- Same Community NOI increased 2.7% for the year,
REIT positioned for growth -
LITTLE ROCK, AR and
TORONTO, March 9, 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 and year
ended December 31, 2020 ("Q4 2020"
and "FY 2020", 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 properties the REIT has owned for equivalent periods
throughout Q4 2020 and FY 2020 and the three months and year
ended December 31, 2019 ("Q4 2019"
and "FY 2019", respectively), thus removing the impact of
acquisitions and dispositions. Audited Financial Statements and
Management's Discussion and Analysis as of and for the three months
and year ended December 31, 2020 are
available on the REIT's website at www.bsrreit.com and at
www.sedar.com.
"2020 was an active and successful year for BSR even with
challenges presented by the pandemic," said John Bailey, the REIT's Chief Executive Officer.
"During the year, we continued to successfully execute our capital
recycling and growth program, with the divestiture of 17 non-core
properties comprising 3,865 apartment units and the acquisition of
six properties comprising 1,978 apartment units in targeted primary
growth markets. This program will continue into 2021. With the
remaining proceeds of the divestiture program and the additional
net proceeds from our recent $69
million unit offering, we are now poised to stabilize and
then grow the portfolio by taking advantage of our robust
acquisition pipeline while increasing unitholder value though
organic rental and asset value growth."
2020 Highlights
- Same Community1 revenues for FY 2020 increased
2.1% over FY 2019;
- Weighted average rent was $1,088
per apartment unit as of December 31,
2020 compared to $937 per
apartment unit as of December 31,
2019, representing a 16.1% increase;
- Same Community1 Net Operating Income1
("NOI") for FY 2020 increased 2.7% over FY 2019;
- During FY 2020, the REIT acquired six apartment communities, in
its primary markets, for $338 million
of which $129 million relates to two
communities acquired in Q4 2020;
- During FY 2020, the REIT added 156 apartment units to the
portfolio, through the development of Wimbledon Green II;
- During FY 2020, the REIT sold 17 non-core properties for
$346 million, of which $260 million relates to 12 properties sold in Q4
2020, as part of the its capital recycling program, under
which the REIT recycles proceeds from asset sales, on a tax
deferred basis, into its high growth primary markets;
- These acquisitions and dispositions reduced the average age of
the BSR portfolio by 13 years to 16 years;
- 95% of NOI is now derived from the REIT's core markets;
- Debt to Gross Book Value1 as of December 31, 2020 was 46.5%;
- During FY 2020, the REIT issued $42.5
million of 5% convertible debentures maturing September 30, 2025 with a conversion price of
$14.40 per Unit;
- During December 2020, the REIT
collected 99% of total monthly revenue which is in line with the
historical average; and
- For the fourth consecutive year, BSR was named one of the best
places to work in the state of Arkansas by Arkansas Business and the Best
Companies Group.
Subsequent Highlights
- On February 9, 2021, the REIT
completed a follow-on offering of 6,302,000 Units ("February 2021 Offering") for total gross proceeds
of $69 million;
- In February 2021, the REIT sold
Towne Park located in Northwest Arkansas for a contractual purchase
price of $31.7 million for the 237
apartment units. Concurrent with the sale, the buyer assumed an
in-place mortgage of $18.8 million
with a fixed interest rate of 4.48% resulting in net proceeds of
$12.9 million and the avoidance of
$5.8 million in prepayment premiums
to the REIT;
- Debt to Gross Book Value1 after the sale of
Towne Park is 40%; and
- In January and February 2021, the
REIT collected 99% of monthly revenue which is in line with the
historical average.
_____________________________
|
1
|
Same Community,
NOI, NOI margin, FFO, AFFO and Debt to Gross Book Value are
non-IFRS financial measures. See "Non-IFRS Financial Measures"
in this news release.
|
2021 Winter Storm Update
As of February 28, 2021, the REIT
has incurred approximately $0.1
million in expenses associated with the winter storms and
freeze damage in Texas,
Arkansas and Oklahoma. There are no down apartment units as
a result of the storm, and the REIT anticipates total costs,
related to storm damage, not to exceed $0.3
million. No insurance claim is being filed at this time.
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 ("CDC"), including:
- Closure of non-essential common areas at all properties in
higher risk areas;
- Closure of apartment offices to external traffic in higher risk
areas;
- Sanitization of regularly touched surfaces on a more frequent
basis;
- Virtual or self-guided apartment tours;
- Contactless doorstep delivery of packages; and
- Additional benefits to employees for paid time off, child care
and sick leave.
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
February 28, 2021, the REIT has
received 21 declarations related to the order, representing
approximately $0.1 million in unpaid
rent.
