series t redeemable preferred stock · 1 day ago · real estate private and public company...
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Included in both theRussell 2000 & 3000 Indexes
The security investment described herein relates solely to BRG’s Series T Redeemable Preferred Stock, non-traded securities of BRG which have not been listed on any national exchange. The risks and rewards of investing in the Series T Redeemable Preferred Stock are separate and distinct from an investment in BRG’s common stock listed on the NYSE American. This is neither an offer to sell nor a solicitation of an offer to buy the securities described herein. An offering is made only by the prospectus. This sales and advertising literature must be read in conjunction with the prospectus in order to understand fully all of the implications and risks of the offering of securities to which it relates. A copy of the prospectus must be made available to you in connection with this offering. Neither the Attorney-General of the State of New York nor any other State regulators have passed on or endorsed the merits of this offering. Any representation to the contrary is unlawful.
Bluerock Residential Growth REIT Inc., a Real Estate Investment Trust (REIT) whose common stock is listed on the NYSE American (NYSE American: BRG), is offering its Series T Redeemable Preferred Stock with the following features and benefits:
6.15% Annual Dividend Paid Monthly 1
Senior Position to Common Stock
1 Dividends have been paid on our Class A common stock since May 5, 2014. Such dividends were paid on a monthly basis at a quarterly rate of $0.29 per share through December 31, 2017 and at a quarterly rate of $0.1625 per share thereafter. From May 5, 2014 through December 31, 2019, we have paid total common stock dividends, including dividends reinvested through our dividend reinvestment plan, of $109,421,425, of which on a cumulative basis, approximately 9% were paid from sources other than cash flows from operations, including from the proceeds of our equity offerings. In addition, the Company has issued Series A preferred stock, Series B Redeemable Preferred Stock, Series C preferred stock, Series D preferred stock, and Series T Redeemable Preferred Stock. The Series A preferred stock carries an 8.25% stated dividend rate, the Series B Redeemable Preferred Stock carries a 6.00% stated dividend rate, the Series C preferred stock carries a 7.625% stated dividend rate, the Series D preferred stock carries a 7.125% stated dividend rate, and the Series T Redeemable Preferred Stock carries a 6.15% stated dividend rate. From May 5, 2014 through December 31, 2019, we have paid total preferred stock dividends of $115,793,005, all of which were paid from cash flows from operations.3 Each Holder receives a pro rata stock dividend in the year shares are purchased based on month of issuance (January purchase receives 100% or 12/12ths, July purchase receives 50% or 6/12ths, December purchase receives 1/12th, etc.) and receive full stock dividend in subsequent years. Paid December 29th of each year to holders of record on December 24th of each year.
Under Maryland law, redemption may be prohibited if BRG is insolvent. If we experience significant liquidity problems, we may not be able to fulfill our obligation to redeem Series T Preferred Stock when submitted for redemption. Redemptions may be paid in cash or in equal value of shares of the Company’s Class A Common Stock at the discretion of the Company. Holder’s estate may redeem for Stated Value if holder dies during first two years following date of issuance. Redemption price includes an amount equal to any accrued but unpaid dividends.
The security investment described herein relates solely to BRG’s Series T Redeemable Preferred Stock, a non-traded security of BRG which has not been listed on any national exchange. The risks and rewards of investing in BRG’s Series T Redeemable Preferred Stock are separate and distinct from an investment in BRG’s common stock listed on the NYSE American.
THIS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES DESCRIBED HEREIN. AN OFFERING IS MADE ONLY BY THE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. THIS SALES AND ADVERTISING LITERATURE MUST BE READ IN CONJUNCTION WITH THE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN ORDER TO UNDERSTAND FULLY ALL OF THE IMPLICATIONS AND RISKS OF THE OFFERING OF SECURITIES TO WHICH IT RELATES. A COPY OF THE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS MUST BE MADE AVAILABLE TO YOU IN CONNECTION WITH THE OFFERING. NEITHER THE ATTORNEY GENERAL OF THE STATE OF NEW YORK NOR ANY OTHER STATE REGULATORS HAS PASSED ON OR ENDORSED THE MERITS OF THE OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Series T Redeemable Preferred Stock Terms
Offering Size: $500,000,000 maximum
Price per Share: $25.00
Brokerage Accounts: $25.00 2
Advisory Accounts/RIA: $23.25 2
2Client account statements reflect $25.00 Stated Value.
