Part I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company reported a $16.8 million net loss in Q2 2025, driven by a $14.5 million impairment charge, despite 5.4% revenue growth and total assets reaching $2.01 billion [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $2.01 billion by June 30, 2025, primarily due to assets held for sale, while total liabilities rose to $1.17 billion, leading to a decrease in total equity Condensed Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$2,013,239** | **$1,913,707** | | Total real estate investments | $1,809,608 | $1,854,761 | | Assets held for sale, net | $137,366 | $— | | **Total Liabilities** | **$1,168,347** | **$1,014,704** | | Revolving lines of credit | $216,030 | $47,359 | | Mortgages payable, net | $595,668 | $608,506 | | **Total Equity** | **$833,582** | **$882,443** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q2 2025 revenue grew 5.4% to $68.5 million, but a $16.8 million net loss was recorded, primarily due to a $14.5 million impairment charge and higher interest expense Q2 and H1 2025 vs 2024 Performance (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$68,549** | **$65,043** | **$135,642** | **$129,549** | | Total Expenses | $75,345 | $57,851 | $137,692 | $117,705 | | Impairment of real estate | $14,543 | $— | $14,543 | $— | | Interest Expense | $(10,724) | $(9,332) | $(20,359) | $(18,539) | | **Net Loss** | **$(16,785)** | **$(1,663)** | **$(20,966)** | **$(6,455)** | | **Net Loss per Share** | **$(0.87)** | **$(0.19)** | **$(1.09)** | **$(0.56)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $50.7 million for H1 2025, while investing activities used $164.5 million, largely for real estate acquisitions, offset by $118.8 million from financing activities Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $50,694 | $47,264 | | Net cash used by investing activities | $(164,468) | $(28,416) | | Net cash provided by (used by) financing activities | $118,838 | $(12,705) | | **Net increase in cash** | **$5,064** | **$6,143** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's REIT operations, including a $149.0 million acquisition, a $14.5 million impairment on assets held for sale, and total debt reaching $1.11 billion - As of June 30, 2025, Centerspace is a REIT focused on owning and managing 72 apartment communities comprising 13,353 apartment homes[25](index=25&type=chunk) - During Q2 2025, the company acquired the 341-home Sugarmont property in Salt Lake City, UT, for **$149.0 million**[101](index=101&type=chunk)[102](index=102&type=chunk) - A loss of **$14.5 million** was recorded for the impairment of five apartment communities, which were written down to fair value upon being classified as held for sale[54](index=54&type=chunk) - Subsequent to the quarter's end, on July 29, 2025, the company acquired Railway Flats, a 420-home community in Loveland, CO, for **$132.2 million**, including the assumption of **$76.5 million** in mortgage debt[131](index=131&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported a 5.4% revenue increase in Q2 2025, but a net loss of $0.87 per share due to a $14.5 million impairment, while Core FFO per share slightly increased to $1.28 [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q2 2025 revenue grew 5.4% to $68.5 million, with same-store NOI up 2.9%, but the net loss widened to $16.8 million due to a $14.5 million impairment and higher interest expense Same-Store Performance Analysis (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Same-Store Revenue | $58,073k | $56,534k | 2.7% | | Same-Store Property Operating Expenses | $21,880k | $21,363k | 2.4% | | **Same-Store NOI** | **$36,193k** | **$35,171k** | **2.9%** | | Same-Store Weighted Average Occupancy | 96.1% | 95.5% | 0.6% | - The company recorded a **$14.5 million** impairment on five apartment communities that were reclassified to assets held for sale, which was the primary driver of the quarterly net loss[166](index=166&type=chunk) - Interest expense increased by **14.9%** in Q2 2025, primarily due to a higher outstanding balance on lines of credit used to fund a recent acquisition[170](index=170&type=chunk) [Funds from Operations and Core Funds from Operations](index=33&type=section&id=Funds%20from%20Operations%20and%20Core%20Funds%20from%20Operations) Q2 2025 FFO increased 10.8% to $24.5 million, with Core FFO per diluted share slightly rising to $1.28, reflecting improved NOI and the absence of prior-year preferred dividends FFO and Core FFO Reconciliation (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss available to common shareholders | $(14,515) | $(2,903) | | FFO applicable to common shares and Units | $24,537 | $22,143 | | Core FFO applicable to common shares and Units | $25,297 | $22,801 | | **FFO per share and Unit - diluted** | **$1.24** | **$1.23** | | **Core FFO per share and Unit - diluted** | **$1.28** | **$1.27** | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, total liquidity was $206.3 million, supported by an expanded $400.0 million Unsecured Credit Facility, with major capital uses including a $150.1 million property acquisition - Total liquidity was approximately **$206.3 million** as of June 30, 2025, including **$194.0 million** available on lines of credit and **$12.4 million** in cash[191](index=191&type=chunk) - In May 2025, the company expanded its Unsecured Credit Facility borrowing capacity from **$250.0 million** to **$400.0 million**[192](index=192&type=chunk) - The company's share repurchase program, which authorized up to **$50.0 million** in repurchases, expired on March 10, 2025. No shares were repurchased in the first six months of 2025[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on variable-rate debt, with no material changes reported for the quarter - The company's main market risk is from interest rate changes affecting its variable rate debt. No material changes were reported for the quarter[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[217](index=217&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[218](index=218&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings beyond routine litigation incidental to its business - The company is not a party to any material pending legal proceedings[220](index=220&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported in the current period - No material changes to previously disclosed risk factors were reported[221](index=221&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued unregistered common shares and redeemed 52,500 Series D preferred units, while its $50.0 million share repurchase program expired - The company's **$50.0 million** share repurchase program expired on March 10, 2025[224](index=224&type=chunk) Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares and Units Purchased | Average Price Paid per Share and Unit | | :--- | :--- | :--- | | April 1 - 30, 2025 | 30 | $64.01 | | May 1 - 31, 2025 | — | — | | June 1 - 30, 2025 | 52,500 | $100.00 | | **Total** | **52,530** | **$99.98** | [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No trustees or executive officers adopted or terminated Rule 10b5-1 trading plans during Q2 2025 - No company trustees or executive officers adopted or terminated a Rule 10b5-1 trading plan during the quarter[225](index=225&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section indexes all exhibits filed with the Form 10-Q, including corporate governance documents, incentive plans, and CEO/CFO certifications - The report includes standard exhibits such as CEO/CFO certifications under Sections 302 and 906, and financial data formatted in iXBRL[228](index=228&type=chunk)

