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Item 1. Financial Statements

2025-05-01 compared with 2024-10-28 · 207 added, 373 removed, 431 unchanged (57% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

ASSETS (Unaudited)

16 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, 2024 and December 31, 2023, 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, 2025 and December 31, 2024, aggregate liquidation preference of $ 16,560 )

$ 16,560 $ 16,560

Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $ 25 per share liquidation preference, no shares issued and outstanding at September 30, 2024 and 3,881 shares issued and outstanding December 31, 2023

Common Shares of Beneficial Interest (Unlimited authorization, no par value, 16,568 shares issued and outstanding at September 30, 2024 and 14,963 shares issued and outstanding at December 31, 2023)

Common Shares of Beneficial Interest (Unlimited authorization, no par value, 16,735 shares issued and outstanding at March 31, 2025 and 16,719 shares issued and outstanding at December 31, 2024)

1,268,888 1,269,549

8 unchanged sentences

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)

(in thousands, except per share data)

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

2024 2023 2024 2023

Three Months Ended March 31,

REVENUE $ 67,093 $ 64,506

2 unchanged sentences

Property management expense 2,433 2,330

Casualty (gain) loss

( 412 ) 937 918 1,242

Casualty loss

Depreciation and amortization 27,654 27,012

1 unchanged sentence

TOTAL EXPENSES $ 62,347 $ 59,854

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

— 11,235 ( 577 ) 71,327

Loss on litigation settlement — — — ( 2,864 )

Loss on sale of real estate and other investments

Operating income

6,350 17,395 17,617 85,958

Interest expense ( 9,635 ) ( 9,207 )

1 unchanged sentence

$ ( 4,181 ) $ ( 4,792 )

NET INCOME (LOSS)

$ ( 1,951 ) $ 9,169 $ ( 8,406 ) $ 59,116

Dividends to Series D preferred unitholders ( 160 ) ( 160 )

Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units

1,095 ( 1,204 ) 2,735 ( 9,058 )

Net loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units

Net income attributable to noncontrolling interests – consolidated real estate entities

( 36 ) ( 32 )

Net income (loss) attributable to controlling interests

Net loss attributable to controlling interests

( 3,734 ) ( 3,905 )

Dividends to preferred shareholders — ( 1,607 )

Redemption of preferred shares ( 3,511 ) — ( 3,511 ) —

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

$ ( 6,166 ) $ 6,167 $ ( 14,581 ) $ 44,661

NET INCOME (LOSS) PER COMMON SHARE – BASIC

$ ( 0.40 ) $ 0.41 $ ( 0.96 ) $ 2.98

NET INCOME (LOSS) PER COMMON SHARE – DILUTED

$ ( 0.40 ) $ 0.41 $ ( 0.96 ) $ 2.96

Weighted average shares - basic 15,528 14,989 15,143 14,988

Weighted average shares - diluted 15,528 18,018 15,143 17,344

See accompanying Notes to Condensed Consolidated Financial Statements.

CENTERSPACE AND SUBSIDIARIES

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

(in thousands)

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

NET LOSS AVAILABLE TO COMMON SHAREHOLDERS

$ ( 3,734 ) $ ( 5,512 )

Net income (loss)

$ ( 4,181 ) $ ( 4,792 )

1 unchanged sentence

Loss on derivative instrument reclassified into earnings

TOTAL COMPREHENSIVE LOSS

$ ( 4,006 ) $ ( 4,595 )

Total comprehensive income (loss)

Net comprehensive loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units

Net income attributable to noncontrolling interests – consolidated real estate entities

( 36 ) ( 32 )

Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units

COMPREHENSIVE LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS

$ ( 3,373 ) $ ( 3,515 )

Net income attributable to noncontrolling interests – consolidated real estate entities

NET LOSS PER COMMON SHARE – BASIC AND DILUTED

$ ( 0.22 ) $ ( 0.37 )

Comprehensive income (loss) attributable to controlling interests

Weighted average shares - basic and diluted

16,727 14,922

3 unchanged sentences

(in thousands, except per share data)

Nine Months Ended September 30, 2023 PREFERRED

Three Months Ended March 31, 2024 PREFERRED

SHARES NUMBER

6 unchanged sentences

Balance at December 31, 2023 $ 93,530 14,963 $ 1,165,694 $ ( 548,273 ) $ ( 1,119 ) $ 221,193 $ 931,025

Net income attributable to controlling interests and noncontrolling interests

Net loss attributable to controlling interests and noncontrolling interests

( 3,905 ) ( 1,047 ) ( 4,952 )

12 unchanged sentences

Other — ( 30 ) — ( 30 )

Balance at September 30, 2023 $ 93,530 15,052 $ 1,169,025 $ ( 527,586 ) $ ( 1,434 ) $ 226,824 $ 960,359

Nine Months Ended September 30, 2024

Balance at March 31, 2024 $ 93,530 14,912 $ 1,160,492 $ ( 564,951 ) $ ( 922 ) $ 218,936 $ 907,085

Three Months Ended March 31, 2025

Balance at December 31, 2024 $ — 16,719 $ 1,269,549 $ ( 615,242 ) $ ( 407 ) $ 228,543 $ 882,443

4 unchanged sentences

( 12,879 ) ( 754 ) ( 13,633 )

Distributions - Series C preferred shares ($ 1.2421875 per Series C share)

( 4,821 ) ( 4,821 )

Distributions - Series E preferred units ($ 0.96875 per unit)

1 unchanged sentence

Share-based compensation, net of forfeitures 8 858 858

Sale of common shares, net 1,587 112,151 112,151

Redemption of Units for common shares 7 ( 1,002 ) 1,002 —

Redemption of Series E preferred units for common shares — ( 43 ) 43 —

Shares repurchased ( 93,530 ) ( 88 ) ( 4,703 ) ( 3,511 ) ( 101,744 )

Shares withheld for taxes ( 292 ) ( 292 )

Other 1 ( 182 ) ( 56 ) ( 238 )

Balance at September 30, 2024 $ — 16,568 $ 1,270,752 $ ( 597,720 ) $ ( 578 ) $ 216,125 $ 888,579

See accompanying Notes to Condensed Consolidated Financial Statements.

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited)

(in thousands, except per share data)

Three Months Ended September 30, 2023 PREFERRED

SHARES NUMBER

SHARES COMMON

SHARES ACCUMULATED

DISTRIBUTIONS

NET INCOME (LOSS) ACCUMULATED OTHER COMPREHENSIVE LOSS

NONCONTROLLING

INTERESTS TOTAL

Balance at June 30, 2023 $ 93,530 14,949 $ 1,169,501 $ ( 522,796 ) $ ( 1,758 ) $ 226,931 $ 965,408

Net income attributable to controlling interests and noncontrolling interests

7,774 1,235 9,009

Amortization of swap settlements 324 324

Distributions - common shares and Units ($ 0.73 per share and unit)

( 10,957 ) ( 658 ) ( 11,615 )

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

( 1,607 ) ( 1,607 )

Distributions - Series E preferred units ($ 0.96875 per unit)

( 1,682 ) ( 1,682 )

Share-based compensation, net of forfeitures — 602 602

Redemption of Units for common shares 97 ( 898 ) 898 —

Redemption of Series E preferred units from common shares 6 ( 176 ) 176 —

Other ( 4 ) ( 76 ) ( 80 )

Balance at September 30, 2023 $ 93,530 15,052 $ 1,169,025 $ ( 527,586 ) $ ( 1,434 ) $ 226,824 $ 960,359

