REITs Weekly

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REITs Weekly

Comments on Revisions / Recent Notes

REAL Centerspace (CSR, Buy, $79 PT) Concludes Strategic Review: On the eve of this week's REITWeek Conference in

NYC, Centerspace announced the conclusion of its Strategic Review announced last November (Link). CSR intends to

sell 12 communities in 2H26 for total proceeds of $240M-$245M, exiting their Bismarck and Rapid City markets in

the process. All 12 deals are already under contract, and the implied economic cap rate on the sale is 6.5%. TheESTATE company will use the proceeds to reduce leverage and will also pay special distributions of approximately $2.65-

$3.90 based on the 1Q26 ending share count. With the debt paydown, CSR expects pro forma leverage to move

below 7.0x debt/EBITDA compared to 8.2x at the end of the first quarter. Similar to other capital recycling for CSR in

recent years, the asset sales focus on smaller communities with modestly lower in-place rents, concentrating the

remaining assets in a more institutional-grade portfolio. Additionally, we note that CSR is selling one community in

Denver. While we generally like the streamlining of the portfolio through exiting core markets, the reduced leverage,INDUSTRY and a return of capital to shareholders, we wonder if the conclusion of the strategic review without a larger (or

outright) sale of assets might raise more questions for investors than it answers. Indeed, we found the focus on an

optimized portfolio and maintaining 'strategic flexibility' to be interesting components of the company's updated

presentation. Management did not update its 2026 guidance other than to highlight the prior range did not

contemplate any of the announced dispositions. We look forward to meeting with management during theREPORT