Thank you and good morning, everyone. Welcome to BSR REIT's conference call to discuss our financial results for the first quarter ending March 31st, 2026.

I'm joined on the call today by our CEO, Dan Oberste, our Chief Financial Officer, Tom Cirbus, and our Chief Operating Officer, Susie Rosenbaum, who are all available to answer your questions after our prepared remarks. Before we begin, I want to remind listeners that certain statements made on this conference call about future events are forward-looking in nature.

Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially. In addition, we will reference certain non-GAAP financial measures that we believe are useful supplemental information about our financial performance.

For more information, please refer to the cautionary statements on forward-looking information and a description of our non-GAAP financial measures in our news release and MD&A dated May 13th, 2026. Dan, over to you.

Thanks, Spencer. We believe that the first quarter marks the beginning of a period of significant momentum for BSR REIT.

Our same-community NOI and NOI margin strengthened sequentially from the fourth quarter of 2025, and we've made progress in bringing our 2025 acquisition class to stabilization, including further lease-up at The Oakhaven, our August 2025 lease-up acquisition. We also continued to ramp up our bulk internet and valet trash initiatives, two key drivers of organic growth.

Externally, rental market dynamics shifted further in our favor. Recapping the first quarter, same-community NOI increased 11% from Q4 last year, due largely to the normalization of expenses, which had an outsized adverse impact on Q4 of last year.

Same-community weighted average occupancy ended the quarter at 94.3%, flat to the end of 2025. Same-community blended rates improved 30 basis points in Q1 from Q4, and I would add that this trend continued in April, improving another 80 basis points versus Q1 results.

Our retention rate was 59.8% at quarter end, a 30 basis point expansion from the end of 2025 and a significant increase from 56.9% a year earlier. Physical occupancy at our August 2025 lease-up reached 73.1% at the end of March, up from 70.4% at the end of December.

Importantly, we began the ramp-up of bulk internet at five of our properties in earnest, which is already showing positive results in our other income line item. The results we posted last night reflect the exact momentum we spoke to last quarter, and underlie the fundamental shift we see in our business.

I will remind everyone that our December investor presentation laid out and provided transparency on our organic growth plans. Yesterday's results also reflect the very early innings of those returns.

While there's still a lot of upside in each of the initiatives we laid out, I'm proud of the tangible progress we made to date. Even more encouragingly, fundamentals continue to improve in our core markets.

Trade-outs were once again improved year-over-year and have demonstrated largely positive momentum. Frankly, the months of May and June will tell us a lot more about the exact extent of the health of the multifamily market.

Sitting here today, we're generally encouraged by the results to date. Given our hand-selected, high-quality portfolio, our value-adding lease-up and our operational enhancement initiatives, and a total absent of debt or swap maturities this year, we are in an ideal position to drive growth on a per-unit basis as market conditions steadily improve.

As we always have, we'll keep focusing on what we can control and carefully allocate capital to its best use to deliver the strongest possible returns. I will now invite Tom to review our first quarter financial results in more detail.

Tom?

Thanks, Dan. Our operational performance in the first quarter met our expectations and, as Dan highlighted, demonstrated substantial improvement on a sequential quarterly basis.

While the pace of this quarter-over-quarter improvement will obviously slow, we expect this positive momentum to continue as we keep moving ahead with the lease-up and operational enhancements that we have discussed at length. Beginning with leasing, effective rates on new leases declined by 5.4% in the quarter, while renewals increased by 2.3% in the quarter, resulting in a blended rate reduction of 1.0%.

That represented an improvement of 30 basis points in the blended rate compared to the fourth quarter. To put that number in more perspective, on a year-over-year basis, blended rates improved by 220 basis points.

Similarly, our April 2026 rates improved 80 basis points relative to our April 2025 results. This, along with several other operational indicators, gives us confidence that rates are generally moving in a positive direction, certainly compared to last year's operating environment.

Same-community revenue ultimately decreased by 1.6% compared to Q1 last year, primarily driven by the lower average occupancy and the lower average monthly in-place leases that I just spoke to. Lower rental income was partially offset by an increase in other property income of $0.2 million driven by higher utility reimbursements and the beginning of our rollout of bulk internet.

Same-community NOI for Q1 '26 was $14.1 million, a 4.7% decrease from last year, but an 11% sequential increase from Q4. The year-over-year decline was attributable to the lower revenue I just described, an increase in utility expenses of $0.2 million, and higher overhead and administrative costs of $0.3 million related to our strategic decision to retain overhead.

