adjustments:
Interest expense9,193 8,900 8,542 8,626 10,305 
Depreciation and amortization related to real estate investments26,988 26,595 24,675 24,351 25,971 
Impairment of real estate investments— 5,218 — — — 
Non-cash casualty loss (recovery)702 535 854 (52)13 
Interest income(280)(316)(187)(248)(92)
(Gain) loss on sale of real estate and other investments
577 83 (11,235)71 (60,159)
Severance and transition related costs— (10)— (19)3,199 
Loss on litigation settlement and associated trial costs(2)
37 1,035 34 3,201 — 
Other miscellaneous items(3)
(42)(35)(129)(22)54 
Adjusted EBITDA$32,351 $32,091 $31,692 $33,493 $31,588 
(1)Adjusted EBITDA is a non-GAAP measure. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.
(2)Consists of $37,000 in associated trial costs related to the litigation matter for the three months ended March 31, 2024. Consists of a $3.9 million loss on litigation settlement for a trial judgment entered against the Company and $406,000 in associated trial costs related to the litigation matter for the year ended December 31, 2023.
(3)Consists of (gain) loss on investments and pursuit costs.
S-8


CENTERSPACE
DEBT ANALYSIS
(in thousands)
Debt Maturity Schedule
Annual Expirations
Future Maturities of Debt
Secured Fixed
Debt		Unsecured Fixed
Debt		Unsecured Variable DebtTotal
Debt		% of
Total Debt
Weighted
Average Interest Rate(1)
2024 (remainder)$— $— $357 $357 — 7.72 %
202530,193 — 40,000 70,193 7.6 %5.39 %
202699,527 — — 99,527 10.7 %3.59 %
202749,353 — — 49,353 5.3 %3.47 %
202865,810 50,000 — 115,810 12.5 %3.14 %
Thereafter343,841 250,000 — 593,841 63.9 %3.48 %
Total debt$588,724 $300,000 $40,357 $929,081 100.0 %3.59 %
(1)Weighted average interest rate of debt that matures during the year.

3/31/202412/31/20239/30/20236/30/20233/31/2023
Debt Balances Outstanding(1)
     
Secured fixed rate - mortgages payable - other$389,874 $391,140 $343,709 $367,679 $279,340 
Secured fixed rate - Fannie Mae credit facility198,850 198,850 198,850 198,850 198,850 
Unsecured variable rate lines of credit40,357 30,000 — 18,989 143,469 
Unsecured senior notes300,000 300,000 300,000 300,000 300,000 
Debt total$929,081 $919,990 $842,559 $885,518 $921,659 
Mortgages payable - other rate4.05 %4.05 %4.14 %4.14 %3.85 %
Fannie Mae Credit Facility rate2.78 %2.78 %2.78 %2.78 %2.78 %
Lines of credit rate(2)
6.68 %6.74 %— 6.56 %6.19 %
Unsecured senior notes rate3.12 %3.12 %3.12 %3.12 %3.12 %
Total debt3.59 %3.54 %3.46 %3.54 %3.71 %
(1)Excludes deferred financing costs and premiums or discounts.
(2)Interest rate excludes any unused facility fees and amounts reclassified from accumulated other comprehensive income (loss) into interest expense from terminated interest rate swaps, as shown in the table below.
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Reclassified from Accumulated OCI into interest expense$197 $315 $324 $159 $138 
S-9

