What changed in this filing

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Item 1. Financial Statements

2022-05-02 compared with 2021-11-01 · 134 added, 338 removed, 453 unchanged (51% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Real estate investments

17 unchanged sentences

COMMITMENTS AND CONTINGENCIES (NOTE 10)

SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $ 100 par value, 166 units issued and outstanding at September 30, 2021 and December 31, 2020, aggregate liquidation preference of $ 16,560 )

SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $ 100 par value, 166 units issued and outstanding at March 31, 2022 and December 31, 2021, aggregate liquidation preference of $ 16,560 )

$ 22,412 $ 25,331

Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $ 25 per share liquidation preference, 3,881 shares issued and outstanding at September 30, 2021 and December 31, 2020, aggregate liquidation preference of $ 97,036 )

Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $ 25 per share liquidation preference, 3,881 shares issued and outstanding at March 31, 2022 and December 31, 2021, aggregate liquidation preference of $ 97,036 )

93,530 93,530

Common Shares of Beneficial Interest (Unlimited authorization, no par value, 14,281 shares issued and outstanding at September 30, 2021 and 13,027 shares issued and outstanding at December 31, 2020)

Common Shares of Beneficial Interest (Unlimited authorization, no par value, 15,366 shares issued and outstanding at March 31, 2022 and 15,016 shares issued and outstanding at December 31, 2021)

1,203,685 1,157,255

10 unchanged sentences

(in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

REVENUE $ 60,314 $ 46,648

6 unchanged sentences

TOTAL EXPENSES $ 64,225 $ 45,007

Operating income 1,144 2,002 5,518 6,530

Operating income (loss) ( 3,911 ) 1,641

Interest expense ( 7,715 ) ( 7,231 )

Interest and other income (loss) 1,063 431

Income (loss) before gain (loss) on sale of real estate and other investments ( 11,240 ) ( 4,492 ) ( 20,136 ) ( 16,071 )

Gain (loss) on sale of real estate and other investments — 25,676 26,840 25,486

NET INCOME (LOSS) $ ( 10,563 ) $ ( 5,159 )

4 unchanged sentences

Dividends to preferred shareholders ( 1,607 ) ( 1,607 )

Discount (premium) on redemption of preferred shares — ( 1 ) — 297

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ ( 10,196 ) $ ( 6,474 )

3 unchanged sentences

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

(in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Net income (loss) $ ( 10,563 ) $ ( 5,159 )

10 unchanged sentences

(in thousands, except per share data)

Nine Months Ended September 30, 2020 PREFERRED

Three Months Ended March 31, 2021 PREFERRED

SHARES NUMBER

15 unchanged sentences

Redemption of units for common shares 26 ( 220 ) 220 —

Shares repurchased ( 5,926 ) 297 ( 5,629 )

Acquisition of noncontrolling interests - consolidated real estate entities ( 7,584 ) ( 4,637 ) ( 12,221 )

Other — ( 182 ) ( 43 ) ( 225 )

Balance September 30, 2020 $ 93,530 12,976 $ 968,436 $ ( 412,577 ) $ ( 17,256 ) $ 54,378 $ 686,511

Nine Months Ended September 30, 2021

Balance March 31, 2021 $ 93,530 13,220 $ 980,453 $ ( 443,409 ) $ ( 12,798 ) $ 53,676 $ 671,452

Three Months Ended March 31, 2022

Balance December 31, 2021 $ 93,530 15,016 $ 1,157,255 $ ( 474,318 ) $ ( 4,435 ) $ 224,248 $ 996,280

9 unchanged sentences

Sale of common shares, net 321 31,684 31,684

Issuance of Series E preferred units 44,905 172,608 217,513

Issuance of Units 13,023 9,859 22,882

Redemption of units for common shares 10 ( 388 ) 388 —

Redemption of units for cash ( 2,903 ) ( 2,903 )

Change in value of Series D preferred units 2,919 2,919

Shares withheld for taxes ( 1,274 ) ( 1,274 )

Other — ( 253 ) — ( 253 )

Balance September 30, 2021 $ 93,530 14,281 $ 1,092,130 $ ( 454,691 ) $ ( 5,784 ) $ 226,495 $ 951,680

Balance March 31, 2022 $ 93,530 15,366 $ 1,203,685 $ ( 495,732 ) $ ( 2,550 ) $ 226,973 $ 1,025,906

See accompanying Notes to Condensed Consolidated Financial Statements.

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited)

Three Months Ended September 30, 2020 PREFERRED

SHARES NUMBER

SHARES COMMON

SHARES ACCUMULATED

DISTRIBUTIONS

NET INCOME ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NONCONTROLLING

INTERESTS TOTAL

Balance June 30, 2020 $ 93,579 12,827 $ 958,292 $ ( 421,515 ) $ ( 18,139 ) $ 53,290 $ 665,507

Net income (loss) attributable to controlling interests and noncontrolling interests 19,629 1,395 21,024

Change in fair value of derivatives 883 883

Distributions - common shares and units ($ 0.70 per share and unit)

( 9,083 ) ( 713 ) ( 9,796 )

Distributions – Series C preferred shares ($ 0.4140625 per Series C share)

( 1,607 ) ( 1,607 )

Share-based compensation, net of forfeitures — 554 554

Sale of common shares, net 145 10,063 10,063

Redemption of units for common shares 4 ( 462 ) 462 —

Shares repurchased ( 49 ) ( 1 ) ( 50 )

Other — ( 11 ) ( 56 ) ( 67 )

Balance September 30, 2020 $ 93,530 12,976 $ 968,436 $ ( 412,577 ) $ ( 17,256 ) $ 54,378 $ 686,511

Three Months Ended September 30, 2021

Balance June 30, 2021 $ 93,530 14,045 $ 1,033,940 $ ( 433,310 ) $ ( 12,064 ) $ 53,790 $ 735,886

Net income (loss) attributable to controlling interests and noncontrolling interests ( 9,492 ) ( 1,908 ) ( 11,400 )

Change in fair value of derivatives 6,280 6,280

Distributions - common shares and units ($ 0.72 per share and unit)

( 10,282 ) ( 609 ) ( 10,891 )

Distributions – Series C preferred shares ($ 0.4140625 per Series C share)

( 1,607 ) ( 1,607 )

