BSR REIT Announces Q1 2021 Financial Results

– Dynamic Texas Markets lift NAV 8.3% to $13.21

– Strong property pipeline and substantial acquisition capacity position REIT for significant NOI and AFFO growth in second half of 2021 and throughout 2022 –

LITTLE ROCK, Ark. and TORONTO, May 11, 2021 /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, 2021 ("Q1 2021"). 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 2021 and the three months ended March 31, 2020 ("Q1 2020"), 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, 2021 are available on the REIT's website at www.bsrreit.com and at www.sedar.com.

"With the focus of our capital recycling program now primarily oriented to the deployment of our $287 million in acquisition capacity, the REIT is positioned to significantly expand our property portfolio on a highly accretive basis," said John Bailey , the REIT's Chief Executive Officer. "In conjunction with better-than-anticipated revenue growth in our primary markets of Dallas, Austin and Houston, Texas, we expect significant growth in NOI and AFFO in the second half of 2021 and throughout 2022. In addition, the repositioning of the portfolio into these high growth markets has resulted in an 8.3% increase in the REIT's NAV to $13.21 per unit."

 Q1 2021 Highlights

_____________________________

1 Same Community, NOI, NOI margin, FFO, AFFO, Debt to Gross Book Value and NAV per Unit are non-IFRS financial measures. See "Non-IFRS Financial Measures" in this news release.

Subsequent Highlights

COVID-19 Mitigation

The REIT's highest priority is the health and safety of its residents and team members. Given the fluid nature of the pandemic, management continues to monitor all of its locations to adjust policies and procedures as necessary to provide a safe environment to live and work. A combination of measures has been implemented at each of the REIT's properties based on requirements from state and local governments and recommendations from the Center for Disease Control.

To prevent further spread of the coronavirus, the CDC issued an order to temporarily halt certain residential evictions for non-payment of rent if a declaration is provided to the landlord stating the resident meets specific eligibility requirements. As of April 30, 2021, the REIT has received 22 declarations related to the order, representing approximately $0.1 million in unpaid rent.

Q1 2021 Financial Summary

In thousands of U.S. dollars


Three months
ended March
31, 2021

Three months
ended March
31, 2020

Change

Change %

Revenue, Total Portfolio

$

25,770

$

27,522

$

-1,752

-6.4%

Revenue, Same Community1 Properties

$

14,826

$

14,470

$

356

2.5%

NOI1, Total Portfolio

$

13,355

$

14,683

$

-1,328

-9.0%

NOI1, Same Community1 Properties

$

8,003

$

7,829

$

174

2.2%

FFO1

$

5,806

$

6,970

$

-1,164

-16.7%

FFO per Unit1

$

0.12

$

0.15

$

-0.03

-20.0%

Maintenance capital expenditures

$

-496

$

-813

$

317

-39.0%

Escrowed rent guaranty realized

$

$

437

$

-437

-100.0%

Severance/retention costs on dispositions

$

46

$

31

$

15

48.4%

Straight line rental revenue differences

$

-46

$

-18

$

-28

155.6%

AFFO1

$

5,310

$

6,607

$

-1,297

-19.6%

AFFO per Unit1

$

0.11

$

0.15

$

-0.04

-26.7%

Weighted Average Unit Count


49,265,328


44,995,099


4,270,228

9.5%

NAV1

$

688,231

$

544,744

$

143,487

26.3%

NAV per Unit1

$

13.21

$

12.20

$

1.01

8.3%

The REIT sold $364.6 million in assets with an average age of 29 years located primarily in secondary markets from March 31, 2020 through March 31, 2021, and purchased $283.4 million in assets with an average age of three years located in primary markets, excluding the purchases announced on March 31, 2021, over the same time period. The timing of these asset sales and purchases is the primary driver for the decline in total portfolio NOI, FFO and AFFO for Q1 2021 compared to Q1 2020.

