LITTLE ROCK, AR and
TORONTO, Aug. 13, 2018 /CNW/ - BSR Real Estate Investment
Trust ("BSR", or the "REIT") (TSX: HOM.U) today
announced its financial results for the 44-day period ended
June 30, 2018 (the "44 Day
Period"). The REIT completed its initial public offering (the
"IPO") and commenced trading on the Toronto Stock exchange
on May 18, 2018. The REIT had no
operations prior to May 18, 2018. Due
to the short duration of the reporting period, the REIT's financial
results for the 44 Day Period may not be indicative of future full
quarters or annualized financial results. In order to provide
investors with a more complete understanding of the REIT's
performance, the REIT has also provided total revenue and NOI
metrics in this news release that encompass the entire three-months
ended June 30, 2018 for the
properties that were acquired by the REIT upon closing of the
IPO.
44 Day Period
The following summary of the REIT's financial results for the 44
Day Period are presented in comparison to the pro-rated financial
forecast presented in the REIT's prospectus dated May 11, 2018. All dollar amounts are presented in
U.S. dollars. Full Financial Statements and Management's Discussion
and Analysis are available on the REIT's website at www.bsrreit.com
and at www.SEDAR.com.
Period Highlights
- On May 18, 2018, the REIT
completed its IPO, raising gross proceeds of $135 million; in addition $30 million in debt was converted to 3 million
REIT units increasing the total equity proceeds to $165 million.
- Weighted average occupancy as of June
30, 2018 was 94.0% compared to 92.7% as of December 31, 2017.
- Weighted average rent was $799
per unit as of June 30, 2018 compared
to $777 per unit as of December 31, 2017.
- Total revenue for the 44 Day Period was $12.2 million, 3.0% higher than the pro-rated
forecast.
- Net Operating Income1 ("NOI") of $6.7 million was 10.1% higher than the pro-rated
forecast.
- NOI margin was 54.4% for the 44 Day Period which exceeded the
pro-rated forecast by 350 basis points.
- Funds from Operations1 ("FFO") of $3.7 million was 8.3% above the pro-rated
forecast.
- Adjusted Funds from Operations1 ("AFFO") of
$3.1 million exceeded the pro-rated
forecast by 8.0%.
- The REIT's AFFO payout ratio was 76.0% compared with the
pro-rated forecast of 83.9%.
- Debt to Gross Book Value1 as of June 30, 2018 was 45.1%.
- On June 1, 2018, the REIT
completed the acquisition of Brandon Place, a 200-unit,
garden-style residential community in Oklahoma City, OK for $23.4 million.
- The REIT paid an initial distribution of $0.0591 per Unit for the 44 Day Period
May 18, 2018 to June 30, 2018 on July 16,
2018 to unitholders of record on June
29, 2018.
- For the second straight year, BSR has been named as one of the
best places to work in the state of Arkansas by Arkansas Business and Best
Companies Group.
"I am pleased with the REIT's operating results in our initial
period as a publicly traded entity, as we benefitted from earlier
than expected traction from our capital redevelopment program,"
stated John Bailey, BSR's Chief
Executive Officer. "Looking out to the balance of the 12-month
forecast period ending March 31,
2019, we are confident in achieving our AFFO1
forecast of $25.5 million.
Longer-term, our capital redevelopment program and strong balance
sheet position us well for both organic and acquisition-based
growth. BSR will continue to pursue acquisition opportunities in
our target markets, such as certain markets in Texas that have a diversified employment base,
less than average unemployment and higher renter migration. The
REIT intends to build unitholder value by identifying opportunities
for acquisitions, value-add investments, and asset rotation."
Financial Summary
In thousands of U.S. dollars (except per unit
amounts)
|
44 Day
Period
|
Pro-rated
Forecast
|
Variance
|
Variance
%
|
Total
revenue
|
$
|
12,214
|
$
|
11,858
|
$
|
356
|
3.0%
|
NOI
1
|
$
|
6,650
|
$
|
6,040
|
$
|
610
|
10.1%
|
NOI Margin
1
|
|
54.4%
|
50.9%
|
350bps
|
6.9%
|
FFO
1
|
$
|
3,690
|
$
|
3,406
|
$
|
284
|
8.3%
|
AFFO
1
|
$
|
3,088
|
$
|
2,859
|
$
|
229
|
8.0%
|
AFFO per
Unit
|
$
|
0.078
|
$
|
0.072
|
$
|
0.006
|
8.3%
|
AFFO payout
ratio
|
|
76.0%
|
83.9%
|
790bps
|
-9.4%
|
For the 44 Day Period, revenues totalled $12.2 million, compared to the pro-rated forecast
of $11.9 million. The 3.0% increase
over forecast was primarily the result of higher than expected
occupancy for the entire portfolio as well as rental rate
increases, both of which were attributable to BSR's capital
redevelopment program, impacting earnings more quickly than
forecasted. As of June 30, 2018,
weighted average occupancy was 94.0% and average monthly in-place
leases were $799 per apartment
unit.
