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Delaware Statutory Trust

What is a DST? 

A Delaware Statutory Trust (DST) is a legal entity that allows for the fractional ownership of real estate assets. DSTs that are properly structured are recognized by the IRS as qualified replacement property for real property in a 1031 Exchange. Investors in a DST are not direct owners of the real estate. The trust holds title to the property, for the benefit of many investors, each of whom has a “beneficial interest” and is treated as owning an undivided fractional interest in the property.

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Simply put, DSTs provide a turn-key solution for Accredited Investors who may not have the time, energy or real estate expertise to find and/or manage a replacement property. DSTs can be used for all or a portion of the sales proceeds.

Past Offerings

DST Benefits

Towering Skyscrapers

Access to Institutional Quality Real Estate

Fractional ownership allows investors to access larger high quality properties that are normally out of reach.

Credit Assessment

Non-Recourse Financing

Debt in a DST is "non-recourse" meaning the loan limits the lender’s remedies to the property itself and an investor’s assets outside the property are protected.  

Reading in Nature

Passive Ownership

Sponsors are responsible for the acquisition, management, and disposition of all property(s) held within a DST. Leaving Investors with no management duties. 

Flexible Payment Planning

Low-Minimum Investment

There can be up to 2,999 investors in a single DST. Minimum investments are typically $100,000 but can be as low as $50,000. 

Contemporary Homes

1031 Exchange Eligible

DSTs are identified as like-kind replacement property in a 1031 Exchange under Revenue Ruling 2004-86. Being a passive replacement solution for 1031 Investors.

Partnership

Ability to close quickly

DSTs are a “Pre-Packaged” investment, which means the property has already been acquired thereby reducing the risk of missing 1031 timeframes.

Risks to Consider

  • Tax laws are subject to change which may have a negative impact on a DST investment.

  • These investments are not suitable for all investors. Must be an Accredited Investor.

  • Lack of liquidity. DSTs are illiquid investments that are held for 5-10 years on average. 

Asset Classes Available

Guidelines of a DST 

In order to be recognized by the IRS as a properly structured DST, a DST must avoid the “Seven Deadly Sins”:

Seven Deadly Sins 

01

Future Equity Contributions

 Once the DST is closed, there can be no new contributions by new or current investors. This preserves the beneficiaries’ interests because additional borrowing can dilute ownership percentages.

02

New Borrowing or Renegotiating Terms

Existing loans and terms cannot be renegotiated, and no new loans can be secured. The only exception to this rule is if the loan is in default or in risk of default or the tenant declares bankruptcy.

03

Reinvestment of Sales Proceeds

All potential proceeds earned by the DST can only be distributed to the beneficiaries. This prevents the trustees from reinvesting the proceeds and allows each beneficiary to determine how to use the capital earned from his/her investment.

04

Capital Expenditures

Capital expenditures are limited and can only be used to maintain the property and its value. Specifically, expenditures are only valid if they are for normal repairs and maintenance; minor non-structural capital improvements; and those required by law.

05

Liquid Cash Investments

Any cash held can only be invested in short-term debt obligations. And it must be able to be easily converted back to cash so that can be distributed to the beneficiaries.

06

Cash Distributions

 All cash must be distributed on a regular and current basis. Except for reserves for repairs or unexpected expenses, potential earnings and proceeds need to be dispersed in a timely manner.

07

New Leases or Renegotiations

Leases like loans, cannot be renegotiated unless the loan is in danger of being defaulted upon or the tenant is facing or has become insolvent or bankrupt. Typically DSTs are structured with a master lease to avoid this risk

Access our DST marketplace 

Send us your information to get access to our DST marketplace and quartlery updates regarding the real estate market. 

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Contact Info 

15333 North Pima Road 305

Scottsdale, AZ 85260

Phone: 602-931-7607

Email: Info@Waypoint1031.com

About

1031 Exchange

DST

Opportunity Zone Funds

Resources

Marketplace

Contact

Securities are offered through Realta Equities, Inc., Member FINRA  / SIPC, located at 1201 N. Orange Street, Suite 729, Wilmington, DE 19801. Realta Equities, Inc. is not affiliated with Waypoint 1031 Investments.

Opportunity Zone Disclosures:

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  • Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings.

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  • Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments.

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  • Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations.

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  • Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available.

  • Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund.

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  • Leverage. Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments.

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  • Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities.

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  • Regulation. It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.

 1031 Risk Disclosure:

  • There is no guarantee that any strategy will be successful or achieve investment objectives;

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  • Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;

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  • Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;

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  • Potential for foreclosure – All financed real estate investments have potential for foreclosure;

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  • Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.

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  • Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;

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  • Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits

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