By Al DiNi­co­la, AIF®

Pri­vate Mar­kets / 1031 Exchange / DST Com­men­tary
DST 1031 Spe­cial­ist
Fidu­cia­ry Cap­i­tal Man­age­ment, LLC
Secu­ri­ties offered through MSC-BD, LLC, Mem­ber of FINRA/SIPC

CHAPTER 6

After-Tax Wealth Optimization

A frame­work con­nect­ing tax strat­e­gy, invest­ment dis­ci­pline, and port­fo­lio design

Every real estate trans­ac­tion is ulti­mate­ly a cap­i­tal allo­ca­tion deci­sion. The investor is decid­ing where to place a finite amount of equi­ty, what risks to accept, what return to expect, how much liq­uid­i­ty to pre­serve, and how the new invest­ment will fit with­in a broad­er finan­cial plan. Sec­tion §1031 may influ­ence that deci­sion, but it should not con­trol it. The tax code can help pre­serve cap­i­tal. It can­not deter­mine whether a prop­er­ty is well locat­ed, fair­ly priced, prop­er­ly financed, oper­a­tional­ly sound, or suit­able for the investor’s long-term objec­tives. Those are invest­ment ques­tions.

This dis­tinc­tion is crit­i­cal because a §1031 exchange can be exe­cut­ed per­fect­ly from a tax per­spec­tive while still pro­duc­ing an infe­ri­or finan­cial result. An investor may defer a sub­stan­tial tax lia­bil­i­ty yet allo­cate cap­i­tal into an over­priced, con­cen­trat­ed, illiq­uid, or under­per­form­ing asset. The trans­ac­tion may sat­is­fy every tech­ni­cal require­ment. The cap­i­tal allo­ca­tion may still be poor. For this rea­son, the cen­tral ques­tion should not be:

• How much tax can be deferred?
• The bet­ter ques­tion is:

How can the investor’s capital be allocated to maximize long-term after-tax wealth?

That ques­tion forms the basis of After-Tax Wealth Opti­miza­tion.

What Is After-Tax Wealth Optimization

After-Tax Wealth Opti­miza­tion is a deci­sion-mak­ing frame­work that eval­u­ates invest­ments based on their expect­ed con­tri­bu­tion to the investor’s long-term finan­cial posi­tion after con­sid­er­ing tax­es, risk, costs, liq­uid­i­ty, income, appre­ci­a­tion poten­tial, diver­si­fi­ca­tion, and estate-plan­ning objec­tives. The frame­work does not min­i­mize the impor­tance of tax­es.

Tax­es mat­ter.

They affect the amount of cap­i­tal avail­able for rein­vest­ment, the tim­ing of cash flows, the eco­nom­ics of a sale, and the investor’s ulti­mate net return. How­ev­er, tax con­se­quences rep­re­sent only one com­po­nent of the invest­ment deci­sion. After-Tax Wealth Opti­miza­tion­be­gins with a broad­er premise:

The objec­tive is not to min­i­mize tax­es in iso­la­tion. The objec­tive is to max­i­mize the amount of wealth the investor ulti­mate­ly retains after tax­es, expens­es, risk, and invest­ment per­for­mance are con­sid­ered. This requires investors and advi­sors to eval­u­ate both sides of the equa­tion. They must con­sid­er the val­ue of the tax­es deferred. They must also con­sid­er the eco­nom­ic qual­i­ty of the invest­ment receiv­ing the deferred cap­i­tal. Defer­ring $1 mil­lion of tax may cre­ate sig­nif­i­cant val­ue if the pre­served cap­i­tal is invest­ed pru­dent­ly.

The same defer­ral may cre­ate lit­tle or no val­ue if the investor over­pays for a weak asset, accepts inad­e­quate income, assumes exces­sive risk, or incurs avoid­able loss­es. Tax defer­ral mag­ni­fies the amount of cap­i­tal invest­ed. It does not guar­an­tee that the cap­i­tal will be invest­ed well.

