Passco Riverside is a 265-unit Class A apartment community (Velo Riverside) completed in 2024 on the Northern Kentucky riverfront in Dayton, KY, directly across the Ohio River from downtown Cincinnati. The thesis monetizes cross-river cost arbitrage - CBD employer and logistics-cluster access against a lower Kentucky tax basis - into a forecast 2026 contraction in submarket deliveries. The operating plan targets occupancy normalization from 91.69% toward a modeled 94.24% via revenue management and ancillary-income growth, capitalized at 45.49% LTC on fixed-rate Fannie Mae DUS debt over a 10-year hold.
) completed in 2024, sited on the Northern Kentucky riverfront in Dayton, KY (Campbell County) directly across the Ohio River from downtown Cincinnati within the Cincinnati OH-KY-IN MSA. The mix is weighted to one-bedroom (~39% of units) and two-bedroom (~46%) product at a 1,042 SF blended average across four residential buildings with structured/garage parking. 4 mi) and the CVG/DHL/Amazon Air logistics cluster 17 mi south—against a lower Kentucky tax basis, layered onto a forecast 2026 contraction in submarket deliveries.
24%, executed through revenue-management pricing (YieldStar / Passco Pricing Model), an ancillary-income ramp (valet trash, utility reimbursement, parking, pet revenue), and light amenity capex under an affiliate master lease with Arlington Properties as third-party manager. 49% loan-to-cost on fixed-rate Fannie Mae DUS debt across a 10-year hold.
| Lender | KeyBank, National Association |
| Interest Rate | 4.85% (Fixed) |
| Loan Term | 10 years |
| Interest-Only Period | 7 years |
| Amortization | 30 years |
| Total Debt | $40.8M ($40,801,000) |
| In-Place LTV | 45.49% |
| Year 1 DSCR | 2.16x |
The submarket is transitioning through a supply-absorption inflection that underpins the rent thesis. Trailing deliveries ran hot—roughly 3,200 units, up ~44% versus the recent average—and supply outpaced demand over the prior twelve months, but Kentucky alone captured more than one-third of market-wide net absorption, and deliveries are slated for a notable pullback in 2026 that supports vacancy stabilization. The asset enters this window already constructed and amenitized, positioning it to absorb residual demand without competing against a fresh wave of lease-up concessions from later-cycle starts.
The location exploits a structural cross-river labor and cost arbitrage. The Kentucky riverfront delivers downtown-Cincinnati employment access while sitting on a lower Kentucky tax basis, and the property manager reports a median resident household income near $97,656 with approximately 53.30% of units occupied by households earning above $90,000. That income profile implies a meaningful rent-to-income cushion relative to in-place rents, supporting renewal pricing power and reducing collection-loss sensitivity through a softening labor cycle.
Demand drivers are diversified across non-correlated employment verticals within the commute shed rather than concentrated in a single industry. The CVG aviation/logistics hub (DHL's primary U.S. international gateway undergoing a $292M expansion; Amazon Air's 800,000 SF facility), aerospace via GE Aerospace, and a deep healthcare/education base (the sector is the MSA's largest employment concentration at 15.8%) are reinforced by announced expansions including Medpace's $327M tower (~1,500 jobs) and Resilience's biomanufacturing build-out. This breadth dampens idiosyncratic tenant-demand risk across the hold.
The capital structure is conservatively levered and rate-insulated. The Fannie Mae DUS facility carries a fixed 4.85% coupon bought down for $816,020, with a 7-year interest-only runway before 30-year amortization, on a nonrecourse basis at 45.49% loan-to-cost. The resulting 2.16x Year 1 DSCR and an ascending coverage profile through the I/O window provide substantial debt-service headroom, while loan assumability (subject to lender approval and a 1% fee) furnishes financing optionality that can widen the buyer pool at disposition in a higher-rate exit environment.
The asset benefits from a property-tax abatement structure in which fee title is held by the City of Dayton under Taxable Industrial Building Revenue Bonds (Series 2022), with PILOT-style payments calibrated to what the taxing jurisdictions would otherwise receive. This vehicle supports interim net operating income during the early hold and is a structural enhancement not present in comparably situated unabated assets, even as the projections conservatively model a reassessment to 100% of purchase price beginning in 2027.
