Capital Square Enhances Investor Returns with $57.5 Million UPREIT Transaction for Marina Pointe

On October 1, 2025, Capital Square, a top sponsor of tax-advantaged real estate investments in the United States, made a significant announcement regarding their recent transaction involving Marina Pointe. This multifamily community, consisting of 308 units located in Chattanooga, Tennessee, was contributed to Capital Square Housing Trust, a Real Estate Investment Trust (REIT) managed by Capital Square, through an umbrella partnership real estate investment trust (UPREIT) structure. This transaction is expected to deliver substantial returns for investors.

Transaction Details

Over 62% of the beneficial ownership, representing 59 investors, decided to reinvest by contributing their Delaware Statutory Trust (DST) interests into the operating partnership of Capital Square. This decision was made under Section 721 of the Internal Revenue Code, allowing for a tax-advantaged exchange. Capital Square financed part of this deal through proceeds gained from its Series 1 preferred stock offering, catering to those investors that wished to engage in a new Section 1031 exchange or cash out.

The property had been acquired in October 2020 for $44.5 million as part of Capital Square’s DST/Section 1031 exchange program. With the recent UPREIT transaction, the fair market value of Marina Pointe increased to $57.5 million, resulting in projected distributions for DST investors to rise by over 22% due to appreciation.

Strategic Importance

Louis Rogers, the founder and CEO of Capital Square, highlighted the common practice among real estate owners to use Section 1031 exchanges to defer taxes when selling appreciated properties. As DSTs come with a limited holding period, owners often find a need for a permanent solution. Capital Square has catered to these needs by introducing the UPREIT program, allowing investors to maintain their interests indefinitely while enjoying significant benefits of a REIT, such as diversification and ongoing tax advantages.

The transaction between DSTs and UPREIT represents a transformative stage in retail real estate investments, transitioning from whole properties to investment-grade DSTs and now towards diversified REIT interests.

Investor Flexibility

In a unique approach, Capital Square allows every investor to make a choice in their investment strategy: they can exchange their DST interests for operating partnership units in the REIT tax-free under Section 721, form another exchange to extend tax deferral per Section 1031, or opt to cash out a portion or all of their investment on a taxable basis. Regardless of the chosen option, all investors receive the same fair market value purchase price based on appraised values.

Marina Pointe Overview

Located at 5750 Lake Resort Drive on 20.578 acres of land, Marina Pointe features one- and two-bedroom units ranging from 760 to 1,414 square feet. The amenities include a resort-style swimming pool, fitness center, playground, outdoor lounge, and various community facilities enhancing residents' lifestyles. With its proximity to Chattanooga’s employment hubs such as Enterprise South Industrial Park and Downtown Chattanooga, Marina Pointe is set in a prime location that complements its luxurious offerings.

Final Thoughts

This $57.5 million UPREIT transaction is a testament to Capital Square’s robust investment platform and its commitment to maximizing returns for investors. Whitson Huffman, co-CEO and CIO, reinforced the firm’s goal of helping investors preserve wealth and participate in a growing tax-advantaged multifamily portfolio in the fast-growing Sun Belt region. As Capital Square Housing Trust expands, with now six multifamily communities and a gross asset value exceeding $270 million, its approach continues to attract investors seeking quality real estate options and the benefits that accompany them.

Founded in 2012, Capital Square has established itself as a major player in the real estate market, facilitating over $7.9 billion in transactions while remaining dedicated to offering tailored solutions for investors interested in tax-efficient real estate positioning.