DST Exit Strategies

Under­stand­ing how a DST may even­tu­al­ly end is just as impor­tant as eval­u­at­ing its ini­tial dis­tri­b­u­tion rate. The most com­mon exit occurs when the spon­sor sells the under­ly­ing prop­er­ty.

After prop­er­ty-lev­el oblig­a­tions and trans­ac­tion expens­es are sat­is­fied, avail­able net pro­ceeds are gen­er­al­ly dis­trib­uted accord­ing to the offer­ing struc­ture. Depend­ing on the investor and trans­ac­tion, the next step may be to receive cash, com­plete anoth­er qual­i­fy­ing Sec­tion 1031 exchange, eval­u­ate anoth­er DST, or con­sid­er a poten­tial Sec­tion 721/UPREIT strat­e­gy if offered.

Pro­ject­ed hold­ing peri­ods are esti­mates. Investors gen­er­al­ly have lim­it­ed con­trol over the tim­ing of the dis­po­si­tion.

Key Point: Do not eval­u­ate only how you enter a DST. Under­stand the antic­i­pat­ed exit and your options when the prop­er­ty is sold.

Relat­ed DSTNews.org Arti­cles

• DST Exit Strate­gies: What Investors Can Expect at Sale

• Can You Exchange Out of a DST into Anoth­er §1031 Exchange?

Edu­ca­tion­al use only. This mate­r­i­al is not tax, legal, account­ing, or invest­ment advice. Pri­vate real estate invest­ments involve risk, includ­ing pos­si­ble loss of prin­ci­pal and illiq­uid­i­ty.