Centerspace Announces Financial and Operating Results for the Year Ended December 31, 2021 and Provides 2022 Financial Outlook; Dividend Increase

Rhea-AI Summary

Centerspace (NYSE: CSR) reported a net loss of $(0.47) per diluted share for 2021, compared to a loss of $(0.15) in 2020. Core Funds from Operations (FFO) increased by 5.8% to $3.99 per share. Same-store revenues grew by 4.8%, influenced by a 5.1% rise in rental income, though occupancy declined by 0.3%. The company strategically acquired 17 communities for a total of $499.8 million. A regular quarterly dividend of $0.73 per share is set for April 11, 2022. As of December 31, 2021, Centerspace had $204.8 million in total liquidity.

Positive

• Core FFO per share increased by 5.8% to $3.99.
• Same-store revenues rose 4.8% driven by a 5.1% increase in rental income.
• Successful acquisition of 17 communities totaling 2,696 homes for $499.8 million.
• Regular quarterly dividend increased by $0.01 to $0.73 per share.

Negative

• Net loss per diluted share was $(0.47), worsening from $(0.15) in 2020.
• Occupancy decreased by 0.3% year-over-year.

MINNEAPOLIS, Feb. 28, 2022 /PRNewswire/ -- Centerspace (NYSE: CSR) announced today its financial and operating results for the year ended December 31, 2021. The tables below show Net Income (Loss), Funds from Operations ("FFO")¹, and Core FFO¹, all on a per share basis, for the year ended December 31, 2021; Same-Store Revenues, Expenses, and Net Operating Income ("NOI")¹ over comparable periods; and Same-Store Weighted Average Occupancy for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020 and the twelve months ended December 31, 2021 and 2020.

		Three Months Ended December 31,				Twelve Months Ended December 31,
Per Share		2021		2020		2021		2020
Earnings (loss) per share - diluted		$                   (0.61)		$                   (0.46)		$                   (0.47)		$                   (0.15)
FFO - diluted		1.07		0.97		3.54		3.47
Core FFO - diluted		1.08		1.02		3.99		3.78

 

		Year-Over-Year Comparison		Sequential Comparison		YTD Comparison
Same-Store Results		4Q21 vs 4Q20		4Q21 vs. 3Q21		CY21 vs. CY20
Revenues		9.2%		4.1%		4.8%
Expenses		10.9%		0.9%		4.8%
Net Operating Income ("NOI")		8.1%		6.4%		4.8%

 

		Three months ended						Twelve months ended
Same-Store Results		December 31, 2021		September 30, 2021		December 31, 2020		December 31, 2021		December 31, 2020
Weighted Average Occupancy		93.4%		94.3%		94.8%		94.4%		94.7%

(1)	Net operating income, Funds from Operations, and Core FFO are non-GAAP financial measures.  For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to "Non-GAAP Financial Measures and Reconciliations" in the Supplemental Financial and Operating Data below.

Highlights for the Year Ended December 31, 2021

• Net Loss was $(0.47) per diluted share for the year ended December 31, 2021, compared to Net Income of $(0.15) per diluted share for the year ended December 31, 2020;
• Core FFO increased to $3.99 or 5.8% per diluted share compared to $3.78 for the year ended December 31, 2020;
• Same-store revenue increased 4.8% driven by 5.1% growth in rental revenue and offset by a decrease of 0.3% in occupancy;
• Same-store operating expenses increased 4.8% year-over-year with a increase of 3.7% in same-store controllable expenses, and a increase of 6.7% in same-store non-controllable expenses;
• Same-store NOI growth of 4.8% for the year ended December 31, 2021;
• Same-store NOI growth of 6.4% from the third quarter of 2021;
• Continued to grow the portfolio through a strategic acquisition of 14 communities in Minneapolis, Minnesota and three communities in St. Cloud, Minnesota totaling 2,696 apartment homes for an aggregate purchase price of $359.9 million. Acquired two new apartment communities in Denver, Colorado consisting of 432 homes for an aggregate purchase price of $139.9 million;
• Sold five apartment communities consisting of 589 apartment homes in Rochester, Minnesota for an aggregate sale price of $60.0 million;
• Amended and expanded the Note Purchase Private Shelf Agreement to increase the aggregate amount under the agreement from $150.0 million to $225.0 million and issued $50.0 million of 2.7% unsecured Series C Notes due June 6, 2030;
• Issued $125.0 million of unsecured notes with a weighted average interest rate of 2.6% and weighted average maturity of 10.5 years;
• Improved and extended $250.0 million revolving credit facility with an accordion feature for up to $400.0 million which matures in September 2025; and
• Continued to strengthen the balance sheet by issuing 1.8 million common shares at an average price of $86.13 per share for total consideration, net of commissions and issuance costs, of approximately $156.4 million in the year ended December 31, 2021.

Subsequent Events

Subsequent to December 31, 2021, Centerspace acquired a portfolio of three communities in the Minneapolis, Minnesota region totaling 267 apartment homes for an aggregate purchase price of $68.1 million. The company also acquired Noko Apartments in Minneapolis for an aggregate purchase price of $46.4 million. The company previously financed the construction and mezzanine loan.

On February 23, 2022 the company paid $3.3 million to terminate a $75.0 million interest rate swap and a $70.0 million forward swap.

Dividend Distributions

Centerspace's Board of Trustees announced a regular quarterly distribution of $0.73 per share/unit, payable on April 11, 2022, to common shareholders and unitholders of record at the close of business on March 31, 2022, which represents a $0.01 increase over the prior distribution.

The Board of Trustees also declared a distribution of $0.4140625 per share on the 6.625% Series C Cumulative Redeemable Preferred Shares (NYSE: CSR PRC), payable on March 31, 2022, to holders of record at the close of business on March 15, 2022. Series C preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.65625 per share. 

Balance Sheet

At December 31, 2021, Centerspace had $204.8 million of total liquidity on its balance sheet, including $173.5 million available on its lines of credit.

2022 Financial Overview

Centerspace is providing the following guidance for its 2022 performance.

2022 Calendar Year Financial Outlook
			Range for 2022
	2021 Actual		Low		High
Earnings per Share - diluted	$             (0.47)		$             (0.41)		$             (0.16)
FFO per Share - diluted	$              3.54		$              4.25		$              4.50
Core FFO per Share - diluted	$              3.99		$              4.33		$              4.57

Additional assumptions:

• Same-store capital expenditures of $925 per home to $975 per home
• Value-add expenditures of $21.0 million to $24.0 million
• Investments of $114.5 million due to the January 2021 acquisitions of four communities in Minneapolis, Minnesota

FFO and Core FFO are non-GAAP financial measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, please refer to "2021 Financial Outlook" in the Supplemental Financial and Operating Data below.

