Financial Data and Key Metrics Changes - The company reported a year-to-date increase in core FFO of 6.8% year-over-year [6] - Same store revenue achieved a 5.7% year-over-year increase, slightly ahead of expectations [7] - Core FFO was reported at $1.20 per diluted share, driven by a 5.4% year-over-year increase in same store NOI [19] Business Line Data and Key Metrics Changes - The company executed one-third of its lease expirations in the third quarter, achieving a 3.9% blended lease trade out [7] - New lease trade outs showed a 2.3% increase, while renewals increased by 4.9% [7] - Cost control measures have benefited repairs and maintenance costs, offsetting increased on-site compensation [9] Market Data and Key Metrics Changes - Market rent is declining as leasing slows into the fourth quarter, with October showing a blended 0.8% leasing trade out [8] - The company noted that certain markets, particularly Denver and Minneapolis, are experiencing elevated supply pressures [38] Company Strategy and Development Direction - The company is focusing on value-add capital in smart home and smart community categories, targeting implementation in about 50% of total communities by the end of 2024 [10] - The company aims to improve portfolio quality and market exposure through capital recycling, with recent dispositions and acquisitions enhancing its geographic footprint [11][18] Management's Comments on Operating Environment and Future Outlook - Management expects supply to moderate in 2024, with a focus on maintaining occupancy levels [25][39] - The company anticipates no relief on insurance costs and expects overall expenses to moderate to 3% to 4% growth [57] - Management expressed optimism about holding revenue and growing NOI next year [47] Other Important Information - The company ended the quarter with no balance on its line of credit and a weighted average interest rate of 3.46% [20] - The acquisition of Lake Vista apartment homes was completed for $94.5 million, with an attractive interest rate on the assumed mortgage [18] Q&A Session Summary Question: What are the new lease numbers in October? - Management indicated that the new lease numbers are relatively normal for October, but they are feeling some pressure on lease rates [24][25] Question: What is the expected occupancy level for Q4? - The company expects occupancy to be in the mid-94% range, factoring in guidance [41] Question: How is the company managing staffing and retention? - The company is focused on retention through professional development and training opportunities to combat staffing challenges in the industry [60][61] Question: What are the expectations for new supply in the market? - Management noted that while some markets are experiencing elevated supply, they feel insulated due to their portfolio's characteristics [38][39] Question: What is the current state of bad debt? - Bad debt is reported at about 30 to 40 basis points, consistent with pre-COVID trends, and management has not seen significant fraud [52][71]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Centerspace's unaudited condensed consolidated financial statements, highlighting a significant increase in net income to $59.1 million for the nine months ended September 30, 2023, primarily due to real estate sales [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets decreased to $1.88 billion due to property sales, while liabilities also decreased, and equity slightly increased Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet Item | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :--- | :--- | :--- | | Total real estate investments | $1,809,735 | $1,998,723 | | Cash and cash equivalents | $29,701 | $10,458 | | **Total Assets** | **$1,878,281** | **$2,033,301** | | Revolving lines of credit | $0 | $113,500 | | Total Liabilities | $901,362 | $1,066,445 | | Total Equity | $960,359 | $950,296 | | **Total Liabilities & Equity** | **$1,878,281** | **$2,033,301** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 2023, net income significantly improved to $9.2 million due to real estate sales, while nine-month net income surged to $59.1 million driven by similar gains Condensed Consolidated Statements of Operations (in thousands, except EPS) | Metric (in thousands, except EPS) | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $64,568 | $65,438 | $197,241 | $188,868 | | Operating Income | $17,395 | $7,031 | $85,958 | $6,955 | | Net Income (Loss) | $9,169 | $(770) | $59,116 | $(15,076) | | Net Income (Loss) Available to Common Shareholders | $6,167 | $(2,130) | $44,661 | $(16,924) | | Diluted EPS | $0.41 | $(0.14) | $2.96 | $(1.11) | - The significant improvement in net income for both the three and nine-month periods of 2023 was primarily driven by gains on the sale of real estate and other investments, amounting to **$11.2 million** and **$71.3 million**, respectively[6](index=6&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to $77.4 million, while investing activities provided $185.4 million primarily from real estate sales, leading to a $40.3 million net increase in cash Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $77,420 | $68,973 | | Net cash provided by (used by) investing activities | $185,371 | $(137,140) | | Net cash provided by (used by) financing activities | $(222,485) | $45,916 | | **Net Increase (Decrease) in Cash** | **$40,306** | **$(22,251)** | - The primary driver for the positive cash flow from investing activities was the **$223.3 million** in net proceeds