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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended
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Dec. 31, 2025
Accounting Policies [Abstract] |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 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, a North Dakota limited partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities. The accompanying 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, and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All intercompany balances and transactions are eliminated in consolidation. The Company’s interest in the Operating Partnership as of December 31, 2025 and 2024 was 85.6% and 85.3%, respectively, of the limited partnership units of the Operating Partnership (“Units”), which includes 100% of the general partnership interest. The Consolidated Financial Statements also reflected the Operating Partnership’s ownership of a joint venture entity in which the Operating Partnership had a general partner or controlling interest. The joint venture entity no longer held any assets or liabilities and was deconsolidated as of December 31, 2025. This entity was consolidated into the Company’s operations with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses. 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. RECLASSIFICATIONS Certain previously reported amounts within net cash provided by operating activities on the Consolidated Statements of Cash Flows have been reclassified to conform to the current financial statement presentation. These reclassifications had no impact on net income (loss) as reported in the Consolidated Statements of Operations and Comprehensive Income (Loss), total assets, liabilities or equity as reported in the Consolidated Balance Sheets and the classifications within the Consolidated Statements of Cash Flows. IMMATERIAL CORRECTION OF PRIOR PERIOD ERROR During the second quarter of 2025, the Company identified immaterial prior period errors in the consolidated financial statements related to the balance of common shares and noncontrolling interest within Total Equity on the consolidated balance sheets and condensed consolidated balance sheets. The errors related to the equity amount allocated between common shares and noncontrolling interest based on ownership percentage, and did not impact the amount of Total Equity. The Company assessed the materiality of this change on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” (ASC Topic 250, Accounting for Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections are not material to any previously presented consolidated financial statements. Accordingly, the Company corrected the previously reported immaterial errors as of and for the years ended December 31, 2023 and 2024, the three months ended March 31, 2024, the three and six months ended June 30, 2024, the three and nine months ended September 30, 2024, and the three months ended March 31, 2025 in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025. The financial reporting periods affected by this error include the Company’s previously reported audited consolidated financial statements as of and for the years ended December 31, 2023 and 2024 and the Company’s previously reported interim unaudited condensed consolidated financial statements for the three months ended March 31, 2025. A summary of the immaterial corrections to the Company’s previously reported audited and unaudited consolidated financial statements follows. Corrected Consolidated Balance Sheet as of December 31, 2024 (in thousands)
| December 31, 2024
| Previously Reported |  | Corrections | As Corrected
Common Shares of Beneficial Interest | $ | 1,269,549 |  |  | $ | 98,088 |  | $ | 1,367,637 |
Total shareholders’ equity | 653,900 |  |  | 98,088 |  | 751,988 |
Noncontrolling interests – Operating Partnership and Series E preferred units | 227,870 |  |  | (98,088) |  | 129,782 |
Corrected Consolidated Statements of Cash Flows (in thousands)
| Three Months Ended March 31, 2025
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | Previously Reported |  | Corrections | As Corrected
Operating partnership units converted to common shares | $ | (1,002) |  |  | $ | 1,337 |  | $ | 335 |
Series E preferred units converted to common shares | (43) |  |  | 57 |  | 14 |
| Year Ended December 31, 2024
