BSR Real Estate Investment Trust (TSE:HOM.UN) reported higher third-quarter revenue and net operating income as properties acquired in 2025 continued to lease up, although performance declined at its comparable properties.
Total portfolio revenue rose 4.3% year over year to $34.5 million for the quarter ended September 30, 2026. Net operating income (NOI) increased 2.4% to $17.7 million. Funds from operations (FFO) were $0.19 per unit, unchanged from a year earlier and up from $0.18 in the second quarter.
Chief Executive Officer Dan Oberste said occupancy ended the quarter at 94%. Occupancy at non-same-community properties rose to 93.6% from 83.6% a year earlier, while NOI from those properties increased 36.5%.
The gains helped offset weaker results in the same-community portfolio, where third-quarter NOI fell 4.5% year over year to $13.7 million. Chief Financial Officer Tom Cirbus attributed the decline to the timing of real estate tax refunds, softer revenue and higher overhead and administrative expenses.
Leasing Strategy Shifts Toward Occupancy
Effective rates on new leases fell 4.4% in the third quarter, while renewal rates rose 2.6%. The combined effect was a 0.2% decline in blended lease rates.
Cirbus said BSR pushed new-lease rates during the first two months of the quarter while generally maintaining occupancy. Management shifted its focus toward occupancy in September as leasing seasonally slowed and the market signaled that the trust had reached its limit on rates.
Chief Operating Officer Susie Rosenbaum said occupancy had subsequently risen to 96.1% in Austin, 94.9% in Dallas and 94.6% in Houston. With occupancy at a level she was comfortable with, she said BSR would begin pushing rates again, although she could not predict how much it would achieve through the remainder of the quarter and into 2027.
Rosenbaum said slower-than-expected absorption remained a challenge in North Dallas and Northwest Houston. In Northwest Houston, BSR plans to prioritize occupancy over rates in 2027. By contrast, she said the trust’s Austin development property had nearly reached stabilization and was no longer offering concessions.
Growth Initiatives and Guidance
BSR maintained the full-year guidance it revised in the second quarter. Asked about the outlook for 0% to 1% same-property NOI growth despite a year-to-date decline, Cirbus said an unusually weak fourth quarter of 2025 would make for an easier comparison. He said flat sequential same-community NOI in the fourth quarter would translate into roughly 9% year-over-year growth.
Cirbus also pointed to expected revenue growth from occupancy, rates and the rollout of bulk internet, along with potential expense improvements. He said there was no immediate initiative to change the same-property pool, although a couple of properties were close to joining it.
Oberste said the NOI margin at non-same-community properties was 49.2% in the third quarter, up from 44.7% a year earlier. He expects the gap with stabilized properties to narrow as concessions expire, rent is collected for a full year and expenses normalize. During the question-and-answer session, he said the portfolio should move toward a roughly 54% margin during 2027 and reach a more traditional stabilized level by late 2027 or early 2028.
The trust’s bulk internet program was operating at seven of its 26 properties and being installed at five more, Oberste said. He expects those five to begin ramping up by year-end and the remaining properties to be live by the first quarter of 2027. Cirbus said a property typically takes 12 to 14 months to ramp up as leases turn over.
Oberste said a centralization initiative was meeting its target of annualized savings equivalent to $0.02 of FFO per unit. Management reiterated its target for its organic initiatives to generate incremental growth of $0.13 to $0.22 per unit by early 2028.
Balance Sheet and Market Conditions
Adjusted FFO was $0.16 per unit, down from $0.17 a year earlier but up from $0.15 in the second quarter. At quarter-end, debt represented 52.2% of gross book value, with an average interest rate of 4.1% and a weighted average maturity of 3.2 years. Liquidity totaled $59.9 million.
BSR registered with the U.S. Securities and Exchange Commission and listed on the New York Stock Exchange. Cirbus estimated that the exchange listing alone could add a $0.01 to $0.03 per-unit general and administrative expense headwind in 2027, while other efficiency initiatives could offset some of the impact.
Oberste said the trust’s markets were still absorbing housing delivered between 2022 and 2024. He said rising Treasury yields and borrowing costs had affected property-market negotiations, but BSR had not seen evidence in closed transactions of higher capitalization rates as of November 12.
About BSR Real Estate Investment Trust (TSE:HOM.UN)
BSR Real Estate Investment Trust is an internally managed, unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT owns a portfolio of multifamily garden-style residential properties located in attractive primary markets in the Sunbelt region of the United States.