Distributions - Series E preferred units ($ 0.322917 per unit)

( 585 ) ( 585 )

Share-based compensation, net of forfeitures 1 600 600

Sale of common shares, net 199 19,508 19,508

Issuance of Series E preferred units 44,905 172,608 217,513

Redemption of units for common shares 36 ( 3,233 ) 3,233 —

Change in value of Series D preferred units ( 3,563 ) ( 3,563 )

Other — ( 27 ) ( 34 ) ( 61 )

Balance September 30, 2021 $ 93,530 14,281 $ 1,092,130 $ ( 454,691 ) $ ( 5,784 ) $ 226,495 $ 951,680

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

2 unchanged sentences

Depreciation and amortization, including amortization of capitalized loan costs 31,096 20,245

(Gain) loss on sale of real estate and other investments ( 26,840 ) ( 25,486 )

Realized (gain) loss on marketable securities — 3,378

Share-based compensation expense 719 810

Loss on termination of interest rate swaps 5,343 —

(Gain) loss on interest rate swap termination, amortization, and mark-to-market ( 613 ) —

Other, net 416 836

4 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of marketable securities — 3,856

Proceeds from repayment of mortgage loans and notes receivable 139 10,020

Increase in mortgages and notes receivable — ( 5,445 )

Proceeds from sale of real estate and other investments 59,233 43,669

Payments for acquisitions of real estate investments ( 9,545 ) ( 77,585 )

3 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from mortgages payable 196,725 —

Principal payments on mortgages payable ( 2,154 ) ( 3,566 )

2 unchanged sentences

Net proceeds from notes payable — 49,940

Principal payments on notes payable ( 145,000 ) —

Payment for termination of interest rate swap ( 3,209 ) —

Payments for acquisition of noncontrolling interests – consolidated real estate entities — ( 12,221 )

Net proceeds from issuance of common shares 31,684 11,782

Repurchase of Series C preferred shares — ( 5,629 )

Redemption of partnership units ( 2,903 )

Distributions paid to common shareholders ( 10,812 ) ( 9,119 )

14 unchanged sentences

Fair value adjustment to debt 1,224 —

Real estate assets acquired through exchange of note receivable — 17,663

Note receivable exchanged through real estate acquisition 43,276 —

Real estate assets acquired through issuance of Series E preferred units 217,513 —

Real estate assets acquired through issuance of operating partnership units 22,882 —

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest $ 7,182 $ 6,787

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)

Balance sheet description September 30, 2021 December 31, 2020 September 30, 2020

Balance sheet description March 31, 2022 December 31, 2021 March 31, 2021

Cash and cash equivalents $ 13,313 $ 31,267 $ 10,816

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

for the nine months ended September 30, 2021 and 2020

for the three months ended March 31, 2022 and 2021

NOTE 1 • ORGANIZATION

Centerspace, collectively with its consolidated subsidiaries (“Centerspace,” “the Company,” “we,” “us,” or “our”), is a North Dakota real estate investment trust (“REIT”) focused on the ownership, management, acquisition, redevelopment, and development of apartment communities.

As of September 30, 2021, Centerspace owned interests in 79 apartment communities consisting of 14,275 apartment homes.

As of March 31, 2022, Centerspace owned interests in 83 apartment communities consisting of 14,838 apartment homes.

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

15 unchanged sentences

Actual results could differ from those estimates.

RECENT ACCOUNTING PRONOUNCEMENTS

The following table provides a brief description of recent accounting standards updates (“ASUs”).

Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters

ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting

This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

This ASU is optional and may be elected over time.

Centerspace adopted the guidance in June 2021 on a prospective basis.

This adoption did not have a material impact on the Condensed Consolidated Financial Statements.

ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity

This ASU simplifies accounting for convertible instruments and removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception.

This ASU also simplifies the diluted earnings per share calculation in certain areas and provides updated disclosure requirements.

This ASU is effective for annual reporting periods beginning after December 15, 2021.

Early adoption is permitted.

Centerspace early adopted this guidance in the first quarter of 2021 using the modified retrospective method.

The adoption did not have a material impact on the Condensed Consolidated Financial Statements.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

As of September 30, 2021 and December 31, 2020, restricted cash consisted primarily of real estate deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

As of March 31, 2022 and December 31, 2021, restricted cash consisted primarily of real estate deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.

As a lessor, Centerspace primarily leases multifamily apartment homes which qualify as operating leases with terms that are generally one year or less.

Rental revenues are recognized in accordance with ASC 842, Leases , using a method that represents a straight-line basis over the term of the lease.

Rental income represents approximately 98.1 % of total revenues and includes gross market rent less adjustments for concessions, vacancy loss, and bad debt.

Rental income represents approximately 98.1 % of total revenues and includes gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt.

Other property revenues represent the remaining 1.9 % of total revenues and are primarily driven by other fee income, which is typically recognized when earned, at a point in time.

2 unchanged sentences

The leases for commercial spaces generally include options to extend the lease for additional terms.

Beginning in April 2020, the Company abated rent, common area maintenance, and real estate taxes for commercial tenants that experienced government-mandated interruptions or closures of their businesses related to the COVID-19 pandemic.

The Company elected to account for these accommodations as though enforceable rights and obligations existed without evaluating if such a right or obligation existed under the lease agreement, as allowed by the FASB Q&A released on April 10, 2020.

The accommodations were recognized as variable lease payments.

During the three months ended September 30, 2021, the Company did not recognize a reduction in revenue due to the abatement of amounts due from commercial tenants, compared to a reduction of $ 136,000 in the same period of the prior year.

During the nine months ended September 30, 2021 and 2020, the Company recognized reductions of $ 47,000 and $ 538,000 , respectively, due to the abatement of amounts due from commercial tenants.

Many of the leases contain non-lease components for utility reimbursement from residents and common area maintenance from commercial tenants.

1 unchanged sentence

The combined components are included in lease income and are accounted for under ASC 842.

The aggregate amount of future scheduled lease income on commercial operating leases, excluding any variable lease income and non-lease components, as of September 30, 2021, was as follows:

The aggregate amount of future scheduled lease income on commercial operating leases, excluding any variable lease income and non-lease components, as of March 31, 2022, was as follows:

(in thousands)

8 unchanged sentences

A gain or loss is recognized when the criteria for derecognition of an asset are met, including when (1) a contract exists and (2) the buyer obtained control of the nonfinancial asset that was sold.

