Delaware Statutory Trusts
This article is part of a series — start with the definitive guide: Delaware Statutory Trusts: 2026 Guide.
Passive, fractional ownership of institutional real estate that qualifies as 1031 replacement property — professionally managed, debt pre-arranged, and accessible at lower minimums than whole assets.
2004 IRS Rev. Rul. 2004-86
$25K+ Typical minimum
Passive No landlord duties
100% Of equity 1031-eligible
A fractional interest the IRS treats as like-kind real property
A Delaware Statutory Trust (DST) is a legal entity that holds title to one or more real estate assets on behalf of many investors. Each investor owns a beneficial interest in the trust rather than a deeded piece of the property, and the trust — through a professional sponsor — handles financing, management, and eventual sale. In 2004, IRS Revenue Ruling 2004-86 confirmed that a properly structured DST interest is treated as like-kind real property, making it eligible as 1031 exchange replacement property.
For investors selling appreciated real estate, that ruling is the whole point: a DST can absorb exchange proceeds — including the debt that must be replaced — without the investor signing on a new loan or managing a building. Minimums are typically $25,000 to $100,000, so a single exchange can be diversified across several DSTs, property types, and sponsors.
From sponsor acquisition to full cycle
- Sponsor Acquires the Asset A DST sponsor buys an institutional property (or portfolio), arranges any non-recourse financing, and places it into the trust before investors come in.
- You Purchase Beneficial Interests Through a broker-dealer, accredited investors buy interests via private placement memorandum, often using 1031 exchange proceeds within the 45/180-day windows.
- The Sponsor Manages, You Receive Distributions All operations — leasing, capital projects, lender relations — are handled by the sponsor and its asset manager. Investors receive their pro-rata share of cash flow, typically monthly.
- Full-Cycle Sale or 721 Roll-Up When the trust sells, investors can 1031 again into a new DST, exchange into a REIT via a 721 UPREIT, or cash out and pay deferred tax.
By the Numbers
Average current distribution by DST sector
Going-in yield · current offerings · Source: Baker 1031 Master Listings (sponsor-projected)
8% 6% 4% 2% 0%
Marina — 7.98%
Healthcare — 6.41%
Net Lease — 5.13%
Multifamily — 4.99%
Office — 1.86%
Marina Healthcare Net Lease Multifamily Office
Why exchangers choose DSTs
Truly Passive No tenants, toilets, or trash — the sponsor runs everything. DSTs are popular with investors exiting active management.
Debt Comes Pre-Packaged Non-recourse debt is arranged at the trust level, satisfying the 1031 requirement to replace debt without a personal loan application.
Diversification Lower minimums let one exchange spread across sectors, geographies, and multiple sponsors instead of a single replacement building.
Backup-Strategy Fit Because a DST can close quickly, it is widely used as an identified backup so an exchange doesn't fail at the 45-day mark.
What to weigh before investing
Illiquidity DSTs are long-term, illiquid holdings — typically 5–10 years — with no public secondary market. Plan to hold to the sponsor's full cycle.
No Investor Control The 'seven deadly sins' rules that protect 1031 status also prohibit investors from making management decisions; you are a passive owner.
Fees and Load Syndicated DSTs carry sponsor, broker-dealer, and ongoing fees that reduce net return; compare load and projected distributions across offerings.
Market and Sponsor Risk Returns depend on the sponsor's execution and on real estate fundamentals. Diversify across sponsors and read each PPM's risk factors.
Compare
DST vs. direct property vs. tenant-in-common (TIC)
Feature DST Direct property TIC
1031 eligible Yes (Rev. Rul. 2004-86) Yes Yes
Number of investors Unlimited 1 Up to 35
Management Sponsor (passive) Owner (active) Shared / manager
Financing Non-recourse, pre-arranged Investor-arranged Each co-owner signs
Typical minimum $25K–$100K Full asset price Larger
Decision-making None (by design) Full Unanimous on key items
General comparison; specific offerings vary. Not tax or legal advice.
Explore
Where to go next
Browse current DST offerings Live marketplace of DST and 1031 replacement properties.
DST sponsor directory Tracked sponsors with realized full-cycle track records.
DST market data Full-cycle returns and sector yield benchmarks.
Talk to an Advisor Request a consultation — you'll reach the desk directly.