Core Insights - Centerspace reported a net loss of $0.87 per diluted share for Q2 2025, compared to a net loss of $0.19 per diluted share in Q2 2024 [7] - Funds from Operations (FFO) per diluted share for Q2 2025 was $1.24, a decrease from $1.28 in Q2 2024 [2][7] - Core FFO per diluted share increased by 0.8% to $1.28 for Q2 2025, compared to $1.27 for the same period in 2024 [7] Financial Performance - Revenue for Q2 2025 increased by $3.5 million or 5.4% to $68.5 million, compared to $65.0 million for Q2 2024 [7] - Same-store revenues increased by 2.7% for Q2 2025 compared to Q2 2024, contributing to a 2.9% increase in same-store Net Operating Income (NOI) [7] - Same-store expenses rose by 2.4% year-over-year, while sequentially they decreased by 1.3% [2] Operational Metrics - Weighted average occupancy for Q2 2025 was 96.1%, up from 95.5% in Q2 2024 [2] - New lease rate growth was 2.1% for Q2 2025, while renewal lease rate growth was 2.6% [2] - The retention rate improved to 60.2% in Q2 2025 from 49.2% in Q2 2024 [2] Balance Sheet and Liquidity - As of the end of Q2 2025, Centerspace had total liquidity of $206.3 million, including $194.0 million available under lines of credit and $12.4 million in cash [5] - The company updated its 2025 financial outlook, projecting a net loss per share of $(0.71) to $(0.45) and FFO per share of $4.70 to $4.83 [9] Recent Developments - Centerspace acquired Sugarmont, its first apartment community in Salt Lake City, for $149.0 million [7] - On July 29, 2025, the company closed on the acquisition of Railway Flats, a 420-home apartment community in Loveland, CO, for $132.2 million [10]

