The parties involved in a DST (Delaware Statutory Trust) investment offering typically include:

Sponsor: The sponsor is the issuer of the offering and is responsible for sourcing the real estate, structuring the offering, arranging financing, syndicating the offering, managing the asset, servicing the debt, distributing cash flow, providing reports and investor communications, and facilitating the sale of the property. They are usually national real estate firms with a track record in acquiring, managing, and divesting commercial properties.

Lenders: Lenders provide non-recourse debt financing for the property. They can include CMBS lenders, national banks, regional banks, and agency HUD lenders. The loan amount is typically a percentage of the fair market value of the property, and lenders perform due diligence to ensure loan repayment.

Attorney: The sponsor’s legal counsel is responsible for creating the private placement memorandum (PPM) and other offering materials. They also create the trust’s governing instrument (trust agreement) in the case of a DST. The attorney ensures that all material facts and risks are disclosed in the PPM and may also provide a tax opinion on whether the DST qualifies for an IRC Section 1031 exchange.

Broker-Dealer: The broker-dealer acts as a sales intermediary between the sponsor and the investors. They are responsible for conducting due diligence on the offering, ensuring compliance with applicable rules and regulations, and assessing the suitability of the investment for each individual investor. Registered representatives of the broker-dealer must be licensed to sell alternative real estate investment offerings.

It’s important to note that these parties work together in a collaborative manner to bring the DST investment offering to the market. Each party plays a distinct role in the syndication process, and their expertise contributes to the successful execution of the offering and the satisfaction of investor needs.


The DST offering follows a five-step process:
Step 1: Sponsor Due Diligence – The sponsor conducts thorough research in the national real estate market to identify attractive investment-grade properties. They perform extensive due diligence on each potential property before acquiring or contracting to purchase it.
Step 2: Debt Financing Arrangement – Once the sponsor selects a property, they arrange non-recourse debt financing with a major lender. The lender also conducts due diligence on the property. The loan is initially made to the sponsor but is eventually assumed by the investors based on their proportionate share of the offering. Loan repayments are made by either the property manager or the sponsor.
Step 3: Preparation of the Private Placement Memorandum – After negotiating the debt side of the offering, the sponsor structures the equity side through a private placement offering. They engage a reputable law firm to draft a comprehensive PPM that discloses all risks and material facts related to the offering.
Step 4: Selling Agreement – Once the PPM is prepared, along with all underwriting information, it is presented to a FINRA member securities broker-dealer. The broker-dealer conducts its own due diligence on the sponsor and the property before signing a selling agreement, providing additional protection for investors.
Step 5: Presentation to Prospective Investors – With the selling agreement in place, licensed registered representatives of the broker-dealer can present the offering to prospective investors. This ensures that investors receive accurate and reliable information about the DST offering.