Inland Private Capital Corporation, a sponsor of securitized 1031 exchange programs, has sold two pharmacy portfolios, comprised of 12 pharmacy retail properties located across 10 states, for a combined $80 million.
The properties were sold on behalf of Pharmacy Portfolio III DST and Pharmacy Portfolio IV DST, both Delaware statutory trusts structured as zero cash flow programs.
Pharmacy Portfolio III launched in August 2011 and sought to raise $5 million from accredited investors. Inland Private reported that the portfolio sale resulted in a total return to investors of 278.10 percent of their original investment, and an average annual return of 16.37 percent.
The Pharmacy Portfolio IV launched in February 2012 and sought to raise $5.2 million. The sale resulted in a total return to investors of 267.06 percent of their original investment, and an average annual return of 15.08 percent, the company said.
These transactions mark Inland Private’s first full-cycle zero cash-flow investment programs. The company explained that “zero cash-flow DSTs are an investment vehicle designed to satisfy high debt replacement requirements while also achieving equity growth and capital preservation through ongoing principal pay down of the loan balance. Zeros are typically long-term, triple-net leased commercial real estate assets backed by tenants with strong balance sheets and investment-grade credit ratings.”
“Being the first two in IPC’s series of zero-coupon offerings, this was a proof-of-concept execution for us,” said Keith Lampi, president and chief operating officer. “Both portfolios performed incredibly well for our investors while simultaneously fulfilling the various tax-related objectives the investment structure was designed to accomplish. To date, IPC has syndicated more than $1.49 billion in transactions structured as zeros with a number of Fortune 500 tenants.”
In addition to providing liquidity to investors, the sales also provided investors with the option to utilize their sales proceeds to complete a subsequent tax-deferred exchange.
Inland Private specializes in offering multiple-owner, tax-focused, private placement investments as well as qualified opportunity zone investments throughout the U.S. Since inception, the firm has monetized in excess of $3.7 billion in full-cycle transactions on behalf of its investors. Currently, it manages a portfolio of more than $10.6 billion across several asset classes spanning 43 states.
As of December 31, 2021, the firm had sponsored 287 private placement real estate offerings, with investments and developments in the multifamily, self-storage, hospitality, healthcare, student housing, retail, corporate office, senior living, and industrial sectors.