MINNEAPOLIS, Feb. 21,
2023 /PRNewswire/ -- Centerspace (NYSE: CSR)
announced today its financial and operating results for the year
ended December 31, 2022. The tables below show Net Income
(Loss), Funds from Operations ("FFO")1, and Core
FFO1, all on a per share basis, for the year ended
December 31, 2022; Same-Store Revenues, Expenses, and Net
Operating Income ("NOI")1 over comparable periods;
and Same-Store Weighted Average Occupancy for the three months
ended December 31, 2022, September 30,
2022, and December 31, 2021 and the twelve months ended
December 31, 2022 and 2021.
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
Per
Share
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net loss per share -
diluted
|
|
$
(0.24)
|
|
$
(0.61)
|
|
$
(1.35)
|
|
$
(0.47)
|
FFO -
diluted(1)
|
|
1.16
|
|
1.07
|
|
4.32
|
|
3.54
|
Core FFO -
diluted(1)
|
|
1.17
|
|
1.08
|
|
4.43
|
|
3.99
|
|
|
Year-Over-Year
Comparison
|
|
Sequential Comparison
|
|
YTD Comparison
|
Same-Store
Results
|
|
4Q22 vs
4Q21
|
|
4Q22 vs.
3Q22
|
|
CY22 vs.
CY21
|
Revenues
|
|
9.3 %
|
|
2.2 %
|
|
10.0 %
|
Expenses
|
|
14.2 %
|
|
3.3 %
|
|
11.6 %
|
Net Operating Income
("NOI")(1)
|
|
6.1 %
|
|
1.4 %
|
|
9.0 %
|
|
|
Three months
ended
|
|
Twelve months
ended
|
Same-Store
Results
|
|
December 31,
2022
|
|
September 30,
2022
|
|
December 31,
2021
|
|
December 31,
2022
|
|
December 31,
2021
|
Weighted Average
Occupancy
|
|
94.9 %
|
|
94.5 %
|
|
93.4 %
|
|
94.5 %
|
|
94.3 %
|
|
|
(1)
|
NOI, Funds from
Operations, and Core FFO are non-GAAP financial measures. For
more information on their usage and presentation, and a
reconciliation to the most directly comparable GAAP measures, refer
to "Non-GAAP Financial Measures and Reconciliations" in the
Supplemental Financial and Operating Data below.
|
Highlights for the Year Ended December 31, 2022
- Net Loss was $1.35 per diluted
share for the year ended December 31,
2022, compared to Net Loss of $0.47 per diluted share for the year ended
December 31, 2021;
- Core FFO(1) increased to $4.43 or 11.0% per diluted share for the year
ended December 31, 2022, compared to $3.99 for the year ended December 31,
2021;
- Same-store year-over-year NOI(1) growth of 9.0%
driven by same-store revenue growth of 10.0%; and
- Repurchased 432,000 common shares for total consideration of
$29.1 million and an average of
$67.23 per share.
Balance Sheet
Centerspace closed on a $100.0
million term loan which bears interest at a floating rate of
120 to 175 basis points over the Secured Overnight Financing Rate
("SOFR") based upon its leverage ratio and has a 364-day term with
an option to extend for an additional 364-day term.
At December 31, 2022, Centerspace had $153.0 million of total liquidity on its balance
sheet, including $142.5 million
available on its lines of credit.
Subsequent Events
Subsequent to December 31, 2022, we entered into definitive
purchase and sale agreements for nine communities and believe they
will close in the first quarter. The closing of pending
transactions is subject to certain conditions and restrictions;
therefore, there can be no assurance that the transactions will be
consummated or that the final terms will not differ in material
respects.
2023 Financial Outlook
Centerspace is providing the following guidance for its 2023
performance.
2023 Financial
Outlook
|
|
|
|
Range for
2023
|
|
2022
Actual
|
|
Low
|
|
High
|
Net income (loss) per
Share - diluted
|
$
(1.35)
|
|
$
2.37
|
|
$
3.25
|
FFO per Share -
diluted
|
$
4.32
|
|
$
4.21
|
|
$
4.50
|
Core FFO per Share -
diluted
|
$
4.43
|
|
$
4.27
|
|
$
4.56
|
Additional assumptions:
- Same-store capital expenditures of $1,100 per home to $1,150 per home
- Value-add expenditures of $24.5
million to $27.5 million
- Proceeds from potential dispositions of $155.0 million to $165.0
million
FFO and Core FFO are non-GAAP financial measures. For more
information on their usage and presentation, and a reconciliation
to the most directly comparable GAAP measures, please refer to
"2023 Financial Outlook" in the Supplemental Financial and
Operating Data below.
Earnings Call
Live webcast and
replay: https://www.ir.centerspacehomes.com
|
|
|
|
Live Conference
Call
|
|
Conference Call
Replay
|
Wednesday, February 22,
2023 at 10:00 AM ET
|
|
Replay available until
March 8, 2023
|
USA Toll Free
Number
|
1-844-200-6205
|
|
USA Toll Free
Number
|
1-866-813-9403
|
International Toll Free
Number
|
1-929-526-1599
|
|
International Toll Free
Number
|
44-204-525-0658
|
Canada Toll Free
Number
|
1-833-950-0062
|
|
Canada Toll Free
Number
|
1-226-828-7578
|
Conference
Number
|
831728
|
|
Conference
Number
|
229148
|
Supplemental Information
Supplemental Operating and Financial Data for the year ended
December 31, 2022, is available in the Investors section on
Centerspace's website at https://www.centerspacehomes.com or by
calling Investor Relations at 701-837-7104. Non-GAAP financial
measures and other capitalized terms, as used in this earnings
release, are defined and reconciled in the Supplemental Financial
and Operating Data, which accompanies this earnings release.
About Centerspace
Centerspace is an owner and operator of
apartment communities committed to providing great homes by
focusing on integrity and serving others. Founded in 1970, as of
December 31, 2022, Centerspace owned 84 apartment communities
consisting of 15,065 homes located in Colorado, Minnesota, Montana, Nebraska, North
Dakota, and South Dakota.
Centerspace was named a Top Workplace for 2022 by the
Minneapolis Star Tribune. For more information, please visit
www.centerspacehomes.com.
Forward-Looking Statements
Certain statements in this press release are based on the
company's current expectations and assumptions, and are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements do not discuss historical fact, but instead include
statements related to expectations, projections, intentions or
other items related to the future. Forward-looking statements are
typically identified by the use of terms such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks,"
"estimates," "will," "assumes," "may," "projects," "outlook,"
"future," and variations of such words and similar expressions.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance, or achievements to be materially different from the
results of operations, financial conditions, or plans expressed or
implied by the forward-looking statements. Although the company
believes the expectations reflected in its forward-looking
statements are based upon reasonable assumptions, it can give no
assurance that the expectations will be achieved. Any statements
contained herein that are not statements of historical fact should
be deemed forward-looking statements. As a result, reliance should
not be placed on these forward-looking statements, as these
statements are subject to known and unknown risks, uncertainties,
and other factors beyond the company's control and could differ
materially from actual results and performance. Such risks and
uncertainties are detailed from time to time in filings with the
SEC, including the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors"
contained in the company's Annual Report on Form 10-K, in quarterly
reports on Form 10-Q, and in other reports the company files with
the SEC from time to time. The company assumes no obligation to
update or supplement forward-looking statements that become untrue
due to subsequent events.
Contact Information
Investor Relations
Joe McComish
Phone: 701-837-7104
E-mail: IR@centerspacehomes.com
Marketing & Media
Kelly Weber
Phone: 701-837-7104
E-mail: kweber@centerspacehomes.com
Common Share Data
(NYSE: CSR)
|
|
|
|
Three Months
Ended
|
|
|
December 31,
2022
|
|
September 30,
2022
|
|
June 30,
2022
|
|
March 31,
2022
|
|
December 31,
2021
|
High closing
price
|
|
$
70.20
|
|
$
89.71
|
|
$
103.17
|
|
$
108.27
|
|
$
111.26
|
Low closing
price
|
|
$
58.50
|
|
$
65.85
|
|
$
76.65
|
|
$
89.01
|
|
$
96.58
|
Average closing
price
|
|
$
64.64
|
|
$
79.40
|
|
$
87.61
|
|
$
97.15
|
|
$
103.29
|
Closing price at end of
quarter
|
|
$
58.67
|
|
$
67.32
|
|
$
81.55
|
|
$
98.12
|
|
$
110.90
|
Common share
distributions—annualized
|
|
$
2.92
|
|
$
2.92
|
|
$
2.92
|
|
$
2.92
|
|
$
2.88
|
Closing price dividend
yield - annualized
|
|
5.0 %
|
|
4.3 %
|
|
3.6 %
|
|
3.0 %
|
|
2.6 %
|
Closing common shares
