Net loss and Core FFO decline at Centerspace (NYSE: CSR) in Q1 2026
Filing Impact
Filing Sentiment
Form Type
10-Q
Centerspace reported weaker results for the quarter ended March 31, 2026. Revenue declined 3.0% to $65.1 million, mainly because 12 communities were sold in 2025. Same-store revenue was flat, but higher operating costs led to a 1.1% drop in same-store net operating income.
The company recorded a $9.7 million impairment on one Denver apartment community, contributing to a net loss available to common shareholders of $12.9 million, or $0.77 per diluted share, versus a loss of $0.22 a year earlier. Core FFO per diluted share fell to $1.12 from $1.21, reflecting lower NOI from dispositions and same-store assets, along with higher general and administrative and interest expenses.
As of March 31, 2026, Centerspace owned 61 apartment communities with 12,263 homes, total assets of $1.89 billion, total debt of about $1.02 billion, and maintained high weighted average occupancy of 95.1%.
Positive
- None.
Negative
- Net loss and impairment materially worsened results: Net loss available to common shareholders increased to $12.9 million (or $0.77 per diluted share) from $3.7 million (or $0.22), driven by a $9.7 million impairment on a Denver community and higher interest and general and administrative expenses, while Core FFO per diluted share declined from $1.21 to $1.12.
Insights
Q1 2026 shows higher losses, an impairment charge, and softer core cash earnings.
Centerspace saw revenue fall to $65.1 million, driven by prior-year asset sales, while same-store revenue was flat. Same-store NOI slipped 1.1% as property operating expenses, notably repairs, utilities, and admin and marketing, rose faster than rents.
A $9.7 million impairment on a Denver community and higher interest and general and administrative expenses pushed net loss available to common shareholders to $12.9 million. Core FFO per diluted share declined to $1.12 from $1.21, indicating weaker recurring earnings despite contributions from two recently acquired properties.
Leverage remains significant with total debt around $1.02 billion, including $150.4 million drawn on the main credit facility. However, occupancy stayed high at 95.1% and the company continued paying a quarterly distribution of $0.77 per common share and Unit for the quarter ended March 31, 2026.
Key Figures
Revenue: $65.1M
Net loss to common: $12.9M
EPS (basic and diluted): $(0.77)/share
+5 more
8 metrics
Revenue
$65.1M
Three months ended March 31, 2026; down 3.0% from $67.1M
Net loss to common
$12.9M
Three months ended March 31, 2026; vs $3.7M prior year
EPS (basic and diluted)
$(0.77)/share
Net loss per common share for Q1 2026; vs $(0.22) in 2025
Core FFO per share
$1.12/share
Core FFO per diluted share Q1 2026; vs $1.21 in Q1 2025
Net operating income
$39.5M
NOI for Q1 2026; down from $40.4M in Q1 2025
Impairment charge
$9.7M
Impairment of one Denver apartment community in Q1 2026
Total debt (carrying amount)
$1.02B
Total debt as of March 31, 2026, after financing costs and discounts
Weighted average occupancy
95.1%
Portfolio weighted average occupancy for Q1 2026
Key Terms
Net operating income (NOI), Funds from Operations (FFO), Core Funds from Operations (Core FFO), Real estate investment trust (REIT), +2 more
6 terms
Net operating income (NOI) financial
"The CODMs evaluate each property’s operating results, using net operating income (“NOI”) to make decisions about resources to be allocated"
Net operating income (NOI) is the money a property or business generates from its regular operations after paying direct operating costs (like maintenance, utilities, and staff) but before paying financing costs, taxes, or accounting write‑downs. Investors use NOI to judge how well an asset produces cash from its core activity—think of it as the profit from running a store before paying the mortgage and taxes—so it helps compare properties and value income-producing investments.
Funds from Operations (FFO) financial
"We believe that Funds from Operations (“FFO”), which is a non-GAAP financial measure used as a standard supplemental measure for equity real estate investment trusts, is helpful to investors"
Funds from operations (FFO) is a performance measure commonly used for real estate companies that adjusts net income by adding back non‑cash items like building depreciation and removing one‑time gains or losses from property sales, to show recurring operating earnings. Investors use FFO to judge a property portfolio’s ability to generate cash for dividends and growth — think of it as measuring a car’s regular fuel efficiency rather than its accounting value or one‑off resale price.
Core Funds from Operations (Core FFO) financial
"Core Funds from Operations (“Core FFO”), a non-GAAP measure, is FFO adjusted for non-routine items or items not considered core to business operations."
Core funds from operations (core FFO) is a measure used mainly for real estate companies to show the recurring cash profit from property operations after removing one-time items, unusual gains or losses, and other non-recurring accounting adjustments. Investors use it like a household’s steady paycheck—helping judge the business’s ongoing ability to pay dividends and cover operating costs without being misled by temporary events or accounting quirks.
Real estate investment trust (REIT) financial
"We are a real estate investment trust, or REIT, that owns, manages, acquires, redevelops, and develops apartment communities."
A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate like shopping malls, apartments, or office buildings. Investors buy shares of the REIT, making it easy for people to invest in real estate without buying property themselves, and it often pays regular dividends from the rent it collects.
Tax increment financing note receivable (TIF) financial
"the Company has a tax increment financing note receivable (“TIF”) with an initial principal balance of $4.1 million."
Variable interest entity (VIE) financial
"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”)"
A variable interest entity (VIE) is a company or legal entity that an investor controls and reports in its financial statements not by owning a majority of shares but through contracts or other arrangements that give it economic rights and decision-making power. Investors care because a VIE can expose them to assets, debts and legal risks without traditional ownership—think of it like running someone else’s branch through a power-of-attorney rather than holding the keys, which can affect transparency and value.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ____________ to ____________
Commission File Number 001-35624
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of principal executive offices) | (Zip code) | |||||||||||||
(701 ) 837-4738
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.
| ☑ | No | ☐ | ||||||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
| ☑ | No | ☐ | ||||||||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||||||||||
| Smaller Reporting Company | Emerging growth company | ||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes | ☐ | No | ||||||||||||
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
The number of common shares of beneficial interest outstanding as of April 27, 2026, was 16,803,148.858 .
Table of Contents
TABLE OF CONTENTS
| Page | |||||
Part I. Financial Information | |||||
Item 1. Financial Statements - First Quarter - 2026 | 3 | ||||
Condensed Consolidated Balance Sheets March 31, 2026 (unaudited) and December 31, 2025 | 3 | ||||
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) For the Three Months Ended March 31, 2026 and 2025 | 4 | ||||
Condensed Consolidated Statements of Equity (unaudited) For the Three Months Ended March 31, 2026 and 2025 | 5 | ||||
Condensed Consolidated Statements of Cash Flows (unaudited) For the Three Months Ended March 31, 2026 and 2025 | 6 | ||||
Notes to Condensed Consolidated Financial Statements (unaudited) | 7 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 32 | ||||
Item 4. Controls and Procedures | 33 | ||||
Part II. Other Information | |||||
Item 1. Legal Proceedings | 34 | ||||
Item 1A. Risk Factors | 34 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 34 | ||||
Item 3. Defaults Upon Senior Securities | 34 | ||||
Item 4. Mine Safety Disclosures | 34 | ||||
Item 5. Other Information | 34 | ||||
Item 6. Exhibits | 35 | ||||
Signatures | 36 | ||||
2
Table of Contents
PART I
Item 1. Financial Statements
CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| (in thousands, except per share data) | |||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| 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 | |||||||||||
| Mortgages payable, net | |||||||||||
| TOTAL LIABILITIES | $ | $ | |||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 10) | |||||||||||
SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $ | $ | $ | |||||||||
| EQUITY | |||||||||||
Common Shares of Beneficial Interest ( | |||||||||||
| Accumulated distributions in excess of net income | ( | ( | |||||||||
| Total shareholders’ equity | $ | $ | |||||||||
Noncontrolling interests – Operating Partnership and Series E preferred units | |||||||||||
| TOTAL EQUITY | $ | $ | |||||||||
| TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
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CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited)
| (in thousands, except per share data) | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| REVENUE | $ | $ | |||||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Property operating expenses, excluding real estate taxes | |||||||||||||||||||||||
| Real estate taxes | |||||||||||||||||||||||
| Property management expense | |||||||||||||||||||||||
| Casualty loss, net of recoveries | ( | ||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Impairment of real estate investments | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| TOTAL EXPENSES | $ | $ | |||||||||||||||||||||
Operating income (loss) | ( | ||||||||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||||||||
Interest and other income | |||||||||||||||||||||||
NET LOSS | $ | ( | $ | ( | |||||||||||||||||||
| Distributions to Series D preferred unitholders | ( | ( | |||||||||||||||||||||
Net loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | |||||||||||||||||||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | ( | ||||||||||||||||||||||
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | $ | ( | $ | ( | |||||||||||||||||||
NET LOSS | $ | ( | $ | ( | |||||||||||||||||||
Other comprehensive loss | |||||||||||||||||||||||
Loss on derivative instrument reclassified into earnings | |||||||||||||||||||||||
TOTAL COMPREHENSIVE LOSS | $ | ( | $ | ( | |||||||||||||||||||
Net comprehensive loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | |||||||||||||||||||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | ( | ||||||||||||||||||||||
COMPREHENSIVE LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS | $ | ( | $ | ( | |||||||||||||||||||
NET LOSS PER COMMON SHARE – BASIC AND DILUTED | $ | ( | $ | ( | |||||||||||||||||||
Weighted average shares - basic and diluted | |||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
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CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited)
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | 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, 2024 | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||
Net loss attributable to controlling interests and noncontrolling interests | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Amortization of swap settlements | ||||||||||||||||||||||||||||||||||||||
Distributions - common shares and Units ($ | ( | ( | ( | |||||||||||||||||||||||||||||||||||
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 | — | ( | ||||||||||||||||||||||||||||||||||||
| Equity rebalancing | ( | |||||||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||
Net loss attributable to controlling interests and noncontrolling interests | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Distributions - common shares and Units ($ | ( | ( | ( | |||||||||||||||||||||||||||||||||||
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 | ( | |||||||||||||||||||||||||||||||||||||
| Equity rebalancing | ( | |||||||||||||||||||||||||||||||||||||
| Shares withheld for taxes | ( | ( | ||||||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
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CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| (in thousands) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization, including amortization of capitalized loan costs | |||||||||||
| Share-based compensation expense | |||||||||||
| Impairment of real estate investments | |||||||||||
| Provision for bad debt | |||||||||||
| Non-cash casualty loss | |||||||||||
| Amortization of debt premiums and discounts | |||||||||||
| 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 | |||||||||||
| Proceeds from insurance | |||||||||||
| Payments for improvements of real estate investments | ( | ( | |||||||||
| Other investing activities | ( | ( | |||||||||
Net cash 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 | ( | ( | |||||||||
| Distributions paid to common shareholders | ( | ( | |||||||||
| Distributions paid to Series D preferred unitholders | ( | ( | |||||||||
| Distributions paid to noncontrolling interests – Operating Partnership and Series E preferred units | ( | ( | |||||||||
| Payments related to tax withholding for share-based compensation | ( | ||||||||||
| Other financing activities | ( | ( | |||||||||
Net cash used by financing activities | $ | ( | $ | ( | |||||||
NET INCREASE (DECREASE) 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 | ( | ( | |||||||||
| Non-cash interest income | |||||||||||
| Unrealized gain on investment | |||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| (in thousands) | |||||||||||||||||
Balance Sheet Description | March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Restricted cash | |||||||||||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | $ | ||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
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CENTERSPACE AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
March 31, 2026
NOTE 1 • ORGANIZATION
NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Centerspace conducts a majority of its business activities through a consolidated operating partnership, Centerspace, LP, 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 reflected the Operating Partnership’s ownership of a joint venture entity in which the Operating Partnership had a general partner or controlling interest. The joint venture entity no longer held any assets or liabilities and was deconsolidated as of December 31, 2025. This entity was 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 unaudited 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, 2025, as filed with the SEC on February 17, 2026.
