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BSR REIT ANNOUNCES Q1 2022 FINANCIAL RESULTS

T.HOM.DB.U

LITTLE ROCK, Ark. and TORONTO, May 10, 2022 /CNW/ - BSR Real Estate Investment Trust ("BSR", or the "REIT") (TSX: HOM.U) (TSX: HOM.UN) today announced its financial results for the three months ended March 31, 2022 ("Q1 2022"). All comparisons in the following summary are to the corresponding period in the prior year. Results are presented in U.S. dollars. References to "Same Community" correspond to stabilized properties the REIT has owned for equivalent periods throughout Q1 2022 and the three months ended March 31, 2021 ("Q1 2021"), thus removing the impact of acquisitions, dispositions and non-stabilized properties. Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis as of and for the three months ended March 31, 2022 are available on the REIT's website at www.bsrreit.com and at www.sedar.com.

A reconciliation of Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") to net income and comprehensive income, as well as an expanded discussion of the components of FFO and AFFO, and a reconciliation of Net Asset Value ("NAV") to unitholders equity can be found under "Non-IFRS Measures" in this release. FFO per Unit, AFFO per Unit and NAV per Unit include diluted trust units of the REIT ("Units") and Class B Units of BSR Trust, LLC ("Class B Units").

"Results for the first quarter reflected continued strong rent growth, which contributed to a 66.4% year-over-year increase in the REIT's NAV to $21.98 per unit," said Dan Oberste, the REIT's President and Chief Executive Officer. "The $115 million equity offering completed in April fortified our balance sheet and positions BSR to continue to execute our growth plan by building on our established scale in Austin, Dallas and Houston."

Q1 2022 Highlights

  • NAV per Unit1 increased 66.4% to $21.98 as of Q1 2022 as compared to $13.21 as of Q1 2021 and 11.0% sequentially from $19.81 at the end of 2021;
  • FFO per Unit1 for Q1 2022 increased 75.0% over Q1 2021;
  • AFFO per Unit1 for Q1 2022 increased 81.8% over Q1 2021;
  • Weighted average rent was $1,349 per apartment unit as of March 31, 2022 compared to $1,134 as of March 31, 2021, representing a 19.0% increase;
  • Same Community[1] revenues for Q1 2022 increased 11.2% over Q1 2021;
  • Same Community1 NOI1 for Q1 2022 increased 16.3% over Q1 2021;
  • During Q1 2022, the REIT's AFFO Payout Ratio1 was 63.3% compared to 117.3% during Q1 2021;
  • During Q1 2022, rental rates for new leases, excluding properties undergoing initial lease up, increased 17.4% and renewals increased 9.0%, for a blended increase of 12.5%;
  • As of March 31, 2022, weighted average occupancy was 94.5% compared to 94.5% as of March 31, 2021;
  • Debt to Gross Book Value1 excluding Convertible Debentures (as defined below) as of March 31, 2022 was 40.2% and improved subsequent to quarter-end to 35.1% following the April 2022 equity offering, noted below;
  • In February 2022, the REIT's Board of Trustees approved a 4% increase to the cash distribution beginning with the February 2022 distribution which was paid on March 15, 2022; and
  • BSR ranked 2nd among all multifamily REITs in Online Reputation Assessment ("ORA") scores for 2021 by J. Turner Research.

Subsequent Highlights

  • On April 29, 2022, the REIT completed an offering of 5,888,000 Units ("April 2022 Offering") for gross proceeds of approximately $115 million following the underwriters' full exercise of their overallotment option.

______________


1Same Community, NOI, NOI Margin, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio, Debt to Gross Book Value and NAV per Unit are non-IFRS measures. For a description of the basis of presentation and reconciliations of the REIT's non-IFRS measures, see "Non-IFRS Measures" in this news release.

Q1 2022 Financial Summary

In thousands of U.S. dollars, except per unit amounts










Q1 2022


Q1 2021


Change


Change %

Revenue, Total Portfolio

$ 37,545


$ 25,770


$ 11,775


45.7%

Revenue, Same Community1 Properties

$ 22,201


$ 19,961


$ 2,240


11.2%

Revenue, Non-Same Community1 Properties

$ 15,344


$ 5,809


$ 9,535


164.1%

Net income and comprehensive income

$ 59,031


$ 69,378


$ (10,347)


nm*

NOI1, Total Portfolio

$ 19,645


$ 13,355


$ 6,290


47.1%

NOI1, Same Community1 Properties

$ 12,119


$ 10,422


$ 1,697


16.3%

NOI1, Non-Same Community1 Properties

$ 7,526


$ 2,933


$ 4,593


156.6%

FFO1

$ 11,065


$ 5,806


$ 5,259


90.6%

FFO per Unit1

$ 0.21


$ 0.12


$ 0.09


75.0%

Maintenance capital expenditures

$ (702)