Investment Minimums:Qualified Accounts: $5,000Non-Qualified Accounts: $5,000
Series T Redeemable Preferred Stock
2
Principal Growth with Annual Stock Dividend
Investor-Focused Fee Structure Full Investment (Stated Value) on Client Statement & Full Elimination of Ongoing Fees
Offering Overview
There can be no assurance that any investment strategy will achieve its objectives, generate profits or avoid losses.0.2% annual stock dividend paid at the end of each of the
first 5 years of ownership (paid pro-rata in Year 1 based upon month of purchase and in full in Years 2, 3, 4 and 5 if shares are held on applicable record date). 3
• Upon issuance, for Stated Value, less a 12% redemption fee;
• After 1 year, for Stated Value, less a 9% redemption fee;
• After 2 years, for Stated Value, less a 6% redemption fee;
• After 3 years, for Stated Value, less a 3% redemption fee;
• After 4 years, for Stated Value.
Optional Redemption Following Death of Holder at Stated Value.
Company Redemption Option: After 2 years, BRG may redeem for Stated Value plus accrued and unpaid cash dividends
Shareholder Redemption Option as follows: 3
Annual Stock Dividend
Operating Properties
Preferred Equity/Mezzanine Investments
Existing BRG Markets
Target BRG Markets
3.00%
2.00%
1.00%
0.00%
1.41%
1.90%
2.64%2.38%
Employment Growth Rate
Projected Median Household Income
Growth Rate
87% 25%
BRG Targeting Growth Markets1’2
U.S. Existing and Target Markets
3
About Bluerock Residential Growth REIT (“BRG”)
BRG is a publicly traded real estate investment trust (REIT) that acquires institutional quality, Class A apartment properties in growth markets across the United States. With over 15,600 units (operating and in development) and $2.34+ billion in property assets, BRG seeks to maximize returns through investments where we believe we can drive substantial growth in funds from operations and net asset value.There can be no assurance that any investment strategy will achieve its objectives, generate profits or avoid losses.
Investment Strategy
BRG invests primarily with members of its Network, which allows it to draw on the collective market knowledge of some of the nation’s leading private apartment owner/operators who may invest alongside BRG (generally < 20%) to create a better alignment of interest for BRG shareholders.
BRG Offers:
▪ A network with some of the largest, leading apartment operators in the nation with more than 157,000 apartment units under management
▪ Decades of experience and local market knowledge within BRG’s selected target markets
▪ Extensive operational infrastructure to deliver best-in-class execution across multiple markets without the cost and logistical burdens to BRG
Leveraging Network Members in High Growth Markets
BRG selects and continuously evaluates its target markets for strong rentership characteristics which include areas with:
▪ High populations of a young, educated workforce with a high density of “renters by choice”
▪ Jobs of the future such as health care and technology that lead to employment growth
▪ Growing economic base driven by the presence of technology centers, major colleges and universities, health care, trade, next-generation manufacturing, government industries, and modern transportation facilities and networks
▪ Areas with abundant recreation, leisure, cultural, and entertainment options which foster population retention and growth
BRG focuses on demographically attractive growth markets which it defines as markets characterized by growing population and job growth. Employment growth is highly correlated with apartment demand; therefore, BRG believes that selecting markets with job growth significantly above the national average will provide high potential for increase rental demand leading to revenue growth and attractive risk-adjusted returns.
(1) Source: Bureau of Labor Statistics(2) Income Growth Rate Projections from SNL Financial, Dec 2019
ALABAMA GEORGIA
NORTHCAROLINA
NEVADA
UTAH
ARIZONA TENNESSEE
SOUTHCAROLINA
COLORADO
WASHINGTON
TEXAS
HoustonOrlando
Atlanta
San Antonio
Dallas/Ft. Worth
Denver
Raleigh
Birmingham
Tampa
Phoenix
Las Vegas
NashvilleCharlotte
SarasotaNaples
Ft. Lauderdale
DaytonaAustin FLORIDA
Network Member Experience157,000+ Total Units Under Management
NETWORK MEMBER
BELL PROPERTIES
SECURITY PROPERTIES
ROSCOE PROPERTIES
CWS CAPITAL PARTNERS
TRAMMELL CROW
UNITS
47,000
33,000
32,000
30,000
15,750
Bluerock Selected Network Members
AS OF DECEMBER 31, 2019 AS OF DECEMBER 2019
4
Why Invest in Apartments?
