Inland Downers Grove Retail DST

Inland Downers Grove Retail DST

[This offering is fully subscribed. This is provided as an example of one of the offerings our affiliates have recommended to clients in the past.]

Description:

Inland Downers Grove Retail DST is an all-cash, net-leased investment property located directly off the interchange of the I-355 and I-88 freeways in Downers Grove, Illinois, a Western suburb of the Chicago metropolitan statistical area (MSA). It comprises two contiguous retail buildings, the first of which is triple-net-leased to Toys “R” Us (S&P rated B), and the second of which is double-net-leased to Best Buy, (S&P rated BB). Both tenants pay significantly below-market rates, providing an opportunity to increase cash flow to investors through market-appropriate rental increases, or, in the event of a default, re-leasing at higher rates to new tenants. Best Buy currently pays $11.92 per square foot (PSF) and Toy’s “R” Us pays $2.21 PSF, while average market rent is $16.87 PSF. The property is well positioned geographically, making it desirable to potential tenants. The location is among the broader MSA’s most important and densely occupied retail and office districts. There are two prominent malls nearby: Yorktown Mall, closer to the subject property, and Oakbrook Center, a high-end retail center to the East. Major tenants in the trade zone include Nordstrom, Target, Wal-Mart, Home Depot, Costco, Nordstrom Rack, JC Penney, Von Maur, Macy’s, Carson Pirie Scott, Bed Bath & Beyond, PetSmart, Sports Authority, Lord & Taylor, Neiman Marcus, Sears, HH Gregg, Sporting Goods, Marshalls, Office Max, Kohl’s, and Fry’s Electronics. Downers Grove itself is highly accessible, and Butterfield Road averages ~42,700 vehicles per day. The population within a five-mile radius of the property is 265,128, and that population has an estimated average household income of $101,713 as of 2013. The offering does not have any debt, so provides investors with less risk.


Tax-Benefits:

The investment was structured as an all-cash Delaware Statutory Trust (DST) designed to qualify as a replacement property in a 1031 exchange. Depending on each investor's tax basis at the time of invesment, many investors were also able to utilize depreciation to defer the taxes on a portion of the income derived from the investment.


Goals:

  1. Stable, long-term cash flow backed by value-oriented multi-tenant retail  property.
  2. Capital gains tax deferral as a 1031 replacement property option.
  3. An option for income-tax avoidance via depreciation.
  4. Potential long-term upside, either due to a sale or to increasing rental income.


Status:

This property has performed inline with its projections, providing steady cash flow for 1031 and cash investors. Individual investors in the program will be able to derive income-tax deferral from the depreciation allowed for commercial real estate.


Annualized Cash Flow Return:

Year2013
Projected5.5%
Actual5.5%
Variance0.0%


[Past performance does not guarantee future results. This offering’s results are not necessarily indicative of future recommended offerings. Real Estate Investing is subject to risk, including, but not limited to potential disruptions in cash flow, loss of principal, illiquidity, etc.]

 
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