EX-99.1 2 centerspace093021exhibit991.htm EX-99.1 Document

Exhibit 99.1
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Earnings Release
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Centerspace Reports Third Quarter 2021 Financial Results and Increases Financial Outlook
MINNEAPOLIS, MN, November 1, 2021 – Centerspace (NYSE: CSR) announced today its financial and operating results for the three and nine months ended September 30, 2021. The tables below show Net Income, Funds from Operations (“FFO”)1, and Core FFO1, all on a per share basis, for the three and nine months ended September 30, 2021; Same-Store Revenues, Expenses, and Net Operating Income (“NOI”)1 over comparable periods; and Same-Store Weighted-Average Occupancy for each of the three months ended September 30, 2021, June 30, 2021, and September 30, 2020.
 Three Months Ended September 30,Nine Months Ended September 30,
Per Share2021202020212020
Net Income - diluted$(0.81)$1.38 $0.12 $0.33 
FFO - diluted$0.60 $0.90 $2.44 $2.49 
Core FFO - diluted$0.98 $0.94 $2.91 $2.76 
 Year-Over-Year
Comparison		Sequential
Comparison		YTD Comparison
Same-Store ResultsQ3 2021 vs. Q3 2020Q3 2021 vs. Q2 20212021 vs. 2020
Revenues6.2 %3.7 %3.3 %
Expenses4.4 %3.6 %2.9 %
NOI7.5 %3.8 %3.6 %
Three months ended
Same-Store ResultsSeptember 30, 2021June 30, 2021September 30, 2020
Weighted Average Occupancy94.3 %94.9 %94.3 %
(1)NOI, FFO, Core FFO, and same-store results are non-GAAP financial measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to “Non-GAAP Financial Measures and Reconciliations” below.
Highlights
•Net Loss was $(0.81) per diluted share for the third quarter of 2021, compared to Net Income of $1.38 per diluted share for the same period of 2020;
•Core FFO increased 4.3% to $0.98 per diluted share for the three months ended September 30, 2021, compared to $0.94 for the three months ended September 30, 2020 and 5.4% to $2.91 per diluted share for the nine months ended September 30, 2021, compared to $2.76 for the nine months ended September 30, 2020;
•Same-store revenues increased by 6.2% for the third quarter of 2021 compared to the third quarter of 2020;
•Same-store new lease over lease rates were 10.8% for the third quarter of 2021, compared to 0.0% in the same period of the prior year. Same-store renewal lease over lease rates were 7.2% for the third quarter of 2021, compared to 0.6% for the same period the prior year. Same-store blended lease over lease rates were 9.0% for the third quarter of 2021, compared to 0.4% for the same period the prior year;
•Full year earnings per share mid-point outlook of $(0.30) resulting in a 3% increase in Core FFO from our prior outlook;
•Continued to grow the portfolio through the strategic portfolio acquisition comprised of 14 communities in Minneapolis, Minnesota and three communities in St. Cloud, Minnesota totaling 2,696 apartment homes for an aggregate acquisition cost of $359.9 million;
•Issued $125.0 million of unsecured notes with a weighted average interest rate of 2.6% and weighted average maturity of 10.5 years with tranches of $35.0 million in 2030, $50.0 million in 2031, $25.0 million in 2032 and $15.0 million in 2034;
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•Improved and extended $250.0 million revolving credit facility with an accordion feature for up to $400.0 million which matures in September 2025; and
•Continued to strengthen the balance sheet by issuing 199,000 common shares under the ATM program for net proceeds of $19.6 million.
Acquisitions and Dispositions
On September 1, 2021, Centerspace closed on its strategic portfolio acquisition in Minneapolis and St. Cloud, Minnesota for an aggregate acquisition cost of $359.9 million. The portfolio is comprised of 14 communities in Minneapolis, Minnesota and three communities in St. Cloud, Minnesota. The acquisition added 2,696 apartments homes to the portfolio. Centerspace fully funded the acquisition with the issuance of $181.4 million of Convertible Preferred Operating Partnership Units at $100.0 dollar par value that pay a 3.875% dividend rate and are convertible into common units at an exchange rate of 1.2048 common units per Convertible Preferred Operating Partnership Units representing a conversion price of $83.00 per unit. The acquired assets were subject to $126.5 million in mortgage liabilities of which $20.0 million was assumed at a rate of 4.31% with the remaining $106.5 million refinanced through a $198.9 million Fannie Mae Credit Facility. The Fannie Mae Credit facility includes tranches in 7, 10 and 12-year increments with a weighted average interest rate of 2.78%. The additional proceeds from the refinancing were used to reduce the outstanding balance under our bank credit facility.
Subsequent to the end of the quarter, Centerspace sold its sole remaining commercial property Minot IPS located in Minot, North Dakota on October 18th for an aggregate sale price of $2.3 million.
Balance Sheet
At the end of the third quarter, Centerspace had $219.8 million of total liquidity on its balance sheet, consisting of $199.0 million available under the line of credit and cash and cash equivalents of $20.8 million.
In the three months ended September 30, 2021, Centerspace issued $125.0 million of unsecured notes with a weighted average interest rate of 2.6% and weighted average maturity of 10.5 years.
During the quarter, Centerspace amended and extended our existing $250.0 million revolving credit facility. The new facility includes an accordion feature for up to $400.0 million and matures in September 2025 with two optional six-month extensions.
Revised 2021 Financial Outlook
Centerspace revised its 2021 financial outlook, which includes the acquisition of KMS on September 1, 2021. For additional information, see S-16 of the Supplemental Financial and Operating Data for the quarter ended September 30, 2021 included at the end of this release. These ranges should be considered in their entirety. The revised outlook is:
Previous Outlook for 2021Updated Outlook for 2021
LowHighLowHigh
Earnings per Share – diluted$0.58 $0.76 $(0.36)$(0.24)
Same-Store Revenue2.0 %3.5 %3.5 %4.0 %
Same-Store Expenses4.0 %6.0 %4.5 %5.0 %
Same-Store NOI0.5 %2.0 %3.0 %3.5 %
FFO per Share – diluted$3.64 $3.83 $3.40 $3.52 
Core FFO per Share – diluted$3.78 $3.94 $3.92 $4.02 
COVID-19 Developments
The COVID-19 pandemic, including the associated economic disruptions, has continued to impact business and operations since March 2020. The company continues to prioritize the health and well-being of its residents, team members, and the communities it serves.
A discussion of the ongoing and potential effects of the COVID-19 pandemic on financial condition, results of operations, and cash flows can be found in "Management's Discussion and Analysis of Financial Conditions and Results of Operations" presented in the company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 22, 2021. For a more detailed description of the risks and uncertainties affecting business, see the risk factors presented in Item 1A in the company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 22, 2021.
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Upcoming Events
Centerspace is scheduled to participate in the upcoming National Association of Real Estate Investment Trusts ("Nareit") REITworld 2021 Annual Conference, which will be held virtually November 9-11.
Earnings Call
Live webcast and replay:  https://ir.centerspacehomes.com
  
