Delaware Statutory Trusts

Shop

Flexible-equity investments in commercial income properties


KB Exchange Trust  provides real estate investors with a simplified 1031-exchange solution through Delaware Statutory Trust (DST) ownership interests.


Delaware Statutory Trusts (DSTs) provide real estate investors with a way to invest passively in commercial real estate. KB Exchange Trust, as a sponsor of DSTs, acquires high-quality commercial income properties, places non-recourse financing on the properties, and retains a national, third-party property and asset management firm to manage the properties and make monthly distributions to all investors. Ownership in the Trust is based on a pro-rata share of the equity invested. For example, if a property requires $5 million of equity to acquire and an investor purchases $1 million worth of the Trust, they will own 20% of the Trust and,  as such, will receive 20% of the cash flow distributions as well as 20% of the depreciation allocation in order to defer capital gains taxes.

KB Exchange Trust acquires single-tenant properties leased to healthcare-related companies on long-term leases. These companies are generally publicly-traded, highly-regarded companies with revenues exceeding $1 billion annually. The Delaware Statutory Trust ownership structure makes these investments ideal for investors who are in a 1031 exchange. The investment amount is flexible, starting at $100,000, which is also beneficial to 1031 exchange investors who are trying to invest an amount equivalent to their downleg exchange.

...

What is a Delaware Statutory Trust?

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.


A 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 responsibilities.


KB Exchange Trust Facilitates The Entire Transaction:

  • Acquisition of 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 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.

  • Provides investors with lower minimum equity requirements
  • Provides a more simple and efficient closing process
  • Provides investors protection against loan recourse liability
  • Provides the ability to act quickly when 1031 exchange issues arise
  • Eliminates shareholder voting responsibilities
  • Provides a simple structure for investors
  • Eliminates annual LLC fees to investors
  • Eliminates need for investors to provide tax returns to lenders
  • Provides management-free income