During FY 2020, BSR provided $0.4
million of additional benefits to employees including paid
time off, onsite bonuses and medical reimbursements, spent
$0.1 million on disinfectant foggers
and pumps, PPE and other cleaning supplies and chose to forgo
$0.3 million in late fee income
related to the COVID-19 pandemic. The REIT resumed charging late
fees in mid-August 2020. The REIT has
not received any government subsidies related to the pandemic.
Q4 2020 Financial Summary
In thousands of U.S. dollars
|
Three months
ended
December 31,
2020
|
|
Three months
ended
December 31,
2019
|
|
Change
|
|
Change
%
|
Revenue, Total
Portfolio
|
$
|
28,627
|
|
$
|
28,122
|
|
$
|
505
|
|
1.8%
|
Revenue, Same
Community1 Properties
|
$
|
11,970
|
|
$
|
11,878
|
|
$
|
92
|
|
0.8%
|
NOI1,
Total Portfolio
|
$
|
15,098
|
|
$
|
14,864
|
|
$
|
234
|
|
1.6%
|
NOI1, Same
Community1 Properties
|
$
|
6,498
|
|
$
|
6,501
|
|
$
|
-3
|
|
-0.0%
|
FFO1
|
$
|
6,655
|
|
$
|
6,698
|
|
$
|
-43
|
|
-0.6%
|
FFO per
Unit1
|
$
|
0.15
|
|
$
|
0.15
|
|
$
|
–
|
|
– %
|
Maintenance capital
expenditures
|
$
|
-846
|
|
$
|
-1,196
|
|
$
|
350
|
|
29.3%
|
Escrowed rent
guaranty realized
|
$
|
87
|
|
$
|
626
|
|
$
|
-539
|
|
-86.1%
|
Severance/retention
costs on dispositions
|
$
|
382
|
|
$
|
170
|
|
$
|
212
|
|
124.7%
|
Straight line rental
revenue differences
|
$
|
-153
|
|
$
|
-25
|
|
$
|
-128
|
|
-512.0%
|
AFFO1
|
$
|
6,125
|
|
$
|
6,273
|
|
$
|
-148
|
|
-2.3%
|
AFFO per
Unit1
|
$
|
0.13
|
|
$
|
0.14
|
|
$
|
-0.01
|
|
-7.1%
|
Weighted Average Unit
Count
|
45,626,505
|
|
45,017,734
|
|
608,771
|
|
1.4%
|
The increase in total portfolio revenue for Q4 2020 compared to
Q4 2019 was primarily the result of property acquisitions which
contributed $7.1 million in revenue
as well as higher rental rates across the portfolio, partially
offset by dispositions which reduced revenue by $6.7 million.
Revenue from Same Community properties outperformed Q4 2019 by
$0.1 million due to an increase in
average rental rates from $915 per
apartment unit as of December 2019 to
$924 per apartment unit as of
December 2020.
The increase in total portfolio NOI for Q4 2020 compared to Q4
2019 was primarily the result of acquisitions contributing
$3.9 million, offset by property
dispositions that reduced NOI by $3.6
million.
NOI from Same Community properties for Q4 2020 was flat compared
to the Q4 2019, predominantly due to the higher revenue described
above, offset by an increase in real estate taxes and
insurance costs over the prior period.
FFO for Q4 2020 of $6.7 million,
or $0.15 per Unit, was consistent
with Q4 2019 due to the increase in NOI of $0.2 million discussed above, offset by higher
severance/retention costs of $0.2
million, related to the capital recycling program. The REIT
excluded from FFO loss on extinguishment of debt of $10.0 million, primarily related to the non-cash
write off of net discounts, premiums and prepayment embedded
derivatives, and has reclassified prior periods to confirm to the
current presentation.
AFFO decreased by $0.1 million to
$6.1 million, or $0.13 per Unit, for Q4 2020, compared to
$6.2 million, or $0.14 per Unit, for Q4 2019. The decrease was
primarily the result of a $0.5
million decline in escrowed rent guarantees realized during
the periods related to property acquisitions, offset by a decrease
in maintenance capital expenditures of $0.4
million.
