DST.EDU Series A Part 2- What is a DST and why you should or may consider.

Wel­come DST News! This is Part 2 in our series of edu­ca­tion­al infor­ma­tion on Delaware Statu­to­ry Trust (DSTs). Our goal is to pro­vide non-biased edu­ca­tion and mar­ket infor­ma­tion for Accred­it­ed Investors on DSTs.

Jan­u­ary 15, 2024, UPDATED
Orig­i­nal Post Feb 3, 2022

By Al DiNi­co­la, AIF®, CEPA™
DST 1031 Spe­cial­ist
NAMCOA® — Naples Asset Man­age­ment Com­pa­ny®, LLC
Secu­ri­ties offered through MSC-BD, LLC

A Delaware Statu­to­ry Trust (DST) is a rel­a­tive­ly new vehi­cle pro­vid­ing indi­vid­ual investors access to large insti­tu­tion­al grade com­mer­cial prop­er­ties. These prop­er­ties typ­i­cal­ly are larg­er than the typ­i­cal size in invest­ment dol­lars than what an indi­vid­ual would be able to pur­chase.  Large com­mer­cial prop­er­ties are owned by pen­sion funds, Real Estate Invest­ment Trust (REITs), insur­ance com­pa­nies and oth­er large funds who can deploy pri­vate cap­i­tal or pub­lic funds.

For those cash investors and poten­tial­ly more impor­tant­ly the investors seek­ing to uti­lize a §1031 tax deferred exchange strat­e­gy the DST option can be very valu­able. Espe­cial­ly when pur­chas­ing (replace­ment of prop­er­ty for 1031 investors) and when the DST invest­ment is sold (the exit). The advan­tages include not only defer­ring the cap­i­tal gains and defer­ring the recap­ture of depre­ci­a­tion but also tax advan­taged pas­sive income (monthly/quarterly). There is also the poten­tial appre­ci­a­tion all investors hope for while own­ing the real estate or pay­ing down the mort­gage.

One of the first con­cerns of real estate investors is the man­age­ment of the prop­er­ty. DSTs are pro­fes­sion­al­ly man­aged invest­ments pro­vid­ing relief to investors. Since this is a pas­sive invest­ment there are no man­age­ment respon­si­bil­i­ties ties to the real estate invest­ment. The type of DST prop­er­ties includes many of the same types of prop­er­ties but on a larg­er scale includ­ing:

• Apart­ment build­ings (mul­ti­fam­i­ly)
• Stu­dent Hous­ing
• Man­u­fac­tured Hous­ings
• Retail
• Office
• Med­ical Office
• Indus­tri­al build­ings
• Self-stor­age

DSTs may be sin­gle prop­er­ties or a port­fo­lio of prop­er­ties. DSTs are pre-pack­aged by design to offer investors a selec­tion of asset style as well as geo­graph­ic loca­tions. DSTs that have debt (by design) enable investors to sat­is­fy the §1031 require­ments of debt replace­ment with non-recourse debt. While there is a min­i­mum to invest, most DST acqui­si­tions are eas­i­ly obtain­able by accred­it­ed investors (qual­i­fi­ca­tion reviewed lat­er). Some of the advan­tages enable investors to diver­si­fy port­fo­lios with­out any land­lord duties and pro­vide month­ly income with sig­nif­i­cant tax advan­tages. Diver­si­fi­ca­tion is a strat­e­gy that spreads risk but does not guar­an­tee avoid­ance of risk. This is a pas­sive invest­ment, and the prop­er­ties are pro­fes­sion­al­ly man­aged. More details in a lat­er infor­ma­tion­al ses­sion.

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. 8215 SW Tualatin ‑Sher­wood Rd, Suite 200 Tualatin, OR 97062.  MSC-BD, LLC and NAMCOA are inde­pen­dent­ly owned and are not affil­i­at­ed.