0000798359 12/31 2021 Q3 false P3Y 1 0000798359 2021-01-01 2021-09-30 0000798359 us-gaap:CommonClassAMember 2021-01-01 2021-09-30 0000798359 us-gaap:SeriesCPreferredStockMember 2021-01-01 2021-09-30 xbrli:shares 0000798359 2021-10-25 iso4217:USD 0000798359 2021-09-30 0000798359 2020-12-31 0000798359 us-gaap:MediumTermNotesMember 2021-09-30 0000798359 us-gaap:MediumTermNotesMember 2020-12-31 0000798359 us-gaap:MortgagesMember 2021-09-30 0000798359 us-gaap:MortgagesMember 2020-12-31 iso4217:USD xbrli:shares 0000798359 csr:SeriesDPreferredUnitsMember 2021-09-30 0000798359 csr:SeriesDPreferredUnitsMember 2020-12-31 0000798359 csr:SeriesCPreferredSharesOfBeneficialInterestMember 2020-12-31 0000798359 csr:SeriesCPreferredSharesOfBeneficialInterestMember 2021-09-30 0000798359 2021-07-01 2021-09-30 0000798359 2020-07-01 2020-09-30 0000798359 2020-01-01 2020-09-30 0000798359 us-gaap:PreferredStockMember 2019-12-31 0000798359 us-gaap:CommonStockMember 2019-12-31 0000798359 us-gaap:RetainedEarningsMember 2019-12-31 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000798359 us-gaap:NoncontrollingInterestMember 2019-12-31 0000798359 2019-12-31 0000798359 us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0000798359 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-09-30 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-09-30 0000798359 us-gaap:SeriesCPreferredStockMember 2020-01-01 2020-09-30 0000798359 us-gaap:SeriesCPreferredStockMember us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0000798359 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0000798359 us-gaap:PreferredStockMember 2020-01-01 2020-09-30 0000798359 us-gaap:PreferredStockMember 2020-09-30 0000798359 us-gaap:CommonStockMember 2020-09-30 0000798359 us-gaap:RetainedEarningsMember 2020-09-30 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0000798359 us-gaap:NoncontrollingInterestMember 2020-09-30 0000798359 2020-09-30 0000798359 us-gaap:PreferredStockMember 2020-12-31 0000798359 us-gaap:CommonStockMember 2020-12-31 0000798359 us-gaap:RetainedEarningsMember 2020-12-31 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0000798359 us-gaap:NoncontrollingInterestMember 2020-12-31 0000798359 us-gaap:RetainedEarningsMember 2021-01-01 2021-09-30 0000798359 us-gaap:NoncontrollingInterestMember 2021-01-01 2021-09-30 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-09-30 0000798359 us-gaap:SeriesCPreferredStockMember us-gaap:RetainedEarningsMember 2021-01-01 2021-09-30 0000798359 us-gaap:SeriesEPreferredStockMember 2021-01-01 2021-09-30 0000798359 us-gaap:NoncontrollingInterestMember us-gaap:SeriesEPreferredStockMember 2021-01-01 2021-09-30 0000798359 us-gaap:CommonStockMember 2021-01-01 2021-09-30 0000798359 us-gaap:CommonStockMember us-gaap:SeriesEPreferredStockMember 2021-01-01 2021-09-30 0000798359 us-gaap:PreferredStockMember 2021-09-30 0000798359 us-gaap:CommonStockMember 2021-09-30 0000798359 us-gaap:RetainedEarningsMember 2021-09-30 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0000798359 us-gaap:NoncontrollingInterestMember 2021-09-30 0000798359 us-gaap:PreferredStockMember 2020-06-30 0000798359 us-gaap:CommonStockMember 2020-06-30 0000798359 us-gaap:RetainedEarningsMember 2020-06-30 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0000798359 us-gaap:NoncontrollingInterestMember 2020-06-30 0000798359 2020-06-30 0000798359 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0000798359 us-gaap:NoncontrollingInterestMember 2020-07-01 2020-09-30 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0000798359 us-gaap:SeriesCPreferredStockMember 2020-07-01 2020-09-30 0000798359 us-gaap:SeriesCPreferredStockMember us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0000798359 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0000798359 us-gaap:PreferredStockMember 2020-07-01 2020-09-30 0000798359 us-gaap:PreferredStockMember 2021-06-30 0000798359 us-gaap:CommonStockMember 2021-06-30 0000798359 us-gaap:RetainedEarningsMember 2021-06-30 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0000798359 us-gaap:NoncontrollingInterestMember 2021-06-30 0000798359 2021-06-30 0000798359 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0000798359 us-gaap:NoncontrollingInterestMember 2021-07-01 2021-09-30 0000798359 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-01 2021-09-30 0000798359 us-gaap:SeriesCPreferredStockMember 2021-07-01 2021-09-30 0000798359 us-gaap:SeriesCPreferredStockMember us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0000798359 us-gaap:SeriesEPreferredStockMember 2021-07-01 2021-09-30 0000798359 us-gaap:NoncontrollingInterestMember us-gaap:SeriesEPreferredStockMember 2021-07-01 2021-09-30 0000798359 us-gaap:CommonStockMember 2021-07-01 2021-09-30 0000798359 us-gaap:CommonStockMember us-gaap:SeriesEPreferredStockMember 2021-07-01 2021-09-30 csr:apartmentProperty 0000798359 us-gaap:ResidentialRealEstateMember 2021-09-30 csr:apartmentUnit xbrli:pure 0000798359 csr:RentalIncomeMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-01-01 2021-09-30 0000798359 us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember csr:FeeIncomeMember 2021-01-01 2021-09-30 0000798359 srt:MinimumMember 2021-09-30 0000798359 srt:MaximumMember 2021-09-30 0000798359 csr:MultiFamilySameStoreMember csr:TaxIncrementFinancingMember csr:IronwoodApartmentsNewHopeMNMember 2021-09-30 0000798359 csr:MultiFamilySameStoreMember csr:TaxIncrementFinancingMember csr:IronwoodApartmentsNewHopeMNMember 2020-12-31 0000798359 csr:MultiFamilyResidentialMember csr:TaxIncrementFinancingMember csr:IronwoodApartmentsNewHopeMNMember 2020-03-01 2020-03-31 0000798359 csr:MultiFamilyResidentialMember us-gaap:ConstructionLoansMember csr:MinneapolisMinnesotaMember 2019-12-31 0000798359 csr:MultiFamilyResidentialMember csr:MezzanineLoanMember csr:MinneapolisMinnesotaMember 2019-12-31 0000798359 csr:MultiFamilyResidentialMember us-gaap:ConstructionLoansMember csr:MinneapolisMinnesotaMember 2019-12-01 2019-12-31 0000798359 csr:MultiFamilyResidentialMember csr:MezzanineLoanMember csr:MinneapolisMinnesotaMember 2019-12-01 2019-12-31 0000798359 csr:MultiFamilyResidentialMember us-gaap:ConstructionLoansMember csr:MinneapolisMinnesotaMember 2021-09-30 0000798359 csr:MultiFamilyResidentialMember csr:MezzanineLoanMember csr:MinneapolisMinnesotaMember 2021-09-30 0000798359 us-gaap:ConstructionLoansMember csr:MinneapolisMinnesotaMember 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:ConstructionLoansMember csr:MinneapolisMinnesotaMember 2020-12-31 0000798359 csr:PerformanceSharesAndRestrictedStockUnitsMember 2021-01-01 2021-09-30 0000798359 csr:PerformanceSharesAndRestrictedStockUnitsMember 2021-07-01 2021-09-30 0000798359 csr:PerformanceSharesAndRestrictedStockUnitsMember 2020-01-01 2020-09-30 0000798359 csr:PerformanceSharesAndRestrictedStockUnitsMember 2020-07-01 2020-09-30 0000798359 csr:SeriesDPreferredUnitsMember 2020-01-01 2020-09-30 0000798359 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-09-30 0000798359 us-gaap:EmployeeStockOptionMember 2020-07-01 2020-09-30 0000798359 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-09-30 0000798359 us-gaap:SeriesDPreferredStockMember 2021-07-01 2021-09-30 0000798359 us-gaap:SeriesDPreferredStockMember 2020-07-01 2020-09-30 0000798359 us-gaap:SeriesDPreferredStockMember 2021-01-01 2021-09-30 0000798359 us-gaap:SeriesDPreferredStockMember 2020-01-01 2020-09-30 0000798359 us-gaap:SeriesEPreferredStockMember 2020-07-01 2020-09-30 0000798359 us-gaap:SeriesEPreferredStockMember 2020-01-01 2020-09-30 0000798359 csr:ExerciseofExchangeRightsMember 2021-07-01 2021-09-30 0000798359 csr:ExerciseofExchangeRightsMember 2020-07-01 2020-09-30 0000798359 csr:ExerciseofExchangeRightsMember 2021-01-01 2021-09-30 0000798359 csr:ExerciseofExchangeRightsMember 2020-01-01 2020-09-30 0000798359 us-gaap:SeriesEPreferredStockMember 2021-09-01 0000798359 csr:A2021AcquisitionsMember 2021-09-01 0000798359 us-gaap:SeriesEPreferredStockMember 2021-09-01 2021-09-01 0000798359 csr:IncentivePlan2015Member 2021-07-01 2021-09-30 0000798359 csr:IncentivePlan2015Member 2021-01-01 2021-09-30 0000798359 csr:IncentivePlan2015Member 2020-07-01 2020-09-30 0000798359 csr:IncentivePlan2015Member 2020-01-01 2020-09-30 0000798359 csr:AtTheMarketOfferingMember 2019-12-31 0000798359 csr:AtTheMarketOfferingMember 2018-05-01 2019-12-31 0000798359 csr:AtTheMarketOfferingMember 2021-09-30 0000798359 csr:AtTheMarketOfferingMember 2021-07-01 2021-09-30 0000798359 csr:AtTheMarketOfferingMember 2020-07-01 2020-09-30 0000798359 csr:AtTheMarketOfferingMember 2021-01-01 2021-09-30 0000798359 csr:AtTheMarketOfferingMember 2020-01-01 2020-09-30 0000798359 csr:SeriesDPreferredUnitsMember 2019-02-26 0000798359 csr:SeriesDPreferredUnitsMember 2019-02-26 2019-02-26 0000798359 csr:BMOLineOfCreditMember us-gaap:LineOfCreditMember 2021-09-30 0000798359 csr:TermLoanMaturing2024Member us-gaap:UnsecuredDebtMember 2021-09-30 0000798359 us-gaap:UnsecuredDebtMember csr:TermLoanMaturing2025Member 2021-09-30 0000798359 srt:MinimumMember us-gaap:BaseRateMember us-gaap:LineOfCreditMember 2021-01-01 2021-09-30 0000798359 srt:MaximumMember us-gaap:BaseRateMember us-gaap:LineOfCreditMember 2021-01-01 2021-09-30 0000798359 srt:MinimumMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2021-01-01 2021-09-30 0000798359 srt:MaximumMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2021-01-01 2021-09-30 0000798359 us-gaap:UnsecuredDebtMember csr:PrivateShelfAgreementMember 2021-01-31 0000798359 us-gaap:UnsecuredDebtMember csr:PrivateShelfAgreementMember 2021-09-30 0000798359 csr:NotePurchaseAgreementMember us-gaap:UnsecuredDebtMember 2021-09-30 0000798359 csr:DebtInstrumentSeriesAMember us-gaap:UnsecuredDebtMember 2021-01-31 0000798359 csr:DebtInstrumentSeriesBMember us-gaap:UnsecuredDebtMember 2021-01-31 0000798359 csr:SeriesCMember us-gaap:UnsecuredDebtMember 2021-01-31 0000798359 csr:Series2021AMember us-gaap:UnsecuredDebtMember 2021-09-30 0000798359 csr:Series2021BMember us-gaap:UnsecuredDebtMember 2021-09-30 0000798359 csr:Series2021CMember us-gaap:UnsecuredDebtMember 2021-09-30 0000798359 csr:Series2021DMember us-gaap:UnsecuredDebtMember 2021-09-30 0000798359 csr:FannieMaeCreditFacilityAgreementMember us-gaap:MortgagesMember 2021-09-30 0000798359 csr:FannieMaeCreditFacilityAgreementMember us-gaap:MortgagesMember csr:A2021AcquisitionsMember 2021-09-30 0000798359 csr:FannieMaeCreditFacilityAgreementMember csr:InterestOnlyPaymentDateOneMember us-gaap:MortgagesMember 2021-01-01 2021-09-30 0000798359 csr:FannieMaeCreditFacilityAgreementMember csr:InterestOnlyPaymentDateTwoMember us-gaap:MortgagesMember 2021-01-01 2021-09-30 0000798359 csr:FannieMaeCreditFacilityAgreementMember csr:InterestOnlyPaymentDateThreeMember us-gaap:MortgagesMember 2021-01-01 2021-09-30 csr:loan 0000798359 us-gaap:MortgagesMember 2021-01-01 2021-09-30 0000798359 csr:OperatingLineOfCreditMember 2021-09-30 0000798359 us-gaap:LineOfCreditMember us-gaap:UnsecuredDebtMember 2021-09-30 0000798359 us-gaap:LineOfCreditMember us-gaap:UnsecuredDebtMember 2020-12-31 0000798359 us-gaap:LineOfCreditMember us-gaap:UnsecuredDebtMember 2021-01-01 2021-09-30 0000798359 us-gaap:UnsecuredDebtMember us-gaap:MediumTermNotesMember 2021-09-30 0000798359 us-gaap:UnsecuredDebtMember us-gaap:MediumTermNotesMember 2020-12-31 0000798359 us-gaap:UnsecuredDebtMember us-gaap:MediumTermNotesMember 2021-01-01 2021-09-30 0000798359 us-gaap:UnsecuredDebtMember us-gaap:SeniorNotesMember 2021-09-30 0000798359 us-gaap:UnsecuredDebtMember us-gaap:SeniorNotesMember 2020-12-31 0000798359 us-gaap:UnsecuredDebtMember us-gaap:SeniorNotesMember 2021-01-01 2021-09-30 0000798359 us-gaap:UnsecuredDebtMember 2021-09-30 0000798359 us-gaap:UnsecuredDebtMember 2020-12-31 0000798359 us-gaap:UnsecuredDebtMember 2021-01-01 2021-09-30 0000798359 csr:FannieMaeCreditFacilityAgreementMember us-gaap:MortgagesMember 2020-12-31 0000798359 csr:FannieMaeCreditFacilityAgreementMember us-gaap:MortgagesMember 2021-01-01 2021-09-30 0000798359 csr:MortgagesPayableOtherMember us-gaap:MortgagesMember 2021-09-30 0000798359 csr:MortgagesPayableOtherMember us-gaap:MortgagesMember 2020-12-31 0000798359 csr:MortgagesPayableOtherMember us-gaap:MortgagesMember 2021-01-01 2021-09-30 0000798359 us-gaap:LineOfCreditMember us-gaap:UnsecuredDebtMember csr:PrimaryLineOfCreditMember 2021-09-30 0000798359 us-gaap:LineOfCreditMember us-gaap:UnsecuredDebtMember csr:PrimaryLineOfCreditMember 2020-12-31 0000798359 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember 2021-09-30 csr:derivativeInstrument 0000798359 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember 2020-12-31 0000798359 srt:ScenarioForecastMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember 2023-01-31 0000798359 srt:ScenarioForecastMember us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2023-01-31 0000798359 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember 2021-07-01 2021-09-30 0000798359 us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2021-07-01 2021-09-30 0000798359 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember 2021-09-30 0000798359 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember 2020-12-31 0000798359 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2021-09-30 0000798359 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2020-12-31 0000798359 us-gaap:InterestRateContractMember 2021-07-01 2021-09-30 0000798359 us-gaap:InterestRateContractMember 2020-07-01 2020-09-30 0000798359 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember 2021-07-01 2021-09-30 0000798359 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember 2020-07-01 2020-09-30 0000798359 us-gaap:InterestRateContractMember 2021-01-01 2021-09-30 0000798359 us-gaap:InterestRateContractMember 2020-01-01 2020-09-30 0000798359 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember 2021-01-01 2021-09-30 0000798359 us-gaap:InterestRateContractMember us-gaap:InterestExpenseMember 2020-01-01 2020-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0000798359 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:InterestRateSwapMember 2021-09-30 0000798359 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:InterestRateSwapMember 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:InterestRateSwapMember 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:InterestRateSwapMember 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0000798359 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:InterestRateSwapMember 2020-12-31 0000798359 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:InterestRateSwapMember 2020-12-31 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:InterestRateSwapMember 2020-12-31 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:InterestRateSwapMember 2020-12-31 0000798359 us-gaap:MeasurementInputRiskFreeInterestRateMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member srt:MinimumMember 2021-01-01 2021-09-30 0000798359 us-gaap:MeasurementInputRiskFreeInterestRateMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member srt:MaximumMember 2021-01-01 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member srt:MinimumMember us-gaap:MeasurementInputEntityCreditRiskMember 2021-01-01 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member srt:MaximumMember us-gaap:MeasurementInputEntityCreditRiskMember 2021-01-01 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember csr:OtherGainsLossesMember 2021-01-01 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:InterestIncomeMember 2021-01-01 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember 2021-01-01 2021-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember csr:OtherGainsLossesMember 2020-01-01 2020-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:InterestIncomeMember 2020-01-01 2020-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember 2020-01-01 2020-09-30 0000798359 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueMeasuredAtNetAssetValuePerShareMember 2021-09-30 0000798359 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2021-09-30 0000798359 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-09-30 0000798359 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-12-31 0000798359 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-12-31 0000798359 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:CashMember 2021-09-30 0000798359 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:CashMember 2021-09-30 0000798359 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:CashMember 2020-12-31 0000798359 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:CashMember 2020-12-31 0000798359 us-gaap:CarryingReportedAmountFairValueDisclosureMember csr:FannieMaeCreditFacilityAgreementMember us-gaap:MortgagesMember 2021-09-30 0000798359 us-gaap:EstimateOfFairValueFairValueDisclosureMember csr:FannieMaeCreditFacilityAgreementMember us-gaap:MortgagesMember 2021-09-30 0000798359 us-gaap:CarryingReportedAmountFairValueDisclosureMember csr:FannieMaeCreditFacilityAgreementMember us-gaap:MortgagesMember 2020-12-31 0000798359 us-gaap:EstimateOfFairValueFairValueDisclosureMember csr:FannieMaeCreditFacilityAgreementMember us-gaap:MortgagesMember 2020-12-31 0000798359 us-gaap:CarryingReportedAmountFairValueDisclosureMember csr:MortgagesPayableOtherMember us-gaap:MortgagesMember 2021-09-30 0000798359 us-gaap:EstimateOfFairValueFairValueDisclosureMember csr:MortgagesPayableOtherMember us-gaap:MortgagesMember 2021-09-30 0000798359 us-gaap:CarryingReportedAmountFairValueDisclosureMember csr:MortgagesPayableOtherMember us-gaap:MortgagesMember 2020-12-31 0000798359 us-gaap:EstimateOfFairValueFairValueDisclosureMember csr:MortgagesPayableOtherMember us-gaap:MortgagesMember 2020-12-31 0000798359 csr:A2021AcquisitionsMember 2021-09-30 0000798359 csr:A2021AcquisitionsMember 2021-07-01 2021-09-30 0000798359 csr:A2020AcquisitionsMember 2020-07-01 2020-09-30 0000798359 csr:UnionPointeApartmentHomesLongmontCOMember 2021-09-30 0000798359 csr:UnionPointeApartmentHomesLongmontCOMember 2021-01-01 2021-09-30 0000798359 csr:BayberryPlaceMinneapolisMNMember 2021-09-30 0000798359 csr:BayberryPlaceMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:BurgandyHillsboroCourtMinneapolisMNMember 2021-09-30 0000798359 csr:BurgandyHillsboroCourtMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:VenueOnKnoxMinneapolisMNMember 2021-09-30 0000798359 csr:VenueOnKnoxMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:GatewoodStCloudMNMember 2021-09-30 0000798359 csr:GatewoodStCloudMNMember 2021-01-01 2021-09-30 0000798359 csr:GroveRidgeMinneapolisMNMember 2021-09-30 0000798359 csr:GroveRidgeMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:TheLegacyStCloudMNMember 2021-09-30 0000798359 csr:TheLegacyStCloudMNMember 2021-01-01 2021-09-30 0000798359 csr:NewHopeGardenVillageMinneapolisMNMember 2021-09-30 0000798359 csr:NewHopeGardenVillageMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:PalisadesMinneapolisMNMember 2021-09-30 0000798359 csr:PalisadesMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:PlymouthPointeMinneapolisMNMember 2021-09-30 0000798359 csr:PlymouthPointeMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:PointeWestStCloudMNMember 2021-09-30 0000798359 csr:PointeWestStCloudMNMember 2021-01-01 2021-09-30 0000798359 csr:RiverPointeMinneapolisMNMember 2021-09-30 0000798359 csr:RiverPointeMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:SouthdaleParcMinneapolisMNMember 2021-09-30 0000798359 csr:SouthdaleParcMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:PortageMinneapolisMNMember 2021-09-30 0000798359 csr:PortageMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:WindsorGatesMinneapolisMNMember 2021-09-30 0000798359 csr:WindsorGatesMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:WingateMinneapolisMNMember 2021-09-30 0000798359 csr:WingateMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:WoodhavenMinneapolisMNMember 2021-09-30 0000798359 csr:WoodhavenMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:WoodlandPointeMinneapolisMNMember 2021-09-30 0000798359 csr:WoodlandPointeMinneapolisMNMember 2021-01-01 2021-09-30 0000798359 csr:A2021AcquisitionsMember 2021-01-01 2021-09-30 0000798359 csr:A2020AcquisitionsMember us-gaap:SeriesEPreferredStockMember 2021-09-01 2021-09-01 0000798359 csr:IronwoodApartmentsNewHopeMNMember 2020-09-30 0000798359 csr:IronwoodApartmentsNewHopeMNMember 2020-01-01 2020-09-30 0000798359 csr:ParkhouseApartmentHomesThorntonCOMember 2020-09-30 0000798359 csr:ParkhouseApartmentHomesThorntonCOMember 2020-01-01 2020-09-30 0000798359 csr:A2020AcquisitionsMember 2020-01-01 2020-09-30 0000798359 csr:A2020AcquisitionsMember 2020-09-30 0000798359 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2021-07-01 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-07-01 2020-09-30 0000798359 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember srt:OtherPropertyMember 2020-07-01 2020-09-30 0000798359 csr:RealEstatePropertyExcludingUnimprovedLandMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:CrystalBayRochesterMNMember 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:CrystalBayRochesterMNMember 2021-01-01 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:FrenchCreekRochesterMNMember 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:FrenchCreekRochesterMNMember 2021-01-01 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:HeritageManorRochesterMNMember 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:HeritageManorRochesterMNMember 2021-01-01 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:OlympikVillageRochesterMNMember 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:OlympikVillageRochesterMNMember 2021-01-01 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:WinchesterVillageGreenRochesterMNMember 2021-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:WinchesterVillageGreenRochesterMNMember 2021-01-01 2021-09-30 0000798359 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2021-09-30 0000798359 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2021-01-01 2021-09-30 0000798359 csr:MultiFamilyResidentialMember csr:ForestParkGrandForksNDMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-09-30 0000798359 csr:MultiFamilyResidentialMember csr:ForestParkGrandForksNDMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-01-01 2020-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:LandmarkGrandForksNDMember 2020-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:LandmarkGrandForksNDMember 2020-01-01 2020-09-30 0000798359 csr:MultiFamilyResidentialMember csr:SouthwindGrandForksNDMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-09-30 0000798359 csr:MultiFamilyResidentialMember csr:SouthwindGrandForksNDMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-01-01 2020-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:ValleyParkGrandForksNDMember 2020-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:ValleyParkGrandForksNDMember 2020-01-01 2020-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-09-30 0000798359 csr:MultiFamilyResidentialMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-01-01 2020-09-30 0000798359 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:DakotaWestMember srt:OtherPropertyMember 2020-09-30 0000798359 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:DakotaWestMember srt:OtherPropertyMember 2020-01-01 2020-09-30 0000798359 csr:UnimprovedLandMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:RapidCityLandRapidCityNDMember 2020-09-30 0000798359 csr:UnimprovedLandMember us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember csr:RapidCityLandRapidCityNDMember 2020-01-01 2020-09-30 0000798359 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-09-30 0000798359 us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember 2020-01-01 2020-09-30 0000798359 csr:MultiFamilyResidentialMember 2021-07-01 2021-09-30 0000798359 us-gaap:AllOtherSegmentsMember 2021-07-01 2021-09-30 0000798359 csr:MultiFamilyResidentialMember 2020-07-01 2020-09-30 0000798359 us-gaap:AllOtherSegmentsMember 2020-07-01 2020-09-30 0000798359 csr:MultiFamilyResidentialMember 2021-01-01 2021-09-30 0000798359 us-gaap:AllOtherSegmentsMember 2021-01-01 2021-09-30 0000798359 csr:MultiFamilyResidentialMember 2020-01-01 2020-09-30 0000798359 us-gaap:AllOtherSegmentsMember 2020-01-01 2020-09-30 0000798359 csr:MultiFamilyResidentialMember 2021-09-30 0000798359 us-gaap:AllOtherSegmentsMember 2021-09-30 0000798359 csr:MultiFamilyResidentialMember 2020-12-31 0000798359 us-gaap:AllOtherSegmentsMember 2020-12-31 csr:segment 0000798359 csr:SubjectToRestrictionsOnTaxableDispositionsMember 2021-09-30 0000798359 2021-05-01 2021-05-31 0000798359 csr:IncentivePlan2015Member 2021-09-30 0000798359 us-gaap:RestrictedStockUnitsRSUMember csr:EmployeesMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-01-01 0000798359 csr:EmployeesMember us-gaap:PerformanceSharesMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-01-01 0000798359 csr:EmployeesMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-01-01 0000798359 us-gaap:EmployeeStockOptionMember csr:SharebasedCompensationAwardTrancheFourMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-01-01 0000798359 us-gaap:EmployeeStockOptionMember us-gaap:ShareBasedCompensationAwardTrancheOneMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-01-01 0000798359 us-gaap:EmployeeStockOptionMember us-gaap:ShareBasedCompensationAwardTrancheTwoMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-01-01 0000798359 us-gaap:EmployeeStockOptionMember us-gaap:ShareBasedCompensationAwardTrancheThreeMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-01-01 0000798359 us-gaap:EmployeeStockOptionMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-09-30 0000798359 us-gaap:EmployeeStockOptionMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-09-30 0000798359 csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-09-30 0000798359 us-gaap:PerformanceSharesMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-01-01 0000798359 us-gaap:PerformanceSharesMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 2021-09-30 0000798359 us-gaap:PerformanceSharesMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-01-01 0000798359 us-gaap:RestrictedStockUnitsRSUMember csr:TrusteeMember csr:A2021LongTermIncentivePlanLTIPAwardsMember 2021-05-01 2021-05-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q

☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021
or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________
Commission File Number 001-35624
CENTERSPACE
(Exact name of registrant as specified in its charter)

North Dakota |  |  | 45-0311232
(State or other jurisdiction of incorporation or organization) |  |  | (I.R.S. Employer Identification No.)
3100 10th Street SW | Post Office Box 1988 | Minot | ND | 58702-1988
(Address of principal executive offices) |  |  | (Zip code)

(701) 837-4738
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.

Yes | ☑ |  | No | ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes | ☑ |  | No | ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐
Smaller Reporting Company | ☐ | Emerging growth company | ☐ |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes | ☐ |  | No | ☑

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Shares of Beneficial Interest, no par value | CSR | New York Stock Exchange
Series C Cumulative Redeemable Preferred Shares | CSR-PRC | New York Stock Exchange

The number of common shares of beneficial interest outstanding as of October 25, 2021, was 14,280,535.

Table of Contents
TABLE OF CONTENTS

| Page
Part I. Financial Information |
Item 1. Financial Statements - Third Quarter - 2021: | 3
Condensed Consolidated Balance Sheets September 30, 2021 (unaudited) and December 31, 2020 | 3
Condensed Consolidated Statements of Operations (unaudited) For the Three and Nine Months ended September 30, 2021 and 2020 | 4
Condensed Consolidated Statements of Comprehensive Income (unaudited) For the Three and Nine Months ended September 30, 2021 and 2020 | 5
Condensed Consolidated Statements of Equity (unaudited) For the Three and Nine Months ended September 30, 2021 and 2020 | 6
Condensed Consolidated Statements of Cash Flows (unaudited) For the Nine Months ended September 30, 2021 and 2020 | 8
Notes to Condensed Consolidated Financial Statements (unaudited) | 10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 37
Item 4. Controls and Procedures | 38
Part II. Other Information |
Item 1. Legal Proceedings | 39
Item 1A. Risk Factors | 39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 39
Item 3. Defaults Upon Senior Securities | 39
Item 4. Mine Safety Disclosures | 39
Item 5. Other Information | 39
Item 6. Exhibits | 40
Signatures | 42

2

Table of Contents
PART I
Item 1. Financial Statements.
CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

| (in thousands, except per share data)
| September 30, 2021 |  | December 31, 2020
ASSETS |  |  |
Real estate investments |  |  |
Property owned | $ | 2,203,606 |  |  | $ | 1,812,557 |
Less accumulated depreciation | (426,926) |  |  | (399,249) |
| 1,776,680 |  |  | 1,413,308 |
Mortgage loans receivable at fair value | 42,160 |  |  | 24,661 |
Total real estate investments | 1,818,840 |  |  | 1,437,969 |
Cash and cash equivalents | 20,816 |  |  | 392 |
Restricted cash | 2,376 |  |  | 6,918 |
Other assets | 34,919 |  |  | 18,904 |
TOTAL ASSETS | $ | 1,876,951 |  |  | $ | 1,464,183 |
LIABILITIES, MEZZANINE EQUITY, AND EQUITY |  |  |
LIABILITIES |  |  |
Accounts payable and accrued expenses | $ | 58,092 |  |  | $ | 55,609 |
Revolving lines of credit | 57,000 |  |  | 152,871 |
Notes payable, net of unamortized loan costs of $546 and $754 respectively | 299,454 |  |  | 269,246 |
Mortgages payable, net of unamortized loan costs of $3,258 and $1,371, respectively | 489,140 |  |  | 297,074 |
TOTAL LIABILITIES | $ | 903,686 |  |  | $ | 774,800 |
COMMITMENTS AND CONTINGENCIES (NOTE 10) |  |  |
SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $100 par value, 166 units issued and outstanding at September 30, 2021 and December 31, 2020, aggregate liquidation preference of $16,560) | $ | 21,585 |  |  | $ | 16,560 |
EQUITY |  |  |
Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $25 per share liquidation preference, 3,881 shares issued and outstanding at September 30, 2021 and December 31, 2020, aggregate liquidation preference of $97,036) | 93,530 |  |  | 93,530 |
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 14,281 shares issued and outstanding at September 30, 2021 and 13,027 shares issued and outstanding at December 31, 2020) | 1,092,130 |  |  | 968,263 |
Accumulated distributions in excess of net income | (454,691) |  |  | (427,681) |
Accumulated other comprehensive income (loss) | (5,784) |  |  | (15,905) |
Total shareholders’ equity | $ | 725,185 |  |  | $ | 618,207 |
Noncontrolling interests – Operating Partnership and Series E preferred units | 225,850 |  |  | 53,930 |
Noncontrolling interests – consolidated real estate entities | 645 |  |  | 686 |
Total equity | $ | 951,680 |  |  | $ | 672,823 |
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY | $ | 1,876,951 |  |  | $ | 1,464,183 |

See accompanying Notes to Condensed Consolidated Financial Statements.
3

Table of Contents
CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

| (in thousands, except per share data)
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
REVENUE | $ | 50,413 |  |  | $ | 44,138 |  |  | $ | 143,717 |  |  | $ | 132,454 |
EXPENSES |  |  |  |  |  |  |
Property operating expenses, excluding real estate taxes | 14,434 |  |  | 13,129 |  |  | 40,901 |  |  | 38,957 |
Real estate taxes | 5,916 |  |  | 5,402 |  |  | 17,450 |  |  | 16,277 |
Property management expense | 2,203 |  |  | 1,442 |  |  | 6,055 |  |  | 4,341 |
Casualty (gain) loss | (10) |  |  | 91 |  |  | 64 |  |  | 1,331 |
Depreciation and amortization | 22,447 |  |  | 18,995 |  |  | 61,747 |  |  | 55,311 |
General and administrative expenses | 4,279 |  |  | 3,077 |  |  | 11,982 |  |  | 9,707 |
TOTAL EXPENSES | $ | 49,269 |  |  | $ | 42,136 |  |  | $ | 138,199 |  |  | $ | 125,924 |
Operating income | 1,144 |  |  | 2,002 |  |  | 5,518 |  |  | 6,530 |
Interest expense | (7,302) |  |  | (6,771) |  |  | (21,622) |  |  | (20,622) |
Interest and other income (loss) | (5,082) |  |  | 277 |  |  | (4,032) |  |  | (1,979) |
Income (loss) before gain (loss) on sale of real estate and other investments | (11,240) |  |  | (4,492) |  |  | (20,136) |  |  | (16,071) |
Gain (loss) on sale of real estate and other investments | — |  |  | 25,676 |  |  | 26,840 |  |  | 25,486 |
NET INCOME (LOSS) | $ | (11,240) |  |  | $ | 21,184 |  |  | $ | 6,704 |  |  | $ | 9,415 |
Dividends to Series D preferred unitholders | (160) |  |  | (160) |  |  | (480) |  |  | (480) |
Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | 1,930 |  |  | (1,387) |  |  | 1,013 |  |  | (248) |
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities | (22) |  |  | (8) |  |  | (58) |  |  | 132 |
Net income (loss) attributable to controlling interests | (9,492) |  |  | 19,629 |  |  | 7,179 |  |  | 8,819 |
Dividends to preferred shareholders | (1,607) |  |  | (1,607) |  |  | (4,821) |  |  | (4,921) |
Discount (premium) on redemption of preferred shares | — |  |  | (1) |  |  | — |  |  | 297 |
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | (11,099) |  |  | $ | 18,021 |  |  | $ | 2,358 |  |  | $ | 4,195 |
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC | $ | (0.79) |  |  | $ | 1.40 |  |  | $ | 0.17 |  |  | $ | 0.33 |
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED | $ | (0.81) |  |  | $ | 1.38 |  |  | $ | 0.12 |  |  | $ | 0.33 |

See accompanying Notes to Condensed Consolidated Financial Statements.
4

Table of Contents
CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

| (in thousands)
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Net income (loss) | $ | (11,240) |  |  | $ | 21,184 |  |  | $ | 6,704 |  |  | $ | 9,415 |
Other comprehensive income: |  |  |  |  |  |  |
Unrealized gain (loss) from derivative instrument | (70) |  |  | (210) |  |  | 1,555 |  |  | (11,314) |
(Gain) loss on derivative instrument reclassified into earnings | 6,350 |  |  | 1,093 |  |  | 8,566 |  |  | 1,665 |
Total comprehensive income (loss) | $ | (4,960) |  |  | $ | 22,067 |  |  | $ | 16,825 |  |  | $ | (234) |
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | (3,055) |  |  | (1,451) |  |  | (2,389) |  |  | 516 |
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities | (22) |  |  | (8) |  |  | (58) |  |  | 132 |
Comprehensive income (loss) attributable to controlling interests | $ | (8,037) |  |  | $ | 20,608 |  |  | $ | 14,378 |  |  | $ | 414 |

