Investor Relations

Press Release
 

Centerspace Announces Financial and Operating Results for the Year Ended December 31, 2020 and Provides 2021 Financial Outlook

Company Release -
02/22/2021

MINNEAPOLIS, Feb. 22, 2021 /PRNewswire/ -- Centerspace (NYSE: CSR) announced today its financial and operating results for the year ended December 31, 2020. 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, 2020; 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, 2020, September 30, 2020, and December 31, 2019 and the twelve months ended December 31, 2020 and 2019.



Three Months Ended December 31,


Twelve Months Ended December 31,

Per Share


2020


2019


2020


2019

Earnings (loss) per share - diluted


$

(0.46)



$

3.95



$

(0.15)



$

6.00


FFO - diluted


0.97



0.90



3.47



4.05


Core FFO - diluted


1.02



0.96



3.78



3.72


 



Year-Over-Year
Comparison


Sequential
Comparison


YTD
Comparison

Same-Store Results


4Q20 vs 4Q19


4Q20 vs. 3Q20


CY20 vs. CY19

Revenues


2.3

%


1.4

%


2.1

%

Expenses


(0.4)

%


(5.1)

%


2.6

%

Net Operating Income ("NOI")


4.2

%


6.3

%


1.8

%

 



Three months ended


Twelve months ended

Same-Store Results


December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Weighted Average Occupancy


95.0

%


94.4

%


94.0

%


94.8

%


94.4

%



















(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, 2020

  • Rebranded the Company as Centerspace in December 2020 to reflect both the transformation of the company and its vision for the future;
  • Net Loss was $(0.15) per diluted share for the year ended December 31, 2020, compared to Net Income of $6.00 per diluted share for the year ended December 31, 2019;
  • Core FFO increased to $3.78 per diluted share compared to $3.72 for the year ended December 31, 2019;
  • Total collections for the year ended December 31, 2020 were 99.1% of expected residential revenue compared to 99.6% for the year ended December 31, 2019 while total collections for the quarter ended December 31, 2020 were 98.6% compared to 99.7% for the same period of 2019;
  • Same-store revenue increased 2.1% driven by 1.7% growth in rental revenue and 0.4% increase in occupancy;
  • Same-store operating expenses increased 2.6% year-over-year with a decline of 2.9% in same-store controllable expenses, offset by a increase of 13.6% in same-store non-controllable expenses;
  • Same-store NOI growth of 1.8% for the year ended December 31, 2020;
  • Acquired two new apartment communities in key growth markets of Minneapolis and Denver in the first and third quarter of 2020 consisting of 647 homes for an aggregate purchase price of $191.0 million;
  • Funded $18.5 million of mezzanine/construction loans;
  • Acquired the remaining noncontrolling interest in 71 France in the first quarter of 2020;
  • Sold four apartment communities consisting of 690 homes in Grand Forks, North Dakota for an aggregate sale price of $42.5 million in the third quarter of 2020;
  • Announced Nashville as one of our target markets in June 2020;
  • Maintained an annual dividend of $2.80 per share to common shareholders and unitholders;
  • Continued to strengthen the balance sheet by issuing 829,000 common shares at an average price of $71.39 per share for total consideration, net of commissions and issuance costs, of approximately $59.2 million in the year ended December 31, 2020; and
  • Repurchased and retired approximately 237,000 of our 6.625% Series C preferred shares for an aggregate cost of $5.6 million or an average share price of $23.75.

Subsequent Events

Subsequent to December 31, 2020, Centerspace acquired Union Pointe Apartment Homes in Longmont, Colorado for an aggregate purchase price of $76.9 million. The company also issued $50.0 million of 2.7% unsecured Series C notes, due June 6, 2030.  In concert with this issuance, Centerspace amended and expanded its Note Purchase Private Shelf Agreement (the "Agreement") with Prudential to increase the aggregate amount available under the Agreement from $150.0 million to $225.0 million. After the issuance of Series C notes, the company has $50.0 million remaining under the Agreement, which is excluded for purposes of reporting liquidity.

Balance Sheet

At December 31, 2020, Centerspace had $97.5 million of total liquidity on its balance sheet, including $97.1 million available on its lines of credit.

2021 Financial Overview

Centerspace is providing the following guidance for its 2021 calendar year performance.

2021 Calendar Year Financial Outlook




Range for 2021


2020 Actual


Low


High

Earnings per Share - diluted

$

(0.15)



$

(0.18)



$

0.45


FFO per Share - diluted

$

3.47



$

3.17



$

3.52


Core FFO per Share - diluted

$

3.78



$

3.29



$

3.62


Additional assumptions:

  • Same-store capital expenditures of $912 per home to $1,012 per home
  • Value-add expenditures of $15.0 million to $20.0 million
  • Investments of $145.0 million to $170.0 million, which includes the January 2021 acquisition of Union Pointe in Longmont, Colorado
  • Dispositions of $55.0 million to $75.0 million
  • Proceeds of $50.0 million to $70.0 million from equity issuance

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.

COVID-19 Developments

The COVID-19 pandemic, including the associated economic disruptions, has continued to impact business and operations since March 2020. The company continues to prioritize the health and well-being of its residents, team members, and the communities it serves. 

A discussion of the ongoing and potential effects of the COVID-19 pandemic on financial condition, results of operations, and cash flows can be found in "Management's Discussion and Analysis of Financial Conditions and Results of Operations" presented in the company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 22, 2021. For a more detailed description of the risks and uncertainties affecting business, see the risk factors presented in Item 1A in the company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 22, 2021.

