Centerspace Reports Second Quarter 2022 Financial Results

Rhea-AI Summary

Centerspace (NYSE: CSR) reported its Q2 2022 financial results, showing a net loss of $0.30 per diluted share, compared to a net income of $1.48 per share in Q2 2021. Core FFO rose by 14.3% to $1.12 per diluted share. Same-store revenues increased 11.7% year-over-year, contributing to an 11.5% rise in NOI. Centerspace revised its 2022 outlook, adjusting the net loss guidance to a range of $0.31 to $0.14 and increasing the same-store NOI growth guidance to 10.0% to 12.0%. As of June 30, the company held $196.2 million in liquidity.

Positive

• Core FFO increased 14.3% to $1.12 per diluted share.
• Same-store revenues rose 11.7% compared to Q2 2021.
• Same-store NOI increased 11.5% year-over-year.
• Increased 2022 guidance: net loss per share revised to $0.31 to $0.14.
• Same-store NOI growth guidance raised to 10.0% to 12.0%.

Negative

• Net loss of $0.30 per diluted share, a decline from net income of $1.48 in Q2 2021.
• Revised earnings outlook still shows a projected loss.

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

		Three Months Ended June 30,				Six Months Ended June 30,
Per Share		2022		2021		2022		2021
Net income (loss) - diluted		$                       (0.30)		$                        1.48		$                   (0.97)		$                    1.02
FFO - diluted		$                        1.02		$                        0.95		$                    2.03		$                    1.87
Core FFO - diluted		$                        1.12		$                        0.98		$                    2.10		$                    1.93

 

		Year-Over-Year Comparison		Sequential Comparison		YTD Comparison
Same-Store Results		Q2 2022 vs. Q2 2021		Q2 2022 vs. Q1 2022		2022 vs. 2021
Revenues		11.7 %		4.2 %		10.1 %
Expenses		11.9 %		2.5 %		10.7 %
NOI		11.5 %		5.4 %		9.7 %

 

		Three months ended
Same-Store Results		June 30, 2022		March 31, 2022		June 30, 2021
Weighted Average Occupancy		94.8 %		93.9 %		94.9 %

(1)	NOI, FFO, Core FFO, and same-store results 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" below.

Highlights

• Net Loss was $0.30 per diluted share for the second quarter of 2022, compared to Net Income of $1.48 per diluted share for the same period of 2021;
• Core FFO increased 14.3% to $1.12 per diluted share for the three months ended June 30, 2022, compared to $0.98 for the three months ended June 30, 2021;
• Same-store revenues increased by 11.7% for the second quarter of 2022 compared to the second quarter of 2021, driving an 11.5% increase in NOI compared to the same period of the prior year; and
• Revised 2022 financial outlook, increasing our guidance range for net loss per share to $0.31 to $0.14 per diluted share. We also increased our same-store NOI growth guidance for 2022 to 10.0% to 12.0%, an increase of 2% over our previous guidance range. This resulted in an increase in the Core FFO guidance range to $4.45 to $4.61 per diluted share.

Balance Sheet

At the end of the second quarter, Centerspace had $196.2 million of total liquidity on its balance sheet, consisting of $183.0 million available under the lines of credit and cash and cash equivalents of $13.2 million.

Revised 2022 Financial Outlook

Centerspace revised its 2022 financial outlook and increased its earnings per share, Core FFO and same-store NOI guidance. For additional information, see S-17 of the Supplemental Financial and Operating Data for the quarter ended June 30, 2022 included at the end of this release. These ranges should be considered in their entirety. The table below reflects the revised outlook.

	Previous Outlook for 2022		Updated Outlook for 2022
	Low	High	Low	High
Earnings per Share – diluted	$                        (0.37)	$                         (0.11)	$                        (0.31)	$                        (0.14)
Same-Store Revenue	7.0 %	9.0 %	9.0 %	10.5 %
Same-Store Expenses	5.5 %	7.5 %	7.5 %	8.5 %
Same-Store NOI	8.0 %	10.0 %	10.0 %	12.0 %
FFO per Share – diluted	$                          4.26	$                          4.52	$                          4.32	$                          4.49
Core FFO per Share – diluted	$                          4.33	$                          4.57	$                          4.45	$                          4.61

Earnings Call

Live webcast and replay:  https://ir.centerspacehomes.com
Live Conference Call			Conference Call Replay
Tuesday, August 2, 2022, at 10:00 AM ET			Replay available until August 16, 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	753198		Conference Number	920238

Supplemental Information

Supplemental Operating and Financial Data for the quarter ended June 30, 2022 included herein ("Supplemental Information"), is available in the Investors section on Centerspace's website at 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 June 30, 2022, Centerspace owned 83 apartment communities consisting of 14,838 apartment 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 and the accompanying Supplemental Operating and Financial Data are based on the company's current expectations and assumptions, and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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. Such risks, uncertainties, and other factors that might cause such differences include, but are not limited to those risks and uncertainties detailed from time to time in Centerspace's filings with the Securities and Exchange Commission, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" contained in its Annual Report on Form 10-K for the year ended December 31, 2021, in its subsequent quarterly reports on Form 10-Q, and in other public reports. The company assumes no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

Contact Information

Investor Relations
Joe McComish
Phone: 701-837-7104
IR@centerspacehomes.com

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

 

 

Common Share Data (NYSE: CSR)
		2nd Quarter		1st Quarter		4th Quarter		3rd Quarter		2nd Quarter
		2022		2022		2021		2021		2021
High closing price		$         103.17		$         108.27		$          111.26		$         105.42		$           79.71
Low closing price		$           76.65		$           89.01		$           96.58		$           78.42		$           67.28
Average closing price		$           87.61		$           97.15		$         103.29		$           94.10		$           71.99
Closing price at end of quarter		$           81.55		$           98.12		$         110.90		$           94.50		$           78.90
Common share distributions – annualized		$             2.92		$             2.92		$             2.88		$             2.88		$             2.80
Closing dividend yield – annualized		3.6 %		3.0 %		2.6 %		3.1 %		3.6 %
Closing common shares outstanding (thousands)		15,373		15,365		15,016		14,281		14,045
Closing limited partnership units outstanding (thousands)		995		997		832		845		881
Closing Series E preferred units outstanding, as converted (thousands)		2,186		2,186		2,186		2,186		—
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)		$     1,513,079		$     1,819,930		$     1,999,971		$    1,635,984		$     1,177,661

