My name is Anas, and I'll be your conference operator today. At this time, I would like to welcome everyone to the BSR REIT Q4 2020 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the two. Thank you. Mr. Bailey, you may begin your conference.
All right. Well, thank you, Anas, and good morning, everyone. Welcome to BSR REIT's conference call to discuss our financial results for the fourth quarter and year ended December 31st, 2020. I am joined today by Susie Koehn, our Chief Financial Officer. Also with us are Dan Oberste, President and Chief Investment Officer, and Blake Brazeal, Co-President and Chief Operating Officer, who will be available to answer questions following our prepared remarks. I'll start this call by providing an overview of our annual and quarterly performance and other corporate developments. Susie will then review the financials, and I'll conclude by discussing our outlook and strategy. After that, we will hold a Q&A session. Before we begin, I need to remind listeners that certain statements about future events made on this conference call are forward-looking in nature.
Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially. Please refer to the cautionary statements on forward-looking information in our news release in MD&A dated March 9, 2021, for more information. During the call, we will reference certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they're not recognized measures and do not have standardized meanings under IFRS. Please see our MD&A for additional further information regarding our non-IFRS financial measures, including reconciliations to the nearest IFRS measures. Also, please note that all dollar amounts are denominated in U.S. currency. 2020 was a challenging year on many different levels. However, BSR prevailed by delivering strong financial results while dramatically upgrading our portfolio through the capital recycling and portfolio growth program.
We collected nearly all of our billed rent, and operated without significant interruption in the midst of an ongoing pandemic. It is a tribute to our professional BSR team for performing so well under the unprecedented circumstances. Let me take you through a few quick financial highlights. At year-end, weighted average rent was $1,088 per apartment unit, an increase of 16% compared to year-end 2019 of $937 per apartment unit. Same-community revenue increased 2.1% in 2020 compared to 2019, while same-community NOI was up 2.7%, even with the impact of a pandemic. These numbers demonstrate the benefits of our growing exposure to primary Sun Belt markets with strong economic fundamentals. In short, our strategy is working. This is an excellent opportunity to take stock of our current portfolio. It bears little resemblance to the one that we took public in May of 2018.
During 2020 alone, we acquired six high-quality apartment communities in primary markets for an additional $338 million, including two in the fourth quarter. At the same time, we completed the development of Wimbledon Green Phase II, adding 156 apartment units to the portfolio, and we sold 17 non-core properties for proceeds of $346 million, 12 of which were sold in Q4. After including the sale of Towne Park at Har-Ber Apartments, which we completed last month, we have acquired a total of 14 properties since the IPO while divesting 33 properties. We still consider Northwest Arkansas an attractive market. However, we have not achieved critical scale. Therefore, we determined our best course of action was to capitalize on the strong property values in this market and deploy the capital where we do have scale. The result of this activity is a high-graded portfolio in high-growth primary markets in Texas.
When BSR went public, we generated about 52% of our NOI from primary Sun Belt markets. Today, that number is 95%. The weighted average age of our properties in our portfolio has declined dramatically by 12 years since the IPO, from 29 years in mid 2018 to 17 years today. As I mentioned earlier, COVID-19 is not having a material impact on our rent collections. We collected 99% of total billed revenue in December 2020, and also in January and February of 2021, which is in line with historic norms. Nothing matters more to us than having all necessary measures at our properties to maximize the health and safety of our residents and employees. Finally, I want to talk briefly about the impact of the severe weather which struck the U.S. Sun Belt last month, including our markets in Texas, Oklahoma, and Arkansas.
First, we had no loss of life among our employees or residents. Second, we were fortunate not to have material damages to our business with no down apartment units. We have incurred about $0.1 million of costs associated with the freeze damage, and we do not expect total expenses related to the storm damage to ultimately exceed $0.3 million. No insurance claim is being filed at this time. Our expert and capable team did an exceptional job with responding to the needs of the affected residents in the aftermath of the storm, as we dealt with the utility service interruptions and other temporary issues. Now I'll turn it over to Susie to further review our fourth quarter and full-year results in more detail. Susie?
Thank you, John. Same-community revenue increased 0.8% in the fourth quarter to $12 million from $11.9 million last year, reflecting an increase in same community average rental rates from $9.15 per apartment unit as of December 2019 to $9.24 per apartment unit as of December 2020. Total portfolio revenue for Q4 2020 increased 1.8% to $28.6 million compared to $28.1 million in Q4 2019. The increase was primarily the result of property acquisitions, which contributed $7.1 million in revenue, as well as higher rental rates across the portfolio, partially offset by dispositions that reduced revenue by $6.7 million. NOI for the same community properties were $6.5 million, in line with Q4 last year. The increase in revenue was offset by an anticipated increase in real estate taxes and insurance costs. NOI for the total portfolio increased by 1.6% to $15.1 million compared to $14.9 million in Q4 last year.
