NexPoint Waterford DST Overview
NexPoint Waterford DST is a Regulation D private placement offering Class 1 beneficial interests in a Delaware statutory trust that owns Waterford Place, a 240-unit, garden-style multifamily apartment community located at 101 Shore Lake Drive in Greensboro, North Carolina. The Trust closed on its acquisition of the property on January 16, 2026 for a purchase price of $49,500,000, a figure below the $51,000,000 “as-is” value concluded in the CBRE appraisal. Developed in 1997, the community spans 20.64 acres and comprises 20 residential buildings totaling approximately 277,296 rentable square feet across a mix of one-, two-, and three-bedroom homes averaging 1,155 square feet. As of March 9, 2026, the property was 90.0% leased. The offering seeks to raise a maximum of $31,360,817 of equity representing 100% of the beneficial ownership of the Trust, with a minimum purchase of a 0.319% interest ($100,000 of equity plus $94,704 of allocated debt). The Trust financed the acquisition with a $29,700,000 Freddie Mac loan carrying a 10-year term, full-term interest-only payments, and a fixed 4.86% interest rate, producing a fully-loaded loan-to-capitalization ratio of 48.6% and total capitalization of roughly $61.1 million. Consistent with the DST structure, the property is operated under a master lease by an affiliated master tenant, with day-to-day property management provided by BH Management. Investors hold passive beneficial interests with no voting rights or control over operations or disposition. The sponsor is NexPoint, a Dallas-based alternative investment platform with approximately $15.97 billion of fee-earning assets under management as of December 31, 2025 and a family of affiliated public and private real estate vehicles, including the publicly traded REIT NXDT. The offering is designed primarily for accredited investors completing a Section 1031 exchange who are seeking to defer capital gains, obtain passive fractional ownership of institutional multifamily real estate in a growing Sunbelt market, and potentially access a future Section 721 “UPREIT” exit through the Trust’s Exchange Right with NXDT.
Highlights
Waterford Place sits in the North Greensboro submarket of the Greensboro MSA, part of North Carolina’s Piedmont Triad, a region the PPM describes as benefiting from steady in-migration, a diversified economy, and a competitive cost of living, with population growth of roughly 0.7% annually since 2010. The market is anchored by interstates 40 and 85 and Piedmont Triad International Airport, a logistics and aerospace hub. Per the memorandum, the MSA added about 4,500 non-farm jobs over the trailing year (1.2% growth), led by education and health services (+2.8%) and transportation and warehousing (+2.3%), with unemployment near 4.5%. Transformational corporate investment underpins the outlook: JetZero selected the airport for a $4.7 billion manufacturing site expected to add over 14,500 jobs at an average wage of $89,340, Boom Supersonic announced a $500 million facility, and Toyota’s nearby battery plant in Liberty represents over $20 billion of investment and 5,100-plus jobs. The North Greensboro submarket has seen less new supply than the broader metro, driving asking rents up 4.68% year over year against a stabilized vacancy of about 5.3% and a median household income above $76,900.
The property is an institutional-quality, garden-style community developed in 1997 on 20.64 acres, comprising 20 residential buildings and 240 apartment homes totaling approximately 277,296 rentable square feet. The unit mix is well balanced and family-friendly: 72 one-bedroom/one-bath units averaging 900 square feet, 120 two-bedroom/two-bath units averaging 1,180 square feet, and 48 three-bedroom/two-bath units averaging 1,477 square feet, for an overall average of 1,155 square feet—larger than much of the newly delivered product in the market. Parking is ample at 425 spaces, including 405 open lot spaces and 20 garages. Community amenities include a leasing office/clubhouse with a fitness center, business center and package room, a freshwater swimming pool, a car wash station, a playground, a tennis court, a dog park, and picnic areas, while unit interiors feature wood-plank flooring, designer cabinetry, granite or Formica countertops, and spacious soaking tubs. The property was 90.0% leased as of March 9, 2026, and day-to-day operations are handled by BH Management, a national multifamily operator founded in 1993 that manages roughly 85,000 units.
The Trust capitalized the acquisition with a single $29,700,000 first-mortgage loan originated under the Freddie Mac multifamily program. The loan carries a 10-year term, full-term interest-only payments for the entire term, and an attractive fixed interest rate of 4.86% per annum, locking in financing cost and eliminating amortization drag on cash flow during the hold. On a fully-loaded basis the loan-to-capitalization ratio is 48.6%, a conservative level of leverage relative to the $49,500,000 purchase price and $51,000,000 appraised value, and total capitalization is approximately $61.1 million against $31,360,817 of offering equity. Critically for a passive investor, the loan is non-recourse to the Trust apart from standard “bad-boy” carve-outs, and purchasers are not required to sign personal guaranties or an environmental indemnity, so a beneficial owner’s exposure is limited to invested capital. The financing structure is supported by lender-required reserves, including an initial $461,112 replacement reserve funded at roughly $384 per unit per year, a $336,464 imposition reserve, and a $4,552,427 supplemental trust reserve, providing a cushion for capital needs and operating shortfalls.
