As the DST 1031 Exchange Rises in Popularity, Efficient Solutions Become More Valuable

While the real estate market has remained in flux, Delaware Statutory Trust (DST) investment has grown. To meet demand, both DST sponsors and financial advisors need to find efficient ways to help investors complete a 1031 DST exchange into the right investment products.

At a glance

In contrast to the rest of the real estate market, Delaware Statutory Trust equity reached $7.5 billion through September 2026, up 27% from $5.9 billion a year before, according to Mountain Dell Consulting.
A DST 1031 exchange can be attractive replacement properties because of their diversity, passivity, and reliability in a market where traditional financing is more expensive and replacement properties are hard to come by.
DSTs can offer debt replacement to help achieve full tax deferral in a 1031 exchange, and some are designed for 721 upREIT exchanges where property interests are contributed to a REIT’s operating partnership.
Because of their low barrier to entry, it’s not uncommon for investors to complete a 1031 DST exchange from one whole property into many DSTs. This means more exchanges per investor, increasing the time commitment of financial advisors, DST sponsors, and Qualified Intermediaries.
To keep costs down, an efficient QI solution is necessary to streamline the exchange process and provide investors with visibility across their many exchanges. JTC works with 1031 investors and DST sponsors to offer consistent service before, during, and after the exchange, saving time and reducing overhead.

Real estate investing is a long game, and for many investors, a considerable percentage of their net worth can be tied up in a small number of properties. Most owners of business or investment property only perform a handful of 1031 exchanges in their lifetimes, some only one or two.

That’s what makes financial advisors and other service providers such an important part of the 1031 ecosystem. Investors rely on their tax, legal, and wealth advisors to help them understand when and how to execute a like-kind exchange, including a 1031 into a DST, because things probably aren’t the same as they were the last time, if there even was a last time.

Advisors need to stay on top of trends in real estate and the options available to exchangers. In 2026, one strategy, the DST 1031 exchange, is proving to be a growing force in the 1031 exchange market.

Why the DST 1031 exchange is rising in a difficult real estate market

We’ve written before about interest rates and other factors making 2026 a difficult time in real estate. Limited supply and uncertainty about how prices will fluctuate over the next year have caused many would-be exchangers to hold back, while others have looked for alternative solutions.

Despite overall uncertainty in the real estate market, the Delaware Statutory Trust (DST) market has been strong. According to data from Mountain Dell Consulting, “DST equity totaled $7.5B through September, up 27% from $5.9B a year earlier.”

For investors looking to exit long-held properties, especially those that are maintenance heavy or burdened with high property taxes, DSTs provide an attractive alternative because they eliminate the management burden and are much more reliable when it comes to meeting 1031 exchange timeline requirements.

“Replacement properties have been thin on the ground. Sellers and buyers couldn’t agree on the price. Lenders have been cautious,” says Kiplinger. “Investors are choosing the certainty of a fully structured, professionally managed property over the uncertainty of chasing a direct deal in a difficult market.”

DSTs allow investors to enter markets that otherwise might be closed off to them. This is important at a time when certain commercial markets are faring much better than others.

“Distribution facilities, logistics properties and strategically located industrial assets can benefit from long-term trends involving supply-chain management, e‑commerce, manufacturing and the continuing need for modern warehouse and distribution space,” says DST News. “Industrial offerings may also provide relatively straightforward operating models compared with more management-intensive property sectors.”

DSTs have always had the added advantages of a low barrier to entry, diversification, and debt replacement to achieve full tax deferral, as well as the ability to potentially convert DST interests into shares of a Real Estate Investment Trust (REIT), a route sometimes described as a DST REIT structure. That flexibility means investors are keen to move from single-property ownership to a series of DSTs, often through a 1031 to DST exchange. But as more investors do so, and more choices are available to them, servicing the needs of those investors will require greater technological infrastructure.

