LITTLE
ROCK, Ark. and TORONTO, Aug. 9, 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 six months ended June 30,
2022 ("Q2 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 Q2 2022 and
YTD 2022 and the three months and six months ended June 30, 2021 ("Q2 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 six months ended June 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").
"Strong population growth and positive economic trends in our
core Texas markets are driving
outsized rental demand in our communities," said Dan Oberste, the REIT's President and Chief
Executive Officer. "As a result, operating results for the first
half of 2022 exceeded expectations, and we expect favorable leasing
conditions to continue in the second half of the year."
Q2 2022 Highlights
- On April 29, 2022, the REIT
completed a public offering of 5,888,000 Units ("April 2022 Offering") for gross proceeds of
$115.1 million after the full
exercise of the underwriters' overallotment option;
- NAV per Unit1 increased 51.4% to $22.35, inclusive of the Units issued in the
April 2022 Offering, as of
June 30, 2022 as compared to
$14.77 as of June 30, 2021 and 1.7% sequentially from
$21.98 as of March 31, 2022;
- FFO per Unit1 for Q2 2022 increased 61.5% over Q2
2021;
- AFFO per Unit1 for Q2 2022 increased 26.7% over Q2
2021;
- Weighted average rent increased 17.1% to $1,412 per apartment unit as of June 30, 2022 compared to $1,206 as of June 30,
2021 and 4.6% sequentially from $1,350 as of March 31,
2022;
- Same Community1 revenues for Q2 2022 increased
11.5% over Q2 2021;
- Same Community1 Net Operating Income
("NOI")1 for Q2 2022 increased 16.7% over Q2 2021;
- During Q2 2022, the REIT's AFFO Payout Ratio1 was
71.8% compared to 82.6% during Q2 2021;
- During Q2 2022, rental rates for new leases, increased 16.3%
and renewals increased 8.8%, for a blended increase of 12.6%;
- As of June 30, 2022, weighted
average occupancy was 95.0% compared to 96.2% as of June 30, 2021; and
- Debt to Gross Book Value1 excluding Convertible
Debentures (as defined below) as of June 30,
2022 was 34.0%.
Subsequent Highlights
- In July 2022, the REIT entered
into three interest rate swaps (the "Swaps"). Two of the Swaps are
on notional values of $150 million
and $65 million at fixed rates of
2.163% and 2.178%, respectively, and begin on September 1, 2022 and mature on August 31, 2029. The third Swap is on a
notional value of $65 million at a
fixed rate of 2.087% and begins on January
3, 2023 and matures on July 27,
2029. Following the commencement of the Swaps, 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.
____________________________
|
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.
|
Q2 2022 Financial Summary
In thousands of U.S. dollars, except per unit amounts
|
Q2
2022
|
|
Q2
2021
|
|
Change
|
|
Change
%
|
Revenue, Total
Portfolio
|
$
|
38,787
|
|
$
|
28,046
|
|
$
|
10,741
|
|
38.3 %
|
Revenue, Same
Community1 Properties
|
$
|
23,179
|
|
$
|
20,795
|
|
$
|
2,384
|
|
11.5 %
|
Revenue, Non-Same
Community1 Properties
|
$
|
15,608
|
|
$
|
7,251
|
|
$
|
8,357
|
|
115.3 %
|
Net income and
comprehensive income
|
$
|
160,832
|
|
$
|
35,975
|
|
$
|
124,857
|
|
nm*
|
NOI1, Total
Portfolio
|
$
|
20,998
|
|
$
|
14,374
|
|
$
|
6,624
|
|
46.1 %
|
NOI1, Same
Community1 Properties
|
$
|
12,718
|
|
$
|
10,901
|
|
$
|
1,817
|
|
16.7 %
|
NOI1,
Non-Same Community1 Properties
|
$
|
8,280
|
|
$
|
3,473
|
|
$
|
4,807
|
|
138.4 %
|
Funds from Operations
("FFO")1
|
$
|
11,637
|
|