See accompanying Notes to Condensed Consolidated Financial Statements.
5

Table of Contents
CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited)

| (in thousands, except per share data)
Nine Months Ended September 30, 2020 | PREFERRED SHARES | NUMBER OF COMMON SHARES |  | COMMON SHARES |  | ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME |  | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |  | NONCONTROLLING INTERESTS |  | TOTAL EQUITY
Balance December 31, 2019 | $ | 99,456 |  | 12,098 |  |  | $ | 917,400 |  |  | $ | (390,196) |  |  | $ | (7,607) |  |  | $ | 60,849 |  |  | $ | 679,902 |
Net income (loss) attributable to controlling interests and noncontrolling interests |  |  |  |  |  | 8,819 |  |  |  |  | 116 |  |  | 8,935 |
Change in fair value of derivatives |  |  |  |  |  |  |  | (9,649) |  |  |  |  | (9,649) |
Distributions - common shares and units ($2.10 per share and unit) |  |  |  |  |  | (26,576) |  |  |  |  | (2,159) |  |  | (28,735) |
Distributions – Series C preferred shares ($1.2421875 per Series C share) |  |  |  |  |  | (4,921) |  |  |  |  |  |  | (4,921) |
Share-based compensation, net of forfeitures |  | 20 |  |  | 1,521 |  |  |  |  |  |  |  |  | 1,521 |
Sale of common shares, net |  | 819 |  |  | 58,204 |  |  |  |  |  |  |  |  | 58,204 |
Redemption of units for common shares |  | 40 |  |  | (344) |  |  |  |  |  |  | 344 |  |  | — |
Shares repurchased | (5,926) |  |  |  |  |  | 297 |  |  |  |  |  |  | (5,629) |
Acquisition of noncontrolling interests - consolidated real estate entities |  |  |  | (7,584) |  |  |  |  |  |  | (4,637) |  |  | (12,221) |
Other |  | (1) |  |  | (761) |  |  |  |  |  |  | (135) |  |  | (896) |
Balance September 30, 2020 | $ | 93,530 |  | 12,976 |  |  | $ | 968,436 |  |  | $ | (412,577) |  |  | $ | (17,256) |  |  | $ | 54,378 |  |  | $ | 686,511 |
Nine Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |
Balance December 31, 2020 | $ | 93,530 |  | 13,027 |  |  | $ | 968,263 |  |  | $ | (427,681) |  |  | $ | (15,905) |  |  | $ | 54,616 |  |  | $ | 672,823 |
Net income (loss) attributable to controlling interests and noncontrolling interests |  |  |  |  |  | 7,179 |  |  |  |  | (955) |  |  | 6,224 |
Change in fair value of derivatives |  |  |  |  |  |  |  | 10,121 |  |  |  |  | 10,121 |
Distributions - common shares and units ($2.12 per share and unit) |  |  |  |  |  | (29,368) |  |  |  |  | (1,891) |  |  | (31,259) |
Distributions – Series C preferred shares ($1.2421875 per Series C share) |  |  |  |  |  | (4,821) |  |  |  |  |  |  | (4,821) |
Distributions - Series E preferred units ($0.322917 per unit) |  |  |  |  |  |  |  |  |  | (585) |  |  | (585) |
Share-based compensation, net of forfeitures |  | 28 |  |  | 2,088 |  |  |  |  |  |  |  |  | 2,088 |
Sale of common shares, net |  | 1,095 |  |  | 85,864 |  |  |  |  |  |  |  |  | 85,864 |
Issuance of Series E preferred units |  |  |  | 44,905 |  |  |  |  |  |  | 172,608 |  |  | 217,513 |
Redemption of units for common shares |  | 131 |  |  | (2,815) |  |  |  |  |  |  | 2,815 |  |  | — |
Change in value of Series D preferred units |  |  |  | (5,025) |  |  |  |  |  |  |  |  | (5,025) |
Other |  | — |  |  | (1,150) |  |  |  |  |  |  | (113) |  |  | (1,263) |
Balance September 30, 2021 | $ | 93,530 |  | 14,281 |  |  | $ | 1,092,130 |  |  | $ | (454,691) |  |  | $ | (5,784) |  |  | $ | 226,495 |  |  | $ | 951,680 |

See accompanying Notes to Condensed Consolidated Financial Statements.
6

Table of Contents
CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited)

Three Months Ended September 30, 2020 | PREFERRED SHARES | NUMBER OF COMMON SHARES |  | COMMON SHARES |  | ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME |  | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |  | NONCONTROLLING INTERESTS |  | TOTAL EQUITY
Balance June 30, 2020 | $ | 93,579 |  | 12,827 |  |  | $ | 958,292 |  |  | $ | (421,515) |  |  | $ | (18,139) |  |  | $ | 53,290 |  |  | $ | 665,507 |
Net income (loss) attributable to controlling interests and noncontrolling interests |  |  |  |  |  | 19,629 |  |  |  |  | 1,395 |  |  | 21,024 |
Change in fair value of derivatives |  |  |  |  |  |  |  | 883 |  |  |  |  | 883 |
Distributions - common shares and units ($0.70 per share and unit) |  |  |  |  |  | (9,083) |  |  |  |  | (713) |  |  | (9,796) |
Distributions – Series C preferred shares ($0.4140625 per Series C share) |  |  |  |  |  | (1,607) |  |  |  |  |  |  | (1,607) |
Share-based compensation, net of forfeitures |  | — |  |  | 554 |  |  |  |  |  |  |  |  | 554 |
Sale of common shares, net |  | 145 |  |  | 10,063 |  |  |  |  |  |  |  |  | 10,063 |
Redemption of units for common shares |  | 4 |  |  | (462) |  |  |  |  |  |  | 462 |  |  | — |
Shares repurchased | (49) |  |  |  |  |  | (1) |  |  |  |  |  |  | (50) |
Other |  | — |  |  | (11) |  |  |  |  |  |  | (56) |  |  | (67) |
Balance September 30, 2020 | $ | 93,530 |  | 12,976 |  |  | $ | 968,436 |  |  | $ | (412,577) |  |  | $ | (17,256) |  |  | $ | 54,378 |  |  | $ | 686,511 |
Three Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |
Balance June 30, 2021 | $ | 93,530 |  | 14,045 |  |  | $ | 1,033,940 |  |  | $ | (433,310) |  |  | $ | (12,064) |  |  | $ | 53,790 |  |  | $ | 735,886 |
Net income (loss) attributable to controlling interests and noncontrolling interests |  |  |  |  |  | (9,492) |  |  |  |  | (1,908) |  |  | (11,400) |
Change in fair value of derivatives |  |  |  |  |  |  |  | 6,280 |  |  |  |  | 6,280 |
Distributions - common shares and units ($0.72 per share and unit) |  |  |  |  |  | (10,282) |  |  |  |  | (609) |  |  | (10,891) |
Distributions – Series C preferred shares ($0.4140625 per Series C share) |  |  |  |  |  | (1,607) |  |  |  |  |  |  | (1,607) |
Distributions - Series E preferred units ($0.322917 per unit) |  |  |  |  |  |  |  |  |  | (585) |  |  | (585) |
Share-based compensation, net of forfeitures |  | 1 |  |  | 600 |  |  |  |  |  |  |  |  | 600 |
Sale of common shares, net |  | 199 |  |  | 19,508 |  |  |  |  |  |  |  |  | 19,508 |
Issuance of Series E preferred units |  |  |  | 44,905 |  |  |  |  |  |  | 172,608 |  |  | 217,513 |
Redemption of units for common shares |  | 36 |  |  | (3,233) |  |  |  |  |  |  | 3,233 |  |  | — |
Change in value of Series D preferred units |  |  |  | (3,563) |  |  |  |  |  |  |  |  | (3,563) |
Other |  | — |  |  | (27) |  |  |  |  |  |  | (34) |  |  | (61) |
Balance September 30, 2021 | $ | 93,530 |  | 14,281 |  |  | $ | 1,092,130 |  |  | $ | (454,691) |  |  | $ | (5,784) |  |  | $ | 226,495 |  |  | $ | 951,680 |

7

Table of Contents
CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

| (in thousands)
| Nine Months Ended September 30,
| 2021 |  | 2020
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
Net income (loss) | $ | 6,704 |  |  | $ | 9,415 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |
Depreciation and amortization, including amortization of capitalized loan costs | 62,527 |  |  | 56,070 |
(Gain) loss on sale of real estate and other investments | (26,840) |  |  | (25,486) |
Realized (gain) loss on marketable securities | — |  |  | 3,378 |
Share-based compensation expense | 2,088 |  |  | 1,521 |
Loss on termination of interest rate swaps | 5,343 |  |  | — |
Other, net | 3,275 |  |  | 2,393 |
Changes in other assets and liabilities: |  |  |
Other assets | (4,550) |  |  | (1,632) |
Accounts payable and accrued expenses | 7,808 |  |  | 1,599 |
Net cash provided by (used by) operating activities | $ | 56,355 |  |  | $ | 47,258 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
Proceeds from sale of marketable securities | — |  |  | 3,856 |
Proceeds from repayment of mortgage loans and notes receivable | 139 |  |  | 10,020 |
Increase in mortgages and notes receivable | (17,498) |  |  | (18,187) |
Proceeds from sale of real estate and other investments | 59,233 |  |  | 43,669 |
Payments for acquisitions of real estate investments | (209,669) |  |  | (168,411) |
Payments for improvements of real estate investments | (20,655) |  |  | (20,411) |
Other investing activities | (441) |  |  | 892 |
Net cash provided by (used by) investing activities | $ | (188,891) |  |  | $ | (148,572) |
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
Net proceeds from mortgages payable | 196,725 |  |  | — |
Principal payments on mortgages payable | (27,650) |  |  | (17,233) |
Proceeds from revolving lines of credit | 173,733 |  |  | 126,578 |
Principal payments on revolving lines of credit | (269,604) |  |  | (41,656) |
Net proceeds from notes payable | 174,544 |  |  | — |
Principal payments on notes payable | (145,000) |  |  | — |
Payment for termination of interest rate swap | (3,804) |  |  | — |
Payments for acquisition of noncontrolling interests – consolidated real estate entities | — |  |  | (12,221) |
Net proceeds from issuance of common shares | 85,864 |  |  | 58,204 |
Repurchase of Series C preferred shares | — |  |  | (5,629) |
Distributions paid to common shareholders | (28,205) |  |  | (25,962) |
Distributions paid to preferred shareholders | (4,821) |  |  | (4,921) |
Distributions paid to preferred unitholders | (480) |  |  | (480) |
Distributions paid to noncontrolling interests – Operating Partnership and Series E preferred units | (2,550) |  |  | (2,187) |
Other financing activities | (334) |  |  | (293) |
Net cash provided by (used by) financing activities | $ | 148,418 |  |  | $ | 74,200 |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 15,882 |  |  | (27,114) |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD | 7,310 |  |  | 46,117 |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $ | 23,192 |  |  | $ | 19,003 |

SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES |  |  |
Accrued capital expenditures | $ | 1,239 |  |  | $ | (297) |
Operating partnership units converted to shares | (2,815) |  |  | (344) |
Distributions declared but not paid to common shareholders | 10,891 |  |  | 9,796 |
Retirement of shares withheld for taxes | 929 |  |  | — |
Real estate assets acquired through assumption of debt | 20,000 |  |  | — |
Fair value adjustment to debt | 2,367 |  |  | — |
Real estate assets acquired through exchange of note receivable | — |  |  | 17,663 |
Note receivable exchanged through real estate acquisition | — |  |  | (17,663) |
Real estate assets acquired through issuance of Series E preferred units | 217,513 |  |  | — |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |  |  |
Cash paid for interest | $ | 20,050 |  |  | $ | 19,527 |

8

Table of Contents
CENTERSPACE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

| (in thousands)
Balance sheet description | September 30, 2021 |  | December 31, 2020 |  | September 30, 2020
Cash and cash equivalents | $ | 20,816 |  |  | $ | 392 |  |  | $ | 16,804 |
Restricted cash | 2,376 |  |  | 6,918 |  |  | 2,199 |
Total cash, cash equivalents and restricted cash | $ | 23,192 |  |  | $ | 7,310 |  |  | $ | 19,003 |

See accompanying Notes to Condensed Consolidated Financial Statements.
9

Table of Contents
CENTERSPACE AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
for the nine months ended September 30, 2021 and 2020
NOTE 1 • ORGANIZATION
Centerspace, collectively with its consolidated subsidiaries (“Centerspace,” “the Company,” “we,” “us,” or “our”), is a North Dakota real estate investment trust (“REIT”) focused on the ownership, management, acquisition, redevelopment, and development of apartment communities. As of September 30, 2021, Centerspace owned interests in 79 apartment communities consisting of 14,275 apartment homes.
NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Centerspace conducts a majority of its business activities through a consolidated operating partnership, Centerspace, LP (f/k/a IRET Properties), 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.
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Centerspace’s 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, 2020, as filed with the SEC on February 22, 2021.
USE OF ESTIMATES
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.
10

Table of Contents
RECENT ACCOUNTING PRONOUNCEMENTS
The following table provides a brief description of recent accounting standards updates (“ASUs”).

Standard | Description | Date of Adoption | Effect on the Financial Statements or Other Significant Matters
ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting | This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. | This ASU is optional and may be elected over time. | Centerspace adopted the guidance in June 2021 on a prospective basis. This adoption did not have a material impact on the Condensed Consolidated Financial Statements.
ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity | This ASU simplifies accounting for convertible instruments and removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception. This ASU also simplifies the diluted earnings per share calculation in certain areas and provides updated disclosure requirements. | This ASU is effective for annual reporting periods beginning after December 15, 2021. Early adoption is permitted. | Centerspace early adopted this guidance in the first quarter of 2021 using the modified retrospective method. The adoption did not have a material impact on the Condensed Consolidated Financial Statements.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
As of September 30, 2021 and December 31, 2020, restricted cash consisted primarily of real estate deposits and escrows held by lenders for real estate taxes, insurance, and capital additions.
LEASES
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 ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 98.1% of total revenues and includes gross market rent less adjustments for concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 1.9% of total revenues and are primarily driven by other fee income, which is typically recognized when earned, at a point in time.
Some of the Company’s apartment communities have commercial spaces available for lease. Lease terms for these spaces typically range from three to fifteen years. The leases for commercial spaces generally include options to extend the lease for additional terms.
Beginning in April 2020, the Company abated rent, common area maintenance, and real estate taxes for commercial tenants that experienced government-mandated interruptions or closures of their businesses related to the COVID-19 pandemic. The Company elected to account for these accommodations as though enforceable rights and obligations existed without evaluating if such a right or obligation existed under the lease agreement, as allowed by the FASB Q&A released on April 10, 2020. The accommodations were recognized as variable lease payments. During the three months ended September 30, 2021, the Company did not recognize a reduction in revenue due to the abatement of amounts due from commercial tenants, compared to a reduction of $136,000 in the same period of the prior year. During the nine months ended September 30, 2021 and 2020, the Company recognized reductions of $47,000 and $538,000, respectively, due to the abatement of amounts due from commercial tenants.
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 for all asset classes. The combined components are included in lease income and are accounted for under ASC 842.
The aggregate amount of future scheduled lease income on commercial operating leases, excluding any variable lease income and non-lease components, as of September 30, 2021, was as follows:
11

Table of Contents

|  | (in thousands)
2021 (remainder) |  | $ | 593 |
2022 |  | 2,339 |
2023 |  | 2,336 |
2024 |  | 2,323 |
2025 |  | 2,292 |
Thereafter |  | 2,488 |
Total scheduled lease income - commercial operating leases |  | $ | 12,371 |

REVENUES
Revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration to which the Company expects to be entitled for those goods and services.
Revenue streams that are included in revenues from contracts with customers include:
•O ther property revenue: Centerspace recognizes revenue for rental related income not included as a component of a lease, such as application fees, as earned.
•Gains or losses on sales of real estate: A gain or loss is recognized 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.
The following table presents the disaggregation of revenue streams for the three and nine months ended September 30, 2021 and 2020:

|  |  | (in thousands)
|  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Revenue Stream | Applicable Standard |  | 2021 | 2020 |  | 2021 | 2020
Fixed lease income - operating leases | Leases |  | $ | 47,292 |  | $ | 41,712 |  |  | $ | 134,817 |  | $ | 125,555 |
Variable lease income - operating leases | Leases |  | 2,171 |  | 1,729 |  |  | 6,243 |  | 4,811 |
Other property revenue | Revenue from contracts with customers |  | 950 |  | 697 |  |  | 2,657 |  | 2,088 |
Total revenue |  |  | $ | 50,413 |  | $ | 44,138 |  |  | $ | 143,717 |  | $ | 132,454 |

IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates long-lived assets, including investments in real estate, 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 expected 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 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 anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates, and capital requirements that could differ materially from actual results. Reducing planned property holding periods may increase the likelihood of recording impairment losses.
During the three and nine months ended September 30, 2021 and 2020, the Company recorded no impairment charges.
MORTGAGE LOANS RECEIVABLE AND NOTES RECEIVABLE
In March 2020, in connection with the acquisition of Ironwood, an apartment community in New Hope, Minnesota, the Company acquired a tax increment financing note receivable (“TIF”) with a principal balance of $6.4 million at September 30, 2021 and December 31, 2020, which appears within other assets in the Condensed Consolidated Balance Sheets. The note bears an interest rate of 4.5% with payments due in February and August of each year.
12

Table of Contents
In December 2019, Centerspace originated a $29.9 million construction loan and a $15.3 million mezzanine loan for the development of a multifamily community located in Minneapolis, Minnesota. During the three months ended September 30, 2021, construction on the project was completed and the lease-up phase began. In conjunction with the loans, the Company received a guaranty for the substantial completion of the project improvements from an investment grade guarantor. The construction and mezzanine loans bear and accrue interest at 4.5% and 11.5%, respectively. As of September 30, 2021, the Company had fully funded the $29.9 million construction loan and $11.4 million of the mezzanine loan, both of which appear within mortgage loans receivable in the Condensed Consolidated Balance Sheets. As of September 30, 2021, the construction loan had accrued $813,000 of interest which is added to the $29.9 million original principal balance. As of December 31, 2020, the Company had funded $24.7 million of the construction loan. The loans are secured by mortgages and mature on December 31, 2023, and the agreement provides Centerspace with an option to purchase the development. The loans represent an investment in an unconsolidated variable interest entity (“VIE”). The Company is not the primary beneficiary of the VIE as it does not have the power to direct the activities that most significantly impact the entity’s economic performance nor does it have significant influence over the entity.
VARIABLE INTEREST ENTITIES
Centerspace has determined that its Operating Partnership and each of its less-than-wholly owned real estate partnerships are VIEs, 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.
MARKETABLE SECURITIES
Marketable securities consisted of equity securities. Equity securities are reported at fair value based on quoted market prices (Level 1 inputs). Any unrealized gains or losses are included in interest and other income on the consolidated statements of operations. As of September 30, 2021 and December 31, 2020 the Company had no marketable securities. During the nine months ended September 30, 2020, the Company had a realized loss of $3.4 million arising from the disposal of such securities which appears in interest and other income (loss) in the Condensed Consolidated Statements of Operations.
NOTE 3 • EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares of beneficial interest (“common shares”) outstanding during the period. Centerspace has issued restricted stock units (“RSUs”) and incentive stock options (“ISOs”) under the 2015 Incentive Plan, Series D Convertible Preferred Units (“Series D preferred units”), and Series E Convertible Preferred Units (“Series E preferred units”), which could have a dilutive effect on the earnings per share upon exercise of the RSUs or ISOs or upon conversion of the Series D or Series E preferred units (refer to Note 4 for further discussion of the Series D and the Series E preferred units). Other than the issuance of RSUs, ISOs, Series D preferred units, and Series E preferred units, there are no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their limited partnership units (“Units”) any time following the first anniversary of the date they acquired such Units (“Exchange Right”). Upon the exercise of Exchange Rights, and in Centerspace’s sole discretion, it may issue common shares in exchange for Units on a one-for-one basis.
Performance-based RSUs of 31,821 for the three and nine months ended September 30, 2021 and 27,506 for the three and nine months ended September 30, 2020, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.
For the nine months ended September 30, 2020, Series D preferred units of 228,000 and time-based RSUs of 13,000 were excluded from the calculation of diluted earnings per share because they were anti-dilutive.
For the three and nine months ended September 30, 2020, weighted average stock options of 140,554 and 68,292, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.
The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2021 and 2020:
13