Live Conference CallConference Call Replay
Tuesday, November 2, 2021, at 10:00 AM ETReplay available until November 16, 2021
USA Toll Free Number1-877-509-9785USA Toll Free Number1-877-344-7529
International Toll Free Number1-412-902-4132International Toll Free Number1-412-317-0088
Canada Toll Free Number1-855-669-9657Canada Toll Free Number1-855-669-9658
  Conference Number10160003
Supplemental Information
Supplemental Operating and Financial Data for the quarter ended September 30, 2021 included herein (“Supplemental Information”), is available in the Investors section on Centerspace’s website at www.centerspacehomes.com or by calling Investor Relations at 701-837-7104. Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Financial and Operating Data, which accompanies this earnings release.  
About Centerspace
Centerspace is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of September 30, 2021, Centerspace owned 79 apartment communities consisting of 14,275 apartment homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Centerspace was named a Top Workplace for 2021 by the Minneapolis Star Tribune. For more information, please visit www.centerspacehomes.com.
Forward-Looking Statements
Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on the company's current expectations and assumptions, and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although the company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be achieved. Such risks, uncertainties, and other factors that might cause such differences include, but are not limited to those risks and uncertainties detailed from time to time in Centerspace's filings with the Securities and Exchange Commission, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in its Annual Report on Form 10-K for the year ended December 31, 2020, in its subsequent quarterly reports on Form 10-Q, and in other public reports. The company assumes no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.
Contact Information
Investor Relations
Emily Miller
Phone: 701-837-7104
IR@centerspacehomes.com
Marketing & Media
Kelly Weber
Phone: 701-837-7104
kweber@centerspacehomes.com
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Supplemental Financial and Operating Data
Table of Contents
September 30, 2021


Common Share Data (NYSE: CSR)
 3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
 20212021202120202020
High closing price$105.42 $79.71 $73.42 $74.55 $73.53 
Low closing price$78.42 $67.28 $68.00 $65.79 $61.87 
Average closing price$94.10 $71.99 $71.37 $70.30 $70.15 
Closing price at end of quarter$94.50 $78.90 $68.00 $70.64 $65.17 
Common share distributions – annualized$2.88 $2.80 $2.80 $2.80 $2.80 
Closing dividend yield – annualized3.1 %3.6 %4.1 %4.0 %4.3 %
Closing common shares outstanding (thousands)
14,281 14,045 13,220 13,027 12,976 
Closing limited partnership units outstanding (thousands)
845 881 950 977 1,018 
Closing Series E preferred units outstanding, as converted (thousands)
2,186 — — — — 
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)
$1,635,984 $1,177,661 $963,560 $989,243 $911,989 

S-1


CENTERSPACE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands)
 Three Months EndedNine Months Ended
 9/30/20216/30/20213/31/202112/31/20209/30/20209/30/20219/30/2020
REVENUE$50,413 $46,656 $46,648 $45,540 $44,138 $143,717 $132,454 
EXPENSES
Property operating expenses, excluding real estate taxes14,434 13,018 13,449 12,668 13,129 40,901 38,957 
Real estate taxes5,916 5,742 5,792 5,256 5,402 17,450 16,277 
Property management expense2,203 2,085 1,767 1,460 1,442 6,055 4,341 
Casualty (gain) loss(10)(27)101 331 91 64 1,331 
Depreciation/amortization22,447 19,308 19,992 20,282 18,995 61,747 55,311 
General and administrative expenses4,279 3,797 3,906 3,733 3,077 11,982 9,707 
TOTAL EXPENSES$49,269 $43,923 $45,007 $43,730 $42,136 $138,199 $125,924 
Operating income1,144 2,733 1,641 1,810 2,002 5,518 6,530 
Interest expense(7,302)(7,089)(7,231)(6,903)(6,771)(21,622)(20,622)
Interest and other income (loss)(5,082)619 431 404 277 (4,032)(1,979)
Income (loss) before gain (loss) on sale of real estate and other investments(11,240)(3,737)(5,159)(4,689)(4,492)(20,136)(16,071)
Gain (loss) on sale of real estate and other investments— 26,840 — 17 25,676 26,840 25,486 
Net income (loss)$(11,240)$23,103 $(5,159)$(4,672)$21,184 $6,704 $9,415 
Dividends to Series D preferred unitholders(160)(160)(160)(160)(160)(480)(480)
Net (income) loss attributable to noncontrolling interest – Operating Partnership and Series E preferred units1,930 (1,386)469 460 (1,387)1,013 (248)
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities(22)(19)(17)(6)(8)(58)132 
Net income (loss) attributable to controlling interests(9,492)21,538 (4,867)(4,378)19,629 7,179 8,819 
Dividends to preferred shareholders(1,607)(1,607)(1,607)(1,607)(1,607)(4,821)(4,921)
Discount (premium) on redemption of preferred shares— — — — (1)— 297 
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS$(11,099)$19,931 $(6,474)$(5,985)$18,021 $2,358 $4,195 
Per Share Data - Basic
Net earnings (loss) per common share – basic$(0.79)$1.49 $(0.49)$(0.46)$1.40 $0.17 $0.33 
Per Share Data - Diluted
Net earnings (loss) per common share – diluted$(0.81)$1.48 $(0.49)$(0.46)$1.38 $0.12 $0.33 
S-2