CENTERSPACE 
CAPITAL ANALYSIS 
(in thousands, except per share and unit amounts)
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Equity Capitalization
Common shares outstanding14,912 14,963 15,052 14,949 15,032 
Operating partnership units outstanding844 861 864 961 967 
Series E preferred units (as converted)2,062 2,078 2,087 2,094 2,103 
Total common shares, Units, and Series E preferred units, as converted, outstanding17,818 17,902 18,003 18,004 18,102 
Market price per common share (closing price at end of period)$57.14 $58.20 $60.26 $61.36 $54.63 
Equity capitalization-common shares and units$1,018,121 $1,041,896 $1,084,861 $1,104,725 $988,912 
Recorded book value of preferred shares$93,530 $93,530 $93,530 $93,530 $93,530 
Total equity capitalization$1,111,651 $1,135,426 $1,178,391 $1,198,255 $1,082,442 
Series D Preferred Units$16,560 $16,560 $16,560 $16,560 $16,560 
Debt Capitalization
Total debt$929,081 $919,990 $842,559 $885,518 $921,659 
Total capitalization$2,057,292 $2,071,976 $2,037,510 $2,100,333 $2,020,661 
Total debt to total capitalization(1)
45.2 %44.4 %41.4 %42.2 %45.6 %
(1)Total debt to total market capitalization is a non-GAAP financial measure. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Debt service coverage ratio(1)
3.02  x3.09  x3.11  x3.33  x2.70  x
Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization2.59  x2.64  x2.65  x2.83  x2.35  x
Net debt/Adjusted EBITDA(2)
7.08  x7.10  x6.41  x6.54  x7.22  x
Net debt and preferred equity/Adjusted EBITDA(2)
7.93  x7.96  x7.28  x7.36  x8.09  x
Distribution Data
Common shares and Units outstanding at record date15,756 15,824 15,916 15,910 15,999 
Total common distribution declared
$11,805 $11,551 $11,615 $11,608 $11,668 
Common distribution per share and Unit
$0.75 $0.73 $0.73 $0.73 $0.73 
Payout ratio (Core FFO per diluted share and unit basis)(3)
61.0 %59.8 %60.8 %57.0 %68.2 %
(1)Debt service coverage ratio is a non-GAAP financial measure. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.
(2)Net debt divided by adjusted EBITDA and net debt and preferred equity divided by adjusted EBITDA are non-GAAP financial measures. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.
(3)Payout ratio (Core FFO per diluted share and unit basis) is a non-GAAP financial measure. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.

S-10


CENTERSPACE
SAME-STORE FIRST QUARTER COMPARISONS
(in thousands, except property data amounts and percentages)

 Apartment Homes IncludedRevenuesExpenses
NOI(2)
RegionsQ1 2024Q1 2023% ChangeQ1 2024Q1 2023% ChangeQ1 2024Q1 2023% Change
Denver, CO2,104 $13,354 $13,118 1.8 %$4,589 $4,444 3.3 %$8,765 $8,674 1.0 %
Minneapolis, MN4,711 22,978 22,376 2.7 %9,414 10,083 (6.6)%13,564 12,293 10.3 %
North Dakota1,710 6,995 6,510 7.5 %2,972 2,843 4.5 %4,023 3,667 9.7 %
Omaha, NE872 3,568 3,356 6.3 %1,474 1,433 2.9 %2,094 1,923 8.9 %
Rochester, MN1,129 5,915 5,648 4.7 %2,103 2,228 (5.6)%3,812 3,420 11.5 %
St. Cloud, MN832 3,626 3,351 8.2 %1,614 1,691 (4.6)%2,012 1,660 21.2 %
Other Mountain West(1)
1,222 5,100 5,080 0.4 %1,829 1,804 1.4 %3,271 3,276 (0.2)%
Same-Store Total12,580 $61,536 $59,439 3.5 %$23,995 $24,526 (2.2)%$37,541 $34,913 7.5 %


 % of NOI Contribution
Weighted Average Occupancy (3)
Average Monthly
Rental Rate (3)
Average Monthly
Revenue per Occupied Home (3)
RegionsQ1 2024Q1 2023GrowthQ1 2024Q1 2023% ChangeQ1 2024Q1 2023% Change
Denver, CO23.3 %95.3 %95.5 %(0.2)%$1,976 $1,934 2.2 %$2,221 $2,175 2.1 %
Minneapolis, MN36.1 %94.5 %94.9 %(0.4)%1,529 1,497 2.1 %1,720 1,668 3.1 %
North Dakota10.7 %95.6 %96.5 %(0.9)%1,303 1,214 7.3 %1,426 1,315 8.4 %
Omaha, NE5.6 %93.3 %94.0 %(0.7)%1,326 1,234 7.5 %1,462 1,364 7.2 %
Rochester, MN10.2 %94.6 %94.8 %(0.2)%1,730 1,664 4.0 %1,846 1,759 4.9 %
St. Cloud, MN5.4 %93.8 %90.1 %3.7 %1,353 1,315 2.9 %1,549 1,490 4.0 %
Other Mountain West(1)
8.7 %93.1 %95.1 %(2.0)%1,340 1,319 1.6 %1,494 1,457 2.5 %
Same-Store Total100.0 %94.6 %94.9 %(0.3)%$1,547 $1,499 3.2 %$1,724 $1,660 3.9 %
(1)Includes apartment communities in Billings, Montana and Rapid City, South Dakota.
(2)NOI is a non-GAAP financial measure. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.
(3)Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for definitions.

