LITTLE
ROCK, Ark. and TORONTO, Aug. 9, 2023
/CNW/ - BSR Real Estate Investment Trust ("BSR", or the "REIT")
(TSX: HOM.U) (TSX: HOM.UN) today announced its financial results
for the three and six months ended June 30,
2023 ("Q2 2023" and "YTD 2023", respectively). All
comparisons are to the corresponding periods in the prior year.
Results are presented in U.S. dollars. References to "Same
Community" correspond to stabilized properties the REIT has owned
for equivalent periods throughout Q2 2023 and YTD 2023 and the
three months and six months ended June 30,
2022 ("Q2 2022" and "YTD 2022", respectively), thus removing
the impact of acquisitions, dispositions and non-stabilized
properties. Condensed Consolidated Interim Financial Statements and
Management's Discussion and Analysis as of and for the three and
six months ended June 30, 2023 are
available on the REIT's website at www.bsrreit.com and at
www.sedar.com.
A reconciliation of Funds from Operations ("FFO") and Adjusted
Funds from Operations ("AFFO") to net income and comprehensive
income, as well as an expanded discussion of the components of FFO
and AFFO, and a reconciliation of Net Asset Value ("NAV") to
unitholders equity can be found under "Non-IFRS Measures" in this
release. FFO per Unit, AFFO per Unit and NAV per Unit include trust
units of the REIT ("Units"), Class B Units of BSR Trust, LLC
("Class B Units") and issued Deferred Units.
"The REIT delivered Same Community NOI growth of 11.7% and FFO
per Unit growth of 9.5% in Q2 2023 over Q2 2022, reflecting the
strong fundamentals in our core sunbelt multifamily markets and the
outstanding performance of the BSR management platform," said
Dan Oberste, the REIT's President
and Chief Executive Officer. "With our prudent balance sheet and
leverage profile, the REIT is well positioned to capitalize on new
growth opportunities that are expected to emerge as the Federal
Reserve continues to respond to improving inflation numbers."
Q2 2023 Highlights
- FFO per Unit1 for Q2 2023 of $0.23 increased 9.5% over Q2 2022;
- AFFO per Unit1 for Q2 2023 of $0.20 increased 5.3% over Q2 2022;
- Weighted average rent increased 6.3% to $1,501 per apartment unit as of June 30, 2023 compared to $1,412 as of June 30,
2022 and 0.8% sequentially from $1,489 as of March 31,
2023;
- Excluding short term leases, rental rates for new leases and
renewals increased 1.1% and 6.7%, respectively, over the prior
leases, resulting in a blended increase of 3.7%;
- Same Community1 revenues for Q2 2023 increased 8.5%
over Q2 2022;
- Same Community1 Net Operating Income
("NOI")1 for Q2 2023 increased 11.7% over Q2 2022;
- During Q2 2023, the REIT's AFFO Payout Ratio1 was
63.9% compared to 71.8% during Q2 2022;
- Weighted average occupancy was 95.3% as of June 30, 2023 compared to 95.0% as of
June 30, 2022;
- Debt to Gross Book Value1 excluding Convertible
Debentures (as defined below) as of June 30,
2023 was 37.3%;
- In May 2023, the REIT entered
into a $50 million interest rate swap
at a fixed rate of 2.25% effective October
1, 2024 and maturing July 1,
2031, subject to the counterparty's optional early
termination date of February 1,
2027;
- In June 2023, the REIT exercised
its option pursuant to the terms of its revolving credit facility
(the "Credit Facility") to extend the maturity for a 12-month
period, now maturing on September 30,
2026; and
- During Q2 2023, the REIT purchased and canceled 390,477 Units
under its normal course issuer bid ("NCIB") and automatic
securities purchase plan ("ASPP") at an average price of
$12.43 per Unit. Through June 30, 2023, the REIT has purchased and
canceled 1,469,984 Units under its NCIB at an average price of
$13.25 per Unit.
