Your 1031 DST Authority
Fortress FREX DB Series I DST
Offering Overview
Domain at Town Centre is a 2012-vintage, stabilized 336-unit / 912-bed purpose-built student housing community at 5000 Domain Drive, Morgantown, WV 26501, serving West Virginia University (WVU) approximately one mile from campus and adjacent to a main retail center, with a free private campus shuttle. The asset spans 14 residential buildings, a clubhouse, and 976 parking spaces; the bed-to-bath-parity unit mix runs across 1x1 ($1,558/bed), 2x2 ($875), 3x3 ($763), and 4x4 ($650) plans, with 4x4 product representing ~53% of beds. The Trust acquired the Property for a $65,100,000 real estate price ($68,484,744 total acquisition cost) and capitalized the transaction at $75,983,939, comprising $40,178,939 of Class 1 equity and a $35,805,000 Wells Fargo Bank, N.A. first mortgage (47.12% loan-to-cost; 6.098% fixed; full-term interest-only; maturing March 11, 2036), supported by a CBRE as-is appraisal. The Property is net-leased to an affiliated Master Tenant (FREX DB LeaseCo Series I LLC) under a 10-year master lease backed by a $1,500,000 demand note from FREX DST Holdings LLC, paying Base Rent (debt service plus taxes and insurance), capped Additional Rent, and performance-based Supplemental Rent. Year 1 NOI is $4,438,106; the operating thesis is completion of lease-up (93% occupied for 2025/26, 73% pre-leased for 2026/27), cure of limited deferred maintenance, and capture of Morgantown rent growth in a supply-constrained submarket. Sponsored by Fortress Investment Group; securities offered through Orchard Securities, LLC.
Investment Highlights
- The Morgantown student-housing submarket exhibits unusually durable barriers to entry: only 534 beds have been delivered over the past decade, none since 2016, with nothing under construction or in the pipeline, as large-scale developers have avoided the market on relatively low achievable rents and limited buildable sites. Against WVU enrollment of roughly 23,600, approximately 5,249 on-campus beds and ~6,700 off-campus beds imply a structural shortfall near 11,700 students (a ~57% capture rate), and the market reached 96% occupancy for 2025/26, its highest in ten years, supporting pricing power and re-leasing economics at a 2012-vintage asset that is among the newer, higher-quality products in the trade area.
- Demand is anchored to a single, growing flagship university operating under a state mandate to expand enrollment. WVU's Governor publicly tasked the university with dramatic enrollment growth, and a newly hired enrollment leader previously grew another institution's enrollment 43% (25,000 to 40,000) between 2017 and 2025; Fall 2025 freshman enrollment rose 7.2% year-over-year and freshman retention reached a record above 85%. These dynamics underpin the underwriting's lease-up and rent-growth assumptions, but the asset's demand profile is concentrated in the enrollment trajectory of one institution in a single submarket.
- Financing is a $35,805,000 Wells Fargo Bank, N.A. first mortgage fixed at 6.098% and interest-only for the full 10-year term to a March 11, 2036 maturity at 47.12% loan-to-cost. The fixed coupon removes floating-rate and cap-renewal exposure and the interest-only structure (annual debt service ~$2,213,714) maximizes current distributable cash, producing healthy Year 1 NOI-to-debt-service coverage of approximately 2.00x. The structural offset is that no principal amortizes, leaving the entire balance to balloon at maturity, and the 6.098% coupon is relatively high, reflecting 2026 origination.
- In-place rents are positioned below the local competitive set, with the most comparable properties reportedly 100% occupied and charging 4x4 rents (~53% of Domain's beds) roughly 16% above the Trust's underwriting, framing embedded mark-to-market upside. The submarket has produced a 3.4% historical rent compound annual growth rate and is tracking to ~5.6% effective rent growth for Fall 2026, and the forecast carries Year 1 NOI of $4,438,106 to $6,000,358 by Year 10 (~35% cumulative growth), driving projected cash-on-cash from 5.00% to 7.69%.
- The Sponsor, Fortress Investment Group, is a diversified global manager with 20-plus years of history, approximately $53 billion of AUM, and over $29 billion invested in global real estate, including more than $1.0 billion of common equity across its targeted DST asset classes (multifamily, student housing, senior housing) spanning 122 investments and $3.4 billion of total capitalization. Its global real estate platform is led by former Wells Fargo CEO Tim Sloan, lending institutional depth to a property that has been institutionally owned for nearly a decade and is expected to require minimal near-term capital expenditure.
Forecasted Cash Flow
Projected annual cash-on-cash distributions with the corresponding tax-equivalent yield over the hold, based on the sponsor’s underwriting assumptions.
Illustrative projections only — targeted distributions are not guaranteed and actual results will vary. Tax-equivalent yield assumes depreciation shelter of distributed income.
Analyst Notes
The risk-adjusted profile is that of a stabilized, income-oriented student-housing DST with a lease-up-and-rent-growth optimization overlay, appropriately Core-Plus rather than Core given residual leasing and performance-contingent distribution mechanics. Leverage economics are roughly neutral: the in-place yield against a 6.098% fixed cost of debt implies an essentially flat initial spread that widens only as forecast NOI compounds (~35% over the hold) against a static interest burden, so investor return is a function of executing the rent-growth and lease-up plan rather than financial leverage. The defining tension is temporal and concentration-driven: the underwriting back-loads returns (5.00% to 7.69% cash-on-cash, ~2.00x coverage) on the assumption that a single university's enrollment mandate and a supply-starved submarket sustain roughly 5%-plus rent growth, while the interest-only balloon matures in 2036, leaving terminal value highly sensitive to the exit pricing and rate environment. The supply picture (no deliveries since 2016) and the ~16% below-market 4x4 rents are genuine supports for the thesis; the credible variance lies in leasing velocity, the durability of WVU enrollment gains, master-tenant coverage of the Additional and Supplemental Rent waterfall, and refinancing conditions at maturity. The optional Section 721/FMV exit affords a potential tax-deferred continuation path, though it is discretionary and unquantified.
