TSX:HOM.DB.U - Post by User
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retiredcfon May 11, 2022 9:00am
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Post# 34673422
RBC
RBC May 10, 2022
BSR REIT
Q1/22 slightly ahead; 2022 guidance maintained
Sentiment: Positive
Outperform
TSX: HOM/U; USD 17.25; TSX: HOM-U
Price Target USD 24.00
All values in USD unless otherwise noted.
Priced as of prior trading day's market close, EST (unless otherwise noted).
Our view: BSR REIT (“BSR”) reported FFO/unit of $0.21, +75% y/y, vs. RBC/ consensus of $0.20/$0.20. 2022 FFO guidance was maintained. Consistent with other US multi-family names, pricing power remains in its key Texas markets. Post-quarter de-leveraging will eat into FFO/unit somewhat, but the growth outlook remains strong for the balance of the year.
Key points
• SP NOI growth: +16% (SP-Rev +11%; SP-Exp +5.7%). This compares with larger Sun Belt peers in the 12–14% range. Same-asset pool represented 62% of BSR’s total NOI. While expenses are up, they are reasonably benign considering the current environment. SP NOI margin improved 240 bps y/y to 52.3%. Austin continues to be an outperformer with SP NOI +26%.
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SP occupancy: 94.3%, -10 bps y/y; SP rent $1,238, +9% y/y
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2022 guidance maintained: FFO/unit $0.86–0.90; midpoint of $0.88; SP NOI growth guidance is 11–13%, based on 8–10% revenue growth and
4.5–6.5% expense growth.
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Lease spreads: blended +12.5% (+15.3% Q4/21); new lease +17.4%;
renewal +9.0%; turnover rate 43%.
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Leverage: D/GBV (incl. converts) 40.2%, declining to 35% post April
$115m equity offering used to pay down credit facility.
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IFRS BV/unit (pre-tax): $21.98, +66% y/y, +11% sequentially from
$19.81. Average cap rate utilized was 3.9%.