← Back to all investments
Cottonwood Riverfront DST property photo

Cottonwood Riverfront DST

Sponsored by Cottonwood
Minimum Investment$100,000
Total Offering$117,502,000
Available Equity$74,946,000 100% available
Equity$74,946,000
Debt$42,556,000
In-Place LTV36.22% LTV
Average Yield4.30%
Est. Tax-Adjusted Yield¹10.93%
Cap Rate Equivalent7.82%
LocationCA
Estimated Hold Period7 years
721 Exchange ExitMandatory
StrategyCore
Offering Type506(b)
Connected REITCottonwood Communities (REIT)
StatusConfirm Availability

Cottonwood Riverfront DST Overview

Cottonwood Riverfront DST is a $117.5 million (total capitalization) Delaware Statutory Trust offering interests in 805 Riverfront Apartments, a newly built (2022), Class A, 285-unit mid-rise multifamily community on the Sacramento riverfront in West Sacramento, California, roughly one mile from downtown Sacramento in the emerging Bridge District. The property spans approximately 380,351 rentable square feet across a five-story building on 4.41 acres, with a unit mix of one-, two-, and three-bedroom apartments plus six ground-floor commercial units (two of which were vacant as of August 31, 2025), and was approximately 89.1% occupied at underwriting. The offering raises $74.95 million of equity against a $42.56 million non-recourse Fannie Mae loan through Berkadia (36.22% loan-to-value) fixed at 5.08% and interest-only for its full seven-year term. Interests are structured for Section 1031 exchange, and the Sponsor plans a mandatory Section 721 UPREIT contribution of the property into its Cottonwood Communities REIT platform. Projected distributions begin at a 4.085% annualized rate and step up modestly to 4.44% by year ten, for a roughly 4.30% average, with disposition contemplated around a fair-market-value option in year seven.

Highlights

Newly built Class A location. 805 Riverfront is a 2022-delivered, five-story, 285-unit community positioned directly on the Sacramento River in the Bridge District, about one mile from downtown Sacramento and adjacent to Sutter Health Park. The Sacramento economy is anchored by state government, healthcare, and higher education (State of California, UC Davis Health, Sutter Health), with diversification into technology, life sciences, and advanced manufacturing, and the sub-market is projected to grow faster than the broader MSA over 2025-2029.

Conservative leverage and fixed-rate, interest-only financing. The offering carries a 36.22% loan-to-value - low for a stabilized multifamily DST - on a $42.56 million non-recourse Fannie Mae loan arranged through Berkadia, fixed at 5.08% and interest-only for the full seven-year term. Rate certainty and the absence of amortization support distributable cash flow during the hold, and first-year net operating income of roughly $4.84 million covers estimated debt service approximately 2.24 times, leaving a meaningful equity cushion against the loan's year-seven maturity.

Institutional multifamily sponsor with a vertically integrated platform. Cottonwood brings more than fifteen years of multifamily experience and billions of dollars invested in stabilized properties, development, and preferred equity nationwide, operating a vertically integrated platform spanning acquisitions, development, and property management. The Sponsor recently consolidated multiple affiliated REITs into a single diversified platform intended to enhance scale, liquidity, and portfolio strength, and 805 Riverfront is managed by a Sponsor affiliate under the DST master-lease structure.

Defined UPREIT exit path. The Sponsor's plan is a mandatory Section 721 contribution of the property into its Cottonwood Communities REIT, converting Owners' interests into REIT operating-partnership units on a tax-deferred basis, with a fair-market-value option contemplated around year seven. This aggregation strategy offers a clear, pre-defined liquidity route rather than an open-market sale, though the timing, price, and terms of any 721 transaction are controlled by the Sponsor and are not guaranteed.

Riverfront setting within a growth corridor. The community sits within the Bridge District redevelopment along the West Sacramento riverbank, walkable to downtown Sacramento amenities and adjacent to Sutter Health Park (River Cats stadium and recent temporary home of the Oakland Athletics). The sub-market is forecast to grow at roughly 1.4% annually through 2029 versus about 0.5% for the broader Sacramento MSA, and average in-place rents were approximately $2,499 per month at underwriting.

Analysis of Cottonwood Riverfront DST

Insights

We read Cottonwood Riverfront as a capital-preservation vehicle dressed as an income deal - a low-leverage, new-build Class A multifamily DST whose return rides on the sponsor's REIT roll-up far more than on its rent roll. The defensive case is real: a 2022-built, 285-unit riverfront community on a 36.22% LTV, non-recourse Fannie Mae loan fixed at 5.08%, interest-only for its full 7-year term (~2.24x coverage). That conservatism is exactly why the coupon is thin. Distributions open at 4.085% and crawl to 4.44% by year ten - a ~4.30% average that screens Below Average on all three benchmark axes: current income trails the ~4.85% sector norm, peak yield sits under the ~5.55% average, and projected rent growth is below market too. And the coupon is not fully earned: at a 0.88 Year-1 payout ratio, NOI covers only ~88% of the distribution, so part of the first-year check is a return of capital, not earned income - the report projects negative net income in years one and two, with reserves near 1% of price. The 7.24% load is moderate, but you pay it for optionality - tax deferral and a new asset - not a discounted basis. The crux is that exit: the Section 721 contribution into Cottonwood Communities REIT is mandatory and sponsor-timed, so total return hinges on a non-traded REIT whose reported return since inception has been negative. The platform sold as "defined liquidity" is exactly where you surrender price discovery, not gain it; low leverage cushions the loan but does nothing if the roll-up NAV is struck low. Underwrite that REIT harder than the building. Net: this fits a 1031 investor who wants new Class A bricks, minimal debt, and a tax-deferred REIT path and will accept a below-market, appreciation-dependent coupon, slim coverage and California exposure. Anyone needing durable current income, control over their own exit, or who doubts the REIT's record should pass.