Three Months Ended September 30, 2024

Balance at June 30, 2024 $ 93,530 15,057 $ 1,167,055 $ ( 579,139 ) $ ( 749 ) $ 217,600 $ 898,297

Net loss attributable to controlling interests and noncontrolling interests

( 1,048 ) ( 1,063 ) ( 2,111 )

Amortization of swap settlements 171 171

Distributions - common shares and Units ($ 0.75 per share and unit)

( 12,415 ) ( 607 ) ( 13,022 )

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

( 1,607 ) ( 1,607 )

Distributions - Series E preferred units ($ 0.96875 per unit)

( 1,651 ) ( 1,651 )

Share-based compensation, net of forfeitures 1 764 764

Sale of common shares, net 1,477 104,831 104,831

Redemption of Units for common shares 19 ( 845 ) 845 —

Redemption of Series E preferred units for common shares 15 ( 1,051 ) 1,051 —

Shares repurchased ( 93,530 ) — — ( 3,511 ) ( 97,041 )

Other ( 1 ) ( 2 ) ( 50 ) ( 52 )

Balance at September 30, 2024 $ — 16,568 $ 1,270,752 $ ( 597,720 ) $ ( 578 ) $ 216,125 $ 888,579

Balance at March 31, 2025 $ — 16,735 $ 1,268,888 $ ( 631,855 ) $ ( 232 ) $ 226,639 $ 863,440

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

$ ( 4,181 ) $ ( 4,792 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization, including amortization of capitalized loan costs 27,971 27,305

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

577 ( 71,323 )

Loss on litigation settlement — 2,864

Loss on sale of real estate and other investments

Share-based compensation expense 858 749

Loss on interest rate swap settlement amortization

Casualty loss write off 2,034 752

Amortization of debt premiums and discounts 409 258

Other, net 750 268

5 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from repayment of mortgage loans and notes receivable 450 430

Increase in mortgages and real estate related notes receivable — ( 7,279 )

Net proceeds from sale of real estate and other investments

18,251 223,259

Proceeds from insurance 177 1,635

1 unchanged sentence

Other investing activities ( 20 ) 171

Net cash provided by (used by) investing activities

Net cash used by investing activities

$ ( 4,885 ) $ ( 9,032 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from mortgages payable — 90,000

Principal payments on mortgages payable ( 1,906 ) ( 1,529 )

1 unchanged sentence

Principal payments on revolving lines of credit ( 43,519 ) ( 30,198 )

Principal payments on notes payable — ( 100,000 )

Net proceeds from issuance of common shares 112,218 —

Repurchase of common shares — ( 4,703 )

Redemption of Series C preferred shares ( 97,041 ) —

Distributions paid to common shareholders ( 12,443 ) ( 10,923 )

14 unchanged sentences

Retirement of shares withheld for taxes 292 118

Loss on litigation settlement — 2,864

Involuntary conversion of assets ( 463 ) ( 160 )

2 unchanged sentences

Cash paid for interest $ 8,640 $ 8,302

See accompanying Notes to Condensed Consolidated Financial Statements.

CENTERSPACE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)

Balance sheet description September 30, 2024 December 31, 2023 September 30, 2023

Balance sheet description March 31, 2025 December 31, 2024 March 31, 2024

Cash and cash equivalents $ 11,916 $ 12,030 $ 12,682

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

September 30, 2024

March 31, 2025

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, 2024, Centerspace owned interests in 70 apartment communities consisting of 12,883 apartment homes.

As of March 31, 2025, Centerspace owned interests in 71 apartment communities consisting of 13,012 apartment homes.

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

16 unchanged sentences

RECLASSIFICATIONS

Certain previously reported amounts have been reclassified to conform to the current financial statement presentation.

Certain previously reported amounts within net cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current financial statement presentation.

These reclassifications had no impact on net income (loss) as reported in the Condensed Consolidated Statements of Operations, total assets, liabilities or equity as reported in the Condensed Consolidated Balance Sheets and the classifications within the Condensed Consolidated Statements of Cash Flows.

Centerspace reclassified certain items within the disaggregated revenue table included in Note 2 to conform to the current year presentation.

RECENT ACCOUNTING PRONOUNCEMENTS

The following table provides a brief description of Financial Accounting Standards Board (“FASB”) recent accounting standards updates (“ASU”).

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

ASU 2024-03, Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses;

ASU 2025-01 , Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Clarifying the Effective Date

This ASU is intended to improve financial reporting by requiring public companies disclose additional information about specific expense categories in the notes to the financial statements.

In 2025, an additional ASU was issued to provide clarification on the effective date of the original ASU.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The ASU will require additional disclosure but is not expected to have a material impact on the Company.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

Cash and cash equivalents include all cash and highly liquid investments purchased with maturities of three months or less.

Cash and cash equivalents consist of bank deposits and deposits in a money market mutual fund.

The Company is potentially exposed to credit risk for cash deposited with FDIC-insured financial institutions in accounts which, at times, may exceed

federally insured limits.

Cash and cash equivalents consist of bank deposits and deposits in money market mutual funds.

The Company is potentially exposed to credit risk for cash deposited with FDIC-insured financial institutions in accounts which, at times, may exceed federally insured limits.

Although past bank failures have increased the risk of loss in such accounts, the Company has not experienced any losses in such accounts.

As of September 30, 2024 and December 31, 2023, restricted cash consisted of $ 2.8 million and $ 639,000 , respectively, for real estate deposits and escrows held by lenders.

As of March 31, 2025 and December 31, 2024, restricted cash consisted of $ 6.1 million and $ 1.1 million, respectively, for real estate deposits and escrows held by lenders.

Escrows include funds deposited with a lender for payment of real estate taxes and insurance and reserves to be used for replacement of structural elements and mechanical equipment at certain communities.

2 unchanged sentences

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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC 842, Leases , using a method that represents a straight-line basis over the term of the lease.

For the three months ended September 30, 2024 and 2023, rental income represented approximately 98.1 % and 97.9 % of total revenues, respectively, and included gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt.

For the three months ended September 30, 2024 and 2023, other property revenues represented the remaining 1.9 % and 2.1 % of total revenues, respectively, and were primarily driven by other fee income, which is typically recognized when earned, at a point in time.

For the nine months ended September 30, 2024 and 2023, rental income represented approximately 98.2 % and 98.1 % of total revenues, respectively.

For the nine months ended September 30, 2024 and 2023, other property revenues represented the remaining 1.8 % and 1.9 % of total revenues, respectively.

Rental revenues are recognized in accordance with FASB Accounting Standards Codification (“ASC”) 842, Leases , using a method that represents a straight-line basis over the term of the lease.

For the three months ended March 31, 2025 and 2024, rental income represents approximately 98.4 % and 98.2 % of total revenues, respectively, and includes gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt.

For the three months ended March 31, 2025 and 2024, other property revenues represent the remaining 1.6 % and 1.8 % of total revenues, respectively, and are primarily driven by other fee income, which is typically recognized when earned, at a point in time.

Some of the Company’s apartment communities have commercial spaces available for lease.

2 unchanged sentences

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

Centerspace has elected the practical expedient to combine lease and non-lease components for all asset classes.

Centerspace has elected the practical expedient to combine lease and non-lease components.