_________________________________
|
1 Same
Community, NOI, NOI Margin, FFO, FFO per Unit, AFFO, AFFO per Unit,
AFFO Payout Ratio, Debt to Gross Book Value and NAV per Unit are
non-IFRS measures. For a description of the basis of
presentation and reconciliations of the REIT's non-IFRS measures,
see "Non-IFRS Measures" in this news release.
|
Q2 2023 Financial Summary
In thousands of U.S. dollars, except per unit amounts
|
|
Q2 2023
|
|
Q2 2022
|
|
Change
|
|
Change
%
|
Revenue, Total
Portfolio
|
$
|
42,043
|
$
|
38,787
|
$
|
3,256
|
|
8.4 %
|
Revenue, Same
Community1 Properties
|
$
|
39,992
|
$
|
36,871
|
$
|
3,121
|
|
8.5 %
|
Revenue, Non-Same
Community1 Properties
|
$
|
2,051
|
$
|
1,916
|
$
|
135
|
|
7.0 %
|
Net (loss) income and
comprehensive (loss) income
|
$
|
(45,916)
|
$
|
160,832
|
$
|
(206,748)
|
|
nm*
|
NOI1, Total
Portfolio
|
$
|
23,044
|
$
|
20,998
|
$
|
2,046
|
|
9.7 %
|
NOI1, Same
Community1 Properties
|
$
|
22,037
|
$
|
19,737
|
$
|
2,300
|
|
11.7 %
|
NOI1,
Non-Same Community1 Properties
|
$
|
1,007
|
$
|
1,261
|
$
|
(254)
|
|
-20.1 %
|
Funds from Operations
("FFO")1
|
$
|
13,277
|
$
|
11,637
|
$
|
1,640
|
|
14.1 %
|
FFO per
Unit1
|
$
|
0.23
|
$
|
0.21
|
$
|
0.02
|
|
9.5 %
|
Maintenance capital
expenditures
|
$
|
(1,776)
|
$
|
(1,218)
|
$
|
(558)
|
|
45.8 %
|
Escrowed rent guaranty
realized
|
$
|
-
|
$
|
5
|
$
|
(5)
|
|
nm*
|
Straight line rental
revenue differences
|
$
|
25
|
$
|
54
|
$
|
(29)
|
|
nm*
|
AFFO1
|
$
|
11,526
|
$
|
10,478
|
$
|
1,048
|
|
10.0 %
|
AFFO per
Unit1
|
$
|
0.20
|
$
|
0.19
|
$
|
0.01
|
|
5.3 %
|
Weighted Average Unit
Count
|
|
57,199,497
|
|
56,290,702
|
|
908,795
|
|
1.6 %
|
Unitholders'
equity
|
$
|
901,319
|
$
|
991,865
|
$
|
(90,546)
|
|
-9.1 %
|
NAV1
|
$
|
1,165,819
|
$
|
1,300,732
|
$
|
(134,913)
|
|
-10.4 %
|
NAV per
Unit1
|
$
|
20.48
|
$
|
22.35
|
$
|
(1.87)
|
|
-8.4 %
|
*Percentages have
been excluded for changes which are not considered to be meaningful
for comparative purposes.
|
1Same Community, NOI, NOI
Margin, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio,
Debt to Gross Book Value and NAV per Unit are non-IFRS measures.
For a description of the basis of presentation and reconciliations
of the REIT's non-IFRS measures, see "Non-IFRS Measures" in this
news release.
|
Total portfolio revenue of $42.0
million for Q2 2023 increased 8.4% compared to $38.8 million in Q2 2022. Same Community
properties contributed $3.1 million,
as described below, and the non-stabilized property contributed
$0.1 million to the overall
increase.
Revenue from Same Community properties of $40.0 million for Q2 2023 increased 8.5% from
$36.9 million in Q2 2022, primarily
due to a 6.5% increase in average rental rates from $1,403 per apartment unit as of June 30, 2022 to $1,495 per apartment unit as of June 30, 2023.
The net (loss) income and comprehensive (loss) income change
between Q2 2023 and Q2 2022 is primarily due to non-cash
adjustments to fair values of investment properties and derivatives
and other financial liabilities from March
31, 2023 to June 30, 2023 and
March 31, 2022 to June 30, 2022, respectively, and is not
considered comparable period over period.
The 9.7% increase in total portfolio NOI for Q2 2023 to
$23.0 million compared to
$21.0 million in Q2 2022 was the
result of increases of $2.3 million
from Same Community properties, described below, partially offset
by a $0.3 million reduction due to
property dispositions.
The 11.7% increase in Same Community NOI to $22.0 million for Q2 2023 compared to
$19.7 million in Q2 2022 was the
result of the increase in revenue described above, partially offset
by an increase in property operating expenses of $0.8 million due to higher payroll costs and
property insurance.
FFO was $13.3 million, or
$0.23 per Unit, for Q2 2023 compared
to $11.6 million, or $0.21 per Unit, for Q2 2022. The increase was
primarily the result of the higher NOI discussed above, partially
offset by an increase of $0.2 million
in finance costs (net of finance income primarily from interest
rate swaps) and an increase of $0.2
million in general and administrative expenses.
