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A little clarity for your next decision.
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Investor WorkspaceA little clarity for your next decision.
By Jerry Baker
Passco Companies is a real estate sponsor with a long history in 1031 exchanges and a major focus on apartment communities. This guide explains its business, the difference between property operations and investment structure, and the evidence I would want before considering a Passco investment. It also covers a privacy notice on the company’s website and why investor data controls belong in the review.
Passco’s website describes a national business that acquires, develops, and manages multifamily and commercial real estate. Its history begins in 1998 with retail investments in Central California and later shifts toward apartments. The firm lists its corporate headquarters in Irvine, California, and a Southeast headquarters in Atlanta. These are company descriptions, not proof that any particular property will perform well. [1] [2]
The name on the building, the name of the sponsor, and the name on your investment agreement may be different. I would start by putting those names on one sheet. Which trust owns the real estate? Which company manages the asset? Who handles the day-to-day leasing? Which entity receives each fee? Those questions help turn a broad company profile into a useful review of your actual choices.
This page does not confirm current availability, a relationship with Baker 1031, or approval of an offering. It explains how I would approach the firm and its real estate. Public pages cannot replace the current private placement memorandum, trust agreement, loan documents, financial reports, and independent tax review.
Passco publishes criteria for market-rate and luxury apartments, including core, core-plus, and near-stabilized properties. Its stated search covers primary, secondary, and tertiary markets nationwide, generally targets at least 200 units, and includes portfolios and active senior housing. The same page also lists retail, self-storage, industrial, and land interests. These are acquisition preferences, not a promise that every investment has the same features. [2]
I would give special attention to the phrase “near stabilized.” A community that is almost fully leased can still need cash to cover concessions, staffing, repairs, and the remaining lease-up. The useful question is not whether a brochure calls it stable. It is how much income the signed leases and recent collections support today.
For a larger apartment community, I would divide the rent roll into useful groups: occupied units, leased units awaiting move-in, units ready to rent, and units under repair. Then I would separate new leases from renewals. A headline occupancy figure can hide a batch of move-outs next month or a heavy reliance on free rent to attract new residents.
Luxury finishes also need a market test. I would compare the subject property with homes a resident could realistically choose nearby. The comparison should include rent after concessions, parking, utilities, commute, unit size, and lease terms. A pool photograph is pleasant. It does not tell us whether the property’s price fits the local renter’s budget.
Passco’s leadership page identifies William O. Passo as its founder, Larry Sullivan as president, Colin Gillis as chief investment officer, and Suzy Cottle as chief financial officer. It identifies Thomas Jahncke as president of Passco Capital, Inc. The page also lists separate roles for asset management, technology, legal matters, development, and investor services. Titles were checked on October 6, 2026; people and responsibilities can change. [3]
My next step would be to ask who is responsible for the specific investment, rather than stop with the senior team. Who approves annual budgets? Who notices when collections slip? Who can replace a local manager? Who signs off on a major repair? A strong company chart helps only if the duties connect to real controls at the property.
I would also ask about continuity. If the lead asset manager leaves, where are the records, relationships, and decision history? Can the next person understand why rents, reserves, and debt terms were set the way they were? A property can be held for many years. The process needs to work beyond any one person’s tenure.
Passco Capital, Inc. is a distinct name in the firm’s distribution structure. Its 2025 financial statements filed with the SEC describe commission and fee revenue from sales of interests in DSTs and limited liability companies. That filing is evidence about the securities business; it is not an audit of every property or a guarantee for an investor’s trust. [4]
I would use that distinction to map costs. The property purchase price, investor offering price, commissions, reserves, and other costs should reconcile. If an investor puts in $100,000, the sources-and-uses schedule should explain how that money is allocated. A property can be acquired at a reasonable price while the full investment still carries meaningful upfront costs.
Consider an invented example: a trust raises $20 million of equity. It uses $17.5 million toward the property and puts $1 million into reserves. The remaining $1.5 million goes to disclosed fees and other costs. All three amounts matter, but they serve different purposes. Reserves may later support the property; a paid fee is not still sitting in a repair account.
