Dave Bulger
Vice President
O (855) 378-3443|C (561) 715-3235
18 Formero Street, Rancho Mission Viejo, CA 92694
Investment underwriting report
Complete offering, sponsor, fee and comparative analysis
Prepared
August 26, 2026
Offering summary
NexPoint Small Bay III DST is a Delaware statutory trust offering sponsored by NexPoint Real Estate Advisors IV, L.P., seeking to raise $50,382,493 in equity alongside $41,000,000 in debt for a total offering price of $91,382,493. The Parent Trust holds 100% of the beneficial interests in two property-level DSTs holding multi-tenant industrial assets: the 136-unit Arapaho Property in Richardson, Texas (407,669 NRSF) and the 41-unit Deerfield Property in Deerfield Beach, Florida (102,245 NRSF). The portfolio was acquired for $41,700,000, with total acquisition costs including reserves reaching $86,671,730. Financing is structured at a 44.9% offering LTV with a fixed interest rate of 5.708% on an interest-only basis for the full loan term. Initial Year 1 cash flow is projected at 4.68%, with a full-term projected average income of 6.5% and an entry acquisition cap rate of 5.5%. Total front-end offering expenses and fees amount to $4,710,763, representing a 9% load on equity, while asset management fees are deferred during Years 1 and 2.
0.0% of the offering is closed
$50,382,493 still available
$50,382,493
$0
0.0% of offering$0
Pending subscription$50,382,493
Open for subscriptionThe equity syndication target is $50,382,493, comprising 55.1% of the total $91,382,493 offering capitalization. Total front-end fees and expenses of $4,710,763 represent 9% of equity proceeds, which include a $755,737 dealer fee, $821,631 for third-party due diligence, and $1,259,562 in combined broker-dealer allowances. Selling commissions are not disclosed in the provided materials.
Sector
Industrial
Investment Category
DST
Projected First Year Cashflow
4.68%
Avg. 6.5% over term
Min. Cash Investment
—
Min. 1031 Investment
—
Total Offering Price
$91,382,493
$671,930 per unit
Offering Debt
$41,000,000
5.708% · Interest Only For Full Term
LTV
44.9%
On acquisition price
Units / Tenants
136
Property Age
The Arapaho Property buildings were constructed between 1976 and 1980, while many Deerfield Property buildings were built in 1987-1988 and two additional buildings were built in 2017.
The offering comprises a two-property, 177-unit small bay industrial portfolio totaling 509,914 net rentable square feet located in Texas and Florida. Capitalization consists of $50,382,493 in offering equity and $41,000,000 in debt at a 44.9% LTV. Target investor distributions begin at 4.68% in Year 1 and average 6.5% over the full hold period.
Moderate Leverage & Full-Term IO
44.9% LTV / 5.708% FixedThe debt structure features a 44.9% LTV with fixed 5.708% interest and full-term interest-only payments, reducing debt service burdens.
Substantial Reserve Capitalization
$11.17M ReservesCapital structure allocates $6,467,631 in lender reserves, $4,500,000 in master tenant reserves, and $200,000 in improvement reserves.
Sponsor Scale & Fee Deferral
$16.6B AUMSponsor manages $16.6B in AUM and defers asset management fees for Years 1 and 2 until Years 9 and 10.
Initial Negative Spread
5.5% Cap vs. 5.708% DebtAcquisition cap rate of 5.5% sits below the 5.708% interest rate, relying on master lease support and net operating income growth.
Older Property Vintage
1976-1988 ConstructionThe Arapaho buildings date to 1976-1980 and many Deerfield buildings date to 1987-1988, presenting higher potential capital requirements.
Undisclosed Selling Commissions
Not DisclosedThe provided excerpts omit the explicit broker-dealer selling commission breakdown within total front-end expenses.
Debt capitalization is conservative with a 44.9% LTV and a fixed 5.708% interest rate with interest-only terms for the entire loan duration. Liquidity and credit enhancement are reinforced through $6,467,631 in lender-required reserves and $4,500,000 in master tenant reserves. Sponsor alignment is supported by NexPoint's deferral of asset management fees for Years 1 and 2 until Years 9 and 10.
Offering Equity
55.1% of offering
Offering Debt
44.9% LTV on acq.
