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In the Delaware Statutory Trust (DST) industry, Principal typically refers to an individual or entity that plays a primary role in the operation or management of the trust. However, the term can be used in various contexts, and its exact meaning can vary depending on the specific area of finance or investment.

The Delaware Statutory Trust (DST) is a legally recognized trust structure under Delaware law that is often used for securitization purposes and for holding one or more assets (often real estate properties). DSTs are frequently used in 1031 tax-deferred exchanges, allowing investors to defer capital gains taxes by exchanging one property for another.

In the DST industry, there are two main ways the term “Principal” is commonly used:

  1. Key Entity or Individual: A “principal” may refer to the primary party responsible for making decisions related to the trust, whether it’s in regard to investment, management, or operations. This could be an individual, a group of individuals, or an entity like a trust company.
  2. Capital Contribution: In a financial context, the “principal” often refers to the original sum of money invested or loaned, excluding any earned interest or profit. For instance, in the case of a DST, an investor’s principal amount would be the original capital they invested into the trust.

When navigating the DST industry or considering investment in a DST, it’s important to clarify the specific context in which the term “Principal” is being used to ensure a clear understanding.