BSR Real Estate Investment Trust of Little Rock on Wednesday reported a 4.4% increase in net operating income from its portfolio of multifamily residential properties in three states.
Net operating income, a key measure of performance used by real estate operating companies and REITs, rose to $23.84 million in the period, compared to $22.84 million in the same quarter a year ago.
Income rose on higher revenue, which increased primarily due to a 0.9% annual increase in average rental rates from $1,489 per unit to $1,502 per unit, as well as increases in other rental income and utilities reimbursements.
Total revenue was $42 million, up 1% from $41.6 million in the first quarter of 2023.
Another key performance metric, adjusted funds from operations, rose by 3.05% to $12.89 million, compared to $12.51 million a year ago. Adjusted funds from operations measures the cash generated from an REIT’s properties and deducts capital expenditures required to maintain the properties.
BSR is publicly traded on the Toronto Stock Exchange (TSX HOM.U). It owns 31 multifamily residential properties consisting of 8,666 apartment units, with 85% located in Texas, 11% in Oklahoma and 4% in Arkansas.
In a statement, BSR said concerns have been raised about an influx of new apartments in its Sun Belt markets, primarily Dallas and Austin. The company pointed to its steady occupancy rate of 95.3% as evidence that it’s weathering the storm of new supply.
BSR also noted that high interest rates have dramatically slowed new developments heading into 2025.
The company posted a net loss of $1.57 million in the quarter. BSR attributed the loss primarily to adjustments in the fair value of investment properties and said the figure is not comparable period over period.
Shares of the company fell about 2% Thursday morning to $11.09. Year to date, shares were down nearly 7%.
Revised outlook
The company revised its guidance for 2024 to lower the midpoint for its project revenue growth from 2% to 1.5%
The revenue decrease is expected to be offset by lower operating expenses, which are now projected to rise 1% instead of 2%
There were no changes to BSR’s projected growth in net operating income or adjusted funds from operations per unit. The former is projected to grow between 1% and 3%. The latter is projected to be between 84 cents and 90 cents per unit.
The guidance does not include potential acquisitions, dispositions or future growth from the impact of properties currently under development.
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