8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 28, 2022

CENTERSPACE

(Exact name of Registrant as specified in its charter)

North Dakota	001-35624	45-0311232
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

3100 10th Street SW, Post Office Box 1988, Minot, ND 58702-1988

(Address of principal executive offices) (Zip code)

(701) 837-4738

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐    Written communications pursuant to Rule 425 under the Securities Act

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest, no par value	CSR	New York Stock Exchange
Series C Cumulative Redeemable Preferred Shares	CSR -PRC	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

Centerspace (the "Company") issued an earnings release on February 28, 2022, announcing certain financial and operational results for the year ended December 31, 2021. A copy of the press release is furnished as Exhibit 99.1 and incorporated herein by reference.

The information in this Item 2.02 and Item 9.01, including the press release furnished as Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01    Financial Statements and Exhibits

(d)Exhibits

Exhibit
Number	Description
99.1	Earnings Release and Supplemental Operating and Financial Data, dated February 28, 2022.
104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL Document.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Centerspace
	By	/s/ Mark O. Decker, Jr.
		Mark O. Decker, Jr.
Date: February 28, 2022		President and Chief Executive Officer

EX-99.1

Exhibit 99.1

Earnings Release

Centerspace Announces Financial and Operating Results for the Year Ended

December 31, 2021 and Provides 2022 Financial Outlook; Dividend Increase

MINNEAPOLIS, MN, February 28, 2022 – 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;

1

•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

2

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

3

Supplemental Financial and Operating Data

Table of Contents

December 31, 2021

	Page
Common Share Data	S-1
Key Financial Data
Condensed Consolidated Statements of Operations	S-2
Condensed Consolidated Balance Sheets	S-3
Non-GAAP Financial Measures and Reconciliations
Net Operating Income Detail	S-4
Same-Store Controllable Expenses	S-7
Funds From Operations and Core Funds From Operations	S-7
Adjusted EBITDA	S-10
Debt and Capital Analysis
Debt Analysis	S-11
Capital Analysis	S-12
Portfolio Analysis
Same-Store Comparison	S-13
Portfolio Summary	S-16
Same-Store Capital Expenditures	S-17
2022 Financial Outlook	S-18

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

S-1

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)

S-2

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

S-3

CENTERSPACE

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (unaudited)

This release contains certain non-GAAP financial measures. The non-GAAP financial measures should not be considered a substitute for operating results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The definitions and calculations of these non-GAAP financial measures, as calculated by 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.

S-4

	(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	%

S-5

	(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	%

S-6

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.

S-7

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.

S-8

	(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

S-9

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

S-10

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

S-11

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.

S-12

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.

S-13

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.

S-14

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.

S-15

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.

S-16

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

S-17

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

S-18

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

S-19

XML

Cover Page Cover Page	Feb. 28, 2022
Entity Information [Line Items]
Document Type	8-K
Document Period End Date	Feb. 28, 2022
Entity Registrant Name	CENTERSPACE
Entity Incorporation, State or Country Code	ND
Entity File Number	001-35624
Entity Tax Identification Number	45-0311232
Entity Address, Address Line One	3100 10th Street SW
Entity Address, Address Line Two	Post Office Box 1988
Entity Address, City or Town	Minot
Entity Address, State or Province	ND
Entity Address, Postal Zip Code	58702
City Area Code	701
Local Phone Number	837-4738
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000798359
Amendment Flag	false
Common Shares
Entity Information [Line Items]
Title of 12(b) Security	Common Shares of Beneficial Interest, no par value
Trading Symbol	CSR
Security Exchange Name	NYSE
Series C Cumulative Redeemable Preferred Shares
Entity Information [Line Items]
Title of 12(b) Security	Series C Cumulative Redeemable Preferred Shares
Trading Symbol	CSR -PRC
Security Exchange Name	NYSE