ARCTRUST Exchange DST

Overview

ARCTRUST Exchange DST is a $21.1 million Delaware Statutory Trust portfolio of six single-tenant properties in Alabama, North Carolina, and West Virginia. The portfolio totals 53,530 square feet and is fully leased to CVS Pharmacy and Pinnacle Bank, with an 11.8-year weighted average lease term and contractual rent increases described in the offering materials. The offering provides $12.245 million of Class A equity interests and is leveraged with an $8.855 million Provident Bank loan at 5.75% fixed interest. The original five-year interest-only loan is paired with two two-year extension options and a 25-year amortization schedule after the interest-only period. The First Amendment extends the projected trust plan through February 1, 2035, creating a projected five-to-nine-year hold. The PPM includes an FMV Option under which eligible investors may elect Exchange Entity units intended to qualify under Section 721, but the option is discretionary and not guaranteed.

Highlights

Six single-tenant absolute-net-lease properties across AL, NC, and WV; 53,530 square feet; 11.8-year WALT.

100% of rental income is from CVS Pharmacy and Pinnacle Bank, which the sponsor materials identify as rated or investment-grade tenants.

42% loan-to-purchase-price ratio with 5.75% fixed Provident Bank debt; five years of interest-only payments before scheduled amortization.

Current supplement projects cash distributions of 5.01% to 5.28% in years 1-4, 5.23% in year 5, and 4.08% to 4.42% in years 6-9 as amortization begins.

FMV Option allows eligible holders to elect Exchange Entity units intended to qualify under Section 721 if the option is exercised and suitability requirements are met.

Analysis

Insights

100% tenant concentration in only CVS Pharmacy and Pinnacle Bank; regional and retail/pharmacy concentration; CVS operating and closure risk; discretionary FMV/Exchange Entity option; refinancing and extension risk; returns are projections and distributions are not guaranteed.

Advantages

$50,000 minimum investment; 1031/DST structure; diversified across six properties and three states.

Concerns

Absolute-net leases and credit-oriented tenants may reduce property-level expense exposure; fixed-rate debt and moderate leverage support visibility into near-term cash flow; the sponsor reports four prior full-cycle DST investments.

Projected Distributions

Average Yield4.75%

Est. Tax-Adjusted Yield¹11.85%

Cap Rate Equivalent8.56%

Y15.01%

Y25.10%

Y35.19%

Y45.28%

Y55.23%

Y64.12%

Y74.08%

Y84.31%

Y94.42%

Projected, not guaranteed. Distribution rates are the sponsor’s projections, are not a promise of performance, and can be reduced or suspended. ¹ Estimated Tax-Adjusted Yield reflects the projected impact of depreciation and amortization deductions at an assumed combined federal and state tax rate; individual tax outcomes vary — consult your CPA regarding your specific situation. Cap Rate Equivalent is a Baker 1031 Investments calculation intended to allow comparison with direct property ownership; it is not a sponsor-reported figure and does not represent a rate of return. See the private placement memorandum for the assumptions behind these figures.

Financing

LenderProvident Bank

Interest Rate5.75% (Fixed)

Loan Term9 years

I/O Period5 years

Amortization25 years (after I/O)

Y1 DSCR2.19x

Benchmarks

Avg. Income

This deal4.75%

Market5.13%

Meets Average

Growth

This deal5.39%

Market8.59%

Below Average

Peak

This deal5.28%

Market5.36%