$ (496)


$ (206)


41.5%

Escrowed rent guaranty realized

$ 82


$ -


$ 82


nm*

Severance/retention costs on dispositions

$ -


$ 46


$ (46)


nm*

Straight line rental revenue differences

$ 82


$ (46)


$ 128


nm*

AFFO1

$ 10,527


$ 5,310


$ 5,217


98.2%

AFFO per Unit1

$ 0.20


$ 0.11


$ 0.09


81.8%

Weighted Average Unit Count

52,179,657


49,265,328


2,914,329


5.9%


*Percentages have been excluded for changes which are not considered to be meaningful for comparative purposes.

1Same Community, NOI, NOI Margin, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio, Debt to Gross Book Value and NAV per Unit are non-IFRS
measures. For a description of the basis of presentation and reconciliations of the REIT's non-IFRS measures, see "Non-IFRS Measures" in this news release.

The 45.7% increase in total portfolio revenue for Q1 2022, compared to Q1 2021, was the result of contributions of $2.2 million from Same Community properties, $13.5 million from property acquisitions and $0.6 million from non-stabilized properties, partially offset by property dispositions that reduced revenue by $4.6 million.

Revenue from Same Community properties for Q1 2022 outperformed Q1 2021 by 11.2%, primarily due to a 9.0% increase in average rental rates from $1,136 per apartment unit as of March 31, 2021 to $1,239 per apartment unit as of March 31, 2022 that represented approximately $2.0 million of the increase, as well as higher other income of $0.2 million.

The decrease in net income and comprehensive income for Q1 2022 compared to Q1 2021 was primarily due to a higher fair value loss on derivatives and other financial liabilities of $70.0 million, partially offset by a higher fair value gain to investment properties of $56.1 million.

The 47.1% increase in total portfolio NOI for Q1 2022 compared to Q1 2021 was the result of contributions of $1.7 million from Same Community properties and $6.9 million from property acquisitions and non-stabilized properties, partially offset by property dispositions that reduced NOI by $2.3 million. Severance/retention costs on dispositions are excluded from NOI.

The substantial increase in Same Community NOI for Q1 2022 compared to Q1 2021 was the result of the increase in revenue described above, partially offset by an increase in real estate taxes of $0.4 million.

FFO increased 90.6% to $11.1 million, or $0.21 per Unit, for Q1 2022 compared to $5.8 million, or $0.12 per Unit, for Q1 2021. The increase was primarily the result of higher NOI discussed above, partially offset by increases of $0.2 million in general and administrative expenses and $0.6 million in finance costs. Losses on extinguishment of debt are excluded from the calculation of FFO.

AFFO nearly doubled to $10.5 million, or $0.20 per Unit, for Q1 2022, compared to $5.3 million, or $0.11 per Unit, for Q1 2021. The improvement was primarily the result of the increase in FFO. Losses on extinguishment of debt and severance/retention costs on dispositions are excluded from the calculation of AFFO.

Highlights from Recent Four Quarters

In thousands of U.S. dollars (except per unit amounts)