Table of Contents

| (in thousands, except per share data)
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
NUMERATOR |  |  |  |  |  |  |
Net income (loss) attributable to controlling interests | $ | (9,492) |  |  | $ | 19,629 |  |  | $ | 7,179 |  |  | $ | 8,819 |
Dividends to preferred shareholders | (1,607) |  |  | (1,607) |  |  | (4,821) |  |  | (4,921) |
Redemption of preferred shares | — |  |  | (1) |  |  | — |  |  | 297 |
Numerator for basic earnings (loss) per share – net income available to common shareholders | (11,099) |  |  | 18,021 |  |  | 2,358 |  |  | 4,195 |
Noncontrolling interests – Operating Partnership and Series E preferred units | (1,930) |  |  | 1,387 |  |  | (1,013) |  |  | 248 |
Dividends to preferred unitholders | 160 |  |  | 160 |  |  | 480 |  |  | 480 |
Numerator for diluted earnings (loss) per share | $ | (12,869) |  |  | $ | 19,568 |  |  | $ | 1,825 |  |  | $ | 4,923 |
DENOMINATOR |  |  |  |  |  |  |
Denominator for basic earnings per share weighted average shares | 14,065 |  |  | 12,885 |  |  | 13,501 |  |  | 12,424 |
Effect of redeemable operating partnership units | 865 |  |  | 1,020 |  |  | 917 |  |  | 1,039 |
Effect of Series D preferred units | 228 |  |  | 228 |  |  | 228 |  |  | — |
Effect of Series E preferred units | 705 |  |  | — |  |  | 239 |  |  | — |
Effect of dilutive restricted stock units and stock options | 59 |  |  | 10 |  |  | 32 |  |  | — |
Denominator for diluted earnings per share | 15,922 |  |  | 14,143 |  |  | 14,917 |  |  | 13,463 |
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC | $ | (0.79) |  |  | $ | 1.40 |  |  | $ | 0.17 |  |  | $ | 0.33 |
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED | $ | (0.81) |  |  | $ | 1.38 |  |  | $ | 0.12 |  |  | $ | 0.33 |

NOTE 4 • EQUITY AND MEZZANINE EQUITY
Operating Partnership Units. The Operating Partnership had 845,000 and 977,000 outstanding Units at September 30, 2021 and December 31, 2020, respectively.
Exchange Rights. Centerspace redeemed Units in exchange for common shares in connection with Unitholders exercising their exchange rights during the three and nine months ended September 30, 2021 and 2020 as detailed in the table below.

| (in thousands)
Three Months Ended September 30, | Number of Units |  | Net Book Basis
2021 | 36 |  |  | $ | (3,233) |
2020 | 4 |  |  | $ | (462) |
Nine Months Ended September 30, |  |  |
2021 | 131 |  |  | $ | (2,815) |
2020 | 40 |  |  | $ | (344) |

Series E Preferred Units (Noncontrolling interests). On September 1, 2021, Centerspace issued 1.8 million Series E preferred units with a par value of $100 per Series E preferred unit as partial consideration for the acquisition of 17 apartment communities. The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year. Each Series E preferred unit is convertible, at the holder’s option, into 1.2048 Units, representing a conversion exchange rate of $83.00 per unit. The Series E preferred units have an aggregate liquidation preference of $181.4 million. The holders of the Series E preferred units do not have voting rights and are required to hold the units for one year before they may elect to convert.
Common Shares and Equity Awards. Common shares outstanding on September 30, 2021 and December 31, 2020, totaled 14.3 million and 13.0 million, respectively. There were 578 and 26,764 shares issued upon the vesting of equity awards under the 2015 Incentive Plan during the three and nine months ended September 30, 2021, respectively, with a total grant-date fair value of $32,000 and $946,000, respectively. During the three and nine months ended September 30, 2020, the Company issued 297 and 20,998 shares, respectively, upon the vesting of equity awards under the 2015 Incentive Plan, with a total grant-date fair value of $17,000 and $1.0 million, respectively. These shares vest based on performance and service criteria.
Equity Distribution Agreement. Centerspace had an equity distribution agreement in connection with an at-the-market offering (“2019 ATM Program”) through which it could offer and sell common shares having an aggregate sales price of up to $150.0
14

Table of Contents
million. Under the 2019 ATM Program, we sold shares having an aggregate sales price of $149.9 million. During the three months ended September 30, 2021, the Company replaced the 2019 ATM Program with a new at-the-market offering (“2021 ATM Program”) through which it may offer and sell common shares having an aggregate sales price of up to $250.0 million, in amounts and at times determined by management. Under the 2021 ATM Program, the Company may enter into separate forward sale agreements. The proceeds from the sale of common shares under the 2021 ATM Program are intended to be used for general purposes, which may include the funding of acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness. The table below provides details on the sale of common shares during the three and nine months ended September 30, 2021 and 2020 under both the 2019 and 2021 ATM Programs. As of September 30, 2021, common shares having an aggregate offering price of up to $230.1 million remained available under the 2021 ATM Program.

| (in thousands, except per share amounts)
Three Months Ended September 30, | Number of Common Shares |  | Net Consideration(1) |  | Average Net Price Per Share
2021 | 199 |  |  | $ | 19,632 |  |  | $ | 98.58 |
2020 | 145 |  |  | $ | 10,218 |  |  | $ | 70.55 |
Nine Months Ended September 30, |  |  |  |  |
2021 | 1,095 |  |  | $ | 86,127 |  |  | $ | 78.63 |
2020 | 819 |  |  | $ | 57,528 |  |  | $ | 70.23 |

(1)Total consideration is net of $299,000 and $1.0 million in commissions and issuance costs during the three and nine months ended September 30, 2021, respectively. Total consideration for the three and nine months ended September 30, 2020 is net of $156,000 and $890,000 in commissions, respectively, and issuance costs.
Series C Preferred Shares. Series C preferred shares outstanding were 3.9 million shares at September 30, 2021 and December 31, 2020. The Series C preferred shares are nonvoting and redeemable for cash at $25.00 per share at Centerspace’s option after October 2, 2022. Holders of these shares are entitled to cumulative distributions, payable quarterly (as and if declared by the Board of Trustees). Distributions accrue at an annual rate of $1.65625 per share, which is equal to 6.625% of the $25.00 per share liquidation preference ($97.0 million liquidation preference in the aggregate).
Series D Preferred Units (Mezzanine Equity). On February 26, 2019, Centerspace issued 165,600 newly created Series D preferred units at an issuance price of $100 per preferred unit as partial consideration for the acquisition of SouthFork Townhomes. The Series D preferred unit holders receive a preferred distribution at the rate of 3.862% per year. The Series D preferred units have a put option which allows the holder to redeem any or all of the Series D preferred units for cash equal to the issuance price. Each Series D preferred unit is convertible, at the holder’s option, into 1.37931 Units, representing a conversion exchange rate of $72.50 per unit. The Series D preferred units have an aggregate liquidation preference of $16.6 million. Changes in the redemption value are charged to common shares on the Condensed Consolidated Balance Sheets from period to period. The holders of the Series D preferred units do not have voting rights. Distributions to Series D unitholders are presented in the Condensed Consolidated Statements of Equity within net income (loss) attributable to controlling interests and noncontrolling interests.
NOTE 5 • DEBT
As of September 30, 2021, 46 apartment communities were not encumbered by mortgages and are available to provide credit support for the unsecured borrowings. The Company’s primary unsecured credit facility (“unsecured credit facility”) is a revolving, multi-bank line of credit, with the Bank of Montreal serving as administrative agent. The line of credit has total commitments and borrowing capacity of $250.0 million, based on the value of unencumbered properties. As of September 30, 2021, the additional borrowing availability was $193.0 million beyond the $57.0 million drawn. This unsecured credit facility was amended on September 30, 2021 to extend the maturity date to September 2025 and provide for a $400.0 million accordion option.
Prior to the amendment, the unsecured credit facility also had unsecured term loans of $70.0 million and $75.0 million, included within notes payable on the Condensed Consolidated Balance Sheets. As of September 30, 2021, these term loans had been paid in full.
The interest rates on the line of credit and term loans are based, at the Company’s option, on either the lender’s base rate plus a margin, ranging from 25-80 basis points, or the London Interbank Offered Rate (“LIBOR”), plus a margin that ranges from 125-180 basis points based on the consolidated leverage ratio, as defined under the Third Amended and Restated Credit Agreement. The unsecured credit facility and unsecured senior notes are subject to customary financial covenants and limitations. The Company believes that it is in compliance with all such financial covenants and limitations as of September 30, 2021.
15

Table of Contents
In January 2021, Centerspace amended and expanded its private shelf agreement to increase the aggregate amount available for issuance of unsecured senior promissory notes (“unsecured senior notes”) to $225.0 million. Under this agreement, the Company has issued $200.0 million unsecured senior notes with $25.0 million remaining available as of September 30, 2021. In September 2021, the Company entered into a note purchase agreement for the issuance of $125.0 million senior unsecured promissory notes. The following table shows the notes issued under both agreements.

| (in thousands) |  |  |
| Amount |  | Maturity Date | Interest Rate
Series A | $ | 75,000 |  |  | September 13, 2029 | 3.84 | %
Series B | $ | 50,000 |  |  | September 30, 2028 | 3.69 | %
Series C | $ | 50,000 |  |  | June 6, 2030 | 2.70 | %
Series 2021-A | $ | 35,000 |  |  | September 17, 2030 | 2.50 | %
Series 2021-B | $ | 50,000 |  |  | September 17, 2031 | 2.62 | %
Series 2021-C | $ | 25,000 |  |  | September 17, 2032 | 2.68 | %
Series 2021-D | $ | 15,000 |  |  | September 17, 2034 | 2.78 | %

In September 2021, Centerspace entered into a $198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”) for the financing of 16 apartment communities acquired during the quarter. The FMCF is currently secured by mortgages on those apartment communities. The notes are interest-only, have varying maturity dates of 7, 10, and 12 years, and a blended, weighted average interest rate of 2.78%. As of September 30, 2021, the FMCF had a balance of $198.9 million. The FMCF is included within mortgages payable on the Condensed Consolidated Balance Sheets.
As of September 30, 2021, Centerspace owned 17 apartment communities that served as collateral for mortgage loans, in addition to the apartment communities secured by the FMCF. All of these mortgage loans were non-recourse to the Company other than for standard carve-out obligations. As of September 30, 2021, the Company believes that there are no material defaults or instances of noncompliance in regards to any of these mortgages payable.
Centerspace also has a $6.0 million operating line of credit. This operating line of credit is designed to enhance treasury management activities and more effectively manage cash balances. This operating line matures on November 29, 2021, with pricing based on a market spread plus the one-month LIBOR index rate.
The following table summarizes indebtedness:

| (in thousands) |
| September 30, 2021 | December 31, 2020 | Weighted Average Maturity in Years at September 30, 2021
Lines of credit | $ | 57,000 |  | $ | 152,871 |  | 4.00
Term loans (1) | — |  | 145,000 |  |
Unsecured senior notes (1) | 300,000 |  | 125,000 |  | 8.88
Unsecured debt | 357,000 |  | 422,871 |  | 8.10
Mortgages payable - Fannie Mae credit facility | 198,850 |  | — |  | 9.81
Mortgages payable - other | 293,547 |  | 298,445 |  | 5.05
Total debt | $ | 849,397 |  | $ | 721,316 |  | 7.46
Weighted average interest rate on lines of credit (rate with swap) | 2.79 | % | 2.85 | % |
Weighted average interest rate on term loans (rate with swap) | 3.52 | % | 4.15 | % |
Weighted average interest rate on unsecured senior notes | 3.12 | % | 3.78 | % |
Weighted average interest rate on mortgages payable - Fannie Mae credit facility | 2.78 | % | — |  |
Weighted average interest rate on mortgages payable - other | 3.83 | % | 3.93 | % |
Weighted average interest rate on total debt | 3.23 | % | 3.62 | % |

(1)Included within notes payable on the Condensed Consolidated Balance Sheets.
16

Table of Contents
The aggregate amount of required future principal payments on unsecured senior notes and mortgages payable as of September 30, 2021, was as follows:

| (in thousands)
2021 (remainder) | $ | 1,362 |
2022 | 34,284 |
2023 | 45,068 |
2024 | 4,054 |
2025 | 32,850 |
Thereafter | 475,929 |
Total payments | $ | 593,547 |

NOTE 6 • DERIVATIVE INSTRUMENTS
Centerspace’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate fluctuations. To accomplish this objective, the Company primarily uses interest rate swap contracts to fix the variable interest rate debt.
Changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (“OCI”) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for the interest rate swaps will be reclassified to interest expense as interest payments are incurred on the hedged variable rate debt. During the next twelve months, the Company estimates an additional $1.9 million will be reclassified as an increase to interest expense.
At September 30, 2021, the Company had one interest rate swap contract designated as a cash flow hedge of interest rate risk with a total notional amount of $75.0 million to fix the interest rate on the line of credit.
As of December 31, 2020, Centerspace had three interest rate swap contracts designated as cash flow hedges of interest rate risk with a notional amount of $195.0 million and one additional interest rate swap that becomes effective on January 31, 2023, with a notional amount of $70.0 million. These interest rate swaps fixed the interest rate on the term loans and a portion of the line of credit.
During the three months ended September 30, 2021, Centerspace paid $3.8 million to terminate its $50.0 million interest rate swap and its $70.0 million interest rate swap in connection with the pay down of the Company’s term loans (see Note 5 - Debt for additional details). The Company accelerated the reclassification of a $5.4 million loss from OCI into other income loss in the Condensed Consolidated Statement of Operations as a result of the hedged transactions becoming probable not to occur.
Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements. Changes in fair value of derivatives not designated in hedging relationships are recorded directly to earnings within other income loss in the Condensed Consolidated Statement of Operations. As of September 30, 2021, the Company had one interest rate swap with a notional amount of $70.0 million that is not effective until January 31, 2023 and was not designated as a hedge in a qualifying hedging relationship. For the three and nine months ended September 30, 2021, the Company recorded a gain of $60,000 related to the interest rate swap not designated in a hedging relationship.
As of December 31, 2020, the Company did not have any outstanding interest rate derivatives that were not designated as hedges in a qualifying hedging relationships.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020.

|  |  |  |  |  |  | (in thousands)
|  |  |  |  |  |  |  |  | September 30, 2021 |  | December 31, 2020
|  |  |  |  |  |  | Balance Sheet Location |  | Fair Value |  | Fair Value
Total derivative instruments designated as hedging instruments - interest rate swaps |  |  |  |  |  |  | Accounts Payable and Accrued Expenses |  | $ | 6,012 |  |  | $ | 15,905 |
Total derivative instruments not designated as hedging instruments - interest rate swaps |  |  |  |  |  |  | Accounts Payable and Accrued Expenses |  | $ | 1,457 |  |  | $ | — |

17

Table of Contents
The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of September 30, 2021 and 2020.

| (in thousands)
| Gain (Loss) Recognized in OCI |  | Location of Gain (Loss) Reclassified from Accumulated OCI into Income |  | Gain (Loss) Reclassified from Accumulated OCI into Income
Three months ended September 30, | 2021 |  | 2020 |  |  |  | 2021 |  | 2020
Total derivatives in cash flow hedging relationships - Interest rate contracts | $ | (70) |  |  | $ | (210) |  |  | Interest expense |  | $ | (940) |  |  | $ | (1,093) |
Nine months ended September 30, |  |  |  |  |  |  |  |  |
Total derivatives in cash flow hedging relationships - Interest rate contracts | $ | 1,555 |  |  | $ | (11,314) |  |  | Interest expense |  | $ | (3,156) |  |  | $ | (1,665) |

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
NOTE 7 • FAIR VALUE MEASUREMENTS
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 assumptions (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)
| Total |  | Level 1 |  | Level 2 |  | Level 3
September 30, 2021 |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Mortgages and notes receivable | $ | 48,364 |  |  | — |  |  | — |  |  | $ | 48,364 |
Liabilities |  |  |  |  |  |  |
Derivative instruments - interest rate swaps | $ | 7,469 |  |  | — |  |  | — |  |  | $ | 7,469 |
December 31, 2020 |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Mortgages and notes receivable | $ | 30,994 |  |  | — |  |  | — |  |  | $ | 30,994 |
Liabilities |  |  |  |  |  |  |
Derivative instruments - interest rate swaps | $ | 15,905 |  |  | $ | — |  |  | — |  |  | $ | 15,905 |

The fair value of the interest rate swaps is determined using the market standard methodology of netting discounted expected variable cash payments and receipts. The variable cash payments and receipts are based on an expectation of future interest rates (a forward curve) derived from observable market interest rate curves. The Company also considers both its own nonperformance risk and the counterparty’s nonperformance risk in the fair value measurement (Level 3).
Centerspace utilizes an income approach with level 3 inputs based on expected future cash flows to value mortgages and notes receivable. The inputs include market transactions for similar instruments, management estimates of comparable interest rates (range of 3.75% to 10.75%), 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.
18

Table of Contents

| (in thousands)
| Fair Value Measurement at September 30, |  | Other Gains (Losses) |  | Interest Income |  | Total Changes in Fair Value Included in Current-Period Earnings
Nine months ended September 30, 2021 |  |  |  |  |  |  |
Mortgage loans and notes receivable | $ | 48,364 |  |  | $ | 11 |  |  | $ | 1,759 |  |  | $ | 1,770 |
Nine months ended September 30, 2020 |  |  |  |  |  |  |
Mortgage loans and notes receivable | $ | 24,315 |  |  | $ | 3 |  |  | $ | 260 |  |  | $ | 263 |

