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DST Potential Benefits & Risks

DST Potential Benefits & Risks

Delaware Statutory Trust (DST) - Potential Benefits 

Access to institutional-quality properties (through fractional ownership) that you may not otherwise have the ability to own.

Ability to diversity your real estate portfolio accross property types, geographies, and even sponsors. 

Tax advantages for heirs when used for generational wealth transfer and estate planning.

Access to national credit clients and reliable coporate tenants. 

Ability to reinvest gains back into the DST, or receive passive income.

No more stressful tenant or property management. 

All expenses are handled by the sponsor.

Ability to compare various DST Investments side by side. 

Typical minimum entry point of $100,000, allowing the option to split the investment into multiple DST's which can help meet boot requirements or further diversification. 

Delaware Statutory Trust (DST) - Potential Risks

Illiquid Investments - you may not have access to your investment for four to five years or longer.

Lack of Control - as a passive investor you do not have voting rights and cannot participate in the trust's operations.

Inability to raise new capital - the IRS prohibits trustees from accepting new contributions once the offering is sold.

Investment Expenses - fees and expenses for private investments may be higher than those publicly-traded securities. 

Accessibility - DST's are only available to accredited investors who need to meet certain financial thresholds.

Strict Requirements - In order to qualify for the deferral of capital gains there are strict process requirements that must be met. 

May be speculative and carries a high degree of risk including loss of the entire investment. 

bd-eh-gp-a-1318-10-2023 

This is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.

There are material risks associated with investing in private placements, Delaware Statutory Trusts ("DSTs") and real estate securities including the potential loss of the entire investment principal, illiquidity, tenant vacancies impacting income and revenue, general and real estate market conditions, lack of operating history, interest rate risks, competition, including 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 investors should read the PPM carefully before investing paying special attention to the risk section.

DST 1031 properties are only available to accredited investors (typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two years; or have an active Series 7, Series 82, or Series 65). Individuals holding a Series 66 do not fall under this definition) 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.

The rules and regulations of the QOZ Program are complex, and compliance with the QOZ Program comes with significant challenges such as appreciation unpredictability, certain neighborhoods may be less accommodating to development, illiquidity for up to ten or more years, availability and cost of construction and development financing uncertainty, development and redevelopment real estate risks, as well as a number of Jobs Act interpretation uncertainty which may impact future risks, if any.

Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.

Potential cash flows/returns/appreciation are not guaranteed and could be lower