FY 2020 Financial Summary
In thousands of U.S. dollars
|
Year ended
December 31,
2020
|
|
Year ended
December 31,
2019
|
|
Change
|
|
Change
%
|
Revenue, Total
Portfolio
|
$
|
113,286
|
|
$
|
111,664
|
|
$
|
1,622
|
|
1.5%
|
Revenue, Same
Community1 Properties
|
$
|
47,733
|
|
$
|
46,734
|
|
$
|
999
|
|
2.1%
|
NOI1,
Total Portfolio
|
$
|
59,236
|
|
$
|
59,699
|
|
$
|
-463
|
|
-0.8%
|
NOI1, Same
Community1 Properties
|
$
|
26,001
|
|
$
|
25,306
|
|
$
|
695
|
|
2.7%
|
FFO1
|
$
|
27,687
|
|
$
|
29,261
|
|
$
|
-1,574
|
|
-5.4%
|
FFO per
Unit1
|
$
|
0.61
|
|
$
|
0.71
|
|
$
|
-0.10
|
|
-14.1%
|
Maintenance capital
expenditures
|
$
|
-3,295
|
|
$
|
-3,858
|
|
$
|
563
|
|
14.6%
|
Escrowed rent
guaranty realized
|
$
|
524
|
|
$
|
626
|
|
$
|
-102
|
|
-16.3%
|
Severance/retention
costs on dispositions
|
$
|
568
|
|
$
|
388
|
|
$
|
180
|
|
46.4%
|
Straight line rental
revenue differences
|
$
|
-70
|
|
$
|
-27
|
|
$
|
-43
|
|
-159.3%
|
AFFO1
|
$
|
25,414
|
|
$
|
26,390
|
|
$
|
-976
|
|
-3.7%
|
AFFO per
Unit1
|
$
|
0.56
|
|
$
|
0.64
|
|
$
|
-0.08
|
|
-12.5%
|
Weighted Average Unit
Count
|
45,136,847
|
|
41,228,567
|
|
3,908,280
|
|
9.5%
|
The increase in total portfolio revenue for FY 2020 compared to
FY 2019 was primarily the result of property acquisitions,
contributing $25.8 million in
revenue, and a $1 million increase in
Same Community revenue, partially offset by property dispositions
that reduced revenue by $25.2
million.
Same Community properties revenue for FY 2020 outperformed FY
2019 by $1.0 million, primarily due
to an increase in Same Community rental rates as well as an
increase in utility reimbursements of $0.3
million, partially offset by the absence of late rental fees
of $0.2 million related to the
COVID-19 pandemic. The REIT resumed charging late fees in
mid-August of 2020.
The decrease in total portfolio NOI for FY 2020 compared to FY
2019 was primarily the result of property dispositions reducing NOI
by $13.9 million, partially offset by
acquisitions contributing $12.7
million, as well as the increase in NOI from Same Community
properties discussed below.
NOI from Same Community properties for FY 2020 outperformed FY
2019 by $0.7 million, predominantly
due to the increase in revenue discussed above, partially offset by
an increase in property insurance expense of $0.2 million. The REIT paid $0.3 million in COVID-19 related expenses for
Same Community properties in FY 2020, offset by a decline in
payroll expenses.
FY 2020 FFO was $27.7 million, or
$0.61 per Unit, compared to
$29.3 million, or $0.71 per Unit, in FY 2019. The decrease of
$1.6 million in FFO was the result of
a decrease of $0.5 million in NOI,
described above, as well as an increase in general and
administrative expenses of $0.3
million resulting from an increase in share-based
compensation and other employee benefits, offset by lower legal and
professional fees and travel expenses in FY 2020. The amortization
of deferred financing fees contributed $0.5
million and severance/retention costs, related to the
capital recycling program, contributed $0.2
million to the decrease in FFO over the prior year. The REIT
excluded from FFO loss on extinguishment of debt of $11.6 million, primarily related to the non-cash
write off of net discounts, premiums and prepayment embedded
derivatives, and has reclassified prior periods to confirm to the
current presentation.
FY 2020 AFFO was $25.4 million, or
$0.56 per Unit, compared to
$26.4 million, or $0.64 per Unit, for FY 2019. The decrease of
$1.0 million over the prior year was
primarily the result of the change in FFO described above,
partially offset by a decrease in maintenance capital expenditures
of $0.6 million due to emergency only
maintenance during the second quarter of 2020. The
severance/retention costs, discussed above, are excluded from
AFFO.
