Moody Med Center 2 DST Overview
Moody Med Center 2 DST is a Delaware statutory trust (formed June 3, 2025) offering up to 41,905 Class A beneficial interests at $1,000 per interest, for a maximum equity raise of $41,905,000. The Trust owns a single asset: the 182-room Residence Inn by Marriott Houston Medical Center, a 16-story, interior-corridor, select-service hotel at 7807 Kirby Drive, Houston, Texas, situated on approximately 1.417 acres and featuring a breakfast area, bar, business center, 4,028 square feet of meeting space, fitness center, indoor pool, guest laundry, and a 182-space parking garage. The Trust acquired the property for $33,000,000 on an all-cash, unleveraged basis — there is no mortgage debt — which the sponsor emphasizes gives the Trust flexibility to sell at what it views as the peak of the market rather than on a loan's maturity schedule. The hotel sits in the Medical Center/NRG Stadium submarket, directly serving the Texas Medical Center (TMC), described by the offering as the world's largest medical center, with more than 60 institutions, over 10 million patient visits annually, and more than 120,000 employees, including MD Anderson Cancer Center and Texas Children's Hospital. The property is leased to an affiliated master tenant (Moody National) under a master lease, with the Trust receiving base rent plus percentage rent tied to hotel revenue; the sponsor's projections target an approximate 6% annualized return on equity to holders in the early lease years over an anticipated 10-year hold. The offering is made under Rule 506(c) of Regulation D and is available only to accredited investors, with a 25-interest ($25,000) minimum for cash buyers and a 100-interest ($100,000) minimum for 1031 exchangers. It is designed for accredited 1031-exchange investors seeking passive, hotel-sector real estate with the tax-deferral benefits of a DST structure and a defined, sponsor-controlled exit path.
Highlights
The property's core strength is its location in Houston's Medical Center/NRG Stadium submarket, immediately serving the Texas Medical Center (TMC). Per the appraisal cited in the PPM, TMC is the world's largest medical center — more than 60 institutions spanning hospitals, research facilities, and medical schools, receiving over 10 million patient visits annually and employing more than 120,000 people, anchored by MD Anderson Cancer Center and Texas Children's Hospital. Demand comes from patients, families, traveling medical staff, and researchers, with the property manager citing established key accounts such as Veterans Affairs, MD Anderson, CLC Lodging, and Joe's House. The PPM also highlights TMC3 – Helix Park, a multi-institutional life-sciences and biotechnology campus projected to create roughly 26,000 jobs and generate approximately $5.4 billion in economic benefit, plus proximity to NRG Stadium and its year-round sports and entertainment events — a diversified, largely need-based demand base for lodging.
The asset is the 182-room Residence Inn by Marriott Houston Medical Center, a 16-story, interior-corridor, extended-stay/select-service hotel on approximately 1.417 acres at 7807 Kirby Drive. Amenities include a breakfast area, bar, business center, 4,028 square feet of meeting space, fitness center, indoor pool, guest laundry, and a 182-space parking garage (including 8 accessible spaces). As a Residence Inn, the hotel carries an established, extended-stay Marriott flag well suited to the lengthy stays typical of medical patients and their families. The Trust has budgeted an approximately $3,200,000 Property Improvement Plan (about $17,582 per guest room) — a franchisor-required renovation to repair and refresh guest rooms and baths, the lobby, meeting space, common areas, breakfast and bar area, fitness center, pool, and laundry, as well as the building exterior — funded from established reserves rather than from operating cash flow, positioning the hotel to compete as a refreshed product.
The offering's capital structure is conservative in one key respect: the Trust acquired the hotel for $33,000,000 entirely with cash and carries no mortgage debt. With zero leverage and a 0% loan-to-value, there is no balloon maturity, no refinancing risk, and no lender able to force a sale — the sponsor frames this as freedom to time a disposition to market conditions rather than a loan's schedule. The full $41,905,000 maximum raise is equity. Of the proceeds, approximately 78.75% is applied toward the real estate, with the balance covering selling commissions (6.0%, or $2,514,300), a marketing and due-diligence allowance (~1.0%), organization and offering expenses, an acquisition fee, and a substantial operating reserve of $3,620,782 (about 8.64% of the raise). The reserve is intended to fund the PIP and to support distributions and Trust obligations. The absence of debt removes a major source of risk common to leveraged DSTs, though it also means returns rely on operating performance rather than financial leverage.
