CENTERSPACECSR
CENTERSPACE Fair Value Disclosure
FAIR VALUE MEASUREMENTS
(1)Excludes deferred financing costs, debt premiums and discounts
In determining the fair value of other financial instruments, Centerspace applies FASB ASC 820, “Fair Value Measurement and Disclosures”. Fair value hierarchy under ASC 820 distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting entity’s own assumptions about market participant data (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.
Fair Value Measurements on a Recurring Basis
| (in thousands) | ||||||||||||||||||||
| Balance Sheet Location | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| Assets | ||||||||||||||||||||
| Real estate related notes receivable | Other assets | $ | 26,394 | $ | — | $ | — | $ | 26,394 | |||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Assets | ||||||||||||||||||||
| Real estate related notes receivable | Other assets | $ | 25,092 | $ | — | $ | — | $ | 25,092 | |||||||||||
Centerspace utilizes an income approach with Level 3 inputs based on expected future cash flows to value the notes receivable. The unobservable inputs include market transactions for similar instruments, management estimates of comparable interest rates (range of 5.00% to 9.00%), and instrument specific credit risk (range of 0.5% to 1.0%). Changes in fair value of these receivables from period to period are reported in interest and other income on the Consolidated Statements of Operations and Comprehensive Income (Loss).
| (in thousands) | |||||||||||||||||
| Fair Value Measurement | Total Changes in Fair Value Included in Current Period Earnings | ||||||||||||||||
| Year ended December 31, 2025 | |||||||||||||||||
| Real estate related notes receivable | $ | 26,394 | $ | 36 | $ | 2,246 | $ | 2,282 | |||||||||
| Year ended December 31, 2024 | |||||||||||||||||
| Real estate related notes receivable | $ | 25,092 | $ | 23 | $ | 1,554 | $ | 1,577 | |||||||||
As of December 31, 2025 and 2024, Centerspace had investments totaling $3.5 million and $2.7 million, respectively, in real estate technology venture funds consisting of privately held entities that develop technology related to the real estate industry. These investments appear within other assets on the Consolidated Balance Sheets. The investments are measured at net asset value (“NAV”) as a practical expedient under ASC 820. As of December 31, 2025, the Company had unfunded commitments of $650,000.
Fair Value Measurements on a Nonrecurring Basis
Non-financial assets measured at fair value on a nonrecurring basis at December 31, 2025 consisted of real estate investments that were written down to estimated fair value in connection with impairment recorded on one apartment community during the year ended December 31, 2025. There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at December 31, 2024. The Company’s determination of fair value is based on an independent appraisal which considers operating and other market data to determine fair value. Due to uncertainties in the estimation process, actual results could differ from such estimates.
| (in thousands) | ||||||||||||||||||||
| Balance Sheet Location | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| Assets | ||||||||||||||||||||
| Real estate investments measured at fair value | Property owned | $ | 39,700 | $ | — | $ | — | $ | 39,700 | |||||||||||
Financial Assets and Liabilities Not Measured at Fair Value
Cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses, and other liabilities are carried at amounts that reasonably approximate their fair value due to their short-term nature. For variable rate line of credit debt that re-prices frequently, fair values are based on carrying values.
The fair value of mortgages payable and unsecured senior notes is estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates, excluding any prepayment penalties (Level 3).
The estimated fair values of the Company’s financial instruments as of December 31, 2025 and 2024 are as follows:
| (in thousands) | ||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||
| Balance Sheet Location | Amount | Fair Value | Amount | Fair Value | ||||||||||||||||
| FINANCIAL ASSETS | ||||||||||||||||||||
| Cash and cash equivalents (Level 1) | Cash and cash equivalents | $ | 12,833 | $ | 12,833 | $ | 12,030 | $ | 12,030 | |||||||||||
| Restricted cash (Level 1) | Restricted cash | 2,818 | 2,818 | 1,099 | 1,099 | |||||||||||||||
| FINANCIAL LIABILITIES | ||||||||||||||||||||
| Revolving lines of credit (Level 3) | Revolving lines of credit | 154,925 | 154,925 | 47,359 | 47,359 | |||||||||||||||
Unsecured senior notes (Level 3)(1) | Notes payable | 300,000 | 267,420 | 300,000 | 253,808 | |||||||||||||||
| Mortgages payable - Fannie Mae credit facility (Level 3) | Mortgages payable | 198,850 | 175,996 | 198,850 | 166,679 | |||||||||||||||
Mortgages payable - other (Level 3)(1) | Mortgages payable | 400,134 | 358,627 | 420,414 | 383,213 | |||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Jun 28, 2018 | |
| 2017 | Jun 28, 2017 | |
| 2016 | Jun 29, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.