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News

Centerspace Announces Financial and Operating Results for the Year Ended December 31, 2021 and Provides 2022 Financial Outlook; Dividend Increase

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MINNEAPOLIS, Feb. 28, 2022 /PRNewswire/ — Centerspace (NYSE: CSR) announced today its financial and operating results for the year ended December 31, 2021. The tables below show Net Income (Loss), Funds from Operations (“FFO”)1, and Core FFO1, all on a per share basis, for the year ended December 31, 2021; Same-Store Revenues, Expenses, and Net Operating Income (“NOI”)1 over comparable periods; and Same-Store Weighted Average Occupancy for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020 and the twelve months ended December 31, 2021 and 2020.

Three Months Ended December 31,

Twelve Months Ended December 31,

Per Share

2021

2020

2021

2020

Earnings (loss) per share – diluted

$                   (0.61)

$                   (0.46)

$                   (0.47)

$                   (0.15)

FFO – diluted

1.07

0.97

3.54

3.47

Core FFO – diluted

1.08

1.02

3.99

3.78

 

Year-Over-Year
Comparison

Sequential

Comparison

YTD

Comparison

Same-Store Results

4Q21 vs 4Q20

4Q21 vs. 3Q21

CY21 vs. CY20

Revenues

9.2%

4.1%

4.8%

Expenses

10.9%

0.9%

4.8%

Net Operating Income (“NOI”)

8.1%

6.4%

4.8%

 

Three months ended

Twelve months ended

Same-Store Results

December 31,
2021

September 30,
2021

December 31,
2020

December 31,
2021

December 31,
2020

Weighted Average Occupancy

93.4%

94.3%

94.8%

94.4%

94.7%

(1)

Net operating income, Funds from Operations, and Core FFO are non-GAAP financial measures.  For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to “Non-GAAP Financial Measures and Reconciliations” in the Supplemental Financial and Operating Data below.

Highlights for the Year Ended December 31, 2021

  • Net Loss was $(0.47) per diluted share for the year ended December 31, 2021, compared to Net Income of $(0.15) per diluted share for the year ended December 31, 2020;
  • Core FFO increased to $3.99 or 5.8% per diluted share compared to $3.78 for the year ended December 31, 2020;
  • Same-store revenue increased 4.8% driven by 5.1% growth in rental revenue and offset by a decrease of 0.3% in occupancy;
  • Same-store operating expenses increased 4.8% year-over-year with a increase of 3.7% in same-store controllable expenses, and a increase of 6.7% in same-store non-controllable expenses;
  • Same-store NOI growth of 4.8% for the year ended December 31, 2021;
  • Same-store NOI growth of 6.4% from the third quarter of 2021;
  • Continued to grow the portfolio through a strategic acquisition of 14 communities in Minneapolis, Minnesota and three communities in St. Cloud, Minnesota totaling 2,696 apartment homes for an aggregate purchase price of $359.9 million. Acquired two new apartment communities in Denver, Colorado consisting of 432 homes for an aggregate purchase price of $139.9 million;
  • Sold five apartment communities consisting of 589 apartment homes in Rochester, Minnesota for an aggregate sale price of $60.0 million;
  • Amended and expanded the Note Purchase Private Shelf Agreement to increase the aggregate amount under the agreement from $150.0 million to $225.0 million and issued $50.0 million of 2.7% unsecured Series C Notes due June 6, 2030;
  • Issued $125.0 million of unsecured notes with a weighted average interest rate of 2.6% and weighted average maturity of 10.5 years;
  • Improved and extended $250.0 million revolving credit facility with an accordion feature for up to $400.0 million which matures in September 2025; and
  • Continued to strengthen the balance sheet by issuing 1.8 million common shares at an average price of $86.13 per share for total consideration, net of commissions and issuance costs, of approximately $156.4 million in the year ended December 31, 2021.

Subsequent Events

Subsequent to December 31, 2021, Centerspace acquired a portfolio of three communities in the Minneapolis, Minnesota region totaling 267 apartment homes for an aggregate purchase price of $68.1 million. The company also acquired Noko Apartments in Minneapolis for an aggregate purchase price of $46.4 million. The company previously financed the construction and mezzanine loan.

On February 23, 2022 the company paid $3.3 million to terminate a $75.0 million interest rate swap and a $70.0 million forward swap.

Dividend Distributions

Centerspace's Board of Trustees announced a regular quarterly distribution of $0.73 per share/unit, payable on April 11, 2022, to common shareholders and unitholders of record at the close of business on March 31, 2022, which represents a $0.01 increase over the prior distribution.

The Board of Trustees also declared a distribution of $0.4140625 per share on the 6.625% Series C Cumulative Redeemable Preferred Shares (NYSE: CSR PRC), payable on March 31, 2022, to holders of record at the close of business on March 15, 2022. Series C preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.65625 per share. 

Balance Sheet

At December 31, 2021, Centerspace had $204.8 million of total liquidity on its balance sheet, including $173.5 million available on its lines of credit.

2022 Financial Overview

Centerspace is providing the following guidance for its 2022 performance.

2022 Calendar Year Financial Outlook

Range for 2022

2021 Actual

Low

High

Earnings per Share – diluted

$             (0.47)

$             (0.41)

$             (0.16)

FFO per Share – diluted

$              3.54

$              4.25

$              4.50

Core FFO per Share – diluted

$              3.99

$              4.33

$              4.57

Additional assumptions:

  • Same-store capital expenditures of $925 per home to $975 per home
  • Value-add expenditures of $21.0 million to $24.0 million
  • Investments of $114.5 million due to the January 2021 acquisitions of four communities in Minneapolis, Minnesota

FFO and Core FFO are non-GAAP financial measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, please refer to “2021 Financial Outlook” in the Supplemental Financial and Operating Data below.

Earnings Call

Live webcast and replay:  https://www.ir.centerspacehomes.com

Live Conference Call

Conference Call Replay

Tuesday, March 1, 2022 at 10:00 AM ET

Replay available until March 15, 2022

USA Toll Free Number

1-844-200-6205

USA Toll Free Number

1-866-813-9403

International Toll Free Number

1-929-526-1599

International Toll Free Number

44-204-525-0658

Canada Toll Free Number

1-833-950-0062

Canada Toll Free Number

1-226-828-7578

Conference Number

130830

Conference Number

848822

Supplemental Information

Supplemental Operating and Financial Data for the year ended December 31, 2021, is available in the Investors section on Centerspace's website at https://www.centerspacehomes.com or by calling Investor Relations at 701-837-7104. Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Financial and Operating Data, which accompanies this earnings release.

