Can Delaware Statutory Trust Creators Meet Growing Demand for Product?

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Can Delaware Statutory Trust Creators Meet Growing Demand for Product?

By Mike Janssen

June 27, 2013

The use of Delaware Statutory Trusts (DSTs) in net lease investing has started to gain popularity, with creators of DSTs facing the same challenge that’s vexing other net lease buyers: finding adequate product to meet high demand.

DSTs grew to $500 million last year and should continue to upwards of $3 billion within the next three years, according to Steve Meier, a partner with Chicago-­based law firm Seyfarth Shaw. And in the third quarter of last year, just a few DST products were on the market, ranging in gross amount from $20 million to $25 million. That number doubled in the fourth quarter.

Several factors are contributing to the growing interest in DST products. The recent hike in the capital gains tax, which affects real estate investors, makes the DST a more appealing investment option because the trusts allow investors to swap properties and defer tax payments.
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