Capital Square's UPREIT Deal Offers 152% Return for DST Investors

Capital Square Achieves Substantial Returns for DST Investors

Capital Square, known as a leading firm in tax-advantaged real estate investments, recently unveiled impressive returns for its investors. The firm reported a remarkable 152% total return for DST (Delaware Statutory Trust) investors following the UPREIT (Umbrella Partnership Real Estate Investment Trust) transaction involving the sale of Mayton Transfer Lofts. This multifamily community, located in Old Towne Petersburg, Virginia, is noteworthy for its blend of historical charm and modern living.

The sale, valued at $27.25 million, marks a significant milestone for the firm, which originally acquired the property in 2018 for $21.5 million. The success of this transaction reflects Capital Square's strategy of enhancing its portfolio with quality assets that are coming to maturity from the DST and 1031 exchange programs. It is noteworthy that 24 out of 38 owners chose to exchange their DST interests for limited partnership units in Capital Square Housing Trust, allowing them to leverage potential tax advantages under Section 721 of the Internal Revenue Code.

According to Louis Rogers, co-CEO of Capital Square, “Capital Square Housing Trust is methodically building its portfolio with quality assets... All DST investors receive fair market valuation.” This approach has enabled investors to choose options that cater to their individual financial goals, whether that involves exchanging interests or simplifying their investments for cash.

The Mayton Transfer Lofts itself stands out as a housing community with 223 units, combining 16 studios, 152 one-bedroom, 46 two-bedroom, and 5 townhouses. Notably, the property showcases features from its original 1911 construction, which have been thoughtfully preserved through renovations executed between 2008 and 2012. Residents can enjoy modern amenities including washer-dryer units, gated parking, and easy access to local resources like the YMCA.

With its prime location—just off Interstate 95 and a short drive from key locales such as Richmond and Virginia State University—the community is ideally positioned to attract a diverse resident base.

In stark contrast to many UPREIT transactions, Capital Square stands out by offering various options for investors. They can either exchange their DST interests for partnership units without immediate tax implications or withdraw their investments on a taxable basis, receiving the same fair market purchase price based on appraised value.

As further assurance, the fair market value of the Mayton Transfer Lofts was determined through an independent appraisal, with an additional fairness opinion provided by Robert A. Stanger & Company, reinforcing that investors in Capital Square benefit from comprehensive assessments and decisions aimed at favoring their financial well-being.

“Those who participated in the DST were able to realize a successful total return, while those in the UPREIT transaction enjoyed enhanced portfolio diversification,” added Whitson Huffman, another co-CEO of Capital Square.

Overall, this recent UPREIT transaction embodies the key mission of Capital Square: delivering attractive investment options while focusing on quality property offerings. The firm continues to expand, now owning five multifamily communities with a gross asset value exceeding $212 million. Since its inception in 2012, Capital Square has attracted over 6,500 investors and completed real estate acquisitions totaling more than $7.9 billion. Their ongoing efforts reassert Capital Square's reputation as a prominent player in the real estate market, especially among tax-advantage investments. Investors looking for stability in cash flow and capital appreciation find solace in Capital Square’s diversified offerings, reaffirming their commitment to not only meet investors' needs but to exceed expectations.

With its dedication to enhancing the value and appeal of its assets and crafting beneficial strategies for investors, Capital Square is poised for further growth in the competitive real estate landscape.