About Centerspace

Centerspace is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of December 31, 2021, Centerspace owned 79 apartment communities consisting of 14,441 homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Centerspace was named a Top Workplace for 2021 by the Minneapolis Star Tribune. For more information, please visit www.centerspacehomes.com

Forward-Looking Statements

Certain statements in this press release are based on the company's current expectations and assumptions, and are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Forward-looking statements are typically identified by the use of terms such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “assumes,” “may,” “projects,” “outlook,” “future,” and variations of such words and similar expressions. Forward-looking statements include the impact of a public health crisis, including the COVID-19 pandemic, and the governmental and third-party response to such a crisis, which may affect our key personnel, our tenants, and the costs of operating our assets; the impact of social distancing, shelter-in-place, travel restrictions, remote work requirements, and similar governmental and private measures taken to combat the spread of a public health crisis on our operations and our tenants. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements.  Although the company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond the company's control and could differ materially from actual results and performance. Such risks and uncertainties are detailed from time to time in filings with the SEC, including the “Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in the company's Annual Report on Form 10-K, in quarterly reports on Form 10-Q, and in other reports the company files with the SEC from time to time. The company assumes no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

Contact Information
Investor Relations
Emily Miller
Phone: 701-837-7104
E-mail: IR@centerspacehomes.com

Marketing & Media
Kelly Weber
Phone: 701-837-7104
E-mail: kweber@centerspacehomes.com

 

Common Share Data (NYSE: CSR)

Three Months Ended

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

High closing price

$                 111.26

$               105.42

$           79.71

$             73.42

$                  74.55

Low closing price

$                   96.58

$                 78.42

$           67.28

$             68.00

$                  65.79

Average closing price

$                 103.29

$                 94.10

$           71.99

$             71.37

$                  70.30

Closing price at end of quarter

$                 110.90

$                 94.50

$           78.90

$             68.00

$                  70.64

Common share distributions—annualized

$                     2.88

$                   2.88

$             2.80

$               2.80

$                    2.80

Closing price dividend yield – annualized

2.6%

3.1%

3.6%

4.1%

4.0%

Closing common shares outstanding (thousands)

15,016

14,281

14,045

13,220

13,027

Closing limited partnership units outstanding (thousands)

832

845

881

950

977

Closing Series E preferred units, as converted (thousands)

2,186

2,186

Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)

$            1,999,971

$          1,635,984

$     1,177,661

$         963,560

$              989,243

 

CENTERSPACE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share amounts)

Three Months Ended

Twelve months ended

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

12/31/2021

12/31/2020

REVENUE

$          57,988

$     50,413

$     46,656

$     46,648

$     45,540

$   201,705

$    177,994

EXPENSES

Property operating expenses, excluding real estate taxes

16,852

14,434

13,018

13,449

12,668

57,753

51,625

Real estate taxes

6,654

5,916

5,742

5,792

5,256

24,104

21,533

Property management expenses

2,697

2,203

2,085

1,767

1,460

8,752

5,801

Casualty loss

280

(10)

(27)

101

331

344

1,662

Depreciation/amortization

30,418

22,447

19,308

19,992

20,282

92,165

75,593

General and administrative expenses

4,231

4,279

3,797

3,906

3,733

16,213

13,440

TOTAL EXPENSES

$          61,132

$     49,269

$     43,923

$     45,007

$     43,730

$   199,331

$    169,654

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

678

26,840

17

27,518

25,503

Operating income (loss)

(2,466)

1,144

29,573

1,641

1,827

29,892

33,843

Interest expense

(7,456)

(7,302)

(7,089)

(7,231)

(6,903)

(29,078)

(27,525)

Interest and other income (loss)

1,117

(5,082)

619

431

404

(2,915)

(1,575)

Net income (loss)

$          (8,805)

$    (11,240)

$     23,103

$      (5,159)

$      (4,672)

$      (2,101)

$       4,743

Dividends to Series D preferred unitholders

(160)

(160)

(160)

(160)

(160)

(640)

(640)

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

1,793

1,930

(1,386)

469

460

2,806

212

Net (income) loss attributable to noncontrolling interests – consolidated real estate entities

(36)

(22)

(19)

(17)

(6)

(94)

126

Net income (loss) attributable to controlling interests

(7,208)

(9,492)

21,538

(4,867)

(4,378)

(29)

4,441

Dividends to preferred shareholders

(1,607)

(1,607)

(1,607)

(1,607)

(1,607)

(6,428)

(6,528)

Discount (premium) on redemption of preferred shares

297

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

$          (8,815)

$    (11,099)

$     19,931

$      (6,474)

$      (5,985)

$      (6,457)

$      (1,790)

Per Share Data – Basic

Net earnings (loss) per common share – basic

$            (0.61)

$        (0.79)

$         1.49

$        (0.49)

$        (0.46)

$        (0.47)

$        (0.15)

Per Share Data – Diluted

Net earnings (loss) per common share – diluted

$            (0.61)

$        (0.81)

$         1.48

$        (0.49)

$        (0.46)

$        (0.47)

$        (0.15)

 

CENTERSPACE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands)

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

ASSETS

Real estate investments

Property owned

$  2,271,170

$  2,203,606

$  1,838,837

$  1,883,407

$  1,812,557

Less accumulated depreciation

(443,592)

(426,926)

(407,400)

(408,014)

(399,249)

1,827,578

1,776,680

1,431,437

1,475,393

1,413,308

Mortgage loans receivable

43,276

42,160

37,457

30,107

24,661

Total real estate investments

1,870,854

1,818,840

1,468,894

1,505,500

1,437,969

Cash and cash equivalents

31,267

20,816

5,194

10,816

392

Restricted cash

7,358

2,376

8,444

1,610

6,918

Other assets

30,582

34,919

17,218

18,427

18,904

TOTAL ASSETS

$  1,940,061

$  1,876,951

$  1,499,750

$  1,536,353

$  1,464,183

LIABILITIES, MEZZANINE EQUITY, AND EQUITY

LIABILITIES

Accounts payable and accrued expenses

$       62,403

$       58,092

$       52,413

$       53,852

$       55,609

Revolving line of credit

76,000

57,000

87,000

181,544

152,871

Notes payable, net of loan costs

299,344

299,454

319,286

319,236

269,246

Mortgages payable, net of loan costs

480,703

489,140

287,143

293,709

297,074

TOTAL LIABILITIES

$     918,450

$     903,686

$     745,842

$     848,341

$     774,800

SERIES D PREFERRED UNITS

$       25,331

$       21,585

$       18,022

$       16,560

$       16,560

EQUITY

Series C Preferred Shares of Beneficial Interest

93,530

93,530

93,530

93,530

93,530

Common Shares of Beneficial Interest

1,157,255

1,092,130

1,033,940

980,453

968,263

Accumulated distributions in excess of net income

(474,318)

