Sponsor Due Diligence

The prop­er­ty is only part of a DST invest­ment. The spon­sor respon­si­ble for struc­tur­ing and man­ag­ing the invest­ment can be equal­ly impor­tant.

A spon­sor may select the prop­er­ty, arrange financ­ing, estab­lish reserves, over­see asset man­age­ment, com­mu­ni­cate with investors, and deter­mine the even­tu­al dis­po­si­tion strat­e­gy. Investors should eval­u­ate expe­ri­ence, finan­cial strength, full-cycle his­to­ry, actu­al ver­sus pro­ject­ed per­for­mance, report­ing, con­flicts, and per­for­mance dur­ing dif­fi­cult mar­kets.

• Track record and full-cycle exits
• Finan­cial strength and access to cap­i­tal
• Asset-class expe­ri­ence
• Prop­er­ty-man­age­ment capa­bil­i­ties
• Investor report­ing
• Con­flicts of inter­est and spon­sor co-invest­ment

Key Point: A strong prop­er­ty can­not com­plete­ly com­pen­sate for weak spon­sor­ship. Eval­u­ate both.

Relat­ed DSTNews.org Arti­cles

• DST Spon­sor Due Dili­gence: How to Eval­u­ate a DST Oper­a­tor Before You Invest

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.