A Delaware Statutory Trust (DST) is a legal entity used to arrange for the co-ownership of property. Given a DST’s legal structure, co-owners are entitled to profits earned from the property (such as rent) without any management responsibilities, making DSTs advantageous in constructing multi-investor commercial real estate offerings.

WHY DELAWARE?

There are many reasons that Delaware Statutory Trusts are highly-regarded in the industry, but two stand out. First, statutory trusts formed in accordance with the Delaware Statutory Trust Act (DSTA) are the only trusts that are explicitly recognized as 1031-compatible by the IRS.

And second, the DSTA was written to allow unencumbered freedom of contract, making DSTs well-suited for large-scale investments in diverse high-quality assets.

DST shares are regarded by the IRS as “like kind” with real property, making DST investments 1031-compatible. Unlike ordinary exchanges, however, investors are not burdened with any management obligations for their replacement properties, which instead are assumed by the DST’s trustee.

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