(454,691)

(433,310)

(443,409)

(427,681)

Accumulated other comprehensive income (loss)

(4,435)

(5,784)

(12,064)

(12,798)

(15,905)

Total shareholders' equity

$     772,032

$     725,185

$     682,096

$     617,776

$     618,207

Noncontrolling interests – Operating Partnership and Series E preferred units

223,600

225,850

53,133

53,007

53,930

Noncontrolling interests – consolidated real estate entities

648

645

657

669

686

TOTAL EQUITY

$     996,280

$     951,680

$     735,886

$     671,452

$     672,823

TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY

$  1,940,061

$  1,876,951

$  1,499,750

$  1,536,353

$  1,464,183

 

CENTERSPACE
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)

This release contains certain non-GAAP financial measures. The non-GAAP financial measures should not be considered a substitute for operating results determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The definitions and calculations of these non-GAAP financial measures, as calculated by the company may not be comparable to non-GAAP measures reported by other REITs that do not define each of the non-GAAP financial measures exactly as Centerspace does.

The company provides certain information on a same-store and non-same-store basis.  Same-store apartment communities are owned or in service for substantially all of the periods being compared, and, in the case of development properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, Centerspace determines the composition of the same-store pool for that year and adjusts the previous year, to evaluate full period-over-period operating comparisons for existing apartment communities and their contribution to net operating income. Measuring performance on a same-store basis allows investors to evaluate how a fixed pool of communities are performing year-over-year. Centerspace uses this measure to assess success in increasing NOI, renewing leases on existing residents, controlling operating costs, and making prudent capital improvements.

Reconciliation of Operating Income (Loss) to Net Operating Income

Net operating income, or NOI, is a non-GAAP financial measure which the company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation and amortization, financing costs, property management expenses, casualty losses, and general and administrative expenses.  NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance.

(dollars in thousands)

Three Months Ended

Sequential

Year-Over-Year

12/31/2021

9/30/2021

12/31/2020

$ Change

% Change

$ Change

% Change

Operating income (loss)

$      (2,466)

$       1,144

$       1,827

$   (3,610)

(315.6)%

$   (4,293)

(235.0)%

Adjustments:

Property management expenses

2,697

2,203

1,460

494

22.4%

1,237

84.7%

Casualty loss

280

(10)

331

290

(2,900.0)%

(51)

(15.4)%

Depreciation and amortization

30,418

22,447

20,282

7,971

35.5%

10,136

50.0%

General and administrative expenses

4,231

4,279

3,733

(48)

(1.1)%

498

13.3%

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

$         (678)

$           (17)

$      (678)

100.0%

$      (661)

3,888.2%

Net operating income

$      34,482

$      30,063

$      27,616

$     4,419

14.7%

$     6,866

24.9%

Revenue

Same-store

$      43,771

$      42,034

$      40,075

$     1,737

4.1%

$     3,696

9.2%

Non-same-store

13,407

7,214

3,105

6,193

85.8%

10,302

331.8%

Other

810

1,120

413

(310)

(27.7)%

397

96.1%

Dispositions

45

1,947

(45)

(100.0)%

(1,947)

(100.0)%

Total

57,988

50,413

45,540

7,575

15.0%

12,448

27.3%

Property operating expenses, including real estate taxes

Same-store

17,275

17,126

15,573

149

0.9%

1,702

10.9%

Non-same-store

5,914

2,940

1,157

2,974

101.2%

4,757

411.1%

Other

312

317

249

(5)

(1.6)%

63

25.3%

Dispositions

5

(33)

945

38

(115.2)%

(940)

(99.5)%

Total

23,506

20,350

17,924

3,156

15.5%

5,582

31.1%

Net operating income

Same-store

26,496

24,908

24,502

1,588

6.4%

1,994

8.1%

Non-same-store

7,493

4,274

1,948

3,219

75.3%

5,545

284.7%

Other

498

803

164

(305)

(38.0)%

334

203.7%

Dispositions

(5)

78

1,002

(83)

(106.4)%

(1,007)

(100.5)%

Total

$      34,482

$      30,063

$      27,616

$     4,419

14.7%

$     6,866

24.9%

 

(dollars in thousands)

Twelve Months Ended December 31,

2021

2020

$ Change

% Change

Operating income (loss)

$    29,892

$      33,843

$          (3,951)

(11.7)%

Adjustments:

Property management expenses

8,752

5,801

2,951

50.9%

Casualty loss

344

1,662

(1,318)

(79.3)%

Depreciation and amortization

92,165

75,593

16,572

21.9%

General and administrative expenses

16,213

13,440

2,773

20.6%

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

(27,518)

(25,503)

(2,015)

7.9%

Net operating income

$  119,848

$    104,836

$          15,012

14.3%

Revenue

Same-store

$  166,326

$    158,702

$            7,624

4.8%

Non-same-store

29,298

5,424

23,874

440.2%

Other

2,831

2,147

684

31.9%

Dispositions

3,250

11,721

(8,471)

(72.3)%

Total

201,705

177,994

23,711

13.3%

Property operating expenses, including real estate taxes

Same-store

67,306

64,204

3,102

4.8%

Non-same-store

11,790

2,152

9,638

447.9%

Other

1,120

1,008

112

11.1%

Dispositions

1,641

5,794

(4,153)

(71.7)%

Total

81,857

73,158

8,699

11.9%

Net operating income

Same-store

99,020

94,498

4,522

4.8%

Non-same-store

17,508

3,272

14,236

435.1%

Other

1,711

1,139

572

50.2%

Dispositions

1,609

5,927

(4,318)

(72.9)%

Total

$  119,848

$    104,836

$          15,012

14.3%

Reconciliation of Same-Store Controllable Expenses to Property Operating Expenses, Including Real Estate Taxes

Same-store controllable expenses exclude real estate taxes and insurance, in order to provide a measure of expenses that are within management's control, and is used for the purposes of budgeting, business planning, and performance evaluation. This is a non-GAAP financial measure and should not be considered an alternative to total expenses or total property operating expenses and real estate taxes.

