August 2020- MONTHLY LANDSCAPE COMMENTARY: AN OVERVIEW OF THE DST OFFERINGS

Last month the focus was on the $200 MM of DST invest­ments made by indi­vid­ual investors.  August con­tin­ued to see addi­tion­al invest­ment as DST offer­ings were fund­ed. Many eyes are focused on the response of the Spon­sor in secur­ing addi­tion­al prop­er­ties and struc­tur­ing into offer­ings for the large antic­i­pat­ed num­ber of indi­vid­ual sell­ers of real estate pri­or to year end. The old phrase the “Dog days of August” did not real­ly exist in the acqui­si­tion teams of the Spon­sors. Dur­ing the height of the COVID restrict­ed activ­i­ty, many due dili­gence teams could not phys­i­cal­ly inspect the prop­er­ties that were the sub­ject of future acqui­si­tion. With­out fol­low­ing the strict com­pli­ance of eval­u­a­tion of every prop­er­ty that would ulti­mate­ly be offered to indi­vid­ual investors (either cash investors or 1031 exchang­ors) the invest­ment would not be sound. Many of the spon­sors have mul­ti­ple DST prop­er­ties in the process of final eval­u­a­tion.

Many Spon­sors are con­tin­u­ing to expe­ri­ence good rent col­lec­tion results con­sid­er­ing the cur­rent respons­es (mora­to­ri­um) by states on evic­tion of renters who can­not pay the rent or choose not to pay the rent. The sus­pi­cion may be that the mul­ti­fam­i­ly sec­tor, as well as stu­dent hous­ing would see a dras­tic drop in rental col­lec­tion. Con­trary to that sus­pi­cion, many have seen strong occu­pan­cy as well as strong rental col­lec­tion. Even in areas like Las Vegas rent col­lec­tion have been strong. As the col­leges con­tin­ue their indi­vid­ual deci­sion on how to oper­ate col­lege class­es (either in per­son or vir­tu­al) pri­vate stu­dent hous­ing is see­ing an uptick in leas­es signed.  Many stu­dents are return­ing to the col­lege towns even though the future of class­es and col­lege ath­let­ics are in flux. These two sec­tors (mul­ti­fam­i­ly and stu­dent hous­ing) make up near­ly 60% of all DST offer­ings. How­ev­er, the core com­pe­ten­cies of each offer­ing need to be strong. Mean­ing once we are on the road to return­ing to more busi­ness­es open­ing (such as in Las Vegas) are the demo­graph­ics pos­i­tive, are busi­ness­es expand­ing and hir­ing employ­ees, and are the assets or prop­er­ties those that would attract renters.  The essen­tial busi­ness­es in the retail sec­tor con­tin­ues to be sta­ble. Food stores, phar­ma­cies and the local eco­nom­ic dri­vers con­tin­ue to have be demand. Indus­tri­al and self-stor­age are sta­ble but new offer­ings have been slow to enter the pipeline. Many of the self-stor­age offer­ings have been rel­a­tive­ly small (under $15 MM each) and are sub­scribed quick­ly. Med­ical and senior hous­ing are still attrac­tive.

The spon­sors re active in get­ting new assets in the pipeline.  Spon­sor are com­plet­ing the pre clos­ing DST due dili­gence and expect to have mul­ti­ple offer­ings com­ing on the mar­ket in the begin­ning of Sep­tem­ber.  There con­tin­ues to be equi­ty and liq­uid­i­ty look­ing to pur­chase new DST offer­ings.  Many investors will be seek­ing to bal­ance their real estate hold­ings by end of 2020.  Look for a robust 4^th quar­ter.

Our DST Land­scape Sur­vey pro­vides a snap­shot of com­par­a­tive data rep­re­sent­ing most avail­able DST offer­ings based on actu­al data pro­vid­ed by DST Spon­sors.  This land­scape sur­vey is updat­ed in real time as Spon­sors pro­vide updates on cur­rent prop­er­ties and on their new DST ini­tia­tives. 

DSTs are for accred­it­ed investors only. DST as well as all real estate invest­ments car­ry risk. This is not an offer to pur­chase any secu­ri­ty and all pur­chas­es must include a Pri­vate Place­ment mem­o­ran­dum (PPM) Please con­sult your CPA for ques­tions regard­ing qual­i­fi­ca­tions for 1031 tax deferred exchange

For addi­tion­al infor­ma­tion, please email us support@dst.investments or phone 800.378.0515