S-11

CENTERSPACE
SAME-STORE SEQUENTIAL QUARTER COMPARISONS
(in thousands, except property data amounts and percentages)

Apartment Homes IncludedRevenuesExpenses
NOI(2)
RegionsQ1 2024Q4 2023% ChangeQ1 2024Q4 2023% ChangeQ1 2024Q4 2023% Change
Denver, CO2,104 $13,354 $13,276 0.6 %$4,589 $4,583 0.1 %$8,765 $8,693 0.8 %
Minneapolis, MN4,711 22,978 23,029 (0.2)%9,414 10,090 (6.7)%13,564 12,939 4.8 %
North Dakota1,710 6,995 6,966 0.4 %2,972 2,653 12.0 %4,023 4,313 (6.7)%
Omaha, NE872 3,568 3,597 (0.8)%1,474 1,230 19.8 %2,094 2,367 (11.5)%
Rochester, MN1,129 5,915 5,744 3.0 %2,103 2,134 (1.5)%3,812 3,610 5.6 %
St. Cloud, MN832 3,626 3,461 4.8 %1,614 1,555 3.8 %2,012 1,906 5.6 %
Other Mountain West(1)
1,222 5,100 5,157 (1.1)%1,829 1,768 3.5 %3,271 3,389 (3.5)%
Same-Store Total12,580 $61,536 $61,230 0.5 %$23,995 $24,013 (0.1)%$37,541 $37,217 0.9 %

% of NOI Contribution
Weighted Average Occupancy (3)
Average Monthly
Rental Rate (3)
Average Monthly
Revenue per Occupied Home (3)
RegionsQ1 2024Q4 2023GrowthQ1 2024Q4 2023% ChangeQ1 2024Q4 2023% Change
Denver, CO23.3 %95.3 %95.3 %— $1,976 $1,985 (0.5)%$2,221 $2,206 0.7 %
Minneapolis, MN36.1 %94.5 %95.3 %(0.8)%1,529 1,531 (0.1)%1,720 1,710 0.6 %
North Dakota10.7 %95.6 %95.5 %0.1 %1,303 1,295 0.6 %1,426 1,422 0.3 %
Omaha, NE5.6 %93.3 %94.4 %(1.1)%1,326 1,324 0.2 %1,462 1,456 0.4 %
Rochester, MN10.2 %94.6 %93.6 %1.0 %1,730 1,734 (0.2)%1,846 1,812 1.9 %
St. Cloud, MN5.4 %93.8 %92.2 %1.6 %1,353 1,353 — 1,549 1,504 3.0 %
Other Mountain West(1)
8.7 %93.1 %94.2 %(1.1)%1,340 1,342 (0.1)%1,494 1,493 0.1 %
Same-Store Total100.0 %94.6 %94.8 %(0.2)%$1,547 $1,548 (0.1)%$1,724 $1,711 0.8 %
(1)Includes apartment communities in Billings, Montana and Rapid City, South Dakota.
(2)NOI is a non-GAAP financial measure. Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.
(3)Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for definitions.




