NexPoint Life Sciences III DST

Overview

A 137,811 RSF, 2021-vintage single-tenant life sciences facility on approximately 11.73 acres at 11200 Hudson Road, Woodbury, Minnesota (Minneapolis-St. Paul MSA, an established top-tier U.S. life science cluster), net-leased to Kindeva Drug Delivery L.P., a global pharmaceutical CDMO specializing in drug-device combination products (pulmonary/nasal, injectable, transdermal delivery) and backed by private-equity sponsor Altaris Capital Partners. The Trust holds the asset subject to a Master Lease to 11200 Hudson Leaseco, LLC, an unaffiliated, thinly capitalized newly-formed Master Tenant funded by a $1,900,000 Sponsor-financed Demand Note that subleases to Kindeva under a 15-year Tenant Lease commenced September 17, 2021 and expiring September 30, 2036 with three five-year extension options, structured as a net lease under which the Tenant bears maintenance and services and the Master Tenant passes through taxes, insurance, and utilities. The Property was acquired indirectly by a Sponsor affiliate for a $57,750,000 MIPA price against a $59,000,000 BBG as-is appraisal, capitalized at $61,961,253 comprising $30,661,253 of Class 1 equity and an assumed $31,300,000 Wings Financial Credit Union loan. The income thesis is single-tenant, in-place net-lease cash flow; the nine-year financial forecast aligns with the November 1, 2032 loan maturity and the Sponsor's business plan contemplates disposition within approximately five to nine years. Distributions to Holders are projected to begin at 4.18% and range 4.01%-4.10% thereafter, partially shielded by depreciation. The offering is a best-efforts Regulation D placement whose termination date has been extended serially from January 31, 2025 to January 31, 2026 and then to July 31, 2026.

Investment highlights

• The asset is 100% net-leased to Kindeva Drug Delivery L.P., a global contract development and manufacturing organization focused on drug-device combination products that operates nine facilities across the U.S. and U.K. and is backed by Altaris Capital Partners, under a 15-year lease commenced September 2021 and running to September 30, 2036 with three five-year extension options; the long-dated term extends roughly three years beyond both the November 2032 loan maturity and the planned disposition window, providing a contracted income stream with no rollover exposure during the hold.
• The 2021-vintage, purpose-built 137,811 RSF facility on 11.73 acres constitutes mission-critical, build-to-suit pharmaceutical manufacturing and R&D real estate in the Minneapolis–St. Paul MSA, one of the highest-ranked U.S. life science clusters; specialized fill-finish, container-closure, and drug-device assembly infrastructure elevates tenant switching costs and supports retention economics that generic office or industrial product cannot replicate.
• Going-in leverage is moderate at a 50.52% loan-to-capitalization, $31,300,000 against $61,961,253 of total capitalization, and the in-place yield produces positive leverage against the 4.50% fixed coupon during the interest-only window, generating Year 1 net operating income that covers debt service at roughly 2.56x before amortization commences.
• The assumed Wings Financial Credit Union facility carries a 4.50% fixed coupon with 36 months of interest-only payments, front-loading distributable cash flow and supporting the 4.18% Year 1 distribution before scheduled amortization beginning December 2025 on a 300-month schedule and the November 2029 rate reset compress coverage in the back half of the hold.
• Distributions are projected to be partially tax-deferred through depreciation and amortization, and the structure embeds an Exchange Right under which the Sponsor's Exchange Entity may, after a one-year hold, call Holders' Interests for operating-partnership units in a transaction intended to qualify under Code Section 721 or 351, offering a potential UPREIT continuation path most single-asset DSTs lack, though the election rests with the Sponsor rather than the investor.

Sponsor

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