BR Churchill Downs, DST Overview
BR Churchill Downs, DST is a Regulation D, Rule 506(c) private placement, sponsored by an affiliate of Bluerock (BHM Holdings, LLC), that offers Class 1 beneficial interests in a newly formed Delaware statutory trust to accredited investors, structured principally for investors completing a Section 1031 like-kind exchange. The Trust owns a single asset: a 272-unit multifamily apartment community at 800 Churchill Downs Drive, Aberdeen, North Carolina 28315, formerly operated as "Hawthorne at the Pines" and being rebranded "Southern Pines Reserve." The community sits on roughly 21.31 acres and comprises 34 residential buildings (96 direct-entry townhome units and 176 garden-style apartments), a clubhouse/leasing office, and a fitness center totaling 288,480 net rentable square feet with 622 parking spaces; the buildings were completed between 2000 and 2003. The unit mix spans one-, two-, and three-bedroom plans averaging 1,061 square feet, and the Property was 91% occupied as of April 30, 2025. It sits in the Pinehurst/Southern Pines submarket of Moore County, positioned across the street from the restored Southern Pines Golf Club and within a short drive of the Southern Pines Historic District and most of the market's retail and dining. The Trust acquired the Property on April 28, 2025 for a $56,600,000 purchase price against a $57,900,000 appraisal, capitalized with $37,778,539 of offered equity and a $30,739,000 Fannie Mae DUS loan, for total capitalization of $68,517,539. The business plan is a value-add strategy, building on roughly $1.5 million of recently completed improvements, operated under a master lease, with a targeted hold of approximately seven to ten years and a potential UPREIT-style exit through the Operating Partnership's FMV Option. It is intended for accredited 1031 exchangers seeking passive, monthly income and tax deferral who can accept illiquidity, leverage, and single-asset concentration.
Highlights
The Property is located in Aberdeen, North Carolina, within the Pinehurst/Southern Pines area of Moore County, a nationally recognized golf destination anchored by the Pinehurst resort complex. According to the Memorandum, the community sits within an approximately five-minute drive of nearly 60% of the market's retail and many of its most popular dining options, and is positioned directly across the street from the newly restored Southern Pines Golf Club, cited as one of the Top 100 Public Courses in the country (Source: Golf Digest). The nearby Southern Pines Historic District offers a walkable, quintessential small-town main street of locally owned shops and restaurants. The Property benefits from strong visibility and connectivity along US Route 1 and US Route 501, two of the area's main thoroughfares, with big-box and grocery retailers close by. The Sponsor highlights durable, diversified area demographics supported by employment in defense and military, healthcare, education, and other essential industries, and an attractive average household income-to-rent ratio of roughly 4.5 (Source: Skolnick Consulting), which supports rental demand and affordability across the submarket.
The community comprises 272 units across 34 buildings, 96 direct-entry townhomes and 176 garden-style apartments, averaging 1,061 net rentable square feet, a comparatively large average unit size. The mix is 78 one-bedroom units (28.7%), 98 two-bedroom units (36.0%), and 96 three-bedroom townhome units (63 at 3BR/2.5BA and 33 at 3BR/3BA, together 35.3%) averaging up to 1,375 square feet in the townhomes. Units feature large kitchens with bar-top seating, wood-style plank flooring, washer/dryer connections, high ceilings, ample closets, private patios or balconies, and full appliance packages. Amenities include an enhanced fitness center with Echelon Mirror and Bike, a Starbucks coffee bar and coworking lounge in an upgraded clubhouse, a resort-style pool with cabanas and padded loungers, an expanded putting green, a leash-free dog park and pet spa, grilling pavilion, playground, and laundry facilities. Approximately $1.5 million of capital improvements was recently completed, covering clubhouse, leasing office and fitness center renovations, roof replacements, landscaping, parking-lot refinishes, and pool and pet-area upgrades, and the Property was 91% occupied as of April 30, 2025, giving the value-add plan a solid in-place operating base.
The Trust financed the acquisition with a $30,739,000 first-mortgage loan from KeyBank National Association under the Fannie Mae DUS program, assigned at closing to Fannie Mae with KeyBank continuing to service it. The loan carries a fixed interest rate of 5.13% per annum, a term of approximately ten years maturing May 1, 2035, a 30-year amortization schedule, and a full ten years of interest-only payments, with the entire principal due as a balloon at maturity. It is non-recourse to the Trust and to Investors except for standard non-recourse carveouts. On a fully loaded basis the loan-to-capitalization ratio is approximately 44.78% (equating to roughly 54% of the $56,600,000 purchase price), a conservative level of leverage relative to many DST offerings. At closing the Trust funded Lender-mandated reserves of $211,072 (replacement) and $505,537 (tax and insurance), plus an $8,795 monthly replacement deposit, and established a $3,000,000 Supplemental Trust Reserve funded first from Offering proceeds for renovations and Property-related costs, along with a $102,225 Trust operating account. Each $100,000 interest is allocated approximately $81,366 of the loan for Section 1031 debt-replacement purposes.
