FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2025

Cash and cash equivalents, restricted cash, accounts payable, accrued expenses, and other liabilities are carried at amounts that reasonably approximate their fair value due to their short-term nature. For variable rate line of credit debt that re-prices frequently, fair values are based on carrying values.

In determining the fair value of other financial instruments, Centerspace applies FASB ASC 820, “Fair Value Measurement and Disclosures.” Fair value hierarchy under ASC 820 distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting entity’s own assumptions about market participant data (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

Fair Value Measurements on a Recurring Basis


		(in thousands)
	Balance Sheet Location	Total		Level 1	Level 2	Level 3
June 30, 2025
Assets
Real estate related notes receivable	Other assets	$	27,238	—	—	$	27,238



December 31, 2024
Assets
Real estate related notes receivable	Other assets	$	25,092	—	—	$	25,092

Centerspace utilizes an income approach with Level 3 inputs based on expected future cash flows to value the notes receivable. The unobservable inputs include market transactions for similar instruments, management estimates of comparable interest rates (range of 5.00% to 9.00%), and instrument specific credit risk (range of 0.5% to 1.0%). Changes in the fair value of these receivables from period to period are reported in interest and other income on the Condensed Consolidated Statements of Operations and Comprehensive Loss.


	(in thousands)
	Fair Value Measurement		Other Gains		Interest Income		Total Changes in Fair Value Included in Current-Period Earnings
Six months ended June 30, 2025
Real estate related notes receivable	$	27,238	$	18	$	1,092	$	1,110
Six months ended June 30, 2024
Real estate related notes receivable	$	20,311	$	10	$	563	$	573

As of June 30, 2025 and December 31, 2024, Centerspace had investments totaling $3.0 million and $2.7 million, respectively, in real estate technology venture funds consisting of privately held entities that develop technology related to the real estate industry. These investments appear within other assets on the Condensed Consolidated Balance Sheets. The investments are measured at net asset value (“NAV”) as a practical expedient under ASC 820. As of June 30, 2025, the Company had unfunded commitments of $750,000.

Fair Value Measurements on a Nonrecurring Basis

Non-financial assets measured at fair value on a nonrecurring basis at June 30, 2025 consisted of real estate investments that were written-down to estimated fair value in connection with the impairment recorded on five apartment communities during the six months ended June 30, 2025. There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at December 31, 2024. The Company’s determination of fair value is based on broker opinions of value net of estimated costs to sell and includes inputs management believes are consistent with those that market participants would use. Due to uncertainties in the estimation process, actual results could differ from such estimates.

(in thousands)

Balance Sheet Location

Total

Level 1

Level 2

Level 3

June 30, 2025

Assets

Real estate investments measured at fair value

Assets held for sale, net

61,375

—

61,375

—

Financial Assets and Liabilities Not Measured at Fair Value

The fair value of unsecured senior notes and mortgages payable is estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates, excluding any prepayment penalties (Level 3).

The estimated fair values of the Company’s financial instruments as of June 30, 2025 and December 31, 2024, respectively, are as follows:


		(in thousands)
		June 30, 2025				December 31, 2024
	Balance Sheet Location	Amount		Fair Value		Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	12,378	$	12,378	$	12,030	$	12,030
Restricted cash	Restricted cash	$	5,815	$	5,815	$	1,099	$	1,099

FINANCIAL LIABILITIES
Revolving lines of credit	Revolving lines of credit	$	216,030	$	216,030	$	47,359	$	47,359

Unsecured senior notes(1)	Notes payable	$	300,000	$	262,009	$	300,000	$	253,808
Mortgages payable - Fannie Mae credit facility	Mortgages payable	$	198,850	$	173,170	$	198,850	$	166,679
Mortgages payable - other(1)	Mortgages payable	$	406,412	$	382,320	$	420,414	$	383,213

(1)Excludes deferred financing costs, debt premiums, and discounts

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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+ Details