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.