CENTERSPACE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
9/30/20216/30/20213/31/202112/31/20209/30/2020
ASSETS
Real estate investments
Property owned$2,203,606 $1,838,837 $1,883,407 $1,812,557 $1,805,390 
Less accumulated depreciation(426,926)(407,400)(408,014)(399,249)(380,392)
1,776,680 1,431,437 1,475,393 1,413,308 1,424,998 
Mortgage loans receivable42,160 37,457 30,107 24,661 17,986 
Total real estate investments1,818,840 1,468,894 1,505,500 1,437,969 1,442,984 
Cash and cash equivalents20,816 5,194 10,816 392 16,804 
Restricted cash2,376 8,444 1,610 6,918 2,199 
Other assets34,919 17,218 18,427 18,904 16,947 
TOTAL ASSETS$1,876,951 $1,499,750 $1,536,353 $1,464,183 $1,478,934 
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
LIABILITIES
Accounts payable and accrued expenses$58,092 $52,413 $53,852 $55,609 $58,596 
Revolving line of credit57,000 87,000 181,544 152,871 135,000 
Notes payable, net of loan costs299,454 319,286 319,236 269,246 269,202 
Mortgages payable, net of loan costs489,140 287,143 293,709 297,074 313,065 
TOTAL LIABILITIES$903,686 $745,842 $848,341 $774,800 $775,863 
SERIES D PREFERRED UNITS$21,585 $18,022 $16,560 $16,560 $16,560 
EQUITY
Series C Preferred Shares of Beneficial Interest93,530 93,530 93,530 93,530 93,530 
Common Shares of Beneficial Interest1,092,130 1,033,940 980,453 968,263 968,436 
Accumulated distributions in excess of net income(454,691)(433,310)(443,409)(427,681)(412,577)
Accumulated other comprehensive income (loss)(5,784)(12,064)(12,798)(15,905)(17,256)
Total shareholders’ equity$725,185 $682,096 $617,776 $618,207 $632,133 
Noncontrolling interests – Operating Partnership and Series E preferred units225,850 53,133 53,007 53,930 53,669 
Noncontrolling interests – consolidated real estate entities645 657 669 686 709 
Total equity$951,680 $735,886 $671,452 $672,823 $686,511 
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY$1,876,951 $1,499,750 $1,536,353 $1,464,183 $1,478,934 
S-3

CENTERSPACE
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)

This release contains certain non-GAAP financial measures. The non-GAAP financial measures should not be considered a substitute for operating results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The definitions and calculations of these non-GAAP financial measures, as calculated by us, may not be comparable to non-GAAP financial measures reported by other REITs that do not define each of the non-GAAP financial measures exactly as Centerspace does.
The company provides certain information on a same-store and non-same-store basis. Same-store apartment communities are owned or in service for substantially all of the periods being compared, and, in the case of newly-constructed properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, Centerspace determines the composition of its same-store pool for that year as well as adjusts the previous year, which allows us to evaluate full period-over-period operating comparisons for existing apartment communities and their contribution to net income. The company believes that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of its communities are performing year-over-year. Centerspace uses this measure to assess whether or not the company has been successful in increasing NOI, renewing the leases on existing residents, controlling operating costs, and making prudent capital improvements.
Reconciliation of Operating Income to Net Operating Income
Net operating income, or NOI, is a non-GAAP financial measure which the company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.
 (in thousands, except percentages)
 Three Months EndedSequentialYear-Over-Year
 9/30/20216/30/20219/30/2020$ Change% Change$ Change% Change
Operating income$1,144 $2,733 $2,002 $(1,589)(58.1)%$(858)(42.9)%
Adjustments:
Property management expenses2,203 2,085 1,442 118 5.7 %761 52.8 %
Casualty (gain) loss(10)(27)91 17 (63.0)%(101)(111.0)%
Depreciation and amortization22,447 19,308 18,995 3,139 16.3 %3,452 18.2 %
General and administrative expenses4,279 3,797 3,077 482 12.7 %1,202 39.1 %
Net operating income$30,063 $27,896 $25,607 $2,167 7.8 %$4,456 17.4 %
Revenue
Same-store$42,034 $40,521 $39,571 $1,513 3.7 %$2,463 6.2 %
Non-same-store7,214 4,436 1,117 2,778 62.6 %6,097 545.8 %
Other properties1,120 646 833 474 73.4 %287 34.5 %
Dispositions45 1,053 2,617 (1,008)(95.7)%(2,572)(98.3)%
Total50,413 46,656 44,138 3,757 8.1 %6,275 14.2 %
Property operating expenses, including real estate taxes
Same-store17,126 16,528 16,409 598 3.6 %717 4.4 %
Non-same-store2,940 1,439 491 1,501 104.3 %2,449 498.8 %
Other properties317 268 229 49 18.3 %88 38.4 %
Dispositions(33)525 1,402 (558)(106.3)%(1,435)(102.4)%
Total20,350 18,760 18,531 1,590 8.5 %1,819 9.8 %
Net operating income
Same-store24,908 23,993 23,162 915 3.8 %1,746 7.5 %
Non-same-store4,274 2,997 626 1,277 42.6 %3,648 582.7 %
Other properties803 378 604 425 112.4 %199 32.9 %
Dispositions78 528 1,215 (450)(100.0)%(1,137)(93.6)%
Total$30,063 $27,896 $25,607 $2,167 7.8 %$4,456 17.4 %
S-4

(in thousands, except percentages)
Nine Months Ended September 30,
20212020$ Change% Change
Operating income$5,518 $6,530 $(1,012)(15.5)%
Adjustments:
Property management expenses6,055 4,341 1,714 39.5 %
Casualty (gain) loss64 1,331 (1,267)(95.2)%
Depreciation and amortization61,747 55,311 6,436 11.6 %
General and administrative expenses11,982 9,707 2,275 23.4 %
Net operating income$85,366 $77,220 $8,146 10.5 %
Revenue
Same-store$122,555 $118,627 $3,928 3.3 %
Non-same-store15,892 2,319 13,573 585.3 %
Other properties2,415 2,208 207 9.4 %
Dispositions2,855 9,300 (6,445)(69.3)%
Total143,717 132,454 11,263 8.5 %
Property operating expenses, including real estate taxes
Same-store50,032 48,631 1,401 2.9 %
Non-same-store5,875 995 4,880 490.5 %
Other properties873 759 114 15.0 %
Dispositions1,571 4,849 (3,278)(67.6)%
Total58,351 55,234 3,117 5.6 %
Net operating income
Same-store72,523 69,996 2,527 3.6 %
Non-same-store10,017 1,324 8,693 656.6 %
Other properties1,542 1,449 93 6.4 %
Dispositions1,284 4,451 (3,167)(71.2)%
Total$85,366 $77,220 $8,146 10.5 %
S-5

