BSR Real Estate Investment Trust of Little Rock on Thursday reported a 3.4% fourth-quarter decrease in net operating income from its portfolio of multifamily residential properties.
Net operating income (NOI), a key measure of performance used by real estate operating companies and REITs, fell to $21.7 million in the period, compared to $22.5 million in the same quarter a year ago.
The company attributed the decrease in part to operating expenses at a 258-unit apartment complex in Austin, Texas. Construction on the complex was completed in December. BSR has been working to fill vacant units at the property.
Another key performance metric, adjusted funds from operations (AFFO), fell by 12.6% to $10.9 million, compared to $12.4 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.
For the full year, NOI was $91.9 million, up 1% from 2023; AFFO was $47.6 million, down 1.7% from the previous year.
By another metric, 2024 was BSR’s best ever, CEO Dan Oberste said in a news release. The company reported AFFO per unit of 88 cents, up from 85 cents in 2023. “These results underline the resilience of BSR’s management platform and the REIT’s ability to generate cash flow growth despite the cost of capital challenge facing the industry,” Oberste said.
BSR is publicly traded on the Toronto Stock Exchange (TSX HOM.U). It owns 32 multifamily residential properties consisting of 9,181 units in total, with 85% located in Texas, 11% in Oklahoma and 4% in Arkansas.
The company in February announced a $618 million deal to sell nine Texas multifamily properties to AvalonBay Communities Inc. of Arlington, Virginia, one of the largest REITs in the U.S. The deal sets the stage for more growth or the possible sale of BSR. The transaction is expected to close in the second quarter of 2025.
“We intend to redeploy the proceeds of this sale to acquire properties that are anticipated to offer higher returns for unitholders, a strategy that we have consistently executed successfully in the past,” Oberste said. “The future has never been brighter for BSR.”
Occupancy at BSR properties ticked up to 95.6% in the fourth quarter, compared to 95.3% a year ago.
BSR posted a net loss of $40.2 million in the quarter. The company 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 were flat Friday morning, trading at $12.59. Over the past year, shares were up more than 13%.
New CFO
BSR announced the hiring of Tom Cirbus as CFO and corporate secretary, effective March 17.
In a corresponding move, Susan Rosenbaum will step down as interim CFO and continue in her role as chief operating officer. She has been interim CFO since February 2024, filling in for Brandon Barger, who resigned for health-related reasons.
Cirbus previously spent 11 years in the investment banking division of Wells Fargo across the real estate, gaming, lodging and leisure coverage and equity capital markets teams.
Prior to his time at Wells Fargo, he worked at global professional services firm KPMG as an analyst.
“Tom will make a great addition to our team,” Oberste said. “His real estate investment banking and capital markets experience are the perfect complement to our existing management team and will be key as we navigate this next chapter in BSR.”
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