Research guide

Delaware Statutory Trust Fees: How to Find the Full Cost Structure in a PPM

By Sequoia ResearchPublished Read as Markdown

What Is This Article About?

This article shows how to find DST fees in a private placement memorandum, or PPM, and the files that go with it. An invented packet places charges in several sections so you can practice linking them. You will check a closing budget, a cash forecast, a short-term fee waiver, and sale costs. The goal is a clear record of known terms, estimates, and open questions.

Table of Contents

Why the PPM Fee Table Is Only a Starting Point

A PPM compensation table is a good place to begin a DST fee review. It gives you names and rates to trace. It may not answer every question about the amount paid, the time of payment, the party that bears the cost, or a later change in the terms.

The SEC identifies a PPM as one place to find investment product charges. Its fee guidance also points to account documents, fee schedules, Form CRS, and other disclosures for charges tied to the investment relationship. The product file and the account file answer related questions, but they need not contain the same costs. SEC: How Fees and Expenses Affect Your Investment Portfolio

Treat each fee as a record with several fields. Write its name, amount or formula, calculation base, payment date, payer, recipient, and source location. Add any cap, waiver, condition, or reimbursement rule. Then connect each later mention to that record.

This prevents two opposite mistakes. You can overlook a charge buried in an exhibit. You can also count one fee twice because it appears in the compensation table, the forecast, and the contract. Multiple mentions do not necessarily mean multiple payments.

The worked packet in this article is fictional. Its invented issuer is Harbor Junction DST. All amounts, terms, section labels, and page references below were created for teaching. They are not excerpts from an actual offering, standard industry terms, or a review of a real sponsor. A short, separately labeled public-filing example appears later.

“Full cost structure” means locating and describing the relevant charges and cash uses within the reviewed scope. It does not mean every future dollar can be known. A contract can define a fee clearly while leaving its future calculation base uncertain. Record that difference instead of turning an unknown amount into zero.

Identify the Offering and Document Versions

Before searching for fees, confirm which offering you are reading. Record the issuer’s exact name, the interest or class being sold, and the date on the PPM. Match those details to the subscription package. Similar names or a shared sponsor do not establish that two documents apply to the same investment.

Next, inventory the files received. Include the main PPM, amendments, supplements, exhibits, financial forecasts, and relevant account disclosures. Note whether an agreement is signed, a form to be signed later, or a summary of a separate contract. Those are different evidence states.

For a PDF, save both its printed page number and its viewer page number when they differ. A cover, legal opinion, or exhibit can shift the viewer count. “Page 18” may send another reviewer to the wrong place unless you say which page numbering you used.

The fictional Harbor Junction file has an original PPM and a later Supplement S1. The original compensation section states a $75,000 annual asset management fee. S1 gives a limited first-year waiver. Keeping only the original table would miss the waiver. Keeping only the supplement would lose the base fee and later-year terms.

Do not decide which document legally controls by file date alone. Read what the later document changes and what it leaves in force. If the summary and the agreement conflict, identify both passages and request an explanation from the appropriate party. A reviewer’s preferred reading is not an amendment.

The SEC cautions that private-placement documents typically are not reviewed by a regulator and may offer limited disclosure. Receiving a PPM is therefore the start of review, rather than proof that its presentation is complete or balanced. SEC: Private Placements Under Regulation D

Keep a dated copy of the packet you actually reviewed. If a later version changes a cost, preserve the earlier version and explain the change. A replacement file with the same name can otherwise erase the path from the first question to the final answer.

Create a Section-by-Section PPM Reading Map

Use the table of contents to make a reading map, then search the whole document. A fee can be described under a service, a related party, a financing term, or a distribution provision. Searching only for “fee” can miss words such as compensation, reimbursement, allowance, servicing, or expense.

Here is the invented Harbor Junction map. The page codes are teaching labels within this article, not links to an unseen real PPM.