S-12

CENTERSPACE
PORTFOLIO SUMMARY(1)
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Number of Apartment Homes at Period End
Same-Store12,580 12,173 12,173 12,885 12,885 
Non-Same-Store303 915 612 612 612 
All Communities12,883 13,088 12,785 13,497 13,497 
Average Monthly Rental Rate(2)
Same-Store$1,547 $1,522 $1,511 $1,467 $1,450 
Non-Same-Store1,885 1,893 1,907 1,894 1,890 
All Communities$1,555 $1,547 $1,530 $1,487 $1,470 
Average Monthly Revenue per Occupied Apartment Home(2)
Same-Store$1,724 $1,683 $1,676 $1,634 $1,606 
Non-Same-Store2,053 2,055 2,072 2,072 2,066 
All Communities$1,732 $1,708 $1,695 $1,654 $1,627 
Weighted Average Occupancy(2)
Same-Store94.6 %94.8 %94.7 %95.2 %94.8 %
Non-Same-Store96.6 %95.8 %93.5 %95.4 %95.9 %
All Communities94.6 %94.9 %94.6 %95.2 %94.9 %
Operating Expenses as a % of Scheduled Rent(2)
Same-Store41.1 %41.5 %43.3 %41.2 %43.9 %
Non-Same-Store33.0 %35.7 %41.9 %38.8 %37.8 %
All Communities40.9 %41.0 %43.3 %41.1 %43.5 %
Capital Expenditures
Total Recurring Capital Expenditures(2) per Apartment Home – Same-Store
$209 $491 $389 $258 $115 
(1)Previously reported amounts are not revised for changes in the composition of the same-store properties pool.
(2)Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for definitions.
S-13

CENTERSPACE
CAPITAL EXPENDITURES
($ in thousands, except per home amounts)
Three Months Ended
Capital Expenditures
3/31/20243/31/2023
Total Same-Store Apartment Homes12,580 12,580 
All Properties - Weighted Average Apartment Homes12,883 14,542 
Same-Store
Building - Exterior$1,341 $— 
Building - Interior16 — 
Mechanical, Electrical, & Plumbing2,809 270 
Furniture & Equipment82 13 
Landscaping & Grounds504 — 
Turnover replacements878 695 
Work in progress - net change(3,000)387 
Recurring Capital Expenditures - Same-Store(1)
$2,630 $1,365 
Recurring Capital Expenditures per Apartment Home - Same-Store(1)
$209 $109 
Recurring Capital Expenditures - All Properties(1)
$2,677 $1,730 
Recurring Capital Expenditures per Apartment Home - All Properties(1)
$208 $119 
Value Add(1)
Same-Store
Interior - Units
$237 $1,219 
Common Areas and Exterior
6,128 1,244 
Work in Progress
3,160 93 
Total Value Add - Same Store$9,525 $2,556 
All Properties
Interior - Units
$237 $1,219 
Common Areas and Exterior
6,133 1,318 
Work in Progress
3,588 93 
Total Value Add - All Properties$9,958 $2,630 
Acquisition and Other Capital Expenditures(1)(2)
All Properties
$2,581 $4,838 
Total Capital Spend
Total Capital Spend - Same-Store(3)
$12,155 $3,921 
Total Capital Spend per Apartment Home - Same-Store(3)
$966 $312 
Total Capital Spend - All Properties$15,216 $9,198 
Total Capital Spend per Apartment Home - All Properties$1,181 $633 
(1)Refer to pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for definitions.
(2)Non-routine capital expenditures were reclassified for inclusion in the Acquisition and Other Capital Expenditures category. For the three months ended March 31, 2023, $165,000 was reclassified to Acquisition and Other Capital Expenditures.
(3)Includes value-add and excludes acquisition and other capital expenditures on same-store communities.
S-14

