Downgrading to Neutral After Conclusion of Strategic Review

Research evidence excerpt

Downgrading to Neutral After Conclusion of Strategic Review

Investment Thesis

Centerspace continues to shift its portfolio by selling out of lower-density markets and acquiring assets in its target larger markets,

Minneapolis, Colorado, and Salt Lake City. While this reallocation could lead to better growth and more institutional relevance

longer term, in the near term the CO markets are the weakest performing in the portfolio. CSR will also improve its balance sheet

with the sales, lowering its debt/EBITDA and extending its average maturity through paydowns, although they will be dilutive to

earnings through 2027. The company has underperformed Apartment REIT peers year-to-date, and especially since announcingAPARTMENTS the conclusion of its strategic review. While the shares now trade at a larger discount to peers of 18%, we think continued lack

/ of growth through 2027 and the lack of validation of portfolio value through the strategic review is likely to remain a headwind

for shares.

Upcoming Catalysts Price PerformanceHOTELS ■ 2Q26 Earnings and 2026 outlook update; $85

/ ■ Incremental announcements on the announced dispositions; $80

■ Updates on debt repayment and the size of the special dividend. $75

$70RETAIL $65

Base Case Assumptions $60 $55

■ SSNOI decreases (0.3%) in 2026 & increased 1.9% in 2027; $50EQUITY ■ No acquisitions in 2026 and 2027; Jul-25 Aug-25 Sep-25 Oct-25 Nov-25 Dec-25 Jan-26 Feb-26 Mar-26 Apr-26 May-26 Jun-26 ■ Dispositions of $245M in 2026 at 6.9% and none in 2027;

CSR

■ No material new equity or debt issuance in 2026 or 2027. S&P 500 (rebased)

Source: FactSet

Upside Scenario Company DescriptionRESEARCH

■ Recovery in Denver comes more quickly and is more robust; Centerspace is an equity real estate