Passco Allure DST Overview
Passco Allure DST is a Delaware statutory trust offering that gives accredited investors fractional beneficial ownership of Allure at Edinburgh, a 280-unit Class A apartment community completed in 2024/2025 and located at 249 Allure Lane in Chesapeake, Virginia, within the Virginia Beach-Chesapeake-Norfolk (Hampton Roads) metropolitan area. The community spans approximately 11.74 acres and comprises seven buildings - three four-story residential buildings, three single-story community buildings, and a single-story parking garage - with a mix of one-, two-, and three-bedroom floor plans totaling roughly 272,338 rentable square feet and averaging 973 square feet per unit. The Trust, formed on March 17, 2026 by Passco Allure Depositor, LLC and managed by Passco Allure Manager, LLC (an affiliate of sponsor Passco Companies), is offering up to $58,575,000 of equity through 11,715 Class A Beneficial Interests priced at $5,000 each. The property is held subject to a master lease with a sponsor-affiliated master tenant that operates the community and remits rent to the Trust, a structure designed to preserve the Trust's passive status while distributing monthly cash flow to investors. The business plan calls for maximizing revenue and occupancy over an anticipated ten-year hold, funding targeted amenity and capital improvements, and selling the asset when market conditions warrant. Because Interests are structured to qualify as replacement property under Internal Revenue Code Section 1031, the offering is intended primarily for investors completing a 1031 exchange who seek to defer capital gains while transitioning from active management into a passive, professionally managed real estate position; a cash-investment tranche is also available. The offering is conducted under Rule 506(b) of Regulation D and is limited to accredited investors, with a minimum investment of $100,000 for 1031 exchangers and $25,000 for cash purchasers. It suits investors who prioritize durable, institutionally managed multifamily real estate in a growing coastal market, who understand and accept the illiquidity and lack of control inherent to the DST structure, and who value the tax-deferral and estate-planning features of a 1031-eligible vehicle.
Highlights
The property sits in the Virginia Beach-Chesapeake-Norfolk, VA-NC MSA (Hampton Roads), home to roughly 1,794,278 residents as of 2024 and ranked the 37th-largest U.S. metro by population and 41st-largest by GDP, generating approximately $127.459 billion in economic output in 2023. The Milken Institute's 2025 Best-Performing Cities report ranks the metro 90th nationally and among the top four large cities for ranking gains. CoStar data cited in the PPM shows roughly 4.2% annual rent growth - ahead of the national average - alongside a 6.2% vacancy rate that reflects a market absorbing new supply without major disruption, with twelve-month effective rent growth in the Chesapeake submarket running 4.00% to 4.30% above the national average. The immediate area is anchored by stable, recession-resistant employment: the property's own resident base is led by Military (20.18%), Healthcare (17.81%), and Government (12.76%) workers, with a median resident household income near $115,080 and residents earning approximately 4.61x their monthly rent.
Allure at Edinburgh is a recently constructed (2024/2025) Class A community that was 98.57% occupied as of the April 27, 2026 rent roll. Its 280 units span seven distinct floor plans - one-bedroom layouts (Charm, Bliss, Glam), two-bedroom layouts (Intrigue, Enchant, Captivate), and three-bedroom Charisma units - ranging from 630 to 1,309 square feet and averaging 973 square feet. Unit interiors feature open-concept layouts, chef-inspired kitchens with islands, granite countertops, stainless steel appliances, faux-wood flooring, full-size in-unit washers and dryers, smart-home keyless entry, generous walk-in closets, and 9- to 10-foot ceilings in select units. Community amenities are extensive and lifestyle-oriented: a resort-style saltwater pool, 24-hour fitness center, golf simulator, theater and arcade rooms, EV charging stations, indoor pet spa and leash-free dog park, multiple resident lounges, a cyber cafe, yoga and meditation rooms, and a splash pad. The master tenant's plan adds private unit yards, enhanced landscaping, a clubhouse refresh, and grill-station pergolas to further strengthen resident appeal and retention.
The Trust acquired the property for a total price of $106,925,000 (an acquisition cost of $102,903,429 plus $4,021,571 of reserves) and financed it with a $48,350,000 Fannie Mae loan, producing conservative leverage of approximately 45.22% loan-to-value when reserves are included in the purchase price (46.85% excluding reserves, and a 51.38% loan-to-cost ratio). The loan carries a 10-year term with a fixed interest rate of 4.98% that the Trust bought down, and is interest-only through June 1, 2033 (roughly seven years) before amortizing, with a balloon payment due at the May 1, 2036 maturity; the Trust is not permitted to refinance. Total equity offered is $58,575,000 across 11,715 Class A Interests at $5,000 each. The moderate leverage and extended interest-only period are intended to support monthly distributions, projected at an approximate 4.35% annualized return on equity in the first lease period and rising toward 4.70% by lease period ten if the Trust Manager's assumptions are met.
