BSR reports 3Q rise in net operating income

BSR Real Estate Investment Trust reported slight upticks in net operating income and revenue for the third quarter on Wednesday.

The Little Rock company, which owns and manages high-end apartment complexes in Arkansas and neighboring states, also said it is "positioned as a net acquirer of assets" in management comments released in conjunction with the results.

Net income plummeted in the quarter, generating a loss of $79.3 million compared with a profit of $23.8 million in the same quarter a year ago. Net operating income bumped up to $22.7 million for the period ending Sept. 30 compared with $21.7 million in the same quarter last year.

Adjusted funds from operations, a vital metric watched by the investment community, was up to 21 cents from 19 cents last year. The metric measures how much real estate investment generates. BSR recorded total adjusted funds from operations of $11.9 million in the third quarter, up from $11.2 million in 2022.

"These results reflect the outstanding market fundamentals in our core Texas markets, which continue to attract residents and businesses from other jurisdictions," Chief Executive Officer Dan Oberste said in the announcement Wednesday. "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."

The Austin, Dallas and Houston markets delivered about 90% of the company's net operating income.

BSR's apartment portfolio has remained flat for the past year at 31 complexes and 8,666 units. Yet officials said Wednesday that could change, with the management discussion noting the company is looking for other properties in the core Sunbelt markets.

"The REIT's internal management platform is highly scalable given the REIT's ability to acquire properties with only a marginal increase in general and administrative expenses," the company said. "Therefore, with the REIT now positioned as a net acquirer of assets, more of the cash flows generated by the portfolio are retained" and will boost adjusted funds from operations.

Executive management has scheduled a conference call with the investment community at 11 a.m. today to discuss the results. The call is available at 1-888-390-0546.