TSX:HOM.DB.U - Post by User
Post by
retiredcfon Jul 14, 2023 9:16am
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Post# 35540891
RBC
RBC July 13, 2023
BSR REIT
Texas property tax relief estimated impact
TSX: HOM/U | USD 13.75 | Outperform | Price Target USD 18.00
Sentiment: Positive
Event: Earlier this week, an agreement was reached between the House and Senate to lower property taxes for Texans (see here). Among the various measures proposed, the key measure impacting BSR REIT is the proposed reduction in the school property tax rate by 10.7 cents per $100 valuation for homeowners (including apartment landlords), retroactive to the 2023 tax year.
Implications:
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Preliminarily, we estimate that the positive impact of lower property taxes for BSR to be in the range of ~$1.3-1.5M. This assumes property assessment values of ~$1.3B for its Texas properties. If correct, this would imply ~75-90bps NOI margin improvement in 2023 or 2.5-3% in higher FFO in 2023. We expect BSR to provide guidance on this at its upcoming Q2 reporting.
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The bill will go before Governor Greg Abbott who has stated that he will approve. We expect voters will pass the plan in a constitutional election on November 7.
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The market has positively reacted to this news given the recent positive (+5%) price action in the stock.