We underwrite the building before the offering.
Most DST diligence starts with the offering — the projections, the structure, the sponsor's marketing deck. Ours starts a step earlier, with the real estate itself. Before a single offering is shown to a client, we underwrite the underlying property the way a private-equity investor would: the market, the rent roll, the business plan, and the debt.
The conviction behind that order is simple: if the real estate does not make sense, the rest of the deal will not either. A clean structure cannot rescue a bad building, an over-rented tenant, or a submarket with a supply problem. But when the real estate holds up, the remaining questions — fees, structure, financing, exit — can be evaluated on their merits.
This page describes the six layers of that review. It is the same standard applied to every offering on this site, whether or not we ultimately present it.
A real-estate-first, six-layer review
Market
We start outside the building: submarket supply and demand, new construction in the pipeline, employment and population drivers, and the realism of the rent-growth assumptions. A pro forma built on a market that cannot deliver its assumed growth fails here, before we look at anything else.
Property
Then the asset itself — physical quality and vintage, capital-expenditure exposure, tenancy and lease terms, and the rent roll behind projected income. We read leases the way an acquirer would: escalators, expirations, renewal probability, and what happens to cash flow if the largest tenant leaves.
Sponsor
The sponsor's full-cycle track record, tenure across cycles, financial strength, and — just as telling — how they have treated investors when a deal has gone sideways. We compile sponsor performance under a published methodology so the numbers behind our coverage can be inspected.
Structure
The trust or fund mechanics: the total load and every layer of fees, master-lease terms and master-tenant capitalization, reserve adequacy, and the rights investors actually hold. Thin reserves and thinly capitalized master tenants are recurring findings — we flag them plainly.
Debt
Leverage level, lender and loan terms, maturity and rate exposure, covenants, and what the financing means for a 1031 investor's debt-replacement requirement. Debt-free structures remove refinancing risk; leveraged ones must be sized against the exchange they serve.
Exit
Finally, the way out: the disposition assumptions behind the projected return, residual lease term at the expected sale date, and the sensitivity of investor outcomes to exit-year pricing. A deal that only works at an aggressive exit cap rate is a finding, not a footnote.
Where the diligence shows up
Every offering page we publish carries the output of this review: the fact table, the financing terms, the year-by-year income forecast, deal-versus-market benchmarks, and — most importantly — written Analyst Notes with the pros, the cons, and our independent read. We surface risks as plainly as opportunities, because that is what working for the investor means.
Diligence is a filter, not a formality: offerings that fail the review are simply not presented. And coverage is not endorsement — every investment decision is made on the sponsor's private placement memorandum, which controls.
Securities offered through Aurora Securities, Inc. (ASI) — CRD #46147, SEC #8-51322 — member FINRA/SIPC. Gerald F. 'Jerry' Baker, III is a registered representative of ASI (FINRA CRD #7537416). Baker 1031 Investments, LLC is independent of ASI and is not a registered broker-dealer or investment adviser. This page is informational only and is not an offer to sell or a solicitation of an offer to buy any security, or tax or legal advice; any offer is made solely through a sponsor's private placement memorandum following a suitability determination. DST and related securities are speculative and illiquid, for accredited investors only, and involve substantial risk including possible loss of principal.