DST vs. REIT

DSTNews.org | DST Edu­ca­tion

Delaware Statu­to­ry Trusts and Real Estate Invest­ment Trusts both pro­vide expo­sure to real estate, but they are dif­fer­ent own­er­ship struc­tures.

A DST typ­i­cal­ly holds iden­ti­fied real estate and investors own ben­e­fi­cial inter­ests in the trust. A REIT may own a broad­er port­fo­lio and investors hold shares or inter­ests in the REIT. Cer­tain prop­er­ly struc­tured DST inter­ests may poten­tial­ly qual­i­fy as Sec­tion 1031 replace­ment prop­er­ty, while REIT shares gen­er­al­ly do not qual­i­fy as direct replace­ment real prop­er­ty.

Liq­uid­i­ty, diver­si­fi­ca­tion, con­trol, tax treat­ment, fees, income sources, and exit options can also dif­fer sub­stan­tial­ly between the two struc­tures.

Key Point: Do not treat DSTs and REITs as inter­change­able. Com­pare the own­er­ship, tax, liq­uid­i­ty, con­trol, and exit char­ac­ter­is­tics.

Relat­ed DSTNews.org Arti­cles

• Com­mon Mis­con­cep­tions About Delaware Statu­to­ry Trusts

• Div­ing into Non­trad­ed REIT Struc­tures

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.

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