Accredited Investor

In the realm of real estate investment, the term accredited investor holds significant importance, especially when dealing with certain types of investment opportunities that are not available to the general public. The U.S. Securities and Exchange Commission (SEC) has established this designation to identify individuals and entities that possess a... Read more

Accredited Mortgage Trust (AMT)

An Accredited Mortgage Trust (AMT), within the Delaware Statutory Trust (DST) industry, refers to a specific kind of investment vehicle that allows accredited investors to invest in a pool of mortgages. AMTs are typically structured as a Delaware Statutory Trust, which is a legally recognized trust set up for the... Read more

Amendment

An amendment refers to a formal change or modification made to a document, such as a lease, contract, or agreement. This change can be relatively minor, such as altering the spelling of a name or adjusting a clause, or more substantial, like changing the terms of a lease or the... Read more

Annual Report

An Annual Report, as part of a Delaware Statutory Trust (DST), generally refers to a comprehensive report on a trust's activities throughout the preceding year. As with annual reports in other corporate structures and sectors, the primary goal of these reports is to provide trust beneficiaries, and potentially other interested... Read more

Beneficiary

The term beneficiary refers to the individual or entity designated by the account or property holder to receive the assets upon the death of the owner. The role of a beneficiary is crucial in estate planning and asset management, as it ensures the transfer of assets is executed according to... Read more

Blue Sky Laws

Blue Sky Laws are state regulations in the United States that were established to protect investors against fraudulent sales practices and activities. These laws, which may vary by state, generally require sellers of new securities to register their offerings and provide financial details. This allows investors to base their judgments... Read more

Board of Trustees

The Board of Trustees in the terms of the Delaware Statutory Trust (DST) industry refers to a group of individuals who hold a fiduciary responsibility to manage the affairs of the trust for the benefit of the trust's beneficiaries. Here's a more detailed breakdown: Delaware Statutory Trust (DST): A DST... Read more

Bond

In the context of the real estate investment industry, the term bond typically refers to a type of debt security in which an investor loans money to an entity, such as a corporation or government, which borrows the funds for a specific period of time at a fixed interest rate.... Read more

Breach of Trust

Breach of Trust in the real estate investment industry typically refers to a situation where an individual or organization fails to fulfill their duties or obligations as per a trust agreement. In real estate, trusts are commonly used for holding properties or investments. A trustee is designated and is obligated... Read more

Business Trust

A Business Trust is a type of unincorporated business organization which operates much like a corporation. The trust is managed by trustees for the benefit of its owners, who are known as beneficiaries. These beneficiaries hold "units" in the trust, which are similar to shares of stock in a corporation.... Read more

Capital Account

A Capital Account in the context of a Delaware Statutory Trust (DST) industry, much like in other financial and investment contexts, is a ledger that records the equity contribution of each individual trust beneficiary or investor. This includes their initial investments, subsequent contributions, and their share of profits or losses,... Read more

Capital Gain

Capital gain, within the context of the real estate investment industry, refers to the increase in the value of a real estate property or investment over time. This increase in value, when the property is sold, results in a profit for the investor, which is known as a capital gain.... Read more

Capital Gain or Loss

Capital gain or loss in the real estate investment industry refers to the difference in the purchase price and the selling price of real property. A capital gain occurs when you sell a real estate property for more than you purchased it. The gain is the amount by which the... Read more

Capital Gain Tax

Capital Gain Tax in the context of the real estate investment industry refers to a type of tax that is levied on the profit (the capital gain) realized from the sale of a real estate property or investment. The tax is only applied when the property is sold, and not... Read more

Capitalization Rate

The capitalization rate, often just called the cap rate, is a metric that is widely used in the real estate investment industry to estimate the potential return on an investment property. The cap rate is calculated by taking the net operating income (NOI) of the property (i.e., the income the... Read more

Certificate of Trust

A Certificate of Trust, in the context of a Delaware Statutory Trust (DST), is a legal document that serves as evidence of the formation and existence of the trust. It is typically filed with the Delaware Secretary of State and contains the essential information related to the trust, such as... Read more

Collateralized Debt Obligation (CDO)

A Collateralized Debt Obligation (CDO) is a type of structured asset-backed security (ABS) that is commonly associated with the real estate investment industry. Originally developed for the corporate debt markets, it became widely used in mortgage and mortgage-backed security markets. At its core, a CDO is a complex financial product... Read more