outstanding
(thousands)
|
|
15,020
|
|
15,376
|
|
15,373
|
|
15,365
|
|
15,016
|
Closing limited
partnership units
outstanding (thousands)
|
|
971
|
|
980
|
|
995
|
|
997
|
|
832
|
Closing Series E
preferred units, as
converted (thousands)
|
|
2,119
|
|
2,186
|
|
2,186
|
|
2,186
|
|
2,186
|
Closing market value of
outstanding
common shares, plus imputed closing
market value of outstanding limited
partnership units (thousands)
|
|
$
1,062,514
|
|
$
1,248,247
|
|
$ 1,513,079
|
|
$ 1,819,930
|
|
$
1,999,971
|
CENTERSPACE CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited) (in thousands,
except per share amounts)
|
|
|
|
Three Months Ended
|
|
|
Twelve months
ended
|
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
|
|
12/31/2022
|
|
12/31/2021
|
REVENUE
|
|
$
67,848
|
|
$ 65,438
|
|
$ 63,116
|
|
$ 60,314
|
|
$ 57,988
|
|
|
$
256,716
|
|
$
201,705
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses, excluding real
estate taxes
|
|
21,755
|
|
20,290
|
|
19,011
|
|
19,014
|
|
16,852
|
|
|
80,070
|
|
57,753
|
Real estate
taxes
|
|
7,464
|
|
7,039
|
|
7,205
|
|
6,859
|
|
6,654
|
|
|
28,567
|
|
24,104
|
Property management
expenses
|
|
2,358
|
|
2,563
|
|
2,721
|
|
2,253
|
|
2,697
|
|
|
9,895
|
|
8,752
|
Casualty
loss
|
|
335
|
|
276
|
|
382
|
|
598
|
|
280
|
|
|
1,591
|
|
344
|
Depreciation and
amortization
|
|
25,768
|
|
23,720
|
|
24,768
|
|
31,001
|
|
30,418
|
|
|
105,257
|
|
92,165
|
General and
administrative expenses
|
|
3,276
|
|
4,519
|
|
5,221
|
|
4,500
|
|
4,231
|
|
|
17,516
|
|
16,213
|
TOTAL
EXPENSES
|
|
$
60,956
|
|
$ 58,407
|
|
$ 59,308
|
|
$ 64,225
|
|
$ 61,132
|
|
|
$
242,896
|
|
$
199,331
|
Gain (loss) on sale of
real estate and other
investments
|
|
14
|
|
—
|
|
27
|
|
—
|
|
678
|
|
|
41
|
|
27,518
|
Operating income
(loss)
|
|
6,906
|
|
7,031
|
|
3,835
|
|
(3,911)
|
|
(2,466)
|
|
|
13,861
|
|
29,892
|
Interest
expense
|
|
(9,603)
|
|
(7,871)
|
|
(7,561)
|
|
(7,715)
|
|
(7,456)
|
|
|
(32,750)
|
|
(29,078)
|
Interest and other
income (loss)
|
|
132
|
|
70
|
|
(17)
|
|
1,063
|
|
1,117
|
|
|
1,248
|
|
(2,915)
|
Net income
(loss)
|
|
$
(2,565)
|
|
$
(770)
|
|
$ (3,743)
|
|
$
(10,563)
|
|
$ (8,805)
|
|
|
$
(17,641)
|
|
$ (2,101)
|
Dividends to Series D
preferred unitholders
|
|
(160)
|
|
(160)
|
|
(160)
|
|
(160)
|
|
(160)
|
|
|
(640)
|
|
(640)
|
Net (income) loss
attributable to noncontrolling
interest – Operating Partnership and Series E
preferred units
|
|
753
|
|
439
|
|
950
|
|
2,157
|
|
1,793
|
|
|
4,299
|
|
2,806
|
Net (income) loss
attributable to noncontrolling
interests – consolidated real estate entities
|
|
(34)
|
|
(32)
|
|
(38)
|
|
(23)
|
|
(36)
|
|
|
(127)
|
|
(94)
|
Net income (loss)
attributable to controlling
interests
|
|
(2,006)
|
|
(523)
|
|
(2,991)
|
|
(8,589)
|
|
(7,208)
|
|
|
(14,109)
|
|
(29)
|
Dividends to preferred
shareholders
|
|
(1,607)
|
|
(1,607)
|
|
(1,607)
|
|
(1,607)
|
|
(1,607)
|
|
|
(6,428)
|
|
(6,428)
|
NET INCOME (LOSS)
AVAILABLE TO
COMMON SHAREHOLDERS
|
|
$
(3,613)
|
|
$ (2,130)
|
|
$ (4,598)
|
|
$
(10,196)
|
|
$ (8,815)
|
|
|
$
(20,537)
|
|
$ (6,457)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data -
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per
common share – basic
and diluted
|
|
$
(0.24)
|
|
$
(0.14)
|
|
$
(0.30)
|
|
$
(0.68)
|
|
$
(0.61)
|
|
|
$
(1.35)
|
|
$
(0.47)
|
CENTERSPACE CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited) (in thousands)
|
|
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Real estate
investments
|
|
|
|
|
|
|
|
|
|
|
Property
owned
|
|
$
2,534,124
|
|
$
2,513,470
|
|
$
2,401,427
|
|
$
2,390,952
|
|
$
2,271,170
|
Less accumulated
depreciation
|
|
(535,401)
|
|
(511,000)
|
|
(487,834)
|
|
(465,752)
|
|
(443,592)
|
|
|
1,998,723
|
|
2,002,470
|
|
1,913,593
|
|
1,925,200
|
|
1,827,578
|
Mortgage loans
receivable
|
|
—
|
|
—
|
|
—
|
|
—
|
|
43,276
|
Total real estate
investments
|
|
1,998,723
|
|
2,002,470
|
|
1,913,593
|
|
1,925,200
|
|
1,870,854
|
Cash and cash
equivalents
|
|
10,458
|
|
14,957
|
|
13,156
|
|
13,313
|
|
31,267
|
Restricted
cash
|
|
1,433
|
|
1,417
|
|
1,914
|
|
2,409
|
|
7,358
|
Other
assets
|
|
22,687
|
|
19,742
|
|
18,950
|
|
24,651
|
|
30,582
|
TOTAL ASSETS
|
|
$
2,033,301
|
|
$
2,038,586
|
|
$
1,947,613
|
|
$
1,965,573
|
|
$
1,940,061
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, MEZZANINE
EQUITY, AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
58,812
|
|
$
58,322
|
|
$
48,077
|
|
$
50,360
|
|
$
62,403
|
Revolving line of
credit
|
|
113,500
|
|
171,500
|
|
73,000
|
|
46,000
|
|
76,000
|
Notes payable, net of
unamortized loan costs
|
|
399,007
|
|
299,388
|
|
299,374
|
|
299,359
|
|
299,344
|
Mortgages payable, net
of unamortized loan costs
|
|
495,126
|
|
496,530
|
|
497,917
|
|
521,536
|
|
480,703
|
TOTAL
LIABILITIES
|
|
$
1,066,445
|
|
$
1,025,740
|
|
$ 918,368
|
|
$ 917,255
|
|
$ 918,450
|
|
|
|
|
|
|
|
|
|
|
|
SERIES D PREFERRED
UNITS
|
|
$
16,560
|
|
$
16,560
|
|
$
18,627
|
|
$
22,412
|
|
$
25,331
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
Series C Preferred
Shares of Beneficial Interest
|
|
93,530
|
|
93,530
|
|
93,530
|
|
93,530
|
|
93,530
|
Common Shares of
Beneficial Interest
|
|
1,177,484
|
|
1,209,732
|
|
1,207,849
|
|
1,203,685
|
|
1,157,255
|
Accumulated
distributions in excess of net income
|
|
(539,422)
|
|
(524,905)
|
|
(511,552)
|
|
(495,732)
|
|
(474,318)
|
Accumulated other
comprehensive income (loss)
|
|
(2,055)
|
|
(2,158)
|
|
(2,362)
|
|
(2,550)
|
|
(4,435)
|
Total shareholders'
equity
|
|
$ 729,537
|
|
$ 776,199
|
|
$ 787,465
|
|
$ 798,933
|
|
$ 772,032
|
Noncontrolling
interests – Operating Partnership and Series E preferred
units
|
|
220,132
|
|
219,466
|
|
222,528
|
|
226,302
|
|
223,600
|
Noncontrolling
interests – consolidated real estate entities
|
|
627
|
|
621
|
|
625
|
|
671
|
|
648
|
TOTAL EQUITY
|
|
$ 950,296
|
|
$ 996,286
|
|
$
1,010,618
|
|
$
1,025,906
|
|
$ 996,280
|
TOTAL LIABILITIES,
MEZZANINE EQUITY, AND EQUITY
|
|
$
2,033,301
|
|
$
2,038,586
|
|
$
1,947,613
|
|
$
1,965,573
|
|
$
1,940,061
|
CENTERSPACE
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATIONS (unaudited)
This release contains certain non-GAAP financial measures. The
non-GAAP financial measures should not be considered a substitute
for operating results determined in accordance with accounting
principles generally accepted in the
United States of America ("GAAP"). The definitions and
calculations of these non-GAAP financial measures, as calculated by
the company may not be comparable to non-GAAP measures reported by
other REITs that do not define each of the non-GAAP financial
measures exactly as Centerspace does.
The company provides certain information on a same-store and
non-same-store basis. Same-store apartment communities are owned or
in service for substantially all of the periods being compared,
and, in the case of development properties, have achieved a target
level of physical occupancy of 90%. On the first day of each
calendar year, Centerspace determines the composition of the
same-store pool for that year and adjusts the previous year, to
evaluate full period-over-period operating comparisons for existing
apartment communities and their contribution to Net Operating
Income. Measuring performance on a same-store basis allows
investors to evaluate how a fixed pool of communities are
performing year-over-year. Centerspace uses this measure to assess
success in increasing NOI (defined and reconciled below), renewing
leases on existing residents, controlling operating costs, and
making prudent capital improvements.
Reconciliation of Operating Income (Loss) to Net Operating
Income
Net Operating Income, or NOI, is a non-GAAP financial measure
which the company defines as total real estate revenues less
property operating expenses, including real estate taxes.
Centerspace believes that NOI is an important supplemental measure
of operating performance for real estate because it provides a
measure of operations that is unaffected by depreciation and
amortization, financing costs, property management expenses,
casualty losses, and general and administrative expenses. NOI does
not represent cash generated by operating activities in accordance
with GAAP and should not be considered an alternative to net
income, net income available for common shareholders, or cash flow
from operating activities as a measure of financial
performance.
