Fortress FREX DB Series I DST Overview
Domain at Town Centre is a 2012-vintage, stabilized 336-unit / 912-bed purpose-built student housing community at 5000 Domain Drive, Morgantown, WV 26501, serving West Virginia University (WVU) approximately one mile from campus and adjacent to a main retail center, with a free private campus shuttle. The asset spans 14 residential buildings, a clubhouse, and 976 parking spaces; the bed-to-bath-parity unit mix runs across 1x1 ($1,558/bed), 2x2 ($875), 3x3 ($763), and 4x4 ($650) plans, with 4x4 product representing ~53% of beds. The Trust acquired the Property for a $65,100,000 real estate price ($68,484,744 total acquisition cost) and capitalized the transaction at $75,983,939, comprising $40,178,939 of Class 1 equity and a $35,805,000 Wells Fargo Bank, N.A. first mortgage (47.12% loan-to-cost; 6.098% fixed; full-term interest-only; maturing March 11, 2036), supported by a CBRE as-is appraisal. The Property is net-leased to an affiliated Master Tenant (FREX DB LeaseCo Series I LLC) under a 10-year master lease backed by a $1,500,000 demand note from FREX DST Holdings LLC, paying Base Rent (debt service plus taxes and insurance), capped Additional Rent, and performance-based Supplemental Rent. Year 1 NOI is $4,438,106; the operating thesis is completion of lease-up (93% occupied for 2025/26, 73% pre-leased for 2026/27), cure of limited deferred maintenance, and capture of Morgantown rent growth in a supply-constrained submarket. Sponsored by Fortress Investment Group; securities offered through Orchard Securities, LLC.
Highlights
The Morgantown student-housing submarket exhibits unusually durable barriers to entry: only 534 beds have been delivered over the past decade, none since 2016, with nothing under construction or in the pipeline, as large-scale developers have avoided the market on relatively low achievable rents and limited buildable sites. Against WVU enrollment of roughly 23,600, approximately 5,249 on-campus beds and ~6,700 off-campus beds imply a structural shortfall near 11,700 students (a ~57% capture rate), and the market reached 96% occupancy for 2025/26, its highest in ten years, supporting pricing power and re-leasing economics at a 2012-vintage asset that is among the newer, higher-quality products in the trade area.
Demand is anchored to a single, growing flagship university operating under a state mandate to expand enrollment. WVU's Governor publicly tasked the university with dramatic enrollment growth, and a newly hired enrollment leader previously grew another institution's enrollment 43% (25,000 to 40,000) between 2017 and 2025; Fall 2025 freshman enrollment rose 7.2% year-over-year and freshman retention reached a record above 85%. These dynamics underpin the underwriting's lease-up and rent-growth assumptions, but the asset's demand profile is concentrated in the enrollment trajectory of one institution in a single submarket.
Financing is a $35,805,000 Wells Fargo Bank, N.A. first mortgage fixed at 6.098% and interest-only for the full 10-year term to a March 11, 2036 maturity at 47.12% loan-to-cost. The fixed coupon removes floating-rate and cap-renewal exposure and the interest-only structure (annual debt service ~$2,213,714) maximizes current distributable cash, producing healthy Year 1 NOI-to-debt-service coverage of approximately 2.00x. The structural offset is that no principal amortizes, leaving the entire balance to balloon at maturity, and the 6.098% coupon is relatively high, reflecting 2026 origination.
In-place rents are positioned below the local competitive set, with the most comparable properties reportedly 100% occupied and charging 4x4 rents (~53% of Domain's beds) roughly 16% above the Trust's underwriting, framing embedded mark-to-market upside. The submarket has produced a 3.4% historical rent compound annual growth rate and is tracking to ~5.6% effective rent growth for Fall 2026, and the forecast carries Year 1 NOI of $4,438,106 to $6,000,358 by Year 10 (~35% cumulative growth), driving projected cash-on-cash from 5.00% to 7.69%.
The Sponsor, Fortress Investment Group, is a diversified global manager with 20-plus years of history, approximately $53 billion of AUM, and over $29 billion invested in global real estate, including more than $1.0 billion of common equity across its targeted DST asset classes (multifamily, student housing, senior housing) spanning 122 investments and $3.4 billion of total capitalization. Its global real estate platform is led by former Wells Fargo CEO Tim Sloan, lending institutional depth to a property that has been institutionally owned for nearly a decade and is expected to require minimal near-term capital expenditure.
