Mr. Dan Oberste reports

BSR REIT ANNOUNCES THIRD QUARTER 2023 FINANCIAL RESULTS

BSR Real Estate Investment Trust today released its financial results for the three and nine months ended Sept. 30, 2023 (Q3 2023 and YTD 2023, respectively). All comparisons are with the corresponding periods in the prior year. Results are presented in United States dollars.

"Q3 2023 proved to be strong as anticipated with AFFO per unit increasing 10.5 per cent and same community NOI increasing 7.0 per cent over Q3 2022," said Dan Oberste, the REIT's president and chief executive officer. "These results reflect the outstanding market fundamentals in our core Texas markets, which continue to attract residents and businesses from other jurisdictions. And with the recent reduction of real estate taxes in the state, it is now more attractive than ever for them to relocate to our markets."

Q3 2023 highlights

• FFO (funds from operations) per unit for Q3 2023 of 23 cents increased 8.3 per cent over Q3 2022;
• AFFO (adjusted funds from operations) per unit for Q3 2023 of $0.21 increased 10.5 per cent over Q3 2022;
• Weighted average rent increased 3.0 per cent to $1,504 per apartment unit as of Sept. 30, 2023, compared with $1,460 as of Sept. 30, 2022;
• Excluding short-term leases, rental rates for new leases and renewals changed negative 0.2 per cent and 5.6 per cent, respectively, over the prior leases, resulting in a blended increase of 2.7 per cent;
• Same community revenues for Q3 2023 increased 3.9 per cent over Q3 2022;
• Same community net operating income (NOI) for Q3 2023 increased 7.0 per cent over Q3 2022;
• During Q3 2023, the REIT's AFFO payout ratio was 61.6 per cent compared with 67.2 per cent during Q3 2022;
• Weighted average occupancy was 95.2 per cent as of Sept. 30, 2023, compared with 94.7 per cent as of Sept. 30, 2022;
• Debt to gross book value excluding convertible debentures (as defined herein) as of Sept. 30, 2023, was 39.2 per cent;
• During Q3 2023, the REIT used excess cash from operations to pay down $9.0-million on its revolving credit facility;
• In September, 2023, the REIT extended $160-million of mortgage notes by one year to Sept. 13, 2025, with no other contractual changes as a result of the extension;
• During Q3 2023, the REIT purchased and canceled 11,700 units under its normal course issuer bid (NCIB) and automatic securities purchase plan (ASPP) at an average price of $12.46 per unit.

Subsequent highlights

• On Oct. 4, 2023, the REIT renewed its NCIB for the 12-month period through Oct. 5, 2024, permitting the REIT to purchase for cancellation up to a maximum of 3,186,336 units, or approximately 10 per cent of the public float as of Sept. 27, 2023, over the 12-month period commencing Oct. 6, 2023. The REIT concurrently renewed the ASPP.
• In October, 2023, since the commencement of the renewed NCIB, the REIT purchased and cancelled 44,800 units under the renewed NCIB and ASPP at an average price of $10.73 per unit.
• On Nov. 1, 2023, the REIT entered into a new $65-million interest rate swap at a fixed rate of 3.27 per cent effective July 1, 2024, and maturing Jan. 31, 2031, subject to the counterparty's optional early termination date of Jan. 2, 2025.
• On Nov. 3, 2023, the REIT entered into a new $60-million interest rate swap at a fixed rate of 3.537 per cent effective Jan. 2, 2024, and maturing Jan. 2, 2031, subject to the counterparty's optional early termination date of Jan. 1, 2025.

Total portfolio revenue of $42.1-million for Q3 2023 increased 3.8 per cent compared with $40.5-million in Q3 2022. Same community properties contributed $1.5-million to the overall increase, as described herein.

Revenue from Same Community properties of $40.0-million for Q3 2023 increased 3.9 per cent from $38.5-million in Q3 2022, primarily due to a 3.1-per-cent increase in average rental rates from $1,452 per apartment unit as of Sept. 30, 2022, to $1,497 per apartment unit as of Sept. 30, 2023.

The net (loss) income and comprehensive (loss) income change between Q3 2023 and Q3 2022 is primarily due to non-cash adjustments to fair values of investment properties and derivatives and other financial liabilities from June 30, 2023, to Sept. 30, 2023, and June 30, 2022, to Sept. 30, 2022, respectively, and is not considered comparable period over period.

The 4.5-per-cent increase in total portfolio NOI for Q3 2023 to $22.7-million compared with $21.7-million in Q3 2022 was the result of increases of $1.4-million from same community properties, described herein, partially offset by the reduction from non-same community properties of $400,000 due to real estate tax refunds received during Q3 2022 related to properties sold in 2021.

