MINNEAPOLIS, June 3, 2021 /PRNewswire/ -- Centerspace
(NYSE: CSR) has entered into Contribution Agreements with entities
managed by KMS Management, Inc. ("KMS"), to acquire a portfolio of
17 communities for the aggregate purchase price of $323.8 million. The portfolio of 19 real estate
assets is compriseed of 14 communities in Minneapolis, Minnesota and three communities
in St. Cloud, Minnesota. The
acquisition will add 2,696 apartment homes to the Centerspace
portfolio, further strengthening the Company's footprint in markets
where the Company has historically strong operations.
The Company will fully fund the transaction through the issuance
of up to $197.3 million Convertible
Preferred Operating Partnership units that pay a preferred 3.875%
dividend and are convertible into common units at an exchange rate
of 1.2048 common units per Convertible Preferred Operating
Partnership Unit representing a conversion price of $83.00 per unit. In lieu of Convertible Preferred
Operating Partnership Units, KMS may elect to receive up to
$16.2 million of the aggregate
purchase price in cash at closing. The Company will acquire the
communities subject to approximately $126.5
million in mortgage liabilities, a portion of which the
Company intends to refinance upon consummation of the transaction.
Additionally, the Company plans to fund approximately $40 million of capital into repositioning the
communities over the next 24-36 months. The transaction is expected
to close in the third quarter of 2021, subject to customary
approvals and closing conditions.
"This fully-funded acquisition fits seamlessly into our
investment thesis," said Mark O. Decker
Jr., President and CEO. "Adding KMS' communities, team and
investors to our Company will double our presence in our core
market of Minneapolis, increase
the scale of our operations and provide numerous opportunities to
improve our business. We are thankful to the KMS team and investors
and all of their work on this transaction and for their faith in
Centerspace as they join our platform."
Centerspace currently owns 2,537 homes in Minneapolis across 14 communities and 1,192
homes in St. Cloud in six
communities. With the addition of the KMS portfolio, the Company
will increase its footprint in Minneapolis to 4,901 homes and to 1,524 homes
in St. Cloud.
Minneapolis boasts a diverse
economy driven by strong employment, headquartering 24 Fortune
1,000 companies and maintains the highest median income in the
Midwest. Centerspace's Minneapolis
suburban communities have seen compounded revenue growth of 6.3%
and compounded NOI growth of 5.8% from 2018-2020 with St. Cloud having compounded revenue growth of
4.7% and compounded NOI growth of 9.3% during the same period.
"Our plan is to integrate this portfolio onto our existing
platform and leverage our operating initiatives, particularly our
focus on customer experience and margin expansion, to enhance the
overall quality and cash flow of our aggregate portfolios in
Minneapolis and St. Cloud. The KMS communities have a long and
successful operating history, great locations within their
respective submarkets, and we are seeing high demand for product
with attainable rental rates," said Mr. Decker.
The portfolio consists of the following:
Property
|
City
|
Homes
|
Average In-Place
Rent (1)
|
Palisades
|
Ramsey
|
330
|
$1,181
|
River
Pointe
|
Fridley
|
301
|
$1,059
|
Woodland
Pointe
|
Woodbury
|
288
|
$1,183
|
Burgundy/Hillsboro
Court
|
New Hope
|
251
|
$1,041
|
Windsor
Gates
|
Brooklyn
Park
|
200
|
$1,016
|
Woodhaven
|
Minneapolis
|
178
|
$1,003
|
New Hope Garden/New
Hope Village
|
New Hope
|
151
|
$991
|
Wingate
|
New Hope
|
136
|
$963
|
Bayberry
Place
|
Eagan
|
120
|
$1,049
|
Gatewood
|
Waite Park
|
120
|
$828
|
Legacy
|
Waite Park
|
119
|
$828
|
Calhoun
|
Minneapolis
|
97
|
$1,278
|
Plymouth
Pointe
|
Plymouth
|
96
|
$1,095
|
Pointe
West
|
Saint
Cloud
|
93
|
$871
|
Grove
Ridge
|
Cottage
Grove
|
84
|
$1.064
|
Southdale
Parc
|
Richfield
|
70
|
$937
|
West
Calhoun
|
Minneapolis
|
62
|
$1,074
|
Total
|
|
2,696
|
$1,050
|
(1)
|
Per 4/14/2021 rent
roll
|
About Centerspace
Centerspace is an owner and operator of apartment communities
committed to providing great homes by focusing on integrity and
serving others. Founded in 1970, the Company currently owns 62
apartment communities consisting of 11,579 homes located in
Colorado, Minnesota, Montana, Nebraska, North
Dakota, and South Dakota.
Centerspace was named a Top Workplace for 2020 by the
Minneapolis Star Tribune. For more information, please visit
www.centerspacehomes.com.
If you would like more information about this topic, please
contact Emily Miller, Investor
Relations, at (701) 837-7104 or IR@centerspacehomes.com.
Forward-Looking Statements
Certain statements in this press release are based on the Company's
current expectations and assumptions and are "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements involve known
and unknown risks, uncertainties, and other factors that may cause
the actual results, performance, or achievements to be materially
different from the results of operations, financial conditions, or
plans expressed or implied by the forward-looking statements.
Although the Company believes the expectations reflected in its
forward-looking statements are based upon reasonable assumptions,
it can give no assurance that the expectations will be achieved.
Such risks, uncertainties, and other factors that might cause such
differences include, but are not limited to those risks and
uncertainties detailed from time to time in our filings with the
Securities and Exchange Commission, including the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and "Risk Factors" contained in our Annual Report on
Form 10-K for the year ended December 31, 2020, in our
subsequent quarterly reports on Form 10-Q, and in other public
reports. The Company assumes no obligation to update or supplement
forward-looking statements that become untrue due to subsequent
events.
Contact Information
Emily
Miller, Investor Relations
Phone : (701) 837-7104
E-mail : IR@centerspacehomes.com
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SOURCE Centerspace