Cove Capital Fully Subscribes $27.7M DST, Launches $12.1M Alabama Industrial Offering

Cove Capital Investments has fully subscribed a debt-free Delaware statutory trust offering that raised approximately $27.7 million in equity from accredited investors. The firm separately launched a DST anchored by a build-to-suit industrial distribution facility in Mobile, Ala., the company said.

Diversified Portfolio 88 DST

Cove Capital’s Diversified Portfolio 88 DST – a Regulation D, Rule 506(c) offering launched in May 2025 – was structured as a debt-free investment to eliminate the risks of lender foreclosure and cash flow sweeps. The portfolio includes five net lease and retail assets totaling approximately 211,000 square feet across California, New York, Texas, Kentucky, and South Carolina.

“The portfolio’s net lease and logistics/distribution assets provide the potential for predictable income, while its multi-tenant retail asset positions investors to capitalize on potential value-add upside and a diversified tenant base. Our focus remains on potentially delivering capital preservation, durable cash flow, and risk-adjusted returns for our 1031 exchange investors navigating today’s market,” said Dwight Kay, managing member and founding partner of Cove Capital Investments.

As with many of Cove Capital’s offerings, the firm’s principals invested their own capital in the portfolio, said Chay Lapin, managing member and founding partner of Cove Capital.

“Our emphasis on debt-free investing has been an important differentiator in the 1031 exchange and Delaware statutory trust marketplace, and an attractive ingredient for our growing number of accredited 1031 exchange investors, broker-dealers, registered representatives, and RIAs,” said Lapin.

Essential Net Lease Industrial 114 DST

Cove Capital separately acquired a 23,018-square-foot build-to-suit industrial distribution facility that serves as a product exchange center for a division of a multinational food and beverage company. The property, which carries a 10-year net lease, anchors Cove Capital’s Essential Net Lease Industrial 114 DST, a Regulation D, Rule 506(c) offering launched last month that targets approximately $12.1 million in equity.

The property sits along Interstate 65 with connectivity to Interstate 10. It is also near the Port of Mobile, where the Alabama Port Authority is completing a deepening and widening project that the authority has said will make Mobile the deepest port on the Gulf Coast.

The tenant operates in the U.S. snack food market and previously occupied an older facility for more than 20 years. According to Cove Capital, its relocation to the new facility will reduce transportation times and support growth along the surrounding logistics corridor.

Optional 721 Exchange Exit

Both offerings include a potential 721 exchange rollup – a tax-deferred strategy that converts DST interests into REIT shares – as an optional exit. Kay said any 721 transaction would be optional, allowing investors to evaluate the destination REIT — including its debt levels, dividend coverage, and tax considerations — before deciding whether to participate.

“Cove Capital is a big believer in fully optional REIT exit options as opposed to forced 721 exchanges,” said Kay.

Cove Capital Investments is a private equity real estate firm that provides accredited investors with access to 1031 exchange-eligible DST properties and other real estate offerings. The firm has sponsored more than 3.6 million square feet of DST and real estate offerings in the multifamily, net lease, industrial, and office sectors.

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