LITTLE
ROCK, Ark. and TORONTO, Nov. 8, 2022
/CNW/ - BSR Real Estate Investment Trust ("BSR", or the "REIT")
(TSX: HOM.U) (TSX: HOM.UN) today announced its financial results
for the three and nine months ended September 30, 2022 ("Q3 2022" and "YTD 2022",
respectively). All comparisons in the following summary 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 2022 and YTD 2022 and the three months and nine
months ended September 30, 2021 ("Q3
2021" and "YTD 2021", respectively), 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 and nine months
ended September 30, 2022 are
available on the REIT's website at www.bsrreit.com and at
www.sedar.com.
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
diluted trust units of the REIT ("Units") and Class B Units of BSR
Trust, LLC ("Class B Units").
"Positive economic trends in our core Texas markets continued to drive rental demand
as we captured double-digit rental increases on both new and
renewed leases during the third quarter," said Dan Oberste, the REIT's President and Chief
Executive Officer. "Even with the rent increases achieved over the
past year, our rent as a percentage of household income remains
highly affordable compared to the national average, and we expect
favorable leasing conditions to continue."
Q3 2022 Highlights
- NAV per Unit1 increased 25.6% to $22.32 as of September 30,
2022, compared to $17.77 as of
September 30, 2021 and is consistent
with NAV per Unit1 as of June 30,
2022;
- FFO per Unit1 for Q3 2022 of $0.21 increased 31.3% over Q3 2021;
- AFFO per Unit1 for Q3 2022 of $0.19 increased 26.7% over Q3 2021;
- Weighted average rent increased 14.5% to $1,460 per apartment unit as of September 30, 2022 compared to $1,275 as of September 30,
2021 and 3.4% sequentially from $1,412 as of June 30,
2022;
- During Q3 2022, rental rates for new leases, increased 12.3%
and renewals increased 10.3% over the prior lease, resulting in a
blended increase of 11.2%;
- Same Community1 revenues for Q3 2022 increased
10.7% over Q3 2021;
- Same Community1 Net Operating Income
("NOI")1 for Q3 2022 increased 9.7% over Q3 2021;
- During Q3 2022, the REIT's AFFO Payout Ratio1 was
67.2% compared to 82.7% during Q3 2021;
- As of September 30, 2022,
weighted average occupancy was 94.7% compared to 96.5% as of
September 30, 2021;
- Debt to Gross Book Value1 excluding Convertible
Debentures (as defined below) as of September 30, 2022 was 34.1%;
- In July 2022, the REIT hedged an
additional $280.0 million in variable
rate debt. Following the commencement of the final swap on
January 3, 2023, 100% of the REIT's
debt will be fixed or economically hedged to fixed rates at a
weighted average contractual interest rate of 3.4%;
- In July 2022, the REIT entered
into an agreement to jointly develop phase II of Aura 36Hundred in
the Austin, Texas metropolitan
statistical area. The 238 apartment unit development is expected to
be completed in 2024 with a projected total cost of $59.5 million;
- For the sixth consecutive year, BSR was named as one of the
Best Places to Work in Arkansas by Arkansas Business and the Best
Companies Group; and
Subsequent Highlights
- On October 3, 2022, the Toronto
Stock Exchange accepted the REIT's notice of intention to make a
normal course issuer bid for up to a maximum of approximately 3.3
million of its issued and outstanding Units. The REIT may purchase
Units for a twelve-month period beginning on October 6, 2022 and the normal course issuer bid
will terminate on October 5, 2023.
The REIT purchased 199,650 Units under its normal course issuer bid
and automatic securities purchase plan at an average price of
$13.99 per Unit through November 7, 2022.