Capital Allocation Versus Tax Allocation

A tra­di­tion­al §1031 exchange dis­cus­sion often focus­es on tax allo­ca­tion. The investor and advi­so­ry team deter­mine:

• How much equi­ty must be rein­vest­ed
• How much debt must be replaced
• Whether tax­able boot may arise
• Which prop­er­ties qual­i­fy
• Whether the iden­ti­fi­ca­tion and clos­ing dead­lines can be met
• These are essen­tial con­sid­er­a­tions
• How­ev­er, cap­i­tal allo­ca­tion requires a broad­er analy­sis
• Cap­i­tal allo­ca­tion asks:
• Which invest­ment offers the strongest risk-adjust­ed return?

How much capital should be placed into one property?

Should the investor diver­si­fy among mul­ti­ple assets?

How much leverage is appropriate?

What lev­el of liq­uid­i­ty should be retained? Which prop­er­ty sec­tors and geo­graph­ic mar­kets best sup­port the investor’s objec­tives? Does the invest­ment gen­er­ate sus­tain­able income? What are the prob­a­ble cap­i­tal expen­di­tures? Debt must be replaced to ful­ly com­ply with the exchange. Can the investor apply for and qual­i­fy for replace­ment financ­ing in time to clear­ly iden­ti­fy replace­ment prop­er­ties. DSTs have prepack­aged non-recourse debt, and investors do not need to apply for or qual­i­fy for debt assign­ment.

How does the investment affect the investor’s overall balance sheet?

Does the struc­ture sup­port future estate and suc­ces­sion plan­ning? Tax allo­ca­tion focus­es on sat­is­fy­ing the require­ments of a trans­ac­tion. Cap­i­tal allo­ca­tion focus­es on improv­ing the investor’s finan­cial future. A sophis­ti­cat­ed strat­e­gy requires both.

Investment Quality Should Drive Tax Strategy

The prop­er sequence of deci­sion-mak­ing is essen­tial. Invest­ment qual­i­ty should dri­ve tax strat­e­gy. Tax strat­e­gy should not force the investor into a low-qual­i­ty invest­ment. That means the process should gen­er­al­ly begin with the investor’s objec­tives. The advi­so­ry team should first deter­mine:

• The investor’s income require­ments
• Risk tol­er­ance
• Desired lev­el of man­age­ment respon­si­bil­i­ty
• Time hori­zon
• Liq­uid­i­ty needs
• Diver­si­fi­ca­tion goals
• Estate-plan­ning pri­or­i­ties
• Geo­graph­ic and sec­tor pref­er­ences

Only after these objec­tives are under­stood should the team deter­mine which tax strate­gies may sup­port them. This sequence might lead to a tra­di­tion­al §1031 exchange into direct­ly owned prop­er­ty. It might lead to a diver­si­fied exchange involv­ing mul­ti­ple prop­er­ties. It might include one or more Delaware Statu­to­ry Trust inter­ests. It might involve accept­ing some tax­able boot rather than over­pay­ing for an unsuit­able asset. It may also involve sell­ing, pay­ing the tax, and real­lo­cat­ing into a port­fo­lio that bet­ter serves the investor’s long-term needs. The best struc­ture depends on the investor. There is no uni­ver­sal answer.

The mis­take occurs when tax defer­ral becomes the pre­de­ter­mined objec­tive and the invest­ment is select­ed mere­ly because it allows the trans­ac­tion to be com­plet­ed.

The Cost of Reversing the Decision Process

When tax strat­e­gy dri­ves invest­ment selec­tion, the sequence becomes dis­tort­ed. The investor begins with the con­clu­sion:

“I must com­plete a ful­ly tax-deferred exchange.”

The search then becomes an effort to jus­ti­fy whichev­er replace­ment prop­er­ty can sat­is­fy that con­clu­sion.

