#United States #Capital Square #UPREIT #Newnan #Promenade

Capital Square's Strategic UPREIT Transaction in Atlanta

Capital Square, a prominent name in the realm of tax-advantaged real estate investments, has recently concluded a noteworthy UPREIT (Umbrella Partnership Real Estate Investment Trust) transaction involving the Promenade at Newnan Crossing Apartments in the Atlanta suburb of Newnan, Georgia. This strategic maneuver is set to provide over 55% of the Delaware statutory trust (DST) owners with valuable options for enhancing their investments.

Conducted on January 28, 2026, this significant UPREIT transaction allows those DST investors to exchange their interests for limited partnership units within the REIT's operating partnership. This exchange is framed under the tax-advantaged framework of Section 721 of the Internal Revenue Code, which is a substantial incentive for many investors seeking beneficial alternatives.

Originally acquired in 2020, Promenade at Newnan Crossing has not only met expectations but exceeded them remarkably. The property has shown impressive financial performance, surpassing its pro forma projections by more than 17% in income and nearly 30% in net operating income over a five-year period. Rising rents, which increased by over 25%, and consistent occupancy rates averaging above 95.5% have contributed to this stellar performance, leading many DST investors to retain their interests while availing themselves of the REIT's additional benefits through the UPREIT transaction.

Louis Rogers, Capital Square’s founder and co-CEO, pointed out that the DST model is particularly advantageous for Section 1031 investors who are focused on generating cash flow and achieving property appreciation. Investors have expressed a desire for a tax-favored solution that not only ensures long-term tax deferral but also offers expanded diversification options - an area where the DST-to-UPREIT transaction delivers significant value.

Unlike many UPREIT transactions, Capital Square stands out by providing DST investors with comprehensive options. They can opt to:
1. Exchange their DST interests for operating partnership units without incurring taxation.
2. Structure a separate exchange to continue their tax deferral strategy under Section 1031.
3. Liquidate all or part of their investment, although this would be on a taxable basis.

This flexibility ensures equitable treatment for all participating investors, based on appraised value, which is integral to maintaining investor trust and satisfaction.

The Promenade community itself is impressive, situated on 24.21 acres and featuring 298 units that include townhomes, manor-style homes, and garden-style apartment flats ranging from 577 to 1,423 square feet. Noteworthy amenities abound, including a resident clubhouse with lounges, a resort-style pool, a community garden, and even a dog park. The options for recreational activities are plentiful with spaces designed for outdoor movie screenings and engaging games like bocce ball.

The fair market value of the property was substantiated through an independent appraisal, and the transaction was further fortified by a fairness opinion from Robert A. Stanger & Company, a respected third-party investment banking entity.

As articulated by Whitson Huffman, co-CEO and chief investment officer at Capital Square, this sale is a testament to the firm’s resilience and its ability to provide favorable long-term outcomes for investors. Investors who engaged in this DST offering have benefitted from a successful total return, while those opting for UPREIT integration into the Capital Square Housing Trust are poised for enhanced portfolio diversification, increased cash flow, and other benefits not typically available to DST investors.

With this recent transaction, Capital Square Housing Trust now boasts ownership of ten multifamily communities, underscoring the firm’s robust asset base that exceeds $389 million in gross value.

Since its inception in 2012, Capital Square has been active in acquiring over 175 real estate assets for more than 6,500 investors who aim for quality replacement properties conducive to tax deferral under Section 1031, alongside robust cash flow and capital appreciation. Today, its portfolio includes 66 multifamily apartment developments and 13 age-restricted manufactured housing communities in Florida, reflecting a total investment exceeding $5 billion.

About Capital Square Housing Trust

Capital Square Housing Trust, sponsored by Capital Square, specializes in diversifying housing solutions across Southeast growth markets. For more detailed insights into Capital Square and its offerings, visit www.CapitalSquareREIT.com.

About Capital Square

Capital Square is a forward-thinking, vertically integrated national real estate company dedicated to tax-advantaged investments, providing options like DSTs and REITs along with actively developing multifamily housing. The firm has recorded over $7.9 billion in transaction volume since 2012. To learn more about their offerings and portfolio, visit CapitalSq.com.