Centerspace conducts a majority of its business activities through a consolidated operating partnership, Centerspace, LP, a North Dakota limited partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities. The accompanying Condensed Consolidated Financial Statements include the Company’s accounts and the accounts of all its subsidiaries in which it maintains a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation.

The Condensed Consolidated Financial Statements also reflect the Operating Partnership’s ownership of a joint venture entity in which the Operating Partnership has a general partner or controlling interest. This entity is consolidated into the Company’s operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses.

Centerspace’s unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of financial position, results of operations, and cash flows for the interim periods, have been included.

The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim Condensed Consolidated Financial Statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 18, 2025.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain previously reported amounts within net cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current financial statement presentation. These reclassifications had no impact on net income (loss) as reported in the Condensed Consolidated Statements of Operations and Comprehensive Loss, total assets, liabilities or equity as reported in the Condensed Consolidated Balance Sheets and the classifications within the Condensed Consolidated Statements of Cash Flows.

The Company identified immaterial prior period errors in the consolidated financial statements related to the balance of common shares and noncontrolling interest within Total Equity on the consolidated balance sheets and condensed consolidated balance sheets. The errors related to the equity amount allocated between common shares and noncontrolling interest based on ownership percentage, and did not impact the amount of Total Equity. The Company assessed the materiality of this change on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” (ASC

Topic 250, Accounting for Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections are not material to any previously presented consolidated financial statements. Accordingly, the Company corrected the previously reported immaterial errors as of and for the years ended December 31, 2023 and 2024, the three months ended March 31, 2024, the three and six months ended June 30, 2024, the three and nine months ended September 30, 2024, and the three months ended March 31, 2025 in this Quarterly Report on Form 10-Q.

The financial reporting periods affected by this error include the Company’s previously reported audited consolidated financial statements as of and for the years ended December 31, 2023 and 2024 and the Company’s previously reported interim unaudited condensed consolidated financial statements for the three months ended, March 31, 2024, the three and six months ended June 30, 2024, the three and nine months ended September 30, 2024, and the three months ended March 31, 2025. In addition, the Company expects to present the corrected interim 2024 amounts in its 2025 condensed consolidated interim financial statements upon the filing of each of its Quarterly Reports on Form 10-Q on a year-to-date basis as a correction to applicable 2024 periods. A summary of the immaterial corrections to the Company’s previously reported audited and unaudited consolidated financial statements follows.


	December 31, 2024
	Previously Reported		Corrections		As Corrected



















Common Shares of Beneficial Interest	$	1,269,549	$	98,088	$	1,367,637


Total shareholders’ equity	653,900		98,088		751,988
Noncontrolling interests – Operating Partnership and Series E preferred units	227,870		(98,088)		129,782


	Three Months Ended March 31, 2025
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES	Previously Reported		Corrections		As Corrected
Operating partnership units converted to common shares	$	(1,002)	$	1,337	$	335
Series E preferred units converted to common shares	(43)		57		14


	Nine Months Ended September 30, 2024
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES	Previously Reported		Corrections		As Corrected
Operating partnership units converted to common shares	$	(2,212)	$	4,558	$	2,346
Series E preferred units converted to common shares	(2,271)		4,081		1,810


	Six Months Ended June 30, 2024
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES	Previously Reported		Corrections		As Corrected
Operating partnership units converted to common shares	$	(1,367)	$	2,901	$	1,534
Series E preferred units converted to common shares	(1,220)		2,370		1,150


	Year Ended December 31, 2024
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES	Previously Reported		Corrections		As Corrected
Operating partnership units converted to common shares	$	(2,663)	$	5,881	$	3,218
Series E preferred units converted to common shares	(8,938)		16,722		7,784


	Year Ended December 31, 2023
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES	Previously Reported		Corrections		As Corrected
Operating partnership units converted to common shares	$	(1,910)	$	7,134	$	5,224
Series E preferred units converted to common shares	(1,390)		2,947		1,557


