CS1031 Texas Active Living Portfolio I DST Overview
CS1031 Texas Active Living Portfolio I, DST (sponsored by Capital Square) is a debt-free, all-cash offering of $39,300,000 of beneficial interests (100% equity, 0.0% LTV) in a 76-unit portfolio of two boutique, age-restricted (55+) build-for-rent cottage communities in Texas: the 44-unit Emerald Cottages of McKinney (2551 Alma Road, delivered 2016) and the 32-unit community at 2412 Marketplace Drive, Waco (built 2018). The single-story cottages average 1,350 SF (all two-bedroom) with private entrances, oversized attached garages, clubhouses, and upgraded interiors (granite, custom cabinetry, stainless appliances, walk-in closets) configured for low-maintenance living. The Trust acquired the Properties on March 3, 2026 for a $32,225,000 unloaded price within the $39,300,000 offering, with no mortgage debt. Both communities were 100% occupied as of March 1, 2026 with a combined 30-resident waitlist ($1,000 deposits), zero bad debt, no concessions, and trailing retention of 86% (McKinney) and 78% (Waco); average rents are $3,536 (McKinney) and $3,334 (Waco). The Properties are net-leased to two affiliated master tenants (McKinney and Waco), with management by a Capital Square affiliate subcontracting to operator Carbon Shepherd. The forecast assumes 3% annual rent growth over a 10-year hold to a projected March 2036 sale, targeting cash-on-cash distributions rising from 4.50% to 5.59% (4.93% average) and a 1.51x-1.61x equity multiple; the sponsor disposition fee is fully subordinated to investors' return of capital, and an optional Section 721 UPREIT contribution provides a potential tax-deferred exit. Securities offered through WealthForge Distributors, LLC.
Highlights
The offering is entirely unleveraged: the Properties were acquired on an all-cash basis with no mortgage debt (0.0% LTV), eliminating refinancing, interest-rate, balloon-maturity, and lender-foreclosure risk and removing any Section 1031 requirement to replace debt at the investor level. Distributions, projected at 4.50% rising to 5.59%, are funded directly by in-place net rent and 3% contractual rent growth rather than by financial leverage, positioning the portfolio as a stabilized current-income vehicle.
Both communities were 100% occupied as of March 1, 2026, with a combined 30-prospect waitlist (each backed by a $1,000 deposit), zero bad debt, no concessions, and trailing-twelve-month retention of 86% in McKinney and 78% in Waco. The active-adult (55-plus) build-for-rent cottage format of single-story, private-entrance homes with attached garages serves durable, needs-based demand from an aging demographic and has demonstrated stable, healthy tenancy.
The portfolio targets two high-growth Texas markets. McKinney sits in Collin County within the Dallas-Fort Worth metro (the sixth-largest U.S. metro at 8.3 million), a fast-growing, high-income city (~$120,000 median household income; home values up ~37% over five years) where four planned build-for-rent communities reportedly target none of the active-adult segment, reinforcing differentiated positioning. Waco, along the I-35 corridor between DFW and Austin, is anchored by Baylor University (~20,000 students) and a population of which roughly 26.8% are age 55-plus, supporting sustained demand for age-restricted housing.
The sponsor, Capital Square, is a vertically integrated national real estate firm specializing in tax-advantaged vehicles (Delaware statutory trusts, qualified opportunity zone funds, and a REIT) and an active developer and manager of housing. Investor alignment is reinforced by a fully subordinated disposition fee, with the sponsor's 2.95% disposition fee subordinated to investors' return of capital, and by funded reserves including a $912,000 capital-expenditure reserve and $297,307 of investor reserves returned at disposition if unused.
The structure provides exit optionality beyond an outright sale: the Signatory Trustee may elect to facilitate a Section 721 UPREIT contribution, under which beneficial owners could exchange their interests for operating-partnership units at fair market value, offering a potential tax-deferred continuation path. The base-case business plan nonetheless targets a sale at the end of an approximately ten-year hold (projected March 2036), with a forecast 1.51x-1.61x equity multiple and 5.03%-5.75% IRR across the disclosed terminal-value sensitivities.