The offering is sponsored by an affiliate of Bluerock, a national real estate investment manager, through BHM Holdings, LLC. The DST and its Master Tenant are affiliates of Bluerock Homes Trust, Inc. (NYSE: BHM), an externally managed REIT that, as of December 31, 2024, held interests in more than 5,000 single-family and multifamily rental homes and targets high-quality-of-life communities in growth-oriented middle-market and first-ring suburban markets. The Trust's manager, BR Churchill Downs DST Manager, LLC, is led indirectly by senior members of the Bluerock management team, and CSC Delaware Trust Company serves as independent co-trustee. Day-to-day, on-site property management is delegated to RPM Living, LLC, a full-service, Austin, Texas-based multifamily operator that manages more than 225,000 units and ranks among the largest apartment operators in the United States, working under Bluerock Homes Manager, LLC as property manager. Investors also gain indirect exposure to Bluerock's broader residential platform and access to the UPREIT structure of BHM's Operating Partnership, though an investment in the Interests is not an investment in BHM itself.
The Trust is structured as a Delaware statutory trust specifically so that Investors' interests are intended to be treated as direct ownership of real estate, allowing an acquisition of Interests to serve as replacement property in a Section 1031 like-kind exchange and defer capital gains. Investors are allocated a pro rata share of the $30,739,000 loan (about $81,366 per $100,000 interest) to help balance debt replacement, and receive projected monthly cash distributions the Sponsor targets in a range of roughly 4.27% to 6.33% per annum over the hold. On exit, the Operating Partnership holds an FMV Option: at its sole discretion it may acquire the Interests in exchange for Class A OP Units (a Section 721 UPREIT-style transaction into Bluerock Homes Trust's operating partnership), for cash, or a combination. Contributing Investors electing OP Units may achieve continued tax deferral and future liquidity through exchange into BHM shares, and a Tax Protection Agreement is designed to provide limited protection against certain triggering events. Section 704(c) principles apply. A tax opinion is provided at Exhibit D, though qualification depends on each Investor's facts and no IRS ruling has been obtained.
Analysis of BR Churchill Downs, DST
Insights
For a 1031 exchanger, BR Churchill Downs reads best as a levered value-add multifamily bet dressed as passive income: the current yield is ordinary, and most of the return is engineered to arrive later through renovation-driven rent growth and a favorable exit. The distribution ramp says as much - about 4.28% in Year 1 building to 6.33% by Year 10, a 5.23% average that only meets the multifamily income benchmark while peak yield and projected growth both screen above it. That is the trade: investors are paid for back-end execution, not current income. The early yield is thin on its own terms, too - the Year-1 payout runs roughly 105% of in-place NOI, so even 4.28% leans slightly on reserves until the plan lifts income. Leverage is moderate at ~45% loan-to-capitalization, and the $30.74M Fannie Mae loan is fixed at 5.13%, interest-only and non-recourse for ten years - near-term rate risk removed but concentrated into a single 2035 balloon. The all-in load is heavy at roughly 13% (about 9.4% selling commissions), so a real slice of contributed capital never reaches the property and the deal needs years of NOI growth just to earn it back, which is why the seven-to-ten-year hold and no-liquidity profile are non-negotiable. The crux is the master lease: income flows through a thinly capitalized Bluerock affiliate Master Tenant backed by only a $401,000 demand note, so any shortfall in property cash flow can compress or suspend distributions long before the balloon - watch occupancy (91% at acquisition) and the pace of unit upgrades. What the marketing underplays: Bluerock's strong record (131 full-cycle deals, ~20.7% average annual return, 1.79x equity multiple) was built on an average hold under four years, yet this asks investors to sit two to three times as long; and the FMV Option 721 path into NYSE-listed BHM - the real differentiator for extending deferral and liquidity - is the Operating Partnership's call alone, converting real estate into small-cap REIT units if exercised. Net: it fits accredited exchangers who want deferral, can accept illiquidity and single-asset concentration, and trust Bluerock and RPM Living to execute. Those needing covered current income from day one, dependable liquidity, or a hands-off bond-proxy should pass.