These factors were partially offset by a decrease in property insurance expenses of $0.2 million. Importantly, the sequential improvement was driven primarily by a normalization of the expense load in the first quarter relative to the confluence of anomalies we faced in the fourth quarter on the expense side.

More directly, real estate taxes improved as our typical levels of refunds returned, improvements in turn and repair and maintenance costs driven by a higher retention flowed through, and lower administrative and utility expenses. A quick side note before moving on, in appreciating the quarter-over-quarter movement in our taxes was historically challenging to decipher, on our financials, we've sought to increase transparency in our MD&A this year via breaking out refunds as a separate line item in the disclosure package.

This change will hopefully allow all stakeholders to better appreciate and explain the quarterly changes in this key figure. Below NOI, G&A expense increased by $0.4 million year-over-year due primarily to higher legal and professional fees as well as payroll expenses.

Sequentially, G&A was essentially flat. Finally, net finance costs declined by $1.2 million year-over-year, primarily related to the 2025 strategic disposition of assets.

Overall, FFO in Q1 '26 was up 29% to 18 cents per unit compared to 14 cents per unit in the fourth quarter. I'm happy to report that the 2025 asset rotations continue to gain momentum and are now accretive relative to our dispositions made during the year, despite our August lease-up acquisition sitting at essentially breakeven at only 73% physically occupied.

The contribution of our results from the 2025 acquisitions cohort should only improve throughout the balance of 2026. The year-over-year decrease in FFO per unit was primarily driven by three items: higher borrowing costs of 3 cents per unit, lower same-community results of 1 cent per unit, and higher G&A of 1 cent per unit.

Sequentially, same-community improvements added 3 cents per unit and non-same-community added nearly 2 cents, slightly offset by 1 cent related to headwinds in borrowing costs. AFFO was 17 cents per unit for the first quarter, 55% higher than the 11 cents per unit in Q4.

To state the obvious, the sequential quarterly improvements are highly encouraging and demonstrate our momentum in driving organic growth. Moving to the balance sheet, the REIT's debt-to-gross book value as of March 31, '26 was 52% compared to 51.2% at the end of 2025.

This amounts to $738 million of debt outstanding with a weighted average interest rate of 4.1% and a weighted average term to maturity of 3.7 years. Total liquidity was $67.3 million at quarter end, including cash and cash equivalents of $7.4 million and $59.9 million available under our revolving credit facility.

As usual, we have the ability to obtain additional liquidity by adding unencumbered properties to the current borrowing base of the facility. On March 10, 2026, we refinanced a $28 million mortgage onto the REIT's credit facility, and as a result, the REIT has no remaining 2026 maturities.

Importantly, subsequent to quarter end, we locked in the REIT's cost of credit for the balance of 2026 via a $175 million swap, which amended two previously outstanding swaps at a rate of 2.98%. Finally, as you're likely aware, we are reiterating our original 2026 earnings and same-community portfolio guidance that we provided in March.

It calls for full-year FFO per unit of 75 to 79 cents, or 77 cents per unit at the midpoint, and full-year AFFO of 68 to 74 cents per unit, or 71 cents per unit at the midpoint. This guidance assumes 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, amounting to 0 to 100 basis points of same-community NOI growth.

We continue to expect our core real estate business to be healthy as we continue building revenue from our lease-up activity along with marginal additional overhead costs. We will update this guidance as needed throughout the year.

I will now turn it back to Dan for his closing remarks.

Thanks, Tom. We are increasingly excited about our business outlook.

The asset rotations we completed last year, along with our subsequent stabilization efforts, have obviously caused volatility in our short-term financial performance. They put us in an increasingly strong competitive position to benefit from positive rental market fundamentals.

Obviously, the focus on the last couple of years has been on the increased multifamily apartments supply in the Texas Triangle. The absorption process persisted longer than we would have hoped, but here is what we're looking at now.

After peaking in 2024, new apartment deliveries declined by 25% to 50% last year across Austin, Dallas, and Houston. In 2026, deliveries are projected to drop by a further 43% in Austin, nearly 30% in Dallas, and 7% in Houston.

Another 40% decline is expected in Austin in 2027. There's minimal new product coming, and high development costs all but ensure that we won't get a surprising surge of new construction.

Demand, meanwhile, continues to be very strong. Our three Texas markets have been among the leaders in supply absorption among all MSAs in the United States.

Their economies are strong and housing is highly affordable, which has made them magnets for migrants from other states and other countries. Texas added more residents in 2025 than any other state.

Population growth has been notably strong in the age of the 20 to 34 cohort, which has the highest propensity to rent of any demographic. You will recall that back in December, we laid out a plan to drive an incremental organic growth in FFO per unit of approximately 13 cents to 22 cents from 2026 to 2028.

