BSR Real Estate Investment Trust Q1 2026 Earnings Report

BSR Real Estate Investment Trust EPS Results

• Actual EPS: C$0.94
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

BSR Real Estate Investment Trust Revenue Results

• Actual Revenue: $47.02 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

BSR Real Estate Investment Trust Announcement Details

• Quarter: Q1 2026
• Date: 5/13/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, May 14, 2026
• Conference Call Time: 12:00PM ET

BSR Real Estate Investment Trust (TSE:HOM.UN) is an open-ended real estate investment trust. It is engaged in the business to acquire and operate multi-family residential rental properties, with a focus on garden-style multifamily communities in select high growth markets across the Sunbelt region of the United States. The REIT operates in Arkansas, Texas, Oklahoma and Mississippi. Its key revenue source is rental income.

BSR Real Estate Investment Trust Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Same-community NOI rose 11% sequentially from Q4 2025, driven largely by normalization of expenses, while Q1 same-community NOI still came in at $14.1 million.
• Positive Sentiment: Leasing trends improved with same-community blended rates up 30 bps sequentially, April rates up another 80 bps versus Q1, and retention improving to 59.8%.
• Positive Sentiment: FFO and AFFO improved sharply on a sequential basis to $0.18 and $0.17 per unit, respectively, supported by stronger same-community results and non-same-community contributions.
• Positive Sentiment: The balance sheet looks stable with no remaining 2026 debt maturities after refinancing, $67.3 million of liquidity, and a $175 million swap locking in the cost of credit for the rest of 2026 at 2.98%.
• Neutral Sentiment: Management reiterated full-year guidance for FFO of $0.75-$0.79 per unit and AFFO of $0.68-$0.74 per unit, while saying organic growth initiatives like bulk internet and lease-up stabilization remain early but on track.

Presentation

[Operator]

I now like to turn the conference over to Spencer Andrews, Vice President of Investor Relations and Marketing. Please go ahead, sir.

[Spencer Andrews, VP of Investor Relations and Marketing at BSR REIT]

Thank you, good morning, everyone. Welcome to BSR REIT's conference call to discuss our financial results for the Q1 ending March 31st, 2026. I'm joined on the call today by our CEO, Dan Oberste, our Chief Financial Officer, Tom Cirbus, and our Chief Operating Officer, Susie Rosenbaum, who are all available to answer your questions after our prepared remarks. Before we begin, I want to remind listeners that certain statements made on this conference call about future events are forward-looking in nature. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially. In addition, we will reference certain non-GAAP financial measures that we believe are useful supplemental information about our financial performance.

[Spencer Andrews, VP of Investor Relations and Marketing at BSR REIT]

For more information, please refer to the cautionary statements on forward-looking information and a description of our non-GAAP financial measures in our news release and MD&A dated May 13th, 2026. Dan, over to you.

[Dan Oberste, President and CEO at BSR REIT]

Thanks, Spencer. We believe that the Q1 marks the beginning of a period of significant momentum for BSR REIT. Our same community NOI and NOI margins strengthened sequentially from the Q4 of 2025, and we've made progress in bringing our 2025 acquisition class to stabilization, including further lease-up at The Ownsby, our August 2025 lease-up acquisition. We also continued to ramp up our bulk internet and valet trash initiatives, two key drivers of organic growth. Externally, rental market dynamics shifted further in our favor. Recapping the Q1, same community NOI increased 11% from Q4 last year, due largely to the normalization of expenses, which had an outsized adverse impact on Q4 of last year.

[Dan Oberste, President and CEO at BSR REIT]

Same community weighted average occupancy ended the quarter at 94.3%, flat to the end of 2025. Same community blended rates improved 30 basis points in Q1 from Q4. I would add that this trend continued in April, improving another 80 basis points versus Q1 results. Our retention rate was 59.8% at quarter end, a 30 basis point expansion from the end of 2025, and a significant increase from 56.9% a year earlier. Physical occupancy at our August 2025 lease-up reached 73.1% at the end of March, up from 70.4% at the end of December.

[Dan Oberste, President and CEO at BSR REIT]

Importantly, we began the ramp-up of bulk internet at five of our properties in earnest, which is already showing positive results in our other income line item. The results we posted last night reflect the exact momentum we spoke to last quarter and underlie the fundamental shift we see in our business. I will remind everyone that our December investor presentation laid out and provided transparency on our organic growth plans. Yesterday's results also reflect the very early innings of those returns. While there's still a lot of upside in each of the initiatives we laid out, I'm proud of the tangible progress we've made to date. Even more encouragingly, fundamentals continue to improve in our core markets. Trade-outs were once again improved year-over-year and have demonstrated largely positive momentum.