(dollars in thousands)

Three Months Ended December 31,

Twelve Months Ended December 31,

2021

2020

$ Change

% Change

2021

2020

$ Change

% Change

Controllable expenses

On-site compensation (1)

$      4,419

$      4,412

$            7

0.2%

$    17,602

$    17,319

$        283

1.6%

Repairs and maintenance

2,725

2,037

688

33.8%

9,785

9,507

278

2.9%

Utilities

2,736

2,597

139

5.4%

10,975

10,286

689

6.7%

Administrative and marketing

942

781

161

20.6%

3,643

3,376

267

7.9%

Total

$    10,822

$      9,827

$        995

10.1%

$    42,005

$    40,488

$      1,517

3.7%

Non-controllable expenses

Real estate taxes

$      4,839

$      4,513

$        326

7.2%

$    19,503

$    19,026

$        477

2.5%

Insurance

1,614

1,233

381

30.9%

5,798

4,690

1,108

23.6%

Total

$      6,453

$      5,746

$        707

12.3%

$    25,301

$    23,716

$      1,585

6.7%

Property operating expenses, including real estate taxes – non-same-store

$      5,914

$      1,157

$      4,757

411.1%

$    11,790

$      2,152

$      9,638

447.9%

Property operating expenses, including real estate taxes – other

312

249

63

25.3%

1,120

1,008

112

11.1%

Property operating expenses, including real estate taxes – dispositions

5

945

(940)

(99.5)%

1,641

5,794

(4,153)

(71.7)%

Total property operating expenses, including real estate taxes

$    23,506

$    17,924

$      5,582

31.1%

$    81,857

$    73,158

$      8,699

11.9%

(1)

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

Reconciliation of Net Income (Loss) Available to Common Shareholders to Funds From Operations and Core Funds From Operations

Centerspace believes that FFO, which is a non-GAAP financial measurement used as a supplemental measure for equity real estate investment trusts, is helpful to investors in understanding operating performance, primarily because its calculation does not assume that the value of real estate assets diminishes predictably over time as implied by the historical cost convention of GAAP and the recording of depreciation.

Centerspace uses the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit defines FFO as net income or loss calculated in accordance with GAAP, excluding:

  • depreciation and amortization related to real estate;
  • gains and losses from the sale of certain real estate assets; and
  • impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

The exclusion in Nareit's definition of FFO of impairment write-downs and gains and losses from the sale of real estate assets helps to identify the operating results of the long-term assets that form the base of the company's investments, and assists management and investors in comparing those operating results between periods.

Due to the limitations of the Nareit FFO definition, Centerspace has made certain interpretations in applying the definition. The company believes that all such interpretations not specifically provided for in the Nareit definition are consistent with the definition. Nareit's FFO White Paper – 2018 Restatement clarified that impairment write-downs of land related to a REIT's main business are excluded from FFO, and a REIT has the option to exclude impairment write-downs of assets that are incidental to the main business.

While FFO is widely used by Centerspace as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO in the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders.

Core Funds from Operations (“Core FFO”), a non-GAAP measure, is FFO adjusted for non-routine items or items not considered core to business operations. By further adjusting for items that are not considered part of core business operations, the company believes that Core FFO provides investors with additional information to compare core operating and financial performance between periods. Core FFO should not be considered as an alternative to net income or as any other GAAP measurement of performance, but rather should be considered an additional supplemental measure. Core FFO also does not represent cash generated from operating activities in accordance with GAAP, nor is it indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders. Core FFO is a non-GAAP and non-standardized financial measure that may be calculated differently by other REITs and that should not be considered a substitute for operating results determined in accordance with GAAP.

(in thousands, except per share amounts)

Three Months Ended

Twelve Months Ended

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

12/31/2021

12/31/2020

Net (loss) income available to common shareholders

$     (8,815)

$   (11,099)

$    19,931

$     (6,474)

$      (5,985)

$      (6,457)

$      (1,790)

Adjustments:

Noncontrolling interests – Operating Partnership and Series E preferred units

(1,793)

(1,930)

1,386

(469)

(460)

(2,806)

(212)

Depreciation and amortization

30,418

22,447

19,308

19,992

20,282

92,165

75,593

Less depreciation – non real estate

(101)

(80)

(87)

(98)

(87)

(366)

(353)

Less depreciation – partially owned entities

(21)

(24)

(24)

(24)

(33)

(93)

(379)

Gain on sale of real estate

(678)

(26,840)

(17)

(27,518)

(25,503)

FFO applicable to common shares and Units

$    19,010

$      9,314

$    13,674

$    12,927

$      13,700

$      54,925

$      47,356

Adjustments to Core FFO:

 Casualty loss (recovery)

204

749

 Loss on extinguishment of debt

2

530

3

2

535

23

 Rebranding costs

402

402

 Technology implementation costs

535

625

447

413

2,020

 (Gain) loss on marketable securities

3,378

 (Discount) premium on redemption of preferred shares

(297)

 Commercial lease termination proceeds

(450)

(450)

 Acquisition related costs

90

140

230

 Interest rate swap termination, amortization, and mark-to-market

(411)

5,353

4,942

 Amortization of assumed debt

(26)

(27)

(53)

 Other miscellaneous items

(61)

(3)

(64)

Core FFO applicable to common shares and Units

$    19,139

$     15,482

$    14,124

$    13,340

$      14,308

$      62,085

$      51,611

FFO applicable to common shares and Units

$    19,010

$       9,314

$    13,674

$    12,927

$      13,700

$      54,925

$      47,356

Dividends to preferred unitholders

160

160

160

160

160

640

537

FFO applicable to common shares and Units – diluted

$    19,170

$       9,474

$    13,834

$    13,087

$      13,860

$      55,565

$      47,893

Core FFO applicable to common shares and Units

$    19,139

$     15,482

$    14,124

$    13,340

$      14,308

$      62,085

$      51,611

Dividends to preferred unitholders

160

160

160

160

160

640

537

Core FFO applicable to common shares and Units – diluted

$    19,299

$     15,642

$    14,284

$    13,500

$      14,468

$      62,725

$      52,148

Per  Share Data

Earnings (loss) per share and unit – diluted

$       (0.61)

$       (0.81)

$        1.48

$       (0.49)

$        (0.46)

$        (0.47)

$        (0.15)

FFO per share and unit – diluted

$        1.07

$        0.60

$        0.95

$        0.92

$         0.97

$         3.54

$         3.47

Core FFO per share and unit – diluted

$        1.08

$        0.98

$        0.98

$        0.95

$         1.02

$         3.99

$         3.78

Weighted average shares and units – diluted

17,868

15,922

14,514

14,282

14,222

15,704

13,835

Reconciliation of Net Income (Loss) Available to Common Shareholders to Adjusted EBITDA

Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain or loss on sale of real estate and other investments, impairment of real estate investments, gain or loss on extinguishment of debt, gain on litigation settlement, and gain/loss from involuntary conversion. Adjusted EBITDA is a non-GAAP financial measure and should not be considered a substitute for operating results determined in accordance with GAAP. The company considers Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, financing costs, or non-operating gains and losses.

