A Delaware Statutory Trust is a separate legal entity created as a trust under Delaware 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.
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 responsibilities.
A DST-structure is a "pooled-equity" investment. DST purchasers realize significant benefits by acquiring larger commercial properties that are typically higher-quality assets than could be purchased individually. Investors looking for stabilized, core properties often favor a DST-structured investment.