DSTs/1031 Exchange Disclosures
DSTs are not suitable for all investors, and are speculative, illiquid, and involve a high degree of risk, including the possible complete loss of your investment.
A Delaware Statutory Trust (DST) is a legal entity created under Delaware law as a trust that holds title to 100% of the interest in real property.
Investors acquire a beneficial interest in the trust, with limited personal liability for the underlying assets. DSTs differ from Tenancy in Commons (TICs), another 1031 Exchange fractional ownership strategy, in that each investor does not own a fractional, undivided interest in a property as a co-owner. Therefore, DST investors are not required to share the associated costs of ownership or be considered “tenants in common.”
- There will be no public market for the interests, limited transferability and lack of liquidity
- There is no specified time that the investment will be liquidated.
- Delaware Statutory Trusts (DSTs) are a relatively new vehicle for real estate investment and are inflexible vehicles to own real property.
- Investors will have no voting rights and will have no control over management of the trust or the Property.
- There is no guarantee that investors will receive any return.
- Distributions are not guaranteed and may be sourced from non-income items and constitute a return of capital.
- DSTs will be subject to the risks generally associated with the acquisition, ownership and operation of real estate including, without limitation, environmental concerns, competition, occupancy, easements and restrictions and other real estate related risks.
- No assurance that the disposition of property will allow for the repayment of outstanding indebtedness;
- Payment of significant fees to the advisor, sponsor and its affiliates;
- Limited powers of the advisor with respect to the properties;
- Potential conflicts of interest;
- Risk that a prospective purchase may not be consummated;
- Risk typically associated with real estate and real-estate-related debt securities;
- Accredited investor use only.
- Risks related to retaining tenants and/or re-leasing properties;
- Risk that a program’s operating results will be adversely affected by economic and regulatory changes;
- Risk that program securities will not be treated as interests in real estate for federal income tax purposes;
- Risk that the closing of a purchase may be delayed and may not satisfy the timeliness requirements of Internal Revenue Code Section 1031; and
- These risks may impact a sponsored investment program’s financial condition, operating results, returns to its investors and ability to make distributions as stated in the applicable
- CAUTION: Although significant due diligence may be performed by Sponsors, Lenders, Third Party Consultants, Appraisers, Broker Dealers and Securities Professionals, it does not ensure that the investment will perform as projected. There may be issues that are not discovered through due diligence prior to a purchasers acquisition of an investment, or after such acquisition, which may cause the purchaser to incur losses up to, and including, the entire investment.
- We do not provide tax advice. Please consult your tax professional.
There can be no assurance that the investment objectives described herein will be achieved. Investment in securities is subject to substantial risks and may result in the loss of principal invested.
The views and opinions expressed are for informational purposes only as of the date of this material and are subject to change at any time. This material is not a recommendation, offer or solicitation to buy or sell any securities or engage in any particular investment strategy and should not be considered specific legal, investment or tax advice.