_________________________________
|
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 2022 Financial Summary
In thousands of U.S. dollars, except per unit amounts
|
Q3
2022
|
|
Q3
2021
|
|
Change
|
|
Change
%
|
Revenue, Total
Portfolio
|
$
40,549
|
|
$
31,705
|
|
$
8,844
|
|
27.9 %
|
Revenue, Same
Community1 Properties
|
$
24,033
|
|
$
21,702
|
|
$
2,331
|
|
10.7 %
|
Revenue, Non-Same
Community1 Properties
|
$
16,516
|
|
$
10,003
|
|
$
6,513
|
|
65.1 %
|
Net income and
comprehensive income
|
$
23,787
|
|
$
106,993
|
|
$
(83,206)
|
|
nm*
|
NOI1, Total
Portfolio
|
$
21,719
|
|
$
16,504
|
|
$
5,215
|
|
31.6 %
|
NOI1, Same
Community1 Properties
|
$
12,471
|
|
$
11,366
|
|
$
1,105
|
|
9.7 %
|
NOI1,
Non-Same Community1 Properties
|
$
9,248
|
|
$
5,138
|
|
$
4,110
|
|
80.0 %
|
Funds from Operations
("FFO")1
|
$
12,082
|
|
$
8,160
|
|
$
3,922
|
|
48.1 %
|
FFO per
Unit1
|
$
0.21
|
|
$
0.16
|
|
$
0.05
|
|
31.3 %
|
Maintenance capital
expenditures
|
$
(920)
|
|
$
(948)
|
|
$
28
|
|
-3.0 %
|
Escrowed rent guaranty
realized
|
$
-
|
|
$
677
|
|
$
(677)
|
|
nm*
|
Straight line rental
revenue differences
|
$
47
|
|
$
(40)
|
|
$
87
|
|
nm*
|
AFFO1
|
$
11,209
|
|
$
7,849
|
|
$
3,360
|
|
42.8 %
|
AFFO per
Unit1
|
$
0.19
|
|
$
0.15
|
|
$
0.04
|
|
26.7 %
|
Weighted Average Unit
Count
|
58,205,337
|
|
52,109,042
|
|
6,096,294
|
|
11.7 %
|
Unitholders'
equity
|
$
1,011,580
|
|
$
596,109
|
|
$
415,471
|
|
69.7 %
|
NAV1
|
$
1,299,344
|
|
$
926,471
|
|
$
372,873
|
|
40.2 %
|
NAV per
Unit1
|
$
22.32
|
|
$
17.77
|
|
$
4.54
|
|
25.6 %
|
*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.
|
Total portfolio revenue of $40.5
million for Q3 2022 increased 27.9% compared to $31.7 million in Q3 2021. The increase was the
result of contributions of $2.3
million from Same Community properties, as described below,
and $9.3 million from property
acquisitions, partially offset by property dispositions that
reduced revenue by $2.9 million.
Revenue from Same Community properties of $24.0 million for Q3 2022 increased 10.7% from
$21.7 million in Q3 2021, primarily
due to a 13.0% increase in average rental rates from $1,199 per apartment unit as of September 30, 2021 to $1,354 per apartment unit as of September 30, 2022.
The decrease in net income and comprehensive income for Q3 2022
compared to Q3 2021 was primarily due to a change in the fair value
adjustment to investment properties (loss) of $185.8 million, partially offset by the change in
the fair value adjustment (gain) to derivatives and other financial
liabilities of $95.4 million, over
the prior period, and an increase in NOI, discussed below.
The 31.6% increase in total portfolio NOI for Q3 2022 to
$21.7 million compared to
$16.5 million in Q3 2021 was the
result of contributions of $1.1
million from Same Community properties, described below, and
$5.4 million from property
acquisitions and non-stabilized properties, partially offset by the
reduction in NOI due to property dispositions of $1.2 million.
The 9.7% increase in Same Community NOI to $12.5 million for Q3 2022 compared to
$11.4 million in Q3 2021 was the
result of the increase in revenue described above, partially offset
by an increase in property operating expenses, of $1.2 million due to an increase in payroll,
administrative and repair and maintenance expenses as well as an
increase in the cost of real estate taxes and insurance over the
prior period.
FFO was $12.1 million, or
$0.21 per Unit, for Q3 2022 compared
to $8.2 million, or $0.16 per Unit, for Q3 2021. The increase was
primarily the result of the higher NOI discussed above, partially
offset by an increase of $1.2 million
in finance costs associated with additional debt related to
additional investment properties over the prior period and an
increase in interest rates. As discussed below, during Q3 2022 the
REIT entered into three Swaps to hedge an additional $280.0 million in variable rate debt. The first
two Swaps became effective on September 1,
2022. Losses on extinguishment of debt are excluded from the
calculation of FFO.
AFFO was $11.2 million, or
$0.19 per Unit, for Q3 2022, compared
to $7.8 million, or $0.15 per Unit, for Q3 2021. The improvement was
primarily the result of the increase in FFO discussed above,
partially offset by an escrowed rent guaranty realized in the prior
year of $0.7 million. Losses on
extinguishment of debt and severance/retention costs on
dispositions are excluded from the calculation of AFFO.
