Fortress FREX DB Series I DST

Overview

Domain at Town Centre is a 2012-vintage, stabilized 336-unit / 912-bed purpose-built student housing community at 5000 Domain Drive, Morgantown, WV 26501, serving West Virginia University (WVU) approximately one mile from campus and adjacent to a main retail center, with a free private campus shuttle. The asset spans 14 residential buildings, a clubhouse, and 976 parking spaces; the bed-to-bath-parity unit mix runs across 1x1 ($1,558/bed), 2x2 ($875), 3x3 ($763), and 4x4 ($650) plans, with 4x4 product representing ~53% of beds. The Trust acquired the Property for a $65,100,000 real estate price ($68,484,744 total acquisition cost) and capitalized the transaction at $75,983,939, comprising $40,178,939 of Class 1 equity and a $35,805,000 Wells Fargo Bank, N.A. first mortgage (47.12% loan-to-cost; 6.098% fixed; full-term interest-only; maturing March 11, 2036), supported by a CBRE as-is appraisal. The Property is net-leased to an affiliated Master Tenant (FREX DB LeaseCo Series I LLC) under a 10-year master lease backed by a $1,500,000 demand note from FREX DST Holdings LLC, paying Base Rent (debt service plus taxes and insurance), capped Additional Rent, and performance-based Supplemental Rent. Year 1 NOI is $4,438,106; the operating thesis is completion of lease-up (93% occupied for 2025/26, 73% pre-leased for 2026/27), cure of limited deferred maintenance, and capture of Morgantown rent growth in a supply-constrained submarket. Sponsored by Fortress Investment Group; securities offered through Orchard Securities, LLC.

Investment highlights

• The Morgantown student-housing submarket exhibits unusually durable barriers to entry: only 534 beds have been delivered over the past decade, none since 2016, with nothing under construction or in the pipeline, as large-scale developers have avoided the market on relatively low achievable rents and limited buildable sites. Against WVU enrollment of roughly 23,600, approximately 5,249 on-campus beds and ~6,700 off-campus beds imply a structural shortfall near 11,700 students (a ~57% capture rate), and the market reached 96% occupancy for 2025/26, its highest in ten years, supporting pricing power and re-leasing economics at a 2012-vintage asset that is among the newer, higher-quality products in the trade area.
• Demand is anchored to a single, growing flagship university operating under a state mandate to expand enrollment. WVU's Governor publicly tasked the university with dramatic enrollment growth, and a newly hired enrollment leader previously grew another institution's enrollment 43% (25,000 to 40,000) between 2017 and 2025; Fall 2025 freshman enrollment rose 7.2% year-over-year and freshman retention reached a record above 85%. These dynamics underpin the underwriting's lease-up and rent-growth assumptions, but the asset's demand profile is concentrated in the enrollment trajectory of one institution in a single submarket.
• Financing is a $35,805,000 Wells Fargo Bank, N.A. first mortgage fixed at 6.098% and interest-only for the full 10-year term to a March 11, 2036 maturity at 47.12% loan-to-cost. The fixed coupon removes floating-rate and cap-renewal exposure and the interest-only structure (annual debt service ~$2,213,714) maximizes current distributable cash, producing healthy Year 1 NOI-to-debt-service coverage of approximately 2.00x. The structural offset is that no principal amortizes, leaving the entire balance to balloon at maturity, and the 6.098% coupon is relatively high, reflecting 2026 origination.
• In-place rents are positioned below the local competitive set, with the most comparable properties reportedly 100% occupied and charging 4x4 rents (~53% of Domain's beds) roughly 16% above the Trust's underwriting, framing embedded mark-to-market upside. The submarket has produced a 3.4% historical rent compound annual growth rate and is tracking to ~5.6% effective rent growth for Fall 2026, and the forecast carries Year 1 NOI of $4,438,106 to $6,000,358 by Year 10 (~35% cumulative growth), driving projected cash-on-cash from 5.00% to 7.69%.
• The Sponsor, Fortress Investment Group, is a diversified global manager with 20-plus years of history, approximately $53 billion of AUM, and over $29 billion invested in global real estate, including more than $1.0 billion of common equity across its targeted DST asset classes (multifamily, student housing, senior housing) spanning 122 investments and $3.4 billion of total capitalization. Its global real estate platform is led by former Wells Fargo CEO Tim Sloan, lending institutional depth to a property that has been institutionally owned for nearly a decade and is expected to require minimal near-term capital expenditure.

Sponsor

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