BSR REIT Exits Beaumont, Texas Market with the Sale of West End Lodge for $44.0 Million
LITTLE ROCK, Ark. and TORONTO, Dec. 10, 2020 /CNW/ - BSR Real Estate Investment Trust ("BSR" or the "REIT") (TSX: HOM.U) (HOM.UN) announced today it has sold West End Lodge located in Beaumont, Texas, built in 2010 and comprising 360 apartment units, for gross proceeds of $44.0 million (the "Transaction"). The REIT has now exited the Beaumont, Texas market as part of its portfolio enhancement growth strategy and capital recycling program. All dollar amounts in this news release are denominated in US currency.
As part of the Transaction, the buyer assumed the REIT's in-place mortgage financing of $21.9 million and the REIT took back a $5.2 million note receivable maturing in five years. The note bears interest at 4.1% in years one and two, 5.1% in years three and four and 10.0% in year five. The REIT intends to use the remaining cash proceeds of $21.5 million to fund acquisitions.
This Transaction marks the twelfth disposition for the REIT in the fourth quarter of 2020. The cumulative gross proceed of the 12 dispositions was $260.8 million, representing a 10.5% increase over the IPO appraised values. The $5.2 million note receivable related to this Transaction was from a buyer of multiple properties and was the only such asset taken back by the REIT in connection with the divestiture program.
Following the progress of the capital recycling program completed to date, the REIT's portfolio has 6,948 apartment units in 28 real estate investment properties, with 96% of Net Operating Income ("NOI") coming from strategic high growth core markets. This compares with just 52% at the time of the REIT's IPO in May 2018.
"BSR has now exited the Longview and Beaumont, Texas markets, the Baton Rouge and Shreveport, Louisiana markets and the Tulsa, Oklahoma market, in addition to other non-core asset dispositions in the Little Rock, Arkansas and Houston, Texas markets," stated John Bailey, BSR's Chief Executive Officer. "We now turn to completing this current phase of the capital recycling program by making acquisitions in our target markets, fully funded by our current liquidity position. We have a robust pipeline of acquisition opportunities and expect to deploy our available capital over the short-run."
Since BSR completed its IPO on May 18, 2018, the portfolio's weighted average age has decreased from 29 years to 18 years old, 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 32 dispositions totaling 6,399 apartment units with a weighted average year built of 1988 (32 years old). Following the Transaction announced today, the REIT's debt to gross book value ratio ("Debt to GBV") is 39.0% and its acquisition capacity is approximately $300 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 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