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What changed in CENTERSPACE's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CENTERSPACE's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+329 added−289 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-20)

Top changes in CENTERSPACE's 2024 10-K

329 paragraphs added · 289 removed · 268 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeRisk Factors, for information concerning the potential costs associated with zoning and permitting regulations, “ The COVID-19 pandemic affected our business in the past, and the potential future outbreak of other highly infectious or contagious diseases may materially and adversely impact and disrupt our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations, and our ability to pay dividends and other distributions to our equityholders ” in Item 1A Risk Factors, for information concerning the potential effects of regulations related to the COVID-19 pandemic, and “ Multifamily residential properties may be subject to rent stabilization regulations, now or in the future, which limit our ability to raise rents above specified maximum amounts and could give rise to claims by residents that their rents exceed such specified maximum amounts ” in Item 1A.
Biggest changeRisk Factors, for information concerning the potential costs associated with zoning and permitting regulations, and “ Multifamily residential properties may be subject to rent stabilization regulations and other restrictions which limit our ability to raise rents above specified maximum amounts and could give rise to claims by residents that their rents exceed such specified maximum amounts ” in Item 1A.
Training and development . Training our team is important, and we facilitate that through a learning management system which allows us to provide custom training as well as utilize a library of multifamily focused courses specializing in customer service, sales, leadership, diversity, fair housing, safety, and cyber security.
Training and development . Training our team members is important, and we facilitate that through a learning management system which allows us to provide custom training as well as utilize a library of multifamily focused courses specializing in customer service, sales, leadership, diversity, fair housing, safety, and cyber security.
FINANCING AND DISTRIBUTIONS To fund our investment and capital activities, we rely on a combination of issuance of common shares, preferred shares, Units in exchange for property, and borrowed funds. We regularly issue dividends to our shareholders. Each of these is described below.
FINANCING AND DISTRIBUTIONS To fund our investment and capital activities, we rely on a combination of issuance of common shares, preferred shares, Units in exchange for property, and borrowed funds. We regularly issue dividends to our shareholders and Unitholders. Each of these is described below.
Our primary unsecured credit facility (the “Unsecured Credit Facility”) is a revolving, multi-bank line of credit, with Bank of Montreal serving as administrative agent. Our line of credit has total commitments and borrowing capacity of up to $250.0 million, based on the value of unencumbered properties.
Our primary unsecured credit facility (the “Unsecured Credit Facility” or “Facility”) is a revolving, multi-bank line of credit, with Bank of Montreal serving as administrative agent. Our line of credit has total commitments and borrowing capacity of up to $250.0 million, based on the value of unencumbered properties.
The holders of Series E preferred units do not have voting rights. Distributions to Shareholders The Code requires a REIT to distribute 90% of its net taxable income, excluding net capital gains, to its shareholders, and a separate requirement to distribute 100% net capital gains or pay a corporate level tax in lieu thereof.
The holders of Series E preferred units do not have voting rights. Distributions to Shareholders The Code requires a REIT to distribute 90% of its net taxable income, excluding net capital gains, to its shareholders, and to either distribute 100% net capital gains or pay a corporate level tax in lieu thereof.
As part of our ESG initiatives, we publish an annual ESG report detailing our efforts related to furthering our mission, including through providing corporate sponsorship in the communities which we serve, offering paid time off for team members to volunteer, training and compensation programs. During the year ended December 31, 2023, team members completed 2,260 volunteer hours.
As part of our ESG initiatives, we publish an annual ESG report detailing our efforts related to furthering our mission, including through providing corporate sponsorship in the communities which we serve, offering paid time off for team members to volunteer, training and compensation programs. During the year ended December 31, 2024, team members completed over 2,700 volunteer hours.
Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 Units. The Series D preferred units have an aggregate liquidation preference of $16.6 million. The holders of the Series D preferred units do not have any voting rights. We had 1.7 million Series E preferred units outstanding as of December 31, 2023.
Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 Units. The Series D preferred units have an aggregate liquidation preference of $16.6 million. The holders of the Series D preferred units do not have voting rights. We had 1.6 million Series E preferred units outstanding as of December 31, 2024.
As of December 31, 2023, we owned interests in 72 apartment communities, containing 13,088 homes and having a total real estate investment amount, net of accumulated depreciation, of $1.9 billion. Our corporate headquarters is located in Minot, North Dakota. We also have a corporate office in Minneapolis, Minnesota. Website and Available Information Our internet address is www.centerspacehomes.com.
As of December 31, 2024, we owned interests in 71 apartment communities, containing 13,012 homes and having a total real estate investment amount, net of accumulated depreciation, of $1.9 billion. Our corporate headquarters is located in Minot, North Dakota. We also have a corporate office in Minneapolis, Minnesota. Website and Available Information Our internet address is www.centerspacehomes.com.
The interest rates on the line of credit are based on the consolidated leverage ratio, at the Company’s option, on either the lender’s base rate plus a margin, ranging from 25-80 basis points, or daily or term SOFR, plus a margin that ranges from 125-180 basis points with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended.
As amended, the interest rates on the line of credit are based on the consolidated leverage ratio, at our option, on either the lender’s base rate plus a margin, ranging from 20-80 basis points, or daily or term SOFR, plus a margin that ranges from 120-180 basis points with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended.
Under the 2021 ATM Program, we may enter into separate forward sale agreements. The proceeds from the sale of common shares under the 2021 ATM Program may be used for general corporate purposes, including the funding of future acquisitions, construction and mezzanine loans, community renovations, and the servicing of indebtedness.
Under the ATM Program, we may enter into separate forward sale agreements. The proceeds from the sale of common shares under the ATM Program may be used for general corporate purposes, including the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness.
Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of limited partnership units (“Units”), which is one of the reasons the Company is structured in this manner. As of December 31, 2023, Centerspace, Inc. owned an 83.6% interest in Centerspace, LP. The remaining interest in Centerspace, LP is held by individual limited partners.
Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of limited partnership units (“Units”), which is one of the reasons the Company is structured in this manner. As of December 31, 2024, Centerspace, Inc. owned an 85.3% interest in Centerspace, LP. The remaining interest in Centerspace, LP is held by individual limited partners.
Each Series E preferred unit has a par value of $100. The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year. Each Series E preferred unit is convertible, at the holder’s option, into 1.2048 Units. The Series E preferred units have an aggregate liquidation preference of $172.5 million.
Each Series E preferred unit has a par value of $100. The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year. Each Series E preferred unit is convertible, at the holder’s option, into 1.20482 Units. The Series E preferred units have an aggregate liquidation preference of $158.2 million.
Risk Factors - “ Competition may negatively impact our earnings. ” GOVERNMENT REGULATION See the discussion under the caption “ Risks Related to Our Properties and Operations -- We may be responsible for potential liabilities under environmental laws” in Item 1A, Risk Factors, for information concerning the potential effects of environmental matters on our business, “ Complying with laws benefiting disabled persons or other safety regulations and requirements may affect our costs and investment strategies ” in Item 1A, Risk Factors, for information concerning the potential effects of compliance with disabled persons and other safety regulations on our business, “ Changes in federal or state laws and regulations relating to climate change could result in increased costs to our business, including capital expenditures to improve the energy efficiency of our existing communities or new development communities without a corresponding increase in revenue ” in Item 1A, Risk Factors, for information concerning the potential effects of climate change regulation on our business, “ Complying with zoning and permitting law may affect our acquisition, redevelopment, and development costs ” in Item 1A.
We may be responsible for potential liabilities under environmental laws” in Item 1A, Risk Factors, for information concerning the potential effects of environmental matters on our business, “ Complying with laws benefiting disabled persons or other safety regulations and requirements may affect our costs and investment strategies ” in Item 1A, Risk Factors, for information concerning the potential effects of compliance with disabled persons and other safety regulations on our business, “ Changes in federal or state laws and regulations relating to climate change could increase our costs, including capital expenditures to improve the energy efficiency of our existing communities or new development communities without a corresponding increase in revenue ” in Item 1A, Risk Factors, for information concerning the potential effects of climate change regulation on our business, “ Complying with zoning and permitting law may affect our acquisition, redevelopment, and development costs ” in Item 1A.
Our objective is to attract, develop, retain, and reward individuals with the talent and skills to help support our business objectives and make our communities home for our residents. As of December 31, 2023, we had 414 employees (377 full-time and 37 part-time) across multiple states. Compensation and benefits.
Our objective is to attract, develop, retain, and reward individuals with the talent and skills to help support our business objectives and make our communities home for our residents. As of December 31, 2024, we had 404 employees (374 full-time and 30 part-time) across multiple states. Compensation and benefits.
The results of these assessments are a component of the merit increase and pay for performance strategy. As of December 31, 2023, the average tenure of our team members was 3.93 years. Environmental, Social, and Governance.
The results of these assessments are a component of the merit increase and pay for performance strategy. As of December 31, 2024, the average tenure of our team members was 4.27 years. Environmental, Social, and Governance.
Distributions to our common shareholders and unitholders in the years ended December 31, 2023 and 2022 totaled approximately 68% each year, on a per share and Unit basis of our funds from operations.
Distributions to our common shareholders and unitholders in the years ended December 31, 2024 and 2023 totaled approximately 67% and 68%, respectively, on a per share and Unit basis of our funds from operations.
As of December 31, 2022, the Term Loan had a balance of $100.0 million. We have a $198.9 million Fannie Mae Credit Facility Agreement (“FMCF”). The FMCF is currently secured by mortgages on 12 apartment communities. The notes are interest-only, with varying maturity dates of 7, 10, and 12 years, at a blended weighted average, fixed interest rate of 2.78%.
The FMCF is currently secured by mortgages on 11 apartment communities. The notes are interest-only, with varying maturity dates of 7, 10, and 12 years, at a blended weighted average, fixed interest rate of 2.78%. As of December 31, 2024 and 2023, the FMCF had a balance of $198.9 million.
We also purchase limited terrorism, environmental, and flood insurance as well as other types of insurance coverage related to a variety of risks and exposures. There are certain types of losses that may not be covered or could exceed coverage limits. Due to changing market conditions, our insurance policies are also subject to increasing deductibles and coverage limits.
INSURANCE We purchase general liability and property insurance coverage for each of our properties. We also purchase limited terrorism, environmental, and flood insurance as well as other types of insurance coverage related to a variety of risks and exposures. There are certain types of losses that may not be covered or could exceed coverage limits.
This operating line matures on September 30, 2024, with pricing based on SOFR. We have a private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc. (collectively, “PGIM”) under which we have issued $200.0 million in unsecured senior promissory notes (“unsecured senior notes”).
We have a private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc. (collectively, “PGIM”) under which we have issued $175.0 million in unsecured senior promissory notes (“Unsecured Shelf Notes”).
As of December 31, 2023 and 2022, the FMCF had a balance of $198.9 million. As of December 31, 2023, we owned 14 apartment communities that served as collateral for mortgage loans, in addition to the apartment communities secured by the FMCF. All of these mortgages payable were non-recourse to us other than for standard carve-out obligations.
As of December 31, 2024, we owned 15 apartment communities that served as collateral for mortgage loans, in addition to the apartment communities secured by the FMCF. All of these mortgage loans were non-recourse to us other than for standard carve-out obligations.
(in thousands) Amount Maturity Date Fixed Interest Rate Series A $ 75,000 September 13, 2029 3.84 % Series B $ 50,000 September 30, 2028 3.69 % Series C $ 50,000 June 6, 2030 2.70 % Series 2021-A $ 35,000 September 17, 2030 2.50 % Series 2021-B $ 50,000 September 17, 2031 2.62 % Series 2021-C $ 25,000 September 17, 2032 2.68 % Series 2021-D $ 15,000 September 17, 2034 2.78 % In November 2022, we entered into a $100.0 million term loan agreement (“Term Loan”) with PNC Bank, National Association serving as administrative agent.
(in thousands) Amount Maturity Date Fixed Interest Rate Series A $ 75,000 September 13, 2029 3.84 % Series B $ 50,000 September 30, 2028 3.69 % Series C $ 50,000 June 6, 2030 2.70 % Series 2021-A $ 35,000 September 17, 2030 2.50 % Series 2021-B $ 50,000 September 17, 2031 2.62 % Series 2021-C $ 25,000 September 17, 2032 2.68 % Series 2021-D $ 15,000 September 17, 2034 2.78 % We have a $198.9 million Fannie Mae Credit Facility Agreement (“FMCF”).
During the year ended December 31, 2023, we did not issue any common shares under the 2021 ATM Program. As of December 31, 2023, we had common shares having an aggregate offering price of up to $126.6 million remaining available under the 2021 ATM Program.
As of December 31, 2024, we had common shares having an aggregate offering price of up to $262.9 million remaining available under the ATM Program.
Based on market conditions, we may change or potentially eliminate insurance coverages or face higher deductibles or other costs.
Due to changing market conditions, our insurance policies are also subject to increasing deductibles and coverage limits. Based on market conditions, we may change or potentially eliminate insurance coverages or face higher deductibles or other costs.
At-the-Market Offering Program We have an equity distribution agreement in connection with an at-the-market offering program (the “2021 ATM Program”). Under the 2021 ATM Program, we may offer and sell common shares having an aggregate sales price of up to $250.0 million, in amounts and at times determined by management.
At-the-Market Offering Program We have an equity distribution agreement in connection with an at-the-market offering program (“ATM Program”). On September 9, 2024 we amended our equity distribution agreement to increase the maximum aggregate offering price of common shares available for offer and sale thereunder from $250.0 million to $500.0 million, in amounts and at times determined by management.
We also have a separate note purchase agreement for the issuance of $125.0 million senior unsecured promissory notes, of which $25.0 million was issued under the private shelf agreement with PGIM. The following table shows the notes issued under both agreements as of December 31, 2023.
We also have a separate private note purchase agreement with PGIM and certain other lenders for the issuance of $125.0 million of senior unsecured promissory notes (“Unsecured Club Notes”, and, collectively with the Unsecured Shelf Notes, the “unsecured senior notes”), of which all $125.0 million was issued in September 2021.
We are committed to becoming a better reflection of the world we live in and the communities we serve. We strive to develop enduring change by recognizing talent with different backgrounds and experiences with shared goals, and by nurturing an environment where every team member can bring their whole selves to work.
We strive to develop enduring change by recognizing talent with different backgrounds and experiences with shared goals, and by nurturing an environment where every team member can bring their whole selves to work. It is through an active focus on policies, procedures, and best practices along with increased awareness and education.
Interest rates on mortgage loans range from 3.45% to 5.04%, and the mortgage loans have varying maturity dates from May 1, 2025, through May 1, 2035.
Interest rates on mortgage loans range from 3.45% to 5.04%, and the mortgage loans have varying maturity dates from May 1, 2025, through February 1, 2037. 5 Table of Contents As of December 31, 2024, our ratio of total indebtedness to total gross real estate investments was 39.0%.
As of December 31, 2023, the additional borrowing availability was $220.0 million beyond the $30.0 million drawn, priced at an interest rate of 7.82%. This credit facility matures in September 2025, with an option to extend maturity for up to two additional six-month periods, and has an accordion option to increase borrowing capacity up to $400.0 million.
As amended, this credit facility matures in July 2028, with an option to extend maturity for up to two additional six-month periods, and has an accordion option to increase borrowing capacity up to $400.0 million. The Secured Overnight Financing Rate (“SOFR”) is the benchmark alternative reference rate under the Facility.
The Series C preferred shares are redeemable, at our option. 4 Table of Contents Bank Financing and Other Debt As of December 31, 2023, we owned 46 apartment communities that were not encumbered by mortgages and which were available to provide credit support for our unsecured borrowings.
Distributions accrued at an annual rate of $1.65625, which is equal to 6.625% of the $25.00 per share liquidation preference. Bank Financing and Other Debt As of December 31, 2024, we owned 45 apartment communities that were not encumbered by mortgages and which were available to provide credit support for our unsecured borrowings.
The survey and others conducted throughout the year allows team members to provide feedback anonymously. The results are discussed and presented within functional teams and company-wide. 6 Table of Contents Diversity, Equity, & Inclusion . We are committed to creating a culture that is inclusive, equitable, and diverse by fostering an environment where everyone can participate and everybody belongs.
We conduct a team member engagement survey annually, where we encourage all team members to provide feedback on our performance. The survey and others conducted throughout the year allow team members to provide feedback anonymously. The results are discussed and presented within functional teams and company-wide. Diversity, Equity, & Inclusion .
Our Declaration of Trust, as amended (our “Declaration of Trust”), does not contain any restrictions on our ability to offer limited partnership Units of Centerspace, LP in exchange for property. As a result, any decision to do so is vested solely in our Board of Trustees. We had 165,600 Series D preferred units outstanding as of December 31, 2023.
As a result, any decision to do so is vested solely in our Board of Trustees. In October 2024, we issued 190,000 Units as partial consideration for the acquisition of an apartment community located in Denver, Colorado. We had 165,600 Series D preferred units outstanding as of December 31, 2024.
Prior to the amendment, interest rates on the line of credit were also based on the consolidated leverage ratio, applying the same margin ranges to LIBOR. We also have a $6.0 million operating line of credit with Wells Fargo Bank, N.A., which is designed to enhance treasury management activities and more effectively manage cash balances.