YTD 2022 Financial Summary
In thousands of U.S. dollars, except per unit amounts
|
YTD
2022
|
|
YTD
2021
|
|
Change
|
|
Change
%
|
Revenue, Total
Portfolio
|
$
116,881
|
|
$
85,521
|
|
$
31,360
|
|
36.7 %
|
Revenue, Same
Community1 Properties
|
$
69,413
|
|
$
62,458
|
|
$
6,955
|
|
11.1 %
|
Revenue, Non-Same
Community1 Properties
|
$
47,468
|
|
$
23,063
|
|
$
24,405
|
|
105.8 %
|
Net income and
comprehensive income
|
$
243,650
|
|
$
212,346
|
|
$
31,304
|
|
nm*
|
NOI1, Total
Portfolio
|
$
62,362
|
|
$
44,233
|
|
$
18,129
|
|
41.0 %
|
NOI1, Same
Community1 Properties
|
$
37,308
|
|
$
32,689
|
|
$
4,619
|
|
14.1 %
|
NOI1,
Non-Same Community1 Properties
|
$
25,054
|
|
$
11,544
|
|
$
13,510
|
|
117.0 %
|
FFO1
|
$
34,784
|
|
$
20,966
|
|
$
13,818
|
|
65.9 %
|
FFO per
Unit1
|
$
0.63
|
|
$
0.41
|
|
$
0.22
|
|
53.7 %
|
Maintenance capital
expenditures
|
$
(2,840)
|
|
$
(2,134)
|
|
$
(706)
|
|
33.1 %
|
Escrowed rent guaranty
realized
|
$
87
|
|
$
2,152
|
|
$
(2,065)
|
|
nm*
|
Severance/retention
costs on dispositions
|
$
-
|
|
$
105
|
|
$
(105)
|
|
nm*
|
Straight line rental
revenue differences
|
$
183
|
|
$
(75)
|
|
$
258
|
|
nm*
|
AFFO1
|
$
32,214
|
|
$
21,014
|
|
$
11,200
|
|
53.3 %
|
AFFO per
Unit1
|
$
0.58
|
|
$
0.41
|
|
$
0.17
|
|
41.5 %
|
Weighted Average Unit
Count
|
55,580,637
|
|
51,163,398
|
|
4,417,239
|
|
8.6 %
|
*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.
|
The 36.7% increase in total portfolio revenue for YTD 2022 to
$116.9 million compared to
$85.5 million in YTD 2021 was the
result of contributions of $6.9
million from Same Community properties, $34.2 million from property acquisitions and
$0.9 million from non-stabilized
properties, partially offset by property dispositions that reduced
revenue by $10.7 million.
Revenue from Same Community properties for YTD 2022 increased
11.1% to $69.4 million compared to
$62.5 million in YTD 2021, primarily
due to a 13.0% increase in average rental rates from $1,199 per apartment unit as of September 30, 2021 to $1,354 per apartment unit as of September 30, 2022.
The increase in net income and comprehensive income for YTD 2022
compared to YTD 2021 was primarily due to an increase in the fair
value adjustment (gain) to derivatives and other financial
liabilities of $203.5 million over
the prior period and the increase in NOI, discussed below,
partially offset by the change in the fair value adjustment (loss)
to investment properties of $192.9
million.
The 41.0% increase in total portfolio NOI for YTD 2022 to
$62.4 million compared to
$44.2 million in YTD 2021 was the
result of contributions of $4.6
million from Same Community properties, discussed below, and
$18.6 million from property
acquisitions and non-stabilized properties, partially offset by
property dispositions which reduced NOI by $4.9 million. Severance/retention costs on
dispositions are excluded from NOI.
The 14.1% increase in Same Community NOI for YTD 2022 to
$37.3 million compared to
$32.7 million in YTD 2021 was the
result of the increase in revenue described above, offset by an
increase in property operating expenses, of $2.3 million due to higher payroll expenses,
administrative expenses, cost of utilities, real estate taxes and
property insurance expense compared to the prior period.
FFO was $34.8 million, or
$0.63 per Unit, for YTD 2022 compared
to $21.0 million, or $0.41 per Unit, for YTD 2021. The FFO per Unit
increase of 53.7% was primarily the result of higher NOI discussed
above, partially offset by increases of $0.6
million in general and administrative expenses primarily
related to payroll expenses and $3.7
million in finance costs related to additional debt
associated with additional investment properties over the prior
period and an increase in interest rates. As discussed above,
during Q3 2022 the REIT entered into three Swaps to hedge an
additional $280.0 million in variable
rate debt. The first two Swaps became effective on September 1, 2022. Losses on extinguishment of
debt are excluded from the calculation of FFO.
AFFO was $32.2 million, or
$0.58 per Unit, for YTD 2022,
compared to $21.0 million, or
$0.41 per Unit, for YTD 2021. The
AFFO per Unit improvement of 41.5% was primarily the result of the
increase in FFO, discussed above, partially offset by a lower
escrow rent guaranty realized of $2.1
million and an increase in maintenance capital expenditures
of $0.7 million largely related to
the painting of metal railings and replacing of gutters in Q2 2022.
