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Capital Square REIT Launches $20 Million Preferred Stock Offering

Capital Square Housing Trust Inc., a real estate investment trust sponsored by Capital Square, is offering of up to two million shares of Series 1 Redeemable & Convertible 9% Preferred Stock at $10 per share available to accredited investors.

Capital Square Housing Trust seeks to raise $20 million, subject to an increase to $25 million, to fund acquisitions and UPREIT transactions, as well as for general corporate purposes.

“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 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% 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 $10 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.

Capital Square Housing Trust, Inc. is a real estate investment trust sponsored by Capital Square, a national real estate firm that is led by a seasoned team of real estate investment professionals with decades of experience. Capital Square Housing Trust acquires and manages a range of housing solutions, including Class A and B multifamily as well as build-for-rent communities in growth markets to mitigate risks while providing long-term capital appreciation for our stakeholders.

Capital Square is a real estate firm specializing in tax-advantaged real estate investments, including Delaware statutory trusts for Section 1031 exchanges and qualified opportunity zone funds for tax deferral and exclusion. In recent years the company has become an active developer of mixed-use, multifamily properties in the southeastern United States, with eight current projects totaling approximately 2,000 apartment units with a total gross asset value of $730 million. Since 2012, Capital Square has completed more than $7.8 billion in transaction volume.

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