In September 2024, we entered into an operating line of credit agreement with US Bank, N.A. which has a borrowing capacity of up to $10.0 million and pricing based on SOFR. This operating line of credit terminates in September 2025 and is designed to enhance treasury management activities and more effectively manage cash balances.
As of December 31, 2023, our ratio of total indebtedness to total gross real estate investments was 38.0%. 5 Table of Contents Issuance of Securities in Exchange for Property Our organizational structure allows us to issue shares and Units of Centerspace, LP in exchange for real estate.
Issuance of Securities in Exchange for Property Our organizational structure allows us to issue shares and Units of Centerspace, LP in exchange for real estate contributions. The Units generally are redeemable, at our option, for cash or common shares on a one-for-one basis.
The Units generally are redeemable, at our option, for cash or common shares on a one-for-one basis. Generally, Units receive the same per unit cash distributions as the per share dividends paid on common shares.
Generally, Units receive the same per unit cash distributions as the per share dividends paid on common shares. Our Declaration of Trust, as amended (our “Declaration of Trust”), does not contain any restrictions on our ability to offer limited partnership Units of Centerspace, LP in exchange for property.
As of December 31, 2023, 49.5% of our total team members, 60.0% of our senior management, and 57.1% of our Board of Trustees self-identified as female. INSURANCE We purchase general liability and property insurance coverage for each of our properties.
As of December 31, 2024, 74.5% of our team members self-identified as white, 7.7% as Hispanic and/or Latino, 5.7% as Black or African American, and 12.1% other ethnicities. As of December 31, 2024, 47.5% of our total team members, 66.6% of our senior management, and 50.0% of our Board of Trustees self-identified as female.
Removed
Issuance of Senior Securities On October 2, 2017, we issued 4.1 million shares of 6.625% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series C preferred shares”). As of December 31, 2023, 3.9 million shares remained outstanding.
Added
During the year ended December 31, 2024, we issued 1.6 million common shares under the ATM Program at an average price of $71.66 per share, net of commissions. Total consideration, net of commissions and issuance costs, was approximately $112.0 million.
Removed
Depending on future interest rates and market conditions, we may issue additional preferred shares or other senior securities which would have a dividend and liquidation preference over our common shares.
Added
Redemption of Series C Preferred Shares On August 30, 2024, we delivered notice to holders of our Series C preferred shares that we intended to redeem all 3.9 million Series C preferred shares at a redemption price equal to $25 per share plus any accrued but unpaid distributions per share up to and including the redemption date of September 30, 2024.
Removed
On May 31, 2023, this Unsecured Credit Facility was amended to replace the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) as the benchmark alternative reference rate under the Unsecured Credit Facility.
Added
On September 30, 2024, we completed the redemption of all the outstanding Series C preferred shares for an aggregate redemption price of $97.0 million, excluding distributions, which were $3.5 million in excess of the carrying value and are included in redemption of preferred shares on the Consolidated Statements 4 Table of Contents of Operations.
Removed
The interest rate on the Term Loan was based on SOFR, plus a margin that ranged from 120 to 175 basis points based on our consolidated leverage ratio. The Term Loan had a 364-day term with an option for an additional 364-day term. As of December 31, 2023, the Term Loan was paid in full.
Added
Such shares were no longer outstanding as of December 31, 2024. Series C preferred shares outstanding were 3.9 million at December 31, 2023. The Series C preferred shares were nonvoting and redeemable for cash at $25.00 at our option. Holders of these shares were entitled to cumulative distributions, payable quarterly (as and if declared by the Board of Trustees).
Removed
During the year ended December 31, 2023, 243 custom courses were added to our learning management system and over 22,000 training courses were completed by team members. Team member engagement. We conduct a team member engagement survey annually, where we encourage all team members to provide feedback on our performance.
Added
As of December 31, 2024, the additional borrowing availability was $206.0 million beyond the $44.0 million drawn, priced at an interest rate of 5.81%. On July 26, 2024, the Unsecured Credit Facility was amended to extend maturity and to modify the leverage-based margin ratios applicable to borrowings (as described below).
Removed
It is through an active focus on policies, procedures, and best practices along with increased awareness and education. As of December 31, 2023, 77.3% of our team members self-identified as white, 6.5% as Hispanic and/or Latino, 5.6% as Black or African American, and 10.6% other ethnicities.
Added
The Unsecured Credit Facility and unsecured senior notes are subject to customary financial covenants and limitations. We believe we were in compliance with all such financial covenants and limitations as of December 31, 2024.
Added
As of December 31, 2024, there was $3.4 million outstanding on this line of credit. We previously had a $6.0 million operating line of credit with Wells Fargo Bank, N.A. with pricing based on SOFR that matured on August 31, 2024. As of December 31, 2023, there was no outstanding balance on this line of credit.
Added
On October 28, 2024, the shelf agreement was amended to extend the period of time during which we may borrow money to October 2027 and to increase the borrowing capacity to $300.0 million.
Added
The following table shows the notes issued under both agreements as of December 31, 2024.
Added
We partnered with Interplay Learning to bring a library of maintenance courses that provide immersive, hands-on learning using virtual reality to complete training 6 Table of Contents designed for continuing education and onboarding. During the year ended December 31, 2024, team members completed approximately 24,700 training courses and attended 3,965 live training events. Team member engagement.
Added
We are committed to creating a culture that is inclusive, equitable, and diverse by fostering an environment where everyone can participate and everybody belongs. We are committed to becoming a better reflection of the world we live in and the communities we serve.
Added
Risk Factors - “ Competition could limit our ability to acquire attractive investment opportunities and could increase the costs of those opportunities, which may adversely affect our profitability and impede our growth. ” GOVERNMENT REGULATION See the discussion under the caption “ Risks Related to Our Properties and Operations -- We may face opposition from governmental authorities or third parties alleging that our activities are anti-competitive” in Item 1A, Risk Factors, for information concerning the potential effects of compliance with anti-trust regulations.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe current conflicts in Russia and Ukraine, as well as Israel and Gaza, resulting sanctions and related countermeasures by the United States and other countries could to lead to market disruptions, including significant volatility in the credit and capital markets and the economy in general, which could have an adverse impact on our operations and financial performance. 8 Table of Contents The COVID-19 pandemic affected our business in the past, and the potential future outbreak of other highly infectious or contagious diseases may materially and adversely impact and disrupt our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations, and our ability to pay dividends and other distributions to our equityholders.
Biggest changeThe COVID-19 pandemic affected our business in the past, and the potential future outbreak of other highly infectious or contagious diseases may materially and adversely impact and disrupt our business, income, cash flow, results of operations, financial condition, liquidity, prospects, and ability to service our debt obligations, and our ability to pay dividends and other distributions to our equityholders.
Residents’ inability to timely or fully pay their rents may be impacted by their employment prospects and/or other constraints on their personal finances, including debts, purchases and other factors. These and other changes beyond our control may adversely affect our residents’ ability to make their required lease payments.
Residents’ inability to timely or fully pay their rents may be impacted by their employment prospects and other constraints on their personal finances, including debts, purchases and other factors. These and other changes beyond our control may adversely affect our residents’ ability to make their required lease payments.
We may have limited ability to change our portfolio of properties quickly in response to our strategic plan and changes in economic or other conditions, and the prohibitions under the federal income tax laws on REITs holding property for sale and related regulations may affect our ability to sell properties.
We may have limited ability to change our portfolio of properties quickly in response to our strategic plan and changes in economic or other conditions, the prohibitions under the federal income tax laws on REITs holding property for sale, and related regulations may affect our ability to sell properties.
In arranging for the disposal or treatment of hazardous or toxic substances, we also may be liable for the costs of removal of, or remediation of, these substances at that disposal or treatment facility, whether or not we own or operate the facility.
In arranging for the disposal or treatment of hazardous or toxic substances, we also may be liable for the costs of removal or remediation of these substances at that disposal or treatment facility, whether or not we own or operate the facility.
Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s sustainability efforts and/or score when making an investment decision. In addition, investors, particularly institutional investors, may use ESG or sustainability scores issued by proxy advisory firms or other third parties to benchmark companies against their peers.
Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s sustainability efforts and score when making an investment decision. In addition, investors, particularly institutional investors, may use ESG or sustainability scores issued by proxy advisory firms or other third parties to benchmark companies against their peers.
Under current law, unless a sale of real property qualifies for a safe harbor, the question of whether the sale of a property constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction.
Under current law, unless a sale of real property qualifies for a safe harbor, whether the sale of a property constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction.
We may be liable for costs associated with bringing communities into compliance and additionally may face costs or delays when seeking approvals for redevelopment or development projects within our portfolio. Some regulations related to zoning or permitting allow governmental entities to discontinue operations if violations are left uncured, which would significantly impact our business.
We may be liable for costs associated with bringing communities into compliance and may face costs or delays when seeking approvals for redevelopment or development projects within our portfolio. Some regulations related to zoning or permitting allow governmental entities to discontinue operations if violations are left uncured, which would significantly impact our business.
Although we make ESG disclosures and undertake sustainability and diversity initiatives, there can be no assurance that we will score highly on ESG matters in the future or satisfy all stakeholders. The criteria by which companies are rated may change, which could cause us to perform differently or worse than we have in the past.
Although we make ESG disclosures and undertake sustainability and diversity initiatives, there can be no assurance that we will score highly on ESG matters or satisfy all stakeholders. The criteria by which companies are rated may change, which could cause us to perform differently or worse than we have in the past.
In connection with our current or former ownership (direct or indirect), operation, management, development, and/or control of real properties, we may be potentially liable for removal or remediation costs with respect to hazardous or toxic substances at those properties, as well as certain other costs, including governmental fines and claims for injuries to persons and property.
In connection with our current or former ownership (direct or indirect), operation, management, development, and control of real properties, we may be potentially liable for removal or remediation costs for hazardous or toxic substances at those properties, as well as certain other costs, including governmental fines and claims for injuries to persons and property.
We periodically evaluate the recoverability of the carrying value of our real estate assets under United States generally accepted accounting principles (“GAAP”). Factors considered in evaluating impairment of our real estate assets held for investment include recurring net operating losses and other significant adverse changes in general market conditions that are considered permanent in nature.
We periodically evaluate the recoverability of the carrying value of our real estate assets under United States generally accepted accounting principles (“GAAP”). Factors considered in evaluating impairment of our real estate assets held for investment include recurring net operating losses and other significant adverse changes in general market conditions that are considered permanent.
In the normal course of business, we and our service providers (including service providers engaged in providing web hosting, property management, leasing, accounting and/or payroll software/services) collect and retain certain personal information provided by our residents, employees, and vendors. We also rely extensively on computer systems to process transactions and manage our business.
In the normal course of business, we and our service providers (including service providers engaged in providing web hosting, property management, leasing, accounting and payroll software/services) collect and retain certain personal information provided by our residents, employees, and vendors. We also rely extensively on computer systems to process transactions and manage our business.
These costs include, but are not limited to, retaining services of cybersecurity experts, compliance costs arising out of existing and future cybersecurity, data protection, privacy laws, regulations, and related reporting obligations, and costs related to maintaining data backups and other damage-mitigation services. We previously suffered a ransomware attack on our information technology systems.
These costs include, but are not limited to, retaining services of cybersecurity experts, maintaining insurance, compliance costs arising out of existing and future cybersecurity, data protection, privacy laws, regulations, and related reporting obligations, and costs related to maintaining data backups and other damage-mitigation services. We previously suffered a ransomware attack on our information technology systems.
The Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) are major sources of financing for the multifamily sector, and both have historically experienced losses due to credit-related expenses, securities impairments and fair value losses.
The Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) are major sources of financing for the multifamily housing sector, and both have historically experienced losses due to credit-related expenses, securities impairments, and fair value losses.
We have acquired and intend to continue to pursue the acquisition of apartment communities, but the success of our acquisition activities is subject to numerous risks, including the following: • acquisition agreements are subject to customary closing conditions, including completion of due diligence investigations, and we may be unable to complete an acquisition after making a non-refundable deposit and incurring other acquisition-related costs; • actual results may differ from expected occupancy, rental rates, and operating expenses of acquired apartment communities, or from those of our existing apartment communities; • we may be unable to obtain financing for acquisitions on favorable terms, or at all; • competition for these properties could cause us to pay higher prices or prevent us from purchasing a desired property at all; • we may be subject to unknown liabilities from acquired properties, with either no or limited recourse against prior owners or other third parties; and • we may be unable to quickly and efficiently integrate new acquisitions into our existing operations.
We have acquired and intend to continue to pursue the acquisition of apartment communities, but the success of our acquisition activities is subject to many risks, including the following: • acquisition agreements are subject to customary closing conditions, including completion of due diligence investigations, and we may be unable to complete an acquisition after making a non-refundable deposit and incurring other acquisition-related costs; • actual results may differ from expected occupancy, rental rates, and operating expenses of acquired apartment communities, or from those of our existing apartment communities; • we may be unable to obtain financing for acquisitions on favorable terms, or at all; • competition for these properties could cause us to pay higher prices or prevent us from purchasing a desired property at all; • we may be subject to unknown liabilities from acquired properties, with either no or limited recourse against prior owners or other third parties; and • we may be unable to efficiently integrate new acquisitions into our existing operations.
The combined account balances at each institution periodically exceed the FDIC insurance coverage of $250,000, and, as a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage.
The combined account balances at each institution periodically exceed the FDIC insurance coverage of $250,000. As a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage.
While we and our service providers employ a variety of data security measures to protect confidential information on our systems and periodically review and improve our data security measures, we cannot provide assurance that we or our service providers will be able to prevent unauthorized access to this personal information, that our efforts to maintain the security and integrity of the information that we and our service providers collect will be effective, or that attempted security breaches or disruptions would not be successful or damaging.
While we and our service providers employ a variety of data security measures to protect confidential information on our systems and periodically review and improve our data security measures, we cannot provide assurance that we or our service providers will be able to prevent unauthorized access to this personal information, that our efforts to maintain the security and integrity of the information that we and our service providers collect will be effective, or that attempted security breaches or disruptions would not succeed or be damaging.
We are subject to the normal risks associated with debt financing, including the risks that: • our cash flow will be insufficient to meet required payments of principal and interest, particularly if net operating income is reduced significantly due to the effects of the uncertain global macroeconomic and political conditions including inflation, price volatility and the COVID-19 pandemic; • we will not be able to renew, refinance, or repay our indebtedness when due; and 14 Table of Contents • the terms of any renewal or refinancing are at terms less favorable than the terms of our current indebtedness.
We are subject to the normal risks associated with debt financing, including the risks that: • our cash flow will be insufficient to meet required payments of principal and interest, particularly if net operating income is reduced significantly due to the effects of the uncertain global macroeconomic and political conditions including inflation, price volatility and the COVID-19 pandemic; • we will not be able to renew, refinance, or repay our indebtedness when due; and • the terms of any renewal or refinancing are at terms less favorable than the terms of our current indebtedness.
The incident did not have a material impact on our business, operations or financial results. However, notwithstanding every measure we take to address cybersecurity matters, and although we have not experienced any material losses relating to any cyber-attack, we cannot assure you that we will not suffer losses related to cyber-attacks in the future.
The incident did not have a material impact on our business, operations, or financial results. However, despite every measure we take to address cybersecurity matters, and although we have not experienced any material losses relating to any cyber-attack, we cannot assure you that we will not suffer losses related to cyber-attacks in the future.
We have entered into, and may continue in the future to enter into, partnerships or joint ventures with other persons or entities. Joint venture investments involve risks that may not be present with other methods of ownership, based on the financial condition and business interests of our partners, which are beyond our control and which may conflict with our interests.
We have entered into, and may continue to enter into, partnerships or joint ventures with other persons or entities. Joint venture investments involve risks that may not be present with other methods of ownership, based on the financial condition and business interests of our partners, which are beyond our control and which may conflict with our interests.
To the extent the economic conditions, job growth, wage growth, and unemployment in any of these markets deteriorate or any of these areas experience natural disasters or more pronounced effects of climate change, the value of our portfolio, our results of operations, and our ability to make payments on our debt and to make distributions could be adversely affected.
If economic conditions, job growth, wage growth, and unemployment in any of these markets deteriorate or any of these areas experience natural disasters or more pronounced effects of climate change, the value of our portfolio, our results of operations, and our ability to make payments on our debt and to make distributions could be adversely affected.
In addition, a security breach could require that we expend significant additional resources to repair and/or enhance our information security systems.
In addition, a security breach could require that we expend significant additional resources to repair and enhance our information security systems.
Legislation or regulations that may be adopted in the future may impose further burdens or restrictions on us with respect to improved access to, and use of these buildings by, disabled persons. Noncompliance could result in the imposition of fines by government authorities or the award of damages to private litigants.
Legislation or regulations that may be adopted in the future may impose further burdens or restrictions on us with respect to improved access to, and use of these buildings by, disabled persons. Noncompliance could cause the imposition of fines by government authorities or the award of damages to private litigants.
This may cause investors to view REIT investments as less attractive than investments in non-REIT corporations, which in turn may adversely affect the value of stock in REITs, including our stock. Investors should consult with their tax advisers regarding the U.S. tax consequences of an investment in our stock or Units.
This may cause investors to view REIT investments as less attractive than investments in non-REIT corporations, which in turn may adversely affect the value of stock in REITs, including our stock. Investors should consult with their tax advisers about the U.S. tax consequences of an investment in our stock or Units.
