Research guide

Top DST Sponsors for 1031 Exchanges (2026): What to Compare About Debt, Equity, and Minimum Investments

By Sequoia ResearchPublished Read as Markdown

What Is This Article About?

This guide explains how to compare loans and purchase terms for DST offerings from different sponsors. It shows how your cash, the trust's equity, its debt, and its minimum purchase amount fit together. Dated sources and invented examples show where the math can go wrong. You will learn what to request and what to ask your tax and investment team.

Table of Contents

Compare Offerings Before Comparing Sponsor Names

A sponsor name does not give you a debt ratio or a minimum purchase amount. One firm can offer several trusts with different loans, property types, cash needs, and investor terms. Start with the exact legal name of each offering. Then attach each figure to that offering and to a dated document.

The phrase top DST sponsors for 1031 exchanges can suggest that one company belongs at the top of every list. Financing does not work that way. A program that offers the debt exposure one investor seeks may be a poor match for another person's cash needs or risk limits. This guide provides a comparison method, not a sponsor ranking.

First decide what you are trying to compare. Are you checking the amount you can invest? The debt tied to that investment? The property's ability to pay its loan? Or the cash that might come back after a sale? These questions use related figures, but they are not the same calculation.

For each answer, record the source and its limits. A public announcement can identify a program and describe broad terms. The current private placement memorandum, supplements, subscription agreement, and relevant loan records provide a more complete basis for review. A summary should help you find those records, not replace them.

Keep your personal requirements beside the offering facts. Include money needed outside the investment, any maximum exposure you have set, and questions that remain open. Do not let a neat comparison table make an unresolved issue look settled. A blank field should remain a visible question until someone provides support.

What Published Sponsor Materials Show in 2026

Public sources show why the offering name and date matter. The following examples were checked on October 16, 2026. They are selected illustrations, not a survey of all sponsors, a list of available purchases, or evidence that any program fits a particular exchange.

ExchangeRight's September 1, 2026 announcement describes Net-Leased Portfolio 74 DST as a $63.34 million portfolio with $26.75 million of nonrecourse debt and a reported 42.23% loan-to-value ratio. The same page says the offering is closed and is not accepting new investors. Its financing figures may help explain a past structure; they do not establish current purchase capacity. ExchangeRight Portfolio 74 announcement

Capital Square's October 21, 2025 launch notice for CS1031 The Villages at Miami Gardens BFR Housing, DST states a $50,000 minimum. It describes debt of about 54% and a fixed-rate loan with a ten-year term. Those are dated sponsor statements for that named program. The release does not, by itself, confirm today's terms or availability. Capital Square launch notice A later release, dated April 1, 2026, reports that the offering was fully subscribed. Capital Square full-subscription notice

Inland's educational brochure has a current publication date of August 18, 2026. It describes 1031 exchange minimums as often $100,000. That is general guidance, not a binding minimum for every Inland trust. The named offering's current documents are still needed. Inland DST brochure, pages 3 and 6

These sources differ in purpose. One reports a closed offering, one announces a historical launch, and one explains a structure in general terms. Putting their numbers in a table without those labels would hide that difference. None provides a complete, current set of comparable investor-level terms for all three firms.

Use the examples to improve your requests. Ask for the exact program, current minimum, debt assigned per dollar invested, price basis, document date, and confirmation of remaining capacity. A missing answer is a research gap. It is not permission to carry a figure from another program into your comparison.

Separate Equity, Debt, Price, and Total Cost

Your subscription amount is the money you put into the offering. The offering's total equity is the capital raised from its investors under the stated structure. Property debt is a separate funding source. The property purchase price is what the buyer pays for the real estate. Total uses can also include fees, closing costs, and reserves.

Consider a fictional acquisition with a $20 million property price. It also has $1.2 million of fees and other costs and an $800,000 reserve. Total uses equal $22 million. If a $10 million loan and $12 million of investor equity fund those uses, the sources and uses balance at $22 million.

Fictional use or source Amount
Property purchase price $20,000,000
Fees and other costs $1,200,000
Starting reserve $800,000
Total uses $22,000,000
Loan proceeds $10,000,000
Investor equity $12,000,000
Total sources $22,000,000

This does not mean the property is worth $22 million. It means the example uses that much funding. Nor does it mean every cost is a fee paid to the sponsor. The reserve is cash set aside for stated purposes. The cost schedule is needed to identify each payee, purpose, and timing.

Ask whether the equity figure is gross capital raised or a net amount after deductions. If one summary starts with gross equity and another starts after fees, the same label can conceal different math. Do not subtract a fee again if it is already reflected in the amount being used.

