Capital Square Housing Trust, a real estate investment trust sponsored by Capital Square, announced the offering of up to two million shares of Series 1 Redeemable & Convertible 9.0% Preferred Stock at $10 per share available to accredited investors.
“Capital Square is pleased with the results of two UPREIT transactions in which over 85% and 71% of investors elected to exchange their Delaware statutory trust (DST) interests for operating partnership units on a tax-advantaged basis under Section 721 of the Internal Revenue Code,” said Louis Rogers, founder and co-chief executive officer of Capital Square. “UPREIT transactions allow real estate owners to diversify and reduce risk by exchanging their single property for operating partnership units in a REIT that owns a much larger portfolio along with many REIT benefits, including liquidity options. Future Capital Square Housing Trust UPREIT transactions will be funded with a portion of the proceeds of this preferred offering.”
Investors in the preferred stock offering are projected to receive a 9.0% annual dividend, paid monthly. Following the fourth anniversary of the offering, the preferred stock will be convertible by either the REIT or the shareholders at a discounted price of the lesser of 95% of the per share liquidation price, and 95% of the net asset value per share, if the REIT is calculating NAV at that time. This 5% discount on the price per share of REIT common stock results in a premium to holders upon conversion.
Investors in the preferred stock offering may also elect to purchase shares through the Preferred Distribution Reinvestment Plan, or “DRIP,” rather than receive their monthly cash dividend payments. DRIP participants will acquire additional shares in the offering at the then current purchase price, free of any fees or sales commissions.
“Investors in the Capital Square Housing Trust preferred offering receive an outstanding 9% preferred return and a 5% discount in a future conversion to common stock, creating a powerful one-two punch,” said Whitson Huffman, co-chief executive officer of Capital Square.