CENTERSPACE
2024 Financial Outlook
(in thousands, except per share and per home amounts)
Centerspace revised its financial outlook for 2024 in the table below.
2024 Previous Outlook Range
2024 Revised Outlook Range
Three Months EndedLowHighLowHigh
March 31, 2024AmountAmountAmountAmount
Same-store growth
Revenue$61,536 3.00 %5.00 %3.00 %4.50 %
Controllable expenses15,371 6.00 %7.50 %4.00 %5.50 %
Non-controllable expenses8,624 4.75 %6.50 %4.00 %5.50 %
Total Expenses$23,995 5.50 %7.00 %4.00 %5.50 %
Same-store NOI(1)
$37,541 1.50 %3.50 %2.50 %4.00 %
Components of NOI(1)
Same-store$37,541 $148,700 $151,700 $148,900 $151,000 
Non-same-store1,237 4,900 5,100 4,900 5,100 
Other properties456 1,750 1,950 1,750 1,850 
Dispositions203 $— $— $203 $203 
Total NOI(1)
$39,437 $155,350 $158,750 $155,753 $158,153 
Net impact of potential dispositions
$— (200)(100)— — 
Other operating income and expenses
General and administrative and property management(6,953)(27,300)(26,700)(28,000)(27,500)
Casualty loss(820)(1,350)(1,250)(1,850)(1,750)
Non-real estate depreciation and amortization(85)(600)(550)(400)(350)
Non-controlling interest(32)(120)(130)(120)(130)
Total other operating income and expenses$(7,890)$(29,370)$(28,630)$(30,370)$(29,730)
Interest expense$(9,207)(38,800)(38,400)(38,200)(37,800)
Interest and other income316 $2,000 $2,200 $1,800 $2,000 
Dividends to preferred shareholders(1,607)(6,428)(6,428)(6,428)(6,428)
FFO applicable to common shares and Units - diluted(1)
$21,049 $82,552 $87,392 $82,555 $86,195 
Non-core income and expenses
Non-cash casualty loss
$702 $450 $400 $1,050 $1,000 
Interest rate swap amortization197 750 725 725 700 
Amortization of assumed debt263 1,075 1,025 1,075 1,025 
Loss on litigation settlement and associated trial costs
37 50 25 125 100 
Other miscellaneous items(42)100 50 100 50 
Total non-core income and expenses$1,157 $2,425 $2,225 $3,075 $2,875 
Core FFO applicable to common shares and Units - diluted(1)
$22,206 $84,977 $89,617 $85,630 $89,070 
Net loss per share - diluted
$(0.37)$(1.31)$(0.99)$(1.34)$(1.10)
FFO per diluted share(1)
$1.16 $4.54 $4.80 $4.57 $4.76 
Core FFO per diluted share(1)
$1.23 $4.68 $4.92 $4.74 $4.92 
Weighted average shares outstanding - diluted18,102 18,175 18,200 18,075 18,100 
Additional Assumptions
Same-store recurring capital expenditures (per home)
$209 $1,075 1,150 $1,075 1,150 
Value-add expenditures$9,958 $25,000 $27,000 $25,000 $27,000 
Proceeds from Dispositions
$19,000 $18,800 $19,000 $19,000 $19,000 
(1)NOI, FFO, and Core FFO are non-GAAP financial measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to "Non-GAAP Financial Measures and Reconciliations" in the Supplemental Financial and Operating Data" above and pages S-17 through S-20 “Non-GAAP Financial Measures and Other Terms” for additional information.
S-15

Reconciliation of Net Income (Loss) Available to Common Shareholders to FFO and Core FFO
The following table presents reconciliations of Net income (loss) available to common shareholders to FFO and Core FFO, which are non-GAAP financial measures described in greater detail under “Non-GAAP Financial Measures and Other Terms.” They should not be considered as alternatives to net income (loss) or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO and Core FFO also do not represent cash generated from operating activities in accordance with GAAP, nor are they indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders. The outlook and projections provided below are based on current expectations and are forward-looking.
Previous OutlookRevised Outlook
Three Months Ended12 Months Ended12 Months Ended
March 31, 2024December 31, 2024December 31, 2024
ActualLowHighLowHigh
Net loss available to common shareholders
$(5,512)$(16,071)$(10,181)$(16,468)$(11,953)
Noncontrolling interests - Operating Partnership and Series E preferred units(1,079)(7,795)(7,885)(7,795)(7,885)
Depreciation and amortization27,012 106,098 105,298 106,098 105,298 
Less depreciation - non real estate(85)(600)(550)(400)(350)
Less depreciation - partially owned entities(24)(120)(130)(120)(130)
Loss on sale of real estate
577 400 200 600 575 
Dividends to preferred unitholders160 640 640 640 640 
FFO applicable to common shares and Units - diluted$21,049 $82,552 $87,392 $82,555 $86,195 
Adjustments to Core FFO:
Non-cash casualty loss
702 450 400 1,050 1,000 
Interest rate swap amortization
197 750 725 725 700 
Amortization of assumed debt263 1,075 1,025 1,075 1,025 
Loss on litigation settlement and associated trial costs
37 50 25 125 100 
Other miscellaneous items(42)100 50 100 50 
Core FFO applicable to common shares and Units - diluted$22,206 $84,977 $89,617 $85,630 $89,070 
Net loss per share - diluted
$(0.37)$(1.31)$(0.99)$(1.34)$(1.10)
FFO per share - diluted$1.16 $4.54 $4.80 $4.57 $4.76 
Core FFO per share - diluted$1.23 $4.68 $4.92 $4.74 $4.92 
Reconciliation of Operating Income to Net Operating Income
Net operating income, or NOI, is a non-GAAP financial 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 is unaffected by sales of real estate and other investments, depreciation, amortization, financing costs, property management expenses, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income (loss), net income (loss) available for common shareholders, or cash flow from operating activities as a measure of financial performance.
Previous OutlookRevised Outlook
Three Months Ended12 Months Ended12 Months Ended
March 31, 2024December 31, 2024December 31, 2024
ActualLowHighLowHigh
Operating income$4,075 $20,152 $25,277 $19,080 $22,930 
Adjustments:
General and administrative and property management expenses6,953 27,300 26,700 28,000 27,500 
Casualty loss820 1,350 1,250 1,850 1,750 
Depreciation and amortization27,012 106,098 105,298 106,098 105,298 
Loss on sale of real estate and other investments
577 400 200 600 575 
Loss on litigation settlement and associated trial costs
— 50 25 125 100 
Net operating income$39,437 $155,350 $158,750 $155,753 $158,153 