I would ask who received each payment and whether it was negotiated with an outside party or an affiliate. The existence of an affiliate fee does not establish misconduct. It does mean the reviewer should understand the service, the amount, the basis for charging it, and any approval process.
Passco’s history identifies DST use within its exchange business. The tax treatment still depends on the actual structure. IRS Revenue Ruling 2004-86 describes circumstances in which a beneficial interest in a qualifying trust can be treated as an interest in real estate for an exchange. It does not approve every trust using the letters DST. [2] [5]
I would ask your tax adviser and qualified intermediary to review the proposed ownership, taxpayer, exchange value, debt allocation, and closing steps. An apartment property’s business plan and the tax rules are separate tests. Passing one does not automatically pass the other.
For the usual deferred exchange, the IRS explains the identification and acquisition deadlines and limits on receiving proceeds. Those rules should be addressed before a property sale closes. A sponsor’s willingness to accept an investment is not an extension of the exchange clock. [6]
The trust’s limits also deserve plain language. Can it raise more cash, refinance, change leases, or fund improvements as the business plan requires? The answers should come from counsel and the documents. I would not assume that a manager can solve any future problem just because it manages many properties elsewhere.
For Passco’s apartment focus, my operating review would work from resident payments upward. Start with scheduled rent, then subtract vacant units, concessions, unpaid balances, and other lost revenue. Add only supportable other income. Compare that result with payroll, repairs, taxes, insurance, utilities, and management costs.
Here is a hypothetical example, not a Passco forecast. A 250-unit community charging an average of $1,800 per month has $5.4 million of annual potential rent. At 94% economic collection, it produces $5.076 million before other income and expenses. At 89%, it produces $4.806 million. That five-point change reduces annual rental revenue by $270,000.
Some costs might fall with occupancy, but many will not fall by the same amount. The roof still needs repairs. Property taxes remain due. The office still needs staff. I would therefore ask for a downside budget, rather than subtract five percent from every line and call the work complete.
Then I would follow the cash from property operations to the trust’s payment. Debt service, reserves, trust expenses, and other charges may stand between the two. If distributions exceed cash generated during a period, I want the source explained. Cash from an earlier reserve is different from cash earned through current operations.
An apartment investment needs a debt review even when the first year’s coverage looks comfortable. I would examine the interest rate, maturity, principal payments, rate protection, lender reserves, and conditions that can restrict distributions. I would also ask what happens if the property takes longer to meet its goals.
Loan-to-value is a ratio with a denominator. A lender may compare the loan with an appraisal or acquisition price. An investor’s exchange calculations may use the full offering cost and assigned debt. Those figures serve different tasks. I would label each one so the same percentage is not used to answer two different questions.
For example, $30 million of debt on a $60 million property equals 50% of the purchase price. If the total investor offering value is $64 million, that same debt equals about 46.9% of that larger amount. Neither calculation changes the dollars owed. The difference comes from the value being used.
The exit calculation matters as much as the entry. If an interest-only loan remains at $30 million, a sale at $54 million leaves $24 million before sales costs and other claims. At $60 million it leaves $30 million. A 10% decline in property price produces a 20% decline in that simplified equity amount. Debt can magnify gains as well, but the loss scenario belongs on the same page.
I would not review an active senior community as if it were an ordinary apartment building with different marketing. First establish exactly what residents receive and what the owner must provide. Are there age restrictions, extra common areas, transportation, meals, or other services? Who pays for them? Which obligations continue even when units are empty?
These are questions to resolve for a proposed investment, not claims about services at all Passco properties. The firm’s acquisition criteria create a reason to check the details. An active adult property and a licensed care facility should not be placed in the same operating category just because both serve older adults.
For any near-stabilized property, I would compare the remaining lease-up plan with the reserve schedule. Suppose a hypothetical budget expects $80,000 of monthly shortfall for six months. That is $480,000. If the shortfall lasts nine months, it is $720,000 before any change in spending. A three-month delay uses another $240,000.