AFFO was $11.5 million, or
$0.20 per Unit, for Q2 2023, compared
to $10.5 million, or $0.19 per Unit, for Q2 2022. The improvement was
primarily the result of the increase in FFO discussed above,
partially offset by higher maintenance capital expenditures. The
45.8% increase in maintenance capital expenditures is primarily due
to roof replacements and balcony restoration at Wimbledon Green and
Westwood Park.
YTD 2023 Financial Summary
In thousands of U.S. dollars, except per unit amounts
|
|
YTD 2023
|
|
YTD 2022
|
|
Change
|
|
Change
%
|
Revenue, Total
Portfolio
|
$
|
83,628
|
$
|
76,332
|
$
|
7,296
|
|
9.6 %
|
Revenue, Same
Community1 Properties
|
$
|
79,556
|
$
|
72,489
|
$
|
7,067
|
|
9.7 %
|
Revenue, Non-Same
Community1 Properties
|
$
|
4,072
|
$
|
3,843
|
$
|
229
|
|
6.0 %
|
Net (loss) income and
comprehensive (loss) income
|
$
|
(62,054)
|
$
|
219,863
|
$
|
(281,917)
|
|
nm*
|
NOI1, Total
Portfolio
|
$
|
45,882
|
$
|
40,643
|
$
|
5,239
|
|
12.9 %
|
NOI1, Same
Community1 Properties
|
$
|
43,907
|
$
|
38,309
|
$
|
5,598
|
|
14.6 %
|
NOI1,
Non-Same Community1 Properties
|
$
|
1,975
|
$
|
2,334
|
$
|
(359)
|
|
-15.4 %
|
FFO1
|
$
|
26,296
|
$
|
22,702
|
$
|
3,594
|
|
15.8 %
|
FFO per
Unit1
|
$
|
0.46
|
$
|
0.42
|
$
|
0.04
|
|
9.5 %
|
Maintenance capital
expenditures
|
$
|
(2,333)
|
$
|
(1,920)
|
$
|
(413)
|
|
21.5 %
|
Escrowed rent guaranty
realized
|
$
|
-
|
$
|
87
|
$
|
(87)
|
|
nm*
|
Straight line rental
revenue differences
|
$
|
70
|
$
|
136
|
$
|
(66)
|
|
nm*
|
AFFO1
|
$
|
24,033
|
$
|
21,005
|
$
|
3,028
|
|
14.4 %
|
AFFO per
Unit1
|
$
|
0.42
|
$
|
0.39
|
$
|
0.03
|
|
7.7 %
|
Weighted Average Unit
Count
|
|
57,205,813
|
|
54,246,536
|
|
2,959,278
|
|
5.5 %
|
*Percentages have
been excluded for changes which are not considered to be meaningful
for comparative purposes.
|
1Same Community, NOI, NOI
Margin, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio,
Debt to Gross Book Value and NAV per Unit are non-IFRS measures.
For a description of the basis of presentation and reconciliations
of the REIT's non-IFRS measures, see "Non-IFRS Measures" in this
news release.
|
Total portfolio revenue of $83.6
million for YTD 2023 increased 9.6% compared to $76.3 million in YTD 2022. Same Community
properties contributed $7.1 million,
as described below, and the non-stabilized property contributed
$0.3 million to the overall increase,
partially offset by a reduction in revenue due to property
dispositions of $0.1 million.
Revenue from Same Community properties of $79.6 million for YTD 2023 increased 9.7% from
$72.5 million in YTD 2022, primarily
due to a 6.5% increase in average rental rates from $1,403 per apartment unit as of June 30, 2022 to $1,495 per apartment unit as of June 30, 2023.
The net (loss) income and comprehensive (loss) income change
between YTD 2023 and YTD 2022 is primarily due to non-cash
adjustments to fair values of investment properties and derivatives
and other financial liabilities from December 31, 2022 to June
30, 2023 and December 31, 2021
to June 30, 2022, respectively, and
is not considered comparable period over period.
The 12.9% increase in total portfolio NOI for YTD 2023 to
$45.9 million compared to
$40.6 million in YTD 2022 was the
result of an increase of $5.6 million
from Same Community properties, described below, partially offset
by a $0.4 million reduction due to
property dispositions.
