What Is A Delaware Statutory Trust?

A real estate sponsor company, which also acts as the master tenant, buys the property under the DST umbrella and opens the trust to potential accredited investors to purchase a beneficial interest. DST investors will potentially benefit from a property that is professionally run and of institutional value. For example, the underlying property could be an apartment building of 500 units, a medical office
property of 100,000 square feet or a shopping center leased to tenants of investment grade.


Many DST contributions are capital that small to mid-size accredited investors would otherwise not be able to afford; however, they can obtain this type of asset by pooling money with other investors. Investors familiar with the investment strategy of tenants in common (TIC) may see some parallels in the definition of DST; however, recognizing the differences between the two concepts is crucial. While a TIC may have up to 35 investors, each owning an undivided, pro-rata share of the title to the property, a DST may have up to 100 investors (sometimes more), with each investor owning a beneficial interest in the trust which, in turn, owns the underlying asset.

1031 Exchanges

A typical 1031 Like-Kind Exchange allows an investor or business owner to sell an investment property and replace it with another property (passive or active ownership) of equal or greater value within a timeframe of 180 days from the date of close using a qualified intermediary. If all the criteria are met the investor can defer taxes on up to 100% of capital gains created from the sale of the original property. Some form of 1031 Like-Kind exchanges has been around since 1921.

How Does A DST Work?

A real estate sponsor company, which also acts as the master tenant, buys the property under the DST umbrella and opens the trust to potential accredited investors to purchase a beneficial interest.

DST investors will potentially benefit from a property that is professionally run and of institutional value. For example, the underlying property could be an apartment building of 500 units, a medical office property of 100,000 square feet or a shopping center leased to tenants of investment grade.

Many DST contributions are capital that small to mid-size accredited investors would otherwise not be able to afford; however, they can obtain this type of asset by pooling money with other investors.

Investors familiar with the investment strategy of tenants in common (TIC) may see some parallels in the definition of DST; however, recognizing 
the differences between the two concepts is crucial. While a TIC may have up to 35 investors, each owning an undivided, pro-rata share of the title to the property, a DST may have up to 100 investors (sometimes more), with each investor owning a beneficial interest in the trust which, in turn, owns the underlying asset.

What Are Some Of The Potential Benefits Of A DST?

Diversification into More than One Property and in More than One Market

Predictability and Flexibility when Closing

Non-Recourse, Institutional Financing

Flexible Investment Amounts

Competitive Income

Competitive Income

Access to Institutional Quality Real Estate

No management Responsibilities, Professionally Managed

Investment Portfolio Diversification

A Typical 1031 Exchange Has Three Basic Steps

1) Exchanger sells property, known as the relinquished property, and proceeds are escrowed with a Qualified Intermediary (QI).

2) Qualified Intermediary, Through a written agreement with the investor, transfers funds for purchase of replacement property.

3) Exchanger receives new property (or DST interest).

A Typical 1031 Exchange Has Three Basic Steps

Want to Learn More about Delaware Statutory Trusts?

DISCLAIMER

Neither Creative Wealth Designs (CWD) nor any of its personnel is securities licensed and nobody associated with CWD performs the function of a broker-dealer or registered representative.  CWD is solely a consultant and, should any CWD clients have an interest in acquiring a securitized product, they will be referred to a duly licensed broker-dealer who is legally able to sell such an offering.