Losses on extinguishment of debt and severance/retention costs on
dispositions are excluded from the calculation of AFFO.
Highlights from Recent Four Quarters
In thousands of U.S. dollars (except per unit
amounts)
|
September 30,
2022
|
|
June 30,
2022
|
|
March 31,
2022
|
|
December 31,
2021
|
Operational
Information
|
|
|
|
|
|
|
|
Number of real estate
investment properties
|
31
|
|
31
|
|
31
|
|
31
|
Total apartment
units
|
8,666
|
|
8,666
|
|
8,666
|
|
8,666
|
Average monthly rent on
in-place leases
|
$
1,460
|
|
$
1,412
|
|
$
1,350
|
|
$
1,328
|
Average monthly rent on
in-place leases,
|
|
|
|
|
|
|
|
Same Community1
Properties
|
$
1,354
|
|
$
1,307
|
|
$
1,238
|
|
$
1,228
|
Weighted average
occupancy rate
|
94.7 %
|
|
95.0 %
|
|
94.5 %
|
|
96.0 %
|
Retention
rate
|
54.0 %
|
|
57.1 %
|
|
57.3 %
|
|
58.5 %
|
Debt to Gross Book
Value1
|
36.2 %
|
|
36.2 %
|
|
43.2 %
|
|
45.1 %
|
|
Q3
2022
|
|
Q2
2022
|
|
Q1
2022
|
|
Q4
2021
|
Operating
Results
|
|
|
|
|
|
|
|
Revenue, Total
Portfolio
|
$
40,549
|
|
$
38,787
|
|
$
37,545
|
|
$
34,061
|
Revenue, Same
Community1 Properties
|
$
24,033
|
|
$
23,179
|
|
$
22,201
|
|
$
21,981
|
Revenue, Non-Same
Community1 Properties
|
$
16,516
|
|
$
15,608
|
|
$
15,344
|
|
$
12,080
|
NOI1, Total
Portfolio
|
$
21,719
|
|
$
20,998
|
|
$
19,645
|
|
$
18,678
|
NOI1, Same
Community1 Properties
|
$
12,471
|
|
$
12,718
|
|
$
12,119
|
|
$
12,369
|
NOI1,
Non-Same Community1 Properties
|
$
9,248
|
|
$
8,280
|
|
$
7,526
|
|
$
6,309
|
NOI Margin1,
Total Portfolio
|
53.6 %
|
|
54.1 %
|
|
52.3 %
|
|
54.8 %
|
NOI Margin1,
Same Community1 Properties
|
51.9 %
|
|
54.9 %
|
|
54.6 %
|
|
56.7 %
|
NOI Margin1,
Non-Same Community1 Properties
|
56.0 %
|
|
53.0 %
|
|
49.0 %
|
|
53.7 %
|
Net income and
comprehensive income
|
$
23,787
|
|
$
160,832
|
|
$
59,031
|
|
$
70,868
|
Distributions on Class
B Units
|
$
2,671
|
|
$
2,678
|
|
$
2,648
|
|
$
2,595
|
Fair value adjustment
to investment properties
|
$
23,449
|
|
$
(20,258)
|
|
$
(118,789)
|
|
$
(114,282)
|
Fair value adj. to
investment prop. (IFRIC 21)
|
$
5,635
|
|
$
7,732
|
|
$
(22,328)
|
|
$
5,057
|
Property tax liability
adjustment, net (IFRIC 21)
|
$
(5,635)
|
|
$
(7,732)
|
|
$
22,328
|
|
$
(5,057)
|
Fair value adjustment
to derivatives and other
|
|
|
|
|
|
|
|
financial
liabilities
|
$
(38,330)
|
|
$
(129,842)
|
|
$
65,607
|
|
$
42,512
|
Fair value adj. to
unit-based compensation
|
$
(354)
|
|
$
(1,771)
|
|
$
2,569
|
|
$
905
|
Costs of disposition of
investment properties
|
$
-
|
|
$
-
|
|
$
-
|
|
$
1,518
|
Loss on extinguishment
of debt
|
$
853
|
|
$
-
|
|
$
-
|
|
$
5,538
|
Principal payments on
lease liability
|
$
(27)
|
|
$
(35)
|
|
$
(34)
|
|
$
(33)
|
Depreciation of
right-to-use asset
|
$
33
|
|
$
33
|
|
$
33
|
|
$
32
|
FFO1
|
$
12,082
|
|
$
11,637
|
|
$
11,065
|
|
$
9,653
|
FFO per Unit
|
$
0.21
|
|
$
0.21
|
|
$
0.21
|
|
$
0.19
|
Maintenance capital
expenditures
|
$
(920)
|
|
$
(1,218)
|
|
$
(702)
|
|
$
(974)
|
Escrowed rent guaranty
realized
|
$
-
|
|
$
5
|
|
$
82
|
|
$
265
|
Severance/retention
costs on dispositions
|
$
-
|
|
$
-
|
|
$
-
|
|
$
106
|
Straight line rental
revenue differences
|
$
47
|
|
$
54
|
|
$
82
|
|
$
43
|
AFFO1
|
$
11,209
|
|
$
10,478
|
|
$
10,527
|
|
$
9,093
|
AFFO per
Unit1
|
$
0.19
|
|
$
0.19
|
|
$
0.20
|
|
$
0.17
|
AFFO Payout
Ratio
|
67.2 %
|
|
71.8 %
|
|
63.3 %
|
|
71.4 %
|
Weighted Average Unit
Count
|
58,205,337
|
|
56,290,702
|
|
52,179,657
|
|
52,130,772
|
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.