In order to maintain our qualification as a REIT, among other things, our Declaration of Trust provides that any transaction that would result in our disqualification as a REIT under Section 856 of the Code will be void, including any transaction that would result in the following: • less than 100 Persons owning our shares; • our being “closely held” within the meaning of Section 856(h) of the Code; or • 50% or more of the fair market value of our shares being held by Persons other than “United States persons,” for federal income tax purposes.
To maintain our qualification as a REIT, among other things, our Declaration of Trust provides that any transaction that would result in our disqualification as a REIT under Section 856 of the Code will be void, including any transaction that would result in the following: • fewer than 100 Persons owning our shares; • our being “closely held” within the meaning of Section 856(h) of the Code; or • 50% or more of the fair market value of our shares being held by Persons other than “United States persons,” for federal income tax purposes.
Although we are not aware of any such claims associated with our existing properties that would have a significant adverse effect on our business, potential future costs and damage claims may be substantial and could exceed any insurance coverage we may have for such events or such coverage may not exist.
Although we are unaware of any such claims associated with our existing properties that would have a significant adverse effect on our business, potential future costs, and damage claims may be substantial and could exceed any insurance coverage we may have for such events or such coverage may not exist.
Such laws and regulations limit our ability to charge market rents, increase rents, evict residents or recover increases in our operating expenses and could reduce the value of our multifamily properties or make it more difficult for us to dispose of properties in certain circumstances.
Such laws and regulations would limit our ability to charge market rents and fees, increase rents, evict residents, or recover increases in our operating expenses and could reduce the value of our multifamily properties or make it more difficult for us to dispose of properties in certain circumstances.
Legislative or regulatory actions affecting REITs could have an adverse effect on us or our shareholders. Changes to tax laws or regulations may adversely impact our shareholders and our business and financial results. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”).
Legislative or regulatory actions affecting REITs could have an adverse effect on us or our shareholders. Changes to tax laws or regulations may adversely impact our shareholders and our business and financial results. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was introduced.
The focus and activism related to ESG and related matters may constrain our business operations or increase expenses. In addition, we may face reputational damage in the event our corporate responsibility procedures or standards do not meet the standards set by various constituencies, including our residents.
The focus and activism related to ESG and related matters may constrain our business operations or increase expenses. In addition, we may face reputational damage if our corporate responsibility procedures or standards do not meet the standards set by various constituencies, including our residents.
The inability of our cash flows to cover our distribution requirements could have an adverse impact on our ability to raise short and long-term debt or sell equity securities in order to fund distributions required to maintain our REIT status.
The inability of our cash flows to cover our distribution requirements could have an adverse impact on our ability to raise short and long-term debt or sell equity securities to fund distributions required to maintain our REIT status.
A security breach or other significant disruption involving computer networks and related systems could cause substantial costs and other negative effects, including litigation, remediation costs, costs to deploy additional protection strategies, compromising of confidential information, and reputational damage adversely affecting investor confidence. The costs of mitigating cybersecurity risks are significant and are likely to increase in the future.
A security breach or other significant disruption involving computer networks and related systems could cause substantial costs and other negative effects, including litigation, remediation costs, costs to deploy additional protection strategies, compromising of confidential information, and reputational damage adversely affecting investor confidence. 12 Table of Contents The costs of mitigating cybersecurity risks are significant and are likely to increase in the future.
In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments at times that may not permit realization of the maximum return on such investments. The effect of prolonged interest rate increases could adversely impact our ability to make acquisitions and develop properties.
In addition, if we need to repay existing debt during periods of rising interest rates, we could have to liquidate one or more of our investments at times that may not permit realization of the maximum return on such investments. The effect of prolonged interest rate increases could adversely impact our ability to make acquisitions and develop properties.
If a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments or refinance the debt at maturity, the mortgagor could foreclose upon the property, appoint a receiver, and receive an assignment of rents and leases or pursue other remedies, including taking ownership of the property, all with a consequent loss of revenues and asset value.
If a property is mortgaged to secure payment of indebtedness and we cannot meet mortgage payments or refinance the debt at maturity, the mortgagor could foreclose upon the property, appoint a receiver, and receive an assignment of rents and leases or pursue other remedies, including taking ownership of the property, all with a consequent loss of revenues and asset value.
Thus, to the extent revenues from non-qualifying sources, such as income from third-party management services, represent more than 5% of our gross income in any taxable year, we will not satisfy the 95% income test and may fail to qualify as a REIT, unless certain relief provisions contained in the Code apply.
Thus, when revenues from non-qualifying sources, such as income from third-party management services, represent more than 5% of our gross income in any taxable year, we will not satisfy the 95% income test and may fail to qualify as a REIT, unless certain relief provisions in the Code apply.
Indoor air quality issues may also necessitate special investigation and remediation. These air quality issues can result from inadequate ventilation, chemical contaminants from indoor or outdoor sources, or biological contaminants such as molds, pollen, viruses and bacteria.
Indoor air quality issues may also require special investigation and remediation. These air quality issues can result from inadequate ventilation, chemical contaminants from indoor or outdoor sources, or biological contaminants such as molds, pollen, viruses, and bacteria.
Even if relief provisions apply, however, a tax would be imposed with respect to excess net income. We are also required to make distributions to the holders of our securities of at least 90% of our REIT taxable income, determined before a deduction for dividends paid and excluding any net capital gain.
Even if relief provisions apply, however, a tax would be imposed on excess net income. We are also required to make distributions to the holders of our securities of at least 90% of our REIT taxable income, determined before a deduction for dividends paid and excluding any net capital gain.
Joint ventures may require us to share decision-making authority with our partners, which could limit our ability to control the properties in the joint ventures. Even when we have a controlling interest, certain major decisions may require partner approval, such as the sale, acquisition, or financing of a property.
Joint ventures may 14 Table of Contents require us to share decision-making authority with our partners, which could limit our ability to control the properties in the joint ventures. Even when we have a controlling interest, certain major decisions may require partner approval, such as the sale, acquisition, or financing of a property.
The federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100% penalty tax.
The federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as 19 Table of Contents inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100% penalty tax.
The impact of climate change also may increase the cost of, or make unavailable, property insurance or other hazard insurance on terms we find acceptable or necessary to adequately protect our properties.
The effect of climate change also may increase the cost of, or make unavailable, property insurance or other hazard insurance on terms we find acceptable or necessary to adequately protect our properties.
These increases and any fiscal or other policy interventions by the U.S. government in reaction to such events could negatively impact our business by increasing our operating costs and our borrowing costs as well as decreasing the capital available to our residents and prospective residents who wish to rent in our communities.
These increases and any fiscal or other policy interventions by the U.S. government in reaction to such events could harm our business by increasing our operating costs and our borrowing costs, as well as decreasing the capital available to our residents and prospective residents who wish to rent in our communities.
A Phase I environmental study generally includes a visual inspection of the property and the surrounding areas, an examination of current and historical uses of the property and the surrounding areas, and a review of relevant state and federal documents but does not involve invasive techniques such as soil and ground water sampling.
A Phase I environmental study generally includes a visual inspection of the property and the surrounding areas, an examination of current 13 Table of Contents and historical uses of the property and the surrounding areas, and a review of relevant state and federal documents but does not involve invasive techniques such as soil and ground water sampling.
If a transaction intended to qualify as a Section 1031 exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax-deferred basis.
If a transaction intended to qualify as a Section 1031 exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may be unable to dispose of properties on a tax-deferred basis.
Some of our properties were acquired using limited partnership Units of Centerspace, LP, our operating partnership, and are subject to certain tax-protection agreements that restrict our ability to sell these properties in transactions that would create current taxable income to the former owners.
Some of our properties were acquired using limited partnership Units of 11 Table of Contents Centerspace, LP, our operating partnership, and are subject to certain tax-protection agreements that restrict our ability to sell these properties in transactions that would create current taxable income to the former owners.
Acquiring or developing new properties and expanding into new markets introduces several risks, including but not limited to the following: • we may not be successful in identifying suitable properties or other assets that meet our acquisition or development criteria or in consummating acquisitions or developments on satisfactory terms, or at all; • we may be unable to maintain consistent standards, controls, policies, and procedures, or realize the anticipated benefits of the acquisitions within the anticipated time frame, or at all; 9 Table of Contents • acquisitions and divestitures could divert our attention from our existing properties and could cause us to lose key employees or be unable to attract highly qualified new employees; • unfamiliarity with the dynamics and prevailing market conditions or local government or permitting procedures of any new geographic markets could adversely affect our ability to successfully expand into or operate within those markets or cause us to become more dependent on third parties in new markets due to our inability to directly and efficiently manage and otherwise monitor new properties in new markets; • we may make assumptions regarding the expected future performance of acquired properties, including expected occupancy, rental rates, and cash flows, that prove to be inaccurate; and • we may improperly estimate the costs of repositioning or redeveloping an acquired property.
Acquiring or developing new properties and expanding into new markets introduces several risks, including, but not limited to, the following: • we may be unable to identify suitable properties or other assets that meet our acquisition or development criteria or in consummating acquisitions or developments on satisfactory terms, or at all; • we may be unable to maintain consistent standards, controls, policies, and procedures, or realize the anticipated benefits of the acquisitions within our expected time frame, or at all; • acquisitions and divestitures could divert our attention from our existing properties and could cause us to lose key employees or be unable to attract highly qualified new employees; • unfamiliarity with the dynamics and prevailing market conditions or local government or permitting procedures of any new geographic markets could adversely affect our ability to successfully expand into or operate within those markets or cause us to become more dependent on third parties in new markets because of our inability to directly and efficiently manage and otherwise monitor new properties in new markets; • we may make assumptions about the expected future performance of acquired properties, including expected occupancy, rental rates, and cash flows, that prove to be inaccurate; and • we may improperly estimate the costs of repositioning or redeveloping an acquired property.
We may not be able to obtain financing on favorable terms, or at all, and we may not be able to complete lease-up of a property on schedule. The resulting time required for development, redevelopment, and lease-up means that we may have to wait years for significant cash returns.
We may be unable to obtain financing on favorable terms, or at all, and we may be unable to complete lease-up of a property on schedule. The resulting time required for development, redevelopment, and lease-up means that we may have to wait years for significant cash returns.
We have experienced significant growth at various times in the past and may do so in the future, principally through the acquisition of additional real estate properties.
We have experienced significant growth at various times in the past and may do so in the future, mainly through the acquisition of additional real estate properties.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption to our operations and the services we provide to customers or damage our reputation.
Any such access, disclosure, or other loss of information could lead to legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption to our operations and the services we provide to customers or damage our reputation.
Our financial performance risks include, but are not limited to, the following: • downturns in national, regional, and local economic conditions (particularly increases in unemployment); • competition from other apartment communities; • local real estate market conditions, including an oversupply of apartments or other housing, or a reduction in demand for apartment communities; • the attractiveness of our apartment communities to residents as well as residents’ perceptions of the safety, convenience, and attractiveness of our apartment communities and the areas in which they are located; • changes in interest rates and availability of attractive financing that might make other housing options, like home ownership, more attractive; • our ability to collect rents from our residents; • vacancies, changes in rental rates, and the periodic need to repair, renovate, and redevelop our apartment communities; • increases in operating costs, including real estate taxes, state and local taxes, insurance expenses, utilities, and security costs, many of which are not reduced significantly when circumstances cause a reduction in revenues from a property; • increases in compensation costs due to the tight labor market in many of the markets in which we operate; • our ability to provide adequate maintenance for our apartment communities; • our ability to provide adequate insurance on our apartment communities; and • changes in tax laws and other government regulations that could affect the value of REITs generally or our business in particular.
Our financial performance risks include, but are not limited to, the following: • downturns in national, regional, and local economic conditions (particularly increases in unemployment); • competition from other apartment communities; • local real estate market conditions, including an oversupply of apartments or other housing, or a reduction in demand for apartment communities; • the attractiveness of our apartment communities to residents as well as residents’ perceptions of the safety, convenience, and attractiveness of our apartment communities and the areas in which they are located; 8 Table of Contents • changes in interest rates and availability of attractive financing that might make other housing options, like home ownership, more attractive; • our ability to collect rents from our residents; • vacancies, changes in rental rates, and the periodic need to repair, renovate, and redevelop our apartment communities; • increases in operating costs, including real estate taxes, state and local taxes, insurance premiums and other expenses, utilities, and security costs, many of which remain constant when circumstances reduce revenues from a property; • increases in compensation costs due to the tight labor market in many markets in which we operate; • our ability to provide adequate maintenance for our apartment communities; • our ability to provide adequate insurance on our apartment communities; and • changes in tax laws and other government regulations that could affect the value of REITs generally or our business in particular.
Interest rate hedging arrangements may result in losses. From time to time, we use interest rate swaps and other hedging instruments to manage our interest rate risks. Although these arrangements may partially protect us against rising interest rates, they also may reduce the benefits to us if interest rates decline.
Interest rate hedging arrangements may lead to losses. From time to time, we use interest rate swaps and other hedging instruments to manage our interest rate risks. Although these arrangements may partially protect us against rising interest rates, they also may reduce the benefits to us if interest rates decline.
Failure of our operating partnership to qualify as a partnership would result in corporate taxation and significantly reduce the amount of cash available for distribution. We believe that Centerspace, LP, our operating partnership, qualifies as a partnership for federal income tax purposes.
Failure of our operating partnership to qualify as a partnership would lead to corporate taxation and significantly reduce the amount of cash available for distribution. We believe that Centerspace, LP, our operating partnership, qualifies as a partnership for federal income tax purposes.
For example, in order to qualify as a REIT, at least 95% of our gross income in any year must come from certain passive sources that are itemized in the REIT tax laws, and we are prohibited from owning specified 17 Table of Contents amounts of debt or equity securities of some issuers.
For example, to qualify as a REIT, at least 95% of our gross income in any year must come from certain passive sources that are itemized in the REIT tax laws, and we are prohibited from owning specified amounts of debt or equity securities of some issuers.
To the extent that we satisfy the 90% test but distribute less than 100% of our REIT taxable income, we will be subject to corporate income tax on such undistributed income and could be subject to an additional 4% excise tax.
If we satisfy the 90% test but distribute less than 100% of our REIT taxable income, we will be subject to corporate income tax on such undistributed income and could be subject to an additional 4% excise tax.
Federal, state, and local laws and regulations designed to improve disabled persons’ access to and use of buildings, including the Americans with Disabilities Act of 1990, may require modifications to, or restrict renovations of, existing buildings that may require unexpected expenditures. These laws and other safety regulations may require that structural features be added to buildings under construction.
Federal, state, and local laws and regulations designed to improve disabled persons’ access to and use of buildings, including the Americans with Disabilities Act of 1990, may require modifications to, or restrict renovations of, existing buildings that may require unexpected expenditures. These laws and other safety regulations may require us to add structural features to buildings under construction.
Under certain circumstances, the Code imposes penalties on a REIT that sells property held for less than two years and limits the number of properties it can sell in a given year. Our ability to dispose of assets also may be limited by constraints on our ability to use disposition proceeds to make acquisitions on financially attractive terms.
In some cases, the Code imposes penalties on a REIT that sells property held for less than two years and limits the number of properties it can sell in a given year. Our ability to dispose of assets also may be limited by constraints on our ability to use disposition proceeds to make acquisitions on financially attractive terms.
Complying with zoning and permitting law may affect our acquisition, redevelopment, and development costs. We face risks associated with zoning and permitting of our communities, the majority of which are governed by municipal, county, and state regulations.
Complying with zoning and permitting law may affect our acquisition, redevelopment, and development costs. We face risks associated with zoning and permitting of our communities, most of which are governed by municipal, county, and state regulations.
Any potential reduction in loans, guarantees and credit- 15 Table of Contents enhancement arrangements from Fannie Mae and Freddie Mac could jeopardize the effectiveness of the multifamily sector’s available financing and decrease the amount of available liquidity and credit that could be used to acquire and diversify our portfolio of multifamily assets.
Any potential reduction in loans, guarantees and credit enhancement arrangements from Fannie Mae and Freddie Mac could jeopardize the effectiveness of the multifamily housing sector’s available financing and decrease the amount of available liquidity and credit that could be used to acquire and diversify our portfolio of multifamily assets.
To the extent that distributions to the holders of our securities had been made in anticipation of qualifying as a REIT, we may need short-term debt or long-term debt or proceeds from asset sales or sales of common shares to fund required distributions as a result of differences in timing between the actual receipt of income and the recognition of income for federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments.
If distributions to the holders of our securities had been 18 Table of Contents made in anticipation of qualifying as a REIT, we may need short-term debt or long-term debt or proceeds from asset sales or sales of common shares to fund required distributions as a result of differences in timing between the actual receipt of income and the recognition of income for federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments.
The risk of a breach or security failure, particularly through cyber-attacks or cyber-intrusion, has generally increased due to the rise in new technologies and the increased sophistication and activities of the perpetrators of attempted attacks and intrusions.
The risk of a breach or security failure, particularly through cyber-attacks or cyber-intrusion, has generally increased because of the rise in new technologies and the increased sophistication and activities of the perpetrators of attempted attacks and intrusions.
