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  • A DST is a separate legal entity formed as a trust under Delaware law. When properly
    structured, the DST will be classified as a grantor trust for federal income tax purposes and, as a
    result, the purchaser of a beneficial interest in the trust will acquire an undivided interest in the
    asset(s) held by the DST. An investor can use a beneficial interest in a DST as replacement
    property in a 1031 or 1033 exchange.
  • A DST investor must be an “Accredited Investor” which means $1 million of net worth exclusive
    of primary home ownership, or $200,000 of income ($300,000 with a spouse).
  • The DST is structured so that each beneficiary (investor) owns a beneficial interest in the trust.
    The managing Trustee of the DST is either the Sponsor or an affiliate of the Sponsor.
  • The DST holds title to 100% of the interest in the property.
  • Tax reporting is done on a Schedule E utilizing property operating information provided by the
    sponsor. The IRS issued Revenue Ruling 2004-86 that set forth parameters a DST must meet in
    order to be viewed as a grantor trust.


  • The DST is the single owner and borrower. Accordingly, the lender only underwrites the DST, not
    each individual investor. Therefore, the loan is non-recourse to the investor and not reportable
    on any personal financial statement.
  • The transfer of a DST ownership interest to an investor can be easier and quicker since there is
    generally less paperwork and due diligence time required as compared with buying a property
  • A typical minimum investment of $100,000 allows more flexibility for investors to 1) diversify
    into several replacement properties and 2) to invest the exact amount needed to complete the
  • An investment in a DST is a passive investment with professional management in place for the
    DST and for the property. This relieves the owner/investor of the headaches and responsibilities
    associated with property management.
  • Many DSTs own large institutional grade properties or a portfolio of properties to reduce risk
    and provide economies of scale. Different property types are generally available, including net
    lease with major credit tenants, multifamily, medical office buildings, industrial, other.
  • The DST is sold as a security with several layers of due diligence performed, including third party
  • Investors can complete a 1031 exchange after the DST property is sold.
  • A DST owner’s estate is likely to benefit from a significant marketability valuation discount.

POTENTIAL DRAWBACKS OF DST OWNERSHIP (Includes, but is not limited to:)

  • A DST investment is an investment in real estate; and any real estate investment is subject to
    market value, rental income fluctuations, government regulations and other factors.
  • A DST owner does not have management control over day to day operations.
  • The investment in a DST is illiquid and no public market is likely to exist. While the sponsor may
    have an exit plan, there are no assurances that such plan will be realized.

There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to sell any securities. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney.

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