Earnings Call

Live webcast and replay:  https://www.ir.centerspacehomes.com
Live Conference Call			Conference Call Replay
Tuesday, March 1, 2022 at 10:00 AM ET			Replay available until March 15, 2022
USA Toll Free Number	1-844-200-6205		USA Toll Free Number	1-866-813-9403
International Toll Free Number	1-929-526-1599		International Toll Free Number	44-204-525-0658
Canada Toll Free Number	1-833-950-0062		Canada Toll Free Number	1-226-828-7578
Conference Number	130830		Conference Number	848822

Supplemental Information

Supplemental Operating and Financial Data for the year ended December 31, 2021, is available in the Investors section on Centerspace's website at https://www.centerspacehomes.com or by calling Investor Relations at 701-837-7104. Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Financial and Operating Data, which accompanies this earnings release.

About Centerspace

Centerspace is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of December 31, 2021, Centerspace owned 79 apartment communities consisting of 14,441 homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Centerspace was named a Top Workplace for 2021 by the Minneapolis Star Tribune. For more information, please visit www.centerspacehomes.com. 

Forward-Looking Statements

Certain statements in this press release are based on the company's current expectations and assumptions, and are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Forward-looking statements are typically identified by the use of terms such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "assumes," "may," "projects," "outlook," "future," and variations of such words and similar expressions. Forward-looking statements include the impact of a public health crisis, including the COVID-19 pandemic, and the governmental and third-party response to such a crisis, which may affect our key personnel, our tenants, and the costs of operating our assets; the impact of social distancing, shelter-in-place, travel restrictions, remote work requirements, and similar governmental and private measures taken to combat the spread of a public health crisis on our operations and our tenants. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements.  Although the company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond the company's control and could differ materially from actual results and performance. Such risks and uncertainties are detailed from time to time in filings with the SEC, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" contained in the company's Annual Report on Form 10-K, in quarterly reports on Form 10-Q, and in other reports the company files with the SEC from time to time. The company assumes no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

Contact Information
Investor Relations
Emily Miller
Phone: 701-837-7104
E-mail: IR@centerspacehomes.com

Marketing & Media
Kelly Weber
Phone: 701-837-7104
E-mail: kweber@centerspacehomes.com

 

Common Share Data (NYSE: CSR)
		Three Months Ended
		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020
High closing price		$                 111.26		$               105.42		$           79.71		$             73.42		$                  74.55
Low closing price		$                   96.58		$                 78.42		$           67.28		$             68.00		$                  65.79
Average closing price		$                 103.29		$                 94.10		$           71.99		$             71.37		$                  70.30
Closing price at end of quarter		$                 110.90		$                 94.50		$           78.90		$             68.00		$                  70.64
Common share distributions—annualized		$                     2.88		$                   2.88		$             2.80		$               2.80		$                    2.80
Closing price dividend yield - annualized		2.6%		3.1%		3.6%		4.1%		4.0%
Closing common shares outstanding (thousands)		15,016		14,281		14,045		13,220		13,027
Closing limited partnership units outstanding (thousands)		832		845		881		950		977
Closing Series E preferred units, as converted (thousands)		2,186		2,186		—		—		—
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)		$            1,999,971		$          1,635,984		$     1,177,661		$         963,560		$              989,243

 

CENTERSPACE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share amounts)
		Three Months Ended											Twelve months ended
		12/31/2021		9/30/2021		6/30/2021		3/31/2021		12/31/2020			12/31/2021		12/31/2020
REVENUE		$          57,988		$     50,413		$     46,656		$     46,648		$     45,540			$   201,705		$    177,994
EXPENSES
Property operating expenses, excluding real estate taxes		16,852		14,434		13,018		13,449		12,668			57,753		51,625
Real estate taxes		6,654		5,916		5,742		5,792		5,256			24,104		21,533
Property management expenses		2,697		2,203		2,085		1,767		1,460			8,752		5,801
Casualty loss		280		(10)		(27)		101		331			344		1,662
Depreciation/amortization		30,418		22,447		19,308		19,992		20,282			92,165		75,593
General and administrative expenses		4,231		4,279		3,797		3,906		3,733			16,213		13,440
TOTAL EXPENSES		$          61,132		$     49,269		$     43,923		$     45,007		$     43,730			$   199,331		$    169,654
Gain (loss) on sale of real estate and other investments		678		—		26,840		—		17			27,518		25,503
Operating income (loss)		(2,466)		1,144		29,573		1,641		1,827			29,892		33,843
Interest expense		(7,456)		(7,302)		(7,089)		(7,231)		(6,903)			(29,078)		(27,525)
Interest and other income (loss)		1,117		(5,082)		619		431		404			(2,915)		(1,575)
Net income (loss)		$          (8,805)		$    (11,240)		$     23,103		$      (5,159)		$      (4,672)			$      (2,101)		$       4,743
Dividends to Series D preferred unitholders		(160)		(160)		(160)		(160)		(160)			(640)		(640)
Net (income) loss attributable to noncontrolling interest – Operating Partnership and Series E preferred units		1,793		1,930		(1,386)		469		460			2,806		212
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities		(36)		(22)		(19)		(17)		(6)			(94)		126
Net income (loss) attributable to controlling interests		(7,208)		(9,492)		21,538		(4,867)		(4,378)			(29)		4,441
Dividends to preferred shareholders		(1,607)		(1,607)		(1,607)		(1,607)		(1,607)			(6,428)		(6,528)
Discount (premium) on redemption of preferred shares		—		—		—		—		—			—		297
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS		$          (8,815)		$    (11,099)		$     19,931		$      (6,474)		$      (5,985)			$      (6,457)		$      (1,790)
Per Share Data - Basic
Net earnings (loss) per common share – basic		$            (0.61)		$        (0.79)		$         1.49		$        (0.49)		$        (0.46)			$        (0.47)		$        (0.15)
Per Share Data - Diluted
Net earnings (loss) per common share – diluted		$            (0.61)		$        (0.81)		$         1.48		$        (0.49)		$        (0.46)			$        (0.47)		$        (0.15)

 