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, 2024, 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, 2025, was as follows:

(in thousands)

1 unchanged sentence

Thereafter 6,073

Total scheduled lease income - commercial operating leases $ 17,866

REVENUES AND GAINS ON SALE OF REAL ESTATE

Total scheduled lease income - operating leases

REVENUES AND GAINS OR LOSSES ON SALE OF REAL ESTATE

Revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration to which the Company expects to be entitled for those goods and services.

Revenue streams that are included in revenues from contracts with customers include other property revenues such as application fees and other miscellaneous items.

Centerspace recognizes revenue, for rental related items not included as a component of a lease, as earned.

The following table presents the disaggregation of revenue streams for the three and nine months ended September 30, 2024 and 2023:

Centerspace recognizes revenue for these rental related items not included as a component of a lease as earned.

The following table presents the disaggregation of revenue streams for the three months ended March 31, 2025 and 2024:

(in thousands)

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

Three Months Ended March 31,

Revenue Stream Applicable Standard 2025 2024

3 unchanged sentences

Total revenue $ 67,093 $ 64,506

In addition to lease income and other property revenue, the Company recognizes gains or losses on the sale of real estate 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.

During the three months ended September 30, 2024, the Company did not recognize a gain or loss on the sale of real estate and other investments, compared to a gain of $ 11.2 million during the three months ended September 30, 2023.

During the nine months ended September 30, 2024, the Company recognized a loss of $ 577,000 on the sale of real estate and other investments, compared to a gain of $ 71.3 million during the nine months ended September 30, 2023.

In addition to lease income and other property revenue, the Company recognizes gains or losses on the sale of real estate and other investments 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.

During the three months ended March 31, 2025, the Company did not recognize a gain or loss on the sale of real estate and other investments, compared to a loss of $ 577,000 during the three months ended March 31, 2024.

Any gain or loss on real estate dispositions is net of certain closing and other costs associated with the disposition.

1 unchanged sentence

The Company records in-place lease assets at the time of acquisition.

The amortization periods reflects the average remaining term of in-place leases acquired, which are generally less than one year.

During the three months ended September 30, 2024 and 2023, the Company recognized $ 37,000 and $ 48,000 , respectively, of amortization expense related to intangibles.

During the nine months ended September 30, 2024 and 2023, the Company recognized $ 1.7 million and $ 941,000 , respectively, of amortization expense related to intangibles, included within depreciation and amortization in the Condensed Consolidated Statements of Operations.

The amortization periods reflects the average remaining term of in-place leases acquired, which are generally less than one year for multifamily apartment homes.

During the three months ended March 31, 2025 and 2024, the Company recognized $ 1.1 million and $ 1.7 million, respectively, of amortization expense related to intangibles, included within depreciation and amortization in the Condensed Consolidated Statements of Operations.

MARKET CONCENTRATION RISK

The Company is subject to increased exposure from economic and other competitive factors specific to markets where it holds a significant percentage of the carrying value of its real estate portfolio.

As of September 30, 2024, Centerspace held more than 10% of the carrying value of its real estate portfolio in each of the Minneapolis, Minnesota and Denver, Colorado markets.

As of March 31, 2025, Centerspace held more than 10% of the carrying value of its real estate portfolio in the Minneapolis, Minnesota and Denver, Colorado markets.

IMPAIRMENT OF LONG-LIVED ASSETS

4 unchanged sentences

If the anticipated holding period for properties, the estimated fair value of properties, or other factors change based on market conditions or otherwise, the evaluation of impairment charges may be different and such differences could be material to the consolidated financial statements.

The evaluation of estimated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates, and capital requirements that could differ materially from actual results.

Plans to hold properties over longer periods decreases the likelihood of recording impairment losses.

During the three and nine months ended September 30, 2024 and 2023, the Company recorded no impairment charges.

The evaluation of estimated cash flows is subjective and is based, in part, on assumptions regarding future physical occupancy, rental rates, and capital requirements that could differ materially from actual results.

Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

During the three months ended March 31, 2025 and 2024, the Company did not record a loss for impairment on real estate.

VARIABLE INTEREST ENTITIES

Centerspace has determined that its Operating Partnership and each of its less-than-wholly owned real estate partnerships are variable interest entities (each, a “VIE”), as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights.

The Company is the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on the balance sheet because the Company has a controlling financial interest in the VIEs and has both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs.

The Company is the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on the balance sheet because the Company has a controlling financial interest in the VIEs and has

both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs.

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

REAL ESTATE RELATED NOTES RECEIVABLE

The Company has a tax increment financing note receivable (“TIF”) with a principal balance of $ 5.2 million and $ 5.7 million at September 30, 2024 and December 31, 2023, respectively, which appears within other assets in the Condensed Consolidated Balance Sheets at fair value.

In connection with the acquisition of The Lydian, an apartment community in Denver, Colorado, the Company has a tax increment financing note receivable (“TIF”) with an initial principal balance of $ 4.1 million.

As of March 31, 2025 and December 31, 2024, the principal balance was $ 4.1 million, which appears within other assets in the Condensed Consolidated Balance Sheets at fair value.

The note bears an interest rate of 6.0 % with payments due periodically each year.

In connection with the acquisition of Ironwood, an apartment community in New Hope, Minnesota, the Company has a tax increment financing note receivable (“TIF”) with a principal balance of $ 5.1 million and $ 5.2 million at March 31, 2025 and December 31, 2024, respectively, which appears within other assets in the Condensed Consolidated Balance Sheets at fair value.

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

1 unchanged sentence

In 2023, the Company originated a $ 15.1 million mezzanine loan for the development of an apartment community located in Inver Grove Heights, Minnesota.

The mezzanine loan bears interest at 10.0 % per annum.

As of September 30, 2024 and December 31, 2023, the Company had funded $ 15.1 million and $ 1.6 million of the mezzanine loan, respectively.

The mezzanine loan bears interest at 10.0 % per annum which accrues interest that is added to the principal balance and is payable at maturity.

As of March 31, 2025 and December 31, 2024, the Company had funded $ 15.1 million of the mezzanine loan.

The loan matures in December 2027 unless extended to December 2028 in accordance with the terms of the mezzanine loan agreement.

5 unchanged sentences

Advertising costs are expensed as incurred and reported on the Condensed Consolidated Statements of Operations within the property operating expenses, excluding real estate taxes line item.

During the three months ended September 30, 2024 and 2023, total advertising expense was $ 899,000 and $ 878,000 , respectively.

During the nine months ended September 30, 2024 and 2023, total advertising expense was $ 2.4 million and $ 2.3 million, respectively.

SEVERANCE AND TRANSITION

On March 23, 2023, the Company entered into a Separation and General Release Agreement (the “Separation Agreement”) in connection with the departure of former CEO, Mark Decker, Jr.

During the nine months ended September 30, 2023, the Company incurred total severance costs of $ 2.2 million for the cash severance and benefits for Mr.

Decker, $ 737,000 in share-based compensation expense for the acceleration of certain equity awards, and $ 306,000 in other CEO transition related expenses.

During the three months ended March 31, 2025 and 2024, total advertising expense was $ 623,000 and $ 738,000 , respectively.

INVOLUNTARY CONVERSION OF ASSETS

During the three and nine months ended September 30, 2024, Centerspace recorded a $ 981,000 write-down of an apartment community asset along with an insurance receivable of $ 2.1 million within other assets on the Condensed Consolidated Balance Sheets due to storm damage at one apartment community.

During the three months ended September 30, 2024, Centerspace also recognized casualty losses of $ 546,000 resulting from two new insurance events and updated loss estimates on six previously reported events.

