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WHAT IS A DST AND WHAT BENEFITS DOES IT PROVIDE?

The Delaware Statutory Trust or DST is an ownership structure that allows investors to acquire fractional interests in larger properties with full 1031 Exchange tax benefits including flow through of depreciation and expense write-offs to increase after-tax income. The DST is managed by a Trustee who is responsible for all major decision making and who also typically is the sole borrower on the property. The DST ownership structure offers the following benefits for owning real estate including:

  • Most DST programs offer attractive monthly income, often starting at 4-6% per year, and income can often be sheltered from taxes through using depreciation and interest deductions
  • Lenders offer attractive non-recourse financing
  • Lenders do not require financial disclosures or loan carve-outs from the individual investors and instead look solely to the financial strength of the Sponsor/Trustee of the DST and the underlying quality of the real estate
  • Since DSTs allow for a larger number of investors (up to 499) investment minimums can be as low as $25K for cash investors
  • Ongoing costs to investors are less since individual investors are not required to establish and maintain Special Purpose Entity (SPE) LLCs
  • Since the DST Sponsor/Trustee assumes all loan liability through the holding cycle, their interests are better aligned with the investors as compared to Sponsors of a TIC investment
  • With rare exceptions, investors are not subject to future capital calls
  • A significant advantage of a DST structure is that the unanimous approval of the individual owners is not required to reach decisions on critical matters – so decision making is much more efficient
  • Under Delaware law, DST investors do not have personal liability. Thus, DST investors have no liability for repayment of the loan or for any actions or liabilities associated with the property
  • A wide range of loan-to-value (LTV) options are generally available and offerings can be mixed and matched to meet equity and debt requirements of the 1031 Exchange

 

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Paul Getty

Paul Getty is a licensed real estate broker in the state of California and Texas and has been directly involved in commercial transactions totaling over $2 billion on assets throughout the United States. His experience spans all major asset classes including retail, office, multifamily, and student and senior housing. Paul Getty’s transaction experience includes buy and sell side representation, sourcing, and structuring of debt and equity, work-outs, and asset and property management. He has worked closely with nationally prominent real estate brokerage and investment organizations including Marcus Millichap, CB Richard Ellis, JP Morgan, and Morgan Stanley among others on the firm’s numerous transactions. Paul Getty also maintains a broad network of active buyers and sellers of commercial real estate including lenders, institutions, family office managers, and high net worth individuals.

Prior to founding First Guardian Group/FGG1031, Paul Getty was a founder and CEO of Venture Navigation, a boutique investment banking firm specializing in structuring equity investments made by institutions and high net worth individuals. He possesses over 25 years of comprehensive worldwide business management experience in environments ranging from early phase start-ups to multi-billion-dollar corporations. His track record includes participation in IPOs and successful M&A activity that has resulted in investor returns of over $700M.

Paul Getty holds an MBA in Finance from the University of Michigan, graduating with honors, and a Bachelor’s Degree in Chemistry from Wayne State University. He is a member of the Institute of Real Estate Management (IREM), a Certified Property Manager Candidate (CPM), and a member of the US Green Building Council. Paul Getty holds Series 22, 62, and 63 securities licenses and is a registered representative with LightPath Capital Inc, member FINRA /SIPC.

Paul Getty is a noted speaker, author, and actively lectures on investments and sales and management related topics. He is the author of The 12 Magic Slides, Regulation A+: How the JOBS Act Creates Opportunities for Entrepreneurs and Investors, and Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST), available on Amazon and other retail outlets.

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