That plan remains entirely on track. All of these initiatives are entirely independent of what happens in our broader rental markets.

When you combine them with the anticipated turnaround in rental rates due to rapidly improving supply-demand fundamentals, we believe that we are in a position to drive very strong returns for unitholders. That concludes our prepared remarks this morning.

Tom, Susie, and I would now be pleased to answer your questions. Please open the line for questions.

Thanks. Just a question on the lease spreads, the sequential improvement you're seeing.

Would you say that's more than the typical seasonal uptick that you'd see as you enter the spring leasing season and actually seeing improvement in market rents? I guess that would be number one.

Then two is sort of the retention rate. Did that sustain into April, and what would be the expectation for the summer?

Hey, Jimmy. First, let's talk about the trade-outs in April versus the end of Q1.

You're right, the blended rate went up 80%, and we think that is a true turn to seasonality. May thus far is holding up about the same.

The second question that you had was about retention.

Yeah.

Right, 60% roughly at the end of Q1, we're looking the same now, too. Why is that?

Basically less people are moving out to buy homes. The stats here are looking pretty good.

It was about 11.6% the end of Q1 compared to 12.1% in Q4, and it was 14% in Q1 of 2025. People, if they can't afford to buy a home, and either have to rent or want to continue to rent, right, they have several choices.

They can incur the cost to move, or they can stay put if they like the services they're getting. I think that our operations teams are really good at delivering excellent service, and people are choosing to stay with us.

Okay. Sorry, those stats you just quoted, 11.6 versus 12.1, what was that again?

That's the percentage of tenants moving out to buy homes? Moving

to buy homes.

Okay. Got it.

Thank you.

Hey there. Just following on Jimmy's question there, it sounds like you're cautiously optimistic about sort of the demand trends you're seeing.

Just how are things trending this year versus what you would have saw last year, and then just maybe a broader comment around which markets you're seeing kind of better demand trends in right now. It seems like it might be Dallas given what you're doing on the rate side, but curious to get your thoughts.

Hey, Brad, this is Dan. I've seen a few of these leasing seasons and cycles, in Texas in particular.

I would say the last two years were anomalies. Two years ago, if everyone recalls, we had a massive spring leasing season throughout the sector and we saw a significant amount of absorption, and it really gave everyone in the industry some real positive feelings about lease-ups.

Now you move forward to last year, you had another strange thing happen, and you had really a buildup in January and February that it looked to be a very promising leasing season. Then I guess you can time it on the watch with the tariff day, whatever it's called in the US.

Really just right after that, what's the name of it, the

Liberation Day.

Liberation Day, I think, is what they called it on Fox News. Right after that Liberation Day occurred, I think what we all saw throughout the sector was really a massive chilling effect on the leasing season, right?

We all saw what happened last year. I think the last two years were abnormal.

We haven't seen leasing seasons like the last two years on different levels of the extreme. I think you're right to characterize us as cautiously optimistic, because what we're seeing right now looks like a traditional leasing season.

It looks like the leasing velocity, the asking rents, the effective rents very predictable. The 17.5% or so of our apartments that either renew or lease throughout this Q2, we see traditional and positive momentum there.

We don't see evidence of either extreme as of today. That's leaving us fairly cautiously optimistic about I think the path of our same-store portfolio on a look-forward for the rest of the year.

That's great. I guess my other question would be I really appreciate the breakdown on the real estate tax and the breakout of the refunds.

Just as a reminder, when you put out the guidance ranges, how do you account for refunds within your guidance? Is that included, or, depending on how the refunds come in, that would be incremental to the guidance?

No, it's included, Brad. This is Tom.

It's included in the guidance. Again, as we say often, real estate taxes in Texas are hand-to-hand combat every single year.

When we're budgeting and thinking about our guidance at the beginning of the year, we really lean on our third-party experts, our consultants, that help us litigate taxes and work on the refunds, and their assessment of where we think we're going to land. Then we use our 30 years of operating history to make a judgment call on what we believe is a realistic outcome and that is actionable, and we budget and guide accordingly.

The guidance reflects all of that.

Appreciate that. I'll turn it back.

Thank you. On the 13 to 22 cents that you guys expect to get over the next 3 years, how much of that was in Q1?

Can you remind us what you expect for 2026 and '27?

Sure. First, let's start with the non-same-store portfolio.

It looks like we leased between 70 and 80 more units after Q4 in Q1, which gave us about $100,000 in additional revenue. Now you got to remember, that's not the fully loaded amount.