Advantages
Institutional-quality, recently improved asset. The community is a large garden-and-townhome multifamily property with above-average unit sizes (averaging 1,061 square feet), a full amenity package, and roughly $1.5 million of recently completed capital improvements, acquired $1.3 million below its April 2025 appraised value. Passive, tax-advantaged income. The DST structure is designed to qualify as Section 1031 replacement property, delivering monthly distributions (targeted at roughly 4.27% to 6.33% per annum) without landlord responsibilities, and the master lease shifts day-to-day operations to a Bluerock affiliate and RPM Living, a top-tier operator managing more than 225,000 units. Conservative leverage with rate certainty. The $30,739,000 Fannie Mae DUS loan is fixed at 5.13% for ten years, interest-only, and non-recourse, with a modest ~44.78% loan-to-capitalization ratio and meaningful reserves, including a $3,000,000 Supplemental Trust Reserve. Attractive submarket. The Pinehurst/Southern Pines location offers golf-destination appeal, strong retail proximity, and a favorable income-to-rent ratio (~4.5). Value-add upside plus a defined exit. A unit-upgrade program targets rent premiums, and the Operating Partnership's FMV Option offers a potential Section 721 UPREIT path into NYSE-listed BHM, cash, or a combination, alongside an eventual sale over a targeted seven-to-ten-year hold.
Concerns
Illiquidity and no control. There is no public market for the Interests, they are not registered with the SEC or state regulators, and Investors may not realize a return for years, if at all. As beneficial owners of a DST, Investors have no voting rights, no say in operations or timing of sale, and waive rights to partition, force dissolution, or file bankruptcy; the Manager controls all decisions. Single-asset concentration. Performance depends entirely on one 272-unit property in one submarket, with no diversification, so local economic, tenant, occupancy, or physical setbacks fall directly on Investors. Leverage and balloon risk. The interest-only loan requires the full $30,739,000 principal to be repaid or refinanced at the May 1, 2035 maturity; on an uncured default the Lender may foreclose and Investors could lose their entire investment. Reliance on the Sponsor and Master Tenant. Distributions flow through a thinly capitalized, affiliated Master Tenant funded by only a $401,000 non-interest-bearing Demand Note; a default or shortfall could interrupt income, and reserves or withheld distributions may be needed to cover gaps. High front-end load. Total sales commissions and expenses are approximately 9.40% of the offering, reducing the capital that goes to work in real estate. Occupancy and execution risk. The Property was only 91% occupied at acquisition, and the value-add plan and projected 4.27% to 6.33% distributions depend on assumptions that may not materialize. Tax and structure risk. No IRS ruling has been obtained; 1031 qualification depends on each Investor's facts, and the FMV Option is entirely at the Operating Partnership's discretion. If exercised, Investors may be forced into OP Units whose value tracks volatile BHM shares, and the consideration received could be less than the amount invested. Numerous conflicts of interest exist among the Sponsor, Depositor, Manager, Master Tenant, and their affiliates.
BR Churchill Downs, DST — Complete Offering Data
Offering & Structure
Investment NameBR Churchill Downs, DST
SponsorBluerock
StructureDelaware Statutory Trust (DST)
Offering Type506(c)
StatusClosed
Last Updated2026-07-13
Size & Availability
Total Offering$68,517,539
Equity$37,778,539
Debt$30,739,000
Available Equity$0 (0% of equity)
Minimum Investment$100,000
Total Load13.15%
Initial Reserves10.11%
Property
Property TypeMultifamily
StrategyValue-Add
LocationNC
Market TierTier 3
Income & Projections
Average Yield5.23%
Projected Yields (Y1–Y10)Y1 4.28% · Y2 4.27% · Y3 4.49% · Y4 4.82% · Y5 5.15% · Y6 5.39% · Y7 5.63% · Y8 5.87% · Y9 6.11% · Y10 6.33%
Tax-Adjusted Yield8.74%
Cap Rate Equivalent8.20%
Year 1 NOI$3,267,692
Y1 Payout Ratio1.05
Financing
In-Place LTV44.86% LTV
LenderKeyBank National Association
Loan TypeFixed
Interest Rate5.13% (Fixed)
Loan Term10 years
I/O Period10 years
AmortizationN/A (interest-only)
Y1 DSCR2.04x
Exit
Estimated Hold Period7-10 years
721 Exchange ExitOptional
Benchmarks (vs sector median)
Avg. Income5.23% vs 4.85% market — Meets Average
Growth47.90% vs 24.76% market — Above Average
Peak6.33% vs 5.55% market — Above Average
Every data point Baker 1031 tracks for this offering, in one place. Figures are drawn from the offering’s private placement memorandum and sponsor materials unless noted, are summaries for convenience only, and are qualified in their entirety by the PPM. Tap the ⓘ icon next to any label for what it means and how it is calculated.
