Dive Brief:

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

Dive Insight:

Like a number of other multifamily REITs, Centerspace recently went through a process to determine what the company will look like in the future. In November 2025, the Minot, North Dakota-based firm confirmed that its board of trustees initiated a review of the REIT’s strategic alternatives. 

Even before then, Centerspace was pruning its portfolio. In the last 14 months, it sold or went under contract to sell 20 communities for approximately $530 million, President and CEO Anne Olson said on the Q2 earnings call.

“These transactions have significantly improved the profile of our portfolio and balance sheet, increasing exposure to institutional markets, eliminating exposure to tertiary markets, like St. Cloud, Rapid City and Bismarck, and reducing leverage,” Olson said.

Olson said the REIT was being intentional with its sales as it aims to change its market mix. “Our goal is a higher quality portfolio with stronger growth potential, lower net-debt-to-EBITDA and greater financial flexibility,” she said.

While transaction volume is still muted, “high conviction investors” have been seeking single-asset acquisitions, according to Campbell.

“Pricing of Rapid City and Bismarck sales is a mid-6% cap rate, and we saw strong interest from potential buyers, including both regional and national platforms,” Campbell said.

Strong demand led to Centerspace’s decision to put the two Minneapolis properties on the block, which was not part of the previously announced portfolio optimization strategy. 

“This was driven by strong asset pricing received given the strength of Minneapolis fundamentals, management of our portfolio concentrations and further advancement of balance sheet strategy,” Campbell said.

Overall, Olson said Centerspace’s Q2 operating results were in line with its expectations, as results will be more weighted to Denver and Minneapolis in the future. 

Despite concessions in Denver, Centerspace grew net operating income by 30 basis points year over year and decreased expenses 10 bps YOY in Q2. The REIT posted YOY renewal rent growth of 3.4% and a new lease change of negative 60 bps for blended lease growth of 1.8%, according to Olson.

“Overall, the softness in Denver is offset by strong results out of North Dakota, Nebraska and Minnesota,” Olson said on the call. 

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