Reconciliation of Same-Store Controllable Expenses to Total Property Operating Expenses, Including Real Estate Taxes
Same-store controllable expenses exclude real estate taxes and insurance, in order to provide a measure of expenses that are within management's control, and is used for the purposes of budgeting, business planning, and performance evaluation. This is a non-GAAP financial measure and should not be considered an alternative to total expenses or total property operating expenses.
 (in thousands, except percentages)
 Three Months Ended September 30,Nine Months Ended September 30,
 20212020$ Change% Change20212020$ Change% Change
Controllable expenses
On-site compensation(1)
$4,488 $4,362 $126 2.9 %$13,182 $12,908 $274 2.1 %
Repairs and maintenance2,562 2,804 (242)(8.6)%7,060 7,469 (409)(5.5)%
Utilities2,941 2,609 332 12.7 %8,239 7,689 550 7.2 %
Administrative and marketing956 853 103 12.1 %2,701 2,595 106 4.1 %
Total$10,947 $10,628 $319 3.0 %$31,182 $30,661 $521 1.7 %
Non-controllable expenses
Real estate taxes$4,812 $4,795 $17 0.4 %$14,665 $14,513 $152 1.0 %
Insurance1,367 986 381 38.6 %4,185 3,457 728 21.1 %
Total$6,179 $5,781 $398 6.9 %$18,850 $17,970 $880 4.9 %
Property operating expenses, including real estate taxes - non-same-store$2,940 $491 $2,449 498.8 %$5,875 $995 $4,880 490.5 %
Property operating expenses, including real estate taxes - other properties317 229 88 38.4 %873 759 114 15.0 %
Property operating expenses, including real estate taxes - dispositions(33)1,402 (1,435)(102.4)%1,571 4,849 (3,278)(67.6)%
Total property operating expenses, including real estate taxes$20,350 $18,531 $1,819 9.8 %$58,351 $55,234 $3,117 5.6 %
(1)On-site compensation for administration, leasing, and maintenance personnel.
Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds From Operations and Core Funds From Operations
Centerspace believes that FFO, which is a non-GAAP financial measure used as a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding its operating performance, primarily because its calculation does not assume that the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation.
Centerspace uses the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding:
•depreciation and amortization related to real estate;
•gains and losses from the sale of certain real estate assets; and
•impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
The exclusion in Nareit’s definition of FFO of gains and losses from the sale of real estate assets and impairment write-downs helps to identify the operating results of the long-term assets that form the base of the company's investments, and assists management and investors in comparing those operating results between periods.
Due to the limitations of the Nareit FFO definition, Centerspace has made certain interpretations in applying this definition. The company believes that all such interpretations not specifically identified in the Nareit definition are consistent with this definition. Nareit’s FFO White Paper 2018 Restatement clarified that impairment write-downs of land related to a REIT’s main business are excluded from FFO and a REIT has the option to exclude impairment write-downs of assets that are incidental to its main business.
While FFO is widely used by Centerspace as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO in the same way. Accordingly, FFO presented here is not necessarily comparable to FFO
S-6

presented by other real estate companies. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash flow needs, including the ability to service indebtedness or make distributions to shareholders.
Core Funds from Operations (“Core FFO”) is FFO as adjusted for non-routine items or items not considered core to business operations. By further adjusting for items that are not considered part of core business operations, the company believes that Core FFO provides investors with additional information to compare core operating and financial performance between periods. Core FFO should not be considered as an alternative to net income, or any other GAAP measurement of performance, but rather should be considered an additional supplemental measure. Core FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund the company's cash needs, including its ability to service indebtedness or make distributions to shareholders. Core FFO is a non-GAAP and non-standardized financial measure that may be calculated differently by other REITs and should not be considered a substitute for operating results determined in accordance with GAAP.
(in thousands, except per share amounts)
Three Months EndedNine Months Ended
9/30/20216/30/20213/31/202112/31/20209/30/20209/30/20219/30/2020
Funds From Operations     
Net income (loss) available to common shareholders$(11,099)$19,931 $(6,474)$(5,985)$18,021 $2,358 $4,195 
Adjustments:
Noncontrolling interests – Operating Partnership(1,930)1,386 (469)(460)1,387 (1,013)248 
Depreciation and amortization22,447 19,308 19,992 20,282 18,995 61,747 55,311 
Less depreciation – non real estate(80)(87)(98)(87)(85)(265)(266)
Less depreciation – partially owned entities(24)(24)(24)(33)(31)(72)(346)
(Gain) loss on sale of real estate— (26,840)— (17)(25,676)(26,840)(25,486)
FFO applicable to common shares and Units$9,314 $13,674 $12,927 $13,700 $12,611 $35,915 $33,656 
Adjustments to Core FFO:
Casualty (gain) loss— — — 204 545 — 545 
Loss on extinguishment of debt530 3 — 2 4 533 21 
Rebranding costs— — — 402 — — — 
Technology implementation costs625 447 413 — — 1,485 — 
(Gain) loss on marketable securities— — — — — — 3,378 
(Discount) premium on redemption of preferred shares— — — — 1 — (297)
Commercial lease termination proceeds(450)— — — — (450)— 
Acquisition related costs140 — — — — 140 — 
Interest rate swap termination and amortization5,353 — — — — 5,353 — 
Amortization of assumed debt(27)— — — — (27)— 
Other miscellaneous items(3)— — — — (3)— 
Core FFO applicable to common shares and Units$15,482 $14,124 $13,340 $14,308 $13,161 $42,946 $37,303 
Funds from operations applicable to common shares and Units$9,314 $13,674 $12,927 $13,700 $12,611 $35,915 $33,656 
Dividends to preferred unitholders160 160 160 160 160 480 480 
Funds from operations applicable to common shares and Units - diluted$9,474 $13,834 $13,087 $13,860 $12,771 $36,395 $34,136 
Core funds from operations applicable to common shares and Units$15,482 $14,124 $13,340 $14,308 $13,161 $42,946 $37,303 
Dividends to preferred unitholders160 160 160 160 160 480 480 
Core funds from operations applicable to common shares and Units - diluted$15,642 $14,284 $13,500 $14,468 $13,321 $43,426 $37,783 
Per Share Data
Earnings (loss) per share and Unit - diluted$(0.81)$1.48 $(0.49)$(0.46)$1.38 $0.12 $0.33 
FFO per share and Unit - diluted$0.60 $0.95 $0.92 $0.97 $0.90 $2.44 $2.49 
Core FFO per share and Unit - diluted$0.98 $0.98 $0.95 $1.02 $0.94 $2.91 $2.76 
Weighted average shares and Units - diluted15,922 14,514 14,282 14,222 14,143 14,917 13,704 
S-7

Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of real estate investments, gain/loss on extinguishment of debt, gain/loss from involuntary conversion; and other non-routine items or items not considered core to business operations. The company considers Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, the cost of debt, or non-operating gains and losses. Adjusted EBITDA is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP.
(in thousands)
Three Months EndedNine Months Ended
9/30/20216/30/20213/31/202112/31/20209/30/20209/30/20219/30/2020
Adjusted EBITDA
Net income (loss) available to common shareholders$(9,492)$21,538 $(4,867)$(4,378)$19,629 $7,179 $8,819 
Adjustments: 
Dividends to preferred unitholders160 160 160 160 160 480 480 
Noncontrolling interests – Operating Partnership(1,930)1,386 (469)(460)1,387 (1,013)248 
Income (loss) before noncontrolling interests – Operating Partnership$(11,262)$23,084 $(5,176)$(4,678)$21,176 $6,646 $9,547 
Adjustments:  
Interest expense7,287 7,075 7,216 6,888 6,756 21,578 20,446 
Loss on extinguishment of debt530 3 — 2 4 533 21 
Depreciation/amortization related to real estate investments22,423 19,284 19,969 20,250 18,964 61,676 54,965 
Casualty (gain) loss — — — 204 545 — 545 
Interest income(769)(583)(407)(328)(256)(1,759)(1,184)
(Gain) loss on sale of real estate and other investments— (26,840)— (17)(25,676)(26,840)(25,486)
Technology implementation costs625 447 413 — — 1,486 — 
(Gain) loss on marketable securities— — — — — — 3,378 
Commercial lease termination proceeds(450)— — — — (450)— 
Acquisition related costs140 — — — — 140 — 
Interest rate swap termination5,361 — — — — 5,361 — 
Other miscellaneous items(3)— — — — (3)— 
Adjusted EBITDA$23,882 $22,470 $22,015 $22,321 $21,513 $68,368 $62,232 

S-8


CENTERSPACE
DEBT ANALYSIS
(in thousands)
Debt Maturity Schedule
Annual Expirations
Future Maturities of Debt
Secured Fixed
Debt
Unsecured Fixed
Debt(1)
Total
Debt		% of
Total Debt
Weighted
Average Interest Rate(2)
2021 (remainder)$— $— $— — — 
202229,822 — 29,822 3.5 %4.07 %
202342,875 — 42,875 5.1 %4.02 %
2024— — — — — 
202532,316 57,000 89,316 10.5 %2.83 %
Thereafter387,384 300,000 687,384 80.9 %3.20 %
Total debt$492,397 $357,000 $849,397 100.0 %3.23 %
(1)The line of credit is fixed with an interest rate swap.
(2)Weighted average interest rate of debt that matures during the year, including the effect of interest rate swaps on the term loans and line of credit.

9/30/20216/30/20213/31/202112/31/20209/30/2020
Debt Balances Outstanding     
Secured fixed rate - other mortgages$293,547 $288,363 $295,001 $298,445 $314,511 
Secured fixed rate - Fannie Mae credit facility198,850 — — — — 
Unsecured fixed rate line of credit(1)
57,000 50,000 50,000 50,000 50,000 
Unsecured variable rate line of credit— 37,000 131,544 102,871 85,000 
Unsecured term loans— 145,000 145,000 145,000 145,000 
Unsecured senior notes300,000 175,000 175,000 125,000 125,000 
Debt total$849,397 $695,363 $796,545 $721,316 $719,511 
Other mortgages rate3.83 %3.90 %3.92 %3.93 %3.99 %
Fannie Mae Credit Facility rate2.78 %— — — — 
Lines of credit rate (rate with swap)2.79 %2.24 %2.18 %2.35 %3.35 %
Term loan rate (rate with swap)— 4.19 %4.11 %4.18 %4.18 %
Senior notes rate3.12 %3.47 %3.47 %3.78 %3.78 %
Total debt3.23 %3.70 %3.37 %3.62 %3.68 %
(1)A portion of the primary line of credit is fixed through an interest rate swap.
S-9

CENTERSPACE 
CAPITAL ANALYSIS 
(in thousands, except per share and unit amounts)
Three Months Ended
9/30/20216/30/20213/31/202112/31/20209/30/2020
Equity Capitalization
Common shares outstanding14,281 14,045 13,220 13,027 12,976 
Operating partnership units outstanding845 881 950 977 1,018 
Series E preferred units (as converted)2,186 — — — — 
Total common shares and units outstanding17,312 14,926 14,170 14,004 13,994 
Market price per common share (closing price at end of period)$94.50 $78.90 $68.00 $70.64 $65.17 
Equity capitalization-common shares and units$1,635,984 $1,177,661 $963,560 $989,243 $911,989 
Recorded book value of preferred shares$93,530 $93,530 $93,530 $93,530 $93,530 
Total equity capitalization$1,729,514 $1,271,191 $1,057,090 $1,082,773 $1,005,519 
Series D Preferred Units$21,585 $18,022 $16,560 $16,560 $16,560 
Debt Capitalization
Total debt$849,397 $695,363 $796,545 $721,317 $719,511 
Total capitalization$2,600,496 $1,984,576 $1,870,195 $1,820,650 $1,741,590 
Total debt to total capitalization(1)
33.1 %35.0 %43.1 %39.6 %41.3 %
(1)Total debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet, market value of common shares and operating partnership units, and book value of Series C preferred shares and Series D preferred units outstanding at the end of the period.

Three Months EndedNine Months Ended
9/30/20216/30/20213/31/202112/31/20209/30/20209/30/20219/30/2020
Debt service coverage ratio(1)
2.75  x2.62  x2.53  x2.73  x2.65  x2.63  x2.52  x
Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization2.32  x2.21  x2.14  x2.28  x2.21  x2.22  x2.08  x
Net debt/Adjusted EBITDA(2)
8.67  x7.68  x8.92  x8.07  x8.17  x9.09  x8.47  x
Net debt and preferred equity/Adjusted EBITDA(2)
9.88  x8.92  x10.17  x9.31  x9.45  x10.35  x9.80  x
Distribution Data
Common shares and Units outstanding at record date15,126 14,926 14,171 14,004 13,994 15,126 13,994 
Total common distribution declared
$10,890 $10,448 $9,919 $9,803 $9,796 $31,257 $28,735 
Common distribution per share and Unit
$0.72 $0.70 $0.70 $0.70 $0.70 $2.12 $2.10 
Payout ratio (Core FFO per diluted share and unit basis)(3)
73.5 %71.4 %73.7 %68.6 %74.5 %72.9 %76.1 %
(1)Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization. This term is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within the Non-GAAP Financial Measures and Reconciliations section.
(2)Net debt is the total debt balance less cash and cash equivalents and net tax deferred exchange proceeds (included within restricted cash). Adjusted EBITDA is annualized for periods less than one year. Net debt and adjusted EBITDA are non-GAAP financial measures and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within the Non-GAAP Financial Measures and Reconciliations section.
(3)Payout ratio (Core FFO per diluted share and unit basis) is the ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual Core FFO per diluted share and unit. This term is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP.
S-10



