NLC Financial Service HQ DST Overview
NLC Financial Service HQ DST is a single-tenant, net-leased office offering structured as a Delaware Statutory Trust and sponsored by Net Lease Capital Advisors LLC. Through a two-tier trust structure, the Trust owns a newly constructed 20-story Class A commercial office tower of approximately 421,481 square feet, together with an attached structured parking garage of approximately 319 spaces, situated on roughly 0.51 acres on Woodward Avenue in the central business district of downtown Detroit, Michigan (48226). Completed in 2023, the Property is 100% leased to The Huntington National Bank (successor by merger to TCF National Bank and Chemical Bank) and serves as administrative headquarters office space for Huntington Bancshares in Detroit. The lease is a long-term triple-net lease with an original term of 22.5 years expiring June 30, 2044, followed by four renewal options of seven years each, and the tenant's obligations are backed by a corporate guaranty from Huntington Bancshares Incorporated. The offering sells 79.30% of the beneficial interests in the Trust to accredited investors under Rule 506(b) of Regulation D, with the remaining 20.70% held by third parties. Because of the DST structure, the interests are intended to qualify as replacement property under Section 1031 of the Internal Revenue Code, allowing exchangers to defer capital gains. This is a highly leveraged, zero-cash-flow program: no cash distributions are expected to investors during the initial 22.5-year lease term, as rent is applied to service the assumed senior and subordinated mortgage debt, which amortizes over the life of the lease. The investment is designed for 1031 exchangers, particularly those carrying substantial debt on relinquished property who must replace that debt, and for investors who prioritize tax deferral, principal preservation, and potential long-term appreciation on the eventual sale or re-tenanting of the Property over current income. The minimum investment is $150,000. Investors acquire a passive beneficial interest with no management authority, relying on the tenant's creditworthiness, the Detroit office market, and the Sponsor's execution at the end of the lease term.
Highlights
The Property occupies a prominent position on Woodward Avenue in the heart of downtown Detroit's central business district (48226), the city's primary commercial corridor. According to the site description in the Memorandum, the roughly 0.51-acre site is rectangular, at grade, served by all major public utilities, and benefits from direct street access and strong accessibility within the downtown core. The location places the asset in Detroit's core office and civic district, an area anchored by major employers, transit access, and continued downtown reinvestment. As the administrative headquarters presence for a large regional bank, the building's downtown siting reflects a long-term corporate commitment to the market. For an accredited 1031 investor, the central business district location provides institutional-quality positioning and a recognizable address, though it also ties the Property's performance to the health and ongoing recovery of the Detroit office market.
The Property is a newly constructed, 20-story Class A commercial office tower containing approximately 421,481 rentable square feet, completed in 2023, with an integrated structured parking garage spanning floors 2 through 11 that provides approximately 319 parking spaces, an important amenity in a dense urban core. The Property is 100% leased to The Huntington National Bank and functions as headquarters administrative office space for Huntington Bancshares, one of the largest regional banking franchises in the Midwest. The lease is triple-net, meaning the tenant is responsible for essentially all operating costs, real estate taxes, insurance, and maintenance obligations relating to the Property, and the tenant is required to carry substantial umbrella liability insurance of not less than $25,000,000. The single, credit-oriented occupancy, new construction, and modern build-out reduce near-term capital and re-leasing demands during the lease term, while the corporate guaranty from Huntington Bancshares Incorporated adds a second layer of credit support behind the operating tenant.
The Property is encumbered by assumed non-recourse mortgage financing totaling approximately $143.68 million as of the Memorandum date, comprising a senior loan and a subordinated loan, both maturing June 10, 2044, coterminous with the lease. The senior loan (held through Wells Fargo Bank, N.A. as trustee) carries a 4.589% rate on an original principal of roughly $141.5 million and amortizes to a modest balloon of about $7.08 million at maturity. The subordinated loan (through UMB Bank, N.A. as trustee) consists of a 7.870% Series B-1 note and a 10.756% Series B-2 note. Each purchaser assumes its pro rata share of this debt; the offering conveys 79.30% of the outstanding balance, or roughly $113.94 million. The structure is a zero-cash-flow program in which rent is directed to debt service and the loans amortize over the lease term, building equity through principal reduction rather than paying current distributions. The debt is non-recourse to investors, though the interests are pledged and a loan default could result in foreclosure and loss of the Property.