|
(dollars
in thousands)
|
|
Three Months
Ended
|
|
|
Sequential
|
|
Year-Over-Year
|
|
12/31/2022
|
|
9/30/2022
|
|
12/31/2021
|
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
Operating income
(loss)
|
$
6,906
|
|
$
7,031
|
|
$ (2,466)
|
|
|
$ (125)
|
|
(1.8) %
|
|
$ 9,372
|
|
(380.0) %
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management
expenses
|
2,358
|
|
2,563
|
|
2,697
|
|
|
(205)
|
|
(8.0) %
|
|
(339)
|
|
(12.6) %
|
Casualty
loss
|
335
|
|
276
|
|
280
|
|
|
59
|
|
21.4 %
|
|
55
|
|
19.6 %
|
Depreciation and
amortization
|
25,768
|
|
23,720
|
|
30,418
|
|
|
2,048
|
|
8.6 %
|
|
(4,650)
|
|
(15.3) %
|
General and
administrative expenses
|
3,276
|
|
4,519
|
|
4,231
|
|
|
(1,243)
|
|
(27.5) %
|
|
(955)
|
|
(22.6) %
|
Gain (loss) on sale of
real estate and other
investments
|
(14)
|
|
—
|
|
(678)
|
|
|
(14)
|
|
N/A
|
|
664
|
|
(97.9) %
|
Net Operating
Income
|
$ 38,629
|
|
$ 38,109
|
|
$ 34,482
|
|
|
$ 520
|
|
1.4 %
|
|
$ 4,147
|
|
12.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-store
|
$ 51,337
|
|
$ 50,253
|
|
$ 46,980
|
|
|
$ 1,084
|
|
2.2 %
|
|
$ 4,357
|
|
9.3 %
|
Non-same-store
|
15,611
|
|
14,151
|
|
10,198
|
|
|
1,460
|
|
10.3 %
|
|
5,413
|
|
53.1 %
|
Other
|
900
|
|
1,034
|
|
810
|
|
|
(134)
|
|
(13.0) %
|
|
90
|
|
11.1 %
|
Dispositions
|
—
|
|
—
|
|
—
|
|
|
—
|
|
N/A
|
|
—
|
|
N/A
|
Total
|
67,848
|
|
65,438
|
|
57,988
|
|
|
2,410
|
|
3.7 %
|
|
9,860
|
|
17.0 %
|
Property operating
expenses, including real estate
taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-store
|
21,063
|
|
20,389
|
|
18,436
|
|
|
674
|
|
3.3 %
|
|
2,627
|
|
14.2 %
|
Non-same-store
|
7,839
|
|
6,620
|
|
4,753
|
|
|
1,219
|
|
18.4 %
|
|
3,086
|
|
64.9 %
|
Other
|
317
|
|
317
|
|
312
|
|
|
—
|
|
— %
|
|
5
|
|
1.6 %
|
Dispositions
|
—
|
|
3
|
|
5
|
|
|
(3)
|
|
(100.0) %
|
|
(5)
|
|
(100.0) %
|
Total
|
29,219
|
|
27,329
|
|
23,506
|
|
|
1,890
|
|
6.9 %
|
|
5,713
|
|
24.3 %
|
Net Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-store
|
30,274
|
|
29,864
|
|
28,544
|
|
|
410
|
|
1.4 %
|
|
1,730
|
|
6.1 %
|
Non-same-store
|
7,772
|
|
7,531
|
|
5,445
|
|
|
241
|
|
3.2 %
|
|
2,327
|
|
42.7 %
|
Other
|
583
|
|
717
|
|
498
|
|
|
(134)
|
|
(18.7) %
|
|
85
|
|
17.1 %
|
Dispositions
|
—
|
|
(3)
|
|
(5)
|
|
|
3
|
|
(100.0) %
|
|
5
|
|
(100.0) %
|
Total
|
$ 38,629
|
|
$ 38,109
|
|
$ 34,482
|
|
|
$ 520
|
|
1.4 %
|
|
$ 4,147
|
|
12.0 %
|
|
(dollars in
thousands)
|
|
Twelve Months Ended
December 31,
|
|
2022
|
|
2021
|
|
$ Change
|
|
% Change
|
Operating income
(loss)
|
$
13,861
|
|
$ 29,892
|
|
$
(16,031)
|
|
(53.6) %
|
Adjustments:
|
|
|
|
|
|
|
|
Property management
expenses
|
9,895
|
|
8,752
|
|
1,143
|
|
13.1 %
|
Casualty
loss
|
1,591
|
|
344
|
|
1,247
|
|
362.5 %
|
Depreciation and
amortization
|
105,257
|
|
92,165
|
|
13,092
|
|
14.2 %
|
General and
administrative expenses
|
17,516
|
|
16,213
|
|
1,303
|
|
8.0 %
|
Gain (loss) on sale of
real estate and other investments
|
(41)
|
|
(27,518)
|
|
27,477
|
|
(99.9) %
|
Net Operating
Income
|
$
148,079
|
|
$
119,848
|
|
$
28,231
|
|
23.6 %
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
Same-store
|
$
197,348
|
|
$
179,348
|
|
$
18,000
|
|
10.0 %
|
Non-same-store
|
55,602
|
|
16,276
|
|
39,326
|
|
241.6 %
|
Other
|
3,766
|
|
2,831
|
|
935
|
|
33.0 %
|
Dispositions
|
—
|
|
3,250
|
|
(3,250)
|
|
(100.0) %
|
Total
|
256,716
|
|
201,705
|
|
55,011
|
|
27.3 %
|
Property operating
expenses, including real estate taxes
|
|
|
|
|
|
|
|
Same-store
|
80,368
|
|
72,009
|
|
8,359
|
|
11.6 %
|
Non-same-store
|
27,063
|
|
7,087
|
|
19,976
|
|
281.9 %
|
Other
|
1,203
|
|
1,120
|
|
83
|
|
7.4 %
|
Dispositions
|
3
|
|
1,641
|
|
(1,638)
|
|
(99.8) %
|
Total
|
108,637
|
|
81,857
|
|
26,780
|
|
32.7 %
|
Net Operating
Income
|
|
|
|
|
|
|
|
Same-store
|
116,980
|
|
107,339
|
|
9,641
|
|
9.0 %
|
Non-same-store
|
28,539
|
|
9,189
|
|
19,350
|
|
210.6 %
|
Other
|
2,563
|
|
1,711
|
|
852
|
|
49.8 %
|
Dispositions
|
(3)
|
|
1,609
|
|
(1,612)
|
|
(100.2) %
|
Total
|
$
148,079
|
|
$
119,848
|
|
$
28,231
|
|
23.6 %
|
Reconciliation of Same-Store Controllable Expenses to
Property Operating Expenses, Including Real Estate Taxes
Centerspace defines same-store controllable expenses as property
operating expenses excluding real estate taxes and insurance. The
company believes it provides a measure of expenses that are within
management's control, and is used for the purposes of budgeting,
business planning, and performance evaluation. This is a non-GAAP
financial measure and should not be considered an alternative to
total expenses or total property operating expenses and real estate
taxes.
|
(dollars
in thousands)
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
2022
|
|
2021
|
|
$ Change
|
|
% Change
|
|
|
2022
|
|
2021
|
|
$ Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Controllable
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On-site compensation
(1)
|
$ 5,379
|
|
$ 4,614
|
|
$
765
|
|
16.6 %
|
|
|
$
20,341
|
|
$
18,634
|
|
$ 1,707
|
|
9.2 %
|
Repairs and
maintenance
|
3,296
|
|
2,941
|
|
355
|
|
12.1 %
|
|
|
12,810
|
|
10,363
|
|
2,447
|
|
23.6 %
|
Utilities
|
3,458
|
|
2,950
|
|
508
|
|
17.2 %
|
|
|
13,902
|
|
11,762
|
|
2,140
|
|
18.2 %
|
Administrative and
marketing
|
1,069
|
|
1,025
|
|
44
|
|
4.3 %
|
|
|
4,348
|
|
3,934
|
|
414
|
|
10.5 %
|
Total
|
$
13,202
|
|
$
11,530
|
|
$ 1,672
|
|
14.5 %
|
|
|
$
51,401
|
|
$
44,693
|
|
$ 6,708
|
|
15.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controllable
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
taxes
|
$ 5,672
|
|
$ 5,226
|
|
$
446
|
|
8.5 %
|
|
|
$
21,746
|
|
$
21,267
|
|
$
479
|
|
2.3 %
|
Insurance
|
2,189
|
|
1,680
|
|
509
|
|
30.3 %
|
|
|
7,221
|
|
6,049
|
|
1,172
|
|
19.4 %
|
Total
|
$ 7,861
|
|
$ 6,906
|
|
$
955
|
|
13.8 %
|
|
|
$
28,967
|
|
$
27,316
|
|
$ 1,651
|
|
6.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses, including real
estate taxes - non-same-store
|
$ 7,839
|
|
$ 4,753
|
|
$ 3,086
|
|
64.9 %
|
|
|
$
27,063
|
|
$ 7,087
|
|
$
19,976
|
|
281.9 %
|
Property operating
expenses, including real
estate taxes - other
|
317
|
|
312
|
|
5
|
|
1.6 %
|
|
|
1,203
|
|
1,120
|
|
83
|
|
7.4 %
|
Property operating
expenses, including real
estate taxes - dispositions
|
—
|
|
5
|
|
(5)
|
|
(100.0) %
|
|
|
3
|
|
1,641
|
|
(1,638)
|
|
(99.8) %
|
Total property
operating expenses,
including real estate taxes
|
$
29,219
|
|
$
23,506
|
|
$ 5,713
|
|
24.3 %
|
|
|
$
108,637
|
|
$
81,857
|
|
$
26,780
|
|
32.7 %
|
_________________________________________
|
(1) On-site
compensation for administration, leasing, and maintenance
personnel.
|
Reconciliation of Net Income (Loss) Available to Common
Shareholders to Funds From Operations and Core Funds From
Operations
Centerspace believes that FFO, which is a non-GAAP financial
measurement used as a supplemental measure for equity real estate
investment trusts, is helpful to investors in understanding
operating performance, primarily because its calculation does not
assume that the value of real estate assets diminishes predictably
over time as implied by the historical cost convention of GAAP and
the recording of depreciation.
Centerspace uses the definition of FFO adopted by the National
Association of Real Estate Investment Trusts, Inc. ("Nareit").
Nareit defines FFO as net income or loss calculated in accordance
with GAAP, excluding:
- depreciation and amortization related to real estate;
- gains and losses from the sale of certain real estate
assets;
- impairment write-downs of certain real estate assets and
investments in entities when the impairment is directly
attributable to decreases in the value of depreciable real estate
held by the entity; and
- similar adjustments for partially owned consolidated real
estate entities.
The exclusion in Nareit's definition of FFO of impairment
write-downs and gains and losses from the sale of real estate
assets helps to identify the operating results of the long-term
assets that form the base of the company's investments, and assists
management and investors in comparing those operating results
between periods.
Due to the limitations of the Nareit FFO definition, Centerspace
has made certain interpretations in applying the definition. The
company believes that all such interpretations not specifically
provided for in the Nareit definition are consistent with the
definition. Nareit's FFO White Paper - 2018 Restatement clarified
that impairment write-downs of land related to a REIT's main
business are excluded from FFO, and a REIT has the option to
exclude impairment write-downs of assets that are incidental to the
main business.
While FFO is widely used by Centerspace as a primary performance
metric, not all real estate companies use the same definition of
FFO or calculate FFO in the same way. Accordingly, FFO presented
here is not necessarily comparable to FFO presented by other real
estate companies. FFO should not be considered as an alternative to
net income or any other GAAP measurement of performance, but rather
should be considered as an additional, supplemental measure. FFO
also does not represent cash generated from operating activities in
accordance with GAAP, nor is it indicative of funds available to
fund all cash needs, including the ability to service indebtedness
or make distributions to shareholders.
Core Funds from Operations ("Core FFO"), a non-GAAP measure, is
FFO adjusted for non-routine items or items not considered core to
business operations. By further adjusting for items that are not
considered part of core business operations, the company believes
that Core FFO provides investors with additional information to
compare core operating and financial performance between periods.
