It’s something that most of us may have experienced but certainly watched. Intelligent people often make poor financial decisions.

You hear of someone making $500,000 per year and find out they eventually go bankrupt. How can that happen?

In most of our cases, it’s a slow erosion of spending. We are feeling happy or sad, so we buy something we don’t need.

I view things from three different perspectives or rules. Ecology, Psychology and Investment.

The first is from the 10 rules of the hive. Nature and the honeybees align perfectly with what we need to do to stay financially savvy, but that's not all.

Next, I apply traditional psychology to gain a deeper understanding of the problem. Dumb money mistakes happen when we are overly happy, sad, or sometimes anxious. Those are the dumb times. At other times, we may overspend to make a good impression. That’s not dumb, but actually stupid. Most people really don’t care what car you drive or what clothes you wear. Again, that’s something you need to work on yourself. But psychology and nature aren’t enough.

The final pillar I use is the money one. Does it make sense for you to spend to purchase that good or service? Is it in line with your budget, and are you still spending less than you earn each month?

So, in rule #1 of our Hive lessons, the Hive comes first. You don’t spend on personal items if the family or your obligations aren’t paid first. 

Next, you don’t purchase anything unless it is a necessity, not a want, when you are not feeling emotionally well.

Finally, when the credit card bill is available or your bank statement, look to see if there were any dumb purchases. Think back on how you were feeling at the time. Also, review your money philosophy (you will develop one over time by reading these newsletters if you don’t already have one) and ensure your purchases align with that belief.

So, in summary, always look at the rule from nature and the bees. In this case, Rule #1: The Hive Comes First. Next, check your emotions. Finally, ensure the purchase aligns with your financial philosophy.

In keeping with my three pillars of nature, psychology, and finance, I created the Hank App. It is the only tool in the world that combines those three pillars. It brings a very different type of analysis to investing and life. In future newsletters, we will back-test it to prove its value, but for now, let me share my REIT analysis.  I started analyzing the top 5 publicly traded Apartment REITs in Canada. I Asked Hank to 'Do a deep analysis of all of the publicly traded apartment REITS in Canada and rank them.' My goal is to create a personal ETF that includes all five of them. Below is #5. I’m not sure what percentage of funds I’ll invest in each, but we’ll go through that exercise once we've shared all five. Here’s BSR REIT.

This information is for Educational Purposes only. Do not make portfolio changes without speaking with your financial advisor. I am not a financial advisor.

BSR REIT: Complete Deep Analysis (Hank Method Framework)

1. Business & Strategy Overview

BSR Real Estate Investment Trust (BSR REIT) is a Canadian-listed, U.S.-focused multifamily residential REIT operating primarily in the Sunbelt region (Texas and surrounding states). As of Q2 2025, BSR owns 25 properties with approximately 6,800 apartment units. The REIT has been recycling its portfolio by selling stabilized assets and reinvesting into higher-growth or lease-up properties. All debt is fixed or economically hedged, providing protection against rate fluctuations.

2. Key Financials, Metrics & Trends

Q2 2025 results show revenue of USD 33.7 million (down 20% YoY), with FFO of USD 9.15 million (USD 0.21/unit) and AFFO of USD 8.38 million (USD 0.19/unit). AFFO payout ratio rose to 73%. Debt-to-Gross Book Value is 48.9%. NAV per unit stands at USD 16.74. Occupancy remains stable around 95.6%. Blended leasing spreads were slightly negative but turned positive in July 2025. Liquidity totals USD 82.5 million, including USD 21.5 million cash.

3. Hank Rule Scoring

| Rule | Score (0–10) | Notes |
|---|---|---|
| 1. Hive Must Come First | 5 | Reasonable insider alignment and capital recycling, but AFFO decline and growth inconsistency. |
| 2. Nature Knows Best | 6 | Multifamily model simple and durable but exposed to cyclical pressures. |
| 3. Recycle | 5 | Portfolio recycling and leverage moderate, though AFFO volatility persists. |
| 4. Focus & Efficiency | 6 | Geographic concentration aids efficiency. |
| 5. Right Place | 7 | Sunbelt exposure positive for long-term demand. |
| 6. Compounding | 5 | Mixed growth record, execution risk in lease-ups. |
| 7. Be Strong | 6 | Proactive disposal of weaker assets. |
| 8. Probability of Success | 6 | Industry fundamentals good, but near-term volatility. |
| 9. Feedback Loops | 5 | Good transparency, moderate governance. |
| 10. Market Sentiment | 4 | Mixed analyst sentiment, cautious tone. |
**Total:** 55/100.

4. Strengths & Risks

Strengths:
- Active capital recycling and management discipline.
- Stable occupancy (~95%).
- Fixed-rate debt and healthy liquidity.
- Exposure to high-growth Sunbelt U.S. markets.

Risks:
- Declining FFO and AFFO.
- Negative lease spreads, though improving.
- Refinancing risks with USD 27.8 million due within 12 months.
- Non-stabilized properties create cash flow drag.
- Uncertain guidance and sentiment headwinds.

5. Key Hank Metrics

- Price-to-Book (P/B): Estimated below 1.0× if trading under USD 16.74 NAV per unit.
- Hank Cap Rate: Approximately 6–7% using AFFO yield.
- Dividend Safety: Payout ratio of 73% is moderate but rising.
- Buyback/Unit Changes: Recent Class B unit cancellation improved per-unit ownership but reduced equity base.

6. Graham-Style Verdict

From a Benjamin Graham perspective, BSR is not a pure defensive value REIT. However, if priced well below NAV, it offers speculative value. Verdict: Speculative Buy (Conditional on Discount to NAV).

7. Bankruptcy / Zero Risk

Low-to-moderate risk. Debt fixed, liquidity sufficient. Main risks are operational (lease-up performance) and refinancing exposure.

8. Macroeconomic & Tariff Context

Exposure to U.S. interest rate changes, USD/CAD exchange risk, and local real estate supply. No major tariff or trade risk identified.

9. Inverse (Why Not to Buy)

- Persistent negative lease growth.
- High refinancing exposure.
- Weak sentiment and guidance.
- Rising payout ratio and lower coverage.

10. Outlook & Recommendation

BSR REIT remains a solid long-term multifamily operator but is currently in a transition phase. Stabilization of lease-up properties and return to positive AFFO growth are key. Current valuation may offer upside if execution improves. Rating: Neutral to Speculative Buy, depending on discount to NAV and risk tolerance.

This information is for Educational Purposes only. Do not make portfolio changes without speaking with your financial advisor. I am not a financial advisor.