 

 

 

CENTERSPACE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands)
		Three Months Ended											Six Months Ended
		6/30/2022		3/31/2022		12/31/2021		9/30/2021		6/30/2021			6/30/2022		6/30/2021
REVENUE		$        63,116		$        60,314		$          57,988		$        50,413		$        46,656			$  123,430		$      93,304
EXPENSES
Property operating expenses, excluding real estate taxes		19,011		19,014		16,852		14,434		13,018			38,025		26,467
Real estate taxes		7,205		6,859		6,654		5,916		5,742			14,064		11,534
Property management expense		2,721		2,253		2,697		2,203		2,085			4,974		3,852
Casualty (gain) loss		382		598		280		(10)		(27)			980		74
Depreciation/amortization		24,768		31,001		30,418		22,447		19,308			55,769		39,300
General and administrative expenses		5,221		4,500		4,231		4,279		3,797			9,721		7,703
TOTAL EXPENSES		$        59,308		$        64,225		$          61,132		$        49,269		$        43,923			$  123,533		$      88,930
Gain (loss) on sale of real estate and other investments		27		—		678		—		26,840			27		—
Operating income (loss)		3,835		(3,911)		(2,466)		1,144		29,573			(76)		4,374
Interest expense		(7,561)		(7,715)		(7,456)		(7,302)		(7,089)			(15,276)		(14,320)
Interest and other income (loss)		(17)		1,063		1,117		(5,082)		619			1,046		1,050
Net income (loss)		$         (3,743)		$         (10,563)		$          (8,805)		$         (11,240)		$        23,103			$   (14,306)		$      (8,896)
Dividends to Series D preferred unitholders		(160)		(160)		(160)		(160)		(160)			(320)		(320)
Net (income) loss attributable to noncontrolling interest – Operating Partnership and Series E preferred units		950		2,157		1,793		1,930		(1,386)			3,107		(917)
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities		(38)		(23)		(36)		(22)		(19)			(61)		(36)
Net income (loss) attributable to controlling interests		(2,991)		(8,589)		(7,208)		(9,492)		21,538			(11,580)		(10,169)
Dividends to preferred shareholders		(1,607)		(1,607)		(1,607)		(1,607)		(1,607)			(3,214)		(3,214)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS		$         (4,598)		$         (10,196)		$          (8,815)		$         (11,099)		$        19,931			$   (14,794)		$     (13,383)
Per Share Data - Basic
Net earnings (loss) per common share – basic		$           (0.30)		$           (0.68)		$            (0.61)		$           (0.79)		$            1.49			$      (0.97)		$         1.02
Per Share Data - Diluted
Net earnings (loss) per common share – diluted		$           (0.30)		$           (0.68)		$            (0.61)		$           (0.79)		$            1.48			$      (0.97)		$         1.02

 

 

 

CENTERSPACE CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
		6/30/2022		3/31/2022		12/31/2021		9/30/2021		6/30/2021
ASSETS
Real estate investments
Property owned		$  2,401,427		$  2,390,952		$  2,271,170		$  2,203,606		$  1,838,837
Less accumulated depreciation		(487,834)		(465,752)		(443,592)		(426,926)		(407,400)
		1,913,593		1,925,200		1,827,578		1,776,680		1,431,437
Mortgage loans receivable		—		—		43,276		42,160		37,457
Total real estate investments		1,913,593		1,925,200		1,870,854		1,818,840		1,468,894
Cash and cash equivalents		13,156		13,313		31,267		20,816		5,194
Restricted cash		1,914		2,409		7,358		2,376		8,444
Other assets		18,950		24,651		30,582		34,919		17,218
TOTAL ASSETS		$  1,947,613		$  1,965,573		$  1,940,061		$  1,876,951		$  1,499,750
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses		$       48,077		$       50,360		$       62,403		$       58,092		$       52,413
Revolving line of credit		73,000		46,000		76,000		57,000		87,000
Notes payable, net of loan costs		299,374		299,359		299,344		299,454		319,286
Mortgages payable, net of loan costs		497,917		521,536		480,703		489,140		287,143
TOTAL LIABILITIES		$     918,368		$     917,255		$     918,450		$     903,686		$     745,842
SERIES D PREFERRED UNITS		$       18,627		$       22,412		$       25,331		$       21,585		$       18,022
EQUITY
Series C Preferred Shares of Beneficial Interest		93,530		93,530		93,530		93,530		93,530
Common Shares of Beneficial Interest		1,207,849		1,203,685		1,157,255		1,092,130		1,033,940
Accumulated distributions in excess of net income		(511,552)		(495,732)		(474,318)		(454,691)		(433,310)
Accumulated other comprehensive income (loss)		(2,362)		(2,550)		(4,435)		(5,784)		(12,064)
Total shareholders' equity		$     787,465		$     798,933		$     772,032		$     725,185		$     682,096
Noncontrolling interests – Operating Partnership and Series E preferred units		222,528		226,302		223,600		225,850		53,133
Noncontrolling interests – consolidated real estate entities		625		671		648		645		657
Total equity		$  1,010,618		$  1,025,906		$     996,280		$     951,680		$     735,886
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY		$  1,947,613		$  1,965,573		$  1,940,061		$  1,876,951		$  1,499,750

 

 

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 us, may not be comparable to non-GAAP financial 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 newly-constructed properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, Centerspace determines the composition of its same-store pool for that year as well as adjusts the previous year, which allows us to evaluate full period-over-period operating comparisons for existing apartment communities and their contribution to net income. The company believes that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of its communities are performing year-over-year. Centerspace uses this measure to assess whether or not the company has been successful in increasing NOI, renewing the 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, 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.