Teaching location Information in the sample packet Question for the reviewer
P1: Offering summary $12 million equity raise and $10 million loan Which figures fund the purchase and costs?
P12: Estimated use of proceeds Property price, closing charges, reserve Do all uses equal all sources?
P18: Compensation Selling, dealer, acquisition, and asset fees What base and recipient apply to each?
P25: Conflicts Related seller and service providers Which parties share ownership or incentives?
P33: Property operations Rent and ordinary expense assumptions Are management costs already included?
P42 and Exhibit C: Debt Loan charges and repayment terms Which charges depend on a later event?
P51: Disposition Sale compensation and other deductions Is a sale fee based on gross price or net cash?
Exhibit B: Management contract Annual fee, timing, increase formula Does it match the compensation summary?
Exhibit D: Forecast Cash available after stated expenses What costs and periods does the forecast include?
Supplement S1 Limited first-year asset-fee waiver When does the waiver end?

A real packet may use other headings or put the same material in a different order. The purpose of the map is to help you locate evidence. It is not a claim that every PPM follows this layout.

Mark each location as read, missing, or needing clarification. “Not found in the files received” is more precise than “there is no fee.” If a summary refers to a contract that was not provided, add that contract to the request list.

Search results also need context. A phrase can appear in a risk factor as a possible future charge, in a table as a budget estimate, and in a contract as a binding formula. Read the surrounding paragraphs and footnotes before assigning a dollar amount to the cost register.

Reconcile the Estimated Use of Proceeds

Start the numerical review with the closing budget. Harbor Junction’s fictional sources total $22 million: $12 million of investor equity and $10 million of loan proceeds. Its base-case estimated uses also total $22 million.

Base-case use Stated calculation or amount Dollars
Property purchase Contract price $20,000,000
Selling commission 5% of $12 million equity $600,000
Dealer manager fee 0.5% of $12 million equity $60,000
Organization and offering expenses Estimated reimbursement $180,000
Acquisition fee 2% of $20 million property price $400,000
Financing fee 1% of $10 million loan $100,000
Other closing costs Estimated outside costs $160,000
Initial cash reserve Funded cash account $500,000
Total uses All listed uses $22,000,000

The budget balances. That is a useful arithmetic check, but it is not proof that the amounts are fair, complete, or final. The organization and closing lines are estimates. The property price and loan amount still need support from the relevant documents.

The six fee and expense lines total $1.5 million. The reserve is another $500,000, and the property price is $20 million. Keeping those categories separate avoids calling every dollar outside the purchase price a fee. A reserve remains cash available for its permitted uses until it is spent, subject to the actual account and loan terms.

For scale, $1.5 million equals 12.5% of the fictional $12 million equity raise. That ratio describes these listed closing fees and expenses relative to equity. It is not a total lifetime cost ratio. It also does not imply that every fee was legally charged on equity; the acquisition and financing formulas use different bases.

Assign a separate ID to each budget line. If the same $400,000 acquisition fee appears in P18 and an exhibit, connect those references to one ID. Do not add another $400,000 simply because the description appears twice.

If sources and uses do not match, stop and identify the gap. A missing reserve, a loan fee netted from proceeds, or a different offering-size assumption can change the reconciliation. Avoid using an unexplained “other” line just to make the totals fit.

Read Compensation Formulas and Payment Paths

The calculation base is part of the fee. Copy it beside the rate. In Harbor Junction, the 2% acquisition fee applies to the $20 million property price. Using the $12 million equity amount instead would produce $240,000 rather than $400,000. The $160,000 difference comes entirely from the wrong base.

The financing fee uses the $10 million loan amount. Its 1% rate therefore produces $100,000. Adding the rates 5%, 0.5%, 2%, and 1% would not give a meaningful combined percentage because the bases differ. Convert them to dollars under a stated scenario first.

Then trace the payment route. Assume the invented selling commission is paid to the dealer manager and passed to the selling firm. The pass-through is the same $600,000 moving between firms. It is not a second $600,000 charge to the trust. The separate $60,000 dealer manager fee remains its own budget line.

A cost register should show both facts: the trust’s economic charge and the recipient chain. That helps the reader see compensation and possible incentives without inflating total costs. It also avoids describing every recipient as if it were the investor’s own adviser.

Pay attention to limiting words. “Up to” can describe a maximum. “Estimated” describes a budget assumption. A fixed dollar fee is different from an expense reimbursement supported by bills. None of those labels can safely be replaced with “actual paid” before you have payment evidence.

If a fee is reduced for a certain purchase route or investor class, record the conditions. Ask whether the reduction lowers the purchase price, increases the interest received, leaves more cash in the trust, or benefits another party. A smaller payment to one intermediary does not by itself tell you who receives the economic benefit.

