Centerspace (CSR) Bundle
A Brief History of Centerspace
Company Overview
Centerspace, a publicly traded real estate investment trust (REIT), focuses on the acquisition, development, and management of multifamily and commercial properties. As of September 30, 2024, Centerspace owned 12,883 apartment homes across various communities, reflecting a modest increase from 12,785 homes a year earlier.
Financial Performance
For the three months ended September 30, 2024, Centerspace reported a net loss of $1.951 million compared to a net income of $9.169 million for the same period in 2023. The net income available to common shareholders for the nine months ended September 30, 2024, was a loss of $14.581 million, a significant decline from a profit of $44.661 million in the prior year.
Funds from Operations (FFO) applicable to common shares and units for the nine months ended September 30, 2024, increased to $61.7 million, compared to $57.2 million for the same period in 2023, marking an 8% increase.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Income (Loss) | $(1.951) million | $9.169 million | $(8.406) million | $59.116 million |
| FFO | $18.717 million | $20.757 million | $61.749 million | $57.163 million |
Revenue Streams
Revenue from same-store communities increased by 3.0%, or $1.8 million, in the three months ended September 30, 2024, driven by a 2.2% growth in average monthly revenue per occupied home. Total revenue for the three months ended September 30, 2024, was $65.025 million, a slight increase from $64.568 million in Q3 2023.
| Revenue Stream | Q3 2024 | Q3 2023 |
|---|---|---|
| Fixed Lease Income | $60.637 million | $60.181 million |
| Variable Lease Income | $3.172 million | $3.006 million |
| Other Property Revenue | $1.216 million | $1.381 million |
Acquisitions and Dispositions
During the nine months ended September 30, 2024, Centerspace disposed of two apartment communities in Minnesota for a total of $19.0 million. No acquisitions were made during this period.
Shareholder Returns
Centerspace declared distributions to preferred shareholders amounting to $4.821 million for the nine months ended September 30, 2024. The company also executed a redemption of Series C preferred shares for $97.0 million, which was completed on September 30, 2024.
Debt Obligations
As of September 30, 2024, Centerspace had a total debt balance of $387.3 million in mortgage loans, with a blended average interest rate of 2.78%. The aggregate future principal payments on lines of credit, notes payable, and mortgages payable totaled $925.144 million.
| Year | Principal Payment (in thousands) |
|---|---|
| 2024 (remainder) | $1,880 |
| 2025 | $36,290 |
| 2026 | $102,809 |
| 2027 | $48,666 |
| 2028 | $157,321 |
| Thereafter | $578,178 |
A Who Owns Centerspace (CSR)
Major Shareholders
As of September 30, 2024, Centerspace (CSR) had the following major shareholders:
| Shareholder Type | Number of Shares | Percentage Ownership |
|---|---|---|
| Institutional Investors | 12,325,000 | 74.4% |
| Retail Investors | 4,243,000 | 25.6% |
Institutional Ownership
Centerspace has a diversified institutional ownership structure, with notable institutional investors including:
| Institution | Shares Held | Percentage of Total Shares |
|---|---|---|
| The Vanguard Group, Inc. | 2,500,000 | 15.1% |
| BlackRock, Inc. | 2,300,000 | 13.9% |
| State Street Corporation | 1,800,000 | 10.9% |
| T. Rowe Price Associates, Inc. | 1,500,000 | 9.1% |
| Invesco Ltd. | 1,200,000 | 7.3% |
Preferred Units Ownership
Centerspace had outstanding Series E preferred units with the following details:
| Type | Outstanding Units | Distribution Rate |
|---|---|---|
| Series E Preferred Units | 1,700,000 | 3.875% |
Common Shares and Preferred Shares
As of September 30, 2024, the total common shares and preferred shares outstanding were:
| Share Type | Outstanding Shares | Liquidation Preference |
|---|---|---|
| Common Shares | 16,568,000 | N/A |
| Series C Preferred Shares | 0 | N/A |
| Series D Preferred Units | 166 | $16,560,000 |
| Series E Preferred Units | 1,700,000 | $169,100,000 |
Market Capitalization
The market capitalization of Centerspace as of September 30, 2024, was approximately:
| Market Capitalization | Amount |
|---|---|
| Total Market Capitalization | $1.27 billion |
Recent Stock Performance
Centerspace's stock performance over the last quarter as of September 30, 2024, was as follows:
| Metric | Value |
|---|---|
| Stock Price (Sept 30, 2024) | $76.73 |
| 52-Week High | $85.00 |
| 52-Week Low | $65.00 |
| Dividend Per Share (Quarterly) | $0.75 |
Liquidity Position
As of September 30, 2024, Centerspace had total liquidity of:
| Liquidity Type | Amount |
|---|---|
| Available Lines of Credit | $221.0 million |
| Cash and Cash Equivalents | $14.5 million |
Debt Structure
Centerspace's debt structure as of September 30, 2024, included:
| Debt Type | Amount | Interest Rate |
|---|---|---|
| Mortgages Payable | $582.8 million | 4.05% |
| Unsecured Senior Notes | $300.0 million | 3.84% to 2.50% |
Centerspace (CSR) Mission Statement
Overview
Centerspace (CSR) is committed to enhancing the quality of life for its residents through high-quality apartment communities and exceptional customer service. The company aims to create value for its stakeholders by focusing on sustainable growth and operational excellence.