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | Previously Reported |  | Corrections | As Corrected
Operating partnership units converted to common shares | $ | (2,663) |  |  | $ | 5,881 |  | $ | 3,218 |
Series E preferred units converted to common shares | (8,938) |  |  | 16,722 |  | 7,784 |
| Year Ended December 31, 2023
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | Previously Reported |  | Corrections | As Corrected
Operating partnership units converted to common shares | $ | (1,910) |  |  | $ | 7,134 |  | $ | 5,224 |
Series E preferred units converted to common shares | (1,390) |  |  | 2,947 |  | 1,557 |
Corrected Consolidated Statements of Equity (in thousands)
Years Ended | Previously Reported COMMON SHARES | Corrections | As Corrected COMMON SHARES | Previously Reported NONCONTROLLING INTERESTS | Corrections | As Corrected NONCONTROLLING INTERESTS
Balance at December 31, 2022 | $ | 1,177,484 |  | $ | 74,658 |  | $ | 1,252,142 |  | $ | 220,759 |  | $ | (74,658) |  | $ | 146,101 |
Redemption of Units for common shares | (1,910) |  | 7,134 |  | 5,224 |  | 1,910 |  | (7,134) |  | (5,224) |
Redemption of Series E preferred units for common shares | (1,390) |  | 2,947 |  | 1,557 |  | 1,390 |  | (2,947) |  | (1,557) |
Equity rebalancing | — |  | (933) |  | (933) |  | — |  | 933 |  | 933 |
Other | (246) |  | (60) |  | (306) |  | (682) |  | 60 |  | (622) |
Balance at December 31, 2023 | $ | 1,165,694 |  | $ | 83,746 |  | $ | 1,249,440 |  | $ | 221,193 |  | $ | (83,746) |  | $ | 137,447 |
Issuance of Units | 5,296 |  | (911) |  | 4,385 |  | 8,579 |  | 911 |  | 9,490 |
Redemption of Units for common shares | (2,663) |  | 5,881 |  | 3,218 |  | 2,663 |  | (5,881) |  | (3,218) |
Redemption of Series E preferred units for common shares | (8,938) |  | 16,722 |  | 7,784 |  | 8,938 |  | (16,722) |  | (7,784) |
Equity rebalancing | — |  | (7,350) |  | (7,350) |  | — |  | 7,350 |  | 7,350 |
Balance at December 31, 2024 | $ | 1,269,549 |  | $ | 98,088 |  | $ | 1,367,637 |  | $ | 228,543 |  | $ | (98,088) |  | $ | 130,455 |
Three Months Ended March 31, 2025 |  |  |  |  |  |
Redemption of Units for common shares | (1,002) |  | 1,337 |  | 335 |  | 1,002 |  | (1,337) |  | (335) |
Redemption of Series E preferred units for common shares | (43) |  | 57 |  | 14 |  | 43 |  | (57) |  | (14) |
Equity rebalancing | — |  | (94) |  | (94) |  | — |  | 94 |  | 94 |
Balance at March 31, 2025 | $ | 1,268,888 |  | $ | 99,388 |  | $ | 1,368,276 |  | $ | 226,639 |  | $ | (99,388) |  | $ | 127,251 |
RECENT ACCOUNTING PRONOUNCEMENTS The following table provides a brief description of Financial Accounting Standards Board (“FASB”) recent accounting standards updates (“ASU”).
Standard | Description | Date of Adoption | Effect on the Financial Statements or Other Significant Matters
ASU 2024-03, Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses | This ASU is intended to improve financial reporting by requiring public companies disclose additional information about specific expense categories in the notes to the financial statements. | This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. | The ASU will require additional disclosure but is not expected to have a material impact on the Consolidated Financial Statements.
ASU 2025-10, Government Grants (Topic 832) - Accounting for Government Grants Received by Business Entities | This ASU establishes authoritative guidance on the accounting for government grants received by business entities. | This ASU is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. | This ASU is not expected to have a material impact on the Consolidated Financial Statements.
ASU 2025-11, Interim Reporting (Topic 270) - Narrow-Scope Improvements | This ASU is intended to provide clarity on the current interim reporting disclosure requirements. | This ASU is effective for interim reporting periods within annual periods beginning after December 15, 2027. | This ASU may require additional disclosure but is not expected to have a material impact on the Consolidated Financial Statements.
ASU 2025-12, Codification Improvements | This ASU is intended to provide technical corrections, clarifications, and minor improvements to the FASB Accounting Standards Codification. | This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. | This ASU is not expected to have a material impact on the Consolidated Financial Statements.