The offering is sponsored by NexPoint, a Dallas-based alternative investment manager that, together with its affiliates, held approximately $15.97 billion of fee-earning assets under management as of December 31, 2025 and has completed more than $21.9 billion of gross real estate transactions. NexPoint operates a broad, vertically integrated platform spanning publicly traded and private REITs, closed-end and interval funds, and a business development company, including affiliates such as NexPoint Diversified Real Estate Trust (NXDT), NexPoint Residential Trust (NXRT), and NexPoint Real Estate Finance (NREF). The Trust will be managed by NexPoint Waterford Parent Manager, LLC, a sponsor affiliate that also serves as Signatory Trustee, with senior members of the sponsor’s management team directing the Trust. The memorandum highlights a deep multifamily acquisitions bench, with team members who have collectively acquired or evaluated billions of dollars of multifamily assets, and notes that NexPoint and its affiliates already own and operate 2,051 multifamily units in North Carolina, including 240 in the Greensboro MSA. Property-level operations are delegated to BH Management, an experienced third-party operator, under the oversight of the sponsor’s asset management team.
The offering is structured specifically to accommodate investors completing a Section 1031 like-kind exchange. Because interests are held through a Delaware statutory trust, tax counsel has provided an opinion that a purchaser’s acquisition of an interest should be treated as a direct acquisition of a fractional interest in the property for purposes of Code Section 1031, allowing deferral of federal and state capital gains taxes, though the Trust has not sought and does not intend to seek a private letter ruling from the IRS. Investors also receive their pro rata share of depreciation. Beyond the initial exchange, the Trust offers a potential future liquidity and continued tax-deferral path through its Exchange Right: NexPoint’s publicly traded REIT, NXDT, may make a purchase offer to acquire beneficial interests in exchange for operating partnership units under Section 721 (an “UPREIT” transaction), which can subsequently be converted into NXDT shares. This structure could allow a beneficial owner to transition from a single-asset DST into a diversified, professionally managed REIT while continuing to defer gain, and NXDT units are referenced as carrying a distribution yield of approximately 4.0%. Exercise of the Exchange Right is at the sponsor’s and NXDT’s discretion and is not guaranteed.
Analysis of NexPoint Waterford DST
Insights
For a 1031 exchanger, NexPoint Waterford DST is best read not as a current-income vehicle but as a moderately leveraged, back-end-weighted bet on continued rent growth and absorption in North Greensboro — underwritten to appreciation and a favorable exit, not to what the property pays today. The entry is defensible: acquisition at $49,500,000 against a $51,000,000 appraisal, 90.0% leased at closing, and a supply-constrained submarket with 4.68% year-over-year rent growth. On relative value it screens well — its ~6.0% average projected yield sits above the multifamily market average near 4.9%, its 7.64% peak-year yield clears the roughly 5.6% peer peak, and its growth profile also reads above average — so the investor is paid a premium coupon for the risk taken. The catch is timing. Because the $29,700,000 Freddie Mac loan is interest-only at a fixed 4.86% for the full 10-year term, near-term cash flow is thin: the distribution starts at 4.51% in Year 1 and only builds to 7.64% by Year 10. First-year master-lease base rent of roughly $1.46 million barely covers about $1.44 million of annual interest, so early distributions lean on the property clearing the master lease's additional- and supplemental-rent breakpoints, and the master tenant retains discretion to defer rent when cash flow falls short. That makes the revenue ramp's achievability, occupancy against the 90.0% leased level and ~5.3% submarket vacancy, and reserve adequacy the variables to underwrite most closely. The 48.6% loan-to-capitalization ratio is conservative for a DST, but full-term interest-only concentrates the entire bet at the 2036 maturity, where the outcome hinges on exit cap rates and the rate environment; a modest widening in exit cap can erase equity even if operations hit plan — leverage cuts both ways. Two points the marketing will not lead with: the 9.35% load sits toward the heavy end of the syndicated-DST range, so a real spread separates equity raised from dollars deployed into the building and appreciation must overcome that drag before an investor is whole; and the sponsor's realized record is genuine but thin — three full-cycle deals at roughly a 1.65x equity multiple and a ~4.6-year average hold — so its proof points come from shorter holds than the 10-year term underwritten here. The headline NXDT Exchange Right is real optionality, an elective Section 721 UPREIT path into a diversified, publicly traded REIT that preserves deferral and suits estate-planning investors seeking a step-up at death, but it is entirely at the sponsor's and NXDT's discretion and should not be counted on as a liquidity backstop. Net: this fits an accredited 1031 investor with a genuinely long horizon, no near-term liquidity need, tolerance for single-asset concentration and sponsor-affiliate conflicts, and a primary goal of tax deferral plus long-run appreciation rather than dependable current income. It is a poor fit for anyone who needs the distribution to clear a set yield from day one, is uncomfortable with a sub-5% Year-1 coupon or with rent that only marginally covers debt service, or who wants a diversified or shorter-duration position. Before committing, confirm distribution timing, reserve sufficiency, and the early-year fee deferrals — such as the Year-1 asset management fee deferred 100% — that prop up initial cash flow.
