Passco Preston Ridge DST

Offering Overview

A 2020/2023-vintage, 340-unit garden-style multifamily community ("Preston Ridge") on 24.07 acres at 2001 Startown Road, Hickory, North Carolina, comprising 13 four-story wood-frame buildings totaling 326,381 net rentable square feet across one-, two-, and three-bedroom plans averaging 960 SF with 654 parking spaces, 89.12% occupied per the January 8, 2026 rent roll. The Trust acquired the fee interest on January 8, 2026 from an unaffiliated seller for a gross purchase price of $73,082,500 (net $71,300,000 plus a $1,782,500 advisory fee to affiliate Passco Management Services), against a November 21, 2025 as-is appraisal of $73,300,000. The Project is subject to a Master Lease with Passco Preston Ridge MT, LLC, a thinly capitalized affiliate of the Depositor funded with $50,000 cash plus $310,000 and $500,000 notes guaranteed by Passco Companies, and is professionally managed by Fogelman Properties. Total capitalization is $83,565,000, comprising $44,350,000 of Class A equity and a $39,215,000 KeyBank loan under the Fannie Mae DUS program fixed at 5.01% with a seven-year interest-only period and a 30-year amortization schedule, maturing in 2036. Net distributions to Holders are projected at 4.45% in 2026, rising to roughly 5.19% by 2032 before dipping to 4.72% in 2033 as amortization commences and recovering to 5.02% by 2035, over a 10-year hold. The business plan is a Core-Plus strategy combining a recently built, stabilizing asset with a modest capital-improvement program in the Hickory submarket of western North Carolina.

Investment Highlights

• The 2020/2023-vintage, 340-unit garden community is among the newest assets of the recent DST cohort, with only six years of effective age, wood-frame construction, and a 1.92-per-unit parking ratio; the recent build materially limits near-term capital expenditure relative to older value-add multifamily and supports a lower-risk operating profile.
• The $39,215,000 KeyBank loan under the Fannie Mae DUS program is fixed at 5.01% with seven years of interest-only payments, holding leverage to a conservative 46.93% loan-to-capitalization and roughly 53.5% of the $73,300,000 appraised value; agency execution, a green-spread reduction, and a rate buydown lower the coupon, and the structure defers amortization drag through 2032.
• The asset was acquired at $209,706 per unit against a $73,300,000 as-is appraisal that exceeds the $73,082,500 gross purchase price, providing a basis modestly below appraised value and positive leverage over the 5.01% fixed coupon during the interest-only period.
• Net distributions to Holders are projected to rise from 4.45% to approximately 5.19% by 2032 on rent growth, with a temporary dip to 4.72% in 2033 when the seven-year interest-only period ends and 30-year amortization begins, before recovering to 5.02%; the 4.81% ten-year average reflects a stabilizing rather than fully stabilized rent roll at 89.12% occupancy.
• Day-to-day operations are handled by Fogelman Properties, an experienced third-party multifamily operator, under a Passco-affiliated master lease; the Hickory submarket showed competing-property occupancy of 88.9% to 96.0% and average asking rents near $1,583 per unit, framing the lease-up and rent-growth opportunity against a limited local supply pipeline.

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 recently constructed, stabilizing garden-apartment asset financed conservatively with fixed-rate agency debt, where the capital stack is genuinely low-risk - 46.93% leverage, fixed 5.01%, seven-year interest-only - and the principal variables reside in lease-up execution, the tertiary Hickory submarket, and the affiliated master-tenant structure. The recent vintage and below-appraisal basis are real supports, and the in-place yield provides positive leverage and a reasonable entry yield, but the projected 4.81% ten-year average net distribution is modest, and the amortization-driven dip in 2033 underscores that current cash flow weakens in the back half before any disposition. The thin, Passco-guaranteed master-tenant capitalization, the affiliate advisory-fee gross-up, and a single-asset concentration in a smaller western North Carolina market are the chief frictions, while the conservative leverage and recent construction are the clearest strengths. The investment suits an income-oriented 1031 exchanger comfortable with tertiary-market lease-up risk and a back-loaded, amortization-affected cash-flow profile.

Financing

Financing terms for this offering are summarized below.

Benchmark Comparison

Benchmark reflects the average of comparable Multifamily offerings. Differences are relative to the benchmark.

Offering Documents

Offering Documents Available By Request

About the Sponsor

Passco

Passco Companies is an Irvine multifamily and commercial sponsor, founded in 1998, whose founder Bill Passo helped pioneer the modern tenant-in-common 1031 structure that preceded the DST—giving the firm genuine standing in the history of securitized exchanges. With $4.1 billion in AUM as of late 2025 and more than $8 billion in lifetime acquisitions across multiple cycles, Passco concentrates on Class A multifamily in Southeastern and secondary/tertiary markets, owning or managing some 30,000 units. Its structural heritage and through-cycle acquisition record make it a seasoned, large-scale name in the category.