This may result in:

• Pay­ing above mar­ket val­ue
• Accept­ing a low­er cap­i­tal­iza­tion rate
• Con­cen­trat­ing too much equi­ty in one prop­er­ty
• Enter­ing an unfa­mil­iar asset class
• Pur­chas­ing in a weak or declin­ing mar­ket
• Accept­ing exces­sive lever­age
• Over­look­ing deferred main­te­nance
• Com­pro­mis­ing on ten­ant qual­i­ty
• Reduc­ing due-dili­gence stan­dards

Select­ing an invest­ment that does not match the investor’s age, goals, or man­age­ment pref­er­ences. These com­pro­mis­es may not appear imme­di­ate­ly.

The exchange clos­es.

The tax is deferred.

The trans­ac­tion is cel­e­brat­ed.

The eco­nom­ic cost may emerge years lat­er through weak cash flow, cap­i­tal calls, leas­ing dif­fi­cul­ties, refi­nanc­ing risk, poor appre­ci­a­tion, or a dif­fi­cult exit. The tax strat­e­gy suc­ceed­ed in the present. The cap­i­tal allo­ca­tion failed over time.

A Sim­ple Illus­tra­tion

Con­sid­er an investor sell­ing a prop­er­ty and receiv­ing $4 mil­lion of net exchange equi­ty. The investor is con­sid­er­ing two replace­ment strate­gies.

Strategy One: Full Allocation to a Single Direct Property

The investor acquires one replace­ment prop­er­ty for the full amount nec­es­sary to com­plete the exchange. Because the 45-day iden­ti­fi­ca­tion dead­line is approach­ing and inven­to­ry is lim­it­ed, the investor accepts a pur­chase price approx­i­mate­ly $400,000 above the val­ue sup­port­ed by com­pa­ra­ble sales and cur­rent income. The prop­er­ty sat­is­fies the exchange require­ments.

All tax­es are deferred.

How­ev­er, the investor begins with an imme­di­ate eco­nom­ic dis­ad­van­tage. The addi­tion­al $400,000 does not cre­ate addi­tion­al rent. It does not improve the build­ing.

It does not reduce risk.

It mere­ly increas­es the investor’s basis in an asset acquired above the price the investor would oth­er­wise have paid.

Strategy Two: Disciplined Capital Allocation

The investor nego­ti­ates the direct­ly owned prop­er­ty to a price sup­port­ed by the property’s income and mar­ket com­pa­ra­bles. Rather than pay­ing the addi­tion­al $400,000, the investor con­sid­ers allo­cat­ing remain­ing exchange pro­ceeds among one or more qual­i­fy­ing replace­ment invest­ments, poten­tial­ly includ­ing DST inter­ests, sub­ject to suit­abil­i­ty and due dili­gence.

The result may include:

• Bet­ter pur­chase-price dis­ci­pline
• Expo­sure to more than one prop­er­ty
• Greater geo­graph­ic or sec­tor diver­si­fi­ca­tion
• Mul­ti­ple ten­ants and income sources
• Reduced depen­dence on the per­for­mance of a sin­gle asset
• A more bal­anced port­fo­lio
• Both strate­gies may achieve sub­stan­tial tax defer­ral

The sec­ond strat­e­gy, how­ev­er, places greater empha­sis on cap­i­tal effi­cien­cy. The dif­fer­ence is not mere­ly where the mon­ey is invest­ed. The dif­fer­ence is whether each dol­lar is required to jus­ti­fy its place in the port­fo­lio.

Every Dol­lar Has a Job

A use­ful cap­i­tal-allo­ca­tion prin­ci­ple is that every dol­lar should have a defined pur­pose. Some cap­i­tal may be allo­cat­ed to income gen­er­a­tion. Some may be allo­cat­ed to growth. Some may pro­vide diver­si­fi­ca­tion.

Some may reduce debt.

Some may sup­port liq­uid­i­ty.