Upcoming Events

Centerspace is scheduled to participate in the Raymond James & Associates' 42nd Annual Institutional Investors Conference, which will be held virtually on March 1-3, 2021.

Earnings Call

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




Live Conference Call


Conference Call Replay

Tuesday, February 23, 2021 at 10:00 AM ET


Replay available until March 9, 2021

USA Toll Free Number

1-877-509-9785


USA Toll Free Number

1-877-344-7529

International Toll Free Number

1-412-902-4132


International Toll Free Number

1-412-317-0088

Canada Toll Free Number

1-855-669-9657


Canada Toll Free Number

1-855-669-9658




Conference Number

10145476

Supplemental Information

Supplemental Operating and Financial Data for the year ended December 31, 2020, 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, 2020, Centerspace owned 67 apartment communities consisting of 11,910 homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Centerspace was named a Top Workplace for 2020 by the Minneapolis Star Tribune. For more information, please visit www.centerspacehomes.com

Forward-Looking Statements

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

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

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

 

Common Share Data (NYSE: CSR)




Three Months Ended



December 31, 2020


September 30, 2020


June 30, 2020


March 31, 2020


December 31, 2019

High closing price


$

74.55



$

73.53



$

76.82



$

84.68



$

78.91


Low closing price


$

65.79



$

61.87



$

44.36



$

52.55



$

71.74


Average closing price


$

70.30



$

70.15



$

63.91



$

71.62



$

74.67


Closing price at end of quarter


$

70.64



$

65.17



$

70.49



$

55.00



$

72.50


Common share distributions—annualized


$

2.80



$

2.80



$

2.80



$

2.80



$

2.80


Closing price dividend yield - annualized


4.0

%


4.3

%


4.0

%


5.1

%


3.9

%

Closing common shares outstanding (thousands)


13,027



12,976



12,827



12,164



12,099


Closing limited partnership units outstanding (thousands)


977



1,018



1,022



1,044



1,058


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


$

989,243



$

911,989



$

976,216



$

726,440



$

953,883


 

CENTERSPACE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share amounts)




Three Months Ended



Twelve months ended



12/31/2020


9/30/2020


6/30/2020


3/31/2020


12/31/2019



12/31/2020


12/31/2019

REVENUE


$

45,540



$

44,138



$

43,910



$

44,406



$

45,777




$

177,994



$

185,755


EXPENSES
















Property operating expenses, excluding real estate taxes


12,668



13,129



12,360



13,468



14,018




51,625



57,249


Real estate taxes


5,256



5,402



5,410



5,465



4,835




21,533



21,066


Property management expenses


1,460



1,442



1,345



1,554



1,634




5,801



6,186


Casualty loss


331



91



913



327



205




1,662



1,116


Depreciation/amortization


20,282



18,995



18,156



18,160



18,972




75,593



74,271


General and administrative expenses


3,733



3,077



3,202



3,428



3,647




13,440



14,450


TOTAL EXPENSES


$

43,730



$

42,136



$

41,386



$

42,402



$

43,311




$

169,654



$

174,338


Operating income (loss)


1,810



2,002



2,524



2,004



2,466




8,340



11,417


Interest expense


(6,903)



(6,771)



(6,940)



(6,911)



(7,357)




(27,525)



(30,537)


Loss on extinguishment of debt


(2)



(4)



(17)





(864)




(23)



(2,360)


Interest and other income (loss)


406



281



538



(2,777)



702




(1,552)



2,092


Income (loss) before gain (loss) on sale of real estate and other investments, and  gain (loss) on litigation settlement


(4,689)



(4,492)



(3,895)



(7,684)



(5,053)




(20,760)



(19,388)


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


17



25,676



(190)





57,850




25,503



97,624


Gain (loss) on litigation settlement















6,586


Net income (loss)


$

(4,672)



$

21,184



$

(4,085)



$

(7,684)



$

52,797




$

4,743



$

84,822


Dividends to preferred unitholders


(160)



(160)



(160)



(160)



(160)




(640)



(537)


Net (income) loss attributable to noncontrolling interest – Operating Partnership


460



(1,387)



447



692



(4,202)




212



(6,752)


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


(6)



(8)



(5)



145



223




126



1,136


Net income (loss) attributable to controlling interests


(4,378)



19,629



(3,803)



(7,007)



48,658




4,441



78,669


Dividends to preferred shareholders


(1,607)



(1,607)



(1,609)



(1,705)



(1,705)




(6,528)



(6,821)


Discount (premium) on redemption of preferred shares




(1)



25



273






297




NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS


$

(5,985)



$

18,021



$

(5,387)



$

(8,439)



$

46,953




$

(1,790)



$

71,848


















Per Share Data - Basic
















Net earnings (loss) per common share – basic


$

(0.46)



$

1.40



$

(0.44)



$

(0.69)



$

3.95




$

(0.15)



$

6.06


















Per Share Data - Diluted
















Net earnings (loss) per common share – diluted


$

(0.46)



$

1.38



$

(0.44)



$

(0.67)



$

3.89




$

(0.15)



$

6.00


 

CENTERSPACE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands)




12/31/2020


9/30/2020


6/30/2020


3/31/2020


12/31/2019

ASSETS











Real estate investments











Property owned


$

1,812,557



$

1,805,390



$

1,694,033



$

1,687,436



$

1,643,078


Less accumulated depreciation


(399,249)



(380,392)



(383,917)



(366,307)



(349,122)




