BSR Real Estate Investment Trust is planning to raise up to $500 million over the next two years, providing ammunition to hunt for higher-end apartment complexes in larger growth markets.
Northwest Arkansas is a target market for the company, which is based in Little Rock.
Last week, BSR sold nine properties in smaller cities, including Ridgewood Apartments in Hot Springs, for $119.2 million. The sales also involved three complexes in Louisiana and five in Oklahoma.
"We have the ability now, because we paid down debt when we sold those properties, to go out and buy new ones in the next few months," said Susie Koehn, BSR's chief financial officer.
The company has purchased four Texas properties this year for nearly $200 million. That includes two complexes in Austin, one in the Houston area and another in the Dallas-Fort Worth metroplex. To help finance the Austin purchases, BSR raised $55.2 million through private-placement offerings.
"The transformation of our portfolio continues as we rotate out of secondary markets and into our target markets on a tax-deferred basis," Chief Executive Officer John Bailey said in a prepared statement.
The company, which is traded on the Toronto Stock Exchange, has filed a shelf short-form prospectus outlining its intent to raise $500 million over the next two years, though BSR is under no obligation to issue securities. The filing allows the company to move quickly if it wants to raise money for future acquisitions, according to Koehn.
Specific use of proceeds will be detailed when securities are issued. "We'll still have to file a supplemental prospectus on why we need the money, what we're going to do with it," Koehn said Monday. "This [filing] allows us to go through the administrative procedures quicker."
BSR has been active in selling properties in smaller markets while acquiring apartment complexes in larger markets since it went public in May 2018. The company now owns 40 properties in Arkansas, Louisiana, Mississippi, Oklahoma and Texas.
In addition to Northwest Arkansas, target markets for future purchases include Austin, Dallas, Houston and Oklahoma City, Koehn said. The shelf prospectus is in place to help BSR "raise equity to buy additional properties if the time is right, if the pricing looks good within the marketplace and if we see accretive opportunities," Koehn said.
The company is valued at $1 billion, according to the prospectus. "We're super excited to be growing at this pace. The reason we went public is so we could grow, and we've been doing exactly that," Koehn said.
BSR's Arkansas properties include garden-style apartment complexes in Blytheville, Conway, Fayetteville, Little Rock, North Little Rock and Springdale. The company owns more than 9,000 units in its five-state footprint and has nearly 300 employees.
Business on 11/12/2019