Resource Royalty Fund 26

OK, TX

Property Type

Mineral Rights

Assumable Loan

No Loan; All-Cash

Current Yield

10.00% (net)

Distributions

Quarterly

Estimated Hold Period

5-7 Years

721 Exchange (UPREIT)

None

Resource Royalty Fund 26

Investment Highlights

  • Resource Royalty 26, LLC, offered by Resource Royalty, LLC, is a diversified portfolio of income-producing mineral and royalty interests located in Oklahoma and Texas.

  • Ten of the portfolio properties are located in the highly productive Anadarko Basin in Oklahoma, and two properties are located in the prolific Permian Basin of West Texas.

  • The ownership of Resource Royalty 26, LLC is effective as of November 5, 2025, meaning owners are entitled to all income from oil, natural gas, and natural gas liquids production starting on that date.

  • Twenty-one wells are currently producing income, which will be paid to the new owners.

  • Mineral Rights are the deeded, income-producing real estate beneath the surface.

  • Mineral Owners hold an interest in the real estate beneath the surface, known as the mineral interest, and are entitled to compensation for everything produced from their subsurface real estate.

  • As energy companies, such as Devon Energy and EOG Resources, drill wells and produce hydrocarbons, they are required to pay a percentage of gross revenue to the Mineral Owners. This is called a Royalty. The energy companies, known as operators, pay all drilling and operating expenses and assume all drilling risks and liabilities.

  • 10% depletion allowance tax credit.

  • Sponsor provides new investors with retroactive distributions in addition to their scheduled distributions.

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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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