Core FFO should not be considered as an alternative to net income
or as any other GAAP measurement of performance, but rather should
be considered an additional supplemental measure. Core FFO also
does not represent cash generated from operating activities in
accordance with GAAP, nor is it indicative of funds available to
fund all cash needs, including the ability to service indebtedness
or make distributions to shareholders. Core FFO is a non-GAAP and
non-standardized financial measure that may be calculated
differently by other REITs and that should not be considered a
substitute for operating results determined in accordance with
GAAP.
|
|
(in thousands,
except per share amounts)
|
|
|
Three Months Ended
|
|
|
Twelve Months
Ended
|
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
|
|
12/31/2022
|
|
12/31/2021
|
Net (loss) income
available to common shareholders
|
|
$
(3,613)
|
|
$ (2,130)
|
|
$
(4,598)
|
|
$
(10,196)
|
|
$ (8,815)
|
|
|
$
(20,537)
|
|
$ (6,457)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests - Operating Partnership
and Series E preferred units
|
|
(753)
|
|
(439)
|
|
(950)
|
|
(2,157)
|
|
(1,793)
|
|
|
(4,299)
|
|
(2,806)
|
Depreciation and
amortization
|
|
25,768
|
|
23,720
|
|
24,768
|
|
31,001
|
|
30,418
|
|
|
105,257
|
|
92,165
|
Less depreciation -
non real estate
|
|
(91)
|
|
(94)
|
|
(101)
|
|
(101)
|
|
(101)
|
|
|
(387)
|
|
(366)
|
Less depreciation -
partially owned entities
|
|
(19)
|
|
(18)
|
|
(7)
|
|
(21)
|
|
(21)
|
|
|
(65)
|
|
(93)
|
(Gain) loss on sale of
real estate
|
|
(14)
|
|
—
|
|
(27)
|
|
—
|
|
(678)
|
|
|
(41)
|
|
(27,518)
|
FFO applicable to
common shares and Units
|
|
$
21,278
|
|
$ 21,039
|
|
$
19,085
|
|
$
18,526
|
|
$
19,010
|
|
|
$
79,928
|
|
$
54,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Core
FFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash casualty loss
(recovery)
|
|
20
|
|
46
|
|
163
|
|
25
|
|
—
|
|
|
254
|
|
—
|
Loss on extinguishment
of debt
|
|
—
|
|
—
|
|
5
|
|
—
|
|
2
|
|
|
5
|
|
535
|
Technology
implementation costs(1)
|
|
89
|
|
234
|
|
447
|
|
103
|
|
535
|
|
|
873
|
|
2,020
|
Commercial lease
termination proceeds
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(450)
|
Acquisition related
costs
|
|
—
|
|
—
|
|
—
|
|
—
|
|
90
|
|
|
—
|
|
230
|
Interest rate swap
termination, amortization, and
mark-to-market
|
|
104
|
|
204
|
|
205
|
|
(613)
|
|
(411)
|
|
|
(100)
|
|
4,942
|
Amortization of
assumed debt
|
|
(117)
|
|
(116)
|
|
(116)
|
|
(115)
|
|
(26)
|
|
|
(464)
|
|
(53)
|
Pursuit
costs
|
|
137
|
|
38
|
|
1,127
|
|
—
|
|
38
|
|
|
1,302
|
|
39
|
Other miscellaneous
items(2)
|
|
(28)
|
|
17
|
|
100
|
|
(4)
|
|
(99)
|
|
|
85
|
|
(103)
|
Core FFO applicable
to common shares and
Units
|
|
$
21,483
|
|
$ 21,462
|
|
$
21,016
|
|
$
17,922
|
|
$
19,139
|
|
|
$
81,883
|
|
$
62,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO applicable to
common shares and Units
|
|
$
21,278
|
|
$ 21,039
|
|
$
19,085
|
|
$
18,526
|
|
$ 19,010
|
|
|
$ 79,928
|
|
$ 54,925
|
Dividends to Series D
preferred unitholders
|
|
160
|
|
160
|
|
160
|
|
160
|
|
160
|
|
|
640
|
|
640
|
FFO applicable to
common shares and Units -
diluted
|
|
$
21,438
|
|
$ 21,199
|
|
$
19,245
|
|
$
18,686
|
|
$ 19,170
|
|
|
$ 80,568
|
|
$ 55,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core FFO applicable to
common shares and Units
|
|
$
21,483
|
|
$ 21,462
|
|
$
21,016
|
|
$
17,922
|
|
$ 19,139
|
|
|
$ 81,883
|
|
$ 62,085
|
Dividends to Series D
preferred unitholders
|
|
160
|
|
160
|
|
160
|
|
160
|
|
160
|
|
|
640
|
|
640
|
Core FFO applicable
to common shares and
Units - diluted
|
|
$
21,643
|
|
$ 21,622
|
|
$
21,176
|
|
$
18,082
|
|
$ 19,299
|
|
|
$ 82,523
|
|
$ 62,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
per share and unit - diluted
|
|
$ (0.24)
|
|
$ (0.14)
|
|
$ (0.30)
|
|
$ (0.68)
|
|
$
(0.61)
|
|
|
$
(1.35)
|
|
$
(0.47)
|
FFO per share and unit
- diluted
|
|
$
1.16
|
|
$
1.13
|
|
$
1.02
|
|
$
1.01
|
|
$
1.07
|
|
|
$
4.32
|
|
$
3.54
|
Core FFO per share and
unit - diluted
|
|
$
1.17
|
|
$
1.15
|
|
$
1.12
|
|
$
0.98
|
|
$
1.08
|
|
|
$
4.43
|
|
$
3.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
- basic
|
|
15,027
|
|
15,373
|
|
15,369
|
|
15,097
|
|
14,541
|
|
|
15,216
|
|
13,803
|
Effect of redeemable
operating partnership units
|
|
974
|
|
984
|
|
995
|
|
965
|
|
838
|
|
|
978
|
|
899
|
Effect of Series D
preferred units
|
|
228
|
|
228
|
|
228
|
|
228
|
|
228
|
|
|
228
|
|
228
|
Effect of Series E
preferred units
|
|
2,185
|
|
2,186
|
|
2,186
|
|
2,186
|
|
2,186
|
|
|
2,185
|
|
729
|
Effect of dilutive
restricted stock units and stock
options
|
|
9
|
|
30
|
|
48
|
|
66
|
|
75
|
|
|
38
|
|
45
|
Weighted average shares
and units - diluted
|
|
18,423
|
|
18,801
|
|
18,826
|
|
18,542
|
|
17,868
|
|
|
18,645
|
|
15,704
|
______________________________________________
|
(1) Costs are
related to a two-year implementation.
|
(2) Consists of
(gain) loss on investments
|
Reconciliation of Net Income (Loss) Available to Common
Shareholders to Adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxes,
depreciation, amortization, gain or loss on sale of real estate and
other investments, impairment of real estate investments, gain or
loss on extinguishment of debt, and adjustments for non-routine
items. Adjusted EBITDA is a non-GAAP financial measure and should
not be considered a substitute for operating results determined in
accordance with GAAP. The company considers Adjusted EBITDA to be
an appropriate supplemental performance measure because it permits
investors to view income from operations without the effect of
depreciation, financing costs, or non-operating gains and
losses.
|
|
(in thousands)
|
|
|
Three Months Ended
|
|
|
Twelve
Months Ended
|
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
|
|
12/31/2022
|
|
12/31/2021
|
Net income (loss)
attributable to controlling
interests
|
|
$ (2,006)
|
|
$
(523)
|
|
$ (2,991)
|
|
$ (8,589)
|
|
$
(7,208)
|
|
|
$
(14,109)
|
|
$
(29)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to Series D
preferred unitholders
|
|
160
|
|
160
|
|
160
|
|
160
|
|
160
|
|
|
640
|
|
640
|
Noncontrolling
interests – Operating
Partnership and Series E preferred units
|
|
(753)
|
|
(439)
|
|
(950)
|
|
(2,157)
|
|
(1,793)
|
|
|
(4,299)
|
|
(2,806)
|
Income (loss) before
noncontrolling interests –
Operating Partnership
|
|
(2,599)
|
|
(802)
|
|
(3,781)
|
|
(10,586)
|
|
(8,841)
|
|
|
(17,768)
|
|
(2,195)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
9,589
|
|
7,856
|
|
7,547
|
|
7,700
|
|
7,440
|
|
|
32,692
|
|
29,018
|
Loss on extinguishment
of debt
|
|
—
|
|
—
|
|
5
|
|
—
|
|
2
|
|
|
5
|
|
535
|
Depreciation and
amortization related to
real estate investments
|
|
25,747
|
|
23,699
|
|
24,759
|
|
30,980
|
|
30,397
|
|
|
105,185
|
|
92,073
|
Non-cash casualty loss
(recovery)
|
|
20
|
|
46
|
|
163
|
|
25
|
|
—
|
|
|
254
|
|
—
|
Interest
income
|
|
(92)
|
|
(82)
|
|
(74)
|
|
(464)
|
|
(644)
|
|
|
(712)
|
|
(2,403)
|
Gain (loss) on sale of
real estate and other
investments
|
|
(14)
|
|
—
|
|
(27)
|
|
—
|
|
(678)
|
|
|
(41)
|
|
(27,518)
|
Technology
implementation costs(1)
|
|
89
|
|
234
|
|
447
|
|
103
|
|
534
|
|
|
873
|
|
2,020
|
Commercial lease
termination proceeds
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(450)
|
Acquisition related
costs
|
|
—
|
|
—
|
|
—
|
|
—
|
|
90
|
|
|
—
|
|
230
|
Interest rate swap
termination and mark-
to-market
|
|
—
|
|
—
|
|
18
|
|
(582)
|
|
(359)
|
|
|
(564)
|
|
5,002
|
Pursuit
costs
|
|
137
|
|
38
|
|
1,127
|
|
—
|
|
38
|
|
|
1,302
|
|
39
|
Other miscellaneous
items(2)
|
|
(28)
|
|
17
|
|
100
|
|
(4)
|
|
(99)
|
|
|
85
|
|
(103)
|
Adjusted
EBITDA
|
|
$ 32,849
|
|
$
31,006
|
|
$ 30,284
|
|
$ 27,172
|
|
$
27,880
|
|
|
$
121,311
|
|
$ 96,248
|
____________________________________________
|
(1) Costs are
related to a two-year implementation.