Analysis of CS1031 Texas Active Living Portfolio I DST
Insights
In portfolio terms this is an unlevered bond-proxy: a debt-free, income-first senior-housing DST whose return turns on rent durability and the exit cap rather than leverage, lease-up, or repositioning. The all-cash capitalization is the defining trait - no mortgage means no refinancing, rate, or balloon risk and no Section 1031 debt-replacement obligation, but it also caps upside, so the 4.50%-to-5.59% distribution ramp leans on the 3% contractual rent-growth assumption and the aging-demographic tailwind. On relative value, the roughly 4.93% average yield about meets the senior-living income benchmark (Meets Average), but the 5.59% peak and projected growth both screen Below Average - investors here buy stability, not a yield or growth edge. The roughly 11.35% load is heavy by DST standards; it pays for the all-cash structure, funded reserves, and a fully subordinated disposition fee, but it is real drag, and with a Year-1 payout ratio of 1.02 the first-year distribution slightly exceeds property NOI - propped by reserves (there being no debt) rather than fully covered by income. The crux is the exit: over a ten-year hold the sponsor's disposition analysis shows IRR of roughly 5.03%-5.75% and an equity multiple of 1.51x-1.61x across the disclosed terminal-value range, so a modest move in the exit cap swings the outcome - and since every dollar flows through two affiliated master tenants the sponsor need not backstop, rent coverage is the variable to watch beneath it. The non-obvious point: this is deliberately lower-octane than Capital Square's own record (19 full-cycle deals, ~15.2% average annual return and a 1.83x multiple over a 4.8-year hold) - no leverage and a decade-long hold yield a projected multiple roughly a third below that history, and the full load plus the $32.2M-to-$39.3M basis markup must be recovered from rent and sale alone. It fits the exchanger who prizes capital preservation, debt-free simplicity, steady income, and the optional 721 UPREIT roll - typically older, tax-sensitive investors who value certainty over IRR. Those who must replace mortgage debt to balance an exchange, underwrite to a total-return target, or are uneasy holding a concentrated, illiquid 76-unit, two-market position should pass.
Advantages
On a micro level, the portfolio offers stabilized, fully occupied (100% as of March 2026) active-adult build-for-rent housing with embedded demand support, including a combined 30-resident waitlist, zero bad debt, no concessions, and 78%-86% retention, across two growing Texas markets: McKinney (high-income Collin County / DFW, where competing build-for-rent supply reportedly does not target the active-adult niche) and Waco (a Baylor-anchored I-35 market with ~26.8% of residents aged 55-plus). The cottage product of single-story, private-entrance, attached-garage homes serves durable, needs-based demand from an aging demographic. On a macro and structural level, the all-cash, debt-free capitalization removes interest-rate, refinancing, and balloon risk entirely and delivers a clean current-income profile (4.50% rising to 5.59%, 4.93% average) funded by 3% contractual rent growth, with strong investor alignment via a fully subordinated disposition fee, funded capital-expenditure and investor reserves, an institutional tax-advantaged sponsor in Capital Square, and an optional Section 721 UPREIT exit alongside the base-case sale.
Concerns
The risks concentrate in scale, concentration, and a full going-in basis rather than leverage. The portfolio is small and undiversified at only 76 units across two single-story communities in two Texas markets, so localized supply, demographic, or operating shifts (or weather and insurance events) would have an outsized effect, and Texas real estate taxes and insurance are sizable, growing expense lines in the forecast. All distributions flow through two affiliated master tenants whose capitalization is supported solely by underlying tenant lease cash flow, with the sponsor under no obligation to contribute capital, so a shortfall in property cash flow would directly pressure rent payments to the Trust. The going-in basis is full for the asset class, with the entry yield compressing materially once the approximately 11.35% upfront load is layered on (9.65% selling/offering plus a ~1.70% acquisition and due-diligence fee), and the $39,300,000 offering price embeds a meaningful premium to the $32,225,000 property purchase price, so early-year yield is modest (4.50%) and total return depends on realizing 3% annual rent growth and a favorable exit. The disclosed disposition analysis shows IRR falling to roughly 5.03% and the equity multiple to 1.51x if the terminal value expands to 5.84% (versus the 5.58% entry), underscoring exit-pricing sensitivity over the ten-year hold, and the interests remain illiquid with no investor control over operations or the timing of a sale or 721 election.
CS1031 Texas Active Living Portfolio I DST — Complete Offering Data
Offering & Structure
Investment NameCS1031 Texas Active Living Portfolio I DST
SponsorCapital Square
StructureDelaware Statutory Trust (DST)
Offering Type506(c)
StatusClosed
Last Updated2026-07-31
Size & Availability
Total Offering$39,300,000
Equity$39,300,000
DebtAll-Cash
Available Equity$0 (0% of equity)
Minimum Investment$50,000
Total Load11.35%
Initial Reserves3.08%
Property
Property TypeSenior Living
StrategyCore
LocationTX
Market TierTier 1
Income & Projections
Average Yield4.93%
Projected Yields (Y1–Y10)Y1 4.50% · Y2 4.53% · Y3 4.58% · Y4 4.62% · Y5 4.77% · Y6 4.93% · Y7 5.08% · Y8 5.25% · Y9 5.41% · Y10 5.59%
Tax-Adjusted Yield6.40%
Cap Rate Equivalent7.09%
Year 1 NOI$1,799,378
Y1 Payout Ratio1.02
Financing
In-Place LTV0.00% LTV
Exit
Estimated Hold Period10 years
721 Exchange ExitOptional
Benchmarks (vs sector median)
Avg. Income4.93% vs 5.05% market — Meets Average
Growth24.22% vs 41.07% market — Below Average
Peak5.59% vs 6.45% 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.
