Blue Owl Real Estate Exchange V DST

Overview

Three single-tenant net-leased industrial manufacturing properties held debt-free in a parent/operating DST structure: 111 Cosma Drive, Bowling Green KY (~1,351,200 SF on ~134 acres), 100% leased to Bowling Green Metalforming LLC, a wholly-owned subsidiary of Magna International Inc.; and two American Rheinmetall (Loc Performance Products) facilities, 1115 South Wayne Street, Saint Marys OH (~701,000 SF, 1939-1973 vintage) and 13505 North Haggerty Road, Plymouth MI (~289,000 SF, 2002), each leased to a subsidiary of Rheinmetall AG. Both tenant leases carry ~20-year base terms, with escalators of 1.25% per annum (Magna) and 2.0% per annum (American Rheinmetall). The Magna site includes a ground-lease and industrial-revenue-bond structure providing tax abatement. The properties are owned free and clear, with the trust agreements prohibiting permanent financing, and the master lease is guaranteed by Blue Owl's Operating Partnership subject to a net-worth standard. Thesis is durable, long-duration credit-tenant net-lease income with an optional Section 721 rollover into the non-listed, perpetual-life Blue Owl Real Estate Net Lease Trust.

Investment highlights

• The portfolio is leased to subsidiaries of two substantial industrial credits: Bowling Green Metalforming, a wholly-owned unit of Magna International, a publicly traded global Tier-1 automotive supplier, and Loc Performance/American Rheinmetall, a subsidiary of Rheinmetall AG, a German defense and industrial group benefiting from the European defense-spending expansion. The Rheinmetall-linked defense exposure is a differentiated, counter-cyclical demand driver atypical of net-lease portfolios, though both leases sit with operating subsidiaries rather than the rated parents.
• Both the Magna and American Rheinmetall properties carry approximately 20-year base lease terms, producing an exceptionally long weighted-average lease term that underpins durable contractual income and supports the perpetual-life UPREIT thesis. Escalators differ materially, 2.0% per annum for American Rheinmetall versus a below-market 1.25% per annum for Magna, the latter eroding real income over the multi-decade term.
• The portfolio is owned free and clear, and the trust agreements affirmatively prohibit the trustee from placing permanent financing, eliminating refinancing, maturity, and interest-rate risk entirely and removing the equal-or-greater-debt replacement requirement for 1031 investors. The structural cost is the absence of positive leverage, which caps levered return and is the primary reason the going-in distribution sits in the high-4% range.
• The FMV Option permits Blue Owl's Operating Partnership, at its sole discretion, to acquire investor interests for OP units in the non-listed, perpetual-life Blue Owl Real Estate Net Lease Trust after a two-year hold, offering a potential tax-deferred path into a large, diversified net-lease REIT platform. The exchange is into a non-traded, illiquid vehicle whose NAV, redemption terms, and exercise timing are sponsor-controlled, ceding investor control and price transparency.
• The assets are large, special-purpose manufacturing facilities purpose-built for their incumbents, the Magna plant alone spanning ~1.35M SF on 134 acres, which makes them mission-critical to tenant operations and raises renewal probability, but also concentrates re-leasing and repurposing risk given limited alternative-use demand if a tenant vacates. The AR Ohio asset is of 1939-1973 vintage, and the Magna site carries ground-lease and industrial-revenue-bond complexity tied to its tax abatement.

Sponsor

This offering is sponsored by Blue Owl. Baker 1031 Investments is independent of the sponsor and provides advisory and brokerage services to accredited investors.