Inland Private Capital Corporation monetizes its first zero-coupon offerings
OAK BROOK - Inland Private Capital Corporation Thursday announced the sale of two pharmacy portfolios for a combined total of $80 million, a premium to the allocated offering price paid by investors. IPC, through its subsidiary that serves as asset manager, facilitated the sales on behalf of Pharmacy Portfolio III DST and Pharmacy Portfolio IV DST, both structured as zero cash flow programs ("zeros").
The Pharmacy Portfolio III 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 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.
These transactions mark IPC's first full-cycle zero cash flow investment programs. 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 paydown 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 of IPC. "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."
The portfolio sales were comprised of a combined 12 pharmacy retail properties located across 10 states.
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. IPC monetized over $1.5 billion in real estate in 2021 on behalf of its 1031 exchange platform.