The purchase of Vale Frisco Apartments and Adley at Gleannloch Apartments on March 31, 2021 and the pending purchase of Alleia Long Meadow Farms in May 2021 will add approximately $4.9 million in AFFO, or $0.09 per Unit, on an annual basis. The REIT expects the portfolio to be stabilized by the end of 2021, with another $250 million in acquisitions completed before year end adding approximately $6.0 million in AFFO, or $0.12 per Unit, on an annual basis assuming similar economics to the REIT's last three acquisitions described above.

The decrease in total portfolio revenue for Q1 2021 compared to Q1 2020 was primarily the result of property dispositions that reduced revenue by $10.7 million, partially offset by acquisitions and non-stabilized properties which contributed $7.4 million and $1.2 million in revenue, respectively, as well as higher rental rates across the portfolio.

Revenue from Same Community properties outperformed Q1 2020 by $0.4 million due to an increase in average rental rates from $1,011 per apartment unit as of March 2020 to $1,025 per apartment unit as of March 2021, an increase in fees associated with pets, late rental payments and the flexibility to rent on a month-to-month basis as well as an increase in utility reimbursement revenue.

The decrease in total portfolio NOI for Q1 2021 compared to Q1 2020 was primarily the result of property dispositions that reduced NOI by $5.9 million, partially offset by acquisitions and non-stabilized properties that contributed $3.3 million and $1.1 million in NOI, respectively, as well as the increase in Same Community NOI discussed below.

The increase in NOI from Same Community properties for Q1 2021 compared to Q1 2020 was primarily the result of the higher revenue described above, offset by an increase in the cost of utilities of $0.2 million. Approximately 80% of the increase in the cost of utilities is expected to be reimbursed to the REIT from residents in the second quarter of 2021.

FFO decreased by $1.2 million to $5.8 million, or $0.12 per Unit, for Q1 2021, compared to $7.0 million, or $0.15 per Unit, for Q1 2020. The decrease was primarily the result of the reduction in NOI, discussed above, partially offset by a reduction in interest expense of $0.3 million, due to the timing of acquisitions, dispositions and the follow on offering in February 2021.

AFFO was $5.3 million, or $0.11 per Unit, for Q1 2021, compared to $6.6 million, or $0.15 per Unit, for Q1 2020. The decrease was primarily the result of the reduction in FFO, discussed above and the $0.4 million in escrowed rent guaranty realized in Q1 2020, offset by a decrease in maintenance capital expenditures of $0.3 million. AFFO in the second half of 2021 and throughout 2022 is expected to significantly benefit from accretive deployment of the REIT's substantial acquisition capacity, as referenced above.

Total Highlights from Recent Four Quarters

The following table highlights certain financial performance of the REIT reported for the most recent four quarters.

