TSX:HOM.DB.U - Post by User
Post by
retiredcfon Mar 10, 2021 10:02am
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Post# 32761819
RBC
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)
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SP-NOI growth: 0.0% (SP-Revenue: +0.8%, SP-Expenses: +1.8%)
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SP-Avg. monthly rent: $924, +1.0% YoY from $915
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SP-Occupancy: 93.6%, +20 bps YoY
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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).