REAL ESTATE INVESTMENTS Real estate investments are recorded at cost less accumulated depreciation and an adjustment for impairment, if any. Property, consisting primarily of real estate investments, totaled $1.9 billion as of December 31, 2025 and 2024, respectively. Upon acquisitions of real estate, the Company assesses the fair value of acquired tangible assets (including land, buildings and personal property), which is determined by valuing the property as if it were vacant, and considers whether there were significant intangible assets acquired (for example, above- and below-market leases, the value of acquired in-place leases and resident relationships) and assumed liabilities, and allocates the purchase price based on these assessments. The as-if-vacant value is allocated to land, buildings, and personal property based on the Company’s determination of the relative fair values of these assets. The estimated fair value of the property is the amount that would be recoverable upon the disposition of the property. Techniques used to estimate fair value include discounted cash flow analysis and reference to recent sales of comparable properties. Estimates of future cash flows are based on a number of factors, including the historical operating results, known trends, and market/economic conditions that may affect the property. Land value is assigned based on the purchase price if land is acquired separately or based on a relative fair value allocation if acquired in a portfolio acquisition. Other intangible assets acquired include amounts for in-place lease values that are based upon the Company’s evaluation of the specific characteristics of the leases. Factors considered in the fair value analysis include an estimate of carrying costs and foregone rental income during hypothetical expected lease-up periods, considering current market conditions, and costs to execute similar leases. The Company also considers information about each property obtained during pre-acquisition due diligence, marketing, and leasing activities in estimating the relative fair value of the tangible and intangible assets acquired. Acquired above- and below-market lease values are recorded as the difference between the contractual amounts to be paid pursuant to the in-place leases and management’s estimate of fair market value lease rates for the corresponding in-place leases. The capitalized above- and below-market lease values are amortized as adjustments to rental revenue over the remaining terms of the respective leases. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. The Company uses a 10-37 year estimated life for buildings and improvements and a 5-10 year estimated life for furniture, fixtures, and equipment. Land is not depreciated. The Company follows the real estate project costs guidance in Accounting Standards Codification (“ASC”) 970, Real Estate – General, in accounting for the costs of development and redevelopment projects. As real estate is undergoing development or redevelopment, all project costs directly associated with and attributable to the development and construction of a project, including interest expense and real estate tax expense, are capitalized to the cost of the real property. The capitalization period begins when development activities and expenditures begin and are identifiable to a specific property and ends upon completion, which is when the asset is ready for its intended use. Generally, rental property is considered substantially complete upon issuance of a certificate of occupancy. General and administrative costs are expensed as incurred. The Company did not capitalize interest during the years ended December 31, 2025, 2024, and 2023. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. Renovations and improvements that improve and/or extend the useful life of the asset are capitalized and depreciated over their estimated useful life, generally five to twenty years. We periodically evaluate our long-lived assets, including real estate investments, for impairment indicators. 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, we compare the estimated future undiscounted cash flows for the property against the carrying amount of that property. If the sum of the estimated undiscounted cash flows is less than the carrying amount, an impairment loss is generally recorded for the difference between the estimated fair value and the carrying amount. If our anticipated holding period for properties, the estimated fair value of properties or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of estimated cash flows is subjective and is based, in part, on assumptions regarding future physical occupancy, rental rates, and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. During the year ended December 31, 2025, the Company incurred a loss of $37.7 million for the impairment of six apartment communities written down to estimated fair value in connection with the communities’ classification as held for sale which were sold during the year ended December 31, 2025 and one apartment community written down to fair value based on an independent appraisal and market data. During the year ended December 31, 2024, the Company did not record a loss for impairment on real estate. During the year ended December 31, 2023, the Company incurred a loss of $5.2 million for the impairment of two apartment communities. The Company recognized impairments of $3.0 million on one apartment community in Richfield, MN and $2.2 million on one apartment community in New Hope, MN. These properties were written-down to estimated fair value based on receipt of market offers to purchase the apartment communities. The Company classifies properties as held for sale when they meet the GAAP criteria, which include: (a) management commits to and initiates a plan to sell the asset; (b) the sale is probable and expected to be completed within one year under terms that are usual and customary for sales of such assets; and (c) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company generally considers these criteria met when the transaction has been approved by its Board of Trustees, there are no known significant contingencies related to the sale, and management believes it is probable that the sale will be completed within one year. The Company had no properties classified as held for sale at December 31, 2025 and 2024. Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal costs. The Company’s determination of fair value is based on inputs management believes are consistent with those that market participants would use. Estimates are significantly impacted by estimates of sales price, selling velocity, and other factors. Due to uncertainties in the estimation process, actual results could differ from such estimates. Depreciation is not recorded on assets classified as held for sale. CASH, CASH EQUIVALENTS, AND RESTRICTED CASH Cash and cash equivalents include all cash and highly liquid investments purchased with maturities of three months or less. Cash and cash equivalents consist of bank deposits and deposits in money market mutual funds. The Company is potentially exposed to credit risk for cash deposited with FDIC-insured financial institutions in accounts which, at times, may exceed federally insured limits. Although past bank failures have increased the risk of loss in such accounts, the Company has not experienced any losses in such accounts. As of December 31, 2025 and 2024, restricted cash consisted of $2.8 million and $1.1 million, respectively, in escrows held by lenders and security deposits. Escrows include funds deposited with a lender for payment of real estate taxes and insurance and reserves to be used for replacement of structural elements and mechanical equipment at certain communities. The funds are under the control of the lender. Disbursements are made after supplying written documentation to the lender. 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 FASB ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. For the years ended December 31, 2025, 2024, and 2023, rental income represents approximately 98.2%, 98.3%, and 98.1%, respectively, of total revenues and includes gross market rent less adjustments for gain or loss to lease, concessions, vacancy loss, and bad debt. For the years ended December 31, 2025, 2024, and 2023, other property revenues represent the remaining 1.8%, 1.7%, and 1.9%, respectively, 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, subject to adjustments in rent and certain other items. Many of the leases contain non-lease components for utility reimbursement from residents and common area maintenance from commercial tenants. Centerspace has elected the practical expedient to combine lease and non-lease components. The combined components are included in lease income and are accounted for under ASC 842. The aggregate amount of future scheduled lease income on commercial operating leases, excluding any variable lease income and non-lease components, as of December 31, 2025, was as follows:
|  | (in thousands)
2026 |  | $ | 3,195 |
2027 |  | 2,898 |
2028 |  | 2,545 |
2029 |  | 2,205 |
2030 |  | 2,108 |
Thereafter |  | 5,861 |
Total scheduled lease income - operating leases |  | $ | 18,812 |
REVENUES AND GAINS OR LOSSES ON SALE OF REAL ESTATE 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 other property revenues such as application fees and other miscellaneous items. Centerspace recognizes revenue for these rental related items not included as a component of a lease as earned. The following table presents the disaggregation of revenue streams for the years ended December 31, 2025, 2024, and 2023:
|  |  | (in thousands)
|  |  | Year ended December 31,
Revenue Stream | Applicable Standard |  | 2025 | 2024 | 2023
Fixed lease income - operating leases | Leases |  | $ | 252,918 |  | $ | 243,008 |  | $ | 243,931 |
Variable lease income - operating leases | Leases |  | 15,887 |  | 13,419 |  | 12,433 |
Other property revenue | Revenue from contracts with customers |  | 4,857 |  | 4,556 |  | 4,945 |
Total revenue |  |  | $ | 273,662 |  | $ | 260,983 |  | $ | 261,309 |
In addition to lease income and other property revenue, the Company recognizes gains or losses on the sale of real estate and other investments when the criteria for derecognition of an asset are met, including when (1) a contract exists and (2) the buyer obtained control of the nonfinancial asset that was sold. For the years ended December 31, 2025, 2024, and 2023, the Company recognized a gain of $79.5 million, loss of $577,000, and gain of $71.2 million, respectively, on the sale of real estate and other investments. Any gain or loss on real estate dispositions is net of certain closing and other costs associated with the disposition. MARKET CONCENTRATION RISK The Company is subject to increased exposure from economic and other competitive factors specific to markets where it holds a significant percentage of the carrying value of its real estate portfolio. As of December 31, 2025, Centerspace held more than 10% of the carrying value of its real estate portfolio in the Minneapolis, Minnesota; Denver, Colorado; and Boulder / Ft. Collins, Colorado markets. INCOME TAXES The Company operates in a manner intended to enable it to continue to qualify as a REIT under Sections 856-860 of the Internal Revenue Code. Under those sections, a REIT which distributes at least 90% of its REIT taxable income, excluding capital gains, as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to shareholders. For the years ended December 31, 2025, 2024, and 2023, the Company distributed in excess of 90% of its taxable income and realized capital gains from property dispositions within the prescribed time limits. Accordingly, no provision has been made for federal income taxes in the accompanying Consolidated Financial Statements. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even as a REIT, the Company may be subject to certain state and local income and property taxes, and to federal income and excise taxes on undistributed taxable income. In general, however, if the Company qualifies as a REIT, no provisions for federal income taxes are necessary except for taxes on undistributed REIT taxable income and taxes on the income generated by a taxable REIT subsidiary (TRS). The Company has one TRS, which is subject to corporate federal and state income taxes on its taxable income at regular statutory rates. There were no income tax provisions or material deferred income tax items including any valuation allowances for the TRS for the years ended December 31, 2025, 2024, and 2023. During the year ended December 31, 2025, the Company adopted ASU 2023-09, Income Tax (Topic 740): Improvements to Income Tax Disclosures. The standard enhances income tax disclosure requirements, including expanded disclosures related to the effective tax rate reconciliation and income taxes paid by jurisdiction. The adoption of ASU 2023‑09 did not have a material impact on the Company’s consolidated financial statements, as the Company generally is not subject to U.S. federal income taxes due to its REIT status. The Company conducts its business activity as an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) through its Operating Partnership. UPREIT status allows us to accept the contribution of real estate in exchange for Units. Generally, such a contribution to a limited partnership allows for the deferral of gain by an owner of appreciated real estate. The following table indicates how distributions were characterized for federal income tax purposes for the years ended December 31, 2025, 2024, and 2023:
CALENDAR YEAR |  | 2025 | 2024 | 2023
Tax status of distributions |  |  |  |
Capital gain |  | 69.55 | % | — | % | 48.79 | %
Ordinary income |  | 30.45 | % | 41.71 | % | 28.46 | %
Return of capital |  | — | % | 58.29 | % | 22.75 | %
VARIABLE INTEREST ENTITY Centerspace has determined that its Operating Partnership and each of its less-than-wholly owned real estate partnerships are variable interest entities (each, a “VIE”), as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights. The Company is the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on the balance sheet because the Company has a controlling financial interest in the VIEs and has both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because the Operating Partnership is a VIE, all the Company’s assets and liabilities are held through a VIE. OTHER ASSETS As of December 31, 2025 and 2024, other assets consisted of the following amounts:
| in thousands
| December 31, 2025 | December 31, 2024
Receivable arising from straight line rents | $ | 1,645 |  | $ | 408 |
Accounts receivable, net of allowance | 524 |  | 384 |
Real estate related notes receivable | 26,394 |  | 25,092 |
Prepaid assets | 7,166 |  | 8,271 |
Other assets(1) | 5,715 |  | 4,626 |
Intangible assets, net of accumulated amortization | 2,015 |  | 1,977 |
Property and equipment, net of accumulated depreciation | 526 |  | 2,543 |
Goodwill | 316 |  | 491 |
Deferred charges and leasing costs | 2,319 |  | 2,025 |
Total Other Assets | $ | 46,620 |  | $ | 45,817 |
(1)See Involuntary Conversion of Assets discussion below for additional information on insurance receivable included here. Real estate related notes receivable. In connection with the acquisition of The Lydian, an apartment community in Denver, Colorado, the Company acquired a tax increment financing note receivable (“TIF”) with an initial principal balance of $4.1 million. As of December 31, 2025 and 2024, the principal balance was $3.9 million and $4.1 million, respectively, which appears within other assets in the Consolidated Balance Sheets at fair value. The note bears an interest rate of 6.0% with payments due in March and July of each year. The note matures September 30, 2041. In connection with the acquisition of Ironwood, an apartment community in New Hope, Minnesota, the Company acquired a TIF note receivable with an initial principal balance of $6.6 million. As of December 31, 2025 and 2024, the principal balance was $4.9 million and $5.2 million, respectively, which appears within other assets in the Consolidated Balance Sheets at fair value. The note bears an interest rate of 4.5% with payments due in February and August of each year. The note matures February 1, 2039 and may be prepaid in whole or in part at any time. In 2023, the Company originated a $15.1 million mezzanine loan for the development of an apartment community located in Inver Grove Heights, Minnesota. The mezzanine loan bears interest at 10.0% per annum, which accrues and is added to the principal balance and is payable at maturity. As of December 31, 2025 and 2024, the Company had funded $15.1 million of the mezzanine loan. As of December 31, 2025 and 2024, the principal balance was $18.0 million and $16.3 million, respectively, which appears within other assets in the Consolidated Balance Sheets at fair value. The loan matures in December 2027 unless extended to December 2028 in accordance with the terms of the mezzanine loan agreement. The loan is secured by a pledge of and first priority security interest against 100% of the membership interests in the mezzanine borrower and the agreement provides the Company with an option to purchase the development at a discount to future appraised