Common Unit

A Common Unit in the context of the Delaware Statutory Trust industry, typically refers to a standard share or unit of beneficial interest that an investor owns in a DST. Delaware Statutory Trusts (DSTs) are legal entities that are used for holding title to investment properties. In the real estate... Read more

Conversion

In the contexts of Delaware Statutory Trusts (DSTs) and Individual Retirement Accounts (IRAs), the term conversion can have multiple meanings depending on the financial processes involved. Here’s a breakdown of how conversion applies to DSTs and IRAs, as well as how these concepts might intersect in the context of retirement... Read more

Corporate Governance

Corporate governance refers to the system of rules, practices, and processes by which a DST is directed and controlled. This structure involves balancing the interests of many stakeholders in a DST, which might include the investors (also called beneficiaries), the trustees, management, customers, government, and others. Fundamentally, corporate governance provides... Read more

Credit Rating

A credit rating, in the context of the Delaware Statutory Trust (DST) industry, refers to an evaluation or assessment of the creditworthiness of the DST, similar to how it would apply to any business entity or financial instrument. Delaware Statutory Trusts are entities established for business purposes, particularly in real... Read more

Debenture

A debenture is a type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer, whether that be a corporation, a non-profit organization, or even a government. It is essentially an unsecured loan that the... Read more

Delaware Statutory Trust (DST)

A Delaware Statutory Trust (DST) is a legally recognized trust that is used for investment, especially in real estate. The DST is a unique entity established under the laws of the state of Delaware, USA. In the real estate investment industry, DSTs are often used in a 1031 exchange, which... Read more

Delaware Statutory Trust Act

The Delaware Statutory Trust Act is the Delaware law that authorizes the creation and operation of Delaware Statutory Trusts, often called DSTs. It provides the legal foundation for how these trusts are formed, governed, and administered. In real estate investing, this Act is especially important because it supports the structure... Read more

Delaware Statutory Trust Agreement

A Delaware Statutory Trust agreement is the legal document that establishes the rules, structure, and operation of a Delaware Statutory Trust, often called a DST. In real estate investing, this agreement helps define how the trust is organized, who is responsible for managing it, what rights investors have, and how... Read more

Delaware Statutory Trust Law

Delaware Statutory Trust law refers to the body of Delaware law that governs the formation, operation, and legal treatment of Delaware Statutory Trusts, commonly known as DSTs. These laws provide the legal framework that allows a DST to exist as a separate entity and outline how it can own property,... Read more

Dissolution

Dissolution in the context of the Delaware statutory trust (DST) industry refers to the legal process by which a DST is terminated and its assets are distributed among the trust's beneficiaries or other entities as stipulated in the trust agreement. This process is generally initiated due to various reasons such... Read more

Distributions

Distributions in relation to Delaware Statutory Trusts (DST) are the monetary returns or payouts that the trust distributes to its beneficiaries or owners, who are typically investors. DSTs are commonly used in the real estate industry, allowing multiple investors to hold fractional ownership of a property. The property within the... Read more

Due Diligence

Due diligence in the 1031 exchange industry involves a careful and thorough examination of all aspects of a potential real estate transaction to ensure its compliance with the requirements of a Section 1031 exchange and other related laws, as well as its suitability for the investor's objectives. The due diligence... Read more

Duty of Care

Duty of Care is a legal concept prevalent in various forms of business, including the Delaware Statutory Trust industry. It refers to the obligation that a trustee or manager has to act with a certain level of attention, caution, and prudence while making decisions that could potentially impact the trust... Read more

Duty of Loyalty

Duty of Loyalty is a fundamental aspect of the fiduciary duties that are owed by the trustees and directors in the Delaware statutory trust industry. This is based on Delaware law and it implies that those in a position of trust must act in the best interests of the trust... Read more

Entity Classification Election

Entity Classification Election generally refers to the choice made by an entity, such as a corporation or partnership, about how it should be classified for federal tax purposes. The term isn't exclusive to the Delaware statutory trust (DST) industry, but it's certainly very relevant. A Delaware Statutory Trust is a... Read more

Equity

Equity in the context of the 1031 exchange industry refers to the value that an investor has in a real estate property. In a 1031 exchange, this is essentially the net value of the property being "exchanged" or sold, once any liabilities such as a mortgage are subtracted. Let's say... Read more

Exit Strategy

In the context of the Delaware Statutory Trust (DST) industry, an Exit Strategy refers to a plan outlining how investors can realize a return on their investment or exit the investment. A well-defined exit strategy will consider the best methods and timing to liquidate holdings, maximize returns, and minimize losses,... Read more