CENTERSPACE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
		12/31/2021		9/30/2021		6/30/2021		3/31/2021		12/31/2020
ASSETS
Real estate investments
Property owned		$  2,271,170		$  2,203,606		$  1,838,837		$  1,883,407		$  1,812,557
Less accumulated depreciation		(443,592)		(426,926)		(407,400)		(408,014)		(399,249)
		1,827,578		1,776,680		1,431,437		1,475,393		1,413,308
Mortgage loans receivable		43,276		42,160		37,457		30,107		24,661
Total real estate investments		1,870,854		1,818,840		1,468,894		1,505,500		1,437,969
Cash and cash equivalents		31,267		20,816		5,194		10,816		392
Restricted cash		7,358		2,376		8,444		1,610		6,918
Other assets		30,582		34,919		17,218		18,427		18,904
TOTAL ASSETS		$  1,940,061		$  1,876,951		$  1,499,750		$  1,536,353		$  1,464,183
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses		$       62,403		$       58,092		$       52,413		$       53,852		$       55,609
Revolving line of credit		76,000		57,000		87,000		181,544		152,871
Notes payable, net of loan costs		299,344		299,454		319,286		319,236		269,246
Mortgages payable, net of loan costs		480,703		489,140		287,143		293,709		297,074
TOTAL LIABILITIES		$     918,450		$     903,686		$     745,842		$     848,341		$     774,800
SERIES D PREFERRED UNITS		$       25,331		$       21,585		$       18,022		$       16,560		$       16,560
EQUITY
Series C Preferred Shares of Beneficial Interest		93,530		93,530		93,530		93,530		93,530
Common Shares of Beneficial Interest		1,157,255		1,092,130		1,033,940		980,453		968,263
Accumulated distributions in excess of net income		(474,318)		(454,691)		(433,310)		(443,409)		(427,681)
Accumulated other comprehensive income (loss)		(4,435)		(5,784)		(12,064)		(12,798)		(15,905)
Total shareholders' equity		$     772,032		$     725,185		$     682,096		$     617,776		$     618,207
Noncontrolling interests – Operating Partnership and Series E preferred units		223,600		225,850		53,133		53,007		53,930
Noncontrolling interests – consolidated real estate entities		648		645		657		669		686
TOTAL EQUITY		$     996,280		$     951,680		$     735,886		$     671,452		$     672,823
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY		$  1,940,061		$  1,876,951		$  1,499,750		$  1,536,353		$  1,464,183

 

CENTERSPACE
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)

This release contains certain non-GAAP financial measures. The non-GAAP financial measures should not be considered a substitute for operating results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The definitions and calculations of these non-GAAP financial measures, as calculated by the company may not be comparable to non-GAAP measures reported by other REITs that do not define each of the non-GAAP financial measures exactly as Centerspace does.

The company provides certain information on a same-store and non-same-store basis.  Same-store apartment communities are owned or in service for substantially all of the periods being compared, and, in the case of development properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, Centerspace determines the composition of the same-store pool for that year and adjusts the previous year, to evaluate full period-over-period operating comparisons for existing apartment communities and their contribution to net operating income. Measuring performance on a same-store basis allows investors to evaluate how a fixed pool of communities are performing year-over-year. Centerspace uses this measure to assess success in increasing NOI, renewing leases on existing residents, controlling operating costs, and making prudent capital improvements.

Reconciliation of Operating Income (Loss) to Net Operating Income

Net operating income, or NOI, is a non-GAAP financial measure which the company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation and amortization, financing costs, property management expenses, casualty losses, and general and administrative expenses.  NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.

	(dollars in thousands)
	Three Months Ended							Sequential				Year-Over-Year
	12/31/2021		9/30/2021		12/31/2020			$ Change		% Change		$ Change		% Change
Operating income (loss)	$      (2,466)		$       1,144		$       1,827			$   (3,610)		(315.6)%		$   (4,293)		(235.0)%
Adjustments:
Property management expenses	2,697		2,203		1,460			494		22.4%		1,237		84.7%
Casualty loss	280		(10)		331			290		(2,900.0)%		(51)		(15.4)%
Depreciation and amortization	30,418		22,447		20,282			7,971		35.5%		10,136		50.0%
General and administrative expenses	4,231		4,279		3,733			(48)		(1.1)%		498		13.3%
Gain (loss) on sale of real estate and other investments	$         (678)		—		$           (17)			$      (678)		100.0%		$      (661)		3,888.2%
Net operating income	$      34,482		$      30,063		$      27,616			$     4,419		14.7%		$     6,866		24.9%
Revenue
Same-store	$      43,771		$      42,034		$      40,075			$     1,737		4.1%		$     3,696		9.2%
Non-same-store	13,407		7,214		3,105			6,193		85.8%		10,302		331.8%
Other	810		1,120		413			(310)		(27.7)%		397		96.1%
Dispositions	—		45		1,947			(45)		(100.0)%		(1,947)		(100.0)%
Total	57,988		50,413		45,540			7,575		15.0%		12,448		27.3%
Property operating expenses, including real estate taxes
Same-store	17,275		17,126		15,573			149		0.9%		1,702		10.9%
Non-same-store	5,914		2,940		1,157			2,974		101.2%		4,757		411.1%
Other	312		317		249			(5)		(1.6)%		63		25.3%
Dispositions	5		(33)		945			38		(115.2)%		(940)		(99.5)%
Total	23,506		20,350		17,924			3,156		15.5%		5,582		31.1%
Net operating income
Same-store	26,496		24,908		24,502			1,588		6.4%		1,994		8.1%
Non-same-store	7,493		4,274		1,948			3,219		75.3%		5,545		284.7%
Other	498		803		164			(305)		(38.0)%		334		203.7%
Dispositions	(5)		78		1,002			(83)		(106.4)%		(1,007)		(100.5)%
Total	$      34,482		$      30,063		$      27,616			$     4,419		14.7%		$     6,866		24.9%

 

	(dollars in thousands)
	Twelve Months Ended December 31,
	2021		2020		$ Change		% Change
Operating income (loss)	$    29,892		$      33,843		$          (3,951)		(11.7)%
Adjustments:
Property management expenses	8,752		5,801		2,951		50.9%
Casualty loss	344		1,662		(1,318)		(79.3)%
Depreciation and amortization	92,165		75,593		16,572		21.9%
General and administrative expenses	16,213		13,440		2,773		20.6%
Gain (loss) on sale of real estate and other investments	(27,518)		(25,503)		(2,015)		7.9%
Net operating income	$  119,848		$    104,836		$          15,012		14.3%
Revenue
Same-store	$  166,326		$    158,702		$            7,624		4.8%
Non-same-store	29,298		5,424		23,874		440.2%
Other	2,831		2,147		684		31.9%
Dispositions	3,250		11,721		(8,471)		(72.3)%
Total	201,705		177,994		23,711		13.3%
Property operating expenses, including real estate taxes
Same-store	67,306		64,204		3,102		4.8%
Non-same-store	11,790		2,152		9,638		447.9%
Other	1,120		1,008		112		11.1%
Dispositions	1,641		5,794		(4,153)		(71.7)%
Total	81,857		73,158		8,699		11.9%
Net operating income
Same-store	99,020		94,498		4,522		4.8%
Non-same-store	17,508		3,272		14,236		435.1%
Other	1,711		1,139		572		50.2%
Dispositions	1,609		5,927		(4,318)		(72.9)%
Total	$  119,848		$    104,836		$          15,012		14.3%

Reconciliation of Same-Store Controllable Expenses to Property Operating Expenses, Including Real Estate Taxes

Same-store controllable expenses exclude real estate taxes and insurance, in order to provide a measure of expenses that are within management's control, and is used for the purposes of budgeting, business planning, and performance evaluation. This is a non-GAAP financial measure and should not be considered an alternative to total expenses or total property operating expenses and real estate taxes.