(in thousands)

Three Months Ended

Twelve Months Ended

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

12/31/2021

12/31/2020

Net income (loss) attributable to controlling interests

$      (7,208)

$     (9,492)

$      21,538

$      (4,867)

$        (4,378)

$           (29)

$        4,441

Adjustments:

Dividends to preferred unitholders

160

160

160

160

160

640

640

Noncontrolling interests – Operating Partnership and Series E preferred units

(1,793)

(1,930)

1,386

(469)

(460)

(2,806)

(212)

Income (loss) before noncontrolling interests – Operating Partnership

(8,841)

(11,262)

23,084

(5,176)

(4,678)

(2,195)

4,869

Adjustments:

Interest expense

7,440

7,287

7,075

7,216

6,888

29,018

27,334

Loss on extinguishment of debt

2

530

3

2

535

23

Depreciation/amortization related to real estate investments

30,397

22,423

19,284

19,969

20,250

92,073

75,215

Casualty loss (recovery)

204

749

Interest income

(644)

(769)

(583)

(407)

(328)

(2,403)

(1,512)

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

(678)

(26,840)

(17)

(27,518)

(25,503)

Technology implementation costs

534

625

447

413

2,020

(Gain) loss on marketable securities

3,378

Commercial lease termination proceeds

(450)

(450)

Acquisition related costs

90

140

230

Interest rate swap termination and mark-to-market

(359)

5,361

5,002

Other miscellaneous items

(61)

(3)

(64)

Adjusted EBITDA

$      27,880

$    23,882

$      22,470

$      22,015

$       22,321

$      96,248

$      84,553

 

CENTERSPACE

DEBT ANALYSIS

(in thousands)

Debt Maturity Schedule

Annual Expirations

Future Maturities of Debt

Secured
Fixed

Debt

Unsecured
Fixed
Debt(1)

Unsecured
Variable
Debt

Total

Debt

% of

Total Debt

Weighted
Average Interest
Rate(2)

2022

$         22,429

$               —

$               —

$         22,429

2.6%

3.92%

2023

42,596

42,596

5.0%

4.02%

2024

2025

32,112

75,000

1,000

108,112

12.6%

3.18%

2026

53,487

53,487

6.2%

3.74%

Thereafter

333,160

300,000

633,160

73.6%

3.15%

Total debt

$       483,784

$       375,000

$          1,000

$       859,784

100.0%

3.26%

(1)

The line of credit was fixed through an interest rate swap with a $75.0 million notional as of December 31, 2021. The interest rate swap was terminated in February 2022.

(2)

Weighted average interest rate of debt that matures during the year, including the effect of interest rate swaps on the term loans and line of credit.

 

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

Debt Balances Outstanding

Secured fixed rate – other mortgages

$  284,934

$    293,547

$    288,363

$    295,001

$    298,445

Secured fixed rate – Fannie Mae credit facility

198,850

198,850

Unsecured fixed rate line of credit(1)

75,000

57,000

50,000

50,000

50,000

Unsecured variable rate line of credit

1,000

37,000

131,544

102,871

Unsecured term loans

145,000

145,000

145,000

Unsecured senior notes

300,000

300,000

175,000

175,000

125,000

Debt total

$  859,784

$    849,397

$    695,363

$    796,545

$    721,316

Quarterly Weighted Average Interest Rates

Other mortgages rate

3.81%

3.83%

3.90%

3.92%

3.93%

Fannie Mae Credit Facility rate

2.78%

2.78%

Lines of credit rate (rate with swap)

4.22%

2.79%

2.24%

2.18%

2.35%

Term loan rate (rate with swap)

4.19%

4.11%

4.18%

Senior notes rate

3.12%

3.12%

3.47%

3.47%

3.78%

Total debt

3.26%

3.23%

3.70%

3.37%

3.62%

(1)

The current rate on our line of credit was LIBOR plus 150 basis points. The LIBOR exposure on the line of credit as of December 31, 2021 was hedged using an interest rate swap with a notional of $75.0 million and a fixed rate of 2.81%. The interest rate swap was terminated in February 2022.

 

Debt Maturity by Quarter for the Next Two Years

Year

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Total

2022

$             —

$             —

$       22,429

$             —

$       22,429

2023

19,187

23,409

42,596

$       65,025

 

CENTERSPACE

CAPITAL ANALYSIS

(in thousands, except per share and unit amounts)

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

Equity Capitalization

Common shares outstanding

15,016

14,281

14,045

13,220

13,027

Operating partnership units outstanding

832

845

881

950

977

Series E preferred units (as converted)

2,186

2,186

Total common shares and units outstanding

18,034

17,312

14,926

14,170

14,004

Market price per common share (closing price at end of period)

$      110.90

$        94.50

$        78.90

$        68.00

$        70.64

Equity capitalization-common shares and units

$ 1,999,971

$ 1,635,984

$ 1,177,661

$    963,560

$    989,243

Recorded book value of preferred shares

$      93,530

$      93,530

$      93,530

$      93,530

$      93,530

Total equity capitalization

$ 2,093,501

$ 1,729,514

$ 1,271,191

$ 1,057,090

$ 1,082,773

Series D preferred units

$      25,331

$      21,585

$      18,022

$      16,560

16,560

Debt capitalization

Total debt

859,784

849,397

695,363

796,545

721,317

Total capitalization

$ 2,978,616

$ 2,600,496

$ 1,984,576

$ 1,870,195

$ 1,820,650

Total debt to total capitalization(1)

28.9%

33.1%

35.0%

43.1%

39.6%

(1)

Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet, market value of common shares and operating partnership units, and book value of Series C preferred shares and Series D preferred units outstanding at the end of the period.

 

Three Months Ended

Twelve Months Ended

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

12/31/2021

12/31/2020

Debt service coverage ratio(1)

        3.17 x

         2.75 x

        2.62 x

        2.53 x

        2.73 x

          2.77 x

          2.57 x

Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization

        2.68 x

         2.32 x

        2.21 x

        2.14 x

        2.28 x

          2.34 x

          2.13 x

Net debt/Adjusted EBITDA(2)

        7.43 x

         8.67 x

        7.68 x

        8.92 x

        8.07 x

          8.61 x

          8.53 x

Net debt and preferred equity/Adjusted EBITDA(2)

        8.50 x

         9.88 x

        8.92 x

       10.17 x

        9.31 x

          9.84 x

          9.83 x

Distribution Data

Common shares and units outstanding at record date

15,848

15,126

14,926

14,171

14,004

15,848

14,004

Total common distribution declared

$   11,411

$    10,890

$   10,448

$     9,919

$     9,803

$     42,669

$     38,538

Common distribution per share and unit

$       0.72

$        0.72

$       0.70

$       0.70

$       0.70

$         2.84

$         2.80

Payout ratio (Core FFO per diluted share and unit basis)(3)

66.7%

73.5%

71.4%

73.7%

68.6%

71.2%

74.1%

(1)

Debt service coverage ratio is computed by dividing Adjusted EBITDA by interest expense and principal amortization.