|
Liquidity and Capital Structure
As of September 30, 2022, the REIT
had liquidity of $176.7 million,
consisting of cash and cash equivalents of $9.4 million and $167.3
million available under its revolving credit facility. The
REIT also has the ability to obtain additional liquidity by adding
properties to the current borrowing base of the revolving credit
facility.
As of September 30, 2022, the REIT
had total mortgage notes payable of $499.5
million, excluding the credit facility, with a weighted
average contractual interest rate of 3.4% and a weighted average
term to maturity of 5.4 years. Total loans and borrowings of the
REIT as of September 30, 2022 were
$718.5 million with a weighted
average contractual interest rate of 3.4%, excluding the
convertible unsecured subordinated debentures (the "Convertible
Debentures"). Debt to Gross Book Value excluding the convertible
debentures as of September 30, 2022
was 34.1%. As of September 30, 2022,
92% of the REIT's debt was fixed or economically hedged to fixed
rates. In July of 2022, the REIT entered into three interest rate
swaps (the "Swaps"). Two of the Swaps, which have notional values
of $150 million and $65 million at fixed rates of 2.163% and 2.178%,
respectively, began on September 1,
2022 and mature on August 31,
2029. The third Swap, which has a notional value of
$65 million at a fixed rate of
2.087%, will begin on January 3, 2023
and matures on July 27, 2029.
Following the commencement of the final swap, 100% of the REIT's
debt will be fixed or economically hedged to fixed rates at a
weighted average contractual interest rate of 3.4%.
As of September 30, 2022, the REIT
had outstanding Convertible Debentures valued at $44.3 million at a contractual interest rate of
5%, maturing on September 30, 2025
with a conversion price of $14.40 per
Unit.
On December 8, 2021, the REIT
announced that it has established an at-the-market equity program
(the "ATM Program") that allows the REIT to issue up to
$150 million of Units from treasury
to the public from time to time, at the REIT's discretion. The ATM
Program is effective until the earlier of (i) the issuance and sale
of all of the Units through the agents on the terms and conditions
set forth in the equity distribution agreement, (ii) the Shelf
Prospectus ceasing to be effective on January 1, 2024, and (iii) the termination of the
equity distribution agreement as permitted therein. As of
September 30, 2022, no Units have
been issued under the ATM Program.
On April 29, 2022, the REIT
completed the April 2022 equity
offering for gross proceeds of $115.1
million, after the full exercise of the underwriters'
overallotment option.
On October 3, 2022, the Toronto
Stock Exchange accepted the REIT's notice of intention to make a
normal course issuer bid for up to a maximum of approximately 3.3
million of its issued and outstanding Units. The REIT may purchase
Units for a twelve-month period beginning on October 6, 2022 and the normal course issuer bid
will terminate on October 5,
2023.
Distributions and Units Outstanding
Cash distributions declared to holders of Units and holders of
Class B Units totalled $7.5 million
for Q3 2022, representing an AFFO Payout
Ratio1 of 67.2%. 100% of the REIT's cash
distributions were classified as return of capital. As of
September 30, 2022, the total number
of Units outstanding was 37,388,788. There were also 20,554,586
Class B Units outstanding, which are redeemable for Units on a
one-for-one basis.
Change in Senior Management Structure
The REIT also announced today the retirement of Blake Brazeal, the REIT's Co-President and Chief
Operating Officer, effective on December 31,
2022. Susan Koehn, the REIT's
current Chief Financial Officer and Corporate Secretary will assume
the role of Chief Operating Officer and Brandon Barger, the REIT's current Chief
Accounting Officer, will assume the role of Chief Financial Officer
and Corporate Secretary consistent with the REIT's succession plan
effective on January 1, 2023. Mr.
