Centerspace(US:CSR)2022-02-27 16:00Employee and Team Dynamics - As of December 31, 2021, the company had 462 employees, comprising 394 full-time and 68 part-time[44] - The average tenure of team members is 4.3 years, with 52% of total team members being female[46] - Over 12,000 training courses were completed by team members, indicating a strong focus on employee development[46] - The company has a pay-for-performance strategy, aligning team members' compensation with overall company performance[45] Financial Performance and Risks - The ongoing COVID-19 pandemic has materially impacted the company's financial condition, cash flow, and results of operations[57] - The concentration of investments in the multifamily sector makes the company vulnerable to downturns in this asset class[70] - Competition from various institutions, including other REITs and private partnerships, may negatively impact the company's earnings due to their greater financial resources[73] - Short-term leases expose the company to quicker impacts from declining market rents, affecting rental revenues[75] - Adverse changes in taxes and laws, including recent property tax increases, may affect cash available for distributions and the ability to pay debt[78] - The company faces risks associated with cybersecurity breaches, which could lead to significant costs and reputational damage[81] - The company faces risks related to employee theft or fraud, which could result in significant financial or reputational harm[102] Growth and Market Strategy - The company intends to explore acquisitions or developments in new and existing geographic markets, which introduces various risks[63] - The company may face challenges in managing growth effectively, particularly through the acquisition of additional real estate properties[77] Legal and Regulatory Risks - Changes in federal or state laws regarding climate change could result in increased costs for the company without a corresponding increase in revenue[69] - Environmental laws may impose liabilities for hazardous substances, potentially affecting the ability to sell or rent properties[85] - The company may incur substantial costs related to compliance with laws benefiting disabled persons, impacting investment strategies[95] - Joint ventures may present risks that could adversely affect financial performance and operational results due to shared decision-making authority[96] - Legislative or regulatory changes affecting REITs could adversely impact the company and its shareholders, as tax laws are subject to review and potential amendments[129] Debt and Financing - The company reported outstanding borrowings of approximately $859.8 million as of December 31, 2021[106] - The company anticipates needing to refinance a significant portion of its outstanding debt as it matures, which may not be possible on favorable terms[103] - Rising interest rates could increase the company's interest costs and affect its ability to refinance fixed-rate debt[107] - The company is required to make distributions of at least 90% of its REIT taxable income, limiting its ability to retain cash for future growth[119] - The company has a private shelf agreement for issuing up to $225.0 million of unsecured senior promissory notes, with $200.0 million already issued and $25.0 million remaining available as of December 31, 2021[252] - As of December 31, 2021, the company had a balance of $198.9 million under the Fannie Mae Credit Facility Agreement, secured by mortgages on 16 apartment communities, with a blended weighted average interest rate of 2.78%[254] - The company prepaid two variable rate term loans and terminated two interest rate swaps during the year ended December 31, 2021, with a remaining swap notional of $75.0 million at an average pay rate of 2.81%[251] - The aggregate fair value of the company's interest rate swaps was a liability of $5.7 million as of December 31, 2021[251] - The company has no variable-rate mortgage debt outstanding and $76.0 million of variable-rate borrowings under its line of credit, with $75.0 million fixed through interest rate swaps[255] - The company must distribute at least 90% of its REIT taxable income to maintain its REIT status, and failure to do so could result in corporate income tax on undistributed income[127] - If the company fails to qualify as a REIT, it would be subject to federal income tax at regular corporate rates, which could materially adversely affect its ability to make distributions to shareholders[127] - The company has tax protection agreements in place on thirty-four properties, which require it to make unitholders whole if those properties are sold in a taxable transaction[133] - The company is exposed to credit risk from interest rate swaps in the event of non-performance by the counterparty[251] Debt Structure and Interest Rates - Mortgage loan indebtedness decreased by $13.5 million as of December 31, 2021, compared to December 31, 2020, primarily due to loan maturities and prepayments[256] - 100.0% of the $284.9 million mortgage debt was at fixed rates of interest as of December 31, 2021, with a weighted average interest rate of 3.81%, down from 3.93% in 2020[256] - The total fixed-rate debt for 2022 is $27,113,000, with future principal payments of $45,067,000 in 2023 and $4,054,000 in 2024[258] - The average interest rate for fixed-rate debt is 3.85% for 2022, decreasing to 3.80% for 2024 and thereafter[258] - The company has $76,000,000 in variable-rate debt, with an average interest rate of 2.74%[258] - The total fair value of fixed-rate debt is $791,698,000[258] - The company aims to maintain low exposure to interest rate risk but acknowledges potential vulnerabilities to fluctuations in interest rates[256] Market Perception and Stock Performance - The company has experienced an increase in online reputation management scores from 3.46 to 3.48 out of 5 stars[46] - The company’s stock price may fluctuate significantly due to various market conditions and investor perceptions[112] - The company’s ability to pay distributions is not guaranteed and may be affected by operating and financial results[116] - Material weaknesses in internal control over financial reporting could adversely affect investor confidence and the company's stock price[121]