BSR Real Estate Investment Trust on Wednesday reported a surge in third-quarter earnings that company officials attributed to the expansion of operations in Texas. Net operating income rose by 8.3% and the equivalent of earnings per share increased by 7.1%.
The Little Rock Company said its net operating income rose to $16.5 million from $15.2 million in the quarter ending Sept. 30. . Revenue for the quarter increased 6.2% to $31.7 million from $29.8 million in 2020.
“BSR REIT had an outstanding third quarter,” chief executive John Bailey said Wednesday during the opening of a conference call with industry analysts.
This year, BSR bought amenity-filled properties in the Austin, Dallas-Fort Worth, and Houston markets while selling older apartment complexes in Blytheville, Arkansas’ Northwest Corridor. and in Pascagoula, Miss.
“These results highlight the strength of our core Texas markets – Austin, Dallas-Fort Worth and Houston,” Bailey said. “We shifted our portfolio to focus on these three primary markets due to their strong fundamentals and this move has clearly paid off.”
As a result, the average age of BSR properties dropped from 29 to 13 when the company went public in May 2018.
As the company has expanded into high-growth markets, average rents and occupancy rates have improved. For example, the weighted average rent jumped 26.1% to $1,275 from $1,011 for the same quarter a year ago and the occupancy rate was 96.4% from 93.7% in 2020.
Same-community rental rates for new leases increased 19% year-over-year. “This is an extremely strong number and shows how well these MSAs have rebounded from the economic crisis caused by the pandemic,” Bailey said, noting that Texas markets have been characterized by an increase in population and job, factors that worked in favor of BSR.
“We expect to continue to deliver strong organic rental growth,” Bailey said.
And the company said it will continue to expand with about $70 million earmarked for further acquisitions before the end of the year, with a total of $250 million available in the war chest for more purchases. real estate.
President and COO Dan Oberste told analysts that BSR is benefiting from basic market dynamics in Texas — there are more tenants than apartments available and rental properties are in demand.
“From what we see, this phenomenon will not seem to stop in the next two years,” Oberste said.
BSR plans to add more properties soon, Oberste said. “I think we have a Christmas present or two under the tree in the acquisition pipeline,” he added. “I am confident that we will fulfill this order by the end of the year.”
In a planned transition, Oberste will assume the role of CEO on Jan. 1 while Bailey will become executive vice chairman of the board.
BSR’s strategy paid off for investors, who benefited from rising equities throughout the year. The company’s per-share price opened in January on the Toronto Stock Exchange at $11.20 and dipped below $11 in February, but has been climbing ever since, closing Wednesday at $16.90.
BSR owns and operates 30 apartment complexes in Arkansas, Oklahoma and Texas.