	(dollars in thousands)
	Three Months Ended December 31,									Twelve Months Ended December 31,
	2021		2020		$ Change		% Change			2021		2020		$ Change		% Change
Controllable expenses
On-site compensation (1)	$      4,419		$      4,412		$            7		0.2%			$    17,602		$    17,319		$        283		1.6%
Repairs and maintenance	2,725		2,037		688		33.8%			9,785		9,507		278		2.9%
Utilities	2,736		2,597		139		5.4%			10,975		10,286		689		6.7%
Administrative and marketing	942		781		161		20.6%			3,643		3,376		267		7.9%
Total	$    10,822		$      9,827		$        995		10.1%			$    42,005		$    40,488		$      1,517		3.7%
Non-controllable expenses
Real estate taxes	$      4,839		$      4,513		$        326		7.2%			$    19,503		$    19,026		$        477		2.5%
Insurance	1,614		1,233		381		30.9%			5,798		4,690		1,108		23.6%
Total	$      6,453		$      5,746		$        707		12.3%			$    25,301		$    23,716		$      1,585		6.7%
Property operating expenses, including real estate taxes - non-same-store	$      5,914		$      1,157		$      4,757		411.1%			$    11,790		$      2,152		$      9,638		447.9%
Property operating expenses, including real estate taxes - other	312		249		63		25.3%			1,120		1,008		112		11.1%
Property operating expenses, including real estate taxes - dispositions	5		945		(940)		(99.5)%			1,641		5,794		(4,153)		(71.7)%
Total property operating expenses, including real estate taxes	$    23,506		$    17,924		$      5,582		31.1%			$    81,857		$    73,158		$      8,699		11.9%

(1)	On-site compensation for administration, leasing, and maintenance personnel.

Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds From Operations and Core Funds From Operations

Centerspace believes that FFO, which is a non-GAAP financial measurement used as a supplemental measure for equity real estate investment trusts, is helpful to investors in understanding operating performance, primarily because its calculation does not assume that the value of real estate assets diminishes predictably over time as implied by the historical cost convention of GAAP and the recording of depreciation.

Centerspace uses the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. ("Nareit"). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding:

• depreciation and amortization related to real estate;
• gains and losses from the sale of certain real estate assets; and
• impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

The exclusion in Nareit's definition of FFO of impairment write-downs and gains and losses from the sale of real estate assets helps to identify the operating results of the long-term assets that form the base of the company's investments, and assists management and investors in comparing those operating results between periods.

Due to the limitations of the Nareit FFO definition, Centerspace has made certain interpretations in applying the definition. The company believes that all such interpretations not specifically provided for in the Nareit definition are consistent with the definition. Nareit's FFO White Paper - 2018 Restatement clarified that impairment write-downs of land related to a REIT's main business are excluded from FFO, and a REIT has the option to exclude impairment write-downs of assets that are incidental to the main business.

While FFO is widely used by Centerspace as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO in the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders.

Core Funds from Operations ("Core FFO"), a non-GAAP measure, is FFO adjusted for non-routine items or items not considered core to business operations. By further adjusting for items that are not considered part of core business operations, the company believes that Core FFO provides investors with additional information to compare core operating and financial performance between periods. Core FFO should not be considered as an alternative to net income or as any other GAAP measurement of performance, but rather should be considered an additional supplemental measure. Core FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders. Core FFO is a non-GAAP and non-standardized financial measure that may be calculated differently by other REITs and that should not be considered a substitute for operating results determined in accordance with GAAP.

		(in thousands, except per share amounts)
		Three Months Ended											Twelve Months Ended
		12/31/2021		9/30/2021		6/30/2021		3/31/2021		12/31/2020			12/31/2021		12/31/2020
Net (loss) income available to common shareholders		$     (8,815)		$   (11,099)		$    19,931		$     (6,474)		$      (5,985)			$      (6,457)		$      (1,790)
Adjustments:
Noncontrolling interests - Operating Partnership and Series E preferred units		(1,793)		(1,930)		1,386		(469)		(460)			(2,806)		(212)
Depreciation and amortization		30,418		22,447		19,308		19,992		20,282			92,165		75,593
Less depreciation - non real estate		(101)		(80)		(87)		(98)		(87)			(366)		(353)
Less depreciation - partially owned entities		(21)		(24)		(24)		(24)		(33)			(93)		(379)
Gain on sale of real estate		(678)		—		(26,840)		—		(17)			(27,518)		(25,503)
FFO applicable to common shares and Units		$    19,010		$      9,314		$    13,674		$    12,927		$      13,700			$      54,925		$      47,356
Adjustments to Core FFO:
Casualty loss (recovery)		—		—		—		—		204			—		749
Loss on extinguishment of debt		2		530		3		—		2			535		23
Rebranding costs		—		—		—		—		402			—		402
Technology implementation costs		535		625		447		413		—			2,020		—
(Gain) loss on marketable securities		—		—		—		—		—			—		3,378
(Discount) premium on redemption of preferred shares		—		—		—		—		—			—		(297)
Commercial lease termination proceeds		—		(450)		—		—		—			(450)		—
Acquisition related costs		90		140		—		—		—			230		—
Interest rate swap termination, amortization, and mark-to-market		(411)		5,353		—		—		—			4,942		—
Amortization of assumed debt		(26)		(27)		—		—		—			(53)		—
Other miscellaneous items		(61)		(3)		—		—		—			(64)		—
Core FFO applicable to common shares and Units		$    19,139		$     15,482		$    14,124		$    13,340		$      14,308			$      62,085		$      51,611
FFO applicable to common shares and Units		$    19,010		$       9,314		$    13,674		$    12,927		$      13,700			$      54,925		$      47,356
Dividends to preferred unitholders		160		160		160		160		160			640		537
FFO applicable to common shares and Units - diluted		$    19,170		$       9,474		$    13,834		$    13,087		$      13,860			$      55,565		$      47,893
Core FFO applicable to common shares and Units		$    19,139		$     15,482		$    14,124		$    13,340		$      14,308			$      62,085		$      51,611
Dividends to preferred unitholders		160		160		160		160		160			640		537
Core FFO applicable to common shares and Units - diluted		$    19,299		$     15,642		$    14,284		$    13,500		$      14,468			$      62,725		$      52,148
Per  Share Data
Earnings (loss) per share and unit - diluted		$       (0.61)		$       (0.81)		$        1.48		$       (0.49)		$        (0.46)			$        (0.47)		$        (0.15)
FFO per share and unit - diluted		$        1.07		$        0.60		$        0.95		$        0.92		$         0.97			$         3.54		$         3.47
Core FFO per share and unit - diluted		$        1.08		$        0.98		$        0.98		$        0.95		$         1.02			$         3.99		$         3.78
Weighted average shares and units - diluted		17,868		15,922		14,514		14,282		14,222			15,704		13,835

Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA

Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain or loss on sale of real estate and other investments, impairment of real estate investments, gain or loss on extinguishment of debt, gain on litigation settlement, and gain/loss from involuntary conversion. Adjusted EBITDA is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP. The company considers Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, financing costs, or non-operating gains and losses.

