Your 1031 DST Authority
NexPoint Life Sciences III DST
Offering Overview
A 137,811 RSF, 2021-vintage single-tenant life sciences facility on approximately 11.73 acres at 11200 Hudson Road, Woodbury, Minnesota (Minneapolis-St. Paul MSA, an established top-tier U.S. life science cluster), net-leased to Kindeva Drug Delivery L.P., a global pharmaceutical CDMO specializing in drug-device combination products (pulmonary/nasal, injectable, transdermal delivery) and backed by private-equity sponsor Altaris Capital Partners. The Trust holds the asset subject to a Master Lease to 11200 Hudson Leaseco, LLC, an unaffiliated, thinly capitalized newly-formed Master Tenant funded by a $1,900,000 Sponsor-financed Demand Note that subleases to Kindeva under a 15-year Tenant Lease commenced September 17, 2021 and expiring September 30, 2036 with three five-year extension options, structured as a net lease under which the Tenant bears maintenance and services and the Master Tenant passes through taxes, insurance, and utilities. The Property was acquired indirectly by a Sponsor affiliate for a $57,750,000 MIPA price against a $59,000,000 BBG as-is appraisal, capitalized at $61,961,253 comprising $30,661,253 of Class 1 equity and an assumed $31,300,000 Wings Financial Credit Union loan. The income thesis is single-tenant, in-place net-lease cash flow; the nine-year financial forecast aligns with the November 1, 2032 loan maturity and the Sponsor's business plan contemplates disposition within approximately five to nine years. Distributions to Holders are projected to begin at 4.18% and range 4.01%-4.10% thereafter, partially shielded by depreciation. The offering is a best-efforts Regulation D placement whose termination date has been extended serially from January 31, 2025 to January 31, 2026 and then to July 31, 2026.
Investment Highlights
- The asset is 100% net-leased to Kindeva Drug Delivery L.P., a global contract development and manufacturing organization focused on drug-device combination products that operates nine facilities across the U.S. and U.K. and is backed by Altaris Capital Partners, under a 15-year lease commenced September 2021 and running to September 30, 2036 with three five-year extension options; the long-dated term extends roughly three years beyond both the November 2032 loan maturity and the planned disposition window, providing a contracted income stream with no rollover exposure during the hold.
- The 2021-vintage, purpose-built 137,811 RSF facility on 11.73 acres constitutes mission-critical, build-to-suit pharmaceutical manufacturing and R&D real estate in the Minneapolis–St. Paul MSA, one of the highest-ranked U.S. life science clusters; specialized fill-finish, container-closure, and drug-device assembly infrastructure elevates tenant switching costs and supports retention economics that generic office or industrial product cannot replicate.
- Going-in leverage is moderate at a 50.52% loan-to-capitalization, $31,300,000 against $61,961,253 of total capitalization, and the in-place yield produces positive leverage against the 4.50% fixed coupon during the interest-only window, generating Year 1 net operating income that covers debt service at roughly 2.56x before amortization commences.
- The assumed Wings Financial Credit Union facility carries a 4.50% fixed coupon with 36 months of interest-only payments, front-loading distributable cash flow and supporting the 4.18% Year 1 distribution before scheduled amortization beginning December 2025 on a 300-month schedule and the November 2029 rate reset compress coverage in the back half of the hold.
- Distributions are projected to be partially tax-deferred through depreciation and amortization, and the structure embeds an Exchange Right under which the Sponsor's Exchange Entity may, after a one-year hold, call Holders' Interests for operating-partnership units in a transaction intended to qualify under Code Section 721 or 351, offering a potential UPREIT continuation path most single-asset DSTs lack, though the election rests with the Sponsor rather than the investor.