from the sale of real estate, compared to none in the same period of 2022[21](index=21&type=chunk) - Significant uses of cash in financing activities included principal payments on revolving lines of credit (**$189.4M**), notes payable (**$100.0M**), and mortgages payable (**$46.8M**), alongside distributions to shareholders (**$32.8M**)[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's REIT focus on 71 apartment communities, significant property dispositions, a litigation settlement loss, CEO transition costs, and subsequent property acquisition - As of September 30, 2023, Centerspace owned interests in **71 apartment communities** consisting of **12,785 apartment homes**[25](index=25&type=chunk) - During the nine months ended September 30, 2023, the company disposed of **13 apartment communities** for an aggregate sales price of **$226.8 million**, resulting in a gain of **$71.4 million**[149](index=149&type=chunk)[150](index=150&type=chunk) - The company recorded a **$2.9 million** loss on a litigation settlement due to a trial judgment concerning water damage caused by a retaining wall at one of its properties[113](index=113&type=chunk)[185](index=185&type=chunk) - On October 11, 2023, subsequent to the quarter end, the company acquired Lake Vista Apartment Homes in Loveland, Colorado, for **$94.5 million**[140](index=140&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2023 financial performance, highlighting a revenue decrease offset by same-store growth, improved net income driven by property sales, increased Core FFO, and strong liquidity - As of September 30, 2023, the company owned interests in **71 apartment communities** with **12,785 apartment homes**, with a historical cost of **$2.3 billion**[120](index=120&type=chunk) - For Q3 2023, revenue decreased by **1.3%** year-over-year, mainly due to dispositions, but this was partially offset by a **5.7%** revenue increase from same-store communities[144](index=144&type=chunk) - The company's liquidity position is strong, with approximately **$285.7 million** available as of September 30, 2023, consisting of **$256.0 million** on lines of credit and **$29.7 million** in cash[82](index=82&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q3 2023 saw a 1.3% revenue decrease due to dispositions, offset by 5.7% same-store revenue growth, with net income improving significantly due to real estate sale gains Results of Operations (in thousands) | Metric (in thousands) | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $64,568 | $65,438 | (1.3)% | | Same-Store Revenue | $57,949 | $54,838 | 5.7% | | Net Operating Income (NOI) | $37,823 | $38,109 | (0.8)% | | Same-Store NOI | $34,043 | $32,305 | 5.4% | | Net Income (Loss) | $9,169 | $(770) | * | - For the nine months ended Sep 30, 2023, General and Administrative expenses increased **10.4%** to **$15.7 million**, primarily due to **$3.2 million** in executive severance and transition costs related to the CEO's departure[241](index=241&type=chunk) - Interest expense increased by **8.7%** in Q3 and **18.9%** YTD, primarily due to higher interest rates[243](index=243&type=chunk)[267](index=267&type=chunk) [Funds from Operations (FFO) and Core Funds from Operations (Core FFO)](index=31&type=section&id=Funds%20from%20Operations%20(FFO)%20and%20Core%20Funds%20from%20Operations%20(Core%20FFO)) Q3 2023 FFO per share slightly decreased to $1.15, while Core FFO per share increased to $1.20, with nine-month Core FFO growing to $3.56 due to strong performance and non-core item adjustments Per Share Data | Per Share Data | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | FFO per share and Unit - diluted | $1.15 | $1.13 | $3.15 | $3.16 | | Core FFO per share and Unit - diluted | $1.20 | $1.15 | $3.56 | $3.25 | - Core FFO for the nine months ended Sep 30, 2023, includes adjustments to exclude **$3.2 million** in severance and transition costs and a **$3.2 million** loss on litigation settlement and related trial costs[299](index=299&type=chunk)[272](index=272&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity of $285.7 million as of September 30, 2023, utilizing proceeds from property sales and new mortgages to repay debt and fund capital improvements - Total liquidity was approximately **$285.7 million** as of September 30, 2023, up from **$153.0 million** at year-end 2022[82](index=82&type=chunk) - During the nine months ended September 30, 2023, the company repaid its **$100.0 million** term loan in full and made net repayments of **$113.5 million** on its revolving line of credit[85](index=85&type=chunk)[284](index=284&type=chunk) - The company repurchased **124,000 common shares** for **$6.7 million** during the first nine months of 2023, with **$14.2 million** remaining authorized for purchase under the program as of quarter-end[284](index=284&type=chunk)[88](index=88&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from interest rate fluctuations affecting debt obligations, and it does not use derivative instruments for speculative purposes - Centerspace's main market risk is from fluctuations in interest rates on its debt obligations, which can impact operating results and cash flows[287](index=287&type=chunk)[314](index=314&type=chunk) - The company states it does not use derivative instruments for trading or speculative purposes[287](index=287&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective[288](index=288&type=chunk) - There were no material changes to the company's internal control over financial reporting