Feb 11, 2022 DST Education Series A- Part 6: Allowances for Broker Dealers

Welcome DST News! Our goal is to provide non-biased education and market information for Accredited Investors on DSTs. We hope to provide a Depth & Breath of knowledge for Investors About Delaware Statutory Trusts (DSTs).

By Al DiNicola, AIF® Feb 11, 2022

In this part we continue to review expenses that are included in the DST in order to bring the offering to market. There are additional expenses that may reimburse the marketing efforts of the Broker dealer for due diligence and marketing efforts.  Marketing expenses are typically included in many products that are offset by or included in the selling prices.

There is a Managing Broker-Dealer responsible for the offering. DSTs are recognized as securities offerings and only for accredited investors (we will review the definition of accredited investors in a future part). There are many regulations involved with these types of investments and issued through a managing broker dealer (this may be like a transfer agent on other investments) for compliance standards.  At this level there are expenses involved with other cost involving document preparation, compliance with securities laws other due diligence items. Many of the regulations were instituted to protect the individual investors.

Who are wholesalers?  Wholesalers are in-house representatives or selling teams that provide all the necessary information to licensed registered representatives.  The amount of documentation may be viewed as overwhelming at times.  Most information comes in the form of a Private Placement Memorandum (PPM). PPMs will be covered as a separate topic.  Many sponsors will have wholesalers who are located throughout the county to assist in meeting with representatives and provide additional support including education. Like many sales positions wholesalers are paid a commission for their efforts.

There are expenses setting up the offering. The cost to set up the offerings include normal printing cost (electronic documents), overhead cost for setting up along with ongoing cost of the Delaware Statutory Trust and the Trustee. There are also securities registration cost and ongoing compliance cost. Investors have clear insight into cost associated with any of the DST offerings in the Private Placement Memoranda (PPM).  We will provide additional insight in future parts as we review the “load”.

Look for Part 7: Cost of Acquisition

DST’s (Delaware Statutory Trusts) are for accredited investors only.  Contact your investment adviser for additional details on how a DST may be a solution to your 1031 Exchange and compliment your financial objectives. For more information on how to properly set up an IRC 1031Tax Deferred Exchange or if you are an accredited investor and would like additional information on a DST contact Al DiNicola at 239-691-8098 or email adinicola@namcoa.com.

This is not an offer to purchase or solicitation to purchase any security, as such be made only through an offering memorandum or prospectus.  Investing in securities, real estate, or any investment, in any form, involves risk, including but not limited to the potential of losing some or all of your investment dollars when you invest in securities. You should review any planned financial transactions that may have tax or legal implications with your personal tax or legal advisor.   NAMCOA, LLC is a Registered Investment Advisor, regulated by SEC (Securities and Exchange Commission). Our corporate office is located at 999 Vanderbilt Beach Road, Suite 200, Naples Florida 34108. Securities Offered through MSC-BD, LLC, Member of FINRA/SIPC. 410 Peachtree Parkway Suite 4245, Cumming, GA 30041. MSC-BD, LLC and NAMCOA are independently owned and are not affiliated. 

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