Company Overview - Centerspace (NYSE: CSR) is an owner and operator of apartment communities, focusing on providing quality homes with an emphasis on integrity and service [2]. - Founded in 1970, the company currently owns 72 apartment communities comprising 13,353 homes across several states including Colorado, Minnesota, Montana, Nebraska, North Dakota, South Dakota, and Utah [2]. Upcoming Financial Results - Centerspace will release its operating results for the quarter ended June 30, 2025, after market close on August 4, 2025 [1]. - A conference call to discuss these results is scheduled for August 5, 2025, at 10:00 a.m. Eastern Time [1]. Recognition - Centerspace was recognized as a top workplace for the sixth consecutive year in 2025 by the Minneapolis Star Tribune [2].

Market Overview - The fiber cement market is valued at USD 14.437 billion in 2025 and is projected to grow at a CAGR of 4.28%, reaching USD 17.807 billion by 2030, driven by rising construction activities and demand for eco-friendly products [1][7]. Market Trends - The global construction sector's expansion significantly boosts the fiber cement market, with rapid urbanization and industrialization in developing countries being major growth drivers [2]. - Challenges include high manufacturing costs and the need for skilled labor for advanced technologies [2]. Regional Insights - The Asia Pacific region is expected to experience the fastest growth due to urbanization, infrastructure investments, and awareness of fiber cement benefits, supported by government initiatives like India's 'Housing for All by 2024' program [3]. Key Players - Major players in the fiber cement market include James Hardie Industries, Etex Group, Nichiha Corporation, CSR Limited, Gyproc, Everest Industries Limited, Swisspearl Group, Shera, and Ramco Industries [4]. Report Coverage - The report includes historical data (2022-2024) and forecasts (2025-2030), covering growth opportunities, challenges, supply chain outlook, regulatory framework, and competitive positioning [6][9]. - It also provides insights on market size, forecasts, trends by product type, installation types, and end-use sectors [6].

Company Overview - Centerspace owns and operates 13,353 apartments[12] - The company's total capitalization is $2.3 billion[14] - Centerspace's current trading price is at an 18% discount to consensus NAV[15] Operational Performance - Q2 2025 blended same-store leasing spreads are 2.5%[19] - Denver same-store new leasing spreads for May 2025 are 1.6%[21] - Centerspace's ORA score as of May 1, 2025, is 72.17[27] Transaction Activity - 2025 acquisitions include 2 communities with 761 homes, average monthly rent of $2,012 per home, and NOI margin of 67.4%[37] - 2025 dispositions include 12 communities with 1,511 homes, average monthly rent of $1,383 per home, and NOI margin of 52.9%[39] - The Salt Lake City acquisition closed on May 30, 2025, for $149 million, adding a 341-home community[43] Portfolio Composition - Pro forma for 2025 transactions, Minneapolis accounts for 30% of portfolio NOI, Colorado 26%, and Salt Lake City 4%[45] - The company closed a $150 million line of credit expansion on May 29, 2025[45] Market Fundamentals - Denver portfolio includes 7 communities with 1,977 homes, average rent of $1,976, and 94.7% occupancy[79] - Minneapolis portfolio includes 20 communities with 4,032 homes, average rent of $1,579, and 95.5% occupancy[88]

Group 1 - The article discusses the author's journey into investing, starting in high school in 2011, focusing on REITs, preferred stocks, and high-yield bonds, which sparked a long-lasting interest in markets and the economy [1] - Recently, the author has been combining long stock positions with covered calls and cash secured puts, indicating a strategic approach to investment [1] - The investment philosophy is fundamentally long-term, with a primary focus on REITs and financials, along with occasional insights on ETFs and other stocks influenced by macroeconomic trends [1]