during the third quarter of 2023[316](index=316&type=chunk) [Part II. Other Information](index=40&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings beyond ordinary routine litigation incidental to its business - The company is not involved in any material pending legal proceedings outside of ordinary, routine litigation[290](index=290&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the previously disclosed risk factors were reported for the quarter - No material changes to risk factors were reported for the quarter[98](index=98&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued 8,553 unregistered Common Shares in exchange for Units and detailed equity securities repurchases during the quarter - On July 31, 2023, the company issued **8,553 unregistered Common Shares** to limited partners in exchange for their Units, relying on a private offering exemption[291](index=291&type=chunk) Equity Securities Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2023 | 0 | N/A | | August 2023 | 60 | $61.27 | | September 2023 | 380 | $63.70 | | **Total Q3 2023** | **440** | **$63.37** | - As of September 30, 2023, the maximum dollar amount that may yet be purchased under the company's share repurchase program is **$14,234,010**[99](index=99&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No trustees or executive officers adopted or terminated any Rule 10b5-1 trading plans during the third quarter of 2023 - No trustees or executive officers adopted or terminated any Rule 10b5-1 trading plans during the quarter[108](index=108&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including CEO and CFO certifications and interactive data files - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[327](index=327&type=chunk)

Financial Data and Key Metrics Changes - Revenue growth was strong, achieving 7% to 10% increases across same-store portfolios compared to the same quarter last year [7] - Core FFO grew by 10.8% year-over-year, with a year-to-date increase of 10% [11] - NOI increased by 12.1% year-over-year and 7.2% sequentially [16] - Same-store revenues increased by 8.5% year-over-year, while same-store expenses grew by 3.3% [16] - Core FFO guidance raised to $4.65 per diluted share, an increase of $0.23 from the previous midpoint [19] Business Line Data and Key Metrics Changes - Same-store new lease trade-outs achieved a 5.2% increase, while same-store renewals saw a 7% increase [7] - Blended rent increase was 4.9% for the quarter, with July showing 4.6% for new lease trade-outs and 4.1% for renewals [8] Market Data and Key Metrics Changes - The company experienced consistent strength in leasing across its markets, with a focus on the Mountain West region for future acquisitions [15][30] - The transaction market remains slow for institutional quality products, but there is significant demand for well-located and stable products [15] Company Strategy and Development Direction - The company is focusing on a deep value-add pipeline and plans to invest approximately $100 million in new acquisitions [14][21] - There is a strategic shift towards expanding the Mountain West portfolio, particularly targeting Denver [30] - The company aims to maintain flexibility in its balance sheet while advancing portfolio composition initiatives [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational performance and the ability to raise guidance for the remainder of the year [11][22] - There is an expectation of normal seasonality in leasing and revenue trends, with continued discipline on expenses [14] - Management noted that while insurance costs are expected to remain steady in the short term, a significant increase is anticipated next year [32] Other Important Information - The company recorded a loss on litigation settlement of $2.9 million during the second quarter [17] - Total liquidity stands at over $245 million, with leverage at an all-time low of 6.5x [18] Q&A Session Summary Question: What are the things that were boosting the second quarter results that you don't expect to be as recurring? - Management acknowledged that while some trends are expected to continue, they built in room for potential changes in turn costs and utilities due to heavy expirations [25][26] Question: Is there a reduction in renewals in July typical on a seasonal basis? - Management clarified that lower renewals reflect lease rates from the end of the first quarter and expect a slight uptick as they head into fall [27] Question: Are you looking at any new markets for acquisitions? - Management confirmed a focus on expanding the Mountain West portfolio, particularly in Denver and surrounding areas [30] Question: What are the expectations for insurance costs over the next couple of quarters? - Management indicated that insurance costs are expected to remain steady in the short term, with a significant increase anticipated next year [32] Question: What is driving the large increase in guidance now? - Management attributed the increase to strong operating results and the successful transition in executive leadership, which provided certainty in G&A costs [36][38] Question: What markets are showing the strongest and least strongest blended growth? - Strongest growth is seen in Omaha and St. Cloud, driven by value-add spend over the last 18 months [69]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section presents the company's unaudited financial statements and management's analysis of financial performance and condition [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Centerspace's