Advantages
NexPoint Waterford DST offers accredited 1031 investors turnkey, fully passive ownership of an institutional-quality Sunbelt apartment community, eliminating the burden of active management while preserving tax deferral. The property is a well-located 1997-vintage, garden-style community of 240 units in North Greensboro, a supply-constrained submarket where asking rents grew 4.68% year over year against a stabilized vacancy near 5.3%. The broader Greensboro MSA is supported by outsized economic development, including JetZero’s $4.7 billion manufacturing site (14,500-plus jobs), Boom Supersonic’s $500 million facility, and Toyota’s $20 billion-plus battery plant nearby, providing a long runway of employment and housing demand. The capital structure is conservative for a leveraged DST: a $29,700,000 Freddie Mac loan at a fixed 4.86% rate, interest-only for its full 10-year term, at a 48.6% loan-to-capitalization ratio, and non-recourse to investors with no personal guaranty required. The property was acquired at $49,500,000, below its $51,000,000 appraised value. The offering is backed by NexPoint, a large, vertically integrated sponsor with roughly $15.97 billion in fee-earning AUM and an existing North Carolina multifamily footprint, with experienced operator BH Management running the asset. Lender and supplemental reserves totaling several million dollars provide a cushion for capital expenditures and operating shortfalls, and the Trust’s Exchange Right offers a potential Section 721 UPREIT path into the publicly traded NXDT for future liquidity and continued deferral. The minimum investment of $100,000 of equity makes the offering accessible for right-sizing exchange proceeds.
Concerns
The offering carries the full slate of DST and single-asset risks disclosed in the PPM’s risk factors, and prospective investors should weigh them carefully. The interests are illiquid, with no public market and no redemption right, and beneficial owners have no voting rights or control over operations, financing, or the timing of a sale. This is a single, undiversified investment—one apartment community in one North Carolina submarket—so performance is fully exposed to local market, tenant, and economic conditions, including recessions and other systemic shocks. The Trust depends entirely on an affiliated master tenant for rent, and the master tenant in turn depends on end-user residents; the master lease expressly permits the master tenant to defer a portion of rent when property cash flow is insufficient, which could reduce or suspend investor distributions. Notably, first-year base rent to the Trust of roughly $1.46 million barely exceeds annual interest-only debt service of about $1.44 million, so a meaningful portion of investor cash flow depends on property revenue exceeding master-lease breakpoints. The offering uses leverage with a 10-year interest-only loan, creating refinancing and balloon-maturity risk and full sensitivity to property value at exit. The load is significant: total offering expenses and commissions equal 9.35% of equity (including sales commissions up to 6.0% and a managing broker-dealer fee up to 1.50%), reducing capital invested in real estate. Numerous conflicts of interest exist among the sponsor, manager, master tenant, and property manager, all affiliates, and the sponsor earns asset management, facilitation, and disposition fees plus any rent retained above master-lease requirements. Material tax risks apply, including the possibility that the interests are not respected under Section 1031 and that use of exchange funds for acquisition costs generates taxable boot; no IRS private letter ruling has been obtained. Distributions may be supported in part by reserves rather than operations, and the Exchange Right is discretionary and not guaranteed.
NexPoint Waterford DST — Complete Offering Data
Offering & Structure
Investment NameNexPoint Waterford DST
SponsorNexPoint
StructureDelaware Statutory Trust (DST)
StatusAvailable
Last Updated2026-07-31
Size & Availability
Total Offering$61,060,817
Equity$31,360,817
Debt$29,700,000
Available Equity$26,000,000 (82.9% of equity)
Minimum Investment$100,000
Total Load9.35%
Initial Reserves7.46%
Property
Property TypeMultifamily
StrategyCore-Plus
LocationNC
Market TierTier 2
Income & Projections
Average Yield6.04%
Projected Yields (Y1–Y10)Y1 4.51% · Y2 4.87% · Y3 5.24% · Y4 5.52% · Y5 5.66% · Y6 6.18% · Y7 6.57% · Y8 6.99% · Y9 7.20% · Y10 7.64%
Tax-Adjusted Yield11.35%
Cap Rate Equivalent8.44%
Financing
In-Place LTV48.64% LTV
LenderWalker & Dunlop, LLC
Loan TypeFixed
Interest Rate4.86% (Fixed)
Loan Term10 years
I/O Period10 years
AmortizationN/A
Y1 DSCR2.01x
Exit
Estimated Hold Period10 years
721 Exchange ExitOptional
Benchmarks (vs sector median)
Avg. Income6.04% vs 4.85% market — Above Average
Growth69.40% vs 24.76% market — Above Average
Peak7.64% vs 5.55% 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.