The increase was primarily attributable to acquisitions contributing $3.9 million, partially offset by property dispositions, reducing NOI by $3.6 million. FFO for the fourth quarter was $6.7 million or $0.15 per unit, which was consistent with Q4 last year. The increase in NOI was offset by $0.2 million of severance and retention costs. I also want to note that we excluded from FFO a loss on extinguishment of debt of $10 million, primarily related to the non-cash write-off of net discounts, premiums, and prepayment-embedded derivatives. Q4 2020 AFFO was $6.1 million or $0.13 per unit compared to $6.3 million or $0.14 per unit last year. The decrease in AFFO was primarily the result of $0.5 million less rent guarantees related to property acquisitions, partially offset by a decrease in maintenance capital expenditures of $0.4 million.
The REIT paid quarterly cash distributions of $0.125 per unit in Q4 of both years, representing an AFFO payout ratio of 92.9% in Q4 2020 compared with 89.6% last year. The payout ratio will decline as we complete the disruptions caused by rotations of this magnitude. I'll now review our results for the year ended December 31st, 2020. Same community revenue increased 2.1% in 2020 to $47.7 million from $46.7 million in 2019. The increase reflects higher rental rates as well as an increase in utility reimbursements of $0.3 million, partially offset by the absence of late rental fees of $0.2 million related to COVID-19. We resumed charging late fees in August 2020, as previously disclosed. Total revenue was $113.3 million in 2020, an increase of 1.5% from $111.7 million in 2019. Property acquisitions contributed $25.8 million of revenue while dispositions reduced revenue by $25.2 million.
Same community NOI increased 2.7% to $26 million from $25.3 million in 2019. The increase in revenue was partially offset by a $0.2 million increase in property insurance expense. COVID-19 related expenses of $0.3 million in 2020 were offset by lower payroll expenses. Total NOI was $59.2 million in 2020 compared to $59.7 million in 2019. Property dispositions reduced NOI by $13.9 million, while property acquisitions contributed $12.7 million. FFO for 2020 was $27.7 million or $0.61 per unit compared to $29.3 million or $0.71 per unit in 2019. The decrease in FFO in 2020 reflects the reduction in NOI and a $0.3 million increase in G&A expenses related to share-based compensation and employee benefits, partially offset by lower legal and professional fees and lower travel expenses.
The amortization of deferred financing fees contributed $0.5 million to the decrease in FFO, while severance and retention costs related to the capital recycling program contributed $0.2 million to the decrease. A loss on extinguishment of debt of $11.6 million was excluded from FFO, primarily related to the non-cash write-off of net discounts, premiums, and prepayment-embedded derivatives. AFFO for 2020 was $25.4 million, or $0.56 per unit, compared to $26.4 million or $0.64 per unit in 2019. The reduction in AFFO reflects the decrease in FFO, partially offset by a $0.6 million decrease in maintenance capital expenditures due to emergency-only maintenance being conducted in the second quarter of 2020, as well as the rotation out of older properties into newer properties. The severance and retention costs I just mentioned are excluded from AFFO.
The REIT paid cash distributions of $0.50 per unit in both years with an AFFO payout ratio of 88.7% in 2020 and 78.6% in 2019. As previously discussed, the payout ratio will decline once the portfolio is stabilized. Turning to our balance sheet. On February 9th, we completed a bought deal equity offering in which we issued approximately 6.3 million units at a price of $10.95 per unit, raising gross proceeds of approximately $69 million. We were pleased to see the over-allotment option granted to underwriters was fully exercised, clearly reflecting strong demand from investors. In addition, as Dan noted earlier, we completed the sale of Towne Park at Har-Ber Apartments on February 16th, which generated gross proceeds of $31.7 million.
Accordingly, our total liquidity is now $170 million, and our debt to GBV ratio has declined to 40%. We are well-positioned to pursue our growth strategy with our strong liquidity position. As of December 31st, we had total mortgage notes payable of $355 million, excluding the credit facility and line of credit, with a weighted average contractual interest rate of 3.8% and a weighted average term to maturity of 7.6 years. Total loans and borrowings at year-end were $475.9 million, excluding the debentures, and 87% of the REIT's debt was fixed or economically hedged to fixed rates. I will now turn it back over to John for some closing comments. John?