As of September 30, 2021, Centerspace has an investment of $604,000 in a real estate technology venture consisting of privately held entities that develop technology related to the real estate industry. This investment is measured at net asset value (“NAV”) as a practical expedient under ASC 820. As of September 30, 2021, the Company had unfunded commitments of $1.4 million.
Fair Value Measurements on a Nonrecurring Basis
There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at September 30, 2021 and December 31, 2020.
Financial Assets and Liabilities Not Measured at Fair Value
The fair value of mortgages payable are estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates (Level 3).
The estimated fair values of the Company’s financial instruments as of September 30, 2021 and December 31, 2020, respectively, are as follows:

| (in thousands)
| September 30, 2021 |  | December 31, 2020
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
FINANCIAL ASSETS |  |  |  |  |  |  |
Cash and cash equivalents | $ | 20,816 |  |  | $ | 20,816 |  |  | $ | 392 |  |  | $ | 392 |
Restricted cash | $ | 2,376 |  |  | $ | 2,376 |  |  | $ | 6,918 |  |  | $ | 6,918 |
FINANCIAL LIABILITIES |  |  |  |  |  |  |
Revolving lines of credit(1) | $ | 57,000 |  |  | $ | 57,000 |  |  | $ | 152,871 |  |  | $ | 152,871 |
Term loans(1) | $ | — |  |  | $ | — |  |  | $ | 145,000 |  |  | $ | 145,000 |
Unsecured senior notes | $ | 300,000 |  |  | $ | 308,560 |  |  | $ | 125,000 |  |  | $ | 133,181 |
Mortgages payable - Fannie Mae | $ | 198,850 |  |  | $ | 198,850 |  |  | $ | — |  |  | $ | — |
Mortgages payable - other | $ | 293,547 |  |  | $ | 297,988 |  |  | $ | 298,445 |  |  | $ | 308,855 |

(1)Excluding the effect of interest rate swap agreements. Refer to Note 6 for discussion on the fair value of the interest rate swap agreements.
NOTE 8 • ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS
Centerspace acquired 17 new apartment communities for an aggregate acquisition cost of $359.9 million during the three months ended September 30, 2021 compared to acquisitions of $144.8 million in the three months ended September 30, 2020. The acquisitions during the nine months ended September 30, 2021 and 2020 are detailed below.
19

Table of Contents
Nine Months Ended September 30, 2021

| Date Acquired |  | (in thousands)
|  | Total Acquisition Cost(1) |  | Form of Consideration |  | Investment Allocation
Acquisitions |  |  | Cash |  | Units(2) |  | Other(3) |  | Land |  | Building |  | Intangible Assets |  | Other(4)
256 homes - Union Pointe - Longmont, CO | January 6, 2021 |  | $ | 76,900 |  |  | $ | 76,900 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,727 |  |  | $ | 69,966 |  |  | $ | 1,207 |  |  | $ | — |
120 homes - Bayberry Place - Minneapolis, MN | September 1, 2021 |  | 16,673 |  |  | 898 |  |  | 9,855 |  |  | 5,920 |  |  | 1,807 |  |  | 14,113 |  |  | 753 |  |  | — |
251 homes - Burgandy & Hillsboro Court - Minneapolis, MN | September 1, 2021 |  | 35,569 |  |  | 2,092 |  |  | 22,542 |  |  | 10,935 |  |  | 2,834 |  |  | 31,148 |  |  | 1,587 |  |  | — |
97 homes - Venue on Knox - Minneapolis, MN | September 1, 2021 |  | 18,896 |  |  | 500 |  |  | 11,375 |  |  | 7,021 |  |  | 3,438 |  |  | 14,743 |  |  | 715 |  |  | — |
120 homes - Gatewood - St. Cloud, MN | September 1, 2021 |  | 7,781 |  |  | 378 |  |  | 3,388 |  |  | 4,015 |  |  | 327 |  |  | 6,858 |  |  | 596 |  |  | — |
84 homes - Grove Ridge - Minneapolis, MN | September 1, 2021 |  | 12,060 |  |  | 121 |  |  | 8,579 |  |  | 3,360 |  |  | 1,250 |  |  | 10,271 |  |  | 539 |  |  | — |
119 homes - The Legacy - St. Cloud, MN | September 1, 2021 |  | 10,560 |  |  | 229 |  |  | 5,714 |  |  | 4,617 |  |  | 412 |  |  | 9,556 |  |  | 592 |  |  | — |
151 homes - New Hope Garden & Village - Minneapolis, MN | September 1, 2021 |  | 15,006 |  |  | 1,435 |  |  | 10,812 |  |  | 2,759 |  |  | 1,603 |  |  | 12,578 |  |  | 825 |  |  | — |
330 homes - Palisades - Minneapolis, MN | September 1, 2021 |  | 53,354 |  |  | 2,884 |  |  | 30,470 |  |  | 20,000 |  |  | 6,919 |  |  | 46,577 |  |  | 2,211 |  |  | (2,353) |
96 homes - Plymouth Pointe - Minneapolis, MN | September 1, 2021 |  | 14,450 |  |  | 370 |  |  | 9,061 |  |  | 5,019 |  |  | 1,042 |  |  | 12,809 |  |  | 599 |  |  | — |
93 homes - Pointe West - St. Cloud, MN | September 1, 2021 |  | 7,558 |  |  | 91 |  |  | 3,605 |  |  | 3,862 |  |  | 246 |  |  | 6,849 |  |  | 463 |  |  | — |
301 homes - River Pointe - Minneapolis MN | September 1, 2021 |  | 38,348 |  |  | 2,249 |  |  | 21,653 |  |  | 14,446 |  |  | 3,346 |  |  | 33,117 |  |  | 1,885 |  |  | — |
70 homes - Southdale Parc - Minneapolis, MN | September 1, 2021 |  | 9,670 |  |  | 165 |  |  | 7,907 |  |  | 1,598 |  |  | 1,569 |  |  | 7,740 |  |  | 361 |  |  | — |
62 homes - Portage - Minneapolis, MN | September 1, 2021 |  | 9,171 |  |  | 323 |  |  | 5,588 |  |  | 3,260 |  |  | 2,133 |  |  | 6,685 |  |  | 353 |  |  | — |
200 homes - Windsor Gates - Minneapolis, MN | September 1, 2021 |  | 22,231 |  |  | 1,122 |  |  | 12,080 |  |  | 9,029 |  |  | 2,140 |  |  | 18,943 |  |  | 1,148 |  |  | — |
136 homes - Wingate - Minneapolis, MN | September 1, 2021 |  | 15,784 |  |  | 723 |  |  | 10,246 |  |  | 4,815 |  |  | 1,480 |  |  | 13,530 |  |  | 774 |  |  | — |
178 homes - Woodhaven - Minneapolis, MN | September 1, 2021 |  | 25,009 |  |  | 1,682 |  |  | 15,200 |  |  | 8,127 |  |  | 3,940 |  |  | 20,080 |  |  | 989 |  |  | — |
288 homes - Woodland Pointe - Minneapolis, MN | September 1, 2021 |  | 47,796 |  |  | 437 |  |  | 29,438 |  |  | 17,921 |  |  | 5,367 |  |  | 40,422 |  |  | 2,007 |  |  | — |
|  |  | $ | 436,816 |  |  | $ | 92,599 |  |  | $ | 217,513 |  |  | $ | 126,704 |  |  | $ | 45,580 |  |  | $ | 375,985 |  |  | $ | 17,604 |  |  | $ | (2,353) |
Total Acquisitions |  |  | $ | 436,816 |  |  | $ | 92,599 |  |  | $ | 217,513 |  |  | $ | 126,704 |  |  | $ | 45,580 |  |  | $ | 375,985 |  |  | $ | 17,604 |  |  | $ | (2,353) |

(1)Includes $36.1 million for additional fair value of Series E preferred units for the September 1, 2021 portfolio acquisition
(2)Fair value of Series E preferred units at the acquisition date
(3)Payoff of debt or assumption of seller's debt upon closing
(4)Debt discount on assumed mortgage
20

Table of Contents
Nine Months Ended September 30, 2020

| Date Acquired |  | (in thousands)
|  | Total Acquisition Cost |  | Form of Consideration |  | Investment Allocation
Acquisitions |  |  | Cash |  | Other(1) |  | Land |  | Building |  | Intangible Assets |  | Other(2)
182 homes - Ironwood - New Hope, MN | March 5, 2020 |  | $ | 46,263 |  |  | $ | 28,600 |  |  | $ | 17,663 |  |  | $ | 2,165 |  |  | $ | 36,869 |  |  | $ | 824 |  |  | $ | 6,405 |
465 homes - Parkhouse Apartment Homes - Thornton, CO | September 22, 2020 |  | 144,750 |  |  | 144,750 |  |  | — |  |  | 10,474 |  |  | 132,105 |  |  | 2,171 |  |  | — |
Total Acquisitions |  |  | $ | 191,013 |  |  | $ | 173,350 |  |  | $ | 17,663 |  |  | $ | 12,639 |  |  | $ | 168,974 |  |  | $ | 2,995 |  |  | $ | 6,405 |

(1)Payoff at closing of note receivable and accrued interest due from seller.
(2)Consists of TIF note acquired. Refer to Note 2 for further discussion.
DISPOSITIONS
During the three months ended September 30, 2021, Centerspace disposed of no real estate. During the three months ended September 30, 2020, the Company disposed of four apartment communities and one commercial property for a total sale price of $43.0 million. The following tables detail the dispositions for the nine months ended had September 30, 2021 and 2020.
Nine Months Ended September 30, 2021

|  |  | (in thousands)
Dispositions | Date Disposed |  | Sale Price |  | Book Value and Sales Cost |  | Gain/(Loss)
Multifamily |  |  |  |  |  |  |
76 homes - Crystal Bay-Rochester, MN | May 25, 2021 |  | $ | 13,650 |  |  | $ | 10,255 |  |  | $ | 3,395 |
40 homes - French Creek-Rochester, MN | May 25, 2021 |  | 6,700 |  |  | 4,474 |  |  | 2,226 |
182 homes - Heritage Manor-Rochester, MN | May 25, 2021 |  | 14,125 |  |  | 4,892 |  |  | 9,233 |
140 homes - Olympik Village-Rochester, MN | May 25, 2021 |  | 10,725 |  |  | 6,529 |  |  | 4,196 |
151 homes-Winchester/Village Green-Rochester, MN | May 25, 2021 |  | 14,800 |  |  | 7,010 |  |  | 7,790 |
Total Dispositions |  |  | $ | 60,000 |  |  | $ | 33,160 |  |  | $ | 26,840 |

Nine Months Ended September 30, 2020

|  |  | (in thousands)
Dispositions | Date Disposed |  | Sale Price |  | Book Value and Sales Cost |  | Gain/(Loss)
Multifamily |  |  |  |  |  |  |
268 homes - Forest Park - Grand Forks, ND | August 18, 2020 |  | $ | 19,625 |  |  | $ | 6,884 |  |  | $ | 12,741 |
90 homes - Landmark - Grand Forks, ND | August 18, 2020 |  | 3,725 |  |  | 1,348 |  |  | 2,377 |
164 homes - Southwind - Grand Forks, ND | August 18, 2020 |  | 10,850 |  |  | 4,573 |  |  | 6,277 |
168 homes - Valley Park - Grand Forks, ND | August 18, 2020 |  | 8,300 |  |  | 4,059 |  |  | 4,241 |
|  |  | $ | 42,500 |  |  | $ | 16,864 |  |  | $ | 25,636 |
Other |  |  |  |  |  |  |
Dakota West | August 7, 2020 |  | $ | 500 |  |  | $ | 474 |  |  | $ | 26 |
Unimproved Land |  |  |  |  |  |  |
Rapid City Land - Rapid City, SD | June 29, 2020 |  | $ | 1,300 |  |  | $ | 1,490 |  |  | $ | (190) |
Total Dispositions |  |  | $ | 44,300 |  |  | $ | 18,828 |  |  | $ | 25,472 |

21

Table of Contents
NOTE 9 • SEGMENT REPORTING
Centerspace operates in a single reportable segment which includes the ownership, management, development, redevelopment, and acquisition of apartment communities. Each of the operating properties is considered a separate operating segment because each property earns revenues, incurs expenses, and has discrete financial information. The chief operating decision-makers evaluate each property’s operating results to make decisions about resources to be allocated and to assess performance and do not group the properties based on geography, size, or type for this purpose. The apartment communities have similar long-term economic characteristics and provide similar products and services to residents. No apartment community comprises more than 10% of consolidated revenues, profits, or assets. Accordingly, the apartment communities are aggregated into a single reportable segment. “All other” includes non-multifamily components of mixed-use properties and apartment communities the Company has sold.
The executive management team comprises the chief operating decision-makers. This team measures the performance of the reportable segment based on net operating income (“NOI”), 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, amortization, financing, property management overhead, casualty losses, and general and administrative expense. 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.
The following tables present NOI for the three and nine months ended September 30, 2021 and 2020, respectively, along with reconciliations to net income in the Condensed Consolidated Financial Statements. Segment assets are also reconciled to total assets as reported in the Condensed Consolidated Financial Statements.

| (in thousands)
Three Months Ended September 30, 2021 | Multifamily |  | All Other |  | Total
Revenue | $ | 49,248 |  |  | $ | 1,165 |  |  | $ | 50,413 |
Property operating expenses, including real estate taxes | 20,066 |  |  | 284 |  |  | 20,350 |
Net operating income | $ | 29,182 |  |  | $ | 881 |  |  | $ | 30,063 |
Property management |  |  |  |  | (2,203) |
Casualty gain (loss) |  |  |  |  | 10 |
Depreciation and amortization |  |  |  |  | (22,447) |
General and administrative expenses |  |  |  |  | (4,279) |
Interest expense |  |  |  |  | (7,302) |
Interest and other income |  |  |  |  | (5,082) |
Net income (loss) |  |  |  |  | $ | (11,240) |

| (in thousands)
Three Months Ended September 30, 2020 | Multifamily |  | All Other |  | Total
Revenue | $ | 40,688 |  |  | $ | 3,450 |  |  | $ | 44,138 |
Property operating expenses, including real estate taxes | 16,900 |  |  | 1,631 |  |  | 18,531 |
Net operating income | $ | 23,788 |  |  | $ | 1,819 |  |  | $ | 25,607 |
Property management |  |  |  |  | (1,442) |
Casualty gain (loss) |  |  |  |  | (91) |
Depreciation and amortization |  |  |  |  | (18,995) |
General and administrative expenses |  |  |  |  | (3,077) |
Interest expense |  |  |  |  | (6,771) |
Interest and other income |  |  |  |  | 277 |
Income (loss) before gain (loss) on sale of real estate and other investments |  |  |  |  | (4,492) |
Gain (loss) on sale of real estate and other investments |  |  |  |  | 25,676 |
Net income (loss) |  |  |  |  | $ | 21,184 |

22

Table of Contents

| (in thousands)
Nine Months Ended September 30, 2021 | Multifamily |  | All Other |  | Total
Revenue | $ | 138,447 |  |  | $ | 5,270 |  |  | $ | 143,717 |
Property operating expenses, including real estate taxes | 55,907 |  |  | 2,444 |  |  | 58,351 |
Net operating income | $ | 82,540 |  |  | $ | 2,826 |  |  | $ | 85,366 |
Property management expenses |  |  |  |  | (6,055) |
Casualty gain (loss) |  |  |  |  | (64) |
Depreciation and amortization |  |  |  |  | (61,747) |
General and administrative expenses |  |  |  |  | (11,982) |
Interest expense |  |  |  |  | (21,622) |
Interest and other income |  |  |  |  | (4,032) |
Income (loss) before gain (loss) on sale of real estate and other investments |  |  |  |  | (20,136) |
Gain (loss) on sale of real estate and other investments |  |  |  |  | 26,840 |
Net income (loss) |  |  |  |  | $ | 6,704 |

| (in thousands)
Nine Months Ended September 30, 2020 | Multifamily |  | All Other |  | Total
Revenue | $ | 120,946 |  |  | $ | 11,508 |  |  | $ | 132,454 |
Property operating expenses, including real estate taxes | 49,626 |  |  | 5,608 |  |  | 55,234 |
Net operating income | $ | 71,320 |  |  | $ | 5,900 |  |  | $ | 77,220 |
Property management expenses |  |  |  |  | (4,341) |
Casualty gain (loss) |  |  |  |  | (1,331) |
Depreciation and amortization |  |  |  |  | (55,311) |
General and administrative expenses |  |  |  |  | (9,707) |
Interest expense |  |  |  |  | (20,622) |
Interest and other income |  |  |  |  | (1,979) |
Income (loss) before gain (loss) on sale of real estate and other investments |  |  |  |  | (16,071) |
Gain (loss) on sale of real estate and other investments |  |  |  |  | 25,486 |
Net income (loss) |  |  |  |  | $ | 9,415 |

Segment Assets and Accumulated Depreciation
Segment assets are summarized as follows as of September 30, 2021, and December 31, 2020, respectively, along with reconciliations to the Condensed Consolidated Financial Statements:

| (in thousands)
As of September 30, 2021 | Multifamily |  | All Other |  | Total
Segment assets |  |  |  |  |
Property owned | $ | 2,170,321 |  |  | $ | 33,285 |  |  | $ | 2,203,606 |
Less accumulated depreciation | (414,829) |  |  | (12,097) |  |  | (426,926) |
Total property owned | $ | 1,755,492 |  |  | $ | 21,188 |  |  | $ | 1,776,680 |
Mortgage loans receivable |  |  |  |  | 42,160 |
Cash and cash equivalents |  |  |  |  | 20,816 |
Restricted cash |  |  |  |  | 2,376 |
Other assets |  |  |  |  | 34,919 |
Total Assets |  |  |  |  | $ | 1,876,951 |

