Broker Check

Delaware Statutory Trust 1031

What Is a Delaware Statutory Trust (DST)?

What Is a Delaware Statutory Trust (DST)?

A Delaware Statutory Trust (DST) is a legal structure used to hold title to investment real estate. Similar in some respects to an LLC, a properly structured DST may qualify as a like- kind replacement property for purposes of a 1031 exchange.

DSTs have become a widely used solution for investors seeking to complete a 1031 exchange while transitioning into a more passive form of real estate ownership.

How DST Investments Work

How DST Investments Work

When you invest in a DST, you purchase a beneficial interest in the trust, alongside other investors. DSTs may have multiple investors—sometimes 100 or more—each owning a fractional interest in the underlying real estate.

Investors may receive distributions from:

  • Rental income generated by the property
  • Proceeds from the eventual sale of the asset

The property is professionally managed, with a trustee responsible for all operational decisions.

Potential Benefits

DSTs can offer several advantages for certain investors:


Access to Institutional-Quality Real Estate

Invest in larger, professionally managed properties that may not be accessible individually


Flexible Investment Amounts

Allocate capital across one or multiple properties based on your goals.


Passive Ownership

No day-to-day management responsibilities or landlord obligations.


Portfolio Diversification

Spread investment across asset types, locations, and tenants.


Potential Income Stream

Designed to provide ongoing distributions, though not guaranteed.

Important Considerations

DSTs are not suitable for every investor and come with specific limitations:

No Operational Control

All decisions are made by the trustee; investors do not have voting or management authority

Illiquidity

DST investments are long-term (typically 5–10 years) and are not traded on a public market

Capital Constraints

Once the offering is closed, additional capital cannot be raised

Operational Limitations

The trustee is restricted in certain activities, such as renegotiating leases or
acquiring new assets

Market Risk

Property values, occupancy levels, and income are subject to market conditions
and are not guaranteed

DST vs. TIC Structures

DST vs. TIC Structures

DSTs are often compared to Tenants-in-Common (TIC) investments. While both structures allow fractional ownership:

  • DST Investors own an interest in a trust that holds the property

  • TIC Investors hold direct, fractional ownership in the real estate itself

In recent years, many sponsors have shifted toward DST structures due to:

  • The ability to accommodate a larger number of investors
  • Lower minimum investment thresholds
  • Streamlined decision-making through centralized management

Is a DST Right for You?

DSTs can be an effective solution for investors seeking a passive 1031 exchange strategy, income potential, and diversification. However, they require careful evaluation to ensure alignment with your overall financial plan, liquidity needs, and risk tolerance.

Contact UsLet’s Discuss Your Options

We work closely with you and your advisors to evaluate whether a DST is appropriate for your 1031 exchange strategy and long-term investment objectives.

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