Factor	DST interest	Whole property
Management	Professionally managed by the sponsor, passive for the investor	Owner handles maintenance, tenants and property taxes
Minimum investment	Lower, so one exchange can go into several DSTs	Higher, usually concentrated in one property
Diversification	Multiple property types and markets possible	Depends on the single asset
Debt replacement	DSTs offered with different levels of debt, so full deferral may be achievable	Depends on lender appetite and financing costs
Exchange timing	Properties already vetted, so often a useful backup for identification	Finding and closing a suitable property can be harder in the current market
Market access	Access to sectors such as industrial and multifamily	Limited by capital and local knowledge
Control	Limited, as the sponsor makes decisions	Full control
Liquidity	Held for the DST’s holding period	Owner decides when to sell, subject to the market

What rising DST investment means for financial advisors and DST sponsors

As the DST marketplace grows, there will naturally be new entrants to the space, providing investors with greater choice. This means different things for DST sponsors and the advisors who help investors make the choice of where to allocate their capital.

For DST sponsors, there is likely to be more competition in every sector. In order to stand out, they’ll have to offer 1031-eligible and 721 upREIT-eligible DSTs that can supply the diverse range of property types and debt replacement options 1031 investors need. Further, they’ll need to keep fees down so they can compete.

For financial advisors, more DST options means more due diligence to evaluate the DST investments available. Relying on preexisting relationships and track record will be a major part of any investment strategy.

“Investors today have access to a broader variety of institutional-quality real estate strategies than existed during the earlier stages of the DST industry,” says DST News. “That increased choice creates opportunity, but it also increases the importance of disciplined due diligence.”

Because DSTs require a lower minimum investment than whole properties, it’s natural for exchangers to exchange from one whole property into several DSTs. That means complex multi-property exchanges into a series of DSTs, and potentially many exchanges out of those DSTs at the end of their holding periods. That will require a process that can be replicated and streamlined. Both advisors and DST sponsors will need reliable partners they can work with again and again who are able to deal with the varying needs of a diverse investor population.

How advisors and attorneys can better support clients exchanging into DSTs

“As investment solutions continue to evolve, so do the considerations surrounding them,” says JTC National Sales Manager and Account Executive Justin Amos in a recent LinkedIn post outlining the changing concerns for DST investors. “Investors may be evaluating passive ownership, income objectives, diversification, estate planning, or the desire to step away from actively managing real estate. And with those considerations comes a broader network of professionals, platforms, and processes involved in supporting their decisions.”

A growing DST market will mean more investors, more DST investment options, and a larger number of 1031 exchanges per investor. To facilitate the increased workload will require a focus on technological solutions that can streamline as many processes as possible.

“Growth in investment options should be accompanied by growth in the infrastructure and expertise supporting the investor,” says Amos, who advocates for scalable solutions that can be used to increase efficiency, lower costs, and accommodate a wide range of exchange types.

“Are we investing in technology that makes exchanges more efficient and transparent? Are we strengthening relationships across the professionals who support the investor? Are we improving education so investors and their advisors better understand the exchange process? Are we building processes that can accommodate increasingly sophisticated transactions?”

In addition to those questions, financial advisors should also strive to reduce the number of service providers they work with. A different Qualified Intermediary (QI) for every 1031 exchange client simply isn’t practical. For DSTs, hundreds of different QIs would require different onboarding solutions for every investor joining the DST, a burden for both DST sponsors and advisors. A single provider that can work in every state and handle the many types of exchanges involved can help save money, reduce workload, and allow financial advisors and DST sponsors to offer better service.

What makes JTC’s QI services different for DSTs and their investors

One thing that sets JTC apart from other QIs is our size. We don’t just do 1031 exchanges, and we don’t just service traditional exchanges. We’ve worked with everyone from first-time exchangers to major corporations, and have extensive experience with DST 1031 exchanges. All of our clients, no matter their net worth, get access to the same scalable technology-based platform that provides 24/7 exchange visibility, with all necessary information gathered in one place.

JTC’s online portal works as a DST platform that can be used throughout the DST lifecycle, with the same platform offering access across multiple DSTs from different sponsors. Investors and their advisors can more easily keep track of their progress during and after their exchanges, and the process is easily replicable.

