BSR Real Estate Investment Trust

Good afternoon. My name is Joelle, and I will be your conference coordinator today. At this time, I would like to welcome everyone to the BSRE Q3 2024 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. Thank you. Now I'd like to turn the conference over to Dan Oberski, President and Chief Executive Officer of BSR REIT.

Please go ahead. Thank you, Joelle, and good day, everyone.

Welcome to BSR REIT's conference call to discuss our financial results for the third quarter ended September 30th, 2024. I'm joined on the call by Susie Rosenbaum, the REIT's COO and Interim Chief Financial Officer. I'll begin the call with an overview of our Q3 performance highlights. Suzy will then review the financials in detail, and I'll conclude by discussing our business outlook. After that, we'll be pleased to take your questions. To begin, I want to remind listeners that certain statements about future events made on this conference call are forward-looking in nature. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially. Please refer to the cautionary statements on forward-looking information in our news release in MD&A dated November 7, 2024 for more information. During the call, we will reference certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they're not recognized measures and do not have standardized meetings under IFRS. Please see our MD&A for additional information regarding our non-IFRS financial measures including reconciliations to the nearest IFRS measures. Also, please note that all dollar amounts are denominated in U.S. currency. Our financial and operating performance in the third quarter was in line with our expectations, as we expertly managed through the latter stages of the absorption of the unprecedented new multifamily housing supply. Through the quarter, we generated an increase in our blended lease rate, maintained strong occupancy, and retired about $12 million of long-term debt. For the quarter, same community revenues increased 0.5% compared to Q3 last year. Same community NOI declined slightly due to an increase in property tax expense associated with the recording of the change in Texas tax legislation for 2023 in Q3 of last year, and to lower tax refunds related to the timing of when refunds were received. an expected result discussed in previous quarters. And FFO and AFFO per unit were consistent with last year. Blended rental rates in the quarter increased by 0.3% over the prior leases, excluding short-term leases. Furthermore, if you remove Austin, which is our most challenging market as it relates to new supply, our blended rental rates increased another 80 basis points to 1.1% for the quarter. It should also be noted according to RealPage Market Analytics, that Dallas, Austin, and Houston were first, second, and fourth, respectively, in national rankings for the absorption of new multifamily deliveries in Q2 of this year. Our weighted average occupancy at quarter end was 94.7%, slightly below recent levels, but still in line with our range of comfort as it relates to balancing occupancy and rate. Finally, Our November and December 60-day exposure to expiring leases of 5.8% will serve to keep occupancy stable during the slower leasing season. The results continue to reflect the high quality of our portfolio and the resilience of our core Texas rental markets, driven by robust economic growth and continued population migration. Though we have seen record levels of new deliveries take place in our markets, the absorption of this supply has exceeded our expectations. and the pace of new development has slowed dramatically. Migration into our markets continues to be very strong, with our two Austin submarkets of Georgetown and Kyle leading the nation in population growth for cities of 50,000 or more, and Dallas and Houston first and second in cumulative population growth among MSAs. When you look at our markets combined, we believe that we are past peak supply deliveries. As this impressive rate of absorption continues, it will create supply constraints moving into late 25 and beyond. Meanwhile, we have continued to strengthen our balance sheet. We took further action to mitigate interest costs through a $150 million swaption in the quarter that Suzy will describe shortly. And as I highlighted, we retired $11.9 million of debt on our credit facility with cash flow generated from operations. Subsequent to quarter end, last week, we executed a separate $42 million forward swap beginning February 2025. Once it takes effect, this swap enables us to lock in interest savings for our unit holders following retiring our debentures. Suzy will discuss more on our debenture retirement later on in the call. Suffice to say, we seize every opportunity to preserve and increase returns to our unit holders. As you know, Our Board of Trustees also made the decision during the quarter to increase our monthly distributions by 7.7%. This is the second time we've increased distributions since 2022 and reflects our cash flow growth and our commitment to maximizing returns for our unit holders. The increase went into effect with our August distribution. Our AFFO payout ratio for the quarter was 65.9%, reflecting the increase. We continue to view our units as a great investment. Accordingly, we are renewing our normal course issuer bid effective November 12, 2024, for up to a maximum of 10% of the public float over the following 12-month period. On the external growth front, as you are aware, we previously discussed the initial leasing of our 238-suite Austin development in August. We are pleased to see the community named ORA 3550 leasing up on schedule with between 9 and 14 leases per month of leasing velocity since August. We expect final COs of ORA to be delivered in November and look forward to the incremental cash flow generated by the project as it stabilizes next year. We continue to see opportunities for additional acquisitions and perhaps some rotations in our markets. As is our reputation, we will execute when we see appropriate accretion for our unit holders. While we did not acquire an asset in the third quarter, as expected, we saw increased opportunities, just not the right opportunity. We will remain patient and disciplined with our unit holders' capital and look forward to seizing acquisitions when appropriate in the near future. I will now invite Suzy to review our third quarter financial results in more detail. Suzy?