The following table presents the disaggregation of revenue streams for the three and nine months ended September 30, 2021 and 2020:

The following table presents the disaggregation of revenue streams for the three months ended March 31, 2022 and 2021:

(in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Revenue Stream Applicable Standard 2022 2021

11 unchanged sentences

Reducing planned property holding periods may increase the likelihood of recording impairment losses.

During the three and nine months ended September 30, 2021 and 2020, the Company recorded no impairment charges.

During the three months ended March 31, 2022 and 2021, the Company recorded no impairment charges.

MORTGAGE LOANS RECEIVABLE AND NOTES RECEIVABLE

In March 2020, in connection with the acquisition of Ironwood, an apartment community in New Hope, Minnesota, the Company acquired a tax increment financing note receivable (“TIF”) with a principal balance of $ 6.4 million at September 30, 2021 and December 31, 2020, which appears within other assets in the Condensed Consolidated Balance Sheets.

In March 2020, in connection with the acquisition of Ironwood, an apartment community in New Hope, Minnesota, the Company acquired a tax increment financing note receivable (“TIF”) with a principal balance of $ 6.1 million and $ 6.4 million at March 31, 2022 and December 31, 2021, respectively, which appears within other assets in the Condensed Consolidated Balance Sheets.

The note bears an interest rate of 4.5 % with payments due in February and August of each year.

1 unchanged sentence

During the three months ended September 30, 2021, construction on the project was completed and the lease-up phase began.

In conjunction with the loans, the Company received a guaranty for the substantial completion of the project improvements from an investment grade guarantor.

The construction and mezzanine loans bear and accrue interest at 4.5 % and 11.5 %, respectively.

As of September 30, 2021, the Company had fully funded the $ 29.9 million construction loan and $ 11.4 million of the mezzanine loan, both of which appear within mortgage loans receivable in the Condensed Consolidated Balance Sheets.

As of September 30, 2021, the construction loan had accrued $ 813,000 of interest which is added to the $ 29.9 million original principal balance.

As of December 31, 2020, the Company had funded $ 24.7 million of the construction loan.

The loans are secured by mortgages and mature on December 31, 2023, and the agreement provides Centerspace with an option to purchase the development.

The loans represent an investment in an unconsolidated variable interest entity (“VIE”).

The Company is not the primary beneficiary of the VIE as it does not have the power to direct the activities that most significantly impact the entity’s economic performance nor does it have significant influence over the entity.

The construction and mezzanine loans bore and accrued interest at 4.5 % and 11.5 %, respectively.

During the three months ended March 31, 2022, the Company exercised its option to purchase the apartment community in exchange for the loans and cash.

As of March 31, 2022, the loans had no remaining balance.

As of December 31, 2021, the Company had fully funded the $ 29.9 million construction loan and $ 13.4 million of the mezzanine loan, both of which appear within mortgage loans receivable in the Condensed Consolidated Balance Sheets.

VARIABLE INTEREST ENTITIES

2 unchanged sentences

Because the Operating Partnership is a VIE, all of the Company’s assets and liabilities are held through a VIE.

MARKETABLE SECURITIES

Marketable securities consisted of equity securities.

Equity securities are reported at fair value based on quoted market prices (Level 1 inputs).

Any unrealized gains or losses are included in interest and other income on the consolidated statements of operations.

As of September 30, 2021 and December 31, 2020 the Company had no marketable securities.

During the nine months ended September 30, 2020, the Company had a realized loss of $ 3.4 million arising from the disposal of such securities which appears in interest and other income (loss) in the Condensed Consolidated Statements of Operations.

NOTE 3 • EARNINGS PER SHARE

4 unchanged sentences

Upon the exercise of Exchange Rights, and in Centerspace’s sole discretion, it may issue common shares in exchange for Units on a one -for-one basis.

Performance-based RSUs of 31,821 for the three and nine months ended September 30, 2021 and 27,506 for the three and nine months ended September 30, 2020, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the nine months ended September 30, 2020, Series D preferred units of 228,000 and time-based RSUs of 13,000 were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three and nine months ended September 30, 2020, weighted average stock options of 140,554 and 68,292 , respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2021 and 2020:

For the three months ended March 31, 2022 and 2021, performance-based RSUs of 33,000 and 46,000 , respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three months ended March 31, 2022, operating partnership units of 965,000 , Series D preferred units of 228,000 , Series E preferred units of 2.2 million, time-based RSUs of 14,000 , and weighted average stock options of 52,000 , were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three months ended March 31, 2021, Series D preferred units of 228,000 , time-based RSUs of 19,000 , and weighted average stock options of 44,000 , were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

(in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Net income (loss) attributable to controlling interests $ ( 8,589 ) $ ( 4,867 )

Dividends to preferred shareholders ( 1,607 ) ( 1,607 )

Redemption of preferred shares — ( 1 ) — 297

Numerator for basic earnings (loss) per share – net income available to common shareholders ( 10,196 ) ( 6,474 )

4 unchanged sentences

Effect of redeemable operating partnership units — 957

Effect of Series D preferred units 228 228 228 —

Effect of Series E preferred units 705 — 239 —

Effect of dilutive restricted stock units and stock options 59 10 32 —

Denominator for diluted earnings per share 15,097 14,035

3 unchanged sentences

Operating Partnership Units.

The Operating Partnership had 845,000 and 977,000 outstanding Units at September 30, 2021 and December 31, 2020, respectively.

The Operating Partnership had 997,000 and 832,000 outstanding Units at March 31, 2022 and December 31, 2021, respectively.

During the three months ended March 31, 2022, we issued 209,000 Units as partial consideration for the acquisition of three apartment communities.

Exchange Rights .

Centerspace redeemed Units in exchange for common shares in connection with Unitholders exercising their exchange rights during the three and nine months ended September 30, 2021 and 2020 as detailed in the table below.

Centerspace redeemed Units in exchange for common shares in connection with Unitholders exercising their exchange rights during the three months ended March 31, 2022 and 2021 as detailed in the table below.

