Moody Village Towers is a 325,557 SF Class A, two-tower office complex (built 2019) in the Memorial City/Katy Freeway corridor of Houston, 99.64% leased to an energy- and finance-weighted tenant base as of October 2025. The income profile was materially restructured post-issuance via a Fourth Supplement that introduced an unsecured sponsor Note front-loading returns that decay to the base PPM rate by Year 10 as the Note matures in November 2031. The operating thesis is in-place income over a single-asset ~10-year hold, with disposition contemplated around the 2032 loan maturity.
A 325,557 RSF Class A office complex at 9651 and 9655 Katy Freeway, Houston (City of Hedwig Village, Memorial City/Katy Freeway corridor), built 2019 and comprising two six-story towers (Village Tower I, 141,249 RSF; Village Tower II, 141,059 RSF), a single-story plaza (43,249 RSF), and a six-story parking structure. The asset is held under a non-triple-net master lease to affiliate Moody Village Towers MT, LLC, with base rent supplemented by percentage rent equal to 70% of gross revenue over an escalating baseline. The income profile delivered to Holders was materially restructured after issuance: the Fourth Supplement (August 31, 2023) introduced an unsecured sponsor Note issued to every Holder, including those admitted before the supplement, which raised the anticipated all-in annual return above the base PPM proforma on a front-loaded basis that decays to the base rate by Year 10 as the Note matures November 30, 2031.
The offering also converted from Rule 506(b) to Rule 506(c) general solicitation, accredited-investor-only (Second Supplement), and its termination horizon was extended in stages to a 45-month anniversary of the Conversion Notice (Eleventh Supplement). 90/SF above the prior tenant's final-year rent. The operating thesis is income-in-place with a single-asset, roughly 10-year hold and a contemplated disposition around the 2032 loan maturity.
| Lender | Veritex Community Bank and American National Bank of Texas |
| Interest Rate | 5.09% (Fixed) |
| Loan Term | 10 years |
| Interest-Only Period | 10 years |
| Total Debt | $74.5M ($74,500,000) |
| In-Place LTV | 35.35% |
| Year 1 DSCR | 2.49x |
Going-in leverage is conservative relative to the broader DST office cohort: $74,500,000 of debt against $210,750,000 of total capitalization yields a 35.35% loan-to-cost, and even measured against the lower of two independent as-is appraisals ($184,300,000) the loan-to-value sits near 40%, preserving substantial equity cushion ahead of a disposition into a stressed office market.
The full $74,500,000 floating-rate facility (Term SOFR plus 185 bps) is hedged to a synthetic fixed coupon of 5.09% for a tenor co-terminous with the 10-year hold, neutralizing reset risk across the entire ownership period and insulating distributable cash flow from rate volatility in a higher-for-longer environment.
Investor income was enhanced post-closing by the Fourth Supplement's unsecured sponsor Note, lifting the anticipated all-in annual return from the base 4.50%–5.88% DST distribution band to 4.88%–6.00%, with the uplift concentrated in Years 2 and 3; because the Note carries a fixed 5.12% coupon and fixed per-Interest principal, the enhancement is dollar-defined rather than performance-linked and reverts to the base distribution in the final year as the Note matures, distinguishing it from genuine property-level income growth.
Income is structurally bifurcated between contractual base rent (roughly $7.32M annually, essentially flat) and percentage rent set at 70% of gross revenue above an escalating baseline, channeling revenue outperformance directly to Holders; projected percentage rent grows from $2.73M in Year 1 to $4.61M in Year 10, supplying the base-case ramp in property-level cash-on-cash from 4.50% to 5.88%.
The 2019 vintage and a stabilized 99.64% leased rent roll anchored by credit names (Prologis, Frost Bank, Veritex, EnCap, WSP USA) reduce near-term capital intensity and single-tenant concentration relative to suburban-office norms; recent leasing momentum is positive, with Tauber Oil's January 2026 backfill of vacated 2ND.MD space struck at roughly $3.90/SF above the departing tenant's final-year rate.