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
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RECENT ACCOUNTING PRONOUNCEMENTS
The following table provides a brief description of Financial Accounting Standards Board (“FASB”) recent accounting standards updates (“ASU”).
| Standard | Description | Date of Adoption | Effect on the Financial Statements or Other Significant Matters | ||||||||
ASU 2024-03, Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses; ASU 2025-01, Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Clarifying the Effective Date | This ASU is intended to improve financial reporting by requiring public companies disclose additional information about specific expense categories in the notes to the financial statements. In 2025, an additional ASU was issued to provide clarification on the effective date of the original ASU. | This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. | The ASU will require additional disclosure but is not expected to have a material impact on the Consolidated Financial Statements. | ||||||||
ASU 2025-10, Government Grants (Topic 832) - Accounting for Government Grants Received by Business Entities | This ASU establishes authoritative guidance on the accounting for government grants received by business entities. | This ASU is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. | This ASU is not expected to have a material impact on the Consolidated Financial Statements. | ||||||||
ASU 2025-11, Interim Reporting (Topic 270) - Narrow-Scope Improvements | This ASU is intended to provide clarity on the current interim reporting disclosure requirements. | This ASU is effective for interim reporting periods within annual periods beginning after December 15, 2027. | This ASU may require additional disclosure but is not expected to have a material impact on the Consolidated Financial Statements. | ||||||||
ASU 2025-12, Codification Improvements | This ASU is intended to provide technical corrections, clarifications, and minor improvements to the FASB Accounting Standards Codification. | This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. | This ASU is not expected to have a material impact on the Consolidated Financial Statements. | ||||||||
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 money market mutual funds. 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.
As of March 31, 2026 and December 31, 2025, restricted cash consisted of $2.7 million and $2.8 million, respectively, in escrows held by lenders and security deposits. 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 escrow 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 FASB Accounting Standards Codification (“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, 2026 and 2025, rental income represented approximately 98.6 % and 98.4 % of total revenues, respectively. For the three months ended March 31, 2026 and 2025, other property revenues represented the remaining 1.4 % and 1.6 %, respectively, of total revenues and are primarily driven by other fee income, which is typically recognized when earned, at a point in time.
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Some of the Company’s apartment communities have commercial spaces available for lease. Lease terms for these spaces typically range from three to fifteen years . The leases for commercial spaces generally include options to extend the lease for additional terms, subject to adjustments in rent and certain other items.
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, 2026, was as follows:
| (in thousands) | ||||||||
2026 (remainder) | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
Total scheduled lease income - operating leases | $ | |||||||
REVENUES AND GAINS OR LOSSES 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.
The following table presents the disaggregation of revenue streams for the three months ended March 31, 2026 and 2025:
| (in thousands) | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| Revenue Stream | Applicable Standard | 2026 | 2025 | ||||||||||||||||||||
| Fixed lease income - operating leases | Leases | $ | $ | ||||||||||||||||||||
| Variable lease income - operating leases | Leases | ||||||||||||||||||||||
| Other property revenue | Revenue from contracts with customers | ||||||||||||||||||||||
| Total revenue | $ | $ | |||||||||||||||||||||
IN-PLACE LEASE AMORTIZATION
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, 2026, Centerspace held more than 10% of the carrying value of its real estate portfolio in the Minneapolis, Minnesota; Denver, Colorado; and Boulder / Ft. Collins, Colorado markets.
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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, the 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 physical occupancy, rental rates, and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.
During the three months ended March 31, 2026, the Company incurred a loss of $9.7 million for the impairment of one apartment community in Denver, Colorado. During the three months ended March 31, 2025, the Company did not record a loss for impairment on real estate.
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
In connection with the acquisition of The Lydian, an apartment community in Denver, Colorado, the Company has a tax increment financing note receivable (“TIF”) with an initial principal balance of $4.1 million. As of March 31, 2026 and December 31, 2025, the principal balance was $3.9 6.0 % and matures September 30, 2041.
In connection with the acquisition of Ironwood, an apartment community in New Hope, Minnesota, the Company has a TIF note receivable with an initial principal balance of $6.6 million. As of March 31, 2026 and December 31, 2025, the principal balance was $4.6 million and $4.9 million, respectively, which appears within other assets in the Condensed Consolidated Balance Sheets at fair value. The note bears interest at a rate of 4.5 % with payments due in February and August of each year. The note matures February 1, 2039, and may be prepaid in whole or in part at any time.
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, which accrues and is added to the principal balance and is payable at maturity. As of March 31, 2026 and December 31, 2025, the Company had funded $15.1 18.4 million and $18.0 million, 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 at a discount to future appraised value. 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
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INVOLUNTARY CONVERSION OF ASSETS
During the three months ended March 31, 2026, Centerspace recorded $936,000 in casualty losses resulting from one new loss event and updated loss estimates on previously reported events along with $698,000 in insurance receivables reported within other assets on the Condensed Consolidated Balance Sheets and receipt of insurance proceeds totaling $459,000 which was in excess of previously recorded receivables. Any business interruption insurance proceeds will be recognized when received in accordance with ASC 610-30.
During the three months ended March 31, 2025, Centerspace recognized $512,000 in casualty losses resulting from two new insurance events and updated loss estimates from two previously reported events. Any business interruption insurance proceeds will be recognized when received in accordance with ASC 610-30.
NOTE 3 • NET INCOME (LOSS) PER SHARE
Basic net loss per share is computed by dividing net 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 its 2015 Incentive Plan, RSUs under its 2025 Incentive Plan (as defined below), 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 the vesting of the RSUs, exercise of ISOs, or 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, Units, 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, 2026 and 2025.
| (in thousands, except per share data) | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| NUMERATOR | |||||||||||||||||||||||
Net loss attributable to controlling interests | $ | ( | $ | ( | |||||||||||||||||||
Numerator for basic and diluted loss per share – net loss available to common shareholders(1) | ( | ( | |||||||||||||||||||||
| DENOMINATOR | |||||||||||||||||||||||
Denominator for basic and diluted loss per share weighted average shares(1) | |||||||||||||||||||||||
NET LOSS PER COMMON SHARE – BASIC AND DILUTED | $ | ( | $ | ( | |||||||||||||||||||
(1)For the three months ended March 31, 2026 and 2025, distributions to Series D preferred unitholders and the impact of Units and Series E preferred units were excluded from the calculation of net loss per common share - diluted as they were anti-dilutive.
For the three months ended March 31, 2026, weighted average operating partnership units of 914,000 , Series D preferred units of 82,000 , as converted, Series E preferred units of 1.9 million, as converted, time-based RSUs and options of 29,000 , and performance-based RSUs of 13,000 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, 2025, weighted average operating partnership units of 980,000 , Series D preferred units of 228,000 , as converted, Series E preferred units of 1.9 million, as converted, time-based RSUs and options of 35,000 , and performance-based RSUs of 43,000 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.