Brazeal has served as the Chief Operating Officer of the REIT and
its predecessor since 2004. "I have enjoyed being part of a
best-in-class team at BSR that successfully repositioned the REIT
and I am confident Dan, Susie and Brandon represent the right team
to continue the tradition of excellence going forward," said Mr.
Brazeal. "After my retirement, I will be available to assist the
team as necessary on a consulting basis. I know BSR has the right
leadership in place to continue to outperform in the future."
"Blake epitomizes loyalty and common-sense leadership. While his
presence in our business day-to-day will transition, Blake remains
an advocate for BSR in the shareholder capacity and my friend and
confidante," said Mr. Oberste. "He and I have discussed the REIT's
succession plan at length for some years, and we have confidence in
Susie and Brandon's leadership and expertise. We both eagerly look
forward to the future of BSR."
Ms. Koehn served as the Chief Financial Officer of the REIT and
it's predecessor since 2016 and served as the Chief Accounting
Officer from 2014 to 2016. Mr. Barger joined the REIT's predecessor
in 2014 as the Director of Financial Reporting and assumed the role
of Chief Accounting Officer in 2017.
2022 Earnings and Same Community Portfolio Guidance
The REIT provided initial 2022 guidance for FFO per
Unit1 and AFFO per Unit1,
along with its expectations for growth of the Same
Community1 properties revenue, property
operating expense and NOI1 in 2022. As of
September 30, 2022, the REIT is
lowering its expectations for FFO per Unit1 and
AFFO per Unit1 due to the impact of unprecedented
increases in the federal funds rate prior to the commencement of
the Swaps discussed above. Following the commencement of the final
swap on January 3, 2023, 100% of the
REIT's debt will be fixed or economically hedged to fixed
rates. The REIT decreased its full year 2022 FFO per
Unit1 midpoint to $0.86 or 2.3% compared to $0.88 as of June 30,
2022. The REIT decreased its full year 2022 AFFO per
Unit1 midpoint to $0.80 or 2.4% compared to $0.82 as of June 30,
2022. The guidance for Same Community1
properties revenue, property operating expenses and
NOI remains unchanged.
|
Revised guidance for
2022
|
Per
Unit
|
Range
|
Midpoint
|
Total
Portfolio
|
|
|
FFO per Unit
|
$0.85 to
$0.87
|
$0.86
|
AFFO per
Unit
|
$0.79 to
$0.81
|
$0.80
|
|
|
|
Same Community
Growth
|
|
|
Total
Revenue
|
10.0% to
12.0%
|
11.00 %
|
Property Operating
Expenses
|
4.5% to 6.5%
|
5.50 %
|
NOI
|
12.0% to
14.0%
|
13.00 %
|
Non-IFRS measures are presented to illustrate alternative relevant
measures to assess the REIT's performance. See "Non-IFRS
Measures" in this news release. See also "Forward-Looking
Information", as the figures presented above are considered
"financial outlook" for purposes of applicable Canadian securities
laws and may not be appropriate for purposes other than to
understand management's current expectations relating to the future
growth of the REIT. Although the REIT believes that its
anticipated future results, performance or achievements expressed
or implied by the forward-looking statements and information are
based upon reasonable assumptions and expectations, the reader
should not place undue reliance on forward-looking statements and
information. The REIT reviews its key assumptions regularly and may
change its outlook on a going-forward basis if necessary.
Conference Call
Dan Oberste, President and Chief
Executive Officer, and Susan Koehn,
Chief Financial Officer, will host a conference call for analysts
and investors on Thursday, November
10th, 2022 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://app.webinar.net/prRvyVvye2d
A replay of the call will be available until Thursday, November 17th, 2022. To
access the replay, dial 416-764-8677 or 888-390-0541 (Passcode:
877414#). 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 Measures
Same Community, NOI, NOI Margin, FFO, FFO per Unit, AFFO, AFFO
per Unit, AFFO Payout Ratio, 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, FFO per Unit, AFFO,
AFFO per Unit, AFFO Payout Ratio, 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. For complete
definitions of these measures, as well as an explanation of their
composition and how the measures provide useful information to
investors, please refer to the section titled "Non-IFRS Measures"
in the REIT's Management's Discussion and Analysis for the three
and nine months ended September 30,
2022, which section is hereby incorporated herein by
reference.
