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Delaware Statutory Trusts (DSTs)

A Delaware statutory trust (DST) represents a specialized investment structure enabling multiple investors to acquire partial ownership stakes in substantial commercial real estate properties that would typically be beyond the reach of individual investors acting alone.

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Real estate owners looking to sell appreciated properties frequently consider a 1031 Exchange while pursuing portfolio diversification and hands-off property ownership.

 

DST fractional ownership interests give investors access to passive real estate opportunities managed by professional firms that handle property selection, comprehensive due diligence, financing arrangements when needed, ongoing asset oversight, property administration for non-triple net (NNN) leases, and eventual property sales.​

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When you're attempting to execute a 1031 exchange we know it can be difficult to identify appropriate replacement properties within the 45-day limit. We can help with that.

 

We work with firms that offer DST investments across various asset types, including multifamily, necessary retail, industrial, student housing, and more.

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Contact us for help exploring your options.

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DST Risks & Benefits

Like all real estate investment opportunities, DSTs are not risk-free. Let's discuss the risks and benefits to help you decide if DST investing is right for you.​

DST Benefits

  • Passive Real Estate Ownership: Opportunity to invest in real estate without the burden of active management.
     

  • Income Potential: Possibility of stable cash flow throughout the investment lifecycle.
     

  • Tax Advantages: Potential for deferred capital gains through 1031 Exchanges and reduced tax burden for heirs.
     

  • Greater Investment Leverage: Higher adjusted basis due to tax deferral, potentially increasing reinvestment equity.
     

  • Diversification: Ability to exchange one property for multiple DST properties, offering asset type and geographical diversification.
     

  • Access to Institutional-Grade Properties: Individual investors can participate in larger commercial properties typically reserved for institutional investors.
     

  • Flexibility in 1031 Exchanges: DSTs provide the ability to "right-size" exchange amounts in both equity and debt.
     

  • Built-in Financing: Investors benefit from sponsor-arranged financing without individual underwriting (beyond accredited investor status).
     

  • Limited Liability: Investors are protected from personal liabilities beyond their investment amount.
     

  • Opportunistic Investing: Ability to exchange underperforming properties for those with better growth potential or income generation.
     

  • Close Time: DSTs typically close much quicker (2-5 days) than traditional real estate and can be a great tool to prevent failed 1031 Exchanges.
     

  • Back-Up Planning: DSTs can be used as a backup by always identifying a DST as one of the three replacement properties for a 1031 Exchange.

DST Risks

  • Market Volatility: Real estate investments are subject to market fluctuations, potentially impacting property value and returns.
     

  • Illiquidity: DSTs are illiquid investments with no established secondary market for resale of interests.
     

  • Limited Control: Investors have restricted rights and cannot participate in property management decisions.
     

  • Structural Limitations: DSTs must operate within specific guidelines to maintain 1031 Exchange eligibility.
     

  • Fees and Expenses: Acquisition costs may be higher than direct property purchases due to additional structuring and marketing expenses.
     

  • Reliance on Sponsor: Investors depend on the sponsor and property manager for day-to-day decisions and property performance.
     

  • Real Estate Risks: Subject to general real estate risks including occupancy fluctuations, market changes, and potential loss of principal.
     

  • Potential Conflicts of Interest: Conflicts may arise that could adversely affect the investment.
     

  • Limited Reinvestment Options: Trustees cannot reinvest proceeds from property sales or renegotiate existing loans.
     

  • Regulatory Compliance: Failure to adhere to DST guidelines may jeopardize 1031 Exchange eligibility and impact investment value.

Note: DST investments carry risks and may not be suitable for all investors. Consult with a financial advisor to determine if DSTs align with your investment goals and risk tolerance. For more information on DSTs, see the IRS fact sheet. 

Securities offered only by duly-licensed individuals through Madison Avenue Securities, LLC (MAS), member FINRA/SIPC. Investment advisory services offered through Csenge Advisory Group, LLC, a registered investment advisor. Wayfinder Wealth, Csenge Advisory Group, LLC, and MAS are not affiliated entities and do not provide legal or tax advice. Investing involves risk, including the potential loss of principal. Our firm is not permitted to offer and no statement made during this presentation shall constitute tax or legal advice. General 1031/TIC risks include potential for property value loss, change of tax status, potential for foreclosure, Illiquidity, impact of fees and expenses, reduction or elimination of monthly cash flow distributions, and loss of management control. IRC restrictions include - Properties must be held for productive use in a trade, a business, or as an investment The investor must identify the replacement property within 45 days from closing on the sale of a relinquished property and the new property must be acquired within 180 days of the original sale Properties must be exchanged solely for a “like-kind” property
The seller must not directly receive funds from the sale of the relinquished property. Our firm is not licensed to buy or sell real estate properties.

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