(in thousands)

Three Months Ended September 30, Number of Units Net Book Basis

Three Months Ended March 31, Number of Units Net Book Basis

2022 10 $ ( 388 )

2021 26 $ ( 220 )

Nine Months Ended September 30,

Pursuant to the exercise of exchange rights, the Company redeemed Units for cash during the three months ended March 31, 2022 and 2021 as detailed in the table below.

(in thousands)

Three Months Ended March 31, Number of Units Aggregate Cost Average Price Per Unit

2022 31 $ 2,903 $ 93.14

3 unchanged sentences

The Series E preferred unit holders receive a preferred distribution at the rate of 3.875 % per year.

Each Series E preferred unit is convertible, at the holder’s option, into 1.2048 Units, representing a conversion exchange rate of $ 83.00 per unit.

Each Series E preferred unit is convertible, at the holder’s option, into 1.2048 Units.

The Series E preferred units have an aggregate liquidation preference of $ 181.4 million.

1 unchanged sentence

Common Shares and Equity Awards .

Common shares outstanding on September 30, 2021 and December 31, 2020, totaled 14.3 million and 13.0 million, respectively.

There were 578 and 26,764 shares issued upon the vesting of equity awards under the 2015 Incentive Plan during the three and nine months ended September 30, 2021, respectively, with a total grant-date fair value of $ 32,000 and $ 946,000 , respectively.

During the three and nine months ended September 30, 2020, the Company issued 297 and 20,998 shares, respectively, upon the vesting of equity awards under the 2015 Incentive Plan, with a total grant-date fair value of $ 17,000 and $ 1.0 million, respectively.

These shares vest based on performance and service criteria.

Common shares outstanding on March 31, 2022 and December 31, 2021, totaled 15.4 million and 15.0 million, respectively.

There were 18,759 and 2,801 shares issued upon the vesting of equity awards under the 2015 Incentive Plan during the three months ended March 31, 2022 and 2021, respectively, with a total grant-date fair value of $ 1.5 million and $ 164,000 , respectively.

These shares vested based on performance and service criteria.

Equity Distribution Agreement.

Centerspace had an equity distribution agreement in connection with an at-the-market offering (“2019 ATM Program”) through which it could offer and sell common shares having an aggregate sales price of up to $ 150.0

Under the 2019 ATM Program, we sold shares having an aggregate sales price of $ 149.9 million.

During the three months ended September 30, 2021, the Company replaced the 2019 ATM Program with a new at-the-market offering (“2021 ATM Program”) through which it may offer and sell common shares having an aggregate sales price of up to $ 250.0 million, in amounts and at times determined by management.

Under the 2021 ATM Program, the Company may enter into separate forward sale agreements.

In September 2021, the Company replaced the 2019 ATM Program with a new at-the-market offering (“2021 ATM Program”) through which it may offer and sell common shares having an aggregate sales price of up to $ 250.0 million, in amounts and at times determined by management.

Under the 2021 ATM Program, the Company may enter into separate

forward sale agreements.

The proceeds from the sale of common shares under the 2021 ATM Program are intended to be used for general purposes, which may include the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness.

The table below provides details on the sale of common shares during the three and nine months ended September 30, 2021 and 2020 under both the 2019 and 2021 ATM Programs.

As of September 30, 2021, common shares having an aggregate offering price of up to $ 230.1 million remained available under the 2021 ATM Program.

The table below provides details on the sale of common shares during the three months ended March 31, 2022 and 2021 under both the 2019 and 2021 ATM Programs.

As of March 31, 2022, common shares having an aggregate offering price of up to $ 126.6 million remained available under the 2021 ATM Program.

(in thousands, except per share amounts)

Three Months Ended September 30, Number of Common Shares Net Consideration (1)

Three Months Ended March 31, Number of Common Shares Net Consideration (1)

Average Net Price Per Share

1 unchanged sentence

2021 164 $ 11,859 $ 72.19

Nine Months Ended September 30,

2021 1,095 $ 86,127 $ 78.63

2020 819 $ 57,528 $ 70.23

(1) Total consideration is net of $ 299,000 and $ 1.0 million in commissions and issuance costs during the three and nine months ended September 30, 2021, respectively.

Total consideration for the three and nine months ended September 30, 2020 is net of $ 156,000 and $ 890,000 in commissions, respectively, and issuance costs.

(1) Total consideration is net of $ 338 and $ 181 in commissions and issuance costs during the three months ended March 31, 2022 and 2021, respectively.

Series C Preferred Shares.

Series C preferred shares outstanding were 3.9 million shares at September 30, 2021 and December 31, 2020.

Series C preferred shares outstanding were 3.9 million shares at March 31, 2022 and December 31, 2021.

The Series C preferred shares are nonvoting and redeemable for cash at $ 25.00 per share at Centerspace’s option after October 2, 2022.

2 unchanged sentences

Series D Preferred Units (Mezzanine Equity).

On February 26, 2019, Centerspace issued 165,600 newly created Series D preferred units at an issuance price of $ 100 per preferred unit as partial consideration for the acquisition of SouthFork Townhomes.

Series D preferred units outstanding were 165,600 preferred units at March 31, 2022 and December 31, 2021.

The Series D preferred units have a par value price of $ 100 per preferred unit.

The Series D preferred unit holders receive a preferred distribution at the rate of 3.862 % per year.

The Series D preferred units have a put option which allows the holder to redeem any or all of the Series D preferred units for cash equal to the issuance price.

Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 Units, representing a conversion exchange rate of $ 72.50 per unit.

Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 Units.

The Series D preferred units have an aggregate liquidation preference of $ 16.6 million.

3 unchanged sentences

NOTE 5 • DEBT

As of September 30, 2021, 46 apartment communities were not encumbered by mortgages and are available to provide credit support for the unsecured borrowings.

As of March 31, 2022, 49 apartment communities were not encumbered by mortgages and are available to provide credit support for the unsecured borrowings.

The Company’s primary unsecured credit facility (“unsecured credit facility”) is a revolving, multi-bank line of credit, with the Bank of Montreal serving as administrative agent.

The line of credit has total commitments and borrowing capacity of $ 250.0 million, based on the value of unencumbered properties.

As of September 30, 2021, the additional borrowing availability was $ 193.0 million beyond the $ 57.0 million drawn.

This unsecured credit facility was amended on September 30, 2021 to extend the maturity date to September 2025 and provide for a $ 400.0 million accordion option.