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 single-tenant, net-leased life sciences credit-lease underwritten primarily for in-place income, with the principal variables residing in lease-schedule mechanics, counterparty depth, and refinancing rather than occupancy or the capital stack, which is moderately levered and fixed through 2029. The Minneapolis-St. Paul life science positioning and the mission-critical, build-to-suit nature of the improvements are genuine supports for tenant retention and residual value, and the lease term comfortably exceeds the hold, removing rollover risk from the base case. Against this, the underwriting embeds three coincident pressures - a Year 4 contractual rent decline, the commencement of amortization, and a 2029 reset to a projected 6.25% - that together compress coverage from roughly 2.56x to below 1.5x over the forecast even before the exit, leaving the 4.01%-4.10% distribution band with limited cushion if any assumption underperforms. The thin, Sponsor-financed Master Tenant capitalization and an entry basis above appraised value are the chief structural frictions, while the 4.50% terminal-value exit assumption against the entry basis is the most aggressive single assumption. Serial extension of the offering termination date through July 2026 indicates a measured placement pace for a best-efforts, no-minimum Regulation D offering.
Pros
The offering presents a stabilized, single-tenant net-leased life sciences asset of recent 2021 construction in a premier life science MSA, leased to a global pharmaceutical CDMO under a long-dated 15-year term that extends beyond both loan maturity and the disposition window, eliminating in-hold rollover exposure. Leverage is moderate at a 50.52% loan-to-capitalization with a 4.50% fixed coupon through 2029 and interest-only payments that front-load coverage near 2.56x in Year 1, while the in-place yield produces positive leverage during the fixed-rate period. The net-lease structure minimizes landlord operating exposure, the specialized build-to-suit improvements raise tenant switching costs, distributions are projected to be partially tax-sheltered by depreciation, the capitalization is broadly corroborated by a third-party BBG as-is appraisal, and the structure preserves an optional Section 721/351 exchange continuation path.
Cons
The Tenant's contractual rent schedule embeds a pronounced step-down, with forecast net operating income declining approximately 11.67% in Year 4 as Master Lease Base Rent falls from $3,541,236 to $3,127,921 around 2027, pressuring distributable cash flow at the same time coverage is already eroding from the onset of amortization. The Master Tenant is a newly-formed, unaffiliated single-purpose entity with no substantial assets beyond its leasehold, capitalized only by a $1,900,000 Demand Note that was itself financed by the Sponsor, concentrating master-lease performance risk in a thinly capitalized counterparty whose support traces back to the Sponsor. The fixed 4.50% coupon expires in November 2029 and resets to a projected 6.25% at 2.00% over the three-year U.S. Treasury, driving scheduled debt service from roughly $1.41 million to as high as $2.48 million and compressing debt-service coverage toward approximately 1.38x by Year 7 before any adverse rate move. The underlying Tenant, Kindeva, is privately held with no public credit rating, leaving credit assessment dependent on a private-equity-owned CDMO in a cyclical pharmaceutical-services sector. Total capitalization of $61,961,253 exceeds both the $59,000,000 as-is appraisal and the $57,750,000 affiliate-acquisition price, embedding roughly $2.87 million of offering load that disposition pricing must overcome, and the exit is underwritten at a 4.50% terminal value against the entry basis, an approximately 130-basis-point compression assumption.
Financing
Financing terms for this offering are summarized below.
Benchmark Comparison
| Metric | This Offering | Benchmark | Difference |
|---|---|---|---|
| Average Yield | 4.07% | 4.07% | +0.00% |
| Max Yield | 4.18% | 4.18% | +0.00% |
| 10-Yr Income Growth | 0.00% | 0.00% | — |
Benchmark reflects the average of comparable Life Sciences offerings. Differences are relative to the benchmark.
Offering Documents
Offering Documents Available By Request
About the Sponsor
NexPoint is a Dallas alternative manager—an affiliate of the former Highland Capital complex—overseeing roughly $15 billion across listed and non-listed REITs, DSTs, 1031 exchanges, interval funds and a BDC. Its breadth across real estate and credit, paired with significant own-capital co-investment, gives it institutional heft in the exchange channel, and its concentrated Dallas/Uptown asset base reflects conviction in its home market. For exchangers, the platform offers a diversified menu backed by a sizable alternatives manager.
This page describes a specific Delaware Statutory Trust offering (NexPoint Life Sciences III 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.