	(in thousands, except percentages)
	Three Months Ended							Sequential				Year-Over-Year
	6/30/2022		3/31/2022		6/30/2021			$ Change		% Change		$ Change		% Change
Operating income (loss)	$      3,835		$     (3,911)		$     29,573			$      7,746		(198.1) %		$     (25,738)		(87.0) %
Adjustments:
Property management expenses	2,721		2,253		2,085			468		20.8 %		636		30.5 %
Casualty (gain) loss	382		598		(27)			(216)		(36.1) %		409		*
Depreciation and amortization	24,768		31,001		19,308			(6,233)		(20.1) %		5,460		28.3 %
General and administrative expenses	5,221		4,500		3,797			721		16.0 %		1,424		37.5 %
(Gain) loss on sale of real estate and other investments	(27)		—		(26,840)			(27)		N/A		26,813		(99.9) %
Net operating income	$     36,900		$     34,441		$     27,896			$      2,459		7.1 %		$      9,004		32.3 %
Revenue
Same-store	$     48,867		$     46,891		$     43,762			$      1,976		4.2 %		$      5,105		11.7 %
Non-same-store	13,334		12,507		1,195			827		6.6 %		12,139		1,015.8 %
Other properties	915		916		664			(1)		(0.1) %		251		37.8 %
Dispositions	—		—		1,035			—		—		(1,035)		(100.0) %
Total	63,116		60,314		46,656			2,802		4.6 %		16,460		35.3 %
Property operating expenses, including real estate taxes
Same-store	19,700		19,215		17,610			485		2.5 %		2,090		11.9 %
Non-same-store	6,286		6,329		357			(43)		(0.7) %		5,929		1,660.8 %
Other properties	230		329		258			(99)		(30.1) %		(28)		(10.9) %
Dispositions	—		—		535			—		—		(535)		(100.0) %
Total	26,216		25,873		18,760			343		1.3 %		7,456		39.7 %
Net operating income
Same-store	29,167		27,676		26,152			1,491		5.4 %		3,015		11.5 %
Non-same-store	7,048		6,178		838			870		14.1 %		6,210		741.1 %
Other properties	685		587		406			98		16.7 %		279		68.7 %
Dispositions	—		—		500			—		—		(500)		(100.0) %
Total	$     36,900		$     34,441		$     27,896			$      2,459		7.1 %		$      9,004		32.3 %

^{* Not a meaningful percentage}

	Six Months Ended June 30,
	2022		2021		$ Change		% Change
Operating income (loss)	$                (76)		$           31,214		$       (31,290)		(100.2) %
Adjustments:
Property management expenses	4,974		3,852		1,122		29.1 %
Casualty (gain) loss	980		74		906		*
Depreciation and amortization	55,769		39,300		16,469		41.9 %
General and administrative expenses	9,721		7,703		2,018		26.2 %
(Gain) loss on sale of real estate and other investments	(27)		(26,840)		26,813		(99.9) %
Net operating income	$           71,341		$           55,303		$       16,038		29.0 %
Revenue
Same-store	$           95,758		$           86,956		$        8,802		10.1 %
Non-same-store	25,841		2,242		23,599		1,052.6 %
Other properties	1,831		1,332		499		37.5 %
Dispositions	—		2,774		(2,774)		(100.0) %
Total	123,430		93,304		30,126		32.3 %
Property operating expenses, including real estate taxes
Same-store	38,915		35,140		3,775		10.7 %
Non-same-store	12,614		701		11,913		1,699.4 %
Other properties	560		521		39		7.5 %
Dispositions	—		1,639		(1,639)		(100.0) %
Total	52,089		38,001		14,088		37.1 %
Net operating income
Same-store	56,843		51,816		5,027		9.7 %
Non-same-store	13,227		1,541		11,686		758.3 %
Other properties	1,271		811		460		56.7 %
Dispositions	—		1,135		(1,135)		(100.0) %
Total	$           71,341		$           55,303		$       16,038		29.0 %

^{* Not a meaningful percentage}

 

Reconciliation of Same-Store Controllable Expenses to Total 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.

	(in thousands, except percentages)
	Three Months Ended June 30,									Six Months Ended June 30,
	2022		2021		$ Change		% Change			2022		2021		$ Change		% Change
Controllable expenses
On-site compensation(1)	$    5,234		$    4,676		$       558		11.9 %			$    9,978		$    9,199		$        779		8.5 %
Repairs and maintenance	3,055		2,534		521		20.6 %			5,627		4,730		897		19.0 %
Utilities	3,089		2,519		570		22.6 %			7,035		5,678		1,357		23.9 %
Administrative and marketing	1,059		923		136		14.7 %			2,105		1,857		248		13.4 %
Total	$  12,437		$  10,652		$    1,785		16.8 %			$  24,745		$  21,464		$      3,281		15.3 %
Non-controllable expenses
Real estate taxes	$    5,521		$    5,391		$       130		2.4 %			$  10,763		$  10,741		$          22		0.2 %
Insurance	1,742		1,567		175		11.2 %			3,407		2,935		472		16.1 %
Total	$    7,263		$    6,958		$       305		4.4 %			$  14,170		$  13,676		$        494		3.6 %
Property operating expenses, including real estate taxes - non-same-store	$    6,286		$      357		$    5,929		1,660.8 %			$  12,614		$      701		$    11,913		1,699.4 %
Property operating expenses, including real estate taxes - other properties	230		258		(28)		(10.9) %			560		521		39		7.5 %
Property operating expenses, including real estate taxes - dispositions	—		535		(535)		(100.0) %			—		1,639		(1,639)		(100.0) %
Total property operating expenses, including real estate taxes	$  26,216		$  18,760		$    7,456		39.7 %			$  52,089		$  38,001		$    14,088		37.1 %

 

(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 measure used as a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding its 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 gains and losses from the sale of real estate assets and impairment write-downs 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 this definition. The company believes that all such interpretations not specifically identified in the Nareit definition are consistent with this 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 its 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 flow needs, including the ability to service indebtedness or make distributions to shareholders.

Core Funds from Operations ("Core FFO") is FFO as 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 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 the company's cash needs, including its 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 should not be considered a substitute for operating results determined in accordance with GAAP.