unaudited condensed consolidated financial statements, showing a net income of **$49.9 million** for H1 2023 driven by real estate sales [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a summary of Centerspace's financial position, including assets, liabilities, and equity, as of June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheet Summary (Unaudited) | Account | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$1,920,177** | **$2,033,301** | | Total real estate investments, net | $1,890,874 | $1,998,723 | | Cash and cash equivalents | $9,745 | $10,458 | | **Total Liabilities** | **$938,209** | **$1,066,445** | | Revolving lines of credit | $18,989 | $113,500 | | Notes payable, net | $299,428 | $399,007 | | Mortgages payable, net | $563,079 | $495,126 | | **Total Equity** | **$965,408** | **$950,296** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details Centerspace's revenues, expenses, and net income (loss) for the three and six months ended June 30, 2023 and 2022 Statement of Operations Summary (Unaudited, in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$64,776** | **$63,116** | **$132,673** | **$123,430** | | Total Expenses | $55,879 | $59,308 | $121,338 | $123,533 | | Gain (loss) on sale of real estate | ($67) | $27 | $60,092 | $27 | | Loss on litigation settlement | ($2,864) | $0 | ($2,864) | $0 | | **Net Income (Loss)** | **($2,380)** | **($3,743)** | **$49,947** | **($14,306)** | | Net Income (Loss) Available to Common Shareholders | ($3,470) | ($4,598) | $38,494 | ($14,794) | Net Income (Loss) Per Share (Diluted) | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three Months Ended June 30 | $(0.23) | $(0.30) | | Six Months Ended June 30 | $2.55 | $(0.97) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines Centerspace's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Cash Flow Summary for Six Months Ended June 30 (Unaudited, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $45,561 | $34,491 | | Net cash provided by (used by) investing activities | $117,246 | ($23,547) | | Net cash used by financing activities | ($164,387) | ($34,499) | | **Net Decrease in Cash** | **($1,580)** | **($23,555)** | | Cash at end of period | $10,311 | $15,070 | - Key investing activities in H1 2023 included **$141.6 million** in proceeds from real estate sales[83](index=83&type=chunk) - Key financing activities included **$90.0 million** in proceeds from new mortgages, offset by **$100.0 million** in term loan repayments, **$156.8 million** in revolving credit repayments, and **$21.9 million** in distributions to common shareholders[83](index=83&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides additional details and explanations for the figures presented in the condensed consolidated financial statements - As of June 30, 2023, Centerspace owned interests in **75 apartment communities** comprising **13,497 apartment homes**[87](index=87&type=chunk) - The company recorded a **$2.9 million** loss on litigation settlement due to a trial judgment against Centerspace for property damage caused by a retaining wall at one of its properties[45](index=45&type=chunk)[124](index=124&type=chunk) - In H1 2023, the company incurred **$2.2 million** in cash severance and benefits, plus **$737,000** in accelerated share-based compensation expense, related to the departure of former CEO, Mark Decker, Jr[27](index=27&type=chunk)[122](index=122&type=chunk) - There were no real estate acquisitions during the six months ended June 30, 2023[3](index=3&type=chunk) - During the same period, the company disposed of **nine apartment communities** for an aggregate sales price of **$144.3 million**, resulting in a gain of **$60.1 million**[35](index=35&type=chunk)[117](index=117&type=chunk) - Share-based compensation expense was **$2.1 million** for the six months ended June 30, 2023, an increase from **$1.2 million** in the prior-year period[26](index=26&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights a **7.7%** increase in Net Operating Income (NOI) for Q2 2023, driven by strong same-store performance, and improved Core Funds from Operations [Executive Summary](index=25&type=section&id=Executive%20Summary) This section provides an overview of Centerspace's operational and financial highlights for the period, including property portfolio and key performance indicators - As of June 30, 2023, Centerspace owned interests in **75 apartment communities** with **13,497 homes**, with property owned at a historical cost of **$2.4 billion**[59](index=59&type=chunk) - For Q2 2023, revenue increased **2.6%** YoY to **$64.8 million**, while total expenses decreased by **$3.4 million** to **$55.9 million**[52](index=52&type=chunk)[53](index=53&type=chunk) - Net loss per diluted share improved to **$0.23** for Q2 2023, compared to a net loss of **$0.30** per diluted share for the same period in 2022[53](index=53&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section analyzes Centerspace's financial performance, including revenue, expenses, Net Operating Income, and Funds from Operations, for the reported periods Q2 and H1 2023 vs 2022 Performance Highlights (in thousands) | Metric | Q2 2023 | Q2 2022 | Change | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$64,776** | **$63,116** | **+2.6%** | **$132,673** | **$123,430** | **+7.5%** | | Same-Store Revenue | $60,104 | $55,386 | +8.5% | $118,964 | $108,635 | +9.5% | | **Total NOI** | **$39,730** | **$36,900** | **+7.7%** | **$78,704** | **$71,341** | **+10.3%** | | Same-Store