BSR's Q1 earnings showed negative rent pressure in Austin and DFW due to elevated supply, leading to a revised NAVPU of ~$13.5. Modest revenue decline offset by lower operating costs resulted in a 6% increase in NOI, with FFO and AFFO per unit up ~6% and ~7%. BSR's valuation implies ~11% upside in addition to the ~4.4% yield, with risks including continued rent pressures and supply overhang.
We had rated BSR REIT as a buy in our initial coverage. The REIT has performed well and delivered great returns. We look at the REIT's Q1-2024 results and tell you why we are moving elsewhere.