Seven Delaware Statutory Trust (DST) equity offerings have been fully subscribed to in the past month. Two of the offerings were on the market for over a year with a few small offerings selling out in under four months.
June 15, 2024
By Al DiNicola, AIF®, CEPA™
DST 1031 Specialist
NAMCOA® — Naples Asset Management Company®, LLC
Securities offered through MSC-BD, LLC Member of FINRA/SIPC
Good news for sponsors and investors alike. With seven being fully subscribed there were seven new offerings making their debut. Equity volume was $400 Million +/- for the second month in a row. Total equity raised so far is now nearly $2.2 Billion. All signs moving in the right direction.
Available equity:
There has been a notable reduction in the amount of equity that is available. While the shift in the percentage of equity absorbed and available may only be minor there may be early signs of trends. Available equity naturally is driven by absorption from the previous month. For example, 57% of the equity raised in the past month was in the multifamily asset class. However, the multifamily asset class only makes up 42% of the available equity. This may indicate that investors still find the multifamily asset class as being one of the cornerstones to have in their portfolios.
Seven New Offerings:
As noted previously there were seven fully subscribed DST offerings and ironically seven new DST offerings released. An observation regarding the new offering was the lack of any new multifamily offering or any residential offering. There were two self-storage offerings (not seen in a while) industrial, energy (oil, gas and mineral rights), retail and medical office. Net available equity is About $2.1 Billion. As a note we typically review all new offerings and review due diligence materials when available.
Tracking Inventory:
Another observation noted was the percentage of multifamily offerings that were available. Of the approximate $2.1 Billion 39% is multifamily offerings and nearly 25% is industrial offerings. Over the years multifamily has comprised nearly 50% of all offerings. Raising interest rates and lack of inventory may contribute to the lack of new multifamily offerings. There are several very large office facilities available with one governmental portfolio of nearly $200 M. The office sector makes up just over 16% of all equity.
Average offering Size:
While there are still several large offerings of over $100 Million there is somewhat of a shift in the industrial offerings. There are many smaller offerings under the $35 Million offering size as smaller industrial parks including flex spaces is providing an alternative to the large distribution warehouse offerings. Five of the seven new offerings that came on the market were under $20 Million. Small offerings, well positioned, may see an advantage with a shorter subscription time or “days on market”. The two other new offerings we both under $50 Million. Small offerings translate into getting investors and sponsors due diligence review by advisors so investors can evaluate options. The clock continues to run in the case of the 45-days when the investor is involved with a §1031 exchange.
Selecting the correct program:
Each investor has a different risk profile, and advisors should be conducting evaluation for each individual investor. Sone investors we only seek the highest distribution (translation income) while others will seek a combination of potential growth and income. We encourage investors to review the Private Placement Memorandum (PPM) to identify which style of program must describe your style. For 1031 investors it may be all about developing a generational wealth program.
Investor Restriction:
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.
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