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)
|
December
31,
2020
|
September
30,
2020
|
June
30,
2020
|
March
31,
2020
|
Operational
Information
|
|
|
|
|
Number of real estate
investment properties
|
|
30
|
|
40
|
38
|
40
|
Total apartment
units
|
|
7,628
|
|
9,681
|
9,035
|
9,460
|
Average monthly rent
on in-place leases
|
$
|
1,088
|
$
|
1,011
|
$
|
996
|
$
|
961
|
Average monthly rent
on in-place leases,
Same
Community1 Properties
|
$
|
924
|
$
|
920
|
$
|
910
|
$
|
919
|
Weighted average
occupancy rate
|
|
93.8%
|
|
93.5%
|
94.8%
|
|
94.2%
|
Retention
rate
|
|
56.5%
|
|
53.4%
|
53.5%
|
|
52.8%
|
Debt to Gross Book
Value1
|
|
46.5%
|
|
50.8%
|
48.5%
|
|
49.4%
|
|
|
|
|
|
|
Three months
ended
December 31,
2020
|
Three months
ended
September 30,
2020
|
Three months
ended
June 30,
2020
|
Three months
ended
March 31,
2020
|
Operating
Results
|
|
|
|
|
Revenue, Total
Portfolio
|
$
|
28,627
|
$
|
29,849
|
$
|
27,288
|
$
|
27,522
|
Revenue, Same
Community1 Properties
|
$
|
11,970
|
$
|
12,089
|
$
|
11,814
|
$
|
11,860
|
NOI1,
Total Portfolio
|
$
|
15,098
|
$
|
15,233
|
$
|
14,222
|
$
|
14,683
|
NOI1, Same
Community1 Properties
|
$
|
6,498
|
$
|
6,450
|
$
|
6,446
|
$
|
6,607
|
NOI
Margin1, Total Portfolio
|
|
52.7%
|
|
51.0%
|
|
52.1%
|
|
53.4%
|
NOI
Margin1, Same
Community1 Properties
|
|
54.3%
|
|
53.4%
|
|
54.6%
|
|
55.7%
|
FFO1
|
$
|
6,655
|
$
|
7,427
|
$
|
6,635
|
$
|
6,970
|
FFO per
Unit
|
$
|
0.15
|
$
|
0.16
|
$
|
0.15
|
$
|
0.15
|
Escrowed rent
guaranty realized
|
$
|
87
|
$
|
–
|
$
|
–
|
$
|
437
|
Maintenance capital
expenditures
|
$
|
846
|
$
|
958
|
$
|
678
|
$
|
813
|
AFFO1
|
$
|
6,125
|
$
|
6,490
|
$
|
6,192
|
$
|
6,607
|
AFFO per
Unit1
|
$
|
0.13
|
$
|
0.14
|
$
|
0.14
|
$
|
0.15
|
AFFO Payout
Ratio
|
|
92.9%
|
87.5%
|
90.0%
|
84.8%
|
Weighted Average Unit
Count
|
45,626,505
|
45,255,977
|
44,663,118
|
44,995,099
|
Liquidity and Capital Structure
As of December 31, 2020, the REIT
had liquidity of $91.5 million,
consisting of cash and cash equivalents of $5.3 million, $51.2
million available on the REIT's credit facility and
$35 million available on a line of
credit.
As of December 31, 2020, the REIT
had total mortgage notes payable of $355.5
million, excluding the credit facility and line of credit,
with a weighted average contractual interest rate of 3.8% and a
weighted average term to maturity of 7.6 years. Total loans and
borrowings of the REIT as of December 31,
2020 were $475.9 million,
excluding the Debentures. 87% of the REIT's debt was fixed or
economically hedged to fixed rates.
Additionally, as of December 31,
2020, 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.
On February 9, 2021, the REIT
completed the February 2021 Offering,
referenced above, for total gross proceeds of $69 million. Net proceeds of $66.2 million were used to repay amounts
outstanding on the REIT's credit facility.
On February 11, 2021, the REIT
sold Towne Park at Har-Ber, located
in the Northwest Arkansas MSA, for a contractual purchase price of
$31.7 million. The purchaser assumed
$18.8 million of mortgage debt,
leaving net cash proceeds of $12.3
million and the avoidance of $5.8
million in prepayment premiums to the REIT. Following the
sale, the REIT's debt to gross book value is 40.0%, providing
approximately $170 million in
liquidity.
Distributions and Units Outstanding
Cash distributions declared to REIT unitholders and Class B
unitholders of BSR Trust, LLC totalled $5.7
million for Q4 2020, representing an AFFO payout ratio of
92.9%. 100% of the REIT's cash distributions were classified as
return of capital. As of December 31,
2020, the total number of REIT Units outstanding was
23,863,511. There were also 21,707,767 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, March 10th,
2020 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=1428096&tp_key=ab0fb85c44
A replay of the call will be available until Wednesday, March 17th, 2020. To access the
replay, dial 416-764-8677 or 888-390-0541 (Passcode: 123406 #). 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 and Debt to Gross
Book Value 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 and Debt to
Gross Book Value 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
December 31, 2020 for a
reconciliation of Same Community, NOI, NOI Margin, FFO, AFFO and
Debt to Gross Book Value 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 year ended
December 31, 2020 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