|
|
|
|
|
|
|
Three months ended
September 30, 2022
|
|
Three months ended
September 30, 2021
|
|
Nine months ended
September 30, 2022
|
|
Nine months ended
September 30, 2021
|
|
Net income and
comprehensive income
|
|
$
23,787
|
|
$
106,993
|
|
$
243,650
|
|
$
212,346
|
|
Adjustments to
arrive at FFO
|
|
|
|
|
|
|
|
|
|
|
Distributions on Class
B Units
|
|
2,671
|
|
2,628
|
|
7,997
|
|
8,043
|
|
|
Fair value adjustment
to investment properties
|
|
23,449
|
|
(162,302)
|
|
(115,598)
|
|
(308,466)
|
|
|
Fair value adjustment
to investment properties (IFRIC 21)
|
|
5,635
|
|
5,606
|
|
(8,961)
|
|
(2,064)
|
|
|
Property tax liability
adjustment, net (IFRIC 21)
|
|
(5,635)
|
|
(5,606)
|
|
8,961
|
|
2,064
|
|
|
Fair value adjustment
to derivatives and other financial
|
|
|
|
|
|
|
|
|
|
|
|
liabilities
|
|
(38,330)
|
|
57,084
|
|
(102,565)
|
|
100,965
|
|
|
Fair value adjustment
to unit-based compensation
|
|
(354)
|
|
1,285
|
|
444
|
|
2,067
|
|
|
Costs of disposition of
investment properties
|
|
—
|
|
—
|
|
—
|
|
1,689
|
|
|
Loss on extinguishment
of debt
|
|
853
|
|
2,472
|
|
853
|
|
4,323
|
|
|
Principal payments on
lease liability
|
|
(27)
|
|
(33)
|
|
(96)
|
|
(99)
|
|
|
Depreciation of
right-to-use asset
|
|
33
|
|
33
|
|
99
|
|
98
|
|
Funds from
Operations ("FFO")
|
|
$
12,082
|
|
$
8,160
|
|
$
34,784
|
|
$
20,966
|
|
FFO per
Unit
|
|
$
0.21
|
|
$
0.16
|
|
$
0.63
|
|
$
0.41
|
|
Adjustments to
arrive at AFFO
|
|
|
|
|
|
|
|
|
|
|
Maintenance capital
expenditures
|
|
(920)
|
|
(948)
|
|
(2,840)
|
|
(2,134)
|
|
|
Escrowed rent guaranty
realized
|
|
—
|
|
677
|
|
87
|
|
2,152
|
|
|
Severance/retention
costs on dispositions
|
|
—
|
|
—
|
|
—
|
|
105
|
|
|
Straight line rental
revenue differences
|
|
47
|
|
(40)
|
|
183
|
|
(75)
|
|
Adjusted Funds from
Operations ("AFFO")
|
|
$
11,209
|
|
$
7,849
|
|
$
32,214
|
|
$
21,014
|
|
AFFO per
Unit
|
|
$
0.19
|
|
$
0.15
|
|
$
0.58
|
|
$
0.41
|
|
Distributions
declared
|
|
$
7,528
|
|
$
6,493
|
|
$
21,719
|
|
$
19,213
|
|
AFFO Payout
Ratio
|
|
67.2 %
|
|
82.7 %
|
|
67.4 %
|
|
91.4 %
|
|
Weighted average
unit count
|
|
58,205,337
|
|
52,109,042
|
|
55,580,637
|
|
51,163,398
|
|
|
|
|
|
|
|
Three months
ended September 30, 2022
|
|
Three months
ended September 30, 2021
|
|
Nine months
ended September 30, 2022
|
|
Nine months
ended September 30, 2021
|
|
Total
revenue
|
|
$
40,549
|
|
$
31,705
|
|
$
116,881
|
|
$
85,521
|
|
Property operating
expenses
|
|
(12,150)
|
|
(9,804)
|
|
(33,900)
|
|
(26,642)
|
|
Real estate
taxes
|
|
(1,045)
|
|
210
|
|
(29,580)
|
|
(16,814)
|
|
|
|
|
|
|
|
27,354
|
|
22,111
|
|
53,401
|
|
42,065
|
|
Property tax liability
adjustment (IFRIC 21)
|
|
(5,635)
|
|
(5,606)
|
|
8,961
|
|
2,064
|
|
Severance/retention
costs on dispositions
|
|
—
|
|
—
|
|
—
|
|
105
|
|
Net Operating Income
("NOI")
|
|
$
21,719
|
|
$
16,505
|
|
$
62,362
|
|
$
44,234
|
|
NOI
margin
|
|
53.6 %
|
|
52.1 %
|
|
53.4 %
|
|
51.7 %
|
|
|
|
|
|
|
|
|
|
September 30,
2022
|
|
December 31,
2021
|
|
Loans and borrowings
(current portion)
|
|
|
|
$
1,762
|
|
$
1,714
|
|
Loans and borrowings
(non-current portion)
|
|
|
|
716,694
|
|
824,767
|
|
Convertible
debentures
|
|
|
|
44,270
|
|
51,745
|
|
Total loans and
borrowings and convertible debentures ("Debt")
|
|
|
|
762,726
|
|
878,226
|
|
Gross Book
Value
|
|
|
|
$
2,106,623
|
|
$
1,948,095
|
|
Debt to Gross Book
Value
|
|
|
|
36.2 %
|
|
45.1 %
|
|
|
|
|
|
|
|
|
|
September 30,
2022
|
|
December 31,
2021
|
|
Unitholders'
equity
|
|
|
|
$
1,011,580
|
|
$
666,569
|
|
Class B
Units
|
|
|
|
287,764
|
|
366,365
|
|
NAV
|
|
|
|
|
|
$
1,299,344
|
|
$
1,032,934
|
|
Unit count, as of the
end of period
|
|
|
|
58,225,682
|
|
52,142,519
|
|
NAV per
Unit
|
|
|
|
$
22.32
|
|
$
19.81
|
Forward-Looking Statements
This news release contains forward-looking information within
the meaning of applicable Canadian securities legislation
(collectively, "forward-looking statements"). Forward-looking
statements in this news release include, but are not limited to,
statements which reflect management's expectations regarding
objectives, plans, goals, strategies, future growth (including 2022
guidance for FFO, AFFO, and Same Community metrics Revenue,
