Bluerock BR Diversified Industrial Portfolio 7 DST

AL, FL, MO, VA

Property Type

Industrial

Assumable Loan

No Loan; All-Cash

Current Yield

4.97% (net)

Distributions

Monthly

Estimated Hold Period

5-7 Years

721 Exchange (UPREIT)

Optional

Bluerock BR Diversified Industrial Portfolio 7 DST

Investment Highlights

  • Strategic assembly of four high-quality, diverse industrial tenants and five properties featuring an attractive combination of investment-grade and credit-rated, publicly traded and privately held, global and large national tenants with in-place triple net leases.

  • Portfolio purchased for more than $1,350,000 below appraised value.

  • Geographically diverse industrial property portfolio in high-demand Sunbelt and industrial corridor regions with access to exceptional distribution routes and connectivity to major population centers.

  • Potential for future investment appreciation with contractual annual lease rate escalations, rents substantially below (25% on average) current submarket rates, and projected cumulative market rent growth of 13% through 2029.

  • Portfolio has in place, long-term absolute and triple-net leases with a weighted average lease term of nearly 12 years, providing for durable cash flows during the hold period.

  • Unique competitive advantage with Corporate Property and Quality Property possessing highly coveted industrial outdoor storage, providing an anticipated scarcity demand premium.

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Have Questions?

Jerry Baker

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Jerry Baker, Founder of Baker 1031 Investments

FAQ: Common Investor Questions About DSTs and 1031 Exchanges

1. What is a 1031 exchange?
Named after Section 1031 of the Internal Revenue Code, a 1031 exchange allows a real estate investor to "swap" one investment property for another "like-kind" property while deferring federal capital gains taxes. To qualify, the investor must identify a replacement property within 45 days of selling their original asset and complete the acquisition within 180 days. This strategy is widely used to shift portfolios into higher-value assets or different sectors without the immediate "tax haircut" that usually accompanies a sale.
2. What is a Delaware Statutory Trust (DST) property?
A Delaware Statutory Trust (DST) is a legally recognized entity that allows multiple investors to hold fractional "beneficial interests" in a single large-scale commercial property or a portfolio of properties. Unlike a standard partnership, a DST is structured specifically to meet IRS requirements for passive ownership, meaning the day-to-day management, leasing, and financing are handled by a professional "Sponsor." This allows individual investors to own a piece of institutional-grade real estate without the headaches of being a landlord.
3. Do DSTs qualify for 1031 exchanges?
Yes, thanks to IRS Revenue Ruling 2004-86, an interest in a DST is officially treated as a direct interest in real estate for federal income tax purposes. This means a DST qualifies as "like-kind" replacement property for a 1031 exchange. This ruling was a game-changer for the industry, as it allows investors who are selling a managed property (like a rental home) to roll their proceeds into a DST to achieve complete tax deferral while moving into a strictly passive investment role.
4. How does income work with DSTs?
Income in a DST is distributed to investors on a pro-rata basis, meaning you receive a share of the net rental income proportional to your percentage of ownership in the trust. Because the properties are typically pre-stabilized with corporate tenants or high occupancy rates, distributions are often paid out monthly or quarterly. It’s important to note that this income is "net" of property operating expenses, management fees, and mortgage interest, but it still retains the tax benefits of direct ownership, such as depreciation deductions, which can shield a portion of that cash flow from taxes.
5. How do assumable loans work with DSTs?
One of the most attractive features of a DST is that it comes with "pre-packaged" non-recourse financing. The Sponsor secures the mortgage at the trust level, and because the investor is buying a beneficial interest in that trust, they effectively "assume" their share of the debt without having to personally qualify for a bank loan or sign a personal guarantee. This is particularly helpful for 1031 exchangers who need to replace a specific amount of debt from their previous sale to avoid paying "boot" (taxable gain), as the DST structure provides an easy way to satisfy those debt requirements instantly.
6. What does a 721 exchange (UPREIT) exit mean?
A 721 exchange (UPREIT) is an exit strategy where an investor trades their DST interest for operating partnership units in a larger REIT. This is often an optional move offered by the Sponsor at the end of the DST's life cycle, allowing the investor to trade a single-asset interest for a diversified share in a massive portfolio. While this further defers taxes and increases liquidity, it typically involves fees for a Fair Market Value (FMV) appraisal to ensure the exchange ratio is accurate. Investors should be aware that once they convert to REIT shares via a 721 exchange, they generally lose the ability to perform a 1031 exchange back into physical real estate in the future.

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