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FAIR VALUE MEASUREMENTS | 3 Months Ended
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Mar. 31, 2024
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | 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)
| Balance Sheet Location | Total |  | Level 1 |  | Level 2 |  | Level 3
March 31, 2024 |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Real estate related notes receivable | Other assets | $ | 14,103 |  |  | — |  |  | — |  |  | $ | 14,103 |
December 31, 2023 |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Real estate related notes receivable | Other assets | $ | 7,039 |  |  | — |  |  | — |  |  | $ | 7,039 |
Centerspace utilizes an income approach with Level 3 inputs based on expected future cash flows to value the notes receivable. The unobservable inputs include market transactions for similar instruments, management estimates of comparable interest rates (range of 5.00% to 9.00%), and instrument specific credit risk (range of 0.5% to 1.0%). Changes in the fair value of these receivables from period to period are reported in interest and other income on the Condensed Consolidated Statements of Operations.
| (in thousands)
| Fair Value Measurement |  | Other Gains |  | Interest Income |  | Total Changes in Fair Value Included in Current-Period Earnings
Three months ended March 31, 2024 |  |  |  |  |  |  |
Notes receivable | $ | 14,103 |  |  | $ | 5 |  |  | $ | 208 |  |  | $ | 213 |
Three months ended March 31, 2023 |  |  |  |  |  |  |
Notes receivable | $ | 5,661 |  |  | $ | 5 |  |  | $ | 67 |  |  | $ | 72 |
As of March 31, 2024 and December 31, 2023, Centerspace had investments totaling $2.1 million in real estate technology venture funds consisting of privately held entities that develop technology related to the real estate industry. These investments appear within other assets on our Condensed Consolidated Balance Sheets. The investments are measured at net asset value (“NAV”) as a practical expedient under ASC 820. As of March 31, 2024, the Company had total unfunded commitments of $1.0 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 March 31, 2024. Non-financial assets measured at fair value on a nonrecurring basis at December 31, 2023 consisted of real estate investments that were written-down to estimated fair value during the year ended December 31, 2023.
|  | (in thousands)
| Balance Sheet Location | Total |  | Level 1 |  | Level 2 |  | Level 3
December 31, 2023 |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Real estate investments measured at fair value | Property owned | $ | 19,250 |  |  | $ | — |  |  | $ | 19,250 |  |  | $ | — |
As of December 31, 2023, the Company estimated the fair value of real estate investments using market offers to purchase and other market data. Financial Assets and Liabilities Not Measured at Fair Value The fair value of unsecured senior notes and mortgages payable are estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates, excluding any prepayment penalties (Level 3). The estimated fair values of the Company’s financial instruments as of March 31, 2024 and December 31, 2023, respectively, are as follows:
|  | (in thousands)
|  | March 31, 2024 |  | December 31, 2023
| Balance Sheet Location | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
FINANCIAL ASSETS |  |  |  |  |  |  |  |
Cash and cash equivalents | Cash and cash equivalents | $ | 12,682 |  |  | $ | 12,682 |  |  | $ | 8,630 |  |  | $ | 8,630 |
Restricted cash | Restricted cash | $ | 1,066 |  |  | $ | 1,066 |  |  | $ | 639 |  |  | $ | 639 |
FINANCIAL LIABILITIES |  |  |  |  |  |  |  |
Revolving lines of credit | Revolving lines of credit | $ | 40,357 |  |  | $ | 40,357 |  |  | $ | 30,000 |  |  | $ | 30,000 |
Unsecured senior notes | Notes payable | $ | 300,000 |  |  | $ | 250,704 |  |  | $ | 300,000 |  |  | $ | 252,108 |
Mortgages payable - Fannie Mae credit facility | Mortgages payable | $ | 198,850 |  |  | $ | 167,501 |  |  | $ | 198,850 |  |  | $ | 168,555 |
Mortgages payable - other | Mortgages payable | $ | 389,874 |  |  | $ | 365,190 |  |  | $ | 391,140 |  |  | $ | 367,080 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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