Zero Coupon Pharmacy VIII DST

Arizona | Illinois | Louisiana | Tennessee | Texas

Beneficial Interests: $17,337,655

Offering Price: $79,970,823

  • Loan Proceeds: $62,633,168
  • Current Cash Flow: 0.00%
  • Loan-to-Offering Price Ratio: 78.32%
  • Minimum Investment[1031]: $25,000

Zero Coupon Pharmacy VIII DST, also known as the Parent Trust, a newly formed Delaware statutory trust and an affiliate of Inland Private Capital Corporation (IPC), is hereby offering (the Offering) to sell to certain qualified, accredited investors (Investors) pursuant to this Private Placement Memorandum (the Memorandum) 100 percent of the beneficial interests in the Parent Trust.

CVS Health Properties

The portfolio consists of 16 free-standing, single-tenant, triple net, or “NNN”, properties operated as CVS pharmacy stores.The Parent Trust owns 100 percent of the beneficial interests in 16 Delaware statutory trusts, each of which owns a property operated as a CVS pharmacy store . The tenant of each of the Properties is an affiliate of CVS Health Corporation, a Delaware corporation (CVS Health).

INVESTMENT HIGHLIGHTS

IPC believes that an investment in the Parent Trust offers the following benefits:

National, Investment Grade Tenant 

 • All of the tenants are affiliates of CVS Health (NYSE:CVS)

• CVS Health guarantees rent payments and the performance of all obligations by the tenants

• CVS Health offers more than 9,700 retail pharmacies and 1,100 walk-in medical clinics

• CVS Health is a leading pharmacy benefits manager with nearly 90 million plan members

Geographic Diversity

• Portfolio dispersed across the United States to offer diversification

• Properties located in five states – Arizona, Illinois, Louisiana, Tennessee and Texas

Long-term Net Leases 

• All of the leases are absolute net leases, with the tenant responsible for real estate taxes, insurance and other operating expenses

• Each lease has a remaining lease term of more than 22 years with 10 five-year renewal options

• Each lease requires the tenant to pay monthly rent in a fixed amount

• See “Summary of the Leases” in the Memorandum

High-Leverage, Long-term, Fixed-Rate, Amortizing Financing 

• The Properties are highly leveraged

• No cash flow will be produced to maximize the amortization

• Each Loan has a maturity date of August 10, 2036

• Each Loan has a fixed interest rate equal to 4.163%

• Principal is amortized over the term of each Loan

INVESTMENT STRATEGY

The 1031 Exchange

Each of the Properties is highly leveraged and, by design, will produce no cash flow. An investment in the Parent Trust may be especially appropriate for those selling a property and looking for suitable replacement property(ies) to execute a Section 1031 exchange. To meet IRS rules and accomplish a successful Section 1031 exchange, there must be equal or greater debt on the replacement property(ies). Many investors own business/income-producing properties that are encumbered by high levels of debt or investors may be interested in increasing the amount of debt on their investment, and therefore creating the need for a highly leveraged opportunity.

THE OFFERING

The Offerings are designated for accredited investors seeking to participate in a tax-deferred exchange as well as those seeking a quality, multiple-owner real estate investment. Only accredited investors may purchase interests in the Offerings. For more information, see “Summary of the Offerings” and “The Offerings” in the Memorandum.

THE FINANCING

Loans

The Properties are subject to 16 separate mortgage loans, collectively referred to as the Loans, from Wells Fargo Bank Northwest, National Association, as Trustee (the Lender), in the aggregate original principal amount of $69,137,935.84. The Loans are not cross-collateralized or cross-defaulted, meaning a default under one of the Loans will allow the Lender to recover against only the particular Property securing the particular Loan and will not trigger a default under any other Loan.

Financing Terms

The maturity date of each of the Loans is August 10, 2036 and the Loans bear interest at a fixed rate equal to 4.163% per annum.The Operating Trusts are required to make consecutive monthly payments of principal and interest,amortized over the term of their respective Loans, with interest calculated on the basis of a 360-day year.The monthly debt service payment for each of the Loans equals the corresponding monthly base rent payable by the tenant under the corresponding lease. Through financing with monthly debt service equal to monthly base rent, a high loan-to-value ratio can be achieved, while also fully amortizing the Loans within the initial lease terms. All income from the Properties will be used to pay the Loans and thus no cash will be available for distribution to Investors while the Loans are outstanding.

Amortization Schedule

This chart is designed to illustrate the concept of equity growth through principal amortization. These projections are based on the value of the Properties remaining the same as at the date of acquisition.There is potential for property value loss. All real estate investments have the potential to lose value during the life of the investment; therefore, these projections may not be realized if the values of the Properties decrease. There is no guarantee that investment objectives will be achieved or that Investors will receive a return of their capital or any projected equity growth.

PROPERTY OVERVIEW

CVS Health Properties

The portfolio consists of 16 free-standing, single-tenant, triple net, or “NNN”, properties operated as CVS pharmacy stores.
CVS Health places an emphasis on convenience, service and accessibility. The company challenges itself to deliver increasingly greater convenience to its customers through selecting the right sites for its stores.CVS store location criteria includes the following items, and therefore the Properties generally have the following attributes:

• Highly visible

• Easy access with traffic signal

• High traffic intersections

• Freestanding sites with drive-thru pharmacy capability

• Sufficient population in a trade area

ABOUT Inland Real Estate Group of Companies, Inc.

The Inland Real Estate Group of Companies, Inc. (Inland) is one of the nation’s largest commercial real estate and finance groups, representing nearly 50 years of expertise and integrity in the industry. As a business incubator, Inland specializes in creating, developing and supporting member companies that provide real estaterelated investment funds – including limited partnerships, institutional funds and nonlisted real estate investment trusts (REITs) – and real estate services for both third parties and Inland-member companies.

In March 2001, Inland Private Capital Corporation was formed to provide replacement properties for investors wishing to complete a tax-deferred exchange under Section 1031 of the Internal Revenue Code of 1986, as amended, as well as investors seeking a quality, multiple-owner real estate investment. The programs sponsored by IPC offer securities to accredited investors on a private placement basis.