$
|
7,000
|
|
$
|
4,637
|
|
66.2 %
|
FFO per
Unit1
|
$
|
0.21
|
|
$
|
0.13
|
|
$
|
0.08
|
|
61.5 %
|
Maintenance capital
expenditures
|
$
|
(1,218)
|
|
$
|
(690)
|
|
$
|
(528)
|
|
76.5 %
|
Escrowed rent guaranty
realized
|
$
|
5
|
|
$
|
1,475
|
|
|
(1,470)
|
|
nm*
|
Severance/retention
costs on dispositions
|
$
|
-
|
|
$
|
59
|
|
$
|
(59)
|
|
nm*
|
Straight line rental
revenue differences
|
$
|
54
|
|
$
|
11
|
|
$
|
43
|
|
nm*
|
AFFO1
|
$
|
10,478
|
|
$
|
7,855
|
|
$
|
2,623
|
|
33.4 %
|
AFFO per
Unit1
|
$
|
0.19
|
|
$
|
0.15
|
|
$
|
0.04
|
|
26.7 %
|
Weighted Average Unit
Count
|
|
56,290,702
|
|
|
52,084,576
|
|
|
4,206,126
|
|
8.1 %
|
Unitholders'
equity
|
$
|
991,865
|
|
$
|
484,465
|
|
$
|
507,400
|
|
104.7 %
|
NAV1
|
$
|
1,300,732
|
|
$
|
769,302
|
|
$
|
531,430
|
|
69.1 %
|
NAV per
Unit1
|
$
|
22.35
|
|
$
|
14.77
|
|
$
|
7.58
|
|
51.4 %
|
*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 38.3% increase in total portfolio revenue for Q2 2022,
compared to Q2 2021, was the result of contributions of
$2.4 million from Same Community
properties, $11.4 million from
property acquisitions and $0.2
million from non-stabilized properties, partially offset by
property dispositions that reduced revenue by $3.3 million.
Revenue from Same Community properties for Q2 2022 outperformed
Q2 2021 by $2.4 million, or 11.5%,
primarily due to a 12.6% increase in average rental rates from
$1,161 per apartment unit as of
June 30, 2021 to $1,307 per apartment unit as of June 30, 2022.
The increase in net income and comprehensive income for Q2 2022
compared to Q2 2021 was primarily due to an increase in the fair
value adjustment (gain) to derivatives and other financial
liabilities of $178.1 million, over
the prior period, partially offset by a decrease in the fair value
gain to investment properties of $63.2
million.
The increase in total portfolio NOI for Q2 2022 compared to Q2
2021 of $6.6 million, or 46.1%, was
the result of contributions of $1.8
million from Same Community properties and $6.3 million from property acquisitions and
non-stabilized properties, partially offset by property
dispositions which reduced NOI by $1.3
million. Severance/retention costs on dispositions are
excluded from NOI.
The increase in Same Community NOI for Q2 2022 compared to Q2
2021 of $1.8 million, or 16.7%, was
the result of the increase in revenue described above, partially
offset by an increase in property operating expenses, including
real estate taxes, of $0.6 million,
or 5.7%, due to an increase in payroll, administrative and repair
and maintenance expenses as well as an increase in the cost of
insurance over the prior period.
FFO was $11.6 million, or
$0.21 per Unit, for Q2 2022 compared
to $7.0 million, or $0.13 per Unit, for Q2 2021. The increase was
primarily the result of the higher NOI discussed above, partially
offset by increases of $0.4 million
in general and administrative expenses associated with payroll and
insurance and $1.6 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 above, subsequent to Q2 2022 the REIT
entered into Swaps to hedge an additional $280.0 million in variable rate debt. Losses on
extinguishment of debt are excluded from the calculation of
FFO.
AFFO was $10.5 million, or
$0.19 per Unit, for Q2 2022, compared
to $7.9 million, or $0.15 per Unit, for Q2 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 $1.5 million and an increase
in maintenance capital expenditures of $0.5
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.