|
(2) Consists of
(gain) loss on investments
|
CENTERSPACE DEBT ANALYSIS
(in thousands)
|
|
Debt Maturity
Schedule Annual Expirations
|
|
|
|
Future Maturities of Debt
|
|
|
Secured
Fixed
Debt
|
|
Unsecured
Fixed
Debt
|
|
Unsecured
Variable
Debt
|
|
Total
Debt
|
|
% of
Total Debt
|
|
Weighted
Average Interest
Rate(1)
|
2023
|
|
$
41,425
|
|
$
—
|
|
$
100,000
|
|
$
141,425
|
|
14.0 %
|
|
5.11 %
|
2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
— %
|
|
— %
|
2025
|
|
31,279
|
|
—
|
|
113,500
|
|
144,779
|
|
14.0 %
|
|
4.03 %
|
2026
|
|
52,023
|
|
—
|
|
—
|
|
52,023
|
|
5.0 %
|
|
3.73 %
|
2027
|
|
50,933
|
|
—
|
|
—
|
|
50,933
|
|
5.0 %
|
|
3.47 %
|
Thereafter
|
|
322,617
|
|
300,000
|
|
—
|
|
622,617
|
|
62.0 %
|
|
3.19 %
|
Total debt
|
|
$
498,277
|
|
$
300,000
|
|
$
213,500
|
|
$
1,011,777
|
|
100.0 %
|
|
3.62 %
|
_____________________________________________
|
(1) Weighted
average interest rate of debt that matures during the year,
including the effect of interest rate swaps on the term loans and
line of credit.
|
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
Debt Balances
Outstanding
|
|
|
|
|
|
|
|
|
|
|
Secured fixed rate -
mortgages payable - other
|
|
$
299,427
|
|
$
300,956
|
|
$
302,360
|
|
$
326,113
|
|
$
284,934
|
Secured fixed rate -
mortgages payable - Fannie Mae credit facility
|
|
198,850
|
|
198,850
|
|
198,850
|
|
198,850
|
|
198,850
|
Unsecured fixed rate
line of credit(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
75,000
|
Unsecured variable
rate line of credit
|
|
113,500
|
|
171,500
|
|
73,000
|
|
46,000
|
|
1,000
|
Unsecured term
loans
|
|
100,000
|
|
—
|
|
—
|
|
—
|
|
—
|
Unsecured senior
notes
|
|
300,000
|
|
300,000
|
|
300,000
|
|
300,000
|
|
300,000
|
Debt total
|
|
$
1,011,777
|
|
$
971,306
|
|
$
874,210
|
|
$
870,963
|
|
$
859,784
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Weighted
Average Interest Rates
|
|
|
|
|
|
|
|
|
|
|
Mortgages payable -
other rate
|
|
3.85 %
|
|
3.85 %
|
|
3.85 %
|
|
3.85 %
|
|
3.81 %
|
Mortgages payable -
Fannie Mae Credit Facility rate
|
|
2.78 %
|
|
2.78 %
|
|
2.78 %
|
|
2.78 %
|
|
2.78 %
|
Lines of credit rate
(rate with swap)(1)
|
|
5.23 %
|
|
4.13 %
|
|
3.04 %
|
|
2.56 %
|
|
4.22 %
|
Unsecured term loan
rate
|
|
5.57 %
|
|
—
|
|
—
|
|
—
|
|
—
|
Unsecured senior notes
rate
|
|
3.12 %
|
|
3.12 %
|
|
3.12 %
|
|
3.12 %
|
|
3.12 %
|
Total debt
|
|
3.62 %
|
|
3.45 %
|
|
3.27 %
|
|
3.29 %
|
|
3.26 %
|
____________________________________________
|
(1)
|
The LIBOR exposure on
the line of credit was hedged using an interest rate swap with a
notional of $75.0 million and a fixed rate of 2.81%. The interest
rate swap was terminated in February 2022.
|
CENTERSPACE CAPITAL ANALYSIS
(in thousands, except per share and unit amounts)
|
|
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
Equity
Capitalization
|
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding
|
|
15,020
|
|
15,376
|
|
15,373
|
|
15,365
|
|
15,016
|
Operating partnership
units outstanding
|
|
971
|
|
980
|
|
995
|
|
997
|
|
832
|
Series E preferred
units (as converted)
|
|
2,119
|
|
2,186
|
|
2,186
|
|
2,186
|
|
2,186
|
Total common shares
and units outstanding
|
|
18,110
|
|
18,542
|
|
18,554
|
|
18,548
|
|
18,034
|
Market price per
common share (closing price at end of period)
|
|
$
58.67
|
|
$
67.32
|
|
$
81.55
|
|
$
98.12
|
|
$ 110.90
|
Equity
capitalization-common shares and units
|
|
$ 1,062,514
|
|
$ 1,248,247
|
|
$ 1,513,079
|
|
$ 1,819,930
|
|
$ 1,999,971
|
Recorded book value of
preferred shares
|
|
$ 93,530
|
|
$ 93,530
|
|
$ 93,530
|
|
$ 93,530
|
|
$ 93,530
|
Total equity
capitalization
|
|
$ 1,156,044
|
|
$ 1,341,777
|
|
$ 1,606,609
|
|
$ 1,913,460
|
|
$ 2,093,501
|
|
|
|
|
|
|
|
|
|
|
|
Series D preferred
units
|
|
$ 16,560
|
|
$ 16,560
|
|
$ 18,627
|
|
$ 22,412
|
|
25,331
|
|
|
|
|
|
|
|
|
|
|
|
Debt
capitalization
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
1,011,777
|
|
971,306
|
|
874,210
|
|
870,963
|
|
859,784
|
Total
capitalization
|
|
$ 2,184,381
|
|
$ 2,329,643
|
|
$ 2,499,446
|
|
$ 2,806,835
|
|
$ 2,978,616
|
|
|
|
|
|
|
|
|
|
|
|
Total debt to total
capitalization(1)
|
|
46.3 %
|
|
41.7 %
|
|
35.0 %
|
|
31.0 %
|
|
28.9 %
|
__________________________________________
|
(1)
|
Debt to total market
capitalization is total debt not adjusted for unamortized deferred
financing costs divided by the sum of total debt, market value of
common shares and operating partnership units, Series E preferred
units, as converted, and book value of Series C preferred shares
and Series D preferred units outstanding at the end of the
period.
|
|
|
Three Months Ended
|
|
|
Twelve Months
Ended
|
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
|
|
12/31/2022
|
|
12/31/2021
|
Debt service coverage
ratio(1)
|
|
2.99
x
|
|
3.35
x
|
|
3.39
x
|
|
2.93
x
|
|
3.17
x
|
|
|
3.16 x
|
|
2.77 x
|
Adjusted
EBITDA/Interest expense plus
preferred distributions and principal
amortization
|
|
2.58
x
|
|
2.81
x
|
|
2.83
x
|
|
2.50
x
|
|
2.68
x
|
|
|
2.67 x
|
|
2.34 x
|
Net debt/Adjusted
EBITDA(2)
|
|
7.62
x
|
|
7.71
x
|
|
7.11
x
|
|
7.89
x
|
|
7.43
x
|
|
|
8.25 x
|
|
8.61 x
|
Net debt and preferred
equity/Adjusted
EBITDA(2)
|
|
8.46
x
|
|
8.60
x
|
|
8.03
x
|
|
8.96
x
|
|
8.50
x
|
|
|
9.16 x
|
|
9.84 x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares and
units outstanding at
record date
|
|
15,991
|
|
16,354
|
|
16,367
|
|
16,363
|
|
15,848
|
|
|
15,991
|
|
15,848
|
Total common
distribution declared
|
|
$
11,614
|
|
$
11,939
|
|
$
11,948
|
|
$
11,944
|
|
$
11,411
|
|
|
$ 47,445
|
|
$ 42,669
|
Common distribution
per share and unit
|
|
$ 0.73
|
|
$ 0.73
|
|
$ 0.73
|
|
$ 0.73
|
|
$ 0.72
|
|
|
$
2.92
|
|
$
2.84
|
Payout ratio (Core FFO
per diluted share and
unit basis)(3)
|
|
62.4 %
|
|
63.5 %
|
|
65.2 %
|
|
74.5 %
|
|
66.7 %
|
|
|
65.9 %
|
|
71.2 %
|
______________________________________________
|
(1)
|
Debt service coverage
ratio is computed by dividing Adjusted EBITDA by interest expense
and principal amortization.
|
(2)
|
Net debt is the total
debt balance less cash and cash equivalents and net tax deferred
exchange proceeds (included within restricted cash). For the
quarterly period presented, adjusted EBITDA is annualized. Net debt
and adjusted EBITDA are non-GAAP measures and should not be
considered a substitute for operating results determined in
accordance with GAAP. Refer to the Adjusted EBITDA definition
included within the Non-GAAP Financial Measures and Reconciliations
section on page S-9.
|
(3)
|
Payout ratio (Core FFO
per diluted share and unit basis) is the current quarterly or
annual distribution rate per common share and unit divided by
quarterly or annual Core FFO per diluted share and unit. Refer to
the definition of Core FFO in the Non-GAAP Financial Measures and
Reconciliations section on page S-6 for This term is a non-GAAP
measure and should not be considered a substitute for operating
results determined in accordance with GAAP.