NOI | $36,722 | $32,757 | +12.1% | $70,988 | $63,637 | +11.6% | | **Net Income (Loss)** | **($2,380)** | **($3,743)** | **+36.4%** | **$49,947** | **($14,306)** | **+449.1%** | - The increase in same-store revenue for Q2 2023 was driven by an **8.3%** growth in average monthly revenue per occupied home and a **0.2%** increase in weighted average occupancy to **95.2%**[204](index=204&type=chunk) - General and administrative expenses for H1 2023 increased **22.3%** to **$11.9 million**, primarily due to **$3.2 million** in executive severance and transition costs[229](index=229&type=chunk) FFO and Core FFO Reconciliation (in thousands) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) available to common shareholders | $(3,470) | $(4,598) | $38,494 | $(14,794) | | **FFO applicable to common shares and Units** | **$20,152** | **$19,085** | **$36,406** | **$37,611** | | **Core FFO applicable to common shares and Units** | **$23,303** | **$21,016** | **$42,845** | **$38,938** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Centerspace's financial flexibility, including cash, credit facilities, debt obligations, and capital allocation strategies - As of June 30, 2023, the company had total liquidity of approximately **$246.7 million**, consisting of **$237.0 million** available on lines of credit and **$9.7 million** in cash[274](index=274&type=chunk) - During H1 2023, the company generated **$141.6 million** from the sale of nine apartment communities and **$90.0 million** from a new mortgage[282](index=282&type=chunk) - Significant uses of capital in H1 2023 included repaying a **$100.0 million** term loan, net repayments of **$94.5 million** on the line of credit, paying **$29.9 million** in distributions, and repurchasing **$6.7 million** of common shares[282](index=282&type=chunk) - The company amended its unsecured credit facility on May 31, 2023, to replace LIBOR with SOFR as the benchmark reference rate[163](index=163&type=chunk)[244](index=244&type=chunk) - As of June 30, 2023, **$126.6 million** remained available for sale of common shares under the at-the-market (ATM) offering program[133](index=133&type=chunk)[249](index=249&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure relates to interest rate fluctuations affecting its fixed and variable rate debt obligations - The company's main market risk is from adverse changes in interest rates, which affect future revenue, cash flows, and the fair value of financial instruments[8](index=8&type=chunk) - Exposure is primarily related to fluctuations in interest rates (including LIBOR and SOFR) on current and future debt[301](index=301&type=chunk) - The company does not use derivatives for trading or speculation[301](index=301&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal controls - Based on an evaluation as of June 30, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[302](index=302&type=chunk) - No changes in internal controls over financial reporting were identified during the quarter ended June 30, 2023, that have materially affected or are likely to materially affect internal control over financial reporting[10](index=10&type=chunk) [Part II. Other Information](index=39&type=section&id=Part%20II.%20Other%20Information) This section provides additional information including legal proceedings, risk factors, equity security sales, and exhibits [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings, other than ordinary routine litigation incidental to its business - The company is not involved in any material pending legal proceedings, apart from ordinary routine litigation[11](index=11&type=chunk)[304](index=304&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K and Quarterly Report - No material changes to risk factors have been reported since the fiscal year-end 2022 Form 10-K and Q1 2023 Form 10-Q[11](index=11&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued unregistered common shares in exchange for Operating Partnership Units and repurchased shares under its authorized program - In May and June 2023, the company issued **150** and **2,773** unregistered Common Shares, respectively, to limited partners in exchange for their Units, relying on the private offering exemption[12](index=12&type=chunk) Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Shares/Units Purchased | Average Price Paid | Shares Purchased Under Program | Max Dollar Amount Remaining (in thousands) | | :--- | :--- | :--- | :--- | :--- | | April 2023 | 103,648 | $54.51 | 103,618 | $14,283 | | May 2023 | 1,035 | $55.01 | 885 | $14,234 | | June 2023 | 0 | - | 0 | $14,234 | | **Total** | **104,683** | **$54.51** | **104,503** | | - The board authorized a **$50.0 million** share repurchase program on March 10, 2022[13](index=13&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the quarterly report, including certifications by the CEO and CFO (Sections 302 and 906) and iXBRL-formatted financial statements - The report includes filed exhibits such as CEO and CFO certifications under Sections 302 and 906, and financial data formatted in Inline eXtensible Business Reporting Language (iXBRL)[16](index=16&type=chunk)[293](index=293&type=chunk)

CLAPPO centerspace Civic Lofts – Denver, CO Certain statements in this presentation are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from expected results. These statements may be identified by our use of words such as "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," and similar expre ...