The 14.6% increase in Same Community NOI to $43.9 million for YTD 2023 compared to
$38.3 million in YTD 2022 was the
result of the increase in revenue described above, as well as a
$0.4 million decrease in real estate
taxes, primarily due to the timing of property tax refunds during
Q2 2023, partially offset by an increase in property operating
expenses of $1.8 million due to an
increase in payroll costs, real estate tax appeals, repair and
maintenance expenses and the cost of insurance.
FFO was $26.3 million, or
$0.46 per Unit, for YTD 2023 compared
to $22.7 million, or $0.42 per Unit, for YTD 2022. The increase was
primarily the result of the higher NOI discussed above, partially
offset by an increase of $1.1 million
in finance costs (net of finance income primarily from interest
rate swaps) associated with an increase in interest rates versus
the comparative period as well as an increase of $0.5 million in general and administrative
expenses due to higher payroll expenses, travel costs and
consulting fees.
AFFO was $24.0 million, or
$0.42 per Unit, for YTD 2023,
compared to $21.0 million, or
$0.39 per Unit, for YTD 2022. The
improvement was primarily the result of the increase in FFO
discussed above, partially offset by an increase in maintenance
capital expenditures of $0.4 million.
The increase in maintenance capital expenditures is primarily due
to roof replacements and balcony restoration at Wimbledon Green and
Westwood Park.
Highlights from Recent Four Quarters
In thousands of U.S. dollars (except per unit
amounts)
|
June 30, 2023
|
|
March 31, 2023
|
|
December 31,
2022
|
|
September 30,
2022
|
Operational Information
|
|
|
|
|
|
|
|
Number of real estate
investment properties
|
31
|
|
31
|
|
31
|
|
31
|
Total apartment
units
|
8,666
|
|
8,666
|
|
8,666
|
|
8,666
|
Average monthly rent on
in-place leases
|
$
1,501
|
|
$
1,489
|
|
$
1,482
|
|
$
1,460
|
Average monthly rent on
in-place leases,
|
|
|
|
|
|
|
|
Same Community1
Properties
|
$
1,495
|
|
$
1,482
|
|
$
1,475
|
|
$
1,452
|
Weighted average
occupancy rate
|
95.3 %
|
|
95.9 %
|
|
96.0 %
|
|
94.7 %
|
Retention
rate
|
56.0 %
|
|
52.5 %
|
|
56.3 %
|
|
54.0 %
|
Debt to Gross Book
Value1
|
39.4 %
|
|
38.4 %
|
|
37.3 %
|
|
36.2 %
|
|
|
Q2 2023
|
|
Q1 2023
|
|
Q4 2022
|
|
Q3 2022
|
Operating Results
|
|
|
|
|
|
|
|
|
Revenue, Total Portfolio
|
$
|
42,043
|
$
|
41,585
|
$
|
41,637
|
$
|
40,549
|
Revenue, Same Community1
Properties
|
$
|
39,992
|
$
|
39,564
|
$
|
39,604
|
$
|
38,518
|
Revenue, Non-Same Community1
Properties
|
$
|
2,051
|
$
|
2,021
|
$
|
2,033
|
$
|
2,031
|
NOI1, Total
Portfolio
|
$
|
23,044
|
$
|
22,838
|
$
|
23,154
|
$
|
21,719
|
NOI1, Same Community1
Properties
|
$
|
22,037
|
$
|
21,870
|
$
|
21,970
|
$
|
20,247
|
NOI1, Non-Same Community1
Properties
|
$
|
1,007
|
$
|
968
|
$
|
1,184
|
$
|
1,472
|
NOI Margin1, Total
Portfolio
|
|
54.8 %
|
|
54.9 %
|
|
55.6 %
|
|
53.6 %
|
NOI Margin1, Same Community1
Properties
|
|
55.1 %
|
|
55.3 %
|
|
55.5 %
|
|
52.6 %
|
NOI Margin1, Non-Same
Community1 Properties
|
|
49.1 %
|
|
47.9 %
|
|
58.2 %
|
|
72.5 %
|
Net (loss) income and comprehensive (loss)
income
|
$
|
(45,916)
|
$
|
(16,138)
|
$
|
(16,420)
|
$
|
23,787
|
Distributions on Class B Units
|
$
|
2,665
|
$
|
2,668
|
$
|
2,670
|
$
|
2,671
|
Fair value adjustment to investment
properties
|
$
|
71,805
|
$
|
16,526
|
$
|
43,071
|
$
|
23,449
|
Fair value adjustment to
investment
|
|
|
|
|
|
|
|
|
properties (IFRIC 21)
|
$
|
7,746
|
$
|
(22,163)
|
$
|
8,961
|
$
|
5,635
|
Property tax liability adjustment, net (IFRIC
21)
|
$
|
(7,746)
|
$
|
22,163
|
$
|
(8,961)
|
$
|
(5,635)
|
Fair value adjustment to derivatives and
other
|
|
|
|
|
|
|
|
|
financial liabilities
|
$
|
(15,107)
|
$
|
