BR Churchill Downs is a 272-unit Class B townhome and garden apartment community in the Pinehurst Metro (Aberdeen, NC), acquired in April 2025 for $56.6M, ~$1.3M below appraised value, and financed with a $30.7M KeyBank/Fannie Mae DUS loan (5.13% fixed, interest-only, 44.86% LTC). The value-add business plan layers in-unit washer/dryer installation and interior/exterior upgrades atop $1.5M of prior-owner capex under RPM Living management. The Pinehurst Metro sits 70-90 miles from the Charlotte and Raleigh-Durham growth markets, with an optional Section 721 FMV rollover into a Bluerock-affiliated operating partnership.
31 acres with 288,480 rentable SF (one-, two-, and three-bedroom units averaging 1,061 SF), completed in 2000 and 2003. 13% fixed, interest-only, maturing May 2035) and equity. 5M of prior-owner capex, supported by revenue-management software and third-party management (RPM Living).
The Property is leased to an affiliated Master Tenant under a 10-year master lease paying Base Rent (debt service), Additional Rent (monthly distributions), and Supplemental Rent (performance distributions). The Pinehurst Metro sits ~70-90 miles from the high-growth Charlotte and Raleigh-Durham metros, with a golf-tourism-anchored economy and proximity to Fort Liberty. Exit options include an optional Section 721 FMV rollover into a Bluerock-affiliated operating partnership.
| Lender | KeyBank National Association |
| Interest Rate | 5.13% (Fixed) |
| Loan Term | 10 years |
| Interest-Only Period | 10 years |
| Total Debt | $30.7M ($30,739,000) |
| In-Place LTV | 44.86% |
| Year 1 DSCR | 2.04x |
The investment thesis is operational value creation on a Class B community with below-market rents (income-to-rent ratio ~4.5x on ~$79,000 average household income). The program installs in-unit washers and dryers at a rent premium, applies light interior upgrades to original finishes, and refreshes exteriors, landscaping, and signage, layered on $1.5M of capital already deployed by prior owners, with revenue-management software and a national third-party manager (RPM Living) engaged to drive rate growth.
The Property was acquired for $56.6M, approximately $1.3M below appraised value, providing a measure of day-one valuation cushion against the 44.86% leverage. The discount is modest in percentage terms (~2.3% of purchase price), so the equity margin of safety is real but thin.
The asset sits in the Pinehurst Metro, ranked the top micropolitan area in North Carolina for seven consecutive years and tenth nationally, positioned roughly equidistant (70-90 miles) between the high-growth Charlotte and Raleigh-Durham metros. The local economy is anchored by golf tourism (Home of American Golf, the USGA's second headquarters, and future U.S. Opens including 2029, with ~$805M in annual golf-tourism impact) and supported by healthcare and Fort Liberty defense employment.
Financing is a $30.74M KeyBank loan originated under the Fannie Mae DUS program, fixed at 5.13% and interest-only for the full 10-year term (maturing May 2035), at 44.86% loan-to-capitalization. The agency execution provides institutional terms and the interest-only structure maximizes current distributions and supports a healthy 2.04x Year 1 coverage, but the full principal balloons at maturity and prepayment/defeasance provisions constrain the exit window.
The master lease channels return through three layers: Base Rent covering debt service, Additional Rent producing a flat ~4.25% monthly distribution, and Supplemental Rent equal to 90% of revenue above a stated breakpoint. As the value-add program lifts revenue, investor cash-on-cash is forecast to ramp from 4.28% to 6.33%, a performance-linked upside atypical of stabilized DSTs, though the affiliated master tenant retains the Base Rent spread and 10% of the Supplemental Rent.
The offering pairs a below-appraised-value entry on a Class B multifamily asset with a defined value-add plan, in a supply-constrained, top-ranked North Carolina micropolitan market between two high-growth metros. Fannie Mae DUS fixed-rate financing at 5.13% delivers a healthy 2.04x Year 1 DSCR with interest-only payments that maximize current distributions, and the master-lease Supplemental Rent gives investors performance-linked upside that ramps cash-on-cash from 4.28% to 6.33%. Depreciation shelter is substantial (roughly 82%-127% of cash flow sheltered; ~8.7% average tax-equivalent yield), and broad demand tailwinds, a national housing shortage, depressed new multifamily supply, and the homeownership affordability gap, support the rental thesis.
