Thesis
BSR REIT (OTCPK:BSRTF) is a small cap multifamily REIT with investments across the sunbelt region. Dilution to earnings has resulted from short-term capital recycling activities. Consequently, BSR’s stock price has lagged peer multifamily REITs. Capital recycling activity from tertiary sunbelt markets to primary sunbelt markets has concentrated the REIT in stable, growth-oriented markets that have fared well amidst uncertainty from COVID-19. These moves have made the REIT well-positioned for earnings growth going into 2021, allowing for potential stock price appreciation.
Portfolio Overview and Updates
A recurring theme for BSR since it went public is the transition from smaller markets to larger, more stable markets in the sunbelt. The primary markets that BSR has consolidated its holdings include Austin, Dallas/Fort Worth, Houston, Oklahoma City, and Northwest Arkansas.
In Q3 2018, BSR generated just 52% of its net operating income from these five markets. It had significant holdings in much smaller