1,413,308



1,424,998



1,310,116



1,321,129



1,293,956


Unimproved land








1,376



1,376


Mortgage loans receivable


24,661



17,986



10,961



16,775



16,140


Total real estate investments


1,437,969



1,442,984



1,321,077



1,339,280



1,311,472


Cash and cash equivalents


392



16,804



52,714



26,338



26,579


Restricted cash


6,918



2,199



2,535



2,344



19,538


Other assets


18,904



16,947



16,484



21,124



34,829


TOTAL ASSETS


$

1,464,183



$

1,478,934



$

1,392,810



$

1,389,086



$

1,392,418













LIABILITIES, MEZZANINE EQUITY, AND EQUITY











LIABILITIES











Accounts payable and accrued expenses


$

55,609



$

58,596



$

54,883



$

52,337



$

47,155


Revolving line of credit


152,871



135,000



63,000



83,000



50,079


Notes payable, net of loan costs


269,246



269,202



269,155



269,106



269,058


Mortgages payable, net of loan costs


297,074



313,065



323,705



328,367



329,664


TOTAL LIABILITIES


$

774,800



$

775,863



$

710,743



$

732,810



$

695,956













SERIES D PREFERRED UNITS


$

16,560



$

16,560



$

16,560



$

16,560



$

16,560


EQUITY











Series C Preferred Shares of Beneficial Interest


93,530



93,530



93,579



96,046



99,456


Common Shares of Beneficial Interest


968,263



968,436



958,292



912,653



917,400


Accumulated distributions in excess of net income


(427,681)



(412,577)



(421,515)



(407,150)



(390,196)


Accumulated other comprehensive income (loss)


(15,905)



(17,256)



(18,139)



(17,360)



(7,607)


Total shareholders' equity


$

618,207



$

632,133



$

612,217



$

584,189



$

619,053


Noncontrolling interests – Operating Partnership


53,930



53,669



52,558



54,777



55,284


Noncontrolling interests – consolidated real estate entities


686



709



732



750



5,565


TOTAL EQUITY


$

672,823



$

686,511



$

665,507



$

639,716



$

679,902


TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY


$

1,464,183



$

1,478,934



$

1,392,810



$

1,389,086



$

1,392,418



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


12/31/2020


09/30/2020


12/31/2019



$ Change


% Change


$ Change


% Change
















Operating income (loss)

$

1,810



$

2,002



$

2,466




$

(192)



(9.6)

%


$

(656)



(26.6)

%

Adjustments:















Property management expenses

1,460



1,442



1,634




18



1.2

%


(174)



(10.6)

%

Casualty loss

331



91



205




240



263.7

%


126



61.5

%

Depreciation and amortization

20,282



18,995



18,972




1,287



6.8

%


1,310



6.9

%

General and administrative expenses

3,733



3,077



3,647




656



21.3

%


86



2.4

%

Net operating income

$

27,616



$

25,607



$

26,924




$

2,009



7.8

%


$

692



2.6

%
















Revenue















Same-store

$

38,582



$

38,043



$

37,718




$

539



1.4

%


$

864



2.3

%

Non-same-store

6,353



4,420



3,191




1,933



43.7

%


3,162



99.1

%

Other properties and dispositions

605



1,675



4,868




(1,070)



(63.9)

%


(4,263)



(87.6)

%

Total

45,540



44,138



45,777




1,402



3.2

%


(237)



(0.5)

%
















Property operating expenses, including real estate taxes















Same-store

15,370



16,198



15,432




(828)



(5.1)

%


(62)



(0.4)

%

Non-same-store

2,271



1,712



1,090




559



32.7

%


1,181



108.3

%

Other properties and dispositions

283



621



2,331




(338)



(54.4)

%


(2,048)



(87.9)

%

Total

17,924



18,531



18,853




(607)



(3.3)

%


(929)



(4.9)

%
















Net operating income















Same-store

23,212



21,845



22,286




1,367



6.3

%


926



4.2

%

Non-same-store

4,082



2,708



2,101




1,374



50.7

%


1,981



94.3

%

Other properties and dispositions

322



1,054



2,537




(732)



(69.4)

%


(2,215)



(87.3)

%

Total

$

27,616



$

25,607



$

26,924




$

2,009



7.8

%


$

692



2.6

%

 


(dollars in thousands)


Twelve Months Ended December 31,


2020


2019


$ Change


% Change









Operating income (loss)

$

8,340



$

11,417



$

(3,077)



(27.0)

%

Adjustments:








Property management expenses

5,801



6,186



(385)



(6.2)

%

Casualty loss

1,662



1,116



546



48.9

%

Depreciation and amortization

75,593



74,271



1,322



1.8

%

General and administrative expenses

13,440



14,450



(1,010)



(7.0)

%

Net operating income

$

104,836



$

107,440



$

(2,604)



(2.4)

%









Revenue








Same-store

$

152,790



$

149,615



$

3,175



2.1

%

Non-same-store

18,441



6,020



12,421



206.3

%

Other properties and dispositions

6,763



30,120



(23,357)



(77.5)

%

Total

177,994



185,755



(7,761)



(4.2)

%









Property operating expenses, including real estate taxes








Same-store

63,227



61,622



1,605



2.6

%

Non-same-store

6,817



2,287



4,530



198.1

%

Other properties and dispositions

3,114



14,406



(11,292)



(78.4)

%

Total

73,158



78,315



(5,157)



(6.6)

%









Net operating income








Same-store

89,563



87,993



1,570



1.8

%

Non-same-store

11,624



3,733



7,891



211.4

%

Other properties and dispositions

3,649



15,714



(12,065)



(76.8)

%

Total

$

104,836



$

107,440



$

(2,604)



(2.4)