[Dan Oberste, President and CEO at BSR REIT]

Frankly, the months of May and June will tell us a lot more about the exact extent of the health of the multi-family market. Sitting here today, we're generally encouraged by the results to date. Given our hand-selected high-quality portfolio, our value-adding lease-up, and our operational enhancement initiatives, and a total absence of debt or swap maturities this year, we are in an ideal position to drive growth on a per unit basis as market conditions steadily improve. As we always have, we'll keep focusing on what we can control and carefully allocate capital to its best use to deliver the strongest possible returns. I will now invite Tom to review our Q1 financial results in more detail. Tom?

[Tom Cirbus, CFO at BSR REIT]

Thanks, Dan. Our operational performance in the Q1 met our expectations, and as Dan highlighted, demonstrated substantial improvement on a sequential quarterly basis. While the pace of this quarter-over-quarter improvement will obviously slow, we expect this positive momentum to continue as we keep moving ahead with the lease-up and operational enhancements that we have discussed at length. Beginning with leasing. Effective rates on new leases declined by 5.4% in the quarter, while renewals increased by 2.3% in the quarter, resulting in a blended rate reduction of 1.0%. That represented an improvement of 30 basis points in the blended rate compared to the Q4. To put that number in more perspective, on a year-over-year basis, blended rates improved by 220 basis points.

[Tom Cirbus, CFO at BSR REIT]

Similarly, our April 2026 rates improved 80 basis points relative to our April 2025 results. This, along with several other operational indicators, gives us confidence that rates are generally moving in a positive direction, certainly compared to last year's operating environment. Same community revenue ultimately decreased by 1.6% compared to Q1 last year, primarily driven by the lower average occupancy and the lower average monthly in-place leases that I just spoke to. Lower rental income was partially offset by an increase in other property income of $0.2 million, driven by higher utility reimbursements and the beginning of our rollout of bulk internet. Same community NOI for Q1 2026 was $14.1 million. A 4.7% decrease from last year, but an 11% sequential increase from Q4.

[Tom Cirbus, CFO at BSR REIT]

The year-over-year decline was attributable to the lower revenue I just described, an increase in utility expenses of $0.2 million, and higher overhead and administrative costs of $0.3 million related to our strategic decision to retain overhead. These factors were partially offset by a decrease in property insurance expenses of $0.2 million. Importantly, the sequential improvement was driven primarily by a normalization of the expense load in the Q1 relative to the confluence of anomalies we faced in the Q4 on the expense side. More directly, real estate taxes improved as our typical levels of refunds returned, improvements in turn and repair and maintenance costs driven by a higher retention flow through, and lower administrative and utility expenses. A quick side note before moving on, and appreciating the quarter-over-quarter movement in our taxes was historically challenging to decipher.

[Tom Cirbus, CFO at BSR REIT]

On our financials, we've sought to increase transparency in our MD&A this year via breaking out refunds as a separate line item in the disclosure package. This change will hopefully allow all stakeholders to better appreciate and explain the quarterly changes in this key figure. Below NOI, G&A expense increased by $0.4 million year-over-year, due primarily to higher legal and professional fees as well as payroll expenses. Sequentially, G&A was essentially flat. Finally, net finance costs declined by $1.2 million year-over-year, primarily related to the 2025 strategic disposition of assets. Overall, FFO in Q1 2026 was up 29% to $0.18 per unit compared to $0.14 per unit in the Q4.

[Tom Cirbus, CFO at BSR REIT]

I'm happy to report that the 2025 asset rotations continue to gain momentum and are now accretive relative to our dispositions made during the year, despite our August lease-up acquisition sitting at essentially break even at only 73% physically occupied. The contribution of our results from the 2025 acquisitions cohort should only improve throughout the balance of 2026. The year-over-year decrease in FFO per unit was primarily driven by three items. Higher borrowing costs of $0.03 per unit, lower same community results of $0.01 per unit, and higher G&A of $0.01 per unit. Sequentially, same community improvements added $0.03 per unit, and non-same community added nearly $0.02, slightly offset by $0.01 related to headwinds and borrowing costs. AFFO was $0.17 per unit for the Q1, 55% higher than the $0.11 per unit in Q4.