Trace each total to its components. If the figures do not balance, ask what is missing before making an investor-level calculation. The gap might reflect a loan held elsewhere, later funding, rounding, a different date, or an error. You cannot tell which explanation applies by forcing the total to work.

Understand the Denominator Behind DST Leverage

A debt percentage needs a denominator: the amount below the line in the fraction. A loan divided by purchase price is different from a loan divided by appraised value or total project funding. Each can describe a real relationship. They should not share a label unless the definition is clear.

In the fictional acquisition above, $10 million of debt divided by the $20 million purchase price equals 50%. Debt divided by $22 million of total funding equals about 45.45%. Neither ratio is debt divided by investor equity. That third ratio is $10 million divided by $12 million, or about 83.33%.

The difference is not a rounding problem. The denominators answer different questions. A reader who uses the 50% price ratio to infer one dollar of debt per dollar of investor equity would overstate the ratio in this example. The actual funding schedule contains costs and reserves that the property price does not include.

For a reported loan-to-value figure, ask what value was used and when it was measured. Is it an appraisal, a purchase price used as a proxy, or another stated basis? Was the loan balance measured at acquisition or later? Keep the original definition beside the figure rather than silently changing it.

A lower reported percentage can reflect a larger denominator rather than less debt. For example, an unchanged $10 million loan would equal 40% of a $25 million value. That does not show a $2 million loan paydown from the earlier 50% example. It shows a different value base. Ask what changed before drawing a risk conclusion.

Use the same dates, property group, and basis when you compare debt ratios. If you cannot match them, keep the figures in separate columns and explain each one. A figure can be precise yet answer the wrong question. Two decimal places do not cure a mismatch in the data.

Check the Debt Amount Assigned to Your Purchase

For exchange planning, an investor often needs a supported debt amount tied to the interest being purchased. Request the offering's stated allocation method and have your tax professional check its use. Do not infer a tax amount from a marketing percentage when the governing calculation has not been confirmed.

In a simple proportional funding model, debt per equity dollar equals total debt divided by total equity. Using the fictional $10 million loan and $12 million equity raise, a $120,000 subscription represents 1% of the equity. Under that model it corresponds to $100,000 of debt. The combined amount is $220,000.

That is a model, not a finding about a real trust. It assumes the stated proportional relationship applies to the investor's class and purchase. It also does not decide what value or liability belongs on an exchange return. Your tax adviser needs the actual documents, costs, liability facts, and transaction history.

Ask how much debt goes with each $100,000 of equity. Request the formula too. That common unit makes figures easier to compare. Still check the minimum and allowed purchase amounts. If you plan to invest $137,500, get the debt figure for that exact amount. The round-number example is only a starting point.

Check whether the figure is estimated or fixed for your closing. Ask what could change it and who will issue the final statement. A revised equity amount, debt balance, offering structure, or allocation method can change the result. Keep the earlier and later versions so your adviser can see the difference.

Ask who borrowed the money and who must repay it. A share of property debt does not, by itself, mean you signed a personal promise to pay. But a limit on your personal duty does not erase the loan. If the borrower defaults, the property and your invested money can still be at risk.

Read DST Minimum Investment Terms Carefully

The minimum is an entry condition. It is not a recommended allocation, a measure of quality, or a statement that the investment is affordable for you. A person may meet the minimum while needing that money for near-term expenses. A small required purchase can still create a large exposure within that person's portfolio.

Ask whether the displayed minimum applies to your purchase route. Does the program distinguish exchange proceeds from a cash purchase? Does a particular class have different terms? Are there additional limits imposed by the selling firm or account provider? Record the answer for the actual route you intend to use.

A minimum and an increment are different. A $100,000 minimum does not tell you whether $125,500 is allowed. A program might accept amounts above the floor subject to its stated terms, or it might require specific increments. Do not assume either approach. Get the rule in writing before building a detailed allocation.

Treat a possible waiver as a request until the right party approves it. Someone may expect an exception, but that is not approval of your exact purchase. Record the terms and any end date. If the request is denied, change the plan. Do not keep the lower amount as though it had been accepted.

There is also a difference between a minimum purchase and the amount left for sale. An offering with a $100,000 minimum may have less than your intended $300,000 allocation available. It may also have conditional reservations ahead of you. A published entry amount does not answer the capacity question.

Finally, ask which costs are included in the subscription and which are separate. Identify the actual cash that must reach each authorized destination. Avoid adding every fee to the subscription amount by default; some are already part of the offering's funding. Your closing team should reconcile the cash instructions with the reviewed documents.

