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News - Full Story Cove Capital Investments Provides Investors a Closer Look at Its Pharmacy Net Lease 65 DST in Downtown Encinitas, CA Through Aerial Drone Photography

LOS ANGELES, April 16, 2024 /PRNewswire/ -- Cove Capital Investments announced it has released an exclusive 360-degree aerial video of its Pharmacy Net Lease 65 DST a Regulation D Rule 506 (c) offering in downtown Encinitas, CA. This offering is available for 1031 exchange as well as direct cash investors.

Cove Capital acquired the net lease trophy asset in 2023 shortly after a popular national pharmacy signed a long-term, corporately backed lease, reasserting its desire to remain in the downtown Encinitas location just blocks from San Diego's famous Moonlight Beach.

Cove Capital Investments, a private equity real estate firm and DST sponsor company, announced it has released the exclusive video footage of the 11,370 square foot free-standing building in order to showcase the asset's strategic location along a dense commercial thoroughfare and retail trade area in one of California's most popular beach communities.

Dwight Kay, Managing Member and Founding Partner of Cove Capital Investments explained that the Cove Pharmacy Net Lease 65 is being offered to accredited investors as a 100% debt-free asset available for 1031 exchange and direct cash investments.

"The vast majority of investment real estate offerings are leveraged - especially in the DST space. Like Cove Pharmacy Net Lease 65, Cove Capital has purchased the majority of its DST assets specifically for debt-free offerings. We believe this strategy is an attractive option for those investors seeking to potentially mitigate risk by avoiding leverage and long-term mortgages encumbering the properties.

This unleveraged nature of the DST will pair nicely with the fact that the property neighbors multiple regional retail centers occupied by national tenants, including Sprouts Farmers Market, Kohl's, Peet's Coffee, and LA Fitness. We believe that in addition to our investors, the broker/dealers, registered representatives, and RIA's will also be attracted to this particular DST offering," said Dwight Kay, Managing Member and Co-Founder of Cove Capital Investments.

According to Chay Lapin, Managing Member and Founding Partner of Cove Capital Investments, the net lease asset was acquired as part of Cove's Net Lease 65 DST, LLC, a Reg D, Rule 506C offering. The fund seeks to raise $10 million from accredited investors with a minimum investment of $50,000.

"While each one of our offerings provides investors unique investment advantages,we feel the acquisition of the of this leading pharmacy brand asset in downtown Encinitas will be a very attractive offering to Cove Capital investors. First, the property is located in one of the most beautiful and affluent coastal communities in Southern California, second the asset is secured by a new long-term net lease that is corporately guaranteed by WBA, Inc. In addition, this Encinitas pharmacy location is one of the top performing stores among the chain's 8,802 locations," said Lapin.

Some of the highlights of the Cove Pharmacy Net Lease 65 Include:

100% Debt-Free Acquisition

The Cove Pharmacy Net Lease 65 was purchased as an all-cash, 100% debt-free acquisition as a purposeful strategy to mitigate risk associated with potential lender foreclosure or cash flow sweeps. In addition, Cove Capital believes the best DST investments are debt free for a variety of reasons which include:

  • Debt-Free Real Estate Creates Greater Flexibility for Investors
  • Debt-free DSTs real estate provides greater flexibility for investors to hold through potential market downturns, credit crunches, or recessions. Debt-Free Real Estate Helps Investors Avoid Cross Collateralization
  • One of the things lenders will often insist on from investors is the need to use multiple assets as collateral to secure a single loan. Called cross collateralization, this action allows the lender to lay claim to all the collateralized properties in the case of default. Debt-Free DST Real Estate Offerings Can Potentially Provide Higher Cash Flow
  • One of the things that Cove Capital is seeing in today's higher interest environment is that some of debt-free real estate offerings have a higher projected cash flow than leveraged DST investments because there is no monthly debt service that needs to be paid to a lender. Debt-Free Real Estate Offerings Have No Balloon Mortgage Maturity Payment

Most leveraged DST properties have a balloon mortgage maturity attached with the loan. The balloon mortgage is a hard maturity date. That means if you don't sell the property by that date or pay back the loan, then the lender will seek to take back the property through a foreclosure or other mechanism. Debt-free DST properties don't have balloon mortgage maturity payment risks associated them.

