Inside Peachtree's $91.5M Savannah Industrial DST

Peachtree Group announced on September 4, 2026 that it fully subscribed PG Savannah Industrial DST, a $91.5 million Delaware Statutory Trust structured as a debt-free acquisition of a newly built, approximately 600,000-square-foot distribution center in Midway, Georgia. The facility accounts for roughly 25% of Hasbro's U.S. distribution footprint and anchors the trust under a 10-year lease running through May 30, 2036. (Peachtree Group Newsroom, Sept. 4, 2026.) This deal is a real, datable case study in how a modern industrial DST gets underwritten: debt-free capital structure, single investment-grade tenant, contractual 3.25% annual rent escalations, and all the concentration risk that a one-tenant building carries. If you are a 1031 exchange investor evaluating industrial DSTs, this is the benchmark.

What a Delaware Statutory Trust Is, and Why This One Deserves Study

A Delaware Statutory Trust (DST) is a legal entity that holds title to real property on behalf of multiple beneficial-interest holders. Each investor owns a fractional interest in the trust rather than a direct deed, which allows dozens of investors to co-own a single institutional asset without creating the management complications of a traditional tenancy in common. The IRS treats a properly structured DST beneficial interest as a direct ownership interest in real property, making it eligible to serve as a replacement property in a Section 1031 like-kind exchange. (IRS Form 8824 Instructions, Like-Kind Exchanges.) That ruling, formalized in IRS Revenue Ruling 2004-86, is what made DSTs a workable 1031 vehicle in the first place.

The 1031 exchange rules create a narrow timing window: an investor who sells appreciated real estate must identify a replacement property within 45 days of closing and complete that purchase within 180 days. For a solo buyer trying to find, negotiate, and close on institutional-quality real estate inside that window, those deadlines alone kill many deals. A DST offering that is already capitalized and under contract solves that problem. The investor purchases a beneficial interest, the trust already holds title, and the 45-day and 180-day clocks are satisfied. Capital gains tax deferral is preserved.

Most DST articles stop there and become a generic "what is a DST" explainer. This one does not. What matters for an actual investor is how a specific DST was underwritten, what risks the sponsor chose to accept, and which of those risks belong to you as the beneficial-interest holder. The Savannah deal gives us real numbers to work with.

The Deal Numbers, Worked Out

At $91.5 million for a 600,000-square-foot building, the implied acquisition cost is approximately $152 per square foot. The facility is newly built and sits in Liberty County, Georgia, roughly 30 minutes from the Port of Savannah, one of the busiest container ports on the U.S. East Coast. That port proximity matters for Hasbro: imported goods arriving by container can move inland to the Midway distribution center without an additional long-haul trucking leg.

The lease runs through May 30, 2036. Hasbro holds two five-year extension options, each priced at fair market value at the time of renewal. That detail is not a minor footnote. Fair-market-value renewals do not lock in today's rental rate beyond the initial term. If industrial rents in coastal Georgia soften over the next decade, Hasbro can renew at the lower market rate. If rents rise sharply, Hasbro may choose not to renew, leaving the DST to re-tenant or sell a very large, specialized building on its own timeline.

The 3.25% annual rent escalation is fixed and contractual for the initial term. Run the math: $1.00 of base rent compounds to approximately $1.09 by year three, $1.19 by year six, and $1.37 by year ten. Across a $91.5 million property, the income base grows meaningfully over the lease period. This escalation clause is the primary mechanism for growing investor distributions above the initial yield, which is why its rate and structure matter so much. An escalation tied to CPI with a cap is structurally different from a fixed 3.25%. Always read the exact lease language.

Hasbro is responsible for operating expenses under the lease, a modified triple-net (NNN) structure in which the tenant pays property taxes, insurance, and maintenance costs. According to reporting on the facility opening, Hasbro reduced its U.S. distribution nodes from five to three when the Midway center became operational, and the facility is expected to generate approximately $8 million in annual productivity savings for the company. (Retail Dive, April 6, 2026.) GXO, a major third-party logistics operator, runs day-to-day warehouse operations on-site.

The debt-free structure is the other headline number. Peachtree did not layer mortgage financing onto this acquisition. The entire $91.5 million came from investors. There is no lender to satisfy in a vacancy scenario, no balloon maturity to refinance in year seven, and no debt-service coverage covenant that can trigger a default if net operating income dips. For a 1031 exchange investor whose primary goal is income stability rather than maximum return, the absence of a mortgage removes a category of failure mode that sinks many DSTs.

The Hasbro Concentration Risk: Name It Plainly

One hundred percent of this DST's income comes from a single company. If Hasbro's U.S. distribution strategy changes through a merger, a shift in logistics footprint, financial distress, or a renegotiated network configuration, the Savannah facility's income disappears entirely. That is the defining risk of this investment, and no amount of investment-grade credit ratings changes the arithmetic of 100% concentration.

The credit ratings offer partial comfort. Fitch affirmed Hasbro at BBB- in September 2026 before withdrawing coverage. (Fitch Ratings, Sept. 1, 2026.) S&P Global rates Hasbro's senior unsecured debt at BBB. (S&.P Global Ratings.) Investment-grade means a lower probability of near-term default, not zero probability. BBB- is the lowest rung of investment-grade at Fitch, one notch above speculative. The rating is relevant context, not a guarantee.

The operational facts are more reassuring, though they do not eliminate concentration risk. Hasbro built the Midway hub as a central node in a streamlined three-site U.S. network (Midway plus Chino, California and Joliet, Illinois). The Georgia facility handles both retail replenishment and direct-to-consumer fulfillment, and it is the first U.S. distribution center Hasbro has developed and branded with its own name. Those facts indicate deep operational integration: abandoning this site mid-lease would require Hasbro to either rebuild capacity elsewhere or absorb significant service disruptions. That raises the switching cost, which is meaningful credit protection even if it is not a formal covenant.

