As of June, there was $1.3 billion in equity placed into DSTs. There are many different types of DSTs available, depending on what asset class an investor wishes to purchase. 47 DSTs have been sold in 2020 consisting of the following different asset classes: multifamily, student housing, retail, hospitality, senior housing, self storage, office, medical, industrial, energy. Of these, multifamily offerings have been the most popular, consisting of 50% of all DSTs sold. The bulk of these offerings focus on current income rather than growth, with an average first year distribution rate of 5.26%.
The Delaware Statutory Trust (DST) is an investment vehicle that has allowed investors to benefit from passive ownership of real estate for many years. While it has been around for some time, the demand for DSTs really took off in 2004, when the IRS released revenue ruling 2004-86. This effectively ‘blessed’ the use of the DST to complete 1031 exchanges.
The booming real estate market of the early 2000’s helped fuel demand and at its peak in 2006 there was approximately $3.7 billion equity placed into DSTs. The recession of 2008 cooled that demand for a few years, but the DST market has been steadily growing since 2010.
2019 was another banner year in the DST investment world. In 2019 there was approximately $3.5 billion in equity placed into DSTs, that is $9.6 million per day. This represented a 40% increase over the equity placed in 2018.
Based on current trends, industry experts believe that 2020 will end with over $2 billion placed into DSTs. While political and economic factors will have an impact on the future, 2021 is anticipated to resume upward climb of DST sales.
2020 DST update summary as of June 12:
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