Capital Square Seeks to Raise $20 Million From Investors With BFR Purchase Near Chattanooga
Capital Square – a sponsor of tax-advantaged real estate investments and an active developer and manager of housing communities – announced the acquisition of Valley Ridge, a newly constructed, 129-unit build-for-rent community in the Chattanooga, Tenn., suburb of Rossville, Ga.
The community was acquired on behalf of CS1031 Valley Ridge BFR Housing, DST, a newly launched Delaware statutory trust private placement offering that seeks to raise $20.25 million in equity from accredited investors and has a minimum investment of $50,000.
This represents Capital Square’s sixth BFR offering for its Section 1031/DST program and the ninth BFR project for its private equity group. Led by Dave Platter and Jon Trott, co-chief investment officers, Capital Square’s private equity group was formed to realize investment potential in the housing market, including a dedicated BFR strategy in high-growth Sunbelt markets.
“The build-for-rent strategy has become very popular with Capital Square’s investors and their financial advisers who are seeking a direct real estate investment with an asset manager that has a demonstrated track record of stability and growth,” said Louis Rogers, founder and co-chief executive officer of Capital Square. “Also, this is the first acquisition that has benefited from the recent decline in interest rates, increasing leverage and cash flow.”
Located at 10 Draught St., construction of Valley Ridge was completed in 2023. Developed by homebuilder D.R. Horton, the modern units boast a mix of three-, four-, and five-bedroom detached single-family homes averaging 1,874 square feet. The open floor plans feature high-end finishes, including stainless steel appliances, full-size washers and dryers, walk-in closets, smart home integration, and attached two-car garages. The community is professionally landscaped, has onsite professional management, 24-hour emergency maintenance, community irrigation and fenced backyards, and is pet friendly, according to Capital Square.
Valley Ridge is located within the Chattanooga, Tenn., metropolitan statistical area, which is the fourth largest MSA in the state and has a 93% occupancy rate with forecasted 3.5%, 3.1% and 4% rent growth in 2025, 2026 and 2027, respectively.
Sitting within the foothills of the Appalachian Mountains, the region is a transportation and logistical hub served by multiple railroads and interstate highways. Its connectivity to major metros in the region, as well as innovative approach to growth and revitalization, have turned the Chattanooga area into a popular market attracting people and businesses alike.
Chattanooga’s diverse economy is driven by key sectors such as healthcare, higher education, advanced manufacturing, government, tourism, and technology. The healthcare sector is a major employer, with over 40,000 jobs supported by institutions like Erlanger Health System and BlueCross BlueShield of Tennessee. Higher education institutions, including the University of Tennessee at Chattanooga and Chattanooga State Community College, play a crucial role in supplying the workforce with skilled graduates, particularly in technology and advanced manufacturing.
The city is a hub for advanced manufacturing and logistics, with major employers like Volkswagen and Amazon leveraging Chattanooga’s strategic location and robust infrastructure. The government sector, anchored by the Tennessee Valley Authority, contributes significantly to the local economy, supporting over 35,000 jobs and generating substantial revenue, according to Capital Square. Tourism is another vital component, attracting millions of visitors annually and supporting 30,000 jobs.
“Capital Square has an extensive footprint in Chattanooga’s attractive and promising real estate market with almost 1,300 units, making us one of the largest institutional owners of multifamily properties in the area,” said Whitson Huffman, co-CEO. “Limited supply in Rossville has resulted in the delivery of only 409 multifamily units since 2014, and zero units currently under construction or proposed. Valley Ridge is the only asset delivered in the submarket in the past 12 months and has already shown promising performance, accomplishing 90% physical occupancy as of September 2024.”
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 and other investors seeking stable cash flow and capital appreciation.
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. Since 2012, Capital Square has completed more than $7.9 billion in transaction volume.
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