[Tom Cirbus, CFO at BSR REIT]

To state the obvious, the sequential and quarterly improvements are highly encouraging and demonstrate our momentum in driving organic growth. Moving to the balance sheet. The REIT's debt to gross book value as of March 31, 2026 was 52% compared to 51.2% at the end of 2025. This amounts to $738 million of debt outstanding, with a weighted average interest rate of 4.1% and a weighted average term to maturity of 3.7 years. Total liquidity was $67.3 million at quarter end, including cash and cash equivalents of $7.4 million and $59.9 million available under our revolving credit facility. As usual, we have the ability to obtain additional liquidity by adding unencumbered properties to the current borrowing base of the facility.

[Tom Cirbus, CFO at BSR REIT]

On March 10, 2026, we refinanced a $28 million mortgage onto the REIT's credit facility. As a result, the REIT has no remaining 2026 maturities. Importantly, subsequent to quarter end, we locked in the REIT's cost of credit for the balance of 2026 via a $175 million swap, which amended two previously outstanding swaps at a rate of 2.98%. Finally, as you're likely aware, we are reiterating our original 2026 earnings and same community portfolio guidance that we provided in March. It calls for full year FFO per unit of $0.75-$0.79 or $0.77 per unit at the midpoint, and full year AFFO of $0.68-$0.74 per unit, or $0.71 per unit at the midpoint.

[Tom Cirbus, CFO at BSR REIT]

This guidance assumes 50-150 basis points of same community revenue growth, 100-200 basis points of same community property operating expense and real estate tax growth, amounting to 0-100 basis points of same community NOI growth. We continue to expect our core real estate business to be healthy as we continue building revenue from our lease-up activity, along with marginal additional overhead costs. We will update this guidance as needed throughout the year. I will now turn it back to Dan for his closing remarks.

[Dan Oberste, President and CEO at BSR REIT]

Thanks, Tom. We are increasingly excited about our business outlook. The asset rotations we completed last year, along with our subsequent stabilization efforts, have obviously caused volatility in our short-term financial performance. They put us in an increasingly strong competitive position to benefit from positive rental market fundamentals. Obviously, the focus on the last couple of years has been on the increased multifamily apartment supply in the Texas Triangle. The absorption process persisted longer than we would have hoped, but here's what we're looking at now. After peaking in 2024, new apartment deliveries declined by 25%-50% of last year across Austin, Dallas, and Houston. In 2026, deliveries are projected to drop by a further 43% in Austin, nearly 30% in Dallas, and 7% in Houston.

[Dan Oberste, President and CEO at BSR REIT]

Another 40% decline is expected in Austin in 2027. There's minimal new product coming, and high development costs all but ensure that we won't get a surprising surge of new construction. Demand, meanwhile, continues to be very strong. Our three Texas markets have been among the leaders in supply absorption among all MSAs in the U.S. Their economies are strong and housing is highly affordable, which has made them magnets for migrants from other states and other countries. Texas added more residents in 2025 than any other state. Population growth has been notably strong in the age of the 20-34 cohort, which has the highest propensity to rent of any demographic.

[Dan Oberste, President and CEO at BSR REIT]

You'll recall that back in December, we laid out a plan to drive incremental organic growth in FFO per unit of approximately $0.13-$0.22 from 2026 to 2028. That plan remains entirely on track. All of these initiatives are entirely independent of what happens in our broader rental markets. When you combine them with the anticipated turnaround in rental rates due to rapidly improving supply-demand fundamentals, we believe that we are in a position to drive very strong returns for unitholders. That concludes our prepared remarks this morning. Tom, Susie, and I would now be pleased to answer your questions. Please open the line for questions.

[Operator]

We will now begin the question-and-answer session. Our first question will come from the line of Jimmy Shan with RBC Capital Markets. Please go ahead.

[Jimmy Shan, Managing Director of Global Equity Research at RBC Capital Markets]

Thanks. Just a question on the lease spreads. You know, the sequential improvement that you're seeing, would you say that's more than the typical seasonal uptick that you'd see as you end the spring leasing season and actually seeing improvement in market rents? I guess that would be number 1. Then two is sort of the retention rate. Did that sustain into April and what would be expectation for the summer?