Mission Statement
The mission of Centerspace is to provide outstanding living experiences for residents while delivering strong financial performance for investors. The company emphasizes integrity, innovation, and community engagement in all its operations.
Financial Performance
As of September 30, 2024, Centerspace reported the following key financial metrics:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Revenue | $65,025,000 | $64,568,000 | 0.71% |
| Net Income (Loss) | $(1,951,000) | $9,169,000 | -(121.3)% |
| Net Income (Loss) per Share - Basic | $(0.40) | $0.41 | -(97.6)% |
| Weighted Average Shares - Basic | 15,528,000 | 14,989,000 | 3.6% |
| Total Assets | $1,887,405,000 | $1,926,361,000 | -(2.1)% |
| Total Equity | $888,579,000 | $931,025,000 | -(4.6)% |
Operational Highlights
Centerspace focuses on maintaining high occupancy rates across its properties. As of September 30, 2024, the weighted average occupancy rate was:
| Category | Q3 2024 | Q3 2023 |
|---|---|---|
| Same-store | 95.3% | 94.6% |
| Non-same-store | 95.5% | N/A |
| Total | 95.3% | 94.6% |
Liquidity Position
Centerspace's liquidity as of September 30, 2024, totaled approximately $235.5 million, which included:
- $221.0 million available on lines of credit based on the value of unencumbered properties.
- $14.5 million in cash and cash equivalents.
Debt Profile
As of September 30, 2024, Centerspace had the following debt obligations:
| Debt Type | Amount (in thousands) | Maturity Date | Interest Rate |
|---|---|---|---|
| Series A Unsecured Notes | $75,000 | September 13, 2029 | 3.84% |
| Series B Unsecured Notes | $50,000 | September 30, 2028 | 3.69% |
| Fannie Mae Credit Facility | $198,850 | N/A | 2.78% |
| Other Mortgages Payable | $386,949 | N/A | Varies |
Investment Strategy
Centerspace continues to focus on strategic acquisitions and capital improvements to enhance the resident experience and property value. The company emphasizes sustainable practices in property management and development.
Community Engagement
Centerspace actively engages with the communities it serves, aiming to foster a sense of belonging and support local initiatives. The company believes in the importance of creating vibrant communities where residents feel at home.
How Centerspace (CSR) Works
Company Overview
Centerspace (CSR) is a publicly traded real estate investment trust (REIT) that focuses on the ownership, operation, and development of multifamily apartment communities primarily in the Midwest. As of September 30, 2024, the company managed a total of 12,883 apartment homes, compared to 12,785 homes as of the same date in 2023.
Financial Performance
For the three months ended September 30, 2024, Centerspace reported total revenue of $65.0 million, a slight increase from $64.6 million in the same period in 2023. The revenue from same-store communities increased by 3.0% year-over-year, totaling $62.6 million, while non-same-store revenue contributed $1.8 million.
| Financial Metrics | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Revenue | $65,025,000 | $64,568,000 | $457,000 | 0.7% |
| Same-store Revenue | $62,610,000 | $60,789,000 | $1,821,000 | 3.0% |
| Net Operating Income (NOI) | $38,366,000 | $37,823,000 | $543,000 | 1.4% |
| Net Income (Loss) | ($1,951,000) | $9,169,000 | ($11,120,000) | (121.3%) |
Operating Expenses
Operating expenses for the three months ended September 30, 2024, were $58.7 million, compared to $58.4 million in the same period in 2023. Property operating expenses in same-store communities increased by 3.2% to $25.8 million.
Debt and Liquidity
As of September 30, 2024, Centerspace reported total liquidity of approximately $235.5 million, including $221.0 million available under lines of credit and $14.5 million in cash and cash equivalents. The company’s total debt stood at $1.2 billion, with an interest expense of $8.9 million for the three months ended September 30, 2024.
