BSR Real Estate Investment Trust (BSRTF:OTCMKTS) recently released financial results from the first quarter of 2023, which were in line with previous forecast and consensus, noted Echelon Capital Markets analyst David Chrystal in a May 12, 2023 research note.
Chrystal noted that while in line with Echelon's forecast, these results included "exceptional same property NOI growth (+17.8%) partially offset by higher interest expense." As seasonal rebound takes hold in the market, rental lifts will likely remain modest as they were in this quarter.
Chrystal suggested that a "lack of attractive external growth opportunities will likely see management focus on highly accretive buybacks and re-investment in existing assets in the near term."
The report contained multiple upcoming highlights for BSR, including:
- A market rent rebound is building momentum as the spring leasing season begins, showcasing three months of positive m/m market rent growth.
- The development of Phase II f Aura 36Hundred in Austin is progressing within budget and the perceived timeframes. This is scheduled to be finished in 2023, with a total cost projection of US$59.5.
- Investment focus is inward.
Chrystal noted, "Though Q1 did not include any activity on the REIT's NCIB, management earmarked US$5M for purchases under an automatic share purchase plan. Given the significant discount of the REIT's units relative to the price of apartment assets in its core markets, management believes that unit buybacks are currently the best use of excess capital."
Structure and Predictions
In this report, Echelon Capital Markets maintained its Buy rating on BSR, but lowered its target price from US$21 to US$19, "based on a 10% discount to our NAV estimate."
Chrystal's research also shared current market data on the company:
- Rating: Buy
- Price: US$12.72, with a 52-week range between US$12.32 and US$20.03
- Price Target: US$19
- Market Cap: US$729
Chrystal expects a projected return to target of 53.5% for shareholders. BSR has an enterprise value of US$1,531 million and 57.3 million outstanding shares.
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Disclosures for Echelon Capital Markets, BSR Real Estate Investment Trust, May 12, 2023
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Company: BSR REIT | HOM.U:TSX
I, David Chrystal, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers.
The Analyst or any member of the Analyst’s household have a financial interest in the securities of the subject issuer: Long Position, Trust Units.
Echelon Wealth Partners Inc. and/or one or more entities affiliated with Echelon Wealth Partners Inc. beneficially own common shares (or any other class of common equity securities) of this issuer which constitutes more than 1% of the presently issued and outstanding shares of the issuer.