ERP 1031 Industrial Portfolio IV DST Overview
ERP 1031 Industrial Portfolio IV DST is a Regulation D, Rule 506(c) private placement offering beneficial interests in a Delaware statutory trust to accredited investors seeking to complete a tax-deferred Section 1031 exchange. The Trust, an affiliate of Midland, Texas-based sponsor ERP 1031, LLC, owns a portfolio of four single-tenant, triple-net (NNN) industrial properties serving the energy industry of the Permian Basin. The four assets encompass approximately 323,352 rentable square feet across 111.28 acres in Odessa and Midland, Texas, and were 100% leased as of January 1, 2026 with a weighted-average remaining lease term of roughly 13.1 years. The properties are located along Interstate 20, Business 20, and Highway 191, which the Sponsor defines as "Tier 1" transportation corridors serving one of the largest producing oil fields in the world. The Trust acquired the Properties on December 15, 2025 from an affiliate of the Sponsor (ERP Funds III, LLC) for an aggregate purchase price of $44,000,000, a stated 12.32% discount to the $51,640,000 average appraised value. The offering has a maximum amount of $49,150,000, consisting of $36,150,000 of equity and $13,000,000 of estimated attributable debt, priced at $491,500 per 1.0% interest with a minimum purchase of $50,000 of equity. The Trust master-leases the Properties to an affiliated Master Tenant and targets a 5.25% annual cash distribution paid monthly in arrears. As a passive DST investment structured to satisfy IRS Revenue Ruling 2004-86, investors hold beneficial interests with no role in day-to-day management and no voting rights over the Properties. The offering is designed for accredited 1031 exchangers who want hard-asset, single-tenant net-lease industrial exposure in the Permian Basin energy corridor, can accept illiquidity and sector concentration, and have no need for liquidity during the hold.
Highlights
The portfolio is concentrated in the Permian Basin of West Texas, one of the largest producing oil fields in the world, with Permian regional crude production cited at approximately 6.7 million barrels per day (EIA Short-Term Energy Outlook, November 2025). The four assets sit in Odessa and Midland along Interstate 20, Business 20, and Highway 191 — corridors the Sponsor designates "Tier 1" for their direct access to the basin's key transportation routes. The Sponsor believes these high-traffic, high-visibility locations give tenants an operational and logistics advantage. It also emphasizes that land comprises roughly 94% of the total portfolio area, an attractive land-to-building ratio the Sponsor believes positions the Properties to accommodate tenant growth and to appeal to a broad group of energy users seeking larger industrial formats in a market where excess yard space is a deciding factor for many operators.
The four properties total approximately 323,352 square feet (about 25% office / 75% warehouse) across 111.28 acres and were 100% occupied as of January 1, 2026. Each building is leased to a single tenant on a triple-net basis: ChampionX LLC / Schlumberger (NYSE: SLB) at 11809 W. CR 125, Odessa; DNOW L.P. (NYSE: DNOW) at 5301 W. Murphy St., Odessa; American Cementing, LLC (owned by Argonaut Private Equity) at 6165 W. Murphy St., Odessa; and Odessa American Refabrication LLC / Odessa AIM Holdings (a BP Energy Partners portfolio company) at 11716 Highway 191, Midland. The weighted-average remaining lease term is approximately 13.1 years. The Sponsor highlights specialized infrastructure across the portfolio, including a combined ~28 crane systems, structurally reinforced concrete yards, fire-suppression water towers, modern office build-out, and attractive clear heights — features it believes make the assets desirable to a variety of Permian Basin energy operators.
The Properties were acquired for an aggregate purchase price of $44,000,000 and financed with a $13,000,000 loan from GECU Federal Credit Union, producing conservative initial leverage of approximately 29.5% loan-to-value based on purchase price, 25.2% based on the average appraised value of $51,640,000, and 26.4% based on the maximum offering amount. The loan carries an initial fixed interest rate of 5.90% for the first 60 months, a 15-year term and a 20-year amortization schedule, with monthly principal and interest payments, no prepayment penalty, and non-recourse terms. After year five, the rate resets on December 14, 2030 and December 15, 2035 to the 5-year U.S. Treasury Rate plus a 225 basis point margin. The minimum debt service coverage ratio requirement is 1.50x. Because principal is amortized, the Sponsor estimates scheduled principal payments will reduce the loan balance by roughly 15.1% over the first five years, contributing approximately 1.09% of additional investor equity annually through paydown.
