TO COMPLETE YOUR

1031 EXCHANGE

DELAWARE STATUTORY TRUST (DST)

In the majority of cases, 1031 Exchanges are completed by the investment property owner with the help of a real estate broker. However, there is another alternative - a passive solution to satisfying a 1031 Exchange - and that is a Delaware Statutory Trust (DST).

DSTs that are properly structured are recognized by the IRS as qualified replacement property for real property. Investors in a DST are not direct owners of the real estate. The trust holds title to the property, for the benefit of many investors, each of whom has a "beneficial interest" and is treated as owning an undivided fractional interest in the property.

GUIDELINES FOR DSTs

There are certain guidelines that DSTs must follow. Specifically, a DST may not:

Invest accrued cash, from rental income or investment proceeds, between distribution dates in anything other than short-term securities.

Accept additional capital to the DST

Renegotiate terms of debt or enter into new financing

Renegotiate leases

Enter into new leases (except in certain circumstances)

Make improvements other than minor non-structural repairs

It is important to note that all investments in a DST involve certain risks, including, but not limited to illiquidity, general market conditions, interest rate risks, financing risks, potential adverse tax consequences, general economic risks, development risks, and potential loss of the entire investment principal. The performance of a DST will depend on the tenant's ability to pay rent. Properties may be leveraged, and will be liquidated at the discretion of the DST, which may encounter difficulty in selling any or all of them. No public market exists, nor is likely to develop for the DST interests. Investors should read the "Risk Factors" section of the PPM for full disclosure prior to investing.

DST POTENTIAL BENEFITS

TAX DEDUCTIONS

A DST's tax benefits pass through to you as an owner during the hold period, including deductions for interest and depreciation. After the hold period you may choose to defer any taxes that might otherwise be due on the capital gain by performing another 1031 Exchange.

NON-RECOURSE FINANCING

DST investment offerings can be pre-packaged with long-term, non-recourse financing at 35-75% Loan-to-Value, so you can replace equity and debt to satisfy 1031 exchange requirements. The DST itself is the borrower and you don't have to sign for the loan. So you'll get the benefit of leveraging the loan, and go through the hassle of an underwriting and approval process. Many investors use leverage to potentially receive a higher cash flow. Some DSTs have no debt, in case that's what a client may need or prefer. Also, institutional financing is usually available at terms and rates not available to individuals.

LIMITED LIABILITY

A DST provides the same limited liability protection as an LLC, shielding your personal assets from liability in case anything goes wrong.

A DST MAY PROVIDE YOU A PASSIVE INCOME STREAM

CASH FLOW

Net cash-on-cash returns typically starts around 4.5%-6.5% per year and are paid on a monthly basis, net of all fees. *

DIVERSIFICATION POTENTIAL

Acquiring a share in a DST or multiple DSTs with a well-diversified portfolio of assets may help preserve your capital from being overly dependent on any one property, location, asset class, tenant or industry.

DUE DILIGENCE

DST sponsors are required to provide investors access to appraisals, property condition reports, environmental reports, loan documents, and all market and property underwriting data, as opposed to "let the buyer beware."

PASSIVITY

The sponsor is responsible for all of the management, accounting, reporting, and investor services.

TIMING

You can close escrow on my share of the DST independently, making it possible to close in as few as 1-3 days to successfully complete your 1031 Exchange on time.

*Potential cash flows/returns are not guaranteed and could be lower than anticipated. Past performance is not indicative of future results.