DSTs – An Option to Keep on Your 1031 Radar
DSTs offer an intriguing option for investors who are looking for properties to complete their 1031 Exchanges.
A DST (Delaware Statutory Trust) is an “arm chair investment”, or a passive investment opportunity that allows individuals to own fractional shares in institutional grade properties. A DST is a legal entity created as a trust under Delaware law that can hold real estate. In the context of real estate, DSTs are formed pursuant to private governing agreements under which a property or several properties are held, managed, administered, and/or operated for profit by a trustee for the benefit of the holders of the DST’s beneficial interests. Some examples of properties that were recently structured as DSTs are:
According to DST proponents, these are some of the benefits of DST ownership:
Given the intricacies of purchasing suitable real estate assets and structuring these offerings, from both a securities and tax perspective, exchangers and their advisors should perform due diligence when selecting a DST sponsor. The sponsor will provide a Private Placement Memorandum (“PPM”) which provides information about the properties, area demographics, leases, projections and other important disclosures. Due diligence emphasis should be placed on real estate, property management and asset management expertise, prior performance track record, experience with sophisticated financing structures, transparent investor communications, financial strength of the sponsor and excellent legal representation.
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As the nationwide leader in tax deferred exchanges, IPX1031® is here to offer you the best in service, experience and security. When you choose IPX1031® as your Qualified Intermediary, you can be confident that your exchange will be handled expertly and that your funds will be safe, secure, and available when needed. IPX1031® strives to help our clients and their advisors keep current on tax and industry issues pertaining to 1031 Exchanges. For more information about us, additional resources, or our complimentary monthly webinars, visit our website at www.ipx1031.com.