In the ordinary course 12 Table of Contents of our business we acquire and store sensitive, private data, including intellectual property, our proprietary business information and personally identifiable information of our prospective and current residents, our employees and third-party service providers in our offices and on our networks and website and on third-party provider networks.
In the ordinary course of our business we acquire and store sensitive, private data, including intellectual property, our proprietary business information and personally identifiable information of our prospective and current residents, our employees, our unitholders and third-party service providers in our offices and on our networks and website and on third-party provider networks.
Our ability to acquire our partner’s interest may be limited if we do not have sufficient cash, available borrowing capacity, or other capital resources. In such event, we may be forced to sell our interest in the joint venture when we would otherwise prefer to retain it.
Our ability to acquire our partner’s interest may be limited if we lack sufficient cash, available borrowing capacity, or other capital resources. In such event, we may have to sell our interest in the joint venture when we would otherwise prefer to retain it.
The COVID-19 pandemic had, and any future pandemic may have, an impact on our financial condition, results of operations, and cash flows as well as adversely affect our residents and commercial tenants, the real estate market, and the global economy and financial markets generally.
The COVID-19 pandemic had, and any future pandemic may have, an impact on our financial condition, results of operations, and cash flows, as well as an adverse effect our residents and commercial tenants, the real estate market, and the global economy and financial markets generally.
If we cannot refinance, extend, or pay principal payments due at maturity with the proceeds of other capital transactions, our cash flows may not be sufficient in all years to repay debt as it matures.
If we cannot refinance, extend, or pay principal payments due at maturity with the proceeds of other capital transactions, our cash flows may not be sufficient in every year to repay debt as it matures.
This treatment would reduce funds available for investment or distributions to the holders of our securities due to the additional tax liability to us for the year or years involved, and we would no longer be able to deduct, and would not be required to make, distributions to our shareholders.
This treatment would reduce funds available for investment or distributions to the holders of our securities due to the added tax liability to us for the year or years involved, and we would no longer be able to deduct, and would not need to make, distributions to our shareholders.
These initiatives and any other future enactments of rent control or rent stabilization laws or other laws regulating multifamily housing, as well as any lawsuits against us arising from such rent control or other laws, may reduce rental revenues or increase operating costs.
These restrictions, initiatives, government enforcement actions and any other future enactments of rent control or rent stabilization laws or other laws regulating multifamily housing, as well as any lawsuits against us arising from such rent control or other laws, may reduce rental revenues or increase operating costs.
Rent control or rent stabilization laws and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our residents.
Rent control or rent stabilization laws and other regulatory restrictions may limit our ability to increase rents and otherwise charge residents fees and pass through new or increased operating costs to our residents.
Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt. As of December 31, 2023, 14 of our properties were encumbered by mortgages.
Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt. As of December 31, 2024, 26 of our properties were encumbered by mortgages.
The Trust’s Declaration of Trust also provides a limit on a Person owning in excess of the ownership limit of 9.8%, in number or value, of the Trust’s outstanding shares, although the Board of Trustees retains the ability to make exceptions to this ownership threshold.
The Trust’s Declaration of Trust also forbids a Person from owning in excess of the ownership limit of 9.8%, in number or value, of the Trust’s outstanding shares, although the Board of Trustees retains the ability to make exceptions to this ownership threshold.
Security breaches could compromise our information and expose us to liability, which would cause our business and reputation to suffer. Information security risks with respect to data privacy have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber-attacks.
Security breaches could compromise our information and expose us to liability, which would cause our business and reputation to suffer. Information security risks for data privacy have generally increased in recent years because of the rise in new technologies and the increased sophistication and activities of perpetrators of cyber-attacks.
See “ Multifamily residential properties may be subject to rent stabilization regulations, now or in the future, which limit our ability to raise rents above specified maximum amounts and could give rise to claims by residents that their rents exceed such specified maximum amounts. ” The Inflation Reduction Act of 2022 may also increase our tax burden.
See “ Multifamily residential properties may be subject to rent stabilization regulations and other restrictions which limit our ability to raise rents above specified maximum amounts and could give rise to claims by residents that their rents exceed such specified maximum amounts. ” The Inflation Reduction Act of 2022 may also increase our tax burden.
Incurring mortgage and other secured debt obligations increases our risk of property losses because defaults on indebtedness secured by property may result in foreclosure actions initiated by lenders and ultimately our loss of the property securing any loans for which we are in default.
Incurring mortgage and other secured debt obligations increases our risk of property losses because defaults on 15 Table of Contents indebtedness secured by property may prompt foreclosure actions initiated by lenders and ultimately our loss of the property securing any loans for which we are in default.
If the IRS were to be successful in treating Centerspace, LP as an entity taxable as a corporation (such as a publicly traded partnership taxable as a corporation), we would cease to qualify as a REIT because the value of our ownership interest in Centerspace, LP would exceed 5% of our assets and because we would be considered to hold more than 10% of the voting securities and value of the outstanding securities of another corporation.
If the IRS were to treat Centerspace, LP as an entity taxable as a corporation (such as a publicly traded partnership taxable as a corporation), we would no longer qualify as a REIT because the value of our ownership interest in Centerspace, LP would exceed 5% of our assets and because we would be considered to hold more than 10% of the voting securities and value of the outstanding securities of another corporation.
Effective management of rapid growth presents challenges, including: • the need to expand our management team and staff; • the need to enhance internal operating systems and controls; and • the ability to consistently achieve targeted returns on individual properties. 11 Table of Contents We may not be able to maintain similar rates of growth in the future or manage our growth effectively.
Effective management of rapid growth presents challenges, including: • the need to expand our management team and staff; • the need to enhance internal operating systems and controls; and • the ability to consistently achieve targeted returns on individual properties. We may be unable to maintain similar rates of growth in the future or manage our growth effectively.
However, the coverage limits of our current or future policies may be insufficient to cover the full cost of repair or replacement of all potential losses, or our level of coverage may not 10 Table of Contents continue to be available in the future or, if available, may be available only at unacceptable cost or with unacceptable terms.
However, the coverage limits of our current or future policies may be insufficient to cover the full cost of repair or replacement of all potential losses, or our level of coverage may not remain available in the future or, if available, may be available only at unacceptable cost or with unacceptable terms.
Because we have a limited ability to retain earnings as a result of the REIT distribution requirements, we will generally be required to refinance debt that matures with additional debt or equity.
Because we have a limited ability to retain earnings as a result of the REIT distribution requirements, we will generally have to refinance debt that matures with new debt or equity.
In some instances, we and/or our partner may have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction.
Sometimes, we and our partner have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction.
The occurrence of any of the foregoing could have an adverse effect on our reputation, the price of our stock and our business, financial condition and results of operations, including increased capital expenditures and operating expenses. Payment of distributions on our common shares is not guaranteed.
The occurrence of any of the foregoing could weaken our reputation, the price of our stock and our business, financial condition, and results of operations, including increased capital expenditures and operating expenses. Payment of distributions on our common shares is not guaranteed.
In most cases, we have to renew our insurance policies on an annual basis and negotiate acceptable terms for coverage, exposing us to the volatility of the insurance markets, including the possibility of rate increases.
In most cases, we have to renew our insurance policies annually and negotiate acceptable terms for coverage, exposing us to the volatility of the insurance markets, including the possibility of rate increases.
We depend on a concentration of our investments in a single asset class, making our results of operations more vulnerable to a downturn or slowdown in the sector or other economic factors . Substantially all of our investments are concentrated in the multifamily sector. As a result, we are subject to risks inherent in investments in a single asset class.
We depend on a concentration of our investments in a single asset class, making our results of operations more vulnerable to a downturn or slowdown in the sector or other economic factors . Substantially all of our investments are concentrated in the multifamily housing sector.
The use of social media could cause us to suffer broad reputational damage. Negative posts or comments about us through social media, whether by residents or prospective residents, could damage our reputation or that of our apartment communities, whether or not such claims or posts are valid, which in turn could adversely affect our business and results of operations.
Negative posts or comments about us through social media, whether by residents or prospective residents, could damage our reputation or that of our apartment communities, whether or not such claims or posts are valid, which in turn could adversely affect our business and results of operations.
Certain provisions of our Declaration of Trust may limit a change in control and deter a takeover.
Certain provisions of our Declaration of Trust may delay, limit, or prevent a change in control and deter a takeover.
Expenses associated with our investment in these multifamily properties, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in rental income from the community. Furthermore, such regulations may negatively impact our ability to attract higher-paying residents to such multifamily properties. Competition may negatively impact our earnings.
Expenses associated with our investment in these multifamily properties, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances reduce rental income from the community. Furthermore, such regulations may impair our ability to attract higher-paying residents to such multifamily properties.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn 2021, we suffered a ransomware attack on our information technology systems. This incident did not have a material impact on our business, operations, or financial condition; however, as a result, we began work on certain information technology initiatives earlier than originally planned.
Biggest changeWe have not suffered any cyber incident that had a material impact on our business, operations, or financial condition.
Any known known cybersecurity incidents would be reported to our board, chief executive officer, and disclosure committee for evaluation. We engage third party experts to monitor for and identify cyber threats. Both management and the third party provider receive alerts regarding cyber threats.
Any known cybersecurity incidents would be reported to our board, chief executive officer, and disclosure committee for evaluation. We engage third party experts to monitor for and identify cyber threats. Both management and the third party provider receive alerts regarding cyber threats.
A security breach or other significant disruption involving our computer networks and related systems could cause substantial costs and other negative effects, including litigation, remediation costs, costs to deploy additional protection strategies, compromising of confidential information, and reputational damage adversely affecting investor confidence.
However, a security breach or other significant disruption involving our computer networks and related systems could cause substantial costs and other negative effects, including litigation, remediation costs, costs to deploy additional protection strategies, compromising of confidential information, and reputational damage adversely affecting investor confidence.
Senior leadership, including our Senior Vice President of Information Technology (the “SVP of IT”), meets with the Board of Trustees at least annually to present and discuss strategies and cybersecurity initiatives. This meeting includes reporting of cybersecurity incidents at least annually or more often, if identified.
Senior leadership, including our Senior Vice President of Information Technology (the “SVP of IT”), meets with the Board of Trustees at least annually to present and discuss strategies 20 Table of Contents and cybersecurity initiatives. This meeting includes reporting of cybersecurity incidents at least annually or more often, if identified.
Risk Factors – “We face risks associated with cyber-attacks, cyber intrusions, or otherwise, which could pose a risk to our systems, networks, and services” and “Security breaches could compromise our information and expose us to liability, which would cause our business and reputation to suffer.” and “Security breaches could compromise our information and expose us to liability, which would cause our business and reputation to suffer.” 20 Table of Contents
Risk Factors – “We face risks associated with cyber-attacks, cyber intrusions, or otherwise, which could pose a risk to our systems, networks, and services” and “Security breaches could compromise our information and expose us to liability, which would cause our business and reputation to suffer.” and “Security breaches could compromise our information and expose us to liability, which would cause our business and reputation to suffer.”
Added
Our Board of Trustees has also delegated authority to its Audit Committee to review our internal controls relating to information technology, data privacy, including data protection and cybersecurity, including network security and cloud security.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCloud, MN (1) 149 19,583 92.0 % Rimrock West Apartments - Billings, MT 78 5,702 96.2 % River Pointe - Fridley, MN (2) 300 41,979 95.0 % River Ridge Apartment Homes - Bismarck, ND 146 26,678 95.9 % Rocky Meadows Apartments - Billings, MT 98 7,893 92.9 % Rum River Apartments - Isanti, MN 72 6,199 94.4 % Silver Springs Apartment Homes - Rapid City, SD 52 4,268 96.2 % Southdale Parc - Richfield, MN (2) 69 7,104 88.4 % SouthFork Townhomes + Flats - Lakeville, MN (1) 272 54,943 91.5 % Southpoint Apartments - Grand Forks, ND 96 10,878 96.9 % Sunset Trail Apartment Homes - Rochester, MN 146 19,111 92.5 % Union Pointe - Longmont, CO 256 76,371 96.9 % Venue on Knox - Minneapolis, MN (2) 97 24,178 89.7 % Westend - Denver, CO 390 129,283 96.2 % Whispering Ridge - Omaha, NE (1) 336 33,158 91.4 % Wingate - New Hope, MN (2) 136 13,978 99.3 % Woodhaven - Minneapolis, MN (2) 176 25,911 92.6 % Woodland Pointe - Woodbury, MN (2) 288 61,211 91.7 % Woodridge on Second - Rochester, MN 110 12,460 93.6 % TOTAL SAME-STORE 12,173 $ 2,106,517 NON-SAME-STORE Elements of Linden Hills - Minneapolis, MN (1) 31 9,084 96.8 % 22 Table of Contents (in thousands) Investment Physical Number of (initial cost plus Occupancy Apartment improvements less as of Community Name and Location Homes impairment) December 31, 2023 Lake Vista Apartment Homes - Loveland, CO (1) 303 87,789 94.4 % Lyra Apartments - Centennial, CO (2) 215 93,045 93.5 % Martin Blu - Eden Prairie, MN (1) 191 49,625 93.7 % Noko Apartments - Minneapolis, MN 130 44,846 95.4 % Zest - Minneapolis, MN (1) 45 11,638 97.8 % TOTAL NON-SAME-STORE 915 $ 296,027 TOTAL MULTIFAMILY 13,088 $ 2,402,544 (in thousands) Investment Physical Net Rentable (initial cost plus Occupancy Square improvements less as of Property Name and Location Footage impairment) December 31, 2023 OTHER - MIXED USE COMMERCIAL 71 France - Edina, MN (1) 20,922 $ 6,495 86.1 % Civic Lofts - Denver, CO 1,600 — 100.0 % Lugano at Cherry Creek - Denver, CO 11,998 2,461 92.2 % Noko Apartments - Minneapolis, MN 23,988 118 100.0 % Oxbo Urban Rentals- St Paul, MN 11,477 3,526 100.0 % Red 20 Apartments - Minneapolis, MN (1) 10,508 2,959 70.9 % Zest - Minneapolis, MN (1) 3,200 53 100.0 % TOTAL OTHER - MIXED USE COMMERCIAL 83,693 $ 15,612 OTHER - COMMERCIAL 3100 10th St SW - Minot, ND (4) 9,690 $ 1,990 N/A TOTAL OTHER - COMMERCIAL 9,690 $ 1,990 TOTAL SQUARE FOOTAGE - OTHER 93,383 TOTAL GROSS REAL ESTATE INVESTMENTS $ 2,420,146 (1) Encumbered by mortgage debt.
Biggest changeCloud, MN (1) 149 19,465 94.0 % Rimrock West Apartments - Billings, MT 78 5,741 94.9 % River Pointe - Fridley, MN (2) 300 42,301 96.7 % River Ridge Apartment Homes - Bismarck, ND 146 27,525 92.5 % Rocky Meadows Apartments - Billings, MT 98 8,054 94.9 % Rum River Apartments - Isanti, MN 72 6,214 91.7 % Silver Springs Apartment Homes - Rapid City, SD 52 4,315 90.4 % SouthFork Townhomes + Flats - Lakeville, MN (1) 272 55,570 96.0 % Southpoint Apartments - Grand Forks, ND 96 10,902 100.0 % Sunset Trail Apartment Homes - Rochester, MN 146 19,990 95.9 % The Bosk - Woodbury, MN (2) 288 64,369 91.7 % Union Pointe - Longmont, CO 256 77,034 93.4 % Venue on Knox - Minneapolis, MN (2) 97 24,743 92.8 % Westend - Denver, CO 390 131,069 96.9 % Whispering Ridge - Omaha, NE (1) 336 32,505 95.5 % Woodhaven - Minneapolis, MN (2) 176 26,355 97.7 % Woodridge on Second - Rochester, MN 110 12,738 93.6 % Zest - Minneapolis, MN (1) 45 11,687 97.8 % TOTAL SAME-STORE 12,580 $ 2,333,918 NON-SAME-STORE Lake Vista Apartment Homes - Loveland, CO (1) 303 89,285 96.7 % Lydian - Denver, CO (1) 129 39,558 89.9 % TOTAL NON-SAME-STORE 432 $ 128,843 TOTAL MULTIFAMILY 13,012 $ 2,462,761 23 Table of Contents (in thousands) Investment Physical Net Rentable (initial cost plus Occupancy Square improvements less as of Property Name and Location Footage impairment) December 31, 2024 OTHER - MIXED USE COMMERCIAL 71 France - Edina, MN (1) 20,922 $ 6,195 60.5 % Civic Lofts - Denver, CO 1,600 — 100.0 % Lugano at Cherry Creek - Denver, CO 11,998 2,463 100.0 % Lydian - Denver, CO (1) 22,676 672 100.0 % Noko Apartments - Minneapolis, MN 23,988 118 100.0 % Oxbo Urban Rentals- St Paul, MN (2) 11,477 3,526 100.0 % Red 20 Apartments - Minneapolis, MN (1) 10,508 2,959 100.0 % Zest - Minneapolis, MN (1) 3,200 53 100.0 % TOTAL OTHER - MIXED USE COMMERCIAL 106,369 $ 15,986 OTHER - COMMERCIAL 3100 10th St SW - Minot, ND (4) 9,603 $ 1,994 N/A TOTAL OTHER - COMMERCIAL 9,603 $ 1,994 TOTAL SQUARE FOOTAGE - OTHER 115,972 TOTAL GROSS REAL ESTATE INVESTMENTS $ 2,480,741 (1) Encumbered by mortgage debt.