Tenant Signed Long-Term Absolute NNN Lease

Cove Capital acquired this Pharmacy 65 DST with a long-term absolute NNN lease in place with Walgreens. An absolute NNN (Triple Net) lease is one where the tenant assumes the responsibility for all expenses associated with the property on top of paying rent. These expenses typically include property taxes, insurance, and maintenance costs, leaving the DST investor and sponsor landlord with minimal to no ongoing financial obligations related to the property.

Strong Tenant Commitment to Location

When Cove Capital acquired the Pharmacy Net Lease 65 DST asset, the tenant, Walgreens, had recently a 15-year lease extension with 5% increases every five years. This represents two potentially important points. One, because the tenant has been at this location for several years before extending their lease for another 15-years, and has a corporate lease guarantee with Walgreens Corporate, we feel these are good indicators the tenant has a strong commitment to the area. Second, the recently signed long-term net lease agreement with 5% increases every five years has the potential to act as a hedge against inflation which will help grow our Net Operating Income on the property.

Essential Business

The Pharmacy Net Lease 65 DST is leased to an essential business and essential retailer. While past performance doesn't guarantee future results, Walgreens has performed well from the Great Financial Crisis to COVID-19 pandemic. Being an essential business, they remained open and paying rent when other companies were either forced to close, or unable to pay rent.

Trophy Asset Location

Cove Capital considers the Pharmacy Net Lease 65 a trophy asset because of the intrinsic value of its location - Encinitas, CA.

Encinitas is a beach city in the North County area of San Diego County. Located within Southern California, it is approximately 25 miles (40 km) north of San Diego, between Solana Beach and Carlsbad, and about 95 miles (153 km) south of Los Angeles. This Delaware Statutory Trust asset is one of the top performing sites for Walgreens chain of stores and is located in one of San Diego County's dense commercial thoroughfare on the coast. The property neighbors several major regional retail centers including Encinitas Marketplace, Encinitas Village Shopping Center, and Camino Real Shopping Center.

About Cove Capital Investments

All offerings shown are Regulation D, Rule 506c private placements. DST properties and other private placement real estate investments are for accredited investors. Accredited investors are defined under SEC Rule 506 of Regulation D. Generally, an investor is deemed accredited if their net worth is greater than $1,000,000 exclusive of their primary residence and/or their annual income exceeds $200,000 for the current and past two years. Click here to view an applicable SEC bulletin. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney.

*Past performance is no guarantee of future results. *Diversification does not guarantee returns and does not protect against loss. *Preferred return is not guaranteed and is subject to available cash flow. *These examples are the experiences of a few of our clients and may not represent the experience of others. *These testimonials may not be representative of the experience of other clients. These clients were not compensated for their testimonials. Please speak with your attorney and CPA before considering an investment. *All DST properties shown are Regulation D Rule 506(c) offerings. All Offerings are subject to availability. There can be no assurance that any DST properties and offerings will be available for purchase. *DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million exclusive of primary residence, and/or possessing an annual income of over $200,000, or $300,000 with a spouse and expects the same or greater for the current year) and accredited entities (generally described as an entity owned entirely by accredited investors and/or owning investments in excess of $5 million). Please check with a qualified CPA or attorney to determine if you are accredited.

All DST properties shown are subject to availability. There can be no assurance that the DST properties shown will be available.

This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the "Memorandum"). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. By visiting the covecapitalinvestments.com site, other affiliated portals, or corresponding on pages herewithin, you are opting for communications on behalf of Cove Capital Investments, or its affiliated companies.

Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument .Securities offered through FNEX Capital, member FINRA, SIPC.

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