During the nine months ended September 30, 2024, Centerspace recognized $ 1.3 million in casualty losses from two new insurance events and updated loss estimates on six previously reported events, excluding the storm damage claim discussed above.

During the three months ended March 31, 2025, Centerspace recorded $ 512,000 in casualty losses resulting from two new insurance events and updated loss estimates on two previously reported events.

Any business interruption insurance proceeds will be recognized when received in accordance with ASC 610-30.

During the three months ended March 31, 2024, Centerspace recognized $ 618,000 in casualty loss resulting from updated loss estimates from four separate insurance events at apartment communities.

Any business interruption insurance proceeds will be recognized when received in accordance with ASC 610-30.

In April 2023, a portion of an apartment community was destroyed by fire.

The Company recorded a write-down of the apartment community asset, in accordance with ASC 610-30 on involuntary conversion of non-monetary assets, totaling $ 1.3 million with an offsetting insurance receivable recorded within other assets on the Condensed Consolidated Balance Sheets.

During the nine months ended September 30, 2024, the claim was settled for $ 1.6 million, including remediation and other operating expenses.

During the three months ended March 31, 2024, the claim was settled for $ 1.6 million, including remediation and other operating expenses.

NOTE 3 • NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares of beneficial interest (“common shares”) outstanding during the period.

Centerspace has issued restricted stock units (“RSUs”) and incentive stock options (“ISOs”) under the 2015 Incentive Plan, Series D Convertible Preferred Units (“Series D preferred units”), and Series E Convertible Preferred Units (“Series E preferred units”), which could have a dilutive effect on net income (loss) per share upon vesting of the RSUs, upon exercising of ISOs, or upon conversion of the Series D or Series E preferred units (refer to Note 4 for further discussion of the Series D and the Series E preferred units).

Centerspace has issued restricted stock units (“RSUs”) and incentive stock options (“ISOs”) under its 2015 Incentive Plan, Series D Convertible Preferred Units (“Series D preferred units”), and Series E Convertible Preferred Units (“Series E preferred units”), which could have a dilutive effect on net income (loss) per share upon vesting of the RSUs, upon exercising of ISOs, or upon conversion of the Series D or Series E preferred units (refer to Note 4 for further discussion of the Series D and the Series E preferred units).

The Company calculates diluted net income (loss) per share using the treasury stock method for RSUs and ISOs and the if converted method for Series D preferred units and Series E preferred units.

2 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.

The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted net income (loss) per share reported in the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2024 and 2023.

(in thousands, except per share data)

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

2024 2023 2024 2023

Net income (loss) attributable to controlling interests

Three Months Ended March 31,

Net loss attributable to controlling interests

$ ( 3,734 ) $ ( 3,905 )

Dividends to preferred shareholders — ( 1,607 )

Redemption of preferred shares ( 3,511 ) — ( 3,511 ) —

Numerator for basic income (loss) per share – net income (loss) available to common shareholders

( 6,166 ) 6,167 ( 14,581 ) 44,661

Noncontrolling interests – Operating Partnership and Series E preferred units (1)

— 1,204 — 6,233

Dividends to Series D preferred unitholders (2)

Numerator for diluted income (loss) per share

Numerator for basic and diluted loss per share – net loss available to common shareholders (1)

( 3,734 ) ( 5,512 )

Denominator for basic income (loss) per share weighted average shares 15,528 14,989 15,143 14,988

Effect of redeemable operating partnership units — 908 — —

Effect of Series D preferred units — — — 228

Effect of Series E preferred units — 2,093 — 2,105

Effect of dilutive restricted stock units and stock options — 28 — 23

Denominator for diluted income (loss) per share 15,528 18,018 15,143 17,344

NET INCOME (LOSS) PER COMMON SHARE – BASIC

Denominator for basic and diluted income (loss) per share weighted average shares (1)

16,727 14,922

NET INCOME (LOSS) PER COMMON SHARE – DILUTED

NET LOSS PER COMMON SHARE – BASIC AND DILUTED

$ ( 0.22 ) $ ( 0.37 )

(1) For the three and nine months ended September 30, 2024, the impact of Units and Series E preferred units was excluded from the calculation of net income (loss) per common share - diluted as they were anti-dilutive.

(2) For the three and nine months ended September 30, 2024 and the three months ended September 30, 2023, dividends to preferred unitholders are excluded from the calculation of net income (loss) per common share - diluted as they were anti-dilutive.

For the three months ended September 30, 2024, operating partnership units of 818,000 , Series D preferred units of 228,000 , as converted, Series E preferred units of 2.1 million, as converted, time-based RSUs and options of 49,000 , and performance-based RSUs of 41,000 were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive as including these items would have improved net loss per share.

For the three months ended September 30, 2023, Series D preferred units of 228,000 , as converted and performance-based RSUs of 26,000 were excluded from the calculation of diluted income (loss) per share because they were anti-dilutive as including these items would have improved net income per share.

For the nine months ended September 30, 2024, operating partnership units of 836,000 , Series D preferred units of 228,000 , as converted, Series E preferred units of 2.1 million, as converted, time-based RSUs and options of 32,000 , and performance-based RSUs of 41,000 were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive as including these items would have improved net loss per share.

For the nine months ended September 30, 2023, operating partnership units of 943,000 and performance-based RSUs of 26,000 were excluded from the calculation of diluted net income per share because they were anti-dilutive as including these items would have improved net income per share.

NOTE 4 • EQUITY AND MEZZANINE EQUITY

(1) For the three months ended March 31, 2025 and 2024, dividends to preferred unitholders and the impact of Units and Series E preferred units are excluded from the calculation of net income (loss) per common share - diluted as they were anti-dilutive.

For the three months ended March 31, 2025, operating partnership units of 980,000 , Series D preferred units of 228,000 , as converted, Series E preferred units of 1.9 million, as converted, time-based RSUs and options of 35,000 , and performance-based RSUs of 43,000 were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive as including these items would have improved net loss per share.

For the three months ended March 31, 2024, operating partnership units of 854,000 , Series D preferred units of 228,000 , as converted, Series E preferred units of 2.1 million, as converted, time-based RSUs of 20,000 , and performance-based RSUs of 41,000 were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive as including these items would have improved net loss per share.

NOTE 4 • MEZZANINE EQUITY AND EQUITY

Series D Preferred Units (Mezzanine Equity).

Series D preferred units outstanding were 165,600 preferred units at September 30, 2024 and December 31, 2023.

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.

Series D preferred units outstanding were 165,600 preferred units at March 31, 2025 and December 31, 2024.

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

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

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Series C Preferred Shares.

On August 21, 2024, our Board of Trustees authorized the redemption of all of the Series C preferred shares.

On August 30, 2024, we delivered notice to holders of the Series C preferred shares that we intended to redeem all 3.9 million Series C preferred shares at a redemption price equal to $ 25 per share plus any accrued but unpaid distributions per share up to and including the redemption date of September 30, 2024.

On September 30, 2024, the Company completed the redemption of all the outstanding Series C preferred shares for an aggregate redemption price of $ 97.0 million, excluding distributions, which was $ 3.5 million in excess of the carrying value and is included in redemption of preferred shares on the Condense Consolidated Statement of Operations.

Such shares were no longer outstanding as of September 30, 2024.

Series C preferred shares outstanding were 3.9 million shares at December 31, 2023.

Such shares were no longer outstanding as of March 31, 2025 and December 31, 2024.

The Series C preferred shares were nonvoting and redeemable for cash at $ 25 per share at Centerspace’s option.

