CS1031 Livingston Apartment Flats,DST Losses?

Soreide Law Group is investigating whether brokers or financial advisors improperly recommended or marketed CS1031 Livingston Apartment Flats, DST, a private real estate offering sponsored by Capital Square Realty Advisors LLC. The Delaware statutory trust owns a 307-unit apartment community in Chesterfield County, Virginia, and was offered to accredited investors, including those seeking a Section 1031 exchange.

Concerns about CS1031 Livingston Apartment Flats, DST include illiquidity, fees, debt exposure, concentration in one property, conflicts of interest, reliance on a master tenant, and the risk of losing money. Here's a closer look at the offering and the risks.

What Is CS1031 Livingston Apartment Flats, DST?

CS1031 Livingston Apartment Flats, DST formed in 2021. The trust sought to raise up to $44.586 million through a Rule 506(c) private offering, with minimum investments reportedly starting at $50,000, according to an SEC Form D filed in August 2021. Capital Square Realty Advisors LLC was identified as the promoter, with CSRA Manager LLC among the affiliated parties. WealthForge Securities LLC was named in connection with sales of the securities.

The property is a 307-unit, Class A apartment community built in 2020 in the Richmond metropolitan area. It sits near U.S. Route 360 in Chesterfield County, within the 68-acre Cosby Village mixed-use development. Investors purchase passive beneficial interests in the trust and have no direct role in managing the property.

Concerns About CS1031 Livingston Apartment Flats, DST

The offering reportedly projected approximately $3.79 million in sales commissions and about $2.24 million in proceeds for executive officers, directors, or promoters. The Rule 506(c) private placement was exempt from SEC registration and did not provide the same disclosure framework as a registered public offering.

The DST is illiquid and concentrated in a single property. There is no public market for investors to sell their interests, and they have no voting rights over the property's management, operations, or sale. Also, investors must rely on the master tenant to collect rent and handle leasing, operations, management, and maintenance.

The master tenant's funding depends on cash flow from the underlying lease, and the sponsor does not have to provide additional capital. Vacancies, lower rental rates, higher operating costs, competition, environmental problems, financing conditions, or weaker property performance could reduce distributions or make it harder to service debt, refinance, or sell the property.

There is no guarantee of returns and distributions. Investors may receive less than projected and could lose their entire investment. The investment also carries tax risks, risks tied to Virginia real estate, conflicts of interest involving the sponsor, trust, trustee, and affiliates, and the speculative risks of a private placement.

Potential Sales Practice Violations Involving This DST

A broker's recommendation could give rise to a complaint if the investor needed liquidity, diversification, reliable income, preservation of principal, or access to invested capital. Concerns could also arise if the broker emphasized Section 1031 tax deferral without adequately explaining the DST's concentration in one property, the lack of a public market, or investors' lack of management or voting control.

Other potential violations could include downplaying risks involving the master tenant or debt service, failing to disclose commissions or affiliate-related payments, or overstating projected distributions. Questions could also arise about whether the broker adequately investigated the property, sponsor, financing, conflicts of interest, and offering documents. Depending on the circumstances, investors harmed by unsuitable recommendations, material misrepresentations or omissions, or inadequate due diligence may be able to pursue claims through FINRA arbitration or litigation.

Have Questions About CS1031 Livingston Apartment Flats, DST Losses?

If you lost money in CS1031 Livingston Apartment Flats, DST and believe your financial advisor or securities broker was responsible, contact Soreide Law Group online or at (888) 760-6552 to discuss possible recovery with a securities attorney. Specifically, Soreide Law Group has recovered losses for investors throughout the United States. The firm works on a contingency fee basis and advances all costs.