What is a DST Sponsor Company?

Multiple real estate properties that used 1031 dst sponsors

By: Alex Madden, Vice President, Kay Properties and Investments, LLC

Many 1031 exchange investors have never heard of a DST Sponsor, what they are, or what they do. It is important for investors considering DST properties to understand what a DST sponsor is and how they work.  After reading this article, a 1031 exchange investor should have a better understanding of what a DST sponsor company is and does.

What is a DST Sponsor?

A DST Sponsor is a professional real estate company that purchases real estate and structures that real estate as a DST, making it available to accredited investors.  A DST sponsor is often also referred to as the asset manager of a DST investment.

What does a DST Sponsor Do?

A DST Sponsor company will often evaluate hundreds of properties for purchase, they will typically make offers on several properties and eventually purchase one property, and they will structure it as a DST which is then made available for accredited investors to purchase either via a 1031 exchange or as a direct cash investment.

Sponsor companies will often use a combination of their own capital to purchase a property and a bridge loan, and when the DST is leveraged, they will get the loan in place prior to investor’s purchase of interest in the DST so that investor’s needing to replace debt in their 1031 exchange will be able to upon purchasing the DST.

After a property is purchased and structured as a DST, the Sponsor will manage the property on a day-to-day basis and will retain all management responsibility. 

What to know about a DST Sponsor:

  • DST Sponsors will be the Asset Manager of the DST after an investor purchases an interest in a DST. 
  • DST Sponsor companies often have specific strengths, and weaknesses, which are important to evaluate prior to investing. 
  • DST Sponsors often have a core competency, or a target asset class they focus on.  For example they may be a specialist in self-storage, medical facilities, multifamily apartments or even in providing debt free DST offerings.
  • We believe it is important to diversify* across DST Sponsors, as well as asset class, geography, etc. 
  • Some DST Sponsors have more profitable past performance than others. 

On the www.kpi1031.com marketplace, 1031 exchange investors are able to view over 25 different DST sponsors, specific track records of DST sponsor companies and typically between 20-40+ DST offerings.  To register for free please visit www.kpi1031.com.

*Diversification does not guarantee profits or protect against losses.

About Kay Properties and www.kpi1031.com

Kay Properties is a national Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market.  Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have participated in over 21 Billion of DST 1031 investments.

This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing.  IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation.  There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed.

Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. Securities offered through Growth Capital Services, member FINRASIPC, Office of Supervisory Jurisdiction located at 582 Market Street, Suite 300, San Francisco, CA 94104.

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