Delaware Statutory Trust (DST) Historical Performance Data

A DST Delaware Statutory Trust 1031 is a fiduciary entity that allows for fractional ownership of institutional-grade real estate. It qualifies as "like-kind" replacement property under IRS Revenue Ruling 2004-86, enabling 1031 tax deferral.

The downside to a Delaware Statutory Trust includes total illiquidity (hold periods of 5-10 years), zero management control for investors, and the seven deadly sins which prevent the sponsor from taking specific financial actions to save the trust.

A statutory trust is a separate legal entity created under specific state law (the Delaware Statutory Trust Act). Unlike a common law trust, it offers corporate-style asset protection and "freedom of contract" for beneficial owners.

Key benefits include management-free real estate, diversification into Class-A assets, access to non-recourse debt, and lower investment minimums for institutional property.

It is often a "good idea" for retiring landlords who want to maintain income and tax-deferral status without the headache of managing tenants or maintenance.

At the end of a Delaware Statutory Trust, the property is sold, the trust dissolves, and proceeds are distributed. You must then pay capital gains or roll into another 1031 exchange.

A 1031 exchange is the tax-deferral method; a DST is the legal structure of the property used to satisfy the exchange.

In 2026, the average return is typically 4% to 6% in monthly cash distributions, with a target total return of 7% to 10% including capital appreciation.

The purpose of a DST is to facilitate passive fractional ownership for investors who want institutional assets while maintaining their individual tax benefits.

Are DSTs risky? Yes. Risks include market downturns, tenant defaults, illiquidity, and the loss of principal.

Most DST offerings have a projected lifecycle of 5 to 10 years.

To transition equity into a passive role, secure non-recourse debt, and diversify across high-growth geographic markets.

There is no active secondary market. You typically "get out" only when the sponsor sells the property at the end of the term.

Pros: 1031 eligibility, passive income, Class-A property access. Cons: No control, illiquidity, front-end fees.

A 721 property exchange (UPREIT) involves contributing real estate to a REIT's operating partnership in exchange for tax-deferred units.

A 1031 exchange keeps you in the "like-kind" loop; a 721 exchange is usually a final move into a REIT, ending 1031 eligibility.

It is a good idea for those who prioritize maximum portfolio diversification and future liquidity over the flexibility of choosing specific assets.

The primary disadvantage of the 721 exchange is that you can never perform another 1031 exchange once the units are issued.

Institutional investors or those with high-value assets looking to "exit" into a large, managed REIT portfolio.

Vetting the REIT's management, historical dividends, and the overall quality of their diversified holdings is essential.

Timeline is based on private negotiation with the REIT, not the statutory 45/180 day 1031 rules.

Yes. Navigating Section 721 requires tax attorneys and CPAs specialized in partnership law.

Section 721 property refers to assets transferred to a partnership in exchange for a partnership interest, deferring gain recognition.

Complexity and the conversion of real estate equity into a taxable installment note via Section 453.

In 2026, the tax burden is high. A 1031 exchange is almost always better to keep your full principal working for you.

Related parties in an exchange must both hold their property for 24 months to preserve tax deferral.

Inventory, primary residences, and homes not held for "productive use in trade or business" are disqualified.

Taxes are deferred until a final cash-out sale. Heirs get a step-up in basis, potentially eliminating the tax forever.