Years Ended	Previously Reported COMMON SHARES		Corrections		As Corrected COMMON SHARES		Previously Reported NONCONTROLLING INTERESTS		Corrections		As Corrected NONCONTROLLING INTERESTS
Balance at December 31, 2022	$	1,177,484	$	74,658	$	1,252,142	$	220,759	$	(74,658)	$	146,101
Redemption of Units for common shares	(1,910)		7,134		5,224		1,910		(7,134)		(5,224)
Redemption of Series E preferred units for common shares	(1,390)		2,947		1,557		1,390		(2,947)		(1,557)
Equity rebalancing	—		(933)		(933)		—		933		933
Other	(246)		(60)		(306)		(682)		60		(622)
Balance at December 31, 2023	$	1,165,694	$	83,746	$	1,249,440	$	221,193	$	(83,746)	$	137,447
Issuance of Units	5,296		(911)		4,385		8,579		911		9,490
Redemption of Units for common shares	(2,663)		5,881		3,218		2,663		(5,881)		(3,218)
Redemption of Series E preferred units for common shares	(8,938)		16,722		7,784		8,938		(16,722)		(7,784)
Equity rebalancing	—		(7,350)		(7,350)		—		7,350		7,350
Balance at December 31, 2024	$	1,269,549	$	98,088	$	1,367,637	$	228,543	$	(98,088)	$	130,455
Three Months Ended March 31, 2025
Redemption of Units for common shares	(1,002)		1,337		335		1,002		(1,337)		(335)
Redemption of Series E preferred units for common shares	(43)		57		14		43		(57)		(14)
Equity rebalancing	—		(94)		(94)		—		94		94
Balance at March 31, 2025	$	1,268,888	$	99,388	$	1,368,276	$	226,639	$	(99,388)	$	127,251


Three Months Ended	Previously Reported COMMON SHARES		Corrections		As Corrected COMMON SHARES		Previously Reported NONCONTROLLING INTERESTS		Corrections		As Corrected NONCONTROLLING INTERESTS
Balance at December 31, 2023	$	1,165,694	$	83,746	$	1,249,440	$	221,193	$	(83,746)	$	137,447
Redemption of Units for common shares	(398)		1,195		797		398		(1,195)		(797)
Redemption of Series E preferred units for common shares	(702)		1,430		728		702		(1,430)		(728)
Equity rebalancing	—		(122)		(122)		—		122		122
Balance at March 31, 2024	$	1,160,492	$	86,249	$	1,246,741	$	218,936	$	(86,249)	$	132,687
Redemption of Units for common shares	(969)		1,706		737		969		(1,706)		(737)
Redemption of Series E preferred units for common shares	(518)		940		422		518		(940)		(422)
Equity rebalancing	—		(551)		(551)		—		551		551
Balance at June 30, 2024	$	1,167,055	$	88,344	$	1,255,399	$	217,600	$	(88,344)	$	129,256
Redemption of Units for common shares	(845)		1,657		812		845		(1,657)		(812)
Redemption of Series E preferred units for common shares	(1,051)		1,711		660		1,051		(1,711)		(660)
Equity rebalancing	—		(6,451)		(6,451)		—		6,451		6,451
Balance at September 30, 2024	$	1,270,752	$	85,261	$	1,356,013	$	216,125	$	(85,261)	$	130,864


Six Months Ended June 30, 2024	Previously Reported COMMON SHARES		Corrections		As Corrected COMMON SHARES		Previously Reported NONCONTROLLING INTERESTS		Corrections		As Corrected NONCONTROLLING INTERESTS
Balance at December 31, 2023	$	1,165,694	$	83,746	$	1,249,440	$	221,193	$	(83,746)	$	137,447
Redemption of Units for common shares	(1,367)		2,901		1,534		1,367		(2,901)		(1,534)
Redemption of Series E preferred units for common shares	(1,220)		2,370		1,150		1,220		(2,370)		(1,150)
Equity rebalancing	—		(673)		(673)		—		673		673
Balance at June 30, 2024	$	1,167,055	$	88,344	$	1,255,399	$	217,600	$	(88,344)	$	129,256