Holders of these shares were entitled to cumulative distributions, payable quarterly (as and if declared by the Board of Trustees).

Distributions accrued at an annual rate of $ 1.65625 per share, which is equal to 6.625 % of the $ 25 per share liquidation preference.

Distributions accrued at an annual rate of $ 1.65625 per share, which is equal to 6.625 % of the $ 25 per share liquidation preference, quarterly until September 30, 2024.

Operating Partnership Units.

The Operating Partnership had 809,000 and 861,000 outstanding Units at September 30, 2024 and December 31, 2023, respectively.

The Operating Partnership had 972,000 and 980,000 outstanding Units at March 31, 2025 and December 31, 2024, respectively.

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, 2024 and 2023 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, 2025 and 2024 as detailed in the table below.

(in thousands)

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

2024 19 $ 845

2023 97 $ 898

Nine Months Ended September 30,

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

2025 7 $ ( 1,002 )

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Series E Preferred Units (Noncontrolling Interests).

Centerspace had 1.7 million Series E preferred units outstanding on September 30, 2024 and December 31, 2023.

Centerspace had 1.6 million Series E preferred units outstanding as of March 31, 2025 and December 31, 2024.

Each Series E preferred unit has a par value of $ 100 .

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Centerspace has the option, at its sole election, to convert Series E preferred units into Units if its stock has traded at or above $ 83 per share for 15 of 30 consecutive trading days and it has made at least three consecutive quarters of distributions with a rate of at least $ 0.804 per Unit.

The Series E preferred units have an aggregate liquidation preference of $ 169.1 million as of September 30, 2024.

The Series E preferred units have an aggregate liquidation preference of $ 158.2 million as of March 31, 2025 and December 31, 2024.

The holders of the Series E preferred units do not have voting rights.

The Company redeemed Series E preferred units in exchange for common shares in connection with Series E unitholders exercising their exchange rights during the three months ended March 31, 2025 and 2024 as detailed below.

(in thousands)

Number of Series E Number of Total

Three Months Ended September 30, Preferred Units Redeemed Common Shares Issued Value

2024 12 15 $ 1,051

2023 5 6 $ 176

Nine Months Ended September 30,

Three Months Ended March 31, Number of Series E Preferred Units Redeemed

Number of Common Shares Issued

2025 — — $ 43

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Common Shares and Equity Awards .

Common shares outstanding on September 30, 2024 and December 31, 2023, totaled 16.6 million and 15.0 million, respectively.

During the three and nine months ended September 30, 2024, Centerspace issued approximately 46 and 13,511 common shares, respectively, with a total grant-date fair value of $ 4,000 and $ 1.0 million, respectively, as share-based compensation for employees and trustees under its 2015 Incentive Plan.

During the three and nine months ended September 30, 2023, Centerspace issued approximately 64 and 19,014 common shares, respectively, with a total grant-date fair value of $ 5,000 and $ 1.7 million, respectively, as share-based compensation for employees and trustees under its 2015 Incentive Plan.

Common shares outstanding as of March 31, 2025 and December 31, 2024, totaled 16.7 million.

During the three months ended March 31, 2025 and 2024, Centerspace issued 7,818 and 3,742 common shares, respectively, with a total grant-date fair value of $ 786,000 and $ 445,000 , respectively, as share-based compensation for employees and trustees under its 2015 Incentive Plan.

These shares vested based on performance and service criteria.

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The proceeds from the sale of common shares under the ATM Program may be used for general corporate purposes, including 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, 2024 under the ATM Program.

There were no sales of common shares under the ATM Program during the three and nine months ended September 30, 2023.

As of September 30, 2024, common shares having an aggregate offering price of up to $ 262.9 million remained available under the ATM Program.

(in thousands, except per share amounts)

Three Months Ended September 30, Number of Common Shares

Net Consideration (1)

Average Net Price Per Share

2024 1,477 $ 105,052 $ 71.12

Nine Months Ended September 30,

2024 1,587 $ 112,613 $ 71.66

(1) Includes 869,000 shares sold on a forward basis for $ 62.7 million which were physically settled during the three months ended September 30, 2024.

(2) Total consideration is net of $ 1.0 million and $ 1.1 million in commissions during the three and nine months ended September 30, 2024, respectively.

There were no sales of common shares under the ATM Program during the three months ended March 31, 2025 and 2024.

As of March 31, 2025, common shares having an aggregate offering price of up to $ 262.9 million remained available under the ATM Program.

Share Repurchase Program.

On March 10, 2022, the Board of Trustees approved a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $ 50.0 million of the Company’s outstanding common shares.

Under the Share Repurchase Program, the Company is authorized to repurchase common shares through open market purchases, privately-negotiated transactions, block trades or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities and Exchange Act of 1934, as amended.

The repurchases have no time limit and may be suspended or discontinued completely at any time.

The specific timing and amount of repurchases will vary based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors.

There were no common shares repurchased during the three months ended September 30, 2024 and 2023.

The table below provides details on the shares repurchased during the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, the Company had $ 4.7 million remaining authorized for purchase under this program.

The Company had a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $ 50 million of the Company’s outstanding common shares.

This program expired on March 10, 2025.

Under the Share Repurchase Program, the Company was authorized to repurchase common shares through open market purchases, privately-negotiated transactions, block trades or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as

The specific timing and amount of repurchases varied based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors.

There were no common shares repurchased during the three months ended March 31, 2025.

The table below provides details on the shares repurchased during the three months ended March 31, 2024.

(in thousands, except per share amounts)

Nine Months Ended September 30, Number of Common Shares Aggregate Cost (1)

Three Months Ended March 31, Number of Common Shares Aggregate Cost (1)

Average Price Per Share (1)

2024 88 $ 4,703 $ 53.62

2023 124 $ 6,718 $ 54.19

(1) Amount includes commissions.

NOTE 5 • DEBT

The following table summarizes the Company’s secured and unsecured debt at September 30, 2024 and December 31, 2023.

The following table summarizes the Company’s secured and unsecured debt at March 31, 2025 and December 31, 2024.

(in thousands)

September 30, 2024 December 31, 2023

Carrying Amount Weighted Average Interest Rate Carrying Amount Weighted Average Interest Rate Weighted Average Maturity in Years at September 30, 2024

March 31, 2025 December 31, 2024

Carrying Amount Weighted Average Interest Rate Carrying Amount Weighted Average Interest Rate Weighted Average Maturity in Years at March 31, 2025

Lines of credit (1)

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Subtotal 966,092 3.57 % 966,623 3.58 % 5.36

Premiums and discounts, net ( 345 ) ( 1,134 )

Deferred financing costs, net ( 3,533 ) ( 3,968 )

Deferred financing costs, premiums, and discounts on mortgages payable, net ( 10,174 ) ( 10,758 )

Deferred financing costs on notes payable, net ( 465 ) ( 480 )

Total debt $ 955,453 $ 955,385

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(3) Represents apartment communities encumbered by mortgages;

14 at September 30, 2024 and December 31, 2023.

15 at March 31, 2025 and December 31, 2024.

(4) Interest rate is fixed.

As of September 30, 2024, 45 apartment communities were not encumbered by mortgages and were available to provide credit support for the unsecured borrowings.

The Company’s primary unsecured credit facility (“Unsecured Credit Facility” or “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, 2024, there was $ 39.0 million outstanding on this line of credit.

Therefore the additional borrowing availability was $ 211.0 million.