Pros
On a micro level, the offering pairs a 2012-vintage, institutionally maintained student-housing asset with a structurally supply-constrained Morgantown submarket (no new beds delivered since 2016 and none in the pipeline) against a ~57% capture rate of WVU's off-campus demand and a market that reached a ten-year-high 96% occupancy for 2025/26. Demand is reinforced by a state-backed enrollment-growth mandate, 7.2% freshman growth, and record retention above 85%, while in-place rents sit roughly 16% below the most comparable 4x4 product, framing mark-to-market upside that supports a forecast NOI ramp of ~35% and a cash-on-cash schedule rising from 5.00% to 7.69% (6.24% average). The capital structure is rate-insulated: a 47.12% loan-to-cost Wells Fargo first mortgage fixed at 6.098% and fully interest-only, generating a healthy ~2.00x Year 1 coverage, with meaningful funded reserves including a ~$2.0M lender reserve account, a growing Trust Reserve, and an $832,800 DST working-capital reserve. Macro support includes a diversified, institutionally resourced sponsor in Fortress and an optional Section 721/FMV exit alongside a cash election.
Cons
Asset-specific vulnerabilities concentrate in single-university demand, the income waterfall, and the loan maturity. All cash flow ultimately depends on one institution's enrollment trajectory in a tertiary, less-liquid Morgantown market, so any reversal of WVU's enrollment-growth mandate, a soft leasing season (the asset is only 73% pre-leased for 2026/27 with lease-up still required), or rent-growth underperformance versus the ~5.6% Fall 2026 assumption would directly compress distributions. The distribution ramp is only partly contractual: Base Rent covers debt service, taxes, and insurance, while investor distributions rely on capped Additional Rent and performance-based Supplemental Rent that does not begin until Year 2, routed through a thinly capitalized affiliated Master Tenant funded by a $1,500,000 demand note. The loan is interest-only with no amortization, so the full $35,805,000 balloons at the March 2036 maturity into an unknown rate environment, the 6.098% fixed coupon is relatively high, and the lender reserve account is modeled to draw down from ~$2,003,906 to ~$68,572 by Year 10, leaving limited cushion for unbudgeted capital. The Property also carries an identified radon condition (a funded $50,150 Radon Reserve and recommended mitigation), student housing is operationally intensive with full annual turnover, and the 2012 vintage has a limited set of deferred-maintenance items to cure.
Financing
Financing terms for this offering are summarized below.
Benchmark Comparison
| Metric | This Offering | Benchmark | Difference |
|---|---|---|---|
| Average Yield | 6.24% | — | — |
| Max Yield | 7.69% | — | — |
| 10-Yr Income Growth | 53.80% | — | — |
Benchmark reflects the average of comparable Student Housing offerings. Differences are relative to the benchmark.
Offering Documents
Offering Documents Available By Request
About the Sponsor
Fortress Investment Group is a roughly $49 billion diversified alternatives manager spanning credit, real estate and private equity, with a heritage rooted in distressed and credit investing. Its real estate exposure runs through funds and net-lease vehicles rather than a marquee retail DST franchise, and its Mubadala ownership provides a deep, patient capital base. For exchange investors, the relevance is institutional underwriting and balance-sheet strength, set against the reality that property sponsorship is one line in a credit-centric business.
This page describes a specific Delaware Statutory Trust offering (Fortress FREX DB Series I DST) and is provided for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any security. Any offering is made solely to verified accredited investors and only by means of a confidential private placement memorandum (PPM).
All figures shown — including minimum investment, cash-flow projections, tax-equivalent yield, loan-to-value, and hold period — reflect the sponsor's current estimates and assumptions and are not guarantees of future performance. Tax-equivalent yield depends on each investor's tax circumstances; projected distributions may not be achieved and actual results will vary. Sponsor track record, benchmark data, and full-cycle averages describe prior programs and are not indicative of the results of this offering.
An investment in a DST is speculative, illiquid, and involves a high degree of risk, including the possible loss of the entire amount invested. There is no public market for these interests, distributions are not guaranteed, and investors have no control over property operations. 1031 exchange and tax treatment depend on each investor's individual circumstances and on tax laws that are subject to change; consult your own tax and legal advisors.
Tax-equivalent yield represents the pre-tax yield a fully taxable investment would need to generate in order to match the after-tax cash flow of this offering. It assumes that a portion of distributions is sheltered by depreciation and other deductions, and it depends entirely on each investor's individual tax bracket, state of residence, and holding structure. It is illustrative only and is not a projection of return. Cap rate equivalent is the implied capitalization rate (net operating income divided by purchase price) shown solely for comparison to direct real estate; it is not a distribution rate, a yield, or a measure of investor return.
This offering and all terms shown are subject to change, withdrawal, or cancellation at any time without notice, and availability is not guaranteed. Nothing on this page creates a commitment or reservation. An investment is confirmed only upon the sponsor's acceptance of fully executed subscription documents; no other communication, indication of interest, or reservation constitutes a binding investment.