		(in thousands)
		Three Months Ended											Twelve Months Ended
		12/31/2021		9/30/2021		6/30/2021		3/31/2021		12/31/2020			12/31/2021		12/31/2020
Net income (loss) attributable to controlling interests		$      (7,208)		$     (9,492)		$      21,538		$      (4,867)		$        (4,378)			$           (29)		$        4,441
Adjustments:
Dividends to preferred unitholders		160		160		160		160		160			640		640
Noncontrolling interests – Operating Partnership and Series E preferred units		(1,793)		(1,930)		1,386		(469)		(460)			(2,806)		(212)
Income (loss) before noncontrolling interests – Operating Partnership		(8,841)		(11,262)		23,084		(5,176)		(4,678)			(2,195)		4,869
Adjustments:
Interest expense		7,440		7,287		7,075		7,216		6,888			29,018		27,334
Loss on extinguishment of debt		2		530		3		—		2			535		23
Depreciation/amortization related to real estate investments		30,397		22,423		19,284		19,969		20,250			92,073		75,215
Casualty loss (recovery)		—		—		—		—		204			—		749
Interest income		(644)		(769)		(583)		(407)		(328)			(2,403)		(1,512)
Gain (loss) on sale of real estate and other investments		(678)		—		(26,840)		—		(17)			(27,518)		(25,503)
Technology implementation costs		534		625		447		413		—			2,020		—
(Gain) loss on marketable securities		—		—		—		—		—			—		3,378
Commercial lease termination proceeds		—		(450)		—		—		—			(450)		—
Acquisition related costs		90		140		—		—		—			230		—
Interest rate swap termination and mark-to-market		(359)		5,361		—		—		—			5,002		—
Other miscellaneous items		(61)		(3)		—		—		—			(64)		—
Adjusted EBITDA		$      27,880		$    23,882		$      22,470		$      22,015		$       22,321			$      96,248		$      84,553

 

CENTERSPACE
DEBT ANALYSIS
(in thousands)
Debt Maturity Schedule
Annual Expirations
		Future Maturities of Debt
		Secured Fixed Debt		Unsecured Fixed Debt(1)		Unsecured Variable Debt		Total Debt		% of Total Debt		Weighted Average Interest Rate(2)
2022		$         22,429		$               —		$               —		$         22,429		2.6%		3.92%
2023		42,596		—		—		42,596		5.0%		4.02%
2024		—		—		—		—		—		—
2025		32,112		75,000		1,000		108,112		12.6%		3.18%
2026		53,487		—		—		53,487		6.2%		3.74%
Thereafter		333,160		300,000		—		633,160		73.6%		3.15%
Total debt		$       483,784		$       375,000		$          1,000		$       859,784		100.0%		3.26%

(1)	The line of credit was fixed through an interest rate swap with a $75.0 million notional as of December 31, 2021. The interest rate swap was terminated in February 2022.
(2)	Weighted average interest rate of debt that matures during the year, including the effect of interest rate swaps on the term loans and line of credit.

 

		12/31/2021		9/30/2021		6/30/2021		3/31/2021		12/31/2020
Debt Balances Outstanding
Secured fixed rate - other mortgages		$  284,934		$    293,547		$    288,363		$    295,001		$    298,445
Secured fixed rate - Fannie Mae credit facility		198,850		198,850		—		—		—
Unsecured fixed rate line of credit(1)		75,000		57,000		50,000		50,000		50,000
Unsecured variable rate line of credit		1,000		—		37,000		131,544		102,871
Unsecured term loans		—		—		145,000		145,000		145,000
Unsecured senior notes		300,000		300,000		175,000		175,000		125,000
Debt total		$  859,784		$    849,397		$    695,363		$    796,545		$    721,316
Quarterly Weighted Average Interest Rates
Other mortgages rate		3.81%		3.83%		3.90%		3.92%		3.93%
Fannie Mae Credit Facility rate		2.78%		2.78%		—		—		—
Lines of credit rate (rate with swap)		4.22%		2.79%		2.24%		2.18%		2.35%
Term loan rate (rate with swap)		—		—		4.19%		4.11%		4.18%
Senior notes rate		3.12%		3.12%		3.47%		3.47%		3.78%
Total debt		3.26%		3.23%		3.70%		3.37%		3.62%

(1)	The current rate on our line of credit was LIBOR plus 150 basis points. The LIBOR exposure on the line of credit as of December 31, 2021 was hedged using an interest rate swap with a notional of $75.0 million and a fixed rate of 2.81%. The interest rate swap was terminated in February 2022.

 

Debt Maturity by Quarter for the Next Two Years
Year		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2022		$             —		$             —		$       22,429		$             —		$       22,429
2023		—		19,187		—		23,409		42,596
										$       65,025

 

CENTERSPACE
CAPITAL ANALYSIS
(in thousands, except per share and unit amounts)
		12/31/2021		9/30/2021		6/30/2021		3/31/2021		12/31/2020
Equity Capitalization
Common shares outstanding		15,016		14,281		14,045		13,220		13,027
Operating partnership units outstanding		832		845		881		950		977
Series E preferred units (as converted)		2,186		2,186		—		—		—
Total common shares and units outstanding		18,034		17,312		14,926		14,170		14,004
Market price per common share (closing price at end of period)		$      110.90		$        94.50		$        78.90		$        68.00		$        70.64
Equity capitalization-common shares and units		$ 1,999,971		$ 1,635,984		$ 1,177,661		$    963,560		$    989,243
Recorded book value of preferred shares		$      93,530		$      93,530		$      93,530		$      93,530		$      93,530
Total equity capitalization		$ 2,093,501		$ 1,729,514		$ 1,271,191		$ 1,057,090		$ 1,082,773
Series D preferred units		$      25,331		$      21,585		$      18,022		$      16,560		16,560
Debt capitalization
Total debt		859,784		849,397		695,363		796,545		721,317
Total capitalization		$ 2,978,616		$ 2,600,496		$ 1,984,576		$ 1,870,195		$ 1,820,650
Total debt to total capitalization(1)		28.9%		33.1%		35.0%		43.1%		39.6%

(1)	Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet, market value of common shares and operating partnership units, and book value of Series C preferred shares and Series D preferred units outstanding at the end of the period.

