DST 101:  Delaware Statutory Trusts

A Delaware Statutory Trust is a separate legal entity created as a trust under Delaware statutory law. Delaware law provides great flexibility in the design and operation of the entity. However, to use a DST in a Section 1031 tax-deferred exchange program, it must comply with the requirements of IRS Revenue Ruling 2004-86 so that a beneficial interest in the trust is treated as a direct interest in real estate for tax purposes. The trust also must satisfy lender requirements, especially if the loan is to be securitized.

Simplified 1031 Exchange Solution

Purchasers of DST-structured real estate investments typically enjoy monthly cash flow from high quality properties. A KB Exchange Trust DST investment affords purchasers an investment free of day-to-day management responsibilities as KB Exchange Trust and its third-party management partners professionally conduct all property and asset management.

KB Exchange Trust facilitates the entire transaction:

  • Identifying the real property
  • Professional due diligence reports
  • Securing financing (non-recourse to DST Investors)
  • Coordinating with qualified intermediaries
  • Providing all organizational and offering documentation
  • Providing a legal Tax Opinion
  • Professional third party property and asset management services
  • Monthly check issuance to investors (by check or direct-deposit)


DST Advantages

A DST-structure is a "pooled-equity" investment. DST purchasers realize significant benefits by acquiring a property that is typically a higher-quality asset than could be purchased individually. Investors looking for stabilized, core properties often favor a DST-structured investment.

  • Provides investors with lower minimum equity requirements
  • Provides more simple and efficient closing process
  • Provides investors protection against loan recourse liability
  • Provides the ability to act quickly when issues arise
  • Provides investors greater security against rogue investors
  • Provides a less complex structure for investors
  • Eliminates annual LLC fees to investors
  • Eliminates need for investors to provide tax returns to lenders