Some may serve estate-plan­ning objec­tives. The prob­lem aris­es when cap­i­tal is invest­ed for only one rea­son:

• To avoid rec­og­niz­ing tax­able gain

Cap­i­tal invest­ed sole­ly to sat­is­fy a tax rule may not be work­ing effi­cient­ly. For exam­ple, an investor may com­mit excess equi­ty to a replace­ment prop­er­ty even though the addi­tion­al invest­ment pro­duces lit­tle incre­men­tal income. The investor may believe the cap­i­tal has been pre­served because tax­es were deferred. In real­i­ty, the cap­i­tal may have been trapped in a low-yield­ing or over­priced asset. Pre­serv­ing cap­i­tal and deploy­ing cap­i­tal effec­tive­ly are not the same thing. Sec­tion §1031  may pre­serve the gross amount avail­able for invest­ment.

After-Tax Wealth Opti­miza­tion™ seeks to ensure that the pre­served cap­i­tal is placed where it has the strongest prob­a­bil­i­ty of advanc­ing the investor’s goals.

Risk-Adjusted Return Matters More Than Nominal Return

Cap­i­tal allo­ca­tion should not be based sole­ly on pro­ject­ed return. A high­er stat­ed return may be accom­pa­nied by:

• Greater lever­age
• Low­er ten­ant cred­it qual­i­ty
• Short­er lease terms
• Sig­nif­i­cant cap­i­tal expen­di­tures
• Devel­op­ment or lease-up risk
• Geo­graph­ic con­cen­tra­tion
• Illiq­uid­i­ty
• Uncer­tain exit pric­ing

After-Tax Wealth Opti­miza­tion eval­u­ates return in rela­tion to the risks required to obtain it. This is espe­cial­ly impor­tant in a §1031 exchange because the desire to defer tax can cause investors to under­es­ti­mate risk. A prop­er­ty may appear attrac­tive because it allows the investor to place all exchange pro­ceeds. Yet the investor may be accept­ing risks that would not have been accept­able out­side the exchange envi­ron­ment. A dis­ci­plined investor should ask:

• Would I make this invest­ment if no tax dead­line exist­ed?

If the answer is no, the tax ben­e­fits should not trans­form a poor invest­ment into a good one.

Diversification as a Capital-Allocation Decision

Many real estate investors accu­mu­late wealth through con­cen­tra­tion. They own one build­ing, one mar­ket, or one prop­er­ty type for many years. That con­cen­tra­tion may have worked excep­tion­al­ly well. How­ev­er, the sale of a major prop­er­ty cre­ates an oppor­tu­ni­ty to recon­sid­er how future cap­i­tal should be allo­cat­ed. The investor may choose to remain con­cen­trat­ed. (Markowitz, 1952).

That may be appro­pri­ate.

But the deci­sion should be inten­tion­al. A §1031 exchange can poten­tial­ly allow investors to diver­si­fy by:

• Acquir­ing mul­ti­ple replace­ment prop­er­ties
• Invest­ing across geo­graph­ic regions
• Com­bin­ing dif­fer­ent prop­er­ty sec­tors
• Mix­ing direct own­er­ship with pas­sive DST inter­ests
• Reduc­ing depen­dence on one ten­ant, mar­ket, or oper­at­ing strat­e­gy
• Diver­si­fi­ca­tion does not elim­i­nate risk

It may reduce the finan­cial dam­age caused by the fail­ure of any sin­gle invest­ment. From an After-Tax Wealth Opti­miza­tion™ per­spec­tive, the ques­tion is not sim­ply whether every dol­lar was rein­vest­ed. It is whether the rein­vest­ed dol­lars cre­at­ed a port­fo­lio bet­ter posi­tioned to with­stand chang­ing mar­ket con­di­tions.

