Cove Capital Acquires Asset for Dallas MSA Small Bay Industrial 91 DST Offering

Cove Capital Investments LLC has completed the purchase of a new small bay industrial asset in the Dallas metropolitan area. The purchase completes the formation of the firm’s Dallas MSA Small Bay Industrial 91 DST, a Regulation D, Rule 506(c) Delaware statutory trust offering seeking to raise nearly $6.1 million in equity.

“This 100% occupied, debt-free small bay industrial asset has several potentially beneficial elements to it including that it was purchased with 0% debt as a purposeful strategy to mitigate potential risks associated with lender foreclosure, and the asset is 100% leased with rents that are currently below market, creating the potential for upside value creation as leases roll,” said Dwight Kay, managing member and co-founder of Cove Capital.

In addition, Kay explained that like many of Cove Capital’s offerings, the firm’s principals are investing their own capital into the portfolio.

“This asset is located in the high growth Dallas submarket of Wylie, Texas, just off FM 554 South of N State Highway 78. It has a historic occupancy of 100% with a consistent waitlist of tenants to lease space at the property,” he added.

According to Cove Capital, small bay industrial properties are distinguished by their smaller suite footprints and ability to accommodate a large variety of diverse tenants. With smaller, more flexible layout and suite sizes, the small bay industrial asset helps them to accommodate a broad swath of users that can range from small businesses, contractors, artisans and even last mile e-commerce distribution nodes.

According to the company’s founders, another compelling aspect of the offering is that it has the potential for a 721 exchange rollup as a potential exit strategy.

Dallas MSA Small Bay Industrial 91 DST “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.

“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, the use of floating rate debt, does the REIT offer 721 investors a tax protection agreement, if so how long is it for? And other key components investors must consider prior to participating in a 721 exchange UPREIT DST investment,” said Lapin.

Earlier this month, Cove Capital announced Diversified Portfolio 88 DST, a private placement offering which seeks to raise roughly $27.69 million from accredited investors. That unlevered, all-cash DST investment comprises a portfolio of industrial distribution, essential net lease, and multi-tenant retail assets spanning five states: California, Kentucky, New York, South Carolina, and Texas.

Cove Capital Investments is a private equity real estate firm providing accredited investors access to 1031 exchange-eligible DST 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 3 million square feet of 1031 DST and real estate offerings in the multifamily, net lease, industrial, and office sectors in 35 states nationwide.

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