|
CENTERSPACE SAME-STORE FOURTH QUARTER
COMPARISONS
(dollars in thousands)
|
|
|
|
Homes
Included
|
|
Revenues
|
|
Expenses
|
|
NOI
|
Regions
|
|
|
Q42022
|
|
Q42021
|
|
%
Change
|
|
Q42022
|
|
Q42021
|
|
%
Change
|
|
Q42022
|
|
Q42021
|
|
%
Change
|
Denver, CO
|
|
1,457
|
|
$
9,262
|
|
$
8,163
|
|
13.5 %
|
|
$
2,923
|
|
$
2,657
|
|
10.0 %
|
|
$
6,339
|
|
$
5,506
|
|
15.1 %
|
Minneapolis,
MN
|
|
2,538
|
|
13,217
|
|
12,572
|
|
5.1 %
|
|
5,747
|
|
5,145
|
|
11.7 %
|
|
7,470
|
|
7,427
|
|
0.6 %
|
North Dakota
|
|
2,422
|
|
8,919
|
|
8,155
|
|
9.4 %
|
|
3,790
|
|
3,273
|
|
15.8 %
|
|
5,129
|
|
4,882
|
|
5.1 %
|
Omaha, NE
|
|
1,370
|
|
4,729
|
|
4,222
|
|
12.0 %
|
|
2,389
|
|
1,888
|
|
26.5 %
|
|
2,340
|
|
2,334
|
|
0.3 %
|
Rochester,
MN
|
|
1,129
|
|
5,593
|
|
4,996
|
|
11.9 %
|
|
2,365
|
|
2,174
|
|
8.8 %
|
|
3,228
|
|
2,822
|
|
14.4 %
|
St. Cloud,
MN
|
|
1,192
|
|
4,498
|
|
4,576
|
|
(1.7) %
|
|
2,079
|
|
1,820
|
|
14.2 %
|
|
2,419
|
|
2,756
|
|
(12.2) %
|
Other Mountain
West(1)
|
|
1,222
|
|
5,119
|
|
4,296
|
|
19.2 %
|
|
1,770
|
|
1,479
|
|
19.7 %
|
|
3,349
|
|
2,817
|
|
18.9 %
|
Same-Store
Total
|
|
11,330
|
|
$
51,337
|
|
$
46,980
|
|
9.3 %
|
|
$
21,063
|
|
$
18,436
|
|
14.2 %
|
|
$
30,274
|
|
$
28,544
|
|
6.1 %
|
|
|
% of
NOI
|
|
Weighted Average
Occupancy (2)
|
|
Average
Monthly
Rental Rate
(3)
|
|
Average
Monthly
Revenue per Occupied
Home (4)
|
Regions
|
|
|
Q42022
|
|
Q42021
|
|
Growth
|
|
Q42022
|
|
Q42021
|
|
%
Change
|
|
Q42022
|
|
Q42021
|
|
%
Change
|
Denver, CO
|
|
20.9 %
|
|
96.6 %
|
|
93.5 %
|
|
3.1 %
|
|
$
1,949
|
|
$
1,797
|
|
8.5 %
|
|
$
2,194
|
|
$
1,997
|
|
9.9 %
|
Minneapolis,
MN
|
|
24.7 %
|
|
94.6 %
|
|
92.6 %
|
|
2.0 %
|
|
1,644
|
|
1,593
|
|
3.2 %
|
|
1,835
|
|
1,783
|
|
2.9 %
|
North Dakota
|
|
16.9 %
|
|
96.3 %
|
|
95.3 %
|
|
1.0 %
|
|
1,168
|
|
1,107
|
|
5.5 %
|
|
1,275
|
|
1,178
|
|
8.2 %
|
Omaha, NE
|
|
7.7 %
|
|
93.7 %
|
|
93.9 %
|
|
(0.2) %
|
|
1,111
|
|
996
|
|
11.5 %
|
|
1,228
|
|
1,094
|
|
12.2 %
|
Rochester,
MN
|
|
10.7 %
|
|
93.8 %
|
|
91.7 %
|
|
2.1 %
|
|
1,663
|
|
1,505
|
|
10.5 %
|
|
1,760
|
|
1,608
|
|
9.5 %
|
St. Cloud,
MN
|
|
8.0 %
|
|
91.3 %
|
|
91.9 %
|
|
(0.6) %
|
|
1,218
|
|
1,106
|
|
10.1 %
|
|
1,377
|
|
1,392
|
|
(1.1) %
|
Other Mountain
West(1)
|
|
11.1 %
|
|
95.8 %
|
|
94.5 %
|
|
1.3 %
|
|
1,314
|
|
1,132
|
|
16.1 %
|
|
1,458
|
|
1,240
|
|
17.6 %
|
Same-Store
Total
|
|
100.0 %
|
|
94.9 %
|
|
93.4 %
|
|
1.5 %
|
|
$
1,438
|
|
$
1,333
|
|
7.9 %
|
|
$
1,592
|
|
$
1,480
|
|
7.6 %
|
_____________________________________________
|
(1)
|
Includes apartment
communities in Billings, Montana and Rapid City, South
Dakota.
|
(2)
|
Weighted average
occupancy is defined as the percentage resulting from dividing
actual rental revenue by scheduled rent. Scheduled rent represents
the value of all apartment homes, with occupied apartment homes
valued at contractual rates pursuant to leases and vacant apartment
homes valued at estimated market rents. When calculating actual
rents for occupied apartment homes and market rents for vacant
homes, delinquencies and concessions are not taken into
account. Market rates are determined using the currently
offered effective rates on new leases at the community and are used
as the starting point in determination of the market rates of
vacant apartment homes.
|
(3)
|
Average monthly rental
rate is scheduled rent divided by the total number of apartment
homes.
|
(4)
|
Average monthly revenue
per occupied home is defined as total rental revenues divided by
the weighted average occupied apartment homes for the
period.
|
CENTERSPACE SAME-STORE SEQUENTIAL QUARTER
COMPARISONS(1) (dollars in
thousands)
|
|
|
|
Homes
Included
|
|
Revenues
|
|
Expenses
|
|
NOI
|
Regions
|
|
|
Q42022
|
|
Q32022
|
|
%
Change
|
|
Q42022
|
|
Q32022
|
|
%
Change
|
|
Q42022
|
|
Q32022
|
|
%
Change
|
Denver, CO
|
|
1,457
|
|
$
9,262
|
|
$
8,922
|
|
3.8 %
|
|
$
2,923
|
|
$
3,121
|
|
(6.3) %
|
|
$
6,339
|
|
$
5,801
|
|
9.3 %
|
Minneapolis,
MN
|
|
2,538
|
|
13,217
|
|
13,057
|
|
1.2 %
|
|
5,747
|
|
5,768
|
|
(0.4) %
|
|
7,470
|
|
7,289
|
|
2.5 %
|
North Dakota
|
|
2,422
|
|
8,919
|
|
8,784
|
|
1.5 %
|
|
3,790
|
|
3,457
|
|
9.6 %
|
|
5,129
|
|
5,327
|
|
(3.7) %
|
Omaha, NE
|
|
1,370
|
|
4,729
|
|
4,703
|
|
0.6 %
|
|
2,389
|
|
2,084
|
|
14.6 %
|
|
2,340
|
|
2,619
|
|
(10.7) %
|
Rochester,
MN
|
|
1,129
|
|
5,593
|
|
5,451
|
|
2.6 %
|
|
2,365
|
|
2,039
|
|
16.0 %
|
|
3,228
|
|
3,412
|
|
(5.4) %
|
St. Cloud,
MN
|
|
1,192
|
|
4,498
|
|
4,370
|
|
2.9 %
|
|
2,079
|
|
2,154
|
|
(3.5) %
|
|
2,419
|
|
2,216
|
|
9.2 %
|
Other Mountain
West
|
|
1,222
|
|
5,119
|
|
4,966
|
|
3.1 %
|
|
1,770
|
|
1,766
|
|
0.2 %
|
|
3,349
|
|
3,200
|
|
4.7 %
|
Same-Store
Total
|
|
11,330
|
|
$
51,337
|
|
$
50,253
|
|
2.2 %
|
|
$
21,063
|
|
$
20,389
|
|
3.3 %
|
|
$
30,274
|
|
$
29,864
|
|
1.4 %
|
|
|
% of
NOI
|
|
Weighted Average
Occupancy
|
|
Average
Monthly
Rental
Rate
|
|
Average
Monthly
Revenue per Occupied
Home
|
Regions
|
|
|
Q42022
|
|
Q32022
|
|
Growth
|
|
Q42022
|
|
Q32022
|
|
%
Change
|
|
Q42022
|
|
Q32022
|
|
%
Change
|
Denver, CO
|
|
20.9 %
|
|
96.6 %
|
|
96.4 %
|
|
0.2 %
|
|
$
1,949
|
|
$
1,902
|
|
2.5 %
|
|
$
2,194
|
|
$
2,118
|
|
3.6 %
|
Minneapolis,
MN
|
|
24.7 %
|
|
94.6 %
|
|
94.2 %
|
|
0.4 %
|
|
1,644
|
|
1,623
|
|
1.3 %
|
|
1,835
|
|
1,821
|
|
0.8 %
|
North Dakota
|
|
16.9 %
|
|
96.3 %
|
|
96.2 %
|
|
0.1 %
|
|
1,168
|
|
1,148
|
|
1.7
|
|
1,275
|
|
1,257
|
|
1.4 %
|
Omaha, NE
|
|
7.7 %
|
|
93.7 %
|
|
94.7 %
|
|
(1.1) %
|
|
1,111
|
|
1,083
|
|
2.6 %
|
|
1,228
|
|
1,208
|
|
1.7 %
|
Rochester,
MN
|
|
10.7 %
|
|
93.8 %
|
|
93.5 %
|
|
0.3 %
|
|
1,663
|
|
1,619
|
|
2.7 %
|
|
1,760
|
|
1,721
|
|
2.3 %
|
St. Cloud,
MN
|
|
8.0 %
|
|
91.3 %
|
|
88.1 %
|
|
3.6 %
|
|
1,218
|
|
1,206
|
|
1.0 %
|
|
1,377
|
|
1,387
|
|
(0.7) %
|
Other Mountain
West
|
|
11.1 %
|
|
95.8 %
|
|
95.7 %
|
|
0.1 %
|
|
1,314
|
|
1,279
|
|
2.7 %
|
|
1,458
|
|
1,415
|
|
3.0 %
|
Same-Store
Total
|
|
100.0 %
|
|
94.9 %
|
|
94.5 %
|
|
0.4 %
|
|
$
1,438
|
|
$
1,411
|
|
1.9 %
|
|
$
1,592
|
|
$
1,565
|
|
1.7 %
|
________________________________________________
|
(1) Refer to
footnotes on page S-12.