Liquidity Has Value

Tra­di­tion­al real estate analy­sis fre­quent­ly empha­sizes income, appre­ci­a­tion, and tax ben­e­fits. Liq­uid­i­ty may receive less atten­tion. Yet liq­uid­i­ty has eco­nom­ic val­ue. Investors need access to cap­i­tal for:

• Emer­gen­cies
• Per­son­al expens­es
• Prop­er­ty repairs
• Cap­i­tal calls
• New invest­ment oppor­tu­ni­ties
• Estate set­tle­ment costs
• Changes in fam­i­ly cir­cum­stances

A ful­ly tax-deferred strat­e­gy may place near­ly all avail­able cap­i­tal into illiq­uid real estate. That may be appro­pri­ate for some investors. For oth­ers, the lack of liq­uid­i­ty may cre­ate future pres­sure. After-Tax Wealth Opti­miza­tion™ rec­og­nizes that pay­ing some tax may occa­sion­al­ly be prefer­able to invest­ing every avail­able dol­lar into assets that leave the investor finan­cial­ly inflex­i­ble. This does not mean investors should casu­al­ly accept tax­able boot. It means the cost of tax­a­tion should be com­pared with the val­ue of liq­uid­i­ty, flex­i­bil­i­ty, and port­fo­lio suit­abil­i­ty.

The Role of Delaware Statutory Trusts

Delaware Statu­to­ry Trusts may play an impor­tant role in cap­i­tal allo­ca­tion when they are suit­able for the investor and sup­port­ed by care­ful due dili­gence. DSTs may allow investors to allo­cate exchange pro­ceeds into frac­tion­al inter­ests in insti­tu­tion­al-scale real estate with­out assum­ing direct prop­er­ty-man­age­ment respon­si­bil­i­ties (Rev. Rul. 2004–86, 2004–2 C.B. 191; SEC, 2022). Poten­tial strate­gic uses may include:

Com­plet­ing an exchange when direct-prop­er­ty pro­ceeds do not align exact­ly with the nego­ti­at­ed pur­chase price. Diver­si­fy­ing among mul­ti­ple prop­er­ties or sec­tors. Access­ing pas­sive real estate own­er­ship. Reduc­ing man­age­ment respon­si­bil­i­ties. Pro­vid­ing poten­tial debt replace­ment through the investor’s pro­por­tion­ate share of trust-lev­el financ­ing. Cre­at­ing greater flex­i­bil­i­ty when direct-prop­er­ty nego­ti­a­tions require dis­ci­pline. DSTs are not appro­pri­ate for every investor. They are gen­er­al­ly illiq­uid secu­ri­ties. Investors do not con­trol day-to-day prop­er­ty oper­a­tions.

Fees, financ­ing, spon­sor qual­i­ty, prop­er­ty fun­da­men­tals, lease struc­ture, and exit assump­tions require care­ful eval­u­a­tion. With­in an After-Tax Wealth Opti­miza­tion™ frame­work, DSTs are not viewed as auto­mat­ic solu­tions. They are eval­u­at­ed as one pos­si­ble cap­i­tal-allo­ca­tion tool among sev­er­al.

Tax Deferral Has a Return Requirement

One of the most impor­tant prin­ci­ples is that deferred tax cap­i­tal has a return require­ment. When an investor com­pletes a §1031 exchange, the tax lia­bil­i­ty is post­poned rather than erased. The investor receives the ben­e­fit of con­tin­u­ing to invest cap­i­tal that oth­er­wise would have been paid in tax­es. That pre­served cap­i­tal should earn a return suf­fi­cient to jus­ti­fy the risks, costs, and restric­tions asso­ci­at­ed with the replace­ment invest­ment. If the investor defers $1 mil­lion of tax­es but invests the pre­served cap­i­tal into an asset that sig­nif­i­cant­ly under­per­forms avail­able alter­na­tives, the eco­nom­ic val­ue of the defer­ral may be reduced.

The investor should there­fore ask:

• What return is the deferred cap­i­tal expect­ed to gen­er­ate?
• What risks are required to earn that return?

