NLC Financial Service HQ DST

Overview

A Zero Cash Flow Delaware Statutory Trust offering 79.30% of the beneficial interests in NLC Financial Service HQ DST, which indirectly owns the Huntington Tower—a 2023-built, 20-story Class A office headquarters and structured parking garage totaling 421,481 gross square feet on 0.51 acres at 2025 Woodward Ave., Detroit, Michigan (downtown Wayne County). The Property is 100% leased to The Huntington National Bank under a 22.5-year absolute triple-net lease commenced January 1, 2022 and expiring June 30, 2044, with 2.00% annual escalations and four seven-year renewal options; the lease is guaranteed by Huntington Bancshares Incorporated (S&P BBB+, Fitch A-, Morningstar A). The structure is zero cash flow: 100% of lease rent is applied to mortgage debt service, so no current distributions are paid to Holders during the term—investor return is generated through mortgage amortization and equity buildup, Section 1031 tax-deferral status, and capital appreciation realized upon eventual disposition. The all-in transaction amount (79.30% share) is $137,692,566, comprising $23,751,968 of equity (17.25%) and $113,940,598 of assumed non-recourse debt (82.75%) across a 4.589% amortizing senior note and two accrual subordinated notes at 7.870% and 10.756%, all maturing June 10, 2044 coterminous with the lease. The Appraisal projects a terminal property value of approximately $240,000,000 at the end of the initial lease term against a total balloon of roughly $67.6 million, framing the equity-buildup thesis. Sponsor: Net Lease Capital Advisors LLC.

Investment highlights

• The Property is 100% leased to The Huntington National Bank under a 22.5-year absolute triple-net lease running to June 2044 and guaranteed by Huntington Bancshares Incorporated, an investment-grade institution (S&P BBB+, Fitch A-, Morningstar A) with $210.2 billion in assets and $2.08 billion of net income; the absolute-NNN structure places all operating, maintenance, and capital obligations on the tenant, and the lease term is coterminous with the debt, eliminating rollover and re-leasing risk during the financing.
• As a zero cash flow structure, 100% of rent services the mortgage and no current distributions are paid; the investor return is engineered through forced mortgage amortization that builds equity over the hold, with the Appraisal projecting a terminal property value of approximately $240,000,000 at the June 2044 lease expiry against a total balloon of roughly $67.6 million, the spread representing the targeted equity accretion plus appreciation.
• The offering is designed for Section 1031 exchange investors seeking to replace both equity and a large allocation of debt; the 82.75% non-recourse leverage allows a relatively small equity outlay to satisfy substantial replacement-debt requirements, and the absence of current cash flow paired with depreciation can shelter income, positioning the structure as a debt-replacement and tax-deferral vehicle rather than an income vehicle.
• The 2023-vintage, build-to-suit headquarters anchors Huntington's regional presence in downtown Detroit on Woodward Avenue, with mission-critical single-tenant occupancy spanning a ground-floor bank branch, structured parking, and office floors that supports tenant commitment; recent construction limits near-term capital needs, which are in any event the tenant's obligation under the absolute-NNN lease.
• The $131.9 million current-balance senior note carries a 4.589% fixed coupon and amortizes to a modest $7.1 million balloon at June 2044, while the subordinated notes accrue rather than requiring current payment; all debt is non-recourse to Holders, and the matched lease-and-loan maturities align the credit, the amortization schedule, and the disposition at a single 2044 horizon.

Sponsor

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