BSR REIT Announces the Sale of Five Noncore Properties for $86 Million
LITTLE ROCK, Ark. and TORONTO, Dec. 2, 2020 /CNW/ - BSR Real Estate Investment Trust ("BSR" or the "REIT") (TSX:HOM.U) (TSX: HOM.UN) announced today that it has sold five noncore properties, comprising 890 apartment units, as part of the REIT's portfolio enhancement growth strategy and capital recycling program. The REIT received total gross proceeds of $86 million. All dollar amounts in this news release are denominated in US currency.
Two of the five assets sold, Windsor Estates I and II, which were built in 2001 and 2003, respectively, are in the Houston, Texas metropolitan statistical area ("MSA"). Other assets sold were The Pointe, built in 2004 in the Beaumont, Texas MSA; South Oaks, built in 1987 in the Little Rock, Arkansas MSA; and Willow Lake, built in 1977 in the Longview, Texas MSA. The net proceeds of $83 million generated from these dispositions were used to repay $40 million in mortgage debt, with the balance used to reduce the outstanding balance on the REIT's credit facility. These sales follow the recent dispositions of Indian Hills, Overbrook I and V and Woodland Oaks, all located in the Little Rock, Arkansas MSA and Baystone and Vanderbilt, located in the Houston, Texas MSA, cumulatively sold for gross proceeds of $130 million. The total gross proceeds of the 11 dispositions was $216 million, representing a 10% increase over the IPO appraised values.
Following the progress of the capital recycling program completed to date, the REIT's portfolio has 7,308 apartment units in 29 real estate investment properties, with 91% of Net Operating Income ("NOI") coming from strategic high growth core markets
"BSR continues to deliver on its strategy in regard to the transformation of the portfolio and confirm values, even amidst the challenges presented by the pandemic," stated John Bailey, BSR's Chief Executive Officer. "We have now exited the Longview, Texas market and look forward to completing the capital recycling program in our target markets in the short-run, fully funded by our current liquidity position."
Since BSR completed its IPO on May 18, 2018, the portfolio's weighted average age has decreased by 12 years to 17 years old, from 29 years, directly attributable to the capital recycling program. The REIT's 12 acquisitions following the IPO added 3,511 apartment units with a weighted average year built of 2011 (nine years old) compared to 31 dispositions totaling 6,039 apartment units with a weighted average year built of 1986 (34 years old). As stated above, NOI from properties located in the REIT's core markets now comprises 91% of total NOI compared to 52% at the time of the REIT's IPO. Following the dispositions announced today, the REIT's debt to gross book value ratio ("Debt to GBV") is 41.1%.
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 multifamily garden-style residential properties located in attractive primary and secondary markets 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 and Analysis for the third quarter of 2020, dated November 10, 2020, 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 Measures
NOI and Debt to GBV are key measures of operating performance and financial position 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. NOI or Debt to GBV 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 nine month periods ended September 30, 2020 for a reconciliations of NOI and Debt-to-GBV to standardized IFRS measures.
SOURCE BSR Real Estate Investment Trust