Use Form D Without Treating It as a Live Quote

SEC Form D can help identify reported offering terms. Item 11 concerns the minimum accepted from an outside investor. Its instructions address waivable minimums by asking for the lowest amount below which a waiver would not be granted. Item 13 separates total offering amount, amount sold, and amount remaining. These fields are useful leads, but they are not a personal purchase approval. SEC Form D and instructions

Keep the filing date and any later amendments beside the numbers. The filing rules allow some changes, including sales amounts, without a new amendment. The form is not a live inventory feed. An older remaining amount may differ from what the sponsor can accept today.

An offering of equity interests can own property financed with a loan. The security-type field does not by itself describe the real estate's full funding. Likewise, an equity offering amount does not automatically equal the purchase price of its assets. Use the funding schedule to connect those different levels of information.

When a filing and a summary appear to disagree, first check the legal issuer, date, class, and definition. The discrepancy may be a version issue or a different measurement. Ask for an explanation; do not pick the figure that makes your plan work. The SEC's updated private-placement bulletin also explains the limited public information and resale risks of these offerings. A filing is not an endorsement. SEC private-placement bulletin

Keep a short resolution note. State the two figures, where they came from, what the responsible party explained, and which document controls your next step. If the difference remains unresolved, preserve both figures as a question. That is more useful than hiding the conflict behind one apparently exact number.

Ask About Loan Payments and Cash Coverage

The size of a loan is only one part of its burden. Ask for the interest rate, whether it is fixed or variable, the payment schedule, and whether payments reduce principal. A loan can have interest-only payments for a period and a different schedule later. Use the actual sequence in any cash-flow review.

Consider a fictional $10 million loan at a fixed 6% annual rate with interest-only payments. Annual interest is $600,000. If the property produces $900,000 of net operating income, dividing that income by the debt payment gives 1.50 times coverage. At $750,000 of income, coverage is 1.25 times.

At $540,000 of income, the same payment has 0.90 times coverage. Income falls $60,000 short of the $600,000 debt payment in that simple period. These examples omit other cash needs and do not predict an offering's outcome. They show why a fixed rate does not make the ability to pay fixed.

Ask how the loan documents define income and debt service for any formal coverage test. A lender may use adjustments that differ from a simple investor worksheet. Do not compare a lender-defined figure with an unadjusted calculation as though both measure the same thing. Keep the definition and measurement period attached.

Then trace the cash beyond debt payments. What remains for reserves, repairs, fees, and distributions? A positive amount before those uses is not automatically cash available to investors. Ask whether the distribution plan draws on current operations, reserves, or another stated source. A target payment should not be mistaken for cash already earned.

Use stress cases that explain an actual concern. Lower rent collections, higher operating costs, or the end of an interest-only period can each change available cash. Change one input at a time before combining them. This helps you see what drives the result and avoids a complex model that no one can explain.

Connect Loan Maturity With the Exit Plan

Put the loan maturity date on the same page as the sponsor's expected holding period. A planned sale before maturity is an intention. The maturity is a contractual event subject to the loan's terms. Ask what happens if the property cannot be sold on the expected schedule or at the assumed price.

Do not assume a trustee can get a new loan whenever it would help the plan. Revenue Ruling 2004-86 examines a trust with limited powers, including limits on its debt. The tax result depends on the stated facts and other rules. Have a professional review the actual trust, loan, and any proposed change in structure. IRS Revenue Ruling 2004-86

Ask about any stated extension option. Who can exercise it? What conditions must be met? Is there a fee, a rate change, a paydown, or another requirement? An option with conditions should not be entered into the base plan as an automatic extra year. Record the conditions beside the possible new date.

Review the cost of paying the loan early as well. A sale price alone does not tell you the cash left for investors. The loan payoff may include more than the remaining principal. Ask for a current method of estimating any prepayment cost, and note that the amount may change with timing and market conditions.

A useful exit worksheet separates gross sale price, selling costs, loan principal, other payoff amounts, and the remaining cash. It should also state what has been omitted. A number labeled equity value can look reassuring while hiding a large payoff assumption. Follow the cash through the full sequence before comparing exit estimates.

Compare an All-Cash DST With a Financed DST

Clarify what all-cash means in the specific discussion. It may describe a property acquired without a mortgage. A cash investor, by contrast, may simply mean a person buying outside a 1031 exchange. That person can still invest in a trust whose property has debt. The source of your subscription does not establish the property's financing.

In a simplified property-value example, a $10 million asset with a $6 million loan has $4 million of equity before costs. If the asset value falls to $8 million while the loan stays at $6 million, that equity falls to $2 million. A 20% asset-value decline has produced a 50% equity decline in this model.

