#United States #Cove Capital #Delaware Statutory Trust #Houston #Texas Industrial

Cove Capital Investments Enhances Portfolio

Cove Capital Investments, LLC has made a strategic move in the real estate market by acquiring two small bay industrial properties in Texas. This purchase is part of their newly launched Texas Small Bay Industrial Portfolio 86 Delaware Statutory Trust (DST) offering. The unique aspect of this acquisition is that it was completed through a debt-free transaction, making it particularly appealing for accredited investors seeking lower-risk options in real estate.

The Acquired Properties

The newly assembled DST portfolio consists of two properties situated in the greater Houston metropolitan area, which includes five buildings in total. The first property is located in Katy, Texas, featuring three buildings that span a total of 29,165 square feet. What makes this asset noteworthy is that it is 100% leased and was constructed in 2023, ensuring modern standards and tenant satisfaction.

The second property can be found in Richmond, Texas, comprising two newly built structures on 2.52 acres, offering a total of 40,000 net rentable square feet. This site is strategically positioned within a bustling residential corridor in Southwest Houston, boasting a population exceeding one million people in a ten-mile radius. Similar to the Katy property, this asset is also fully leased, providing immediate income revenue for investors.

Investment Strategy and Risk Mitigation

Cove Capital’s Managing Member and Founder, Dwight Kay, emphasized that this portfolio provides a compelling investment opportunity due to several factors. One significant advantage is the potential to enhance property value as current leases expire, allowing Cove Capital to explore rent increases to align with market conditions. Moreover, the in-place triple net leases facilitate the transfer of some inflationary expenses to tenants, further ensuring stability and profitability.

One of the major attractions to investing in small bay assets is their appeal to investors who prefer properties with multiple tenants. This diversification reduces risk as vacancies tend to have a lesser impact compared to larger properties that often depend on a single tenant.

Unique Selling Points of Cove’s DST Offering

An essential feature of the Cove Texas Small Bay Industrial 86 DST portfolio is the option for investors to utilize a 721 Exchange roll-up as an exit strategy. Unlike many sponsors that enforce 721 UPREITs, Cove Capital provides full flexibility, allowing investors to choose to participate in the exchange at their discretion.

Additionally, Cove has introduced a 20-year Tax Protection Agreement (TPA) for investors opting for a future 721 exchange. This long-term commitment stands out in the DST marketplace, where many offerings either lack any TPA or impose limited protection ranging from 2 to 5 years. The 20-year TPA effectively alleviates concerns regarding capital gains tax liabilities associated with future property sales.

About Cove Capital Investments

Cove Capital Investments is recognized as a leading Delaware Statutory Trust sponsor, managing a comprehensive portfolio exceeding 2.5 million square feet across 33 states. With over 2,000 satisfied investors, the firm has established a reputation for providing accessible and secure investment opportunities in real estate, focusing primarily on debt-free offerings. Their portfolio's design is aimed at minimizing risk by avoiding the potential pitfalls associated with mortgage debts and lender foreclosure, making them an attractive option for cautious investors.

To explore current offerings, including potential opportunities for 1031 exchange and direct investments, interested parties can visit Cove Capital Investments.

This strategic acquisition of two small bay industrial properties in Texas marks a significant step for Cove Capital, emphasizing their commitment to providing investors secure, diversified, and high-value opportunities in the real estate sector.