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What is a PPM?

One of the key documents that must be reviewed when considering an investment in a DST is the Private Placement Memorandum or PPM that should be provided to you through your representative. The PPM is 100+-page summary of the offering that includes information on risk factors, financing terms, property and market information, sponsor background, and financial projections. The PPM includes exhibits which typically contain other pertinent documents such as the DST trust agreement, subscription agreements, a tax opinion, summary of third-party reports, leases, loan documents, and highlights of the most recent property appraisal. It is also common to find a copy of marketing materials such as a property brochure and links to property videos in the PPM.

While all sections of the PPM are important to review and understand, I would like to highlight sections of the PPM that our investors most often refer to when comparing DSTs and which generate the most common questions. 

Risk Factors

Not unlike most investments that we make, DSTs are subject to numerous risks including the loss of principal. The risk factors presented in the PPM fall into two broad categories:

1) General real estate risks that are common to all DSTs e.g., investors have limited control and should be able to bear the loss of their investment, interests are illiquid, and there is no public market to resell interests, etc., and

2) Property specific risks, e.g., location risks such as hurricane, earthquakes, flood zones, tenant and lease risks including credit worthiness of the tenant, early lease termination options, re-leasing expenses, etc. 

Estimated Use of Proceeds

This section details the costs and fees associated with the creation and marketing of the DST and helps investors to better understand how overall costs compare between various DST sponsors. The total cost of developing and marketing a DST are not insignificant and can typically consume 8% to 14% of invested funds depending on cost allocations by the sponsors.  


Since a DST investor has very little influence over the management of the property, it is very important to learn more about the backgrounds of the individuals who will be responsible for the performance of the property. How many years have they been performing duties like what they will doing for this DST? What is their experience with the specific type of asset in the DST? How long have they worked with other team members?

Prior Performance of the Manager

If you have read my book, Tax Deferral Strategies Utilizing the Delaware Statutory Trust, you may recall that the most important differentiator that we recommend reviewing when comparing DSTs is the prior performance history of the manager. Most PPMs provide a historical summary of all specific prior investments made by the manager spanning up to 10 past years. A close review of this section should reveal past successes as well as shortfalls that occurred and show shifts in investment strategies over past years e.g., moving from retail to multifamily properties. 

Forecasted Statement of Cash Flows

Typically located in an exhibit near the end of the PPM are a series of financial tables that summarize projected cash flows during a 5 to 10 year holding period. There will also be a summary of assumptions on which the projections are based. Keep in mind that projections are not guarantees and can be subject to unexpected changes that may occur in the future. 

Towards the bottom of the projections, there will be a line typically labeled “Cash on Cash Return” that is the projected net annual cash flow that is estimated to be provided to the investor after all ongoing property and financing expenses, provided that the assumptions prove to be reasonably accurate. 

Many DSTs have loans that have an interest-only mortgage payment for a period, e.g., 5 years, followed by a period when the principal balance of the loan begins to be paid down. Since a portion of the property’s income is used to fund the principal loan payments, investor distributions decline during this period and then are recovered when the property is sold, and the loan is repaid. 

In past years, DST marketing brochures included the forecasted first year distribution figure e.g., 5%. Recent industry regulations however generally prohibit publishing projected investor distributions in marketing materials, so an investor must now refer to the cash flow tables in this section to obtain this information. 

This section may also include hypothetical scenarios on the anticipated future sales price of the property and estimates of total return including the total distributions plus capital appreciation that may occur over the life of the investment. 


Every DST investor is strongly encouraged to review the entire PPM of all DSTs that they may be considering. While the review of the first PPM may be daunting, industry practice has significantly standardized the presentation of PPM information across most sponsors and once an investor becomes familiar with the organization of one PPM, the contents of other PPMs will be similar making them easier to review and compare. 

Having an experienced representative who can assist investors to review and understand important information in the PPM can be invaluable. We recommend that investors first review PPMs on their own and develop questions that they then can discuss with their representative. 

For further assistance in considering DST options and reviewing PPMs, please contact us at

1 The terms Manager, Trustee, and Sponsor are often used synonymously and refer to related entities within the DST management structure. 

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 $3 billion on assets throughout the United States. His experience spans all major asset classes including retail, office, multifamily, and student, and senior housing. Paul’s transaction experience includes buy and sell side representation, sourcing and structuring of debt and equity, workouts, 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 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 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 35 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 holds an MBA in Finance from the University of Michigan, graduating with honors, and a Bachelor’s Degree in Chemistry from Wayne State University. Paul Getty holds Series 22, 62, and 63 securities licenses and is a registered financial representative with LightPath Capital Inc, member FINRA /SIPC. Paul is a noted speaker, author, and actively lectures on investments, sales, and management related topics. He is 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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