New York, July 21 – Bluerock Residential Growth REIT Inc. increased its offering of preferred stock units to $225 million from $150 million previously, according to a 424B5 prospectus filed with the Securities and Exchange Commission on Friday.
The continuous offering began on Feb. 24, 2016.
Bluerock plans to sell the full amount by Dec. 19 although it has the option to extend the sale through June 17, 2018.
Each units is made up of one 6% $1,000-par series B cumulative preferred share and one warrant equal to 20 shares of class A common stock.
Bluerock Capital Markets Inc. is acting as the dealer manager.
Dividends on the preferreds will be paid monthly. Holders of the preferreds can require the company to redeem the preferreds at any time on a sliding scale basis.
Immediately after issuance, holders of the preferreds can request that the shares be redeemed at par plus accrued dividends, less a 13% redemption fee. After one year, the fee slides to 10%. In year three, the fee equals 5% and then 3% in year four. Beginning in the fifth year, there is no longer a fee.
Additionally, within the first two years of issuance, the company will redeem preferreds of a deceased holder upon written request of the holder’s estate.
Upon the second anniversary of issuance, the company can elect to redeem the preferreds at par plus accrued dividends. The preferreds can also be redeemed, in whole, in the event of a change of control. The original deal allowed for the company to redeem the issue after year three. There also was no provision for a change-of-control redemption.
As for the warrants, they become exercisable after the first anniversary date of issuance and expire after four years. The initial exercise price will be a 20% premium over the current market price, with a minimum of $10.00 per share.
The preferred stock and warrants are immediately separable.
Proceeds will be used for future investments and acquisitions and for other general corporate and working capital purposes, which may include capital expenditures.
Bluerock is a New York-based real estate investment trust.
| Issuer: | Bluerock Residential Growth REIT Inc.
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| Securities: | Preferred stock units
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| Amount: | $225 million, or 225,000 units
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| Dealer manager: | Bluerock Capital Markets Inc.
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| Pricing date: | Feb. 24, 2016
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| Series B redeemable preferred stock
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| Dividend: | 6%
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| Par: | $1,000
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| Call options: | Redeemable by holder immediately after issuance at par plus accrued dividends, less a 13% redemption fee; after one year, the fee slides to 10%. In year three, the fee equals 5% and then 3% in year four. Beginning in the fifth year, there is no longer a fee. Redeemable upon holder’s death. Also redeemable by company two years after issuance or in the vent of a change of control
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| Warrants
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| Strike price: | 20% premium over market price
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| Minimum threshold: | $10.00 per share
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