DST

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Delaware Statutory Trust (DST)

A Delaware Statutory Trust is a separate legal entity created as a trust under Delaware statutory law. (DST) 1031 exchange is a purchase by an investor of beneficial interests in the Trust. Where the investor receives a Certificate of Beneficial Interests. Bankruptcy creditors of the beneficiaries cannot reach the DST’s property. The Trustees have powers with respect to the real estate operations and the holders of the beneficial interests have no powers. Each PPM contains a legal opinion discussing the structure and its compliance with IRS Revenue Proclamation 2004-86 which dictates the requirements necessary to satisfy IRS’s ruling.

Synonyms:
Delaware Statutory Trust
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There is no guarantee that any strategy will be successful or achieve investment objectives;

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

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;

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

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

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;

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

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