BSR Real Estate Investment Trust Announces Bought Deal Public Offering of US$40 Million of Convertible Unsecured Subordinated Debentures

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

LITTLE ROCK, Ark. and TORONTO, Aug. 27, 2020 /CNW/ - BSR Real Estate Investment Trust ("BSR", or the "REIT") (TSX: HOM.U) (TSX: HOM.UN) announced today that it has entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets, on a bought deal basis, US$40 million aggregate principal amount of 5.00% convertible unsecured subordinated debentures due September 30, 2025 (the "Debentures") (the "Public Offering").

In addition, the REIT has also granted the underwriters an option (the "Over-Allotment Option"), exercisable at any time, in whole or in part, for a period of 30 days following the closing of the Public Offering to purchase up to an additional US$6 million aggregate principal amount of Debentures, which, if exercised in full, would increase the gross proceeds of the Public Offering to approximately US$46 million.

The Debentures are convertible at the option of the holder into units of the REIT at US$14.40 per unit (the "Conversion Price"). The Conversion Price represents a conversion rate of approximately 69.4444 units for each US$1,000 principal amount of Debentures, subject to adjustment in accordance with a trust indenture to be entered into on or before closing of the Public Offering that will govern the Debentures. The Debentures will bear interest at a rate of 5.00% per annum and will be payable semi-annually on March 31 and September 30 until maturity on September 30, 2025, with interest payments commencing on March 31, 2021. The Debentures will not be redeemable by BSR prior to September 30, 2023. On or after September 30, 2023, but prior to September 30, 2024, the Debentures will be redeemable, in whole or in part, at a price equal to the principal amount plus accrued and unpaid interest, at BSR's option, provided that the volume weighted average trading price of the US dollar denominated Units on the Toronto Stock Exchange for the 20 consecutive trading days ending five trading days preceding the date on which notice of redemption is given is not less than 125% of the Conversion Price. On and after September 30, 2024, the Debentures will be redeemable by BSR, in whole or in part, at a price equal to the principal amount plus accrued and unpaid interest.

BSR intends to use the net proceeds from the Public Offering to repay a portion of amounts outstanding on its credit facility (current outstanding balance of US$193 million) and for general trust purposes. Upon completion of the Public Offering (and assuming the Over-Allotment Option is exercised in full), BSR expects to have access to approximately US$98 million of available liquidity through unrestricted cash and borrowing capacity available under its credit facility. Following closing of the Public Offering, BSR expects to have acquisition capacity of approximately US$200 million to US$220 million to pursue its acquisition pipeline.

The Debentures forming part of the Public Offering will be offered in Canada pursuant to a base shelf prospectus dated November 8, 2019. The terms of the Debentures will be described in a prospectus supplement to be filed with securities regulators in all provinces and territories of Canada. Closing of the Public Offering is expected to take place on or about September 3, 2020 and is subject to the REIT receiving all necessary regulatory approvals, including approval of the Toronto Stock Exchange.

The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the "1933 Act") and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons.

About BSR Real Estate Investment Trust
BSR Real Estate Investment Trust is an internally managed, unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT owns a portfolio of multifamily garden-style residential properties located in attractive primary and secondary markets in the Sunbelt region of the United States.

Additional information about the REIT is available at www.bsrreit.com or www.sedar.com.

Forward-Looking Statements

This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events, including statements about the Public Offering and the proposed use of proceeds thereof available liquidity and acquisition capacity. In some cases forward-looking information can be identified by such terms as "will" and "expected". Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. The REIT's estimates, beliefs and assumptions, which may prove to be incorrect, including those relating to the REIT's ability to complete the Public Offering and finance and complete future acquisitions, as well as that COVID-19 will not have a material impact on the REIT's business. The risks and uncertainties that may impact such forward-looking information include, but are not limited to, the impact of COVID-19 on the REIT's operations, business and financial results and the factors discussed under "Risks and Uncertainties" in the REIT's Management's Discussion and Analysis for the three and six months ended June 30, 2020 and in the REIT's annual information form dated March 10, 2020, both of which are available on SEDAR (www.sedar.com). The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.

SOURCE BSR Real Estate Investment Trust