As of March 31, 2025, 45 apartment communities were not encumbered by mortgages and were available to provide credit support for the unsecured borrowings.

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

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

As of March 31, 2025, the Company had additional borrowing availability of $ 204.0 million beyond the $ 46.0 million drawn under the Facility, priced at an interest rate of 5.71 %.

As of December 31, 2024, the Company had additional borrowing availability of $ 206.0 million beyond the $ 44.0 million drawn under the Facility, priced at an interest rate of 5.81 %.

On July 26, 2024, the Unsecured Credit Facility was amended to extend maturity and to modify the leverage-based margin ratios applicable to borrowings.

As amended, this credit facility matures in July 2028, with an option to extend maturity for up to two additional six-month periods and has an accordion option to increase borrowing capacity up to $ 400.0 million.

As amended, this Facility matures in July 2028, with an option to extend maturity for up to two additional six-month periods and has an accordion option to increase borrowing capacity up to $ 400.0 million.

The Secured Overnight Financing Rate (“SOFR”) is the benchmark alternative reference rate under the Facility.

On July 26, 2024, the Unsecured Credit Facility was amended to extend the maturity of the facility to July 2028 and to modify the leverage-based margin rates applicable to borrowings.

As amended, the interest rates on the line of credit are based on the consolidated leverage ratio, at the Company’s option, on either the lender’s base rate plus a margin, ranging from 20 - 80 basis points, or daily or term SOFR, plus a margin that ranges from 120 - 180 basis points with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended.

The Unsecured Credit Facility and unsecured senior notes are subject to customary financial covenants and limitations.

The Company believes that it was in compliance with all such financial covenants and limitations as of September 30, 2024.

In September 2024, Centerspace entered into a line of credit agreement with borrowing capacity of up to $ 10.0 million and pricing based on SOFR.

The Company believes that it was in compliance with all such financial covenants and limitations as of March 31, 2025.

In September 2024, Centerspace entered into an operating line of credit agreement with US Bank, N.A.

which has a borrowing capacity of up to $ 10.0 million and pricing based on SOFR.

This operating line of credit terminates in September 2025 and is designed to enhance treasury management activities and more effectively manage cash balances.

Centerspace had a $ 6.0 million operating line of credit with pricing based on SOFR that matured on August 31, 2024.

As of September 30, 2024 and December 31, 2023, there was no outstanding balance on these lines of credit.

As of March 31, 2025 and December 31, 2024, there was $ 2.7 million and $ 3.4 million outstanding on this line of credit, respectively.

Centerspace had a private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc.

(collectively, “PGIM”) under which the Company issued $ 175.0 million in unsecured senior promissory notes (“Unsecured Shelf Notes”).

On October 28, 2024, the shelf agreement was amended to extend the period of time during which Centerspace may borrow money to October 2027 and to increase the borrowing capacity to $ 300.0 million.

On October 28, 2024, the shelf agreement was amended to extend the period of time during which the Company may borrow money to October 2027 and to increase the borrowing capacity to $ 300.0 million.

The Company also has a separate private note purchase agreement with PGIM and certain other lenders for the issuance of $ 125.0 million of senior unsecured promissory notes (“Unsecured Club Notes”, and, collectively with the Unsecured Shelf Notes, the “unsecured senior notes”), of which all $ 125.0 million was issued in September 2021.

The following table shows the notes issued under both agreements as of September 30, 2024 and December 31, 2023.

The following table shows the notes issued under both agreements as of March 31, 2025 and December 31, 2024.

(in thousands)

Amount Maturity Date Interest Rate

Amount Maturity Date Fixed Interest Rate

Series A $ 75,000 September 13, 2029 3.84 %

5 unchanged sentences

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

Centerspace has a $ 198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”).

Centerspace has a $ 198.9 million Fannie Mae Credit Facility Agreement (“FMCF”).

The FMCF is secured by mortgages on 11 apartment communities.

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

As of September 30, 2024 and December 31, 2023, the FMCF had a balance of $ 198.9 million.

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

As of March 31, 2025 and December 31, 2024, 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, 2024, Centerspace owned 14 apartment communities that served as collateral for mortgage loans, in addition to the apartment communities secured by the FMCF.

As of March 31, 2025, Centerspace owned 15 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, 2024, the Company believes that there were no material defaults or instances of material noncompliance in regard to any of these mortgage loans.

As of September 30, 2024 and December 31, 2023, the mortgage loans had a balance of $ 387.3 million and $ 392.3 million, respectively, excluding unamortized premiums and discounts.

As of March 31, 2025, the Company believes that there were no material defaults or instances of material noncompliance in regard to any of these mortgage loans.

As of March 31, 2025 and December 31, 2024, the mortgage loans had a balance of $ 418.5 million and $ 420.4 million, respectively, excluding unamortized premiums and discounts.

The mortgage loans are included within mortgages payable on the Condensed Consolidated Balance Sheets.

The aggregate amount of required future principal payments on lines of credit, notes payable, and mortgages payable as of September 30, 2024, was as follows:

The aggregate amount of required future principal payments on outstanding debt as of March 31, 2025, was as follows:

(in thousands)

2 unchanged sentences

Total payments

Premiums and discounts, net ( 345 )

Deferred financing costs, net ( 3,533 )

Deferred financing costs, premiums, and discounts on mortgages payable, net ( 10,174 )

Deferred financing costs on notes payable, net ( 465 )

NOTE 6 • DERIVATIVE INSTRUMENTS

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During the next twelve months, the Company estimates an additional $ 232,000 will be reclassified as an increase to interest expense.

As of September 30, 2024 and December 31, 2023 the Company had no remaining interest rate swaps.

The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of September 30, 2024 and 2023.

As of March 31, 2025 and December 31, 2024 the Company had no remaining interest rate swaps.

The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of March 31, 2025 and 2024.

(in thousands)

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

Three months ended September 30, 2024 2023 2024 2023

Total derivatives in cash flow hedging relationships - Interest rate contracts $ — $ — Interest expense $ ( 171 ) $ ( 324 )

Nine months ended September 30,

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

Three months ended March 31, 2025 2024 2025 2024

Total derivatives in cash flow hedging relationships - Interest rate contracts $ — $ — Interest expense $ ( 175 ) $ ( 197 )

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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).

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

Balance Sheet Location Total Level 1 Level 2 Level 3

September 30, 2024

March 31, 2025

Real estate related notes receivable Other assets $ 25,406 — — $ 25,406

6 unchanged sentences

Fair Value Measurement Other Gains Interest Income Total Changes in Fair Value Included in Current-Period Earnings

Nine months ended September 30, 2024

Three months ended March 31, 2025

Real estate related notes receivable $ 25,406 $ 9 $ 531 $ 540

Nine months ended September 30, 2023

Three months ended March 31, 2024

Real estate related notes receivable $ 14,103 $ 5 $ 208 $ 213

As of September 30, 2024 and December 31, 2023, Centerspace had investments totaling $ 2.2 million and $ 2.1 million, respectively, in real estate technology venture funds consisting of privately held entities that develop technology related to the real estate industry.

These investments appear within other assets on our Condensed Consolidated Balance Sheets.

As of March 31, 2025 and December 31, 2024, Centerspace had investments totaling $ 2.9 million and $ 2.7 million, respectively, in real estate technology venture funds consisting of privately held entities that develop technology related to the real estate industry.

These investments appear within other assets on the Condensed Consolidated Balance Sheets.

The investments are measured at net asset value (“NAV”) as a practical expedient under ASC 820.