[Susie Rosenbaum, COO at BSR REIT]

Yeah. Hey, Jimmy. First let's talk about the trade-outs in April versus the end of Q1. You're right, the blended rate went up 80%, and we think that is a true turn to seasonality. You can also. Well, May thus far is holding up about the same. The second question that you had was about What's your second question? Sorry. Oh, retention.

[Jimmy Shan, Managing Director of Global Equity Research at RBC Capital Markets]

Retention rate. Yeah.

[Susie Rosenbaum, COO at BSR REIT]

Yeah, thanks. By 60% roughly, at the end of Q1, we're looking the same now too. Why is that? Basically less people are moving out to buy homes. The stats here are looking pretty good. It was about 11.6% at the end of Q1, compared to 12.1% in Q4, and it was 14% in Q1 of 2025. People, you know, if they can't afford to buy a home and either have to rent or want to continue to rent, right, they have several choices. They can incur the cost to move, or they can stay put if they like the services they're giving. I think that our teams, our operations teams, are really good at delivering excellent service, and people are choosing to stay with us.

[Jimmy Shan, Managing Director of Global Equity Research at RBC Capital Markets]

Okay. Sorry, those stats that you just quoted, 11.6 versus 12.1, what was that again? That's the percent of tenants moving out to buy a home?

[Susie Rosenbaum, COO at BSR REIT]

Buying homes.

[Jimmy Shan, Managing Director of Global Equity Research at RBC Capital Markets]

Okay. Got it. Okay. Thank you.

[Operator]

Our next question will come from the line of Brad Sturges with Raymond James. Please go ahead.

[Brad Sturges, Managing Director and Equity Research Analyst at Raymond James]

Hey there. Just following on Jimmy's question there. It sounds like you're cautiously optimistic about the sort of the demand trends you're seeing. Just how are things trending this year versus what you would have saw last year? You know, just maybe a broader comment around which markets you're seeing kind of better demand trends in right now. It seems like it might be Dallas, just given what you're doing on the rate side, but curious to get your thoughts.

[Dan Oberste, President and CEO at BSR REIT]

Hey, Brad, this is Dan. You know, I've seen a few of these leasing seasons and cycles in Texas in particular. I would say the last two years were somewhat anomalies. Two years ago, everyone recalls we had a massive spring leasing season throughout the sector. We saw a significant amount of absorption. It really gave everyone in the industry some real positive feelings about lease-ups. You move forward to last year, you had another strange thing happened, you had really a build-up in January and February that looked to be a very promising leasing season. I guess you can time it on the watch with the Tariff Day, whatever it's called in the U.S. Really just right after that What's the name of it?

[Tom Cirbus, CFO at BSR REIT]

Liberation Day.

[Dan Oberste, President and CEO at BSR REIT]

Liberation Day, I think, is what they called it on Fox News.

[Susie Rosenbaum, COO at BSR REIT]

Yeah.

[Dan Oberste, President and CEO at BSR REIT]

Right after that Liberation Day occurred, I think what we all saw throughout the sector was really a massive chilling effect on the leasing season. We all saw what happened last year. I think the last two years were abnormal. We haven't seen leasing seasons like the last two years on different levels of the extreme. I think you're right to characterize this as cautiously optimistic because what we're seeing right now looks like a traditional leasing season. It looks like the leasing velocity, the asking rents, the effective rents, very predictable.

[Dan Oberste, President and CEO at BSR REIT]

You know, the 17.5% or so of our apartments that either renew or lease throughout this Q2, we see traditional and positive momentum there. We don't see evidence of either extreme as of today. That's leaving us fairly cautiously optimistic about, I think, the path of our same store portfolio and our look forward for the rest of the year.

[Brad Sturges, Managing Director and Equity Research Analyst at Raymond James]

That's great. I guess my other question would be, I really appreciate the breakdown on the real estate tax, and the, you know, the breakout of the refunds. Just as a reminder, when you, when you put out the guidance ranges, how do you account for refunds within your guidance? Is that included, or would that, depending on how the refunds come in, that would be incremental to the guidance?

[Tom Cirbus, CFO at BSR REIT]

Yeah. No, it's included, Brad. This is Tom. It's included in the guidance. Again, well, as we say often, real estate taxes in Texas are hand-to-hand combat every single year. When we're budgeting and thinking about our guidance at the beginning of the year, we really lean on our third-party experts, our consultants that help us litigate taxes and work on the refunds, and their assessment of where we think we're gonna land. Then we use our 30 years of operating history, to make a judgment call on what we believe is a realistic outcome and that is actionable, and we budget and guide accordingly. The guidance effect reflects all of that.

