Capital Square has launched its first multifamily fund that will invest in projects in the Mid-Atlantic and Southeast regions of the U.S., the company announced. The Capital Square Multifamily Development Fund I, L.P. is looking to raise up to $300 million in equity from institutional investors.
The fund is planning to invest in the limited partner equity portion of the capital stack and will focus on ground-up, multifamily communities in emerging secondary growth markets that aren’t seeing institutional capital investment. According to the firm, some of the initial target growth markets include Richmond, Va., Charleston, S.C., and Knoxville, Tenn.
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Louis Rogers, founder & CEO of Capital Square, said in prepared remarks that the fund will focus on shovel-ready, ground-up sites to accelerate the development of new Class A communities. Overall, the fund is looking to invest in more than $850 million of development projects. The eventual portfolio is expected to include primarily multifamily developments sponsored by one of Capital Square’s vetted joint venture partners.
The Capital Square Multifamily Development Fund I is the firm’s latest step in its strategy of investing in quality multifamily properties. Rogers also said in prepared remarks that Capital Square is bullish on Class A multifamily investments due to the sector’s stable cash flow, appreciation potential and inflation protection. He added that investors are flocking to the asset class.
The firm is also planning to launch additional multifamily development fund offerings approximately every two years. Over the last ten years, Capital Square completed more than $5.6 billion in real estate transactions in growing secondary markets across the U.S. The transactions include acquisitions totaling 13,100 units and eight multifamily projects that are currently under development and will amount to 1,954 units. In May, the firm acquired a 304-unit community in Houston for $67 million from Wood Partners.