The offering pairs a 2024-vintage, fully amenitized institutional asset—minimizing near-term deferred maintenance and functional-obsolescence exposure—with a conservatively structured balance sheet. Fixed-rate DUS leverage at 45.49% loan-to-cost insulates cash flow from rate volatility through a 7-year interest-only window, producing a 2.16x Year 1 DSCR that ascends to the low-2.30x range before amortization commences. Demand fundamentals are supported by a diversified MSA employment base spanning logistics, aerospace, and healthcare/education, a high-income in-place resident profile, a forecast 2026 contraction in competing deliveries, and identifiable operational upside through revenue-management pricing and ancillary-income capture. The PILOT abatement supports interim NOI, and the assumable nonrecourse loan enhances exit flexibility.
The diligence record discloses a roof-truss / snow-load design deficiency: the Curtainwall Design & Consulting report (Oct. 8, 2025) documents trusses deflecting beyond design and bearing on walls not intended to carry those loads, addressed through ad hoc bracing, gusset plates, and Simpson truss screws, with no confirmed comprehensive truss-by-truss remediation plan—latent structural-capital exposure atypical for a 2024 build. Going-in basis is unfavorable: the October 6, 2025 as-is appraised value of $77,100,000 sits below the $78,566,250 real-estate allocation and well under the $89,701,000 total capitalization, embedding a negative basis versus appraisal and an implied loan-to-appraised-value of ~52.9% against the stated 45.49% loan-to-cost. Year 1 underwriting assumes 94.24% occupancy above the 91.69% in-place rent roll, into a submarket where deliveries recently outpaced absorption (3,200 units, +44%; 7.5% metro vacancy) and five comparable communities within 5.3 miles report occupancy spanning 89.5%-97.1%. The master tenant (Passco Riverside MT, LLC) is newly formed with limited capital and net worth, carries thin modeled net income (~$112,062 in Year 1), and depends on a percentage-rent mechanism (80% of EGR growth over an escalating base, re-adjusted in Year 8) to fund distributions—a master-tenant capitalization weakness. A 2027 reassessment to full purchase price drives a ~48.3% real-estate-tax step-up in Year 3 that suppresses NOI growth, and amortization onset in Year 8 cuts the net investor distribution to 4.30%.
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.
On a risk-adjusted basis the offering reads as an income-oriented core-plus DST whose return is bond-like through the interest-only window and increasingly amortization-driven thereafter, with a mid-4% going-in cash yield on moderate fixed-rate leverage. Feasibility of the underwriting rests on three contingencies: occupancy normalizing above the current rent roll despite recent submarket oversupply; percentage-rent escalation actually materializing through revenue-management execution; and the truss remediation plus 2027 reassessment not impairing modeled NOI. The negative basis to appraisal and the ~15.31% equity load mean realized appreciation must first absorb the syndication load before investor equity is preserved at a Code Section 1031-qualifying exit - placing weight on the forecast 2026 supply pullback and the diversified employment base that anchor the demand thesis. The distribution path (4.35% rising to 4.89%, then resetting to 4.30% as principal amortization begins) is most sensitive to the thinly capitalized master tenant's coverage, which is the structural fulcrum of the cash-flow projection.
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 | 4.55% | 5.04% | Below Average |
| Income Growth | 12.41% | 33.66% | Below Average |
| Peak Income | 4.89% | 5.95% | Below Average |
Passco
Passco Companies is an Irvine multifamily and commercial sponsor, founded in 1998, whose founder Bill Passo helped pioneer the modern tenant-in-common 1031 structure that preceded the DST—giving the firm genuine standing in the history of securitized exchanges. With $4.1 billion in AUM as of late 2025 and more than $8 billion in lifetime acquisitions across multiple cycles, Passco concentrates on Class A multifamily in Southeastern and secondary/tertiary markets, owning or managing some 30,000 units. Its structural heritage and through-cycle acquisition record make it a seasoned, large-scale name in the category.
Learn More About Passco →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.