March 31,
2022


December 31,
2021


September 30,
2021


June 30,
2021

Operational Information








Number of real estate investment properties

31


31


30


28

Total apartment units

8,666


8,666


8,367


7,660

Average monthly rent on in-place leases

$ 1,350


$ 1,328


$ 1,275


$ 1,206

Average monthly rent on in-place leases,








Same Community1 Properties

$ 1,238


$ 1,228


$ 1,199


$ 1,161

Weighted average occupancy rate

94.5%


96.0%


96.4%


96.2%

Retention rate

57.3%


58.5%


56.6%


57.5%

Debt to Gross Book Value1

43.2%


45.1%


43.5%


41.5%










Q1 2022


Q4 2021


Q3 2021


Q2 2021

Operating Results








Revenue, Total Portfolio

$ 37,545


$ 34,061


$ 31,705


$ 28,046

Revenue, Same Community1 Properties

$ 22,201


$ 21,981


$ 21,702


$ 20,795

Revenue, Non-Same Community1 Properties

$ 15,344


$ 12,080


$ 10,003


$ 7,251

NOI1, Total Portfolio

$ 19,645


$ 18,678


$ 16,504


$ 14,374

NOI1, Same Community1 Properties

$ 12,119


$ 12,369


$ 11,366


$ 10,901

NOI1, Non-Same Community1 Properties

$ 7,526


$ 6,309


$ 5,138


$ 3,473

NOI Margin1, Total Portfolio

52.3%


54.8%


52.1%


51.3%

NOI Margin1, Same Community1 Properties

54.6%


56.7%


54.8%


53.0%

NOI Margin1, Non-Same Community1 Properties

49.0%


53.7%


50.2%


50.0%

Net income and comprehensive income

$ 59,031


$ 70,868


$ 106,993


$ 35,975

Distributions on Class B Units

$ 2,648


$ 2,595


$ 2,628


$ 2,703

Fair value adjustment to investment properties

$ (118,789)


$ (114,282)


$ (162,302)


$ (83,469)

Fair value adj. to investment prop. (IFRIC 21)

$ (22,328)


$ 5,057


$ 5,606


$ 5,698

Property tax liability adjustment, net (IFRIC 21)

$ 22,328


$ (5,057)


$ (5,606)


$ (5,698)

Fair value adjustment to derivatives and other








financial liabilities

$ 65,607


$ 42,512


$ 57,084


$ 48,302

Fair value adj. to unit-based compensation

$ 2,569


$ 905


$ 1,285


$ 830

Costs of disposition of investment properties

$ -


$ 1,518


$ -


$ 1,080

Loss on extinguishment of debt

$ -


$ 5,538


$ 2,472


$ 1,580

Principal payments on lease liability

$ (34)


$ (33)


$ (33)


$ (33)

Depreciation of right-to-use asset

$ 33


$ 32


$ 33


$ 32

FFO1

$ 11,065


$ 9,653


$ 8,160


$ 7,000

FFO per Unit

$ 0.21


$ 0.19


$ 0.16


$ 0.13

Maintenance capital expenditures

$ (702)


$ (974)


$ (948)


$ (690)

Escrowed rent guaranty realized

$ 82


$ 265


$ 677


$ 1,475

Severance/retention costs on dispositions

$ -


$ 106


$ –


$ 59

Straight line rental revenue differences

$ 82


$ 43


$ (40)


$ 11

AFFO1

$ 10,527


$ 9,093


$ 7,849


$ 7,855

AFFO per Unit1

$ 0.20


$ 0.17


$ 0.15


$ 0.15

AFFO Payout Ratio

63.3%


71.4%


82.7%


82.6%

Weighted Average Unit Count

52,179,657


52,130,772


52,109,042


52,084,576


1Same Community, NOI, NOI Margin, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio, Debt to Gross Book Value and NAV per Unit are non-IFRS
measures. For a description of the basis of presentation and reconciliations of the REIT's non-IFRS measures, see "Non-IFRS Measures" in this news release.

Liquidity and Capital Structure

As of March 31, 2022, the REIT had liquidity of $34.7 million, consisting of cash and cash equivalents of $9.2 million, $25.5 million available under its revolving credit facility. The REIT also has the ability to obtain additional liquidity by adding properties to the current borrowing base.

As of March 31, 2022, the REIT had total mortgage notes payable of $488.8 million, excluding the credit facility, with a weighted average contractual interest rate of 3.2% and a weighted average term to maturity of 5.8 years. Total loans and borrowings of the REIT as of March 31, 2022 were $831.6 million, excluding the convertible unsecured subordinated debentures (the "Convertible Debentures"). 52% of the REIT's debt was fixed or economically hedged to fixed rates.

As of March 31, 2022, the REIT had outstanding Convertible Debentures valued at $62.8 million at a contractual interest rate of 5%, maturing on September 30, 2025 with a conversion price of $14.40 per Unit.

On December 8, 2021, the REIT announced that it has established an at-the-market equity program (the "ATM Program") that allows the REIT to issue up to $150 million of Units from treasury to the public from time to time, at the REIT's discretion. The ATM Program is effective until the earlier of (i) the issuance and sale of all of the Units through the agents on the terms and conditions set forth in the equity distribution agreement, (ii) the Shelf Prospectus ceasing to be effective on January 1, 2024, and (iii) the termination of the equity distribution agreement as permitted therein. As of March 31, 2022, no Units have been issued under the ATM Program.

Subsequent to quarter-end, on April 29, 2022, the REIT completed the April 2022 Offering, referenced above, for gross proceeds of $115 million, after the full exercise of the overallotment option. Net proceeds of $109.8 million were used to pay down the REIT's credit facility increasing liquidity to approximately $150 million and reducing its Debt to GBV to 35.1%, excluding the convertible debentures.