YTD 2022 Financial Summary
In thousands of U.S. dollars, except per unit amounts
|
YTD
2022
|
|
YTD
2021
|
|
Change
|
|
Change
%
|
Revenue, Total
Portfolio
|
$
|
76,332
|
|
$
|
53,816
|
|
$
|
22,516
|
|
41.8 %
|
Revenue, Same
Community1 Properties
|
$
|
45,380
|
|
$
|
40,756
|
|
$
|
4,624
|
|
11.3 %
|
Revenue, Non-Same
Community1 Properties
|
$
|
30,952
|
|
$
|
13,060
|
|
$
|
17,892
|
|
137.0 %
|
Net income and
comprehensive income
|
$
|
219,863
|
|
$
|
105,353
|
|
$
|
114,510
|
|
nm*
|
NOI1, Total
Portfolio
|
$
|
40,643
|
|
$
|
27,729
|
|
$
|
12,914
|
|
46.6 %
|
NOI1, Same
Community1 Properties
|
$
|
24,837
|
|
$
|
21,323
|
|
$
|
3,514
|
|
16.5 %
|
NOI1,
Non-Same Community1 Properties
|
$
|
15,806
|
|
$
|
6,406
|
|
$
|
9,400
|
|
146.7 %
|
FFO1
|
|
22,702
|
|
$
|
12,806
|
|
$
|
9,896
|
|
77.3 %
|
FFO per
Unit1
|
$
|
0.42
|
|
$
|
0.25
|
|
$
|
0.17
|
|
68.0 %
|
Maintenance capital
expenditures
|
$
|
(1,920)
|
|
$
|
(1,186)
|
|
$
|
(734)
|
|
61.9 %
|
Escrowed rent guaranty
realized
|
$
|
87
|
|
$
|
1,475
|
|
$
|
(1,388)
|
|
nm*
|
Severance/retention
costs on dispositions
|
$
|
-
|
|
$
|
105
|
|
$
|
(105)
|
|
nm*
|
Straight line rental
revenue differences
|
$
|
136
|
|
$
|
(35)
|
|
$
|
171
|
|
nm*
|
AFFO1
|
$
|
21,005
|
|
$
|
13,165
|
|
$
|
7,840
|
|
59.6 %
|
AFFO per
Unit1
|
$
|
0.39
|
|
$
|
0.26
|
|
$
|
0.13
|
|
50.0 %
|
Weighted Average Unit
Count
|
|
54,246,536
|
|
|
50,682,740
|
|
|
3,563,796
|
|
7.0 %
|
*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 41.8% increase in total portfolio revenue for YTD 2022
compared to YTD 2021 was the result of contributions of
$4.6 million from Same Community
properties, $25.0 million from
property acquisitions and $0.8
million from non-stabilized properties, partially offset by
property dispositions that reduced revenue by $7.8 million.
Revenue from Same Community properties for YTD 2022 outperformed
YTD 2021 by $4.6 million, or 11.3%,
primarily due to a 12.6% increase in average rental rates from
$1,161 per apartment unit as of
June 30, 2021 to $1,307 per apartment unit as of June 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 $108.1 million over
the prior period.
The increase in total portfolio NOI for YTD 2022 compared to YTD
2021 of $12.9 million, or 46.6%, was
the result of contributions of $3.5
million from Same Community properties and $13.2 million from property acquisitions and
non-stabilized properties, partially offset by property
dispositions which reduced NOI by $3.6
million. Severance/retention costs on dispositions are
excluded from NOI.
The increase in Same Community NOI for YTD 2022 compared to YTD
2021 of $3.5 million, or 16.5%, was
the result of the increase in revenue described above, offset by an
increase in property operating expenses, including real estate
taxes, of $1.1 million, or 5.7%, due
to higher payroll expenses, administrative expenses, utilities and
property insurance expense as well as higher property taxes of
$0.3 million.
