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OUR TAKE: Positive. Our target is increased to $22.00 (+$1.50) and implies 25%+ total return upside. We have raised our 2022 FFOPU estimates by ~3% and 2023 FFOPU estimate by 12.5%. Our 2023 FFOPU estimate is now 7.5% above consensus. There has been no-end- of-the-year seasonal slowdown, and as such we have increased our rent growth expectations in the US Sunbelt multi-family markets. Rent growth has further accelerated to 15.3% y/y (blended) in Q4/21 for BSR vs 9.5% y/y in Q3/21. We now expect double-digit effective rent growth y/y in 2022 and ~6% y/y in 2023 for BSR portfolio which is mainly concentrated in Dallas, Austin and Houston. Our rent growth projection is based on RealPage data. Our US analyst (Nick Yulico) also highlighted the same theme (see his report) – renewal pricing shows no signs of abating, while tougher new lease pricing won’t fully manifest until 2H/22.
We reiterate our SO rating with a high conviction in the name. BSR is trading at 20% discount to our 1-yr fwrd NAVPU of $22.00. Our NAVPU is increased on higher NOI estimates.