[Brad Sturges, Managing Director and Equity Research Analyst at Raymond James]

Okay. Appreciate that. I'll turn it back.

[Operator]

Our next question comes from the line of Jonathan Kelcher with TD Cowen. Please go ahead.

[Jonathan Kelcher, Analyst at TD Cowen]

Thank you. On the $0.13-$0.22 that you guys expect to get over the next three years, how much are of it or any of that was in Q1? Can you remind us what you expect for 2026 and 2027?

[Susie Rosenbaum, COO at BSR REIT]

Sure. First let's start with our the non-same store portfolio. It looks like we leased between 70 and 80 more units after Q4 in Q1, which gave us about $100,000 in additional revenue net. You got to remember, that's not the fully loaded amount. Why? Because we're leasing over the quarter. That should contribute a little over $300,000 for those additional units in Q2 and then in quarters forward. You also have to remember that we're gonna continue leasing as we move forward throughout the year. The other piece of it is our August acquisition, which is in lease up. We ended the quarter at 73% physical occupancy. We expect that one at the latest by July to be physically stabilized. That's physically, Dave.

[Susie Rosenbaum, COO at BSR REIT]

We still will continue to burn off concessions, which is the second bite of apple, so to speak. That would be over the next year as well before that one gets to true stabilization. Bulk internet. There you go. We brought online the first five that we started in 2025. As I've said before, Q1, there's not a contribution really to revenue there because we're in the ramp-up period. However, by the end of the year, we would expect to have a net $400,000 in additional revenue in 2026 related to the bulk internet project.

[Susie Rosenbaum, COO at BSR REIT]

Now, as I also said during our last call, however, we're gonna recognize around on 70% of total realization for those who are bringing online this year too, which is the remainder of the portfolio in 2027, and then the tail of it in the Q1 of 2028.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. sounds like not a ton yet, and it's gonna continue to build with a bigger portion, the biggest portion, I guess, coming on next year. Is that fair?

[Susie Rosenbaum, COO at BSR REIT]

Correct.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. Secondly, Dan, probably for you, just on capital recycling, are you seeing right now any opportunities to sell assets and redeploy into new opportunities?

[Dan Oberste, President and CEO at BSR REIT]

Yeah. Right now, Jonathan, we don't have anything in our in our guidance related to dispositions or acquisitions. I think my sense of the market is that, you know, we're seeing some transaction volume in our markets, you know, several billions of dollars of it. In speaking with the buyers and sellers, capital feels threatened, and lower transaction velocity makes sense. We kind of see this as transitory and prefer to transact specifically on the sale side in markets where capital doesn't feel threatened and where transaction volume is heightened. There's some read-throughs on some low caps. The buyer pool is generally smaller, not institutional grade. I think I'm gonna blame this entirely on the volatility in credit spreads.

[Dan Oberste, President and CEO at BSR REIT]

If the private buyer pool is leading on the acquisition front right now in our markets, Jonathan, then they're gonna be more highly reliant on the interest rate curve. I think we've seen it take all, like, 16 different shapes in the last two months. What we've seen is we've seen a lot of evidence of transactions being placed, or properties being placed under contract at promising values. Those transactions being thrown back by the market, for one or more reasons, but they all lead to credit rates, credit spreads. You know, we've bought and sold in several different types of markets. When interest rate volatility is doing what it does in a market like this, it becomes a real popular excuse for a buyer to throw back a deal.

[Dan Oberste, President and CEO at BSR REIT]

You see a lot more buyers enter the market that are more promoter-oriented, where they try to put a property under contract, and then go raise capital behind it. We've found in our experience that a non-reliable buyer like that creates an uncertain transaction, and we just can't run our business in that environment, you know, for dispositions. Does that answer your question?

[Jonathan Kelcher, Analyst at TD Cowen]

Yeah, that's, I guess we need a calmer credit environment before volumes pick up.

[Dan Oberste, President and CEO at BSR REIT]

Yeah, more or less.

[Jonathan Kelcher, Analyst at TD Cowen]

Right? Yeah. Okay, thanks. I'll turn it back.

[Operator]

Our next question will come from the line of Dean Wilkinson with CIBC. Please go ahead.