		(in thousands, except per share amounts)
		Three Months Ended											Six Months Ended
		6/30/2022		3/31/2022		12/31/2021		9/30/2021		6/30/2021			6/30/2022		6/30/2021
Funds From Operations
Net income (loss) available to common shareholders		$     (4,598)		$     (10,196)		$     (8,815)		$     (11,099)		$     19,931			$  (14,794)		$   13,457
Adjustments:
Noncontrolling interests – Operating Partnership		(950)		(2,157)		(1,793)		(1,930)		1,386			(3,107)		917
Depreciation and amortization		24,768		31,001		30,418		22,447		19,308			55,769		39,300
Less depreciation – non real estate		(101)		(101)		(101)		(80)		(87)			(202)		(185)
Less depreciation – partially owned entities		(7)		(21)		(21)		(24)		(24)			(28)		(48)
(Gain) loss on sale of real estate		(27)		—		(678)		—		(26,840)			(27)		(26,840)
FFO applicable to common shares and Units		$     19,085		$     18,526		$     19,010		$       9,314		$     13,674			$   37,611		$   26,601
Adjustments to Core FFO:
Non-cash casualty (gain) loss		163		25		—		—		—			188		—
Loss on extinguishment of debt		5		—		2		530		3			5		—
Technology implementation costs(1)		447		103		535		625		447			550		860
Commercial lease termination proceeds		—		—		—		(450)		—			—		—
Acquisition related costs		—		—		90		140		—			—		—
Interest rate swap termination, amortization, and mark-to-market		205		(613)		(411)		5,353		—			(408)		—
Amortization of assumed debt		(116)		(115)		(26)		(27)		—			(231)		—
Pursuit costs		1,127		—		—		—		—			1,127		—
Other miscellaneous items		100		(4)		(61)		(3)		—			96		3
Core FFO applicable to common shares and Units		$     21,016		$     17,922		$     19,139		$     15,482		$     14,124			$   38,938		$   27,464
Funds from operations applicable to common shares and Units		$     19,085		$     18,526		$     19,010		$       9,314		$     13,674			$   37,611		$   26,601
Dividends to preferred unitholders		160		160		160		160		160			320		320
Funds from operations applicable to common shares and Units - diluted		$     19,245		$     18,686		$     19,170		$       9,474		$     13,834			$   37,931		$   26,921
Core funds from operations applicable to common shares and Units		$     21,016		$     17,922		$     19,139		$     15,482		$     14,124			$   38,938		$   27,464
Dividends to preferred unitholders		160		160		160		160		160			320		320
Core funds from operations applicable to common shares and Units - diluted		$     21,176		$     18,082		$     19,299		$     15,642		$     14,284			$   39,258		$   27,784
Per Share Data
Earnings (loss) per share and Unit - diluted		$       (0.30)		$       (0.68)		$       (0.61)		$       (0.81)		$        1.48			$      (0.97)		$       1.02
FFO per share and Unit - diluted		$        1.02		$        1.01		$        1.07		$        0.60		$        0.95			$       2.03		$       1.87
Core FFO per share and Unit - diluted		$        1.12		$        0.98		$        1.08		$        0.98		$        0.98			$       2.10		$       1.93
Weighted average shares - basic		15,369		15,097		14,541		14,065		13,353			15,233		13,216
Effect of redeemable operating partnership units		995		965		838		865		916			978		939
Effect of Series D preferred units		228		228		228		228		228			228		228
Effect of Series E preferred units		2,186		2,186		2,186		705		—			2,186		—
Effect of dilutive restricted stock units and stock options		48		66		75		59		17			57		18
Weighted average shares and Units - diluted		18,826		18,542		17,868		15,922		14,514			18,682		14,401

 

(1)	Costs are related to a two-year implementation.

 

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

Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of real estate investments, gain/loss on extinguishment of debt, gain/loss from involuntary conversion; and other non-routine items or items not considered core to business operations. 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, the cost of debt, or non-operating gains and losses. Adjusted EBITDA is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP. 

		(in thousands)
		Three Months Ended											Six Months Ended
		6/30/2022		3/31/2022		12/31/2021		9/30/2021		6/30/2021			6/30/2022		6/30/2021
Adjusted EBITDA
Net income (loss) available to common shareholders		$    (2,991)		$      (8,589)		$       (7,208)		$     (9,492)		$    21,538			$  (11,580)		$    16,671
Adjustments:
Dividends to preferred unitholders		160		160		160		160		160			320		320
Noncontrolling interests – Operating Partnership		(950)		(2,157)		(1,793)		(1,930)		1,386			(3,107)		917
Income (loss) before noncontrolling interests – Operating Partnership		$    (3,781)		$      (10,586)		$       (8,841)		$     (11,262)		$    23,084			$  (14,367)		$    17,908
Adjustments:
Interest expense		7,547		7,700		7,440		7,287		7,075			15,247		14,291
Loss on extinguishment of debt		5		—		2		530		3			5		3
Depreciation/amortization related to real estate investments		24,759		30,980		30,397		22,423		19,284			55,739		39,253
Non-cash casualty (gain) loss		163		25		—		—		—			188		—
Interest income		(74)		(464)		(644)		(769)		(583)			(538)		(990)
(Gain) loss on sale of real estate and other investments		(27)		—		(678)		—		(26,840)			(27)		(26,840)
Technology implementation costs		447		103		534		625		447			550		860
Commercial lease termination proceeds		—		—		—		(450)		—			—		—
Acquisition related costs		—		—		90		140		—			—		—
Interest rate swap termination and mark-to-market		18		(582)		(359)		5,361		—			(564)		—
Pursuit costs		1,127		—		—		—		—			1,127		—
Other miscellaneous items		100		(4)		(61)		(3)		—			96		—
Adjusted EBITDA		$    30,284		$      27,172		$       27,880		$     23,882		$    22,470			$    57,456		$    44,485

 

 

CENTERSPACE DEBT ANALYSIS (in thousands)
Debt Maturity Schedule Annual Expirations
		Future Maturities of Debt
		Secured Fixed Debt		Unsecured Fixed Debt		Unsecured Variable Debt		Total Debt		% of Total Debt		Weighted Average Interest Rate(1)
2022 (remainder)		$                    —		$                    —		$              —		$                    —		—		—
2023		42,015		—		—		42,015		4.8 %		4.02 %
2024		—		—		—		—		—		—
2025		31,699		—		73,000		104,699		12.0 %		3.08 %
2026		52,762		—		—		52,762		6.0 %		3.74 %
Thereafter		374,734		300,000		—		674,734		77.2 %		3.21 %
Total debt		$            501,210		$            300,000		$        73,000		$            874,210		100.0 %		3.27 %

 

(1)	Weighted average interest rate of debt that matures during the year.