How long will the capital remain invested?

What costs are asso­ci­at­ed with the strat­e­gy?

What is the expected after-tax outcome compared with alternative strategies?

Tax defer­ral cre­ates an oppor­tu­ni­ty. Invest­ment per­for­mance deter­mines the val­ue of that oppor­tu­ni­ty.

The Advisor’s Responsibility

After-Tax Wealth Opti­miza­tion requires col­lab­o­ra­tion. No sin­gle pro­fes­sion­al typ­i­cal­ly pos­sess­es respon­si­bil­i­ty for every ele­ment of the deci­sion. The CPA eval­u­ates tax expo­sure and report­ing con­se­quences. The Qual­i­fied Inter­me­di­ary admin­is­ters the exchange process. The com­mer­cial real estate bro­ker ana­lyzes mar­kets, prop­er­ties, and nego­ti­a­tions. The attor­ney eval­u­ates con­tracts, title, lia­bil­i­ty, and legal struc­ture. The Reg­is­tered Invest­ment Advi­sor may assess port­fo­lio fit, diver­si­fi­ca­tion, cash-flow needs, and broad­er finan­cial objec­tives. The estate-plan­ning attor­ney may eval­u­ate own­er­ship, suc­ces­sion, trusts, and basis con­sid­er­a­tions.

The strongest out­comes often occur when these pro­fes­sion­als com­mu­ni­cate before the relin­quished prop­er­ty is sold. Ear­ly col­lab­o­ra­tion allows the investor to iden­ti­fy poten­tial con­flicts among tax effi­cien­cy, liq­uid­i­ty, income, val­u­a­tion, risk, and estate plan­ning before the statu­to­ry dead­lines begin. The advi­so­ry team should not mere­ly ask whether a strat­e­gy is per­mit­ted. It should ask whether the strat­e­gy is pru­dent.

There are occa­sions where CPAs, attor­neys, real estate bro­kers are not famil­iar with alter­na­tive invest­ments that are designed to defer tax­es and strate­gies that fall out­side tra­di­tion­al real estate. Under­stand­ing DSTs and oth­er alter­na­tives are strate­gies that require spe­cial­ists

A New Standard for Evaluating §1031 Exchanges

The tra­di­tion­al def­i­n­i­tion of a suc­cess­ful §1031 exchange is tech­ni­cal.

The prop­er­ty qual­i­fies.

The dead­lines are met.

The funds are han­dled prop­er­ly.

The tax­pay­er acquires the replace­ment prop­er­ty. Tax­able gain is deferred. All of this remains essen­tial. After-Tax Wealth Opti­miza­tion™ adds a sec­ond stan­dard. A suc­cess­ful exchange should also seek to:

• Pre­serve pur­chase-price dis­ci­pline
• Improve port­fo­lio qual­i­ty
• Sup­port sus­tain­able income
• Man­age con­cen­tra­tion risk
• Main­tain appro­pri­ate liq­uid­i­ty
• Align with the investor’s time hori­zon
• Advance estate-plan­ning goals
• Strength­en the investor’s long-term after-tax finan­cial posi­tion

Tech­ni­cal suc­cess and invest­ment suc­cess should not be treat­ed as com­pet­ing objec­tives. The goal is to achieve both.

The Cen­tral Prin­ci­ple

The pur­pose of Sec­tion §1031 is not sim­ply to post­pone a tax pay­ment. Its great­est val­ue lies in the oppor­tu­ni­ty to keep more cap­i­tal invest­ed and work­ing toward the investor’s long-term objec­tives. That oppor­tu­ni­ty should not be wast­ed through poor val­u­a­tion, weak under­writ­ing, exces­sive con­cen­tra­tion, or dead­line-dri­ven deci­sions.

The sequence mat­ters.

