In its first go-around as a publicly traded company, Little Rock-based BSR Trust booked a second quarter profit of $6.7 million nearly 45 days after the company completed its initial public offering (IPO) and began trading on the Canada-based Toronto Stock Exchange (TSX).
The newly traded Arkansas real estate investment trust, which now trades under the stock symbol “HOM.U,” closed out Monday’s trading session on the Canadian stock exchange at $9 per share. That is one dollar below the company’s initial public offering of 13.3 million shares at a unit price of $10 in U.S. currency.
Through that IPO, which was handled by a syndicate of Canadian banks led by BMO Capital Markets, the Little Rock apartment owner and real estate management firm was able to raise a total of $135 million in new capital. An additional $30 million in debt was also converted to 3 million shares, raising the total cash proceeds to $165 million, company officials said.
“I am pleased with the REIT’s operating results in our initial period as a publicly traded entity, as we benefitted from earlier than expected traction from our capital redevelopment program,” said BSR Chairman and CEO John Bailey.
For the three-month period ended June 30, BSR Trust reported net operating income of $13.5 million on revenues of $24.9 million. Prorated for the 44 days since the company completed its IPO on June 18, the company reported net operating income of $6.7 million on revenues of $12.2 million.
BSR reported funds from operations (FFO) of nearly $3.7 million, or 7 cents per share. Funds from operations is a closely watched measure in the REIT industry. It takes net income and adds back items such as depreciation and amortization.
BSR completed its IPO on May 18 but had to wait 30 days under U.S. “quiet period” securities laws before announcing the results of the successful capital raising campaign. In a closely related deal, BSR completed the acquisition of Brandon Place, a 200-unit garden-style residential community in Oklahoma City for $23.4 million on June 4.
On June 22, the Little Rock REIT announced its first cash distribution in the amount of nearly six cents per share. Company officials have said they expect to pay out nearly 50 cents per share on an annual basis, a feature that has led cash-hungry investors to seek out REITs to pad their investment portfolios.
With the completion of the Brandon Place acquisition, BSR now owns a portfolio of 48 multifamily garden-style residential properties consisting of 9,879 apartment units located in Arkansas, Oklahoma, Texas, Mississippi and Louisiana.
“Looking out to the balance of the 12-month forecast period ending March 31, 2019, we are confident in achieving our adjusted FFO forecast of $25.5 million,” said Bailey. “Longer-term, our capital redevelopment program and strong balance sheet position us well for both organic and acquisition-based growth.”
Bailey said the Little Rock apartment owner will continue to pursue acquisition opportunities across its target “Sun Belt” consumer base, including potential markets in Texas that have a diversified employment base, less than average unemployment and higher renter migration.
“(We) intend to build unitholder value by identifying opportunities for acquisitions, value-add investments, and asset rotation,” he said.
To read more about BSR Trust’s historic initial public offering on the Toronto Stock Exchange, click here.