FSX Industrial 34, DST Overview
A two-property, single-tenant absolute-NNN industrial portfolio (995,781 SF total) acquired through a leveraged DST, diversified by geography and tenant. Property 1 is a 680,508 SF build-to-suit distribution hub at 380 Estill Baker Road, Hanson KY (54.8 acres, built 1998 / expanded 2009, up to 70-foot clear heights, 48 dock doors), serving as Carhartt's primary national SKU facility, into which Carhartt has invested over $70 million in robotics, racking, and conveyor automation plus $1 million-plus of annual capex since 2015; the lease has 11.8 years remaining, 2.50% annual escalations, and eight 5-year renewal options. Property 2 is a 315,273 SF warehouse/manufacturing/office facility at 1730 East Main Street, Duncan SC (30.3 acres, built 1980 / expanded 2011, 29-31-foot clear heights), leased to Eaton Corporation (NYSE: ETN) for its Electrical segment and occupied since 1984, in the institutional Greenville-Spartanburg market (Spartanburg West submarket, 2.6% vacancy, inland-port and I-85 access); the lease has 11.9 years remaining, 2.00% escalations, and five 5-year options. The portfolio carries an 11-plus-year WALT and was acquired for $86,400,000 (First Year property-level NOI of $5,447,009), capitalized with $50,200,000 equity and a $47,520,000 Old National Bank first mortgage (7-year term, SOFR+1.95% swapped to a fixed 5.495%, interest-only for 48 months then 30-year amortization, nonrecourse). Distributions are monthly, beginning at a 5.05% annualized cash-on-cash yield. Both tenants' credit is rated 'good' by Alliance Research; Eaton is an investment-grade public company and Carhartt is a privately held, century-old workwear manufacturer. Sponsored by Four Springs TEN31 Xchange (founded 2014); securities offered through Third Seven Capital, LLC and distributed by Four Springs Capital Markets.
Highlights
The portfolio's credit profile is a barbell of one transparent, investment-grade public credit and one strong but opaque private credit. Eaton Corporation (NYSE: ETN) is a globally diversified, century-old power-management company serving customers in over 170 countries, providing rated, publicly reported counterparty strength on the Duncan SC asset. Carhartt is a privately held, 135-year-old workwear manufacturer whose creditworthiness rests on a sponsor-commissioned Alliance Research review rated 'good' rather than a public agency rating, so the larger of the two assets by footprint carries materially less credit transparency, and both leases are with the operating tenants.
Both assets are demonstrably mission-critical to their tenants, which raises renewal probability and switching costs well above a generic warehouse. The Hanson KY facility is Carhartt's primary national SKU distribution hub, into which the tenant has sunk over $70 million of fixed automation (robotics, racking, conveyor) plus more than $1 million of annual capital since 2015, embedding the operation in the building. Eaton has occupied Duncan SC continuously since 1984 and funded a roughly $5 million, 127,000 SF expansion, reflecting four decades of operational entrenchment.
The lease economics are durable and long-dated: absolute-NNN structure with minimal landlord responsibility, an 11-plus-year weighted-average remaining term (11.8 and 11.9 years), contractual escalators, and unusually deep renewal optionality (eight 5-year options at Carhartt extending up to 40 years, five 5-year options at Eaton extending up to 25 years). The qualifier is that the 2.00% to 2.50% escalators sit at or below long-run inflation expectations, so real income growth is limited and the blended roughly 2.35% step-up modestly lags a higher-for-longer cost environment.
Submarket quality is asymmetric across the two assets. The Eaton property sits in the Greenville-Spartanburg industrial market's largest submarket (Spartanburg West), a top-tier institutional logistics corridor with a record-low 2.6% vacancy rate, 5.1% availability, inland-port access at Greer, and I-85 frontage, supporting strong re-leasing economics. The Carhartt property, while logistically well-connected (I-69, CSX rail interchange, Ohio River ports, central to Carhartt's Kentucky manufacturing cluster), is in a rural, tertiary Western Kentucky location where alternative-tenant demand is thin if the incumbent ever vacates.
The financing structure generates positive leverage and, atypically for the ledger, builds principal equity. The $47.52 million Old National Bank loan is swapped to a fixed 5.495% against the in-place yield at 48.63% loan-to-capitalization, and amortizes on a 30-year schedule beginning in year 5, so investors accrete modest equity through the back half of the hold rather than facing a full interest-only balloon. The offset is that the interest-rate swap introduces breakage and termination cost if the assets are sold or the loan is prepaid, and scheduled amortization lifts annual debt service from roughly $2.65 million to about $3.27 million in years 5 through 7, compressing coverage.
