Little Rock-based BSR Trust posts 3Q profit of $13.5 million, expands in Northwest Arkansas

by Wesley Brown (wesbrocomm@gmail.com) 231 views 

Little Rock-based BSR Real Investment Trust on Wednesday (Nov. 7) posted third quarter profits of $13.5 million as the publicly-traded apartment owner and operator continued to expand in the dynamic Northwest Arkansas market.

For the three-month period ended Sept. 30, BSR Trust reported net operating income of $13.5 million on revenues of $25.6 million. On an adjusted funds from operations (AFFO) based, BSR results of $6.3 million, or 15.9 cents per share for the three month period were in line with the company’s internal forecast.

Adjusted FFO is a closely watched measure in the REIT industry. It takes net income and adds back items such as depreciation and amortization. The company also reported that weighted average rent per apartment was rose 3.6% to $806 in the third quarter,  up from $777 per apartment at the close of fiscal year 2017

On Oct. 15, BSR completed the $28.9 acquisition of Towne Park, a 237-unit, garden style residential community in Springdale. Towne Park, which was constructed in two phases in 2016 and 2017, is BSR’s second purchase in this region in two years. In March 2017, the Arkansas REIT first entered the Northwest Arkansas market by acquiring the upscale Mountain Ranch Apartments in Fayetteville, a 360-unit garden-style complex less than 10 miles away Towne Park.

“I continue to be very pleased with our operating results as the benefits of our capital redevelopment program come to fruition,” said BSR Trust CEO John Bailey. “I am also excited about our latest acquisition in Northwest Arkansas which is consistent with our clustering strategy to maximize efficiencies as well as allows us to take advantage of our strong management platform to increase net operating income.

“We will continue to pursue acquisition opportunities in our target markets that meet our acquisition criteria and build unitholder value through our capital redevelopment program and asset rotation. Furthermore, we continue to be confident in meeting our adjusted FFO forecast,” concluded Bailey.

BSR recently began operations as Arkansas’ newest publicly traded company this summer after completing its initial public offering (IPO) on the Toronto Stock Exchange on May 18. The newly traded Arkansas real estate investment trust, which now trades under the stock symbol “HOM.U,” closed out Wednesday’s trading session on the Canadian stock exchange at $8.98 per share. That is about 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 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, The recent Springdale deal was funded using the REIT’s revolving credit facility, company officials said.

Although BSR completed its IPO in May, it had to wait 30 days under the U.S. “quiet period” securities laws before announcing the results of the successful capital raising campaign. Following that 30-day holding pattern, 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.

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