S-16

CENTERSPACE
NON-GAAP FINANCIAL MEASURES AND OTHER TERMS
Acquisition and Other Non-Routine Capital Expenditures
Represents capital additions contemplated in the underwriting at recently acquired communities. These amounts are considered when determining expected returns. Other includes casualty and other non-routine capital items including, but not limited to, tenant improvements, real estate special assessments, and capital expenditures incurred to dispose of properties. Casualty represents capitalized costs incurred in connection with the restoration of an apartment community after a casualty event.
Adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of real estate investments, gain/loss on extinguishment of debt, gain/loss from involuntary conversion; and other non-routine items or items not considered core to business operations. The Company considers Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, financing costs, or non-operating gains and losses. Adjusted EBITDA is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP.
Average Monthly Rental Rate
Average monthly rental rate is scheduled rent divided by the total number of apartment homes.
Average Monthly Revenue per Occupied Home
Average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period.
Debt Service Coverage Ratio
Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization. This term is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within this Non-GAAP Financial Measures and Other Terms section.
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Adjusted EBITDA$32,351 $32,091 $31,692 $33,493 $31,588 
Interest Expense9,193 8,913 8,556 8,641 10,319 
Principal Amortization1,529 1,487 1,646 1,416 1,383 
Total Interest Expense and Principal Amortization10,72210,40010,20210,05711,702
Distributions paid to Series C preferred shareholders and Series D preferred unitholders1,7671,7671,7671,7671,767
Total Interest Expense, Principal Amortization, and preferred distributions12,48912,16711,96911,82413,469
Debt Service Coverage Ratio3.023.093.113.332.70
Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization2.592.642.652.832.35
Funds From Operations and Core Funds From Operations
The Company believes that FFO, which is a non-GAAP financial measure used as a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding its operating performance, primarily because its calculation does not assume that the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation and amortization.
The Company uses the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding:
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•depreciation and amortization related to real estate;
•gains and losses from the sale of certain real estate assets;
•impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity; and
•similar adjustments for partially owned consolidated real estate entities.
The exclusion in Nareit’s definition of FFO of gains and losses from the sale of real estate assets and impairment write-downs helps to identify the operating results of the long-term assets that form the base of the Company's investments, and assists management and investors in comparing those operating results between periods.
Due to the limitations of the Nareit FFO definition, Centerspace has made certain interpretations in applying this definition. The Company believes that all such interpretations not specifically identified in the Nareit definition are consistent with this definition. Nareit’s FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT’s main business are excluded from FFO and a REIT has the option to exclude impairment write-downs of assets that are incidental to its main business.
While FFO is widely used by Centerspace as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO in the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash flow needs, including the ability to service indebtedness or make distributions to shareholders.
Core Funds from Operations (“Core FFO”) is FFO as adjusted for non-routine items or items not considered core to business operations. By further adjusting for items that are not considered part of core business operations, the Company believes that Core FFO provides investors with additional information to compare core operating and financial performance between periods. Core FFO should not be considered as an alternative to net income, or any other GAAP measurement of performance, but rather should be considered an additional supplemental measure. Core FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund the Company's cash needs, including its ability to service indebtedness or make distributions to shareholders. Core FFO is a non-GAAP and non-standardized financial measure that may be calculated differently by other REITs and should not be considered a substitute for operating results determined in accordance with GAAP.
Net Debt Divided by Adjusted EBITDA