A recent study concludes that the U.S. will need 4.6 million apartment units by 2030. Current supply trends indicate that just over three million units will be delivered during that time, leading to an imbalance.
Robust apartment market conditions are expected to continue nationally with Axiometrics projecting an average occupancy rate of 95.2% and effective rent growth of 17.7% through Q2 2025.
Future Supply/Demand Imbalance
Favorable Market Outlook
Projected National Apartment Demand
National Apartment Market Trends
Sources: Axiometrics Q4 2019 National Trend Report
Source: NMHC “U.S. Apartment Demand - A Forward Look”, May 2017
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
5.0
4.0
3.0
2.0
1.0
0.0
PROJECTED CUMULATIVE DEMAND
PROJECTED CUMULATIVE SUPPLY
CURRENT/PROJECTED EFFECTIVE RENT CURRENT PERIOD OCCUPANCY
MILLIO
NS
OF U
NITS
PROJECTED
MO
NTH
LY E
FFEC
TIVE
REN
T PE
R U
NIT
Q1 2
010
Q4 2
010
Q3 2
011
Q2 2
012
Q1 2
013
Q4 2
013
Q3 2
014
Q2 2
015
Q1 2
016
Q4 2
016
Q3 2
017
Q2 2
018
Q1 2
019
Q4 2
019
Q3 2
020
Q2 2
021
Q1 2
022
Q4 2
022
Q3 2
023
Q2 2
024
Q1 2
025
$1,800
$1,700
$1,600
$1,500
$1,400
$1,300
$1,200
$1,100
$1,000
$900
$800
OC
CU
PANC
Y RATE
97.0%
96.0%
95.0%
94.0%
93.0%
92.0%
91.0%
90.0%
5
Defensive with historical higher risk-adjusted returns, and limited downside rent stability and resiliency.
Apartment Sector
Attractive Risk/Return Profile
10.0%
9.0%
8.0%
7.0%
6.0%
1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%
LOWER RETURN
HIG
HER
RIS
K(S
tand
ard
Devi
atio
n)
LOWER RISK
(Standard Deviation)
HIGHER RETURN
RETAIL
INDUSTRIAL
OFFICE
APARTMENT
20.0%
10.0%
0.0%
-10.0%
-20.0%
-17.7%-14.1%
-7.9%
-17.5%
MULTIFAMILY OFFICE INDUSTRIAL RETAIL
20.0%
10.0%
0.0%
-10.0%
-20.0%
5.0%
-4.5%
25.7%
7.8%
Cumulative Rent Changes During the Great Recession
Cumulative Rent Changes After the Great Recession
Sources: CBRE, U.S. Multifamily Research Brief, February 2019.
Sources: Morningstar Direct, average rolling 10-year return data, National Council of Real Estate Fiduciaries Property Index, 01.01.1983 through 01.01.2019
Return/Risk Overview,Rolling 10-Year
Periods Since 1983
Apartment 8.9% 2.0%
Industrial 8.5% 2.5%
Office 6.9% 3.5%
Retail 8.8% 2.4%
AverageRollingReturn
StandardDeviation
Roswell City Walk
Location: Roswell, GAYear Built: 2015BRG Ownership: 98%
CADE Boca Raton
Location: Boca Raton, FLYear Built: 2018 | Under ConstructionMezzanine Investment
The Preserve atHenderson Beach
Location: Destin, FLYear Built: 2010BRG Ownership: 100%
New Class A Portfolio - BRG Sample Properties
6
Wesley Village
Location: Charlotte, NCYear Built: 2010BRG Ownership: 100%
Alexan Southside Place
Location: Houston, TXYear Built: 2018Preferred Equity Investment
Park & Kingston
Location: Charlotte, NCYear Built: 2014BRG Ownership: 100%
Providence Trail
Location: Mount Juliet (Nashville), TNYear Built: 2007BRG Ownership: 100%
The District at Scottsdale
Location: Scottsdale, AZYear Built: 2018BRG Ownership: 100%
Bluerock is a private asset management and investment firm based in New York, NY whose senior management team has an average of over 30 years each investing experience and has helped launch several leading real estate private and public company platforms.
Bluerock’s key principals have been involved with sourcing, structuring and acquiring over 50 million square feet of real estate, with approximately $13 billion in value during three major market cycles. Bluerock has acquired/developed approximately 127 real estate properties, including approximately 110 apartment properties comprising over 31,000 apartment units, 33 million square feet across 16 states and over $5.2 billion in acquisition value.