Centerspace (NYSE:CSR) Q1 2023 Earnings Conference Call May 2, 2023 10:00 AM ET Company Participants Joe McComish - VP, Finance Anne Olson - President & CEO Bhairav Patel - EVP & CFO Conference Call Participants Brad Heffern - RBC Capital Markets Barry Oxford - Colliers Robert Stevenson - Janney Buck Horne - Raymond James Operator Thank you all for joining. I would like to welcome you to Centerspace Q1 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. And after the spea ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 CENTERSPACE (Exact name of registrant as specified in its charter) | North Dakota | | | | 45-0311232 | | --- | --- | --- | --- | --- | | (State or other jurisdiction of incorporation or organization) | | | | (I.R.S. Employer Identification No.) | | 3100 10th Street SW | Post Office Box 1988 | Minot | ND | 58702-1988 | | (Address of principal executive offices) | | | | (Zip code) | ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF TH ...

Centerspace (NYSE:CSR) Q4 2022 Earnings Conference Call February 22, 2023 10:00 AM ET Company Participants Joe McComish - VP, Finance Mark Decker - CEO Anne Olson - COO Bhairav Patel - CFO Conference Call Participants Brad Heffern - RBC Capital Markets John Kim - BMO Capital Markets Alexander Goldfarb - Piper Sandler Rob Stevenson - Janney Wes Golladay - Baird Operator Hello, everyone, and welcome to the Centerspace Fourth Quarter 2022 Earnings Call. My name is Daisy, and I'll be coordinating the call today ...

Part I [Business Overview](index=4&type=section&id=Item%201.%20Business) Centerspace is a REIT specializing in owning, managing, and developing apartment communities across the Midwest and Mountain West - Centerspace is a REIT focused on owning, managing, and developing apartment communities, with **84 communities** and **15,065 homes** and a net real estate investment of **$2.0 billion** as of December 31, 2022[15](index=15&type=chunk)[40](index=40&type=chunk) - The company operates as an Umbrella Partnership Real Estate Investment Trust (UPREIT) through its operating partnership, facilitating tax-deferred property contributions[17](index=17&type=chunk)[43](index=43&type=chunk) - Business strategies focus on enhancing resident experience, scaling for efficiency, leveraging technology, and committing to ESG initiatives[20](index=20&type=chunk)[21](index=21&type=chunk) - As of December 31, 2022, the company had **471 employees**, with **52.0% identifying as female** and diverse ethnic representation[85](index=85&type=chunk)[34](index=34&type=chunk) - The company faces direct competition from other apartment communities, single-family homes, and various real estate investors, including REITs[36](index=36&type=chunk)[104](index=104&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, financial, and stock-related risks, including macroeconomic volatility, sector concentration, and REIT status maintenance - Operations are materially affected by uncertain global macroeconomic and political conditions, including inflation and geopolitical instability[62](index=62&type=chunk)[92](index=92&type=chunk) - Investments are significantly concentrated in the multifamily sector, increasing vulnerability to market downturns[68](index=68&type=chunk) - The company faces risks from security breaches and cyber-attacks, having previously experienced a non-material ransomware attack[77](index=77&type=chunk)[108](index=108&type=chunk) - Financing risks include inability to refinance debt on favorable terms due to high interest rates and restrictive debt covenants[115](index=115&type=chunk)[116](index=116&type=chunk)[131](index=131&type=chunk) - Failure to qualify as a REIT would result in federal income tax at corporate rates, significantly reducing funds for distribution and investment[148](index=148&type=chunk)[170](index=170&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved comments from the SEC staff - No unresolved staff comments were reported[179](index=179&type=chunk) [Properties](index=22&type=section&id=Item%202.%20Properties) As of December 31, 2022, the portfolio included 84 apartment communities with 15,065 homes, concentrated in Minnesota and Colorado - As of December 31, 2022, the company owned **84 apartment communities** with **15,065 homes**, categorized into same-store and non-same-store pools[161](index=161&type=chunk) Properties by State (as of Dec 31, 2022) | State | Total Value (in thousands) | % of Total | | :--- | :--- | :--- | | Minnesota | $ 1,046,037 | 52.3 % | | Colorado | 632,310 | 31.6 % | | North Dakota | 203,955 | 10.2 % | | Nebraska | 73,023 | 3.7 % | | South Dakota | 24,179 | 1.2 % | | Montana | 19,219 | 1.0 % | | **Total** | **$ 1,998,723** | **100.0 %** | - The portfolio comprises **71 same-store communities** with **11,330 homes** and **24 non-same-store communities** with **3,735 homes**[162](index=162&type=chunk)[185](index=185&type=chunk)[203](index=203&type=chunk) [Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) The company