DST fees are typically a mix of up front, ongoing, financing related, and exit costs, and they vary by sponsor and offering. The key is understanding not just what the fees are, but when they are paid and how they affect your cash flow and sale proceeds.
Up front fees may include selling or placement fees, dealer manager fees, and offering or organizational expenses. These can reduce the portion of your investment that goes into the property on day one. Many DSTs also have acquisition related costs tied to sourcing, due diligence, and closing the property.
Ongoing fees are generally paid from property operations and may include sponsor asset management, property management, and administrative or trustee expenses. These costs can reduce net operating income, which is what drives distributions. In addition, most DSTs budget reserves for items like tenant improvements, leasing commissions, repairs, and capital expenditures. Reserves are not always “fees,” but they can still reduce current distributions in order to help protect the property and support lease up or future expenses.
If the DST uses financing, there may be lender costs, required escrows, interest expense, and loan reserves that can impact cash flow. Debt can also introduce refinancing risk, even when the investment is structured as non recourse for the investor.
At sale, there are typically disposition and closing costs such as broker commissions, legal and closing fees, and sometimes a disposition fee. These reduce net sale proceeds distributed to investors.
Always ask for a clear fee and expense summary from the offering documents, confirm any fees paid to sponsor affiliates, and compare deals using net projected distributions and net sale proceeds, not just the headline distribution rate.