Capital Square Reports Another Record Year with Full Integration of Property Management Division, 10 Fully Subscribed Offerings and Eight Full-Cycle DST Sales in 2023
RICHMOND, Va. (Jan. 25, 2024) – Capital Square, one of the nation’s leading sponsors of tax-advantaged real estate investments and an active developer and manager of housing communities, announced today that 2023 was another record year in which the firm completed the full integration of its property management division, raised more than $345 million in equity for its investment programs, fully subscribed 10 Delaware statutory trust (DST) programs and successfully took eight DST programs full-cycle.
As of year-end 2023, Capital Square has sponsored more than 135 investment offerings for the firm’s DST programs, qualified opportunity zone funds and real estate investment trust, Capital Square Apartment REIT, Inc. The firm has completed more than $7.8 billion in real estate transaction volume since its formation in late 2012. Since 2018, Capital Square has taken 28 DST offerings full-cycle, resulting in an average 170.24% total return and an average 13.11% internal rate of return to investors.*
“I started as an attorney way back in 1984 specializing in tax, real estate and securities law, the disciplines necessary to succeed as a real estate fund manager,” said Louis Rogers, founder and co-chief executive officer at Capital Square. “For over 25 years, I observed the many attributes of successful fund managers. Then, in 2012, the time was right – Capital Square was formed with the lofty goal of becoming the nation’s leading real estate fund manager. Now, over a decade later, we proudly celebrate our transformation as a fully vertically integrated company with significant growth and accolades under our belt. The firm’s achievements in 2023 go beyond financial results, truly embodying our purpose of ‘building legacies for our investors, team members, and communities.’ As we look forward to 2024, we stay committed to enriching the lives of those who trust us with their investments and continue shaping an enduring legacy in the real estate industry. And, after all these years, I am certain that the best is yet to come at Capital Square.”
During 2023, Capital Square fully subscribed 10 DST programs and took another eight offerings full-cycle, with most investors reinvesting in another Capital Square-sponsored DST to continue the tax deferral under Internal Revenue Code Section 1031. Total return to investors from 2023 full-cycle DSTs averaged 156.4% with an average internal rate of return of 8.12%.*
At year-end, Capital Square’s real estate portfolio totaled 62 multifamily, 13 manufactured housing and 63 commercial assets with an aggregate occupancy of 94.7%.
In March of 2023, Capital Square launched Capital Square Living, a wholly owned subsidiary that will oversee all management functions of the company’s growing multifamily portfolio. Capital Square Living now manages 29 residential communities, consisting of more than 7,000 units. Before year-end, Capital Square Living will manage 44 residential communities comprised of over 11,000 units across six states and 25 cities in the Southeast. This strategic move will drive growth and improve efficiency by controlling all aspects of property operations.
Capital Square completed its first successful UPREIT transaction with Saltmeadow Bay Apartments, a 229-unit multifamily community in Virginia Beach, Virginia. In this UPREIT transaction, DST investors realized an approximately 161% total return* and more than 85% of the DST investors (by value) exchanged their interests for operating partnership units in Capital Square Apartment REIT, Inc. on a tax-deferred basis under Section 721 of the Internal Revenue Code.
On the development front, the firm’s transformative efforts continued with the topping out of two opportunity zone developments and the start of construction on a third, totaling more than 750 multifamily units. Additionally, the firm delivered four opportunity zone developments totaling 560 units in Richmond, Virginia. The units were delivered, stabilized and refinanced, delivering special distributions to investors. The firm is also on a remarkable pre-leasing pace for the Steamboat Basecamp mixed-use development in Steamboat Springs, Colorado, with 95% of units pre-leased.
Capital Square’s robust build-for-rent pipeline continued to grow, which focuses on satisfying the demand among residents who seek a single-family lifestyle, along with the financial and leasing flexibility of a rental with the amenities and convenience of a professionally managed property. The firm recently broke ground on a 29-acre build-for-rent community in Glendale, Arizona, that will feature 320 single-family rental homes and a full menu of amenities.
“Despite a challenging year in 2023, when the impact of the Federal Reserve’s aggressive interest rate expansion resulted in a massive disruption in commercial real estate, Capital Square continued to perform at a high level on behalf of the investors and financial advisors we serve,” said Whitson Huffman, co-chief executive officer. “Capital Square continued to source attractive investment opportunities and financing options in the midst of the most difficult operating environments since the global financial crisis and is well positioned for 2024, when we believe transaction activity and lending will begin to normalize and deal flow will accelerate.”
The company achieved a major milestone when it earned the prestigious Accredited Management Organization (AMO) designation from the Institute for Real Estate Management, awarded to the nation’s elite property management firms.
Finally, demonstrating its commitment to building a better future, Capital Square continued its “Capital Square Cares” philanthropic program. Throughout the year, the company actively supported charitable organizations, fueling charitable initiatives in the regions where the firm invests, builds and manages.
About Capital Square
Capital Square is a vertically integrated national real estate firm specializing in tax-advantaged real estate investments, including Delaware statutory trusts for Section 1031 exchanges, qualified opportunity zone funds for tax deferral and exclusion and a real estate investment trust (REIT). In recent years the company has become an active developer and manager of mixed-use multifamily properties in the southeastern U.S., with eight current projects totaling approximately 2,000 apartment units with a total development cost in excess of $590 million. Since 2012, Capital Square has completed more than $7.8 billion in transaction volume. Capital Square’s related entities provide a range of services, including due diligence, acquisition, loan sourcing, property/asset management and disposition, for a growing number of high-net-worth investors, private equity firms, family offices and institutional investors. Since 2017, Capital Square has been recognized by Inc. 5000 as one of the fastest growing companies in the nation for seven consecutive years. In 2017, 2018 and 2020, the company was also ranked on Richmond BizSense’s list of fastest growing companies. Additionally, Capital Square was listed by Virginia Business on their “Best Places to Work in Virginia” report in 2019 and their “Fantastic 50” reports in 2019 and 2020. In 2023, Capital Square was recognized by the Richmond Times-Dispatch as one of the region’s “Top Work Places.” To learn more, visit www.CapitalSq.com.
Disclaimer: Securities offered through WealthForge Securities, LLC, Member FINRA/SIPC. Capital Square and WealthForge Securities, LLC are separate entities. There are material risks associated with investing in DST properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to see any securities. Please read the Private Placement Memorandum (PPM) in its entirety, paying careful attention to the risk section prior to investing. Private placements are speculative. Diversification does not guarantee profits or protect against losses.
The “total return” represents the ratio of total sales proceeds and distributions through the life of the asset over the total initial equity invested. The “annualized return” is defined as the difference between net sale proceeds and initial investment, plus the distributions over the holding period, divided by the initial investment; divided by the number of months; times 12. The ROE and annualized return are net of fees and represent a return to an individual investor. No representation is made that any investment will or is likely to achieve profits or losses similar to those achieves in the past or that losses will not be incurred.
