Education
The Delaware Statutory Trust
A Delaware Statutory Trust holds title to institutional-grade real estate; investors own beneficial interests in the trust. Under IRS Revenue Ruling 2004-86, those interests qualify as like-kind replacement property for a 1031 exchange.
From the 1947 trust law through the 2002 DST Act and the 2004 revenue ruling, the structure matured into the default passive 1031 vehicle — roughly $3.2B raised in 2020 alone, and growing since.
A worked example
How the math looks
A family sells a rental and exchanges $800,000 of equity into a DST holding a Class-A apartment community at 60% loan-to-value. The trust's non-recourse debt tops up their debt-replacement requirement automatically, and distributions arrive monthly without a single tenant call.
The structure
Five defining characteristics
Up to 499 investors per trust; minimums from $50,000
Pre-arranged, non-recourse financing at the trust level
Professional asset and property management
Monthly distribution potential
Closes in days, not months — funds transfer in as little as 2–3 business days
Typical asset classes
Multi-family · Self-storage · Senior housing · Healthcare · Industrial · Corporate-leased triple net
Pros & cons
The honest ledger
Why investors choose DSTs
- Truly passive — no tenants, toilets, or trash
- Institutional real estate at fractional size
- Diversification across multiple trusts, sponsors, and markets
- Debt replacement handled by the structure
- Estate planning: interests divide cleanly among heirs
- “Swap 'til you drop” — exchange again and again, then step-up at death
What you give up
- Illiquid — plan to hold for the trust's full cycle
- No investor control over management decisions
- Distributions and tax treatment are not guaranteed
From the library
When a DST may not fit
A DST is not right for every investor or every exchange — when it isn't, we say so. Ask us for “When a DST May Not Fit,” one of the most-requested papers in our library.
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Which trusts fit your exchange?
Typically 30 to 45 DST offerings tracked at any given time, including off-market, all-cash, and leveraged structures.