 

		6/30/2022		3/31/2022		12/31/2021		9/30/2021		6/30/2021
Debt Balances Outstanding
Secured fixed rate - other mortgages		$  302,360		$  326,113		$  284,934		$  293,547		$  288,363
Secured fixed rate - Fannie Mae credit facility		198,850		198,850		198,850		198,850		—
Unsecured fixed rate line of credit(1)		—		—		75,000		57,000		50,000
Unsecured variable rate line of credit		73,000		46,000		1,000		—		37,000
Unsecured term loans		—		—		—		—		145,000
Unsecured senior notes		300,000		300,000		300,000		300,000		175,000
Debt total		$  874,210		$  870,963		$  859,784		$  849,397		$  695,363
Other mortgages rate		3.85 %		3.85 %		3.81 %		3.83 %		3.90 %
Fannie Mae Credit Facility rate		2.78 %		2.78 %		2.78 %		2.78 %		—
Lines of credit rate (rate with swap)(1)		3.04 %		2.56 %		4.22 %		2.79 %		2.24 %
Term loan rate (rate with swap)		—		—		—		—		4.19 %
Senior notes rate		3.12 %		3.12 %		3.12 %		3.12 %		3.47 %
Total debt		3.27 %		3.29 %		3.26 %		3.23 %		3.70 %

 

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

 

 

CENTERSPACE  CAPITAL ANALYSIS  (in thousands, except per share and unit amounts)
		Three Months Ended
		6/30/2022		3/31/2022		12/31/2021		9/30/2021		6/30/2021
Equity Capitalization
Common shares outstanding		15,373		15,365		15,016		14,281		14,045
Operating partnership units outstanding		995		997		832		845		881
Series E preferred units (as converted)		2,186		2,186		2,186		2,186		—
Total common shares and units outstanding		18,554		18,548		18,034		17,312		14,926
Market price per common share (closing price at end of period)		$       81.55		$       98.12		$     110.90		$       94.50		$      78.90
Equity capitalization-common shares and units		$ 1,513,079		$ 1,819,930		$ 1,999,971		$ 1,635,984		$  1,177,661
Recorded book value of preferred shares		$     93,350		$     93,530		$     93,530		$     93,530		$    93,530
Total equity capitalization		$ 1,606,429		$ 1,913,460		$ 2,093,501		$ 1,729,514		$  1,271,191
Series D Preferred Units		$     18,627		$     22,412		$     25,331		$     21,585		$    18,022
Debt Capitalization
Total debt		$   874,210		$   870,963		$   859,784		$   849,397		$  695,363
Total capitalization		$ 2,499,266		$ 2,806,835		$ 2,978,616		$ 2,600,496		$  1,984,576
Total debt to total capitalization(1)		35.0 %		31.0 %		28.9 %		33.1 %		35 %

 

(1)

Total 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, operating partnership units, and the as converted Series E preferred units, and book value of Series C preferred shares and Series D preferred units outstanding at the end of the period.

 

Three Months Ended

Six Months Ended

6/30/2022

3/31/2022

12/31/2021

9/30/2021

6/30/2021

6/30/2022

6/30/2021

Debt service coverage ratio(1)

3.39 x

2.93 x

3.17 x

2.75 x

2.62 x

3.16 x

2.58 x

Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization

2.83 x

2.50 x

2.68 x

2.32 x

2.21 x

2.64 x

2.17 x

Net debt/Adjusted EBITDA(2)

7.11 x

7.89 x

7.43 x

8.67 x

7.68 x

7.49 x

7.76 x

Net debt and preferred equity/Adjusted EBITDA(2)

8.03 x

8.96 x

8.50 x

9.88 x

8.92 x

8.47 x

9.01 x

Distribution Data

Common shares and Units outstanding at record date

16,367

16,363

15,848

15,126

14,926

16,367

14,926

Total common distribution declared

$ 11,948

$ 11,944

$ 11,411

$ 10,890

$  10,448

$ 23,892

$ 20,367

Common distribution per share and Unit

$     0.73

$     0.73

$     0.72

$     0.72

$   0.70

$     1.46

$     1.40

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

65.2 %

74.5 %

66.7 %

73.5 %

71.4 %

69.5 %

72.5 %

 

(1)	Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization. This term is a non-GAAP financial measure 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.
(2)	Net debt is the total debt balance less cash and cash equivalents and net tax deferred exchange proceeds (included within restricted cash). Adjusted EBITDA is annualized for periods less than one year. Net debt and adjusted EBITDA are non-GAAP financial 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 ratio of 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 financial measure and should not be considered a substitute for operating results determined in accordance with GAAP.

 

 

 

CENTERSPACE SAME-STORE SECOND QUARTER COMPARISONS (in thousands, except property data amounts and percentages)
		Apartment Homes Included		Revenues						Expenses						NOI
Regions				Q2 2022		Q2 2021		% Change		Q2 2022		Q2 2021		% Change		Q2 2022		Q2 2021		% Change
Denver, CO		1,457		$        8,667		$             7,870		10.1 %		$         2,816		$         2,504		12.5 %		$         5,851		$          5,366		9.0 %
Minneapolis, MN		2,537		12,911		11,395		13.3 %		5,480		5,064		8.2 %		7,431		6,331		17.4 %
North Dakota		2,421		8,482		8,078		5.0 %		3,523		3,199		10.1 %		4,959		4,879		1.6 %
Omaha, NE		1,370		4,501		4,037		11.5 %		1,931		1,885		2.4 %		2,570		2,152		19.4 %
Rochester, MN		1,121		5,235		4,709		11.2 %		2,138		1,937		10.4 %		3,097		2,772		11.7 %
St. Cloud, MN		1,192		4,353		3,634		19.8 %		1,992		1,582		25.9 %		2,361		2,052		15.1 %
Other Mountain West		1,221		4,718		4,039		16.8 %		1,820		1,439		26.5 %		2,898		2,600		11.5 %
Same-Store Total		11,319		$      48,867		$           43,762		11.7 %		$       19,700		$       17,610		11.9 %		$       29,167		$        26,152		11.5 %

 

 