Why? Because we're leasing over the quarter.

That should contribute a little over $300,000 for those additional units in Q2 and then in quarters forward. You also have to remember that we're going to continue leasing as we move forward throughout the year.

The other piece of it is our August acquisition, which is in lease-up. We ended the quarter at 73% physical occupancy.

We expect that one, at the latest, by July to be physically stabilized. That's physically, though.

We still then will continue to burn off concessions, which is the second bite of apple, to speak. That would be over the next year as well before that one gets to true stabilization.

Also, bulk internet. We brought online the first five that we started in 2025.

As I've said before, Q1, there's not a contribution really to revenue there because we're in the ramp-up period. However, by the end of the year, we would expect to have a net $400,000 in additional revenue in 2026 related to the bulk internet project.

Now as I also said during our last call, however, we're going to recognize 70% of total realization for those we're bringing online this year, too, which is the remainder of the portfolio, in 2027, and then the tail of it in the first quarter of 2028.

Okay. Sounds like not a ton yet, and it's going to continue to build with the biggest portion, I guess, coming on next year.

Is that fair?

Correct.

Okay. Then secondly, Dan, probably for you, just on capital recycling.

Are you seeing right now any opportunities to sell assets and redeploy into new opportunities?

Right now, Jonathan, we don't have anything in our guidance related to dispositions or acquisitions. I think my sense of the market is that we're seeing some transaction volume in our markets, several billion dollars of, but in speaking with the buyers and sellers, capital feels threatened.

Lower transaction velocity makes sense. We kind of see this as transitory, and prefer to transact specifically on the sell side in markets where capital doesn't feel threatened and where transaction volume is heightened.

There's some read-throughs on some low caps, but the buyer pool is generally smaller, not institutional-grade. I think I'm going to blame this entirely on the volatility in credit spreads.

If the private buyer pool is leading on the acquisition front right now in our markets, Jonathan, then they're going to be more highly reliant on the interest rate curve. I think we've seen it take all 16 different shapes in the last 2 months.

What we've seen is a lot of evidence of transactions being placed or properties being placed under contract at promising values, and then those transactions being thrown back by the market for one or more reasons, but they all lead to credit rates, credit spreads. We've bought and sold in several different types of markets.

When interest rate volatility is doing what it does in a market like this, it becomes a real popular excuse for a buyer to throw back a deal. You see a lot more buyers enter the market that are more promoter-oriented, where they try to put a property under contract, and then go raise capital behind it.

We found in our experience that a non-reliable buyer like that creates an uncertain transaction, and we just can't run our business in that environment for dispositions. Does that answer your question?

Yeah. I guess you need a calmer credit environment before volumes pick up.

Right? More or less.

Yeah. Thanks.

I'll turn it back.

Thank you. I just want to follow on Jonathan's question there.

Dan, do you think that that reticence from the buyer is coming more from the equity side of things, or do you think that credit is starting to clamp down on them a little bit? Maybe these were potentially, sort of higher-levered acquirers that just are not getting that access to credit.

You look at the 30-year now piercing through 5, 10's probably heading there, that it's more of a debt issue than an equity one.

I think the debt begets the equity, Dean. If debt's pricing in at 5.30 and 5.40 in some of these markets for the leverage that the private buyer is trying to take out, I think you've got to be very convicted on the revenue growth to underwrite an acquisition at a negative leverage.

Your equity can afford to be patient, but your credit partner's going to have a hard time levering at 80% advance rates on those acquisitions. That's speaking specifically to just our observations of the private market and how it's acting right now.

I think the other thing you're seeing is the mindset of the seller. Fortunately for our investors, we've picked up our acquisitions in lease-ups in our '25 acquisition class.

The mindset of those sellers right now is they understand there's a clear, distinctive line in value between a lease-up value and an occupied value. We're seeing a lot of those developers pivot to I think completing their lease-ups before they're really actively and sincerely engaged in disposing.

Now, naturally, we see the greatest benefit in buying a lease-up asset,

but

we see sellers that aren't necessarily interested. They want to hold on to that value as long as they can.

It's an interesting game of chicken you're seeing in the market. The buyer wants to generate income increases by buying lease-ups.

The seller wants to hold on to the lease-up because they believe that the occupied asset is going to trade at a higher value. The seller probably walked into that deal higher levered to begin with, and is just trying to recoup some of their capital that they placed on the deal from the outset.

All that, to me, leads to sellers hanging on to lease-ups a little bit longer. I would say potentially a less reliable private buyer pool than in calmer waters.

Not necessarily indicative of, say, a stressed seller.