8,964
|
$
|
(17,274)
|
$
|
(38,330)
|
Fair value adjustment to unit-based
compensation
|
$
|
(170)
|
$
|
997
|
$
|
(396)
|
$
|
(354)
|
Restructuring
costs
|
$
|
-
|
$
|
-
|
$
|
1,630
|
$
|
-
|
Loss on extinguishment
of debt
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
853
|
Principal payments on
lease liability
|
$
|
(33)
|
$
|
(31)
|
$
|
(31)
|
$
|
(27)
|
Depreciation of
right-to-use asset
|
$
|
33
|
$
|
33
|
$
|
34
|
$
|
33
|
FFO1
|
$
|
13,277
|
$
|
13,019
|
$
|
13,284
|
$
|
12,082
|
FFO per Unit
|
$
|
0.23
|
$
|
0.23
|
$
|
0.23
|
$
|
0.21
|
Maintenance capital
expenditures
|
$
|
(1,776)
|
$
|
(557)
|
$
|
(793)
|
$
|
(920)
|
Straight line rental
revenue differences
|
$
|
25
|
$
|
45
|
$
|
8
|
$
|
47
|
AFFO1
|
$
|
11,526
|
$
|
12,507
|
$
|
12,499
|
$
|
11,209
|
AFFO per
Unit1
|
$
|
0.20
|
$
|
0.22
|
$
|
0.22
|
$
|
0.19
|
AFFO Payout
Ratio
|
|
63.9 %
|
|
59.1 %
|
|
59.6 %
|
|
67.2 %
|
Weighted Average Unit
Count
|
|
57,199,497
|
|
57,212,200
|
|
58,006,651
|
|
58,205,337
|
1Same Community, NOI, NOI
Margin, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio,
Debt to Gross Book Value and NAV per Unit are non-IFRS measures.
For a description of the basis of presentation and reconciliations
of the REIT's non-IFRS measures, see "Non-IFRS Measures" in this
news release.
|
Liquidity and Capital Structure
As of June 30, 2023, the REIT had
liquidity of $189.9 million,
consisting of cash and cash equivalents of $6.3 million and $183.6
million available under its revolving credit facility. The
REIT also can obtain additional liquidity by adding properties to
the borrowing base of the revolving credit facility.
As of June 30, 2023, the REIT had
total mortgage notes payable of $498.2
million, excluding the credit facility and construction loan
for the investment property under development, with a weighted
average contractual interest rate of 3.3% and a weighted average
term to maturity of 4.2 years. In aggregate, mortgage notes payable
and the revolving credit facility total $746.2 million as of June
30, 2023 with a weighted average contractual interest rate
of 3.3%, which excludes the convertible unsecured subordinated
debentures (the "Convertible Debentures") and the construction loan
for the investment property under development. Debt to Gross Book
Value excluding the convertible debentures as of June 30, 2023 was 37.3%. As of June 30, 2023, 97% of the REIT's debt was fixed
or economically hedged to fixed rates.
As of June 30, 2023, the REIT had
outstanding Convertible Debentures valued at $41.8 million at a contractual interest rate of
5%, maturing on September 30, 2025
with a conversion price of $14.40 per
Unit.
On October 3, 2022, the Toronto
Stock Exchange accepted the REIT's notice of intention to make a
NCIB for up to a maximum of approximately 3.3 million of its issued
and outstanding Units. The REIT may purchase Units for a
twelve-month period ending on October 5,
2023. The REIT purchased and canceled 1,079,507 Units under
its NCIB and automatic securities purchase plan ("ASPP") at an
average price of $13.55 per Unit
through December 31, 2022. During the
six months ended June 30, 2023, the
REIT purchased and cancelled 390,477 Units under its NCIB and ASPP
at an average price of $12.43.
Distributions and Units Outstanding
Cash distributions declared to holders of Units and holders of
Class B Units totalled $7.4 million
for Q2 2023, representing an AFFO Payout
Ratio1 of 63.9%. 100% of the REIT's cash
distributions were classified as return of capital. As of
June 30, 2023, the total number of
Units outstanding was 36,059,551. There were also 20,519,791 Class
B Units outstanding, which are redeemable for Units on a
one-for-one basis.