Prior to the amendment, the unsecured credit facility also had unsecured term loans of $ 70.0 million and $ 75.0 million, included within notes payable on the Condensed Consolidated Balance Sheets.

As of September 30, 2021, these term loans had been paid in full.

As of March 31, 2022, the additional borrowing availability was $ 204.0 million beyond the $ 46.0 million drawn.

This unsecured credit facility was amended on September 30, 2021 to extend the maturity date to September 2025 and to provide for a $ 400.0 million accordion option.

The interest rates on the line of credit and term loans are based, at the Company’s option, on either the lender’s base rate plus a margin, ranging from 25 - 80 basis points, or the London Interbank Offered Rate (“LIBOR”), plus a margin that ranges from 125 - 180 basis points based on the consolidated leverage ratio, as defined under the Third Amended and Restated Credit Agreement.

The unsecured credit facility and unsecured senior notes are subject to customary financial covenants and limitations.

The Company believes that it is in compliance with all such financial covenants and limitations as of September 30, 2021.

In January 2021, Centerspace amended and expanded its private shelf agreement to increase the aggregate amount available for issuance of unsecured senior promissory notes (“unsecured senior notes”) to $ 225.0 million.

Under this agreement, the Company has issued $ 200.0 million unsecured senior notes with $ 25.0 million remaining available as of September 30, 2021.

In September 2021, the Company entered into a note purchase agreement for the issuance of $ 125.0 million senior unsecured promissory notes.

The Company believes that it is in compliance with all such financial covenants and limitations as of March 31, 2022.

In January 2021, Centerspace amended and expanded its private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc.

(collectively, “PGIM”) to increase the aggregate amount available for issuance of unsecured senior promissory notes (“unsecured senior notes”) to $ 225.0 million.

Under this agreement, the Company has issued $ 200.0 million unsecured senior notes with $ 25.0 million remaining available as of March 31, 2022.

In September 2021, the Company entered into a note purchase agreement for the issuance of $ 125.0 million senior unsecured promissory notes, of which $ 25.0 million was under the private shelf agreement with PGIM.

The following table shows the notes issued under both agreements.

8 unchanged sentences

Series 2021-D $ 15,000 September 17, 2034 2.78 %

In September 2021, Centerspace entered into a $ 198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”) for the financing of 16 apartment communities acquired during the quarter.

In September 2021, Centerspace entered into a $ 198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”) for the acquisition of 16 apartment communities.

The FMCF is currently secured by mortgages on those apartment communities.

The notes are interest-only, have varying maturity dates of 7 , 10 , and 12 years, and a blended, weighted average interest rate of 2.78 %.

As of September 30, 2021, the FMCF had a balance of $ 198.9 million.

As of March 31, 2022, the FMCF had a balance of $ 198.9 million.

The FMCF is included within mortgages payable on the Condensed Consolidated Balance Sheets.

As of September 30, 2021, Centerspace owned 17 apartment communities that served as collateral for mortgage loans, in addition to the apartment communities secured by the FMCF.

As of March 31, 2022, Centerspace owned 18 apartment communities that served as collateral for mortgage loans, in addition to the apartment communities secured by the FMCF.

All of these mortgage loans were non-recourse to the Company other than for standard carve-out obligations.

As of September 30, 2021, the Company believes that there are no material defaults or instances of noncompliance in regards to any of these mortgages payable.

As of March 31, 2022, the Company believes that there are no material defaults or instances of noncompliance in regards to any of these mortgages payable.

Centerspace also has a $ 6.0 million operating line of credit.

3 unchanged sentences

(in thousands)

September 30, 2021 December 31, 2020 Weighted Average Maturity in Years at September 30, 2021

March 31, 2022 December 31, 2021 Weighted Average Maturity in Years at March 31, 2022

Lines of credit $ 46,000 $ 76,000 3.75

Term loans (1)

Unsecured senior notes (1)

5 unchanged sentences

Weighted average interest rate on lines of credit (rate with swap) (2)

Weighted average interest rate on term loans (rate with swap) 3.52 % 4.15 %

2.56 % 2.74 %

Weighted average interest rate on unsecured senior notes 3.12 % 3.12 %

3 unchanged sentences

(1) Included within notes payable on the Condensed Consolidated Balance Sheets.

The aggregate amount of required future principal payments on unsecured senior notes and mortgages payable as of September 30, 2021, was as follows:

(2) The interest rate swap was terminated during the three months ended March 31, 2022 .

The aggregate amount of required future principal payments on unsecured senior notes and mortgages payable as of March 31, 2022, was as follows:

(in thousands)

4 unchanged sentences

Centerspace’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate fluctuations.

To accomplish this objective, the Company primarily uses interest rate swap contracts to fix the variable interest rate debt.

To accomplish this objective, the Company primarily uses interest rate swap contracts to fix variable interest rate debt.

Changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (“OCI”) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings.

Amounts reported in accumulated other comprehensive income for the interest rate swaps will be reclassified to interest expense as interest payments are incurred on the hedged variable rate debt.

During the next twelve months, the Company estimates an additional $ 1.9 million will be reclassified as an increase to interest expense.

At September 30, 2021, the Company had one interest rate swap contract designated as a cash flow hedge of interest rate risk with a total notional amount of $ 75.0 million to fix the interest rate on the line of credit.

As of December 31, 2020 , Centerspace had three interest rate swap contracts designated as cash flow hedges of interest rate risk with a notional amount of $ 195.0 million and one additional interest rate swap that becomes effective on January 31, 2023, with a notional amount of $ 70.0 million.

These interest rate swaps fixed the interest rate on the term loans and a portion of the line of credit.

During the three months ended September 30, 2021, Centerspace paid $ 3.8 million to terminate its $ 50.0 million interest rate swap and its $ 70.0 million interest rate swap in connection with the pay down of the Company’s term loans (see Note 5 - Debt for additional details).

The Company accelerated the reclassification of a $ 5.4 million loss from OCI into other income loss in the Condensed Consolidated Statement of Operations as a result of the hedged transactions becoming probable not to occur.

During the next twelve months, the Company estimates an additional $ 633,000 will be reclassified as an increase to interest expense.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements.