Fiduciary Duty

In a Delaware Statutory Trusts (DST) and Individual Retirement Accounts (IRA), fiduciary duty refers to the legal and ethical obligation that a fiduciary (such as a trustee, financial advisor, or investment manager) has to act in the best interests of the beneficiaries or account holders. This duty is of the... Read more

Indenture

An indenture typically refers to a formal legal agreement, contract, or document between two or more parties, particularly concerning a loan or the issuance of bonds. When dealing with real estate investment, an indenture might outline the terms and conditions of a mortgage, bond issuance, or other debt instruments that... Read more

Independent Trustee

The role of an Independent Trustee within a Delaware Statutory Trust (DST) is multifaceted, serving to enhance the integrity and function of the trust structure, especially in investment scenarios. Here's an expanded view of the Independent Trustee's responsibilities and importance: Fiduciary Responsibility: The Independent Trustee is charged with a fiduciary... Read more

Interest

Interest refers to the charge for the privilege of borrowing money, typically expressed as an annual percentage rate. It can also refer to a share or a right in a property or in an investment. Here's a bit more detail on how interest works in real estate investment: Mortgage Interest:... Read more

Investment Trust

An Investment Trust refers to a legally recognized trust that's created for the purpose of business, especially investment. Delaware Statutory Trusts are often used for investment purposes, including holding, managing, administering, investing, or operating a property, assets, or business. In an Investment Trust structure, investors buy shares in the trust,... Read more

Legal Opinion

A legal opinion is a written statement provided by an attorney or law firm that offers an analysis or conclusion regarding a legal matter or transaction related to a real estate investment. It often serves as a supporting document for various real estate transactions, including the purchase, sale, financing, or... Read more

Limited Liability

Limited Liability refers to a legal structure that can protect an investor's personal assets from the financial obligations or debts of the investment entity. Here's a bit more detailed explanation: Protection of Personal Assets: In a limited liability company (LLC) or other limited liability entity, the owner's liability is restricted... Read more

Limited Liability Company (LLC)

A Limited Liability Company (LLC) is a specific form of a private limited company that is often utilized within the real estate investment industry. In the realm of real estate investment, a Limited Liability Company (LLC) is a legal entity structure that provides its owners (referred to as members) with limited... Read more

Limited Partnership

A Limited Partnership (LP) refers to a legal business structure that includes at least one General Partner (GP) and one or more Limited Partners (LPs). General Partner (GP): The GP is responsible for managing the day-to-day operations of the partnership, including making decisions related to the real estate investment, such... Read more

Liquidation

Liquidation refers to the process of selling off assets, typically real estate properties, to convert them into cash. This might occur for various reasons, such as to pay off debts, realize gains, or wind down a real estate investment fund or business. Liquidation in real estate investment refers to the... Read more

Merger

A merger, in the Delaware Statutory Trust (DST) industry, is the legal process in which one or more trusts combine to form a new entity or one trust absorbs another. This can be part of a strategic plan to grow assets, consolidate resources, increase operational efficiencies, or enhance the overall... Read more

Net Asset Value (NAV)

Net Asset Value (NAV) refers to the value of an entity's assets minus the value of its liabilities. It represents the underlying value of the property or properties within a real estate investment, such as a Real Estate Investment Trust (REIT) or a property investment fund. Here's how NAV is... Read more

Note

The term note refers to a debt instrument or a promise to pay a specified amount of money, either on demand or at a future specified date. DSTs are often used in the real estate industry as investment vehicles. In such scenarios, the DST might acquire real estate properties and... Read more

Offering Memorandum

In a Delaware Statutory Trusts (DSTs) and Qualified Opportunity Funds (QOFs), an Offering Memorandum (OM) is a comprehensive legal document provided to potential investors that outlines the terms, risks, and details of the investment opportunity. It serves as a disclosure document and typically includes the following key information: Investment Overview:... Read more

Offering Price

The Offering Price generally refers to the price at which units or beneficial interests in the trust are offered to potential investors. It represents the amount an investor is expected to pay to acquire a share or stake in the DST. A Delaware Statutory Trust is a distinct type of... Read more

Principal

In a Real Estate Investment Trusts (REITs) and Delaware Statutory Trusts (DSTs), the term principal is a key financial concept that refers to the original amount of money invested by an individual or entity. It is crucial to understand this term as it forms the foundation upon which any potential... Read more

