Capital Square Housing Trust Fully Subscribes Preferred Stock Offering
Capital Square Housing Trust, a private real estate investment trust sponsored by Capital Square, announced that its offering of two million shares of Series 1 redeemable & convertible 9% preferred stock has been fully subscribed. The offering launched one year ago and has since raised $24 million, with proceeds to be used to fund additional acquisitions and UPREIT transactions, in addition to general corporate purposes.
“The proceeds of this preferred stock offering will help fund approximately $200 million in UPREIT transactions,” said Louis Rogers, founder and co-chief executive officer of Capital Square. “Capital Square sponsors Delaware statutory trust offerings for investors seeking tax deferral under Section 1031 and offers optional UPREIT transactions when the DST properties mature. Because the majority of DST owners elect the UPREIT option, a relatively small amount of proceeds from this offering will have a substantial impact on Capital Square Housing Trust.”
Investors in the preferred stock offering receive a 9% annual dividend, paid monthly. Beginning on the fourth anniversary of the offering, the preferred stock may be converted to common stock with a 5% discount, resulting in a favorable price for investors.
Investors may also elect to participate in the preferred distribution reinvestment plan, or DRIP, allowing them to reinvest monthly dividends into additional shares at the then-current offering price, free of fees or sales commissions.
“We appreciate the confidence of our Capital Square Housing Trust investors,” said Whitson Huffman, co-chief executive officer and chief investment officer of Capital Square. “Our preferred shareholders not only enjoy a strong 9% annual dividend but also have the opportunity to convert their holdings at a 5% discount upon maturity, further enhancing the long-term value of their investment.”
Capital Square Housing Trust’s portfolio is currently comprised of five Class A and Class B multifamily communities with a combined gross asset value exceeding $212 million, based on aggregate purchase price. The company relies on an UPREIT acquisition strategy that affords investors in Capital Square’s tax-advantaged DST investment programs the opportunity to exchange their DST interests for operating partnership units in the REIT through a similarly tax-advantaged process under Section 721 of the Internal Revenue Code. This strategy allows real estate owners to diversify and reduce risk by exchanging a single property for units in a REIT that owns a larger, diversified portfolio, while benefiting from tax-advantaged income and other advantages of REIT ownership.
At the beginning of 2025, Capital Square sold Mayton Transfer Lofts on behalf of investors in CS1031 Old Towne Loft Apartments, DST, in an UPREIT transaction to Capital Square Housing Trust. This delivered a 152% total return to investors in the DST multifamily community located in Old Towne Petersburg, Va., 25 miles south of Richmond.
In fall 2024, Capital Square announced the sale of CS1031 Bedford Parke Apartments, DST, a 232-unit multifamily community in Warner Robins, Ga., to Capital Square Housing Trust. Through the UPREIT transaction, more than 61% of the DST owners exchanged their interests for limited partnership units within the REIT’s operating partnership. As a result of the $38.3 million UPREIT transaction, the DST owners realized a 200% equity multiple and total return of 167%.
Since its founding in 2012, Capital Square said it 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, along with opportunity zone funds and a real estate investment trust that acquires rental housing in the Southeast and Texas. In total, Capital Square has completed more than $7.9 billion in transaction volume, and its mixed-use development projects total over 2,000 apartment units with a total development value in excess of $800 million.
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