National real estate investor and multifamily developer Capital Square has launched a multifamily institutional development fund to create communities in emerging secondary markets in the Mid-Atlantic and Southeast. The Capital Square Multifamily Development Fund I aims to raise up to $300 million in equity from institutional investors who will participate in the development of a portfolio of ground-up, multifamily communities.
“There is a shortage of quality housing that traces its origin to the Great Real Estate Recession,” said Louis Rogers, founder and CEO of Capital Square. “The shortage was exacerbated by the COVID-19 pandemic that delayed or halted many new developments. To accelerate the development of new Class A institutional-quality multifamily communities, the fund will focus on shovel-ready, ground-up sites. Capital Square is bullish on Class A multifamily investments that generate an unrivaled combination of stable cash flow, appreciation potential, and inflation protection. Investors are flocking to the multifamily asset class.”
Capital Square Multifamily Development Fund I will continue the firm’s focus on investing in multifamily assets that have an opportunity to provide increased investor returns. According to the firm, the fund will invest in the limited partner equity portion of the capital stack and will target secondary growth markets that lack institutional capital investment, including Charleston, South Carolina; Knoxville, Tennessee; and Richmond, Virginia.
“The housing crisis in this country has created strengthening fundamentals in our target markets, and multifamily investment continues to provide strong opportunities for compelling risk-adjusted returns for investors and will do so for the foreseeable future,” said Whitson Huffman, chief strategy and investment officer.
The fund will seek to invest in more than $850 million of development projects. According to Capital Square, the portfolio is expected to be comprised primarily of multifamily communities sponsored by one of the firm’s vetted joint-venture development partners. As part of its current growth strategy, Capital Square said it expects to launch additional multifamily development fund offerings approximately every two years.
Capital Square has completed more than $5.6 billion in real estate transactions in emerging secondary markets, including the acquisition of 13,100 multifamily units, over the past decade. In addition, the firm is developing eight multifamily projects totaling 1,954 units.