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Real Estate Options With A Delaware Statutory Trust

Real estate has always been an attractive option for investors for many reasons. Tax advantages, a steady stream of monthly income, potential equity appreciation and portfolio diversification are just a few of the reasons investors at all levels seek out attractive investment real estate.

Yet these same investors also understand that the field of real estate is not as well-regulated and is far less transparent than the securities market. They also understand that investor-owned real estate requires much more day-to-day management than stocks or other investment options.

So when securitized real estate investments became available, most commonly in the form of Delaware Statutory Trusts, it created an excellent opportunity for investors to combine several very appealing options – a regulated security with the familiarity of real estate minus the hands-on management obligations.

Today, securitized real estate offerings are more popular than ever. However, it is important to understand the types of real estate you will most likely find in a DST. Due to legal limitations and the nature of DST financing, DSTs will usually only include two types of real estate:

  1. Long-term “A” credit triple-net leased properties, or
  2. Properties leased to an affiliate of the sponsor. These affiliates are commonly referred to as a “master tenant” and will operate the property under a master lease on a triple-net basis.