Net debt is the total outstanding debt balance less cash and cash equivalents. Preferred equity is the sum of the book value of Series C preferred shares and Series D preferred units outstanding. Adjusted EBITDA is annualized for periods less than one year. Net debt and adjusted EBITDA are non-GAAP financial measures and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within this Non-GAAP Financial Measures and Other Terms section.
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Total debt$929,081 $919,990 $842,559 $885,518 $921,659 
Less: cash and cash equivalents12,682 8,630 29,701 9,745 8,939 
Net debt$916,399 $911,360 $812,858 $875,773 $912,720 
Adjusted EBITDA(1)
$129,404 $128,364 $126,768 $133,972 $126,352 
Net debt/Adjusted EBITDA7.087.106.416.547.22
Preferred Equity
$110,090 $110,090 $110,090 $110,090 $110,090 
Net debt and preferred equity$1,026,489 $1,021,450 $922,948 $985,863 $1,022,810 
Adjusted EBITDA(1)
$129,404 $128,364 $126,768 $133,972 $126,352 
Net debt and preferred equity/Adjusted EBITDA7.937.967.287.368.09
(1)Annualized for periods less than one year.
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Net Operating Income
Net operating income, or NOI, is a non-GAAP financial measure which the Company defines as total real estate revenues less property operating expenses, including real estate taxes. The Company 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 investments, impairment, depreciation and amortization, financing costs, property management expenses, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income (loss), net income (loss) available for common shareholders, or cash flow from operating activities as a measure of financial performance.
Payout Ratio (Core FFO per Diluted Share and Unit Basis)
Payout ratio (Core FFO per diluted share and unit basis) is the ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual Core FFO per diluted share and unit. This term is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Core FFO definition included within this Non-GAAP Financial Measures and Other Terms section.
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Common distribution per share and unit$0.75 $0.73 $0.73 $0.73 $0.73 
Core FFO per common share and unit diluted1.23 1.22 1.20 1.28 1.07 
Payout ratio61.0 %59.8 %60.8 %57.0 %68.2 %
Recurring Capital Expenditures
Represents expenditures necessary to help preserve the value of and maintain the functionality at communities. Property recurring capital expenditures are necessary to maintain asset quality, including purchasing and replacing items used to operate the communities such as appliances, mechanical equipment, flooring to roof replacement, paving, siding, and major landscaping.
Same-Store Controllable Expenses
The Company defines same-store controllable expenses as property operating expenses excluding real estate taxes and insurance. Same-store controllable expenses exclude real estate taxes and insurance, in order to provide a measure of expenses that are within management's control, and is used for the purposes of budgeting, business planning, and performance evaluation. This is a non-GAAP financial measure and should not be considered an alternative to total expenses or total property operating expenses and real estate taxes.
Scheduled Rental Revenue
Scheduled rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rental rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.
Total Debt to Total Market Capitalization
Total debt to total market capitalization, a non-GAAP financial measure, is total debt not adjusted for unamortized deferred financing costs or unamortized debt premiums and discounts from the balance sheet divided by the sum of total debt from the balance sheet, market value of common shares, operating partnership units, and the as converted Series E preferred units, and book value of Series C preferred shares and Series D preferred units outstanding at the end of the period. This non-GAAP financial measure should not be considered a substitute for operating results determined in accordance with GAAP.
Value Add
Represents expenditures that are expected to result in increased income generation or decreased expense growth over time to improve a community’s cash flow and competitive position. This includes elective capital expenditures such as full-scale renovations including new amenities, interior unit turn renovations, enhanced clubhouses and common area hallways and certain resource management initiatives including smart home automation as well as environmental and sustainability initiatives for higher rental levels or expense savings in their respective markets.
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Weighted Average Occupancy
Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rental revenue. Scheduled rental revenue represents the value of all apartment homes, with occupied homes valued at contractual rental rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes. The Company believes that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and the calculation of weighted average occupancy may not be comparable to that disclosed by other REITs and other real estate companies.
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