Bluerock's Pinehurst DST: A Strategic Play in Supply-Constrained Multifamily Markets

The U.S. multifamily housing sector is at an inflection point. With construction lagging behind demand, rising rents, and a growing population, investors are turning to opportunities where supply constraints and value-add potential align. Bluerock Value Exchange's $37.8 million multifamily Delaware Statutory Trust (DST) in Pinehurst, North Carolina, offers a compelling entry into this dynamic landscape. Tapping into a market ranked among the top 10 small U.S. metro areas and leveraging its golf-centric allure, this offering combines strategic location, operational upside, and Bluerock's proven track record to position itself as a standout 1031 exchange vehicle.

The Pinehurst Advantage: Supply Constraints Meet Demand Drivers

Pinehurst, long celebrated as the “Home of American Golf,” has evolved into a thriving small-market hub. Its proximity to major cities like Charlotte and Raleigh, coupled with a strong tourism economy anchored by golf resorts, has fueled population growth. Yet, the region's housing supply has struggled to keep pace. A confluence of factors—declining new construction, high home ownership costs, and rising household formation—has tightened rental markets, creating a tailwind for multifamily investors.

Bluerock's Pinehurst DST targets this imbalance. The property, a mix of low-density townhomes and garden-style apartments, benefits from a value-add strategy focused on unit upgrades to command higher rents. This approach capitalizes on below-market rental rates in the area, where demand outstrips supply. Josh Hoffman, Bluerock's President, notes that Pinehurst's “economic and demographic trends are aligning perfectly with multifamily fundamentals,” making it a prime location to capture both cash flow and appreciation.

Value-Add Leverage: Upgrades and Market Dynamics

The DST's value-add plan is twofold: physical upgrades to enhance property appeal and strategic timing to exploit market conditions. Renovations targeting unit interiors, amenities, and energy efficiency aim to raise occupancy and rental rates. Meanwhile, broader trends—such as the 15% year-over-year rise in multifamily rents nationally (per Yardi Matrix)—suggest Pinehurst's constrained supply will amplify these gains locally.

Bluerock's strategy also accounts for the region's housing undersupply. New construction permits in the Carolinas fell 18% in 2024 due to rising development costs, exacerbating the imbalance between renters and available units. This scarcity supports the case for buying into stabilized assets with upside, like the Pinehurst DST, which can be upgraded to meet rising demand.

Bluerock's Track Record: Experience in Execution

Bluerock's credibility is underscored by its 20-year history managing over $2.8 billion in 1031 exchange programs. The firm's 42nd DST offering builds on its industrial and multifamily expertise, including the recent $31.6 million BR Diversified Industrial Portfolio IV DST, which sold out swiftly. Its success stems from a focus on “Premier Exchange Properties”—assets in high-growth corridors with operational upside.

The Pinehurst DST's structure further enhances its appeal. Investors benefit from monthly cash flows, depreciation tax shields, and flexibility in exits via 1031 or 721 exchanges. This liquidity and tax efficiency make it attractive to accredited investors seeking to defer gains from prior real estate sales.

Risks and Considerations

While the fundamentals are strong, risks remain. Pinehurst's reliance on tourism could make it vulnerable to economic downturns or shifts in travel patterns. Additionally, the absence of specific occupancy data for this property (the firm cites a 95% average across all DSTs as of 2024) leaves room for uncertainty. Investors should analyze broader regional occupancy trends and Bluerock's historical performance.

Investment Thesis: A 1031 Vehicle for Growth

For investors looking to deploy capital via 1031 exchanges, Bluerock's Pinehurst DST presents a disciplined opportunity. It combines:
1. Location: A top-tier small metro with structural rental demand.
2. Execution: A proven value-add strategy in a supply-constrained market.
3. Track Record: Bluerock's ability to deliver cash flow and exit flexibility.

With multifamily vacancy rates in North Carolina at historic lows (4.2% as of Q1 2025), the timing aligns with the DST's launch. The $37.8 million target underscores investor confidence in Bluerock's ability to navigate this sector.

Final Analysis

Bluerock's Pinehurst DST is more than a property play—it's a bet on a market where supply constraints and strategic upgrades converge to drive returns. For accredited investors seeking a tax-efficient, income-producing vehicle with growth potential, this offering merits serious consideration. As Josh Hoffman concludes, “Pinehurst isn't just a golf destination—it's a multifamily growth story waiting to unfold.”

Investors should conduct thorough due diligence and consult tax advisors before engaging in 1031 exchanges.