Centerspace confirmed that earlier this fall, its Board of Trustees initiated a review of the REIT's strategic alternatives, in a press release posted Tuesday. 

The board, with the support of its independent financial and legal advisors, will consider a range of options, including a sale, merger and other business combinations. Centerspace, which owns more than 12,000 units, said there is no assurance the review will result in a transaction or other strategic change.

The Minneapolis-based REIT has not set a timetable for the review process and has not made any decisions related to any potential strategic alternatives, per the release. It does not intend to comment on developments related to the review until it determines that further disclosure is appropriate or required by law.

Recent sales

Over the past year, Centerspace has taken steps to pare down its portfolio in Minnesota. In June, the REIT announced it was marketing its entire five-community portfolio in the Saint Cloud, Minnesota, region for sale, and several properties from its Minneapolis portfolio are on the sales block, according to a press release.

In September, Centerspace announced that it had sold the five communities comprising 832 units in the St. Cloud market for a sale price of $124 million, marking its exit from that area, according to a press release. Earlier this month, it sold seven properties totaling 679 units in the Minneapolis area for $88.1 million, according to its recent earnings presentation. 

Even with the sale, the REIT’s growth profile in Minneapolis is outsized, Alexander Goldfarb, managing director and senior research analyst for investment bank and financial services company Piper Sandler, wrote in a recent research report.

As it has made sales in its home state, Centerspace has also been buying in new areas. In late May, it officially entered Salt Lake City with the purchase of Sugarmont, a 341-unit property, for $149 million. It also announced the acquisition of a 420-unit community in Fort Collins, Colorado, for $132 million.

“We credit CEO Anne Olson and team for trying to balance broadening CSR's portfolio, pruning over-exposed markets [think greater MSP metro] and tiny markets like Minot, North Dakota,” Goldfarb wrote. “The challenge is that most of where they want to buy trades inside of the markets they are selling. Couple this negative investment spread with the slower fundamentals, courtesy of the tepid jobs market, and thus the impetus to sell makes sense.”

While Centerspace owns properties in Midwestern markets like Rochester, Minnesota; Omaha, Nebraska; and Billings, Montana — markets that institutional investors traditionally avoid — the rise of alternative managers could produce potential buyers for the REIT, according to Goldfarb.

“Ultimately, CSR has to decide if it has a better path to grow [by] staying independent or by selling now,” Goldfarb wrote.

REITs exploring options

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.” Earlier this week, the Denver-based REIT announced the targeted marketing and sale of its remaining assets, as it concludes its strategic review process, according to a press release.

After initiating a “formal evaluation of strategic alternatives” earlier this year, Elme Communities took the first step to liquidating the company by selling a 19-asset portfolio to Atlanta-based investor, developer and manager Cortland Partners for $1.6 billion in cash in August. 

In conjunction with the sale, the Bethesda, Maryland-based REIT’s board of trustees has approved a plan of sale and liquidation under which the company would market its remaining nine multifamily assets, as well as Watergate 600 — an office asset — with the goal of a sale in the next 12 months. The REIT’s shareholders still need to approve the plan.

“CSR's confirmation [that] it is exploring strategic options doesn't surprise and fits within a trend of smaller companies tapping into the growing capital that wants real estate,” Goldfarb wrote.

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