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CENTERSPACE (CSR)·Q3 2025 Earnings Summary

Executive Summary

  • Centerspace delivered solid operational performance in Q3 2025: revenue rose 9.8% year over year to $71.4M, same‑store NOI grew 4.5%, and Core FFO per diluted share was $1.19 .
  • Results versus consensus: revenue beat by ~$2.36M, while FFO/share missed modestly; GAAP EPS was $3.19 driven by a ~$79.5M gain on sale, creating a divergence from EPS consensus metrics that exclude such items .
  • Guidance tweaks: 2025 Core FFO range narrowed/lowered (midpoint from $4.94 to $4.92), same‑store revenue maintained at 2.0–2.5%, and same‑store expenses lowered to 0.5–1.0%; management cited concession activity in Denver and timing of dispositions/G&A .
  • Strategic/catalyst updates: completed sale of five St. Cloud communities for $124M, repurchased ~63K shares for $3.5M at ~$54.86, declared a $0.77 quarterly dividend, and later confirmed a Board-led strategic alternatives review (post-quarter) .

What Went Well and What Went Wrong

  • What Went Well

    • Same‑store execution: “we reported 4.5% year-over-year growth in NOI within our same-store portfolio,” driven by revenue increases and “excellent execution on expenses” .
    • Minneapolis strength: blended lease rate increases of ~2.1% in Q3 and occupancy improvements; management expects Minneapolis to be “top five of U.S. markets for rent growth headed into 2026” .
    • Expense control and tax favorability: non‑controllable expenses down 7.6% YoY in Q3 due to lower property taxes/insurance (Colorado assessments “much lower than initially anticipated”) .

  • What Went Wrong

    • Denver headwinds: concessions up to six weeks free at some properties; blended lease rates in Denver down ~3.5% in Q3 given elevated supply, though occupancy improved sequentially with concessions .
    • Core FFO guidance trimmed: midpoint lowered by $0.02 to $4.92, reflecting higher G&A/interest and disposition timing despite stronger NOI .
    • Portfolio recycling frictions: disposition proceeds in Minneapolis came in “a little bit below” expectations due to selling a disparate portfolio to a single bidder to prioritize execution/1031 timing .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Thousands)$65,025 $68,549 $71,399
Net income per share – diluted ($)($0.40) ($0.87) $3.19
FFO per share and Unit – diluted ($)$1.01 $1.24 $1.19
Core FFO per share and Unit – diluted ($)$1.18 $1.28 $1.19
Same‑store revenue YoY (%)—2.7% 2.4%
Same‑store NOI YoY (%)—2.9% 4.5%
Weighted Avg Occupancy (%)95.6% 96.1% 95.8%
Q3 2025 Actual vs ConsensusEstimateActualDelta
Revenue ($USD)$69,034,140*$71,399,000 +$2,364,860
FFO / Share (REIT) ($)$1.22183*$1.19 -$0.03183
Primary EPS ($)-$0.06*-$0.7787*-$0.7187

Values retrieved from S&P Global*.

Segment breakdown – Same‑Store NOI by region (Q3 2025 vs Q3 2024)

RegionQ3 2024 NOI ($USD Thousands)Q3 2025 NOI ($USD Thousands)YoY %
Denver, CO$7,455 $7,721 3.6%
Minneapolis, MN$10,706 $11,074 3.4%
Boulder/Ft. Collins, CO$2,235 $2,358 5.5%
North Dakota$4,639 $5,037 8.6%
Omaha, NE$2,162 $2,201 1.8%
Rochester, MN$3,599 $3,784 5.1%
Other Mountain West$3,202 $3,356 4.8%
Same‑Store Total$33,998 $35,531 4.5%

KPI trends

KPIQ3 2024Q2 2025Q3 2025
Weighted Avg Occupancy (%)95.6% 96.1% 95.8%
New Lease Rate Growth (%)(1.3%) 2.1% (1.7%)
Renewal Lease Rate Growth (%)3.0% 2.6% 2.9%
Blended Lease Rate Growth (%)1.3% 2.4% 1.3%
Retention Rate (%)61.3% 60.2% 59.9%

Additional highlights

  • Gain on sale of real estate and other investments: $79,531K (driving GAAP EPS uplift) .
  • Liquidity: $200.4M (cash $12.9M; ~$187.5M available on lines of credit) .
  • Share repurchases: 62,973 shares for $3.5M at ~$54.86 average .
  • Adjusted EBITDA (Q3): $35,231K vs $31,757K in Q3 2024 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net income per share – dilutedFY 2025$2.50–$2.76 $1.97–$2.19 Lowered
Same‑Store RevenueFY 20252.0–3.0% 2.0–2.5% Maintained/Narrowed
Same‑Store ExpensesFY 20251.0–2.5% 0.5–1.0% Lowered
Same‑Store NOIFY 20252.5–3.5% 3.0–3.5% Raised low end
FFO per share – dilutedFY 2025$4.70–$4.83 $4.73–$4.82 Slightly raised low end
Core FFO per share – dilutedFY 2025$4.88–$5.00 $4.88–$4.96 Lowered high end
Additional assumptionsFY 2025Recurring capex $1,150–$1,200/home; value‑add $16–$18M; dispositions $210–$230M Recurring capex $1,150–$1,200/home; value‑add $14–$16M; dispositions $210–$215M Value‑add lowered; dispositions narrowed
Dividend declaredQ3 2025—$0.77 per share/unit Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Denver supply/concessionsExpected to turn later; concessions pressured rates; blended spreads challenged Concessions up to six weeks; blended down ~3.5%; occupancy improving with concessions; normalization expected in 2026 Near‑term pressure; stabilization in 2026
Minneapolis recoveryOccupancy/rent strength; Q2 blended +2.7% Blended increases ~2.1%; expected top‑five rent growth into 2026 Improving trajectory
Expense control/taxesQ1 lumpiness from prior appeals; non‑controllables up on assessments Q3 non‑controllables down 7.6% YoY; CO valuations lower than forecast Favorable tailwind
Portfolio recyclingAnnounced acquisitions/dispositions and $100M buyback authorization St. Cloud sale $124M; pending seven Minneapolis assets; proceeds to pay down debt Execution focus; deleveraging
Share repurchasesOpportunistic in 2023; evaluate buybacks vs leverage Repurchased ~63K shares at ~$54.86; balancing buybacks vs leverage Tactical
Insurance outlook12% reduction last year; aiming low single‑digit renewals Expect favorable renewal; low single digits Stabilizing
RUBS in Colorado—New legislation will limit RUBS pass‑through starting Jan 1; operational mitigations planned Regulatory headwind
Leverage targetAim to move into low‑7x; longer‑term desire for sub‑7x Expect low‑7x by year‑end as transactions close Gradual deleveraging