The going-in distribution is modest at ~4.25%, and reaching the 6.33% forecast depends entirely on executing the value-add and clearing the Supplemental Rent breakpoint, operational and lease-up risk rather than contractual income. The day-one equity cushion is thin (acquired only ~$1.3M, ~2.3%, below appraised value) against 44.86% leverage, and the KeyBank loan is interest-only with the full $30.74M ballooning at the May 2035 maturity, with prepayment and defeasance provisions that constrain the 7-10 year exit window. The master tenant is a thinly capitalized Sponsor affiliate funded by an Operating Partnership demand note, and it retains the Base-Rent-to-breakpoint spread plus 10% of Supplemental Rent, partially misaligning upside. The Property is single-asset, single-market (Aberdeen/Pinehurst), Class B of 2000/2003 vintage with ~$1.2M of identified long-term capital needs, and the local economy concentrates in golf tourism and Fort Liberty defense activity. Insurance-cost inflation is a demonstrated risk: a related Sponsor program cut distributions from 4.25% to 3.00% in 2024 on a 62% year-over-year insurance spike before restoring them.
The analysis below is Baker 1031's educational opinion — not investment, tax, or legal advice, a recommendation, or a guarantee, and it does not replace the offering's Private Placement Memorandum (PPM), which governs in all respects. Read the PPM and consult your own CPA and attorney before investing.
BR Churchill Downs is a leveraged value-add multifamily DST with a bifurcated return profile: a modest ~4.25% contractual Additional Rent floor plus performance-linked Supplemental Rent that, if the business plan executes, lifts cash-on-cash toward ~6.3% and averages ~5.2% over a 7-10 year hold. Unlike stabilized net-lease DSTs, the thesis depends on operational execution, washer/dryer installs, light renovations, and revenue management lifting Class B rents in the supply-constrained Pinehurst micropolitan market. The Fannie Mae DUS fixed-rate interest-only loan provides strong 2.04x coverage and front-loads distributions but builds no equity and balloons in 2035, so terminal value hinges on NOI growth and exit pricing against a thin day-one basis discount. The after-tax profile is a meaningful draw (~8.7% average tax-equivalent yield on high depreciation shelter). The dominant sensitivities are value-add execution and rent growth, insurance-cost inflation (a proven distribution risk in the sponsor's related programs), and refinancing or selling the balloon within the hold window; the optional Section 721 FMV conversion into a Bluerock-affiliated operating partnership offers a tax-deferred alternative exit, but into an illiquid, sponsor-controlled vehicle.
The analysis below is Baker 1031's educational opinion — not investment, tax, or legal advice, a recommendation, or a guarantee, and it does not replace the offering's Private Placement Memorandum (PPM), which governs in all respects. Read the PPM and consult your own CPA and attorney before investing.
| Metric | This Offering | Market Avg. | Assessment |
|---|---|---|---|
| Avg. Income | 5.23% | 5.04% | Meets Average |
| Income Growth | 47.90% | 33.66% | Above Average |
| Peak Income | 6.33% | 5.95% | Meets Average |
Bluerock
Bluerock has sponsored syndicated 1031 exchanges for more than eighteen years, and its Bluerock Value Exchange (BVEX) arm packages multifamily, industrial and other core sectors into what it markets as 'Premier Exchange Properties.' Backed by a broader Bluerock platform of roughly $19 billion that also spans interval funds, the firm pairs institutional acquisition capability with a long DST track record across multiple cycles. Its national footprint and sector breadth position it as a diversified mid-to-large sponsor rather than a single-asset specialist.
Learn More About Bluerock →Documents for this offering. Available to signed-in investors.
Securities offered through Aurora Securities, Inc. (CRD #46147 / SEC #8-51322), member FINRA / SIPC; Baker 1031 Investments, LLC is independent of Aurora Securities, Inc. and is not a registered broker-dealer or investment adviser. This is not an offer to sell or a solicitation of an offer to buy any security; any offer is made solely by the confidential private placement memorandum (PPM), which qualifies all information herein in its entirety. Delaware Statutory Trust interests are speculative, illiquid securities offered under Rule 506(c) of Regulation D and sold only to investors whose accredited-investor status has been verified; offering documents and subscription materials are provided only after that verification. They involve substantial risk, including possible loss of the entire investment.
Distributions, yields, the cap-rate equivalent, DSCR, occupancy, and benchmark figures are sponsor estimates or projections, are not guaranteed, and may differ materially from actual results. Any tax-adjusted yield assumes a 40% effective rate for non-1031 cash investors and is not tax advice. No tax, legal, or investment advice is provided — consult your own CPA and attorney. Past performance does not guarantee future results.