23

Table of Contents

| (in thousands)
As of December 31, 2020 | Multifamily |  | All Other |  | Total
Segment assets |  |  |  |  |
Property owned | $ | 1,727,229 |  |  | $ | 85,328 |  |  | $ | 1,812,557 |
Less accumulated depreciation | (368,717) |  |  | (30,532) |  |  | (399,249) |
Total property owned | $ | 1,358,512 |  |  | $ | 54,796 |  |  | $ | 1,413,308 |
Mortgage loans receivable |  |  |  |  | 24,661 |
Cash and cash equivalents |  |  |  |  | 392 |
Restricted cash |  |  |  |  | 6,918 |
Other assets |  |  |  |  | 18,904 |
Total Assets |  |  |  |  | $ | 1,464,183 |

NOTE 10 • COMMITMENTS AND CONTINGENCIES
Litigation. In the ordinary course of operations, Centerspace becomes involved in litigation. At this time, the Company knows of no material pending or threatened legal proceedings, or other proceedings contemplated by governmental authorities, that would have a material impact on it.
Environmental Matters. Under various federal, state, and local laws, ordinances, and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around, or under the property. While the Company currently has no knowledge of any material violation of environmental laws, ordinances, or regulations at any of the properties, there can be no assurance that areas of contamination will not be identified at any of its properties or that changes in environmental laws, regulations, or cleanup requirements would not result in material costs.
Restrictions on Taxable Dispositions. Thirty-four properties, consisting of 6,511 apartment homes, are subject to restrictions on taxable dispositions under agreements entered into with some of the sellers or contributors of the properties and are effective for varying periods. Centerspace does not believe that the agreements materially affect the conduct of its business or its decisions whether to dispose of restricted properties during the restriction period because it generally holds these and other properties for investment purposes rather than for sale. In addition, where the Company deems it to be in the shareholders’ best interests to dispose of such properties, it generally seeks to structure sales of such properties as tax-deferred transactions under Section 1031 of the Internal Revenue Code. Otherwise, the Company may be required to provide tax indemnification payments to the parties to these agreements.
NOTE 11 • SHARE-BASED COMPENSATION
Share-based awards are provided to officers, non-officer employees, and trustees under the 2015 Incentive Plan approved by shareholders on September 15, 2015, as amended and restated on May 18, 2021 (the “2015 Incentive Plan”) which allows for awards in the form of cash, unrestricted and restricted common shares, stock options, stock appreciation rights, and RSUs up to an aggregate of 775,000 shares over the ten-year period in which the plan is in effect. Under the 2015 Incentive Plan, officers and non-officer employees may earn share awards under a long-term incentive plan, which is a forward-looking program that measures long-term performance over the stated performance period. These awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year.
2021 LTIP Awards
Awards granted to employees on January 1, 2021, consist of an aggregate of 6,410 time-based RSU awards, 19,224 performance RSUs based on total shareholder return (“TSR”), and 43,629 stock options. The time-based awards vest as to one-third of the shares on each of January 1, 2022, January 1, 2023, and January 1, 2024. The stock options vest as to 25% on each of January 1, 2022, January 1, 2023, January 1, 2024, and January 1, 2025. The fair value of stock options was $7.383 per share and was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
24

Table of Contents

| 2021
Exercise price | $ | 70.64 |
Risk-free rate | 0.65 | %
Expected term | 6.25 years
Expected volatility | 21.08 | %
Dividend yield | 3.963 | %

The TSR performance RSUs are earned based on the Company’s TSR as compared to the FTSE Nareit Apartment Index over a forward looking three-year period. The maximum number of RSUs eligible to be earned is 38,448 RSUs, which is 200% of the RSUs granted. Earned awards (if any) will fully vest as of the last day of the measurement period. These awards have market conditions in addition to service conditions that must be met for the awards to vest. Compensation expense is recognized ratably based on the grant date fair value, as determined using the Monte Carlo valuation model, regardless of whether the market conditions are achieved and the awards ultimately vest. Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved. The Company based the expected volatility on a weighted average of the historical volatility of the Company’s daily closing share price and a select peer average volatility, the risk-free interest rate on the interest rates on U.S. treasury bonds with a maturity equal to the remaining performance period of the award, and the expected term on the performance period of the award. The assumptions used to value the TSR performance RSUs were an expected volatility of 20.63%, a risk-free interest rate of 0.17%, and an expected life of 3 years. The share price at the grant date, January 1, 2021, was $70.64 per share.
Awards granted to trustees in May 2021, consist of 6,948 time-based RSUs with a one-year vesting period. These awards are classified as equity awards.
Share-Based Compensation Expense
Share-based compensation expense recognized in the consolidated financial statements for all outstanding share-based awards was $2.1 million and $1.5 million for the nine months ended September 30, 2021 and 2020, respectively.
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The following discussion and analysis should be read in conjunction with the unaudited Condensed Consolidated Financial Statements included in this report on Form 10-Q for the quarter ended September 30, 2021 (the “Report”), the audited financial statements for the year ended December 31, 2020, which are included in Form 10-K filed with the SEC on February 22, 2021, and the risk factors in Item 1A, “Risk Factors,” of Form 10-K for the year ended December 31, 2020.
This discussion and analysis, and other sections of this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “assumes,” “may,” “projects,” “outlook,” “future,” and variations of those words and similar expressions are intended to identify forward-looking statements. 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 condition, or plans expressed or implied by the forward-looking statements. Although we believe the expectations reflected in these forward-looking statements are based upon reasonable assumptions, we can give no assurance that our 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 our control and could differ materially from actual results and performance.
The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:
•the COVID-19 pandemic and its ongoing effects on our employees, residents, and commercial tenants, third party vendors and suppliers, and apartment communities, as well as our cash flow, business, financial condition, and results of operation;
•deteriorating economic conditions and rising unemployment rates in the markets where we own apartment communities or in which it may invest in the future;
25

Table of Contents
•rental conditions in our markets, including occupancy levels and rental rates, potential inability to renew residents or obtain new residents upon expiration of existing leases, changes in tax and housing laws, or other factors, including the impact of the COVID-19-related governmental rules and regulations relating to rental rates, evictions, and other rental conditions;
•changes in operating costs, including real estate taxes, utilities, insurance costs, and expenses related to complying with COVID-19 restrictions or otherwise responding to the COVID-19 pandemic;
•timely access to material required to renovate apartment communities;
•adverse changes in our markets, including future demand for apartment homes in those markets, barriers of entry into new markets, limitations on the ability to increase rental rates, inability to identify and consummate attractive acquisitions and dispositions on favorable terms, inability to reinvest sales proceeds successfully, and inability to accommodate any significant decline in the market value of real estate serving as collateral for mortgage obligations;
•reliance on a single asset class (multifamily) and certain geographic areas of the U.S.;
•inability to expand operations into new or existing markets successfully;
•failure of new acquisitions to achieve anticipated results or be efficiently integrated;
•inability to complete lease-up of projects on schedule and on budget;
•inability to sell non-core properties on terms that are acceptable;
•failure to reinvest proceeds from sales of properties into tax-deferred exchanges, which could necessitate special dividend and/or tax protection payments;
•inability to fund capital expenditures out of cash flow;
•inability to pay, or need to reduce, dividends on common shares;
•financing risks, including the potential inability to meet existing covenants in existing credit facilities or to obtain new debt or equity financing on favorable terms, or at all;
•level and volatility of interest or capitalization rates or capital market conditions;
•loss contingencies and the availability and cost of casualty insurance for losses;
•inability to continue to satisfy complex rules in order to maintain status as a REIT for federal income tax purposes, inability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal income tax purposes, and the risk of changes in laws affecting REITs;
•inability to attract and retain qualified personnel;
•cyber liability or potential liability for breaches of privacy or information security systems;
•inability to address catastrophic weather, natural events, and climate change;
•inability to comply with laws and regulations applicable to the business and any related investigations or litigation; and
•other risks identified in this Report, in other SEC reports, or in other documents that we publicly disseminate.
New factors may also arise from time to time that could have an adverse effect on our business and results of operations. Except as otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements to reflect events, circumstances, or changes in expectations after the date on which this Report is filed. Readers also should review the risks and uncertainties 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 our Annual Report on Form 10-K for the year ended December 31, 2020.
Executive Summary
We own, manage, acquire, redevelop, and develop apartment communities. We primarily focus on investing in markets characterized by stable and growing economic conditions, strong employment, and an attractive quality of life that we believe, in combination, lead to higher demand for apartment homes and retention of residents. As of September 30, 2021, we owned interests in 79 apartment communities consisting of 14,275 apartment homes. Property owned, as presented in our Condensed Consolidated Balance Sheets, was $2.2 billion at September 30, 2021, compared to $1.8 billion at December 31, 2020.
Renting apartment homes is our primary source of revenue, and our business objective is to provide great homes for our residents. We strive to maximize resident satisfaction and retention by investing in high-quality assets in desirable locations and creating vibrant apartment communities through service-oriented operations. We believe that delivering superior resident experiences will enhance resident satisfaction while also driving profitability for the business and shareholders. We have paid quarterly distributions continuously since our first distribution in 1971.
COVID-19 Developments
The COVID-19 pandemic has affected our business since March 2020, when it spread to many of the markets in which we own properties. Our first priority continues to be the health and well-being of our residents, team members, and the communities we serve. We enhanced cleaning protocols at our communities and offices, implemented physical distancing in community
26

Table of Contents
common spaces, and instituted remote work guidelines for team members, all in accordance with state and local guidelines. We are using technology to allow property teams to interact remotely with prospective residents through virtual leasing. We provided rent deferrals to residents and rent abatement to commercial tenants who were financially impacted by the COVID-19 pandemic. To support team members working on-site, we provided additional COVID-19 paid time off and enhanced flextime arrangements.
Certain states and cities, including some of those in which our apartment communities are located, have reacted to the COVID-19 pandemic by instituting quarantines, restrictions on travel, shelter-in-place or stay-at-home directives, restrictions on types of businesses that may continue to operate, and restrictions on the types of construction projects that may continue. The availability of vaccines has led many states and cities to lift restrictions; however, due to new variants of the virus, we cannot predict whether restrictions will be reinstated or if additional restrictions will be imposed in the future. We implemented a plan to safely re-open common spaces in our communities while adhering to state and local guidelines, but recognize that an increase in COVID-19 cases in these markets could cause us to close common spaces or take other preventive measures.
We cannot predict the continued impact of the pandemic, including the impact of the proposed U.S. vaccine mandate, and the degree to which our business and results of operations may be affected, particularly given the extended duration of the pandemic.
Financial Impact of the COVID-19 Pandemic
Many companies, especially in urban areas, have extended directives for employees to work from home during the COVID-19 pandemic. These extended directives have resulted in decreased traffic to businesses and, in some cases, closures of businesses in urban areas, which has resulted in lower demand and lower rent increases for our five urban based apartment communities. The COVID-19 pandemic and these directives have affected operations and the conduct of business at apartment communities and offices, but did not have a material impact on our financial condition, operating results, or cash flows.
The ongoing COVID-19 pandemic and the new variants of the virus could result in adverse financial and economic impacts that could include, but are not limited to, the following:
•cause our residents or commercial tenants to defer or stop rental payments, and abandon or fail to renew leases, which would reduce our primary source of net operating income and cash flows;
•cause the capital markets generally to become restricted or unavailable, thereby limiting our access to any needed debt or equity capital financing;
•impact the business of, or cause the loss of, certain critical third-party suppliers or other service providers;
•restrict our ability to continue to pay dividends on a quarterly basis at the current rate;
•impair the value of tangible or intangible assets;
•require us to record loss contingencies and incur additional expenses related to its COVID-19 response; or
•cause the U.S. economy to suffer an extended economic slowdown, which could lead to a prolonged recession or even economic depression, which in turn would affect the demand for apartment communities and could have an adverse impact on our business and operating results.
We have taken the following actions in order to protect our residents and employees, manage expenses and preserve cash flow during the COVID-19 pandemic:
•reduced planned travel for team members through 2021;
•left vacant positions unfilled;
•used onsite team members to perform work normally contracted to third parties; and
•moved the meetings of the Board of Trustees to virtual meetings, thereby limiting the expense associated with in-person meetings.
Despite our efforts to manage our r esponse to the effects of the COVID-19 pandemic, the ultimate impact of the COVID-19 pandemic on rental revenue for 2021 and in future years cannot be determined at present. The situation surrounding the COVID-19 pandemic remains fluid, and we are actively managing our response in collaboration with residents, commercial tenants, government officials, and business partners and assessing potential impacts to financial position and operating results, as well as potential adverse impacts on our business. Our management remains committed to ensuring the safety of team members, residents, and communities, and to maintaining the financial stability of our business enterprise for the duration of the COVID-19 pandemic.
27

Table of Contents
Overview of the Three Months Ended September 30, 2021
On September 1, 2021, we closed on a strategic portfolio acquisition in Minneapolis and St. Cloud, Minnesota for an aggregate acquisition cost of $359.9 million. The portfolio is comprised of 14 apartment communities in Minneapolis and three apartment communities in St. Cloud with a total of 2,696 apartment homes. In connection with this transaction, we issued 1.8 million Series E preferred units with a par value of $100 per unit. The Series E preferred units pay a 3.875% dividend rate and are convertible, at the holder’s option, into Units at an exchange rate of 1.2048 Units per Series E preferred unit, representing a conversion price of $83.00 per Unit. The acquired assets were subject to $126.5 million in mortgage liabilities, of which $20.0 million was assumed at a rate of 4.31% with the remaining amount financed through a $198.9 million Fannie Mae credit facility agreement. The FMCF includes tranches in 7, 10, and 12-year increments with a weighted average interest rate of 2.78%.
See Note 8 of the Notes to Condensed Consolidated Financial Statements in this Report for a table detailing acquisitions and dispositions during the nine months ended September 30, 2021 and 2020.
For the three months ended September 30, 2021, revenue increased by $6.3 million to $50.4 million, compared to $44.1 million for the three months ended September 30, 2020, primarily due to same-store and non-same-store communities, offset by dispositions. Total expenses increased by $7.1 million to $49.3 million for the three months ended September 30, 2021, compared to $42.1 million for the three months ended September 30, 2020 primarily due to increased property operating expenses, depreciation and amortization, and general and administrative expenses. Funds from Operations (“FFO”) applicable to common shares and Units for the three months ended September 30, 2021 decreased by $3.3 million to $9.3 million compared to $12.6 million for the three months ended September 30, 2020. This decrease was primarily due to losses related to termination of interest rate swaps, increased property management and general and administrative expenses, and decreased NOI from dispositions, offset by increased NOI from same-store and non-same-store communities. The drivers of these changes are discussed in more detail in the “Results of Operations” section below.
28

Table of Contents
Results of Operations
Reconciliation of Operating Income to Net Operating Income
The following table provides a reconciliation of operating income to net operating income (“NOI”) (non-GAAP), which is defined below.

| (in thousands, except percentages)
| Three Months Ended September 30, |  |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | $ Change |  | % Change |  |  | 2021 |  | 2020 |  | $ Change |  | % Change
Operating income | $ | 1,144 |  |  | $ | 2,002 |  |  | $ | (858) |  |  | (42.9) | % |  |  | $ | 5,518 |  |  | $ | 6,530 |  |  | $ | (1,012) |  |  | (15.5) | %
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property management expenses | 2,203 |  |  | 1,442 |  |  | 761 |  |  | 52.8 | % |  |  | 6,055 |  |  | 4,341 |  |  | 1,714 |  |  | 39.5 | %
Casualty (gain) loss | (10) |  |  | 91 |  |  | (101) |  |  | (111.0) | % |  |  | 64 |  |  | 1,331 |  |  | (1,267) |  |  | (95.2) | %
Depreciation and amortization | 22,447 |  |  | 18,995 |  |  | 3,452 |  |  | 18.2 | % |  |  | 61,747 |  |  | 55,311 |  |  | 6,436 |  |  | 11.6 | %
General and administrative expenses | 4,279 |  |  | 3,077 |  |  | 1,202 |  |  | 39.1 | % |  |  | 11,982 |  |  | 9,707 |  |  | 2,275 |  |  | 23.4 | %
Net operating income | $ | 30,063 |  |  | $ | 25,607 |  |  | $ | 4,456 |  |  | 17.4 | % |  |  | $ | 85,366 |  |  | $ | 77,220 |  |  | $ | 8,146 |  |  | 10.5 | %

Consolidated Results of Operations
The following consolidated results of operations cover the three and nine months ended September 30, 2021 and 2020.

