Cove Capital Acquires Arizona Industrial Facility for $5.88M DST Offering
Delaware statutory trust company Cove Capital Investments LLC recently completed the acquisition of a 26,795-square-foot FedEx distribution center located in Sierra Vista, Ariz.
Connecting the major markets of Tucson and Phoenix, Ariz., and El Paso, Texas, the asset comprises Essential Net Lease Industrial 87 DST – a Regulation D, Rule 506(c) offering that seeks to raise approximately $5.88 million in equity.
According to Cove Capital, the offering is unique in that it provides investors an opportunity to invest in a significant industrial distribution center located less than 1,000 feet from U.S. Highway 90, which is the primary thoroughfare that connects this part of Arizona to Interstate 10.
“This large essential industrial asset is interesting for a number of reasons. First, the location is ideal for our tenant who is a leading player in the global logistics industry. Second, the tenant recently showed commitment to continued operations at this location for the foreseeable future,” said Dwight Kay, managing member and co-founder of Cove Capital Investments.
The company said the offering – a fully debt-free investment created to mitigate common risks associated with real estate debt, such as mortgage foreclosure, cash flow sweep clauses, and go-dark provisions – also has the potential for a 721 Exchange rollup as a potential exit strategy.
“Another important aspect of the Cove Essential Net Lease Industrial 87 is that it provides investors the possibility of using the 721 Exchange rollup as a fully optional exit strategy. Instead of signing up today in a forced 721 UPREIT DST, our investors are going to be given the option to participate in a future potential 721 UPREIT or not – at their discretion,” said Chay Lapin, managing member and co-founder of Cove Capital.
“This means that at the time of any potential future 721 UPREIT transaction, our investors will be able to analyze the final destination REIT by examining key areas such as REIT debt levels, dividend coverage ratios, [and] the use of floating rate debt. Does the REIT offer 721 investors a tax protection agreement, if so how long is it for?” added Lapin.
Earlier this month, AltsWire reported that Cove Capital finalized its Essential Net Lease Portfolio 89 DST offering, which aims to raise $13.5 million, and consists of a pair of properties located in Joplin, Mo., and the other is located in Sylva, N.C.
Those acquisitions followed the company’s purchases in Texas, where it acquired two properties to finalize its Texas Small Bay Industrial Portfolio 86 DST. In fall 2024, the firm also obtained a small bay industrial asset in San Antonio for its Texas Small Bay 85 Flex DST.
Cove Capital Investments is a DST sponsor company providing accredited investors access to 1031 exchange-eligible properties, as well as other real estate investment offerings. The team consists of acquisitions, asset management, accounting, due diligence, in-house counsel, investor relations, marketing, and capital markets. Cove Capital has sponsored over 2.6 million square feet of 1031 DST and real estate offerings in the multifamily, net lease, industrial, and office sectors in 33 states nationwide.
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