For DST sponsors, we offer more than just QI services. We help add efficiency throughout the DST’s full lifecycle, helping sponsors keep fees down and develop trusting relationships with their investors.

No matter what kind of exchange an investor wants to perform, JTC has the experience necessary. That includes state to state exchanges, partial exchanges, and those from one DST to another. We partner with both financial advisors and DST sponsors to educate property owners about what a DST 1031 exchange involves and the benefits of DSTs and craft solutions for their clients looking to access new markets and move from single-property ownership to diverse DST solutions. As the DST market grows, we can help you grow with it.

End-to-End Servicing for 1031 DST Management

Frequently asked questions

Can a DST be a 1031 replacement property?

Yes. An interest in a Delaware Statutory Trust (DST) can be used as a replacement property in a 1031 exchange, provided the exchange meets the usual requirements. It is also possible to exchange out of a DST into a whole property, from a DST to a DST, or from one whole property to a series of DSTs.

Can I exchange into a DST if I have a mortgage?

Yes. DSTs are designed with different levels of debt, so it may be possible to find one that meets your needs to fully defer taxes through Section 1031. DST debt is typically non-recourse, meaning the investor is not personally liable for the loan, although the investment can still lose value.

Can I find a DST fast enough for a 1031 exchange?

Often, yes. Because DST properties have already been professionally vetted, exchanging into a DST is usually faster than a whole property exchange, making DSTs a useful backup for 1031 identification slots. Availability and closing dates vary by offering, so it is best to start early.

Do REITs qualify for a 1031 exchange?

Not directly. It is not possible to perform a 1031 exchange into REIT shares because they are not considered like-kind property. However, it is possible to go from a whole property to a DST interest that is then contributed to a REIT’s operating partnership in a 721 upREIT exchange. A specially designed DST is needed, but trusts of this kind are offered. This depends on the sponsor’s structure, so investors should confirm the terms with a tax adviser.

What is a DST 1031 exchange, and how does it differ from exchanging into a whole property?

A DST 1031 exchange is a like-kind exchange in which an investor reinvests the proceeds from a sold property into an interest in a Delaware Statutory Trust, which holds professionally managed real estate, instead of buying a whole property. Aside from typically non-recourse debt, DSTs allow for diversification and access to commercial markets that exchangers might not normally have access to. During the exchange, the process is broadly the same, but because one property can be exchanged for multiple DST interests, it is helpful to have a single solution to organize all the information and a QI that can manage funds and transfer them properly without violating 1031 rules.

What are the risks of a DST 1031 exchange?

DST investors are passive and have no control over management or sale decisions. Interests are generally illiquid for the holding period, returns are not guaranteed, and values can fall, as with any real estate investment. Fees, debt levels and sponsor quality also vary, which is why due diligence matters. A financial adviser can help assess whether a DST suits an investor’s circumstances.

Why do I need a Qualified Intermediary for a DST 1031 exchange?

A 1031 exchange requires a Qualified Intermediary (QI) to hold the sale proceeds, so that the investor does not take actual or constructive receipt of the funds, which could disqualify the exchange. In a DST 1031 exchange, the QI also transfers funds to each DST at closing and keeps a record of every interest purchased, which matters when a single sale is split across several DSTs.

Can I exchange into more than one DST?

Yes. Because DSTs generally require a lower minimum investment than whole properties, an investor can divide the proceeds of one sale across several DSTs, which can spread an investment across sponsors, property types and markets. Each DST interest must be identified and closed within the exchange deadlines, so many investors use a single QI and one platform to track every transaction.

Is a DST the same as a Deferred Sales Trust?

No. A Delaware Statutory Trust (DST) is a real estate ownership structure that can hold replacement property in a 1031 exchange. A Deferred Sales Trust is a separate tax deferral strategy based on an installment sale and is not a 1031 exchange. The two have different rules and risks, so investors should take tax advice before choosing between them.