FINRA tells covered member firms to review material issuer claims and deals with related parties. It also calls for care when relying on work done by others. This article’s register can help sort the evidence. A firm still has its full review duties, and those duties do not apply to every reader. FINRA: Regulatory Notice 23-08

Follow Reimbursements, Caps, and Affiliate Transactions

An expense reimbursement needs more detail than a rate. Identify which expenses qualify, who first pays them, who can approve repayment, and whether a limit applies. A budget estimate and a contractual cap answer different questions.

In the teaching packet, organization and offering expenses are estimated at $180,000. The fictional terms permit reimbursement up to $240,000. They allow the extra amount within that cap to come from the initial reserve, and state that the sponsor bears expenses above the cap. These are invented terms for this exercise, not assumptions to apply to another offering.

If actual eligible costs reach $240,000, the extra $60,000 reduces the modeled reserve from $500,000 to $440,000. Total sources stay $22 million. Listed closing fees and expenses rise from $1.5 million to $1.56 million, while the property price stays unchanged. The shift still balances the budget.

That cap does not limit every cost in the offering. It applies to this stated reimbursement category. Nor does the sponsor’s promise to bear an excess prove its ability to pay. Record the promise and review any supporting evidence without treating it as cash already received.

P25 adds another fictional fact: the property seller is an affiliate that previously bought the property for $19.6 million. The trust’s purchase price is $20 million. The $400,000 difference deserves a price bridge explaining the earlier transaction, holding period, work, costs, and sale terms.

Do not automatically label that whole difference a fee or profit. The two prices alone do not establish the seller’s net result. Also do not add the $400,000 difference on top of the $20 million purchase price. The difference is already inside that price.

The separate $400,000 acquisition fee is a different line. The two amounts happen to match, but they describe different things. One is a stated charge for a service. The other is a price difference in a deal with a related seller. That price gap still needs an explanation.

This makes the request more useful. Ask for a price bridge and the records behind it. A broad question about “hidden fees” may get a broad answer. The specific price gap could remain unexplained.

Connect Management Contracts to the Cash Forecast

Next, follow recurring charges into the operating model. A fee can be real even when no separate bill arrives in the investor’s mailbox. It may be paid by the property or trust before cash becomes available for distributions.

Harbor Junction’s original forecast assumes the property collects $2 million a year. Routine property costs total $700,000. That sum includes a property management fee of 3% of cash collected, or $60,000. The other routine costs total $640,000.

Subtract the $700,000 once. This leaves $1.3 million before the separate asset management fee and trust costs. Subtracting another $60,000 from that amount would charge the property management fee twice.

Exhibit B states a separate $75,000 annual asset management fee. The forecast also includes $30,000 of trust reporting and legal expenses, $600,000 of debt interest, and a $100,000 addition to reserves. For this example, the stated $10 million loan is interest-only at 6% during the modeled year. No principal payment is assumed in that year.

Original full-year forecast step Dollars remaining
Collected property revenue $2,000,000
After $700,000 ordinary property expenses $1,300,000
After $75,000 asset management fee $1,225,000
After $30,000 trust expenses $1,195,000
After $600,000 debt interest $595,000
After $100,000 reserve funding $495,000

This $495,000 is the original model’s cash available under its stated assumptions. It is not an actual distribution or a promise that the trust will pay that amount. A real forecast may contain other cash restrictions, expenses, or timing effects.

Read each contract’s definition of its revenue base. Gross billed rent, cash collected, and revenue after certain deductions can differ. Check whether reimbursements, late fees, or other receipts are included. The teaching model uses collected revenue simply to make its base clear.

Some offerings also place a master tenant between the property and the trust. If that structure exists, follow cash through each entity’s contract and expense obligations. Do not combine a property-level forecast with trust-level rent as if both were separate income. Harbor Junction’s simplified teaching model has no such intermediate layer.

The point of this reading pass is to connect contract terms to the forecast lines that use them. Mark each charge as included, excluded, or unclear. A forecast that looks reasonable in total can still use the wrong base, omit a fee increase, or subtract a charge twice.

Check Fee Waivers, Supplements, and Expiration Dates

Now read Supplement S1 alongside Exhibit B. The fictional supplement waives $25,000 of the first full operating year’s asset management fee. The original $75,000 charge therefore becomes $50,000 for that year. No other first-year assumption changes in this example.