Analysis of FSX Industrial 34, DST
Insights
FSX Industrial 34 is best read as a moderately levered bond-proxy for credit-tenant industrial income: the return is contractual rent amplified by fixed-rate debt, not a bet on rent growth or cap-rate compression. A 5.495% swapped loan at 48.63% loan-to-capitalization sits below the in-place yield, lifting cash-on-cash from 5.05% to 5.25% (about 5.11% average) over the 7-year hold on a healthy 2.06x Year-1 coverage, early distributions covered by property NOI, not reserves. On relative value the yield is fair-not-generous: average income only meets the net-lease benchmark, while peak yield and income growth both screen below the category average, and the 2.00%-2.50% escalators let real income erode if inflation runs hot. On fees, the headline load is a market-standard 9.69% of equity, roughly two years of distributions, but the 3.00%-of-price acquisition fee and finance fee lift total upfront sponsor economics to about 15% of equity, the real friction an investor pays for institutional credit and a sponsor with a genuine net-lease record (Four Springs, 24 full-cycle deals, ~7% avg annual return). Unlike the ledger's other levered net-lease entries (BREX, ExchangeRight 75), this loan amortizes from year 5, quietly building equity into the exit, though the step-up lifts debt service to ~$3.27M, compressing back-half coverage, and the swap carries breakage cost on early sale. The outcome hinges less on in-place income, highly feasible, than on concentration: unrated Carhartt is ~68% of the footprint in a rural Western Kentucky box with thin backfill demand, and both leases roll within a year of each other just past the exit, leaving a year-7 buyer ~5 years of term. We would watch the exit cap rate and refinancing window at the 7-year balloon; the optional Section 721 conversion is upside, not underwriting. It fits a 1031 exchanger wanting durable, moderately levered credit-tenant income and principal build, able to absorb two-tenant concentration and front-loaded sponsor fees for tax deferral; it is a poor fit for anyone needing inflation-beating growth, light fees, broad diversification, or a guaranteed UPREIT exit.
Advantages
The offering pairs two mission-critical, absolute-NNN industrial distribution assets with an 11-plus-year WALT, contractual escalators, and minimal landlord obligation, diversified across two states, two tenants, and two end-industries (apparel logistics and electrical-equipment distribution). Eaton supplies a rated, investment-grade public credit, and both tenants exhibit deep physical and operational commitment to their facilities through substantial tenant-funded capital investment and multi-decade occupancy. The Eaton asset occupies one of the strongest institutional industrial submarkets in the Southeast, and the broader sector benefits from secular e-commerce and supply-chain demand for distribution space. The capital structure uses moderate, fixed-rate (swapped) leverage at 48.63% loan-to-capitalization that produces positive leverage over the in-place yield, supports a healthy 2.06x Year 1 coverage, amortizes to build equity from year 5, and underpins monthly distributions rising from 5.05% to 5.25% over the hold, with reserves funded at closing.
Concerns
The portfolio is a two-asset, two-tenant pool, so any single vacancy is binary to cash flow, and Carhartt alone represents roughly 68% of square footage, concentrating exposure in the privately held, unrated tenant and its specialized, rural Hanson KY facility where re-leasing or repurposing demand is thin despite the asset's mission-criticality. The two leases expire within roughly one year of each other (approximately years 12 and 12), clustering rollover risk into a narrow window that a buyer at the projected year-7 exit will underwrite with only about five years of residual term remaining. The Eaton building is 1980-vintage with 29-31-foot clear heights, below modern bulk-distribution standards (36-foot-plus), limiting its functional competitiveness for alternative logistics users, and it mixes warehouse, manufacturing, and office space that is more tenant-specific. The financing carries a 7-year balloon and refinancing wall, swap breakage cost on early disposition, and an amortization step-up that raises debt service to roughly $3.27 million in years 5 through 7, causing distributable cash to dip (Year 5 distributable cash of about $2.57 million versus $2.94 million in Year 4) such that distributions are sustained partly through reserve management. Escalators of 2.00% to 2.50% may lag inflation, and while the headline load is a market-standard 9.69% of equity (selling commissions and offering expenses), the sponsor also earns a 3.00%-of-purchase-price acquisition fee (about 5.16% of equity) and a 0.47% finance fee, lifting total upfront sponsor economics to roughly 15% of equity before a disposition fee at exit, against modest reserves of $864,000.
FSX Industrial 34, DST — Complete Offering Data
Offering & Structure
Investment NameFSX Industrial 34, DST
SponsorFour Springs Capital
StructureDelaware Statutory Trust (DST)
Offering Type506(c)
StatusClosed
Last Updated2026-08-05
Size & Availability
Total Offering$97,720,000
Equity$50,200,000
Debt$47,520,000
Available Equity$0 (0% of equity)
Minimum Investment$100,000
Total Load9.69%
Property
Property TypeIndustrial
StrategyCore
LocationKY, SC
Market TierTier 3
Income & Projections
Average Yield5.11%
Projected Yields (Y1–Y10)Y1 5.05% · Y2 5.05% · Y3 5.05% · Y4 5.10% · Y5 5.10% · Y6 5.15% · Y7 5.25%
Tax-Adjusted Yield8.54%
Cap Rate Equivalent8.73%
Financing
In-Place LTV48.63% LTV
LenderOld National Bank
Loan TypeFixed
Interest Rate5.50% (Fixed via swap)
Loan Term7 years
I/O Period4 years
Amortization30 years
Y1 DSCR2.06x
Exit
Estimated Hold Period7 years
721 Exchange ExitOptional
Benchmarks (vs sector median)
Avg. Income5.11% vs 5.33% market — Meets Average
Growth3.96% vs 15.09% market — Below Average
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.