The offering is sponsored by ERP 1031, LLC, a Delaware limited liability company headquartered in Midland, Texas, which describes itself as operating one of the largest and most important industrial real estate investment and operations platforms in the Permian Basin. The Sponsor is a vertically integrated team of approximately 16 experienced professionals with a history of working together and, per the Memorandum, hundreds of tenant relationships across the basin that it believes provide an information and scale advantage. The Sponsor drives value through its local operations team, focusing on growing net operating income, generating cash yields, and providing portfolio tenants a premier experience. Affiliates fill the key roles: ERP 1031 Industrial Portfolio IV ST, LLC serves as Signatory Trustee, an affiliated Master Tenant leases the Properties, and ERP-M II, LLC acts as Property Manager. American Alternative Capital, LLC is the managing broker-dealer, and Sorensen Entity Services, LLC serves as Delaware Trustee. Investors should note the Memorandum states past performance of ERP-sponsored programs provides no assurance of future results.
The purchase of a beneficial interest is likely treated as a direct interest in real estate under IRS Revenue Ruling 2004-86, allowing the investment to satisfy the replacement-property requirement of a tax-deferred Section 1031 exchange. The Trust Agreement is designed to meet the parameters of Revenue Ruling 2004-86. The Trust will offer investors a third-party cost segregation report on the Properties, which may accelerate depreciation deductions and potentially reduce an investor's taxable income during the hold. On a sale, the Trust intends to distribute 100% of net sale proceeds to investors, subject to a subordinated 3.0% disposition fee to the Sponsor that is payable only after investors receive a return of 100% of their capital contributions and all historical stated rent. Beyond a traditional sale, the Sponsor states it may provide alternative exit strategies, including potential UPREIT and UPREIT 721 exchange structures, although it gives no guarantee such a vehicle will be available. Investors should confirm all tax treatment with their own advisors.
Analysis of ERP 1031 Industrial Portfolio IV DST
Insights
Strip away the credit-tenant gloss and ERP 1031 Industrial Portfolio IV reads as a capital-preservation instrument dressed as an income play: a lightly levered, long-lease bet on the Permian Basin staying busy, built to return an exchanger's basis intact rather than compound it. The 5.25% distribution is flat across all ten years; it screens "Meets Average" on income against a 5.36% benchmark but "Below Average" on peak because it never grows. Coverage is genuine — a 1.45x Year-1 payout ratio funds the distribution from NOI, not a return of capital — and going-in leverage of just 26.5% LTV leaves real slack. But the load is heavy at 11.34%, so a real slice of equity must be clawed back through appreciation before an exchanger is whole. What the marketing buries: the portfolio throws off an 8.4% cap-rate-equivalent yield, yet investors are capped at 5.25%. That ~300-basis-point wedge, plus all rent growth, is retained by the affiliated Master Tenant — the "covered" 1.45x is largely the sponsor's own spread. The crux is the exit, not the coupon: with distributions flat and capped, nearly all upside beyond amortization must come from the terminal cap rate, harvested from a thin Permian buyer pool. Watch two stress points — the DNOW lease, ~23% of square footage, rolls in February 2028, inside the ~10-year hold, and the debt resets off the 5-year Treasury after year five, underwritten to 7.0%. The 13.1-year average lease term is real but flattering, and the sponsor brings Permian operating scale, not a disclosed full-cycle track record. Verdict: it suits a Permian-convicted exchanger placing equity into low-leverage, credit-anchored industrial with a genuinely covered coupon who prizes deferral over total return; anyone reaching for yield, wanting rent-growth participation, or unwilling to underwrite single-sector energy concentration, affiliate conflicts, a 2028 rollover, and no audited financials should pass.