|
CENTERSPACE SAME-STORE YEAR-TO-DATE
COMPARISONS(1) (dollars in
thousands)
|
|
|
|
Homes
Included
|
|
Revenues
|
|
Expenses
|
|
NOI
|
Regions
|
|
|
2022
|
|
2021
|
|
%
Change
|
|
2022
|
|
2021
|
|
%
Change
|
|
2022
|
|
2021
|
|
%
Change
|
Denver, CO
|
|
1,457
|
|
$
35,309
|
|
$
31,712
|
|
11.3 %
|
|
$
11,326
|
|
$
10,494
|
|
7.9 %
|
|
$
23,983
|
|
$
21,218
|
|
13.0 %
|
Minneapolis,
MN
|
|
2,538
|
|
51,576
|
|
47,659
|
|
8.2 %
|
|
22,395
|
|
20,080
|
|
11.5 %
|
|
29,181
|
|
27,579
|
|
5.8 %
|
North Dakota
|
|
2,422
|
|
34,342
|
|
32,365
|
|
6.1 %
|
|
14,423
|
|
13,121
|
|
9.9 %
|
|
19,919
|
|
19,244
|
|
3.5 %
|
Omaha, NE
|
|
1,370
|
|
18,297
|
|
16,451
|
|
11.2 %
|
|
8,302
|
|
7,468
|
|
11.2 %
|
|
9,995
|
|
8,983
|
|
11.3 %
|
Rochester,
MN
|
|
1,129
|
|
21,281
|
|
19,223
|
|
10.7 %
|
|
8,639
|
|
8,021
|
|
7.7 %
|
|
12,642
|
|
11,202
|
|
12.9 %
|
St. Cloud,
MN
|
|
1,192
|
|
17,386
|
|
15,548
|
|
11.8 %
|
|
8,309
|
|
6,788
|
|
22.4 %
|
|
9,077
|
|
8,760
|
|
3.6 %
|
Other Mountain
West
|
|
1,222
|
|
19,157
|
|
16,390
|
|
16.9 %
|
|
6,974
|
|
6,037
|
|
15.5 %
|
|
12,183
|
|
10,353
|
|
17.7 %
|
Same-Store
Total
|
|
11,330
|
|
$
197,348
|
|
$
179,348
|
|
10.0 %
|
|
$
80,368
|
|
$
72,009
|
|
11.6 %
|
|
$
116,980
|
|
$
107,339
|
|
9.0 %
|
|
|
% of
NOI
|
|
Weighted Average
Occupancy
|
|
Average
Monthly
Rental
Rate
|
|
Average
Monthly
Revenue per Occupied
Home
|
Regions
|
|
|
2022
|
|
2021
|
|
Growth
|
|
2022
|
|
2021
|
|
%
Change
|
|
2022
|
|
2021
|
|
%
Change
|
Denver, CO
|
|
20.6 %
|
|
95.4 %
|
|
94.0 %
|
|
1.5 %
|
|
$
1,882
|
|
$
1,730
|
|
8.8 %
|
|
$
2,118
|
|
$
1,929
|
|
9.8 %
|
Minneapolis,
MN
|
|
24.9 %
|
|
94.1 %
|
|
93.6 %
|
|
0.5 %
|
|
1,613
|
|
1,544
|
|
4.5 %
|
|
1,800
|
|
1,672
|
|
7.7 %
|
North Dakota
|
|
17.0 %
|
|
95.7 %
|
|
95.4 %
|
|
0.3 %
|
|
1,134
|
|
1,088
|
|
4.2 %
|
|
1,234
|
|
1,167
|
|
5.7 %
|
Omaha, NE
|
|
8.5 %
|
|
95.1 %
|
|
94.7 %
|
|
0.4 %
|
|
1,055
|
|
949
|
|
11.2 %
|
|
1,170
|
|
1,056
|
|
10.8 %
|
Rochester,
MN
|
|
10.8 %
|
|
93.9 %
|
|
93.7 %
|
|
0.2 %
|
|
1,581
|
|
1,429
|
|
10.6 %
|
|
1,674
|
|
1,515
|
|
10.5 %
|
St. Cloud,
MN
|
|
7.8 %
|
|
90.9 %
|
|
92.6 %
|
|
(1.8) %
|
|
1,174
|
|
1,036
|
|
13.3 %
|
|
1,336
|
|
1,174
|
|
13.8 %
|
Other Mountain
West
|
|
10.4 %
|
|
95.5 %
|
|
96.7 %
|
|
(1.2) %
|
|
1,238
|
|
1,053
|
|
17.6 %
|
|
1,367
|
|
1,156
|
|
18.3 %
|
Same-Store
Total
|
|
100.0 %
|
|
94.5 %
|
|
94.3 %
|
|
0.2 %
|
|
$
1,388
|
|
$
1,281
|
|
8.4 %
|
|
$
1,536
|
|
$
1,399
|
|
9.8 %
|
__________________________________
|
(1) Refer to
footnotes on page S-12.
|
CENTERSPACE PORTFOLIO SUMMARY
(1)
|
|
|
|
Three Months
Ended
|
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
Number of Apartment
Homes at Period End
|
|
|
|
|
|
|
|
|
|
|
Same-Store
|
|
11,330
|
|
11,330
|
|
11,319
|
|
11,319
|
|
10,672
|
Non-Same-Store
|
|
3,735
|
|
3,734
|
|
3,519
|
|
3,519
|
|
3,769
|
All
Communities
|
|
15,065
|
|
15,064
|
|
14,838
|
|
14,838
|
|
14,441
|
|
|
|
|
|
|
|
|
|
|
|
Average Monthly Rental
Rate(2)
|
|
|
|
|
|
|
|
|
|
|
Same-Store
|
|
$
1,438
|
|
$ 1,411
|
|
$ 1,366
|
|
$ 1,339
|
|
$ 1,314
|
Non-Same-Store
|
|
1,352
|
|
1,286
|
|
1,245
|
|
1,218
|
|
1,225
|
All
Communities
|
|
$
1,417
|
|
$ 1,381
|
|
$ 1,337
|
|
$ 1,292
|
|
$ 1,291
|
|
|
|
|
|
|
|
|
|
|
|
Average Monthly Revenue
per Occupied Apartment Home(3)
|
|
|
|
|
|
|
|
|
|
|
Same-Store
|
|
$
1,592
|
|
$ 1,565
|
|
$ 1,518
|
|
$ 1,471
|
|
$ 1,463
|
Non-Same-Store
|
|
1,471
|
|
1,417
|
|
1,329
|
|
1,271
|
|
1,306
|
All
Communities
|
|
$
1,562
|
|
$ 1,530
|
|
$ 1,473
|
|
$ 1,424
|
|
$ 1,423
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Occupancy(4)
|
|
|
|
|
|
|
|
|
|
|
Same-Store
|
|
94.9 %
|
|
94.5 %
|
|
94.8 %
|
|
93.9 %
|
|
93.4 %
|
Non-Same-Store
|
|
94.7 %
|
|
94.6 %
|
|
95.0 %
|
|
94.5 %
|
|
94.7 %
|
All
Communities
|
|
94.9 %
|
|
94.5 %
|
|
94.8 %
|
|
94.0 %
|
|
93.7 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses as a
% of Scheduled Rent
|
|
|
|
|
|
|
|
|
|
|
Same-Store
|
|
43.1 %
|
|
42.5 %
|
|
40.3 %
|
|
41.0 %
|
|
39.5 %
|
Non-Same-Store
|
|
51.7 %
|
|
48.7 %
|
|
47.1 %
|
|
50.6 %
|
|
44.1 %
|
All
Communities
|
|
45.1 %
|
|
43.9 %
|
|
41.8 %
|
|
43.0 %
|
|
40.6 %
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
|
|
|
|
|
|
|
|
|
|
Total Capital
Expenditures per Apartment Home – Same-Store
|
|
$
364
|
|
$
465
|
|
$
196
|
|
$
145
|
|
$
369
|
_______________________________________________
|
(1)
|
Previously reported
amounts are not revised for changes in the composition of the
same-store properties pool.
|
(2)
|
Average monthly rental
rate is scheduled rent divided by the total number of apartment
homes. Scheduled rent represents the value of all apartment homes,
with occupied apartment homes valued at contractual rates pursuant
to leases and vacant apartment homes valued at estimated market
rents. When calculating actual rents for occupied apartment homes
and market rents for vacant apartment homes, delinquencies and
concessions are not taken into account. Market rates are determined
using the currently offered effective rates on new leases at the
community and are used as the starting point in determination of
the market rates of vacant apartment homes.
|
(3)
|
Average monthly revenue
per occupied apartment home is defined as total rental revenues
divided by the weighted average occupied apartment homes for the
period.
|
(4)
|
Weighted average
occupancy is the percentage resulting from dividing actual rental
revenue by scheduled rent. The company believes that weighted
average occupancy is a meaningful measure of occupancy because it
considers the value of each vacant unit at its estimated market
rate. Weighted average occupancy may not completely reflect
short-term trends in physical occupancy, and calculation of
weighted average occupancy may not be comparable to that disclosed
by other real estate companies.
|
CENTERSPACE CAPITAL EXPENDITURES
(dollars in thousands, except per home amounts)
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
12/31/2022
|
|
12/31/2021
|
|
|
12/31/2022
|
|
12/31/2021
|
Total Same-Store
Apartment Homes
|
|
11,330
|
|
11,330
|
|
|
11,330
|
|
11,330
|
|
|
|
|
|
|
|
|
|
|
Building -
Exterior
|
|
$
601
|
|
$
982
|
|
|
$
2,643
|
|
$
3,133
|
Building -
Interior
|
|
424
|
|
1,371
|
|
|
490
|
|
1,719
|
Mechanical,
Electrical, & Plumbing
|
|
627
|
|
274
|
|
|
2,850
|
|
845
|
Furniture &
Equipment
|
|
126
|
|
83
|
|
|
439
|
|
186
|
Landscaping &
Grounds
|
|
747
|
|
354
|
|
|
1,737
|
|
719
|
Turnover
Replacements
|
|
1,353
|
|
925
|
|
|
4,842
|
|
3,303
|
Work in
progress
|
|
244
|
|
706
|
|
|
(520)
|
|
706
|
Capital
Expenditures - Same-Store
|
|
$
4,122
|
|
$
4,695
|
|
|
$
12,481
|
|
$
10,611
|
Capital
Expenditures per Apartment Home - Same-Store
|
|
$
364
|
|
$
414
|
|
|
$
1,102
|
|
$
937
|
|
|
|
|
|
|
|
|
|
|
Value Add
|
|
$
10,032
|
|
$
5,921
|
|
|
$
30,432
|
|
$
20,310
|
Total Capital Spend
- Same-Store
|
|
$
14,154
|
|
$
10,616
|
|
|
$
42,913
|
|
$
30,921
|
Total Capital Spend
per Apartment Home - Same Store
|
|
$
1,249
|
|
$
937
|
|
|
$
3,788
|
|
$
2,729
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
Capital Expenditures
- All Properties
|
|
12/31/2022
|
|
12/31/2021
|
|
|
12/31/2022
|
|
12/31/2021
|
All Properties -
Weighted Average Homes
|
|
15,065
|
|
14,324
|
|
|
14,914
|
|
12,486
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
|
$
4,322
|
|
$
5,062
|
|
|
$
14,725
|
|
$
11,226
|
Capital
Expenditures per Apartment Home
|
|
$
287
|
|
$
353
|
|
|
$
987
|
|
$
899
|
|
|
|
|
|
|
|
|
|
|
Value Add
|
|
10,698
|
|
5,922
|
|
|
31,361
|
|
20,328
|
Acquisition
Capital
|
|
6,199
|
|
$
1,523
|
|
|
11,237
|
|
2,818
|
Total Capital
Spend
|
|
$
21,219
|
|
$
12,507
|
|
|
$
57,323
|
|
$
34,372
|
Total Capital Spend
per Apartment Home
|
|
$
1,408
|
|
$
873
|
|
|
$
3,844
|
|
$
2,753
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
Value Add Capital
Expenditures
|
|
12/31/2022
|
|
12/31/2021
|
|
|
12/31/2022
|
|
12/31/2021
|
Interior -
Units
|
|
|
|
|
|
|
|
|
|
Same-Store
|
|
$
4,337
|
|
$
1,923
|
|
|
$
18,857
|
|
$
11,304
|
Non-Same-Store
|
|
326
|
|
1
|
|
|
404
|
|
1
|
Total Interior
Units
|
|
$
4,663
|
|
$
1,924
|
|
|
$
19,261
|
|
$
11,305
|
|
|
|
|
|
|
|
|
|
|
Common Areas and
Exteriors
|
|
|
|
|
|
|
|
|
|
Same-Store
|
|
$
5,425
|
|
$
2,433
|
|
|
$
13,241
|
|
$
7,070
|
Non-Same-Store
|
|
340
|
|
—
|
|
|
536
|
|
6
|
Total Common Areas
and Exteriors
|
|
$
5,765
|
|
$
2,433
|
|
|
$
13,777
|
|
$
7,076
|
|
|
|
|
|
|
|
|
|
|
Work in
Progress
|
|
|
|
|
|
|
|
|
|
Same-Store
|
|
$
270
|
|
$
1,565
|
|
|
$
(1,666)
|
|
$
1,937
|
Non-Same-Store
|
|
—
|
|
—
|
|
|
(11)
|
|
11
|
Total Work in
Progress
|
|
$
270
|
|
$
1,565
|
|
|
$
(1,677)
|
|
$
1,948
|
|
|
|
|
|
|
|
|
|
|
Total Value-Add Capital
Expenditures
|
|
|
|
|
|
|
|
|
|
Same-Store
|
|
$
10,032
|
|
$
5,921
|
|
|
$
30,432
|
|
$
20,311
|
Non-Same-Store
|
|
666
|
|
1
|
|
|
929
|
|
18
|
Total Portfolio
Value-Add
|
|
$
10,698
|
|
$
5,922
|
|
|
$
31,361
|
|
$
20,329
|
CENTERSPACE 2023 Financial Outlook
(in thousands, except per share amounts)
|
|
Centerspace is
providing guidance for 2023.