		% of NOI Contribution		Weighted Average Occupancy (1)						Average Monthly Rental Rate (2)						Average Monthly Revenue per Occupied Home (3)
Regions				Q2 2022		Q2 2021		Growth		Q2 2022		Q2 2021		% Change		Q2 2022		Q2 2021		% Change
Denver, CO		20.1 %		94.0 %		94.3 %		(0.3) %		$         1,856		$         1,693		9.6 %		$         2,109		$          1,909		10.5 %
Minneapolis, MN		25.5 %		94.2 %		94.2 %		—		1,601		1,519		5.4 %		1,800		1,589		13.3 %
North Dakota		17.0 %		95.6 %		95.9 %		(0.3) %		1,119		1,078		3.8 %		1,222		1,159		5.4 %
Omaha, NE		8.8 %		97.1 %		95.5 %		1.6 %		1,028		927		10.9 %		1,128		1,029		9.6 %
Rochester, MN		10.6 %		95.2 %		94.5 %		0.7 %		1,547		1,404		10.2 %		1,635		1,482		10.3 %
St. Cloud, MN		8.1 %		91.5 %		92.7 %		(1.2) %		1,150		1,005		14.4 %		1,330		1,097		21.2 %
Other Mountain West		9.9 %		96.5 %		98.1 %		(1.6) %		1,208		1,015		19.0 %		1,334		1,124		18.7 %
Same-Store Total		100.0 %		94.8 %		94.9 %		(0.1) %		$         1,366		$         1,256		8.8 %		$         1,518		$          1,358		11.8 %

 

(1)	Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rent. Scheduled rental revenue 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.
(2)	Average monthly rental rate is scheduled rent divided by the total number of apartment homes.
(3)	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 (in thousands, except property data amounts and percentages)
		Apartment Homes Included		Revenues						Expenses						NOI
Regions				Q2 2022		Q1 2022		% Change		Q2 2022		Q1 2022		% Change		Q2 2022		Q1 2022		% Change
Denver, CO		1,457		$         8,667		$             8,458		2.5 %		$         2,816		$         2,468		14.1 %		$         5,851		$          5,990		0.4 %
Minneapolis, MN		2,537		12,911		12,391		4.2 %		5,480		5,398		1.5 %		7,431		6,993		6.3 %
North Dakota		2,421		8,482		8,157		4.0 %		3,523		3,653		(3.6) %		4,959		4,504		10.1 %
Omaha, NE		1,370		4,501		4,363		3.2 %		1,931		1,898		1.7 %		2,570		2,465		4.3 %
Rochester, MN		1,121		5,235		5,003		4.6 %		2,138		2,096		2.0 %		3,097		2,907		6.5 %
St. Cloud, MN		1,192		4,353		4,165		4.5 %		1,992		2,084		(4.4) %		2,361		2,081		13.5 %
Other Mountain West		1,221		4,718		4,354		8.4 %		1,820		1,618		12.5 %		2,898		2,736		5.9 %
Same-Store Total		11,319		$       48,867		$           46,891		4.2 %		$       19,700		$       19,215		2.5 %		$       29,167		$        27,676		5.4 %

 

		% of NOI Contribution		Weighted Average Occupancy						Average Monthly Rental Rate						Average Monthly Revenue per Occupied Home
Regions				Q2 2022		Q1 2022		Growth		Q2 2022		Q1 2022		% Change		Q2 2022		Q1 2022		% Change
Denver, CO		20.1 %		94.0 %		94.3 %		(0.3) %		$         1,856		$         1,819		2.0 %		$         2,109		$          2,052		2.8 %
Minneapolis, MN		25.5 %		94.2 %		93.3 %		0.9 %		1,601		1,583		1.1 %		1,800		1,744		3.2 %
North Dakota		17.0 %		95.6 %		94.8 %		0.8 %		1,119		1,103		1.5 %		1,222		1,185		3.1 %
Omaha, NE		8.8 %		97.1 %		94.9 %		2.2 %		1,028		1,000		2.8 %		1,128		1,118		0.9 %
Rochester, MN		10.6 %		95.2 %		92.9 %		2.3 %		1,547		1,518		1.9 %		1,635		1,601		2.1 %
St. Cloud, MN		8.1 %		91.5 %		93.0 %		(1.5) %		1,150		1,120		2.7 %		1,330		1,252		6.2 %
Other Mountain West		9.9 %		96.5 %		94.0 %		2.5 %		1,208		1,155		4.6 %		1,334		1,264		5.5 %
Same-Store Total		100.0 %		94.8 %		93.9 %		0.9 %		$         1,366		$         1,339		2.0 %		$         1,518		$          1,471		3.2 %

 

 

CENTERSPACE SAME-STORE YEAR-TO-DATE COMPARISONS (in thousands, except property data amounts and percentages)
		Apartment Homes Included		Revenues						Expenses						NOI
Regions				2022		2021		% Change		2022		2021		% Change		2022		2021		% Change
Denver, CO		1,457		$       17,124		$           15,536		10.2 %		$         5,283		$         5,074		4.1 %		$       11,841		$        10,462		13.2 %
Minneapolis, MN		2,537		25,302		22,796		11.0 %		10,879		9,944		9.4 %		14,423		12,852		12.2 %
North Dakota		2,421		16,639		16,027		3.8 %		7,176		6,470		10.9 %		9,463		9,557		(1.0) %
Omaha, NE		1,370		8,865		8,063		9.9 %		3,828		3,647		5.0 %		5,037		4,416		14.1 %
Rochester, MN		1,121		10,238		9,353		9.5 %		4,235		3,923		8.0 %		6,003		5,430		10.6 %
St. Cloud, MN		1,192		8,518		7,289		16.9 %		4,076		3,217		26.7 %		4,442		4,072		9.1 %
Other Mountain West		1,221		9,072		7,892		15.0 %		3,438		2,865		20.0 %		5,634		5,027		12.1 %
Same-Store Total		11,319		$       95,758		$           86,956		10.1 %		$       38,915		$       35,140		10.7 %		$       56,843		$        51,816		9.7 %

 

