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Leesburg Apartment Community Trades For $70M

February 7, 2019

WASHINGTON D.C. (February 7, 2019) — A 316-unit apartment community in Leesburg has just traded hands.

Capital Square 1031, a Richmond-based investment and management firm, bought the Bellemeade Farms Apartments from KKR for $69.75M, Bisnow has learned.

The 16-acre community at 775 Gateway Drive SE in Leesburg sits near the interchange of Leesburg’s two main roads, Route 7 and Route 15. It consists of 12 residential buildings with one- and- two-bedroom units ranging from 583 SF to 954 SF.

Built in 1988 and renovated in the last three years, the property is now 95% leased. Its amenities include an outdoor pool, a grilling and entertainment area, a lounge, a clubroom, a dog park, tennis courts and a fitness center.

The deal marks the first D.C.-area acquisition for Capital Square 1031. The firm liked the market dynamics of the area with the growing Silver Line corridor and Amazon HQ2 bringing new multifamily demand to Northern Virginia and a limited amount of new supply being developed around Leesburg.

“We love Northern Virginia,” Capital Square 1031 Vice President of Acquisitions Whitson Huffman said. “We saw this package in Leesburg and identified it as something that fits well with our strategy.”

The investor obtained a loan from Fannie Mae for the acquisition with help from Walker & Dunlop’s Alex Huffman and Andrew Tapley. The deal also represents the company’s largest acquisition since its 2012 founding and brings its total assets under management over $1B.

The investment firm specializes in executing 1031 exchange deals, which allow investors to defer taxes from property sales when making a new acquisition. Its investor base is structured through Delaware Statutory Trusts, an investment vehicle that allows a large number of investors to put relatively small sums of money into shared acquisitions that pay them regular dividends. The minimum investment for Capital Square 1031’s DST deals is $50K, and the average investor puts in around $300K.

“From an operational perspective, DST is great for investors,” Whitson Huffman said. “I came from JBG Smith, and we didn’t do DST. I came to Capital Square 1031 and realized how much momentum there was in the space. We’re seeing a lot more DST volume.”

Capital Square 1031 has previously acquired multifamily communities around Richmond and Virginia Beach and in the Atlanta suburbs. The company has focused on older properties in the suburban areas with strong demand and limited new supply.

“The suburban, Class-B properties we bought have been performing extremely well,” Whitson Huffman said. “We’re focused on markets where we think there’s a tremendous amount of demand … We like that you can’t really build a lot of Class-B in new areas, it creates natural supply constraints.”


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