Generally, our third-party management contracts are for terms of one year or less and provide for compensation ranging from 2.5% to 5.0% of gross rent collections and, typically, we may terminate these contracts upon 60 days or less notice for cause or upon the property manager’s failure to meet certain specified financial performance goals.
Generally, our third-party management contracts are for terms of one year or less and provide for compensation ranging from 2.5% to 5.0% of 21 Table of Contents gross rent collections and, typically, we may terminate these contracts upon 60 days or less notice for cause or upon the property manager’s failure to meet certain specified financial performance goals.
Summary of Communities Owned as of December 31, 2023 The following table presents information regarding our 72 apartment communities held for investment, as of December 31, 2023. We provide certain information on a same-store and non-same-store basis.
Summary of Communities Owned as of December 31, 2024 The following table presents information regarding our 71 apartment communities held for investment, as of December 31, 2024. We provide certain information on a same-store and non-same-store basis.
(in thousands) Investment Physical Number of (initial cost plus Occupancy Apartment improvements less as of Community Name and Location Homes impairment) December 31, 2023 SAME-STORE 71 France - Edina, MN (1) 241 $ 68,136 93.0 % Alps Park Apartments - Rapid City, SD 71 6,509 93.0 % Arcata Apartments - Golden Valley, MN 165 33,905 93.3 % Ashland Apartment Homes - Grand Forks, ND 84 8,595 96.4 % Avalon Cove Townhomes - Rochester, MN 187 40,674 92.5 % Bayberry Place - Eagan, MN (2) 120 17,557 95.0 % Burgundy & Hillsboro - New Hope, MN (2) 250 36,115 95.6 % Canyon Lake Apartments - Rapid City, SD 109 6,598 92.7 % Cardinal Point Apartments - Grand Forks, ND 251 34,889 93.6 % Cascade Shores Townhomes + Flats - Rochester, MN (1) 366 84,365 94.5 % Castlerock Apartment Homes - Billings, MT 165 7,675 92.7 % Civic Lofts - Denver, CO 176 61,945 97.7 % Connelly on Eleven - Burnsville, MN 240 30,760 95.4 % Cottonwood Apartment Homes - Bismarck, ND 268 25,251 95.2 % Country Meadows Apartment Homes - Billings, MT 133 9,737 92.5 % Cypress Court Apartments - St.
(in thousands) Investment Physical Number of (initial cost plus Occupancy Apartment improvements less as of Community Name and Location Homes impairment) December 31, 2024 SAME-STORE 71 France - Edina, MN (1) 241 $ 68,757 93.8 % Alps Park Apartments - Rapid City, SD 71 6,443 88.7 % Arcata Apartments - Golden Valley, MN 165 34,212 97.6 % Ashland Apartment Homes - Grand Forks, ND 84 8,683 98.8 % Avalon Cove Townhomes - Rochester, MN 187 41,302 92.5 % Bayberry Place - Eagan, MN (2) 120 17,601 91.7 % Burgundy & Hillsboro - New Hope, MN (2) 250 36,816 94.0 % Canyon Lake Apartments - Rapid City, SD 109 6,571 92.7 % Cardinal Point Apartments - Grand Forks, ND 251 35,619 98.0 % Cascade Shores Townhomes + Flats - Rochester, MN (1) 366 85,151 96.2 % Castlerock Apartment Homes - Billings, MT 165 7,599 92.7 % Civic Lofts - Denver, CO 176 62,543 92.6 % Connelly on Eleven - Burnsville, MN 240 29,488 95.4 % Cottonwood Apartment Homes - Bismarck, ND 268 25,480 94.4 % Country Meadows Apartment Homes - Billings, MT 133 9,827 95.5 % Cypress Court Apartments - St.
Same-store 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%.
Same-store communities are owned or stabilized for substantially all of the periods being compared, and, in the case of newly-acquired or constructed properties, have achieved a target level of physical occupancy of 90%, or re-positioned communities when they have achieved stabilized operations.
Cloud, MN 116 11,236 91.4 % Greenfield - Omaha, NE 96 7,847 95.8 % Grove Ridge - Cottage Grove, MN (2) 84 12,311 97.6 % Homestead Garden Apartments - Rapid City, SD 152 16,577 95.4 % Ironwood - New Hope, MN 182 39,803 91.8 % Lakeside Village Apartment Homes - Lincoln, NE 208 22,997 93.8 % Legacy Apartments - Grand Forks, ND 360 34,164 94.7 % Legacy Heights Apartment Homes - Bismarck, ND 119 15,249 96.6 % Lugano at Cherry Creek - Denver, CO 328 103,855 94.5 % Meadows Apartments - Jamestown, ND 81 7,101 98.8 % Monticello Crossings - Monticello, MN 202 32,426 92.1 % Monticello Village - Monticello, MN 60 5,452 91.7 % New Hope Garden & Village - New Hope, MN (2) 150 15,574 94.7 % Northridge Apartments - Bismarck, ND 68 8,679 94.1 % Olympic Village Apartments - Billings, MT 274 15,779 94.5 % Oxbo Urban Rentals - St Paul, MN 191 58,106 95.3 % Palisades - Roseville, MN (1) 330 58,302 97.3 % Park Place Apartments - Plymouth, MN 500 111,488 95.8 % Parkhouse Apartment Homes - Thornton, CO (1) 465 145,653 94.8 % Plymouth Pointe - Plymouth, MN (2) 96 14,192 97.9 % Pointe West Apartments - Rapid City, SD 90 5,853 91.1 % Ponds at Heritage Place - Sartell, MN 58 5,469 91.4 % Prosper West - Waite Park, MN (1) 313 29,035 93.3 % Quarry Ridge Apartments - Rochester, MN 320 41,771 95.6 % Red 20 Apartments - Minneapolis, MN (1) 130 26,825 96.2 % Regency Park Estates - St.
Cloud, MN 116 12,129 90.5 % Greenfield - Omaha, NE 96 8,305 95.8 % Grove Ridge - Cottage Grove, MN (2) 84 14,982 86.9 % Homestead Garden Apartments - Rapid City, SD 152 17,630 97.4 % Ironwood - New Hope, MN 182 40,317 96.2 % Lakeside Village Apartment Homes - Lincoln, NE 208 24,489 92.8 % 22 Table of Contents (in thousands) Investment Physical Number of (initial cost plus Occupancy Apartment improvements less as of Community Name and Location Homes impairment) December 31, 2024 Legacy Apartments - Grand Forks, ND 360 33,940 96.7 % Legacy Heights Apartment Homes - Bismarck, ND 119 15,280 96.6 % Lugano at Cherry Creek - Denver, CO 328 105,167 93.3 % Lyra Apartments - Centennial, CO (2) 215 93,788 93.0 % Martin Blu - Eden Prairie, MN (1) 191 50,177 95.8 % Meadows Apartments - Jamestown, ND 81 7,168 93.8 % Monticello Crossings - Monticello, MN 202 33,255 94.6 % Monticello Village - Monticello, MN 60 5,656 90.0 % New Hope Garden & Village - New Hope, MN (2) 150 15,812 99.3 % Noko Apartments - Minneapolis, MN 130 45,173 95.4 % Northridge Apartments - Bismarck, ND 68 8,705 95.6 % Olympic Village Apartments - Billings, MT 274 15,821 96.0 % Oxbo Urban Rentals - St Paul, MN (2) 191 58,366 94.8 % Palisades - Roseville, MN (1) 330 65,611 92.7 % Park Place Apartments - Plymouth, MN 500 112,782 95.0 % Parkhouse Apartment Homes - Thornton, CO (1) 465 149,319 94.6 % Plymouth Pointe - Plymouth, MN (2) 96 14,910 99.0 % Pointe West Apartments - Rapid City, SD 90 5,731 96.7 % Ponds at Heritage Place - Sartell, MN 58 5,578 98.3 % Prosper West - Waite Park, MN (1) 313 29,197 94.3 % Quarry Ridge Apartments - Rochester, MN 320 42,245 95.3 % Red 20 Apartments - Minneapolis, MN (1) 130 26,843 93.9 % Regency Park Estates - St.
Cloud, MN (1) (3) 196 21,536 96.4 % 21 Table of Contents (in thousands) Investment Physical Number of (initial cost plus Occupancy Apartment improvements less as of Community Name and Location Homes impairment) December 31, 2023 Deer Ridge Apartment Homes - Jamestown, ND 163 25,654 93.3 % Donovan Apartment Homes - Lincoln, NE 232 25,508 93.5 % Dylan at RiNo - Denver, CO 274 90,746 96.0 % Evergreen Apartment Homes - Isanti, MN 72 7,406 100.0 % FreightYard Townhomes & Flats - Minneapolis, MN 96 26,952 93.8 % Gardens Apartments - Grand Forks, ND 74 9,372 94.6 % Grand Gateway Apartment Homes - St.
Cloud, MN (1) (3) 196 21,626 94.9 % Deer Ridge Apartment Homes - Jamestown, ND 163 25,680 94.5 % Donovan Apartment Homes - Lincoln, NE 232 27,595 94.0 % Dylan at RiNo - Denver, CO 274 91,069 94.5 % Elements of Linden Hills - Minneapolis, MN (1) 31 9,069 96.8 % Evergreen Apartment Homes - Isanti, MN 72 7,414 88.9 % FreightYard Townhomes & Flats - Minneapolis, MN 96 27,021 96.9 % Gardens Apartments - Grand Forks, ND 74 9,399 96.0 % Grand Gateway Apartment Homes - St.
Properties by State The following table presents, as of December 31, 2023, the total property owned by state: (in thousands) State Total % of Total Minnesota $ 1,244,397 51.5 % Colorado 791,148 32.7 % North Dakota 208,500 8.6 % Nebraska 89,510 3.7 % South Dakota 39,805 1.6 % Montana 46,786 1.9 % Total $ 2,420,146 100.0 %
Properties by State The following table presents, as of December 31, 2024, the total property owned by state: (in thousands) State Total % of Total Minnesota $ 1,247,773 50.4 % Colorado 841,967 33.9 % North Dakota 210,375 8.5 % Nebraska 92,894 3.7 % Montana 47,042 1.9 % South Dakota 40,690 1.6 % Total $ 2,480,741 100.0 %
Added
We define re-positioned communities as having significant development and construction activity on existing buildings pursuant to an authorized plan, which has an impact on current operating results, occupancy and the ability to lease space with the intended result of improved community cash flow and competitive position through extensive unit and amenity upgrades.
Added
We categorize a re-positioned community as same-store when the development and construction activity has been completed, and operations have stabilized. This is typically reaching an overall occupancy of 90%.
Added
Not all communities undergoing value add are considered a re-positioned community.Non-same store communities are communities not owned or stabilized as of the beginning of the previous year, including re-positioned communities, and excluding communities held for sale and the non-multifamily components of mixed-use properties.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings In the ordinary course of our operations, we become involved in litigation. At this time, we know of no material pending or threatened legal proceedings to which we are a party or of which any of our properties are the subject.
Biggest changeItem 3. Legal Proceedings In the ordinary course of our operations, we become involved in litigation. At this time, we know of no material pending or threatened legal proceedings to which we are a party or of which any of our properties are the subject. Item 4. Mine Safety Disclosures Not Applicable. 24 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn September 30, 2023, October 31, 2023, and November 30, 2023, we issued an aggregate of 2,283, 1,265, and 1,505 unregistered common shares, respectively, to limited partners of Centerspace, LP upon exercise of their Exchange Rights for an equal number of Units.
Biggest changeOn October 31, 2024 and December 31, 2024, we issued an aggregate of 8,648 and 120 unregistered common shares, respectively, to limited partners of Centerspace, LP upon exercise of their Exchange Rights for an equal number of Units. All such issuances of our common shares were exempt from registration as private placements under Section 4(a)(2) of the Securities Act.
Set forth below is a graph that compares, for the five years commencing December 31, 2018 and ending December 31, 2023, the cumulative total returns for our common shares with the comparable cumulative total return of three indices, the Standard & Poor’s 500 Index (“S&P 500”), the FTSE Nareit Equity REITs Index, and the FTSE Nareit Equity Apartments Index, the latter of which is an index prepared by the FTSE Group for the National Association of Real Estate Investment Trusts, which includes all tax-qualified equity REITs listed on the NYSE and the NASDAQ Market.
Set forth below is a graph that compares, for the five years commencing December 31, 2019 and ending December 31, 2024, the cumulative total returns for our common shares with the comparable cumulative total return of three indices, the Standard & Poor’s 500 Index (“S&P 500”), the FTSE Nareit Equity REITs Index, and the FTSE Nareit Equity Apartments Index, the latter of which is an index prepared by the FTSE Group for the National Association of Real Estate Investment Trusts, which includes all tax-qualified equity REITs listed on the NYSE and the NASDAQ Market.
The performance graph assumes that, at the close of trading on December 31, 2018, $100 was invested in our common shares and in each of the indices.
The performance graph assumes that, at the close of trading on December 31, 2019, $100 was invested in our common shares and in each of the indices.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our Common Shares of Beneficial Interest, no par value, are traded on the New York Stock Exchange under the symbol “CSR”. Shareholders As of February 13, 2024, there were approximately 2,424 common shareholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our Common Shares of Beneficial Interest, no par value, are traded on the New York Stock Exchange under the symbol “CSR”. Shareholders As of February 11, 2025, there were approximately 2,246 common shareholders of record.
Issuer Purchases of Equity Securities Maximum Dollar Total Number of Shares Amount of Shares That Total Number of Average Price Purchased as Part of May Yet Be Purchased Shares and Units Paid per Publicly Announced Under the Plans or Period Purchased (1) Share and Unit (2) Plans or Programs Programs (3) October 1 - 31, 2023 — $ — — $ 14,234,010 November 1 - 30, 2023 75,465 52.13 75,465 10,301,837 December 1 - 31, 2023 26,482 53.16 16,511 9,414,859 Total 101,947 $ 52.40 91,976 (1) Includes Units redeemed for cash pursuant to the exercise of exchange rights.
Issuer Purchases of Equity Securities Maximum Dollar Total Number of Shares Amount of Shares That Total Number of Average Price Purchased as Part of May Yet Be Purchased Shares and Units Paid per Publicly Announced Under the Plans or Period Purchased (1) Share and Unit (2) Plans or Programs Programs (3) October 1 - 31, 2024 — $ — — $ 4,713,230 November 1 - 30, 2024 — — — 4,713,230 December 1 - 31, 2024 — — — 4,713,230 Total — $ — — (1) Includes Units redeemed for cash pursuant to the exercise of exchange rights.
All such issuances of our common shares were exempt from registration as private placements under Section 4(a)(2) of the Securities Act. We have registered the resale of such common shares under the Securities Act.
We have registered the resale of such common shares under the Securities Act.
Removed
The comparison assumes the reinvestment of all distributions. 24 Table of Contents Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Centerspace 100.00 154.26 156.96 254.70 140.18 146.30 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 FTSE Nareit Equity REITs 100.00 126.00 115.92 166.04 125.58 142.83 FTSE Nareit Equity Apartments Index 100.00 126.32 106.94 174.97 119.06 126.05 Source: S&P Global Market Intelligence
Added
The comparison assumes the reinvestment of all distributions. 25 Table of Contents Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Centerspace 100.00 101.75 165.11 90.87 94.84 112.94 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 197.02 FTSE Nareit Equity REITs 100.00 92.00 131.78 99.67 113.35 123.25 FTSE Nareit Equity Apartments Index 100.00 84.66 138.51 94.25 99.78 120.22 Source: S&P Global Market Intelligence Item 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(in thousands, except percentages) Year Ended December 31, 2023 2022 $ Change % Change Operating income $ 84,453 $ 13,861 $ 70,592 509.3 % Adjustments: Property management expenses 9,353 9,895 (542) (5.5) % Casualty loss 2,095 1,591 504 31.7 % Depreciation and amortization 101,678 105,257 (3,579) (3.4) % Impairment 5,218 — 5,218 N/A General and administrative expenses 20,080 17,516 2,564 14.6 % Gain on sale of real estate and other investments (71,244) (41) (71,203) * Loss on litigation settlement 3,864 — 3,864 N/A Net operating income $ 155,497 $ 148,079 $ 7,418 5.0 % *Not a meaningful percentage GAAP and Non-GAAP Financial Measures The following table metrics, including GAAP and non-GAAP measures, cover the years ended December 31, 2023 and 2022. 27 Table of Contents (in thousands) Year Ended December 31, 2023 2022 $ Change % Change Revenue Same-store (1) $ 230,333 $ 214,941 $ 15,392 7.2 % Non-same-store (1) 16,031 9,434 6,597 69.9 % Other (1) 2,601 2,466 135 5.5 % Dispositions (1) 12,344 29,875 (17,531) (58.7) % Total 261,309 256,716 4,593 1.8 % Property operating expenses, including real estate taxes Same-store (1) 92,847 88,785 4,062 4.6 % Non-same-store (1) 5,915 3,542 2,373 67.0 % Other (1) 797 940 (143) (15.2) % Dispositions (1) 6,253 15,370 (9,117) (59.3) % Total 105,812 108,637 (2,825) (2.6) % Net operating income (2) Same-store (1) 137,486 126,156 11,330 9.0 % Non-same-store (1) 10,116 5,892 4,224 71.7 % Other (1) 1,804 1,526 278 18.2 % Dispositions (1) 6,091 14,505 (8,414) (58.0) % Total $ 155,497 $ 148,079 $ 7,418 5.0 % Property management expense (9,353) (9,895) (542) (5.5) % Casualty loss (2,095) (1,591) 504 31.7 % Depreciation and amortization (101,678) (105,257) (3,579) (3.4) % Impairment of real estate investments (5,218) — 5,218 N/A General and administrative expenses (20,080) (17,516) 2,564 14.6 % Gain on sale of real estate and other investments 71,244 41 71,203 * Loss on litigation settlement (3,864) — 3,864 N/A Interest expense (36,429) (32,750) 3,679 11.2 % Interest and other income 1,207 1,248 (41) (3.3) % NET INCOME (LOSS) $ 49,231 $ (17,641) $ 66,872 379.1 % Dividends to preferred unitholders (640) (640) — — Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units (7,141) 4,299 (11,440) (266.1) % Net income attributable to noncontrolling interests – consolidated real estate entities (125) (127) 2 1.6 % Net income (loss) attributable to controlling interests 41,325 (14,109) 55,434 392.9 % Dividends to preferred shareholders (6,428) (6,428) — — NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 34,897 $ (20,537) $ 55,434 269.9 % (1) This is a component of Net operating income and a non-GAAP financial measure.