All right. Thank you, Susie. The past year has been a challenging one. Our solid performance demonstrates the strength and resilience of high-quality, affordable multifamily housing in primary suburban Sun Belt markets. As we have said before, our market fundamentals are very robust. They include strong economic and population growth in our key markets over the long term, as well as the propensity to rent among millennials who make up more than half of our resident base. We continue to evaluate attractive acquisition opportunities and non-core asset sales. The market for multifamily properties remains a very liquid and active one. Even during a difficult 2020, we completed a large number of deals. Our acquisitions team is very busy evaluating opportunities, and we are confident we will build value with our external growth strategy.
With our current liquidity position of approximately $170 million and debt to gross book value of 40%, we are in an excellent competitive position, and we are excited about the growth opportunities ahead of us. While the pandemic isn't over yet and economic uncertainty remains elevated, we are optimistic that 2021 will be another successful year for BSR. That concludes our remarks this morning. Susie, Dan, Blake, and I would now be pleased to answer any questions you may have. Operator, would you please open the line for questions?
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have any questions, please press star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, please lift your handset before pressing any keys. One moment for your first question. Your first question comes from Liyan Chen with IA Capital. Liyan, please go ahead.
Hi, good morning. Couple of questions from me. Just on the Wimbledon Green phase two development, what was your yield on cost on the project, and was it in line with your budget? How did the expected yield on cost on your project evolve over the last year in light of increasing material costs?
Good morning. This is Dan Oberste. Our original yield on cost, I think we reported our cost there at $16.5 million, and our yield looked to be 6.75%-7.00%. That property's lease-up and current stabilization has outperformed our expectations, so we're probably a little bit higher than those numbers. As it relates to the construction costs, since we penciled in and fixed all of our construction costs prior to last year on that development, we were firmly insulated from any run-ups in the prices of lumber or other construction materials. As our investors have right now, they bought a 4.5 cap for a 7 cap. We're pretty happy with that, and we hope our investors and stakeholders are as well.
That's great. Thanks. Last one from me. Just looking at the single-home residential market across the U.S., particularly in Texas. Your pricing seems to remain very robust. Does this particular environment translate to a stronger demand for rentals within your markets? Just curious as to what you're seeing on the ground today.
This is John. From the standpoint of single-family homes, there has been a run-up in pricing. In our markets in particular, let's just go maybe to Austin, Texas, where you have about $400,000 for your average home price. Our cohort is a middle-income cohort that has an income of a range of $60,000 to $70,000. Buying a home in Austin, Texas, for $400,000, that equates to about $10,000 a year just simply for paying for property taxes. The cohort that we cater to primarily, this particular cohort is much more flexible, mobile. Their balance sheets are pretty well stretched out by having student loan debt. There's about $1.6 trillion of student loan debt to this particular cohort, we don't see this as being a direct competition, even with the continued demand for housing in these markets.
We don't see the demand for the housing to go away in the next several years. It's quite robust with the amount of population and economic growth that we've seen in these Texas markets, which is exactly why our strategy has been to be moving toward these markets.
That's great. That's it for me. I'll turn it back. Thanks, everyone.
Thank you.
Thank you. Your next question comes from Brendon Abrams with Canaccord. Brendon, please go ahead.
Hi. Good morning, everyone. Maybe just on the capital recycling front, just wondering if you could remind us how much is left within the portfolio that you'd like to dispose of, maybe in terms of either units or dollar value. Then just on the acquisition fronts going forward, with about 80% of the NOI in the three big markets in Texas, are there any other markets or geographies within the Sun Belt you're looking closely at right now to potentially add to the portfolio?
Sure. This is Dan. First, as it relates to the rotations and the capital recycling. We may look to trim the edges of the portfolio a bit with some tactical gardening, but overall, the lion's share of the dispositions are complete. I think we've telegraphed our intentions with Northwest Arkansas, and yesterday we sold Capri Apartments in Blytheville for what I see as a foregone 4.1 cap. If that's not representative of the current disregard for cap rates in our markets, I don't know what is. I guess in detail, we'll be opportunistic with our capital discipline. If we see sales prices far exceed what we can otherwise produce on a, call it, a fair value return on what we believe the market value of the property is, then sure, we'll be opportunistic. I don't think you're going to see us selling What did we sell?