Changes in fair value of derivatives not designated in hedging relationships are recorded directly to earnings within other income (loss) in the Condensed Consolidated Statement of Operations.

As of September 30, 2021, the Company had one interest rate swap with a notional amount of $ 70.0 million that is not effective until January 31, 2023 and was not designated as a hedge in a qualifying hedging relationship.

For the three and nine months ended September 30, 2021, the Company recorded a gain of $ 60,000 related to the interest rate swap not designated in a hedging relationship.

As of December 31, 2020, the Company did not have any outstanding interest rate derivatives that were not designated as hedges in a qualifying hedging relationships.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 .

During the three months ended March 31, 2022, the Company recorded a gain of $ 582,000 related to the interest rate swap not designated in a hedging relationship, prior to its termination.

During the three months ended March 31, 2022, the Company paid $ 3.2 million to terminate its $ 75.0 million interest rate swap and its $ 70.0 million forward swap.

As of March 31, 2022 the Company had no remaining interest rate swaps.

As of December 31, 2021 , Centerspace had one interest rate swap contract designated as a cash flow hedge of interest rate risk with a notional amount of $ 75.0 million to fix the interest rate on the line of credit.

The Company also had one additional interest rate swap with an effective date of January 31, 2023 and a notional amount of $ 70.0 million which was not designated as a hedge in a qualifying hedging relationship.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 .

(in thousands)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Balance Sheet Location Fair Value Fair Value

1 unchanged sentence

Total derivative instruments not designated as hedging instruments - interest rate swaps Accounts Payable and Accrued Expenses $ — $ 1,097

The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of September 30, 2021 and 2020.

The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of March 31, 2022 and 2021.

(in thousands)

Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from Accumulated OCI into Income Gain (Loss) Reclassified from Accumulated OCI into Income

Three months ended September 30, 2021 2020 2021 2020

Total derivatives in cash flow hedging relationships - Interest rate contracts $ ( 70 ) $ ( 210 ) Interest expense $ ( 940 ) $ ( 1,093 )

Nine months ended September 30,

Three months ended March 31, 2022 2021 2022 2021

Total derivatives in cash flow hedging relationships - Interest rate contracts $ 1,581 $ 2,011 Interest expense $ ( 304 ) $ ( 1,095 )

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

The Company had agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

NOTE 7 • FAIR VALUE MEASUREMENTS

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In determining the fair value of other financial instruments, Centerspace applies FASB ASC 820, “ Fair Value Measurement and Disclosures.

” Fair value hierarchy under ASC 820 distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting entity’s own assumptions about market participant assumptions (Level 3).

about market participant assumptions (Level 3).

Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

2 unchanged sentences

Total Level 1 Level 2 Level 3

September 30, 2021

Mortgages and notes receivable $ 48,364 — — $ 48,364

Derivative instruments - interest rate swaps $ 7,469 — — $ 7,469

March 31, 2022

Notes receivable $ 6,068 — — $ 6,068

December 31, 2021

1 unchanged sentence

Derivative instruments - interest rate swaps $ 5,707 $ — — $ 5,707

The fair value of the interest rate swaps is determined using the market standard methodology of netting discounted expected variable cash payments and receipts.

The variable cash payments and receipts are based on an expectation of future interest rates (a forward curve) derived from observable market interest rate curves.

The Company also considers both its own nonperformance risk and the counterparty’s nonperformance risk in the fair value measurement (Level 3).

The fair value of the interest rate swaps was determined using the market standard methodology of netting discounted expected variable cash payments and receipts.

The variable cash payments and receipts were based on an expectation of future interest rates (a forward curve) derived from observable market interest rate curves.

The Company also considered both its own nonperformance risk and the counterparty’s nonperformance risk in the fair value measurement (Level 3).

Centerspace utilizes an income approach with Level 3 inputs based on expected future cash flows to value mortgages and notes receivable.

2 unchanged sentences

(in thousands)

Fair Value Measurement at September 30, Other Gains (Losses) Interest Income Total Changes in Fair Value Included in Current-Period Earnings

Nine months ended September 30, 2021

Mortgage loans and notes receivable $ 48,364 $ 11 $ 1,759 $ 1,770

Nine months ended September 30, 2020

Fair Value Measurement at March 31, Other Gains (Losses) Interest Income Total Changes in Fair Value Included in Current-Period Earnings

Three months ended March 31, 2022

Notes receivable $ 6,068 $ 4 $ 460 $ 464

Three months ended March 31, 2021

Mortgage loans and notes receivable $ 36,443 $ 4 $ 407 $ 411

As of September 30, 2021, Centerspace has an investment of $ 604,000 in a real estate technology venture consisting of privately held entities that develop technology related to the real estate industry.

As of March 31, 2022 and December 31, 2021, Centerspace has an investment of $ 890,000 and $ 903,000 , respectively, in a real estate technology venture consisting of privately held entities that develop technology related to the real estate industry.

This investment is measured at net asset value (“NAV”) as a practical expedient under ASC 820.

As of September 30, 2021, the Company had unfunded commitments of $ 1.4 million.

As of March 31, 2022, the Company had unfunded commitments of $ 1.2 million.

Fair Value Measurements on a Nonrecurring Basis

There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at September 30, 2021 and December 31, 2020.

There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2022 and December 31, 2021.

Financial Assets and Liabilities Not Measured at Fair Value

The fair value of mortgages payable are estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates (Level 3).

The estimated fair values of the Company’s financial instruments as of September 30, 2021 and December 31, 2020, respectively, are as follows:

The fair value of unsecured senior notes and mortgages payable are estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates, excluding any prepayment penalties (Level 3).

The estimated fair values of the Company’s financial instruments as of March 31, 2022 and December 31, 2021, respectively, are as follows:

(in thousands)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Carrying Amount Fair Value Carrying Amount Fair Value

5 unchanged sentences

$ 46,000 $ 46,000 $ 76,000 $ 76,000

Term loans (1)

$ — $ — $ 145,000 $ 145,000

Unsecured senior notes $ 300,000 $ 273,973 $ 300,000 $ 308,302

4 unchanged sentences

NOTE 8 • ACQUISITIONS AND DISPOSITIONS

Centerspace acquired 17 new apartment communities for an aggregate acquisition cost of $ 359.9 million during the three months ended September 30, 2021 compared to acquisitions of $ 144.8 million in the three months ended September 30, 2020.

