April 2025 Landscape Review ~ Could DST Equity be on Track for Recovery Year

The first four months are in the rearview mir­ror. There has been on aver­age over $600 Mil­lion raised in the first four months of 2025. These num­bers come from Moun­tain Dell Con­sult­ing, who engages and tracks activ­i­ties from spon­sors of Delaware Statu­to­ry Trust (DST) and TIC Mar­ket Equi­ty invest­ment. Is this a cam­paign to Make 1031/DST Great Again?

May 22, 2025

By Al DiNi­co­la, AIF®
1031 Tax Deferred Exchange Spe­cial­ists & DST Advi­sor
NAMCOA® — Naples Asset Man­age­ment Com­pa­ny®, LLC
Secu­ri­ties offered through MSC-BD, LLC, Mem­ber of FINRA/SIPC

This is not a polit­i­cal endorse­ment. There is much antic­i­pa­tion from investors spon­sors and oth­ers that if spe­cif­ic tax ini­tia­tives are passed by con­gress the num­ber may increase. Part of the suc­cess of the equi­ty raised has con­tributed to the sup­ply chain so to speak of the real estate indus­try.  Investors and buy­ers may have set­tled in on the inter­est rate posi­tions but more impor­tant­ly it may be the under­ly­ing investor and con­sumer con­fi­dence. There are sev­er­al impor­tant fac­tors when review­ing the land­scape. The over­all equi­ty that is avail­able, the dis­tri­b­u­tion among asset class­es, the lever­age fac­tor and the investor suit­abil­i­ty.  Most of the equi­ty being absorbed appears to be com­ing from the 1031 exchange investor sales.  We stat­ed a few months ago that it is too ear­ly to project the 2025 results. How­ev­er, the over­all pro­ject­ed results may top over $7 Bil­lion   

2025 Ear­ly Trends

There has been a trend in the struc­ture of the DST offer­ings.  Besides indus­tri­al offer­ings increas­ing and gain­ing on mul­ti­fam­i­ly, nec­es­sary retail has emerged into the top three types of offer­ings.  Mul­ti­fam­i­ly which at one time held 50% of the offer­ings, now has dropped to 27%. Indus­tri­al offer­ings rep­re­sent 25% of the total offer­ings.  Nec­es­sary retail has moved up to over 15% of the offer­ings.  There appears to be a trend to have more indus­tri­al offer­ings (includ­ing a vari­ety of indus­tri­al) than in pre­vi­ous years.  We have com­ment­ed on demo­graph­ic and eco­nom­ic dri­vers that may increase demand for cer­tain prod­uct offer­ings.

Mar­ket Met­rics.

We mon­i­tor the remain­ing inven­to­ry in each spe­cif­ic offer­ing each week.  There is less over­all avail­able equi­ty now than this time last year.  There are a few very large offer­ings (over $100M and some over $200M) that have a ten­den­cy to move the aver­ages up.  

	End April 2025	Com­ments
Avail­able Equi­ty	$2,055,437,216	Near­ly $500 M less
Num­ber Pro­grams	83	None (9) few­er offer­ings
Days on Mar­ket	326	Vir­tu­al­ly same
# Cur­rent Spon­sors	49	Three (3) few­er spon­sors
Avg Yr 1 Return	4.89%	0.03% increase aver­age
All Cash	50	All cash increased 39 to 50

Nota­tion from chart above. Less equi­ty avail­able, few­er pro­grams, aver­age pro­ject­ed year 1 dis­tri­b­u­tion about the same. How­ev­er, there was an increase in the num­ber of all cash offer­ings rep­re­sent­ing near­ly 60% of all offer­ings. This means less lever­age as a response to increased inter­est rates. A com­ment regard­ing cur­rent spon­sors. Depend­ing on the sta­tus of an offer­ing, mean­ing ful­ly sub­scribed, spon­sors with few offer­ings will enter and exit the land­scape at any giv­en time.

Cur­rent Asset Class Met­rics

Spon­sors have entered a more con­ser­v­a­tive under­writ­ing, reduced the LTV and increased the equi­ty need­ed for each DST. 

Asset Class	Offer­ings	Avail­able Equi­ty	LTV	All Cash	$ as % of offer­ings	# as % of offer­ings
Ener­gy	2	$23,568,966	0.00%	2	1.14%	2.41%
Hos­pi­tal­i­ty	2	$41,611,271	0.00%	2	2.02%	2.41%
Indus­tri­al	21	$601,318,402	27.92%	21	29.18%	25.30%
Mul­ti­fam­i­ly	23	$709,667,612	36.67%	5	34.43%	27.71%
Mul­ti-Man­u­fac­tured	0	$                                  —	0.00%	0	0.00%	0.00%
Mul­ti Stu­dent Hous­ing	3	$32,786,469	49.74%	0	1.59%	3.61%
Office	4	$146,084,806	35.86%	0	7.09%	4.82%
Office-Med­ical	4	$227,829,833	25.65%	2	11.05%	4.82%
Oth­er	4	$93,930,000	0.00%	4	4.56%	4.82%
Retail	13	$120,733,920	18.60%	8	5.86%	15.66%
Self-Stor­age	5	$26,476,821	0.00%	5	1.28%	6.02%
Senior Hous­ing	2	$36,976,121	24.25%	1	1.79%	2.41%
	83	$2,060,984,221		50	100.00%	100.00%

