Centerspace(US:CSR)2025-08-04 20:33Part I. Financial Information Item 1. Financial Statements 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 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 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 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 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 homes25 - During Q2 2025, the company acquired the 341-home Sugarmont property in Salt Lake City, UT, for $149.0 million101102 - 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 sale54 - 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 debt131 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 loss166 - 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 acquisition170 Funds from Operations and Core Funds from Operations 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 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 cash191 - In May 2025, the company expanded its Unsecured Credit Facility borrowing capacity from $250.0 million to $400.0 million192 - 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 2025201 Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 quarter214215216 Item 4. Controls and Procedures 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 effective217 - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting218 Part II. Other Information Item 1. Legal Proceedings 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 proceedings220 Item 1A. Risk Factors No material changes to previously disclosed risk factors were reported in the current period - No material changes to previously disclosed risk factors were reported221 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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, 2025224 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 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 quarter225 Item 6. Exhibits 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 iXBRL228