BSR Real Estate Investment Trust (TSE:HOM.UN) management used its fourth-quarter conference call to frame 2025 as a transition year marked by major portfolio rotation, a softer leasing backdrop in Texas, and interest-rate headwinds, while pointing investors to a multi-year earnings ramp tied to lease-up assets and ancillary revenue initiatives.
2025 transition: asset rotation and capital structure changes
CEO Dan Oberste said the REIT “deliberately rotated nearly $1 billion of property” during 2025, disposing of stabilized assets and redeploying capital into newer lease-up assets with what the company views as greater growth potential. Oberste also highlighted a streamlining of the capital structure through the cancellation of roughly 75% of Class B units, which he said represented about 27% of total units as converted.
Lease-up progress at Aura 3550 and The Owensby
Management emphasized progress at its two primary lease-up assets. Aura 3550 ended 2025 at 92% occupied, up from 86.6% at the end of Q3 and from the “low 20s” in early 2025. Oberste said a full year of a physically stabilized Aura 3550 should provide year-over-year upside in 2026.
The Owensby closed the year at 70.4% occupied, which management described as another potential contributor to upside in the non-same-community portfolio in 2026 as leasing continues.
In the Q&A, management quantified the remaining lease-up opportunity in terms of units and revenue rather than NOI margin. CFO Thomas Cirbus said that at year-end the REIT had 188 apartments left to lease, which at market rents equated to roughly $3.0 million to $3.75 million of gross revenue. Oberste said the financial benefit is expected to show up “in disguise” in the back half of 2026 and then become clearer through 2027 as lease-up completes and renewals reset.
Q4 operating trends: blended rates pressured by new leases
Cirbus said fourth-quarter operating performance was in line with management expectations and reflected the typical seasonal slowdown in leasing activity. The quarter saw renewal rates increase 2.2%, but new lease rates declined 6.3%, resulting in blended rates down 1.3% for the period. Cirbus added that January continued to show deceleration in blended-rate decreases and that the REIT saw “a modest sequential improvement” in February versus January.
COO Susan Rosenbaum noted that year-over-year Q4 leasing metrics improved versus the prior year’s winter period, even though they remained negative on a blended basis. She said same-store blended rates were about negative 3.4% in Q4 2024 compared with negative 1.3% in Q4 2025; renewals improved from positive 1.6% to positive 2.2%; and new lease declines moderated from negative 8.4% to negative 6.3%. Rosenbaum said lease volumes were “about the same” year over year, at roughly 1,000 leases in Q4, and she expected trends to turn more positive toward late March and early April.
For Q4, same-community revenue decreased 1.2% year over year, which Cirbus attributed primarily to lower average monthly in-place leases. Average monthly in-place rent was $1,436 as of December 31, 2025, down from $1,447 a year earlier, partially offset by higher other property income. Cirbus said other income benefited from internalization initiatives, including expansions of valet trash and bulk internet programs, which the REIT expects to “materially enhance” organic growth beginning in 2026.
Financial results: lower FFO/AFFO, taxes timing, and interest headwinds
Same-community NOI in Q4 2025 was $12.7 million, down 6.1% from the prior year. Cirbus cited lower revenue, an additional $0.3 million of expenses pushed to same-community properties due to retained overhead, and higher real estate taxes, repairs and maintenance, and utilities, partially offset by lower insurance expense.
FFO in Q4 was $0.14 per unit, compared with $0.19 in Q3 and $0.22 in Q4 2024. AFFO was $0.11 per unit, versus $0.17 in Q3 and $0.20 in the prior-year quarter. Cirbus said the sequential decline from Q3 to Q4 was primarily related to the timing of real estate tax appeal proceeds and legal and professional fees associated with those appeals. For the full year, FFO per unit was $0.79 versus $0.96 in 2024, and AFFO per unit was $0.70 versus $0.88 in 2024, driven by higher realized interest rates, rotation-related timing drags, and a softer leasing environment versus 2024.
Discussing Q4 real estate taxes, Cirbus said the REIT received no tax refunds in Q4 (compared with about $730,000 in Q3) and that full-year 2025 refunds totaled $2.1 million. He also said the company recorded a Q4 “true-up” for tax expense, primarily related to assets acquired during the year, when initial appraisals came in higher than expected. Cirbus said the REIT feels good about its ability to obtain appeal proceeds in 2026, but it did not have sufficient accounting support to recognize those benefits in advance.
Balance sheet and 2026 guidance
As of December 31, the REIT’s debt-to-gross-book value was 51.2%, with $723.1 million of debt outstanding and a weighted average interest rate of 4%. Cirbus said 99% of the debt was fixed or economically hedged to fixed rates. Liquidity totaled $52.7 million, including $6.3 million of cash and $46.4 million available on the revolving credit facility.
The company refinanced its revolving credit facility in December, extending the maturity to December 2030 assuming an extension option is exercised, and reduced the interest rate margin for most leverage points. The REIT also extended a $160 million term loan to December 2027. Cirbus said a $28 million 2026 maturity related to the Vail Luxury property in Houston was refinanced onto the credit facility, leaving the REIT with no remaining 2026 maturities.
For 2026, management issued preliminary guidance of FFO per unit of CAD 0.75 to CAD 0.79 (midpoint CAD 0.77) and AFFO per unit of CAD 0.68 to CAD 0.74 (midpoint CAD 0.71). Assumptions include 50 to 150 basis points of same-community revenue growth, 100 to 200 basis points of same-community property operating expense and real estate tax growth, and 0 to 100 basis points of same-community NOI growth. In response to an analyst question, Cirbus said the guidance assumes occupancy around the midpoint of the REIT’s “healthy occupancy” range of 94% to 96%, and rates “flat to up 1%.”
Cirbus also said the midpoint guidance implies a $0.04 per unit headwind from interest rates in 2026 versus 2025. Oberste added that his expectations for 2026 rate improvement shifted since December, saying he anticipated earlier rate improvement than the company is currently seeing.
On ancillary revenue, Cirbus said 2026 guidance includes about $400,000 from five properties that went live with bulk internet near the end of 2025, noting those five could contribute about $1.1 million once stabilized in 2028. He added that the remaining 20 properties are expected to begin implementation in 2026 but are not expected to contribute to NOI in 2026, with ramp-ups expected in 2027.
Oberste also noted board changes, including the retirement of W. Daniel Hughes, Jr. and the planned departure of trustee Bryan H. Held at the upcoming annual meeting. The REIT added Mark Decker to the board in January and said it intends to nominate Corinne McIndoe to replace Held.
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.
