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Capital Square Housing Trust Raises $24 Million in Fully Subscribed Preferred Stock Offering

Strategic Insights

— 2 min read

Capital Square Housing Trust, a real estate investment trust (REIT) sponsored by Capital Square, has announced the completion of a fully subscribed offering of two million shares of Series 1 Redeemable & Convertible 9.0% Preferred Stock. The offering raised $24 million, which will be used to fund additional acquisitions and UPREIT transactions, as well as general corporate purposes. According to Louis Rogers, founder and co-chief executive officer of Capital Square, the proceeds will help fund approximately $200 million in UPREIT transactions. This preferred stock offering allows investors to receive a 9.0% annual dividend, paid monthly, with the option to convert to common stock at a 5% discount after four years.

Key Takeaways:

  • Capital Square Housing Trust raised $24 million in a fully subscribed offering of Series 1 Redeemable & Convertible 9.0% Preferred Stock.
  • The offering consists of two million shares, which will be used to fund approximately $200 million in UPREIT transactions.
  • Investors in the preferred stock offering receive a 9.0% annual dividend, paid monthly, with the option to convert to common stock at a 5% discount after four years.
  • The preferred stock offering is a result of the company's UPREIT acquisition strategy, which allows investors to exchange DST interests for operating partnership units in the REIT through a similarly tax-advantaged process under Section 721 of the Internal Revenue Code.
  • Capital Square Housing Trust's growing portfolio is currently comprised of five Class A and Class B multifamily communities with a combined gross asset value exceeding $212 million.
  • The company relies on an UPREIT acquisition strategy that affords investors in Capital Square's tax-advantaged DST investment programs the opportunity to exchange their DST interests for operating partnership units in the REIT.
  • Allen Harris, President of client services for Capital Square Financial, added that these preferred stock offerings have been particularly popular among high-net-worth investors, noting that the 9.0% annual dividend and potential for converting to common stock at a 5% discount make this an attractive investment option.

Statistics:

  • Total offering size: $24 million
  • Number of shares: 2,000,000
  • Annual dividend: 9.0%
  • Optional conversion to common stock: 5% discount
  • Combined gross asset value of existing properties: $212 million
  • Number of properties in the portfolio: 5 (Class A and Class B multifamily communities)
  • Transaction volume completed by Capital Square since 2012: $7.9 billion
  • Development value of multifamily projects: $800 million
  • Total number of apartments managed by Capital Square Living: 13,000

Sources:

  • Capital Square Housing Trust
  • Capital Square
  • WealthForge Securities, LLC
  • FINRA
  • Private Placement Memorandum (PPM)

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