%

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,


2020


2019


$ Change


% Change



2020


2019


$ Change


% Change


















Controllable expenses

















On-site compensation (1)

$

4,356



$

4,035



$

321



8.0

%



$

17,059



$

15,814



$

1,245



7.9

%

Repairs and maintenance

2,068



2,945



(877)



(29.8)

%



9,499



11,358



(1,859)



(16.4)

%

Utilities

2,579



2,453



126



5.1

%



10,096



10,336



(240)



(2.3)

%

Administrative and marketing

763



891



(128)



(14.4)

%



3,265



3,594



(329)



(9.2)

%

Total

$

9,766



$

10,324



$

(558)



(5.4)

%



$

39,919



$

41,102



$

(1,183)



(2.9)

%


















Non-controllable expenses

















Real estate taxes

$

4,350



$

4,067



$

283



7.0

%



$

18,379



$

16,805



$

1,574



9.4

%

Insurance

1,254



1,041



213



20.5

%



4,929



3,715



1,214



32.7

%

Total

5,604



5,108



496



9.7

%



23,308



20,520



2,788



13.6

%


















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

$

2,271



$

1,090



$

1,181



108.3

%



$

6,817



$

2,287



$

4,530



198.1

%

Property operating expenses, including real estate taxes - other properties and dispositions

$

283



$

2,331



$

(2,048)



(87.9)

%



$

3,114



$

14,406



$

(11,292)



(78.4)

%

Total property operating expenses, including real estate taxes

$

17,924



$

18,853



$

(929)



(4.9)

%



$

73,158



$

78,315



$

(5,157)



(6.6)

%






(1)

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

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

Centerspace believes that FFO, which is a non-GAAP financial 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") 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 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



12/31/2020


9/30/2020


6/30/2020


3/31/2020


12/31/2019



12/31/2020


12/31/2019

Net (loss) income available to common shareholders


$

(5,985)



$

18,021



$

(5,387)



$

(8,439)



$

46,953




$

(1,790)



$

71,848


Adjustments:
















Noncontrolling interests - Operating Partnership


(460)



1,387



(447)



(692)



4,202




(212)



6,752


Depreciation and amortization


20,282



18,995



18,156



18,160



18,972




75,593



74,271


Less depreciation - non real estate


(87)



(85)



(88)



(93)



(88)




(353)



(322)


Less depreciation - partially owned entities


(33)



(31)



(33)



(282)



(454)




(379)



(2,059)


Gain on sale of real estate


(17)



(25,676)



190





(57,850)




(25,503)



(97,624)


FFO applicable to common shares and Units


$

13,700



$

12,611



$

12,391



$

8,654



$

11,735




$

47,356



$

52,866


















Adjustments to Core FFO:
















Casualty loss (recovery)


204



545










749




Loss on extinguishment of debt


2



4



17





864




23



2,360


Rebranding costs


402












402




Gain on litigation settlement















(6,586)


(Gain) loss on marketable securities






(175)



3,553



(113)




3,378




(Discount) premium on redemption of preferred shares




1



(25)



(273)






(297)



(113)


Core FFO applicable to common shares and Units


$

14,308



$

13,161



$

12,208



$

11,934



$

12,486




$

51,611



$

48,527


















FFO applicable to common shares and Units


$

13,700



$

12,611



$

12,391



$

8,654



$

11,735




$

47,356



$

52,866


Dividends to preferred unitholders


160



160



160



160



160




640



537


FFO applicable to common shares and Units - diluted


$

13,860



$

12,771



$

12,551



$

8,814



$

11,895




$

47,996



$

53,403


















Core FFO applicable to common shares and Units


$

14,308



$

13,161



$

12,208



$

11,934



$

12,486




$

51,611



$

48,527


Dividends to preferred unitholders


160



160



160



160



160




640



537


Core FFO applicable to common shares and Units - diluted


$

14,468



$

13,321



$

12,368



$

12,094



$

12,646




$

52,251



$

49,064


















Per  Share Data
















Earnings (loss) per share and unit - diluted


$

(0.46)



$

1.38



$

(0.44)



$

(0.67)



$

3.89




$

(0.15)



$

6.00


FFO per share and unit - diluted


$

0.97



$

0.90



$

0.93



$

0.66



$

0.90




$

3.47



$

4.05


Core FFO per share and unit - diluted


$

1.02



$

0.94



$

0.91



$

0.90



$

0.96




$

3.78



$

3.72


















Weighted average shares and units - diluted


14,222



14,143



13,558



13,401



13,188




13,835



13,182


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



12/31/2020


9/30/2020


6/30/2020


3/31/2020


12/31/2019



12/31/2020


12/31/2019

Net income (loss) attributable to controlling interests


$

(4,378)



$

19,629



$

(3,803)



$

(7,007)



$

48,658




$

4,441



$

78,669


Adjustments:
















Dividends to preferred unitholders


160



160



160



160



160




640



537


Noncontrolling interests – Operating Partnership


(460)



1,387



(447)



(692)



4,202




(212)



6,752


Income (loss) before noncontrolling interests – Operating Partnership


(4,678)



21,176



(4,090)



(7,539)



53,020




4,869



85,958


Adjustments:
















Interest expense


6,888



6,756



6,926



6,764



7,112




27,334



29,461


Loss on extinguishment of debt


2



4



17





864




23



2,360


Depreciation/amortization related to real estate investments


20,250



18,964



18,123



17,878



18,518




75,215



72,213


Casualty loss (recovery)


204



545










749




Interest income


(328)



(256)



(331)



(597)



(415)




(1,512)



(1,626)


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


(17)