		% of NOI Contribution		Weighted Average Occupancy						Average Monthly Rental Rate						Average Monthly Revenue per Occupied Home
Regions				2022		2021		Growth		2022		2021		% Change		2022		2021		% Change
Denver, CO		20.8 %		94.2 %		94.0 %		0.2 %		$         1,838		$         1,688		8.9 %		$         2,080		$          1,891		10.0 %
Minneapolis, MN		25.4 %		93.8 %		93.6 %		0.2 %		1,592		1,511		5.4 %		1,772		1,600		10.8 %
North Dakota		16.6 %		95.2 %		96.0 %		(0.8) %		1,111		1,070		3.8 %		1,203		1,149		4.7 %
Omaha, NE		8.9 %		96.0 %		95.3 %		0.7 %		1,014		919		10.3 %		1,123		1,029		9.1 %
Rochester, MN		10.6 %		94.1 %		95.0 %		(0.9) %		1,532		1,390		10.2 %		1,618		1,464		10.5 %
St. Cloud, MN		7.8 %		92.3 %		93.6 %		(1.3) %		1,135		988		14.9 %		1,291		1,089		18.5 %
Other Mountain West		9.9 %		95.3 %		97.9 %		(2.6) %		1,181		1,001		18.0 %		1,299		1,100		18.1 %
Same-Store Total		100.0 %		94.3 %		94.8 %		(0.5) %		$         1,353		$         1,246		8.6 %		$         1,494		$          1,351		10.6 %

 

 

CENTERSPACE PORTFOLIO SUMMARY(1)
		Three Months Ended
		6/30/2022		3/31/2022		12/31/2021		9/30/2021		6/30/2021
Number of Apartment Homes at Period End
Same-Store		11,319		11,319		10,672		10,676		10,676
Non-Same-Store		3,519		3,519		3,769		3,599		903
All Communities		14,838		14,838		14,441		14,275		11,579
Average Monthly Rental Rate(2)
Same-Store		$      1,366		$      1,339		$      1,314		$      1,279		$      1,233
Non-Same-Store		1,245		1,218		1,225		1,506		1,617
All Communities		$      1,337		$      1,292		$      1,291		$      1,293		$      1,263
Average Monthly Revenue per Occupied Apartment Home(3)
Same-Store		$      1,518		$      1,471		$      1,463		$      1,392		$      1,333
Non-Same-Store		1,329		1,271		1,306		1,606		1,739
All Communities		$      1,473		$      1,424		$      1,423		$      1,397		$      1,365
Weighted Average Occupancy(4)
Same-Store		94.8 %		93.9 %		93.4 %		94.3 %		94.9 %
Non-Same-Store		95.0 %		94.5 %		94.7 %		95.1 %		94.2 %
All Communities		94.8 %		94.0 %		93.7 %		94.4 %		94.8 %
Operating Expenses as a % of Scheduled Rent
Same-Store		40.3 %		41.0 %		39.5 %		41.8 %		41.9 %
Non-Same-Store		47.1 %		50.6 %		44.1 %		39.9 %		32.9 %
All Communities		41.8 %		43.0 %		40.6 %		41.6 %		41.0 %
Capital Expenditures
Total Capital Expenditures per Apartment Home – Same-Store		$        196		$        145		$        369		$        255		$        159

 

(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 rental revenue 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 revenue per occupied 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 the calculation of weighted average occupancy may not be comparable to that disclosed by other REITs.

 

 

CENTERSPACE CAPITAL EXPENDITURES ($ in thousands, except per home amounts)
		Three Months Ended					Six Months Ended
Same Store Capital Expenditures		6/30/2022		6/30/2021			6/30/2022		6/30/2021
Total Same-Store Apartment Homes		11,319		11,319			11,319		11,319
Building - Exterior		$               72		$              416			$              598		$              900
Building - Interior		35		50			36		142
Mechanical, Electrical, & Plumbing		591		270			861		417
Furniture & Equipment		113		41			192		107
Landscaping & Grounds		133		87
Turnover		1,279		851			1,946		1,386
Capital Expenditures - Same-Store		$           2,223		$           1,715			$           3,858		$           3,106
Capital Expenditures per Apartment Home - Same-Store		$              196		$              152			$              341		$              274
Value Add		$           6,229		$           4,549			$         11,800		$           7,180
Total Capital Spend - Same-Store		$           8,452		$           6,264			$         15,658		$         10,286
Total Capital Spend per Apartment Home - Same-Store		$              747		$              553			$           1,383		$              909
		Three Months Ended					Six Months Ended
Capital Expenditures - All Properties		6/30/2022		6/30/2021			6/30/2022		6/30/2021
All Properties - Weighted Average Apartment Homes		14,839		11,575			14,839		11,575
Capital Expenditures		$           2,499		$           1,793			$           4,340		$           3,348
Capital Expenditures per Apartment Home		$              168		$              155			$              292		$              289
Value Add		6,288		4,555			11,858		7,186
Acquisition Capital		1,397		402			2,986		960
Total Capital Spend		10,184		6,750			19,184		11,494
Total Capital Spend per Apartment Home		$              686		$              583			$           1,293		$              993
		Three Months Ended					Six Months Ended
Value Add Capital Expenditures		6/30/2022		6/30/2021			6/30/2022		6/30/2021
Interior - Units
Same-Store		$           4,317		$           3,115			$           6,955		$           4,806
Non-Same-Store		—		—			—		—
Total Interior Units		$           4,317		$           3,115			$           6,955		$           4,806
Common Areas and Exteriors
Same-Store		$           1,912		$           1,434			$           4,845		$           2,374
Non-Same-Store		59		6			58		6
Total Common Areas and Exteriors		$           1,971		$           1,440			$           4,903		$           2,380
Total Value-Add Capital Expenditures
Same-Store		$           6,229		$           4,549			$         11,800		$           7,180
Non-Same-Store		59		6			58		6
Total Portfolio Value-Add		$           6,288		$           4,555			$         11,858		$           7,186

 

 

