BSR Real Estate Investment 5 00 convertible unsecured subordinated debentures T.HOM.DB.U

Alternate Symbol(s): BSRTF | T.HOM.UN

BSR Real Estate Investment Trust is an internally managed, unincorporated, open-ended real estate investment trust (REIT). The principal business of the Company is to acquire and operate multi-family residential rental properties across the United States. The Company owns approximately 31 multifamily garden-style residential properties located across three bordering states in the Sunbelt region of the United States, which stretches across the South Atlantic and Southwest portions of the United States. The Company also owns one property under development in Austin, Texas. Its properties include Adley at Gleannloch Apartments, Alleia Long Meadow Farms Apartments, Ariza Plum Creek, Auberry at Twin Creeks, Aura Benbrook, Aura 36Hundred, Bluff Creek Apartments, Brandon Place Apartment Homes, Bridgeport Apartments, Cielo Apartment Living, Hangar 19, Lakeway Castle Hills, Markham Oaks Apartments, M at Lakeline, Overlook by the Park and others. It operates in Arkansas, Texas and Oklahoma.

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BSR Real Estate Investment 5 00 convertible unsecured subordinated debentures

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Post by retiredcfon Mar 10, 2021 10:02am

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Post# 32761819

RBC

March 10, 2021

BSR REIT

In line Q4/20 results cap impressive year of portfolio transformation

Impact: Neutral

BSR REIT ("BSR") reported FFOPU of $0.15, flat YoY, in line with RBC/ consensus at $0.15E/$0.15E.

• IFRS BVPU (pre-tax): $12.35, -$0.30 QoQ (-2%) and +$0.14 YoY (+1%) IFRS fair value gains: $4MM QoQ ($0.09/unit)

SP-NOI growth: 0.0% (SP-Revenue: +0.8%, SP-Expenses: +1.8%)
SP-Avg. monthly rent: $924, +1.0% YoY from $915
SP-Occupancy: 93.6%, +20 bps YoY
D/GBV (incl. converts): 46.5%, -430 bps QoQ and -180 bps YoY

First impression

Our view: Big picture, there was little in BSR's Q4 results to change our constructive outlook for the REIT. While SP-NOI growth decelerated to 0%, this was in line with BSR's Sunbelt apartment peers at nil-% in Q4 (with a range of -5% to +4%)—but ahead on a full-year basis at 3% vs. 2%. That said, BSR's same-property portfolio now represents just 53% of suites and 43% of NOI. More importantly, the REIT now derives 95% of its NOI from its core markets (incl. 79% from Dallas, Austin, and Houston), up from 68% in Q4/19. Looking ahead, BSR appears well positioned to capitalize on substantial acquisition opportunities, with pro forma D/GBV of just ~39% following its $69MM offering in Feb-2020 and subsequent disposition activity. C/C Wednesday, March 10, at 11:00 a.m. ET (1-888-390-0546).

A noisy, but in line, Q4 print. As detailed herein, FFOPU of $0.146 was a touch (4%) below our $0.153 estimate, excluding $10MM ($0.22/unit) of principally non-cash debt extinguishment charges. Notable variances to our forecast included 2% (0.7¢) lower NOI and 2% (0.3¢) of higher interest costs, which were partially offset by 9% (0.5¢) lower G&A. Thematically, the NOI variance and debt charges were largely attributable to capital recycling activity. Operationally, SP-Revenue and SP-NOI were -1.2% and +3.5% on a sequential basis in markets where there were no acquisitions/ dispositions (35% of total NOI). In terms of rent collection, payments during the quarter were 98–99%, in line with BSR's 99% historical average. In Jan/Feb 2021, the collection rate was unchanged at 99%.

2,733 suites sold in Q4 for $261MM, representing a 9% premium over IPO appraised values. During Q4, BSR completed the sale of 12 properties with 2,733 suites for $261MM ($95,000/suite), representing a gain of 9% over the REIT's IPO appraised values of $239MM ($88,000/suite). A portion of the proceeds were recycled into the acquisition of two recently built properties in Texas with 680 suites for $129MM ($190,000/suite). Disposition momentum continued in early 2021, with the sale of Towne Park in NW Arkansas for $32MM ($134,000/suite), representing a 10% gain over its Oct-2018 purchase price of $29MM ($122,000/suite).