|
|
|
Twelve Months
Ended
|
|
2023 Full-Year
Guidance Range
|
|
December 31,
2022
|
|
Low
|
|
High
|
|
Actual
|
|
Amount
|
|
Amount
|
Same-store growth
(1)
|
|
|
|
|
|
Revenue
|
$
220,630
|
|
6.00 %
|
|
8.00 %
|
|
|
|
|
|
|
Controllable
expenses
|
58,571
|
|
3.00 %
|
|
4.50 %
|
Non-controllable
expenses
|
32,682
|
|
8.00 %
|
|
9.50 %
|
Total
Expenses
|
$
91,253
|
|
4.75 %
|
|
6.25 %
|
Same-store NOI
(1)(2)
|
$
129,377
|
|
7.00 %
|
|
9.00 %
|
|
|
|
|
|
|
Components of
NOI(2)
|
|
|
|
|
|
Same-store(1)
|
$
129,377
|
|
$
138,300
|
|
$
141,300
|
Non-same-store(1)
|
5,892
|
|
8,900
|
|
9,100
|
Other(1)
|
2,558
|
|
2,000
|
|
2,400
|
Dispositions(1)
|
10,252
|
|
2,500
|
|
2,800
|
Total
NOI(2)
|
$
148,079
|
|
$
151,700
|
|
$
155,600
|
|
|
|
|
|
|
Interest
expense
|
$
(32,750)
|
|
(37,100)
|
|
(36,700)
|
Dividends to preferred
shareholders
|
$
(6,428)
|
|
(6,400)
|
|
(6,400)
|
|
|
|
|
|
|
Recurring income and
expenses
|
|
|
|
|
|
Interest and other
income (loss)
|
$
1,175
|
|
160
|
|
350
|
General and
administrative and property management
|
(27,411)
|
|
(29,100)
|
|
(28,300)
|
Casualty
losses
|
(1,591)
|
|
(1,500)
|
|
(1,300)
|
Non-real estate
depreciation and amortization
|
(379)
|
|
(375)
|
|
(325)
|
Non-controlling
interest
|
(127)
|
|
(110)
|
|
(100)
|
Total recurring income
and expenses
|
$
(28,333)
|
|
(30,925)
|
|
(29,675)
|
FFO(2)
|
$
80,568
|
|
$
77,275
|
|
$
82,825
|
|
|
|
|
|
|
Non-core income and
expenses
|
|
|
|
|
|
Non-cash casualty
(gain) loss
|
$
254
|
|
$
500
|
|
$
300
|
Technology
implementation costs
|
873
|
|
—
|
|
—
|
Interest rate swap
termination, amortization, and mark-to-market
|
(100)
|
|
900
|
|
1,000
|
Pursuit
costs
|
1,302
|
|
70
|
|
60
|
Other miscellaneous
items
|
(374)
|
|
(310)
|
|
(350)
|
Total non-core income
and expenses
|
$
1,955
|
|
$
1,160
|
|
$
1,010
|
Core
FFO(2)
|
$
82,523
|
|
$
78,435
|
|
$
83,835
|
|
|
|
|
|
|
Net income (loss)
per share - diluted
|
$
(1.35)
|
|
$
2.37
|
|
$
3.25
|
FFO per diluted
share(2)
|
$
4.32
|
|
$
4.21
|
|
$
4.50
|
Core FFO per diluted
share(2)
|
$
4.43
|
|
$
4.27
|
|
$
4.56
|
Weighted average shares
outstanding - diluted
|
18,645
|
|
18,375
|
|
18,400
|
|
|
|
|
|
|
Additional
Assumptions
|
|
|
|
|
|
Same-store capital
expenditures (per home)
|
$
1,102
|
|
$
1,100
|
|
$
1,150
|
Value-add
expenditures
|
31,361
|
|
24,500
|
|
27,500
|
Proceeds from potential
dispositions
|
—
|
|
155,000
|
|
165,000
|
|
|
(1)
|
Amounts for the year
ended December 31, 2022 reflect the 2023 same-store
pool.
|
(2)
|
NOI, FFO, and Core FFO
are non-GAAP financial measures. For more information on
their usage and presentation, and a reconciliation to the most
directly comparable GAAP measures, refer to "Non-GAAP Financial
Measures and Reconciliations" in the Supplemental Financial and
Operating Data" above.
|
Reconciliation of Net Income (Loss) Available to Common
Shareholders to FFO and Core FFO
The following table presents reconciliations of Net income
(loss) available to common shareholders to FFO and Core FFO, which
are non-GAAP financial measures described in greater detail under
"Non-GAAP Financial Measures and Reconciliations." They should not
be considered as alternatives to net income or any other GAAP
measurement of performance, but rather should be considered as an
additional, supplemental measure. FFO and Core FFO also do not
represent cash generated from operating activities in accordance
with GAAP, nor are they indicative of funds available to fund all
cash needs, including the ability to service indebtedness or make
distributions to shareholders. The outlook and projections provided
below are based on current expectations and are
forward-looking.
|
|
|
Outlook
|
|
Twelve Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
2022
|
|
December 31,
2023
|
|
Amount
|
|
|
Low
|
|
High
|
Net income (loss)
available to common shareholders
|
$
(20,537)
|
|
|
$
51,339
|
|
$
67,707
|
Noncontrolling
interests - Operating Partnership and Series E preferred
units
|
(4,299)
|
|
|
(7,795)
|
|
(7,885)
|
Depreciation and
amortization
|
105,257
|
|
|
92,556
|
|
91,768
|
Less depreciation - non
real estate
|
(387)
|
|
|
(375)
|
|
(325)
|
Less depreciation -
partially owned entities
|
(65)
|
|
|
(110)
|
|
(100)
|
(Gain) loss on sale of
real estate
|
(41)
|
|
|
(58,980)
|
|
(68,980)
|
Dividends to preferred
unitholders
|
640
|
|
|
640
|
|
640
|
FFO applicable to
common shares and Units
|
$
80,568
|
|
|
$
77,275
|
|
$
82,825
|
|
|
|
|
|
|
|
Adjustments to Core
FFO:
|
|
|
|
|
|
|
Non-cash casualty
(gain) loss
|
254
|
|
|
500
|
|
300
|
Loss on extinguishment
of debt
|
5
|
|
|
—
|
|
—
|
Technology
implementation costs
|
873
|
|
|
—
|
|
—
|
Interest rate swap
termination, amortization, and mark-to-market
|
(100)
|
|
|
900
|
|
1,000
|
Pursuit
costs
|
1,302
|
|
|
70
|
|
60
|
Other miscellaneous
items
|
(379)
|
|
|
(310)
|
|
(350)
|
Core FFO applicable to
common shares and Units
|
$
82,523
|
|
|
$
78,435
|
|
$
83,835
|
|
|
|
|
|
|
|
Net income (loss) per
share - diluted
|
$
(1.35)
|
|
|
$
2.37
|
|
$
3.25
|
FFO per share -
diluted
|
$
4.32
|
|
|
$
4.21
|
|
$
4.50
|
Core FFO per share -
diluted
|
$
4.43
|
|
|
$
4.27
|
|
$
4.56
|
Reconciliation of Operating Income to Net Operating
Income
Net operating income, or NOI, is a non-GAAP financial measure
which the company defines as total real estate revenues less
property operating expenses, including real estate taxes.
Centerspace believes that NOI is an important supplemental measure
of operating performance for real estate because it provides a
measure of operations that is unaffected by depreciation,
amortization, financing, property management overhead, casualty
losses, and general and administrative expenses. NOI does not
represent cash generated by operating activities in accordance with
GAAP and should not be considered an alternative to net income, net
income available for common shareholders, or cash flow from
operating activities as a measure of financial
performance.
|
|
|
Outlook
|
|
12 Months
Ended
|
12 Months
Ended
|
|
December 31,
2022
|
December 31,
2023
|
|
Actual
|
|
Low
|
|
High
|
Operating
income
|
$
13,861
|
|
$
87,524
|
|
$
103,212
|
Adjustments:
|
|
|
|
|
|
General and
administrative and property management expenses
|
27,411
|
|
29,100
|
|
28,300
|
Casualty
loss
|
1,591
|
|
1,500
|
|
1,300
|
Depreciation and
amortization
|
105,257
|
|
92,556
|
|
91,768
|
(Gain) loss on sale of
real estate and other assets
|
(41)
|
|
(58,980)
|
|
(68,980)
|
Net Operating
Income
|
$
148,079
|
|
$
151,700
|
|
$
155,600
|
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SOURCE Centerspace