If you were interested in beating the end of the year rush in closing on a Section 1031 using a Delaware statutory Trust (DST) you may have several options. Contrary to our last posting regarding §1031 End of the Year Deadlines (which there are no calendar year deadlines) some investors may be seeking quick closing to complete their exchange in one calendar year.
November 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
Understanding your overall replacement value and any debt replacement needs becomes vital in selecting the right asset class or individual DST offering. For example, if you are seeking an industrial property or retail offerings and need debt replacement you are hard pressed. Nearly all those asst classes have all cash offerings. If you are a multifamily investor who is in an all-cash exchange position you are also hard pressed. Unless you acquire debt for any additional tax strategies. Understanding the replacement Loan to Value (LTV) is critical for full 1031 compliance.
The other variable that certain investors may be seeking would be the geographic location. Specifically, is the replacement DST within one state or a portfolio in more than one state. Investors currently living in a non-income tax may only want to secure an asset or replacement property in another non income tax state. Certain investors in high income tax states such as California may have more options at their disposal, especially because of the favorable income offset tax that’s available in California and other state taxes. Meaning that if you are paying a state income tax in Illinois on a rental property that tax would offset your taxes due in California. As always seek your own CPA advice.
Financial advisors and representatives that work on a daily basis with DST offerings as well as other alternative investments have access to multiple properties located throughout the US. As of November 15th, there has been nearly $7 billion of equity raised in DST offerings a large percentage of this raise was via 1031 exchanges.
A brief landscape summary of DST offerings is as follows:
- Industrial offerings currently have an average LTV of around 14.73%. For investors needing to replace debt this is a challenge. This is reflective in 17 offerings, 11 of which are all cash offerings.
- Multifamily offerings have an average LTV of around 38.38%. There are several offerings with LTVs over 50% which may help satisfy debt replacement for investors. That is reflected in 38 total offerings of which only 8 are all cash. If you are an all-cash investor and want multifamily offerings there are fewer offerings.
- One of the more surprising awesome asset classes this year has been the necessary retail program there are 16 total offerings of which 15 are all cash offerings with an average LTV of 2.72%.
- There are a few medical office buildings as well as student housing offerings. Self-storage may be the most challenging with only one offering at this time.
- Are there any others? There is an additional asset class or actually a catch all asset class considered as “Other”. This other classification may be made up of DST’s which are land holdings, marinas properties, or other types of businesses such as convenience stores. All of these are all cash offerings.
- For investors seeking highly leveraged DST there are a few referenced as Zero DST. This means zero distributions with high leverage and all potential distribution retiring the debt bad building equity. These programs may be very tax efficient for certain investors. §1033 exchange investors (eminent domain or disaster) may utilize this strategy enabling the investors to extract tax free cash and replace equity with debt. You may not replace equity with debt in a §1031 exchange.
Balancing the exchange becomes an art form especially when an investor is seeking multiple DST in their replacement portfolio. We have the ability to assist in all §1031 situations (even with less than seven days remaining).
As always contact us for more information and a complimentary consultation.
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.
Alternative investments and DSTs are not for all investors. The acquisition of a certain alternative investments including DSTs 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.