No, not at this time. There's always a handful of stressed sellers in just about any environment.

In our discussions with operators, I see them very patient, and developers very patient. I'm sure there's probably a little bit of acrimony related to partnership behaviors, but nothing on the level of people picking up pitchforks and partnerships blowing up.

Not yet, anyway. All right.

Thanks, Dan. Appreciate it.

Thanks. Hi, everyone.

Just going to your leasing spreads for the first quarter. Obviously, Austin looked like there was a pretty good improvement, but Dallas did look a little bit softer than the fourth quarter.

Just curious if you can talk about the difference in dynamics between the two markets and what maybe drove that in Dallas.

Sure. Look, supply in Dallas, particularly the northern submarkets, Frisco, McKinney, Prosper, and Celina, it's still pretty tough.

There is a lot of supply that still needs to be absorbed, and it will be, because we still have a lot of people moving into these markets as well. You've got lease-ups there that are still offering up to 10 free 10 free weeks concessions, with gift cards anywhere from $500 to $1,500.

Now we continue to lease up our August acquisition, right, and we're offering maybe 8 weeks free on only certain one and two-bedroom floor plans, and we offer 4 weeks free on some of our three-bedroom floor plans. With that, we're balancing rate, right, against physical occupancy as we continue to lease.

We're excited about the momentum that we got at the end of the first quarter, and we continue to see happening right now, which is why I believe it'll be physically stabilized by July. We're also looking at the rates as well.

We're comfortable with the physical occupancy between 94% and 96%, as we've said, and we tweak the rates to fall within that range.

Thank you for that. That was very helpful.

As we look at the non-same-property portfolio, excluding The Oakhaven, it does look like you've had great success there, and it's near stabilization. Something you've talked about in the past is the ability to see margin enhancement as that part of the portfolio becomes more stabilized.

Where would the margins be today versus where could they end up, as you start to turn over leases and get your second or third kick at the can on these?

Right. If you take out the August acquisition, we're probably average physically occupied at about 94%.

Once we've burned off all concessions, we would figure the margins on these new properties would be around 60%.

Okay. Perfect.

That's it for me. I will turn it back.

Thank you very much.

Thank you, operator. Good afternoon, guys, and thank you for taking the question.

I did miss the initial part of the call, my apologies if this has already been discussed. Just sort of you look at occupancy in these markets and you see the ramp-up.

Obviously, you guys focus more on occupancy through the winter quarters. There's still a year-over-year gap in terms of where stabilized occupancy was and where it is right now.

As you see the next couple of quarters play out, are we still comfortable in seeing that supply cliff drop-off coming towards the end of this year and probably into '27?

Sairam, this is Dan. I think we're really comfortable.

We engaged an adviser, and well, I think you might have been there when we spoke to it in December, who, for example, walked through Austin, looked at the supply numbers in Austin, and then physically walked through every asset that was listed as a delivery, or in place, or a construction start in the city of Austin. Their numbers, I'd say, more or less supported what you would see on CoStar.

I think it was 60 or 70 units off. If that's step one, step two is you can kind of understand, I'll say down to the month, how long it takes to deliver a product from shovels in the ground to delivery.

We feel like we have a pretty good picture of construction in process on the supply side of the equation and when those units are going to be delivered, or in this particular case, when they have been delivered from '22 through '25. Then I think the other end is the demand equation.

The numbers on net employment growth continue to support our thesis. I know that we all underwrote probably a little bit less employment and population growth in Texas through 2030.

Those numbers are fairly accurate. Those numbers have been out for 10 years, and they tend to be fairly accurate as well.

What we're seeing on the ground is that continuous flow of population, but it's in line with our expectations. When you balance out the projects in place against the population growth, particularly in the 18 or the 20 to 24 category, it really doesn't have to be that much more complicated.

There's people coming in, households form, a percentage of those households are going to rent, a percentage of those renters are going to be new renters. There's a certain number of available units in the market and a certain number of expected residents that are going to be seeking new apartments in that market.

Then you just kind of do some little addition and subtraction over a period of time, you can extrapolate some absorption numbers. I think we would all be hopeful that the rates would turn sooner, but the absorption picture has been pretty clear and rigid for the last 2 years.

I haven't seen many surprises there.

That is great color, Dan. Thank you.

I'll turn it back.

Thank you, Regina. Thank you all.

We look forward to seeing you in NAREIT in early June for our investor presentations. Between now and then, if any of our investors would like a tour of our markets, please you know where to find us.

Please reach out to us. We're happy to tour you through our properties.

Thank you, everyone, and have a good night.