Cove Capital Launches $5.5M New Mexico Industrial DST Offering
Cove Capital Investments LLC, a sponsor of debt-free Delaware statutory trust offerings for 1031 exchange and direct cash investors, has launched Cove Essential Net Lease Industrial 106 DST, a Regulation D, Rule 506(c) offering targeting just over $5.5 million in equity.
The newly acquired property is an industrial distribution center in Tularosa, N.M., a village in southern New Mexico located about 13 miles north of Alamogordo and approximately 90 miles north of El Paso, Texas. The building is designed for supply chain distribution services, with additional square footage available for future expansion. According to Cove, the facility is 100% occupied by an unnamed “supply chain leader” that recently executed a 10-year lease for the building.
According to Dwight Kay, managing member and co-founder of Cove Capital Investments, this latest acquisition highlights several features that make single-tenant, net lease industrial buildings attractive as a DST asset class.
“For DST investors, the Cove Essential Net Lease Industrial 106 DST offers several very specific potential benefits, including brand new 2025 build-to-suit construction, located along a strategic highway corridor, which offers tremendous value to not only logistics firms, but also manufacturing, government and defense industries,” said Kay.
Cove Essential Net Lease Industrial 106 DST was purchased in an all-cash transaction and is being presented to investors as a debt-free offering. Cove Capital said the deliberate, zero-leverage strategy is a core component of its investment thesis, designed to mitigate risks inherent in leveraged real estate.
Chay Lapin, managing member and co-founder of Cove Capital Investments, said the firm’s zero-leverage DST structure is intended to help protect investor capital by limiting exposure to lender-driven risks such as foreclosure, cash flow sweeps and “go-dark” provisions. He added that the firm invests alongside clients in each DST offering. According to Lapin, another aspect of the offering is the potential for a 721 exchange rollup – a tax-deferred strategy allowing conversion of DST interests into REIT shares – as an optional exit strategy.
Lapin said any potential 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 Investments is a private equity real estate firm providing accredited investors access to 1031 exchange-eligible DST properties and other real estate investment offerings. The firm has sponsored more than 3.5 million square feet of 1031 DST and real estate offerings in the multifamily, net lease, industrial, and office sectors.
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