 

Three Months Ended

Twelve Months Ended

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

12/31/2021

12/31/2020

Debt service coverage ratio(1)

3.17 x

2.75 x

2.62 x

2.53 x

2.73 x

2.77 x

2.57 x

Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization

2.68 x

2.32 x

2.21 x

2.14 x

2.28 x

2.34 x

2.13 x

Net debt/Adjusted EBITDA(2)

7.43 x

8.67 x

7.68 x

8.92 x

8.07 x

8.61 x

8.53 x

Net debt and preferred equity/Adjusted EBITDA(2)

8.50 x

9.88 x

8.92 x

10.17 x

9.31 x

9.84 x

9.83 x

Distribution Data

Common shares and units outstanding at record date

15,848

15,126

14,926

14,171

14,004

15,848

14,004

Total common distribution declared

$   11,411

$    10,890

$   10,448

$     9,919

$     9,803

$     42,669

$     38,538

Common distribution per share and unit

$       0.72

$        0.72

$       0.70

$       0.70

$       0.70

$         2.84

$         2.80

Payout ratio (Core FFO per diluted share and unit basis)(3)

66.7%

73.5%

71.4%

73.7%

68.6%

71.2%

74.1%

(1)	Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization.
(2)	Net debt is the total debt balance less cash and cash equivalents and net tax deferred exchange proceeds (included within restricted cash). For the quarterly period presented, adjusted EBITDA is annualized. Net debt and adjusted EBITDA are non-GAAP measures and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within the Non-GAAP Financial Measures and Reconciliations section.
(3)	Payout ratio (Core FFO per diluted share and unit basis) is the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual Core FFO per diluted share and unit. This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP.

 

CENTERSPACE
SAME-STORE FOURTH QUARTER COMPARISONS
(dollars in thousands)
		Homes Included		Revenues						Expenses						NOI
Regions				Q42021		Q42020		% Change		Q42021		Q42020		% Change		Q42021		Q42020		% Change
Denver, CO		992		$           5,817		$           5,400		7.7%		$           1,990		$           1,634		21.8%		$           3,827		$           3,766		1.6%
Minneapolis, MN		2,355		11,709		10,604		10.4%		4,651		4,488		3.6%		7,058		6,116		15.4%
North Dakota		2,421		8,155		8,011		1.8%		3,273		3,070		6.6%		4,882		4,941		(1.2)%
Omaha, NE		1,370		4,222		3,891		8.5%		1,888		1,648		14.6%		2,334		2,243		4.1%
Rochester, MN		1,121		4,996		4,601		8.6%		2,174		1,860		16.9%		2,822		2,741		3.0%
St. Cloud, MN		1,192		4,576		3,656		25.2%		1,820		1,602		13.6%		2,756		2,054		34.2%
Other Mountain West(1)		1,221		4,296		3,912		9.8%		1,479		1,271		16.4%		2,817		2,641		6.7%
Same-Store Total		10,672		$         43,771		$         40,075		9.2%		$         17,275		$         15,573		10.9%		$         26,496		$         24,502		8.1%
		% of NOI		Weighted Average Occupancy (2)						Average Monthly Rental Rate (3)						Average Monthly Revenue per Occupied Home (4)
Regions				Q42021		Q42020		Growth		Q42021		Q42020		% Change		Q42021		Q42020		% Change
Denver, CO		14.5%		93.6%		94.3%		(0.7)%		$           1,855		$           1,727		7.4%		$           2,089		$           1,924		8.6%
Minneapolis, MN		26.6%		92.8%		93.2%		(0.4)%		1,586		1,502		5.6%		1,786		1,611		10.9%
North Dakota		18.4%		95.3%		95.8%		(0.5)%		1,107		1,062		4.2%		1,178		1,151		2.3%
Omaha, NE		8.8%		93.9%		93.8%		0.1%		996		912		9.2%		1,094		1,010		8.3%
Rochester, MN		10.7%		91.7%		95.5%		(3.8)%		1,515		1,371		10.5%		1,620		1,429		13.4%
St. Cloud, MN		10.4%		91.9%		94.6%		(2.7)%		1,106		971		13.9%		1,392		1,080		28.9%
Other Mountain West(1)		10.6%		94.5%		98.1%		(3.6)%		1,133		981		15.5%		1,241		1,088		14.1%
Same-Store Total		100.0%		93.4%		94.8%		(1.4)%		$           1,314		$           1,215		8.1%		$           1,463		$           1,321		10.6%

(1)	Includes apartment communities in Billings, Montana and Rapid City, South Dakota.
(2)	Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rent. Scheduled rent represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account.  Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.
(3)	Average monthly rental rate is scheduled rent divided by the total number of apartment homes.
(4)	Average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period.

 

CENTERSPACE
SAME-STORE SEQUENTIAL QUARTER COMPARISONS(1)
(dollars in thousands)
		Homes Included		Revenues						Expenses						NOI
Regions				Q42021		Q32021		% Change		Q42021		Q32021		% Change		Q42021		Q32021		% Change
Denver, CO		992		$           5,817		$           5,565		4.5%		$           1,990		$           1,899		4.8%		$           3,827		$           3,666		4.4%
Minneapolis, MN		2,355		11,709		11,361		3.1%		4,651		4,548		2.3%		7,058		6,813		3.6%
North Dakota		2,421		8,155		8,183		(0.3)%		3,273		3,378		(3.1)%		4,882		4,805		1.6%
Omaha, NE		1,370		4,222		4,166		1.3%		1,888		1,933		(2.3)%		2,334		2,233		4.5%
Rochester, MN		1,121		4,996		4,874		2.5%		2,174		1,924		13.0%		2,822		2,950		(4.3)%
St. Cloud, MN		1,192		4,576		3,683		24.2%		1,820		1,750		4.0%		2,756		1,933		42.6%
Other Mountain West		1,221		4,296		4,202		2.2%		1,479		1,694		(12.7)%		2,817		2,508		12.3%
Same-Store Total		10,672		$         43,771		$         42,034		4.1%		$         17,275		$         17,126		0.9%		$         26,496		$         24,908		6.4%
		% of NOI		Weighted Average Occupancy						Average Monthly Rental Rate						Average Monthly Revenue per Occupied Home
Regions				Q42021		Q32021		Growth		Q42021		Q32021		% Change		Q42021		Q32021		% Change
Denver, CO		14.5%		93.6%		94.5%		(1.0)%		$           1,855		$           1,779		4.3%		$           2,089		$           1,978		5.6%
Minneapolis, MN		26.6%		92.8%		94.6%		(1.9)%		1,586		1,558		1.8%		1,786		1,699		5.1%
North Dakota		18.4%		95.3%		94.2%		1.2%		1,107		1,107		—		1,178		1,196		(1.5)%
Omaha, NE		8.8%		93.9%		94.6%		(0.7)%		996		962		3.5%		1,094		1,072		2.1%
Rochester, MN		10.7%		91.7%		93.2%		(1.6)%		1,515		1,459		3.8%		1,620		1,552		4.4%
St. Cloud, MN		10.4%		91.9%		91.5%		0.4%		1,106		1,063		4.0%		1,392		1,125		23.7%
Other Mountain West		10.6%		94.5%		96.6%		(2.2)%		1,133		1,082		4.7%		1,241		1,187		4.5%
Same-Store Total		100.0%		93.4%		94.3%		(1.0)%		$           1,314		$           1,280		2.7%		$           1,463		$           1,392		5.1%

(1)	Refer to footnotes on page S-13.