Private Placement

A Private Placement refers to the sale of securities or investment opportunities in a real estate venture to a select group of investors rather than the general public. This is often done to raise capital for specific real estate projects, such as the development of a new property or the... Read more

Public Offering

A Public Offering in the Delaware Statutory Trust (DST) industry refers to the sale of beneficial interests in a DST to the general public. This type of offering allows investors to buy a stake in a trust that typically holds real estate assets. The DST acts as an alternative investment... Read more

Qualified Institutional Buyer (QIB)

A Qualified Institutional Buyer (QIB) is a term primarily associated with Rule 144A of the United States Securities Act of 1933. A QIB is typically a large institutional investor, like a bank, insurance company, or pension fund, with a securities portfolio of at least $100 million. These entities are considered to... Read more

Real Estate Investment Trust (REIT)

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate in a range of property sectors. These real estate companies have to meet a number of requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a way... Read more

Redemption

Redemption refers to the act of an investor exiting an investment, usually a real estate investment trust (REIT), private real estate fund, or a Delaware statutory trust (DST). This process involves selling the investor’s shares or interest in the investment back to the issuing entity or another investor. Here’s a... Read more

Regulatory Compliance

Regulatory compliance refers to the obligation of DST sponsors, managers, and stakeholders to adhere to the legal, regulatory, and procedural standards set forth by the state of Delaware and any other applicable federal regulations concerning DSTs. This encompasses a broad range of duties, from the creation of the trust and... Read more

Restatement

Restatement refers to the action or process of modifying, amending, or updating the trust agreement or governing document of a DST. Delaware Statutory Trusts are legal entities that allow for fractional ownership of real estate and are commonly used for 1031 exchanges in the United States, allowing investors to defer... Read more

Return On Investment (ROI)

Return on Investment (ROI) is a key performance metric commonly used in various industries, including real estate investment, to evaluate the profitability and efficiency of an investment. In the context of the real estate investment industry, ROI is used to analyze the return or profit made from an investment in... Read more

Risk Management

Risk management is the systematic process of identifying, evaluating, prioritizing, and addressing potential financial, operational, and external threats associated with real estate investments. The primary objective is to protect the investor's capital, achieve expected returns, and ensure the sustainability of the investment over time. Key components of risk management in... Read more

Securities and Exchange Commission (SEC)

The Securities and Exchange Commission (SEC) plays a pivotal role in the oversight and regulation of various sectors within the financial industry, including real estate investments. The SEC is a U.S. federal agency responsible for enforcing federal securities laws, regulating the securities industry, and ensuring that investors are provided with... Read more

Securities Offering

Securities Offering refers to the process of selling shares or stakes of a real estate investment to investors. These offerings can be public or private and involve the selling of securities, which represent an ownership interest in a real estate project or a pool of real estate assets. Here’s a... Read more

Seniority

Seniority, within the context of a Delaware Statutory Trust (DST) industry, refers to the hierarchy or order of claims and interests in the trust’s income and assets. This concept is particularly relevant in scenarios such as the distribution of income or the liquidation of assets, where beneficiaries or interest holders... Read more

Series Trust

A Series Trust is a type of legal entity that offers a unique structure for the pooling and management of assets, often used in the investment management and fund industry. The Series Trust allows for the creation of individual series or "cells" within a single trust entity, each operating as... Read more

Special Purpose Acquisition Company (SPAC)

A Special Purpose Acquisition Company (SPAC) is a company with no commercial operations, formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company, specifically in the real estate sector. Here’s a more detailed breakdown: Formation and IPO Formation: SPACs are formed... Read more

Special Purpose Vehicle (SPV)

A Special Purpose Vehicle (SPV), also known as a Special Purpose Entity (SPE) is a legal entity created for a specific objective, such as the ownership, management, and financing of a property or a portfolio of properties. Here’s a more detailed breakdown of the concept of SPV in real estate... Read more

Statutory Trust

A Statutory Trust is a legal entity that allows investors to pool their resources to invest in a portfolio of properties or other real estate-related assets. Statutory Trusts, also known as Delaware Statutory Trusts (DSTs), are particularly popular in the United States and are governed by the laws of the... Read more

Subscription Agreement

A subscription agreement serves as a crucial legal document that formalizes an investor’s commitment to purchase shares or interests in these specific investment vehicles. This document plays a pivotal role in the investment process, ensuring that both the investor and the investment sponsor or fund manager are aligned on the... Read more