CENTERSPACE
SAME-STORE THIRD QUARTER COMPARISONS
(in thousands, except property data amounts and percentages)

 Apartment Homes IncludedRevenuesExpensesNOI
RegionsQ3 2021Q3 2020% ChangeQ3 2021Q3 2020% ChangeQ3 2021Q3 2020% Change
Denver, CO992 $5,565 $5,372 3.6 %$1,899 $1,916 (0.9)%$3,666 $3,456 6.1 %
Minneapolis, MN2,355 11,361 10,547 7.7 %4,548 4,462 1.9 %6,813 6,085 12.0 %
North Dakota2,422 8,183 7,852 4.2 %3,378 3,146 7.4 %4,805 4,706 2.1 %
Omaha, NE1,370 4,166 3,884 7.3 %1,933 1,790 8.0 %2,233 2,094 6.6 %
Rochester, MN1,122 4,874 4,577 6.5 %1,924 2,064 (6.8)%2,950 2,513 17.4 %
St. Cloud, MN1,192 3,683 3,548 3.8 %1,750 1,603 9.2 %1,933 1,945 (0.6)%
Other Mountain West1,223 4,202 3,791 10.8 %1,694 1,428 18.6 %2,508 2,363 6.1 %
Same-Store Total10,676 $42,034 $39,571 6.2 %$17,126 $16,409 4.4 %$24,908 $23,162 7.5 %


 % of NOI Contribution
Weighted Average Occupancy (1)
Average Monthly
Rental Rate (2)
Average Monthly
Revenue per Occupied Home (3)
RegionsQ3 2021Q3 2020GrowthQ3 2021Q3 2020% ChangeQ3 2021Q3 2020% Change
Denver, CO14.7 %94.5 %93.4 %1.1 %$1,779 $1,750 1.7 %$1,978 $1,932 2.5 %
Minneapolis, MN27.3 %94.6 %93.1 %1.5 %1,558 1,504 3.6 %1,699 1,603 6.2 %
North Dakota19.3 %94.2 %95.5 %(1.3)%1,107 1,054 5.0 %1,195 1,131 5.5 %
Omaha, NE9.0 %94.6 %93.8 %0.8 %962 913 5.4 %1,072 1,008 6.5 %
Rochester, MN11.8 %93.2 %93.8 %(0.6)%1,462 1,385 5.6 %1,554 1,450 7.1 %
St. Cloud, MN7.8 %91.5 %94.4 %(2.9)%1,063 963 10.4 %1,125 1,051 6.7 %
Other Mountain West10.1 %96.6 %97.1 %(0.5)%1,080 970 11.3 %1,185 1,064 11.3 %
Same-Store Total100.0 %94.3 %94.3 %— $1,279 $1,215 5.3 %$1,392 $1,311 6.2 %
(1)Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rent. Scheduled rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.
(2)Average monthly rental rate is scheduled rent divided by the total number of apartment homes.
(3)Average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period.
S-11


CENTERSPACE
SAME-STORE SEQUENTIAL QUARTER COMPARISONS
(in thousands, except property data amounts and percentages)

Apartment Homes IncludedRevenuesExpensesNOI
RegionsQ3 2021Q2 2021% ChangeQ3 2021Q2 2021% ChangeQ3 2021Q2 2021% Change
Denver, CO992 $5,565 $5,486 1.4 %$1,899 $1,837 3.4 %$3,666 $3,649 0.4 %
Minneapolis, MN2,355 11,361 10,538 7.8 %4,548 4,649 (2.2)%6,813 5,889 15.7 %
North Dakota2,422 8,183 8,078 1.3 %3,378 3,199 5.6 %4,805 4,879 (1.5)%
Omaha, NE1,370 4,166 4,037 3.2 %1,933 1,885 2.5 %2,233 2,152 3.8 %
Rochester, MN1,122 4,874 4,709 3.5 %1,924 1,937 (0.7)%2,950 2,772 6.4 %
St. Cloud, MN1,192 3,683 3,634 1.3 %1,750 1,582 10.6 %1,933 2,052 (5.8)%
Other Mountain West1,223 4,202 4,039 4.0 %1,694 1,439 17.7 %2,508 2,600 (3.5)%
Same-Store Total10,676 $42,034 $40,521 3.7 %$17,126 $16,528 3.6 %$24,908 $23,993 3.8 %

% of NOI ContributionWeighted Average OccupancyAverage Monthly
Rental Rate		Average Monthly
Revenue per Occupied Home
RegionsQ3 2021Q2 2021GrowthQ3 2021Q2 2021% ChangeQ3 2021Q2 2021% Change
Denver, CO14.7 %94.5 %94.2 %0.3 %$1,779 $1,727 3.0 %$1,978 $1,957 1.1 %
Minneapolis, MN27.3 %94.6 %94.2 %0.4 %1,558 1,510 3.2 %1,699 1,584 7.4 %
North Dakota19.3 %94.2 %95.9 %(1.7)%1,107 1,078 2.7 %1,195 1,159 3.0 %
Omaha, NE9.0 %94.6 %95.5 %(0.9)%962 927 3.8 %1,072 1,029 4.1 %
Rochester, MN11.8 %93.2 %94.5 %(1.3)%1,462 1,403 4.2 %1,554 1,480 4.8 %
St. Cloud, MN7.8 %91.5 %92.7 %(1.2)%1,063 1,005 5.8 %1,125 1,097 2.5 %
Other Mountain West10.1 %96.6 %98.1 %(1.5)%1,080 1,014 6.5 %1,185 1,122 5.5 %
Same-Store Total100.0 %94.3 %94.9 %(0.6)%$1,279 $1,233 3.7 %$1,392 $1,333 4.4 %