The offering pairs a recently constructed, stabilized Class A asset with conservative 35–40% leverage and debt synthetically fixed at 5.09% for the entire term, removing the rate-reset exposure currently impairing peer office vehicles. Tenant credit quality exceeds the suburban-office norm, aggregate occupancy is effectively full, recent re-leasing has been accretive on a rate basis, and the percentage-rent mechanism affords participation in revenue growth. The post-closing sponsor-Note overlay raises near-term distributable cash to Holders above the base proforma, and new purchasers after December 2025 receive a 15%–20% price discount that further lifts effective cash-on-cash on invested capital. Macro positioning benefits from Houston MSA growth and an established Katy Freeway/Energy Corridor node, while two independent appraisals broadly corroborate acquisition-level valuation and the modest debt quantum limits property-level loss-given-default.
The master lease is expressly not triple-net, leaving the Trust exposed to expense inflation—real estate taxes alone are underwritten to climb from $2.15M to $2.80M over the hold—compressing net cash flow if reimbursements lag, and FY2024 unaudited combined property NOI of roughly $8.16M ran well below the comparable proforma year, indicating the base trajectory is not being met at the property level. Master-tenant capitalization is a structural weakness: projected Master Tenant Proceeds are negative in Year 1 (-$492,589), concentrating performance risk in a thinly capitalized related party. The post-closing income uplift is funded by an unsecured general obligation of the sponsor with no security and no trustee; a portion of each payment is return of Note principal rather than yield, the interest component is taxable ordinary income, and the Note allocation constitutes taxable boot for 1031 purchasers, diluting after-tax and tax-deferral efficiency. Tenancy carries energy-sector cyclicality and active rollover, evidenced by 2ND.MD's negotiated reduction and December 2025 vacatur of 26,507 SF. The recourse loan balloons at the same horizon as the planned sale, creating refinance-or-sell convergence risk, and the asset was acquired from a sponsor affiliate at a basis ($210,750,000 total cost; $199,901,945 assumed Project value) exceeding both as-is appraisals (~$184M). The repeated extensions of the offering-termination date to 45 months and the escalating purchase discounts signal a protracted, undersubscribed capital raise.
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.
The risk-adjusted profile is that of a modestly levered, stabilized Class A Houston office asset underwritten for income, deployed into a secularly challenged sector during a high-rate cycle, with a sponsor-engineered income overlay layered atop softening property-level performance. The financing structure—35–40% leverage termed-out at a synthetic-fixed 5.09%—is genuinely de-risking versus peers facing near-term maturities. The principal fragilities are in the assumptions and the income architecture rather than the capital stack: FY2024 actuals below proforma, an income enhancement dependent on the unsecured creditworthiness of the sponsor rather than the real estate, and a Year-10 exit that must clear a basis already above independent appraisal. The serial termination extensions and deepening 15%–20% new-purchaser discounts indicate weak placement velocity ($56.3M of $136.25M sold by December 2025) and imply that recent entrants transact at a more favorable effective yield than original Holders. Feasibility of the marketed all-in return is supported in the early years by the front-loaded Note but is not corroborated by property cash flow, and the convergence of loan maturity, Note maturity, and planned disposition concentrates outcome risk at the most uncertain point in the office cycle.
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 | 5.58% | 2.79% | Above Average |
| Income Growth | 22.95% | 11.48% | Above Average |
| Peak Income | 6.00% | 3.00% | Above Average |
Moody National
Moody National is a Houston vertically integrated firm, founded in 1996, specializing in hospitality and multifamily DSTs through a full-service platform—roughly 500 professionals spanning acquisition, development, construction and management, with in-house title and insurance. With $3 billion in total capitalization as of early 2025 and more than 3,000 investors served, its hospitality specialization is comparatively rare among DST sponsors and is backed by genuine operating control. The hotel concentration adds cyclicality, balanced by the multifamily book and integrated execution.
Learn More About Moody National →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.