Moody Village Towers DST

Overview

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). The tenant base skews toward energy and financial credit (Prologis, EnCap Investments, SEP Permian, Solaris Oilfield, Solaris Midstream, Veritex Community Bank, Frost Bank, WSP USA); as of October 2025 the Project was 99.64% leased, with 2ND.MD vacating 26,507 SF on December 31, 2025 and Tauber Oil backfilling 16,083 SF at roughly $3.90/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.

Investment highlights

• 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.

Sponsor

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