Cove Capital Investments, a Delaware Statutory Trust sponsor company that specializes in providing accredited investors access to debt-free options for their 1031 exchange, DST and direct cash investments, announced it has recently completed the acquisition of Saddle Creek Crossing to finalize its new Cove Kansas Retail DST 109 offering. The acquisition is a Regulation D, Rule 506(c) offering that is targeting a USD 12,951,877 equity raise.
According to Dwight Kay, Managing Member and Founder of Cove Capital Investments, the Cove Kansas Retail DST 109 is unique, as through the product, it provides investors the opportunity to invest in a high-traffic retail center located just west of I-35 in Wichita, Kansas, with significant mark-to-market rent upside potential.
“This retail center is compelling for a number of reasons. First, with average in-place rents at just $7.71 per square foot while market rents range from USD 12–USD 16 per square foot, we believe there is a meaningful opportunity to add value by potentially capturing mark-to-market rent increases as leases roll. Second, the property is currently 96.37% occupied in a market where retail vacancy sits at approximately 3.0%, creating a strong supply-demand dynamic. Third, this offering is a fully debt-free investment—no mortgage, no lender foreclosure risk—which we believe provides investors with a more conservative DST investment than many other DST 1031 properties that have balloon mortgages attached to them,” Kay remarked.
According to Kay, Cove Capital acquired the Cove Kansas Retail DST 109 for an all-cash purchase price of approximately USD 93 per square foot.
“This basis is significantly below both estimated replacement cost of USD 180–USD 200 per square foot and recent comparable retail transactions in the region trading closer to USD 114 per square foot. Cove believes its debt-free acquisition structure enabled the firm to place the property under contract at a price well below market, potentially creating immediate embedded value for investors,” the official noted.
According Chay Lapin, managing member and Founder of Cove Capital Investments, the Cove Kansas Retail DST 109 has the potential for a 721 UPREIT. However, it utilizes best in class 721 strategies that are far beyond what other REIT (Real Estate Investment Trust) sponsors are offering.
“The Cove Kansas Retail DST 109 offering provides investors the possibility of using the 721 Exchange rollup as a fully optional exit strategy. Unlike many sponsors with forced 721 UPREITs, Cove Capital provides investors with full optionality whereby they are able to participate in the 721 UPREIT if they choose to do so, but at their sole discretion. This full optionality is a key differentiator in today’s marketplace of DST and 721 UPREIT vehicles,” Lapin concluded.