[Dean Wilkinson, Analyst at CIBC]

Thank you. I just wanna follow on Jonathan's question there. Dan, do you think that that reticence from the buyer is coming more from the equity side of things, or do you think that credit is starting to clamp down on them a little bit and maybe these were potentially, you know, sort of higher levered acquirers that just are not getting that access to credit and, you know, you look at the 30-year now piercing through five, 10's probably heading there, that it's more of a debt issue than an equity one?

[Dan Oberste, President and CEO at BSR REIT]

Yeah, I think the debt begets the equity, Dean. I mean, if debt's pricing in at 530 and 540 in some of these markets for the leverage that the private buyer's trying to take out, I think you gotta be very convicted on the revenue growth to underwrite an acquisition at a negative leverage. So your equity can afford to be patient, but your credit partner's gonna have a hard time levering at, you know, 80% advance rates on those acquisitions. That's speaking specifically to just our observations of the private market and how it's acting right now. You know, I think the other thing you're seeing is the mindset of the seller.

[Dan Oberste, President and CEO at BSR REIT]

Fortunately for our investors, we picked up our acquisitions and lease ups in our 2025 acquisition class. The mindset of those sellers right now is they understand there's a clear distinctive line in value between a lease up value and an occupied value. We're seeing a lot of those developers pivot to completing their lease ups before they're really actively and sincerely engaged in disposing. Now naturally, we see the greatest benefit in buying a lease up asset.

[Dean Wilkinson, Analyst at CIBC]

Right.

[Dan Oberste, President and CEO at BSR REIT]

We see sellers that aren't necessarily interested. They wanna hold on to that value as long as they can. It's an interesting game of chicken you're seeing in the market, for, you know, inciting a seller who might have the highest value. You know, the buyer wants to generate income increases by buying lease ups. The seller wants to hold on to the lease up because they believe that the occupied asset's gonna trade at a higher value. The seller probably walked into that deal higher levered to begin with, and is just trying to recoup some of their capital that they placed on the deal from the outset. All that to me leads to sellers hanging on to lease ups a little bit longer and, I would say, potentially a less reliable private buyer pool than in calmer waters.

[Dean Wilkinson, Analyst at CIBC]

Not necessarily indicative of, say, a stressed seller.

[Dan Oberste, President and CEO at BSR REIT]

No, not at this time. I mean, there's always a handful of stressed sellers in just about any environment.

[Dean Wilkinson, Analyst at CIBC]

Yeah

[Dan Oberste, President and CEO at BSR REIT]

I don't see I mean, in our discussions with operators, I see them very patient, and developers very patient. I'm sure there's probably some a little bit of acrimony related to partnership behaviors, but nothing on the level of, people picking up pitchforks and partnerships blowing up.

[Dean Wilkinson, Analyst at CIBC]

Well, not yet anyway. All right. Thanks, Dan. Appreciate it.

[Operator]

Our next question comes from the line of Kyle Stanley with Desjardins. Please go ahead.

[Kyle Stanley, Analyst at Desjardins]

Thanks. Hi, everyone. Just going to your leasing spreads for the Q1. Obviously, Austin looked like there was a pretty good improvement. Dallas did look a little bit softer than the Q4. Just curious if you can talk about the difference in dynamics between the two markets and what maybe drove that in Dallas.

[Susie Rosenbaum, COO at BSR REIT]

Sure. Look, supply in Dallas, particularly the northern sub-market, Frisco, McKinney, Prosper, and Celina, is still pretty tough. There is a lot of supply that still needs to be absorbed, and it will be, 'cause we still have a lot of people moving into these markets as well. You've got, you know, lease-ups there that are still offering up to 10 free weeks concessions with gift cards anywhere from $500-$1,500. We continue to lease up our August acquisition, right? We're offering maybe eight weeks free on only certain one and two-bedroom floor plans and some we offer four weeks free on some of our three-bedroom floor plans. With that, we're balancing rate, right, against physical occupancy as we continue to lease.

[Susie Rosenbaum, COO at BSR REIT]

We're excited about the momentum that we got, at the end of the Q1, and we continue to see happening right now, which is why I believe it'll be physically stabilized, by July. We're also looking at the rates as well. We're comfortable with the physical occupancy between 94% and 96%, as we've said, and we tweak the rates to fall within that range.