The acquisitions during the nine months ended September 30, 2021 and 2020 are detailed below.

Nine Months Ended September 30, 2021

Centerspace acquired four new apartment communities for an aggregate acquisition cost of $ 116.9 million during the three months ended March 31, 2022 compared to acquisitions of $ 76.9 million in the three months ended March 31, 2021.

The acquisitions during the three months ended March 31, 2022 and 2021 are detailed below.

Three Months Ended March 31, 2022

Acquired (in thousands)

Form of Consideration Investment Allocation

Cost Form of Consideration Investment Allocation

Acquisitions Cash Units (1)

1 unchanged sentence

Assets Other (3)

256 homes - Union Pointe - Longmont, CO

191 homes - Martin Blu - Minneapolis, MN

January 4, 2022 $ 49,825 $ 3,031 $ 18,885 $ 27,909 $ 3,547 $ 45,212 $ 1,813 $ ( 747 )

120 homes - Bayberry Place - Minneapolis, MN

September 1, 2021 16,673 898 9,855 5,920 1,807 14,113 753 —

251 homes - Burgandy & Hillsboro Court - Minneapolis, MN

September 1, 2021 35,569 2,092 22,542 10,935 2,834 31,148 1,587 —

97 homes - Venue on Knox - Minneapolis, MN

September 1, 2021 18,896 500 11,375 7,021 3,438 14,743 715 —

120 homes - Gatewood - St.

September 1, 2021 7,781 378 3,388 4,015 327 6,858 596 —

84 homes - Grove Ridge - Minneapolis, MN

September 1, 2021 12,060 121 8,579 3,360 1,250 10,271 539 —

119 homes - The Legacy - St.

September 1, 2021 10,560 229 5,714 4,617 412 9,556 592 —

151 homes - New Hope Garden & Village - Minneapolis, MN

September 1, 2021 15,006 1,435 10,812 2,759 1,603 12,578 825 —

330 homes - Palisades - Minneapolis, MN

September 1, 2021 53,354 2,884 30,470 20,000 6,919 46,577 2,211 ( 2,353 )

96 homes - Plymouth Pointe - Minneapolis, MN

September 1, 2021 14,450 370 9,061 5,019 1,042 12,809 599 —

93 homes - Pointe West - St.

September 1, 2021 7,558 91 3,605 3,862 246 6,849 463 —

301 homes - River Pointe - Minneapolis MN

September 1, 2021 38,348 2,249 21,653 14,446 3,346 33,117 1,885 —

70 homes - Southdale Parc - Minneapolis, MN

September 1, 2021 9,670 165 7,907 1,598 1,569 7,740 361 —

62 homes - Portage - Minneapolis, MN

September 1, 2021 9,171 323 5,588 3,260 2,133 6,685 353 —

200 homes - Windsor Gates - Minneapolis, MN

September 1, 2021 22,231 1,122 12,080 9,029 2,140 18,943 1,148 —

136 homes - Wingate - Minneapolis, MN

September 1, 2021 15,784 723 10,246 4,815 1,480 13,530 774 —

178 homes - Woodhaven - Minneapolis, MN

September 1, 2021 25,009 1,682 15,200 8,127 3,940 20,080 989 —

288 homes - Woodland Pointe - Minneapolis, MN

September 1, 2021 47,796 437 29,438 17,921 5,367 40,422 2,007 —

$ 436,816 $ 92,599 $ 217,513 $ 126,704 $ 45,580 $ 375,985 $ 17,604 $ ( 2,353 )

31 homes - Zest - Minneapolis, MN

January 4, 2022 9,066 1,290 1,748 6,028 941 7,853 335 ( 63 )

45 homes - Elements - Minneapolis, MN

January 4, 2022 11,364 1,429 2,249 7,686 936 10,261 574 ( 407 )

130 homes - Noko Apartments - Minneapolis, MN

January 26, 2022 46,619 3,343 — 43,276 1,915 42,754 1,950 —

Total Acquisitions $ 116,874 $ 9,093 $ 22,882 $ 84,899 $ 7,339 $ 106,080 $ 4,672 $ ( 1,217 )

(1) Includes $ 36.1 million for additional fair value of Series E preferred units for the September 1, 2021 portfolio acquisition

(2) Fair value of Series E preferred units at the acquisition date

(3) Payoff of debt or assumption of seller's debt upon closing

(1) Fair value of operating partnership units issued on acquisition.

(2) Assumption of seller's debt upon closing for Martin Blu, Zest, and Elements.

Mezzanine and construction loans, financed by Centerspace, exchanged as partial consideration for the acquisition of Noko Apartments.

(3) Debt discount on assumed mortgage.

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Acquired (in thousands)

Cost Form of Consideration Investment Allocation

Acquisitions Cash Other (1)

Land Building Intangible

Assets Other (2)

182 homes - Ironwood - New Hope, MN

March 5, 2020 $ 46,263 $ 28,600 $ 17,663 $ 2,165 $ 36,869 $ 824 $ 6,405

465 homes - Parkhouse Apartment Homes - Thornton, CO

September 22, 2020 144,750 144,750 — 10,474 132,105 2,171 —

Total Acquisitions $ 191,013 $ 173,350 $ 17,663 $ 12,639 $ 168,974 $ 2,995 $ 6,405

(1) Payoff at closing of note receivable and accrued interest due from seller.

(2) Consists of TIF note acquired.

Refer to Note 2 for further discussion.

During the three months ended September 30, 2021, Centerspace disposed of no real estate.

During the three months ended September 30, 2020, the Company disposed of four apartment communities and one commercial property for a total sale price of $ 43.0 million.

The following tables detail the dispositions for the nine months ended had September 30, 2021 and 2020.