Management Commentary

  • “we reported 4.5% year-over-year growth in NOI within our same-store portfolio… driven by solid increases in revenue coupled with excellent execution on expenses.” – Anne Olson, CEO .
  • “we are lowering the midpoint of our core FFO guidance by $0.02 to $4.92.” – Anne Olson, CEO .
  • “Specifically on property taxes, we trued up our accrual… for Colorado, which were much lower than initially anticipated.” – Bhairav Patel, CFO .
  • “Fort Collins… has displayed outperformance in annual rent growth, absorption, and vacancy when compared to Metro Denver.” – Grant Campbell, SVP .
  • “As these transactions conclude, we expect our net debt to EBITDA to move into a low seven times level by year-end.” – Bhairav Patel, CFO .
  • “we repurchased 63,000 shares in the quarter at an average price of $54.86 per share.” – Grant Campbell, SVP .

Q&A Highlights

  • Capital allocation balance: repurchases viewed as signal of conviction; sized modestly given leverage/float considerations .
  • Minneapolis runway: management expects above‑historical performance in 2026 due to peak deliveries passed and strong absorption; aiming to capture rent growth while holding expenses .
  • Denver concessions: portfolio at/under market concessions (up to six weeks free), expect supply/demand balance to improve late‑2026/2027 .
  • Guidance drivers: Core FFO midpoint -$0.02 from higher G&A and interest, partially offset by better NOI; disposition timing a factor .
  • RUBS/Regulatory: CO legislation will limit RUBS pass‑through starting Jan 1; company shifting to direct billing where possible .
  • Value‑add/Capex: value‑add spend lowered largely on timing; prioritizing initiatives that reduce operating expenses (smart home/leak detectors) over unit/common area renovations in current environment .
  • Debt maturities/refinancing: 2026 secured debt maturities in H1; refinancing options in low‑5% range or line of credit flexibility .
  • Insurance: expecting low single‑digit premium increases on renewal (favorable after prior 12% reduction) .

Estimates Context

  • Revenue beat: Q3 2025 revenue $71.399M exceeded S&P Global consensus of ~$69.034M by ~$2.365M, reflecting same‑store growth, contributions from non‑same‑store assets, and dispositions timing . Values retrieved from S&P Global*.
  • FFO/share miss: Core operating performance delivered $1.19 FFO/share diluted vs ~$1.222 consensus; management cited concessions in Denver and higher G&A/interest expenses impacting the quarter and FY guidance . Values retrieved from S&P Global*.
  • EPS divergence: GAAP diluted EPS was $3.19, boosted by ~$79.5M gain on sale; S&P “Primary EPS” actual was -$0.7787 (vs -$0.06 consensus), indicating differing methodologies (e.g., excluding non‑recurring gains/continuing operations). For REITs, FFO/share is the more relevant performance metric . Values retrieved from S&P Global*.

Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Revenue/NOI momentum is intact; same‑store NOI grew 4.5% and occupancy remains stable, supporting cash flow resilience despite market-specific headwinds .
  • Expect near‑term pressure in Denver from concessions; management anticipates normalization starting in 2026 as supply peaks roll off; monitor blended lease trends and RUBS regulation impacts .
  • Minneapolis and North Dakota continue to provide ballast and potential upside; Minneapolis set up for above‑trend rent growth into 2026, and ND leads portfolio on blended increases .
  • FY 2025 Core FFO midpoint trimmed to $4.92, with improved expense outlook (tax/insurance favorability) partly offsetting Denver concession drag and higher G&A/interest; positioning into year‑end is constructive .
  • Capital recycling is raising portfolio quality/efficiency and enabling deleveraging; watch pending Minneapolis sale, net debt/EBITDA trajectory to low‑7x by year‑end, and opportunistic buybacks under the $100M authorization .
  • Share repurchases (~$3.5M) signal management conviction on NAV vs market pricing; near‑term capital uses will balance debt paydown vs buybacks to optimize risk/return .
  • Post‑quarter strategic alternatives review adds optionality and could be a stock catalyst; no assurances on outcomes, but process broadens potential paths to value realization .

Additional Q3 Press Releases

  • Completed sale of five St. Cloud communities for $124.0M; proceeds earmarked to decrease leverage and fund corporate purposes .
  • Declared regular quarterly distribution of $0.77 per share/unit payable Oct 10, 2025 .