Not­ed in the chart above is the aver­age LTV for each asset class. There are no asset class­es with an aver­age LTV of over 37% (aver­age down 3% from the pre­vi­ous report).  Under­stand­ing that when dis­play­ing an aver­age there may be (depend­ing on the asset class) an LTV over 37%. Thus, for investors with a high­er LTV need we have a few alter­na­tives.  When we assist an investor with a larg­er §1031 exchange ($1M and above) espe­cial­ly when debt needs to be replaced, we typ­i­cal­ly blend mul­ti­ple DSTs with lever­age to diver­si­fy the replace­ment port­fo­lio for the investor.  For investors with debt replace­ment require­ments, we urge you to engage as soon as pos­si­ble. Few­er DST with high­er LTV offer­ings has become more in demand.  The alter­na­tive for replac­ing debt is to bring more cash to the exchange. Many investors want to avoid this option. Please con­sult with us about our debt bal­anc­ing strat­e­gy.

There are a few inter­est­ing take­aways from this chart as dis­played. In look­ing at the num­ber of pro­grams offered by a sin­gle asset class mul­ti­fam­i­ly with 23 is no longer out­pac­ing the rest of the offer­ings. The Indus­tri­al Asset class con­tin­ues to be attrac­tive with 21 total offer­ings. Over the peri­od last year there were almost as many indus­tri­al offer­ings as there were mul­ti­fam­i­ly. The top three offer­ings of Mul­ti­fam­i­ly, Indus­tri­al and nec­es­sary Retail rep­re­sent over 68% of all offer­ings.  The lim­it­ed sup­ply of the oth­er asset class­es may increase demand, espe­cial­ly for all cash investors. There has been an increased absorp­tion of indus­tri­al assets over the past few months. A note for retail which needs to be explained is that many of the offer­ings may be con­sid­ered “nec­es­sary retail” such as gro­cery stores and need­ed facil­i­ties as com­pared to your depart­ment store retail offer­ings. Notice­ably absent from this is man­u­fac­tured hous­ing. An item which we don’t report on too fre­quent­ly is the inclu­sion of a §721 UPREIT at some point in time after the Delaware statu­to­ry trust is acquired. Some of the offer­ings will have option­al §721 UPREITS, oth­ers will have manda­to­ry upgrades. We will cre­ate an arti­cle on the advan­tages and dis­ad­van­tages of the §721 UPREIT pro­gram. Recent­ly there have been two large insti­tu­tion­al real estate REITs who have intro­duced DSTs as a path to the extreme­ly large REIT.  Migra­tion to the REIT (via 721) would hap­pen after a two-year safe har­bor hold­ing peri­od.

Final DST Mar­ket Overview Com­ments

Recent­ly attend­ing sev­er­al indus­try retreats and con­fer­ences there is opti­mism that the over­all real estate mar­kets will con­tin­ue to improve in many areas of the coun­try. We con­tin­ue to research, review, and mon­i­tor all the major DST spon­sors.  We speak week­ly with our spon­sor con­tacts and con­duct due dili­gence on DST offer­ings. Our con­tin­ued research enables us to pro­vide a quick response to investor ques­tions regard­ing their cash invest­ing needs as well as their §1031 tax deferred exchange.  We are espe­cial­ly skilled at bal­anc­ing the exchange debt equi­ty require­ments. We also spe­cial­ize in the §1033 exchange in the case of nat­ur­al dis­as­ter or emi­nent domain cas­es.

What to Look for in 2025 and 2026

DSTs have been gain­ing broad­er insti­tu­tion­al expo­sure and accep­tance. The inclu­sion of the 721 UPREIT (after a safe har­bor peri­od).  Large insti­tu­tion­al investors have been step­ping into the space. Not only on the spon­sor lev­el but also the large insti­tu­tion­al play­er and advi­sors prospec­tive. Schwab and Fideli­ty have entered the par­tic­i­pa­tion via plat­form­ing DSTs.  Large wire hous­es are step­ping into the §1031 space on the wealth man­age­ment side of the busi­ness. On a dif­fer­ent top­ic, but poten­tial­ly of vast inter­est may be the exten­sion of the tax cuts with the new admin­is­tra­tion as well as a poten­tial mod­i­fi­ca­tion and exten­sion to the Oppor­tu­ni­ty Zone (OZ) invest­ment oppor­tu­ni­ty.

NAMCOA® is a SEC reg­is­tered invest­ment advi­so­ry firm that pro­vides com­pre­hen­sive port­fo­lio man­age­ment, finan­cial plan­ning, and fidu­cia­ry deci­sion-mak­ing ser­vices on behalf of retire­ment plan spon­sors. Our Dif­fer­ence is sum­ma­rized by our fidu­cia­ry approach which enables us to bet­ter meet port­fo­lio and retire­ment plan objec­tives, result­ing in stronger risk adjust­ed returns for investors and peace of mind for Clients. We also focus on alter­na­tive real estate invest­ment. Many real estate investors are seek­ing tax deferred solu­tions uti­liz­ing §1031 exchanges or Oppor­tu­ni­ty Zones.

DSTs are not for all investors.  The acqui­si­tion of a DST is for accred­it­ed investors only.  Con­tact your invest­ment advis­er for addi­tion­al details on how a DST may be a solu­tion to your 1031 Exchange and suit­ed for your invest­ment future. 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, whether pub­lic or pri­vate, 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. 5 Cen­ter­pointe Dri­ve, Ste. 400 Lake Oswego, OR, 97035MSC-BD, LLC and NAMCOA are inde­pen­dent­ly owned and are not affil­i­at­ed.

Thank you.