Quick Overview

  • In their first earnings call since announcing a strategic review in June, Centerspace executives provided an update on plans to sell 12 apartment properties for a total of $245 million.
  • Centerspace sold Civic Lofts in Denver on June 29 for $30 million, and Grant Campbell, Senior Vice President of Investments and Capital Markets, said during the second-quarter call on August 4 that the transaction represented a capitalization rate of approximately 5% on stabilized operations. On July 9, the company completed the sale of five communities in Rapid City, South Dakota, for a total of $66 million, marking the REIT's exit from that market.
  • On July 14, Centerspace completed the disposition of two apartment communities in Minneapolis, totaling 312 units, for $73.8 million. In Bismarck, North Dakota, the REIT is exiting the market by selling six communities for approximately $150 million, with the transaction expected to close this month, according to Campbell.

In-Depth Analysis

Like other multifamily REITs, Centerspace recently underwent an evaluation aimed at clarifying the company's future shape. In November 2025, the Minot, North Dakota-based company confirmed that its board had initiated a review of strategic alternatives for the REIT.

Even before the review, Centerspace had been streamlining its portfolio. President and CEO Anne Olson said during the second-quarter call that over the past 14 months, the company had sold or contracted to sell 20 communities for a total of approximately $530 million.

"These transactions have significantly improved our portfolio and balance sheet position, increased our exposure to institutional markets, eliminated exposure to tertiary markets such as St. Cloud, Rapid City, and Bismarck, and reduced leverage," Olson said.

Olson stated that the REIT has been prudent in its sales, aiming to adjust its market mix. "Our goal is to build a higher-quality portfolio with stronger growth potential, a lower net debt-to-EBITDA ratio, and greater financial flexibility," she said.

Although transaction volume remains subdued, Campbell noted that "high-conviction investors" have been seeking single-asset acquisition opportunities.

"Pricing for the Rapid City and Bismarck sales was at capitalization rates of approximately 6.5%, and we saw strong interest from potential buyers, including regional and national platforms," Campbell said.

Strong demand prompted Centerspace to decide to list the two Minneapolis properties for sale, which was not part of the previously announced portfolio optimization strategy.

"This decision was driven by the strong asset pricing resulting from robust Minneapolis fundamentals, our management of portfolio concentration, and further progress on our balance sheet strategy," Campbell said.

Overall, Olson said Centerspace's second-quarter operating results were in line with expectations, and future performance will rely more heavily on the Denver and Minneapolis markets.

Despite concessions in the Denver market, Centerspace's second-quarter net operating income grew 30 basis points year-over-year, while expenses declined 10 basis points year-over-year. The REIT's renewal rent growth was 3.4% year-over-year, new lease rent change was negative 60 basis points, and blended rent growth was 1.8%, according to Olson.

"Overall, weakness in Denver was offset by strong performance in North Dakota, Nebraska, and Minnesota," Olson said on the call.

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