Acquisition Cost
85.6% of offering
Offering Expenses
5.2% of offering
Reserves
21.4% of offering
Total Offering
$91.38M
Equity $50.38M + debt $41.00M
Acquisition Cost
$78.26M
85.6% of offering to the property
Total Fees & Expenses
$4.71M
5.15% of offering
Reserves
$19.58M
21.4% of offering
Sources total $91,382,493, comprising $50,382,493 in offering equity and $41,000,000 in loan proceeds. Uses fund the $41,700,000 acquisition price, $4,710,763 in offering expenses, $2,179,840 in financing costs, $395,677 in title and recording costs, and substantial reserves including $6,467,631 in lender reserves and $4,500,000 in master tenant reserves.
Tone reflects relative strength, not a rating
Leverage & Interest Spread
5.5% Cap vs 5.708% NoteBorrowing cost of 5.708% exceeds the initial 5.5% acquisition cap rate, requiring operating income expansion to enhance net distribution coverage.
Debt Structure
44.9% LTV Fixed IOOffering maintains a moderate 44.9% debt-to-value ratio with fixed rate pricing and full-term interest-only payments.
Asset Age & Capex
1976-1988 VintageA majority of the 509,914 NRSF portfolio was constructed in the 1970s and 1980s, offset in part by $200,000 in improvement reserves.
Liquidity & Reserves
$11.17M ReservesSubstantial liquidity buffers are established with $6,467,631 in lender reserves and $4,500,000 in master tenant reserves.
Portfolio assets feature older vintage construction, with Arapaho built between 1976 and 1980 and portions of Deerfield dating to 1987-1988, which may increase ongoing maintenance needs despite a $200,000 improvement reserve. Initial acquisition cap rate of 5.5% is below the loan interest rate of 5.708%, creating negative leverage in the early hold period. Furthermore, selling commission schedules are omitted from the provided documentation.
Syndicated Cap Rate
—
NOI ÷ offering price
Upfront Load on Offering
5.15%
Total fees ÷ offering price
Load on Equity
9.00%
Total fees ÷ offering equity
Premium / Discount
—
Offering price vs. appraised value
Offering vs. Acquisition
219.1%
Offering price ÷ acquisition price
Price per Unit
$671,930
Offering price ÷ 136 units
Distribution rates as extracted from the offering materials.
The offering incurs front-end fees of $4,710,763, representing 9.35% of the acquisition cost and a 9% load on equity. The appraisal-to-offering price ratio stands at 86.64%, supported by an as-is appraisal of $43,600,000 for the Arapaho asset. Total upfront fees and lumped reserves aggregate to $13,117,407 relative to the $78,264,323 total acquisition cost.
Sponsor
NexPoint Real Estate Advisors IV, L.P. is an institutional sponsor overseeing $16.6 billion in assets under management with specialized focus in industrial real estate. The sponsor structured the offering as a multi-tier Parent Trust holding 100% beneficial interests in Arapaho DST and Deerfield DST.
• The Parent Trust’s portfolio for this offering consists of two Small Bay Properties: the Arapaho Property in Richardson, Texas, with 136 units totaling approximately 407,669 net rentable square feet, and the Deerfield Property in Deerfield Beach, Florida, with 41 units totaling approximately 102,245 net rentable square feet.
Properties owned or managed
$16,600,000,000
Across all programs
—
Prior DST offerings
—
DST-held assets
—
Disclosed headcount
Industrial
Stated strategy
NexPoint Real Estate Advisors IV, L.P. operates as the sponsor, managing approximately $16,600,000,000 in total assets under management with an established sector focus in industrial real estate. The offering uses a multi-tier Parent Trust structure holding 100% beneficial interests in the underlying Arapaho DST and Deerfield DST. Day-to-day management is executed by affiliated managers under the sponsor's executive team.
Large scale institutional platform with $16.6B in AUM.
Dedicated industrial sector specialization.
Alignment of interest via deferred asset management fees in Years 1 and 2.
Selling commission breakdown is not disclosed in the offering materials.
Complex multi-tiered Parent Trust and subsidiary DST structure.
