2026 DST Market Outlook ~ What Investors Should Expect This Year

As we enter 2026, Delaware Statu­to­ry Trusts (DSTs) remain a core solu­tion for real estate investors seek­ing pas­sive own­er­ship, diver­si­fi­ca­tion, and §1031 exchange tax defer­ral. If the past two years have pro­vid­ed our insight is the DST land­scape is not sta­t­ic. Achiev­ing over $8 Bil­lion in equi­ty raised is an out­stand­ing accom­plish­ments. (We will have a detained analy­sis short­ly).

Jan­u­ary 3, 2026

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

For the past six years we have pro­vid­ed a land­scape com­men­tary with our pro­fes­sion­al eval­u­a­tion of many aspects of DSTs. The Mar­ket con­di­tions, inter­est rates, and spon­sor behav­ior have mate­ri­al­ly changed over the past few years.  Investors who relied on out­dat­ed assump­tions may be dis­ap­point­ed.

We do not have a crys­tal ball and rely on our com­mu­ni­ca­tion with spon­sors, investors and cap­i­tal mar­kets and our inter­nal research to pro­vide insight. Here’s what to expect from the DST mar­ket in 2026 and how investors should posi­tion them­selves.

To move for­ward we need a brief Look Back. As always look­ing back into 2025 Set in Motion.

The DST mar­ket com­ing into 2026 has been shaped by three major forces: Inter­est rates, Spon­sor qual­i­ty, and cap­i­tal preser­va­tion.

1. The first major force is the fact that there are High­er-for-longer inter­est rates. DST by design can­not refi­nance once the loan is in place. How­ev­er, in struc­tur­ing loans for the DST that include lever­age the inter­est rate plays an inte­gral role in the bot­tom line for dis­tri­b­u­tion to investors. The inter­est rate also may pro­hib­it buy­ers from pur­chas­ing indi­vid­ual investor’s prop­er­ty enabling the investor to sell their prop­er­ty prompt­ing the use of a 1031 exchange into a DST.

There is Increased scruti­ny of spon­sor qual­i­ty. The qual­i­ty of the offer­ing is also impor­tant. We have writ­ten in the past on the spon­sor cre­den­tials. 2025 has seen very large real estate funds (REITs) move into the DST offer­ing. Investors became more selec­tive after see­ing per­for­mance gaps between strong and weak oper­a­tors. There have been nat­ur­al dis­as­ters in cer­tain areas of the coun­try that has sus­pend­ed dis­tri­b­u­tions. There have been changes in on-site man­age­ment com­pa­nies seek­ing to man­age oper­a­tional expens­es. Cer­tain oper­a­tional costs for insur­ance and prop­er­ty tax­es have also been an issue.

2. There has been a Shift toward cap­i­tal preser­va­tion. Many investors pri­or­i­tized sta­bil­i­ty and pre­dictabil­i­ty over aggres­sive yield pro­jec­tions. When we review offer­ings that have pro­ject­ed returns out­side the nor­mal pro­ject­ed ranges we pause and take a deep­er dive to ana­lyze the num­bers.

These fac­tors laid the ground­work for a more con­ser­v­a­tive, risk-aware DST envi­ron­ment in 2026.

Key DST Trends Defin­ing 2026

1. Low­er Lever­age Is the New Nor­mal

Many DST offer­ings enter­ing 2026 fea­ture sig­nif­i­cant­ly reduced loan-to-val­ue ratios, and all-cash DSTs are more com­mon than ever. Many DSTs (by design) uti­lize non-recourse lever­age enabling 1031 exchange investors to sat­is­fy the debt replace­ment require­ments of the 1031 exchange. Spon­sors are pri­or­i­tiz­ing long-term sta­bil­i­ty over high­er pro­ject­ed returns.  Investors who need high­er lever­age may need to bring addi­tion­al (fresh) cash to the exchange to replace all the debt if the desired DST does not offer enough Loan to Val­ue.

The bot­tom line for investors may mean less expo­sure to inter­est-rate volatil­i­ty, poten­tial­ly low­er cash flow, and Greater empha­sis on total return and exit plan­ning

2. Longer Hold Peri­ods

Prio to the rise in inter­est rate many DST full cycle event (when they are sold) aver­aged 52 month or just over 4 years.  DSTs in 2026 are increas­ing­ly struc­tured with longer antic­i­pat­ed hold peri­ods, often 7–10 years. Extend­ing beyond 10 years may be unlike­ly since most DST will have loan matu­ri­ty at 10 years. Remem­ber refi­nanc­ing DST is not per­mit­ted.  This reflects a real­is­tic view of mar­ket cycles and exit tim­ing.

Investors should plan accord­ing­ly.  In the pri­vate place­ment mem­o­ran­dum (PPM) is dis­closed in more than one loca­tion that DSTs are illiq­uid by design. In addi­tion. Cap­i­tal tied up longer requires thought­ful retire­ment and liq­uid­i­ty plan­ning

3. Con­tin­ued Demand from 1031 Exchange Investors

Despite dis­cus­sions around tax reform, 1031 exchanges remain intact. DSTs con­tin­ue to be one of the most effi­cient solu­tions for sell­er exit­ing active man­age­ment.

Investors may also be restruc­tur­ing (down­siz­ing) their port­fo­lios. Baby boomers and retirees seek­ing pre­dictable income with­out land­lord respon­si­bil­i­ties will con­tin­ue to eval­u­ate DST as an alter­na­tive.

DST demand in 2026 is dri­ven less by spec­u­la­tion and more by lifestyle and tax plan­ning.

What This Means for Investors in 2026

DSTs in 2026 are less about “chas­ing yield” and more about over­all cap­i­tal preser­va­tion. :

• Pas­sive income con­sis­ten­cy may be more of an inter­est than increased dis­tri­b­u­tion.
• The over­all health of the prop­er­ty and Spon­sor exe­cu­tion con­tin­ues to be a focus.
• Over the past few years, the Exit strate­gies have increased. There are tra­di­tion­al DST, Option­al 721 UPREIT and Manda­to­ry 721 UPRITs offered. Exit strat­e­gy clar­i­ty is need­ed.

Investors who suc­ceed with DSTs this year will be those who Under­stand all the trade-offs. How­ev­er, diver­si­fi­ca­tion across mul­ti­ple DSTs should be a con­sid­er­a­tion.

• At the cen­ter will be the abil­i­ty to Eval­u­ate spon­sors as part­ners, not prod­uct providers.

Final Thoughts

The DST mar­ket in 2026 is more mature, dis­ci­plined, and trans­par­ent than in years past. That’s good news for informed investors — but only if expec­ta­tions align with real­i­ty.

DSTs remain a pow­er­ful tool when used cor­rect­ly, espe­cial­ly for Sec­tion 1031 tax deferred exchange investors seek­ing sim­plic­i­ty and tax effi­cien­cy. The key is enter­ing with eyes wide open.

Call to Action:
Con­sid­er­ing a 1031 exchange or DST invest­ment in 2026? Start plan­ning ear­ly — the best oppor­tu­ni­ties often fill before a prop­er­ty even sells.

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 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 com­pa­ny mail­ing address is 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.