The updated cash available is $520,000: the original $495,000 plus the $25,000 waiver. If a revised forecast already shows $520,000, do not add the waiver again. It is one reduction in one charge.

The teaching contract also raises the unwaived base fee by 3% at each full operating-year anniversary. The waiver ends after year one. The year-two charge is therefore $77,250, calculated as $75,000 multiplied by 1.03. It is not $51,500 based on the temporary $50,000 payment.

Keeping all other annual forecast inputs unchanged, year-two cash available becomes $492,750. The difference from the waived first year is $27,250. That consists of the $25,000 waiver ending plus the $2,250 increase in the base fee.

For year three, the stated formula produces a $79,567.50 asset fee. With the same other assumptions, cash available is $490,432.50. These are controlled teaching calculations. They do not predict flat rent, flat other expenses, or any actual investment’s cash flows.

This sequence shows why “the asset fee is $50,000” would be incomplete. The accurate record needs the original base, waiver amount, period covered, expiration, and increase formula. It also needs the documents that establish each term.

Ask how a waiver can end or change. Is it automatic, subject to an event, or within a party’s discretion? Is a deferred charge later payable, or permanently forgiven? Do not treat a postponed fee as eliminated. Do not assume a lower current payment lasts through the holding period.

When a supplement changes one term, reread the dependent forecast lines. A correction can affect the payment estimate without changing the property’s rent or expenses. Preserve that link in the review record so a later reader can explain why the cash projection changed.

Find Loan and Exit Costs Outside the Fee Summary

Financing costs can appear in the loan section, a debt exhibit, the closing budget, or a repayment provision. Search for origination, lender costs, prepayment, defeasance, extension, release, and assumption. The presence of a term in a document is a prompt to read its conditions, not proof that the charge will occur.

Harbor Junction’s $100,000 financing fee is already in the initial budget. If the lender deducts it from loan proceeds rather than receiving a separate check, the funding presentation changes. The economic cost does not disappear. Reconcile gross loan proceeds, cash received, and listed uses before adding anything.

For later loan charges, record the trigger and formula. A prepayment amount may depend on the sale date or other inputs. If those inputs are unknown, preserve the formula and leave the amount unresolved. Calling an unknown contingent cost zero would make the exit estimate look more precise than it is.

The fictional P51 sale provision has two separate charges with no offset between them: a 1.5% outside sales commission and a 0.75% sponsor disposition fee, both based on gross sale price. Assume a future $25 million sale solely to demonstrate the formulas.

The sales commission would be $375,000. The disposition fee would be $187,500. They total $562,500, or 2.25% of this assumed sale price. Adding their rates works here because the stated bases and event match; that was not true of all the initial fees.

Assume another $100,000 of sale closing costs and a $10 million debt payoff. Subtracting those specified amounts from $25 million leaves $14,337,500. This is a partial exit subtotal before any unmodeled loan charge, other liability, reserve balance, or investor tax. It is not a complete net-sale forecast or an investment return.

Check whether the sale fee applies to the planned deal. Selling a property is different from selling an ownership interest. Another form of exit may have its own terms. The teaching example uses a property sale. Read the contract before carrying that fee into a different exit plan.

Finally, search for offsets and combined limits. If one payment reduces another, show the relationship. If the documents are unclear, retain both stated charges and flag the unresolved overlap. Do not silently assume either that they always add together or that one automatically replaces the other.

Use a Current Filing Without Treating It as the Whole PPM

A public contract can show why precise scope matters. It can also leave parts of a particular offering’s costs outside the reviewed file. The following bounded example is separate from the invented Harbor Junction figures.

Blue Owl’s June 26, 2026 Second Amended and Restated DST Dealer Manager Agreement addresses different offering groups. Section 4.1 gives a 7% upfront-load ceiling for Exchange I and a 6% ceiling, or a lower applicable PPM amount, for later offerings. Section 4.3.1 sets a 0.25% annual DST servicing fee, but uses different bases: the offering amount for Exchange I, versus that amount net of upfront load and expense reimbursement for later offerings. Section 4.5.2 directs the reader to the applicable PPM for the later-offering expense reimbursement. These are terms of the dated agreement, not verified charges to a particular investor or the whole cost of an offering. Blue Owl: June 26, 2026 DST Dealer Manager Agreement, Sections 4.1–4.5

The lesson is a reading habit. Follow the exact offering group, defined term, and cross-reference. A familiar fee label can retain the same rate while its base changes. A public agreement can help locate the next document without supplying that document’s missing amount.