Financial Data and Key Metrics Changes - As of March 20, 2025, there were 16,726,594 common shares outstanding, with 14,681,024 shares represented at the meeting, indicating approximately 87.8% of all shares entitled to vote were present [7] - Proposal one for the election of trustees received at least 93.5% support from shareholders, while proposal two received 96.1% approval, proposal three received 95.95%, and proposal four received 99.1% [10][11] Business Line Data and Key Metrics Changes - No specific data on business line performance was provided in the meeting records Market Data and Key Metrics Changes - No specific market data was discussed during the meeting Company Strategy and Development Direction and Industry Competition - The company is focused on creating long-term value for shareholders and appreciates their continued interest and investment [12] Management's Comments on Operating Environment and Future Outlook - Management expressed gratitude for the hard work and commitment of associates over the past year, emphasizing the mission of providing great homes for residents [5] Other Important Information - Jeff Kyra will be retiring from the Board after ten years of service, and his contributions were recognized by the Board [12] Q&A Session Summary - There were no questions submitted during the meeting [13]

Core Perspective - The housing market presents contrasting views between homeowners and real estate professionals, with homeowners seeing high property values while realtors report declining transaction volumes [1][2][4][6] Market Dynamics - Real estate professionals are currently pessimistic due to macroeconomic changes, including tariff uncertainties and fluctuating mortgage rates, leading to postponed property purchases and a significant drop in commercial real estate transaction activity [6][10][11] - The Dow Jones REIT index has shown a correlation with declining transaction volumes, reflecting the negative sentiment from real estate professionals [11][20] REITs and Valuation - The market's perception of REITs is skewed by the gloomy outlook of transaction-driven professionals, despite the underlying real estate values and net operating income (NOI) remaining stable or growing [15][20] - REITs, as property owners, focus on operating income and property value rather than transaction volume, which is a key distinction in understanding their performance [14][20] Financial Metrics - The median REIT is trading at 77.9% of its Net Asset Value (NAV), indicating a significant discount compared to the actual asset values [20][21] - Funds From Operations (FFO) have shown growth post-COVID, with a modest dip in 2020, but overall trends indicate a recovery and growth trajectory [19] Investment Opportunities - The current market presents an opportunity to invest in REITs at a discount, as property values remain high while REIT stocks are undervalued [22][23] - Specific examples include purchasing apartments at approximately 75% of NAV and farmland at about 65% of its asset value, highlighting the disconnect between stock prices and asset values [23][26]

Financial Data and Key Metrics Changes - Core FFO for Q1 was reported at $1.21 per diluted share, reflecting a 2.1% year-over-year increase in same store NOI [13] - Revenues from same store communities increased by 3.5% compared to the same quarter of 2024, with occupancy rising by 120 basis points to 95.8% [13][14] - Same store expenses increased by 5.8% year-over-year, primarily due to property taxes [14] Business Line Data and Key Metrics Changes - The average physical occupancy for the same store portfolio improved to 96%, with renewal retention around 57% [5] - Blended leasing spreads increased by 70 basis points in Q1, with new lease spreads improving from negative 1.1% to positive 2.4% in April [5][6] - North Dakota led the portfolio with blended leasing spreads of 5.3% year-to-date, while Minneapolis showed positive leasing spreads [7][8] Market Data and Key Metrics Changes - Apartment demand remains resilient, with only a 2.2% expected expansion of apartment stock in the markets, down from 3.8% the previous year [9] - Institutional quality assets in Colorado and Minneapolis are pricing at mid to high 4% and low 5% cap rates, respectively [10] - The company’s footprint in the Midwest and Mountain West regions continues to benefit from a lack of new supply [6][10] Company Strategy and Development Direction - The company is maintaining discipline in all areas within its control and is ready to take advantage of opportunities to advance its platform [8] - Focus remains on enhancing the differentiated Mountain West and Midwest geography, with a robust balance sheet and capital positioning [11] - The company is evaluating new investment opportunities while being mindful of market exposures and leverage [11] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed guidance for the full year, expecting to achieve a midpoint of $4.98 per share for core FFO and 2.25% year-over-year same store NOI growth [15][16] - The macroeconomic environment is expected to continue impacting results, but strong demand trends are anticipated to improve new lease rates as the year progresses [8][10] - Management expressed optimism about the demand in Denver, expecting an inflection point in rents towards the end of the year [39] Other Important Information - The company reported a total liquidity of over $223 million, including cash on hand and a line of credit [16] - Retention rates are expected to improve, with April showing a jump to about 58% [32][63] Q&A Session Summary Question: Midwest apartment market performance - Management acknowledged strong performance in the Midwest, particularly in North Dakota and Omaha, and confirmed that they expected strong growth [20] Question: Occupancy projections for 2025 - Management projected occupancy around 95% for the year, with current occupancy at 96% [23] Question: Operating expenses and lumpiness - Management indicated that lumpiness in operating expenses is expected primarily in the first and fourth quarters, with increased assessments in certain jurisdictions [30] Question: Denver market outlook - Management noted a 200 basis point improvement in new lease spreads in Denver from March to April, with expectations for an inflection point in rents by the end of the year [39] Question: Impact of agriculture on local economies - Management stated that while agriculture is significant, the primary economic drivers in their markets are healthcare and education [56] Question: Retention rates compared to peers - Management explained that lower retention rates in Denver were impacting overall figures, but strong retention was observed in other markets [62]