CENTERSPACE 2022 Financial Outlook (in thousands, except per share and per home amounts)
Centerspace revised its outlook for 2022 in the table below.
	Six Months Ended		2022 Previous Outlook Range				2022 Revised Outlook Range
	June 30, 2022		Low		High		Low		High
	YTD Actual		Amount		Amount		Amount		Amount
Same-store growth
Revenue	$                     95,758		7.0 %		9.0 %		9.0 %		10.5 %
Controllable expenses	24,745		7.0 %		9.0 %		10.0 %		11.5 %
Non-controllable expenses	14,170		3.0 %		4.5 %		3.0 %		3.5 %
Total Expenses	$                     38,915		5.5 %		7.5 %		7.5 %		8.5 %
Same-store NOI	$                     56,843		8.0 %		10.0 %		10.0 %		12.0 %
Components of NOI
Same-store NOI	$                     56,843		$      115,850		$      118,150		$      118,200		$      119,800
Non-same-store NOI (1)	13,227		29,200		29,900		29,200		29,700
Other Commercial NOI	1,271		2,100		2,300		2,200		2,300
Total NOI	$                     71,341		$      147,150		$      150,350		$      149,600		$      151,800
Accretion (dilution) from investments and capital market activity, excluding impact from change in share count	$                             —		—		—		—		—
Interest expense	$                    (15,276)		(32,200)		(31,700)		(32,200)		(31,800)
Preferred dividends	$                      (3,214)		(6,400)		(6,400)		(6,400)		(6,400)
Gain loss on sale of real estate and other investments	$                           (27)		—		—		—		—
Recurring income and expenses
Interest and other income	$                       1,012		$         1,580		$         1,750		$         1,380		$         1,550
General and administrative and property management	(14,695)		(27,625)		(26,975)		(28,900)		(28,600)
Casualty losses	(980)		(1,900)		(1,600)		(1,800)		(1,700)
Non-real estate depreciation and amortization	(202)		(375)		(325)		(375)		(325)
Non-controlling interest	(28)		(110)		(100)		(110)		(100)
Total recurring income and expenses	$                    (14,893)		$      (28,430)		$      (27,250)		$      (29,805)		$      (29,175)
FFO	$                     37,931		$       80,120		$       85,000		$       81,195		$       84,425
Non-core income and expenses
Non-cash casualty (gain)  loss	$                          188		$            500		$            350		$            500		$            400
Technology implementation costs	550		950		850		1,000		900
Interest rate swap termination, amortization, and mark-to-market	(408)		200		200		(100)		(100)
Pursuit costs	1,127		—		—		1,100		1,100
Other miscellaneous items	(130)		(300)		(400)		(100)		—
Total non-core income and expenses	$                       1,327		$         1,350		$         1,000		$         2,400		$         2,300
Core FFO	$                     39,258		$        81,470		$        86,000		$        83,595		$        86,725
EPS - Diluted	$                        (0.97)		$          (0.37)		$          (0.11)		$          (0.31)		$          (0.14)
FFO per diluted share	$                         2.03		$           4.26		$           4.52		$           4.32		$           4.49
Core FFO per diluted share	$                         2.10		$           4.33		$           4.57		$           4.45		$           4.61
Weighted average shares outstanding - diluted	18,682		18,800		18,800		18,800		18,800
Additional Assumptions
Same-store capital expenditures (per home)	$                          341		$            925		975		$            950		1,000
Value-add expenditures	$                     11,858		$        21,000		$        24,000		$        26,000		$        29,000
Investments	$                   116,874		$      116,874		$      116,874		$      116,874		$      116,874

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.

			Previous Outlook				Revised Outlook
	Six Months Ended		12 Months Ended				12 Months Ended
	June 30, 2022		December 31, 2022				December 31, 2022
	Actual		Low		High		Low		High
Net income (loss) available to common shareholders	$                      (14,794)		$              282		$           4,922		$           2,002		$           5,172
Noncontrolling interests - Operating Partnership and Series E preferred units	(3,107)		(7,885)		(7,885)		(7,885)		(7,885)
Depreciation and amortization	55,769		86,923		86,923		86,923		86,923
Less depreciation - non real estate	(202)		(430)		(390)		(375)		(325)
Less depreciation - partially owned entities	(28)		(70)		(90)		(110)		(100)
Dividends to preferred unitholders	320		640		640		640		640
FFO applicable to common shares and Units	$                     37,931		$         79,460		$         84,120		$         81,195		$         84,425
Adjustments to Core FFO:
Casualty loss write off	188		600		500		500		400
Technology implementation costs	550		990		890		1,000		900
Interest rate swap termination and amortization	(408)		—		—		(100)		(100)
Pursuit costs	1,127		—		—		1,100		1,100
Other miscellaneous items	(130)		—		—		(100)		—
Core FFO applicable to common shares and Units	$                     39,258		$         81,050		$         85,510		$         83,595		$         86,725
Earnings per share - diluted	$                        (0.97)		$            (0.37)		$            (0.11)		$            (0.31)		$            (0.14)
FFO per share - diluted	$                         2.03		$             4.26		$             4.52		$             4.32		$             4.49
Core FFO per share - diluted	$                         2.10		$             4.33		$             4.57		$             4.45		$             4.61

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. 

			Previous Outlook				Revised Outlook
	Six Months Ended		12 Months Ended				12 Months Ended
	June 30, 2022		December 31, 2021				December 31, 2021
	Actual		Low		High		Low		High
Operating income (loss)	$                          (76)		$         30,977		$         35,077		$         31,977		$         34,577
Adjustments:
General and administrative and property management expenses	14,695		27,800		27,100		28,900		28,600
Casualty loss	980		2,000		1,700		1,800		1,700
Depreciation and amortization	55,769		86,923		86,923		86,923		86,923
(Gain) loss on sale of real estate and other investments	(27)		—		—		—		—
Net operating income	$                     71,341		$       147,700		$       150,800		$       149,600		$       151,800

 

 

 

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SOURCE Centerspace

FAQ

What were Centerspace's earnings for Q2 2022?

Centerspace reported a net loss of $0.30 per diluted share for Q2 2022.

How did Centerspace's Core FFO perform in Q2 2022?

Core FFO increased by 14.3% to $1.12 per diluted share in Q2 2022 compared to Q2 2021.

What is the revised financial outlook for Centerspace in 2022?

Centerspace revised its outlook, projecting a net loss per share between $0.31 and $0.14.

How much did same-store revenues increase for Centerspace in Q2 2022?

Same-store revenues increased by 11.7% in Q2 2022 compared to the same quarter in 2021.

What is the Core FFO guidance for Centerspace in 2022?

The Core FFO guidance for 2022 was increased to a range of $4.45 to $4.61 per diluted share.