Nine Months Ended September 30, 2024	Previously Reported COMMON SHARES		Corrections		As Corrected COMMON SHARES		Previously Reported NONCONTROLLING INTERESTS		Corrections		As Corrected NONCONTROLLING INTERESTS
Balance at Balance at December 31, 2023	$	1,165,694	$	83,746	$	1,249,440	$	221,193	$	(83,746)	$	137,447
Redemption of Units for common shares	(2,212)		4,558		2,346		2,212		(4,558)		(2,346)
Redemption of Series E preferred units for common shares	(2,271)		4,081		1,810		2,271		(4,081)		(1,810)
Equity rebalancing	—		(7,124)		(7,124)		—		7,124		7,124
Balance at Balance at September 30, 2024	$	1,270,752	$	85,261	$	1,356,013	$	216,125	$	(85,261)	$	130,864

The following table provides a brief description of Financial Accounting Standards Board (“FASB”) recent accounting standards updates (“ASU”).


Standard	Description	Date of Adoption	Effect on the Financial Statements or Other Significant Matters
ASU 2024-03, Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses; ASU 2025-01, Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Clarifying the Effective Date	This ASU is intended to improve financial reporting by requiring public companies disclose additional information about specific expense categories in the notes to the financial statements. In 2025, an additional ASU was issued to provide clarification on the effective date of the original ASU.	This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted.	The ASU will require additional disclosure but is not expected to have a material impact on the Company.

Cash and cash equivalents include all cash and highly liquid investments purchased with maturities of three months or less. Cash and cash equivalents consist of bank deposits and deposits in money market mutual funds. The Company is potentially exposed to credit risk for cash deposited with FDIC-insured financial institutions in accounts which, at times, may exceed federally insured limits. Although past bank failures have increased the risk of loss in such accounts, the Company has not experienced any losses in such accounts.

As of June 30, 2025 and December 31, 2024, restricted cash consisted of $5.8 million and $1.1 million, respectively, for real estate deposits and escrows held by lenders. Escrows include funds deposited with a lender for payment of real estate taxes and insurance and reserves to be used for replacement of structural elements and mechanical equipment at certain communities. The funds are under the control of the lender. Disbursements are made after supplying written documentation to the lender.

As a lessor, Centerspace primarily leases multifamily apartment homes which qualify as operating leases with terms that are generally one year or less. Rental revenues are recognized in accordance with FASB Accounting Standards Codification (“ASC”) 842, Leases, using a method that represents a straight-line basis over the term of the lease. For the three months ended June 30, 2025 and 2024, rental income represented approximately 98.2% and 98.3% of total revenues, respectively, and included gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt. For the three months ended June 30, 2025 and 2024, other property revenues represented the remaining 1.8% and 1.7% of total revenues, respectively, and re primarily driven by other fee income, which is typically recognized when earned, at a point in time. For the six months ended June 30, 2025 and 2024, rental income represented approximately 98.3% and 98.2% of total revenues, respectively. For the six months ended June 30, 2025 and 2024, other property revenues represented the remaining 1.7% and 1.8% of total revenues, respectively.

Many of the leases contain non-lease components for utility reimbursement from residents and common area maintenance from commercial tenants. Centerspace has elected the practical expedient to combine lease and non-lease components. The combined components are included in lease income and are accounted for under ASC 842.

Revenue streams that are included in revenues from contracts with customers include other property revenues such as application fees and other miscellaneous items. Centerspace recognizes revenue for these rental related items not included as a component of a lease as earned.