Financial Data and Key Metrics Changes - Core FFO for Q1 was reported at $1.21 per diluted share, reflecting a 2.1% year-over-year increase in same store NOI [13][14] - Revenues from same store communities increased by 3.5% compared to the same quarter of 2024, with occupancy rising by 120 basis points to 95.8% [13][14] - Same store expenses increased by 5.8% year-over-year, primarily due to property taxes [14] Business Line Data and Key Metrics Changes - The average physical occupancy for the same store portfolio improved to 96%, with April renewal retention at approximately 57% [5][6] - Blended leasing spreads increased by 70 basis points in Q1, with renewal increases steady at 2% to mid-3% levels [5][6] - New lease spreads improved from negative 1.1% in Q1 to positive 2.4% in April [6] Market Data and Key Metrics Changes - The multifamily market is experiencing strong demand, with a projected 2.2% expansion of apartment stock in the company's markets over the next twelve months, down from 3.8% the previous year [9] - In Minneapolis, leasing spreads are outperforming the portfolio average, while Denver is still facing supply pressure [7][10] - North Dakota leads the portfolio with blended leasing spreads of 5.3% year-to-date, indicating strong market performance [6][10] Company Strategy and Development Direction - The company is focused on maintaining discipline in all controllable areas and is prepared to capitalize on opportunities to advance its platform [7][11] - The capital allocation strategy emphasizes enhancing the differentiated Mountain West and Midwest geography [11] - The company aims to evaluate new investment opportunities while being mindful of market exposures and leverage [11] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed guidance for the full year, expecting to achieve a core FFO midpoint of $4.98 per share and same store NOI growth of 2.25% [15] - The company is optimistic about the demand trends in the Midwest and Mountain West regions, despite some challenges in Denver [7][10] - Management noted that the macroeconomic environment remains volatile but believes in the long-term durability of the multifamily asset class [10] Other Important Information - The company reported a robust liquidity position with over $223 million available between cash and credit lines [15] - The debt maturity profile is well-laddered with minimal maturities this year and a weighted average debt cost of 3.6% [15] Q&A Session Summary Question: Are operations ahead of plan given strong Midwest apartment market? - Management acknowledged strong performance in the Midwest, particularly in North Dakota and Omaha, and confirmed they are on plan [18][19] Question: Will occupancy decrease in peak season for rate increases? - Management projected occupancy around 95% for the year, with current occupancy at 96% [21][22] Question: How to expect growth in OpEx for the remainder of the year? - Management indicated some lumpiness in OpEx, particularly in real estate taxes, but expects smoother growth moving forward [25][29] Question: What is the outlook for the Denver market? - Management noted a 200 basis point improvement in new lease spreads in April and anticipates an inflection point in rents by the end of the year [35][38] Question: How does agriculture impact local economies in the markets? - Management stated that while agriculture is significant, healthcare and education are the primary economic drivers in their markets [54][56] Question: What are the expectations for new lease rates for the year? - Management expects new lease rates to improve and taper off into the fall, affirming their guidance [65][66]