BSR Real Estate Investment Trust of Little Rock on Wednesday reported an 11.7% increase in second-quarter 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, increased to $23 million in the period, compared with just under $21 million in the same quarter a year ago.
Another key performance metric, adjusted funds from operations, rose 10% to $11.5 million, up from $10.5 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.
Weighted average rent continued climbing in the second quarter, hitting $1,501 per unit, or 6.3% higher than the same quarter a year ago. Compared to the same quarter three years ago, weighted average rent is up nearly nearly 52%. During that time, weighted average occupancy has held steady at around 95%.
BSR is publicly traded on the Toronto Stock Exchange (TSX HOM.U).
Dan Oberste, CEO of BSR, said in a statement that second-quarter results reflects the “strong fundamentals” in the company’s core Sun Belt market. BSR owns 31 multifamily residential properties consisting of 8,666 apartment units, with 85% located in Texas, 11% in Oklahoma and 4% in Arkansas.
Oberste added that the company is “well positioned to capitalize on new growth opportunities that are expected to emerge as the Federal Reserve continues to respond to improving inflation numbers.”
Revenue in the period was $42 million, up 8.4% from $38.8 million in the second quarter of 2022. The gain was partially offset by rising maintenance costs, which totaled $1.8 million, up 46% on an annual basis. BSR said the increase was primarily due to roof replacements and balcony restoration at two apartment complexes in Little Rock and Norman, Oklahoma.
Excluding short term leases, rental rates for new leases ticked up by 1.1% and renewals increased 6.7% over the prior leases.
The company posted a second-quarter net loss of $46.9 million, compared to a profit of $160.8 million a year ago. It attributed the loss primarily to non-cash adjustments to fair values of investment properties and derivatives, along with other financial liabilities, and noted that the figure is not considered comparable period over period.
International Financial Reporting Standards require that the company report the fair value of its properties each quarter. Those values can vary widely quarter to quarter, and the company did not record gains or losses on them.
For the year to date, shares of the company were down about 1%.
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