PART I FINANCIAL INFORMATION Item 1. Financial Statements This section presents Centerspace's unaudited condensed consolidated financial statements, detailing balance sheets, operations, and cash flows, highlighting asset stability, net loss, and acquisition-related financing Condensed Consolidated Balance Sheets Total assets slightly increased to $1.948 billion, driven by property investments, while total liabilities remained stable and equity grew to $1.011 billion due to share issuances | Balance Sheet Items | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total real estate investments | $1,913,593 | $1,870,854 | | Cash and cash equivalents | $13,156 | $31,267 | | TOTAL ASSETS | $1,947,613 | $1,940,061 | | TOTAL LIABILITIES | $918,368 | $918,450 | | Total equity | $1,010,618 | $996,280 | Condensed Consolidated Statements of Operations The company reported a net loss of $3.7 million for Q2 2022, a shift from prior-year net income, primarily due to the absence of a large gain on real estate sales | Metric (in thousands, except EPS) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenue | $63,116 | $46,656 | | Total Expenses | $59,308 | $43,923 | | Gain on sale of real estate | $27 | $26,840 | | Operating Income | $3,835 | $29,573 | | Net Income (Loss) | $(3,743) | $23,103 | | Net Loss Available to Common Shareholders | $(4,598) | $19,931 | | Diluted EPS | $(0.30) | $1.48 | | Metric (in thousands, except EPS) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenue | $123,430 | $93,304 | | Total Expenses | $123,533 | $88,930 | | Gain on sale of real estate | $27 | $26,840 | | Operating Loss | $(76) | $31,214 | | Net Loss | $(14,306) | $17,944 | | Net Loss Available to Common Shareholders | $(14,794) | $13,457 | | Diluted EPS | $(0.97) | $1.02 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $34.5 million, while investing and financing activities resulted in net cash usage, reflecting acquisitions and debt payments | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $34,491 | $30,574 | | Net cash used by investing activities | $(23,547) | $(40,792) | | Net cash used by financing activities | $(34,499) | $16,546 | | Net decrease in cash | $(23,555) | $6,328 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, debt structure of $874.2 million, termination of interest rate swaps, and $116.9 million in property acquisitions, operating as a multifamily REIT - As of June 30, 2022, Centerspace owned interests in 83 apartment communities comprising 14,838 apartment homes33 - During the six months ended June 30, 2022, the company acquired four apartment communities in Minneapolis, MN, for a total cost of $116.9 million; there were no dispositions in the period102104 - In February 2022, the company paid $3.2 million to terminate its remaining interest rate swaps, and as of June 30, 2022, the company had no interest rate swaps85 | Debt Summary | June 30, 2022 (in thousands) | | :--- | :--- | | Unsecured debt | $373,000 | | Mortgages payable | $501,210 | | Total debt | $874,210 | | Weighted average interest rate | 3.27% | | Weighted average maturity | 6.96 years | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2022 financial results, highlighting strong revenue growth, a net loss due to non-recurring gains, 11.5% same-store NOI growth, and a $196.2 million liquidity position Results of Operations Q2 2022 saw total revenue increase 35.3% to $63.1 million and NOI grow 32.3%, driven by acquisitions and same-store revenue growth, despite a net loss due to prior-year gains | Performance Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $63,116 | $46,656 | 35.3% | | Same-Store Revenue | $48,867 | $43,762 | 11.7% | | Total NOI | $36,900 | $27,896 | 32.3% | | Same-Store NOI | $29,167 | $26,152 | 11.5% | | Same-Store Avg. Occupancy | 94.8% | 94.9% | (0.1)% | - The increase in same-store revenue for Q2 2022 was primarily driven by an 11.8% growth in average monthly revenue per occupied home147 - General and administrative expenses increased by 37.5% in Q2 2022, mainly due to $1.1 million in abandoned pursuit costs and higher professional fees and travel costs157 Funds from Operations (FFO) FFO increased 39.6% to $19.1 million for Q2 2022, with Core FFO at $21.0 million, driven by higher NOI from both same-store and non-same-store communities | FFO Metric (in thousands, except per share) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Loss Available to Common Shareholders | $(4,598) | $19,931 | | FFO applicable to common shares and Units | $19,085 | $13,674 | | Core FFO applicable to common shares and units | $21,016 | $14,124 | | FFO per share and Unit - diluted | $1.02 | $0.95 | | Core FFO per share and Unit - diluted | $1.12 | $0.98 | Liquidity and Capital Resources Total liquidity stood at $196.2 million, comprising cash and available credit, with capital used for acquisitions, debt repayments, and improvements, partially offset by ATM program proceeds - Total liquidity was approximately $196.2 million as of June 30, 2022, down from $211.3 million at year-end 2021182 - The company has a $250.0 million revolving line of credit with an accordion option to increase capacity to $400.0 million, with $177.0 million available as of June 30, 2022183 - On June 13, 2022, the Board approved a new share repurchase program authorizing the repurchase of up to $50.0 million of common shares, with no shares repurchased under this program as of June 30, 202219169 Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure to interest rate fluctuations has increased due to the termination of all interest rate swaps, impacting variable-rate debt - Centerspace's exposure to market risk from interest rate fluctuations has increased as of June 30, 2022, due to the termination of its interest rate swaps which previously fixed the variable rate on its line of credit202203 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective205 - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls206 PART II OTHER INFORMATION Legal Proceedings The company reports no material pending legal proceedings beyond routine litigation incidental to its business operations - As of the filing date, Centerspace is not involved in any material pending legal proceedings209 Risk Factors A new risk factor highlights the potential negative impact of inflation and price volatility, where rising costs may outpace the ability to increase rents - A new risk factor has been added regarding the impact of inflation and price volatility, noting that rising operating and borrowing costs could adversely affect results if they increase faster than the company's ability to raise rents210211 Unregistered Sales of Equity Securities and Use of Proceeds The company issued 615 unregistered Common Shares in exchange for Operating Partnership Units and purchased 3,552 units for cash at an average price of $92.03 - On April 30, 2022, the Company issued 615 unregistered Common Shares in exchange for Operating Partnership Units under the private offering exemption213 | Period | Total Units Purchased | Average Price Paid per Unit | | :--- | :--- | :--- | | April 1 - 30, 2022 | 2,899 | $93.67 | | May 1 - 31, 2022 | 353 | $85.85 | | June 1 - 30, 2022 | 300 | $83.45 | | Total | 3,552 | $92.03 | Exhibits This section lists the exhibits filed as part of the Form 10-Q report, including corporate governance documents and officer certifications
Centerspace(CSR) - 2022 Q2 - Quarterly Report