 

CENTERSPACE
SAME-STORE YEAR-TO-DATE COMPARISONS(1)
(dollars in thousands)
		Homes Included		Revenues						Expenses						NOI
Regions				2021		2020		% Change		2021		2020		% Change		2021		2020		% Change
Denver, CO		992		$         22,276		$         21,568		3.3%		$           7,592		$           6,968		9.0%		$         14,684		$         14,600		0.6%
Minneapolis, MN		2,355		44,073		42,628		3.4%		18,279		17,613		3.8%		25,794		25,015		3.1%
North Dakota		2,421		32,365		31,342		3.3%		13,121		12,861		2.0%		19,244		18,481		4.1%
Omaha, NE		1,370		16,451		15,427		6.6%		7,468		6,846		9.1%		8,983		8,581		4.7%
Rochester, MN		1,121		19,223		18,512		3.8%		8,021		7,782		3.1%		11,202		10,730		4.4%
St. Cloud, MN		1,192		15,548		14,362		8.3%		6,788		6,485		4.7%		8,760		7,877		11.2%
Other Mountain West		1,221		16,390		14,863		10.3%		6,037		5,649		6.9%		10,353		9,214		12.4%
Same-Store Total		10,672		$       166,326		$       158,702		4.8%		$         67,306		$         64,204		4.8%		$         99,020		$         94,498		4.8%
		% of NOI		Weighted Average Occupancy						Average Monthly Rental Rate						Average Monthly Revenue per Occupied Home
Regions				2021		2020		Growth		2021		2020		% Change		2021		2020		% Change
Denver, CO		14.9%		94.2%		93.8%		0.4%		$           1,769		$           1,761		0.5%		$           1,987		$           1,932		2.8%
Minneapolis, MN		26.0%		93.6%		93.6%		—%		1,537		1,497		2.7%		1,666		1,611		3.4%
North Dakota		19.4%		95.4%		95.9%		(0.5)%		1,088		1,049		3.7%		1,168		1,125		3.7%
Omaha, NE		9.1%		94.7%		94.2%		0.5%		949		905		4.8%		1,056		996		6.1%
Rochester, MN		11.3%		93.7%		95.5%		(1.8)%		1,439		1,378		4.2%		1,526		1,438		5.6%
St. Cloud, MN		8.8%		92.6%		94.4%		(1.8)%		1,036		958		8.2%		1,174		1,064		10.0%
Other Mountain West		10.5%		96.7%		96.5%		0.2%		1,054		962		9.5%		1,157		1,052		10.1%
Same-Store Total		100.0%		94.4%		94.7%		(0.3)%		$           1,260		$           1,210		4.1%		$           1,376		$           1,308		5.1%

(1)	Refer to footnotes on page S-13.

 

CENTERSPACE
PORTFOLIO SUMMARY (1)
		Three Months Ended
		12/31/2021		9/30/2021		6/30/2021		3/31/2021		12/31/2020
Number of Apartment Homes at Period End
Same-Store		10,672		10,676		10,676		11,265		10,567
Non-Same-Store		3,769		3,599		903		903		1,343
All Communities		14,441		14,275		11,579		12,168		11,910
Average Monthly Rental Rate(2)
Same-Store		$         1,314		$      1,279		$      1,233		$      1,200		$      1,177
Non-Same-Store		1,225		1,506		1,617		1,584		1,599
All Communities		$         1,291		$      1,293		$      1,263		$      1,229		$      1,225
Average Monthly Revenue per Occupied Apartment Home(3)
Same-Store		$         1,463		$      1,392		$      1,333		$      1,302		$      1,282
Non-Same-Store		1,306		1,606		1,739		1,705		1,708
All Communities		$         1,423		$      1,397		$      1,365		$      1,332		$      1,330
Weighted Average Occupancy(4)
Same-Store		93.4%		94.3%		94.9%		94.9%		95.0%
Non-Same-Store		94.7%		95.1%		94.2%		91.8%		92.3%
All Communities		93.7%		94.4%		94.8%		94.6%		94.6%
Operating Expenses as a % of Scheduled Rent
Same-Store		39.5%		41.8%		41.9%		42.9%		41.2%
Non-Same-Store		44.1%		39.9%		32.9%		34.9%		35.3%
All Communities		40.6%		41.6%		41.0%		42.1%		40.3%
Capital Expenditures
Total Capital Expenditures per Apartment Home – Same-Store		$            369		$        255		$        159		$        131		$        326

(1)	Previously reported amounts are not revised for changes in the composition of the same-store properties pool.
(2)	Average monthly rental rate is scheduled rent divided by the total number of apartment homes. Scheduled rent represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant apartment homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.
(3)	Average monthly revenue per occupied apartment home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period.
(4)	Weighted average occupancy is the percentage resulting from dividing actual rental revenue by scheduled rent. The company believes that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and calculation of weighted average occupancy may not be comparable to that disclosed by other real estate companies.

 

CENTERSPACE
CAPITAL EXPENDITURES
(dollars in thousands, except per home amounts)
		Three Months Ended					Twelve Months Ended
		12/31/2021		12/31/2020			12/31/2021		12/31/2020
Total Same-Store Apartment Homes		10,672		10,672			10,672		10,672
Building - Exterior		$              997		$         1,561			$         3,131		$         3,053
Building - Interior		1,325		29			1,560		230
Mechanical, Electrical, & Plumbing		274		427			826		1,900
Furniture & Equipment		82		118			163		343
Landscaping & Grounds		347		267			712		1,446
Turnover		909		388			3,281		2,940
Capital Expenditures - Same-Store		$            3,934		$         2,790			$         9,673		$         9,912
Capital Expenditures per Apartment Home - Same-Store		$               369		$            261			$            906		$            929
Value Add		$            4,356		$         3,483			$       18,366		$       13,762
Total Capital Spend - Same-Store		$            8,290		$         6,273			$       28,039		$       23,674
Total Capital Spend per Apartment Home - Same Store		$               777		$            588			$         2,627		$         2,218
All Properties - Weighted Average Homes		14,326		11,322			12,489		10,982
Capital Expenditures		$            4,337		$         2,822			$       10,278		$         9,954
Capital Expenditures per Apartment Home		$               303		$            249			$            823		$            906
Value Add		4,356		3,483			18,378		13,762
Acquisition Capital		1,523		$            302			2,818		1,567
Total Capital Spend		$          10,216		$         6,607			$       31,474		$       25,283
Total Capital Spend per Apartment Home		$               713		$            584			$         2,520		$         2,302
Value Add Capital Expenditures
Interior - Units
Same-Store		$            1,941		$         1,171			$       11,340		$         5,752
Non-Same-Store		—		—			8		—
Total Interior Units		$            1,941		$         1,171			$       11,348		$         5,752
Common Areas and Exteriors
Same-Store		$            2,415		$         2,312			$         7,027		$         8,009
Non-Same-Store		—		—			3		—
Total Common Areas and Exteriors		$            2,415		$         2,312			$         7,030		$         8,009
Total Value-Add Capital Expenditures
Same-Store		$            4,356		$         3,483			$       18,367		$       13,761
Non-Same-Store		—		—			11		—
Total Portfolio Value-Add		$            4,356		$         3,483			$       18,378		$       13,761