2023 Earnings and Same Community Portfolio Guidance
The REIT's 2023 guidance is outlined below for FFO per Unit and
AFFO per Unit, along with its expectations for Same Community
Properties for revenue, property operating expenses and NOI in
2023. The guidance does not include potential acquisitions,
dispositions or future growth from the impact of properties
currently under development.
During July 2023, the Texas House
and Senate agreed to lower real estate taxes for Texans, including
multi-family residential rental properties. A constitutional
election is expected to be held on November
7, 2023. If passed, the decrease in real estate taxes will
apply to the 2023 tax year. Initial estimates indicate a potential
annualized savings of approximately $1.3 to $1.5
million in real estate taxes. Due to the pending
ratification, the potential reduction in real estate taxes is not
reflected in the guidance for 2023 and the REIT will address this
and any impact to other property operating expenses, including
increases in property insurance as well as additional real estate
tax refunds in future quarters as necessary. As of June 30, 2023, there have been no revisions to
the initial 2023 guidance.
The REIT will update this guidance on a quarterly basis as
necessary.
|
Initial guidance for 2023
|
Per
Unit
|
Range
|
Midpoint
|
Total Portfolio
|
|
|
FFO per Unit
|
$0.90 to
$0.96
|
$0.93
|
AFFO per
Unit
|
$0.83 to
$0.89
|
$0.86
|
|
|
|
Same Community Growth
|
|
|
Total
Revenue
|
5.0% to 7.0%
|
6.0 %
|
Property Operating
Expenses
|
4.0% to 6.0%
|
5.0 %
|
NOI
|
6.0% to 8.0%
|
7.0 %
|
Non-IFRS measures are presented to illustrate alternative
relevant measures to assess the REIT's performance. See
"Non-IFRS Measures" in this news release. See also
"Forward-Looking Information", as the figures presented above are
considered "financial outlook" for purposes of applicable Canadian
securities laws and may not be appropriate for purposes other than
to understand management's current expectations relating to the
future growth of the REIT. Although the REIT believes
that its anticipated future results, performance or achievements
expressed or implied by the forward-looking statements and
information are based upon reasonable assumptions and expectations,
the reader should not place undue reliance on forward-looking
statements and information. The REIT reviews its key assumptions
regularly and may change its outlook on a going-forward basis if
necessary.
Conference Call
Dan Oberste, President and Chief
Executive Officer, and Brandon
Barger, Chief Financial Officer, will host a conference call
for analysts and investors on Thursday
August 10th, 2023 at 12:00
pm (ET). Participants can register and enter their
phone number at: https://emportal.ink/3D2HSP2 to receive an instant
automated call back. Alternatively, they can dial 416-764-8688 or
1-888-390-0546 to reach a live operator who will join them into the
call. In addition, the call will be webcast live at:
https://app.webinar.net/Y5rv8M58Lw4.
A replay of the call will be available until Thursday, August 17th, 2023. To access
the replay, dial 416-764-8677 or 888-390-0541 (Passcode: 136726#).
A transcript of the call will be archived on the REIT's
website.
About BSR Real Estate Investment Trust
BSR Real Estate Investment Trust is an internally managed,
unincorporated, open-ended real estate investment trust established
pursuant to a declaration of trust under the laws of the Province
of Ontario. The REIT owns a
portfolio of multifamily garden-style residential properties
located in attractive primary markets in the Sunbelt region of
the United States.
Non-IFRS Measures
Same Community, NOI, NOI Margin, FFO, FFO per Unit, AFFO, AFFO
per Unit, AFFO Payout Ratio, Debt to Gross Book Value, NAV and NAV
per Unit are key measures of performance commonly used by real
estate operating companies and real estate investment trusts. They
are not measures recognized under International Financial Reporting
Standards ("IFRS") and do not have standardized meanings prescribed
by IFRS. Same Community, NOI, NOI Margin, FFO, FFO per Unit, AFFO,
AFFO per Unit, AFFO Payout Ratio, Debt to Gross Book Value, NAV and
NAV per Unit as calculated by the REIT may not be comparable to
similar measures presented by other issuers. For complete
definitions of these measures, as well as an explanation of their
composition and how the measures provide useful information to
investors, please refer to the section titled "Non-IFRS Measures"
in the REIT's Management's Discussion and Analysis for the three
and six months ended June 30, 2023,
which section is incorporated herein by reference.