		(in thousands)
		Three Months Ended June 30,				Six Months Ended June 30,
Revenue Stream	Applicable Standard	2025		2024		2025		2024
Fixed lease income - operating leases	Leases	$	63,104	$	60,394	$	125,301	$	120,428
Variable lease income - operating leases	Leases	4,232		3,558		8,063		6,845
Other property revenue	Revenue from contracts with customers	1,213		1,091		2,278		2,276
Total revenue		$	68,549	$	65,043	$	135,642	$	129,549

In addition to lease income and other property revenue, the Company recognizes gains or losses on the sale of real estate and other investments when the criteria for derecognition of an asset are met, including when (1) a contract exists and (2) the buyer obtained control of the nonfinancial asset that was sold. During the three months ended June 30, 2025 and 2024, the Company did not recognize any gain or loss on the sale of real estate and other investments. During the six months ended June 30, 2025, the Company did not recognize any gain or loss on the sale of real estate and other investments, compared to a loss of $577,000 during the six months ended June 30, 2024. Any gain or loss on real estate dispositions is net of certain closing and other costs associated with the disposition.

The Company records in-place lease assets at the time of acquisition. The amortization periods reflects the average remaining term of in-place leases acquired, which are generally less than one year for multifamily apartment homes and average lease term for the commercial component of mixed use properties. During the three months ended June 30, 2025 and 2024, the Company recognized $95,000 and $37,000, respectively, of amortization expense related to intangibles. During the six months ended June 30, 2025 and 2024, the Company recognized $1.2 million and $1.7 million, respectively, of amortization expense related to intangibles, included within depreciation and amortization in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

The Company is subject to increased exposure from economic and other competitive factors specific to markets where it holds a significant percentage of the carrying value of its real estate portfolio. As of June 30, 2025, Centerspace held more than 10% of the carrying value of its real estate portfolio in the Minneapolis, Minnesota and Denver, Colorado markets.

The Company classifies properties as held for sale when they meet the GAAP criteria, which include: (a) management commits to and initiates a plan to sell the asset; (b) the sale is probable and expected to be completed within one year under terms that are usual and customary for sales of such assets; and (c) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company generally considers these criteria met when the transaction has been approved by its Board of Trustees, there are no known significant contingencies related to the sale, and management believes it is probable that the sale will be completed within one year.

The Company presents the assets and liabilities of any properties held for sale separately in the Condensed Consolidated Balance Sheets. Held for sale properties are reported at the lower of their carrying amount or estimated fair value less costs to sell. Both the real estate assets and corresponding liabilities are presented separately in the accompanying Condensed Consolidated Balance Sheets. Upon the classification of an asset as held for sale, no further depreciation is recorded. Disposals representing a strategic shift in operations (e.g., a disposal of a major geographic area, a major line of business or a major equity method investment) will be presented as discontinued operations.

The Company had 12 apartment communities classified as held for sale at June 30, 2025. During the three months ended June 30, 2025, the Company’s Board of Trustees approved a plan to sell a specific list of apartment communities. The Company determined these apartment communities met the criteria to be classified as held for sale as of June 30, 2025. The Company did not have any apartment communities classified as held for sale at December 31, 2024. The table below presents the major components of assets and liabilities for apartment communities held for sale as of June 30, 2025:

The Company evaluates long-lived assets, including real estate investments, for impairment indicators at least quarterly. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each property, and legal and environmental concerns. If indicators exist, the Company compares the estimated future undiscounted cash flows for the property against the carrying amount of that property. If the sum of the estimated undiscounted cash flows is less than the carrying amount, an impairment loss is generally recorded for the difference between the estimated fair value and the carrying amount. If the anticipated holding period for properties, the estimated fair value of properties, or other factors change based on market conditions or otherwise, the evaluation of impairment charges may be different and such differences could be material to the consolidated financial statements. The evaluation of estimated cash flows is subjective and is based, in part, on assumptions regarding future physical occupancy, rental rates, and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

During the three and six months ended June 30, 2025, the Company incurred a loss of $14.5 million for the impairment of five apartment communities. These apartment communities were written-down to estimated fair value in connection with the communities classification as held for sale. During the three and six months ended June 30, 2024 the Company did not record a loss for impairment on real estate.

