Capital Square Sells North Carolina DST Property; Delivers 157% Total Return

Capital Square, a sponsor of tax-advantaged real estate investments and developer of multifamily communities, announced the sale of a medical building near Raleigh, North Carolina.

The company says that the property was owned by a group of Delaware statutory trust investors who realized a 157.57% total return, or a 7.29% annualized return, from their 1031 exchange investment.

“Capital Square is constantly monitoring the real estate markets to determine which asset classes provide the optimal risk-return profile for a Section 1031/DST program,” said Louis Rogers, founder and co-chief executive officer of Capital Square. “When the firm was founded over ten years ago, the parameters were well suited for medical office investments and Capital Square purchased a large number of them for the DST program. As their holding periods wind down, Capital Square has proven the investment thesis with strong total returns to investors. We expect most investors to continue their tax deferral under Section 1031 by re-investing with Capital Square in another DST.”

Since 2018, Capital Square has taken 26 DST offerings full-cycle that have resulted in an average 173.29% total return and an average 14.44% internal rate of return.

Located at 2503 E. Lyon Station Road in Creedmoor, North Carolina, just north of Raleigh and Durham, the single-story building is 100% leased on a long-term basis to Duke University Health System. The 3.52-acre property includes 98 surface parking spaces.

Duke University Health System Inc. is comprised of three hospitals with 1,512 licensed beds based in Durham, North Carolina. The hospitals include the 957-bed, flagship care facility, Duke University Medical Center, located on the Duke University campus; the 369-bed Duke Regional Hospital in Durham; and the 186-bed Duke Raleigh Hospital in Raleigh.

“The sale of our Creedmoor medical office building resulted in an attractive total return to our DST investors, who also received steady monthly cash distributions averaging 5.2% annually throughout the hold period,” said Whitson Huffman, co-chief executive officer. “We are very pleased to have once again taken a DST program full-cycle and to have delivered a successful result to our investors and their financial advisors.”

Since its founding in 2012, Capital Square has reportedly raised more than $3 billion in equity from investors for its various real estate investment offerings, primarily Delaware statutory trust offerings employed to facilitate tax-advantaged 1031 exchanges and qualified opportunity zone funds.

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