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Delaware Statutory Trust Offerings on Pace for Record-Setting Year

Securitized 1031 exchange Delaware statutory trust offerings have raised $1.7 billion year-to-date through February 2022, according to a report by Robert A. Stanger & Co.

Securitized 1031 exchange Delaware statutory trust offerings have raised $1.7 billion year-to-date through February 2022, according to a report by Robert A. Stanger & Co. with a “substantial portion” of the data provided by Mountain Dell Consulting.

In 2021, Mountain Dell reported that securitized 1031 exchange programs, which included DSTs and to a lesser extent tenant-in-common offerings, smashed all previous fundraising records with $7.4 billion raised for the year – double the previous $3.7 billion record set in 2006. If DST fundraising continues at its current pace, 2022 could be another record-breaking year.

Inland Real Estate Investment Corp. continues to lead DST fundraising with 20.4 percent of market share and $348.9 million raised year-to-date through February, followed by Ares Management Corp, formerly Black Creek Group, with 15.2 percent of market share and $260.1 million raised. Third place went to Capital Square with 11.6 percent and $199.6 million.

Rounding out the top five DST sponsors were NexPoint Advisors with 7.4 percent of market share and $126.5 million raised, and ExchangeRight with 5 percent and $85.3 million.

Section 1031 of the Internal Revenue Code allows investors to defer paying capital gains taxes on investment property sales by reinvesting the proceeds into a similar investment property within a specified time frame. Securitized 1031 exchange programs are structured as securities and sold to retail investors, mainly as Delaware statutory trust offerings.

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