Centerspace has determined that its Operating Partnership and each of its less-than-wholly owned real estate partnerships are variable interest entities (each, a “VIE”), as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights. The Company is the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on the balance sheet because the Company has a controlling financial interest in the VIEs and has both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because the Operating Partnership is a VIE, all of the Company’s assets and liabilities are held through a VIE.

During the three months ended June 30, 2025, the Company entered into a note receivable with the limited partner of its joint venture. As of June 30, 2025, the Company had a $1.4 million variable rate note receivable with the limited partner of its consolidated joint venture. The note matures on April 30, 2026 and bears interest at a rate equal to 1.55% above the adjusted secured overnight financing rate (“SOFR”). The note is secured by a pledge of all equity interests in the joint venture held by the limited partner.

In connection with the acquisition of The Lydian, an apartment community in Denver, Colorado, the Company has a tax increment financing note receivable (“TIF”) with an initial principal balance of $4.1 million. As of June 30, 2025 and December 31, 2024, the principal balance was $4.0 million and $4.1 million, respectively, which appears within other assets in the Condensed Consolidated Balance Sheets at fair value. The note bears an interest rate of 6.0% with payments due in March and July of each year.

In connection with the acquisition of Ironwood, an apartment community in New Hope, Minnesota, the Company has a TIF note receivable with a principal balance of $5.1 million and $5.2 million as of June 30, 2025 and December 31, 2024, respectively, which appears within other assets in the Condensed Consolidated Balance Sheets at fair value. The note bears an interest rate of 4.5% with payments due in February and August of each year. The note matures February 1, 2039, and may be prepaid in whole or in part at any time.

In 2023, the Company originated a $15.1 million mezzanine loan for the development of an apartment community located in Inver Grove Heights, Minnesota. The mezzanine loan bears interest at 10.0% per annum which accrues interest that is added to the principal balance and is payable at maturity. As of June 30, 2025 and December 31, 2024, the Company had funded $15.1 million of the mezzanine loan. The loan matures in December 2027 unless extended to December 2028 in accordance with the terms of the mezzanine loan agreement. The loan is secured by a pledge of and first priority security interest against 100% of the membership interests in the mezzanine borrower and the agreement provides the Company with an option to purchase the development at a discount to future appraised value. The loan represents an investment in an unconsolidated variable interest entity. The Company is not the primary beneficiary of the VIE as Centerspace does not have the power to direct the activities which most significantly impact the entity’s economic performance nor does Centerspace have significant influence over the entity. The note receivable appears within other assets in the Condensed Consolidated Balance Sheets at fair value.

Advertising costs are expensed as incurred and reported on the Condensed Consolidated Statements of Operations and Comprehensive Loss within the property operating expenses, excluding real estate taxes line item. During the three months ended June 30, 2025 and 2024, total advertising expense was $676,000 and $742,000, respectively. During the six months ended June 30, 2025 and 2024, total advertising expense was $1.3 million and $1.5 million, respectively.

During the three months ended June 30, 2025, Centerspace recorded $254,000 in casualty losses resulting from updated loss estimates on three previously reported events. During the six months ended June 30, 2025, the Company recorded $776,000 in casualty losses resulting from two new insurance events and updated loss estimates from three previously reported events. Any business interruption insurance proceeds will be recognized when received in accordance with ASC 610-30.

During the three and six months ended June 30, 2024, Centerspace recognized $137,000 and $755,000, respectively in casualty losses resulting from updated loss estimates from six separate insurance events at apartment communities. Any business interruption insurance proceeds will be recognized when received in accordance with ASC 610-30.