|
|
Three
months
ended June
30, 2023
|
|
Three
months
ended June
30, 2022
|
|
Six months
ended June
30, 2023
|
|
Six months
ended June
30, 2022
|
Net (loss) income
and comprehensive (loss) income
|
$
|
(45,916)
|
$
|
160,832
|
$
|
(62,054)
|
$
|
219,863
|
Adjustments to arrive at FFO
|
|
|
|
|
|
|
|
|
|
Distributions on Class
B Units
|
|
2,665
|
|
2,678
|
|
5,333
|
|
5,326
|
|
Fair value adjustment
to investment properties
|
|
71,805
|
|
(20,258)
|
|
88,331
|
|
(139,047)
|
|
Fair value adjustment
to investment properties (IFRIC 21)
|
|
7,746
|
|
7,732
|
|
(14,417)
|
|
(14,596)
|
|
Property tax liability
adjustment, net (IFRIC 21)
|
|
(7,746)
|
|
(7,732)
|
|
14,417
|
|
14,596
|
|
Fair value adjustment
to derivatives and other financial
|
|
|
|
|
|
|
|
|
|
liabilities
|
|
(15,107)
|
|
(129,842)
|
|
(6,143)
|
|
(64,235)
|
|
Fair value adjustment
to unit-based compensation
|
|
(170)
|
|
(1,771)
|
|
827
|
|
798
|
|
Principal payments on
lease liability
|
|
(33)
|
|
(35)
|
|
(64)
|
|
(69)
|
|
Depreciation of
right-to-use asset
|
|
33
|
|
33
|
|
66
|
|
66
|
Funds from Operations ("FFO")
|
$
|
13,277
|
$
|
11,637
|
$
|
26,296
|
$
|
22,702
|
FFO per Unit
|
$
|
0.23
|
$
|
0.21
|
$
|
0.46
|
$
|
0.42
|
Adjustments to arrive at AFFO
|
|
|
|
|
|
|
|
|
|
Maintenance capital
expenditures
|
|
(1,776)
|
|
(1,218)
|
|
(2,333)
|
|
(1,920)
|
|
Escrowed rent guaranty
realized
|
|
—
|
|
5
|
|
—
|
|
87
|
|
Straight line rental
revenue differences
|
|
25
|
|
54
|
|
70
|
|
136
|
Adjusted Funds from Operations
("AFFO")
|
$
|
11,526
|
$
|
10,478
|
$
|
24,033
|
$
|
21,005
|
AFFO per Unit
|
$
|
0.20
|
$
|
0.19
|
$
|
0.42
|
$
|
0.39
|
Distributions declared
|
$
|
7,369
|
$
|
7,525
|
$
|
14,763
|
$
|
14,191
|
AFFO Payout Ratio
|
|
63.9 %
|
|
71.8 %
|
|
61.4 %
|
|
67.6 %
|
Weighted average unit count
|
|
57,199,497
|
|
56,290,702
|
|
57,205,813
|
|
54,246,536
|
|
Three months
ended June 30,
2023
|
|
Three months
ended June 30,
2022
|
|
Six months
ended June 30,
2023
|
|
Six months
ended June 30,
2022
|
Total
revenue
|
$
|
42,043
|
$
|
38,787
|
$
|
83,628
|
$
|
76,332
|
Property operating
expenses
|
|
(12,198)
|
|
(11,388)
|
|
(23,722)
|
|
(21,750)
|
Real estate
taxes
|
|
945
|
|
1,331
|
|
(28,441)
|
|
(28,535)
|
|
|
30,790
|
|
28,730
|
|
31,465
|
|
26,047
|
Property tax liability
adjustment (IFRIC 21)
|
|
(7,746)
|
|
(7,732)
|
|
14,417
|
|
14,596
|
Net Operating Income ("NOI")
|
$
|
23,044
|
$
|
20,998
|
$
|
45,882
|
$
|
40,643
|
NOI margin
|
|
54.8 %
|
|
54.1 %
|
|
54.9 %
|
|
53.2 %
|
|
|
|
|
June 30, 2023
|
|
December 31,
2022
|
Loans and borrowings
(current portion)
|
|
|
|
$
1,808
|
|
$
1,779
|
Loans and borrowings
(non-current portion)
|
|
|
|
741,932
|
|
724,581
|
Convertible
debentures
|
|
|
|
41,764
|
|
42,599
|
Total loans and
borrowings and convertible debentures ("Debt")
|
|
|
|
785,504
|
|
768,959
|
Gross Book
Value
|
|
|
|
$
1,992,053
|
|
$
2,063,275
|
Debt to Gross Book Value
|
|
|
|
39.4 %
|
|
37.3 %
|
|
|
|
|
June 30, 2023
|
|
December 31,
2022
|
Unitholders'
equity
|
|
|
|
$
901,319
|
|
$
975,749
|
Class B
Units
|
|
|
|
264,500
|
|
267,826
|
NAV
|
|
|
|
$
1,165,819
|
|
$
1,243,575
|
Unit count, as of the
end of period
|
|
|
|
56,933,630
|
|
57,169,893
|
NAV per Unit
|
|
|
|
$
20.48
|
|
$
21.75
|
Forward-Looking Statements
This news release contains forward-looking information within
the meaning of applicable Canadian securities legislation
(collectively, "forward-looking statements"). Forward-looking
statements in this news release include, but are not limited to,
statements which reflect management's expectations regarding
objectives, plans, goals, strategies, future growth (including 2023
guidance for FFO, AFFO, and Same Community metrics Revenue,
Property Expenses and NOI growth), results of operations,
performance, business prospects, and opportunities for the REIT.
