How Cove Capital Investment’s History of Full-Cycle Events Can be Used to Evaluate DST Sponsor Firms

With a track record of successfully managing investments from acquisition through strategic full-cycle exits, Cove Capital Investments breaks down exactly what full-cycle performance data truly means for Delaware Statutory Trust investors*

* Past performance does not guarantee future results.  All offerings could result in a full loss of invested capital.  Please read each offering’s Private Placement Memorandum (PPM) for a full discussion of risk factors prior to investing.

Cove Capital Investments believes one of the most important measurements of a successful Delaware Statutory Trust sponsor company is the firm’s full-cycle track record. Since its founding, Cove Capital has completed multiple full-cycle events that have returned an average annualized return of 11.01% to investors. * Past performance does not guarantee future results.

The term “Full Cycle” is the name used to describe a Delaware Statutory Trust property that is purchased and then sold on behalf of a group of accredited investors after a designated period of time.

Cove Capital Investments recognizes that within the DST marketplace, full-cycle performance offers one of the clearest reference points for understanding how underwriting, asset selection, and real estate management decisions align with real-world results. Of course, beautiful marketing materials and optimistic pro formas can make a big impression on the average investor. However, for the sophisticated investor, the full-cycle track record should be the torch that shines a bright light on when the investment plan meets reality. 

Because accredited investors are in the business of investing capital into potentially income-producing real estate assets, closely examining how offerings behave over time is more like looking at the completed building rather than the architect’s blueprints. 

Full-cycle data provides context for evaluating performance patterns, understanding how different asset types respond to varying economic conditions, and determining how a sponsor’s strategy supports long-term execution.

What Full-Cycle Outcomes Reveal About the Presenting DST Sponsor Firm  

It is important to remember that a full-cycle track record isn’t a single data point, but rather it is a complete narrative on how an investment has performed over the course of its investment lifespan. 

That’s why Cove Capital Investments believes it is important to take a closer look at how full-cycle offerings can reveal about a particular sponsor firm. Some of these include:

The Discipline of Acquisition & Underwriting:

A strong history reveals whether a sponsor’s initial underwriting was prudent and realistic. Specifically, did the acquired assets perform as modeled through various economic cycles? In addition, does the sponsor firm have a history of overpaying for assets based on overly optimistic projections?

One of the things that distinguishes Cove Capital Investments from the majority of other DST sponsor firms is its focus on minimizing risk for investors by specializing in providing debt-free Delaware Statutory Trust offerings with zero leverage to its investor base.

This emphasis on debt-free DST real estate offerings is steeped deep within Cove Capital Investment’s core philosophy, which believes that potentially preserving investor capital is the number one goal of any real estate sponsor firm. Since debt is considered one of the most significant risk factors in any real estate investment, Cove Capital removes this component from each one of its debt-free DST offerings, which helps potentially mitigate risk among investors. 

Additionally, this debt-free thesis also directly relates to a decisive competitive edge when it comes to acquisition strategy as well. Unencumbered by third-party financing, Cove Capital often wins deals with stronger negotiating power, often acquiring assets at compelling, below-market values than would otherwise be accomplished using leverage. 

The Art of Asset Management & Operational Execution:

The long-term management of investment real estate is not only the most critical element of any full-cycle deal, but also where many other sponsor firms falter. A full-cycle history demonstrates a sponsor’s ability to actively manage an offering, including successfully leasing space effectively in competitive markets, controlling expenses, executing value-add renovations, and navigating re-tenanting strategies. This full-cycle history demonstrates the sponsor is truly a professional real estate operator, and not just a financier. 

The Strategy & Timing of the Exit:

This is the phase that ultimately defines potential investor returns. A proven track record showcases a sponsor’s strategic foresight and market timing. Do they have a history of selling assets into strength when the market is favorable, rather than being forced to sell due to loan maturities or lender pressure? Can they structure tax-efficient exits, such as 721 UPREIT transactions, that align with investor goals? Cove Capital’s debt-free business model provides a critical advantage here, granting unparalleled flexibility for these disposition decisions. Without the constraints of a lender’s timeline or refinancing requirements, we can execute exits based solely on optimal market conditions and investor strategy, not on the schedule of a third-party bank. This allows for patient, deliberate timing to potentially maximize sale proceeds. Most importantly, have they successfully returned capital to investors, completing the cycle? A history of disciplined, unforced exits is the ultimate proof of a sponsor’s alignment and operational maturity.

Cove Capital Investments’ Dedication to Completing the Full-Cycle Journey for Investors 

From the very outset of each acquisition, Cove Capital Investments is hyper-focused on delivering positive full-cycle outcomes for our investors. Cove Capital has delivered full-cycle results across a variety of real estate asset classes, including industrial distribution centers, multifamily, and net-lease properties, all while delivering regular distributions while navigating varied market cycles.

