With a big milestone surpassed, Louis Rogers now has his eye on $1 billion.
His company, Capital Square 1031, last month purchased its 53rd commercial property since launching 2012, pushing it over the threshold of $500 million in real estate assets under management.
And with deals coming together at a faster clip than last year, Rogers sees the next half-a-billion coming a lot sooner.
“It took from November of 2012 to get to $500 million,” said Rogers, a former Hirschler Fleischer attorney. “It will take half as long to get to $1 billion.”
Capital Square purchases real estate and then sells shares of ownership in each property to pools of investors looking to cash in on 1031 exchanges – a process that allows them to reinvest the proceeds from previously sold properties without paying capital gains taxes.
That model has helped Capital Square tap into a growing appetite from investors seeking returns in real estate, rather than traditional stock and bond market investments.
The company has now successfully completed 34 fundraising rounds from investors, who now own pieces of those 53 revenue producing commercial properties around the country. The portfolio includes largely apartment complexes and medical offices buildings.
Investors get a check every month on their share of the property from the tenants’ rent payment. Capital Square makes its money on an acquisition fee it charges investors and an asset management fee typically paid by the tenant.
Capital Square says its investors are attracted to the cash flow from the commercial properties and the potential for a profit once the real estate is sold.
The deal that put it over the $500 million mark was the purchase of an apartment complex in San Antonio. Other recently funded deals include an apartment complex in Phoenix and one completed this week for a medical office building near Charlotte.
Last year the company raised money from investors to purchase 15 commercial properties across the U.S. for a combined $130 million. It’s moving at a faster pace in 2016 and has already eclipsed that dollar and deal amount, with more than one deal completed each month so far this year.
That pace helped make Capital Square the second-fastest-growing company in Richmond, with 274 percent average revenue growth over the last three years, according to BizSense’s recently released RVA 25 rankings.
Capital Square has 17 employees and recently added new CFO Rick Stanard, new due diligence attorney Rick Chess, and new head of acquisitions Seth Harris.
It’s slowly but surely working on a new headquarters in the old Have a Nice Day Café building at 11 S. 18th St.
It’s working on getting into real estate development, rather than solely focusing on buying existing buildings and has recently begun taking over as fund manager for other 1031 exchange funds.
And the next wave of deals is in the works, Rogers said, including the acquisition of a undisclosed West End apartment complex
“The day we don’t have one in the works is the day we’re out of business,” Rogers said. “That’s like Krispy Kreme not having any donuts.”