(2)

Net debt is the total debt balance less cash and cash equivalents and net tax deferred exchange proceeds (included within restricted cash). For the quarterly period presented, adjusted EBITDA is annualized. Net debt and adjusted EBITDA are non-GAAP measures and should not be considered a substitute for operating results determined in accordance with GAAP. Refer to the Adjusted EBITDA definition included within the Non-GAAP Financial Measures and Reconciliations section.

(3)

Payout ratio (Core FFO per diluted share and unit basis) is the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual Core FFO per diluted share and unit. This term is a non-GAAP measure and should not be considered a substitute for operating results determined in accordance with GAAP.

 

CENTERSPACE

SAME-STORE FOURTH QUARTER COMPARISONS

(dollars in thousands)

Homes
Included

Revenues

Expenses

NOI

Regions

Q42021

Q42020

% Change

Q42021

Q42020

% Change

Q42021

Q42020

% Change

Denver, CO

992

$           5,817

$           5,400

7.7%

$           1,990

$           1,634

21.8%

$           3,827

$           3,766

1.6%

Minneapolis, MN

2,355

11,709

10,604

10.4%

4,651

4,488

3.6%

7,058

6,116

15.4%

North Dakota

2,421

8,155

8,011

1.8%

3,273

3,070

6.6%

4,882

4,941

(1.2)%

Omaha, NE

1,370

4,222

3,891

8.5%

1,888

1,648

14.6%

2,334

2,243

4.1%

Rochester, MN

1,121

4,996

4,601

8.6%

2,174

1,860

16.9%

2,822

2,741

3.0%

St. Cloud, MN

1,192

4,576

3,656

25.2%

1,820

1,602

13.6%

2,756

2,054

34.2%

Other Mountain West(1)

1,221

4,296

3,912

9.8%

1,479

1,271

16.4%

2,817

2,641

6.7%

Same-Store Total

10,672

$         43,771

$         40,075

9.2%

$         17,275

$         15,573

10.9%

$         26,496

$         24,502

8.1%

 

% of NOI

Weighted Average Occupancy (2)

Average Monthly

Rental Rate (3)

Average Monthly

Revenue per Occupied Home (4)

Regions

Q42021

Q42020

Growth

Q42021

Q42020

% Change

Q42021

Q42020

% Change

Denver, CO

14.5%

93.6%

94.3%

(0.7)%

$           1,855

$           1,727

7.4%

$           2,089

$           1,924

8.6%

Minneapolis, MN

26.6%

92.8%

93.2%

(0.4)%

1,586

1,502

5.6%

1,786

1,611

10.9%

North Dakota

18.4%

95.3%

95.8%

(0.5)%

1,107

1,062

4.2%

1,178

1,151

2.3%

Omaha, NE

8.8%

93.9%

93.8%

0.1%

996

912

9.2%

1,094

1,010

8.3%

Rochester, MN

10.7%

91.7%

95.5%

(3.8)%

1,515

1,371

10.5%

1,620

1,429

13.4%

St. Cloud, MN

10.4%

91.9%

94.6%

(2.7)%

1,106

971

13.9%

1,392

1,080

28.9%

Other Mountain West(1)

10.6%

94.5%

98.1%

(3.6)%

1,133

981

15.5%

1,241

1,088

14.1%

Same-Store Total

100.0%

93.4%

94.8%

(1.4)%

$           1,314

$           1,215

8.1%

$           1,463

$           1,321

10.6%

(1)

Includes apartment communities in Billings, Montana and Rapid City, South Dakota.

(2)

Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rent. Scheduled rent represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant homes, delinquencies and concessions are not taken into account.  Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.

(3)

Average monthly rental rate is scheduled rent divided by the total number of apartment homes.

(4)

Average monthly revenue per occupied home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period.

 

CENTERSPACE

SAME-STORE SEQUENTIAL QUARTER COMPARISONS(1)

(dollars in thousands)

Homes
Included

Revenues

Expenses

NOI

Regions

Q42021

Q32021

% Change

Q42021

Q32021

% Change

Q42021

Q32021

% Change

Denver, CO

992

$           5,817

$           5,565

4.5%

$           1,990

$           1,899

4.8%

$           3,827

$           3,666

4.4%

Minneapolis, MN

2,355

11,709

11,361

3.1%

4,651

4,548

2.3%

7,058

6,813

3.6%

North Dakota

2,421

8,155

8,183

(0.3)%

3,273

3,378

(3.1)%

4,882

4,805

1.6%

Omaha, NE

1,370

4,222

4,166

1.3%

1,888

1,933

(2.3)%

2,334

2,233

4.5%

Rochester, MN

1,121

4,996

4,874

2.5%

2,174

1,924

13.0%

2,822

2,950

(4.3)%

St. Cloud, MN

1,192

4,576

3,683

24.2%

1,820

1,750

4.0%

2,756

1,933

42.6%

Other Mountain West

1,221

4,296

4,202

2.2%

1,479

1,694

(12.7)%

2,817

2,508

12.3%

Same-Store Total

10,672

$         43,771

$         42,034

4.1%

$         17,275

$         17,126

0.9%

$         26,496

$         24,908

6.4%

 

% of NOI

Weighted Average Occupancy

Average Monthly

Rental Rate

Average Monthly

Revenue per Occupied Home

Regions

Q42021

Q32021

Growth

Q42021

Q32021

% Change

Q42021

Q32021

% Change

Denver, CO

14.5%

93.6%

94.5%

(1.0)%

$           1,855

$           1,779

4.3%

$           2,089

$           1,978

5.6%

Minneapolis, MN

26.6%

92.8%

94.6%

(1.9)%

1,586

1,558

1.8%

1,786

1,699

5.1%

North Dakota

18.4%

95.3%

94.2%

1.2%

1,107

1,107

1,178

1,196

(1.5)%

Omaha, NE

8.8%

93.9%

94.6%

(0.7)%

996

962

3.5%

1,094

1,072

2.1%

Rochester, MN

10.7%

91.7%

93.2%

(1.6)%

1,515

1,459

3.8%

1,620

1,552

4.4%

St. Cloud, MN

10.4%

91.9%

91.5%

0.4%

1,106

1,063

4.0%

1,392

1,125

23.7%

Other Mountain West

10.6%

94.5%

96.6%

(2.2)%

1,133

1,082

4.7%

1,241

1,187

4.5%

Same-Store Total

100.0%

93.4%

94.3%

(1.0)%

$           1,314

$           1,280

2.7%

$           1,463

$           1,392

5.1%

(1)

Refer to footnotes on page S-13.