(25,676)



190





(57,850)




(25,503)



(97,624)


Gain on litigation settlement















(6,586)


(Gain) loss on marketable securities






(175)



3,553



(113)




3,378



(113)


Adjusted EBITDA


$

22,321



$

21,513



$

20,660



$

20,059



$

21,136




$

84,553



$

84,043


 

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)

2021


$

20,270



$



$

5,871



$

26,141



3.6

%


5.16

%

2022


33,515



50,000



97,000



180,515



25.0

%


2.66

%

2023


43,721







43,721



6.1

%


4.02

%

2024




70,000





70,000



9.7

%


3.65

%

2025


32,915



75,000





107,915



15.0

%


4.34

%

Thereafter


168,024



125,000





293,024



40.6

%


3.74

%

Total debt


$

298,445



$

320,000



$

102,871



$

721,316



100.0

%


3.62

%






(1)

Term loans have variable interest rates that are fixed with interest rate swaps and $50.0 million of the variable interest rate, primary line of credit is fixed with an interest rate swap.

(2)

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



 



12/31/2020


9/30/2020


6/30/2020


3/31/2020


12/31/2019

Debt Balances Outstanding











Secured fixed rate


$

298,445



$

314,511


$

325,230


$

329,988


$

331,376

Unsecured fixed rate line of credit(1)


50,000



50,000


50,000


50,000


50,000

Unsecured variable rate line of credit


102,871



85,000


13,000


33,000


79

Unsecured term loans


145,000



145,000


145,000


145,000


145,000

Unsecured senior notes


125,000



125,000


125,000


125,000


125,000

Debt total


$

721,316



$

719,511


$

658,230


$

682,988


$

651,455












Quarterly Weighted Average Interest Rates











Mortgage debt


3.93

%


3.99

%


4.01

%


4.01

%


4.02

%

Lines of credit (rate with swap)(1)


2.35

%


3.35

%


2.97

%


3.18

%


3.52

%

Term loan (rate with swap)


4.18

%


4.18

%


4.12

%


4.13

%


4.19

%

Senior notes


3.78

%


3.78

%


3.78

%


3.78

%


3.78

%

Total debt


3.62

%


3.68

%


3.87

%


3.92

%


3.97

%



























(1)

A portion of the primary line of credit is fixed through an interest rate swap.

 


Debt Maturity by Quarter for the Next Two Years


Year


First
Quarter


Second
Quarter


Third
Quarter


Fourth
Quarter


Total

2021


$



$

1,997



$

24,144



$



$

26,141


2022(1)


2,508



4,866



173,141





180,515












$

206,656








(1)

Includes primary line of credit with a balance of $147.0 million which has a 12-month extension available, subject to customary terms.

 

CENTERSPACE

CAPITAL ANALYSIS

(in thousands, except per share and unit amounts)




12/31/2020


9/30/2020


6/30/2020


3/31/2020


12/31/2019

Equity Capitalization











Common shares outstanding


13,027



12,976



12,827



12,164



12,099


Operating partnership units outstanding


977



1,018



1,022



1,044



1,058


Total common shares and units outstanding


14,004



13,994



13,849



13,208



13,157


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


$

70.64



$

65.17



$

70.49



$

55.00



$

72.50


Equity capitalization-common shares and units


$

989,243



$

911,989



$

976,216



$

726,440



$

953,883


Recorded book value of preferred shares


$

93,530



$

93,530



$

93,579



$

96,046



$

99,456


Total equity capitalization


$

1,082,773



$

1,005,519



$

1,069,795



$

822,486



$

1,053,339













Series D preferred units


$

16,560



$

16,560



$

16,560



$

16,560



16,560













Debt capitalization











Total debt


721,317



719,511



658,230



682,988



651,455


Total capitalization


$

1,820,650



$

1,741,590



$

1,744,585



$

1,522,034



$

1,721,354













Total debt to total capitalization(1)


39.6

%


41.3

%


37.7

%


44.9

%


37.8

%







(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



12/31/2020


9/30/2020


6/30/2020


3/31/2020


12/31/2019



12/31/2020


12/31/2019

Debt service coverage ratio(1)


2.73

x


2.65

 x


2.48

x


2.42

 x


2.39

 x



2.57

x


2.18

x

Adjusted EBITDA/Interest expense plus preferred distributions and principal amortization


2.28

 x


2.21

 x


2.05

 x


1.97

 x


1.98

 x



2.13

 x


1.83

 x

Net debt/Adjusted EBITDA(2)


8.07

 x


8.17

 x


7.33

 x


8.18

 x


7.19

 x



8.53

 x


7.23

 x

Net debt and preferred equity/Adjusted EBITDA(2)


9.31

 x


9.45

 x


8.66

 x


9.59

 x


8.56

 x



9.83

 x


8.61

 x

















Distribution Data
















Common shares and units outstanding at record date


14,004



13,994



13,849



13,208



13,157




14,004



13,157


Total common distribution declared


$

9,803



$

9,796



$

9,694



$

9,245



$

9,210




$

38,538



$

36,438


Common distribution per share and unit


$

0.70



$

0.70



$

0.70



$

0.70



$

0.70




$

2.80



$

2.80


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


68.6

%


74.5

%


76.9

%


77.8

%


72.9

%



74.1

%


75.3

%






(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



Q42020


Q42019


% Change


Q42020


Q42019


% Change


Q42020


Q42019


% Change

Denver, CO


664



$

3,777



$

3,820



(1.1)

%


$

1,115



$

1,134



(1.7)

%


$

2,662



$

2,686



(0.9)