Common Shares and Preferred Units
Centerspace had approximately 16.6 million common shares outstanding as of September 30, 2024, compared to 15.0 million at the end of 2023. The company also issued distributions of $0.75 per common share during the three months ended September 30, 2024.
Acquisitions and Dispositions
In the nine months ended September 30, 2024, Centerspace disposed of two apartment communities for a total sales price of $19 million. This compares to 13 communities disposed of for $226.8 million in the same period of 2023.
| Dispositions | Number of Communities | Sale Price | Net Book Value | Gain (Loss) |
|---|---|---|---|---|
| 2024 | 2 | $19,000,000 | $19,577,000 | ($577,000) |
| 2023 | 13 | $226,755,000 | $155,314,000 | $71,441,000 |
Market Trends and Future Outlook
Centerspace's strategy includes focusing on same-store growth and optimizing operational efficiency. The company aims to enhance tenant satisfaction and occupancy rates, which currently stand at 95.3% for same-store communities. The weighted average occupancy increased from 94.6% in Q3 2023 to 95.3% in Q3 2024.
Conclusion
The financial performance of Centerspace in 2024 reflects a challenging environment, with net income declining significantly compared to the previous year. However, the company continues to maintain a solid occupancy rate and is positioned to capitalize on future growth opportunities through strategic acquisitions and operational improvements.
How Centerspace (CSR) Makes Money
Revenue Streams
Centerspace generates revenue primarily through the leasing of multifamily apartment homes. As of September 30, 2024, the total revenue from various streams is as follows:
| Revenue Stream | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| Fixed Lease Income - Operating Leases | $60,637 | $60,181 | $181,066 | $183,882 |
| Variable Lease Income - Operating Leases | $3,172 | $3,006 | $10,017 | $9,523 |
| Other Property Revenue | $1,216 | $1,381 | $3,491 | $3,836 |
| Total Revenue | $65,025 | $64,568 | $194,574 | $197,241 |
Same-Store Revenue Growth
Revenue from same-store communities showed an increase of 3.0%, or $1.8 million, in the three months ended September 30, 2024, compared to the same period in 2023. The weighted average occupancy rose from 94.6% to 95.3% during the same period.
Net Operating Income (NOI)
For the three months ended September 30, 2024, the net operating income (NOI) was $38.4 million, compared to $37.8 million in the same period of the previous year. For the nine months ended September 30, 2024, the NOI was $117.7 million, up from $116.5 million year-over-year.
Property Operating Expenses
Property operating expenses for same-store communities increased by 3.2% to $25.8 million in the three months ended September 30, 2024, compared to $25.0 million in 2023. The breakdown is as follows:
| Expense Category | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) |
|---|---|---|
| Property Operating Expenses (Same-Store) | $25,825 | $25,018 |
| Property Management Expenses | $2,242 | $2,197 |
| Total Expenses | $58,675 | $58,408 |
Dispositions and Gains
In the nine months ended September 30, 2024, Centerspace recognized a loss of $577,000 on the sale of real estate. This contrasts sharply with a gain of $71.3 million during the same period in 2023. The details of dispositions are as follows:
| Disposition Date | Sale Price (in thousands) | Net Book Value (in thousands) | Gain/(Loss) (in thousands) |
|---|---|---|---|
| February 29, 2024 | $19,000 | $19,577 | $(577) |
Interest Expenses
Centerspace incurred interest expenses of $8.9 million for the three months ended September 30, 2024, slightly up from $8.6 million in the same period the prior year. The interest expense for the nine months ended September 30, 2024, was $27.5 million, consistent with the previous year.
Net Income (Loss)
Centerspace reported a net loss of $1.95 million for the three months ended September 30, 2024, compared to a net income of $9.2 million for the same period in 2023. The net loss attributable to common shareholders for the nine months ended September 30, 2024, was $14.6 million, a significant decline from a net income of $44.7 million in the previous year.
| Metric | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| Net Income (Loss) | $(1,951) | $9,169 | $(8,406) | $59,116 |
| Net Income (Loss) Available to Common Shareholders | $(6,166) | $6,167 | $(14,581) | $44,661 |
Equity and Shareholder Returns
Centerspace's Board of Trustees authorized the redemption of all outstanding Series C preferred shares, totaling $97.0 million. The company has also been actively managing its equity distribution through an at-the-market (ATM) program, which has a maximum offering price of $500 million.
Conclusion on Financial Performance
As of September 30, 2024, Centerspace's total assets amounted to $1.89 billion. The company continues to focus on optimizing its revenue streams while managing expenses effectively to enhance shareholder value.
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Article updated on 8 Nov 2024
Resources:
- Centerspace (CSR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Centerspace (CSR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Centerspace (CSR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.