is not involved in any material pending or threatened legal proceedings - The company is not aware of any material pending or threatened legal proceedings[187](index=187&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business operations - This item is not applicable[188](index=188&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common shares trade on the NYSE under 'CSR', with approximately 2,524 shareholders and recent share repurchases - The company's common shares are traded on the NYSE under the symbol **'CSR'**[189](index=189&type=chunk) - As of February 14, 2023, there were approximately **2,524 common shareholders** of record[190](index=190&type=chunk) - A stock performance graph compares the company's five-year cumulative total return against key industry indices[193](index=193&type=chunk)[213](index=213&type=chunk) - In Q4 2022, the company purchased **430,502 shares and units** at an average price of **$67.37**[192](index=192&type=chunk) [Reserved](index=27&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company reported strong operational performance in FY2022 with increased Core FFO and NOI, despite a net loss, driven by acquisitions and strategic financing Key Performance Metrics (FY 2022 vs. FY 2021) | Metric | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net Loss per Diluted Share | ($1.35) | ($0.47) | | Core FFO per Diluted Share | $4.43 | $3.99 | | Same-Store NOI Growth | 9.0% | N/A | - During 2022, the company acquired **five apartment communities** for **$211.9 million** and issued **321,000 common shares** via its ATM program for **$31.4 million** in net proceeds[248](index=248&type=chunk)[537](index=537&type=chunk)[47](index=47&type=chunk) Consolidated Results of Operations (in thousands) | Metric | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $256,716 | $201,705 | +27.3% | | Net Operating Income (NOI) | $148,079 | $119,848 | +23.6% | | Net Loss | ($17,641) | ($2,101) | +739.6% | Funds from Operations (FFO) and Core FFO (in thousands, except per share) | Metric | FY 2022 | FY 2021 | | :--- | :--- | :--- | | FFO applicable to common shares and Units | $79,928 | $54,925 | | Core FFO applicable to common shares and Units | $81,883 | $62,085 | | FFO per diluted share and Unit | $4.32 | $3.54 | | Core FFO per diluted share and Unit | $4.43 | $3.99 | - Total liquidity was approximately **$153.0 million** as of December 31, 2022, comprising **$142.5 million** in credit lines and **$10.5 million** in cash[268](index=268&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its **$213.5 million** variable-rate debt, with a **$2.1 million** annual impact per 100 basis points change - The primary market risk stems from interest rate fluctuations on variable rate debt obligations[289](index=289&type=chunk) - As of December 31, 2022, the company had **$213.5 million** in variable-rate borrowings, with a **100 basis point** interest rate change impacting net income by an estimated **$2.1 million** annually[314](index=314&type=chunk) - During 2022, the company terminated its remaining interest rate swaps, increasing exposure to variable rate movements[339](index=339&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the consolidated financial statements and the independent auditor's report by reference, starting on page F-1 - Consolidated financial statements, related notes, and the Independent Registered Public Accounting Firm's Report are included starting on page F-1[316](index=316&type=chunk)[363](index=363&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=39&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - No changes in or disagreements with accountants were reported[342](index=342&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Management concluded that disclosure controls and procedures were effective as of December 31, 2022[292](index=292&type=chunk) - Management assessed and found internal control over financial reporting effective as of December 31, 2022, as audited by Grant Thornton LLP[293](index=293&type=chunk)[347](index=347&type=chunk) - No material changes in internal control over financial reporting were identified during the fourth quarter[343](index=343&type=chunk) [Other Information](index=40&type=section&id=Item%209B.%20Other%20Information) No information is reported under this item - No information is reported[348](index=348&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=40&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - This item is not applicable[349](index=349&type=chunk) Part III [Trustees, Executive Officers and Corporate Governance](index=40&type=section&id=Item%2010.