Advantages

The offering pairs a brand-new (2022) Class A multifamily asset in a walkable riverfront location with unusually conservative financing for a DST: a 36.22% loan-to-value, non-recourse Fannie Mae loan fixed at 5.08% and interest-only for the full seven-year term, producing roughly 2.24x first-year debt-service coverage and rate certainty through the hold. The Sponsor is an experienced, vertically integrated multifamily operator with billions invested nationwide, and the deal offers a defined, tax-deferred Section 721 UPREIT exit into the Cottonwood Communities REIT. The property benefits from a fast-growing Bridge District sub-market one mile from downtown Sacramento, a diversified regional economy led by government, healthcare, and education, and a residential rent roll that avoids single-tenant credit dependence. For 1031 investors seeking new-construction multifamily with low leverage and a pre-defined REIT aggregation path, the risk-adjusted structure is comparatively defensive.

Concerns

Return is income-light and appreciation-dependent. Projected distributions begin at just 4.085% and rise only to 4.44% by year ten, reflecting flat rent-growth assumptions (the PPM models roughly 0.83% total base-rent growth, effectively 0% in years one and two and about 1% per year thereafter), and the third-party report notes projected negative net income in the first two years once master-lease rent is included. Reserves are thin - about $1.25 million, or roughly 1.15% of purchase price - which is low for a stabilized asset. The exit thesis depends on a mandatory 721 roll-up into the Cottonwood Communities REIT, whose total returns since inception have reportedly been negative (approximately -4% to -11% depending on share class) despite 5-6% distributions, so realized value hinges on that platform's performance and on continued strength of the Bridge District redevelopment. As a California multifamily asset, the deal also carries state-specific regulatory and cost exposure, and Owners have no operational control, rely on the Sponsor and master tenant, and bear the standard DST illiquidity, single-market, and 1031 risks.

Cottonwood Riverfront DST Projected Distributions

Average Yield4.30%
Est. Tax-Adjusted Yield¹10.93%
Cap Rate Equivalent7.82%
Y14.08%
Y24.08%
Y34.15%
Y44.23%
Y54.30%
Y64.37%
Y74.44%
Y84.44%
Y94.44%
Y104.44%

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.

Cottonwood Riverfront DST Financing

LenderBerkadia Commercial Mortgage, LLC (Fannie Mae)
Loan TypeFixed
Interest Rate5.08% (Fixed)
Loan Term7 years
I/O Period7 years
AmortizationN/A (interest-only)
Y1 DSCR2.24x

Benchmarks

Avg. Income
This deal4.30%
Market4.85%
Below Average
Growth
This deal8.69%
Market24.76%
Below Average
Peak
This deal4.44%
Market5.55%
Below Average

Benchmarks are calculated by Baker 1031 Investments: each metric is compared against the average across current offerings of the same property type tracked by Baker 1031 as of the last-updated date shown; a figure within ±10% of that average reads “Meets Average.” Benchmark data is internal, unaudited, and subject to change. Review each offering’s PPM for complete information.

Cottonwood Riverfront DST Documents

Cottonwood Riverfront DST — Complete Offering Data

Offering & Structure
Investment NameCottonwood Riverfront DST
SponsorCottonwood
StructureDelaware Statutory Trust (DST)
Offering Type506(b)
StatusConfirm Availability
Last Updated2026-07-29
Size & Availability
Total Offering$117,502,000
Equity$74,946,000
Debt$42,556,000
Available Equity$74,946,000 (100% of equity)
Minimum Investment$100,000
Total Load7.24%
Initial Reserves1.67%
Property
Property TypeMultifamily
StrategyCore
LocationCA
Market TierTier 3
Income & Projections
Average Yield4.30%
Projected Yields (Y1–Y10)Y1 4.08% · Y2 4.08% · Y3 4.15% · Y4 4.23% · Y5 4.30% · Y6 4.37% · Y7 4.44% · Y8 4.44% · Y9 4.44% · Y10 4.44%
Tax-Adjusted Yield10.93%
Cap Rate Equivalent7.82%
Year 1 NOI$4,842,931
Y1 Payout Ratio0.88
Financing
In-Place LTV36.22% LTV
LenderBerkadia Commercial Mortgage, LLC (Fannie Mae)
Loan TypeFixed
Interest Rate5.08% (Fixed)
Loan Term7 years
I/O Period7 years
AmortizationN/A (interest-only)
Y1 DSCR2.24x
Exit
Estimated Hold Period7 years
721 Exchange ExitMandatory
Connected REITCottonwood Communities (REIT)
Benchmarks (vs sector median)
Avg. Income4.30% vs 4.85% market — Below Average
Growth8.69% vs 24.76% market — Below Average
Peak4.44% vs 5.55% market — Below 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.