S-12


CENTERSPACE
SAME-STORE YEAR-TO-DATE COMPARISONS
(in thousands, except property data amounts and percentages)

Apartment Homes IncludedRevenuesExpensesNOI
Regions20212020% Change20212020% Change20212020% Change
Denver, CO992 $16,459 $16,170 1.8 %$5,604 $5,332 5.1 %$10,855 $10,838 0.2 %
Minneapolis, MN2,355 32,365 32,024 1.1 %13,627 13,125 3.8 %18,738 18,899 (0.9)%
North Dakota2,422 24,209 23,331 3.8 %9,848 9,791 0.6 %14,361 13,540 6.1 %
Omaha, NE1,370 12,229 11,536 6.0 %5,580 5,199 7.3 %6,649 6,337 4.9 %
Rochester, MN1,122 14,227 13,910 2.3 %5,847 5,922 (1.3)%8,380 7,988 4.9 %
St. Cloud, MN1,192 10,972 10,705 2.5 %4,967 4,883 1.7 %6,005 5,822 3.1 %
Other Mountain West1,223 12,094 10,951 10.4 %4,559 4,379 4.1 %7,535 6,572 14.7 %
Same-Store Total10,676 $122,555 $118,627 3.3 %$50,032 $48,631 2.9 %$72,523 $69,996 3.6 %

% of NOI ContributionWeighted Average Occupancy Average Monthly
Rental Rate		Average Monthly
Revenue per Occupied Home
Regions20212020Growth20212020% Change20212020% Change
Denver, CO15.0 %94.4 %93.6 %0.8 %$1,741 $1,772 (1.7)%$1,953 $1,935 1.0 %
Minneapolis, MN25.7 %93.9 %93.8 %0.1 %1,521 1,495 1.7 %1,626 1,611 1.0 %
North Dakota19.8 %95.4 %95.9 %(0.5)%1,082 1,045 3.5 %1,164 1,116 4.3 %
Omaha, NE9.2 %95.0 %94.3 %0.7 %934 903 3.4 %1,044 992 5.3 %
Rochester, MN11.6 %94.4 %95.5 %(1.1)%1,413 1,383 2.2 %1,493 1,443 3.4 %
St. Cloud, MN8.3 %92.9 %94.3 %(1.4)%1,013 953 6.3 %1,101 1,058 3.9 %
Other Mountain West10.4 %97.5 %95.9 %1.6 %1,026 954 7.5 %1,127 1,037 8.8 %
Same-Store Total100.0 %94.7 %94.7 %— $1,242 $1,208 2.8 %$1,347 $1,304 3.3 %
S-13

CENTERSPACE
PORTFOLIO SUMMARY(1)
Three Months Ended
9/30/20216/30/20213/31/202112/31/20209/30/2020
Number of Apartment Homes at Period End
Same-Store10,676 10,676 11,265 10,567 10,567 
Non-Same-Store3,599 903 903 1,343 1,343 
All Communities14,275 11,579 12,168 11,910 11,910 
Average Monthly Rental Rate(2)
Same-Store$1,279 $1,233 $1,200 $1,177 $1,178 
Non-Same-Store1,506 1,617 1,584 1,599 1,597 
All Communities$1,293 $1,263 $1,229 $1,225 $1,210 
Average Monthly Revenue per Occupied Apartment Home(3)
Same-Store$1,392 $1,333 $1,302 $1,282 $1,271 
Non-Same-Store1,606 1,739 1,705 1,708 1,729 
All Communities$1,397 $1,365 $1,332 $1,330 $1,307 
Weighted Average Occupancy(4)
Same-Store94.3 %94.9 %94.9 %95.0 %94.4 %
Non-Same-Store95.1 %94.2 %91.8 %92.3 %93.9 %
All Communities94.4 %94.8 %94.6 %94.6 %94.3 %
Operating Expenses as a % of Scheduled Rent
Same-Store41.8 %41.9 %42.9 %41.2 %43.4 %
Non-Same-Store39.9 %32.9 %34.9 %35.3 %39.7 %
All Communities41.6 %41.0 %42.1 %40.3 %43.0 %
Capital Expenditures
Total Capital Expenditures per Apartment Home – Same-Store
$255 $159 $131 $326 $293 
(1)Previously reported amounts are not revised for changes in the composition of the same-store properties pool.
(2)Average monthly rental rate is scheduled rent divided by the total number of apartment homes. Scheduled rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.
(3)Average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period.
(4)Weighted average occupancy is the percentage resulting from dividing actual rental revenue by scheduled rent. The company believes that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy and the calculation of weighted average occupancy may not be comparable to that disclosed by other REITs.
S-14

CENTERSPACE
CAPITAL EXPENDITURES
($ in thousands, except per home amounts)
Three Months EndedNine Months Ended
9/30/20219/30/20209/30/20219/30/2020
Total Same-Store Apartment Homes10,676 10,676 10,676 10,676 
Building - Exterior$1,236 $707 $2,013 $2,796 
Building - Interior128 154 431 370 
Mechanical, Electrical, & Plumbing145 — 476 — 
Furniture & Equipment13 19 76 237 
Landscaping & Grounds211 727 
Turnover989 1,071 2,371 2,553 
Capital Expenditures - Same-Store$2,722 $2,678 $5,737 $7,136 
Capital Expenditures per Apartment Home - Same-Store$255 $251 $537 $668 
Value Add$7,209 $4,118 $14,384 $10,267 
Total Capital Spend - Same-Store$9,931 $6,796 $20,121 $17,403 
Total Capital Spend per Apartment Home - Same-Store$930 $637 $1,885 $1,630 
All Properties - Weighted Average Apartment Homes12,475 11,600 12,140 11,456 
Capital Expenditures$2,827 $2,761 $5,939 $7,755 
Capital Expenditures per Apartment Home$227 $238 $489 $677 
Value Add7,209 4,118 14,396 10,267 
Acquisition Capital336 730 1,297 1,265 
Total Capital Spend10,372 7,609 21,632 19,287 
Total Capital Spend per Apartment Home$831 $656 $1,782 $1,684 
Value Add Capital Expenditures
Interior - Units
Same-Store$4,823 $2,228 $9,622 $4,581 
Non-Same-Store— — 8 — 
Total Interior Units$4,823 $2,228 $9,630 $4,581 
Expected Year 1 Annual ROI16.0 %17.3 %16.3 %17.0 %
Common Areas and Exteriors
Same-Store$2,386 $1,890 $4,762 $5,686 
Non-Same-Store— — 4 — 
Total Common Areas and Exteriors$2,386 $1,890 $4,766 $5,686 
Expected Year 1 Annual ROI8.6 %11.7 %8.4 %11.8 %
Total Value-Add Capital Expenditures
Same-Store$7,209 $4,118 $14,384 $10,267 
Non-Same-Store— — 12 — 
Total Portfolio Value-Add$7,209 $4,118 $14,396 $10,267 
Expected Year 1 Annual ROI13.6 %14.7 %13.7 %14.1 %

