Another REIT Drops To 52-Week New Low

Less-than-expected funds from operations (FFO) in the third quarter led to a new 2022 low for Centerspace CSR, a small New York Stock Exchange real estate investment trust (REIT). 

It dropped to the new low at the opening of trading on Nov. 1 and then bounced back as buying interest appeared during the rest of the session.

The company’s FFO for the third quarter came in at $1.15 per share, up from the $1.12 per share that had been reported for the previous quarter.

Centerspace depends on revenue from apartment complexes it owns, manages and develops. Rental income is the main source of that revenue with most of it coming from properties in Minnesota, Colorado and North Dakota. The REIT also owns and maintains apartment communities in Nebraska, South Dakota and Montana.

Centerspace has a market capitalization of $1 billion, making it one of the diminutive players in the sector. Compare that to Prologis Inc. PLD, for example, which has a market cap of $102 billion or to Equity Residential EQR with a market cap of $23.9 billion. 

Average daily volume for Centerspace is 89,800 shares, a tiny amount for a New York Stock Exchange-listed security. No dividend is paid.

Now that the REIT’s third-quarter report is out, Piper Sandler analyst Alexander Goldfarb has downgraded his rating of the company from overweight to neutral.

The daily price chart for Centerspace looks like this:

The morning selling took it down to a low of $62.79 and later-in-the-day buying brought the price back up to $67.06. The red volume bar (seen underneath the price bar) shows that 225,505 shares traded, much heavier than Centerspace’s typically light trading. The REIT’s price remains below both down-trending 50- and 200-day moving averages, a bearish look.

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Here’s the weekly price chart:

Note how the price dipped to below the early October low before recovering. That Centerspace continues to trade beneath its 200-week moving average is not bullish (from a price chart analyst viewpoint) and neither is the way the 50-week moving average is heading downward.

The real estate investment trust sector continues to be deeply affected by the Federal Reserve’s interest rate hikes and companies like Centerspace are definitely feeling the “pain” that Fed Chair Jerome Powell mentioned at the August Jackson Hole retreat.

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