%20Trustees%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on trustees, executive officers, and corporate governance is incorporated by reference from the 2023 proxy statement - Information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Shareholders[322](index=322&type=chunk) [Executive Compensation](index=40&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information, including tables, is incorporated by reference from the 2023 proxy statement - Information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Shareholders[323](index=323&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=40&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Security ownership information for beneficial owners and management is incorporated by reference from the 2023 proxy statement - Information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Shareholders[324](index=324&type=chunk) [Certain Relationships and Related Transactions, and Trustee Independence](index=40&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Trustee%20Independence) Information on related party transactions and trustee independence is incorporated by reference from the 2023 proxy statement - Information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Shareholders[325](index=325&type=chunk) [Principal Accountant Fees and Services](index=40&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2023 proxy statement - Information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Shareholders[326](index=326&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=40&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules, including Schedule III, filed with or incorporated into the report - This section lists the financial statements, Schedule III (Real Estate and Accumulated Depreciation), and all exhibits filed with the report[327](index=327&type=chunk)[351](index=351&type=chunk) [10-K Summary](index=41&type=section&id=Item%2016.%2010-K%20Summary) The company has not provided a summary for this item - No summary has been provided for this item[331](index=331&type=chunk) Financial Statements and Supplementary Data [Reports of Independent Registered Public Accounting Firm](index=47&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grant Thornton LLP issued unqualified opinions on the consolidated financial statements and internal control over financial reporting - Grant Thornton LLP issued an unqualified opinion on the fair presentation of financial statements in conformity with GAAP[391](index=391&type=chunk) - An unqualified opinion was also issued on the effectiveness of internal control over financial reporting as of December 31, 2022[365](index=365&type=chunk)[368](index=368&type=chunk) - The firm determined there were no critical audit matters from the current period audit[393](index=393&type=chunk) [Consolidated Financial Statements](index=49&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements for FY2022 show total assets of **$2.03 billion**, a net loss of **$17.6 million**, and increased operating cash flow Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Real Estate Investments | $1,998,723 | $1,870,854 | | **Total Assets** | **$2,033,301** | **$1,940,061** | | Total Liabilities | $1,066,445 | $918,450 | | **Total Equity** | **$950,296** | **$996,280** | Consolidated Statement of Operations Data (in thousands) | Account | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Revenue | $256,716 | $201,705 | $177,994 | | Operating Income | $13,861 | $29,892 | $33,843 | | **Net Loss** | **($17,641)** | **($2,101)** | **$4,743 (Income)** | Consolidated Cash Flow Data (in thousands) | Account | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $91,991 | $84,028 | | Net Cash from Investing Activities | ($160,094) | ($267,225) | | Net Cash from Financing Activities | $41,369 | $214,512 | [Notes to Consolidated Financial Statements](index=55&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, **$1.01 billion** in debt, **$211.9 million** in 2022 acquisitions, and share-based compensation plans - The company operates as an UPREIT, holding an **82.9% interest** in its Operating Partnership as of December 31, 2022, with financial statements relying on real estate valuation estimates[410](index=410&type=chunk)[440](index=440&type=chunk)[442](index=442&type=chunk) Total Debt Summary (as of Dec 31, 2022, in thousands) | Debt Type | Balance | Weighted Avg. Maturity (Years) | | :--- | :--- | :--- | | Lines of credit | $113,500 | 2.75 | | Term loans | $100,000 | 0.89 | | Unsecured senior notes | $300,000 | 8.26 | | Mortgages payable | $498,277 | 6.69 | | **Total Debt** | **$1,011,777** | **5.76** | - In 2022, the company acquired **five apartment communities** for **$211.9 million**, with no property dispositions during the year[537](index=537&type=chunk)[566](index=566&type=chunk)[568](index=568&type=chunk) - Total share-based compensation expense was **$2.6 million** in 2022, including grants of **30,245 stock options** and various RSUs to employees and trustees[604](index=604&type=chunk)[487](index=487&type=chunk)[578](index=578&type=chunk)

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 September 30, 2022 or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission File Number 001-35624 CENTERSPACE (Exact name of registrant as specified in its charter) North Dakota (State or other jurisdict ...