Definition
A legal entity structure used in 1031 exchanges that holds title to replacement property and allows investors to participate in returns.
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A Delaware Statutory Trust (DST) is a passive investment vehicle that holds real property and distributes income to investors. DST property qualifies for 1031 exchanges, allowing investors to exchange into income-producing property with reduced management requirements. The DST manager handles all operations. DSTs offer diversification, professional management, and passive income. The trade-off is less control over property decisions and ongoing management. Minimum investments typically range from $25,000 to $100,000.
Pro Tip
Evaluate DST offering documents carefully to understand fees, income distribution, and exit strategies.
Example
An investor used a 1031 exchange to purchase interests in a DST that owned a portfolio of commercial real estate properties.