FFO was $22.7 million, or
$0.42 per Unit, for YTD 2022 compared
to $12.8 million, or $0.25 per Unit, for YTD 2021. The FFO per Unit
increase of 68.0% was primarily the result of higher NOI discussed
above, partially offset by increases of $0.6
million in general and administrative expenses associated
with payroll and professional fees and $2.5
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,
subsequent to Q2 2022 the REIT hedged an additional $280.0 million in variable rate debt. Losses on
extinguishment of debt are excluded from the calculation of
FFO.
AFFO was $21.0 million, or
$0.39 per Unit, for YTD 2022,
compared to $13.2 million, or
$0.26 per Unit, for YTD 2021. The
AFFO per Unit improvement of 50.0% was primarily the result of the
increase in FFO, partially offset by a lower escrow rent guaranty
realized of $1.4 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)
|
June 30,
2022
|
|
March 31,
2022
|
|
December 31,
2021
|
|
September 30,
2021
|
Operational
Information
|
|
|
|
|
|
|
|
Number of real estate
investment properties
|
|
31
|
|
|
31
|
|
|
31
|
|
|
30
|
Total apartment
units
|
|
8,666
|
|
|
8,666
|
|
|
8,666
|
|
|
8,367
|
Average monthly rent on
in-place leases
|
$
|
1,412
|
|
$
|
1,350
|
|
$
|
1,328
|
|
$
|
1,275
|
Average monthly rent on
in-place leases,
|
|
Same Community1
Properties
|
$
|
1,307
|
|
$
|
1,238
|
|
$
|
1,228
|
|
$
|
1,199
|
Weighted average
occupancy rate
|
|
95.0 %
|
|
|
94.5 %
|
|
|
96.0 %
|
|
|
96.4 %
|
Retention
rate
|
|
57.1 %
|
|
|
57.3 %
|
|
|
58.5 %
|
|
|
56.6 %
|
Debt to Gross Book
Value1
|
|
36.2 %
|
|
|
43.2 %
|
|
|
45.1 %
|
|
|
43.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
2022
|
|
Q1
2022
|
|
Q4
2021
|
|
Q3
2021
|
Operating
Results
|
|
|
|
|
|
|
|
|
|
|
Revenue, Total
Portfolio
|
$
|
38,787
|
|
$
|
37,545
|
|
$
|
34,061
|
|
$
|
31,705
|
Revenue, Same
Community1 Properties
|
$
|
23,179
|
|
$
|
22,201
|
|
$
|
21,981
|
|
$
|
21,702
|
Revenue, Non-Same
Community1 Properties
|
$
|
15,608
|
|
$
|
15,344
|
|
$
|
12,080
|
|
$
|
10,003
|
NOI1, Total
Portfolio
|
$
|
20,998
|
|
$
|
19,645
|
|
$
|
18,678
|
|
$
|
16,504
|
NOI1, Same
Community1 Properties
|
$
|
12,718
|
|
$
|
12,119
|
|
$
|
12,369
|
|
$
|
11,366
|
NOI1,
Non-Same Community1 Properties
|
$
|
8,280
|
|
$
|
7,526
|
|
$
|
6,309
|
|
$
|
5,138
|
NOI Margin1,
Total Portfolio
|
|
54.1 %
|
|
|
52.3 %
|
|
|
54.8 %
|
|
|
52.1 %
|
NOI Margin1,
Same Community1 Properties
|
|
54.9 %
|
|
|
54.6 %
|
|
|
56.7 %
|
|
|
54.8 %
|
NOI Margin1,
Non-Same Community1 Properties
|
|
53.0 %
|
|
|
49.0 %
|
|
|
53.7 %
|
|
|
50.2 %
|
Net income and
comprehensive income
|
$
|
160,832
|
|
$
|
59,031
|
|
$
|
70,868
|
|
|
106,993
|
Distributions on Class
B Units
|
$
|
2,678
|
|
$
|
2,648
|
|
$
|
2,595
|
|
$
|
2,628
|
Fair value adjustment
to investment properties
|
$
|