NOI1 for the 44 Day Period totalled $6.7 million, compared to the pro-rated forecast
of $6.0 million. The 10.1% increase
over forecast was the result of the increase in total revenue,
mentioned above, and lower than expected property operating
expenses of $0.3 million, which was
primarily the result of lower than forecasted repairs and
maintenance expense and other administrative costs.
FFO1 was $3.7 million
for the 44 Day Period, compared to the pro-rated forecast of
$3.4 million. The 8.3% outperformance
resulted from increased NOI, partially offset by higher general and
administrative costs and interest expense. AFFO1 was
$3.1 million for the 44 Day Period,
or $0.078 per Unit. The 8.0% increase
over forecast resulted from increased FFO1, partially
offset by higher than forecasted maintenance capital expenditures
due to the timing of maintenance projects completed during the 44
Day Period when compared to the entire quarter.
As of June 30, 2018, the REIT had
total mortgage notes payable of $349.4
million with a weighted average actual interest rate of 3.8%
and a weighted average term to maturity of 11.2 years . Total loans
and borrowings of the REIT as of June 30,
2018 were $393.1 million. Debt
to Gross Book Value1 was 45.1%.
The total number of REIT Units outstanding as of June 30, 2018 was 16,571,600. There are currently
23,158,236 Class B Units outstanding.
Second Quarter 2018 Highlights
The following second quarter 2018 metrics encompass the
three-months ended June 30, 2018 for
the properties that were acquired by the REIT upon closing of the
IPO.
In thousands of U.S. dollars
|
Three-months
ended
June 30, 2018
|
Forecast
|
Variance
|
Variance
%
|
Total
revenue
|
$
|
24,926
|
$
|
24,524
|
$
|
402
|
1.6%
|
NOI
1
|
$
|
13,543
|
$
|
12,491
|
$
|
1,052
|
8.4%
|
For the three-months ended June 30,
2018, total revenues were $24.9
million, compared to the forecast of $24.5 million. The higher revenue is primarily
the result of stronger than forecasted occupancy for the entire
portfolio as well as rental rate increases that occurred more
quickly than forecasted, and were attributable to BSR's capital
redevelopment program.
NOI1 for the three-months ended June 30, 2018 totalled $13.5 million, compared to the forecast of
$12.5 million. The higher NOI is the
result of the increase in total revenue of $0.4 million, mentioned above, and a decrease in
property operating expenses of $0.7
million, which is mainly the result of lower than forecasted
repairs and maintenance expense, employee wages and benefits
expense and utility costs.
Maintenance capital expenditures were in line with our forecast
at $105 per apartment unit for the
three-months ended June 30, 2018.
Conference Call
John Bailey, Chief Executive
Officer, and Susan Koehn, Chief
Financial Officer, will host a conference call for analysts and
investors on Tuesday, August 14th,
2018 at 11:00 am (ET). The
dial-in numbers for participants are 416-764-8609 or 888-390-0605.
In addition, the call will be webcast live at:
https://event.on24.com/wcc/r/1799731/CFC00D98D0B907EEFDCD6BE35704D36C.
A replay of the call will be available until Tuesday, August 21, 2018. To access the replay,
dial 416-764-8677 or 888-390-0541 (Passcode: 087513 #). 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 48 multifamily garden-style residential properties
consisting of 9,879 apartment units located across five bordering
states in the Sunbelt region of the
United States.
Non-IFRS Financial Measures
NOI, FFO and AFFO 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. NOI, FFO and AFFO 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 period ended June 30,
2018 for a reconciliation of NOI, FFO and AFFO to
standardized IFRS measures for the 44 Day Period.
A reconciliation of NOI for the period ended June 30, 2018 is stated below to the IFRS
measures presented in our condensed consolidated interim financial
statements:
In thousands of U.S. dollars
|
Period from
May
18, 2018 to June
30, 2018
(44 Day Period)
|
Period
from
April 1, 2018
to
May 17, 2018
|
Three-months
ended June 30,
2018
|
Total
revenue
|
$
|
12,214
|
$
|
12,712
|
$
|
24,926
|
Property operating
expenses
|
(4,456)
|
(4,674)
|
(9,130)
|
Real estate
taxes
|
—
|
—
|
—
|
|
7,758
|
8,038
|
15,796
|
Property tax
liability adjustment (IFRIC 21)
|
(1,108)
|
(1,145)
|
(2,253)
|
NOI
1
|
$
|
6,650
|
$
|
6,893
|
$
|
13,543
|
Forward-Looking Statements
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.
These statements, which include statements regarding the REIT's
anticipated AFFO for the year ended March
30, 2019 and ability to achieve organic and
acquisition-based growth, are based on the REIT's
expectations, estimates, forecasts and projections. The
forward-looking statements in this news release are based on
certain assumptions, including the assumptions described under the
heading "Financial Forecast" in the REIT's prospectus dated
May 11, 2018 (the
"Prospectus"), which is available at www.sedar.com.
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 Prospectus. 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.
___________________________________________
1 NOI, FFO, AFFO, and Debt to GBV are non-IFRS financial
measures. See "Non-IFRS Financial Measures" in this news
release.
SOURCE BSR Real Estate Investment Trust