Biggest change(in thousands) Year Ended December 31, 2024 2023 $ Change % Change Revenue Same-store (1) $ 249,872 $ 241,989 $ 7,883 3.3 % Non-same-store (1) 7,993 1,526 6,467 * Other properties (1) 2,589 2,600 (11) (0.4) % Dispositions (1) 529 15,194 (14,665) * Total 260,983 261,309 (326) (0.1) % Property operating expenses, including real estate taxes Same-store (1) 99,365 96,785 2,580 2.7 % Non-same-store (1) 2,584 448 2,136 * Other properties (1) 968 797 171 21.5 % Dispositions (1) 327 7,782 (7,455) * Total 103,244 105,812 (2,568) (2.4) % Net operating income Same-store (1) 150,507 145,204 5,303 3.7 % Non-same-store (1) 5,409 1,078 4,331 * Other properties (1) 1,621 1,803 (182) (10.1) % Dispositions (1) 202 7,412 (7,210) * Total $ 157,739 $ 155,497 $ 2,242 1.4 % Property management expense (9,128) (9,353) (225) (2.4) % Casualty loss (3,307) (2,095) 1,212 57.9 % Depreciation and amortization (106,450) (101,678) 4,772 4.7 % Impairment of real estate investments — (5,218) (5,218) (100.0) % General and administrative expenses (17,802) (20,080) (2,278) (11.3) % Gain (loss) on sale of real estate and other investments (577) 71,244 (71,821) 100.8 % Loss on litigation settlement — (3,864) (3,864) (100.0) % Interest expense (37,280) (36,429) 851 2.3 % Interest and other income 2,613 1,207 1,406 116.5 % NET INCOME (LOSS) $ (14,192) $ 49,231 $ (63,423) 128.8 % Dividends to Series D preferred unitholders (640) (640) — — Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units 3,635 (7,141) 10,776 (150.9) % Net income attributable to noncontrolling interests – consolidated real estate entities (131) (125) (6) (4.8) % Net income (loss) attributable to controlling interests (11,328) 41,325 (52,653) 127.4 % Dividends to preferred shareholders (4,821) (6,428) 1,607 (25.0) % Redemption of preferred shares (3,511) — (3,511) N/A NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ (19,660) $ 34,897 $ (54,557) 156.3 % (1) This is a non-GAAP financial measure which is a component of NOI (non-GAAP), as defined above.
Under the Share Repurchase Program, we are authorized to repurchase common shares through open-market purchases, privately-negotiated transactions, block trades, or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended.
Under the Share Repurchase Program, we are authorized to repurchase common shares through open-market purchases, privately-negotiated transactions, block trades, or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities and Exchange Act of 1934, as amended.
The discussion below focuses on the main factors affecting real estate revenue and real estate expenses from same-store apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store communities are generally due to the addition of those properties to our real estate portfolio, and accordingly provide less useful information for evaluating the ongoing operational performance of our real estate portfolio.
The discussion below focuses on the main factors affecting real estate revenue and real estate expenses from same-store apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store communities are generally due to the addition of those communities to our real estate portfolio, and accordingly provide less useful information for evaluating the ongoing operational performance of our real estate portfolio.
Other sources include availability under our unsecured lines of credit, proceeds from property dispositions, including restricted cash related to net tax deferred proceeds, offerings of preferred and common shares under our shelf registration statement, including offerings of common shares under our 2021 ATM program, and long-term unsecured debt and secured mortgages.
Other sources include availability under our unsecured lines of credit, proceeds from property dispositions, including restricted cash related to net tax deferred proceeds, offerings of preferred and common shares under our shelf registration statement, including offerings of common shares under our ATM program, and long-term unsecured debt and secured mortgages.
Scheduled rental revenue represents the value of all homes, with occupied homes valued at contractual rental rates pursuant to leases and vacant homes valued at estimated market rents. When calculating actual rents for occupied homes and market rents for vacant homes, delinquencies and concessions are not taken into account.
Scheduled rental revenue represents the value of all apartment homes, with occupied homes valued at contractual rental 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.
(2) Consists of $3.9 million loss on litigation settlement for a trial judgment entered against the Company and $406,000 in associated trial costs related to the litigation matter during the year ended December 31, 2023.
Consists of $3.9 million loss on litigation settlement for a trial judgment entered against the Company and $406,000 in associated trial costs related to the litigation matter during the year ended December 31, 2023.
We fund capital expenditures, primarily to maintain or renovate our apartment communities. The amounts of these expenditures can vary from year to year depending on the age of the apartment community, timing of planned improvements, and lease turnover. As of December 31, 2023, we had no significant off-balance-sheet arrangements.
We fund capital expenditures, primarily to maintain or renovate our apartment communities. The amounts of these expenditures can vary from year to year depending on the age of the apartment community, timing of planned improvements, and lease turnover. As of December 31, 2024, we had no significant off-balance-sheet arrangements.
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.
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. 32 Table of Contents 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.
Changes in Cash, Cash Equivalents, and Restricted Cash As of December 31, 2023, we had cash and cash equivalents of $8.6 million and restricted cash consisting of $639,000 of escrows held by lenders for real estate taxes, insurance, and capital additions.
As of December 31, 2023, we had cash and cash equivalents of $8.6 million and restricted cash consisting of $639,000 of escrows held by lenders for real estate taxes, insurance, and capital additions.
Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. We use a 10-37 year estimated life for buildings and improvements and a 5-10 year estimated life for furniture, fixtures, and equipment. Maintenance and repairs are charged to operations as incurred.
Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. We use a 10-37 year estimated 38 Table of Contents life for buildings and improvements and a 5-10 year estimated life for furniture, fixtures, and equipment. Maintenance and repairs are charged to operations as incurred.
We believe that delivering superior resident experiences will drive consistent profitability for our shareholders. We have paid quarterly distributions every quarter since our first distribution in 1971. Significant Transactions and Events for the Year Ended December 31, 2023 Highlights .
We believe that delivering superior resident experiences will drive consistent profitability for our business and shareholders. We have paid quarterly distributions every quarter since our first distribution in 1971. Significant Transactions and Events for the Year Ended December 31, 2024 Highlights .
We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by sales of real estate and other investments, impairment, depreciation, amortization, financing costs, property management expenses, casualty losses, and general and administrative expense.
We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by sales of real estate and other investments, impairment, depreciation, amortization, financing costs, property management expenses, casualty losses, loss on litigation settlement, and general and administrative expense.
Loss on litigation settlement was $3.9 million for the year ended December 31, 2023 due to a trial judgment against Centerspace for property damage and monetary losses to a neighboring property. Refer to Litigation Settlement in Note 2 of the Notes to the Consolidated Financial Statements. Operating income.
There was no loss on litigation settlement for the year ended December 31, 2024 compared to $3.9 million in the year ended December 31, 2023 due to a trial judgment against Centerspace for property damage and monetary losses to a neighboring property. Refer to Litigation Settlement in Note 2 of the Notes to the Consolidated Financial Statements. Operating income.
For additional comparison of results of operations for the years ended December 31, 2022 and December 31, 2021, please refer to our Annual Report on Form 10-K filed with the SEC on February 21, 2023. Non-GAAP Financial Measures Net operating income.
For additional comparison of results of operations for the years ended December 31, 2023 and December 31, 2022, please refer to our Annual Report on Form 10-K filed with the SEC on February 20, 2024. Non-GAAP Financial Measures Net operating income.
Refer to the Reconciliation of Operating Income to Net Operating Income on page 27. Non-GAAP financial measures should not be considered an alternative to net income (loss), net income (loss) available for common shareholders, or cash flow from operating activities as a measure of financial performance. * Not a meaningful percentage .
Refer to the Reconciliation of Operating Income to Net Operating Income above. Non-GAAP financial measures should not be considered an alternative to net income (loss), net income (loss) available for common shareholders, or cash flow from operating activities as a measure of financial performance. * Not a meaningful percentage .
We had 1.7 million and 1.8 million Series E preferred units outstanding on December 31, 2023 and 2022, respectively. Each Series E preferred unit has a par value of $100. The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year.
We had 1.6 million and 1.7 million Series E preferred units outstanding on December 31, 2024 and 2023, respectively. Each Series E preferred unit has a par value of $100. The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year.
The increase was primarily due to increased insurance claims activity over the prior year period. Refer to Involuntary Conversion of Assets in Note 2 of the Notes to the Consolidated Financial Statements in the report for more details. Depreciation and amortization.
The increase was primarily due to increased insurance claims activity throughout 2024 compared to the prior year period. Refer to Involuntary Conversion of Assets in Note 2 of the Notes to the Consolidated Financial Statements in the report for more details. Depreciation and amortization.
Impairment of real estate investments. Impairment of real estate investments increased to $5.2 million in the year ended December 31, 2023, compared to no impairment in the prior year. These impairments were the result of two apartment communities that were written down to estimated fair value based on the receipt and acceptance of market offers to purchase the apartment communities.
Impairment of real estate investments. There was no impairment of real estate investments in the year ended December 31, 2024, compared to $5.2 million in 2023. These impairments were the result of two apartment communities that were written down to estimated fair value based on the receipt and acceptance of market offers to purchase the apartment communities.
As of December 31, 2023, the weighted average rate of interest on our mortgage debt was 4.05%, compared to 3.85% on December 31, 2022. Refer to Note 6 of our Consolidated Financial Statements contained in this Report for the principal payments due on our mortgage indebtedness and other tabular information.
As of December 31, 2024, the weighted average rate of interest on our mortgage debt was 4.02%, compared to 4.05% on December 31, 2023. Refer to Note 6 of our Consolidated Financial Statements contained in this Report for the principal payments due on our mortgage indebtedness and other tabular information.
The following table shows the notes issued under both agreements as of December 31, 2023 and 2022.
The following table shows the notes issued under both agreements as of December 31, 2024 and 2023.
As of December 31, 2022, the line of credit borrowing capacity was $250.0 million based on the value of our unencumbered properties, of which $113.5 million was drawn on the line. The line of credit is utilized to refinance existing indebtedness, to finance property acquisitions, to finance capital expenditures, and for general corporate purposes.
As of December 31, 2023, the line of credit borrowing capacity was $250.0 million based on the value of our unencumbered properties, of which $30.0 million was drawn on the line. The line of credit is utilized to refinance existing indebtedness, to finance property acquisitions, to finance capital expenditures, and for general corporate purposes.
Upon acquisitions of real estate, we assess the fair value of acquired tangible assets (including land, buildings and personal property), which is determined by valuing the property as if it were vacant, and consider whether there were significant intangible assets acquired (for example, above-and below-market leases, the value of acquired in-place leases and resident relationships) and assumed liabilities, and allocate the purchase price based on these assessments. 36 Table of Contents The as-if-vacant value is allocated to land, buildings, and personal property based on our determination of the relative fair value of these assets.
Upon acquisitions of real estate, we assess the fair value of acquired tangible assets (including land, buildings and personal property), which is determined by valuing the property as if it were vacant, and consider whether there were significant intangible assets acquired (for example, above-and below-market leases, the value of acquired in-place leases and resident relationships) and assumed liabilities, and allocate the purchase price based on these assessments.
Approximately 6.9% of the increase was due to higher average monthly revenue per occupied home and 0.3% from an increase in occupancy as weighted average occupancy increased from 94.6% to 94.9% for the years ended December 31, 2022 and 2023, respectively.
Approximately 2.9% of the increase was due to higher average monthly revenue per occupied home and 0.3% from an increase in occupancy as weighted average occupancy increased from 94.9% to 95.2% for the years ended December 31, 2023 and 2024, respectively.
To accomplish this, we have introduced initiatives to expand our operating margin by enhancing the resident experience, making value-add investments, and implementing technology solutions and expense controls. We will actively manage our existing portfolio and strategically pursue acquisitions of multifamily communities and selective dispositions as opportunities arise and market conditions allow.
To accomplish this, we have introduced initiatives to expand our operating margin by enhancing the resident experience, making value-add investments, and implementing technology solutions and expense controls. We plan to actively manage our existing portfolio, explore potential new markets, and strategically pursue acquisitions of apartment communities and selective dispositions as opportunities arise and market conditions allow.
As of December 31, 2023, we owned interests in 72 apartment communities consisting of 13,088 homes as detailed in Item 2 - Properties. Property owned, as presented in the Consolidated Balance Sheets, was $2.4 billion at December 31, 2023, compared to $2.5 billion at December 31, 2022.
As of December 31, 2024, we owned interests in 71 apartment communities consisting of 13,012 homes as detailed in Item 2 - Properties. Property owned, as presented in the Consolidated Balance Sheets, was $2.5 billion at December 31, 2024, compared to $2.4 billion at December 31, 2023.
Property management expense, consisting of property management overhead and property management fees paid to third parties decreased by 5.5% to $9.4 million in the year ended December 31, 2023, compared to $9.9 million in the year ended December 31, 2022.
Property management expense, consisting of property management overhead and property management fees paid to third parties decreased by 2.4% to $9.1 million in the year ended December 31, 2024, compared to $9.4 million in the year ended December 31, 2023.
(3) Consists of (gain) loss on investments. 32 Table of Contents Liquidity and Capital Resources Overview We strive to maintain a strong balance sheet and preserve financial flexibility, which we believe should enhance our ability to capitalize on appropriate investment opportunities as they may arise.
(2) Consists of (gain) loss on investments and one-time professional fees. 34 Table of Contents Liquidity and Capital Resources Overview We strive to maintain a strong balance sheet and preserve financial flexibility, which we believe should enhance our ability to capitalize on appropriate investment opportunities as they may arise.
Our primary liquidity demands are normally-recurring operating and overhead expenses, debt service and repayments, capital improvements to our communities, distributions to the holders of our preferred shares, common shares, Series D preferred units, Series E preferred units, and Units, value-add redevelopment, common and preferred share buybacks, Unit redemptions, and acquisitions of additional communities.
Our primary liquidity demands are normally-recurring operating and overhead expenses, debt service and repayments, capital improvements to our communities, distributions to the holders of our preferred shares, common shares, Series D and Series E preferred units, and Units, value-add redevelopment, common and preferred share buybacks and Unit redemptions, funding of mezzanine loans or real estate related notes, and acquisitions of additional communities.
Revenue from non-same-store apartment communities increased by $6.6 million in the year ended December 31, 2023, compared to the same period in the prior year. Property operating expenses from non-same-store apartment communities increased by $2.4 million. Net operating income from non-same-store communities increased by $4.2 million.
Non-same-store analysis. Revenue from non-same-store apartment communities increased by $6.5 million in the year ended December 31, 2024, compared to the same period in the prior year. Property operating expenses from non-same-store apartment communities increased by $2.1 million. Net operating income from non-same-store communities increased by $4.3 million.
Year Ended December 31, Weighted Average Occupancy (1) 2023 2022 Same-store 94.9 % 94.6 % Non-same-store 95.2 % 93.5 % Total 94.9 % 94.6 % (1) Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rental revenue.
Year Ended December 31, Weighted Average Occupancy (1) 2024 2023 Same-store 95.2 % 94.9 % Non-same-store 95.4 % 95.7 % Total 95.2 % 94.9 % (1) Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rental revenue.
For the year ended December 31, 2023, our highlights included the following: • Net Income was $2.32 per basic and diluted share for the year ended December 31, 2023, compared to Net Loss of $1.35 per basic and diluted share for the year ended December 31, 2022; • Core funds from operations (“CFFO”) per diluted share, a non-GAAP measure, increased 7.9% (refer to reconciliations of Funds from Operations and Core Funds from Operations beginning on page 30 for additional detail) to $4.78 from $4.43; • Operating income increased to $84.5 million for the year ended December 31, 2023 compared to $13.9 million for the prior year; and • Same-store year-over-year net operating income growth of 9.0% driven by same-store revenue growth of 7.2% (refer to Reconciliation of Operating Income (Loss) to Net Operating Income on page 27 for additional detail).
