IPO Report: Polar Star Realty Trust (PSRT)

Francis Gaskins |

Polar Star Realty Trust (PSRT) is an internally managed Maryland corporation that acquires, owns, leases, manages and redevelops office and industrial properties located primarily in Norway, Sweden and Denmark, which PSRT refers to as the Nordics or the Nordic Region. The company is based in New York, NY.

Nine other companies are scheduled to IPO for the week of Dec. 8, 2014.  The full IPO calendar is available at IPOpremium.

Manager, Joint-managers: FBR Capital Markets, Wunderlich Securities, ABG Sundal Collier
Co-managers: None

PSRT scheduled a $500 million IPO with a market capitalization of $800 million at a price range midpoint of $11.50 for Thursday, Dec. 11, 2014 on NYSE.  SEC Documents

Polar Star Realty Trust IPO Summary

PSRT is an internally managed Maryland corporation that acquires, owns, leases, manages and redevelops office and industrial properties located primarily in Norway, Sweden and Denmark, which PSRT refers to as the Nordics or the Nordic Region.

PSRT IPO Valuation


Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Expected yield*

Price /BkVlue*

Price /TanBV*

% offered in IPO

annualizing Sept 9 mos


Polar Star Realty Trust (PSRT)








*at $11.50

*p61, bk of $454

*p62, tan bk of $657mm


Apparent accounting inconsistency

PSRT IPO Conclusion


Expected yield of 6%

Price-to-book of 1.8

Price-to-tangible book of 1.2

Apparent accounting inconsistency:  The price-to-tangible book ratio should always be equal to or more than the price-to-book ratio, because the tangible book value (the denominator) should be equal to or less than the book value. It’s not clear from their filing why in this case it’s the reverse


PSRT is an internally managed Maryland corporation that acquires, owns, leases, manages and redevelops office and industrial properties located primarily in Norway, Sweden and Denmark, which PSRT refers to as the Nordics or the Nordic Region.

PSRT’s business is led by Bjarne Eggesbø, who serves as the Chairman of its board of directors, Chief Executive Officer and President, and other members of its highly experienced senior management team who together on average have more than 16 years of experience in the acquisition, management, financing and redevelopment of office and industrial properties in the Nordics.

This team is supported by PSRT’s full-time professional and administrative staff, including nine full-time property management and leasing professionals that will support its growth initiatives and the operating performance of its properties.

Growth Strategy

PSRT’s growth strategy is focused throughout the Nordic region which is currently experiencing strong macroeconomic trends, including low unemployment, high GDP and disposable income per capita, strong current account surpluses and improving growth outlooks, as well as limited sovereign debt risk.

PSRT believes that these and other factors support strong and improving real property fundamentals.

The Nordics are three of only nine countries in the world to maintain a AAA rating from all three leading credit rating agencies (S&P, Moody's and Fitch). Upon completion of this offering and the REIT formation transactions, PSRT will wholly-own a high quality and strategically located portfolio of 26 properties, including 11 properties in Norway and 15 properties in Sweden, with an aggregate of approximately 7.2 million leasable square feet.


As of September 30, 2014, PSRT’s properties were approximately 94.6% leased with a weighted average remaining lease term of approximately 5.8 years.

PSRT’s properties include 12 office properties comprising 3.2 million leasable square feet and 12 industrial properties comprising 3.9 million leasable square feet, as well as two commercial properties comprising approximately 115,105 leasable square feet.

As of September 30, 2014, the majority (75% based on leasable square feet) of PSRT’s properties were multi-tenant properties, and 25% (based on leasable square feet) were single-tenant properties. PSRT’s industrial properties include a combination of warehouse and distribution facilities.

PSRT’s strategy focuses on properties leased to Nordic state owned and controlled enterprises, AAA-rated sovereign tenants, departments and agencies of Nordic governments and state and municipal government entities in the Nordics.

PSRT believes that many of these tenants, which PSRT refers to as government-related tenants, are exceptionally high quality lease counterparties.

PSRT also focuses on properties leased to high credit quality corporate tenants, which are typically large public companies with investment grade ratings. PSRT’s growth strategy focuses on properties with at least five years remaining on their lease term, 100,000 square feet of leasable area and post-1980 construction.


PSRT competes primarily with local and international property developers and real estate investors, including investment funds, for investment opportunities.

With respect to acquiring properties, PSRT competes on the basis of price and other acquisition terms, as well as the ability to obtain acquisition financing on favorable terms.

With respect to leasing properties, PSRT competes with other property owners to attract government and other creditworthy tenants to lease its properties and compete on the basis of lease terms, price, location of its properties and services provided, among other factors.

5% Shareholders Pre-IPO

Rickard Olander  100%


PSRT intends to pay a pro rata initial distribution of $0.04 per share with respect to the period commencing on the completion of this offering and ending at the last day of the then-current fiscal quarter, based on a distribution of $0.17 per share for a full quarter.

On an annualized basis, this would be $0.69 per share, or an annual distribution rate of approximately 6.0% based on the offering price of $11.50 per share.

Use of Proceeds

PSRT expects to receive $459 million from its IPO and together with funds available from a new credit facilities and additional cash on hand plans to use it for the following:

$685.0 million to repay existing indebtedness not including prepayment penalties;

$95.0 million to fund the cash portion of the consideration payable to current holders of interests in EBH I, EBH II, the TRES portfolio and the Kongsberg portfolio;

$33.9 million to pay prepayment penalties, swap breakage costs and other related costs in connection with repaying the indebtedness noted above;

$6.3 million in connection with the incurrence of its new credit facilities; and

$153.8 million for future acquisitions and development activities.

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