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NOTE 4 • MEZZANINE EQUITY AND EQUITY
Series D Preferred Units (Mezzanine Equity). Series D preferred units outstanding were 59,400 100 3.862 1.37931 Units. The Series D preferred units had an aggregate liquidation value of $5.9
Operating Partnership Units. The Operating Partnership had 901,000 and 920,000 outstanding Units at March 31, 2026 and December 31, 2025, 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, 2026 and 2025 as detailed in the table below.
| (in thousands) | |||||||||||
| Three Months Ended March 31, | Number of Units | Total Book Value | |||||||||
| 2026 | $ | ||||||||||
| 2025 | $ | ||||||||||
Series E Preferred Units (Noncontrolling Interests). Centerspace had 1.6 100 3.875 % per year. Each Series E preferred unit is convertible, at the holder’s option, into 1.20482 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 receive an allocation of net income (loss) based upon their participation in earnings or loss of the Company. The Series E preferred units had an aggregate liquidation preference of $156.3 million and $157.0 million as of March 31, 2026 and December 31, 2025, respectively. The holders of the Series E preferred units do not have voting rights.
The Company redeemed Series E preferred units in exchange for common shares in connection with Series E unitholders exercising their exchange rights during the three months ended March 31, 2026 and 2025 as detailed below.
| (in thousands) | ||||||||||||||
| Three Months Ended March 31, | Number of Series E Preferred Units Redeemed | Number of Common Shares Issued | Total Value | |||||||||||
| 2026 | $ | |||||||||||||
| 2025 | $ | |||||||||||||
Common Shares and Equity Awards. Common shares outstanding as of March 31, 2026 and December 31, 2025, totaled 16.8 15,122 and 7,818 common shares, respectively, with a total grant-date fair value of $1.1 million and $786,000 , respectively, as share-based compensation for employees and trustees under its 2015 Incentive Plan and 2025 Incentive Plan (as defined below). These shares vested based on performance and service criteria. Refer to Note 11 for additional details on share-based compensation.
At-the-Market Program. Centerspace has an at-the-market offering (“ATM Program”) through which it may offer and sell common shares in amounts and at times determined by management. The maximum aggregate offering price of common shares available for offer and sale thereunder is $500.0 million. Under the ATM Program, the Company may enter into separate forward sale agreements. The proceeds from the sale of common shares under the 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 262.9 million remained available under the ATM Program.
Share Repurchase Program. Effective July 31, 2025, the Board of Trustees authorized a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of an aggregate of $100.0 million for the Company’s outstanding common
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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 Exchange Act of 1934, as amended. The specific timing and amount of repurchases may vary based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors. There were no 96.5 million remaining authorized for purchase under the Share Repurchase Program.
NOTE 5 • DEBT
The following table summarizes the Company’s secured and unsecured debt at March 31, 2026 and December 31, 2025.
| (in thousands) | ||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||
| Carrying Amount | Weighted Average Interest Rate | Carrying Amount | Weighted Average Interest Rate | Weighted Average Maturity in Years at March 31, 2026 | ||||||||||||||||
Lines of credit (1) | $ | % | $ | % | ||||||||||||||||
Unsecured senior notes (2)(4) | % | % | ||||||||||||||||||
| Unsecured debt | ||||||||||||||||||||
Mortgages payable - Fannie Mae credit facility (4) | % | % | ||||||||||||||||||
Mortgages payable - other (3)(4) | % | % | ||||||||||||||||||
| Secured debt | ||||||||||||||||||||
| Subtotal | % | % | ||||||||||||||||||
| Deferred financing costs, premiums, and discounts on mortgages payable, net | ( | ( | ||||||||||||||||||
| Deferred financing costs on notes payable, net | ( | ( | ||||||||||||||||||
| Total debt | $ | $ | ||||||||||||||||||
(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; 10
(4)Interest rate is fixed.
As of March 31, 2026, 44 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 (the “Unsecured Credit Facility” or “Facility”) is a revolving, multi-bank line of credit, with Bank of Montreal serving as administrative agent. In May 2025, the Company exercised the accordion feature of the Facility, expanding the borrowing capacity by $150.0 million to $400.0 million. Prior to the exercise of the accordion feature, the line of credit had total commitments and borrowing capacity of up to $250.0 million, based on the value of unencumbered properties. As of March 31, 2026, the Company had additional borrowing availability of $250.0 million beyond the $150.0 million drawn under the Facility, bearing interest at a rate of 4.88 %. As of December 31, 2025, the Company had additional borrowing availability of $246.0 million beyond the $154.0 million drawn under the Facility, bearing interest at a rate of 5.12 %. As amended, this The Facility matures in July 2028, with an option to extend maturity for up to two additional six-month periods.
The Secured Overnight Financing Rate (“SOFR”) is the benchmark alternative reference rate under the Facility. As amended, 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 20 -80 basis points, or daily or term SOFR, plus a margin that ranges from 120 -180 basis points with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended.
Centerspace has an operating line of credit agreement with US Bank, N.A. which has a borrowing capacity of up to $10.0 429,000 outstanding balance on this line of credit, bearing interest at a rate of 5.88 %, compared to $925,000 outstanding as of December 31, 2025, bearing interest at a rate of 5.91 %.
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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 issued $175.0 million in unsecured senior promissory notes (“Unsecured Shelf Notes”). On October 28, 2024, the shelf agreement was amended to extend the period of time during which the Company may borrow money to October 2027 and to increase the borrowing capacity to $300.0 million. The Company issued $125.0 million of senior unsecured promissory notes (the “Unsecured Club Notes”, and, collectively with the Unsecured Shelf Notes, the “unsecured senior notes”) under a separate private note purchase agreement with PGIM and certain other lenders. The following table shows the notes issued under both agreements as of March 31, 2026 and December 31, 2025.
| (in thousands) | |||||||||||||||||
| Amount | Maturity Date | Fixed 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 | % | ||||||||||||||
Centerspace has a $198.9 million Fannie Mae Credit Facility Agreement (“FMCF”). The FMCF is secured by mortgages on 7 apartment communities. The notes are interest-only, with varying maturity dates of 7 , 10 , and 12 years, and a blended, weighted average fixed interest rate of 2.78 %. As of March 31, 2026 and December 31, 2025, the FMCF had a balance of $198.9
As of March 31, 2026, Centerspace owned 10 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. The Company believes that there were no material defaults or instances of material noncompliance in regard to any of these mortgage loans as of March 31, 2026. As of March 31, 2026 and December 31, 2025, the mortgage loans had a balance of $398.6 million and $400.1 million, respectively, excluding unamortized premiums and discounts. The mortgage loans are included within mortgages payable on the Condensed Consolidated Balance Sheets.
The aggregate amount of required future principal payments on outstanding debt as of March 31, 2026, was as follows:
| (in thousands) | |||||
| 2026 (remainder) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
Total payments | |||||
| Deferred financing costs, premiums, and discounts on mortgages payable, net | ( | ||||
| Deferred financing costs on notes payable, net | ( | ||||
Total | $ | ||||
The Company’s borrowings are subject to customary covenants and limitations. The Company believes that it was in compliance with all such covenants and limitations as of March 31, 2026.
NOTE 6 • DERIVATIVE INSTRUMENTS
Centerspace had, in the past, 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.
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The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as of March 31, 2026 and 2025.
| (in thousands) | |||||||||||||||||||||||||||||
| Gain Recognized in OCI | Location of Loss Reclassified from Accumulated OCI into Income | Loss Reclassified from Accumulated OCI into Income (Loss) | |||||||||||||||||||||||||||
| Three months ended March 31, | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Total derivatives in cash flow hedging relationships - Interest rate contracts | $ | $ | Interest expense | $ | $ | ( | |||||||||||||||||||||||
NOTE 7 • FAIR VALUE MEASUREMENTS
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 data (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.
Fair Value Measurements on a Recurring Basis
| (in thousands) | ||||||||||||||||||||||||||
| Balance Sheet Location | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| March 31, 2026 | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Real estate related notes receivable | Other assets | $ | $ | |||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Real estate related notes receivable | Other assets | $ | $ | |||||||||||||||||||||||
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 5.0 % to 9.0 %), 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 and Comprehensive Income (Loss).
| (in thousands) | |||||||||||||||||||||||
| Fair Value Measurement | Other Gains | Interest Income | Total Changes in Fair Value Included in Current-Period Earnings | ||||||||||||||||||||
| Three months ended March 31, 2026 | |||||||||||||||||||||||
| Real estate related notes receivable | $ | $ | $ | $ | |||||||||||||||||||
| Three months ended March 31, 2025 | |||||||||||||||||||||||
| Real estate related notes receivable | $ | $ | $ | $ | |||||||||||||||||||
As of March 31, 2026 and December 31, 2025, Centerspace had investments totaling $3.7 million and $3.5 million, respectively, 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 the Condensed Consolidated Balance Sheets. The investments are measured at net asset value (“NAV”) as a practical expedient under ASC 820. As of March 31, 2026, the Company had unfunded commitments of $650,000 .
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The portion of unrealized gains and losses for the three months ended March 31, 2026 and 2025 related to equity securities still held at the reporting date is shown in the table below.