value. The loan represents an investment in an unconsolidated variable interest entity. The Company is not the primary beneficiary of the VIE as Centerspace does not have the power to direct the activities which most significantly impact the entity’s economic performance nor does Centerspace have significant influence over the entity. Intangible Assets. Intangible assets consist of in-place leases valued at the time of acquisition. The amortization period reflects the average remaining term of in-place leases acquired, which are generally less than one year for multifamily apartment homes and average lease term for the commercial spaces in the Company’s mixed use properties. For the years ended December 31, 2025, 2024, and 2023, the Company recognized $8.3 million, $2.8 million, and $2.6 million, respectively, of amortization expense related to these intangibles, included within depreciation and amortization in the Consolidated Statements of Operations and Comprehensive Income (Loss). The intangible assets remaining at December 31, 2025 related to in-place leases of multifamily apartment homes will be fully amortized in 2026, while in-place leases related to commercial spaces at certain apartment communities will be fully amortized by 2036. Property and equipment. Property and equipment consists primarily of office equipment located at the Company’s corporate offices in Minot, North Dakota and in Minneapolis, Minnesota. As of December 31, 2025 and 2024, property and equipment cost was $1.8 million and $4.0 million, respectively. The Consolidated Balance Sheets reflect these assets at cost, net of accumulated depreciation of $1.2 million and $1.5 million as of December 31, 2025 and 2024, respectively, and are included within other assets. ADVERTISING COSTS Advertising costs are expensed as incurred and reported on the Consolidated Statements of Operations and Comprehensive Income (Loss) within the Property operating expenses, excluding real estate taxes line item. During the years ended December 31, 2025, 2024, and 2023 total advertising expense was $3.0 million, $3.3 million, and $3.2 million, respectively. SHARE-BASED COMPENSATION The cost of share-based compensation is measured at grant date fair value based on estimated fair value of the awards. The estimated fair value of share-based awards is being amortized over the requisite service period. Refer to Note 13, Share-Based Compensation for additional discussion. SEVERANCE AND TRANSITION On March 23, 2023, the Company entered into a Separation and General Release Agreement (the “Separation Agreement”) in connection with the departure of our former CEO. During the year ended December 31, 2023, the Company incurred total severance costs of $2.2 million for the cash severance and benefits for the former CEO, $737,000 in share-based compensation expense for the acceleration of certain equity awards, and $306,000 in other CEO transition related expenses. These expenses are included within general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss). During the years ended December 31, 2025 and 2024, the Company had no severance and transition costs. INVOLUNTARY CONVERSION OF ASSETS During the year ended December 31, 2025, the Company recognized $1.9 million in casualty losses resulting from insurance events. The Company also recorded $920,000 in offsetting insurance receivables which are recorded within other assets on the Consolidated Balance Sheets. Any business interruption insurance proceeds and subrogation proceeds will be recognized when received, in accordance with ASC 610-30. During the year ended December 31, 2024, Centerspace recognized $2.8 million in casualty losses resulting from six new insurance events and updated estimates on four previously reported events. The Company also recorded $566,000 in offsetting insurance receivables for new insurance events which are recorded within other assets on the Consolidated Balance Sheets. In April 2023, a portion of an apartment community was destroyed by fire. The Company recorded a write-down of the apartment community asset, in accordance with ASC 610-30 on involuntary conversion of non-monetary assets, totaling $1.3 million with an offsetting insurance receivable recorded within other assets on the Consolidated Balance Sheets. During the year ended December 31, 2024, the claim was settled for $1.6 million, including remediation and other operating expenses. During the year ended December 31, 2023, Centerspace recorded $2.0 million in additional write-downs to three apartment community assets due to separate insurance events with offsetting insurance receivables totaling $1.2 million recorded within other assets on the Consolidated Balance Sheets. LITIGATION SETTLEMENT During the year ended December 31, 2023, the Company recorded a loss on litigation settlement of $3.9 million due to a trial judgment entered against Centerspace for property damage, resulting in monetary losses. Centerspace was the named defendant in a lawsuit where the owner of a neighboring property claimed a retaining wall at one of the Company’s apartment communities was causing water damage to the neighboring property. The original judgment was ordered on October 9, 2023 for $2.9 million which the Company immediately paid. In November 2023, the claimant filed motions requesting additional interest on the judgment and trial costs. Subsequent to December 31, 2023, the claimant was awarded an additional $1.0 million in judgment related interest and costs. The Company paid the additional amount and recorded the loss on litigation for the year ended December 31, 2023. After the additional judgment, the claimant’s appeal was dismissed. The Company believes this matter is settled.

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