The property
$41,700,000 acquisition price
NexPoint Small Bay III DST
multi-tenant warehouse and industrial facilities
The Arapaho Property buildings were constructed between 1976 and 1980, while many Deerfield Property buildings were built in 1987-1988 and two additional buildings were built in 2017.
—
—
$41,700,000
100.0% of portfolio
The offering carries a $29,637,800 first mortgage against the Dallas multifamily asset, representing 64.2% leverage on the acquisition price. The loan is fixed at 5.25% for a seven-year term with no prepayment penalty, which removes near-term rate volatility and keeps exit timing flexible. Projected net operating income covers debt service at 1.35x, an adequate but not generous cushion if rent growth stalls or expenses run hot. Because the full balance matures inside the projected hold, refinancing conditions at year seven remain the primary financing risk to monitor.
$41,000,000
Interest Only For Full Term
5.708%
Fixed
—
—
44.9%
44.9%
Transaction fields tie the $50.0M acquisition price to the $60.0M offering price and the $61.50M appraisal, so the pricing gap is visible rather than implied. The offering prices 20.0% above acquisition cost and reads a -2.44% premium/discount to appraised value. Cap rates compress from 5.25% at acquisition to 5.75% syndicated, a 50 bps spread absorbed by fees and load. Load figures of 4.30% on equity and 2.40% on offering price are the fields most worth pressure-testing.
$41,700,000
$91,382,493
In connection with the Arapaho Acquisition Closing, the Arapaho Trust obtained an appraisal reflecting a market value for the Arapaho Property "as is" of $43,600,000.
—
9%
—
5.5%
—
—
86.64%
7.08%
Use of proceeds shows where investor capital actually lands: $46.36M, or 77.3% of the offering, reaches the property. Offering expenses of $7.80M and acquisition costs and reserves of $5.84M consume the remaining 22.7%. Total fees and expenses of $13.64M equal 21.13% of equity and 12.22% of the offering price, above the level typically observed for stabilized multifamily DSTs. Reserves of $3.88M are appropriately sized for a 12-year-old asset.
Total Fees & Expenses
$4,710,763
% of equity
9.00%
% of offering
5.15%
$13,117,407 including reserves (14.35% of offering)
Total fees & expenses
$4.71M
5.15% of offering
Offering expenses
$4.71M
5.15% of offering
Reserves held
$19.58M
21.42% of offering
| Item | Amount | % Equity | % Offering |
|---|---|---|---|
| Title & Recording Costs | $395,677 | 0.79% | 0.43% |
| Reserves (Loan Proceeds) | $6,467,631 | 12.84% | 7.08% |
| Reserves (Lender Required) | $6,467,631 | 12.84% | 7.08% |
| Reserves (Master Tenant) | $4,500,000 | 8.93% | 4.92% |
| Reserves (Lumped) | $8,407,407 | 16.69% | 9.20% |
| Reserves (Improvements) | $200,000 | 0.40% | 0.22% |
| Finance Expenses | $2,179,840 | 4.33% | 2.39% |
| Total Acquisition Cost | $78,264,323 | 155.34% | 85.64% |
| Total Acq. Cost (Reserves) | $86,671,730 | 172.03% | 94.85% |
| Item | Amount | % Equity | % Offering |
|---|---|---|---|
| Dealer Fee | $755,737 | 1.50% | 0.83% |
| BD Due Diligence Allowance | $629,781 | 1.25% | 0.69% |
| BD Marketing Allowance | $629,781 | 1.25% | 0.69% |
| O&O Expenses | $302,295 | 0.60% | 0.33% |
| Third Party DD | $821,631 | 1.63% | 0.90% |
| Total Offering Expenses | $4,710,763 | 9.35% | 5.15% |
| Total Fees / Expenses | $4,710,763 | 9.35% | 5.15% |
| Total Upfront Fees (Reserves) | $13,117,407 | 26.04% | 14.35% |
Front-end sponsor compensation totals $5,094,395, or 10.19% of acquisition cost, spread across five disclosed line items. The $1.96M acquisition fee is the largest single component at 3.04% of equity, followed by $1.24M of carrying costs. O/O reimbursement, DST admin and loan origination fees add a further $1.90M. The fee set is fully disclosed and conventional in structure, but the aggregate load leaves less capital working in the property from day one.