Advantages
The offering provides accredited 1031 exchangers turnkey access to a 100%-leased, four-property single-tenant industrial portfolio in the Permian Basin without the burden of active management, structured as a DST to satisfy Revenue Ruling 2004-86. Distributions target 5.25% annually, paid monthly in arrears. The rent roll is anchored by nationally recognized, credit-oriented tenants, including ChampionX / Schlumberger (NYSE: SLB) and DNOW L.P. (NYSE: DNOW), alongside private operators backed by Argonaut Private Equity and BP Energy Partners, and the weighted-average remaining lease term is a long ~13.1 years. Leverage is conservative at roughly 29.5% of purchase price (25.2% of appraised value), and the $44,000,000 purchase price represents a stated 12.32% discount to the $51,640,000 average appraisal. The GECU Federal Credit Union loan is non-recourse, fixed at 5.90% for five years, carries no prepayment penalty, and amortizes over 20 years so scheduled principal paydown builds investor equity (an estimated ~15.1% balance reduction over five years). The triple-net lease structure shifts most operating expenses to tenants, land comprises ~94% of portfolio area (supporting future tenant growth and repositioning), and the assets carry specialized energy-industry infrastructure such as ~28 crane systems and reinforced concrete yards. Tax features include an offered third-party cost segregation report for accelerated depreciation and potential UPREIT / 721 exit optionality. The Sponsor is a vertically integrated Permian Basin operator with deep local tenant relationships, and all four properties sit in low-risk FEMA X flood zones with very low seismic hazard.
Concerns
An investment in the Interests is highly speculative, illiquid, and suitable only for investors who can bear the loss of their entire investment and have no need for liquidity. The Interests are not registered, cannot be freely transferred or resold, and there is no secondary market. As a DST governed by Revenue Ruling 2004-86, investors have no voting rights and no participation in management; the Signatory Trustee may sell, refinance, or dispose of the Properties without investor consent. The portfolio is undiversified and geographically and sector-concentrated: all four assets are in the Permian Basin and all tenants operate directly or indirectly in the cyclical oil and gas / energy sector, where commodity-price volatility could reduce tenant demand and rents. Each property depends on a single tenant, and near-term rollover exists — the DNOW lease (about 23% of square footage) expires February 28, 2028 — creating vacancy and re-leasing risk. The 5.25% distribution is fixed and paid via an affiliated, thinly capitalized Master Tenant funded solely by tenant rents; the Sponsor is under no obligation to contribute capital, and distributions may be supported by the $1,000,000 Trust Reserve rather than operations. The Master Tenant retains any excess of property rents over the stated rent, so investors do not share in rent growth. Leverage adds risk: the loan interest rate resets after year five (projections assume an increase to 7.00%), the 15-year balloon must be refinanced or the Properties sold, and a default could trigger a Springing LLC conversion or foreclosure with adverse tax consequences. Fees and load are substantial — selling commissions and offering expenses of up to 11.0% (estimated 10.73%), a 0.5% sponsor fee ($220,000), a 2.0% asset management fee, and a 3.0% disposition fee — and numerous conflicts of interest exist among the affiliated Seller, Sponsor, Master Tenant, and Property Manager. There are no audited financial statements, identified environmental conditions (RECs) exist at certain sites, and the Permian Basin has a limited pool of buyers, which may impair the ability to sell at acceptable prices.
ERP 1031 Industrial Portfolio IV DST — Complete Offering Data
Offering & Structure
Investment NameERP 1031 Industrial Portfolio IV DST
SponsorERP
StructureDelaware Statutory Trust (DST)
Offering Type506(c)
StatusUnder Review
Last Updated2026-07-13
Size & Availability
Total Offering$49,150,000
Equity$36,150,000
Debt$13,000,000
Available Equity$36,150,000 (100% of equity)
Minimum Investment$50,000
Total Load11.34%
Initial Reserves2.77%
Property
Property TypeIndustrial
StrategyCore-Plus
LocationTX
Market TierTier 3
Income & Projections
Average Yield5.25%
Projected Yields (Y1–Y10)Y1 5.25% · Y2 5.25% · Y3 5.25% · Y4 5.25% · Y5 5.25% · Y6 5.25% · Y7 5.25% · Y8 5.25% · Y9 5.25% · Y10 5.25%
Tax-Adjusted Yield12.09%
Cap Rate Equivalent8.39%
Year 1 NOI$3,516,143
Y1 Payout Ratio1.45
Financing
In-Place LTV26.45% LTV
LenderNot Disclosed
Loan TypeVariable
Interest Rate5.90% initial; 5-year resets
Loan Term15 years
I/O PeriodN/A
Amortization20 years
Y1 DSCRNot Disclosed
Exit
Estimated Hold Period10 years
721 Exchange ExitOptional
Benchmarks (vs sector median)
Avg. Income5.25% vs 5.33% market — Meets Average
Growth0.00% vs 15.09% market
Peak5.25% vs 5.80% 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.