| (in thousands, except percentages)
| Three Months Ended September 30, |  |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | $ Change |  | % Change |  |  | 2021 |  | 2020 |  | $ Change |  | % Change
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store | $ | 42,034 |  |  | $ | 39,571 |  |  | $ | 2,463 |  |  | 6.2 | % |  |  | $ | 122,555 |  |  | $ | 118,627 |  |  | $ | 3,928 |  |  | 3.3 | %
Non-same-store | 7,214 |  |  | 1,117 |  |  | 6,097 |  |  | 545.8 | % |  |  | 15,892 |  |  | 2,319 |  |  | 13,573 |  |  | 585.3 | %
Other properties | 1,120 |  |  | 833 |  |  | 287 |  |  | 34.5 | % |  |  | 2,415 |  |  | 2,208 |  |  | 207 |  |  | 9.4 | %
Dispositions | 45 |  |  | 2,617 |  |  | (2,572) |  |  | (98.3) | % |  |  | 2,855 |  |  | 9,300 |  |  | (6,445) |  |  | (69.3) | %
Total | 50,413 |  |  | 44,138 |  |  | 6,275 |  |  | 14.2 | % |  |  | 143,717 |  |  | 132,454 |  |  | 11,263 |  |  | 8.5 | %
Property operating expenses, including real estate taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store | 17,126 |  |  | 16,409 |  |  | 717 |  |  | 4.4 | % |  |  | 50,032 |  |  | 48,631 |  |  | 1,401 |  |  | 2.9 | %
Non-same-store | 2,940 |  |  | 491 |  |  | 2,449 |  |  | 498.8 | % |  |  | 5,875 |  |  | 995 |  |  | 4,880 |  |  | 490.5 | %
Other properties | 317 |  |  | 229 |  |  | 88 |  |  | 38.4 | % |  |  | 873 |  |  | 759 |  |  | 114 |  |  | 15.0 | %
Dispositions | (33) |  |  | 1,402 |  |  | (1,435) |  |  | (102.4) | % |  |  | 1,571 |  |  | 4,849 |  |  | (3,278) |  |  | (67.6) | %
Total | 20,350 |  |  | 18,531 |  |  | 1,819 |  |  | 9.8 | % |  |  | 58,351 |  |  | 55,234 |  |  | 3,117 |  |  | 5.6 | %
Net operating income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same-store | 24,908 |  |  | 23,162 |  |  | 1,746 |  |  | 7.5 | % |  |  | 72,523 |  |  | 69,996 |  |  | 2,527 |  |  | 3.6 | %
Non-same-store | 4,274 |  |  | 626 |  |  | 3,648 |  |  | 582.7 | % |  |  | 10,017 |  |  | 1,324 |  |  | 8,693 |  |  | 656.6 | %
Other properties | 803 |  |  | 604 |  |  | 199 |  |  | 32.9 | % |  |  | 1,542 |  |  | 1,449 |  |  | 93 |  |  | 6.4 | %
Dispositions | 78 |  |  | 1,215 |  |  | (1,137) |  |  | (93.6) | % |  |  | 1,284 |  |  | 4,451 |  |  | (3,167) |  |  | (71.2) | %
Total | $ | 30,063 |  |  | $ | 25,607 |  |  | $ | 4,456 |  |  | 17.4 | % |  |  | $ | 85,366 |  |  | $ | 77,220 |  |  | $ | 8,146 |  |  | 10.5 | %
Property management expenses | (2,203) |  |  | (1,442) |  |  | 761 |  |  | 52.8 | % |  |  | (6,055) |  |  | (4,341) |  |  | 1,714 |  |  | 39.5 | %
Casualty gain (loss) | 10 |  |  | (91) |  |  | (101) |  |  | (111.0) | % |  |  | (64) |  |  | (1,331) |  |  | (1,267) |  |  | (95.2) | %
Depreciation and amortization | (22,447) |  |  | (18,995) |  |  | 3,452 |  |  | 18.2 | % |  |  | (61,747) |  |  | (55,311) |  |  | 6,436 |  |  | 11.6 | %
General and administrative expenses | (4,279) |  |  | (3,077) |  |  | 1,202 |  |  | 39.1 | % |  |  | (11,982) |  |  | (9,707) |  |  | 2,275 |  |  | 23.4 | %
Interest expense | (7,302) |  |  | (6,771) |  |  | 531 |  |  | 7.8 | % |  |  | (21,622) |  |  | (20,622) |  |  | 1,000 |  |  | 4.8 | %
Interest and other income (loss) | (5,082) |  |  | 277 |  |  | (5,359) |  |  | (1,934.7) | % |  |  | (4,032) |  |  | (1,979) |  |  | (2,053) |  |  | 103.7 | %
NET INCOME (LOSS) | $ | (11,240) |  |  | $ | 21,184 |  |  | $ | (32,424) |  |  | (153.1) | % |  |  | $ | 6,704 |  |  | $ | 9,415 |  |  | $ | (2,711) |  |  | (28.8) | %
Dividends to Series D preferred unitholders | (160) |  |  | (160) |  |  | — |  |  | — |  |  |  | (480) |  |  | (480) |  |  | — |  |  | — |
Net (income) loss attributable to noncontrolling interests – Operating Partnership and Series E preferred units | 1,930 |  |  | (1,387) |  |  | 3,317 |  |  | (239.1) | % |  |  | 1,013 |  |  | (248) |  |  | 1,261 |  |  | (508.5) | %
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities | (22) |  |  | (8) |  |  | (14) |  |  | 175.0 | % |  |  | (58) |  |  | 132 |  |  | (190) |  |  | (143.9) | %
Net income (loss) attributable to controlling interests | (9,492) |  |  | 19,629 |  |  | (29,121) |  |  | (148.4) | % |  |  | 7,179 |  |  | 8,819 |  |  | (1,640) |  |  | (18.6) | %
Dividends to preferred shareholders | (1,607) |  |  | (1,607) |  |  | — |  |  | — | % |  |  | (4,821) |  |  | (4,921) |  |  | 100 |  |  | (2.0) | %
Redemption of Preferred Shares | — |  |  | (1) |  |  | 1 |  |  | (100.0) | % |  |  | — |  |  | 297 |  |  | (297) |  |  | (100.0) | %
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | (11,099) |  |  | $ | 18,021 |  |  | $ | (29,120) |  |  | (161.6) | % |  |  | $ | 2,358 |  |  | $ | 4,195 |  |  | $ | (1,837) |  |  | (43.8) | %

29

Table of Contents

| Three Months Ended September 30, |  | Nine Months Ended September 30,
Weighted Average Occupancy(1) | 2021 |  | 2020 |  | 2021 |  | 2020
Same-store | 94.3 | % |  | 94.3 | % |  | 94.7 | % |  | 94.7 | %
Non-same-store | 95.1 | % |  | 96.3 | % |  | 93.8 | % |  | 95.1 | %
Total | 94.4 | % |  | 94.3 | % |  | 94.6 | % |  | 94.7 | %

(1)Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rental revenue. Scheduled rental revenue represents the value of all apartment homes, with occupied homes valued at contractual rental rates pursuant to leases and vacant homes valued at estimated market rents. When calculating actual rents for occupied 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. Centerspace 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 the calculation of weighted average occupancy may not be comparable to that disclosed by other REITs.

Number of Apartment Homes | September 30, 2021 |  | September 30, 2020
Same-store | 10,676 |  |  | 10,676 |
Non-same-store | 3,599 |  |  | 647 |
Total | 14,275 |  |  | 11,323 |

NOI is a non-GAAP financial measure, which we define as total real estate revenues less property operating expenses, including real estate taxes. We believe 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, amortization, financing, property management overhead, 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.
We have provided certain information on a same-store and non-same-store basis. Same-store apartment communities are owned or in service for the entirety of the periods being compared, and, in the case of newly-constructed properties, have achieved a target level of physical occupancy of 90%. On the first day of each calendar year, we determine the composition of our same-store pool for that year as well as adjust the previous year, which allows us to evaluate full period-over-period operating comparisons for existing apartment communities and their contribution to net income. We believe that measuring performance on a same-store basis is useful to investors because it enables evaluation of how a fixed pool of communities are performing year-over-year. We use this measure to assess whether or not we have been successful in increasing NOI, raising average rental revenue, renewing the leases on existing residents, controlling operating costs, and making prudent capital improvements. The discussion below focuses on the main factors affecting real estate revenue and expenses from same-store apartment communities because changes from one year to another in real estate revenue and expenses from non-same-store apartment communities are generally due to the addition of those properties to the real estate portfolio, and accordingly provide less useful information for evaluating ongoing operational performance of the real estate portfolio.
For the comparison of the nine months ended September 30, 2021 and 2020, twenty apartment communities were non-same-store. Sold communities are included in “Dispositions,” while “Other” includes non-multifamily properties and the non-multifamily components of mixed-use properties.
Revenue. Revenue increased by 14.2% to $50.4 million for the three months ended September 30, 2021, compared to $44.1 million in the three months ended September 30, 2020. Revenue from non-same-store communities and other properties increased by $6.1 million and $287,000, respectively, offset by a decrease of $2.6 million from dispositions. Revenue from same-store communities increased 6.2% or $2.5 million in the three months ended September 30, 2021, compared to the same period in the prior year. The increase was attributable to 6.2% growth in average rental revenue for the three months ended September 30, 2021 and 2020, respectively.
Revenue increased by 8.5% to $143.7 million for the nine months ended September 30, 2021, compared to $132.5 million in the nine months ended September 30, 2020. Revenue from non-same-store communities and other properties increased by $13.6 million and 207,000, respectively, offset by a decrease of $6.4 million from dispositions. Revenue from same-store communities increased 3.3% or $3.9 million in the nine months ended September 30, 2021, compared to the same period in the prior year. The increase was attributable to 3.3% growth in average rental revenue for the nine months ended September 30, 2021 and 2020, respectively.
Property operating expenses, including real estate taxes. Property operating expenses, including real estate taxes, increased by 9.8% to $20.4 million in the three months ended September 30, 2021, compared to $18.5 million in the same period of the prior year. An increase of $2.4 million at non-same-store communities was offset by a decrease $1.4 million from dispositions. Property operating expenses, including real estate taxes, at same-store communities increased by 4.4% or $717,000 in the three
30

Table of Contents
months ended September 30, 2021, compared to the same period in the prior year. At same-store communities, controllable expenses (which exclude insurance and real estate taxes) increased by $319,000, primarily due to increased compensation and utilities costs. Non-controllable expenses at same-store communities increased by $398,000, primarily due to insurance costs.
Property operating expenses, including real estate taxes, increased by $3.1 million to $58.4 million in the nine months ended September 30, 2021, compared to $55.2 million in the same period of the prior year. An increase of $4.9 million at non-same-store communities was offset by a decrease of $3.3 million from dispositions. Property operating expenses, including real estate taxes, at same-store communities increased by 2.9% or $1.4 million in the nine months ended September 30, 2021, compared to the same period of the prior year. At same-store communities, controllable expenses (which exclude insurance and real estate taxes), increased by $521,000, primarily due to increases in compensation and utilities costs. Non-controllable expenses at same-store communities increased by $880,000 primarily due to insurance costs.
Property management expenses. Property management expense, consisting of property management overhead and property management fees paid to third parties increased by 52.8% to $2.2 million in the three months ended September 30, 2021, compared to $1.4 million in the same period of the prior year. The increase is primarily due to $364,000 in nonrecurring technology initiatives as well as $276,000 in compensation costs due to the filling of open positions.
Property management expense increased by 39.5% to $6.1 million in the nine months ended September 30, 2021, compared to $4.3 million in the same period of the prior year. The increase is primarily due to $889,000 in nonrecurring technology initiatives as well as $586,000 in compensation costs due to the filling of open positions.
Casualty gain (loss). Casualty gain (loss) decreased by 111.0% to a gain of $10,000 in the three months ended September 30, 2021, compared to a loss of $91,000 in the same period of the prior year. The decrease is primarily due to weather related losses in the prior year which have not occurred in the current year.
Casualty gain (loss) decreased by 95.2% to $64,000 in the nine months ended September 30, 2021, compared to $1.3 million in the same period of the prior year. The decrease is primarily due to weather-related losses that occurred in the prior year which did not occur in the current year.
Depreciation and amortization. Depreciation and amortization increased by 18.2% to $22.4 million in the three months ended September 30, 2021, compared to $19.0 million in the same period of the prior year, attributable to an increase of $4.8 million from non-same-store properties, offset by a decrease of $350,000 from same-store properties and $906,000 from sold properties.
Depreciation and amortization increased by 11.6% to $61.7 million in the nine months ended September 30, 2021, compared to $55.3 million in the same period of the prior year, attributable to an increase of $10.4 million from non-same-store properties, offset by decreases of $1.9 million and $2.0 million at same-store communities and sold properties, respectively.
General and administrative expenses. General and administrative expenses increased by 39.1% to $4.3 million in the three months ended September 30, 2021, compared to $3.1 million in the same period of the prior year, primarily attributable to $374,000 in incentive-based compensation costs related to company performance and share-based compensation arrangements due to the timing and form of grants, $261,000 in nonrecurring technology initiatives, and $204,000 in nonrecurring consulting costs.
General and administrative expenses increased by 23.4% to $12.0 million in the nine months ended September 30, 2021, compared to $9.7 million in the same period of the prior year, primarily attributable to increases of $1.3 million in incentive-based compensation costs related to company performance and share-based compensation arrangements due to the timing and form of grants and $597,000 in nonrecurring technology initiatives.
Interest expense. Interest expense increased by 7.8% to $7.3 million in the three months ended September 30, 2021, compared to $6.8 million in the same period of the prior year, primarily due to maintaining a larger average balance on the line of credit compared to the same period of the prior year and the addition of new unsecured senior notes and the Fannie Mae credit facility, offset by a lower weighted average interest rate.
Interest expense increased by 4.8% to $21.6 million in the nine months ended September 30, 2021, compared to $20.6 million in the same period of the prior year, primarily due to maintaining a larger average balance on the line of credit compared to the same period of the prior year and the addition of new unsecured senior notes and the Fannie Mae credit facility, offset by a lower weighted average interest rate.
Interest and other income (loss). Interest and other income decreased to a loss of $5.1 million in the three months ended September 30, 2021, compared to income of $277,000 in the same period of the prior year. The decrease was primarily due to a $5.4 million loss related to the termination of interest rate swaps in the current period.
31

Table of Contents
Interest and other income decreased to a loss of $4.0 million in the nine months ended September 30, 2021, compared to a loss of $2.0 million in the same period of the prior year. The change was primarily due to a $5.4 million loss related to the termination of interest rate swaps in the nine months ended September 30, 2021, compared to a $3.4 million loss in the value of marketable securities during the nine months ended September 30, 2020.
Net income (loss) available to common shareholders. Net income available to common shareholders decreased to a loss of $11.1 million for the three months ended September 30, 2021, compared to net income of $18.0 million in the three months ended September 30, 2020.
Net income available to common shareholders decrease to net income of $2.4 million for the nine months ended September 30, 2021, compared to a net loss of $4.2 million in the same period of the prior year.
Funds from Operations.
We believe that Funds from Operations (“FFO”), which is a non-GAAP financial measures used as a standard supplemental measure for equity real estate investment trusts, is helpful to investors in understanding operating performance, primarily because its calculation does not assume the value of real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation.
We use the definition of Funds from Operations 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 investments, and assists management and investors in comparing those operating results between periods.
Due to limitations of the Nareit FFO definition, we have made certain interpretations in applying this definition. We believe that all such interpretations not specifically provided for in the Nareit definition are consistent with this 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 us as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO 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 of the our needs, including our ability to service indebtedness or make distributions to shareholders.
FFO applicable to common shares and Units for the three months ended September 30, 2021, decreased to $9.3 million compared to $12.6 million for the comparable period ended September 30, 2020, a decrease of 26.1%. This decrease was primarily due to losses related to termination of interest rate swaps, increased property management and general and administrative expenses, and decreased NOI from dispositions, offset by increased NOI from same-store and non-same-store communities.
FFO applicable to common shares and Units for the nine months ended September 30, 2021, increased to $35.9 million compared to $33.7 million for the same period of the prior year, an increase of 6.7%. The increase was primarily due to increased NOI from same-store and non-same-store communities as well as lower casualty losses and a prior year loss of $3.4 million on marketable securities that did not occur in the current year. These increases were offset by a decrease in NOI from dispositions as well as losses related to termination of interest rate swaps and increases in property management and general and administrative expenses.
32

Table of Contents
Reconciliation of Net Income Available to Common Shareholders to Funds from Operations

| (in thousands, except per share and unit amounts)
| Three Months Ended September 30, |  |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  |  | 2021 |  | 2020
Net income (loss) available to common shareholders | $ | (11,099) |  |  | $ | 18,021 |  |  |  | $ | 2,358 |  |  | $ | 4,195 |
Adjustments: |  |  |  |  |  |  |  |
Noncontrolling interests – Operating Partnership and Series E preferred units | (1,930) |  |  | 1,387 |  |  |  | (1,013) |  |  | 248 |
Depreciation and amortization | 22,447 |  |  | 18,995 |  |  |  | 61,747 |  |  | 55,311 |
Less depreciation – non real estate | (80) |  |  | (85) |  |  |  | (265) |  |  | (266) |
Less depreciation – partially owned entities | (24) |  |  | (31) |  |  |  | (72) |  |  | (346) |
(Gain) loss on sale of real estate | — |  |  | (25,676) |  |  |  | (26,840) |  |  | (25,486) |
Funds from operations applicable to common shares and Units | $ | 9,314 |  |  | $ | 12,611 |  |  |  | $ | 35,915 |  |  | $ | 33,656 |
Funds from operations applicable to common shares and Units | $ | 9,314 |  |  | $ | 12,611 |  |  |  | $ | 35,915 |  |  | $ | 33,656 |
Dividends to preferred unitholders | 160 |  |  | 160 |  |  |  | 480 |  |  | 480 |
Funds from operations applicable to common shares and Units - diluted | $ | 9,474 |  |  | $ | 12,771 |  |  |  | $ | 36,395 |  |  | $ | 34,136 |
Per Share Data |  |  |  |  |  |  |  |
Earnings (loss) per common share - diluted | $ | (0.81) |  |  | $ | 1.38 |  |  |  | $ | 0.12 |  |  | $ | 0.33 |
FFO per share and Unit - diluted | $ | 0.60 |  |  | $ | 0.90 |  |  |  | $ | 2.44 |  |  | $ | 2.49 |
Weighted average shares and Units - diluted | 15,922 |  |  | 14,143 |  |  |  | 14,917 |  |  | 13,704 |

Acquisitions and Dispositions
On September 1, 2021, we closed on a strategic portfolio acquisition in Minneapolis and St. Cloud, Minnesota for an aggregate acquisition cost of $359.9 million. The portfolio is comprised of 14 apartment communities in Minneapolis and three apartment communities in St. Cloud with a total of 2,696 apartment homes. In connection with this transaction, we issued 1.8 million Series E preferred units with a par value of $100 per unit. The Series E preferred units pay a 3.875% dividend rate and are convertible, at the holder’s option, into Units at an exchange rate of 1.2048 Units per Series E preferred unit, representing a conversion price of $83.00 per Unit. The acquired assets were subject to approximately $126.5 million in mortgage liabilities, of which $20.0 million was assumed at a rate of 4.31% with the remaining amount refinanced through a $198.9 million Fannie Mae credit facility agreement. The FMCF includes tranches in 7, 10, and 12-year increments with a weighted average interest rate of 2.78%. See Note 8 of the Notes to Condensed Consolidated Financial Statements in this Report for a table detailing acquisitions and dispositions during the nine-month periods ended September 30, 2021 and 2020.
Distributions Declared
Distributions of $0.72 and $2.12 per common share and Unit were declared during the three and nine months ended September 30, 2021, respectively. Distributions of $0.70 and $2.10 per common share and Unit were declared during the three and nine months ended September 30, 2020, respectively. Distributions of $0.4140625 and $1.242188 per Series C preferred share were declared during the three and nine months ended September 30, 2021 and 2020, respectively. Distributions of $0.9655 and $2.8965 per Series D preferred unit were declared during the three and nine months ended September 30, 2021 and 2020, respectively. Distributions of $0.322917 per Series E preferred unit were declared during the three and nine months ended September 30, 2021.
Liquidity and Capital Resources
Overview
We strive to maintain a strong balance sheet and preserve financial flexibility, which we believe should enhance our ability to capitalize on appropriate investment opportunities as they may arise. We intend to continue to focus on core fundamentals, which include generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs.
Our primary sources of liquidity are cash and cash equivalents on hand and cash flows generated from operations. Other sources include availability under the unsecured lines of credit, proceeds from property dispositions, including restricted cash
33

