Capital Square Housing Trust Introduces New $40 Million Preferred Stock Offering

Capital Square Housing Trust Announces $40 Million Preferred Stock Offering

Capital Square Housing Trust, a prominent real estate investment trust (REIT) sponsored by Capital Square, has made headlines with its latest financial maneuver: a new preferred stock offering aimed at raising $40 million. This initiative involves the issuance of up to four million shares of its Series 2 Class A and Class I Redeemable and Convertible Preferred Stock, each priced at $10. The offering is strictly limited to accredited investors, reflecting the trust's focus on maintaining a robust and investors-focused framework.

The objective of this fundraising effort is multi-faceted. It seeks to fund acquisitions, UPREIT transactions, redemptions of preferred stock, and support various other real estate-related ventures and general working capital needs. A significant feature of this offering is that it will also allow for a potential increase, raising the total up to $45 million, thus giving the trust a broader scope for its investment strategies.

"The success of our prior Series 1 preferred stock offering prompted the launch of Series 2," explained Louis Rogers, the founder and co-chief executive officer of Capital Square. This new offering comprises both Class A shares available for purchase through broker-dealers and Class I shares exclusively for sales via registered investment advisors.

For those interested in investing, Class A shares promise a projected annual dividend of 9.0%, paid monthly, with a minimum investment requirement of $10,000. On the other hand, Class I shares, for which the purchase is facilitated through a registered investment advisor, offer a higher projected annual dividend of 9.75% but come with a much steeper minimum investment of $5 million.

One compelling aspect of this preferred stock offering is the flexibility it presents for investors. After the fourth anniversary of the offering, shareholders—or the REIT itself—can choose to convert these preferred shares into common stock at a discounted rate, reflecting either 95% of the per share liquidation price or 95% of the net asset value per share at the time of calculation. This conversion feature not only offers a potential for capital growth but also adds an attractive layer of flexibility for investors who might wish to transition to common stock.

Additionally, participants in the offering have the option to enroll in the Preferred Distribution Reinvestment Plan (DRIP). Rather than receiving monthly cash dividends, DRIP participants can opt to reinvest their distributions to acquire additional shares at the current purchase price, free of any fees or commissions. This option is particularly appealing for long-term investors looking to maximize their investment growth without immediate cash outflows.

Whitson Huffman, the co-chief executive officer and chief investment officer of Capital Square, emphasized the strengths of this offering: "It presents investors with an enticing yield, regular income, and a significant opportunity to engage in the future growth of Capital Square Housing Trust through conversion. This also fortifies our strategic growth aspirations, encompassing beneficial acquisitions and credit solutions for our future pipeline."

Capital Square Housing Trust is recognized for its focus on acquiring and managing various housing solutions, which includes Class A and B multifamily projects along with build-for-rent communities strategically located in growth markets. The firm aims to mitigate investment risks while offering long-term capital appreciation for its stakeholders.

As Capital Square continues to navigate and expand its portfolio, this recent initiative reflects a commitment to building a best-in-class array of housing communities for various types of investors. With a history that includes more than $7.9 billion in transaction volume since its inception in 2012, the firm shows a strong precedent for successfully managing and improving its investment offerings.

In conclusion, this latest preferred stock offering from Capital Square Housing Trust represents a thoughtful strategy aimed at not just surviving but thriving in today's competitive real estate market. Investors looking for opportunities in the real estate sector should keep an eye on this innovative capital raise and consider the implications of both dividends and future growth potential.

For further information on the offerings and opportunities provided by Capital Square Housing Trust, interested parties can visit their official website at www.CapitalSquareREIT.com.