June 8, 2023 | Capital Square
Capital Square, one of the nation’s leading sponsors of tax-advantaged real estate investments and a developer of mixed-use multifamily communities, announced today the payment of first quarter 2023 distributions to investors in CSRA Opportunity Zone Fund I, LLC equal to a 3.5% annualized cash-on-cash return. To-date, investors in the opportunity zone fund have received quarterly and special distributions equal to 57.3% of invested equity.
CSRA Opportunity Zone Fund I financed the development of “INK,” an 80-unit Class A multifamily property in Richmond, Virginia’s Scott’s Addition qualified opportunity zone. Construction on INK, an 80,000-square-foot property which includes 1,939 square feet of ground-level retail space, began in the second quarter of 2020 and was completed in January 2022. The property achieved 100% occupancy just over five months after the completion of construction. Long-term financing from USAA Life Insurance Company was secured in August 2022 after achieving property stabilization, at which time investors were paid a special distribution that equaled a 53% return of equity.
“This is another milestone in the progression of CSRA Opportunity Zone I, LLC,” said Louis Rogers, founder and co-chief executive officer of Capital Square. “From development, construction, lease-up and permanent financing, the Fund has performed exceptionally.”
INK is the first of three Capital Square development projects that constitute Scott’s Collection, a group of boutique multifamily communities within Richmond’s thriving Scott’s Addition neighborhood. VIV, the second of these developments, was completed in June 2022 and has achieved similar success, with initial lease-up and stabilization achieved within three months of its completion. The third Scott’s Collection development, GEM, is currently completing leasing.
“It would be a bit of an understatement to say that CSRA Opportunity Zone I has been a terrific success for investors,” said Whit Huffman, co-chief executive officer of Capital Square. “The building was planned, constructed, leased-up and secured permanent financing in just three years, despite the historic challenges posed by the global COVID-19 pandemic, and continues to perform exceptionally well, as the financial return to investors demonstrates.”
In addition to the three Scott’s Collection communities, Capital Square has two other multifamily developments underway in Scott’s Addition. These include The Otis, a 350-unit joint development with Greystar that completed initial construction and began welcoming residents earlier this month, as well as 2950 W. Marshall Street, a mixed-use development that will deliver an additional 350 Class A apartment homes in 2025. Each of these developments was financed by opportunity zone funds sponsored by Capital Square.
Since 2019, Capital Square has initiated close to $600 million in total development value across eight opportunity zone developments in fast growing markets in the Southeast. Among these is CSRA Opportunity Zone Fund VII, LLC, which is currently raising equity from accredited investors to fund the development of 2950 W. Marshall Street, and CSRA Opportunity Zone Fund VIII, LLC, which is raising equity to fund the development of a 348-unit multifamily community adjacent to the University of Tennessee in Knoxville.
Opportunity zones were created to stimulate long-term private investments in low-income urban and rural communities nationwide. Conceived as part of the Tax Cuts and Jobs Act of 2017, opportunity zone funds are intended to help foster economic growth by providing tax benefits to incentivize private investments in designated opportunity zones. The opportunity zone legislation is unique; it defers and excludes gains on the sale of any asset. Unlike Section 1031 of the Internal Revenue Code governing tax-deferred exchanges of real estate, the opportunity zone legislation applies to the sale of any asset that would generate a capital gain. The legislation defers capital gains taxes until 2026 on the asset that was sold and also excludes taxes on sale of the property developed by the opportunity zone fund after a ten-year holding period.
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 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 $600 million. Since 2012, Capital Square has completed more than $7.5 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 six 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 Workplaces.” 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 multi-family 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. Diversification does not guarantee profits or protect against losses. Private placements are speculative.
