Three numbers separate a strong DST from a weak one. Here's how to find and weigh them in the PPM.
Every DST private placement memorandum tells a story in three figures: the load (total fees and costs as a percentage of the raise), the leverage (loan-to-value of the pre-arranged, non-recourse debt), and the projected distribution (the going-in yield and its durability).
A high load isn't automatically disqualifying — but it must be justified by the quality of the asset and sponsor. Likewise, higher leverage can amplify returns and risk; match it to your risk tolerance and the stability of the property's cash flow.
Read the distribution projection alongside the rent roll and lease expirations. A yield supported by long, credit-tenant leases is a different animal than one that depends on near-term lease-up. The PPM's risk factors are where the real diligence begins.
This article is for general educational purposes only and is not investment, tax, or legal advice, or an offer to sell or solicitation to buy any security. DST, Opportunity Zone, and other private placements are speculative, illiquid, and sold only to accredited investors via private placement memorandum. Consult your own CPA and attorney.