As of September 30, 2024, the Company had further unfunded commitments of $ 950,000 .

As of March 31, 2025, the Company had unfunded commitments of $ 850,000 .

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, 2024.

Non-financial assets measured at fair value on a nonrecurring basis at December 31, 2023 consisted of real estate investments that were written-down to estimated fair value during the year ended December 31, 2023.

(in thousands)

Balance Sheet Location Total Level 1 Level 2 Level 3

December 31, 2023

Real estate investments measured at fair value Property owned

$ 19,250 $ — $ 19,250 $ —

As of December 31, 2023, the Company estimated the fair value of real estate investments using market offers to purchase and other market data.

There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2025 and December 31, 2024.

Financial Assets and Liabilities Not Measured at Fair Value

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 September 30, 2024 and December 31, 2023, respectively, are as follows:

The fair value of unsecured senior notes and mortgages payable is 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, 2025 and December 31, 2024, respectively, are as follows:

(in thousands)

September 30, 2024 December 31, 2023

Balance Sheet Location Carrying Amount Fair Value Carrying Amount Fair Value

March 31, 2025 December 31, 2024

Balance Sheet Location Amount

Fair Value Amount

FINANCIAL ASSETS

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Revolving lines of credit Revolving lines of credit $ 48,734 $ 48,734 $ 47,359 $ 47,359

Unsecured senior notes Notes payable $ 300,000 $ 259,103 $ 300,000 $ 252,108

Unsecured senior notes (1)

Notes payable $ 300,000 $ 260,468 $ 300,000 $ 253,808

Mortgages payable - Fannie Mae credit facility Mortgages payable $ 198,850 $ 172,735 $ 198,850 $ 166,679

Mortgages payable - other Mortgages payable $ 386,949 $ 369,209 $ 391,140 $ 367,080

Mortgages payable - other (1)

Mortgages payable $ 418,508 $ 393,049 $ 420,414 $ 383,213

(1) Excludes deferred financing costs, debt premiums, and discounts

NOTE 8 • ACQUISITIONS AND DISPOSITIONS

Centerspace did not acquire new real estate during the three and nine months ended September 30, 2024 and 2023.

Centerspace did not dispose of any real estate during the three months ended September 30, 2024.

During the three months ended September 30, 2023, Centerspace disposed of four apartment communities and associated commercial space, in one transaction for an aggregate sales price of $ 82.5 million.

During the nine months ended September 30, 2024, Centerspace disposed of two apartment communities in two exchange transactions for an aggregate sales price of $ 19.0 million.

During the nine months ended September 30, 2023, Centerspace disposed of 13 apartment communities and associated commercial space, in five transactions for an aggregate sales price of $ 226.8 million.

The dispositions for the nine months ended September 30, 2024 and 2023 are detailed below.

Nine Months Ended September 30, 2024

Centerspace did not acquire new real estate during the three months ended March 31, 2025 and 2024.

Centerspace did not dispose of any real estate during the three months ended March 31, 2025.

During the three months ended March 31, 2024, Centerspace disposed of two apartment communities in two exchange transactions for an aggregate sales price of $ 19.0 million.

The dispositions for the three months ended March 31, 2024 are detailed below.

Three Months Ended March 31, 2024

(in thousands)

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Total Dispositions $ 19,000 $ 19,577 $ ( 577 )

Nine Months Ended September 30, 2023

(in thousands)

Dispositions Date

Disposed Sale Price Net Book Value and Transaction Costs

115 homes - Boulder Court - Eagan, MN

March 8, 2023 $ 14,605 $ 4,970 $ 9,635

498 homes - 2 Nebraska apartment communities

March 14, 2023 $ 48,500 $ 14,975 $ 33,525

892 homes - 5 Minnesota apartment communities

March 15, 2023 $ 74,500 $ 55,053 $ 19,447

62 homes - Portage - Minneapolis, MN

March 15, 2023 $ 6,650 $ 9,098 $ ( 2,448 )

712 homes - 4 North Dakota apartment communities

September 14, 2023 $ 82,500 $ 71,218 $ 11,282

Total Dispositions $ 226,755 $ 155,314 $ 71,441

NOTE 9 • SEGMENTS

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Each of the operating properties is considered a separate operating segment because each property earns revenues, incurs expenses, and has discrete financial information.

The chief operating decision-makers evaluate each property’s operating results to make decisions about resources to be allocated and to assess performance and do not group the properties based on geography, size, or type for this purpose.

The apartment communities have similar long-term economic characteristics and provide similar products and services to residents.

The chief executive officer and chief financial officer are the chief operating decision-makers (“CODM”).

The CODMs evaluate each property’s operating results, using net operating income (“NOI”) to make decisions about resources to be allocated and to assess property performance, and do not group the properties based on geography, size, or type for this purpose.

The Company defines NOI as total real estate revenues less property operating expenses, including real estate taxes.

Centerspace believes that NOI is an important measure of operating performance for real estate because it provides a measure of operations that excludes gain (loss) on the sale of real estate and other assets, impairment, depreciation, amortization, financing, including interest income and interest expense, property management expenses, loss on litigation settlement, casualty losses, and general and administrative expense.

The apartment communities have similar long-term economic characteristics and similar operating characteristics, such as type and length of lease, services offered to residents, and property management practices.

No apartment community comprises more than 10% of consolidated revenues, profits, or assets.

Accordingly, the apartment communities are aggregated into a single reportable segment.

“All other” includes non-multifamily components of mixed-use properties and apartment communities the Company has disposed or designated as held for sale.

For the nine months ended September 30, 2024, two sold apartment communities were reclassified from the multifamily segment to “all other” for all periods presented.

For the nine months ended September 30, 2023, thirteen sold apartment communities were reclassified from the multifamily segment to “all other” for all periods presented.

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”), a non-GAAP 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 excludes gain (loss) on the sale of real estate and other assets, impairment, depreciation, amortization, financing costs, property management overhead, casualty gains (losses), loss on litigation settlement, and general and administrative expense.

NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income (loss), net income (loss) 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, 2024 and 2023, respectively, along with reconciliations to net income (loss) in the Condensed Consolidated Financial Statements.

Accordingly, the apartment communities are aggregated into a single reportable segment, Multifamily.

“All other” is composed of non-multifamily properties, non-multifamily components of mixed-use properties and apartment communities the Company has disposed or designated as held for sale, which did not meet the aggregation criteria.

The following tables present NOI for the three months ended March 31, 2025 and 2024, respectively, along with reconciliations to net income (loss) as reported 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, 2024 Multifamily All Other Total

Revenue $ 64,457 $ 568 $ 65,025

Property operating expenses, including real estate taxes 26,430 229 26,659

Net operating income $ 38,027 $ 339 $ 38,366

Property management expense ( 2,242 )

Casualty gain

Depreciation and amortization ( 26,084 )

General and administrative expenses ( 4,102 )

Interest expense ( 8,946 )

Interest and other income 645

(in thousands)

Three Months Ended September 30, 2023 Multifamily All Other Total

Three Months Ended March 31, 2025 Multifamily All Other Total

Revenue $ 66,244 $ 849 $ 67,093

Property operating expenses, including real estate taxes 25,018 1,727 26,745

Property operating expenses

On-site compensation (1)

6,872 — 6,872

Repairs and maintenance (2)

3,142 47 3,189

Utilities 4,810 47 4,857

Administrative and marketing 1,557 2 1,559

Insurance 2,570 21 2,591

Real estate taxes 7,440 223 7,663

Net operating income $ 39,853 $ 509 $ 40,362

3 unchanged sentences

General and administrative expenses ( 4,997 )

Gain on sale of real estate and other investments

Interest expense ( 9,635 )

Interest and other income 708

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

(2) Includes turnover expense.