[Kyle Stanley, Analyst at Desjardins]

Okay. Thank you for that. That was very helpful. As we look at the non-same property portfolio, excluding The Ownsby, it does look like you've had great success there and, you know, it's near stabilization. You know, something you've talked about in the past is the ability to see margin enhancement as that part of the portfolio becomes more stabilized. Where would the margins be today versus where could they end up, you know, as you start to turn over leases and get your second or third kick at the can on these?

[Susie Rosenbaum, COO at BSR REIT]

Right. All right. If you take out the August acquisition, we're probably average physically occupied at about 94%. Once we burned off all concessions, we would figure the margins on those new properties would be around 60%.

[Kyle Stanley, Analyst at Desjardins]

Okay. Okay, perfect. That's it for me. I will turn it back. Thank you very much.

[Operator]

Again, for any questions, press star one. Our next question will come from the line of Sairam Srinivas with ATB Capital Markets. Please go ahead.

[Sairam Srinivas, Analyst at ATB Capital Markets]

Thank you, operator. Good afternoon, guys, and thank you for taking the question. I did miss the initial part of the call, so my apologies if this has already been discussed. Just so when you look at occupancy in these markets and you see the ramp up, obviously, you know, you guys focus more on occupancy through the winter quarters. There's still, you know, a year-over-year gap in terms of where stable's occupancy was and where it is right now. As you see the next couple of quarters play out, are we still comfortable in seeing that supply cliff drop off coming towards the end of this year and probably into 2027?

[Dan Oberste, President and CEO at BSR REIT]

Sairam, this is Dan. I think we're really comfortable. I mean, you know, we engaged a, an advisor, and I think you might have been there when we spoke to it in December, who, for example, walked through Austin and looked at the supply numbers in Austin and then physically walked through every asset that was listed as a delivery or in place or a construction start in the city of Austin. Their numbers, I'd say, more or less supported what you would see on CoStar. I think it was, like, 60 or 70 units off. If that's step 1, step 2 is you can kind of understand, I'll say down to the month, how long it takes to deliver a product from shovels in the ground to delivery.

[Dan Oberste, President and CEO at BSR REIT]

We feel like we have a pretty good picture of construction and process on the supply side of the equation and when those units are gonna be delivered, or in this particular case, when they have been delivered from 2022 through 2025. I think the other end is the demand equation. You know, the numbers on net employment growth continue to support, you know, our thesis. I know that we all underwrote probably a little bit less employment and population growth in Texas through 2030. Those numbers are fairly accurate. Those numbers have been out for 10 years, and they tend to be fairly accurate as well. What we're seeing on the ground is that continuous flow of population, but it's in line with our expectations.

[Dan Oberste, President and CEO at BSR REIT]

When you balance out the projects in place against the population growth, particularly in the 2018 or the 2020 to 2024 category, it really doesn't have to be that much more complicated. There's people coming in, households form, a percentage of those households are gonna rent, a percentage of those renters are gonna be new renters. There's a certain number of available units in the market and a certain number of expected residents that are gonna be seeking new apartments in that market. Then you just kind of do some little addition and subtraction over a period of time, and you can extrapolate some absorption numbers. You know, I think we would all be hopeful that the rates would turn sooner, but the absorption picture has been pretty clear and rigid for the last two years. I hadn't seen many surprises there.

[Sairam Srinivas, Analyst at ATB Capital Markets]

That is great, Dan. Thank you all. Turn it back.

[Operator]

This concludes our question and answer session. I'll hand the call back over to Dan for any closing comments.

[Dan Oberste, President and CEO at BSR REIT]

Thank you, Regina. Thank you, all. We look forward to seeing you in Nareit in early June for our investor presentations. Between now and then, if any of our investors would like a tour of our markets, please, you know where to find us. Please reach out to us. We're happy to tour you through our properties. Thank you, everyone, have a good night.

[Operator]

This concludes our call today. Thank you again for joining. You may now disconnect.

Participants

Analysts

• Brad Sturges, Managing Director and Equity Research Analyst at Raymond James
• Dan Oberste, President and CEO at BSR REIT
• Dean Wilkinson, Analyst at CIBC
• Jimmy Shan, Managing Director of Global Equity Research at RBC Capital Markets
• Jonathan Kelcher, Analyst at TD Cowen
• Kyle Stanley, Analyst at Desjardins
• Sairam Srinivas, Analyst at ATB Capital Markets
• Spencer Andrews, VP of Investor Relations and Marketing at BSR REIT
• Susie Rosenbaum, COO at BSR REIT
• Tom Cirbus, CFO at BSR REIT