BSR Real Estate Investment Trust (TSE:HOM.UN) said its first-quarter results showed sequential improvement as expenses normalized, recent acquisitions continued to lease up and early organic growth initiatives began contributing to revenue.
On the REIT’s earnings call for the quarter ended March 31, 2026, President and CEO Dan Oberste said Q1 “marks the beginning of a period of significant momentum” for the company. He pointed to sequential improvement in same-community net operating income and margins, progress stabilizing the 2025 acquisition class and early results from the REIT’s bulk internet and valet trash initiatives.
“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,” Oberste said.
Same-community NOI rises from fourth quarter but remains below last year
Chief Financial Officer Tom Cirbus said same-community NOI was $14.1 million in the first quarter, down 4.7% from a year earlier but up 11% from the fourth quarter of 2025. The year-over-year decline reflected lower revenue, a $0.2 million increase in utility expenses and $0.3 million of higher overhead and administrative costs tied to the REIT’s decision to retain overhead. Those pressures were partly offset by a $0.2 million decrease in property insurance expenses.
Cirbus said the sequential improvement was driven mainly by a “normalization of the expense load” after unusual expense pressures in the fourth quarter. He cited improved real estate tax refunds, lower turn and repair and maintenance costs due to higher retention, and lower administrative and utility expenses.
Same-community revenue declined 1.6% year over year, primarily due to lower average occupancy and lower average monthly in-place leases. That was partially offset by a $0.2 million increase in other property income, driven by higher utility reimbursements and the start of the bulk internet rollout.
BSR said same-community weighted average occupancy ended the quarter at 94.3%, flat with year-end 2025. The REIT’s retention rate was 59.8% at quarter-end, up 30 basis points from the end of 2025 and up from 56.9% a year earlier.
Leasing trends improve, with April showing further gains
During the first quarter, effective rates on new leases declined 5.4%, while renewals rose 2.3%, resulting in a blended rate decline of 1.0%. Cirbus said that represented a 30-basis-point improvement from the fourth quarter and a 220-basis-point improvement year over year.
Oberste said same-community blended rates improved 30 basis points in Q1 from Q4 and added that the trend continued in April, improving another 80 basis points versus first-quarter results.
In response to a question from RBC Capital Markets analyst Jimmy Shan, Chief Operating Officer Susie Rosenbaum said April’s blended-rate improvement reflected “a true turn to seasonality” and that May was holding up about the same so far. She said retention remained roughly around 60%, helped by fewer residents moving out to buy homes. Rosenbaum said move-outs to buy homes were 11.6% at the end of Q1, compared with 12.1% in Q4 and 14% in Q1 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,” Rosenbaum said. “They can incur the cost to move, or they can stay put if they like the services they’re giving.”
2025 acquisitions and bulk internet expected to build through 2026
BSR said its August 2025 lease-up acquisition, The Ownsby, reached 73.1% physical occupancy at the end of March, up from 70.4% at the end of December. Cirbus said the 2025 asset rotations were now accretive relative to dispositions made during the year, even with the August lease-up acquisition “sitting at essentially break even” at 73% physical occupancy.
Rosenbaum said the REIT expects the August acquisition to be physically stabilized by July at the latest, though concessions will continue to burn off over the following year before the asset reaches “true stabilization.” Excluding the August acquisition, she said the non-same property portfolio was averaging about 94% physical occupancy, with margins expected to be around 60% once concessions fully burn off.
Rosenbaum also said five properties brought online for bulk internet from 2025 were in the ramp-up period during Q1, with little revenue contribution in the quarter. By the end of 2026, the REIT expects approximately $400,000 in additional net revenue from the bulk internet project.
Oberste reiterated that the REIT’s December plan to generate incremental organic growth in FFO per unit of about $0.13 to $0.22 from 2026 to 2028 remains on track.
FFO and AFFO improve sequentially; guidance maintained
BSR reported first-quarter funds from operations of $0.18 per unit, up 29% from $0.14 per unit in the fourth quarter. Adjusted funds from operations were $0.17 per unit, up 55% from $0.11 per unit in Q4.
Cirbus said the year-over-year decline in FFO per unit was mainly due to higher borrowing costs of $0.03 per unit, lower same-community results of $0.01 per unit and higher G of $0.01 per unit. Sequentially, same-community improvements added $0.03 per unit, and non-same-community properties added nearly $0.02 per unit, partly offset by a $0.01 headwind from borrowing costs.
The REIT reiterated its 2026 guidance, which calls for:
- Full-year FFO per unit of $0.75 to $0.79, with a midpoint of $0.77.
- Full-year AFFO per unit of $0.68 to $0.74, with a midpoint of $0.71.
- Same-community revenue growth of 50 to 150 basis points.
- Same-community property operating expense and real estate tax growth of 100 to 200 basis points.
- Same-community NOI growth of 0 to 100 basis points.
Balance sheet positioned with no 2026 maturities
BSR ended the quarter with debt to gross book value of 52%, compared with 51.2% at the end of 2025. Debt outstanding totaled $738 million, 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, including $7.4 million of cash and cash equivalents and $59.9 million available under the revolving credit facility. Cirbus said the REIT refinanced a $28 million mortgage onto its credit facility on March 10, leaving it with no remaining 2026 maturities. Subsequent to quarter-end, BSR locked in its cost of credit for the rest of 2026 through a $175 million swap that amended two previously outstanding swaps at a rate of 2.98%.
Oberste said improving supply-demand fundamentals in the REIT’s Texas markets support the outlook. He said new apartment deliveries declined by 25% to 50% last year across Austin, Dallas and Houston after peaking in 2024, with further declines projected in 2026. He also said demand remains strong, citing Texas population growth and the state’s appeal to the 20-to-34-year-old cohort, which he said has the highest propensity to rent.
“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,” Oberste said.
About BSR Real Estate Investment Trust (TSE:HOM.UN)
BSR Real Estate Investment Trust 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.
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