%

Minneapolis, MN


1,987



8,978



8,867



1.3

%


3,893



3,907



(0.4)

%


5,085



4,960



2.5

%

North Dakota


2,422



8,011



7,724



3.7

%


3,070



2,987



2.8

%


4,941



4,737



4.3

%

Omaha, NE


1,370



3,891



3,751



3.7

%


1,648



1,721



(4.2)

%


2,243



2,030



10.5

%

Rochester, MN


1,711



6,357



6,385



(0.4)

%


2,771



2,571



7.8

%


3,586



3,814



(6.0)

%

St. Cloud, MN


1,190



3,656



3,550



3.0

%


1,602



1,719



(6.8)

%


2,054



1,831



12.2

%

Other Markets(1)


1,223



3,912



3,621



8.0

%


1,271



1,393



(8.8)

%


2,641



2,228



18.5

%

Same-Store Total


10,567



$

38,582



$

37,718



2.3

%


$

15,370



$

15,432



(0.4)

%


$

23,212



$

22,286



4.2

%

 




% of NOI


Weighted Average Occupancy (2)


Average Monthly

Rental Rate (3)


Average Monthly

Revenue per Occupied Home (4)

Regions



Q42020


Q42019


Growth


Q42020


Q42019


% Change


Q42020


Q42019


% Change

Denver, CO


11.5

%


94.1

%


93.2

%


0.9

%


$

1,776



$

1,846



(3.8)

%


$

2,015



$

2,057



(2.0)

%

Minneapolis, MN


21.8

%


93.9

%


92.0

%


1.9

%


1,490



1,497



(0.5)

%


1,604



1,616



(0.7)

%

North Dakota


21.3

%


95.8

%


95.7

%


0.1

%


1,061



1,040



2.0

%


1,151



1,111



3.6

%

Omaha, NE


9.7

%


93.8

%


93.5

%


0.3

%


912



897



1.7

%


1,010



977



3.4

%

Rochester, MN


15.4

%


95.0

%


94.5

%


0.5

%


1,242



1,251



(0.7)

%


1,304



1,316



(0.9)

%

St. Cloud, MN


8.9

%


94.6

%


94.0

%


0.6

%


973



950



2.4

%


1,082



1,058



2.3

%

Other Markets(1)


11.4

%


98.1

%


95.7

%


2.4

%


980



945



3.7

%


1,087



1,031



5.4

%

Same-Store Total


100.0

%


95.0

%


94.0

%


1.0

%


$

1,177



$

1,171



0.5

%


$

1,282



$

1,266



1.3

%






(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

(dollars in thousands)




Homes
Included


Revenues


Expenses


NOI

Regions



Q42020


Q32020


% Change


Q42020


Q32020


% Change


Q42020


Q32020


% Change

Denver, CO


664



$

3,777



$

3,724



1.4

%


$

1,115



$

1,298



(14.1)

%


$

2,662



$

2,426



9.7

%

Minneapolis, MN


1,987



8,978



8,892



1.0

%


3,893



3,859



0.9

%


5,085



5,033



1.0

%

North Dakota


2,422



8,011



7,853



2.0

%


3,070



3,146



(2.4)

%


4,941



4,707



5.0

%

Omaha, NE


1,370



3,891



3,884



0.2

%


1,648



1,790



(7.9)

%


2,243



2,094



7.1

%

Rochester, MN


1,711



6,357



6,351



0.1

%


2,771



3,074



(9.9)

%


3,586



3,277



9.4

%

St. Cloud, MN


1,190



3,656



3,548



3.0

%


1,602



1,603



(0.1)

%


2,054



1,945



5.6

%

Other Markets


1,223



3,912



3,791



3.2

%


1,271



1,428



(11.0)

%


2,641



2,363



11.8

%

Same-Store Total


10,567



$

38,582



$

38,043



1.4

%


$

15,370



$

16,198



(5.1)

%


$

23,212



$

21,845



6.3

%

 




% of NOI


Weighted Average Occupancy


Average Monthly
Rental Rate


Average Monthly
Revenue per Occupied Home

Regions



Q42020


Q32020


Growth


Q42020


Q32020


% Change


Q42020


Q32020


% Change

Denver, CO


11.5

%


94.1

%


92.8

%


1.4

%


$

1,776



$

1,801



(1.4)

%


$

2,015



$

2,014




Minneapolis, MN


21.8

%


93.9

%


93.4

%


0.5

%


1,490



1,496



(0.4)

%


1,604



1,596



0.5

%

North Dakota


21.3

%


95.8

%


95.5

%


0.3

%


1,061



1,054



0.7

%


1,151



1,131



1.8

%

Omaha, NE


9.7

%


93.8

%


93.8

%




912



913



(0.1)

%


1,010



1,008



0.2

%

Rochester, MN


15.4

%


95.0

%


94.1

%


1.0

%


1,242



1,249



(0.6)

%


1,304



1,315



(0.8)

%

St. Cloud, MN


8.9

%


94.6

%


94.4

%


0.2

%


973



965



0.8

%


1,082



1,053



2.8

%

Other Markets


11.4

%


98.1

%


97.1

%


1.0

%


980



970



1.0

%


1,087



1,064



2.2

%

Same-Store Total


100.0

%


95.0

%


94.4

%


0.6

%


$

1,177



$

1,178



(0.1)

%


$

1,282



$

1,271



0.9

%

 

CENTERSPACE

SAME-STORE YEAR-TO-DATE COMPARISONS

(dollars in thousands)




