Centerspace Cuts 2026 Outlook as Asset Sales Reshape Portfolio
Centerspace lowered its 2026 Core FFO guidance to $4.58 to $4.68 a share, down from $4.81 to $5.05, as a wave of dispositions shrank its reported revenue base even while same-store operations turned positive.
Centerspace (CSR) reported second-quarter revenue of $65.8 million, down 4.0% from $68.5 million a year earlier, as the apartment landlord worked through a portfolio of asset sales that has now weighed on reported revenue for two consecutive quarters. Revenue fell 3.0% in the first quarter, and the declines stem from the prior-year sale of 12 apartment communities rather than any softening in underlying demand.
That portfolio churn accelerated on June 1, when Centerspace announced plans to sell $245.0 million of assets in 2026, including a full exit from the Bismarck and Rapid City markets. The company followed through during the quarter with the $30.0 million sale of a 176-home Denver community, and disclosed after quarter-end that it had sold five Rapid City communities for $66.0 million and two Minneapolis communities for $73.8 million. The same-store pool, which had been stable as of the first quarter, shrank to 44 communities after 13 properties were reclassified as held for sale during the first half of the year.
Within that smaller same-store base, operating performance improved. Same-store net operating income turned positive, rising 0.3% year over year in the second quarter after falling 1.1% in the first, and climbed 4.8% sequentially. Core FFO per diluted share fell 0.8% year over year to $1.27, a smaller decline than the 7.4% drop to $1.12 posted in the first quarter. Weighted average occupancy rose to 96.0% from 95.4% sequentially, and resident retention jumped to 61.3% from 54.0%, though both remained just below year-earlier levels. Effective blended lease rate growth reaccelerated to 1.8% from 0.4% in the prior quarter, powered by 3.4% renewal rate growth that offset a 0.6% decline in new lease rates.
The disposition program drove Centerspace to cut its full-year outlook even as operations stabilized. The company now guides to 2026 Core FFO of $4.58 to $4.68 a share, down from a prior range of $4.81 to $5.05, and lowered FFO guidance to $4.37 to $4.50 from $4.65 to $4.92. The reduction marks a reversal from the first-quarter update, when Centerspace had reaffirmed and raised its Core FFO outlook to the $4.81-to-$5.05 range. Net income per share guidance, introduced for the first time this quarter at $6.42 to $6.82, reflects large expected gains on the asset sales and replaces a prior forecast of a net loss of $0.95 to $0.66 a share.
Centerspace also added a new line to its 2026 outlook for potential special distributions of $50.0 million to $60.0 million to shareholders, a figure the company had previously referenced only qualitatively alongside a $45 million to $65 million range in its June 1 strategic review announcement. The Core FFO reconciliation showed $880,000 in severance and related costs that had not appeared in prior quarters, alongside $127,000 in legal and strategic-review costs, down from $977,000 in the first quarter and $1,336,000 in the fourth quarter of 2025.
Proceeds from the asset sales went toward paying down debt. Net debt to adjusted EBITDA fell to 7.32 times from 8.22 times sequentially, and total debt declined to $989.6 million from $1,015.6 million. Total liquidity fell to $242.6 million from $267.1 million over the same period.
Centerspace disclosed share repurchases for the first time in this release cycle, buying back 45,310 common shares in the quarter at an average price of $55.54.