BSR Real Estate Investment Trust of Little Rock announced late Tuesday that it has sold — for $130 million in gross proceeds — six properties, comprising 1,483 apartment units, as part of its portfolio enhancement growth strategy and capital recycling program.
Four of the six are in the Little Rock metropolitan statistical area. They are Indian Hills; Overbrook I and V; and Woodland Oaks. The other two assets sold were Baystone and Vanderbilt in the Houston MSA.
BSR said it spent $127 million in net proceeds from the sales to repay $68 million in mortgage debt. The balance was used to reduce the outstanding balance on the REIT’s credit facility.
These sales follow BSR’s recent acquisitions of Broadstone Park West in the Houston MSA and Aura Castle Hills in the Dallas MSA.
“Throughout 2020, BSR has successfully executed our portfolio enhancement growth strategy and capital recycling program amid the challenges presented by COVID-19,” CEO John Bailey said in a news release. “We are pleased to continue to sell properties above the IPO appraised values and recycle the capital into high quality properties in our target markets. These sales further advance the transformation of BSR’s portfolio over the past 18 months.”
Since BSR completed its IPO in May 2018, the weighted average age of its portfolio has decreased to 18 years from 29 years and 12 acquisitions have added 3,511 apartment units with a weighted average year built of 2011. BSR has also sold 26 properties, totaling 5,149 apartment units, with a weighted average year built of 1985.
The REIT also reported late Tuesday third-quarter total portfolio net operating income of $15.2 million and total portfolio revenue of $29.8 million, up 4.8% and 7.2% year-over-year, respectively.
BSR said net operating income is a key measure of performance commonly used by real estate operating companies and REITs but is not a measure recognized under International Financial Reporting Standards and does not have the standardized meaning prescribed by IFRS. The company is publicly traded on the Toronto Stock Exchange (TSX HOM.U).
BSR said the increase in total portfolio revenue was the result of property acquisitions that contributed $7.4 million in revenue as well as higher rental rates across the portfolio and an increase in utility reimbursements. The increase was partially offset by the selling of assets that generated $6 million in revenue.
The increase in total portfolio NOI was in part the result of acquisitions contributing $3.6 million, also offset somewhat by the selling of assets and pandemic-related expenses.
“We have successfully executed on our portfolio enhancement growth strategy and capital recycling plan to transform our portfolio both in terms of primary market locations and in the age and quality of our communities,” CEO John Bailey said in another news release. “We added $558 million in acquisitions and sold $389 million of our apartment communities and our renewal program is not finished. The acquisitions are expected to drive higher consistent organic rental and asset value growth, while we grow our portfolio by continuing to capitalize on our robust pipeline of acquisition opportunities.”
Weighted average rent was $1,011 per apartment unit as of Sept. 30, a 12.3% increase from the $900 reported at the same time last year.
The REIT also announced that Daniel Oberste has been appointed president, effective immediately. He previously served as executive vice president and will continue serving as chief investment officer of the REIT.
Blake Brazeal will be co-president and chief operating officer.