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Walton Global Launches DST 1031 Exchange Platform Focused on Land-Based Investments

Land plot in aerial view. Gps registration survey of property, real estate for map with location, area. Concept for residential construction, development. Also home or house for sale, buy, investment.

Walton Global, a real estate investment firm and sponsor of private placement offerings, has launched a Delaware statutory trust 1031 exchange platform focused on land-based investments.

Walton says the land-based DST offering is “unique” due to its 1031 exchange strategy that helps accredited investors defer capital gains taxes and involves top U.S. home builders that are expected to buy land to develop residential communities. Typically, an investment in a DST involves transferring proceeds from the sale of an investment property to another developed investment property, like commercial buildings or multifamily units that provide some income but minimal growth.

Walton Global claims their strategy is focused on all-equity, growth DSTs targeting potentially higher investor returns than traditional DSTs, along hold periods that are not artificially lengthened due to repayment restrictions applicable to most traditionally financed DSTs.

Walton will use its experience in land acquisition to acquire a continuous pipeline of DST properties in growth regions across the country, hold the properties for growth in value as contemplated by 1031 tax regulations and market the property after the hold period ends to its established network of top U.S. home builders.

The first Walton DST offering, Georgia Growth 1 DST, is now available and additional offerings are expected to launch throughout the year. The offering, a Regulation D 506 (c) private placement, seeks to raise approximately $3.2 million. According to the company, they expect each of their DST offerings to raise between $3 million to $8 million of investor equity.

“Due to the volatility with cap rates and leverage out there today, we believe there’s going to be a large appetite for an all-equity, growth 1031 exchange from U.S. investors. We truly feel this offering is different than what is available now in the marketplace,” Todd Woodhead, senior vice president of Capital Markets at Walton Global, said. “The growth potential alone in the appreciation of land is expected to far exceed what DST investors are accustomed to receiving in a typical income-based 1031 exchange and our targeted hold periods are 3 to 5 years. Our primary target is growth with a short exit strategy versus traditional DSTs that offer small amounts of cash flow with a longer hold period.”

Walton believes there is a potential for traditional appreciation based on market conditions, and the potential increase in value to the land upon entitlement completion by a builder. Once a builder signs a purchase agreement for a land parcel they expect to buy, they begin the entitlement process and eventually purchase the land to build homes. The investment in the land made by the home builder during this process is passed on to DST investors at the time of sale.

“DST investments are projected to remain a popular choice over the coming years,” Woodhead added. “Accredited investors who are looking to diversify their portfolio, defer their capital gains taxes and preserve their capital through a hard asset by using a growth strategy can consider land a solution for their 1031 exchange needs. We also believe our home builder clients could be targeting our DST properties, when they are available for purchase, as they work toward increasing the housing inventory in the U.S, which is highly needed right now with the lack of homes available across the country.”

Walton Global is a privately-owned, land asset management and global real estate investment company that concentrates on the research, acquisition, administration, planning, and development of land. The company manages and administers $3.6 billion in assets on behalf of its global investors located in 83 countries, builders and developers and industry partners. Walton has more than 93,000 acres of land under ownership, management and administration in the United States and Canada with business lines ranging from exit-focused pre-development land investments, builder land financing and build-to-rent.

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