(20,258)
|
|
$
|
(118,789)
|
|
$
|
(114,282)
|
|
$
|
(162,302)
|
Fair value adj. to
investment prop. (IFRIC 21)
|
$
|
7,732
|
|
$
|
(22,328)
|
|
$
|
5,057
|
|
$
|
5,606
|
Property tax liability
adjustment, net (IFRIC 21)
|
$
|
(7,732)
|
|
$
|
22,328
|
|
$
|
(5,057)
|
|
$
|
(5,606)
|
Fair value adjustment
to derivatives and other
|
|
|
|
|
|
|
|
|
|
|
|
financial
liabilities
|
$
|
(129,842)
|
|
$
|
65,607
|
|
$
|
42,512
|
|
$
|
57,084
|
Fair value adj. to
unit-based compensation
|
$
|
(1,771)
|
|
$
|
2,569
|
|
$
|
905
|
|
$
|
1,285
|
Costs of disposition of
investment properties
|
$
|
-
|
|
$
|
-
|
|
$
|
1,518
|
|
$
|
-
|
Loss on extinguishment
of debt
|
$
|
-
|
|
$
|
-
|
|
$
|
5,538
|
|
$
|
2,472
|
Principal payments on
lease liability
|
|
(35)
|
|
$
|
(34)
|
|
$
|
(33)
|
|
$
|
(33)
|
Depreciation of
right-to-use asset
|
$
|
33
|
|
$
|
33
|
|
$
|
32
|
|
$
|
33
|
FFO1
|
$
|
11,637
|
|
|
11,065
|
|
$
|
9,653
|
|
$
|
8,160
|
FFO per Unit
|
$
|
0.21
|
|
$
|
0.21
|
|
$
|
0.19
|
|
$
|
0.16
|
Maintenance capital
expenditures
|
$
|
(1,218)
|
|
$
|
(702)
|
|
|
(974)
|
|
$
|
(948)
|
Escrowed rent guaranty
realized
|
$
|
5
|
|
$
|
82
|
|
$
|
265
|
|
$
|
677
|
Severance/retention
costs on dispositions
|
$
|
-
|
|
$
|
-
|
|
$
|
106
|
|
$
|
–
|
Straight line rental
revenue differences
|
$
|
54
|
|
$
|
82
|
|
$
|
43
|
|
$
|
(40)
|
AFFO1
|
$
|
10,478
|
|
$
|
10,527
|
|
$
|
9,093
|
|
$
|
7,849
|
AFFO per
Unit1
|
$
|
0.19
|
|
$
|
0.20
|
|
$
|
0.17
|
|
$
|
0.15
|
AFFO Payout
Ratio
|
|
71.8 %
|
|
|
63.3 %
|
|
|
71.4 %
|
|
|
82.7 %
|
Weighted Average Unit
Count
|
|
56,290,702
|
|
|
52,179,657
|
|
|
52,130,772
|
|
|
52,109,042
|
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 June 30, 2022, the REIT had
liquidity of $167.3 million,
consisting of cash and cash equivalents of $8.7 million and $158.6
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.
As of June 30, 2022, the REIT had
total mortgage notes payable of $488.4
million, excluding the credit facility, with a weighted
average contractual interest rate of 3.3% and a weighted average
term to maturity of 5.6 years. Total loans and borrowings of the
REIT as of June 30, 2022 were
$710.9 million with a weighted
average contractual interest rate of 3.3%, excluding the
convertible unsecured subordinated debentures (the "Convertible
Debentures"). Debt to Gross Book Value excluding the convertible
debentures as of June 30, 2022 was
34.0%. As of June 30, 2022, 61% of
the REIT's debt was fixed or economically hedged to fixed rates. As
discussed above, in July of 2022, the REIT hedged an additional
$280.0 million in variable rate debt.
Following the commencement of these interest rate swaps, 100% of
the REIT's debt is fixed or economically hedged to fixed rates with
a weighted average contractual interest rate of 3.4%.
