Delaware Statutory Trust
Questions Answered

A Delaware Statutory Trust (DST) is a legal entity created under Delaware law that allows multiple accredited investors to hold fractional ownership interests in institutional-quality real estate assets. DSTs are structured as passive investments — investors receive income distributions without any landlord or management responsibilities. They qualify as like-kind replacement property in a 1031 exchange and are available exclusively to accredited investors.

A DST sponsor — typically a large institutional real estate firm — acquires a property, places it inside a Delaware Statutory Trust structure, and sells fractional beneficial interests to accredited investors. Each investor owns a percentage of the trust, receives a proportional share of income distributions, and benefits from any appreciation when the property is eventually sold. The sponsor handles all property management, financing, leasing, and operations — investors are entirely passive.

DSTs are available exclusively to accredited investors. An accredited investor is an individual with a net worth exceeding $1 million (excluding primary residence), or annual income of at least $200,000 ($300,000 jointly with a spouse) for the past two years. Certain professional certifications (Series 7, 65, or 82 licenses) may also qualify.

Yes. DSTs are IRS-approved like-kind replacement property for 1031 exchanges under Revenue Ruling 2004-86. Investors who sell appreciated real estate can reinvest their proceeds into a DST within the 1031 exchange timelines — 45 days to identify replacement property and 180 days to close — and fully defer their capital gains taxes. DSTs are one of the most popular 1031 replacement property options because they are passive, close quickly, and are always available. See the full 1031 Exchange FAQ →

Yes. When a DST sponsor sells the underlying property, investors typically receive their proceeds and can initiate a new 1031 exchange into another DST or traditional real estate within the IRS timelines. This allows investors to continue deferring capital gains indefinitely — and potentially pass assets to heirs with a stepped-up cost basis, which could eliminate deferred gains entirely.

DSTs offer several significant tax advantages:

• Capital gains deferral — When used in a 1031 exchange, all capital gains taxes from the sale of the relinquished property are deferred until the DST is eventually sold.
• Depreciation deductions — DST investors receive depreciation deductions proportional to their ownership interest, which can offset income distributions and reduce taxable income.
• Stepped-up basis at death — If the investor holds the DST until death, heirs may receive a stepped-up cost basis, potentially eliminating the deferred capital gains entirely.
• Ongoing 1031 exchange eligibility — When the DST property is sold, investors can roll proceeds into another 1031 exchange and continue deferring.

DST properties typically include institutional-quality assets that individual investors would rarely be able to access or afford on their own:

• Multifamily apartment communities
• Net-lease retail properties (pharmacies, dollar stores, national fast food)
• Industrial warehouses and distribution centers
• Medical office buildings
• Self-storage facilities
• Senior housing and assisted living communities
• Student housing communities

Minimum investment amounts vary by offering but typically range from $25,000 to $100,000. For 1031 exchange investors, the full exchange equity must generally be reinvested to achieve complete tax deferral. Investors may split exchange proceeds across multiple DST offerings to achieve diversification across property types and geographies.

DST investors receive regular income distributions — typically monthly or quarterly — proportional to their ownership percentage. These distributions come from the rental income generated by the underlying property, net of operating expenses, debt service, and reserves. Distribution amounts can vary over the life of the investment based on occupancy, expenses, and financing terms.

True North Private Investments maintains a weekly-updated alternatives marketplace with curated DST offerings from vetted institutional sponsors. To access current opportunities, register at the investor portal or schedule a complimentary consultation with Corey Smith at csmith@quincywells.com or (612) 968-3442.

DSTs carry real investment risks that every investor should understand before committing capital:

• Illiquidity — There is no public market for DST interests. Investors should expect to hold for the full investment term, typically 5–10 years.
• No guaranteed returns — Income distributions and property values can fluctuate based on market conditions, occupancy, and operating expenses.
• Limited control — DST investors have no ability to make decisions about the property — the sponsor controls all management and disposition decisions.
• Financing risk — Some DSTs use debt financing, which magnifies both potential returns and losses.

We strongly recommend reviewing the full offering documents and consulting with a qualified financial and tax advisor before investing. Investing in securities involves the possible loss of principal.

Direct property ownership gives investors full control but requires active management — dealing with tenants, maintenance, financing, and vacancies. A DST eliminates all of those responsibilities while still providing real estate exposure, passive income, and 1031 exchange eligibility. DSTs also provide access to institutional-quality properties that individual investors typically cannot acquire on their own. See the comparison below.