Do not treat EDGAR availability as approval of the fee or offering. The SEC states that it does not approve offerings. Use the filing as evidence of the document’s contents, with its stated date and scope. SEC: Private Placements Under Regulation D

For an actual purchase, get the current packet for that offering and the investor’s account terms. Check whether a later change or another class alters the term you found. If files or answers are still missing, say so. A review of part of the packet should not sound like a review of the whole file.

Close the Cost Record With Evidence and Open Questions

The finished register should link each charge to the places where it appears. It should separate estimates, formulas, and amounts paid. A single “total fees” number cannot carry all those facts.

For Harbor Junction, the acquisition record would show a $400,000 charge and its 2% property-price base. It would name who gets paid, when payment is due, and where the terms appear in P12 and P18. The related seller’s price gap stays a separate question. The first-year asset fee record links the base contract, S1 waiver, and revised forecast.

Add three status fields: term located, amount calculable, and treatment in the forecast checked. A fee may pass the first test but not the second because a future base is unknown. It may pass both while still needing confirmation that the forecast includes it.

Keep outside account charges in a separate, linked section. The SEC’s fee guidance explains why account and product costs both matter. A cost absent from the PPM may still arise under the investor’s advisory, brokerage, or custody arrangement. SEC: How Fees and Expenses Affect Your Investment Portfolio

End with specific requests. Ask which paragraph sets the offset. Ask which exhibit gives the missing loan formula, or which forecast includes the waiver. Save the answer and its source. A verbal assurance alone may leave the original question open.

The result should let a second reader retrace your work. They should be able to see what was found, how the math was done, what was counted once, and what remains uncertain. That is a more useful fee review than a confident percentage with an unexplained base.

Frequently Asked Questions

Does the compensation table show every DST cost?

It is a starting point. Follow its references into the use-of-proceeds table, operating forecast, related agreements, debt terms, and exit provisions. Also review the investor’s separate account disclosures. If a referenced agreement is missing, record that gap. Absence from the summary table does not establish that no charge exists elsewhere.

Why can I not add all the percentages in a PPM?

They may use different bases, periods, and triggers. A percentage of property price differs from a percentage of equity or collected revenue. Convert each formula to dollars for a defined scenario. Add rates only when their bases and relevant periods match and the terms do not provide an offset or other limit.

Are cash reserves part of the fees?

The teaching budget treats reserves as a separate cash use. Reserved cash may later pay expenses, but funding the reserve and paying a vendor are different entries. Follow the actual account restrictions and planned uses. Counting the reserve as a fee and then counting every payment from it again can overstate costs.

What is the difference between a fee estimate and a cap?

An estimate is the amount assumed in a budget. A cap limits a stated category under specified terms. Actual eligible costs can exceed the estimate while remaining within the cap. Find who funds that difference and who bears any amount above the cap. A cap on one category is not necessarily a cap on total investment costs.

Should I subtract management fees from a forecast again?

Only if the forecast leaves them out and a further deduction fits the model. First trace the fee into the expense lines. In Harbor Junction, the property management fee is already in routine costs. The asset fee is a separate line. Subtracting either twice would make the cash estimate too low. Keep the source that shows where each fee belongs.

Does a first-year waiver reduce fees for the whole holding period?

Only if the written terms say so. Record the covered amount, dates, conditions, and expiration. Also check whether later increases use the original fee or the reduced payment. In the fictional example, the waiver ends after year one and the increase applies to the original base. Another contract could work differently.

Can a public filing replace the offering’s current PPM?

A public filing can support a narrow finding about that document. It may refer to a PPM for amounts, conditions, or classes that it does not fully describe. Match the actual issuer and purchase terms, obtain the relevant current package, and check for amendments. Public availability does not mean the regulator approved the investment or its costs.

About Sequoia Research

Sequoia Research, LLC provides independent research on DSTs and other real estate investment offerings. This educational library helps readers trace source documents, check calculations, and identify unanswered investment questions.

Sources

All Harbor Junction terms, document locations, and numerical scenarios are original teaching material. Sources inspected October 16, 2026.