BSR REIT ANNOUNCES THIRD QUARTER 2024 FINANCIAL RESULTS AND EARLY REDEMPTION OF $41.8 MILLION 5.0% CONVERTIBLE DEBENTURES
LITTLE ROCK, AR and TORONTO, Nov. 7, 2024 /CNW/ - BSR Real Estate Investment Trust ("BSR", or the "REIT") (TSX:HOM) (TSX: HOM.UN) today announced its financial results for the three and nine months ended September 30, 2024 ("Q3 2024" and "YTD 2024", respectively). All comparisons are to the corresponding periods 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 Q3 2024 and YTD 2024 and the three and nine months ended September 30, 2023 ("Q3 2023" and "YTD 2023", respectively). With the exception of the investment property under development, all properties are considered Same Community as of September 30, 2024. Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis as of and for the three and nine months ended September 30, 2024 are available on the REIT's website at www.bsrreit.com and at www.sedarplus.ca.
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 trust units of the REIT ("Units"), Class B Units of BSR Trust, LLC ("Class B Units") and issued deferred units of the REIT granted to trustees ("Deferred Units").
"The REIT continues to produce expected returns as our core Texas markets effectively absorb the remnants of an unprecedented increase in new multifamily housing supply," said Dan Oberste, the REIT's President and Chief Executive Officer. "As we exit this phase of new supply in 2025, the REIT is well positioned to generate above-average rental growth and financial returns in future periods."
Q3 2024 Highlights
Same Community1 revenue for Q3 2024 increased 0.5% over Q3 2023;
Weighted average occupancy was 94.7% as of September 30, 2024;
FFO per Unit1 for Q3 2024 of $0.23 was unchanged compared to Q3 2023;
AFFO per Unit1 for Q3 2024 of $0.21 was unchanged compared to Q3 2023;
Debt to Gross Book Value1 as of September 30, 2024 was 46.4%;
During Q3 2024, excluding short term leases, rental rates for new leases and renewals changed -2.5% and 2.6%, respectively, resulting in a 0.3% blended increase over the prior leases;
In August 2024, the REIT's Board of Trustees approved a 7.7% increase to the cash distribution beginning with the August 2024 distribution paid on September 16, 2024;
On September 20, 2024, the REIT entered into a 90-day $150.0 million swaption and received a cash premium of $0.2 million, exercisable by the counterparty on December 20, 2024. If exercised, the underlying swap would be effective as of July 1, 2025 at a rate of 2.50%, maturing on July 1, 2031; and
During Q3 2024, the REIT retired $11.9 million of its debt with cash flows generated from operations.
Subsequent Highlight
On November 1, 2024, the REIT entered into a new $42.0 million interest rate swap at a fixed rate of 3.13% effective February 2, 2025 and maturing February 1, 2030, subject to the counterparty's optional early termination date of February 2, 2026.
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1 Same 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.
Q3 2024 Financial Summary
In thousands of U.S. dollars, except per unit amounts
Q3 2024
Q3 2023
Change
Change %
Revenue, Total Portfolio
$ 42,290
$ 42,079
$ 211
0.5 %
Revenue, Same Community1 Properties
$ 42,273
$ 42,079
$ 194
0.5 %
Revenue, Non-Same Community1 Properties
$ 17
$ -
$ 17
- %
Net loss and comprehensive loss
$ (39,251)
$ (79,286)
$ 40,035
nm*
NOI1, Total Portfolio
$ 22,256
$ 22,694
$ (438)
-1.9 %
NOI1, Same Community1 Properties
$ 22,411
$ 22,694
$ (283)
-1.2 %
NOI1, Non-Same Community1 Properties
$ (155)
$ -
$ (155)
- %
Funds from Operations ("FFO")1
$ 12,159
$ 13,081
$ (922)
-7.0 %
FFO per Unit1
$ 0.23
$ 0.23
$ -
0.0 %
Maintenance capital expenditures
$ (1,067)
$ (1,141)
$ 74
-6.5 %
Straight line rental revenue differences
$ 13
$ (2)
$ 15
nm*
AFFO1
$ 11,105
$ 11,938
$ (833)
-7.0 %
AFFO per Unit1
$ 0.21
$ 0.21
$ -
0.0 %
Weighted Average Unit Count
53,789,870
56,930,050
(3,140,180)
-5.5 %
Unitholders' equity
$ 622,198
$ 817,661
$ (195,463)
-23.9 %
NAV1
$ 907,625
$ 1,062,395
$ (154,770)
-14.6 %
NAV per Unit1
$ 16.87
$ 18.66
$ (1.79)
-9.6 %
*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.
Same Community revenue of $42.3 million for Q3 2024 increased 0.5% compared to $42.1 million for Q3 2023, primarily due to a $0.2 million increase in other property income related to rental fees and utility reimbursements.
