What is a DST?
A Delaware Statutory Trust (DST) is a legal entity that enables multiple investors to hold fractional ownership in institutional-quality real estate assets. Recognized by the IRS as qualified replacement property for a 1031 Exchange, DSTs offer investors the ability to defer capital gains taxes while maintaining a passive investment approach.
By investing in a DST, real estate owners may diversify their portfolios, gain access to institutional-quality properties, and participate in structured investment opportunities with clearly defined business plans. However, DSTs are illiquid investments, and investors should consult their tax and financial professionals to determine suitability.
What is the 721 UPREIT Strategy?
The 721 UPREIT (Umbrella Partnership Real Estate Investment Trust) strategy enables investors to exchange eligible real estate holdings into a DST followed by an exchange of DST interests for Operating Partnership Units. These OP units may be converted into shares of a publicly traded or private REIT, providing an alternative exit strategy for property owners looking to transition away from direct real estate ownership while deferring capital gains taxes.
This strategy is complex and involves multiple steps, including 1031 Exchanges and DST investments. Investors should work with professionals to ensure compliance and suitability based on their financial goals.
New DST Properties
Gain access to premier commercial real estate investments structured for efficient 1031 tax deferral and truly passive ownership.
MCG Madison Ridge DST
- Asset Class: Multi Family
- Minimum: $100000
- Financial Projections Only login member can access download
CX Mode at Hyattsville DST
- Asset Class: Multi Family
- Minimum: $100000
- Financial Projections Only login member can access download
NexPoint Semiconductor Manufacturing DST
- Asset Class: Private Real Estate
- Minimum: $100000
- Financial Projections Only login member can access download
The 721 UPREIT Process
Think of the DST 721 UPREIT strategy like navigating a maze. You start at the entrance (owning a single property), take a series of turns (exchanges), and aim to reach an exit with more options (liquidity or diversification) while avoiding obstacles (taxes).
Position for Diversity and Added Liquidity
Unlock the potential of real estate investment without the hassle of management responsibilities. Delaware Statutory Trusts (DSTs) offer investors a unique opportunity to own a fractional interest in larger institutional real estate assets properties.
Tax Deferral
By leveraging both 1031 and 721 exchanges, investors can defer capital gains taxes multiple times, allowing them to reinvest more capital into growing their portfolio. This deferral strategy preserves wealth and enhances long-term investment potential.
Diversification
Transitioning from a single property into a DST and eventually into an UPREIT spreads risk across multiple properties and markets. This diversification reduces exposure to local economic downturns or property-specific risks, creating a more balanced real estate investment.
Liquidity Potential
UPREIT units offer more liquidity compared to direct real estate ownership. In some cases, these units can be converted into publicly traded REIT shares, providing investors with potential access to cash without the need to sell real estate assets.
Estate Planning
UPREIT units or REIT shares can be easier to manage in estate planning. These assets may be more straightforward to divide among heirs and could receive a step-up in basis upon inheritance, potentially eliminating deferred tax liabilities for beneficiaries.
Loss of Control
Investors transitioning from direct property ownership to a DST and then an UPREIT surrender decision-making authority. Property management and investment strategies are determined by the trust and REIT sponsors, limiting individual influence over asset performance.
Complexity of Transactions
This strategy involves multiple steps—moving from a 1031 exchange into a DST, then into an UPREIT under Section 721 of the tax code. Due to its complexity, professional guidance is often required to ensure compliance and avoid costly mistakes.
Potential Taxable Events
If not structured properly, certain actions—such as converting UPREIT units into publicly traded REIT shares—can create taxable events. Investors should carefully plan their transactions to minimize unintended tax liabilities.
Dependence on Sponsor Management
The performance of DSTs and UPREITs relies on the expertise and decision-making of the managing sponsors. If the sponsor underperforms or makes unfavorable investment decisions, investor returns may be negatively impacted.
DST 721 UPREIT Guide
Download the resources that suit your needs and start building your wealth through tax-deferred strategies.
721 Insights
Dive into our curated insights to understand the market trends and investment opportunities that keep you informed and prepared for strategic financial decisions.
- 721
What Is a 721 Exchange? Benefits, Risks, and Key Considerations
For many real estate investors, the 1031 exchange has been the go-to strategy for years. But there’s another option on the table that could help you defer taxes and build wealth in a different way—the 721 exchange.