The offering is sponsored by Moody National, a vertically integrated Houston-based real estate firm led by Chairman and CEO Brett C. Moody, with affiliated entities serving as depositor, trust manager, master tenant, property manager (Moody National Management, L.P.), and managing broker-dealer (Moody Securities, LLC). The PPM references decades of Moody National activity across acquisitions, development, management, and mortgage finance, and cites prior DST outcomes including the sale of the 285-unit Bardin Greene apartments on March 31, 2023 for $51 million (originally acquired for $30.7 million), which — combined with a companion DFW asset — the sponsor characterizes as more than a 200% return to DST investors exclusive of distributions, as well as the 580-unit Village at Bellaire in Houston. Notably, the sponsor discloses that while certain principals have hotel experience, the specific Trust Manager entity is newly formed, has no experience operating hotels or managing a DST, and has limited capital — a candid limitation to weigh alongside the broader Moody National track record.
Structured as a Delaware statutory trust, the offering is intended to let accredited investors acquire replacement property in a Section 1031 exchange, deferring capital gains tax while owning a fractional beneficial interest in institutional-quality real estate on a fully passive basis. A 100-interest ($100,000) minimum applies to 1031 exchangers, and cash investors may participate at a 25-interest ($25,000) minimum. For the eventual exit, the PPM provides a Fair Market Value (FMV) Option: beginning two years after the Offering Termination Date, the Trust Manager has the right (but not the obligation) to acquire the interests for either cash or units in an affiliated “Exchange Entity” — a Section 721 / UPREIT-style structure that can offer continued tax deferral to holders who elect and qualify for units, while others receive cash. On a sale of the property, the Trust is also designed to allow holders to pursue a subsequent 1031 exchange. Because the property is owned free and clear, 1031 exchangers needing to replace debt would have to address any debt-replacement requirement outside the Trust.
Analysis of Moody Med Center 2 DST
Insights
Read this as a yield instrument backed by a single Houston hotel, not a real-estate growth play — an all-cash trust that swaps the refinancing risk built into leveraged DSTs for the operating volatility of lodging, the most cyclical corner of the market. On relative value the coupon is rich for a DST: a 6.0% Year-1 distribution rising to a 6.4% average and 6.8% by Year 10, against a hospitality benchmark near 3.2% — Above Average on income and peak returns, with growth only Meeting the sector. You pay for it twice: a heavy 9.04% load, just 78.75% of equity reaching the building, and an entry basis of $38,284,218 above both the $33,000,000 price and $35,200,000 as-is appraisal. The Year-1 payout isn't fully earned — at 0.97x it runs just ahead of property NOI, so a sliver is return of capital until income catches up. The crux is whether the hotel out-earns a rising rent hurdle through a disruptive ~$3,200,000 renovation: income runs through a master lease to an affiliated Moody tenant on a $500,000 demand note, percentage rent owed only above an escalating baseline, a $3,620,782 reserve cushions the gap but the payout hangs on that thin tenant paying. Watch RevPAR through the PIP and the sponsor's shallow record — two full-cycle deals at a 14.56% average annual return and 2.0x over ~4.6-year holds, run by a newly formed, hotel-inexperienced Trust Manager. What the marketing buries: the asset throws off an 8.62% cap-rate-equivalent yet investors collect 6% — the ~260-basis-point gap is the load and marked-up basis of packaging a $33M hotel into a $41.9M raise. All-cash also leaves no debt to replace — a trap for exchangers unwinding a mortgage. Own it for conviction in Texas Medical Center lodging, a ten-year horizon, and tolerance for hotel risk and affiliate-run roles; pass if you need debt replacement, income certainty, diversification, or a light load.
