What Is a Delaware Statutory Trust (DST)? Benefits, Risks & Why Investors Are Turning to DSTs in 2026

For multifamily and commercial property owners, especially those considering a 1031 exchange, one strategy continues to gain serious momentum: the Delaware Statutory Trust (DST).

At JML Real Estate Group, we regularly advise clients on exit strategies that maximize value while preserving flexibility—and DSTs have become an increasingly important tool in today’s market.

In this article, we’ll break down:

• What a DST is

• Key benefits and considerations

• Who they are best suited for

• Why DST demand is surging in 2025–2026

What Is a Delaware Statutory Trust (DST)?

A Delaware Statutory Trust (DST) is a legal entity that allows multiple investors to own fractional interests in institutional-quality real estate assets.

Instead of owning and managing a property directly, investors:

• Own a beneficial interest in a trust

• Receive passive income distributions

• Defer capital gains taxes through a 1031 exchange

DSTs are commonly structured to hold:

• Multifamily communities

• Industrial assets

• Medical office and retail properties

These are typically professionally managed, income-producing assets.

Key Benefits of DST Investments

1. Passive Ownership (No Management Headaches)

DSTs are ideal for investors who want to transition from active landlord responsibilities to passive income.

No more:

• Tenant calls

• Maintenance issues

• Day-to-day management

2. 1031 Exchange Eligible

DSTs qualify as “like-kind” property under IRS guidelines, making them a powerful tool for:

• Deferring capital gains taxes

• Simplifying exchange timelines

• Replacing management-heavy assets

3. Access to Institutional-Quality Real Estate

DST investors gain exposure to assets that may otherwise be out of reach individually, such as:

• Class A multifamily

• Large industrial portfolios

• Credit-tenant net lease properties

4. Diversification

Instead of placing all exchange proceeds into a single property, investors can:

• Allocate across multiple DSTs

• Diversify by geography and asset type

• Reduce risk exposure

5. Predictable Cash Flow

Many DSTs are structured to provide:

• Stable monthly or quarterly income

• Long-term leases

• Conservative underwriting

Potential Considerations & Risks

Like any investment, DSTs are not without trade-offs:

• Illiquidity: Investors typically cannot sell early

• Lack of control: Decisions are made by the sponsor

• Market risk: Performance tied to underlying real estate

• Accredited investor requirements: Many DSTs are limited to qualified investors

This is why proper guidance and sponsor selection is critical.

Why DSTs Are Surging in Popularity

The DST market has seen significant growth, particularly over the past two years.

According to recent industry data:

• DST fundraising reached $8.41 billion in 2025, a 49% year-over-year increase 

• Q1 2026 alone saw $2.44 billion raised, up 34% year-over-year 

• Projections estimate $10–$11 billion in DST volume for 2026 

  
  

This surge is being driven by:

• Aging ownership demographic seeking passive income

• Increased activity from wealth managers and institutions

• Continued demand for tax-efficient investment strategies

  
  

Multifamily and industrial assets dominate DST offerings, accounting for a significant share of available inventory .

Who Should Consider a DST?

DSTs are particularly well-suited for:

• Multifamily owners looking to exit management responsibilities

• Investors completing a 1031 exchange

• Owners with highly appreciated assets seeking tax deferral

• Those wanting passive income with institutional exposure

How JML Real Estate Group Helps Clients Navigate DSTs

At JML Real Estate Group, we specialize in helping apartment and commercial property owners:

• Evaluate sale vs. exchange strategies

• Maximize value prior to disposition

• Structure transactions to align with long-term goals

  
  

While we do not directly sell DSTs, we work alongside trusted advisors to ensure our clients understand all available options should they want to look into DSTs.

Considering a 1031 Exchange or DST?

If you’re thinking about selling a multifamily or commercial property in Los Angeles, , or Ventura County, our team would be happy to help you explore your options.

Contact us today to request a complimentary, no-obligation Opinion of Value to start the conversation. (818) 657.6556 or jared@jaredmlevine.com