First, deter­mine what allo­ca­tion of cap­i­tal best sup­ports the investor’s finan­cial goals. Then deter­mine how Sec­tion §1031, DSTs, direct own­er­ship, lever­age, liq­uid­i­ty, estate plan­ning, and oth­er strate­gies may be used to imple­ment that allo­ca­tion effi­cient­ly. This is the core prin­ci­ple of After-Tax Wealth Opti­miza­tion™:

Invest­ment qual­i­ty should dri­ve tax strat­e­gy. Tax strat­e­gy should enhance a sound invest­ment decision—not be used to jus­ti­fy an unsound one.

A suc­cess­ful investor does not ask only how much tax can be deferred today. A suc­cess­ful investor asks how every dollar—both invest­ed cap­i­tal and deferred tax capital—can be posi­tioned to cre­ate, pre­serve, and trans­fer wealth over time.

The Five-Part After-Tax Wealth Optimization Framework

1. Acqui­si­tion Eco­nom­ics- Fair mar­ket val­ue, cap­i­tal­iza­tion rate, cash flow, rent assump­tions, expens­es, cap­i­tal expen­di­tures, financ­ing, and exit val­ue.
2. Tax Effi­cien­cy Gain defer­ral, depre­ci­a­tion recap­ture, tax­able boot, basis, state con­se­quences, and the present val­ue of deferred tax cap­i­tal.
3. Port­fo­lio Con­struc­tion- Con­cen­tra­tion, diver­si­fi­ca­tion, liq­uid­i­ty, income depen­dence, cor­re­la­tion, prop­er­ty-sec­tor expo­sure, and man­ag­er or spon­sor expo­sure.
4. Investor Suit­abil­i­ty- Age, risk tol­er­ance and capac­i­ty, income require­ments, man­age­ment pref­er­ences, time hori­zon, and tol­er­ance for illiq­uid­i­ty.
5. Estate and Lega­cy Plan­ning- Own­er­ship struc­ture, inca­pac­i­ty, suc­ces­sion, heir readi­ness, basis con­sid­er­a­tions, mily gov­er­nance, and char­i­ta­ble objec­tives.

Check back for Chapter 7 The Modern Capital Allocation Model

• Al DiNi­co­la
•  adnicola@fiduciarycm.com  
• Direct: 239 691 8098
• Sched­ule Appoint­ment

Advi­so­ry ser­vices are offered through Fidu­cia­ry CM, an SEC-reg­is­tered advis­er. Invest­ments involve risk and are not guar­an­teed. Always refer to offer­ing doc­u­ments for full risk dis­clo­sures. Delaware Statu­to­ry Trust (DST) invest­ments involve risks asso­ci­at­ed with com­mer­cial real estate own­er­ship and are not suit­able for all investors. These risks may include, but are not lim­it­ed to, loss of prin­ci­pal, illiq­uid­i­ty, ten­ant vacan­cy, financ­ing risk, inter­est rate fluc­tu­a­tions, prop­er­ty val­ue declines, eco­nom­ic and mar­ket con­di­tions, and risks asso­ci­at­ed with spon­sor and prop­er­ty man­age­ment deci­sions. Please refer to the applic­a­ble Prop­er­ty Pri­vate Place­ment Mem­o­ran­dum (PPM) for a com­plete dis­cus­sion of the risks and con­sid­er­a­tions spe­cif­ic to that offer­ing. For addi­tion­al infor­ma­tion regard­ing gen­er­al DST invest­ment risks, please click here. Past per­for­mance is not indica­tive of future results. Nei­ther the Reg­is­tered Rep­re­sen­ta­tive nor the Bro­ker-Deal­er can con­trol or guar­an­tee future deci­sions made by the DST spon­sor, asset man­ag­er, prop­er­ty man­ag­er, ten­ants, lenders, or oth­er third par­ties involved in the oper­a­tion of the prop­er­ty. Past per­for­mance is not indica­tive of future results. Secu­ri­ties may be offered through MSC-BD, LLC, a mem­ber of FINRA/ SIPC.