This is achieved by first ensuring there is a clear alignment between the sponsor firm and the investor base. That’s why the Cove Capital principals regularly invest right alongside their investors to demonstrate their dedication and confidence in the offerings they are presenting to investors. 

Second, Cove Capital Investments believes in showing transparency through every phase of the investment cycle, keeping investors fully apprised of events, strategies, and opportunities. 

Third, the Cove Capital team of fully integrated real estate professionals has extensive experience navigating every type of Delaware Statutory Trust investment, including helping guide investors through the entire lifecycle of 1031 exchanges, DSTs, and even 721 exchange UPREIT conversions.

Why Investors Evaluate Full-Cycle Outcomes When Selecting DST Sponsors

Investors assessing DST opportunities often look for patterns across a sponsor’s completed programs to determine whether outcomes reflect consistent methodology or isolated success. A track record of full-cycle completions shows that a sponsor company has closely evaluated the potential full lifecycle of a DST, a key consideration for investors who rely on steady execution throughout the hold period. It is important to always remember that past performance does not guarantee future results.  All real estate investments, including DSTs, may lose value.  Please read the full PPM before investing.

Full-cycle data can help investors answer important questions, such as how offerings performed relative to initial projections, whether distributions remained steady, and how each asset navigated market challenges. Reports detailing average annualized returns across completed debt-free programs offer another reference point, though past performance cannot guarantee future outcomes.

Full-Cycle Results as a Tool for Evaluating Long-Term Investment Strategies

DST investors typically seek stability, predictable income potential, and a passive ownership structure. Full-cycle data plays a central role in comparing whether offerings are historically aligned with these goals. Completed outcomes help illustrate the real-world behavior of various asset types, including essential-business net-lease properties, value-add multifamily communities, and strategically placed industrial distribution centers.

 “Full-cycle results help investors understand how discipline in underwriting and asset selection carries through to outcomes across different market cycles,” says Dwight Kay, Managing Member and Co-Founder of Cove Capital Investments. 

Full-Cycle Outcomes Support Better Decision-Making for 1031 Exchange Investors

For investors completing a 1031 exchange, selecting a DST replacement property requires confidence that the sponsor has a track record of following through on its stated plans. Full-cycle results provide a historical record that cannot be replicated through forward-looking projections alone. Investors can use this information to evaluate whether offerings deliver continuity in distributions, occupancy rates, and strategic business plan designed to evolve across the investment’s entire lifecycle.

These insights add depth to the due diligence process. A well-documented full-cycle history shows how a sponsor responds when conditions shift, whether distribution levels were maintained or adjusted, how the property was marketed for sale, and which factors supported final investor outcomes.

A DST Investor’s Checklist for Evaluating a Sponsor’s Full-Cycle Record

This brings us to perhaps the most important and practical step in evaluating any DST sponsor firm: performing some basic due diligence. Move beyond projected returns and ask specific questions that reveal important real-world experience. These questions include: 

• Can you show me specific, completed investments that have gone full-cycle and delivered returns to investors? 
• How have you structured exit strategies through the full-cycle sale? 
• How did your offerings perform during a variety of market conditions or even economic downturns? 
• What is your experience with the 721 exchange UPREIT and how did you protect investor optionality? 
• Is your 721 exchange a mandatory (aka forced) exit, or do investors receive a choice if they want to participate or not?
• Was this DST subject to a sponsor markup, and was it an affiliated transaction (non-arm’s-length sale)?  If yes, how long ago did the sponsor actually purchase the DST property, what price did they purchase it for, and what price are they selling it to DST investors for?
• Tell me about the Final Destination REIT that my DST will potentially be UPREIT’ed into – what amount of debt does the REIT have? Is the dividend covered fully by operations, or are you paying dividends out of borrowings?  When were the majority of your REIT properties purchased?  Was it at the peak of the last market cycle?

Closing Perspective

Full-cycle outcomes remain one of the most informative tools for evaluating DST performance. They show how structure, tenant strength, operational oversight, and market timing intersect to produce real-world results. Completed programs help investors understand which strategies have worked under varied conditions, how risk has been managed, and what patterns may signal consistency or volatility. For accredited investors navigating the DST landscape, full-cycle data provides clarity grounded in documented experience and actual outcomes.  As always, past performance doesn’t guarantee future results as well and please reach each PPM before investing to fully understand the risk factors.

*Past performance does not guarantee or indicate the likelihood of future results.
*Average Annualized return is defined as total return including profit on sale and monthly distributions earned on an annualized basis and is calculated as if an investor closed on their DST investment the same day that the DST closed on the property.
*Total return consists of initial return of investor principal, monthly distributions, and profit upon sale.

*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 to investing. This material contains information that has been obtained from sources believed to be reliable. However, Cove Capital Investments, LLC does not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. 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. This material is not intended as tax or legal advice. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family 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. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals and risk tolerances. Securities offered through FNEX Capital, member FINRA, SIPC.

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