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Bailey-Led BSR REIT Goes Public Via TorontoLock Icon

4 min read

BSR, an $870 million-asset real estate investment trust headquartered in Little Rock, quietly made its debut as a public company by way of Canada.

Shares from the company’s $135 million initial public offering began trading May 18 on the Toronto Stock Exchange (TSX HOM.U).

The 13.5 million-share offering was used to shed $122.3 million of debt secured by BSR’s portfolio of 47 market-rate apartment projects.

“It puts us in a position to grow our company,” said John Bailey, CEO of BSR. “We’re at a 45.6 percent leverage to gross book value. That’s an incredibly strong balance sheet.”

The corporate moniker is a nod to Bailey Summit Residential, the result of a 2012 merger of Little Rock’s Bailey Properties and Summit Housing Partners of Montgomery, Alabama.

BSR is the latest incarnation of the real estate enterprise the late Virginia Bailey and her husband, H.A.T., began building with Bailey Corp. in 1956.

“We want people to draw that line,” John Bailey said of his parents’ business legacy. “This is the current version of what the family brought to Little Rock.”

The list of Little Rock projects includes the Foxcroft, Campus Place, McClellan Place, St. Charles and St. Thomas residential subdivisions and the Foxcroft, Andover Square and River Bend townhomes projects.

Over the years, the Bailey family amassed through acquisition an apartment portfolio of more than 3,900 units primarily in the Little Rock-North Little Rock area that became Bailey Properties. John Bailey bought out his family’s interest in 2002.

The IPO created about $140 million in acquisition liquidity BSR quickly began putting to work. The company expanded its holdings to 48 multifamily properties and 9,879 units on June 1 with the $23.4 million acquisition of Brandon Place, a 200-unit garden-style residential community in Oklahoma City.

The deal pushed the company’s total assets beyond $870 million.

That’s a 63 percent increase from BSR’s total assets of $533 million at year-end 2014.

The company generated revenue of $86 million in 2017, compared with nearly $76 million in 2016.

Why Canada?
The decision to go north of the border to take BSR public was driven largely because of its size. The company is considered too small to garner the needed support in the United States, and the Toronto market has taken a shine to REIT opportunities in America.

It also attracts Canadian investors looking for diversification with Sunbelt opportunities like BSR, which pays dividends in the more attractive U.S. dollars.

“The board explored options, and the Toronto market offered the right banking support and analyst support for a mid-sized REIT,” Bailey said. “We have three analysts following us to start with, and that means our story will get out to investors.”

He hopes to ring the bell to open trading at the Toronto Stock Exchange on July 31. That’s the 27th anniversary of the purchase of Little Rock’s Union Train Station, BSR’s headquarters for a 293-member staff spread across a five-state footprint.

Bailey bought the historic building at 1400 W. Markham St. for $540,000 back in 1991 in a tax-deferred land exchange.

The IPO effort was greenlighted by the BSR board in August, and that set in motion an especially busy time of preparation.

A BSR team of Bailey, Dan Oberste, chief investment officer; and Susan Koehn, chief financial officer; made a whirlwind circuit of presentations to potential investors in advance of the stock offering.

The trio did 14 days of road shows that began in Toronto and moved to Montreal, New York, Vancouver, Victoria, Calgary, Winnipeg and Minneapolis before coming full circle in Toronto.

A lunch menu of power bars and bottled water while shuttling between meetings was common.

“It was insane,” Koehn said. “It was back-to-back-to-back. There were nights where we didn’t have dinner. The IPO wasn’t easy to get over the finish line, and we have great financial results.”

Going public in Canada also required BSR to translate its financials. Instead of using the American-made Generally Accepted Accounting Principles, the company had to use International Financial Reporting Standards.

“That in and of itself was a huge deal,” Koehn said. “Our office had an international flavor with people from Scotland and Asia helping us with the conversion.”

Operating under the Canadian rules of engagement, BSR will make its REIT dividend payments to investors monthly instead of the quarterly U.S. norm.

In addition to Bailey, a couple of familiar names are members of the BSR board of trustees: Bill Halter, former Arkansas lieutenant governor; and Dan Hughes Jr., founder of Summit Housing Partners, now chairman of LEDIC Realty Co. of Memphis.

The BSR IPO marks the end of a nearly 12-year dry spell for a private-to-public launch of a venture based in Arkansas.

Home BancShares Inc. of Conway made its initial public offering of stock on June 22, 2006.


Maintaining a high level of customer satisfaction is a big deal at BSR. The apartments-only real estate investment trust monitors its online reputation assessment (ORA), which tracks good and bad reviews.
“We’re a service business,” said John Bailey, BSR CEO. “We want people to have an outstanding experience.”

The company landed a composite score of 72 on J Turner Research’s bad to good rating scale of 0-100. The score derived by the Houston firm is an aggregate compilation of a property’s ratings across various review sites.

Each month, the company monitors online ratings of more than 71,000 properties, nationwide, to assign ORA scores to each property.

A 72 would rank BSR among the top five multifamily REITs. The national average is 60.7. Bailey notes that manners matter at BSR and the corporate norm is to observe conversational courtesy: No sir, yes ma’am, thank you and it was my pleasure.

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