 

CENTERSPACE
2022 Financial Outlook
(in thousands, except per share amounts)
Centerspace is providing guidance for 2022.
	12 Months Ended		2022 Full-Year Guidance Range
	December 31, 2021		Low		High
	Actual		Amount		Amount
Same-store growth (1)
Revenue	$                          179,348		6.00%		8.00%
Controllable expenses	$                            44,693		3.75%		5.25%
Non-controllable expenses	$                            27,317		3.00%		4.50%
Total Expenses	$                            72,010		3.50%		5.00%
Same-store NOI (1)	$                          107,338		8.00%		10.00%
Components of NOI
Same-store NOI (1)	$                          107,338		$       115,600		$       118,100
Non-same-store NOI (1)	$                              9,190		$         30,800		$         31,300
Other Commercial NOI	$                              1,475		$           1,300		$           1,400
Other Sold NOI	$                              1,845		—		—
Total NOI	$                          119,848		$       147,700		$       150,800
Accretion from investments and capital market activity, excluding impact from change in share count	$                                   —		—		—
Interest expense	$                           (29,078)		(32,200)		(31,700)
Preferred dividends	$                             (6,428)		(6,400)		(6,400)
Recurring income and expenses
Interest and other income (loss)	$                             (3,008)		660		700
General and administrative and property management	$                           (24,965)		(27,800)		(27,100)
Casualty losses	$                                (344)		(2,000)		(1,700)
Non-real estate depreciation and amortization	$                                (366)		(430)		(390)
Non-controlling interest	$                                  (94)		(70)		(90)
Total recurring income and expenses	$                           (28,777)		(29,640)		(28,580)
FFO	$                            55,565		$         79,460		$         84,120
FFO per diluted share	$                                3.54		$             4.25		$             4.50
Non-core income and expenses
Casualty loss	$                                   —		$              600		$              500
Technology implementation costs	2,020		990		890
Interest rate swap termination, amortization, and mark-to-market	4,942		—		—
Other miscellaneous items	198		—		—
Total non-core income and expenses	$                              7,160		$           1,590		$           1,390
Core FFO	$                            62,725		$         81,050		$         85,510
Core FFO per diluted share	$                                3.99		$             4.33		$             4.57
EPS - Diluted	$                               (0.47)		$           (0.41)		$            (0.16)
Weighted average shares outstanding - diluted	15,704		18,700		18,700

(1)	Amounts for the year ended December 31, 2021 reflect the 2022 same-store pool.

Additional assumptions:

• Same-store capital expenditures of $925 per home to $975 per home
• Value-add expenditures of $21.0 million to $24.0 million
• Investments of $114.5 million due to the January 2022 acquisitions of four communities in the Minneapolis, Minnesota region

Reconciliation of Net Income (Loss) Available to Common Shareholders to FFO and Core FFO

The following table presents reconciliations of Net income (loss) available to common shareholders to FFO and Core FFO, which are non-GAAP financial measures described in greater detail under "Non-GAAP Financial Measures and Reconciliations." They should not be considered as alternatives to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO and Core FFO also do not represent cash generated from operating activities in accordance with GAAP, nor are they indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders. The outlook and projections provided below are based on current expectations and are forward-looking.

				Outlook
	12 Months Ended			12 Months Ended
	December 31, 2021			December 31, 2022
	Amount			Low		High
Net income (loss) available to common shareholders	$                    (6,457)			$                  282		$                4,922
Noncontrolling interests - Operating Partnership and Series E preferred units	(2,806)			(7,885)		(7,885)
Depreciation and amortization	92,165			86,923		86,923
Less depreciation - non real estate	(366)			(430)		(390)
Less depreciation - partially owned entities	(93)			(70)		(90)
(Gain) loss on sale of real estate	(27,518)			—		—
Dividends to preferred unitholders	$                        640			$                  640		$                  640
FFO applicable to common shares and Units	$                   55,565			$             79,460		$             84,120
Adjustments to Core FFO:
Casualty loss write off	—			600		500
Loss on extinguishment of debt	535			—		—
Technology implementation costs	2,020			990		890
Commercial lease termination proceeds	(450)			—		—
Acquisition related costs	230			—		—
Interest rate swap termination,  amortization, and mark-to-market	4,942			—		—
Other miscellaneous items	(117)			—		—
Core FFO applicable to common shares and Units	$                   62,725			$             81,050		$              85,510
Earnings per share - diluted	$                      (0.47)			$                (0.41)		$                (0.16)
FFO per share - diluted	$                       3.54			$                 4.25		$                 4.50
Core FFO per share - diluted	$                       3.99			$                 4.33		$                 4.57

Reconciliation of Operating Income to Net Operating Income

Net operating income, or NOI, is a non-GAAP financial measure which the company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance. 

			Outlook
	12 Months Ended		12 Months Ended
	December 31, 2021		December 31, 2022
	Actual		Low		High
Operating income	$                     29,892		$                30,977		$                35,077
Adjustments:
General and administrative and property management expenses	24,965		27,800		27,100
Casualty loss	344		2,000		1,700
Depreciation and amortization	92,165		86,923		86,923
(Gain) loss on sale of real estate and other assets	(27,518)		—		—
Net operating income	$                   119,848		$              147,700		$              150,800

 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/centerspace-announces-financial-and-operating-results-for-the-year-ended-december-31-2021-and-provides-2022-financial-outlook-dividend-increase-301491971.html

SOURCE Centerspace

FAQ

What was Centerspace's net income for the year ended December 31, 2021?

Centerspace reported a net loss of $(0.47) per diluted share for 2021.

How much did Centerspace's Core FFO increase in 2021?

Core FFO increased by 5.8% to $3.99 per share for the year ended December 31, 2021.

What is the dividend amount and payment date for Centerspace in 2022?

Centerspace announced a quarterly dividend of $0.73 per share, payable on April 11, 2022.

What were the total acquisitions made by Centerspace in 2021?

Centerspace acquired 17 communities totaling 2,696 apartment homes for an aggregate purchase price of $499.8 million.

What was the change in occupancy for Centerspace in 2021?

Occupancy declined by 0.3% year-over-year.