Successor Trustee

In the Delaware Statutory Trust (DST) industry, a Successor Trustee is an individual or entity appointed to step in and assume the responsibilities and duties of the original or current trustee should they become unable or unwilling to continue serving in that role. The specifics about the roles, powers, and... Read more

Tax Identification Number

Tax Identification Number (TIN) is a unique number assigned by the government tax authority to an individual or an entity for the purpose of tracking tax obligations and payments. In the U.S., for individuals, this can be their Social Security Number (SSN) or for businesses, their Employer Identification Number (EIN). Relevance... Read more

Tax Pass-Through

A Delaware Statutory Trust (DST) is a legally recognized trust that is set up for the purpose of business but is especially popular in the real estate industry. DSTs allow for fractional ownership in property investments, where investors can own a share of the trust itself, which holds assets, often... Read more

Tenant

In the real estate investment industry, a tenant holds significant importance as an occupier of the property, facilitating various aspects of investment outcomes. Tenants occupy and utilize spaces such as residential, commercial, or industrial properties based on the terms laid out in a lease or rental agreement with the landlord... Read more

Termination

A Delaware Statutory Trust (DST) is a legally recognized trust that offers a structure for investment, primarily in real estate, under the laws of Delaware. It's widely used for 1031 exchanges, allowing investors to defer capital gains taxes by reinvesting the proceeds from the sale of investment properties. Regarding the... Read more

Transfer

Transfer refers to the process by which a beneficial interest in the trust is sold or conveyed from one party to another within a Delaware Statutory Trust. This is a flexible type of trust created under Delaware law that can be used for various purposes, including managing investment funds and... Read more

Trust Agreement

A Trust Agreement is a foundational legal document that creates and governs the operation of a Delaware Statutory Trust. The DST is a legally recognized trust set up for the purpose of business, especially investment and finance, and is governed under Delaware state law. Here are the key elements typically... Read more

Trust Assets

Trust assets refer to the various types of property and financial assets that are held and managed within the trust. A DST is a legally recognized trust that is set up under Delaware's statutory law, which allows for the creation of a separate legal entity that can hold investment assets,... Read more

Trust Certificate

A Trust Certificate refers to a document that serves as evidence of an investor's beneficial interest in a DST. A DST is a legally recognized trust that is set up for the purpose of conducting business, including investment in income-producing real estate. Here's a bit more detailed explanation: Delaware Statutory... Read more

Trust Expense

A trust expense typically refers to the costs associated with the administration and operation of the trust itself. Trust expenses in a DST can include a variety of costs, such as: Management Fees: Fees paid to the trustee or to the management company for managing the investment and handling the... Read more

Trust Income

Trust Income generally refers to the income generated by the trust from its holdings and operations, which is then distributed to the beneficiaries or investors. A Delaware Statutory Trust is a legally recognized trust that is set up for the purpose of business investment, especially in real estate. It allows... Read more

Trust Property

A Delaware Statutory Trust (DST) is a legally recognized trust that's set up for the purpose of business, but it's particularly well-known for its use in real estate investment. When you hear the term Trust Property within the context of a Delaware Statutory Trust, it refers to the actual assets... Read more

Trust Protector

A Trust Protector is a relatively modern concept in trust law that provides an additional layer of oversight and control over the trust. While the specific powers and duties of a Trust Protector can vary based on the terms of the trust agreement, generally, the role is designed to ensure... Read more

Trust Term

The Trust Term typically refers to the duration for which the DST is established. Under Delaware statutory law, a DST is governed by the Delaware Statutory Trust Act, which is found in Chapter 38, Part V, Title 12 of the Delaware Code. This act provides the framework for the creation,... Read more

Trustee

In the realm of real estate investments, particularly involving Tenancy in Common (TIC) and Delaware Statutory Trust (DST) structures, as well as 1031 exchanges, the term trustee carries significant responsibilities. The trustee is typically an individual, a corporate entity, or a professional trust company entrusted with holding the legal title... Read more

Valuation

In Delaware Statutory Trusts (DSTs) and Qualified Opportunity Funds (QOFs), valuation refers to the detailed process of assessing and determining the current market value of the assets held within these specific investment structures. Valuation plays a critical role for several reasons: Investor Reporting: Regular and accurate valuations provide investors with... Read more

Voting Trust Certificate

A Voting Trust Certificate is a document that represents the transfer of shareholders' voting rights to trustees. In essence, a voting trust is an arrangement where the shareholders of a company transfer their shares to a trust, and in return, they receive voting trust certificates. These certificates provide evidence of... Read more

Delaware Statutory Trust Glossary