(in thousands) | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Unrealized gains and losses on equity securities still held at the reporting date | $ | $ | |||||||||||||||||||||
Fair Value Measurements on a Nonrecurring Basis
Non-financial assets measured at fair value on a nonrecurring basis at March 31, 2026 and December 31, 2025 consisted of real estate investments that were written down to estimated fair value in connection with impairment recorded on one apartment community during the three months ended March 31, 2026 and the year ended December 31, 2025.
| (in thousands) | ||||||||||||||||||||||||||
| Balance Sheet Location | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| March 31, 2026 | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Real estate investments measured at fair value | Assets held for sale, net | $ | $ | $ | $ | |||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Real estate investments measured at fair value | Assets held for sale, net | $ | $ | $ | $ | |||||||||||||||||||||
Financial Assets and Liabilities Not Measured at Fair Value
Cash and cash equivalents, restricted cash, accounts receivable, 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.
The fair value of unsecured senior notes and mortgages payable is 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, 2026 and December 31, 2025, respectively, are as follows:
| (in thousands) | ||||||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Balance Sheet Location | Amount | Fair Value | Amount | Fair Value | ||||||||||||||||||||||
| FINANCIAL ASSETS | ||||||||||||||||||||||||||
| Cash and cash equivalents (Level 1) | Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||||
| Restricted cash (Level 1) | Restricted cash | $ | $ | $ | $ | |||||||||||||||||||||
| FINANCIAL LIABILITIES | ||||||||||||||||||||||||||
| Revolving lines of credit (Level 3) | Revolving lines of credit | $ | $ | $ | $ | |||||||||||||||||||||
Unsecured senior notes (Level 3)(1) | Notes payable | $ | $ | $ | $ | |||||||||||||||||||||
| Mortgages payable - Fannie Mae credit facility (Level 3) | Mortgages payable | $ | $ | $ | $ | |||||||||||||||||||||
Mortgages payable - other (Level 3)(1) | Mortgages payable | $ | $ | $ | $ | |||||||||||||||||||||
(1)Excludes deferred financing costs, debt premiums, and discounts
NOTE 8 • ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS
Centerspace did not
DISPOSITIONS
Centerspace did not
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NOTE 9 • 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 executive officer and chief financial officer are the chief operating decision-makers (“CODM”). The CODMs evaluate each property’s operating results, using net operating income (“NOI”) to make decisions about resources to be allocated and to assess property performance, and do not group the properties based on geography, size, or type for this purpose. The Company defines NOI as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important 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, amortization, financing costs, including interest and other income, losses on extinguishment of debt, and interest expense, property management expenses, loss on litigation settlement, casualty losses net of recoveries, and general and administrative expense.
The apartment communities have similar long-term economic characteristics and similar operating characteristics, such as type and length of lease, services offered to residents, and property management practices. No apartment community comprises more than 10% of consolidated revenues, profits, or assets. Accordingly, the apartment communities are aggregated into a single reportable segment, Multifamily. “All other” is composed of non-multifamily properties, non-multifamily components of mixed-use properties and apartment communities the Company has disposed or designated as held for sale, which did not meet the aggregation criteria.
During the year ended December 31, 2025, the Company disposed of 12 communities which are included in “all other.”
The following tables present NOI for the three months ended March 31, 2026 and 2025, respectively, along with reconciliations to net income (loss) as reported in the Condensed Consolidated Financial Statements. Segment assets are also reconciled to total assets as reported in the Condensed Consolidated Financial Statements.
| (in thousands) | |||||||||||||||||
| Three Months Ended March 31, 2026 | Multifamily | All Other | Total | ||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Property operating expenses | |||||||||||||||||
On-site compensation(1) | |||||||||||||||||
Repairs and maintenance(2) | |||||||||||||||||
| Utilities | |||||||||||||||||
| Administrative and marketing | |||||||||||||||||
| Insurance | |||||||||||||||||
| Real estate taxes | |||||||||||||||||
| Net operating income | $ | $ | $ | ||||||||||||||
| Property management expense | ( | ||||||||||||||||
| Casualty loss, net of recoveries | |||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||
| Impairment of real estate investments | ( | ||||||||||||||||
| General and administrative expenses | ( | ||||||||||||||||
| Interest expense | ( | ||||||||||||||||
| Interest and other income | |||||||||||||||||
Net loss | $ | ( | |||||||||||||||
(1)On-site compensation for administration, leasing, and maintenance personnel.
(2)Includes turnover expense.
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| (in thousands) | |||||||||||||||||
| Three Months Ended March 31, 2025 | Multifamily | All Other | Total | ||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Property operating expenses | |||||||||||||||||
On-site compensation(1) | |||||||||||||||||
Repairs and maintenance(2) | |||||||||||||||||
| Utilities | |||||||||||||||||
| Administrative and marketing | |||||||||||||||||
| Insurance | |||||||||||||||||
| Real estate taxes | |||||||||||||||||
| Net operating income | $ | $ | $ | ||||||||||||||
| Property management expense | ( | ||||||||||||||||
| Casualty loss, net of recoveries | ( | ||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||
| General and administrative expenses | ( | ||||||||||||||||
| Interest expense | ( | ||||||||||||||||
| Interest and other income | |||||||||||||||||
Net loss | $ | ( | |||||||||||||||
(1)On-site compensation for administration, leasing, and maintenance personnel.
(2)Includes turnover expense.
Segment Assets and Accumulated Depreciation
Segment assets are summarized as follows as of March 31, 2026, and December 31, 2025, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:
| (in thousands) | |||||||||||||||||
| As of March 31, 2026 | 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, 2025 | 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 | $ | ||||||||||||||||
NOTE 10 • COMMITMENTS AND CONTINGENCIES
Litigation. 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.
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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. Sixteen properties, consisting of approximately 3,796 apartment homes, are subject to limitations on taxable dispositions under agreements entered into with certain 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. As of March 31, 2026, Centerspace had unfunded commitments of $650,000 in two real estate technology venture funds. Refer to Note 7 - Fair Value Measurements for additional information regarding these investments.
NOTE 11 • SHARE-BASED COMPENSATION
Share-based awards are provided to officers, non-officer employees, and trustees under the 2025 Incentive Plan approved by shareholders on May 14, 2025 (the “2025 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 650,000 shares over the ten-year period in which the plan is in effect. Under the 2025 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, 2026, awards under the 2025 Incentive Plan consisted of RSUs. The Company accounts for forfeitures of restricted and unrestricted common shares, RSUs, and stock options when they occur instead of estimating the forfeitures.
Prior to the approval of the 2025 Incentive Plan, share based awards were 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 allowed 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 was in effect. Through March 31, 2026, awards under the 2015 Incentive Plan consisted of restricted and unrestricted common shares, RSUs, and stock options.
2026 LTIP Awards
Awards granted to employees on January 1, 2026, under the 2025 Incentive Plan, consisted of an aggregate of 34,599 time-based RSU awards and 20,635 performance RSUs based on total shareholder return (“TSR”). The time-based RSUs vest as to one-third of the shares on each of January 1, 2027, January 1, 2028, and January 1, 2029.
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 41,270 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, the risk-free interest rate on U.S. treasury bonds with a maturity equal to the remaining performance period of the award, and the expected term on the performance period of the award. The assumptions used to value the TSR performance RSUs were an expected volatility of 25.69 %, a risk-free interest rate of 3.55 %, and an expected life of 3 years. The share price at the grant date, January 1, 2026, was $66.72 per share.
Share-Based Compensation Expense
Total share-based compensation expense recognized in the Condensed Consolidated Financial Statements for all outstanding share-based awards was $1.1 million and $858,000 for the three months ended March 31, 2026 and 2025, respectively.
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Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The following discussion and analysis should be read in conjunction with the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (the “Report”), the audited financial statements for the year ended December 31, 2025, which are included in our Annual Report on Form 10-K filed with the SEC on February 17, 2026, and the risk factors in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2025.
This discussion and analysis and other sections of this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. 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 those 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 condition, or plans expressed or implied by the forward-looking statements. Although we believe the expectations reflected in these forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from actual results and performance.
The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:
•inflation and price volatility in the global economy;
•uncertain global macro-economic and political conditions, the impact of actual or threatened wars or other international conflicts, such as in Ukraine, the Middle East, and South America, including sanctions imposed by the U.S. and other countries, on inflation, trade, and general economic conditions;
•deteriorating economic conditions and rising unemployment rates, energy costs, and inflation, in the markets where we own apartment communities or in which we may invest in the future;
•rental conditions in our markets, including occupancy levels and rental rates, our potential inability to renew residents or obtain new residents upon expiration of existing leases, our ability to identify and consummate attractive acquisitions and dispositions on favorable terms, our ability to reinvest sales proceeds successfully, our inability to accommodate any significant decline in the market value of real estate serving as collateral for our debt and mortgage obligations; changes in tax and housing laws, including rent control laws, or other factors;
•timely access to material and labor required to renovate and maintain apartment communities;
•adverse changes in our markets, including future demand for apartment homes in those markets, barriers of entry into new markets, limitations on our ability to increase rental rates, our ability to identify and consummate attractive acquisitions and dispositions on favorable terms, our ability to reinvest sales proceeds successfully, and inability to accommodate any significant decline in market value of real estate serving as collateral for our debt and mortgage obligations;
•pandemics or epidemics and any effects on our employees, residents and commercial tenants, third party vendors and suppliers, and apartment communities, as well as our cash flow, business, financial condition, and results of operations;
•the process and results of our review of strategic alternatives;
•reliance on a single asset class (multifamily) and certain geographic areas (Midwest and Mountain West regions) of the U.S.;
•inability to expand our operations into new or existing markets successfully;
•failure of new acquisitions to achieve anticipated results or be efficiently integrated;
•inability to complete lease-up of our projects on schedule and on budget;
•failure to reinvest proceeds from sales of properties into tax-deferred exchanges, which could necessitate special distribution and/or tax protection payments;
•inability to fund capital expenditures out of cash flow;
•inability to pay, or need to reduce, distributions on our common shares;
•inability to raise additional equity capital, if needed;
•financing risks, including our potential inability to meet existing covenants in our existing credit facilities or to obtain new debt or equity financing on favorable terms, or at all;
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•level and volatility of interest or capitalization rates or capital market conditions;
•loss contingencies and the availability and cost of casualty insurance for losses;
•uninsured losses due to insurance deductibles, uninsured claims or casualties or losses in excess of applicable coverage;
•inability to continue to satisfy complex tax rules in order to maintain our status as a REIT for federal income tax purposes, inability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for tax purposes, and the risk of changes in laws affecting REITs;
•inability to attract and retain qualified personnel;
•cyber liability or potential liability for breaches of our privacy or information security systems;
•recent developments in artificial intelligence, including software used to price rent in apartment communities;
•inability to address catastrophic weather, natural events, and climate change;
•inability to comply with laws and regulations, including those related to the environment, applicable to our business and any related investigations or litigation; and
•other risks identified in this Report, in our other SEC reports, or in other documents that we publicly disseminate.