The 7.0-per-cent increase in same community NOI to $21.7-million for Q3 2023 compared with $20.2-million in Q3 2022 was the result of the increase in revenue described herein, as well as a $700,000 decrease in real estate taxes, primarily due to revised 2023 tax assessments, partially offset by an increase in property operating expenses of $800,000 due to higher repair and maintenance expenses, payroll costs and property insurance.

FFO was $13.1-million, or 23 cents per unit, for Q3 2023 compared with $12.1-million, or 21 cents per unit, for Q3 2022. The improvement was primarily the result of the higher NOI (net operating income) discussed herein as well as a decrease of $300,000 in finance costs (net of finance income primarily from interest rate swaps, excluding the loss on extinguishment of debt in the comparative period), partially offset by $300,000 additional general and administrative expenses.

AFFO was $12.0-million, or 21 cents per unit, for Q3 2023, compared with $11.2-million, or 19 cents per unit, for Q3 2022. The improvement was primarily the result of the increase in FFO discussed herein, partially offset by an increase in maintenance capital expenditures.

Net asset value was $1.1-billion, or $18.66 per unit, as of Sept. 30, 2023, compared with $1.3-billion, or $22.32 per unit, as of Sept. 30, 2022. The decrease is primarily due to a decrease in fair value driven primarily by capitalization rate expansion subsequent to Sept. 30, 2022 (net of the impact of increases in NOI).

Distributions and units outstanding

Cash distributions declared with holders of units and holders of Class B units totalled $7.3-million for Q3 2023, representing an AFFO payout ratio of 61.6 per cent. One hundred per cent of the REIT's cash distributions were classified as return of capital. As of Sept. 30, 2023, the total number of units outstanding was 36,084,795. There were also 20,479,837 Class B units outstanding, which are redeemable for units on a one-for-one basis.

Senior management structure

The REIT announced today that Brandon Barger, the REIT's chief financial officer, is taking a leave of absence for health-related reasons. Susan Rosenbaum, the REIT's chief operating officer and former chief financial officer, was appointed today as interim chief financial officer by the board of trustees of the REIT. Ms. Rosenbaum has a wealth of experience in this role, acting as the REIT's chief financial officer for seven years up until recently, on Jan. 1, 2023, when she was appointed chief operating officer. She has facilitated an orderly and seamless transition with respect to the REIT's Q3 financial results and will act as both interim chief financial officer and chief operating officer until Mr. Barger's return.

"Our thoughts and best wishes go out to Brandon during his leave of absence," said Dan Oberste, the REIT's president and chief executive officer. "Until Brandon's return, the REIT remains soundly managed with our experienced team. The REIT's succession plan takes into account unanticipated executive officer leave. I am confident in Susie and our team's abilities to manage both the REIT's excellent operating performance and financial reporting in Brandon's absence."

2023 earnings and same community portfolio guidance

The REIT's 2023 guidance is outlined herein for FFO per unit and AFFO per unit, along with its expectations for same community properties for revenue, property operating expenses and NOI in 2023. The guidance does not include potential acquisitions, dispositions or future growth from the impact of properties currently under development.

The REIT has revised it's 2023 guidance. In November, 2023, a constitutional election ratified lowering real estate taxes for Texans, including multifamily residential rental properties. This decrease in real estate taxes for the REIT of approximately $1.4-million, applies to the 2023 tax year, and is included in the guidance. These tax savings are offset by an increase in the cost of insurance and additional interest expense which has also been included in the revised guidance for 2023. These changes resulted in the range narrowing for FFO per unit and AFFO per unit, property operating expenses increasing, and total revenue and NOI remaining unchanged.

Conference call

Dan Oberste, president and chief executive officer, and Susan Rosenbaum, interim chief financial officer and chief operating officer, will host a conference call for analysts and investors on Thursday Nov. 9, 2023, at 12 p.m. ET. Participants can register and enter their phone number on-line (link available in original version of this release) to receive an instant automated call back. Alternatively, they can dial 416-764-8688 or 1-888-390-0546 to reach a live operator who will join them into the call. In addition, the call will be webcast live on-line (link available on the original version of this news release).

A replay of the call will be available until Thursday, Nov. 16, 2023. To access the replay, dial 416-764-8677 or 888-390-0541 (pass code: 273311 followed by the pound key). A transcript of the call will be archived on the REIT's website.

About BSR Real Estate Investment Trust

BSR Real Estate Investment Trust is an internally managed, unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT owns a portfolio of multifamily garden-style residential properties located in attractive primary markets in the Sunbelt region of the United States.

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