Strategy Overview
“Capital Square Housing Trust is built to be a durable, all-weather vehicle. You can rely on the income, and you get the benefits of diversification across geographies, demographics, and asset types.”
— Whitson Huffman, CEO and Chief Strategy & Investment Officer, Capital Square Housing Trust
A blend of housing solutions for both income and growth
Because housing is a necessity — people need places to live — housing is more resistant to market volatility than other asset classes.1 Housing solutions provide a combination of potentially stable income, capital appreciation, and a hedge against inflation, all of which lead to lower investor risk and a higher likelihood of asset preservation.
Capital Square Housing Trust is designed to meet this need. This diversified investment employs a disciplined capital allocation strategy, providing income and growth from a mix of multifamily and build-for-rent housing communities.
Our sponsor, Capital Square, tracks the macro trends of supply and demand to create a portfolio of properties that reflect a diverse range of assets, markets, and demographics. Our leadership targets regions of the U.S. that are low on housing supply but supported by employment and population growth.
A focus on superior properties in high-growth markets
We target highly amenitized and value-add housing solutions in the Southeast and Texas — strategic markets that continue to see the strongest demand in the nation.
As residents migrate from expensive gateway cities, demand for apartments has increased in supply-constrained, secondary markets, offering affordability, more space, and shorter commutes. Also, markets in the Southeast and Texas tend to be landlord friendly, allowing for more efficient property management and operations.
A focus on accretive growth
Capital Square Housing Trust has grown its portfolio, in part, by acquiring properties from select DSTs sponsored by Capital Square through 721 exchanges. This gives current Capital Square DST investors new advantages granted by the REIT, including capital preservation, estate planning, tax deferral, and the ability to maintain ownership indefinitely or time a sale to coincide with a tax or financial planning strategy. When presented with a choice to either cash out or participate in a 721 exchange at exit, 65% of DST investors chose to continue their investment with Capital Square through Capital Square Housing Trust.
Our sponsor’s DST pipeline of properties includes a mix of over 60 housing communities, with a gross asset value exceeding $4.5 billion, and open-market acquisitions. This not only positions our portfolio for stable income and capital appreciation, but it also reduces risk, with most of our portfolio assets having completed a five- to seven-year investment cycle.
We upgrade high-performing, value-add assets by renovating and modernizing them to generate growth. Prudent use of debt — many of our mortgages are in the 2%-4% range — provides attractive positive leverage and increases cash flow to multiply asset value.
Two levers, one objective
Most multifamily REITs pull one lever. Capital Square Housing Trust is built to pull two:
Lever One properties provide the REIT with durable current income and reliable rent growth. Lever Two properties provide the REIT with long-term value creation and asset preservation.