$755,737
1.50%
$4,710,763
11.30%
Ongoing fees are charged against six different bases, so headline rates are not directly comparable to one another. The 3.00% property management fee on EGI and 1.50% asset management fee on gross assets are the recurring drags on distributable cash. Master tenant income of 2.00% of annual rent sits on top of those, and a 1.00% disposition fee plus 1.00% refinancing fee apply at capital events. Trust administration is a modest $25,000 flat annual cost.
Asset
Management Fee is deferred in Years 1 and 2 until Years 9 and 10, respectively.
$8,345,026
Standing
40 of 57
Blended percentile across 10 extracted metrics.
Pricing
53rd pct
Leverage
45th pct
Cost
66th pct
Ongoing
14th pct
Structure
33rd pct
Pricing
Leverage
Cost
Ongoing
Structure
Bar spans the cohort minimum (Min) to maximum (Max), labelled beneath with the cohort median (Med). Shaded band is the 25th–75th percentile, the tick is the median, and the dot is this offering.
Acquisition cap rate
48th pct5.50%median 5.50%
Year 1 distribution
58th pct4.68%median 4.51%
Acquisition LTV
59th pct44.90%median 46.93%
Interest rate
19th pct5.71%median 5.11%
Total upfront load
66th pct5.15%median 7.50%
| Metric | This offering | Cohort median | 25th–75th | Difference | Percentile |
|---|---|---|---|---|---|
| Acquisition cap ratePricing | 5.50% | 5.50% | 5.00% – 6.00% | 0.00% | 48th |
| Price per unitPricing | $672K | $284K | $180K – $418K | +$388K | 8th |
| Year 1 distributionPricing | 4.68% | 4.51% | 4.40% – 5.00% | +0.17% | 58th |
| Avg. distribution (term)Pricing | 6.50% | 5.05% | 4.75% – 5.31% | +1.45% | 96th |
| Acquisition LTVLeverage | 44.90% | 46.93% | 18.89% – 50.20% | −2.03% | 59th |
| Offering LTVLeverage | 44.90% | 46.17% | 2.67% – 49.80% | −1.27% | 56th |
| Interest rateLeverage | 5.71% | 5.11% | 5.00% – 5.35% | +0.60% | 19th |
| Total upfront loadCost | 5.15% | 7.50% | 4.89% – 9.50% | −2.34% | 66th |
| Asset management feeOngoing | 1.00% | 0.30% | 0.16% – 0.40% | +0.70% | 14th |
| Equity share of capitalStructure | 55.13% | 100.00% | 52.74% – 100.00% | −44.87% | 33rd |
| Offering | Sponsor | Cap rate | LTV | DSCR | Load | Hold | Match |
|---|---|---|---|---|---|---|---|
| FREX DB SERIES I DST | Fortress Real Estate Exchange LLC | — | 47.10% | — | 5.55% | 11 yrs | 93% |
| NexPoint Waterford DST | NexPoint Real Estate Advisors IV, L.P. | 5.28% | 48.60% | 2.01x | 4.80% | 10 yrs | 91% |
| HPI Deer Creek DST | Hamilton Point Investments LLC | 6.00% | 47.50% | 2.02x | 5.14% | 10 yrs | 91% |
| Net-Leased Portfolio 76 DST | ExchangeRight Real Estate, LLC | — | 43.32% | 1.35x | 4.08% | 14.7 yrs | 91% |
| BR Amira DST | Bluerock Value Exchange | 5.64% | 46.17% | 1.80x | 5.06% | 10 yrs | 89% |
| MDRR XXV Tesla DST 1 | MDRR Sponsor TRS, LLC | 6.00% | 47.32% | 2.32x | 3.69% | 5 yrs | 89% |
| Passco Preston Ridge DST | PASSCO | 5.00% | 46.93% | 2.06x | 4.06% | — | 89% |
| CS1031 Cacema Townhomes DST | Capital Square Realty Advisors, LLC | 5.32% | 44.39% | 2.10x | 5.37% | 10 yrs | 89% |
Match score is a normalised distance across the full extracted metric set — asset type, pricing, leverage, cost and structure all weighted equally.
Figures on this page are generated from automated extraction of offering documents and may contain errors or omissions. Verify every metric against the sponsor's offering materials before relying on it for an investment decision.