BSR REIT Is Facing A Concession Attenuation Slingshot

BSR Real Estate Investment Trust is deeply undervalued, trading at 66% of NAV, with Texas supply distortions masking asset strength.

Current trough NOI is driven by heavy concessions from new supply, but moderating deliveries and concession attenuation should drive AFFO/share higher.

Rental rates are poised to rise 15–30% as concessions fade, supporting a 50% upside to NAV of $16.56 per share.

BSRTF is a prime M&A candidate due to its concentrated Texas portfolio, deep NAV discount, and active share buybacks.

The apartment REIT landscape has become distorted by the delivery timing of previously unbridled supply. Rising interest rates have put the yoke back on the ox of development, and those distortions will soon be undone.

BSR Real Estate Investment Trust ( BSRTF ), with its portfolio concentrated in Texas, the epicenter of supply, is currently the most impacted by the distortions and is consequently positioned to benefit the most as they roll off. We call this the concession attenuation slingshot.

We will discuss this in greater detail later, but let us first take a look at valuation, both relative and absolute.

Valuation At first glance, BSR’s valuation appears normal. They are expected to earn $0.72 of AFFO in 2027 which would be a 15.63X multiple. S&P Global Market Intelligence That is slightly below the apartment sector average, but one would also expect BSR to trade at a lower multiple due to higher leverage. In fact, on a leverage-neutral basis, BSR trades above anticipated valuation.

Portfolio Income Solutions Despite this, I posit that BSR is substantially undervalued. Specifically, we are looking at asset value and cyclically adjusted earnings. NAV per share as of 2Q26 was $16.56. At today’s price of $10.97 (intraday 9/8/26), BSR is trading at 66% of asset value. This number may seem incongruous with a 15.6X AFFO multiple. A relatively high-leverage REIT trading at 66% of NAV would usually have substantially higher AFFO generation. How can the assets be that valuable if they are generating only a moderate amount of AFFO? Well, these assets are currently at a trough NOI due to very specific environmental conditions. As these conditions alleviate, the NOI (and AFFO generation) of the portfolio should be much higher.

Concession Attenuation Slingshot The zero interest rate environment of 2021 led to a truly massive development wave in 2021 and 2022. Those projects took varying amounts of time to actually put shovels in the ground and are still being delivered today. 2025 and the first half of 2026 had very heavy deliveries, which impact the market far more acutely than the actual number of units would on a stabilized basis. It also impacts BSR more directly than any other REIT because of their portfolio location.

S&P Global Capital IQ Austin, Dallas, and Houston are some of the highest supply markets in the nation. The supply is going there for 3 reasons: Zoning is friendlier Taxes are friendlier High growth in population and jobs The 3 rd factor ensures that the supply will eventually be absorbed in a healthy way. It is just a matter of timing. These markets are not oversupplied. Occupancy is fine with BSR sitting at 94.5%. Demand is sufficient for the number of units; there is just a difference between a unit being delivered and a unit that already exists. Deliveries hit leasing dynamics in a more acute way. The developer wants to get properties leased up as soon as possible and will often offer huge concessions to induce full occupancy. This drags the rental rates of existing properties down with them.

Susan Rosenbaum Koehn, BSR’s CFO, describes the concessionary environment in BSR’s markets on the 2Q26 call: “While we expected concessions to still be in the Celina market, they didn't come down at the p...