 

CENTERSPACE

SAME-STORE YEAR-TO-DATE COMPARISONS(1)

(dollars in thousands)

Homes
Included

Revenues

Expenses

NOI

Regions

2021

2020

% Change

2021

2020

% Change

2021

2020

% Change

Denver, CO

992

$         22,276

$         21,568

3.3%

$           7,592

$           6,968

9.0%

$         14,684

$         14,600

0.6%

Minneapolis, MN

2,355

44,073

42,628

3.4%

18,279

17,613

3.8%

25,794

25,015

3.1%

North Dakota

2,421

32,365

31,342

3.3%

13,121

12,861

2.0%

19,244

18,481

4.1%

Omaha, NE

1,370

16,451

15,427

6.6%

7,468

6,846

9.1%

8,983

8,581

4.7%

Rochester, MN

1,121

19,223

18,512

3.8%

8,021

7,782

3.1%

11,202

10,730

4.4%

St. Cloud, MN

1,192

15,548

14,362

8.3%

6,788

6,485

4.7%

8,760

7,877

11.2%

Other Mountain West

1,221

16,390

14,863

10.3%

6,037

5,649

6.9%

10,353

9,214

12.4%

Same-Store Total

10,672

$       166,326

$       158,702

4.8%

$         67,306

$         64,204

4.8%

$         99,020

$         94,498

4.8%

 

% of NOI

Weighted Average Occupancy

Average Monthly

Rental Rate

Average Monthly

Revenue per Occupied Home

Regions

2021

2020

Growth

2021

2020

% Change

2021

2020

% Change

Denver, CO

14.9%

94.2%

93.8%

0.4%

$           1,769

$           1,761

0.5%

$           1,987

$           1,932

2.8%

Minneapolis, MN

26.0%

93.6%

93.6%

—%

1,537

1,497

2.7%

1,666

1,611

3.4%

North Dakota

19.4%

95.4%

95.9%

(0.5)%

1,088

1,049

3.7%

1,168

1,125

3.7%

Omaha, NE

9.1%

94.7%

94.2%

0.5%

949

905

4.8%

1,056

996

6.1%

Rochester, MN

11.3%

93.7%

95.5%

(1.8)%

1,439

1,378

4.2%

1,526

1,438

5.6%

St. Cloud, MN

8.8%

92.6%

94.4%

(1.8)%

1,036

958

8.2%

1,174

1,064

10.0%

Other Mountain West

10.5%

96.7%

96.5%

0.2%

1,054

962

9.5%

1,157

1,052

10.1%

Same-Store Total

100.0%

94.4%

94.7%

(0.3)%

$           1,260

$           1,210

4.1%

$           1,376

$           1,308

5.1%

(1)

Refer to footnotes on page S-13.

 

CENTERSPACE

PORTFOLIO SUMMARY (1)

Three Months Ended

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

Number of Apartment Homes at Period End

Same-Store

10,672

10,676

10,676

11,265

10,567

Non-Same-Store

3,769

3,599

903

903

1,343

All Communities

14,441

14,275

11,579

12,168

11,910

Average Monthly Rental Rate(2)

Same-Store

$         1,314

$      1,279

$      1,233

$      1,200

$      1,177

Non-Same-Store

1,225

1,506

1,617

1,584

1,599

All Communities

$         1,291

$      1,293

$      1,263

$      1,229

$      1,225

Average Monthly Revenue per Occupied Apartment Home(3)

Same-Store

$         1,463

$      1,392

$      1,333

$      1,302

$      1,282

Non-Same-Store

1,306

1,606

1,739

1,705

1,708

All Communities

$         1,423

$      1,397

$      1,365

$      1,332

$      1,330

Weighted Average Occupancy(4)

Same-Store

93.4%

94.3%

94.9%

94.9%

95.0%

Non-Same-Store

94.7%

95.1%

94.2%

91.8%

92.3%

All Communities

93.7%

94.4%

94.8%

94.6%

94.6%

Operating Expenses as a % of Scheduled Rent

Same-Store

39.5%

41.8%

41.9%

42.9%

41.2%

Non-Same-Store

44.1%

39.9%

32.9%

34.9%

35.3%

All Communities

40.6%

41.6%

41.0%

42.1%

40.3%

Capital Expenditures

Total Capital Expenditures per Apartment Home – Same-Store

$            369

$        255

$        159

$        131

$        326

(1)

Previously reported amounts are not revised for changes in the composition of the same-store properties pool.

(2)

Average monthly rental rate is scheduled rent divided by the total number of apartment homes. Scheduled rent represents the value of all apartment homes, with occupied apartment homes valued at contractual rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant apartment homes, delinquencies and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes.

(3)

Average monthly revenue per occupied apartment home is defined as total rental revenues divided by the weighted average occupied apartment homes for the period.

(4)

Weighted average occupancy is the percentage resulting from dividing actual rental revenue by scheduled rent. The company believes that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and calculation of weighted average occupancy may not be comparable to that disclosed by other real estate companies.

 

CENTERSPACE

CAPITAL EXPENDITURES

(dollars in thousands, except per home amounts)