34 properties in the last two years. I don't think we have the capacity to do that kind of rotation on a look-forward. Smart sales, probably further entrenching our NOI in the three markets in Texas is probably what to look out for on a look-forward. As it relates to our markets for acquisitions. We're going to continue to focus on Dallas, Houston and Austin. This real estate investment strategy has proven to be a bullseye in the past 36 months, and we see no compelling reason whatsoever to throw a dart another direction off the board. We'll continue to look at those three markets. We like the demographic trends. We like the fact that every quarter and every year, one of those three markets leads the nation in absorption, employment creation, demographic trends, net migration, population growth.
These are the main ingredients in the, I would say, AFFO growth and value growth. As long as we continue to see those three consistently hit the top mark or the top five mark in every one of those categories year-over-year and decade-over-decade, since as far back as we can look, 1960, we're going to continue to hit the ball into those markets.
This is John. I'd like to add on to that, too. As you know, the REIT owns the management company in our platform. What we want to do as part of our overall strategy, and we haven't backed off. As a matter of fact, we see more and more opportunity to continue to build scale and opportunity with this team's, I would say, expert capabilities and their abilities to continue to find product at more favorable prices than what I would think any other competitor out there would be able to do with our relationship, purchasing, and capabilities. I'll just go with our platform's efficiency going forward is where we're targeting to continue to grow our scale in these markets for every bit of what we talked about our platform scalability.
Okay. That's helpful. That's good color. Just last question from me before I turn it over. Just in terms of occupancy, it hovered around the, or just under the 94% mark. Just wondering if you consider that kind of a stabilized figure for your portfolio and within your markets, or is there potential for that number to increase as you've acquired properties and you deploy some of your active property management techniques on those assets?
This is Blake. 94% is pretty much what we're forecast for this year, and we do consider that to be a stabilized. I must add that with some of our newer properties that are coming online, we're hopefully expecting that we could pick up some occupancy during that time. This is probably a pretty good time to remind everybody that our same store and non-same store is about 50/50 right now, and that ratio is going to keep going up on the non-same store. We've got a lot of new product that is performing really well right now, and we're hopeful that we can move the needle some on that 94%.
Okay. That's great. I'll turn it over. Thank you.
Thank you. We have a following question from Brad Sturges with Raymond James. Brad, please go ahead.
Hey, Brad, we can't hear you.
Hello, Brad.
Hi, can you hear me now?
I think so.
Brad.
Can you hear me?
Yes, we can hear you now.
Sorry about that. I had to take myself off mute. Just on those line of questionings, I guess rent growth year-over-year has been trending around the 1% range, with hopefully a successful rollout on the vaccine front, do you see that being a level that can start to accelerate, like rent growth year-over-year start to accelerate from here over the next few quarters? Where would you think that could normalize out to?
Hello, Brad. It's Blake. Looking at for 2021, we're expecting a 2% rent growth. That's what we're expecting internally. Hopefully, in our markets, as we continue, we've discussed this in past calls. We spend so much time on revenue management and looking at our markets and looking at our competitors. As we continue to get further along past the original pandemic outbreak, we are hopeful that 2021 will create the 2% growth and really looking forward to 2022.
Mm-hmm. With that thought process, where would you currently expect your margins to trend for the year?
Hey, Brad, it's Susie. I would say about 54% is what we're predicting for our margins, based forward.
Okay. Maybe just one last one for me. In terms of the outlook for acquisitions, can you give a little bit more of a context or commentary in terms of your expectations for capital deployment and when you think the REIT could reach more stabilized levels in terms of debt metrics?
Sure. Brad, let's start out with cap rates because that's a fun conversation to have. If I'm looking back to Q3 of 2020, U.S. multifamily cap rates compressed 20 basis points, and that's just through Q3. We're looking at the average of 5.09 is the average U.S. cap rate. There's two items of note here. First, let's take Dallas. DFW was by no means average. Last year, it was the top U.S. metro for multifamily investment in the United States. Second. I haven't seen accurate numbers for Q4 cap rates yet, but since October and through yesterday, I'll tell you right now, cap rates in our markets have compressed substantially.
I hadn't seen a cap rate above 3.75 in Austin since last October, and I'm seeing comps to our recent DFW and Houston acquisitions trading at 20% and 25% premium since the date we acquired those. I'll tell you right now, Houston's probably a solid 4-4.5 cap market at this time. Those are the headwinds. That means that the way I see it, what we bought is worth a lot more than what we paid for, but it does make it somewhat competitive on a look forward. I don't think our investors would be happy with us buying a 3.5 cap in Austin. We won't do that. I want to remind the group that we got about $400 million of acquisitions that we're looking to close on between now and the end of July. June or July.
