ARCTRUST Unveils DST Offering with Essential Retail Portfolio

NEW YORK, NY – May 28, 2026 – ARCTRUST Private Capital has announced the acquisition of a seven-property portfolio of single-tenant net lease assets, which it plans to offer to accredited investors as a Delaware Statutory Trust (DST). The portfolio, named ARCTRUST Exchange II DST, is composed of properties leased to well-known brands CVS Pharmacy, Pinnacle Bank, and NAPA Auto Parts, spread across six different states.

This move by the capital markets division of the ARCTRUST Group of Companies taps into a growing demand for tax-advantaged real estate investments that offer diversification and passive income. The portfolio comprises approximately 51,192 square feet of rentable space on a combined 7.75 acres in North Carolina, Alabama, Kentucky, Michigan, Tennessee, and Virginia. The offering aims to provide a turnkey solution for investors, particularly those navigating the tight deadlines of a 1031 exchange.

The Surging Demand for DSTs in 1031 Exchanges

ARCTRUST's latest offering enters a market where DSTs have become an increasingly vital tool for real estate investors. The DST market has seen explosive growth, raising nearly $5.66 billion in 2024, with projections for 2025 soaring towards $7.5 billion. This surge is largely fueled by investors leveraging Section 1031 of the Internal Revenue Code, which allows for the deferral of capital gains taxes on the sale of a property if the proceeds are reinvested into a "like-kind" property within a strict timeframe.

DSTs provide an elegant solution to the challenges of a 1031 exchange. Investors face a 45-day window to identify a replacement property and a 180-day window to close the acquisition. Finding and vetting a suitable, high-quality asset within this period can be daunting. Pre-packaged DSTs, which offer fractional ownership in a portfolio of institutional-grade properties, allow investors to meet these deadlines efficiently. Furthermore, they offer a transition from the hands-on burdens of property management—often referred to as the headaches of “tenants, toilets, and trash”—to a completely passive income stream. This is particularly attractive to a demographic of retiring property owners looking to preserve capital and simplify their financial lives while still benefiting from real estate ownership.

A Portfolio Built on 'Essential' Resilience

The strategic composition of the ARCTRUST Exchange II DST portfolio reflects a deliberate focus on necessity-based and service-oriented tenants. This “essential retail” strategy is designed to offer resilience against economic downturns and shifts in consumer behavior.

“This portfolio reflects ARCTRUST's continued focus on acquiring essential, service-oriented real estate leased to creditworthy tenants under long-term net leases,” said Chris Wadelin, CEO of ARCTRUST Private Capital.

The three tenants anchor the portfolio in sectors known for their stability:

• Retail Pharmacy: The three CVS Pharmacy locations are backed by CVS Health Corporation (NYSE: CVS), a Fortune 10 diversified health solutions giant. Pharmacies benefit from non-discretionary consumer spending and demographic trends such as an aging population, ensuring consistent demand for prescriptions and health products. S&P Global Ratings maintains a 'BBB' long-term issuer credit rating for CVS Health, citing its strong market position and diversified revenue.

• Community Banking: The two Pinnacle Bank properties are part of Pinnacle Financial Partners, Inc. (NASDAQ: PNFP), a robust financial holding company headquartered in Nashville. Regional banks with strong deposit bases and consistent profitability are often seen as stable pillars of their communities. Pinnacle Financial Partners holds a 'BBB' long-term issuer credit rating from S&P, reflecting its solid asset quality and strong capital levels.

• Automotive Aftermarket: The two NAPA Auto Parts locations are leased to a subsidiary of Genuine Parts Company (NYSE: GPC), a global distributor with a history stretching back to 1928. The auto parts industry is widely considered recession-resistant, as consumers tend to repair existing vehicles rather than purchase new ones during times of economic uncertainty. GPC holds a 'BBB+' rating from S&P, underscoring its leading market position and consistent financial performance.

Diversification as a Defensive Play

A key feature of the portfolio is its inherent diversification, which serves as a built-in risk mitigation strategy. Rather than concentrating capital in a single asset or tenant, the fund spreads risk across three distinct, resilient industries and six separate state economies. The properties are located in established suburban corridors in the Asheville and Nashville metro areas, as well as Roanoke, Virginia; Gadsden, Alabama; Paducah, Kentucky; and Charlotte and Niles, Michigan.

This geographic and tenant diversification is a core part of the offering's appeal. Wadelin noted, “Combining national retail pharmacy, automotive aftermarket, and established community banking locations across six states gives investors a level of tenant and geographic diversification that we believe may align well with the needs of 1031 exchange investors seeking durable income and capital preservation.”

The portfolio's lease structure further enhances its stability. All seven properties are subject to absolute triple-net (NNN) leases, meaning the tenants are responsible for all operating expenses, including taxes, insurance, and maintenance. This structure insulates the property owner from unforeseen costs and creates a predictable cash flow. With a weighted average remaining lease term of approximately 13.6 years and contractual rent increases built into the agreements, the portfolio is designed to provide a reliable, long-term income stream for investors.