Distributions and Units Outstanding

Cash distributions declared to holders of Units and holders of Class B Units totalled $6.7 million for Q1 2022, representing an AFFO Payout Ratio1 of 63.3%. 100% of the REIT's cash distributions were classified as return of capital. As of March 31, 2022, the total number of Units outstanding was 31,380,646. There were also 20,630,985 Class B Units outstanding, which are redeemable for Units on a one-for-one basis.

On February 15, 2022, the REIT's Board of Trustees approved a 4% increase to the cash distribution to US$0.0433 per Unit, representing $0.52 per Unit on an annualized basis.

2022 Earnings and Same Community Portfolio Guidance

Given the unprecedented growth in BSR's markets, the REIT provided initial 2022 guidance for FFO per Unit1 and AFFO per Unit1, along with its expectations for growth of the Same Community1 properties for revenue, property operating expense and NOI1 in 2022. As of March 31, 2022, there have been no revisions to the initial 2022 guidance. The REIT will update this guidance on a quarterly basis as necessary.





Initial guidance for 2022

Per Unit

Range

Midpoint

Total Portfolio



FFO per Unit

$0.86 to $0.90

$0.88

AFFO per Unit

$0.80 to $0.84

$0.82




Same Community Growth



Total Revenue

8.0% to 10.0%

9.00%

Property Operating Expenses

4.5% to 6.5%

5.50%

NOI

11.0% to 13.0%

12.00%

Non-IFRS measures are presented to illustrate alternative relevant measures to assess the REIT's performance. See "Non-IFRS Measures" in this news release. See also "Forward-Looking Information", as the figures presented above are considered "financial outlook" for purposes of applicable Canadian securities laws and may not be appropriate for purposes other than to understand management's current expectations relating to the future growth of the REIT.Although the REIT believes that its anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information. The REIT reviews its key assumptions regularly and may change its outlook on a going-forward basis if necessary.

Conference Call

Dan Oberste, President and Chief Executive Officer, and Susan Koehn, Chief Financial Officer, will host a conference call for analysts and investors on Wednesday, May 11th, 2022 at 11:00 am (ET). The dial-in numbers for participants are 416-764-8688 or 888-390-0546. In addition, the call will be webcast live at:

https://produceredition.webcasts.com/starthere.jsp?ei=1541730&tp_key=c04c226238

A replay of the call will be available until Wednesday, May 18th, 2022. To access the replay, dial 416-764-8677 or 888-390-0541 (Passcode: 440461 #). A transcript of the call will be archived on the REIT's website.

About BSR Real Estate Investment Trust

BSR Real Estate Investment Trust is an internally managed, unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT owns a portfolio of multifamily garden-style residential properties located in attractive primary and secondary markets in the Sunbelt region of the United States.

Non-IFRS Measures

Same Community, NOI, NOI Margin, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio, Debt to Gross Book Value, NAV and NAV per Unit are key measures of performance commonly used by real estate operating companies and real estate investment trusts. They are not measures recognized under International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. Same Community, NOI, NOI Margin, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio, Debt to Gross Book Value, NAV and NAV per Unit as calculated by the REIT may not be comparable to similar measures presented by other issuers. For complete definitions of these measures, as well as an explanation of their composition and how the measures provide useful information to investors, please refer to the section titled "Non-IFRS Measures" in the REIT's Management's Discussion and Analysis for the three months ended March 31, 2022, which section is hereby incorporated herein by reference.
























Three months
ended March
31, 2022


Three months
ended March
31, 2021

Net income and comprehensive income






$ 59,031


$ 69,378

Adjustments to arrive at FFO










Distributions on Class B Units






2,648


2,712


Fair value adjustment to investment properties






(118,789)


(62,695)


Fair value adjustment to investment properties (IFRIC 21)






(22,328)


(13,368)


Property tax liability adjustment, net (IFRIC 21)






22,328


13,368


Fair value adjustment to derivatives and other financial











liabilities






65,607


(4,421)


Fair value adjustment to unit-based compensation






2,569


(48)


Costs of disposition of investment properties







609


Loss on extinguishment of debt







271


Principal payments on lease liability






(34)


(33)


Depreciation of right-to-use asset






33


33

Funds from Operations ("FFO")






$ 11,065


$ 5,806

FFO per Unit






$ 0.21


$ 0.12

Adjustments to arrive at AFFO










Maintenance capital expenditures






(702)


(496)


