BSR Real Estate Investment Trust of Little Rock on Wednesday reported a 4.6% second-quarter increase in net operating income from its portfolio of multifamily residential properties.
Net operating income, a key measure of performance used by real estate operating companies and REITs, rose to $24.1 million in the period, compared to $23 million in the same quarter a year ago.
Income rose on higher revenue, which totaled $42.2 million in the quarter, up 0.4% from $42 million a year ago. The company said revenue increased primarily due to slightly higher average rental rates. The average rate in the quarter was $1,507 per unit, up from $1,501.
BSR also reported lower property operating expenses, which fell 1.1% to $12.1 million compared to a year ago. Professional fees were lower and the cost of property insurance declined, savings that were partially offset by a $300,000 increase in payroll and renting expenses.
Additionally, real estate tax expenses fell by about $700,000 from the prior period, attributable to tax refunds and lower real estate tax assessments due to a change in Texas tax legislation.
Another key performance metric, adjusted funds from operations, rose by 10.3% to $12.7 million, compared to $11.5 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.
BSR, led by CEO Dan Oberste, 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.
The company’s occupancy rate remained steady at 95.3% in the second quarter.
The company posted a net loss of $39.2 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 rose less than 1% Wednesday morning to $12.80. Year to date, shares were up more than 8%.
Revised outlook
The company has revised its 2024 guidance to lower the total midpoint for revenue growth to 1% from 1.5%.
It also adjusted guidance for operating expenses and real estate taxes to a reduction of 1% from an increase of 1%, due to additional real estate tax refunds.
The midpoint for funds from operations per unit was raised 96 cents from 94 cents. Adjusted funds from operations per unit was raised to 88 cents from 87 cents. Both were increased due to lower finance costs.
The increase was partially offset by a decline in net operating income related to the delay in the completion of the property under development.
Sign up for Daily E-news