Bluerock Leadership
60,000+
over $7.8 billion
$5.2 billion
Formed in 2002
7
Risk Factors
▪ There is limited liquidity and no public market for the Series T Redeemable Preferred Stock and BRG does not intend to list them on a securities exchange.
▪ If BRG’s Class A common stock is no longer listed on the NYSE American or another national securities exchange, BRG would be required to terminate the offering and could result in BRG raising gross proceeds substantially less than if the maximum offering is sold.
▪ Distributions paid from sources other than cash flow or funds from operations may constitute a return of capital and reduce investor returns. Rates of distribution to you may not be indicative of BRG’s operating results.
▪ BRG makes no guarantee that it will make distributions.
▪ BRG’s management has broad discretion over the use of proceeds from the offering of the Series T Redeemable Preferred Stock, and investors will not be able to evaluate the economic or other merits of BRG’s investments made with such proceeds prior to BRG making them.
▪ There are substantial conflicts of interest between BRG and its affiliates, including conflicts arising out of allocation of personnel to BRG’s activities, allocation of investment opportunities between BRG and investment vehicles of BRG’s affiliates, the purchase or sale of apartment properties, that might result in investment decisions that are not in the best interests of BRG’s stockholders.
▪ Upon the sale of any individual property, holders of Series T Redeemable Preferred Stock generally do not have a priority over holders of BRG’s common stock regarding return of capital.
▪ BRG’s charter contains various restrictions on the ownership and transfer of BRG’s securities.
▪ After two years from the date of original issuance, BRG will be able to redeem the outstanding shares of Series T Redeemable Preferred Stock, without your consent, at 100% of the Stated Value per share, plus any accrued and unpaid dividends.
▪ Maintenance of BRG’s exemption from registration under the Investment Company Act of 1940 and BRG’s REIT qualification impose significant limitations on BRG’s operations.
▪ Holders of the Series T Redeemable Preferred Stock will have no voting rights or control over changes in BRG’s policies and operations. BRG’s board of directors may approve changes to BRG’s policies without your approval.
▪ BRG’s qualification as a REIT depends upon BRG’s satisfaction of numerous regulatory limitations and qualifications.
▪ BRG may fail to maintain BRG’s qualification as a REIT, which would result in higher taxes for BRG and reduced cash available for distribution to BRG’s stockholders.
An investment in Bluerock Residential Growth REIT, Inc. (“BRG”) involves a high degree of risk. See the “Risk Factors” sections of the Prospectus Supplement and the accompanying Prospectus for a discussion of material risks related to an investment in BRG’s Series T Redeemable Preferred Stock, which include, but are not limited to, the following:
Summary of Fees and Expenses: Investors will be subject to the following Fees and Expenses as part of the Offering: selling commissions, dealer manager fee, and other offering expenses. Please see the Prospectus Supplement and the accompanying Prospectus for a complete listing of all Fees and Expenses related to the Offering.
BRG has filed a registration statement on Form S-3 (No. 333-224990, the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”), including a prospectus (the “Prospectus”), with respect to the securities BRG may offer and sell from time to time, and has further filed with the SEC a prospectus supplement relating to the offering of the Series T Redeemable Preferred Stock (the “Prospectus Supplement”). A copy of the Prospectus Supplement and the accompanying Prospectus must be made available to you in connection with the offering of the Series T Redeemable Preferred Stock, and must be read in conjunction with these materials in order to fully understand the risks of an investment in the offering.
This material contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of BRG’s business, financial condition, liquidity, results from operations, plans and objectives. These forward- looking statements are based on BRG’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to BRG. You should not place undue reliance on these forward-looking statements. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to BRG, and BRG cannot guarantee that BRG will achieve any or all of these expectations.
Securities offered through:Bluerock Capital Markets LLCMember FINRA/SIPCAffiliated with Bluerock Real Estate, LLC
Bluerock Real Estate © 2020. All rights reservedV-20-29
Pictured (left to right):
Links at Plum CreekCastle Rock, CO
BRG Ownership: 88%
Sands ParcDaytona Beach, FL
BRG Ownership: 100%
James on South FirstAustin, TX
BRG Ownership: 90%
Front cover:Alexan City Centre
Houston, TXBRG has a Preferred
Equity/Mezzanine Investmentin this Property
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