| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 56.83 | -12 |
| Intrinsic value (DCF) | 27.27 | -58 |
| Graham-Dodd Method | n/a | |
| Graham Formula | n/a |
Centerspace (NYSE: CSR) is a real estate investment trust (REIT) specializing in residential apartment communities across the Midwest and Mountain regions of the U.S. Founded in 1970, the company owns and operates 62 apartment communities comprising 11,579 units, primarily in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Centerspace focuses on providing high-quality, affordable housing while emphasizing integrity and tenant satisfaction, earning recognition as a Top Workplace by the Minneapolis Star Tribune. As a residential REIT, Centerspace benefits from stable rental income streams and long-term demographic trends favoring rental housing demand. The company’s portfolio targets middle-market renters, positioning it strategically in markets with lower supply volatility and steady occupancy rates. With a market cap of approximately $1.02 billion, Centerspace remains a key player in the niche regional multifamily housing sector.
Centerspace presents a mixed investment profile. On the positive side, its focus on stable Midwest and Mountain region markets provides resilience against economic downturns, supported by a diversified portfolio of 11,579 units. The company’s 0.789 beta indicates lower volatility compared to the broader market, appealing to risk-averse investors. However, its negative net income (-$10.7M) and diluted EPS (-$1.27) raise concerns about profitability, though operating cash flow ($98.2M) suggests underlying operational strength. The dividend yield (~3.02/share) is attractive but must be weighed against high leverage (total debt of $955.4M). Investors should monitor occupancy rates, rent growth, and debt management in a rising interest rate environment.
Centerspace’s competitive advantage lies in its regional focus on underserved Midwest and Mountain markets, where competition from large national REITs is limited. Its portfolio of smaller, community-centric properties allows for localized management and stronger tenant relationships, fostering higher occupancy rates. However, the company faces scalability challenges compared to national peers like AvalonBay or Equity Residential, which benefit from economies of scale and coastal market premiums. Centerspace’s leverage ratio (~93% of market cap) is higher than industry averages, potentially limiting flexibility. Its niche strategy mitigates direct competition but exposes it to localized economic risks. The lack of development activity (zero capital expenditures reported) suggests a conservative growth approach, relying solely on organic rent increases and operational efficiency.