Government Lease Holdings 2 is a two-property DST leased to the U.S. General Services Administration and occupied by the Department of Veterans Affairs (a 353,238 SF Kernersville, NC outpatient clinic) and U.S. Citizenship and Immigration Services (a 574,767 SF Camp Springs, MD headquarters, 50% interest), backed by U.S. Government credit. The $402.4M offering comprises $174.65M equity and $227.75M assumed debt (56.60% LTV) on full-service GSA leases, delivering a level ~4.70% cash-on-cash yield. Total return is weighted heavily toward back-ended residual value at lease expiry in 2035, introducing renewal and residual-realization dependency.
S. S. S. S. Government credit. 872%, maturing July 1, 2035, amortizing).
83%, interest-only through March 14, 2035 (extendable to 2042 on renewal). 60% loan-to-value). Both GSA leases are full-service/modified-gross, with the landlord retaining operating-expense and tax responsibility above base-year stops. 70% over the lease term, with total return weighted heavily toward back-ended residual value at lease expiry (projected VAWS residual approximately $275,990,000 against $34,527,396 equity; USCIS 50% interest approximately $176,500,000 in 2035 or $250,500,000 in 2042). Sponsored by NLCA Real Estate LLC, an affiliate of Net Lease Capital Advisors LLC; managing broker-dealer Clearview.
| Lender | US Bank Trust Company NA; Wells Fargo Trust Company |
| Interest Rate | 2.872% / 4.83% (Fixed) |
| Loan Term | 20 / 15 years |
| Interest-Only Period | USCIS interest-only; VAWS amortizing |
| Amortization | VAWS amortizing 20-yr; USCIS amortizes post-2035 |
| Total Debt | $227.7M ($227,745,000) |
| In-Place LTV | 56.60% |
The portfolio's defining strength is U.S. Government credit: both assets are leased to the GSA and occupied by federal agencies (VA and USCIS), among the strongest counterparties available in net lease, with a historically high government renewal rate. The qualifier is that GSA lease performance ultimately depends on congressional appropriations and agency footprint decisions, and the leases run through GSA rather than carrying the literal full faith and credit of the United States, so renewal is a policy and budget decision rather than a contractual certainty.
Both buildings are mission-critical to their occupants, which materially raises renewal probability. USCIS consolidated its entire national headquarters into the Camp Springs facility for the first time in the agency's history, from six prior locations, in a purpose-built Security Level IV building with conference, press-briefing, filming, and training infrastructure, making relocation highly disruptive. The Kernersville facility is a purpose-built VA hub clinic anchoring the regional hub-and-spoke outpatient model, with 78 physicians across 34 specialties and a 2023 urgent-care expansion serving a growing regional veteran population.
The capital structure embeds a rare financing advantage: the VA property is financed with 2020 tax-exempt bonds fixed at 2.872% for a 20-year term, a well-below-market, long-duration cost of capital that is effectively impossible to replicate in the current rate environment and is the principal engine of the projected equity residual. The USCIS loan is fixed at 4.83% and interest-only to its 2035 maturity. The locked-in, low-cost leverage is a structural asset, though it is heterogeneous across the two properties and concentrates the residual upside in the heavily levered VA bond structure.
Location quality is strong and government-anchored on both assets. Camp Springs sits in the National Capital Region, the nation's sixth-largest and among its most affluent and educated MSAs, adjacent to the Branch Avenue Metro Green Line station and minutes from Joint Base Andrews, with demand driven by the federal government. Kernersville sits in the Piedmont Triad at the intersection of five interstate highways, a logistics and healthcare crossroads with a growing and aging regional veteran population that supports sustained outpatient-care demand.
The return architecture is residual-driven and leverage-amplified: high leverage (approximately 84% on the VA property via the cheap tax-exempt bonds, with only a roughly 15.6% standalone equity slice) magnifies the equity claim on large projected terminal values, with the VA property's residual projected near $275,990,000 against $34,527,396 of equity and the USCIS 50% interest projected at roughly $176,500,000 in 2035 or $250,500,000 with renewal to 2042. This back-ended structure is the defining source of total return and, equally, the dominant risk, since the modest current yield contributes only a fraction of the projected outcome.