The Sponsor, Net Lease Capital Advisors LLC, was founded by Douglas F. Blough and Bruce S. MacDonald and specializes in credit-tenant, net-leased real estate structured as Section 1031 replacement property. The Memorandum states the firm and its affiliates have sponsored DST and prior real estate programs over the past 20 years, with the summary track-record table reflecting aggregate loan amounts of approximately $6.84 billion, property values of roughly $8.48 billion, equity of about $1.63 billion, and more than 2,500 investors. Prior programs feature investment-grade and government tenancies such as Sun Microsystems, the U.S. Government (GSA/Social Security Administration and Veterans Administration clinics), The Hershey Company, Cargill, and United Healthcare. The Sun Microsystems headquarters, the only prior transaction to reach lease maturity per the Memorandum, was re-tenanted with eBay and later sold in 2018 at a reported equity multiple of 3.97x, an outcome the Sponsor presents as illustrative only and not indicative of results here. The principals bring decades of net-lease structuring, financing, and development experience.
The offering is structured specifically to serve as Section 1031 replacement property. Tax counsel, Kelley Drye & Warren LLP, has provided an opinion that the Trust should be treated as an investment (grantor) trust, that purchasers should be treated as owning an undivided fractional interest in the Property, and that acquisition of an interest should qualify for Section 1031 exchange treatment, with the lease treated as a bona fide lease rather than a financing. The highly leveraged, zero-cash-flow design is well suited to exchangers who must replace significant mortgage debt from a relinquished property, since the assumed debt (roughly 82.75% of the transaction) helps satisfy the debt-replacement requirement with a comparatively modest equity outlay. As the loans amortize, investors build equity through principal paydown rather than receiving current income, positioning the program for potential appreciation on an eventual sale or re-tenanting near lease end. At that stage the Trust anticipates a Transfer Distribution converting the trusts into limited liability companies to enable re-leasing, refinancing, or disposition.
Analysis of NLC Financial Service HQ DST
Insights
Read NLC Financial Service HQ DST as a long-duration, credit-wrapped zero-coupon instrument rather than an office investment: you buy roughly eighteen years of principal amortization and a single 2044 terminal value on Huntington's credit, and you buy it to solve a 1031 debt-replacement problem, not to collect rent. About $113.9M of assumed non-recourse debt sits behind a ~$23.8M equity slice — just 17.25% of the ~$137.7M deal — so a small check replaces a large mortgage, which is the entire reason it exists.
On relative value, there is nothing here for a yield buyer. All ten modeled years distribute zero and rent is routed entirely to debt service, so this is not a thin coupon or a partial return of capital but no current cash at all, deferred to one liquidity event; its income screens at the floor against the ~3.1% office net-lease average. The ~8.5% cap-rate-equivalent looks rich for a bank-credit tenant, but it is manufactured by 82.75% leverage and Detroit pricing, not cash in hand — and the 8.36% load is not light, so every point has to be earned back at a distant exit.
The outcome hinges on one number: 2044 terminal value net of the balloon. Marketing sells "amortization builds equity," but only the senior note behaves that way, grinding to a ~$7.08M balloon, while the two subordinated notes accrete toward ~$33.0M and ~$27.5M — so the combined payoff lands near $67.6M against a ~$175M as-is appraisal, and the cushion rides on where Detroit office trades in two decades and whether Huntington keeps this headquarters, which is what we would watch above all. The catch the deck buries: two of three tranches grow rather than shrink, and the end-of-term LLC conversion needed to refinance or re-tenant also ends the interests' 1031 eligibility, so an exchanger who wants to roll again loses that option at the exact exit he is counting on — all resting on a sponsor with only three full-cycle deals (avg 2.74x, ~8.7% annually) and a lone prior HQ analog, Sun-to-eBay at 3.97x.
Verdict: own it if you are a tax-motivated exchanger with a large debt to replace, an ~18-year horizon, an appreciation-over-income appetite, and full tolerance for single-tenant, single-market concentration and total illiquidity. Pass if you need current income, want diversification, or might have to exchange again at exit.