For the year ended December 31, 2024, our highlights included the following: • Net Loss was $1.27 per diluted share for the year ended December 31, 2024, compared to Net Income of $2.32 per diluted share for the year ended December 31, 2023; • Core funds from operations (“CFFO”) per diluted share, a non-GAAP measure, increased 2.1% (refer to reconciliations of Funds from Operations and Core Funds from Operations beginning on page 32 for additional detail) to $4.88 from $4.78; • Operating income decreased to $20.5 million for the year ended December 31, 2024 compared to $84.5 million for the prior year; and • Same-store year-over-year net operating income growth of 3.7% driven by same-store revenue growth of 3.3% (refer to Reconciliation of Operating Income (Loss) to Net Operating Income beginning on page 29 for additional detail).
Debt As of December 31, 2023, we had a multibank, revolving line of credit with total commitments and borrowing capacity of $250.0 million, based on the value of unencumbered properties. As of December 31, 2023, the additional borrowing availability was $220.0 million beyond the $30.0 million drawn.
Debt As of December 31, 2024, we had a multibank, revolving line of credit with total commitments and borrowing capacity of $250.0 million, based on the value of unencumbered properties, (the “Unsecured Credit Facility”). As of December 31, 2024, the additional borrowing availability was $206.0 million beyond the $44.0 million drawn.
The primary line of credit had a $30.0 million balance outstanding at December 31, 2023 and matures in September 2025. Our unsecured senior notes had an aggregate balance of $300.0 million at December 31, 2023 with varying maturities from September 2028 through September 2034.
Our operating line of credit had a $3.4 million balance outstanding at December 31, 2024 and matures in September 2025. Our unsecured senior notes had an aggregate balance of $300.0 million at December 31, 2024 with varying maturities from September 2028 through September 2034.
The interest rates on the line of credit are based on the consolidated leverage ratio, at the Company’s option, on either the lender’s base rate plus a margin, ranging from 25-80 basis points, or daily or term SOFR, plus a margin that ranges from 125-180 basis points, with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended.
As amended, the interest rates on the line of credit are based on the consolidated leverage ratio, at our option, on either the lender’s base rate plus a margin, ranging from 20-80 basis points, or the daily or term Secured Overnight Financing Rate (“SOFR”), plus a margin that ranges from 120-180 basis points, with the consolidated leverage ratio described under the Third Amended and Restated Credit Agreement, as amended.
Gain on sale of real estate and other investments. In the years ended December 31, 2023 and 2022, we recorded gains on sale of real estate and other investments of $71.2 million and $41,000, respectively.
In the years ended December 31, 2024 and 2023, we recorded a loss on the sale of real estate and other investments of $577,000 and a gain on the sale of real estate and other investments of $71.2 million, respectively.
Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and our calculation of weighted average occupancy may not be comparable to that disclosed by other real estate companies. 28 Table of Contents December 31, Number of Homes 2023 2022 Same-store 12,173 12,173 Non-same-store 915 612 Total 13,088 12,785 Same-store analysis.
Weighted average occupancy may not 30 Table of Contents completely reflect short-term trends in physical occupancy, and our calculation of weighted average occupancy may not be comparable to that disclosed by other REITs and other real estate companies. December 31, Number of Homes 2024 2023 Same-store 12,580 12,580 Non-same-store 432 303 Dispositions — 205 Total 13,012 13,088 Same-store analysis.
As of December 31, 2022, we had cash and cash equivalents of $10.5 million and restricted cash consisting of $1.4 million of escrows held by lenders for real estate taxes, insurance, and capital additions.
Changes in Cash, Cash Equivalents, and Restricted Cash As of December 31, 2024, we had cash and cash equivalents of $12.0 million and restricted cash consisting of $1.1 million of escrows held by lenders for real estate taxes, insurance, and capital additions.
As of December 31, 2022, we had total liquidity of approximately $153.0 million, which included $142.5 million available on our lines of credit based on the value of unencumbered properties and $10.5 million of cash and cash equivalents.
As of December 31, 2024, we had total liquidity of approximately $224.6 million, which included $212.6 million available on our lines of credit based on the value of unencumbered properties and $12.0 million of cash and cash equivalents.
As of December 31, 2022, the Term Loan had a balance of $100.0 million. We have a $198.9 million Fannie Mae Credit Facility Agreement (“FMCF”). The FMCF is currently secured by mortgages on 12 apartment communities. The notes are interest-only, with varying maturity dates of 7, 10, and 12 years, and a blended weighted average fixed interest rate of 2.78%.
The FMCF is currently secured by mortgages on 11 apartment communities. The notes are interest-only, with varying maturity dates of 7, 10, and 12 years, and a blended weighted average fixed interest rate of 2.78%. As of December 31, 2024 and 2023, the FMCF had a balance of $198.9 million.
For the comparison of the twelve months ended December 31, 2023 and 2022, 66 apartment communities were classified as same-store and six apartment communities were non-same-store. See Item 2 - Properties for the list of communities classified as same-store and non-same-store.
For the comparison of the years ended December 31, 2024 and 2023, 69 apartment communities were classified as same-store and two apartment communities were non-same-store. See Item 2 - Properties for the list of communities classified as same-store and non-same-store.
Property operating expenses from other decreased by 15.2% or $143,000 while property operating expenses from disposition decreased by $9.1 million due to sold properties. We disposed of 13 apartment communities and associated commercial space during the year ended December 31, 2023. Property management expense.
Property operating expenses from other increased by 21.5% or $171,000 while property operating expenses from dispositions decreased by $7.5 million due to sold properties. We disposed of two apartment communities during the year ended December 31, 2024 and 13 apartment communities and associated commercial space during the year ended December 31, 2023. Property management expense.
Revenue from same-store communities increased by 7.2% or $15.4 million in the year ended December 31, 2023, compared to the same period in the prior year.
Revenue from same-store communities increased by 3.3%, or $7.9 million, in the year ended December 31, 2024, compared to the year ended December 31, 2023.
The increase in revenue, property operating expenses, and NOI from non-same-store communities is primarily due to the addition of apartment communities in the latter part of 2022 and 2023. Other and dispositions analysis. Revenue from other, which encompasses our commercial and mixed use activity, increased by 5.5% or $135,000 while revenue from dispositions decreased by $17.5 million.
The increase in revenue, property operating expenses, and NOI from non-same-store communities is primarily due to the addition of apartment communities during the fourth quarter of 2023 and 2024. Other and dispositions analysis. Revenue from other, which encompasses our commercial and mixed use activity, decreased by 0.4% or $11,000 while revenue from dispositions decreased by $14.7 million.
We will explore potential new markets and acquisition opportunities as market conditions allow. We seek to manage a strong balance sheet that should provide us with flexibility to pursue both internal and external growth. 26 Table of Contents RESULTS OF OPERATIONS We are presenting our results of operations for the years ended December 31, 2023 and 2022.
We seek to manage a strong balance sheet that should provide us with flexibility to pursue both internal and external growth. 27 Table of Contents RESULTS OF OPERATIONS We are presenting our results of operations for the years ended December 31, 2024 and 2023.
For the year ended December 31, 2023, we declared cash distributions of $46.4 million to common shareholders and unitholders of Centerspace, LP, as compared to net cash provided by operating activities of $89.5 million and FFO of $77.3 million.
For the year ended December 31, 2024, we declared cash distributions of $49.9 million to common shareholders and unitholders of Centerspace, LP, as compared to net cash provided by operating activities of $98.2 million and FFO of $83.3 million.
Depreciation and amortization decreased by 3.4% to $101.7 million in the year ended December 31, 2023, compared to $105.3 million in the year ended December 31, 2022, attributable to a decrease of $5.6 million from dispositions and $378,000 from other properties, offset by increases at same-store communities and non-same-store communities driven by the addition of an apartment community in the fourth quarter of the current year and value add and acquisition capital projects.
Depreciation and amortization increased by 4.7% to $106.5 million in the year ended December 31, 2024, compared to $101.7 million in the year ended December 31, 2023, attributable to an increase of $5.6 million from same-store communities and $3.8 million from non-same-store communities driven by the addition of an apartment community in the fourth quarter of both 2024 and 2023 along with value add and acquisition capital projects, offset by a decrease of $5.1 million from dispositions.
(collectively, "PGIM") under which we have issued $200.0 million in unsecured senior promissory notes (“unsecured senior notes”). We also have a separate note purchase agreement for the issuance of $125.0 million senior unsecured promissory notes, of which $25.0 million was issued under the private shelf agreement with PGIM.
We also had a separate private note purchase agreement with PGIM and certain other lenders for the issuance of $125.0 million of senior unsecured promissory notes (“Unsecured Club Notes”, and, collectively with the Unsecured Shelf Notes, the “unsecured senior notes”), of which all $125.0 million was issued in September 2021.
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%.
Same-store apartment communities are owned or stabilized for substantially all of the periods being compared and, in the case of newly-acquired or constructed communities, have achieved a target level of physical occupancy of 90%, or re-positioned communities when they have achieved stabilized operations.
Factors considered in the fair value analysis include an estimate of carrying costs and foregone rental income during hypothetical expected lease-up periods, consideration of current market conditions, and costs to execute similar leases.
Other intangible assets acquired include amounts for in-place lease values that are based upon our evaluation of the specific characteristics of the leases. Factors considered in the fair value analysis include an estimate of carrying costs and foregone rental income during hypothetical expected lease-up periods, consideration of current market conditions, and costs to execute similar leases.
Non-controllable expenses at same-store communities increased by $2.6 million primarily due to insurance premiums and deductibles on claims and real estate taxes. Same-store NOI increased by $11.3 million to $137.5 million for the year ended December 31, 2023 compared to $126.2 million in the same period in the prior year. Non-same-store analysis.
Non-controllable expenses at same-store communities increased by $438,000 primarily due to insurance premiums and deductibles on claims offset by a decrease in real estate taxes resulting from successful real estate tax appeals. Same-store NOI increased by $5.3 million to $150.5 million for the year ended December 31, 2024 compared to $145.2 million in the same period in the prior year.
As of December 31, 2023, common shares having an aggregate offering price of up to $126.6 34 Table of Contents million remained available under the 2021 ATM program. Refer to Note 4 of our Consolidated Financial Statements contained in this Report.
As of December 31, 2024, common shares having an aggregate offering price of up to $262.9 million remained available under the ATM program. Further information can be found in Note 4 of our Consolidated Financial Statements contained in this Report.
(in thousands) Amount Maturity Date Fixed Interest Rate Series A $ 75,000 September 13, 2029 3.84 % Series B $ 50,000 September 30, 2028 3.69 % Series C $ 50,000 June 6, 2030 2.70 % Series 2021-A $ 35,000 September 17, 2030 2.50 % Series 2021-B $ 50,000 September 17, 2031 2.62 % Series 2021-C $ 25,000 September 17, 2032 2.68 % Series 2021-D $ 15,000 September 17, 2034 2.78 % In November 2022, we entered into a $100.0 million term loan agreement (“Term Loan”) with PNC Bank, National Association as administrative agent.
(in thousands) Amount Maturity Date Fixed Interest Rate Series A $ 75,000 September 13, 2029 3.84 % Series B $ 50,000 September 30, 2028 3.69 % Series C $ 50,000 June 6, 2030 2.70 % Series 2021-A $ 35,000 September 17, 2030 2.50 % Series 2021-B $ 50,000 September 17, 2031 2.62 % Series 2021-C $ 25,000 September 17, 2032 2.68 % Series 2021-D $ 15,000 September 17, 2034 2.78 % We have a $198.9 million Fannie Mae Credit Facility Agreement (“FMCF”).
The decrease was primarily due to decreased costs for technology initiatives and compensation costs combined with fewer properties due to dispositions. Casualty loss. Casualty loss increased to $2.1 million in the year ended December 31, 2023, compared to $1.6 million in the year ended December 31, 2022.
The decrease was primarily due to decreased headcount with fewer properties due to dispositions and a decrease in third party management fees. Casualty loss. Casualty loss increased to $3.3 million in the year ended December 31, 2024, compared to $2.1 million in the year ended December 31, 2023.
As of December 31, 2023 and 2022, the FMCF had a balance of $198.9 million. The FMCF is included within mortgages payable on the Consolidated Balance Sheets. Mortgage loan indebtedness, excluding the FMCF, was $391.1 million on and $299.4 million on December 31, 2023, and 2022, respectively on 14 and 15 apartment communities, respectively.
The FMCF is included within mortgages payable on the Consolidated Balance Sheets. Mortgage loan indebtedness, excluding net debt premiums and discounts and the FMCF, was $420.4 million and $392.3 million on December 31, 2024, and 2023, respectively on 15 and 14 apartment communities, respectively.
The increase was due to the sale of 13 29 Table of Contents apartment communities and associated commercial space during the current year that did not occur in the prior year. Refer to Note 9 in the Notes to the Consolidated Financial Statements. Loss on Litigation Settlement.
The decrease was due to the sale of two apartment communities for a loss in 2024 compared to the sale of 13 apartment communities for a gain and associated commercial space during 2023. Refer to Note 9 in the Notes to the Consolidated Financial Statements. Loss on Litigation Settlement.
Each Series E preferred unit is convertible, at the holder’s option, into 1.2048 Units. The Series E preferred units have an aggregate liquidation preference of $172.5 million. The holders of the Series E preferred units do not have voting rights. As of December 31, 2023 and 2022, we had 3.9 million Series C preferred shares outstanding.
Each Series E preferred unit is convertible, at the holder’s option, into 1.20482 Units. The Series E preferred units have an aggregate liquidation preference of $158.2 million. The holders of the Series E preferred units do not have voting rights.
The proceeds from the sale of common shares under the 2021 ATM program are intended to be used for general corporate purposes, which may include the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness. During the year ended December 31, 2023, we did not issue any common shares under the 2021 ATM program.
Under the ATM Program, we may enter into separate forward sale agreements. The proceeds from the sale of common shares under the ATM Program may be used for general corporate purposes, including the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness.
General and administrative expenses increased by 14.6% to $20.1 million in the year ended December 31, 2023, compared to $17.5 million in the year ended December 31, 2022, primarily attributable to $3.2 million in executive severance and transition costs related to the CEO departure, $910,000 in incentive related compensation, and $406,000 in legal fees related to the loss on litigation settlement, offset by $1.3 million in abandoned pursuit costs and $873,000 in technology implementation costs that did not occur in the current year.
General and administrative expenses decreased by 11.3% to $17.8 million in the year ended December 31, 2024, compared to $20.1 million in the year ended December 31, 2023, primarily attributable to $3.2 million in executive severance and transition costs related to the CEO departure in 2023 and lower legal fees due to a litigation settlement from 2023 both of which did not occur in 2024, offset by $1.2 million in increased incentive related compensation. 31 Table of Contents Gain (loss) on sale of real estate and other investments.
During the year ended December 31, 2023, we completed the following transactions in furtherance of our strategic plan: • Disposed of 13 non-core apartment communities for an aggregate sales price of $226.8 million and a realized gain on sale of $71.2 million; and • Acquired Lake Vista Apartment Homes, a 303 home apartment community in Loveland, Colorado for an aggregate purchase price of $94.5 million.
Acquisitions and Dispositions . During the year ended December 31, 2024, we completed the following transactions in furtherance of our strategic plan: • Disposed of two non-core apartment communities for an aggregate sales price of $19.0 million; and • Acquired The Lydian, a 129 home apartment community in Denver, Colorado for an aggregate purchase price of $54 million.
Property operating expenses at same-store communities increased by 4.6% or $4.1 million in the year ended December 31, 2023, compared to the same period in the prior year. At same-store communities, controllable expenses (which exclude insurance and real estate taxes), increased by $1.5 million, primarily due to $2.1 million in compensation costs, offset by decreased utilities and turnover costs.
At same-store communities, controllable expenses (which exclude insurance and real estate taxes), increased by $2.1 million, primarily due to increased repairs and maintenance, technology costs related to smart home technology, and compensation costs, offset by decreased utilities and turnover costs.
(in thousands, except per share amounts) Number of Common Shares Aggregate Cost (1) Average Price Per Share (1) Year ended December 31, 2023 216 $ 11,539 $ 53.44 Year ended December 31, 2022 432 $ 29,059 $ 67.23 (1) Amount includes commissions.
As of December 31, 2024, we had $4.7 million remaining authorized for purchase under this program. (in thousands, except per share amounts) Number of Common Shares Aggregate Cost (1) Average Price Per Share (1) Year ended December 31, 2024 88 $ 4,703 $ 53.62 Year ended December 31, 2023 216 $ 11,539 $ 53.44 (1) Amount includes commissions.
This credit facility matures in September 2025, with an option to extend maturity for up to two additional six-month periods and has an accordion option to increase borrowing capacity up to $400.0 million. 33 Table of Contents On May 31, 2023, this Unsecured Credit Facility was amended to replace the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) as the benchmark alternative reference rate under the credit facility.
As amended, this credit facility 35 Table of Contents matures in July 2028, with an option to extend maturity for up to two additional six-month periods and has an accordion option to increase borrowing capacity up to $400.0 million.
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. 30 Table of Contents Net income available to common shareholders for the year ended December 31, 2023 increased to $34.9 million compared to a net loss of $20.5 million for the year ended December 31, 2022.
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.
