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Modern Building

Delaware Statutory Trust Offerings
Property Type and Debt Structures

The Delaware Statutory Trust Marketplace

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The Delaware Statutory Trust (DST) market has expanded greatly over the past few decades.

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As the United States population has aged, real estate owners seeking to shed management responsibilities have been drawn to the professional management and high-quality properties a DST can offer.

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As such, there is a robust market for Delaware Statutory Trust's with a wide-range of selection regarding property type, tenant, geography, debt level and more.  This diversity allows investors to choose offerings that most closely match their exchange requirements and personal preference.

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Source:  Mountain Dell Consulting Market Report Securitized 1031 Industry as of September 20, 2019

 

Multifamily

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Image by Julián Gentilezza

Rental and Homeowner vacancy rates are at or near ​20 year lows, with strong demand fueling continued multifamily growth.

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Source:  US Census:  Quarterly Residential Vacancies and Homeownership, Q3 2020

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La Zenia

Common amenities of multifamily include:

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  • Resort style pools

  • Health and wellness fitness centers

  • Community clubhouses

  • Executive business centers

  • Picnic areas with grills

  • Hiking/biking trails

  • Tennis centers

  • Car care centers

  • Complimentary coffee bars

  • Pet-friendly outdoor facilities

Net Lease

Fixing the Roof

Under a triple net lease (NNN) structure, the tenant is responsible for real estate taxes, building insurance and maintenance, in addition to any normal fees and rent payments.  This provides for minimal landlord responsibilities.

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New leases typically have longer terms of 10-25 years, with property prices and lease terms having a high correlation to the credit quality of the tenant.

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Net Lease Retail can offer prominent, well-known brand names in high-traffic locations​

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​Medical Office properties have benefited from an aging population and expanding healthcare field

Other Important Sectors

Vegetables

Grocery Anchored Shopping

Self-Storage

Industrial

Demand for self-storage comes from the reduction in home ownership and subsequent increase in apartment rentals.

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Renter ship is also driven by people on the move that need temporary space.  Both demographics continue to use the properties in good or bad economies.

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Grocery-anchored shopping centers are typically less cyclical than other real estate sectors based on the non-discretionary nature of purchases made by consumers.

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The anchor of the center is usually on a longer-term lease and ideally, produces 40 to 60 percent of the property’s net operating income.

Warehouse Shelves

A popular form of industrial ownership has been distribution centers, where facilities are mission-critical to their respective companies.

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Industrial properties often have significant customization and expense outlays by the tenant, with long-term leases.

Non-Recourse Debt

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For an investor to defer taxes fully, one requirement is that all proceeds from the sale of a relinquished property must be reinvested in replacement property.  In addition, an investor must assume an equal or greater amount of debt than that which was held on the relinquished property (or if reducing debt, an equal or greater amount of new equity must offset the reduction).

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DST debt is non-recourse to its investors as it is held at the trust level and linked to their specific properties.  Depending on the investors' debt level requirements and preference, there are a variety of Delaware Statutory Trusts from which to choose.

Zero Leverage

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Zero leverage DST's offer investors the opportunity to participate in all cash acquisitions.

 

As there is no mortgage debt, they are not subject to the risks of debt servicing, refinancing, or foreclosure.

Mid Leverage

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A majority of DST's consist of leverage in the 45-60% loan-to-offering range.

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This moderate level has been a fit for most investors needs regarding debt requirements and desired level of risk.

High Leverage

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Investors with a highly levered property can utilize offerings with debt that exceeds 60%.

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Many of these programs retain a significant portion of rental income to aggressively pay down debt.

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50%

30%

70%

10%

90%

Low

Debt Percentage

High

Real Estate & Capital Transitions

1031 Exchange Basics

Fractional Real Estate

DST Property Types and Debt

DST Estate Planning Strategies

Qualified Opportunity Funds

ESG/Sustainable Investing

Clean Energy Tax Credits

Pass Through Tax Benefits

Learn and Connect

Tax Advantaged Advisors

Education Center

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All securities offered through Patrick Capital Markets, LLC Member FINRA / SIPC.  Investors should review any transaction and the various tax deferred and tax exclusion strategies and structures available with their tax and legal advisors.  Alternative Wealth Management does not provide tax or legal advice to individual investors.

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The information provided in this website is for educational purposes only and does not represent an offer to purchase, acquire or engage in any transactions.  Securities discussed above would only be purchased through Private Placement Memorandum.  Securities and strategies discussed herein may be speculative and entail a high degree of risk.  Investments in Private Placements are suitable only for investors who have adequate means of providing for current needs and personal contingencies, can bear the economic risk of the investment, and have no need for liquidity.

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The following is a brief overview of some of the risks that Alternative Wealth Management deems appropriate to highlight.  It is not and is not intended to be, a summary of all the risks associated with the strategies and securities discussed herein.

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Delaware Statutory Trusts (DSTs) - DSTs are regulation D private placements that offer fractional ownership of real estate.  Investors should understand the risk factors of participating in such investments as outlined in this section in addition to the private placement memorandum; in particular real estate risks, liquidity risk, change of tax status among others.

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Real Estate Risks – Real estate risks include those of specific property issues, the economy of the geographic locations, environmental hazards, the risk of loss of tenant and other factors typically associated with a real estate investment.

 

​Change of Tax Status - IRS tax rule changes may alter or eliminate certain benefits related to current strategies.

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Performance Expectations – There is no guarantee that the investment and tax strategies discussed will elicit the optimal results.  Each taxpayer is unique.  Past performance or the results of other individuals is never an assurance of future results.

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Reduction or Elimination of Cash Flow – Investments in real estate may experience temporary or permanent disruption of cash available for distributions, such as, from a reduction in tenant payments or if the property sustains substantial damage.

 

Potential for Property Value Loss - All real estate investments have the potential to lose value during the life of the investments.

 

Impact of Fees/Expenses – There may be substantial fees paid to Sponsors, affiliates, and others, related to the strategies and securities discussed herein and such fees typically are paid regardless of the performance of the investment or strategy you seek.    Such fees and costs may impact investor returns and may outweigh any anticipated tax benefits.

 

Liquidity Risk – Private Placements are il-liquid with no secondary market.  You should consider these long-term investments regardless of your circumstances.

 

Sponsor Risk – There are substantial conflicts of interest between investors and the self-interest of the Sponsor, Master Tenant, affiliate companies and others who will profit from the private placement for their services regardless of their results.  Their decisions related to the offering and operation of the private placement is critical to the success of the private placement and the return of your investment.  The offering sponsor could take actions that might not be in the best interests of the shareholders of the private placement.  Those types of conflicts of interest could influence the decisions in the management and operation of the private placement that are contrary to the best interests of the Investors.  Investors will have no control over their decisions.

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