The net loss and comprehensive loss change between Q3 2024 and Q3 2023 is primarily due to non-cash adjustments to fair value of investment properties and derivatives and other financial liabilities from June 30, 2024 to September 30, 2024 and June 30, 2023 to September 30, 2023, respectively, and is not considered comparable period over period.
The 1.2% decrease in Same Community NOI for Q3 2024 to $22.4 million compared to $22.7 million in Q3 2023 was the result of an increase in property tax expenses of $0.4 million, and lower tax refunds of $0.1 million due to the timing of when refunds are received, partially offset by the increase in revenue described above.
The 1.9% decrease in total portfolio NOI for Q3 2024 to $22.3 million compared to $22.7 million in Q3 2023 was the result of the decrease in Same Community NOI described above and initial operating expenses for the property under development.
FFO was $12.2 million, or $0.23 per Unit, for Q3 2024 compared to $13.1 million, or $0.23 per Unit, for Q3 2023. The decrease in FFO was primarily the result of the decrease in total portfolio NOI described above and $0.6 million in higher interest costs. FFO per Unit remained unchanged over the prior period as a result of the REIT's repurchase and cancellation of 3.5 million Units under its prior normal course issuer bid (the "2023 NCIB") and related automatic securities purchase plan (the "2023 ASPP") in 2023.
AFFO was $11.1 million, or $0.21 per Unit for Q3 2024 compared to $11.9 million, or $0.21 per Unit for Q3 2023. The decrease in AFFO was primarily the result of the decrease in FFO discussed above, partially offset by a $0.1 million decrease in maintenance capital expenditures. AFFO per Unit remained unchanged over the prior period as a result of the REIT's repurchase and cancellation of 3.5 million Units under its 2023 NCIB and 2023 ASPP in 2023.
NAV was $0.9 billion, or $16.87 per unit, as of September 30, 2024 compared to $1.1 billion, or $18.66 per unit, as of September 30, 2023. The year over year decrease is primarily due to the decline in the estimated fair value of investment property values, driven by capitalization rate expansion, subsequent to September 30, 2023.
YTD 2024 Financial Summary
In thousands of U.S. dollars, except per unit amounts
YTD 2024
YTD 2023
Change
Change %
Revenue, Total Portfolio
$ 126,505
$ 125,707
$ 798
0.6 %
Revenue, Same Community1 Properties
$ 126,488
$ 125,707
$ 781
0.6 %
Revenue, Non-Same Community1 Properties
$ 17
$ -
$ 17
- %
Net loss and comprehensive loss
$ (80,027)
$ (141,340)
$ 61,313
nm*
NOI1, Total Portfolio
$ 70,201
$ 68,576
$ 1,625
2.4 %
NOI1, Same Community1 Properties
$ 70,356
$ 68,576
$ 1,780
2.6 %
NOI1, Non-Same Community1 Properties
$ (155)
$ -
$ (155)
- %
FFO1
$ 39,882
$ 39,377
$ 505
1.3 %
FFO per Unit1
$ 0.74
$ 0.69
$ 0.05
7.2 %
Maintenance capital expenditures
$ (3,181)
$ (3,474)
$ 293
-8.4 %
Straight line rental revenue differences
$ 5
$ 68
$ (63)
nm*
AFFO1
$ 36,706
$ 35,971
$ 735
2.0 %
AFFO per Unit1
$ 0.68
$ 0.63
$ 0.05
7.9 %
Weighted Average Unit Count
53,828,208
57,112,882
(3,284,674)
-5.8 %
*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.
Same Community revenue of $126.5 million for the nine months ended September 30, 2024 ("YTD 2024") increased $0.8 million, or 0.6%, compared to $125.7 million for the nine months ended September 30, 2023 ("YTD 2023"), primarily due to an increase in average rental rates over the comparative period as well as $0.4 million in other property income related to higher rental fees and utility reimbursements.
The net loss and comprehensive loss change between YTD 2024 and YTD 2023 is primarily due to non-cash adjustments to fair value of investment properties and derivatives and other financial liabilities from December 31, 2023 to September 30, 2024 and December 31, 2022 to September 30, 2023, respectively, and is not considered comparable period over period.
The 2.6% increase in Same Community NOI for YTD 2024 to $70.4 million compared to $68.6 million in YTD 2023 was the result of the increase in revenue described above as well as a decrease in real estate tax expense of $1.2 million, caused by an increase in tax refunds of $1.1 million combined with $0.1 million in lower real estate tax assessments. These increases in NOI for YTD 2024 were partially offset by higher payroll expenses of $0.2 million, higher renting expenses of $0.3 million associated with new services to generate other income, and higher repair and maintenance expenses of $0.1 million.
The 2.4% increase in total portfolio NOI for YTD 2024 to $70.2 million compared to $68.6 million in YTD 2023 was the result of the increase in Same Community NOI described above, partially offset by initial operating expenses for the property under development.
FFO ...
