FAQs

REIT stands for “real estate investment trust.” In general, a REIT is a company that:

• combines the capital of many investors to acquire or provide financing for real estate properties;
• allows individual investors to invest in a diversified real estate portfolio managed by a professional management team;
• is required to distribute to investors at least 90% of its REIT taxable income each year; and
• avoids the federal “double taxation” of corporate income because a REIT is generally not subject to federal corporate income taxes on its net income distributed to stockholders if it complies with certain requirements.

Capital Square Housing Trust is a tradename of Capital Square Apartment REIT, Inc., a Maryland corporation that intends to qualify as a REIT for federal income tax purposes. As of June 2024, we do not have any employees and are externally managed by Capital Square Apartment Advisors, LLC, our advisor.

Currently, the Capital Square Housing Trust, Inc. shares are not traded on any market.

We intend to use medium-to-high leverage (between 55% to 60% loan to purchase price) to make investments. However, at certain times during this offering, our debt leverage levels may be temporarily higher as we acquire properties in advance of funds being raised in this offering. Please review our full PPM and associated supplements for further details.

We will use the net proceeds of this offering to purchase primarily multifamily housing assets, to repay bridge financing that we may incur when acquiring properties, and to pay real estate commissions and acquisition expense reimbursements relating to the selection and acquisition of properties, including amounts paid to our Advisor and its affiliates. We may also use net offering proceeds to pay down debt or make distributions if our cash flows from operations are insufficient. See “ESTIMATED USE OF PROCEEDS” in our PPM for further details.

We will operate in an umbrella partnership REIT structure (“UPREIT”) in which our subsidiary operating partnership (or entities wholly owned by our operating partnership) will own, directly or indirectly through one or more special purpose entities, all of the properties that we acquire. We organized our operating partnership to own, operate and manage real estate properties on our behalf. We are the sole general partner of our operating partnership. Please review our full PPM and associated supplements for further details.

UPREIT stands for “Umbrella Partnership Real Estate Investment Trust.” An UPREIT is a REIT that holds all or substantially all of its properties through a partnership in which the REIT (here Capital Square Housing Trust) holds an interest. Using an UPREIT structure may give us an advantage in acquiring properties from persons who might not otherwise sell their properties because of unfavorable tax results. Generally, a sale of property directly to a REIT, or a contribution in exchange for REIT shares, is a taxable transaction to the selling property owner. However, in an UPREIT structure, a seller of a property who desires to defer taxable gain on the sale of his property may transfer the property to the UPREIT in exchange for limited partnership units in the UPREIT’s operating partnership without recognizing gain for tax purposes. Please review our full PPM and associated supplements for further details.

Through our dealer manager, we are offering a maximum of $150,000,000 in shares in our offering on a “best efforts” basis. Please review our full PPM and associated supplements for further details.

When shares are offered on a “best efforts” basis, the dealer manager and the participating dealers are only required to use their best efforts to sell the shares and have no firm commitment or obligation to purchase any of the shares. Therefore, we may not sell all or any of the shares that we are offering. Please review our full PPM and associated supplements for further details.

Yes, assuming the trustee or custodian is willing to hold non-publicly traded securities. Since multifamily housing is an asset class that relies heavily on the management of the properties for generating revenues, we believe we will be deemed to be a “real estate operating company” under the ERISA Plan Asset Regulations. See “INVESTMENT BY TAX-EXEMPT ENTITIES AND ERISA CONSIDERATIONS” in our PPM for further details.

After we receive all completed paperwork, including required custodian account forms, participating dealer authorizations, the purchaser questionnaire and subscription agreement, verification of investment qualifications, and acceptance of the subscription by us, investors will be admitted as stockholders within seven business days of their funds being received by us.

Yes. We expect to pay distributions on a monthly basis to our stockholders, but they are subject to board approval each month. See “DESCRIPTION OF OUR STOCK – Distribution Policy” in our full PPM and associated supplements for further details.

Yes and no. Generally, distributions that you receive, including distributions that are reinvested pursuant to our Distribution Reinvestment Plan, will be taxed as ordinary income to the extent they are from current or accumulated earnings and profits. We expect that some portion of your distributions may not be subject to tax in the year received because depreciation expense reduces taxable income but does not reduce cash available for distribution. In addition, we may make distributions using offering proceeds. We are not prohibited from using offering proceeds to make distributions by our articles of incorporation, bylaws or investment policies, and we may use an unlimited amount from any source to pay our distributions. The portion of your distribution that is not subject to tax immediately is considered a return of investors’ capital for tax purposes and will reduce the tax basis of your investment. This, in effect, defers a portion of your tax until your investment is sold or we are liquidated, at which time you would be taxed at capital gains rates. However, because each investor’s tax considerations are different, we suggest that you consult with your tax advisor.

Under our Distribution Reinvestment Plan, you may reinvest the distributions you receive in additional shares. The purchase price per share under our Distribution Reinvestment Plan will be 95% of the then-current primary offering price. No sales commissions or dealer manager fees will be paid on shares sold under the Distribution Reinvestment Plan. If you participate in the Distribution Reinvestment Plan, you will not receive the cash from your distributions, other than special distributions that are designated by our board of directors. As a result, you may have a tax liability with respect to your share of our taxable income, but you will not receive cash distributions to pay such liability. We may terminate the Distribution Reinvestment Plan at our discretion at any time upon 10 days’ prior written notice to you. See “SUMMARY OF OUR DISTRIBUTION REINVESTMENT PLAN” in the PPM for additional details.

Yes. Our articles of incorporation contain restrictions on the ownership of our shares that prevent any one person from owning more than 9.8% in value of our aggregate outstanding shares unless exempted by our board of directors. Please review our full PPM and associated supplements for further details.

You will receive periodic updates and reports on the performance of your investment in us, including:

• quarterly updates relating to our investment holdings;
• commencing with the fiscal year ending December 31, an annual report to be issued within 120 days following the end of each fiscal year that updates and details our investment holdings; and
• an annual Internal Revenue Service Form 1099 (as applicable).

We have adopted a share redemption program (the “Share Redemption Program”) that enables you to sell your shares back to us in limited circumstances. Our Share Redemption Program generally permits you to submit your shares for redemption after you have held them for at least one year, subject to the significant restrictions and limitations described below. There are several restrictions on your ability to sell your shares to us under our Share Redemption Program. Please review the “SUMMARY OF OUR SHARE REDEMPTION PROGRAM,” section in our offering materials for more information.

We intend to mail your Internal Revenue Service Form 1099 by January 31 of each year, as applicable. It will also be available on the investor portal hosted by our transfer agent.

If you have more questions about the offering, you should contact your registered representative or contact our team directly.
Please email your questions to [email protected]