Escrowed rent guaranty realized






82



Severance/retention costs on dispositions







46


Straight line rental revenue differences






82


(46)

Adjusted Funds from Operations ("AFFO")






$ 10,527


$ 5,310

AFFO per Unit






$ 0.20


$ 0.11

Distributions declared






$ 6,666


$ 6,228

AFFO Payout Ratio






63.3%


117.3%

Weighted average unit count






52,179,657


49,265,328
























Three months
ended March
31, 2022


Three months
ended March
31, 2021

Total revenue






$ 37,545


$ 25,770

Property operating expenses






(10,362)


(8,215)

Real estate taxes






(29,866)


(17,614)











(2,683)


(59)

Property tax liability adjustment (IFRIC 21)






22,328


13,368

Severance/retention costs on dispositions







46

Net Operating Income ("NOI")






$ 19,645


$ 13,355

NOI margin






52.3%


51.8%




















March 31,
2022


December 31,
2021

Loans and borrowings (current portion)




$ 1,730


$ 1,714

Loans and borrowings (non-current portion)




829,836


824,767

Convertible debentures




62,751


51,745

Total loans and borrowings and convertible debentures ("Debt")




894,317


878,226

Gross Book Value




$ 2,068,668


$ 1,948,095

Debt to Gross Book Value




43.2%


45.1%




















March 31, 2022


December 31,
2021

Unitholders' equity




$ 724,987


$ 666,569

Class B Units




423,760


366,365

NAV






$ 1,148,747


$ 1,032,934

Unit count, as of the end of period




52,253,586


52,142,519

NAV per Unit




$ 21.98


$ 19.81

Forward-Looking Statements

This news release contains forward-looking information within the meaning of applicable Canadian securities legislation (collectively, "forward-looking statements"). Forward-looking statements in this news release include, but are not limited to, statements which reflect management's expectations regarding objectives, plans, goals, strategies, future growth (including 2022 guidance for FFO, AFFO, and Same Community metrics Revenue, Property Expenses and NOI growth), results of operations, performance, business prospects, and opportunities for the REIT. The words "expects", "expectation", "anticipates", "anticipated", "believes", "will" or variations of such words and phrases identify forward-looking statements herein.Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. The REIT's estimates, beliefs and assumptions, which may prove to be incorrect, include assumptions relating to the REIT's future growth potential, results of operations, demographic and industry trends, no changes in legislative or regulatory matters, the tax laws as currently in effect, a gradual recovery and growth of the general economy over 2022, the impact of COVID-19, lease renewals and rental increases, the ability to re-lease or find new tenants, the timing and ability of the REIT to sell certain properties, project costs and timing, relatively historically low interest costs, a continuing trend toward land use intensification at reasonable costs and development yields, including residential development in urban markets, access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable refinancing of debts as they mature, the availability of investment opportunities for growth in the REIT's target markets, the valuations to be realized on property sales relative to current IFRS values, and the market price of the Units .When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. The risks and uncertainties that may impact such forward-looking information include, but are not limited to, the REIT's ability to execute its growth strategies, the impact of changing conditions in the U.S. multifamily housing market, increasing competition in the U.S. multifamily housing market, the effect of fluctuations and cycles in the U.S. real estate market, the marketability and value of the REIT's portfolio, changes in the attitudes, financial condition and demand of the REIT's demographic market, fluctuation in interest rates and volatility in financial markets, developments and changes in applicable laws and regulations, the impact of climate change, the impact of COVID-19 on the operations, business and financial results of the REIT and the factors discussed under "Risks and Uncertainties" in the REIT's Management's Discussion and Analysis for the three months ended March 31, 2022 and in the REIT's Annual Information Form dated March 8, 2022, both of which are available on SEDAR (www.sedar.com). If any risks or uncertainties with respect to the above materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.

Certain statements included in this news release, including with respect to 2022 FFO, AFFO and Same Community portfolio guidance, are considered financial outlook for purposes of applicable Canadian securities laws, and as such, the financial outlook may not be appropriate for purposes other than to understand management's current expectations relating to the future growth of the REIT, as disclosed in this news release. These forward-looking statements have been approved by management to be made as at the date of this news release. Certain material factors, estimates or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in this news release and actual results could differ materially from such conclusions, forecasts or projections. There can be no assurance that actual results, performance or achievements will be consistent with these forward-looking statements. The forward-looking statements contained in this document are expressly qualified in their entirety by this cautionary statement.

SOURCE BSR Real Estate Investment Trust

Cision View original content: http://www.newswire.ca/en/releases/archive/May2022/10/c2192.html