I would ask whether that extra cash already exists, who can authorize its use, and what the trust can legally do if the reserve runs low. A projected break-even month is a planning estimate. It should not be treated as cash in the bank.
Passco’s stated national focus gives it a broad search area. It does not make each local market equally attractive. For an apartment proposal, I would want evidence on nearby competing supply, household income, job sources, and recent lease terms. A citywide growth headline can overlook a crowded block of new apartment deliveries.
Insurance and taxes should be based on the actual property. I would request quotes, deductibles, exclusions, and a plan for major losses. For taxes, I would ask whether the seller’s bill is likely to continue after the sale. A model that grows yesterday’s expense by a small percentage can miss a large reset.
At a portfolio level, I would look for repeated exposure. Three properties in different cities might still depend on the same industry, insurance market, or type of renter. I would compare the proposed investment with what you already own. Diversification is about the sources of risk, not just the number of addresses.
At the time of this review, Passco’s homepage carried a notice about an incident that may have affected certain individuals’ information. That is a verified company notice. This profile does not establish that every investor was affected, that money was lost, or that any particular claim has been decided. People who received a letter should use that letter for the details specific to them. [1]
I would request the current incident summary, response steps, and data safeguards as part of sponsor review. I would ask how bank-account changes are confirmed, who can approve distributions, and how the firm verifies wire instructions. Those controls matter when investors send personal records and large sums of money.
For a closing, I would independently confirm payment instructions through an established contact using a verified phone number. A last-minute email requesting a new account should trigger a pause and a check. That is a practical control, not an accusation that a specific message or employee is dishonest.
I would ask for a record of comparable apartment investments that includes both sold and still-held properties. The useful comparison separates asset returns from investor returns and shows dates, debt, fees, and cash flows. A profitable sale made in a different rate environment is worth understanding, but it should not become the base case for a new purchase.
Next, I would match the current team to that record. Did the same people make the acquisition, oversee operations, and manage the sale? If a record includes a development strategy, I would keep it separate from a stabilized DST comparison. Their capital needs and risks may differ substantially.
The documents I would want include a current rent roll, trailing operating statements, property condition and environmental reports, the insurance plan, loan terms, fee schedule, and trust documents. I would also want a sample investor report. Clear reporting should explain misses as well as successes, and state when a plan has changed.
A final decision would connect those facts with your exchange and your needs. A sound property can still be a poor match for someone who may need cash soon. A tax benefit does not replace a workable business plan. My job is to make both sides of that decision easier to see.
Apartments are a major part of its published strategy and history. Passco also lists other property types in its acquisition criteria. Review the actual property and vehicle rather than assume every investment follows the same apartment plan. [2]
No. Passco Capital is a separate entity identified in the distribution business. A trust or other vehicle owns the investment described in its documents. The securities firm’s financial statements should not be confused with the trust’s property-level finances. [4]
Do not assume that it does. A qualifying DST can meet the relevant ownership test under the facts described by the IRS, but you must also meet your own exchange requirements. Your advisers need the current documents for the specific investment. [5] [6]
No. I would still ask how many leases have begun, what rent is collected after concessions, and how much cash the property may need before it reaches the plan. The budget should test delays, not just the expected date.
The homepage notice does not establish that. It identifies a possible impact on certain individuals’ information. Review any personal notice and request current information about the response and safeguards; do not infer a financial loss or legal outcome from the banner alone. [1]
You should not plan on that. Private placements can be hard to sell and may have transfer limits. Review the trust’s terms, potential exit paths, and risks before committing money that you may need on short notice. [7]
Educational information, not an offer or a personal tax, legal, or investment recommendation. Examples are hypothetical and omit stated adjustments. Tax treatment depends on your facts and current law. Review your transaction with your CPA, attorney, and qualified intermediary. Real estate investments can lose value and may be illiquid.
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