Nine Months Ended September 30, 2021

(in thousands)

Dispositions Date

Disposed Sale Price Book Value and Sales Cost Gain/(Loss)

76 homes - Crystal Bay-Rochester, MN

May 25, 2021 $ 13,650 $ 10,255 $ 3,395

40 homes - French Creek-Rochester, MN

May 25, 2021 6,700 4,474 2,226

182 homes - Heritage Manor-Rochester, MN

May 25, 2021 14,125 4,892 9,233

140 homes - Olympik Village-Rochester, MN

May 25, 2021 10,725 6,529 4,196

151 homes-Winchester/Village Green-Rochester, MN

May 25, 2021 14,800 7,010 7,790

Total Dispositions $ 60,000 $ 33,160 $ 26,840

Nine Months Ended September 30, 2020

(in thousands)

Dispositions Date

Disposed Sale Price Book Value and Sales Cost Gain/(Loss)

268 homes - Forest Park - Grand Forks, ND

August 18, 2020 $ 19,625 $ 6,884 $ 12,741

90 homes - Landmark - Grand Forks, ND

August 18, 2020 3,725 1,348 2,377

164 homes - Southwind - Grand Forks, ND

August 18, 2020 10,850 4,573 6,277

168 homes - Valley Park - Grand Forks, ND

August 18, 2020 8,300 4,059 4,241

$ 42,500 $ 16,864 $ 25,636

Dakota West August 7, 2020 $ 500 $ 474 $ 26

Unimproved Land

Rapid City Land - Rapid City, SD June 29, 2020 $ 1,300 $ 1,490 $ ( 190 )

Total Dispositions $ 44,300 $ 18,828 $ 25,472

Acquisitions Cash Land Building Intangible

256 homes - Union Pointe - Longmont, CO

January 6, 2021 $ 76,900 $ 76,900 $ 5,727 $ 69,966 $ 1,207

During the three months ended March 31, 2022 and 2021, Centerspace disposed of no real estate.

NOTE 9 • SEGMENT REPORTING

6 unchanged sentences

“All other” includes non-multifamily components of mixed-use properties and apartment communities the Company has sold.

The executive management team comprises the chief operating decision-makers.

The members of the executive management team are the chief operating decision-makers.

This team measures the performance of the reportable segment based on net operating income (“NOI”), which the Company defines as total real estate revenues less property operating expenses, including real estate taxes.

1 unchanged sentence

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.

The following tables present NOI for the three and nine months ended September 30, 2021 and 2020, respectively, along with reconciliations to net income in the Condensed Consolidated Financial Statements.

The following tables present NOI for the three months ended March 31, 2022 and 2021, respectively, along with reconciliations to net income in the Condensed Consolidated Financial Statements.

Segment assets are also reconciled to total assets as reported in the Condensed Consolidated Financial Statements.

(in thousands)

Three Months Ended September 30, 2021 Multifamily All Other Total

Three Months Ended March 31, 2022 Multifamily All Other Total

Revenue $ 59,398 $ 916 $ 60,314

9 unchanged sentences

(in thousands)

Three Months Ended September 30, 2020 Multifamily All Other Total

Three Months Ended March 31, 2021 Multifamily All Other Total

Revenue $ 44,241 $ 2,407 $ 46,648

7 unchanged sentences

Interest and other income 431

Income (loss) before gain (loss) on sale of real estate and other investments ( 4,492 )

Gain (loss) on sale of real estate and other investments 25,676

Net income (loss) $ ( 5,159 )

(in thousands)

Nine Months Ended September 30, 2021 Multifamily All Other Total

Revenue $ 138,447 $ 5,270 $ 143,717

Property operating expenses, including real estate taxes 55,907 2,444 58,351

Net operating income $ 82,540 $ 2,826 $ 85,366

Property management expenses ( 6,055 )

Casualty gain (loss) ( 64 )

Depreciation and amortization ( 61,747 )

General and administrative expenses ( 11,982 )

Interest expense ( 21,622 )

Interest and other income ( 4,032 )

Income (loss) before gain (loss) on sale of real estate and other investments ( 20,136 )

Gain (loss) on sale of real estate and other investments 26,840

Net income (loss) $ 6,704

(in thousands)

Nine Months Ended September 30, 2020 Multifamily All Other Total

Revenue $ 120,946 $ 11,508 $ 132,454

Property operating expenses, including real estate taxes 49,626 5,608 55,234

Net operating income $ 71,320 $ 5,900 $ 77,220

Property management expenses ( 4,341 )

Casualty gain (loss) ( 1,331 )

Depreciation and amortization ( 55,311 )

General and administrative expenses ( 9,707 )

Interest expense ( 20,622 )

Interest and other income ( 1,979 )

Income (loss) before gain (loss) on sale of real estate and other investments ( 16,071 )

Gain (loss) on sale of real estate and other investments 25,486

Net income (loss) $ 9,415

Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of September 30, 2021, and December 31, 2020, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:

Segment assets are summarized as follows as of March 31, 2022, and December 31, 2021, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:

(in thousands)

As of September 30, 2021 Multifamily All Other Total

As of March 31, 2022 Multifamily All Other Total

Segment assets

2 unchanged sentences

Total property owned $ 1,906,182 $ 19,018 $ 1,925,200

Mortgage loans receivable 42,160

Cash and cash equivalents 13,313

20 unchanged sentences

Restrictions on Taxable Dispositions.

Thirty-four properties, consisting of 6,511 apartment homes, are subject to restrictions on taxable dispositions under agreements entered into with some of the sellers or contributors of the properties and are effective for varying periods.

Thirty-seven properties, consisting of 6,770 apartment homes, are subject to restrictions on taxable dispositions under agreements entered into with certain of the sellers or contributors of the properties and are effective for varying periods.

Centerspace does not believe that the agreements materially affect the conduct of its business or its decisions whether to dispose of restricted properties during the restriction period because it generally holds these and other properties for investment purposes rather than for sale.

26 unchanged sentences

The share price at the grant date, January 1, 2022, was $ 110.90 per share.

Awards granted to trustees in May 2021, consist of 6,948 time-based RSUs with a one-year vesting period.

These awards are classified as equity awards.

Awards granted to employees on February 1, 2022, consist of an aggregate of 1,295 time-based RSU awards which vest as to one-third of the RSUs on each of January 1, 2023, January 1, 2024, and January 1, 2025.

Share-Based Compensation Expense

Share-based compensation expense recognized in the consolidated financial statements for all outstanding share-based awards was $ 2.1 million and $ 1.5 million for the nine months ended September 30, 2021 and 2020, respectively.

Share-based compensation expense recognized in the consolidated financial statements for all outstanding share-based awards was $ 719,000 and $ 810,000 for the three months ended March 31, 2022 and 2021, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements