A 200-unit apartment complex in Columbia County has been bought for more than $38 million on behalf of a Delaware-based trust that’s marketing the property to joint investors.
The property, Lakeside on Riverwatch apartments, is at 4300 River Watch Parkway in Martinez.
“The community was acquired on behalf of CS1031 Lakeside on Riverwatch Apartments, DST, which seeks to raise $26.8 million in equity from accredited investors and has a minimum investment requirement of $50,000,” according to Capital Square, the real-estate advisory firm that brokered the sale, in a Wednesday press release.
Financial terms of the transaction were not disclosed, but Columbia County property records show that CS1031 Lakeside bought the 19.2-acre piece of land Aug. 10 for $38.2 million.
Built in 2000 as Wedgewood Park, the apartment complex rebranded as Lakeside on Riverwatch in 2017.
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No changes were announced in the property’s management, which is BH Management Services, headquartered in Des Moines, Iowa. According to Capital Square, 95% of the apartments have been renovated with new appliances, countertops, flooring and lighting fixtures.
BH Management lists Lakeside on Riverwatch rents at $1,129 for a one-bedroom unit, $1,299 for two bedrooms and $1,450 for three bedrooms.
CS1031 Lakeside is a Delaware statutory trust (DST), which is an investment instrument designed to allow multiple real-estate investors to invest in large assets while shouldering minimal financial risk. It’s named for the state of Delaware, where the majority of these types of trusts are legally registered because of the state’s favorable laws governing corporations.
In a DST, the funds used to purchase the property are gradually replaced by individual investors’ funds until the property is completely owned by the investors. The price of a piece of DST real estate typically reaches into the tens of millions of dollars, which often is out of reach for an individual investor but not for a group of investors.
DSTs have become popular investment tools since the IRS ruled in 2004 that an investor’s interest in a DST can be used as property to initiate a transaction called a 1031 exchange, named for Section 1031 of the U.S. Internal Revenue Code. In a 1031 exchange, an investor sells a property and reinvests the proceeds into property of equal or greater value to defer capital gains taxes from the sale.
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