We're pretty confident in that number. Obviously, we hadn't disclosed any acquisitions yet. That's just the nature of the public disclosure of acquisitions. We're pretty confident that we filled half that number to date. We're excited to roll out our pipeline as we close. I don't think that we are really going to participate in the low cap rate environment that we saw coming through in December and January. The majority of our acquisitions that we source are off-market and from repeat sellers. The REIT's ability to close in a short period of time and to quickly underwrite, and do exactly what we tell people we're going to do, that helps our credibility in these markets. I think the second thing that helps right now is the cash on hand that we have to deploy into acquisition.
What that enables the REIT to do is trade a little cap rate for some volume. What I mean by that is that it opens up the door for portfolio dispositions from a developer standpoint or from a seller standpoint. Allows a little bit more elasticity in cap rates, so that we can go ahead and acquire at cap rates that we think are a little bit higher than where we're seeing the market trade right now, and then turn around and hedge in our debt behind that so we can preserve the economics for our investors. Now, one other component of what we're seeing in the current cap rate environment is the majority of the buy and the sell side, and the lending side for that matter, they're underwriting to some pretty substantial 2022 organic growth numbers.
Some of the numbers that I'm seeing that are commonly dropped on the street are a 9% and 10% organic growth number for Austin, 6% for Dallas, 5%, 4% for Houston. They're embedding some of that organic growth into the current cap rates that they're trading properties at in the market. When you look at how that investment looks over a three-year period, you're seeing cap rate look-back expansion that's sometimes double what we're historically used to. I think that and a little bit of the leverage and the lower rates we saw in December through February is enabling a buyer to probably lever up a little bit, fix their rates, and sacrifice a little bit lower cap for the year two and year three growth expectations, simply out of just organic rent growth.
On the margin of 56%, on the AFFO margin of 50%, you can turn that into year-over-year cash flow growth pretty quick. With that, I'll drop the mic.
That's quite helpful. Just to maybe clarify, it seems like maybe the off-market opportunities are more with the developers at the stage where you can take advantage of liquidity and maybe a little bit of lease-up risk just to get a little bit better stabilized yield.
That's fair to say. It does help us out with economics and having solid trading partners. I think we came into the IPO, and 11 of our 13 prior acquisitions were off-market from repeat sellers. Those statistics really haven't changed since IPO. A lot about acquiring and selling in our markets is knowing everybody at the table who builds and buys and rehabs and brokers and lends, and keeping up good relationships with them. That turns into, really, the ability to confidently project $400 million in acquisitions by the end of the second quarter.
Okay, great. Thank you.
Thank you. Your next question comes from Kyle Stanley with Desjardins. Kyle, please go ahead.
Thanks. Morning, everyone.
Hi, Kyle.
It sounds like the acquisition pipeline is fairly deep, and you just gave a pretty good rundown of what you're seeing out there. Are you seeing any portfolios available for sale, maybe you get that capital deployed even quicker?
Yeah. This is Dan. I'm seeing portfolios, I'm seeing one-offs. It's a great time to shop for properties in our market. When I look at last year's volume, you got $10.5 billion of multifamily trading in Dallas, you got $3.5 billion in Austin, and $3.5 billion in Houston. I see no signs of that slowing down. As a matter of fact, I see that's probably going to accelerate into 2021. We're seeing everything from a fractured condo deal to 17 property portfolios.
Okay, great. That makes sense. Maybe just given your commentary about not participating in the low cap rate environment, you mentioned maybe targeting some developer-owned property with some lease-up risk. Would that also indicate maybe you're looking at some assets with a bit more value add than maybe what you've done in your most recent deals?
Probably not. Our view of value add right now is it's a good time to be a seller of value-add properties. I think it's relatively easy to underwrite to increased economics for value add. It's much tougher to execute upon those increased economics. If I'm looking at hedged debt of, call it 2.5%, and walking into the back of a 3 to 5-year increase in interest rates, that's going to potentially drive cap rates, I really want to run to quality all day long. With that said, if you look at the last, call it six or seven acquisitions we've done, they've all been new assets, and they've all been strategically located. I don't think there's any signs that BSR is going to stop doing that.
Okay. Makes sense. Then just looking at one of the more recent acquisitions, Vale, just how is the leasing program going there?
Blake?
Hey, Kyle, this is Blake. Going really well. We're leased at 75% as of today. Our budget called for 55%. We are reaching the pro forma lease rates. We're actually a little ahead of that right now. Our traffic's great.