Advantages
The offering pairs a newly built (2023), Class A, 20-story downtown Detroit office tower with a long-dated, 22.5-year triple-net lease running to June 30, 2044, plus four seven-year renewal options, providing an extended, contractually defined income stream to service debt. The single tenant, The Huntington National Bank, is a national banking association, and its obligations are further supported by a corporate guaranty from Huntington Bancshares Incorporated, adding a layer of credit backing behind the operating tenant. Because the lease is triple-net, the tenant bears substantially all operating expenses, taxes, insurance, and maintenance, limiting the Trust's exposure to cost inflation and capital outlays during the term. The DST structure is designed to qualify as Section 1031 replacement property, with a supporting opinion from Kelley Drye & Warren LLP, enabling accredited investors to defer capital gains while stepping into a passive, professionally structured position with a low $150,000 minimum. The zero-cash-flow, highly leveraged design, about 82.75% assumed non-recourse debt against roughly 17.25% equity, is particularly efficient for exchangers who carry substantial debt on relinquished property and must replace it, allowing them to meet the debt-replacement requirement with a relatively small equity contribution. Over the hold, the senior loan amortizes toward a modest balloon, so investors build equity through principal reduction, and the interests are intended to preserve capital and defer tax while offering upside on the eventual sale or re-tenanting of the Property. The Sponsor brings a two-decade net-lease track record spanning billions of dollars in prior programs and credit and government tenancies, and it retains flexibility, through a future Transfer Distribution to limited liability companies, to re-tenant, refinance, or sell the asset near lease maturity in order to protect investor value.
Concerns
This is a speculative, illiquid investment: there is no public market for the interests, transfers require Trustee consent and satisfaction of conditions, and investors must be prepared to hold for an indefinite period and to bear a total loss of their investment. It is a single-asset, single-tenant program with no diversification. The Trust depends entirely on The Huntington National Bank for revenue, and any tenant default, financial difficulty, or bankruptcy would leave the Trust unable to pay debt service, likely resulting in loss of the Property; in a tenant bankruptcy the lease could be rejected and the guaranty may not fully protect investors. The program is highly leveraged, with roughly $143.68 million of assumed mortgage debt against an appraised as-is value near $175 million (about 82% loan-to-value), and the subordinated notes accrue toward large maturity balances (a scheduled $33.0 million on the Series B-1 note and $27.5 million on the Series B-2 note), while both loans balloon at maturity on June 10, 2044, creating meaningful refinancing and balloon risk. This is a zero-cash-flow offering: no cash distributions are expected during the entire 22.5-year lease term, so investors receive no current income and returns depend on events at or after lease end. Investors are passive and hold no control; consistent with the DST restrictions under Rev. Rul. 2004-86, the Trustee cannot renegotiate the lease, refinance, re-lease, or accept new capital, which limits the ability to respond to problems without first converting to LLCs, a step that would end the Section 1031 eligibility of the interests. The offering carries a substantial load and affiliate and financing costs, and disposition, refinancing, and transfer fees are payable to the Sponsor and its affiliates, creating conflicts of interest. Tax treatment relies on legal opinions rather than IRS rulings and could be challenged, and boot, phantom income, Michigan state and local taxes, and other consequences may apply. Finally, the value of the Property is exposed to the Detroit office market, real estate cycles, environmental liabilities, and general economic conditions beyond the Trust's control.
NLC Financial Service HQ DST — Complete Offering Data
Offering & Structure
Investment NameNLC Financial Service HQ DST
SponsorNet Lease Capital Advisors
StructureDelaware Statutory Trust (DST)
Offering Type506(b)
StatusConfirm Availability
Last Updated2026-08-05
Size & Availability
Total Offering$137,692,566
Equity$23,751,968
Debt$113,940,598
Available Equity$0 (0% of equity)
Minimum Investment$100,000
Total Load8.36%
Property
Property TypeOffice
StrategyCore
LocationMI
Market TierTier 1
Income & Projections
Average Yield0.00%
Projected Yields (Y1–Y10)Y1 0.00% · Y2 0.00% · Y3 0.00% · Y4 0.00% · Y5 0.00% · Y6 0.00% · Y7 0.00% · Y8 0.00% · Y9 0.00% · Y10 0.00%
Tax-Adjusted YieldNot disclosed
Cap Rate Equivalent8.51%
Financing
In-Place LTV82.75% LTV
LenderWells Fargo Trust Company, N.A.
Loan TypeFixed
Interest Rate4.589% (Fixed)
Loan Term18 years
I/O PeriodN/A
AmortizationSenior amortizes; B-notes accrue
Y1 DSCR1.00x
Exit
Estimated Hold Period18 years
721 Exchange ExitNone
Benchmarks (vs sector median)
Avg. Income0.00% vs 3.09% market
Growth— vs 27.04% market
Peak0.00% vs 3.64% market
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.
