Capital Square Purchases Fort Worth Ground Lease for High-Leverage DST Investment

Capital Square – a sponsor of tax-advantaged real estate investments and an active developer and manager of housing communities across the nation – has acquired a 99-year ground lease beneath a newly renovated luxury hotel in downtown Fort Worth, Texas. The hotel operates under Marriott International’s Le Méridien brand.

The unsubordinated ground lease, which has 95 years remaining on its term, was procured on behalf of CS1031 Zero Coupon DFW Hospitality, DST, a Delaware statutory trust investment offering launched last month that seeks to raise $9.23 million. The offering seeks to raise equity from accredited investors with an offering loan-to-value ratio of nearly 78%.

The purchase price was not disclosed.

“Section 1031 requires exchangers with debt on their relinquished property to have equal (or greater) debt on their replacement property. This DST offering is structured with high leverage for exchangers who need a solution when their relinquished property has a high level of debt ,” said Louis Rogers, founder and co-chief executive officer of Capital Square. “In addition, unsubordinated ground leases are considered the safest tranche of real estate because the building owner/ground tenant risks loss of their building upon an uncured lease default, making defaults less likely. Thus, Capital Square believes that this DST investment is a safe solution for exchangers with higher debt needs.”

Located at 815 Commerce Street, in the heart of downtown Fort Worth, the completely renovated, 14-story, full-service hotel reopened in 2024. The 254,778-square-foot property features 188 guest rooms, 313 garage parking spaces, a restaurant, rooftop bar with outdoor event space, ballroom, convention space, meeting rooms, outdoor swimming pool and deck, fitness center and on-site valet services. The hotel operates under a 25-year franchise agreement with Marriott’s upscale Le Méridien brand and benefits from 2% annual rent increases in the ground lease.

“Fort Worth is one of the fastest-growing metropolitan areas in the nation, with powerful demand drivers that include strong population growth, a strong corporate presence, and significant investment in higher education,” said Whitson Huffman, co-CEO and chief investment officer of Capital Square. “This acquisition delivers a unique opportunity for investors to participate in the ownership of a long-term ground lease of a newly renovated, high-end hotel in a prime downtown location.”

Fort Worth has ranked among the fastest-growing cities in the country, with the U.S. Census Bureau reporting the city placed second in population growth among the 50 largest U.S. metropolitan areas from 2020 to 2024. Major employers in the city include American Airlines, Lockheed Martin, Boeing, and BNSF Railway. Additionally, Texas A&M University is investing $1.5 billion in a new urban campus near the hotel, while Texas Christian University, with an enrollment of nearly 12,400, is located within a 10-minute drive.

The acquisition of this Fort Worth ground lease, on behalf of CS1031 Zero Coupon DFW Hospitality, is the latest of a flurry of activity for Capital Square in the third quarter of 2025. Last week, AltsWire reported on the sale of CSRA Grocery Portfolio I, DST. The fund included a portfolio of three grocery-anchored shopping centers in the Carolinas. Investors in that DST realized a 184% total return from their 1031 exchange investment.

Also, the sponsor acquired Woodland Cottages, a build-for-rent community in Fredericksburg, Texas. The 62-unit, active adult community was acquired on behalf of CS1031 Texas Active Adult Living I, DST, which seeks to raise $34 million from accredited investors. The purchase price and other terms were not disclosed.

Since its founding in 2012, Capital Square 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-used development projects total over 2,000 apartment units with a total development value in excess of $800 million.

For more Capital Square news, please visit their directory page.