Okay, great to hear. Just the last one for me, maybe a little higher level. Just curious on your thoughts on the 1031 exchange program under the new administration. Any chance that we see any changes there or just your general thoughts?
Hey, Kyle, before Dan answers that question, I would want to add too, also, that Satori, which was one of our first properties that we took on a lease up, is at 97% as of today, reaching the rents that we had projected.
Okay. Hey, Kyle, this is John, I'll take the 1031 question. Just, we noted that there was discussion about that during the presidential election period. This president, Biden, has put all kinds of different priorities out in front of him, including just raising overall taxes, much less than getting into the weeds on how they would raise taxes or do away with certain components of the real estate side. I will say this, the 1031 has been around since 1921 in some form or fashion. Since 1987, it's been the way that we're looking at it today. It's provided a great lift to the whole economic component of the U.S. economy. To me, I think that it's pretty far down the weeds to say that this is going to go away or it's going to have a meaningful change.
We don't control that, and from as far as we're concerned, we're going to continue conducting our business and utilizing 1031s as long as it's available. We don't believe that it's going to be something that's going to morph or go away due to one administration's discussion about it last presidential election. It was some good wording around, good fodder for talk speak, if you will, in order for him to be elected.
Okay, great. Thanks for all the color. I'll turn it back.
Thank you. Your next question comes from Joanne Chen with BMO. Joanne, please go ahead.
Hey, good morning, everyone. Maybe just a quick follow-up on the acquisition side. With respect to the $400 million acquisition, in terms of given how competitive the pricing environment is, would you say that the kind of cap rate that you'd be looking at on those acquisitions is probably in the low 4% range?
Yeah, Joanne, this is Dan. I think it's fair at this time to give a range. Let me give you 100 basis point range between 4% and 5%, the way that we look at cap rates, which might be different than the way that the rest of the market views them.
Okay. No, that's helpful. Maybe just switching gears a little bit, I guess, on the maintenance CapEx side of things. How should we think about that to trend, I guess, in 2021, 2022, just given the significant shift in the portfolio this year?
I'm sorry, you faded out for a second, Joanne. Did you ask about maintenance CapEx?
Yeah. How should we think about that to trend, in 2021 and 2022, given the significant shift in the portfolio this year?
Right. Yeah. Generally, we each project around $430 a door-ish. That's going down a little bit. Maybe closer to, I would say, $375 based on the age of this new portfolio.
Okay. I guess just this quarter, there was the weighted average cap rate on the portfolio compressed quite a bit to 4.9%. Can you talk to maybe some of the drivers of that 30 basis points move quarter-over-quarter? Was that mostly from acquisitions of some of the newer properties?
Yeah. Right. I'm sure everybody's noticed the weighted average cap rate of our portfolio has been trending down. There's two reasons, right? We are buying properties with lower cap rates, yes. We're also selling a lot of properties that had higher cap rates. It's a combination of both.
Right. Okay. No, thanks for that clarification. I'll pass it back. Thanks, everyone.
Yeah. Thanks, Joanne.
Thank you, Joanne.
Thank you. We have a following question from Matt Logan with RBC. Matt, please go ahead.
Thank you, and good morning.
Good morning, Matt.
Just wanted to touch on your disposition of Towne Park. When we think about the remaining assets in Northwest Arkansas, would those be something that you would consider selling? Any color there would be appreciated.
Matt, this is John. Northwest Arkansas was certainly one of our target markets to grow in. I will say this. They paid an outrageous price from our perspective for Towne Park, in that it was also some out of market debt that was with it. When you look at the look-back cap rate that we received on the property, it was compelling to the point that we wanted to rotate that capital and put it back into where we do have scale and where our platform could take advantage of the opportunities as Dan had discussed before. We see the same thing for the remaining property in Mountain Ranch. We look at the pricing being in that particular market, I wouldn't be surprised if you ever saw us move out or you know our strategy is a clustering strategy.
If we aren't growing, then most likely we're going to take advantage of an opportunity to move our capital and put it where we can grow it with scale.
Yeah, this is Dan. I'm going to echo some of John's comments and generally say, let's take that Towne Park acquisition or that disposition, I think it was $31.7 million, give or take. I want to note there, and I think we hit on it in some of the disclosure materials, the buyer in that transaction assumed a 10-year fixed-rate, 4.5% interest rate loan that carried with it at closing about a $5 million, I think it's $5 million or $6 million prepay. If you're looking at what that acquisition cap rate would look like all cash, you're looking at a 4 cap flat for Towne Park. Right? You have a buyer that assumed a lower levered loan at a way at a market interest rate. That's what drove down some of that sales price on Towne Park.