For a comparison of FFO applicable to common shares and Units for the years ended December 31, 2022 and 2021, refer to our Annual Report on Form 10-K filed with the SEC on February 21, 2023. 31 Table of Contents Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds from Operations and Core Funds From Operations (in thousands, except per share and unit amounts) Year Ended December 31, 2023 2022 Funds from operations: Net income (loss) available to common shareholders $ 34,897 $ (20,537) Adjustments: Noncontrolling interests – Operating Partnership and Series E preferred units 7,141 (4,299) Depreciation and amortization 101,678 105,257 Less depreciation – non real estate (322) (387) Less depreciation – partially owned entities (80) (65) Impairment of real estate 5,218 — Gain on sale of real estate (71,240) (41) FFO applicable to common shares and Units $ 77,292 $ 79,928 Adjustments to Core FFO: Non-cash casualty loss $ 1,350 $ 254 Loss on extinguishment of debt — 5 Technology implementation costs (1) — 873 Interest rate swap amortization and mark-to-market 936 (100) Amortization of assumed debt (212) (464) Pursuit costs 5 1,302 Severance and transition related costs 3,170 — Loss on litigation settlement and associated trial costs (2) 4,270 — Other miscellaneous items (3) (137) 85 Core FFO applicable to common shares and Units $ 86,674 $ 81,883 FFO applicable to common shares and Units $ 77,292 $ 79,928 Dividends to preferred unitholders 640 640 FFO applicable to common shares and Units - diluted $ 77,932 $ 80,568 Core FFO applicable to common shares and Units $ 86,674 $ 81,883 Dividends to preferred unitholders 640 640 Core FFO applicable to common shares and Units - diluted $ 87,314 $ 82,523 Per Share Data Income (loss) per common share - diluted $ 2.32 $ (1.35) FFO per share and Unit - diluted $ 4.27 $ 4.32 Core FFO per share and Unit - diluted $ 4.78 $ 4.43 Weighted average shares - basic 14,994 15,216 Effect of redeemable operating partnership units 925 978 Effect of Series D preferred units 228 228 Effect of Series E preferred units 2,100 2,185 Effect of dilutive restricted stock units and stock options 24 38 Weighted average shares and Units - diluted 18,271 18,645 (1) Costs are related to a two-year implementation.
FFO applicable to common shares and Units for the year ended December 31, 2024, increased to $83.3 million compared to $77.3 million for the year ended December 31, 2023, a change of 7.8%, primarily due to $3.2 million in severance and transition expenses related to the departure of our former CEO in 2023 and a $3.9 million loss on litigation settlement in 2023, both of which did not occur in 2024, along with increased NOI from same-store and non-same-store communities in the in the year ended December 31, 2024, offset by the redemption of our Series C preferred shares during 2024 and increased casualty loss claim and decreased NOI from dispositions. 33 Table of Contents Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds from Operations and Core Funds From Operations (in thousands, except per share and unit amounts) Year Ended December 31, 2024 2023 Funds from Operations: Net income (loss) available to common shareholders $ (19,660) $ 34,897 Adjustments: Noncontrolling interests – Operating Partnership and Series E preferred units (3,635) 7,141 Depreciation and amortization 106,450 101,678 Less depreciation – non real estate (327) (322) Less depreciation – partially owned entities (98) (80) Impairment of real estate investments — 5,218 (Gain) loss on sale of real estate 577 (71,240) FFO applicable to common shares and Units $ 83,307 $ 77,292 Adjustments to Core FFO: Non-cash casualty loss $ 2,432 $ 1,350 Interest rate swap amortization 712 936 Amortization of assumed debt 1,206 (212) Severance and transition related costs — 3,170 Loss on litigation settlement and associated trial costs (1) 37 4,270 Redemption of preferred shares 3,511 — Other miscellaneous items (2) (526) (132) Core FFO applicable to common shares and Units $ 90,679 $ 86,674 FFO applicable to common shares and Units $ 83,307 $ 77,292 Dividends to Series D preferred unitholders 640 640 FFO applicable to common shares and Units - diluted $ 83,947 $ 77,932 Core FFO applicable to common shares and Units $ 90,679 $ 86,674 Dividends to Series D preferred unitholders 640 640 Core FFO applicable to common shares and Units - diluted $ 91,319 $ 87,314 Per Share Data Income (loss) per common share - diluted $ (1.27) $ 2.32 FFO per share and Unit - diluted $ 4.49 $ 4.27 Core FFO per share and Unit - diluted $ 4.88 $ 4.78 Weighted average shares - basic 15,504 14,994 Effect of redeemable operating partnership units 870 925 Effect of Series D preferred units 228 228 Effect of Series E preferred units 2,056 2,100 Effect of dilutive restricted stock units and stock options 36 24 Weighted average shares and Units - diluted 18,694 18,271 (1) Consists of $37,000 in associated trial costs related to the litigation matter for the year ended December 31, 2024.
Interest and other income. Interest and other income was $1.2 million in the years ended December 31, 2023 and 2022. Net income (loss) available to common shareholders. Net income (loss) available to common shareholders increased to net income of $34.9 million compared to a net loss of $20.5 million in the prior year.
Net loss available to common shareholders for the year ended December 31, 2024 decreased to $19.7 million compared to a net income of $34.9 million for the year ended December 31, 2023.
The repurchases have no time limit and may be suspended or discontinued completely at any time. The specific timing and amount of repurchases will vary based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors.
The specific timing and amount of repurchases will vary based on available capital resources or other financial and operational performance, market conditions, securities law limitations, and other factors. The table below provides details on the shares repurchased during the years ended December 31, 2024 and 2023.
Techniques used to estimate fair value include discounted cash flow analysis and reference to recent sales of comparable properties. Estimates of future cash flows are based on a number of factors, including the historical operating results, known trends, and market/economic conditions that may affect the property.
Estimates of future cash flows are based on a number of factors, including the historical operating results, known trends, and market/economic conditions that may affect the property. Land value is assigned based on the purchase price if land is acquired separately or based on a relative fair value allocation if acquired in a portfolio acquisition.
This operating line of credit is designed to enhance treasury management activities and more effectively manage cash balances. This operating line matures on September 30, 2024, with pricing based on SOFR. We have a private shelf agreement with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc.
In September 2024, we entered into an operating line of credit agreement with US Bank, N.A. which has a borrowing capacity of up to $10.0 million and pricing based on SOFR. This operating line of credit terminates in September 2025 and is designed to enhance treasury management activities and more effectively manage cash balances.
The table below provides details on the shares repurchased during the years ended December 31, 2023 and 2022. As of December 31, 2023, we had $9.4 million remaining authorized for purchase under this program.
The table below provides details on the sale of common shares under the ATM Program during the years ended December 31, 2024 and 2023.
Operating income increased by 509.3% to $84.5 million in the year ended December 31, 2023, compared to $13.9 million in the year ended December 31, 2022. Interest expense. Interest expense increased 11.2% to $36.4 million in the year ended December 31, 2023, compared to $32.8 million in the year ended December 31, 2022, primarily due to higher interest rates.
Operating income decreased by 75.8% to $20.5 million in the year ended December 31, 2024, compared to $84.5 million in the year ended December 31, 2023. Interest expense.
During the year ended December 31, 2022, we issued 321,000 common shares under the 2021 ATM program at an average price of $98.89 per share, net of commissions. During the year ended December 31, 2022, total consideration, net of commissions and issuance costs, was approximately $31.4 million.
During the year ended December 31, 2024, we completed the following financing transactions: • Issued approximately 1.6 million common shares for net consideration of $112.6 million and an average price of $71.66 per share under our ATM Program, compared to 87,722 shares repurchased at an average price of $53.62 per share, excluding commissions.
On March 10, 2022, the Board of Trustees approved a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $50.0 million of our outstanding common shares.
(2) Includes 869,000 shares sold on a forward basis for $62.7 million which were physically settled during the year ended December 31, 2024. We have a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of up to an aggregate of $50.0 million of our outstanding common shares.
In addition to cash flows from operations, during the year ended December 31, 2023, we generated capital from various activities, including: • Receiving $223.3 million in net proceeds from the sale of 13 apartment communities and associated commercial space; and • Receiving $90.0 million in proceeds from a new mortgage on our Parkhouse community.
In addition to cash flows from operations, during the year ended December 31, 2024, we generated capital from various activities, including: • Receiving $18.3 million in net proceeds from the sale of two apartment communities; • Receiving $17.4 million on our line of credit, net of repayments; • Issuing approximately 1.6 million common shares for consideration of $112.1 million, net of commissions and issuance costs; and • Receiving $1.9 million in insurance proceeds, primarily due to one large casualty event that was settled.
During the year ended December 31, 2023, we used capital for various activities, including: • Acquiring an apartment community in Loveland, Colorado for $42.2 million in cash, including transaction costs, with the remainder of the purchase price in assumption of mortgage debt; • Repaying $83.5 million on our line of credit, net of proceeds; • Repaying approximately $46.7 million of mortgage principal; • Repaying $100.0 million on notes payable; • Repurchasing of 216,000 common shares for $11.5 million, net of issuance costs; • Paying distributions on common shares, Series E preferred units, Units, and Series C preferred shares of $59.7 million; and • Funding capital improvements for apartment communities of approximately $58.8 million. 35 Table of Contents Contractual Obligations and Other Commitments Our primary contractual obligations relate to borrowings under our lines of credit, unsecured senior notes, and mortgages payable.
During the year ended December 31, 2024, we used capital for various activities, including: • Redeeming all of our Series C preferred shares for $97.0 million; • Funding $13.6 million on a mezzanine loan for the development of an apartment community; 37 Table of Contents • Repaying approximately $10.9 million of mortgage principal; • Repurchasing of 87,722 common shares for $4.7 million, net of fees and expenses; • Paying distributions on common shares, Series E preferred units, Units, and Series C preferred shares of $59.7 million; and • Funding capital improvements for apartment communities of approximately $56.7 million.
Refer to Item 7A in this Report for additional information on our market and interest rate risk. Equity We have an at-the-market offering program (“2021 ATM program”) through which we may offer and sell common shares having an aggregate sales price of up to $250.0 million, in amounts and at times that we determine.
We amended our equity distribution agreement in connection with the at-the-market offering (“ATM Program”) through which we may offer and sell common shares in amounts and at times determined by management. The amendment increased the maximum aggregate offering price of common shares available for offer and sale thereunder from $250.0 million to $500.0 36 Table of Contents million.
(in thousands) Less than More than Total 1 Year 1-3 Years 3-5 Years 5 Years Lines of credit (principal and interest) (1) $ 33,483 $ 1,995 $ 31,488 — — Notes payable (principal and interest) $ 360,390 $ 9,347 $ 18,694 $ 68,233 $ 264,116 Mortgages payable (principal and interest) $ 727,180 $ 28,285 $ 173,457 $ 145,576 $ 379,862 Total $ 1,121,053 $ 39,627 $ 223,639 $ 213,809 $ 643,978 (1) The future interest payments on the lines of credit were estimated using the outstanding principal balance and interest rate in effect as of December 31, 2023.
(in thousands) Less than More than Total 1 Year 1-3 Years 3-5 Years 5 Years Lines of credit (principal and interest) (1) $ 56,650 $ 6,081 $ 5,113 45,456 — Notes payable (principal and interest) $ 351,043 $ 9,347 $ 18,694 $ 140,668 $ 182,334 Mortgages payable (principal and interest) $ 750,561 $ 58,313 $ 186,030 $ 123,884 $ 382,334 Total $ 1,158,254 $ 73,741 $ 209,837 $ 310,008 $ 564,668 (1) The future interest payments on the lines of credit were estimated using the outstanding principal balance and interest rate in effect as of December 31, 2024.
Prior to the amendment, interest rates on the line of credit were also based on the consolidated leverage ratio, applying the same margin ranges to LIBOR. We also have a $6.0 million unsecured operating line of credit. As of December 31, 2023 and 2022, there was no outstanding balance on this line of credit.
As of December 31, 2024, there was $3.4 million outstanding on this line of credit. We previously had a $6.0 million operating line of credit with Wells Fargo Bank, N.A. with pricing based on SOFR that matured on August 31, 2024. As of December 31, 2023, there was no outstanding balance on this line of credit.
FFO applicable to common shares and Units for the year ended December 31, 2023, decreased to $77.3 million compared to $79.9 million for the year ended December 31, 2022, a change of 3.3%, primarily due to $3.2 million in severance and transition expenses related to the departure of Mark Decker, former CEO, increased interest expense, loss on litigation settlement, and decreased NOI from dispositions, offset by increased NOI from same-store and non-same-store communities and $2.2 million in abandoned pursuit costs and technology implementation costs from the prior year that did not occur in the year ended December 31, 2023.
Interest and other income increased to $2.6 million in the year ended December 31, 2024, compared to $1.2 million in the same period of the prior year, primarily due to interest income on two real estate related notes receivable, offset by a decrease from interest received on escrow funds in 2023 that did not occur in 2024.
Financing Transactions. During the year ended December 31, 2023, we completed the following financing transactions: • Repurchased 216,000 common shares for total consideration of $11.5 million and an average of $53.44 per share. Outlook We intend to continue our focus on maximizing the financial performance of the communities in our existing portfolio.
We used the issuance proceeds to redeem all of the outstanding Series C preferred shares for $97.0 million. Outlook We intend to continue our focus on maximizing the financial performance of the communities in our existing portfolio.
Removed
Sold communities are included in “Dispositions” for the periods prior to the sale, which also includes non-multifamily properties and the non-multifamily components of mixed-use properties. Reconciliation of Operating Income to Net Operating Income (non-GAAP) The following table provides a reconciliation of operating income to NOI (non-GAAP), which is defined above.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−0 removed4 unchanged
Biggest changeAverage variable rates are based on rates in effect at the reporting date. 37 Table of Contents Future Principal Payments (in thousands, except percentages) Fair Debt 2024 2025 2026 2027 2028 Thereafter Total Value Fixed Rate $ 6,860 $ 36,290 $ 99,120 $ 48,666 $ 118,365 $ 580,689 $ 889,990 $ 787,743 Average Interest Rate (1) 3.59 % 3.61 % 3.60 % 3.57 % 3.58 % 3.71 % 3.61 % Variable Rate — $ 30,000 — $ — $ — — $ 30,000 $ 30,000 Average Interest Rate (1)(2) — 6.74 % — — — — 6.74 % (1) Interest rate is annualized.
Biggest changeFuture Principal Payments (in thousands, except percentages) Fair Debt 2025 2026 2027 2028 2029 Thereafter Total Value Fixed Rate $ 36,290 $ 102,809 $ 48,666 $ 118,321 $ 102,477 $ 510,701 $ 919,264 $ 803,700 Average Interest Rate (1) 3.62 % 3.60 % 3.58 % 3.59 % 3.56 % 3.68 % 3.60 % Variable Rate 3,359 — — $ 44,000 — — $ 47,359 $ 47,359 Average Interest Rate (1)(2) 6.56 % — — 5.81 % — — 5.86 % (1) Interest rate is annualized.
We estimate that an increase in 30-day SOFR of 100 basis points with constant risk spreads would result in a $300,000 reduction to our net income (loss) on an annual basis. We estimate that a decrease in 30-day SOFR of 100 basis points would increase our net income (loss) by a similar amount.
We estimate that an increase in 30-day SOFR of 100 basis points with constant risk spreads would result in a $474,000 reduction to our net income (loss) on an annual basis. We estimate that a decrease in 30-day SOFR of 100 basis points would increase our net income (loss) by a similar amount.
Our exposure to market risk is primarily related to fluctuations in the general level of interest rates on our current and future fixed and variable rate debt obligations. Our operating results are, therefore, affected by changes in interest rates, including SOFR. As of December 31, 2023, we had $30.0 million of variable-rate borrowings under our lines of credit.
Our exposure to market risk is primarily related to fluctuations in the general level of interest rates on our current and future fixed and variable rate debt obligations. Our operating results are, therefore, affected by changes in interest rates, including SOFR. As of December 31, 2024, we had $47.4 million of variable-rate borrowings under our lines of credit.
As of December 31, 2023 and 2022, all of our mortgage debt, $391.1 million and $299.4 million, respectively, was at fixed rates of interest with staggered maturities. As of December 31, 2023, the weighted average rate of interest on our mortgage debt was 4.05%, compared to 3.85% on December 31, 2022.
As of December 31, 2024 and 2023, all of our mortgage debt, $420.4 million and $392.3 million, respectively, was at fixed rates of interest with staggered maturities. As of December 31, 39 Table of Contents 2024, the weighted average rate of interest on our mortgage debt was 4.02%, compared to 4.05% on December 31, 2023.
Mortgage loan indebtedness, excluding the FMCF, increased by $91.7 million as of December 31, 2023, compared to December 31, 2022, primarily due to one new mortgage loan and the assumption of a mortgage loan in connection with a 2023 acquisition, offset by the payoff of mortgages.
Mortgage loan indebtedness, excluding net debt premiums and discounts and the FMCF, increased by $28.1 million as of December 31, 2024, compared to December 31, 2023, primarily due to the assumption of a mortgage loan in connection with a 2024 acquisition, offset by principal payments on mortgages.
Added
Average variable rates are based on rates in effect at the reporting date.

Other CSR 10-K year-over-year comparisons