My take: the debt-free structure materially improves the downside scenario. A DST with mortgage financing and a departed tenant faces both lost income and an active lender calling debt. This DST faces only lost income. That is still a bad outcome, but it is a structurally better starting position for an investor waiting for re-leasing or a sale.

A Framework for Evaluating the Next Industrial DST You Are Pitched

The Savannah deal is useful specifically because it is closed and documented. Its terms give you a reference point when the next DST deck arrives in your inbox. Run through these questions in order before you sign anything.

Who is the tenant, and what is their actual credit profile? Investment-grade (BBB- or better from S&.P, Fitch, or Moody's) is meaningfully different from unrated or speculative-grade. Ask for the full credit report, not a summary. Ask when the rating was last affirmed. Note whether the rating agency is placing the tenant on watch for a downgrade.

Is this a single-tenant or multi-tenant structure? Single-tenant industrial DSTs concentrate all vacancy risk on one entity. Multi-tenant DSTs distribute that risk but often involve older buildings with higher deferred capital-expenditure exposure. Neither structure is always better. The question is whether the acquisition price and initial yield reflect the risk profile you are accepting.

Does the deal carry mortgage debt? Leveraged DSTs can offer higher initial yields because debt amplifies returns when income covers debt service. They also add refinancing risk at maturity, interest-rate exposure, and lender-covenant risk during the hold. Model the scenario where the tenant departs in year six and a refinancing comes due in year seven. If that scenario produces a capital call or a forced sale at a loss, the initial yield premium may not be worth it.

What are the exact rent escalation terms? Fixed contractual escalations (like this deal's 3.25%) are predictable and modelable. CPI-linked escalations with floors and caps produce a range of outcomes depending on inflation. Flat rents with no escalation erode real income over a 10-year hold. The type and rate of escalation is not a secondary detail. It determines a substantial portion of total return.

What happens at lease expiration? Fair-market-value renewal options pass re-leasing risk to the DST after the initial term. Fixed-rate renewals lock in rent regardless of market conditions. The Savannah deal has FMV renewals, which means the DST's income profile past 2036 is uncertain today by design. That is not necessarily bad, but it means the 10-year hold should be your planning horizon, not 15.

How does the sponsor operate? Peachtree Group, under managing principal and CEO Greg Friedman, runs its DST platform with a dedicated president for 1031 exchange and DST products (Tim Witt). The firm launched its DST program in 2022 and has expanded across industrial (PG St. Louis Industrial DST, leased to Cummins Inc.) and hospitality (PG Cape Canaveral DST, anchored by a 150-room Holiday Inn Express). A sponsor with a multi-offering track record and a dedicated DST team is structurally more reliable than a sponsor running a one-off deal. Ask any sponsor how many DSTs they have operated through a full cycle.

Finally: how do you exit? DST beneficial interests are not publicly traded. There is no active secondary market. Plan for a full-term hold through 2036, or whatever the initial term of the offering you are evaluating. If you need liquidity before that date, a DST is the wrong vehicle regardless of tenant quality or rent escalation terms.

For more on this, see our coverage of 1031 Exchange Delaware Statutory Trust (DST): What You Need to Know.

Frequently Asked Questions

What makes a Delaware Statutory Trust qualify for a 1031 exchange?

The IRS confirmed through Revenue Ruling 2004-86 that a beneficial interest in a properly structured DST qualifies as real property for purposes of Section 1031 of the Internal Revenue Code, meaning it can serve as the replacement property in a like-kind exchange. Investors must still follow the standard 1031 timelines: identify the replacement property within 45 days of closing the relinquished property sale, and complete the exchange within 180 days. Because the DST already holds title to the real estate, purchasing a DST interest satisfies both deadlines. The exchange is reported to the IRS on Form 8824.

Why did Peachtree choose a debt-free structure for this DST?

Greg Friedman, Peachtree's managing principal and CEO, described the appeal as "conservative capital structures" that provide "stability, tax efficiency and attractive long-term fundamentals." The practical effect is that investors face no refinancing event and no lender foreclosure risk in a vacancy scenario. The tradeoff is that investors forgo the income amplification that mortgage leverage can produce when rents rise. For the 1031 exchange investor whose primary concern is capital preservation and consistent distributions rather than maximum total return, the debt-free structure removes the scenarios that cause the largest losses.

What is the actual risk of owning a single-tenant industrial DST?

The risk is straightforward: if the tenant stops paying rent, all DST income stops. There is no other income source to offset the loss, and re-tenanting a 600,000-square-foot specialized distribution facility takes time, even in a port-adjacent market with strong industrial demand. The investor's downside protection is the tenant's credit quality, the operational integration of the tenant in the building, the absence of mortgage debt (in this case), and the structural cost to the tenant of breaking the lease. None of those factors eliminate the risk. They determine how severe and how likely the worst case is. Any investor in a single-tenant DST should ask what a vacancy scenario looks like in dollar terms before committing capital.

How does the 3.25% annual rent escalation affect investor returns over time?

At 3.25% compounded annually, base rent grows to approximately 1.09 times the initial amount by year three, 1.19 times by year six, and 1.37 times by year ten. For a debt-free DST, that escalation flows directly to investors without being absorbed by debt-service obligations, which means the distribution growth is real and compounding throughout the hold period. After the initial term expires, the two five-year renewal options are priced at fair market value rather than continuing the contractual escalation schedule, so the income trajectory past 2036 depends on where industrial rents sit in coastal Georgia at that time.