The offering is sponsored by Passco Companies, LLC, an Irvine, California-based real estate investment firm whose predecessor, Passco Real Estate Enterprises, began sponsoring real estate programs in 1998. Passco affiliates fill each principal role in the structure: Passco Allure Manager, LLC serves as Trust Manager, a Passco-affiliated entity acts as Master Tenant (with Passco Management Services, LP and Passco Companies guaranteeing certain master-tenant obligations), and Passco Capital, Inc. serves as Managing Broker-Dealer. Day-to-day operations are handled by Arlington, an experienced third-party property management company engaged to oversee the on-site team, and Passco brings proprietary operating platforms - its Pricing Model for dynamic rent optimization and CORE (Central Operation & Resource Efficiency) for centralized administration - to drive performance. Passco also engaged Arlington to complete due diligence including a lease audit, and obtained an independent appraisal from Partner Valuation Advisors, LLC. This vertically integrated, affiliate-driven model concentrates execution expertise but also concentrates investor reliance on a single sponsor group.
The Interests are structured to qualify as like-kind replacement property under Internal Revenue Code Section 1031, allowing exchange investors to defer capital gains and depreciation-recapture taxes while stepping out of active management. The Delaware statutory trust wrapper permits fractional ownership at accessible minimums ($100,000 for 1031 exchangers and $25,000 for cash purchasers), and the PPM notes that first-year cash flow for cash investors may be up to 100% sheltered by depreciation. For estate planning, DST interests can receive a stepped-up basis at death. The offering also embeds a potential tax-efficient exit: beginning two years after the Offering Termination Date, the Trust Manager holds a Fair Market Value (FMV) Option - the right, but not the obligation, to acquire investors' Interests for cash or for units in an affiliated Exchange Entity, offering qualifying holders a possible pathway into a 721-style UPREIT-type vehicle rather than a taxable cash-out. These benefits depend on the offering satisfying Section 1031 requirements and on a tax opinion that relies on sponsor representations.
Analysis of Passco Allure DST
Insights
We read Passco Allure DST as a deferral trade in an income costume: the exchanger pays full price for brand-new Class A multifamily on a low-leverage agency loan and is paid in tax certainty and durability, not coupon. On those terms the yield is deliberately thin — average distributions of ~4.40% (4.35% year one, 4.70% peak) screen Below Average versus the ~4.85% DST income norm and ~5.55% channel peak, with growth also flagged Below Average. The load says as much: ~15% all-in stacks a ~7.65% syndication load on a basis set above the $92.9M as-is appraisal, so the asset must grow into its price before principal is whole. One positive the risk factors bury: the year-one payout is genuinely earned — a 1.07 coverage ratio means in-place NOI covers it with ~7% to spare, not a return of capital.
The outcome hinges on the exit, not the coupon. With a 10-year hold, no refinancing, and a 2036 balloon, the sponsor must sell into whatever cap-rate world exists then; we'd watch the exit cap and terminal rents, then whether Hampton Roads holds its ~4.2% rent growth and occupancy near the 96% mark (98.57% today). What marketing buries is the shape of the curve: the "4.35% rising to 4.70%" headline peaks in year seven, then steps down to ~4.05% once interest-only rolls off in 2033 and amortization begins, recovering to ~4.31% by year ten — a back-half cut, not a climb. Passco's 46 full-cycle deals (~1.89x equity multiple, ~5.6-year holds) are real but leaned on appreciation over shorter holds, and the PPM concedes prior programs missed projections and lost investor capital, with trust manager, master tenant, and broker-dealer all in-house.
Net: own it if you are a conservative income-and-estate exchanger who values new construction, low leverage, a resilient military/healthcare/government demand base, and clean 1031 deferral, and treats the 4%-handle as a bond-like hold. Pass if you are reaching for yield, need liquidity or control, or will not underwrite a single sponsor-affiliated master tenant and a sale a decade out.
