Securitized Real Estate
Securitized real estate refers to property ownership packaged as securities, like DST interests or REIT shares, that investors buy instead of holding title.
Definition
Securitized real estate means real property ownership that has been packaged into securities, financial instruments like DST beneficial interests, REIT shares, or fund units, rather than held as direct title to a building. Investors buy a security that represents a fractional economic interest in the underlying real estate.
This structure brings several advantages: access to large, institutional-grade assets with a modest minimum, professional management, diversification, and passivity. It also brings regulation; these interests are securities, so they are sold under SEC rules, usually Regulation D, and require appropriate disclosure and, often, accredited-investor status.
For 1031 investors, the key example is the DST, which under Rev. Rul. 2004-86 is both a security and treated as direct real estate for exchange purposes, a rare combination. The trade-off versus direct ownership is illiquidity and loss of control, since a securitized interest cannot simply be sold on a whim or actively managed.
Key points
- Real estate ownership packaged as tradable securities
- Includes DST interests, REIT shares, and fund units
- Sold under SEC rules, often to accredited investors
- Offers access and passivity but less liquidity and control
Related terms
Jerry Baker founded Baker 1031 Investments to help exchange investors move from active property ownership into passive, institutional-quality real estate through DST, 721 exchange, mineral royalty, and Opportunity Zone strategies. He holds the FINRA Series 22 and Series 63 registrations and the Securities Industry Essentials (SIE) qualification. Read full bio →
Reviewed by the Aurora Securities, Inc. compliance team — Aurora Securities, Inc., member FINRA/SIPC. Last reviewed July 2026. Securities are offered through Aurora Securities, Inc.; Baker 1031 Investments, LLC is independent of Aurora Securities, Inc.
This glossary entry is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. Definitions are general and may not reflect your specific circumstances — consult your own CPA and attorney. Past performance does not guarantee future results.