Now, even with Towne Park sales price at $31.7 million, let's call that a mid-5s exit cap. When you're stacking the prepay on top of that $31.7 million, you're looking at 4. When we decided to get in and anchor Northwest Arkansas as a core market for us, we saw the basic demographic trends, the net population growth, the AMR growth, the supply and demand mismatch. If we're going to see assets trade at a 4 cap in Northwest Arkansas, then I think it's just basic capital discipline that we would revisit our hold strategy there.
Makes total sense to me. Any thoughts on Oklahoma City at the moment?
None. This is Dan. We got tons of thoughts on them, but no real thoughts that are going to turn into tactics or strategies. We think the Oklahoma City NOI is what I would call pure. Our assets are pretty well capitalized there. We've acquired some of them post-IPO. Then I think if you really look at Oklahoma City performance during COVID, a big pillar of that economy has been hospitality since 2005, and the Oklahoma market performed well in the last year and a half, though hospitality was one of the hardest hit factors of our economy in 2020. We like the way the city market, I guess, performed against some of those negative global macroeconomic trends.
On a look-forward, we hadn't seen much, if any, development in 2019 and 2020 in Oklahoma City. I think some of our organic expectations this year and next make it kind of a quite pleasing market for us to have to hold onto. With that said, we'll continue to be opportunistic.
I guess focus of the acquisitions is really Texas given positive dynamics. Oklahoma's moving along well. In terms of the NOI outlook, I guess we've got 1%-ish rent growth, stable occupancy, and a 54% margin. Correct me if I'm wrong, with a 52% margin in 2020 and 53% in 2019, that should translate into some pretty healthy NOI growth here in the next year.
Yeah, we think so. This is Dan. We spent the last year beating up on our competitors every quarter. We think we'll continue to do that in the next quarter, we hope. I think the motto of BSR is we want to be able to control what we can control, and we are real estate managers and real estate investors. We're going to keep our heads down, and we're going to continue to be excellent landlords and provide a great service and great properties and great locations for our residents and our employees. I see no additional ingredients to apply, and I kind of see the proofs in the pudding on a look-back, and I would expect this to continue to perform and outperform on a look-forward.
Matt, this is John. Just I'll add onto that, is that this just speaks volume to our strategy and why we've been growing primarily in just Austin, Houston, and Dallas. The trend for population and economic growth is forecast by Reis, CoStar, all the different outlets that are forecasting this type of growth going forward is way outpacing the other markets where we had existed. We're going to continue taking advantage of any type of opportunity to have rotated, and we're extremely pleased that we have rotated with the lower cap rate spread compression between our secondary and our primary markets.
Absolutely. Maybe just one quick question from me before I turn it back. Could you give us a sense for what you're seeing for indicative interest rates these days?
Yeah, sure. This is Dan again. This is a topic that short, the majority of the run-up in rates that we've seen carries between years 3 and 10 on the curve. The premium to finance will generally sit in those areas. The premium for hedging against the curve right now is virtually non-existent between years one and three, which generally follows current Fed thinking on short-term rates. I think for BSR, we'll likely look to hedge our future debt obligations through the usage of caps, and we'll just say a 25 basis point cap purchase in lieu of swaps. This will enable the REIT to enjoy current short low-term LIBOR rates while protecting our investors from the potential of rising rates beyond 2023.
Right now, if I'm going to look at swap money, five-year money probably looks like 2.5%-2.75%, leverage dependent, and 10-year money probably sits around just a hair south of 3.5%.
Great commentary. Appreciate it.
Thanks.
I will turn the call back. Fixed.
Thank you.
Thank you, Matt.
Your next question comes from Yash with Laurentian Bank. Yash, please go ahead.
Good morning.
Hey, good morning.
Hey, Yash.
Are you guys modeling any specific number for your same-property NOI growth and FFO per unit growth, given what you know, what is happening in your markets?
I believe you were asking what are we modeling for same-property NOI growth?
What your model is spitting out based on your margin assumptions and rent growth. You said about 2%.
Yeah. We're looking currently at 1%-2%, which is quite a bit more than our competitors in a lot of areas down in the Sun Belt. We're always looking to beat that mark, but at the current time, that's what we're modeling.