Three Months Ended

Twelve Months Ended

12/31/2021

12/31/2020

12/31/2021

12/31/2020

Total Same-Store Apartment Homes

10,672

10,672

10,672

10,672

Building – Exterior

$              997

$         1,561

$         3,131

$         3,053

Building – Interior

1,325

29

1,560

230

Mechanical, Electrical, & Plumbing

274

427

826

1,900

Furniture & Equipment

82

118

163

343

Landscaping & Grounds

347

267

712

1,446

Turnover

909

388

3,281

2,940

 Capital Expenditures – Same-Store

$            3,934

$         2,790

$         9,673

$         9,912

 Capital Expenditures per Apartment Home – Same-Store

$               369

$            261

$            906

$            929

Value Add

$            4,356

$         3,483

$       18,366

$       13,762

Total Capital Spend – Same-Store

$            8,290

$         6,273

$       28,039

$       23,674

Total Capital Spend per Apartment Home – Same Store

$               777

$            588

$         2,627

$         2,218

All Properties – Weighted Average Homes

14,326

11,322

12,489

10,982

 Capital Expenditures

$            4,337

$         2,822

$       10,278

$         9,954

 Capital Expenditures per Apartment Home

$               303

$            249

$            823

$            906

 Value Add

4,356

3,483

18,378

13,762

 Acquisition Capital

1,523

$            302

2,818

1,567

 Total Capital Spend

$          10,216

$         6,607

$       31,474

$       25,283

 Total Capital Spend per Apartment Home

$               713

$            584

$         2,520

$         2,302

Value Add Capital Expenditures

Interior – Units

 Same-Store

$            1,941

$         1,171

$       11,340

$         5,752

 Non-Same-Store

8

 Total Interior Units

$            1,941

$         1,171

$       11,348

$         5,752

Common Areas and Exteriors

 Same-Store

$            2,415

$         2,312

$         7,027

$         8,009

 Non-Same-Store

3

 Total Common Areas and Exteriors

$            2,415

$         2,312

$         7,030

$         8,009

Total Value-Add Capital Expenditures

 Same-Store

$            4,356

$         3,483

$       18,367

$       13,761

 Non-Same-Store

11

 Total Portfolio Value-Add

$            4,356

$         3,483

$       18,378

$       13,761

 

CENTERSPACE

2022 Financial Outlook

(in thousands, except per share amounts)

Centerspace is providing guidance for 2022.

12 Months Ended

2022 Full-Year Guidance Range

December 31, 2021

Low

High

Actual

Amount

Amount

Same-store growth (1)

Revenue

$                          179,348

6.00%

8.00%

Controllable expenses

$                            44,693

3.75%

5.25%

Non-controllable expenses

$                            27,317

3.00%

4.50%

Total Expenses

$                            72,010

3.50%

5.00%

Same-store NOI (1)

$                          107,338

8.00%

10.00%

Components of NOI

Same-store NOI (1)

$                          107,338

$       115,600

$       118,100

Non-same-store NOI (1)

$                              9,190

$         30,800

$         31,300

Other Commercial NOI

$                              1,475

$           1,300

$           1,400

Other Sold NOI

$                              1,845

Total NOI

$                          119,848

$       147,700

$       150,800

Accretion from investments and capital market activity, excluding impact from change in share count

$                                   —

Interest expense

$                           (29,078)

(32,200)

(31,700)

Preferred dividends

$                             (6,428)

(6,400)

(6,400)

Recurring income and expenses

Interest and other income (loss)

$                             (3,008)

660

700

General and administrative and property management

$                           (24,965)

(27,800)

(27,100)

Casualty losses

$                                (344)

(2,000)

(1,700)

Non-real estate depreciation and amortization

$                                (366)

(430)

(390)

Non-controlling interest

$                                  (94)

(70)

(90)

Total recurring income and expenses

$                           (28,777)

(29,640)

(28,580)

FFO

$                            55,565

$         79,460

$         84,120

FFO per diluted share

$                                3.54

$             4.25

$             4.50

Non-core income and expenses

Casualty loss

$                                   —

$              600

$              500

Technology implementation costs

2,020

990

890

Interest rate swap termination, amortization, and mark-to-market

4,942

Other miscellaneous items

198

Total non-core income and expenses

$                              7,160

$           1,590

$           1,390

Core FFO

$                            62,725

$         81,050

$         85,510

Core FFO per diluted share

$                                3.99

$             4.33

$             4.57

EPS – Diluted

$                               (0.47)

$           (0.41)

$            (0.16)

Weighted average shares outstanding – diluted

15,704

18,700

18,700

(1)

Amounts for the year ended December 31, 2021 reflect the 2022 same-store pool.

Additional assumptions:

  • Same-store capital expenditures of $925 per home to $975 per home
  • Value-add expenditures of $21.0 million to $24.0 million
  • Investments of $114.5 million due to the January 2022 acquisitions of four communities in the Minneapolis, Minnesota region

Reconciliation of Net Income (Loss) Available to Common Shareholders to FFO and Core FFO

The following table presents reconciliations of Net income (loss) available to common shareholders to FFO and Core FFO, which are non-GAAP financial measures described in greater detail under “Non-GAAP Financial Measures and Reconciliations.” They should not be considered as alternatives to net income or any other GAAP measurement of performance, but rather should be considered as an additional, supplemental measure. FFO and Core FFO also do not represent cash generated from operating activities in accordance with GAAP, nor are they indicative of funds available to fund all cash needs, including the ability to service indebtedness or make distributions to shareholders. The outlook and projections provided below are based on current expectations and are forward-looking.

Outlook

12 Months Ended

12 Months Ended

December 31, 2021

December 31, 2022

Amount

Low

High

Net income (loss) available to common shareholders

$                    (6,457)

$                  282

$                4,922

Noncontrolling interests – Operating Partnership and Series E preferred units

(2,806)

(7,885)

(7,885)

Depreciation and amortization

92,165

86,923

86,923

Less depreciation – non real estate

(366)

(430)

(390)

Less depreciation – partially owned entities

(93)

(70)

(90)

(Gain) loss on sale of real estate

(27,518)

Dividends to preferred unitholders

$                        640

$                  640

$                  640

FFO applicable to common shares and Units

$                   55,565

$             79,460

$             84,120

Adjustments to Core FFO:

Casualty loss write off

600

500

Loss on extinguishment of debt

535

Technology implementation costs

2,020

990

890

Commercial lease termination proceeds

(450)

Acquisition related costs

230

Interest rate swap termination,  amortization, and mark-to-market

4,942

Other miscellaneous items

(117)

Core FFO applicable to common shares and Units

$                   62,725

$             81,050

$              85,510

Earnings per share – diluted

$                      (0.47)

$                (0.41)

$                (0.16)

FFO per share – diluted

$                       3.54

$                 4.25

$                 4.50

Core FFO per share – diluted

$                       3.99

$                 4.33

$                 4.57

Reconciliation of Operating Income to Net Operating Income

Net operating income, or NOI, is a non-GAAP financial measure which the company defines as total real estate revenues less property operating expenses, including real estate taxes. Centerspace believes that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expenses. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance. 

Outlook

12 Months Ended

12 Months Ended

December 31, 2021

December 31, 2022

Actual

Low

High

Operating income

$                     29,892

$                30,977

$                35,077

Adjustments:

General and administrative and property management expenses

24,965

27,800

27,100

Casualty loss

344

2,000

1,700

Depreciation and amortization

92,165

86,923

86,923

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

(27,518)

Net operating income

$                   119,848

$              147,700

$              150,800

 

(PRNewsfoto/Centerspace)

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/centerspace-announces-financial-and-operating-results-for-the-year-ended-december-31-2021-and-provides-2022-financial-outlook-dividend-increase-301491971.html

SOURCE Centerspace

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