S-15

CENTERSPACE
2021 Financial Outlook
(in thousands, except per share and per home amounts)
Centerspace revised its outlook for 2021 in the table below.
Nine Months Ended2021 Previous Outlook Range2021 Revised Outlook Range
September 30, 2021LowHighLowHigh
YTD ActualAmountAmountAmountAmount
Same-store growth
Revenue$122,555 2.0 %3.5 %3.5 %4.0 %
Controllable expenses$31,182 3.0 %5.0 %3.8 %4.3 %
Non-controllable expenses$18,850 5.5 %7.5 %6.3 %6.8 %
Total Expenses$50,032 4.0 %6.0 %4.5 %5.0 %
Same-store NOI$72,523 0.5 %2.0 %3.0 %3.5 %
Components of NOI
Same-store NOI$72,523 $95,100 $96,300 $97,300 $97,800 
Non-same-store NOI$10,017 $11,800 $12,000 $17,200 $17,800 
Other Commercial NOI$1,542 $1,800 $1,900 $2,100 $2,200 
Other Sold NOI$1,284 $1,200 $1,200 $1,200 $1,200 
Total NOI$85,366 $109,900 $111,400 $117,800 $119,000 
Accretion (dilution) from investments and capital market activity, excluding impact from change in share count$— 4,350 4,500 30 40 
Interest expense$(21,622)(28,700)(28,500)(29,100)(28,900)
Preferred dividends$(4,821)(6,430)(6,430)(6,430)(6,430)
Recurring income and expenses
Interest and other income$(4,104)2,580 2,580 (3,330)(3,330)
General and administrative and property management$(18,037)(23,500)(23,000)(25,100)(24,800)
Casualty losses$(64)(1,245)(755)(600)(400)
Non-real estate depreciation and amortization$(265)(280)(280)(320)(330)
Non-controlling interest$(58)(70)(65)(70)(65)
Total recurring income and expenses$(22,528)(22,515)$(21,520)(29,420)$(28,925)
FFO$36,395 $56,605 $59,450 $52,880 $54,785 
Non-core income and expenses
Casualty loss$— $280 $120 $280 $120 
Technology implementation costs1,485 1,800 1,600 2,000 1,900 
Interest rate swap termination and amortization5,353 — — 5,400 5,400 
Other miscellaneous items193 — — 400 400 
Total non-core income and expenses$7,031 $2,080 $1,720 $8,080 $7,820 
Core FFO$43,426 $58,685 $61,170 $60,960 $62,605 
EPS - Diluted$0.12 $0.58 $0.76 $(0.36)$(0.24)
FFO per diluted share$2.44 $3.64 $3.83 $3.40 $3.52 
Core FFO per diluted share$2.91 $3.78 $3.94 $3.92 $4.02 
Weighted average shares outstanding - diluted14,917 15,541 15,541 15,562 15,570 
Additional Assumptions
Same-store capital expenditures (per home)$537 $875 $925 $885 915 
Value-add expenditures$14,396 $15,000 $20,000 $22,000 $23,000 
Investments$400,000 $400,000 $400,000 $401,000 $401,000 
Dispositions$60,000 $60,000 $60,000 $62,300 $62,300 
Equity issuance proceeds$86,127 $66,500 $66,500 $101,100 $111,100 



S-16

Reconciliation of Net Income (Loss) Available to Common Shareholders to FFO and Core FFO
The following table presents reconciliations of Net income (loss) available to common shareholders to FFO and Core FFO, which are non-GAAP financial measures described in greater detail under “Non-GAAP Financial Measures and Reconciliations.” They should not be considered as alternatives to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO and Core FFO also do not represent cash generated from operating activities in accordance with GAAP, nor are they indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders. The outlook and projections provided below are based on current expectations and are forward-looking.
Previous OutlookRevised Outlook
Nine Months Ended12 Months Ended12 Months Ended
September 30, 2021December 31, 2021December 31, 2021
ActualLowHighLowHigh
Net income (loss) available to common shareholders$2,358 $10,479 $13,324 $(4,180)$(2,270)
Noncontrolling interests - Operating Partnership and Series E preferred units(1,013)(1,456)(1,456)(6,518)(6,518)
Depreciation and amortization61,747 74,157 74,157 90,452 90,452 
Less depreciation - non real estate(265)(280)(280)(320)(330)
Less depreciation - partially owned entities(72)(95)(95)(70)(65)
(Gain) loss on sale of real estate(26,840)(26,840)(26,840)(27,124)(27,124)
Dividends to preferred unitholders480 640 640 640 640 
FFO applicable to common shares and Units$36,395 $56,605 $59,450 $52,880 $54,785 
Adjustments to Core FFO:
Casualty loss write off— 280 120 280 120 
Technology implementation costs1,485 1,800 1,600 2,000 1,900 
Interest rate swap termination and amortization5,353 — — 5,400 5,400 
Other miscellaneous items193 — — 400 400 
Core FFO applicable to common shares and Units$43,426 $58,685 $61,170 $60,960 $62,605 
Earnings per share - diluted$0.12 $0.58 $0.76 $(0.36)$(0.24)
FFO per share - diluted$2.44 $3.64 $3.83 $3.40 $3.52 
Core FFO per share - diluted$2.91 $3.78 $3.94 $3.92 $4.02 
Reconciliation of Operating Income to Net Operating Income
Net operating income, or NOI, is a non-GAAP financial measure which the company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.
Previous OutlookRevised Outlook
Nine Months Ended12 Months Ended12 Months Ended
September 30, 2021December 31, 2021December 31, 2021
ActualLowHighLowHigh
Operating income$5,518 $10,998 $13,488 $1,648 $3,348 
Adjustments:
General and administrative and property management expenses18,037 23,500 23,000 25,100 24,800 
Casualty loss64 1,245 755 600 400 
Depreciation and amortization61,747 74,157 74,157 90,452 90,452 
Net operating income$85,366 $109,900 $111,400 $117,800 $119,000 
S-17