As of June 30, 2022, the REIT had
outstanding Convertible Debentures valued at $46.0 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
June 30, 2022, no Units have been
issued under the ATM Program.
On April 29, 2022, the REIT
completed the April 2022 Offering,
referenced above, for gross proceeds of $115.1 million, after the full exercise of the
underwriters' overallotment option.
Distributions and Units Outstanding
Cash distributions declared to holders of Units and holders of
Class B Units totalled $7.5 million
for Q2 2022, representing an AFFO Payout
Ratio1 of 71.8%. 100% of the REIT's cash
distributions were classified as return of capital. As of
June 30, 2022, the total number of
Units outstanding was 37,337,895. There were also 20,604,860 Class
B Units outstanding, which are redeemable for Units on a
one-for-one basis.
2022 Earnings and Same Community Portfolio Guidance
Given the unprecedented growth in BSR's markets, 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 June 30, 2022, the REIT is increasing its
expectations for the Same
Community1 properties revenue and
NOI1 growth in 2022. However, the guidance for
FFO per Unit1 and AFFO per
Unit1 in 2022 remains unchanged due to the
increased NOI expectations offsetting the impact of the
April 2022 Offering. The REIT will
update this guidance on a quarterly basis as necessary.
|
Revised guidance for
2022
|
Per
Unit
|
Range
|
Midpoint
|
Total
Portfolio
|
|
|
FFO per Unit
|
$0.86 to
$0.90
|
$0.88
|
AFFO per
Unit
|
$0.80 to
$0.84
|
$0.82
|
|
|
|
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 Wednesday, August
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/0XlWGOMgKDr
A replay of the call will be available until Wednesday, August 17th, 2022. To
access the replay, dial 416-764-8677 or 888-390-0541 (Passcode:
758476 #). 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 six months ended June 30, 2022,
which section is hereby incorporated herein by reference.
|
|
|
|
|
|
Three months
ended June
30, 2022
|
|
Three months
ended June
30, 2021
|
|
Six months
ended June
30, 2022
|
|
Six months
ended June
30, 2021
|
Net income and
comprehensive income
|
$
|
160,832
|
|
$
|
35,975
|
|
$
|
219,863
|
|
$
|
105,353
|
Adjustments to
arrive at FFO
|
|
|
|
|
|
|
|
|
Distributions on Class
B Units
|
|
2,678
|
|
|
2,703
|
|
|
5,326
|
|
|
5,415
|
|
Fair value adjustment
to investment properties
|
|
(20,258)
|
|
|
(83,469)
|
|
|
(139,047)
|
|
|
(146,164)
|
|
Fair value adjustment
to investment properties (IFRIC 21)
|
|
7,732
|
|
|
5,698
|
|
|
(14,596)
|
|
|
(7,670)
|
|
Property tax liability
adjustment, net (IFRIC 21)
|
|
(7,732)
|
|
|
(5,698)
|
|
|
14,596
|
|
|
7,670
|
|
Fair value adjustment
to derivatives and other financial
|
|
|
|
liabilities
|
|
|
(129,842)
|
|
|
48,302
|
|
|
(64,235)
|
|
|
43,881
|
|
Fair value adjustment
to unit-based compensation
|
|