Table of Contents
related to net tax deferred proceeds, offerings of preferred and common shares under the shelf registration statement, including offerings of common shares under the 2021 ATM Program, and long-term unsecured debt and secured mortgages.
Our primary liquidity demands are normally-recurring operating and overhead expenses, debt service and repayments, capital improvements to communities, distributions to the holders of preferred shares, common shares, Series D and Series E preferred units, and Units, value-add redevelopment, common and preferred share buybacks and Unit redemptions, and acquisitions of additional communities.
Although we believe that our financial condition and liquidity are sufficient to meet our reasonably anticipated liquidity demands, factors that could impact our future liquidity include, but are not limited to, volatility in capital and credit markets, the ability to access capital and credit markets, the effects of the COVID-19 pandemic, including its potential impact on our ability to access the capital and credit markets on reasonable terms (or at all), the minimum REIT dividend requirements, and our ability to complete asset purchases, sales, or developments.
As of September 30, 2021, we had total liquidity of approximately $219.8 million, which included $199.0 million available on the lines of credit and $20.8 million of cash and cash equivalents. As of December 31, 2020, we had total liquidity of approximately $97.5 million, which included $97.1 million on the lines of credit and $392,000 of cash and cash equivalents.
COVID-19-Related Impacts on Liquidity
We anticipate that our primary sources of liquidity will continue to be cash and cash equivalents on hand, cash flows generated from operations and availability under the unsecured lines of credit. Although cash flows may be reduced as a result of lower monthly collections of rent as well as the potential for lower occupancy or reduced rental rates during and after the COVID-19 pandemic, we have other available sources of liquidity such as proceeds from property dispositions; offerings of preferred and common shares under the shelf registration statement, including offerings of common shares under the 2021 ATM Program; and long term unsecured term loans and secured mortgages. We have the following contractual obligations over the next twelve months:
•no debt maturities remaining in 2021;
•$29.8 million debt maturities in 2022; and
•approximately $3.9 million remaining to fund under a mezzanine loan we originated for the development of a multifamily community in Minneapolis, Minnesota.
Potential Impact of COVID-19-Related Effects on Continuing Debt Availability
Although we are in compliance with the covenants under all of our debt facilities and currently expect to continue to remain in compliance with these covenants, there can be no assurance that we will remain in compliance with those covenants or be able to access these funds depending on the length of the COVID-19 pandemic and the breadth of its impact on the U.S. economy generally and the credit markets in particular. Under the terms of our credit facility, we may be unable to obtain advances under the credit facility if:
•we are unable to make certain representations and warranties, including a certification that, since September 30, 2021, there has been no adverse change in the business, financial condition, operations, performance or properties, taken as a whole, which would reasonably be expected to have a material adverse effect;
•changes in our unencumbered properties may reduce or eliminate availability under the credit facility; or
•changes in the nature and composition (including occupancy rate) of our unencumbered properties could reduce or eliminate the availability under the credit facility.
Even if we remain in compliance with the foregoing representations, warranties, and covenants, it may be unable to access the full amount available under the credit facilities if our lenders fail to fund their commitments, which could occur if:
•credit market deterioration or overall economic conditions affect the ability of one or more of our lenders to meet their funding commitments under the revolving credit facility. If a lender fails to fund its commitment under the revolving credit facility, that portion of the credit facility will be unavailable if the lender’s commitment is not replaced by a new commitment from an alternate lender;
•distressed market conditions cause our lenders to transfer their commitments to other institutions, which could result in committed funds not being available, particularly if consolidation of the commitments under the credit facility or among its lenders were to occur; or
•we are unable to obtain additional letters of credit due to a default by any lender in meeting its funding obligations.
34

Table of Contents
As of the date of this filing, we have not experienced any restrictions or limitations on the availability of credit in its markets or with its lenders, although there can be no assurance that we will continue to be able to access the credit markets generally or the credit facility in the future.
Debt
On September 30, 2021, we amended and restated our unsecured credit facility. The amended agreement provides for a revolving line of credit for $250.0 million, a $400.0 million accordion option, and extends the maturity date to September 2025. Prior to the amendment, the unsecured credit facility included $145.0 million allocated between two term loans: a $70.0 million unsecured term loan and a $75.0 million unsecured term loan, which have been paid in full as of September 30, 2021.
As of September 30, 2021, the line of credit had total commitments and borrowing capacity of $250.0 million, based on the value of unencumbered properties. As of September 30, 2021, the additional borrowing availability was $193.0 million beyond the $57.0 million drawn. At December 31, 2020, the line of credit borrowing capacity was $250.0 million based on the unencumbered asset pool (“UAP”), of which $152.9 million was drawn on the line, including the balance on the operating line of credit.
In January 2021, we amended and expanded our private shelf agreement to increase the aggregate amount available for issuance of unsecured senior promissory notes to $225.0 million. Under this agreement, we issued $200.0 million unsecured senior notes with $25.0 million remaining available. In September 2021, we entered into a note purchase agreement for the issuance of $125.0 million of senior unsecured promissory notes. The following table shows the notes issued under both agreements.

| (in thousands) |  |  |
| Amount |  | Maturity Date | Interest Rate
Series A | $ | 75,000 |  |  | September 13, 2029 | 3.84 | %
Series B | $ | 50,000 |  |  | September 30, 2028 | 3.69 | %
Series C | $ | 50,000 |  |  | June 6, 2030 | 2.70 | %
Series 2021-A | $ | 35,000 |  |  | September 17, 2030 | 2.50 | %
Series 2021-B | $ | 50,000 |  |  | September 17, 2031 | 2.62 | %
Series 2021-C | $ | 25,000 |  |  | September 17, 2032 | 2.68 | %
Series 2021-D | $ | 15,000 |  |  | September 17, 2034 | 2.78 | %

In September 2021, we entered into a $198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”) for the financing of certain apartment communities. The FMCF is currently secured by mortgages on those apartment communities. The notes are interest-only, have varying maturity dates of 7, 10, and 12 months, and a blended, weighted average interest rate of 2.78%. As of September 30, 2021, the FMCF had a balance of $198.9 million. The FMCF is included within mortgages payable on the Condensed Consolidated Balance Sheets.
Mortgage loan indebtedness, excluding the FMCF, was $293.5 million and $298.4 million at September 30, 2021 and December 31, 2020, respectively. All of our mortgage debt is at fixed rates of interest, with staggered maturities. This decreases the exposure to changes in interest rates, which reduces the effect of interest rate fluctuations on our results of operations and cash flows. As of September 30, 2021, the weighted average interest rate on mortgage debt was 3.83%, compared to 3.93% as of December 31, 2020.
We also have a $6.0 million operating line of credit. This operating line of credit is designed to enhance treasury management activities and more effectively manage cash balances. This operating line matures on November 29, 2021, with pricing based on a market spread plus the one-month LIBOR index rate.
Equity
We had an equity distribution agreement in connection with the 2019 ATM Program through which we could offer and sell common shares having an aggregate gross sales price of up to $150.0 million. Under the 2019 ATM Program, we sold shares having an aggregate sales price of $149.9 million. During the three months ended September 30, 2021, we replaced the 2019 ATM Program with the 2021 ATM Program, through which we may offer and sell common shares having an aggregate sales price of up to $250.0 million, in amounts and at times determined by management. The proceeds from the sale of common shares under the 2021 ATM program are intended to be used for general corporate purposes, which may include the funding of acquisitions and the repayment of indebtedness. During the nine months ended September 30, 2021, we issued 1.1 million common shares under the 2019 and 2021 ATM programs at an average price of $78.63 per share, net of commissions. Total consideration, net of commissions and issuance costs, was $86.1 million. As of September 30, 2021, common shares having an aggregate offering price of up to $230.1 million remained available under the 2021 ATM Program.
35

Table of Contents
On September 1, 2021, we issued 1.8 million Series E preferred units with a par value of $100 per Series E preferred unit as partial consideration for the acquisition of 17 apartment communities. The Series E preferred unit holders receive a preferred distribution at the rate of 3.875% per year. Each Series E preferred unit is convertible, at the holder's option, into 1.2048 Units, representing a conversion exchange rate of $83.00 per unit. The Series E preferred units have an aggregate liquidation preference of $181.4 million. The holders of the Series E preferred units do not have voting rights.
Changes in Cash, Cash Equivalents, and Restricted Cash
The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash which are presented in the Condensed Consolidated Statements of Cash Flows in Part I, Item 1 above.
In addition to cash flow from operations, during the nine months ended September 30, 2021, we generated capital from various activities, including:
•Receiving $174.5 million, net of fees, from the issuance of unsecured senior notes;
•Receiving $59.2 million, net of transaction costs, from the sale of five apartment communities in Rochester, Minnesota;
•Receiving $196.7 million, net of fees, from the Fannie Mae credit facility which was used to pay off debt as partial consideration for the September 1, 2021 portfolio acquisition; and
•Receiving $85.9 million in net proceeds from the issuance of 1.1 million common shares under the 2019 and 2021 ATM Programs.
During the nine months ended September 30, 2021, we used capital for various activities, including:
•Acquiring Union Pointe, a 256-home apartment community located in Longmont, Colorado, for an aggregate purchase price of $76.9 million;
•Acquiring a portfolio of 17 apartment communities located in Minneapolis, Minnesota and St. Cloud, Minnesota, for $15.7 million in cash, the paydown of $106.7 million in existing mortgages, and the remainder through the issuance of Series E preferred units;
•Funding of mezzanine and construction loans of $17.5 million;
•Repaying $27.7 million of mortgage principal;
•Repaying $95.9 million on the line of credit;
•Paying off $145.0 million in term loans;
•Paying $3.8 million for the termination of interest rate swaps; and
•Funding capital improvements for apartment communities of approximately $20.7 million.
Contractual Obligations and Other Commitments
Contractual obligations and other commitments were disclosed in our Form 10-K for the year ended December 31, 2020. There have been no material changes to our contractual obligations and other commitments since that report was filed.
Off-Balance Sheet Arrangements
As of September 30, 2021, we had no significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Critical Accounting Policies
In preparing the Condensed Consolidated Financial Statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. A summary of critical accounting policies is included in our Form 10-K for the year ended December 31, 2020, filed with the SEC on February 22, 2021 under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements in this report for additional information. There have been no other significant changes to the our critical accounting policies during the nine months ended September 30, 2021.
36

Table of Contents
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Centerspace’s exposure to market risk is primarily related to fluctuations in the general level of interest rates on the current and future fixed and variable rate debt obligations. The Company currently uses interest rate swaps to offset the impact of interest rate fluctuations on variable-rate debt. During the three months ended September 30, 2021, Centerspace prepaid two variable rate term loans and terminated two of the four interest rate swaps. As of September 30, 2021, Centerspace has a swap with a notional of $75.0 million swap on the line of credit with an average pay rate of 2.81% and a forward swap with a notional of $70.0 million. The Company does not enter into derivative instruments for trading or speculative purposes. The interest rate swaps expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the agreements.
During the three months ended September 30, 2021, Centerspace entered into a $198.9 million Fannie Mae Credit Facility Agreement (the “FMCF”) for financing certain apartment communities. The FMCF is secured by mortgages on certain apartment communities. The notes are interest-only, have varying maturity dates of 7, 10, and 12 months, and a blended, weighted average interest rate of 2.78%. As of September 30, 2021, the FMCF had a balance of $198.9 million.
In September 2021, the Company entered into a note purchase agreement for the issuance of $125.0 million of senior unsecured promissory notes. The following table shows the notes issued under this agreement.

| (in thousands) |  |  |
| Amount |  | Maturity Date | Interest Rate
Series 2021-A | $ | 35,000 |  |  | September 17, 2030 | 2.50 | %
Series 2021-B | $ | 50,000 |  |  | September 17, 2031 | 2.62 | %
Series 2021-C | $ | 25,000 |  |  | September 17, 2032 | 2.68 | %
Series 2021-D | $ | 15,000 |  |  | September 17, 2034 | 2.78 | %

The following table provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. Average variable rates are based on rates in effect at the reporting date.

|  | Future Principal Payments (in thousands, except percentages)
|  |  |  |  |  |  |  |  | Fair
Debt |  | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total | Value
Fixed Rate |  | $ | 1,362 |  | $ | 34,284 |  | $ | 45,068 |  | $ | 4,054 |  | $ | 32,850 |  | $ | 674,779 |  | $ | 792,397 |  | $ | 805,398 |
Average Interest Rate(1) |  | 3.98 | % | 3.97 | % | 3.88 | % | 3.84 | % | 3.84 | % | 3.20 | % |  |
Variable Rate(2) |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 57,000 |  | $ | — |  | $ | 57,000 |  | $ | 57,000 |
Average Interest Rate(1) |  | — |  | — |  | — |  | — |  | 2.34 | % | — |  |  |

(1)Interest rate is annualized and includes the effect of interest rate swaps.
(2)Includes our line of credit, of which $75.0 million is synthetically fixed with an interest rate swap.
See our Annual Report on Form 10-K for the year ended December 31, 2020 under the heading “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for a more complete discussion of the Company’s interest rate sensitivity. As of September 30, 2021, the Company has reduced its exposure to market risk by replacing variable rate debt with fixed rate debt.
37

Table of Contents
Item 4. Controls and Procedures
Disclosure Controls and Procedures:
Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act), as of the end of the period covered by this Report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2021, such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting:
In connection with the evaluation required by Rule 13a-15(d), management, with the participation of the Chief Executive Officer and Chief Financial Officer, has identified no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during that quarter ended September 30, 2021 and that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
38

Table of Contents
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of the Company’s operations, the Company becomes involved in litigation. At this time, the Company knows of no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of the Company’s property is the subject.
Item 1A. Risk Factors
There have been no material changes to the Risk Factors previously disclosed in Item 1A in Annual Report on Form 10-K for the year ended December 31, 2020.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Sales of Securities
On August 31, 2021 and September 30, 2021, the Company issued 5,254 and 6,576 unregistered Common Shares, respectively, to limited partners of the Operating Partnership in exchange for their Units, in reliance on the private offering exemption under Section 4(a)(2) of the Securities Act of 1933, as amended.
Issuer Purchases of Equity Securities

|  |  |  |  | Maximum Dollar
|  |  |  | Total Number of Shares | Amount of Shares That
|  | Total Number of | Average Price | Purchased as Part of | May Yet Be Purchased
|  | Shares and Units | Paid per | Publicly Announced | Under the Plans or
Period |  | Purchased | Share and Unit(1) | Plans or Programs | Programs
July 1 - 31, 2021 |  | — |  | — |  | — |  | — |
August 1 - 31, 2021 |  | — |  | — |  | — |  | — |
September 1 - 30, 2021(2) |  | — |  | — |  | — |  | — |
Total |  | — |  | — |  | — |  |

(1)Amount includes commissions paid.
(2)Includes Units redeemed for cash pursuant to the exercise of exchange rights.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not Applicable
Item 5. Other Information
None
39

Table of Contents
Item 6. Exhibits
The following exhibits are filed as part of this Report.
EXHIBIT INDEX

Exhibit No. | Description
4.1 | Note Purchase Agreement, dated September 17, 2021, by and among the Issuer, the Company, the General Partner, and the Purchasers (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 20, 2021)
4.2 | Form of Series 2021-A Senior Note (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 20, 2021)
4.3 | Form of Series 2021-B Senior Note (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 20, 2021)
4.4 | Form of Series 2021-C Senior Note (incorporated herein by reference to the Company'’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 20, 2021)
4.5 | Form of Series 2021-D Senior Note (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 20, 2021)
4.6 | Guaranty Agreement, dated September 17, 2021 (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 20, 2021)
4.7 | Amendment No. 2 to Note Purchase and Private Shelf Agreement, dated September 17, 2021, and related Exhibit B attached thereto, by and among the Issuer, the Company, the General Partner, PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc. (incorporated by reference to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 20, 2021)
10.1 | Amendment to Limited Partnership Agreement of the Partnership, dated September 1, 2021 (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 2, 2021)
10.2 | Master Credit Facility, dated as of September 1, 2021, among certain wholly-owned indirect subsidiaries of Centerspace and Walker & Dunlop, LLC (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 2, 2021)
10.3 | Assumption Agreement and Amendment to Loan Documents, dated as of September 1, 2021, among CSR –Palisades, LLC, Minnesota Life Insurance Company and Palisades Limited Partnership (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 2, 2021)
10.4 | Equity Distribution Agreement dated September 10, 2021 between the Company and BMO Capital Markets Corp., BTIG, LLC, Jefferies LLC, Raymond James & Associates, Inc., BofA Securities, Inc., UBS Securities LLC, Piper Sandler & Co., and certain of their affiliates (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 10, 2021)
10.5 | Third Amended and Restated Credit Agreement, dated as of September 30, 2021, among Centerspace, LP, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, KeyBank, National Association and PNC Bank, National Association, as Syndicated Agents, and Bank of Montreal, as Administrative Agent (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 30, 2021)
31.1* | Section 302 Certification of Chief Executive Officer
31.2* | Section 302 Certification of Executive Vice President and Chief Financial Officer
32.1* | Section 906 Certifications of Chief Executive Officer
32.2* | Section 906 Certifications of Executive Vice President and Chief Financial Officer
101 INS** | INSTANCE DOCUMENT
101 SCH** | SCHEMA DOCUMENT
101 CAL** | CALCULATION LINKBASE DOCUMENT
101 LAB** | LABELS LINKBASE DOCUMENT
101 PRE** | PRESENTATION LINKBASE DOCUMENT
101 DEF** | DEFINITION LINKBASE DOCUMENT
104** | COVER PAGE INTERACTIVE DATA FILE - THE COVER PAGE XBRL TAGS ARE EMBEDDED WITHIN THE INLINE XBRL DOCUMENT

* Filed herewith
40

Table of Contents
** Submitted electronically herewith. Attached as Exhibit 101 are the following materials from Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Statements of Equity; (iv) the Condensed Consolidated Statements of Cash Flows; (v) notes to these Condensed Consolidated Financial Statements; and (vi) the Cover Page to Quarterly Report on our Form 10-Q.
41

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Centerspace
(Registrant)

/s/ Mark O. Decker, Jr. |
Mark O. Decker, Jr. |
President and Chief Executive Officer |
/s/ John A. Kirchmann |
John A. Kirchmann |
Executive Vice President and Chief Financial Officer |
Date: November 1, 2021 |

42