Homes
Included


Revenues


Expenses


NOI

Regions



2020


2019


% Change


2020


2019


% Change


2020


2019


% Change

Denver, CO


664



$

15,129



$

15,154



(0.2)

%


$

4,767



$

4,748



0.4

%


$

10,362



$

10,406



(0.4)

%

Minneapolis, MN


1,987



36,050



35,407



1.8

%


15,148



15,103



0.3

%


20,902



20,304



2.9

%

North Dakota


2,422



31,342



30,475



2.8

%


12,861



12,874



(0.1)

%


18,481



17,601



5.0

%

Omaha, NE


1,370



15,427



14,949



3.2

%


6,846



6,870



(0.3)

%


8,581



8,079



6.2

%

Rochester, MN


1,711



25,617



25,346



1.1

%


11,471



9,861



16.3

%


14,146



15,485



(8.6)

%

St. Cloud, MN


1,190



14,362



14,127



1.7

%


6,485



6,609



(1.9)

%


7,877



7,518



4.8

%

Other Markets


1,223



14,863



14,157



5.0

%


5,649



5,557



1.7

%


9,214



8,600



7.1

%

Same-Store Total


10,567



$

152,790



$

149,615



2.1

%


$

63,227



$

61,622



2.6

%


$

89,563



$

87,993



1.8

%

 





% of NOI


Weighted Average Occupancy


Average Monthly
Rental Rate


Average Monthly
Revenue per Occupied Home

Regions



2020


2019


Growth


2020


2019


% Change


2020


2019


% Change

Denver, CO


11.6

%


93.7

%


94.1

%


(0.4)

%


$

1,812



$

1,834



(1.2)

%


$

2,026



$

2,022



0.2

%

Minneapolis, MN


23.3

%


93.9

%


92.7

%


1.2

%


1,491



1,480



0.7

%


1,611



1,601



0.6

%

North Dakota


20.6

%


95.9

%


95.2

%


0.7

%


1,049



1,040



0.9

%


1,125



1,101



2.1

%

Omaha, NE


9.6

%


94.2

%


93.8

%


0.4

%


905



889



1.8

%


996



970



2.8

%

Rochester, MN


15.8

%


95.3

%


95.2

%


0.1

%


1,244



1,237



0.6

%


1,309



1,296



1.0

%

St. Cloud, MN


8.8

%


94.4

%


94.7

%


(0.3)

%


959



950



0.9

%


1,065



1,044



2.0

%

Other Markets


10.3

%


96.5

%


95.8

%


0.7

%


961



935



2.8

%


1,050



1,007



4.3

%

Same-Store Total


100.0

%


94.8

%


94.4

%


0.4

%


$

1,173



$

1,163



0.9

%


$

1,270



$

1,250



1.7

%

 


CENTERSPACE

PORTFOLIO SUMMARY (1)




Three Months Ended



12/31/2020


9/30/2020


6/30/2020


3/31/2020


12/31/2019

Number of Apartment Homes at Period End











Same-Store


10,567



10,567



11,257



11,257



10,402


Non-Same-Store


1,343



1,343



878



878



1,551


All Communities


11,910



11,910



12,135



12,135



11,953













Average Monthly Rental Rate(2)











Same-Store


$

1,177



$

1,178



$

1,142



$

1,135



$

1,085


Non-Same-Store


1,599



1,597



1,594



1,572



1,722


All Communities


$

1,225



$

1,210



$

1,175



$

1,163



$

1,168













Average Monthly Revenue per Occupied Apartment Home(3)











Same-Store


$

1,282



$

1,271



$

1,232



$

1,237



$

1,169


Non-Same-Store


1,708



1,729



1,681



1,658



1,869


All Communities


$

1,330



$

1,307



$

1,264



$

1,263



$

1,260













Weighted Average Occupancy(4)











Same-Store


95.0

%


94.4

%


94.6

%


95.4

%


94.0

%

Non-Same-Store


92.3

%


93.9

%


93.9

%


93.3

%


93.0

%

All Communities


94.6

%


94.3

%


94.5

%


95.2

%


93.8

%












Operating Expenses as a % of Scheduled Rent











Same-Store


41.2

%


43.4

%


41.5

%


45.0

%


43.5

%

Non-Same-Store


35.3

%


39.7

%


36.1

%


37.0

%


33.8

%

All Communities


40.3

%


43.0

%


41.0

%


44.3

%


41.6

%












Capital Expenditures











Total Capital Expenditures per Apartment Home – Same-Store


$

326



$

293



$

262



$

151



$

427







(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



12/31/2020


12/31/2019



12/31/2020


12/31/2019

Total Same-Store Apartment Homes


10,567



10,567




10,567



10,567












Building - Exterior(1)


$

1,510



$

1,287




$

3,106



$

1,802


Building - Interior(1)


32



191




234



340


Mechanical, Electrical, & Plumbing(1)