Analysis of Fortress FREX DB Series I DST
Insights
Fortress FREX DB Series I is a rent-growth bet dressed as a stabilized income DST: a Core-Plus student-housing deal whose return comes from lease-up and mark-to-market, not leverage. Income is only average: the Year 1 5.00% cash-on-cash barely clears the 5.12% market benchmark, and the 6.24% average arrives only via a back-loaded 7.69% by Year 10. The Year 1 payout, at least, is real: $4.44M of NOI covers the ~$2.21M interest-only debt service and funds the distribution from operations, not return of capital, and the deal screens Above Average on income, peak, and growth. But the load is where the story goes quiet: 12.93% is heavy, well past the 9% we call expensive, and against 6.098% fixed debt the ~6.8% going-in spread is essentially flat, so you pay up for market-rate yield and bet on rents. The outcome hinges on leasing velocity at the subject, not the market: the plan needs ~5.6% Fall 2026 rent growth and the ~16% mark-to-market on the 4x4 plans (~53% of beds), yet the property is only 73% pre-leased for 2026/27 against a 96% market. What the deck buries is how the cushion thins as the plan demands more: investor distributions ride on capped Additional Rent and Supplemental Rent that starts only in Year 2, run through a lightly capitalized master tenant on a $1.5M note, while the lender reserve is modeled to bleed from ~$2.0M to ~$68.6K by Year 10. Fortress is a ~$53B-AUM balance-sheet manager, so you underwrite the asset and structure more than a realized full-cycle DST record. The interest-only $35.8M balloons at March 2036, with only an optional Section 721 off-ramp. Own it if you want supply-constrained student housing (no new Morgantown beds since 2016), can hold to 2036, and value covered current income over headline yield; pass if you need income from Day 1, distrust thin master-tenant waterfalls and a 12.93% load, or cannot stomach single-university concentration and balloon refinance risk.
Advantages
On a micro level, the offering pairs a 2012-vintage, institutionally maintained student-housing asset with a structurally supply-constrained Morgantown submarket (no new beds delivered since 2016 and none in the pipeline) against a ~57% capture rate of WVU's off-campus demand and a market that reached a ten-year-high 96% occupancy for 2025/26. Demand is reinforced by a state-backed enrollment-growth mandate, 7.2% freshman growth, and record retention above 85%, while in-place rents sit roughly 16% below the most comparable 4x4 product, framing mark-to-market upside that supports a forecast NOI ramp of ~35% and a cash-on-cash schedule rising from 5.00% to 7.69% (6.24% average). The capital structure is rate-insulated: a 47.12% loan-to-cost Wells Fargo first mortgage fixed at 6.098% and fully interest-only, generating a healthy ~2.00x Year 1 coverage, with meaningful funded reserves including a ~$2.0M lender reserve account, a growing Trust Reserve, and an $832,800 DST working-capital reserve. Macro support includes a diversified, institutionally resourced sponsor in Fortress and an optional Section 721/FMV exit alongside a cash election.
Concerns
Asset-specific vulnerabilities concentrate in single-university demand, the income waterfall, and the loan maturity. All cash flow ultimately depends on one institution's enrollment trajectory in a tertiary, less-liquid Morgantown market, so any reversal of WVU's enrollment-growth mandate, a soft leasing season (the asset is only 73% pre-leased for 2026/27 with lease-up still required), or rent-growth underperformance versus the ~5.6% Fall 2026 assumption would directly compress distributions. The distribution ramp is only partly contractual: Base Rent covers debt service, taxes, and insurance, while investor distributions rely on capped Additional Rent and performance-based Supplemental Rent that does not begin until Year 2, routed through a thinly capitalized affiliated Master Tenant funded by a $1,500,000 demand note. The loan is interest-only with no amortization, so the full $35,805,000 balloons at the March 2036 maturity into an unknown rate environment, the 6.098% fixed coupon is relatively high, and the lender reserve account is modeled to draw down from ~$2,003,906 to ~$68,572 by Year 10, leaving limited cushion for unbudgeted capital. The Property also carries an identified radon condition (a funded $50,150 Radon Reserve and recommended mitigation), student housing is operationally intensive with full annual turnover, and the 2012 vintage has a limited set of deferred-maintenance items to cure.
Fortress FREX DB Series I DST — Complete Offering Data
Offering & Structure
Investment NameFortress FREX DB Series I DST
SponsorFortress Investment Group
StructureDelaware Statutory Trust (DST)
StatusUnder Review
Last Updated2026-08-10
Size & Availability
Total Offering$75,983,939
Equity$40,178,939
Debt$35,805,000
Available Equity$24,762,551 (61.6% of equity)
Minimum Investment$100,000
Total Load12.93%
Initial Reserves3.03%
Property
Property TypeStudent Housing
StrategyCore-Plus
LocationWV
Market TierTier 3
Income & Projections
Average Yield6.24%
Projected Yields (Y1–Y10)Y1 5.00% · Y2 5.48% · Y3 5.76% · Y4 5.49% · Y5 5.85% · Y6 6.20% · Y7 6.58% · Y8 6.96% · Y9 7.35% · Y10 7.69%
Tax-Adjusted Yield8.10%
Cap Rate Equivalent8.67%
Financing
In-Place LTV47.12% LTV
LenderWells Fargo Bank, N.A.
Loan TypeFixed
Interest Rate6.098% (Fixed)
Loan Term10 years
I/O Period10 years
AmortizationN/A (interest-only)
Y1 DSCR2.00x
Exit
Estimated Hold Period2 Years
721 Exchange ExitMandatory
Benchmarks (vs sector median)
Avg. Income6.24% vs 5.12% market — Above Average
Growth53.80% vs 23.72% market — Above Average
Peak7.69% vs 5.79% 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.
