Dive Brief:
- On its fourth-quarter earnings call today, Centerspace provided no update or timeline on a strategic review initiated by its board of trustees in 2025 that could potentially lead to a sale of the Midwestern REIT and its more than 12,000 units.
- President and CEO Anne Olson said in the call that there was no assurance the ongoing review would result in a transaction or strategic change. “This process was initiated from a position of strength, having transformed Centerspace into a pure-play multifamily REIT while improving profitability, operating scale and our balance sheet,” she said.
- Olson said the strategic review underscored the Minneapolis-based REIT’s commitment to acting in the best interest of its shareholders, and that it was “a little early in the year to tell” if it would impact the REIT’s underlying strategy for 2026. “The strategic review really is reviewing what we want to do with every dollar of capital,” she said.
Dive Insight:
In 2025, Centerspace acquired two apartment communities — Sugarmont in Salt Lake City and Railway Flats in Loveland, Colorado — for $281.2 million, according to its Q4 earnings release. It sold 12 non-core apartment communities across Minnesota and one corporate office building for a total $215.5 million.
Centerspace saw its operating income increase to $64.5 million for full-year 2025 compared to $20.5 million in 2024, according to the REIT’s earnings release. The firm’s same-store YOY net operating income grew 3.5%, driven by revenue growth of 2.4%.
“Operationally, our portfolio benefits from Midwest exposure,” Olson said. “Blended leasing spreads in the [fourth] quarter were up 10 basis points, while new lease spreads were down 4.8%, renewal spreads show their highest growth of the year at 3.9% and retention of 55.2% leads to blended rates into positive territory.”
In 2026, Centerspace expects continued momentum across many of its markets, following a solid 2025 and amid limited supply in its Midwestern markets. “North Dakota continues to shine (+6.5% revenue FY25) while Denver lagged (-1.9%), and its other Upper Midwestern markets all were positive for the year,” Alexander Goldfarb, managing director and senior research analyst for investment bank and financial services company Piper Sandler, wrote in a recent research report shared with Multifamily Dive.
However, even with those gains, Goldfarb noted the environment could be right for a sale.
“If ever the right backdrop for privatization [was] to occur, now is it where financing is below 5% for short-term money and CSR is trading at an implied cap rate of 6.3%. Further, the broadening diversity of REITs targeted by private equity means the Upper Midwest could be a contender,” Goldfarb wrote.
Centerspace is among a handful of smaller apartment REITs that have taken steps to reevaluate their strategic alternatives.
In January 2025, Aimco’s board of directors decided to explore alternatives to “unlock and maximize shareholder value.” In November, the Denver-based REIT announced the marketing and sale of its remaining assets as it concluded its strategic review, before announcing the sale of a seven-property portfolio in Chicago to LaTerra Capital Management, in partnership with Respark Residential, for $455 million in December.
After initiating a “formal evaluation of strategic alternatives” in early 2025, Elme Communities sold 19 properties to an affiliate of Atlanta-based investor, developer and manager Cortland Partners for $1.6 billion in cash in November. It aims to sell all of its assets by June 2026.
While Veris Residential has pared down its portfolio through sales, activist investor Erez Asset Management has pushed the REIT to consider a strategic review, according to a Feb. 3 filing with the Securities and Exchange Commission.
In the letter attached to the SEC filing, dated Dec. 1, 2025, Erez CEO Bruce Schanzer said that Veris properties, located in supply constrained, high-growth markets, trade at a more than 30% discount to net asset value. Furthermore, Schanzer said one-off asset sales are unlikely to close the valuation gap.
“Despite management’s efforts to enhance the Company’s performance and valuation through asset sales, debt reduction, capital investments and operational initiatives, the significant gap between Veris’ intrinsic value and its valuation in the public markets persists,” Schanzer said in the letter.
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