The words "expects", "expectation", "anticipates", "anticipated",
"believes", "will" or variations of such words and phrases identify
forward-looking statements herein. Statements
containing forward-looking information are not historical facts but
instead represent management's expectations, estimates and
projections regarding future events or circumstances.
Forward-looking information is based on a number of assumptions and
is subject to a number of risks and uncertainties, many of which
are beyond the REIT's control that could cause actual results and
events to differ materially from those that are disclosed in or
implied by such forward-looking information. The REIT's estimates,
beliefs and assumptions, which may prove to be incorrect, include
assumptions relating to the REIT's future growth potential, results
of operations, demographic and industry trends, no changes in
legislative or regulatory matters, the tax laws as currently in
effect, a gradual recovery and growth of the general economy over
2023, the impact of COVID-19, lease renewals and rental increases,
the ability to re-lease or find new tenants, the timing and ability
of the REIT to sell certain properties, project costs and timing, a
continuing trend toward land use intensification at reasonable
costs and development yields, including residential development in
urban markets, access to equity and debt capital markets to fund,
at acceptable costs, future capital requirements and to enable
refinancing of debts as they mature, the availability of investment
opportunities for growth in the REIT's target markets, the
valuations to be realized on property sales relative to current
IFRS values, and the market price of the Units. When
relying on forward-looking statements to make decisions, the REIT
cautions readers not to place undue reliance on these statements,
as forward-looking statements involve significant risks and
uncertainties. The risks and uncertainties that may impact such
forward-looking information include, but are not limited to, the
REIT's ability to execute its growth strategies, the impact of
changing conditions in the U.S. multifamily housing market,
increasing competition in the U.S. multifamily housing market, the
effect of fluctuations and cycles in the U.S. real estate market,
the marketability and value of the REIT's portfolio, changes in the
attitudes, financial condition and demand of the REIT's demographic
market, fluctuation in interest rates and volatility in financial
markets, developments and changes in applicable laws and
regulations, the impact of climate change, the impact of COVID-19
on the operations, business and financial results of the REIT and
the factors discussed under "Risks and Uncertainties" in the REIT's
Management's Discussion and Analysis for the three and six months
ended June 30, 2023 and in the REIT's
Annual Information Form dated March 8,
2023, both of which are available on SEDAR (www.sedar.com).
If any risks or uncertainties with respect to the above
materialize, or if the opinions, estimates or assumptions
underlying the forward-looking information prove incorrect, actual
results or future events might vary materially from those
anticipated in the forward-looking information. The REIT does not
undertake any obligation to update such forward-looking
information, whether as a result of new information, future events
or otherwise, except as expressly required by applicable law. This
forward-looking information speaks only as of the date of this news
release.
Certain statements included in this news release, including
with respect to 2023 FFO, AFFO and Same Community portfolio
guidance, are considered financial outlook for purposes of
applicable Canadian securities laws, and as such, the financial
outlook may not be appropriate for purposes other than to
understand management's current expectations relating to the future
growth of the REIT, as disclosed in this news release. These
forward-looking statements have been approved by management to be
made as at the date of this news release. Certain material factors,
estimates or assumptions were applied in drawing a conclusion or
making a forecast or projection as reflected in this news release
and actual results could differ materially from such conclusions,
forecasts or projections. There can be no assurance that actual
results, performance or achievements will be consistent with these
forward-looking statements. The forward-looking statements
contained in this document are expressly qualified in their
entirety by this cautionary statement.
SOURCE BSR Real Estate Investment Trust