Advantages
Advantages specific to this offering include, first, an all-cash, unleveraged capital structure: with $33,000,000 paid in cash and no mortgage, there is no loan maturity, no refinancing exposure, and no lender that can force an untimely sale — the sponsor can seek to sell when it judges the market favorable. Second, a genuinely need-based location: the hotel directly serves the Texas Medical Center, the world's largest medical complex (60+ institutions, 10M+ annual patient visits, 120,000+ employees), producing durable, less discretionary lodging demand from patients, families, and medical personnel, reinforced by established key accounts (Veterans Affairs, MD Anderson, CLC Lodging, Joe's House) and the growing TMC3 – Helix Park life-sciences campus. Third, a well-recognized Marriott extended-stay flag (Residence Inn) aligned with the long stays common to medical travel, plus a fully funded ~$3,200,000 franchisor-required renovation financed from reserves rather than operations. Fourth, a substantial $3,620,782 operating reserve (about 8.64% of the raise) to cushion the PIP, Trust obligations, and distributions. Fifth, a vertically integrated, Houston-based sponsor (Moody National) that manages the asset, acts as master tenant, and cites prior DST sales such as Bardin Greene at a stated 200%+ investor return. Sixth, meaningful tax utility: a DST built for 1031 deferral, a projected ~6% initial return on equity, and a sponsor-provided FMV/721 option offering a potential path to continued deferral at exit. Together these features suit an accredited 1031 investor prioritizing passive ownership, no leverage risk, and specialized medical-district demand.
Concerns
The risks are real and disclosed at length. The Trust is newly formed with no operating history, and — critically — the Trust Manager itself is newly formed with no experience operating hotels or managing a DST and has limited capital, even though certain principals have hotel experience. The investment is a single hotel plus reserves, so it is entirely undiversified; performance depends on one asset in one submarket. Hotels are the most operationally intensive, economically sensitive real estate: the PPM stresses the lodging industry's cyclical and seasonal nature and its exposure to recessions, reduced travel, and discretionary-spending declines, all of which can compress RevPAR and revenue. Distributions flow through a master lease with an affiliated Master Tenant that is newly formed and thinly capitalized (a $500,000 demand promissory note), so the Trust's income depends on that tenant's ability to pay rent, and percentage rent depends on hotel revenue exceeding an escalating baseline. The offering carries a heavy load: only about 78.75% of proceeds go to real estate, with ~6% selling commissions plus marketing, organization, offering, and acquisition fees — and holders effectively buy at an assumed project value of $38,284,218, above both the $33,000,000 acquisition price and the $35,200,000 “as is” appraised value. Interests are illiquid, with no public market and transfer restrictions; investors must be prepared to hold indefinitely. As a DST, the Trust is deliberately inflexible (it cannot renegotiate the lease, refinance, raise new capital, or reinvest sale proceeds), and a “Springing LLC” conversion could cause holders to lose their 1031 eligibility. The structure carries pervasive affiliate conflicts (depositor, trust manager, master tenant, property manager, and broker-dealer are all Moody entities), and the property was acquired from an affiliated seller. A Marriott franchise dependency adds relicensing, PIP, and consent risk, and tax treatment relies on counsel's opinion without an IRS ruling.
Moody Med Center 2 DST — Complete Offering Data
Offering & Structure
Investment NameMoody Med Center 2 DST
SponsorMoody National
StructureDelaware Statutory Trust (DST)
Offering Type506(c)
StatusClosed
Last Updated2026-08-03
Size & Availability
Total Offering$41,905,000
Equity$41,905,000
DebtAll-Cash
Available Equity$0 (0% of equity)
Minimum Investment$100,000
Total Load9.04%
Initial Reserves8.64%
Property
Property TypeHospitality
StrategyCore-Plus
LocationTX
Market TierTier 1
Income & Projections
Average Yield6.40%
Projected Yields (Y1–Y10)Y1 6.00% · Y2 6.09% · Y3 6.18% · Y4 6.27% · Y5 6.36% · Y6 6.44% · Y7 6.53% · Y8 6.62% · Y9 6.71% · Y10 6.80%
Tax-Adjusted Yield12.84%
Cap Rate Equivalent8.62%
Year 1 NOI$2,440,208
Y1 Payout Ratio0.97
Financing
In-Place LTV0.00% LTV
LenderNone (debt-free)
Interest RateN/A (no debt)
Loan TermN/A (no debt)
I/O PeriodN/A (no debt)
AmortizationN/A (no debt)
Y1 DSCRN/A - no debt service
Exit
Estimated Hold Period10 years
721 Exchange ExitOptional
Benchmarks (vs sector median)
Avg. Income6.40% vs 4.52% market — Above Average
Growth13.33% vs 17.70% market — Below Average
Peak6.80% vs 4.83% 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.
