What is a DST
A Delaware Statutory Trust is how sponsors sell fractional, passive real estate to 1031 buyers. Investors do not run the building. That is the product.
A DST is a Delaware Statutory Trust. Sponsors use it to sell fractional interests in a building as 1031 replacement property. You do not get a deed like a TIC. You get a beneficial interest in a trust. The signatory trustee signs. You don’t.
That passivity is not a customer-protection feature. It is how the interest stays inside Revenue Ruling 2004-86, the IRS ruling that treats a DST interest as like-kind real estate. If investors start acting like partners — voting on leases, refinancing, putting in new capital — the tax story breaks.
The bargain
Most buyers just sold a property and have 45 days to identify a replacement and 180 days to close. The clock, not the yield, is why a DST can be sold in a hurry into a concentrated ticket.
What you get: a fractional piece of a larger building, someone else operating it, and tax deferral if the ruling’s limits hold. What you give up is control. The rest of this page is that trade.
What you typically cannot do
Under the ruling, the trustee generally cannot take more capital after the offering closes, refinance or add debt, renegotiate leases (tenant bankruptcy is the usual exception), reinvest sale proceeds in new real estate, or do more than minor non-structural work.
The trustee can sell the property and wind up the trust. Beneficiaries typically do not vote on that sale. Springing LLC language exists because a DST that needs to refinance has to stop being a DST first.
Replacing the trustee is a Delaware fight over the signatory seat, not a check to investors.
What the structure allows
These do not need a fraud theory. They are how the vehicle is built.
Distributions are not a coupon. Marketing quotes a yield. The PPM usually pays cash when there is cash. The ruling says the trustee must distribute available cash (less reasonable reserves) at least quarterly — available after debt service, taxes, and whatever the master tenant invoices. Zero is a number.
Related-party operators. The trust often leases the property to an affiliate master tenant, which hires an affiliate manager. Fees, “partnership expenses,” and property-management invoices run through that layer. You do not sit on that board.
Bridge debt sits senior. A bridge loan funds the purchase; DST equity sales are supposed to take the lender out. If the raise stalls, the lender still has a claim on leftover equity. DST holders are behind.
A DST generally cannot refinance. When the loan needs a new deal, the documents convert to a springing LLC. Principal can sit there a long time. Average DST investor age, as told on the forums this record used as color: “70 something.”
721 / UPREIT is not a put. The interest goes into a REIT operating partnership for OP units, or sometimes cash at an appraisal. Investors typically do not vote. The REIT controls redemptions. The 721 excerpt in this archive was circulated on the investor thread, not pulled from a PPM on file here.
The 1031 clock is the sales pressure. Forty-five days to identify, 180 to close. This was often someone’s replacement property, not a satellite position.
The sponsor is frequently the wrong pocket. If the sponsor is out of cash, talk on this record shifts to the broker-dealer that sold the interest — suitability, Reg BI, supervision.
This archive
DST Report is filings-first notes on DST offerings, sponsors, and brokers. Directories: DSTs, people, companies.