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Capital Square Launches Ninth OZ Fund, Sixth Development in Richmond Area

Capital Square, a sponsor of tax-advantaged real estate investments and an active developer and manager of housing communities, announced the launch of CSRA Opportunity Zone Fund IX, LLC. The project-specific opportunity zone fund will raise capital to develop an approximately 320-unit, mixed-use apartment community and luxury hotel in the Scott’s Addition designated opportunity zone in Richmond, Va. CSRA Opportunity Zone Fund IX seeks to raise $77 million in equity from accredited investors.

Capital Square has invested over $230 million in equity in the last five years toward the construction of eight opportunity zone-funded multifamily developments, totaling over 1,600 residential units and 40,000 square feet of retail. Four developments, totaling 600 units, are located in Scott’s Addition and have delivered and stabilized, according to Capital Square, having returned over $20 million to date to investors in net proceeds from refinancings.

“This is Capital Square’s ninth opportunity zone fund. In each case, Capital Square purchased a lot in an opportunity zone that qualifies for tax benefits,” said Louis Rogers, founder and co-chief executive officer of Capital Square.

“Next, the firm develops a Class A building with proceeds from each fund and a construction loan. Then, the firm completes construction and leases the building to stabilization. The last step is to complete permanent financing with excess proceeds that are used to make a special distribution to the investors (free of tax) in advance of their tax due date,” explained Rogers.

“This high level of performance is a powerful testament to the strength of Capital Square’s development team who have delivered on schedule and on budget in spite of the pandemic, labor and material shortages and persistent inflation,” he added.

Located at 1600 Roseneath Road at the “main and main” intersection of Scott’s Addition, the 2.18-acre property will feature approximately 220 traditional apartment units and 100 furnished luxury apartment hotel rooms. The property is within walking distance of a large concentration of breweries, restaurants, small businesses, lifestyle amenities and museums, including the Virginia Museum of Fine Arts, Science Museum of Virginia, and Virginia Museum of History and Culture. A full-service Whole Foods is located less than five minutes from the project, and Broad Street, with numerous services and amenities, including a GRTC Pulse rapid transit station are within blocks of the project.

“Having successfully executed, and even exceeded expectations, on our previous developments in the market, we are poised to once again deliver class-leading product to a clearly under supplied Scott’s Addition,” said Whitson Huffman, co-chief executive officer. “The lease-up pace and lease renewal activity in our newly delivered buildings show us that more units are in demand, and the hotel component will be the only nightly stay option in all of Scott’s Addition. We are excited to build off of our previous success and continue to raise the bar in Richmond.”

This marks Capital Square’s sixth development in Richmond’s vibrant Scott’s Addition neighborhood. Previously, Capital Square fully subscribed CSRA/GS Opportunity Zone V, LLC to fund the development of The Otis, a 350-unit multifamily community with ground-floor retail space, as well as CSRA Opportunity Zone Fund VII, LLC to fund the development of 352 apartment units at 2950 W. Marshall Road. Prior to that, Capital Square launched a trio of developments – Scott’s Collection I in August 2020, Scott’s Collection II in January 2021, and Scott’s Collection III in May 2021 – each featuring a single-structure, ground-up development of Class A multifamily communities ranging in size from 60 to 80 units. In total, Capital Square has delivered, or is in the process of developing, over 1,230 multifamily units and 40,000 square feet of retail space within the Scott’s Addition opportunity zone.

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.

Capital Square is a real estate firm specializing in tax-advantaged real estate investments, including Delaware statutory trusts for Section 1031 exchanges and qualified opportunity zone funds for tax deferral and exclusion. In recent years the company has become an active developer of mixed-use, multifamily properties in the southeastern United States, with eight current projects totaling over 2,000 apartment units with a total gross asset value of approximately $730 million. Since 2012, Capital Square has completed more than $7.8 billion in transaction volume.

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