(1,771)
|
|
|
830
|
|
|
798
|
|
|
782
|
|
Costs of disposition of
investment properties
|
|
—
|
|
|
1,080
|
|
|
—
|
|
|
1,689
|
|
Loss on extinguishment
of debt
|
|
—
|
|
|
1,580
|
|
|
—
|
|
|
1,851
|
|
Principal payments on
lease liability
|
|
(35)
|
|
|
(33)
|
|
|
(69)
|
|
|
(66)
|
|
Depreciation of
right-to-use asset
|
|
33
|
|
|
32
|
|
|
66
|
|
|
65
|
Funds from
Operations ("FFO")
|
$
|
11,637
|
|
$
|
7,000
|
|
$
|
22,702
|
|
$
|
12,806
|
FFO per
Unit
|
|
$
|
0.21
|
|
$
|
0.13
|
|
$
|
0.42
|
|
$
|
0.25
|
Adjustments to
arrive at AFFO
|
|
|
|
|
|
Maintenance capital
expenditures
|
|
(1,218)
|
|
|
(690)
|
|
|
(1,920)
|
|
|
(1,186)
|
|
Escrowed rent guaranty
realized
|
|
5
|
|
|
1,475
|
|
|
87
|
|
1,475
|
|
Severance/retention
costs on dispositions
|
|
—
|
|
|
59
|
|
|
—
|
|
105
|
|
Straight line rental
revenue differences
|
|
54
|
|
|
11
|
|
|
136
|
|
(35)
|
Adjusted Funds from
Operations ("AFFO")
|
$
|
10,478
|
|
$
|
7,855
|
|
$
|
21,005
|
|
$
|
13,165
|
AFFO per
Unit
|
|
$
|
0.19
|
|
$
|
0.15
|
|
$
|
0.39
|
|
$
|
0.26
|
Distributions
declared
|
$
|
7,525
|
|
$
|
6,492
|
|
$
|
14,191
|
|
$
|
12,720
|
AFFO Payout
Ratio
|
|
|
71.8 %
|
|
|
82.6 %
|
|
|
67.6 %
|
|
96.6 %
|
Weighted average
unit count
|
|
56,290,702
|
|
|
52,084,576
|
|
|
54,246,536
|
|
50,682,740
|
|
|
|
|
|
|
Three months
ended June 30,
2022
|
|
Three months
ended June 30,
2021
|
|
Six months
ended June 30,
2022
|
|
Six months
ended June 30,
2021
|
Total
revenue
|
|
$
|
38,787
|
|
$
|
28,046
|
|
$
|
76,332
|
|
$
|
53,816
|
Property operating
expenses
|
(11,388)
|
|
(8,623)
|
|
(21,750)
|
|
(16,838)
|
Real estate
taxes
|
1,331
|
|
590
|
|
(28,535)
|
|
(17,024)
|
|
|
|
|
|
|
28,730
|
|
20,013
|
|
26,047
|
|
19,954
|
Property tax liability
adjustment (IFRIC 21)
|
(7,732)
|
|
(5,698)
|
|
14,596
|
|
7,670
|
Severance/retention
costs on dispositions
|
—
|
|
59
|
|
—
|
|
105
|
Net Operating Income
("NOI")
|
$
|
20,998
|
|
$
|
14,374
|
|
$
|
40,643
|
|
$
|
27,729
|
NOI
margin
|
|
54.1 %
|
|
51.3 %
|
|
53.2 %
|
|
51.5 %
|
|
|
|
|
|
|
|
|
June 30,
2022
|
|
December 31,
2021
|
Loans and borrowings
(current portion)
|
$
|
1,746
|
|
$
|
1,714
|
Loans and borrowings
(non-current portion)
|
709,141
|
|
824,767
|
Convertible
debentures
|
|
45,956
|
|
51,745
|
Total loans and
borrowings and convertible debentures ("Debt")
|
756,843
|
|
878,226
|
Gross Book
Value
|
|
|
|
$
|
2,093,448
|
|
$
|
1,948,095
|
Debt to Gross Book
Value
|
|
36.2 %
|
|
45.1 %
|
|
|
|
|
|
|
|
|
June 30,
2022
|
|
December 31,
2021
|
Unitholders'
equity
|
|
|
|
$
991,865
|
|
$
666,569
|
Class B
Units
|
|
|
|
308,867
|
|
366,365
|
NAV
|
|
|
|
$
1,300,732
|
|
$
1,032,934
|
Unit count, as of the
end of period
|
|
|
58,204,190
|
|
52,142,519
|
NAV per
Unit
|
|
|
|
$
22.35
|
|
$
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 six months ended June 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