Advantages
Passco Allure DST pairs a newly built, amenity-rich Class A asset with a conservative capital structure and a passive, tax-advantaged ownership wrapper. The property was completed in 2024/2025 and was 98.57% occupied as of the April 27, 2026 rent roll, minimizing near-term lease-up risk and the deferred capital-expenditure exposure that older assets often carry. Leverage is moderate at roughly 45.22% loan-to-value, and the $48,350,000 Fannie Mae loan is fixed at a bought-down 4.98% rate with an approximately seven-year interest-only period through June 1, 2033, which supports current cash flow and cushions against near-term rate volatility since no refinancing is required before the 2036 maturity. The Hampton Roads market offers demographic and economic durability: it is the 37th-largest U.S. metro, posts above-national-average rent growth of about 4.2%, and is anchored by military, healthcare, and government employment that tends to be resilient across cycles. The DST structure delivers genuine passivity - professional management by Passco and third-party manager Arlington - while qualifying as 1031 replacement property, enabling capital-gains deferral, potential depreciation sheltering of first-year cash flow, and a stepped-up basis for estate-planning purposes. Accessible minimums ($100,000 for exchangers) let investors diversify a larger exchange across multiple properties. Monthly distributions are projected at approximately 4.35% in year one rising toward 4.70% by year ten, and the built-in FMV Option offers a potential tax-efficient exit into an affiliated Exchange Entity rather than forcing a fully taxable sale at the end of the hold.
Concerns
The PPM discloses substantial risks that temper the opportunity. The investment is speculative, illiquid, and carries the potential for total loss; there is no public market for the Interests, and investors must be prepared to hold for an indefinite period. Holders have no voting rights and no control over management, distributions, or the timing of a sale - all decisions rest with the Trust Manager. The Trust owns a single asset, so there is no diversification, and returns depend heavily on one property in one submarket where the appraisal identifies four competing communities within about nine miles, one of them less than a mile away. Leverage adds risk: the loan is interest-only until June 2033, requires a balloon payment at its May 1, 2036 maturity, and cannot be refinanced, so the property must be sold or transferred to a Springing LLC if alternative financing becomes necessary. The offering load is significant - up to 7.65% of proceeds (a $382.50 load on each $5,000 Interest) - creating an immediate gap between invested capital and equity working in the asset, and the appraised as-is value of $92,900,000 is materially below the $103,203,429 value at which investors buy in. The Master Tenant is newly formed and thinly capitalized (roughly $50,000 in cash plus guaranteed notes), the master lease is not a triple-net lease (the Trust bears certain taxes, insurance, and landlord capital expenditures), and returns rely in part on reserves and on the Depositor funding a Reserve Note. Projected returns assume a year-one occupancy of 96.03% that may not be achieved, and distributions may be paid from sources other than earnings. Critically, the PPM discloses that certain prior Passco programs failed to meet projections, that some master leases were amended due to master-tenant insolvency, and that investors in several prior programs lost all or a significant portion of their investment. Tax benefits are not guaranteed and depend on the offering satisfying Section 1031.
Passco Allure DST — Complete Offering Data
Offering & Structure
Investment NamePassco Allure DST
SponsorPassco
StructureDelaware Statutory Trust (DST)
Offering Type506(b)
StatusAvailable
Last Updated2026-08-10
Size & Availability
Total Offering$106,925,000
Equity$58,575,000
Debt$48,350,000
Available Equity$25,000,000 (42.7% of equity)
Minimum Investment$25,000
Total Load15.01%
Initial Reserves6.35%
Property
Property TypeMultifamily
StrategyCore-Plus
LocationVA
Market TierTier 2
Income & Projections
Average Yield4.40%
Projected Yields (Y1–Y10)Y1 4.35% · Y2 4.44% · Y3 4.40% · Y4 4.49% · Y5 4.50% · Y6 4.60% · Y7 4.70% · Y8 4.05% · Y9 4.19% · Y10 4.31%
Tax-Adjusted Yield11.19%
Cap Rate Equivalent8.25%
Year 1 NOI$5,137,176
Y1 Payout Ratio1.07
Financing
In-Place LTV45.22% LTV
LenderKeyBank, National Association (Fannie Mae DUS)
Loan TypeFixed
Interest Rate4.98% (Fixed)
Loan Term10 years
I/O Period7 years
Amortization30 years
Y1 DSCR2.10x
Exit
Estimated Hold Period10 years
721 Exchange ExitOptional
Benchmarks (vs sector median)
Avg. Income4.40% vs 4.85% market — Below Average
Growth8.05% vs 24.76% market — Below Average
Peak4.70% vs 5.55% 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.