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


March 31,

2021

December 31,

2020

September 30,

2020

June 30,

2020

Operational Information





Number of real estate investment properties

29

30

40

38

Total apartment units

7,804

7,628

9,681

9,035

Average monthly rent on in-place leases

$

1,134

$

1,088

$

1,011

$

996

Average monthly rent on in-place leases,

     Same Community1 Properties

$

1,025

$

1,022

$

1,014

$

1,007

Weighted average occupancy rate

94.3%

93.8%

93.5%

94.8%

Retention rate

57.5%

56.5%

53.4%

53.5%

Debt to Gross Book Value1

43.4%

46.5%

50.8%

48.5%







Three months
ended March
31, 2021

Three months

ended December

31, 2020

Three months
ended September
30, 2020

Three months
ended June
30, 2020

Operating Results





Revenue, Total Portfolio

$

25,770

$

28,627

$

29,849

$

27,288

Revenue, Same Community1 Properties

$

14,826

$

14,740

$

14,848

$

14,494

NOI1, Total Portfolio

$

13,355

$

15,098

$

15,233

$

14,222

NOI1, Same Community1 Properties

$

8,003

$

7,985

$

7,674

$

7,765

NOI Margin1, Total Portfolio

51.8%

52.7%

51.0%

52.1%

NOI Margin1, Same Community1 Properties

54.0%

54.2%

51.7%

53.6%

FFO1

$

5,806

$

6,655

$

7,427

$

6,635

FFO per Unit

$

0.12

$

0.15

$

0.16

$

0.15

Escrowed rent guaranty realized

$

$

87

$

$

Maintenance capital expenditures

$

496

$

846

$

958

$

678

AFFO1

$

5,310

$

6,125

$

6,490

$

6,192

AFFO per Unit1

$

0.11

$

0.13

$

0.14

$

0.14

AFFO Payout Ratio

117.3%

92.9%

87.5%

90.0%

Weighted Average Unit Count

49,265,328

45,626,505

45,255,977

44,663,118

Liquidity and Capital Structure

On February 9, 2021, the REIT completed an offering of 6,302,000 REIT units for total gross proceeds of $69 million. Net proceeds of $66 million were used to repay amounts outstanding on the REIT's credit facility.

As of March 31, 2021, the REIT had liquidity of $44.3 million, consisting of cash and cash equivalents of $5.8 million, $3.5 million available on the REIT's credit facility and $35 million available on a line of credit.

As of March 31, 2021, the REIT had total mortgage notes payable of $336.3 million, excluding the credit facility and line of credit, with a weighted average contractual interest rate of 3.6% and a weighted average term to maturity of 7.0 years. Total loans and borrowings of the REIT as of March 31, 2021 were $503.0 million, excluding the Debentures. 85% of the REIT's debt was fixed or economically hedged to fixed rates.

Additionally, as of March 31, 2021, the REIT had $42.5 million in Debentures outstanding at a contractual interest rate of 5%, maturing on September 30, 2025 with a conversion price of $14.40 per Unit.

Distributions and Units Outstanding

Cash distributions declared to REIT unitholders and Class B unitholders of BSR Trust, LLC totalled $6.2 million for Q1 2021, representing an AFFO payout ratio of 117.3%. AFFO in the second half of 2021 and throughout 2022 is expected to significantly benefit from accretive deployment of the REIT's substantial acquisition capacity, as referenced above. 100% of the REIT's cash distributions were classified as return of capital. As of March 31, 2021, the total number of REIT Units outstanding was 30,213,484. There were also 21,671,838 Class B Units of BSR Trust, LLC outstanding, which are redeemable for REIT Units on a one-for-one basis.

Conference Call

John Bailey, Chief Executive Officer, and Susan Koehn, Chief Financial Officer, will host a conference call for analysts and investors on Wednesday, May 12th, 2021 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=1450859&tp_key=4af2407c5b 

A replay of the call will be available until Wednesday, May 19th, 2021. To access the replay, dial 416-764-8677 or 888-390-0541 (Passcode: 967360 #). 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 Financial Measures

Same Community, NOI, NOI Margin, FFO, AFFO, 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, AFFO, 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. Please refer to the REIT's Management's Discussion and Analysis for the year ended March 31, 2021 for a reconciliation of Same Community, NOI, NOI Margin, FFO, AFFO, Debt to Gross Book Value, NAV and NAV per Unit to standardized IFRS measures.

Forward-Looking Statements

This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events, including the accretive impact of the REIT's capital recycling efforts on future financial results and the potential impact of COVID-19, and in some cases can be identified by such terms as "will" and "expected". 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, including those relating to the REIT's ability to finance and complete future acquisitions, as well as that COVID-19 will not have a material impact on the REIT's business. The risks and uncertainties that may impact such forward-looking information include, but are not limited to, the impact of COVID-19 on the REIT's operations, business and financial results and the factors discussed under "Risks and Uncertainties" in the REIT's Management's Discussion and Analysis for the three months ended March 31, 2021 and in the REIT's annual information form dated March 9, 2021, both of which are available on SEDAR (www.sedar.com). 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.

SOURCE BSR Real Estate Investment Trust