Right. Okay. On your FFO per unit growth, how do you guys think about the FFO per unit growth for this new portfolio that you have put together? Given the rent growth you are seeing, what kind of FFO per unit growth do you think you can achieve over the next, say, five years?
Well, five years. This is Dan. Five years is a long time, and if I was ever accurate on a five-year look back, then I should get more than a trophy. If we're really looking, I would say now more than ever, capital discipline and discipline in underwriting is so important. If I look at last year, the team looked at 107 acquisitions, and any one of those 107 acquisitions would've been a great asset to the REIT. That's about 35,000 suites. It's a collective asset value of $6.5 billion, and the average asking price of what we looked at was about $59 million. Average age of construction was about 2011. You saw we bought five, or we bought six. That penetration rate of about 5%-6% is what we like to see every single year. We can only coach to that.
We look at that number, and it's a good bellwether number for us to know whether we're reaching on acquisitions or not. Now, if we look back again and dig through our discipline a little bit more, we like to see 75 basis point cap rate expansion on a three-year look back. I don't see any reason why we can't continue that trend of, call it a three-year look back, turning into NOI and this FFO growth of a 75 basis point expansion. Now, with that said, there could be a couple curve balls in our market. We've set in the last year of some flat to declining rent AMR numbers. Now, our markets continue to lead the nation in population growth, job growth, and in some cases, rent growth.
When I'm looking at and modeling some Austin acquisitions, I'm looking at potentially a 9%-11% organic growth from new constructions in AMR in 2022. That's not going to chase my buy cap down, but it may afford the REIT the opportunity to meet and exceed that 75 basis point look back cap rate number that we generally model to. As we go out five years, and as I said earlier, I think there's a lot of premium built into years three and five on the borrowing spreads. It creates a little bit more uncertainty. I think if we continue to focus on what we can control and buy these assets in the right sub-markets, in the right markets, the other aspects of real estate investment will take care of themselves.
Yeah. Dan hit on something that I feel like I talk about every call, but I think it's really, really important to think about, is that when you just pull up the information on cities, and you're looking at the overall rental growth rates or the occupancy rates, it's really important to look at the sub-markets. Houston, we've owned properties that are 60 mi apart in Houston. These sub-markets, and Dan does a fabulous job with this, and something that Dan and me look at when we're putting together our projections every year is we go through, and we literally look at the projections by three different forecasters of what the rates are going to look like for the coming year. I stress this again, you can't just look at the overall city. You've got to look at the sub-markets.
I think that's been one of our biggest strengths, is buying in the right areas at the right time.
Blake brings up a good point. This is Dan. Let's take Austin as a snapshot, as of December 2020. On a look back, for the entire MSA, I'm seeing a -3.2% average rent performance for 2020. Seeing occupancy reduced year-over-year by 4.2% in that market. A lot of that's driven by the 17,000-18,000 units in lease up and the 21,000 units under construction. There's some supply chain issues there. With that said, let's take a snapshot of where BSR owns in Austin. In South Austin, that's Cielo. We have two assets in South Austin, in Hays County. Hays County was the highest performing sub-market in 2020 in Austin. It demonstrated rent growth of 3%. I want to point out here that only five of the 23 sub-markets in Austin last year had positive rent growth. Hays County was one of them.
BSR has two properties there, and we told you exactly what was going to happen when we bought them. Now, the third and fourth assets we own in Austin are in North Austin. That's up in Williamson County. Now, Williamson County was the only sub-market out of all 23 of those sub-markets that witnessed not only positive rent, but also occupancy growth in the fourth quarter, and that's 2% and 4% respectively. For the year as well, where we saw rent growth of 2% and 6% occupancy growth. I think you can derive two things. Number one, we like to be in the right sub-markets.
Number two, that's kind of indicative of that suburban growth and urban slack that we saw last year, where you saw some of the migration out to more affordable apartments with better amenities in the, we'll call it, the donuts around an urban MSA.
Going back to what I said probably in my first question, and I think to tag along on Dan, what we're seeing on these non-same store assets is the performance is in each instance, either right on top of what we were thinking or in, you just heard me reference Vale. We were performing at 55% at this time. We're at 75% now. We feel really, really good over the next year about where these assets are going to take the portfolio.
Okay. That's great, fellas. Thank you.
Thank you. Ladies and gentlemen, as a final reminder, should you have a question, please press star one. There are no further questions at this time. Please proceed.
All right. Well, that concludes our call this morning, and thank you for your interest in BSR REIT, and we look forward to speaking with you again as we report our first quarter 2021 results. God bless everyone.
Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.