The offering pairs U.S. Government-backed GSA leases on two mission-critical, purpose-built federal facilities with long initial terms running to 2035, in strong markets (the affluent, federally driven National Capital Region and the growing Piedmont Triad), supporting durable, government-credit income. The capital structure locks in below-market, long-duration financing, most notably the 2.872% tax-exempt bonds on the VA property, a hard-to-replicate advantage that amplifies projected equity residuals. The deal delivers level monthly distributions of approximately 4.70% cash-on-cash over the lease term and projects substantial back-ended residual value at lease expiry, with an optional Section 721 contribution offering a potential tax-deferred continuation alongside a cash-election right. USCIS consolidated its entire headquarters into Camp Springs, and the VA clinic anchors a regional outpatient hub, both of which elevate renewal probability.
The leases are GSA full-service/modified-gross rather than triple-net, so the landlord retains operating-expense, tax (above base-year stops), insurance, and maintenance responsibility, exposing net cash flow to expense inflation that a true-NNN structure would pass through; the approximately 4.70% yield is net of these landlord obligations and sensitive to cost escalation. Total return is overwhelmingly back-ended and residual-dependent: with roughly 84% leverage on the VA property, the equity outcome hinges on realizing an approximately $275,990,000 residual in 2035 against a $34.5 million equity sliver, leaving the investment acutely sensitive to 2035 exit pricing, GSA renewal, and the re-leasing of special-purpose government buildings with thin alternative-use demand. A maturity cliff converges in 2035, as both leases (VA December 2035, USCIS January 2035) and both loans (July 2035, March 2035) come due within months of each other, concentrating renewal, refinancing, and disposition risk into a single window; USCIS carries only one 7-year renewal option (exercisable at least twelve months prior) and a Make-Whole Premium if not renewed. The USCIS asset is a 50% co-ownership interest, adding joint-control dependency, and GSA leases remain subject to congressional appropriations and the federal government's stated footprint-reduction agenda. Upfront costs are very high: third-party and affiliate financing costs total roughly 21.23% of equity on top of an approximately 8.62% syndication load, so nearly 30% of equity funds non-real-estate uses, and the structure (tax-exempt bonds plus a commercial loan, two lenders, base-year expense stops, reserve funds) is complex and operationally demanding. Current income is largely flat with limited contractual escalation.
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.
GLH 2 is a leveraged, residual-driven government net-lease DST whose modest approximately 4.70% level cash yield substantially understates a total-return profile dominated by back-ended terminal value, engineered through high leverage on below-market 2.872% tax-exempt bonds. On a risk-adjusted basis the credit is among the strongest available, GSA-backed federal occupancy, and the assets are genuinely mission-critical, but the full-service lease structure leaves the landlord bearing operating-cost inflation, and the investment is fundamentally a leveraged bet on 2035 residual realization rather than a current-income vehicle. The defining structural advantage is the locked-in, long-duration, low-cost financing that is impossible to replicate today and that magnifies the equity's claim on projected residuals; the defining risk is the synchronized 2035 lease-and-loan maturity cliff, with the single USCIS renewal option and 2035 exit pricing as the swing factors on the bulk of investor outcome. Macro fit is favorable insofar as government credit is defensive and cheap fixed-rate debt is a scarce asset in a higher-for-longer environment, but residual feasibility depends on agency renewal decisions amid a federal footprint-reduction agenda and on terminal pricing of special-purpose assets. Current distributions appear well-supported by in-place government rent net of landlord expenses; the credible variance, and the majority of the projected return, lies in the 2035 residual, renewal, and refinancing outcomes, compounded by an unusually high all-in upfront cost load. The structure has no direct analog among the existing ledger holdings.
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 | 4.70% | 4.70% | Meets Average |
| Peak Income | 4.70% | 4.70% | Meets Average |
Net Lease Capital Advisors
Net Lease Capital Advisors is a Nashua, New Hampshire net-lease advisory and sponsorship firm, founded in 1996, with a distinctive specialization in single-tenant assets leased to the U.S. Government (GSA) and investment-grade corporates, and particular expertise in zero-cash-flow structures for 1031 exchangers. The firm cites more than $15 billion in closed net-lease transactions since inception—a lifetime volume figure rather than current AUM—and pairs property sponsorship with capital-gains tax structuring. Its government-credit niche is among the most defensive tenant profiles available to exchange investors.
Learn More About Net Lease Capital Advisors →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.