Property Expenses and NOI growth), results of operations,
performance, business prospects, and opportunities for the REIT.
The words "expects", "expectation", "anticipates", "anticipated",
"believes", "will" or variations of such words and phrases identify
forward-looking statements herein. Statements
containing forward-looking information are not historical facts but
instead represent management's expectations, estimates and
projections regarding future events or circumstances.
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, include
assumptions relating to the REIT's future growth potential, results
of operations, demographic and industry trends, no changes in
legislative or regulatory matters, the tax laws as currently in
effect, a gradual recovery and growth of the general economy over
2022, the impact of COVID-19, lease renewals and rental increases,
the ability to re-lease or find new tenants, the timing and ability
of the REIT to sell certain properties, project costs and timing,
relatively historically low interest costs, a continuing trend
toward land use intensification at reasonable costs and development
yields, including residential development in urban markets, access
to equity and debt capital markets to fund, at acceptable costs,
future capital requirements and to enable refinancing of debts as
they mature, the availability of investment opportunities for
growth in the REIT's target markets, the valuations to be realized
on property sales relative to current IFRS values, and the market
price of the Units . When relying on forward-looking
statements to make decisions, the REIT cautions readers not to
place undue reliance on these statements, as forward-looking
statements involve significant risks and uncertainties. The risks
and uncertainties that may impact such forward-looking information
include, but are not limited to, the REIT's ability to execute its
growth strategies, the impact of changing conditions in the U.S.
multifamily housing market, increasing competition in the U.S.
multifamily housing market, the effect of fluctuations and cycles
in the U.S. real estate market, the marketability and value of the
REIT's portfolio, changes in the attitudes, financial condition and
demand of the REIT's demographic market, fluctuation in interest
rates and volatility in financial markets, developments and changes
in applicable laws and regulations, the impact of climate change,
the impact of COVID-19 on the operations, business and financial
results of the REIT and the factors discussed under "Risks and
Uncertainties" in the REIT's Management's Discussion and Analysis
for the three and nine months ended September 30, 2022 and in the REIT's Annual
Information Form dated March 8, 2022,
both of which are available on SEDAR (www.sedar.com). If any risks
or uncertainties with respect to the above materialize, or if the
opinions, estimates or assumptions underlying the forward-looking
information prove incorrect, actual results or future events might
vary materially from those anticipated in the forward-looking
information. 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.
Certain statements included in this news release, including
with respect to 2022 FFO, AFFO and Same Community portfolio
guidance, are considered financial outlook for purposes of
applicable Canadian securities laws, and as such, the financial
outlook may not be appropriate for purposes other than to
understand management's current expectations relating to the future
growth of the REIT, as disclosed in this news release. These
forward-looking statements have been approved by management to be
made as at the date of this news release. Certain material factors,
estimates or assumptions were applied in drawing a conclusion or
making a forecast or projection as reflected in this news release
and actual results could differ materially from such conclusions,
forecasts or projections. There can be no assurance that actual
results, performance or achievements will be consistent with these
forward-looking statements. The forward-looking statements
contained in this document are expressly qualified in their
entirety by this cautionary statement.
SOURCE BSR Real Estate Investment Trust