Fourth-quarter 2022 net income nose-dived at BSR Real Estate Investment Trust, with the Little Rock company reporting a $16.4 million loss as property values declined in a turbulent market. BSR reported a $70.9 million profit for the same quarter in 2021.
The firm reported that the fair value of its properties increased by $72.5 million for the full year 2022. In the fourth quarter of 2022, it adjusted its fair values down by $43 million.
In 2022, the Little Rock company delivered $227.2 million in profits, dropping from $283.2 million in 2021. Revenue for the year was up 32.6% to $158.5 million from $119.6 million in 2021.
"2022 was easily the strongest year in BSR REIT's history," Chief Executive Officer Dan Oberste told the investment community on a conference call Thursday. "Our focus on high-quality properties in high-growth Texas markets resulted in outstanding financial and operating performance."
BSR owns and manages apartment complexes in Arkansas, Oklahoma and Texas, primarily in the Austin, Dallas-Fort Worth and Houston metro area.
For the quarter, BSR saw increased same-community revenue and net operating income. Same-community revenues increased 13.3% to $24.9 million while net operating income was up 11.7% to $13.8 million. "The results reflected continued high occupancy and strong growth in weighted average rent across our portfolio," Oberste said on the call.
Occupancy rates were flat at 96% while average rents increased 11.7% to $1,482, up from $1,327 in the same period in 2021.
Over the full year, same-community revenue increased 11.7% to $94.3 million and net operating income jumped 13.5% to $51.1 million.
Looking forward, the company said it has a strong foundation in place moving into 2023.
"Our outlook remains highly positive," Oberste said, noting the firm is projecting "solid financial growth in our key financial metrics supported by very strong rental market conditions in our Texas MSAs."
BSR, which has been in active in the mergers-and-acquisitions market by aggressively selling older properties and buying newer developments, is open to more purchases and Oberste said M&A activity could pick up later this year. "Right now, we don't plan on selling any assets," he added.
Property valuations now are not favorable to deal-making and the company will sit on the sidelines until market conditions change. "We'll remain patient and nimble," Oberste said. "When we see opportunities, we'll pounce on them."
The company owns 31 multifamily residential properties with 8,666 apartment units. About 85% of the apartment units are in Texas, 11% in Oklahoma and 4% in Arkansas. BSR also is developing a new property in Austin. BSR trades on the Toronto Stock Exchange and closed down 1% Thursday at $13.71.
CORRECTION: BSR Real Estate Investment Trust reported that the fair value of its properties increased by $72.5 million for the full year 2022. In the fourth quarter of 2022 it adjusted its fair values down by $43 million. An earlier version of this story incorrectly reported the property values.