436



762




1,888



1,408


Furniture & Equipment


73



146




316



365


Landscaping & Grounds


357



713




1,523



1,546


Turnover


1,033



836




3,586



2,992


  Capital Expenditures - Same-Store


$

3,441



$

3,935




$

10,653



$

8,453


  Capital Expenditures per Apartment Home - Same-Store


$

326



$

372




$

1,008



$

800












Value Add


$

2,975



$

1,712




$

10,280



$

4,090


Total Capital Spend - Same-Store


$

6,416



$

5,647




$

20,933



$

12,543


Total Capital Spend per Apartment Home - Same Store


$

607



$

534




$

1,981



$

1,187












All Properties - Weighted Average Homes


11,910



11,909




11,570



12,862












  Capital Expenditures


$

3,968



$

4,939




$

12,159



$

11,128


  Capital Expenditures per Apartment Home


$

333



$

415




$

1,051



$

865












  Value Add


3,496



2,014




13,901



5,011


  Acquisition Capital


302



$

1,814




1,567



3,713


  Total Capital Spend


$

7,766



$

8,767




$

27,627



$

19,852


  Total Capital Spend per Apartment Home


$

652



$

736




$

2,388



$

1,543












Value Add Capital Expenditures










Interior - Units










  Same-Store


$

875



$

1,072




$

4,321



$

2,501


  Non-Same-Store


390



18




1,684



67


  Total Interior Units


$

1,265



$

1,090




$

6,005



$

2,568


  Expected Year 1 Annual ROI


16.0

%


17.3

%



17.0

%


16.7

%











Common Areas and Exteriors










  Same-Store


$

2,100



$

640




$

5,959



$

1,589


  Non-Same-Store


131



284




1,937



854


  Total Common Areas and Exteriors


$

2,231



$

924




$

7,896



$

2,443


  Expected Year 1 Annual ROI


9.0

%


14.6

%



11.2

%


14.7

%











Total Value-Add Capital Expenditures










  Same-Store


$

2,975



$

1,712




$

10,280



$

4,090


  Non-Same-Store


521



302




3,621



921


  Total Portfolio Value-Add


$

3,496



$

2,014




$

13,901



$

5,011


  Expected Year 1 Annual ROI


11.5

%


16.1

%



13.7

%


15.7

%






(1)

Previously disclosed amounts for capital expenditures related to mechanical, electrical, and plumbing were reclassified from Building - Exterior and Building - Interior into Mechanical, Electrical, & Plumbing.

 

CENTERSPACE

2021 Financial Outlook

(in thousands, except per share amounts)


Centerspace is providing guidance for 2021.



12 Months Ended


2021 Full-Year Guidance Range


December 31, 2020


Low


High


Actuals


Amount


Amount

Same-store growth (1)






Revenue

$

165,807



(0.5)

%


3.0

%







Controllable expenses

$

42,902



5.0

%


8.5

%

Non-controllable expenses

$

24,990



2.5

%


6.0

%

Total Expenses

$

67,892



4.0

%


7.5

%

Same-store NOI (1)

$

97,915



(3.5)

%


(0.5)

%







Components of NOI






Same-store NOI (1)

$

97,915



$

94,200



$

97,600


Non-same-store NOI (1)

$

3.272



$

7,900



$

8,200


Other Commercial NOI

$

1,770



$

1,700



$

1,800


Other Sold NOI

$

1,879












Total NOI

$

104,836



$

103,800



$

107,600








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

$



1,300



990








Interest expense

$

(27,525)



(28,650)



(30,000)


Preferred dividends

$

(6,528)



(6,430)



(6,430)








Recurring income and expenses






Interest and other income

$

(1,657)



2,580



2,580


General and administrative and property management

$

(19,241)



(23,670)



(22,000)


Casualty losses

$

(1,662)



(1,750)



(1,250)


Non-real estate depreciation and amortization

$

(353)



(280)



(280)


Non-controlling interest

$

126



(65)



(70)


  Total recurring income and expenses

$

(22,787)



(23,185)



$

(21,020)








FFO

$

47,996



$

46,835



$

51,140


FFO per diluted share

$

3.47



$

3.17



$

3.52








Non-core income and expenses






Casualty loss

$

749



$

580



$

420


Technology implementation costs



1,190



990


Other miscellaneous items

3,507






  Total non-core income and expenses

$

4,256



$

1,770



$

1,410








Core FFO

$

52,252



$

48,605



$

52,550


Core FFO per diluted share

$

3.78



$

3.29



$

3.62








EPS - Diluted

$

(0.15)



$

(0.18)



$

0.45


Weighted average shares outstanding - diluted

13,835



14,773



14,515







(1)

Amounts for the year ended December 31, 2020 reflect the 2021 same-store pool.

Additional assumptions:

  • Same-store capital expenditures of $912 per home to $1,012 per home
  • Value-add expenditures of $15.0 million to $20.0 million
  • Investments of $145.0 million to $170.0 million, which includes the January 2021 acquisition of Union Pointe in Longmont, Colorado
  • Dispositions of $55.0 million to $75.0 million
  • Proceeds of $50.0 million to $70.0 million from equity issuance

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, 2020


December 31, 2021


Amount



Low


High

Net income (loss) available to common shareholders

$

(1,790)




$

(1,274)



$

8,031


Noncontrolling interests - Operating Partnership

(212)




(1,456)



(1,456)


Depreciation and amortization

75,593




71,424



71,424


Less depreciation - non real estate

(353)




(280)



(280)


Less depreciation - partially owned entities

(379)




(95)



(95)


(Gain) loss on sale of real estate

(25,503)




(22,124)



(27,124)


Dividends to preferred unitholders

$

640




$

640



$

640


FFO applicable to common shares and Units

$

47,996




$

46,835



$

51,140









Adjustments to Core FFO:







Casualty loss write off

749




580



420


Loss on extinguishment of debt

23







Rebranding costs

402







(Gain) loss on marketable securities

3,378







(Discount) premium on redemption of preferred shares

(297)







Technology implementation costs




1,190



990


Core FFO applicable to common shares and Units

$

52,251




$

48,605



$

52,550









Earnings per share - diluted

$

(0.15)




$

(0.18)



$

0.45


FFO per share - diluted

$

3.47




$

3.17



$

3.52


Core FFO per share - diluted

$

3.78




$

3.29



$

3.62


 

 

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