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- 721
721 Exchange vs 1031 Exchange: Which One is Right for You
If you’re looking to defer taxes on your real estate investment, you’ve probably come across the 721 Exchange and the 1031 Exchange. But which one is better for you? These two strategies are powerful tools for real estate investors, but they have their own unique advantages.
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- 721
721 Exchange Pros and Cons: Is It the Right Choice for You?
Selling an investment property can mean a hefty tax bill. But what if there was a way to defer taxes while transitioning into a different real estate investment structure?
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Case Stories
Explore firsthand experiences of clients who have successfully transitioned to passive income, built wealth, and diversified their portfolios with our guidance.
Stax made my transition to passive income smooth and stress-free.
Stax helped Shikha complete a 1031 exchange into DSTs, freeing her from property management and allowing her to focus on personal time.
-Shikha
Stax helped me shift to passive income and defer my taxes.
Stax guided Ramesh through a successful 1031 exchange and DST investments, allowing him to defer taxes and enjoy hassle-free income.
-Ramesh
Stax made it easy to switch to passive investments for our retirement.
Stax introduced Sima and Roman to DSTs, allowing them to shift from active property management to a hands-off strategy while maintaining a steady income.
-Sima and Roman
Disclosure
The experiences shared by clients of Stax Capital were given voluntarily without any compensation. These testimonials reflect individual opinions and are not intended as investment advice or guarantees of future results. Each investor should consider their own financial goals, risk comfort, and overall situation before making any investment choices.
Our Partners
Our network of industry-leading partners provides best-in-class investment managers, expert tax advisors, and solution-driven product developers. Together, we deliver exceptional investment solutions tailored to your needs.
Our Leadership Team
Our leadership team combines extensive knowledge of private markets with a shared dedication to putting clients first. We work closely with you, educating you on the pros and cons to ensure the decisions we help you make align with your long-term financial goals.
Founder & CEO
Stacey Morimoto
Due Diligence and Operations
Quinn Morimoto
Compliance Principal
Jason Finley
Stacey Morimoto
Mr. Morimoto leverages over 20 years of experience in the securities industry to help his clients navigate the complexities of alternative investments.
After starting his career at Salomon Smith Barney and recognizing the limitations of the traditional wirehouse platform, Stacey became an independent financial representative and established his own securities broker dealer.
Through DST investments, he saw a unique opportunity to deliver real value to clients that larger firms couldn’t offer. The ability to improve the overall day-to-day quality of people’s lives, beyond just their finances, is still what drives him.
With Stax Capital, a boutique firm that prioritizes individual attention, Stacey’s mission is to deliver the best possible educational experience for investors, so that they can make the right decision for themselves.
Quinn Morimoto
Son of founder and CEO Mr. Stacey Morimoto, Quinn has benefitted from early exposure to the inner workings of the securities industry. With a degree in finance from the University of San Diego, he heads up the due diligence and underwriting for all the DST offerings brought to the Stax Platform, a process that includes gathering appraisals, third party reports, and legal opinions as well as recreating sponsors’ financial models. He dives deep into the numbers and analyzes offers from every angle, looking for flaws, in order to minimize as much risk as possible for investors. Quinn has directly facilitated hundreds of private placement investment transactions and would say that the best part of the job is being able to truly make a lasting impact on people’s lives.
Jason Finley
With two decades of experience in sales and marketing across prestigious golfing, technology, and non-profit sectors, Mr. Finley has consistently embraced roles centered on helping others. He firmly believes that enjoying your work makes it effortless, which is why he cherishes being part of the Stax Capital family.
Educating investors on often-overlooked investment opportunities to help them grow their wealth, achieve tax efficiency, and plan for the future brings him immense satisfaction. From the onboarding process to discussing investment options, Jason is dedicated to ensuring every client receives the highest level of service when working with Stax Capital.
Jason is a graduate of the FINRA Institute at Georgetown Certified Regulatory and Compliance Professional (CRCP) program, further enhancing his expertise and commitment to providing exceptional service and compliance in the financial sector. He also holds the Series 22, 7, and 24 securities licenses, underscoring his comprehensive knowledge and regulatory compliance proficiency.
Download the Essential DST Guide
Learn everything you need about Delaware Statutory Trusts and how they fit your financial goals. Download the guide to see if DSTs align with your investment strategy.