(in thousands)

Nine Months Ended September 30, 2024 Multifamily All Other Total

Three Months Ended March 31, 2024 Multifamily All Other Total

Revenue $ 63,339 $ 1,167 $ 64,506

Property operating expenses, including real estate taxes 75,943 974 76,917

Property operating expenses

On-site compensation (1)

6,711 85 6,796

Repairs and maintenance (2)

3,262 118 3,380

Utilities 4,161 98 4,259

Administrative and marketing 1,617 14 1,631

Insurance 2,657 41 2,698

Real estate taxes 6,152 153 6,305

Net operating income $ 38,779 $ 658 $ 39,437

6 unchanged sentences

Interest and other income

(in thousands)

Nine Months Ended September 30, 2023 Multifamily All Other Total

Revenue $ 180,759 $ 16,482 $ 197,241

Property operating expenses, including real estate taxes 72,771 7,943 80,714

Net operating income $ 107,988 $ 8,539 $ 116,527

Property management expense ( 7,012 )

Casualty loss

Depreciation and amortization ( 75,061 )

General and administrative expenses ( 15,717 )

Gain on sale of real estate and other investments

Loss on litigation settlement ( 2,864 )

Interest expense ( 27,516 )

Interest and other income 674

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

(2) Includes turnover expense.

Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of September 30, 2024, and December 31, 2023, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:

Segment assets are summarized as follows as of March 31, 2025, and December 31, 2024, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:

(in thousands)

As of September 30, 2024 Multifamily All Other Total

As of March 31, 2025 Multifamily All Other Total

Segment assets

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Centerspace is involved in various lawsuits arising in the normal course of business and believes that such matters will not have a material adverse effect on the Condensed Consolidated Financial Statements.

Centerspace was the named defendant in a lawsuit where the owner of a neighboring property claimed a retaining wall at one of its properties was causing water damage to the neighboring property.

The claim was for damage to the property and monetary losses.

During the nine months ended September 30, 2023, the Company recorded a loss on litigation settlement of $ 2.9 million due to a trial judgement entered against the Centerspace.

In November 2023, the claimant filed motions requesting additional interest on the judgment and trial costs.

The claimant was awarded an additional $ 1.0 million in judgment related interest and costs.

The additional $ 1.0 million was a recognizable subsequent event for the year ended December 31, 2023 so was recorded as a loss during the year ended December 31, 2023.

After the additional judgment, the claimant’s appeal was dismissed.

The Company believes this matter is settled.

Environmental Matters.

2 unchanged sentences

Limitations on Taxable Dispositions.

Twenty-seven properties, consisting of 5,033 apartment homes, are subject to limitations on taxable dispositions under agreements entered into with certain of the sellers or contributors of the properties and are effective for varying periods.

Twenty-eight properties, consisting of approximately 5,162 apartment homes, are subject to limitations on taxable dispositions under agreements entered into with certain 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 these properties during the limitation period because it generally holds these and other properties for investment purposes rather than for sale.

2 unchanged sentences

Unfunded Commitments.

Centerspace has unfunded commitments of $ 950,000 in two real estate technology venture funds.

As of March 31, 2025, Centerspace had unfunded commitments of $ 850,000 in two real estate technology venture funds.

Refer to Note 7 - Fair Value Measurements for additional information regarding these investments.

NOTE 11 • SHARE-BASED COMPENSATION

awards in the form of cash, unrestricted and restricted common shares, stock options, stock appreciation rights, and RSUs up to an aggregate of 775,000 shares over the ten-year period in which the plan is in effect.

Share-based awards are provided to officers, non-officer employees, and trustees under the 2015 Incentive Plan approved by shareholders on September 15, 2015, as amended and restated on May 18, 2021 (the “2015 Incentive Plan”), which allows for awards in the form of cash, unrestricted and restricted common shares, stock options, stock appreciation rights, and RSUs up to an aggregate of 775,000 shares over the ten-year period in which the plan is in effect.

Under the 2015 Incentive Plan, officers and non-officer employees may earn share awards under a long-term incentive plan (“LTIP”), which is a forward-looking program that measures long-term performance over the stated performance period.

1 unchanged sentence

The terms of the long-term incentive awards granted under the revised program may vary from year to year.

Through September 30, 2024, awards under the 2015 Incentive Plan consisted of restricted and unrestricted common shares, RSUs, and stock options.

Through March 31, 2025, awards under the 2015 Incentive Plan consisted of restricted and unrestricted common shares, RSUs, and stock options.

The Company accounts for forfeitures of restricted and unrestricted common shares, RSUs, and stock options when they occur instead of estimating the forfeitures.

1 unchanged sentence

Awards granted to employees on January 1, 2025, consisted of an aggregate of 25,121 time-based RSU awards and 11,870 performance RSUs based on total shareholder return (“TSR”).

The time-based awards vest as to one-third of the shares on each of January 1, 2025, January 1, 2026, and January 1, 2027.

The time-based RSUs vest as to one-third of the shares on each of January 1, 2026, January 1, 2027, and January 1, 2028.

The performance RSUs are earned based on the Company’s TSR as compared to the FTSE Nareit Equity Index over a forward looking three-year period.

4 unchanged sentences

Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved.

The Company based the expected volatility on a weighted average of the historical volatility of the Company’s daily closing share price and a select peer average volatility, the risk-free interest rate on the U.S.

treasury bond rates with a maturity equal to the remaining performance period of the award, and the expected term on the performance period of the award.

The Company based the expected volatility on a weighted average of the historical volatility of the Company’s daily closing share price, the risk-free interest rate on U.S.

treasury bonds with a maturity equal to the remaining performance period of the award, and the expected term on the performance period of the award.

The assumptions used to value the TSR performance RSUs were an expected volatility of 27.30 %, a risk-free interest rate of 4.27 %, and an expected life of 3 years.

The share price at the grant date, January 1, 2025, was $ 66.15 per share.

Awards granted to trustees on May 20, 2024 consist of 8,611 time-based RSUs, which vest on May 20, 2025.

These awards are classified as equity awards.

Share-Based Compensation Expense

Share-based compensation expense recognized in the Condensed Consolidated Financial Statements for all outstanding share-based awards was $ 764,000 and $ 602,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 2.2 million and $ 2.7 million for the nine months ended September 30, 2024 and 2023, respectively.

On March 31, 2023, the Company accelerated the vesting of all unvested time-based RSUs and stock options in connection with the Separation Agreement with Mr.

This resulted in the acceleration of share-based compensation expense for those awards resulting in an additional $ 737,000 in expense for the nine months ended September 30, 2023.

NOTE 12 • SUBSEQUENT EVENTS

On October 1, 2024, Centerspace closed on the acquisition of The Lydian in Denver, CO, for total consideration of $ 54.0 million.

The Lydian is a 129 -home apartment community that also includes 23,000 square feet of fully leased office and street-level retail space.

The acquisition was financed through the assumption of mortgage debt, issuance of common operating partnership units, and cash.

Total share-based compensation expense recognized in the Condensed Consolidated Financial Statements for all outstanding share-based awards was $ 858,000 and $ 749,000 for the three months ended March 31, 2025 and 2024, 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