New factors may also arise from time to time that could have an adverse effect on our business and results of operations. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause our actual results to differ materially from those contemplated in any forward-looking statements included in this Report should not be construed as exhaustive. Readers also should carefully review our financial statements and the notes thereto as well as the risks and uncertainties detailed from time to time in filings with the SEC, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2025.
Executive Summary
We are a real estate investment trust, or REIT, that owns, manages, acquires, redevelops, and develops apartment communities. We primarily focus on investing in markets characterized by stable and growing economic conditions, strong employment, and an attractive quality of life that we believe, in combination, lead to higher demand for our apartment homes and retention of our residents. As of March 31, 2026, we owned 61 apartment communities containing 12,263 apartment homes. Property owned, as presented in our Condensed Consolidated Balance Sheets at historical cost was $2.5 billion at March 31, 2026 and December 31, 2025.
Renting apartment homes is our primary source of revenue, and our business objective is to provide great homes. We strive to maximize resident satisfaction and retention by investing in high-quality assets in desirable locations and creating vibrant apartment communities through resident-centered operations. We believe that delivering superior resident experiences will enhance resident satisfaction while also driving profitability for our business and shareholders. We have paid quarterly distributions continuously since our first distribution in 1971.
Overview of the Three Months Ended March 31, 2026
•For the three months ended March 31, 2026, revenue decreased by $2.0 million or 3.0% to $65.1 million, compared to $67.1 million for the three months ended March 31, 2025, primarily due to the sale of 12 apartment communities in the prior year, offset by increased revenue from non-same-store communities.
•Same-store revenues remained consistent year over year, while property operating expenses increased, driving a 1.1% decrease in same-store NOI compared to the same period of the prior year.
•Net loss was $0.77 per diluted share for the three months ended March 31, 2026, compared to net loss of $0.22 per diluted share for the same period of the prior year.
•Non-GAAP Core Funds from Operations (“Core FFO”) per diluted share decreased to $1.12 for the three months ended March 31, 2026, compared to $1.21 for the three months ended March 31, 2025. See the description of Core FFO on pages 25 and 26 and the reconciliation of net loss available to common shareholders to FFO and Core FFO on page 27. This decrease was primarily due to decreased NOI due to dispositions and same-store communities, along with increases in general and administrative expenses and interest expense, offset by increased NOI on non-same-store communities. The drivers of these changes are discussed in more detail in the “Results of Operations” section below.
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Results of Operations
GAAP and Non-GAAP Financial Measures
Net operating income (“NOI”) is a non-GAAP financial measure, which we define as total real estate revenues less property operating expenses, including real estate taxes and is reconciled to operating income (loss) below. We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by sales of real estate and other investments, impairment, depreciation, amortization, financing costs, property management expenses, casualty losses net of recoveries, loss on litigation settlement, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income (loss) available for common shareholders, or cash flow from operating activities as a measure of financial performance.
We have provided certain information on a same-store and non-same-store basis. Same-store apartment communities are owned or stabilized for substantially all of the periods being compared and, in the case of newly-acquired or constructed communities, have achieved a target level of physical occupancy of 90%, or re-positioned communities when they have achieved stabilized operations. We define re-positioned communities as having significant development and construction activity on existing buildings pursuant to an authorized plan, which has an impact on current operating results, occupancy and the ability to lease space with the intended result of improved community cash flow and competitive position through extensive unit and amenity upgrades. We categorize a re-positioned community as same-store when the development and construction activity has been completed, and operations have stabilized. This is typically reaching an overall occupancy of 90%. Not all communities undergoing value add are considered a re-positioned community. Non-same-store communities are communities not owned or stabilized as of the beginning of the previous year, including re-positioned communities, and excluding communities held for sale and the non-multifamily components of mixed-use properties.
On the first day of each calendar year, we determine the composition of our same-store pool for that year as well as adjust the previous year, which allows us to evaluate the performance of existing apartment communities and their contribution to net income (loss). We believe that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of communities are performing year-over-year. We use this measure to assess whether or not we have been successful in increasing NOI, raising average rental revenue, renewing the leases with existing residents, controlling operating costs, and making prudent capital improvements. The discussion below focuses on the main factors affecting real estate revenue and real estate expenses from same-store apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store communities are generally due to the addition of those communities to our real estate portfolio, and accordingly provide less useful information for evaluating the ongoing operational performance of our real estate portfolio.
For the comparison of the three months ended March 31, 2026 and 2025, 58 apartment communities were same-store and three apartment communities and one apartment community were non-same-store, respectively. Sold communities are included in “Dispositions,” for all periods presented, while “Other properties” includes non-multifamily properties and the non-multifamily components of mixed-use properties.
Reconciliation of Operating Income (Loss) to Net Operating Income (non-GAAP)
The following table provides a reconciliation of operating income (loss) to NOI (non-GAAP), which is defined above.
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | (5,393) | $ | 4,746 | $ | (10,139) | (213.6) | % | ||||||||||||||||||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Property management expenses | 2,379 | 2,433 | (54) | (2.2) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Casualty loss, net of recoveries | (21) | 532 | (553) | (103.9) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 26,498 | 27,654 | (1,156) | (4.2) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Impairment of real estate investments | 9,700 | — | 9,700 | N/A | ||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 6,332 | 4,997 | 1,335 | 26.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Net operating income | $ | 39,495 | $ | 40,362 | $ | (867) | (2.1) | % | ||||||||||||||||||||||||||||||||||||||||||
* Not a meaningful percentage.
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The following consolidated results of operations, including GAAP and non-GAAP metrics, cover the three months ended March 31, 2026 and 2025.
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||
Same-store(1) | $ | 58,198 | $ | 58,193 | $ | 5 | — | % | ||||||||||||||||||||||||||||||||||||||||||
Non-same-store(1) | 5,958 | 1,210 | 4,748 | * | ||||||||||||||||||||||||||||||||||||||||||||||
Other properties(1) | 921 | 817 | 104 | 12.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
Dispositions(1) | (8) | 6,873 | (6,881) | * | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | 65,069 | 67,093 | (2,024) | (3.0) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Property operating expenses, including real estate taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||
Same-store(1) | 22,929 | 22,536 | 393 | 1.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
Non-same-store(1) | 2,367 | 632 | 1,735 | * | ||||||||||||||||||||||||||||||||||||||||||||||
Other properties(1) | 305 | 332 | (27) | (8.1) | % | |||||||||||||||||||||||||||||||||||||||||||||
Dispositions(1) | (27) | 3,231 | (3,258) | * | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | 25,574 | 26,731 | (1,157) | (4.3) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Net operating income | ||||||||||||||||||||||||||||||||||||||||||||||||||
Same-store(1) | 35,269 | 35,657 | (388) | (1.1) | % | |||||||||||||||||||||||||||||||||||||||||||||
Non-same-store(1) | 3,591 | 578 | 3,013 | * | ||||||||||||||||||||||||||||||||||||||||||||||
Other properties(1) | 616 | 485 | 131 | 27.0 | % | |||||||||||||||||||||||||||||||||||||||||||||
Dispositions(1) | 19 | 3,642 | (3,623) | * | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 39,495 | $ | 40,362 | $ | (867) | (2.1) | % | ||||||||||||||||||||||||||||||||||||||||||
| Property management expenses | (2,379) | (2,433) | (54) | (2.2) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Casualty loss, net of recoveries | 21 | (532) | (553) | (103.9) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (26,498) | (27,654) | (1,156) | (4.2) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Impairment of real estate investments | (9,700) | — | 9,700 | N/A | ||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | (6,332) | (4,997) | 1,335 | 26.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (10,470) | (9,635) | 835 | 8.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
Interest and other income | 890 | 708 | 182 | 25.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
NET LOSS | $ | (14,973) | $ | (4,181) | $ | (10,792) | 258.1 | % | ||||||||||||||||||||||||||||||||||||||||||
| Distributions to Series D preferred unitholders | (57) | (160) | 103 | (64.4) | % | |||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | 2,141 | 643 | 1,498 | 233.0 | % | |||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests – consolidated real estate entities | — | (36) | 36 | (100.0) | % | |||||||||||||||||||||||||||||||||||||||||||||
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | $ | (12,889) | $ | (3,734) | $ | (9,155) | 245.2 | % | ||||||||||||||||||||||||||||||||||||||||||
(1)This is a non-GAAP financial measure which is a component of NOI (non-GAAP), as defined above. Refer to the Reconciliation of Operating Income (Loss) to Net Operating Income above. Non-GAAP financial measures 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.
* Not a meaningful percentage.
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| Three Months Ended March 31, | |||||||||||||||||||||||
Weighted Average Occupancy(1) | 2026 | 2025 | |||||||||||||||||||||
| Same-store | 95.4 | % | 95.8 | % | |||||||||||||||||||
| Non-same-store | 92.0 | % | 86.4 | % | |||||||||||||||||||
| Total | 95.1 | % | 95.5 | % | |||||||||||||||||||
(1)Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rental revenue. Scheduled rental revenue represents the value of all apartment homes, with occupied homes valued at contractual rental rates pursuant to leases and vacant 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. Centerspace believes that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and the calculation of weighted average occupancy may not be comparable to that disclosed by other REITs and other real estate companies.
| Number of Apartment Homes | as of March 31, 2026 | as of March 31, 2025 | |||||||||
| Same-store | 11,214 | 11,213 | |||||||||
| Non-same-store | 1,049 | 288 | |||||||||
Dispositions | — | 1,511 | |||||||||
| Total | 12,263 | 13,012 | |||||||||
Same-store analysis. Revenue from same-store communities remained consistent in the three months ended March 31, 2026, compared to the same period in the prior year. The average monthly revenue per occupied home for the three months ended March 31, 2026 remained consistent with comparable periods while weighted average occupancy decreased 0.4% from 95.8% for the three months ended March 31, 2025 to 95.4% for the three months ended March 31, 2026. Property operating expenses, including real estate taxes, at same-store communities increased by 1.7% or $393,000 in the three months ended March 31, 2026, compared to the same period in the prior year. At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $490,000, primarily due to an increase in repairs and maintenance, utilities, and administrative and marketing expenses. Non-controllable expenses at same-store communities decreased by $97,000, due to a decrease in real estate taxes. Same-store NOI decreased by $388,000 to $35.3 million for the three months ended March 31, 2026, compared to $35.7 million in the same period of the prior year.
Non-same-store analysis. Revenue from non-same-store communities increased by $4.7 million in the three months ended March 31, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes at non-same-store communities increased by $1.7 million. NOI at non-same-store communities increased by $3.0 million for the three months ended March 31, 2026, compared to the same period of the prior year. The increase in revenue, property operating expenses, and NOI from non-same-store communities is due to the addition of two apartment communities, one during the second quarter of the prior year and one during the third quarter of the prior year, offset by a $149,000 decrease in NOI from a community that experienced an increase in expenses resulting from the cancellation of contracts and uninsured loss events.
Other properties analysis. Revenue from other properties, which encompasses our commercial and mixed-use activity, increased by $104,000 in the three months ended March 31, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes, at other properties decreased by $27,000, compared to the same period in the prior year. NOI at other properties increased by $131,000, compared to the same period in the prior year. The increase in revenue and NOI on other properties is primarily due to increased occupancy in the current period.
Dispositions analysis. Revenue from dispositions decreased by $6.9 million in the three months ended March 31, 2026, compared to the same period in the prior year. Property operating expenses, including real estate taxes, decreased by $3.3 million on dispositions, compared to the same period in the prior year. NOI on dispositions decreased $3.6 million, compared to the same period in the prior year. We disposed of five apartment communities during the third quarter of 2025 and seven apartment communities in the fourth quarter 2025.
Property management expenses. Property management expenses, consisting of property management overhead and property management fees paid to third parties, decreased by 2.2% to $2.4 million in the three months ended March 31, 2026. The decrease was primarily due to reduced compensation related costs resulting from a reduction in headcount compared to the same period of the prior year, offset by an increase in fees paid to third parties for management of an apartment community we acquired in the second quarter of 2025.
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Casualty loss, net of recoveries. Casualty activity was a net recovery of $21,000 in the three months ended March 31, 2026, compared to a net loss of $532,000 in the same period of the prior year. The change is primarily due to claim activity in excess of our deductible along with increases in insurance recoveries and subrogation proceeds compared to the prior year. See Note 2 of the Notes to the Condensed Consolidated Financial Statements in the report for more details.
Depreciation and amortization. Depreciation and amortization decreased by 4.2% to $26.5 million in the three months ended March 31, 2026, compared to $27.7 million in the same period of the prior year, primarily attributable to a decrease of $3.0 million in depreciation from dispositions that occurred in the prior year and a decrease of $861,000 on same-store communities primarily due to amortization of in-place leases in the prior year that did not occur in the current year, offset by an increase of $3.1 million on non-same-store driven by the addition of two apartment communities, one during the second quarter of the prior year and one in the third quarter of the prior year, along with value add and acquisition capital projects and amortization of in-place leases.
General and administrative expenses. General and administrative expenses increased by $1.3 million to $6.3 million in the three months ended March 31, 2026, compared to $5.0 million in the same period of the prior year. The increase was primarily due to $977,000 in fees related to strategic review and increased compensation costs from higher share-based compensation and other compensation related costs in the three months ended March 31, 2026, compared to the same period of the prior year.
Interest expense. Interest expense increased by 8.7% to $10.5 million in the three months ended March 31, 2026, compared to $9.6 million in the same period of the prior year, primarily due to a higher outstanding balance on our lines of credit resulting from the acquisitions of two apartment communities, one in the second quarter and one in the third quarter of the prior year, along with higher mortgage interest and amortization of debt discount resulting from the assumption of mortgages in connection with an acquisition in the third quarter of the prior year.
Interest and other income. Interest and other income increased to $890,000 in the three months ended March 31, 2026, compared to $708,000 in the same period of the prior year. The increase was primarily due to an unrealized gain on investments and interest income from a real estate related note receivable which has a higher principal balance in the current period compared to the same period of the prior year.
Net loss available to common shareholders. Net loss available to common shareholders was $12.9 million for the three months ended March 31, 2026, compared to a net loss of $3.7 million in the three months ended March 31, 2025.
Funds from Operations and Core Funds from Operations.
We believe that Funds from Operations (“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 operating performance, primarily because its calculation does not assume the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation and amortization.
We use 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:
•depreciation and amortization related to real estate;
•gains and losses from the sale of certain real estate assets;
•gains and losses from change in control;
•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 investments and assists management and investors in comparing those operating results between periods.
Due to limitations of the Nareit FFO definition, we have made certain interpretations in applying this definition. We believe that all such interpretations not specifically provided for in the Nareit definition are consistent with this definition. Nareit’s FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT’s main business are excluded from FFO and a REIT has the option to exclude impairment write-downs of assets that are incidental to the main business.
While FFO is widely used by us as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income (loss) or any other GAAP measurement of
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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 needs, including our ability to service indebtedness or make distributions to shareholders.
Core Funds from Operations (“Core FFO”), a non-GAAP measure, is FFO adjusted for non-routine items or items not considered core to business operations. By further adjusting for items that are not considered part of core business operations, we believe 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 (loss) or as any other GAAP measurement of performance, but rather should be considered an additional supplemental measure. Core FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash flow needs, including the ability to service indebtedness or make distributions to shareholders. Core FFO is a non-GAAP and non-standardized financial measure that may be calculated differently by other REITs and that should not be considered a substitute for operating results determined in accordance with GAAP.
Net loss available to common shareholders for the three months ended March 31, 2026, was $12.9 million compared to net loss of $3.7 million for the same period of the prior year. FFO applicable to common shares and Units for the three months ended March 31, 2026, decreased to $21.1 million compared to $23.2 million for the comparable period of the prior year, representing a decrease of 8.9%. This FFO decrease was primarily due to decreased NOI from dispositions and same-store communities along with increases in general and administrative expenses and interest expense, offset by increased NOI from non-same-store communities.
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Reconciliation of Net Loss Available to Common Shareholders to Funds from Operations and Core Funds from Operations
| (in thousands, except per share and unit amounts) | ||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
Funds from Operations: | ||||||||||||||||||||||||||
Net loss available to common shareholders | $ | (12,889) | $ | (3,734) | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Noncontrolling interests – Operating Partnership and Series E preferred units | (2,141) | (643) | ||||||||||||||||||||||||
| Depreciation and amortization | 26,498 | 27,654 | ||||||||||||||||||||||||
| Less depreciation – non real estate | (67) | (83) | ||||||||||||||||||||||||
| Less depreciation – partially owned entities | — | (22) | ||||||||||||||||||||||||
| Impairment of real estate investments | 9,700 | — | ||||||||||||||||||||||||
| FFO applicable to common shares and Units | $ | 21,101 | $ | 23,172 | ||||||||||||||||||||||
| Adjustments to Core FFO: | ||||||||||||||||||||||||||
Non-cash casualty (recovery) loss | (193) | 282 | ||||||||||||||||||||||||
| Interest rate swap amortization | — | 175 | ||||||||||||||||||||||||
| Amortization of assumed debt | 365 | 417 | ||||||||||||||||||||||||
| Legal and other costs related to strategic review | 977 | — | ||||||||||||||||||||||||
Other miscellaneous items(1) | (209) | (67) | ||||||||||||||||||||||||
| Core FFO applicable to common shares and Units | $ | 22,041 | $ | 23,979 | ||||||||||||||||||||||
| FFO applicable to common shares and Units | $ | 21,101 | $ | 23,172 | ||||||||||||||||||||||
| Distributions to Series D preferred unitholders | 57 | 160 | ||||||||||||||||||||||||
| FFO applicable to common shares and Units - diluted | $ | 21,158 | $ | 23,332 | ||||||||||||||||||||||
| Core FFO applicable to common shares and Units | $ | 22,041 | $ | 23,979 | ||||||||||||||||||||||
| Distributions to Series D preferred unitholders | 57 | 160 | ||||||||||||||||||||||||
| Core FFO applicable to common shares and Units - diluted | $ | 22,098 | $ | 24,139 | ||||||||||||||||||||||
| Per Share Data | ||||||||||||||||||||||||||
Net loss per common share - basic and diluted(2) | $ | (0.77) | $ | (0.22) | ||||||||||||||||||||||
| FFO per share and Unit - diluted | $ | 1.07 | $ | 1.17 | ||||||||||||||||||||||
| Core FFO per share and Unit - diluted | $ | 1.12 | $ | 1.21 | ||||||||||||||||||||||
Weighted average shares - basic and diluted for net income (loss) | 16,775 | 16,727 | ||||||||||||||||||||||||
Effect of operating partnership Units for FFO and Core FFO | 914 | 980 | ||||||||||||||||||||||||
Effect of Series D preferred units for FFO and Core FFO | 82 | 228 | ||||||||||||||||||||||||
Effect of Series E preferred units for FFO and Core FFO | 1,892 | 1,906 | ||||||||||||||||||||||||
Effect of dilutive restricted stock units and stock options for FFO and Core FFO | 29 | 35 | ||||||||||||||||||||||||
| Weighted average shares and Units for FFO and Core FFO - diluted | 19,692 | 19,876 | ||||||||||||||||||||||||
(1)Consists of (gain) loss on investments.
(2)Refer to Note 3 of the Notes to the Condensed Consolidated Financial Statements for additional details on net income (loss) per share.
Acquisitions and Dispositions
We did not acquire or dispose of real estate during the three months ended March 31, 2026 and 2025.
Distributions Declared
Distributions of $0.77 per common share and Unit were declared during the three months ended March 31, 2026 and 2025. Distributions of $0.9655 per Series D preferred unit were declared during the three months ended March 31, 2026 and 2025. Distributions of $0.96875 per Series E preferred unit were declared during the three months ended March 31, 2026 and 2025.
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Liquidity and Capital Resources
Overview
We strive to maintain a strong balance sheet and preserve financial flexibility, which we believe should enhance our ability to capitalize on appropriate investment opportunities as they may arise. We intend to continue to focus on core fundamentals, which include generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.
Our primary sources of liquidity are cash and cash equivalents on hand and cash flows generated from operations. Other sources include availability under our unsecured lines of credit, proceeds from property dispositions, including restricted cash related to net tax deferred proceeds, real estate deposits, offerings of preferred and common shares under our shelf registration statement, including offerings of common shares under our ATM Program, and long-term unsecured debt and secured mortgages.
Our primary liquidity demands are normally-recurring operating and overhead expenses, debt service and repayments, capital improvements to our communities, distributions to the holders of our common shares, Series D and Series E preferred units, and Units, value-add redevelopment, common and preferred share buybacks and Unit redemptions, funding of mezzanine loans or real estate related notes, and acquisitions of additional communities.
Although we believe that our financial condition and liquidity are sufficient to meet our reasonably anticipated liquidity demands, factors that could increase or decrease our future liquidity include, but are not limited to, changes in interest rates or sources of financing, general volatility in capital and credit markets, changes in minimum REIT distribution requirements, and our ability to access the capital markets on favorable terms, or at all. As a result of the foregoing conditions or general economic conditions in our markets that affect our ability to attract and retain residents, we may not generate sufficient cash flow from operations. If we are unable to obtain capital from other sources, we may not be able to pay the distribution required to maintain our status as a REIT, make required principal and interest payments, make strategic acquisitions or make necessary routine capital improvements or undertake value add renovation opportunities with respect to our existing portfolio of operating assets.
As of March 31, 2026, we had total liquidity of approximately $267.1 million, which included $259.6 million available on the lines of credit based on the value of unencumbered properties and $7.6 million of cash and cash equivalents. As of December 31, 2025, we had total liquidity of approximately $267.9 million, which included $255.1 million available on the lines of credit based on the value of unencumbered properties and $12.8 million of cash and cash equivalents.
Debt
As of March 31, 2026, we had a multibank, revolving line of credit with total commitments and borrowing capacity of $400.0 million, based on the value of unencumbered properties, (the “Unsecured Credit Facility” or “Facility”). In May 2025, we exercised the accordion feature of the Facility, expanding the borrowing capacity by $150.0 million to $400.0 million. Prior to the exercise of the accordion feature, the line of credit had total commitments and borrowing capacity of up to $250.0 million, based on the value of unencumbered properties. As of March 31, 2026, there was $150.0 million outstanding on this line of credit, bearing interest at a rate of 4.88%, and additional borrowing availability was $250.0 million. As of December 31, 2025, there was $154.0 million outstanding, bearing interest at a rate of 5.12%, and additional borrowing availability was $246.0 million. The line of credit is utilized to refinance existing indebtedness, to finance property acquisitions, to finance capital expenditures, and for general corporate purposes. This Facility matures in July 2028, with an option to extend maturity for up to two additional six-month periods.
The Secured Overnight Financing Rate (“SOFR”) is the benchmark alternative reference rate under the Facility. As amended, the interest rates on the line of credit are based on the consolidated leverage ratio, at our option, on either the lender’s base rate plus a margin, ranging from 20-80 basis points, or the daily or term SOFR, plus a margin that ranges from 120-180 basis points, with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended.
We have an operating line of credit agreement with US Bank, N.A. which has a borrowing capacity of up to $10.0 million and pricing based on SOFR. This operating line of credit terminates in September 2026 and is designed to enhance treasury management activities and more effectively manage cash balances. As of March 31, 2026 there was $429,000 outstanding balance on this line of credit, bearing interest at a rate of 5.88%, compared to $925,000 outstanding as of December 31, 2025, bearing interest at a rate of 5.91%.
We have a private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc. (collectively, “PGIM”) under which we have issued $175.0 million in unsecured senior promissory notes (“Unsecured
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Shelf Notes”). On October 28, 2024, the shelf agreement was amended to extend the period of time during which we may borrow money to October 2027 and to increase the borrowing capacity to $300.0 million. We also issued $125.0 million of senior unsecured promissory notes (the “Unsecured Club Notes”, and collectively with the Unsecured Shelf Notes, the “unsecured senior notes”), under a separate private note purchase agreement with PGIM and certain other lenders. The following table shows the notes issued under both agreements as of March 31, 2026 and December 31, 2025.
| (in thousands) | |||||||||||||||||
| Amount | Maturity Date | Fixed 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 | % | ||||||||||||
We have a $198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”). The FMCF is currently secured by mortgages on 7 apartment communities. The notes are interest-only, with varying maturity dates of 7, 10, and 12 years, and a blended, weighted average fixed interest rate of 2.78%. As of March 31, 2026 and December 31, 2025, the FMCF had a balance of $198.9 million. The FMCF is included within mortgages payable on the Condensed Consolidated Balance Sheets.
Mortgage loan indebtedness, excluding unamortized premiums and discounts and the FMCF, was $398.6 million on 10 apartment communities at March 31, 2026 and $400.1 million on 10 apartment communities at December 31, 2025. All of our mortgage debt is collateralized by apartment communities and is non-recourse at fixed rates of interest, with staggered maturities. This reduces the exposure to changes in interest rates, which minimizes the effect of interest rate fluctuations on our results of operations and cash flows. As of March 31, 2026 and December 31, 2025, the weighted average interest rate on mortgage debt was 3.88%. Further information, including principal payments due on our mortgage indebtedness and other tabular information, can be found in Note 5 - Debt in the Condensed Consolidated notes.
Our borrowings are subject to customary covenants and limitations. We believe that we were in compliance with all such covenants and limitations as of March 31, 2026.
Equity
We have an at the market offering (“ATM Program”) through which we may offer and sell common shares in amounts and at times determined by management. The maximum aggregate offering price of common shares available for offer and sale thereunder is $500.0 million. Under the ATM Program, we may enter into separate forward sale agreements. The proceeds from the sale of common shares under the 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 ATM program during the three months ended March 31, 2026 and 2025. As of March 31, 2026, common shares having an aggregate offering price of up to $262.9 million remained available under the ATM Program. Further information can be found in Note 4 - Mezzanine Equity and Equity in the Condensed Consolidated notes.
Effective July 31, 2025, the Board of Trustees authorized a new share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $100.0 million of our outstanding common shares. Under the Share Repurchase Program, we are 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 specific timing and amount of repurchases may vary based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors. As of March 31, 2026, the Company had $96.5 million remaining authorized for purchase under the Share Repurchase Program.
We had 1.6 million Series E preferred units (noncontrolling interests) outstanding on March 31, 2026 and December 31, 2025. 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 1.20482 Units. The Series E preferred units had an aggregate liquidation preference of $156.3 million and $157.0 million as of March 31, 2026 and December 31, 2025, respectively. The holders of the Series E preferred units do not have voting rights.
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We had 59,400 Series D preferred units outstanding on March 31, 2026 and December 31, 2025. The Series D preferred units have a par value of $100 per preferred unit. The Series D preferred unit holders receive a preferred distribution at the rate of 3.862% per year and 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 had an aggregate liquidation value of $5.9 million at March 31, 2026 and December 31, 2025.
Changes in Cash, Cash Equivalents, and Restricted Cash
As of March 31, 2026, we had cash and cash equivalents of $7.6 million and restricted cash consisting of $2.7 million of security deposits and escrows held by lenders for real estate taxes, insurance, and capital additions. As of December 31, 2025, we had cash and cash equivalents of $12.8 million and restricted cash consisting of $2.8 million of security deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.
The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash which are presented in the Condensed Consolidated Statements of Cash Flows in Part I, Item 1 above.
We generated cash flows from operations of $21.4 million, during the three months ended March 31, 2026.
During the three months ended March 31, 2026, we used capital for various activities, including:
•Funding capital improvements for apartment communities of approximately $5.3 million;
•Repaying $4.5 million of principal, net of draws, on our lines of credit;
•Repaying $1.6 million of mortgage principal; and
•Paying distributions on common shares, Series E preferred units, and Units of $15.1 million.
Contractual Obligations and Other Commitments
Contractual obligations and other commitments were disclosed in our Form 10-K for the year ended December 31, 2025. Refer to Note 10 of the Notes to the Condensed Consolidated Financial Statements in this report for additional details. There have been no material changes to our contractual obligations and other commitments since that report was filed.
Inflation and Supply Chain
Our apartment leases generally have terms of one year or less, which means that, in an inflationary environment, we would have the ability, subject to market conditions, to increase rents upon the commencement of new leases or renewal of existing leases to manage the impact of inflation on our business. However, the cost to operate and maintain communities could increase at a rate greater than our ability to increase rents, which could adversely affect our results of operations. High inflation could have a negative impact on our residents and their ability to absorb rent increases.
We also continue to monitor pressures surrounding supply chain challenges, including the impact of tariffs. Supply chain and inflationary pressures are likely to result in increased operating expenses, specifically, increases in energy costs, labor related costs, and construction materials for repairs and maintenance or capital projects. A worsening of the current environment could contribute to delays in obtaining construction materials and result in higher than anticipated costs, which could prevent us from obtaining expected returns on value add projects.
We continue to have access to the financial markets; however, a prolonged disruption of the markets or a decline in credit and financing conditions could negatively affect our ability to access capital necessary to fund our operations or refinance maturing debt in the future. Additionally, rising interest rates could negatively impact our borrowing costs for any variable rate borrowings or refinancing activity.
Off-Balance Sheet Arrangements
As of March 31, 2026, we had no significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Critical Accounting Policies
In preparing the Condensed Consolidated Financial Statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. A summary of critical accounting policies is included in our Form 10-K for the year ended December 31, 2025, filed with the SEC on February 17, 2026, under the section titled “Management’s Discussion and Analysis of Financial
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Condition and Results of Operations.” Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements in this report for additional information. There have been no other significant changes to the critical accounting policies during the three months ended March 31, 2026.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Our future revenue, cash flows, and fair values of certain financial instruments are dependent upon prevailing market prices and interest rates.
Our exposure to market risk is primarily related to fluctuations in the general level of interest rates on our current and future fixed and variable rate debt obligations. Our operating results are, therefore, affected by changes in interest rates, including SOFR. The Company does not enter into derivative instruments for trading or speculative purposes.
See our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 17, 2026, under the heading “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for a more complete discussion of the Company’s interest rate sensitivity.
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Item 4. Controls and Procedures
Disclosure Controls and Procedures:
Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2026, such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting:
In connection with the evaluation required by Rule 13a-15(d), management, with the participation of the Chief Executive Officer and Chief Financial Officer, has identified no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2026, and that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of the Company’s operations, the Company becomes involved in litigation. At this time, the Company knows of no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of the Company’s property is the subject.
Item 1A. Risk Factors
There have been no material changes to the Risk Factors previously disclosed in Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Sales of Securities
On February 28, 2026, we issued an aggregate of 5,073 unregistered common shares, to limited partners of Centerspace, LP upon exercise of their Exchange Rights for an equal number of Units. All such issuances of our common shares were exempt from registration as private placements under Section 4(a)(2) of the Securities Act. We have registered the resale of such common shares under the Securities Act.
Issuer Purchases of Equity Securities
| Maximum Dollar | |||||||||||||||||
| Total Number of Shares | Amount of Shares That | ||||||||||||||||
| Total Number of | Average Price | Purchased as Part of | May Yet Be Purchased | ||||||||||||||
| Shares and Units | Paid per | Publicly Announced | Under the Plans or | ||||||||||||||
| Period | Purchased(1) | Share and Unit(2) | Plans or Programs | Programs(3) | |||||||||||||
January 1 - 31, 2026 | — | $ | — | — | $ | 96,545,554 | |||||||||||
February 1 - 28, 2026 | — | — | — | 96,545,554 | |||||||||||||
March 1 - 31, 2026 | — | — | — | 96,545,554 | |||||||||||||
| Total | — | $ | — | — | |||||||||||||
(1)Includes Units and Series D preferred units redeemed for cash pursuant to the exercise of exchange rights.
(2)Amount is based on market prices and includes commissions paid.
(3)Effective July 31, 2025, the board authorized a $100.0 million share repurchase program which expires on July 31, 2026.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not Applicable
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended March 31, 2026, none of our trustees or officers (as defined in Rule 16a-1 under the Exchange Act) adopted terminated
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Item 6. Exhibits
The following exhibits are filed as part of this Report.
EXHIBIT INDEX
| Exhibit No. | Description | ||||
| 3.1 | Articles of Amendment and Third Restated Declaration of Trust of Investors Real Estate Trust adopted on September 23, 2003, as amended on September 18, 2007 (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed with the Commission on June 30, 2014). | ||||
| 3.2 | Seventh Restated Trustee’s Regulations (Bylaws) of Investors Real Estate Trust, adopted on April 27, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 1, 2020). | ||||
31.1* | Section 302 Certification of Chief Executive Officer | ||||
31.2* | Section 302 Certification of Executive Vice President and Chief Financial Officer | ||||
32.1* | Section 906 Certifications of Chief Executive Officer | ||||
32.2* | Section 906 Certifications of Executive Vice President and Chief Financial Officer | ||||
| 101 INS** | INSTANCE DOCUMENT | ||||
| 101 SCH** | SCHEMA DOCUMENT | ||||
| 101 CAL** | CALCULATION LINKBASE DOCUMENT | ||||
| 101 LAB** | LABELS LINKBASE DOCUMENT | ||||
| 101 PRE** | PRESENTATION LINKBASE DOCUMENT | ||||
| 101 DEF** | DEFINITION LINKBASE DOCUMENT | ||||
| 104** | COVER PAGE INTERACTIVE DATA FILE - THE COVER PAGE XBRL TAGS ARE EMBEDDED WITHIN THE INLINE XBRL DOCUMENT | ||||
* Filed herewith
** Submitted electronically herewith. Attached as Exhibit 101 are the following materials from Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss); (iii) the Condensed Consolidated Statements of Equity; (iv) the Condensed Consolidated Statements of Cash Flows; (v) notes to these Condensed Consolidated Financial Statements; and (vi) the Cover Page to Quarterly Report on our Form 10-Q.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Centerspace
(Registrant)
| /s/ Anne Olson | |||||
| Anne Olson | |||||
| President and Chief Executive Officer | |||||
| /s/ Bhairav Patel | |||||
| Bhairav Patel | |||||
| Executive Vice President and Chief Financial Officer | |||||
| Date: May 4, 2026 | |||||
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FAQ
How did Centerspace (CSR) perform financially in Q1 2026?
Centerspace reported weaker Q1 2026 results, with revenue of $65.1 million versus $67.1 million a year earlier. Net loss available to common shareholders widened to $12.9 million, or $0.77 per diluted share, largely due to an impairment charge and higher operating and interest costs.
What happened to Centerspace’s Core FFO in the first quarter of 2026?
Core Funds from Operations per diluted share declined to $1.12 in Q1 2026 from $1.21 in Q1 2025. The drop reflects lower NOI from sold and same-store communities, plus higher general and administrative and interest expenses, partly offset by stronger contributions from non-same-store properties.
Why did Centerspace record an impairment charge in Q1 2026?
Centerspace recorded a $9.7 million impairment on one apartment community in Denver, Colorado during Q1 2026. The impairment followed the company’s periodic review of long-lived assets, where estimated future cash flows and fair value no longer supported the property’s previous carrying amount.
How stable were Centerspace’s occupancy and same-store results in Q1 2026?
Weighted average occupancy remained high at 95.1% overall in Q1 2026, with same-store occupancy at 95.4%. Same-store revenue was essentially flat year over year, while same-store NOI decreased 1.1% as property operating expenses rose faster than rental income.
What is Centerspace’s debt and liquidity position as of March 31, 2026?
As of March 31, 2026, Centerspace had total debt of about $1.02 billion, including $150.4 million drawn on its primary unsecured credit facility and $300 million in unsecured senior notes. The company also held cash and cash equivalents of $7.6 million and maintained additional borrowing capacity on its lines of credit.
Did Centerspace (CSR) continue paying dividends in Q1 2026?
Yes. Centerspace declared quarterly distributions of $0.77 per common share and Operating Partnership Unit for Q1 2026. It also declared distributions of $0.9655 per Series D preferred unit and $0.96875 per Series E preferred unit, consistent with the prior-year quarter.