Capital Square Acquires Georgia Build-for-Rent Community Near Chattanooga, Tennessee for DST Offering
CHATTANOOGA, Tenn. (Oct. 8, 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 the acquisition of Valley Ridge, a newly constructed, 129-unit build-for-rent (BFR) community in the Chattanooga, Tennessee, suburb of Rossville, Georgia. The community was acquired on behalf of CS1031 Valley Ridge BFR Housing, DST, a newly launched Delaware statutory trust private placement offering that seeks to raise $20.25 million in equity from accredited investors and has a minimum investment of $50,000.
This represents Capital Square’s sixth BFR offering for its Section 1031/DST program and the ninth BFR project for its private equity group. Led by co-chief investment officers, Dave Platter and Jon Trott, Capital Square’s private equity group was formed to realize investment potential in the housing market, including a dedicated build-for-rent strategy in high-growth Sunbelt markets.
“The build-for-rent strategy has become very popular with Capital Square’s investors and their financial advisors who are seeking a direct real estate investment with an asset manager that has a demonstrated track record of stability and growth,” said Louis Rogers, founder and co-chief executive officer of Capital Square. “Also, this is the first acquisition that has benefited from the recent decline in interest rates, increasing leverage and cash flow.”
Located at 10 Draught St., construction of Valley Ridge was completed in 2023. Developed by D.R. Horton, the nation’s largest homebuilder by volume, the modern units boast a mix of three-, four- and five-bedroom detached single-family homes averaging 1,874 square feet. The open floor plans feature high-end finishes, including stainless steel appliances, full-size washers and dryers, walk-in closets, smart home integration and attached two-car garages. The community is professionally landscaped, has onsite professional management, 24-hour emergency maintenance, community irrigation, fenced backyards and is pet friendly.
Valley Ridge is located within the Chattanooga, Tennessee, metropolitan statistical area, which is the fourth largest MSA in the state1 and has a 93% occupancy rate with forecasted 3.5%, 3.1% and 4.0% rent growth in 2025, 2026 and 2027, respectively.2 Chattanooga ranked first in the country on the John Burns Single-Family Rent Index for year-over-year growth rate, and was recognized as the “#2 Best City to Work From Home” by TechNational in 2024.
Sitting amidst the foothills of the Appalachian Mountains, the region is a transportation and logistical hub served by multiple railroads and interstate highways. Its connectivity to major metros in the region, as well as innovative approach to growth and revitalization, have turned the Chattanooga area into a popular market attracting people and businesses alike.
Chattanooga’s diverse economy is driven by key sectors such as healthcare, higher education, advanced manufacturing, government, tourism and technology. The healthcare sector is a major employer, with over 40,000 jobs supported by institutions like Erlanger Health System and BlueCross BlueShield of Tennessee.3 Higher education institutions, including the University of Tennessee at Chattanooga and Chattanooga State Community College, play a crucial role in supplying the workforce with skilled graduates, particularly in technology and advanced manufacturing.
The city is a hub for advanced manufacturing and logistics, with major employers like Volkswagen and Amazon leveraging Chattanooga’s strategic location and robust infrastructure. The government sector, anchored by the Tennessee Valley Authority, contributes significantly to the local economy, supporting over 35,000 jobs and generating substantial revenue. Tourism is another vital component, attracting millions of visitors annually and supporting 30,000 jobs.
“Capital Square has an extensive footprint in Chattanooga’s attractive and promising real estate market with almost 1,300 units, making us one of the largest institutional owners of multifamily properties in the area,” said Whitson Huffman, co-chief executive officer. “Limited supply in Rossville has resulted in the delivery of only 409 multifamily units since 2014, and zero units currently under construction or proposed.2 Valley Ridge is the only asset delivered in the submarket in the past 12 months and has already shown promising performance, accomplishing 90% physical occupancy as of September 2024.”
Since its founding in 2012, Capital Square has acquired more than 170 real estate assets for over 6,500 investors seeking quality replacement properties that qualify for tax deferral under Section 1031 of the Internal Revenue Code and other investors seeking stable cash flow and capital appreciation.
Sources: 1. Federal Reserve Bank of St. Louis, 2024. | 2. Yardi, 2024. | 3. Berkadia, 2024.
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). The company is also an active developer and manager of multifamily communities. Since 2012, Capital Square has completed more than $7.9 billion in transaction volume. Capital Square’s mixed-used development projects total over 2,000 apartment units with a total development cost in excess of $800 million, and Capital Square Living, the firm’s property management division, now manages over 7,000 apartments across multiple states. 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. The company has been recognized by Inc. 5000 as one of the fastest growing companies in the nation for eight consecutive years. Learn more at CapitalSq.com.
Disclosure: 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. FINRA Broker Check link: https://brokercheck.finra.org/.
