BSR REIT Announces Sale of Nine Noncore Assets for $119.2 Million
LITTLE ROCK, AR and TORONTO, Nov. 8, 2019 /CNW/ - BSR Real Estate Investment Trust ("BSR" or the "REIT") (TSX:HOM.U and HOM.UN) announced today that it has sold nine noncore assets, comprising 1,423 apartment units, as part of the REIT's portfolio enhancement and capital recycling strategy. The gross consideration of $119.2 million is in line with initial public offering (IPO) appraised values. All dollar amounts in this news release are denominated in US currency.
The following properties were sold in Q3 2019: Dove Creek Apartments built in 1978 in Baton Rouge, Louisiana; Longridge Apartments built in 2000 also in Baton Rouge, Louisiana; and Summer Pointe Apartments built in 1985 in Shreveport, Louisiana. Subsequent to Q3 BSR sold the following properties in Tulsa, Oklahoma: 93 Twenty Apartments built in 1985; Ridge Park Apartments built in 1982; Inverness Apartments built in 1987; and Charleston Crossing Apartments built in 1984. Additionally the REIT sold Countryside Village Apartments built in 1986 in Moore, Oklahoma; and Ridgewood Apartments built in 1987 in Hot Springs, Arkansas.
"The transformation of our portfolio continues as we rotate out of secondary markets and into our target markets on a tax deferred basis," said John Bailey, Chief Executive Officer of BSR REIT. "These dispositions enable us to both crystallize the benefits of upgrades previously performed at these properties and to acquire more modern properties, clustered in targeted primary markets, with above average population growth and a clear potential for higher rent using the BSR platform."
Since BSR completed its IPO on May 18, 2018, the portfolio's weighted average age has decreased by six years to 23 years old, from 29 years, directly attributable to acquisitions and dispositions. The REIT's eight acquisitions following the IPO added 2,213 apartment units with a weighted average year built of 2008 (11 years old) compared to the 15 dispositions totaling 2,534 apartment units with a weighted average year built of 1981 (38 years old). NOI from properties located in the REIT's primary markets now comprises 71% of total NOI compared to 52% as of the third quarter of 2018 on a pro-forma basis.
Of the net cash proceeds of $114.1 million generated from these dispositions, $65.6 million was used to retire related mortgage financing and $48.5 million to reduce the balance outstanding under the REIT's credit facility, resulting in a Debt to Gross Book Value ratio of approximately 46.6%. Following closing of these dispositions, BSR's liquidity position, including cash on hand and availability of its lines of credit, is approximately $105.5 million.
About BSR Real Estate Investment Trust
BSR Real Estate Investment Trust is an internally managed, unincorporated, and 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 40 multifamily garden-style residential properties aggregating 9,359 apartment units located across five bordering states in the Sunbelt region of the United States.
This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the REIT. Forward-looking statements are identified by words such as "believe", "anticipate", "project", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. The forward-looking statements in this news release are based on certain assumptions. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the heading "Risk Factors" in the REIT's Management's Discussion & Analysis for the period ended June 30, 2019, dated August 6, 2019, which is available at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law. The REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Non-IFRS Financial Measure
NOI is a key measure of performance commonly used by real estate operating companies and real estate investment trusts. It is not a measure recognized under International Financial Reporting Standards ("IFRS") and does not have a standardized meaning prescribed by IFRS. NOI as calculated by the REIT may not be comparable to similar measures presented by other issuers. Please refer to the REIT's Management's Discussion and Analysis for the three and six months ended June 30, 2019 for a reconciliation of NOI to standardized IFRS measures.
SOURCE BSR Real Estate Investment Trust