Using Delaware Statutory Trusts in Real Estate Investments: Opportunities and Legal Risks

Structuring and Financing the DST, Leveraging Favorable Tax Treatment

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, September 27, 2017

Recorded event now available

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Program Materials

This CLE webinar will provide real estate and tax finance counsel with a review the advantages and risks of Delaware Statutory Trusts (DSTs) as a structure for real estate investments. The panel will offer approaches for structuring and financing the DST as well as discuss the key tax issues involved.

Description

DSTs are quickly replacing tenant-in-common (TIC) structures for real estate investment, particularly in light of the recovery in real estate prices. One of the advantages of a DST as opposed to a TIC is that it is a single entity controlled by a sponsor and thus viewed more favorably by lenders, including some CMBS lenders.

Since DSTs are often used to qualify as replacement property for Section 1031 exchanges, they must be structured to avoid committing the “seven deadly sins.” These restrictions make them inappropriate for certain types of investments but well suited for properties with long-term, triple-net lease properties, and student, multifamily and senior housing, as well as hospitality facilities.

DSTs are commonly used as a structure for non-publicly traded REITs. DSTs can also be used to facilitate the transfer of exchange property into a REIT.

Listen as our authoritative panel of real estate and tax practitioners reviews the opportunities and pitfalls of using DSTs in real estate investments. The panel will discuss structuring and financing the DST with particular attention to the tax issues and ramifications.

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Outline

  1. Trends in the use of DSTs for real estate investments
  2. Structuring the DST
  3. Assets for DST programs
  4. Financing of DST investments
  5. DST governance
  6. Workouts of DST programs
  7. Non-traditional uses for DSTs—REITs/funds vs. direct investment

Benefits

The panel will review these and other key issues:

  • What are the trends in using DSTs as real estate investment vehicles?
  • What opportunities exist for using DSTs and what are some of the legal pitfalls?
  • What types of investment properties are DSTs well-suited for as an investment structure?
  • What challenges do DSTs present for lenders and how should these problems be addressed?

Faculty

Hannon, Edward
Edward J. Hannon

Partner
Quarles and Brady

Mr. Hannon regularly works with institutional investors, high-net-worth individuals, and real estate companies in...  |  Read More

Meier, Steven
Steven R. Meier

Partner
Seyfarth Shaw

Mr. Meier's diverse tax practice involves all aspects of federal taxation. He regularly advises clients on the...  |  Read More

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