For an otherwise identical asset with no debt, value falls from $10 million to $8 million, a 20% decline. This comparison excludes income, expenses, taxes, transaction costs, and changes in the loan. It shows the mechanical effect of fixed debt on residual equity. It is not a forecast or a reason to choose one real offering over another.

A debt-free property can still lose rent, need repairs, face weak demand, or sell for less than expected. A financed property may have a loan schedule that fits its business plan. Compare the whole plan rather than assigning a safe label to one category. The amount of leverage is a risk input, not a complete risk rating.

Also compare what is being financed. Two loans of the same amount can support very different properties and cash flows. A numerical match does not make the tenant base, expenses, reserves, or exit options equal. Use the financing analysis to identify further questions, then connect those questions to the property evidence.

Build a Fictional Multi-Offering Allocation

Suppose an investor reviews three invented programs. This table states the debt per dollar of equity, so the basis is clear. The minimums and purchase amounts are also made up. Assume enough capacity for each planned amount. These are teaching figures, not real terms or a finding about the investor's tax needs.

Fictional program Minimum equity purchase Planned equity Debt per $1 of equity Modeled debt
Pine $100,000 $150,000 $2/3 $100,000
Cedar $100,000 $100,000 $1.50 $150,000
Maple $50,000 $50,000 $0 $0
Total Not a combined minimum $300,000 Not a simple average $250,000

Every planned purchase meets its stated minimum in this example. The debt amounts total $250,000. Equity plus modeled debt totals $550,000. The combined debt share of that funding is $250,000 divided by $550,000, or about 45.45%. It is not the simple average of three reported leverage percentages.

For Pine, debt is 40% of equity plus debt. For Cedar it is 60%; for Maple it is zero. The simple average is about 33.33%, which does not describe the combined funding. Weighting those percentages by equity alone gives 40%, which also differs. The clean approach is to add supported dollar amounts before calculating the combined ratio.

Now suppose Cedar can accept only $75,000, below its stated $100,000 minimum. Do not quietly reduce the line and call the plan complete. The investor needs a confirmed exception or a different plan. Replacing Cedar with more Pine changes the modeled debt as well as the equity allocation. The tax and investment reviews must use the revised numbers.

A lower minimum does not automatically create useful diversification. Two trusts may share a sponsor, tenant, market, or financing risk. More separate subscriptions also mean more records to monitor. Use a separate look-through review to assess those overlaps; the number of rows in this table does not answer that question.

Keep the planned allocation separate from accepted purchases. A row can pass arithmetic and still lack confirmed capacity, firm approval, signatures, or funding. Mark the stage explicitly. This prevents a proposed mix from being mistaken for a completed exchange when it is still being reviewed.

Keep the Tax Review Separate From the Investment Review

The IRS Form 8824 instructions account for cash, other property, liabilities, and exchange expenses in specific ways. Their treatment of net liabilities is more detailed than a slogan about replacing debt. Additional cash can matter, and the full set of facts determines the calculation. Have your tax professional apply the instructions to your exchange. IRS Form 8824 instructions, lines 15–20

Give that professional the relinquished property's closing statement and the proposed replacement records. Ask which figures have been confirmed, which are estimates, and what could change before closing. A personal note saying that you need a certain debt amount is not a substitute for the underlying review.

Then assess investment merit separately. Would the property, cash-flow plan, loan, and fees still make sense if you set aside the desire to finish the exchange? This question does not require you to ignore taxes. It helps reveal when a financing feature is doing all the work in your decision while material property concerns remain unresolved.

For example, an offering might supply the modeled debt amount a worksheet calls for, yet leave the investor with too little cash outside the investment. Another might meet the minimum but concentrate most of the portfolio in one market. A tax calculation cannot resolve those personal and investment concerns by itself.

Ask the people involved to state their role. The sponsor supplies offering information. Your selling professional reviews the recommendation within the applicable relationship. Your tax adviser addresses your tax facts. Your exchange team handles its assigned steps. Clear roles help you identify the right person for an unanswered question instead of assuming one favorable response covers everything.

Prepare a Debt and Equity Comparison Sheet

Build a sheet with one row per exact offering and enough room for source notes. Begin with legal issuer, sponsor, property scope, source date, and current document version. Add your planned equity amount, stated minimum, permitted increments, and confirmed capacity. Keep estimates visibly separate from final figures.

Next list the equity, debt, total uses, and property price. Define each debt ratio. Add the formula used to assign debt to your purchase and name its source. If a figure is missing, say so. Use zero only when the source supports it. Missing loan data is not the same as proof that there is no loan.

For the loan, record borrower, lender, rate type, current payment, amortization changes, maturity, and relevant conditions. For reserves, record starting cash, planned uses, and any restrictions. These fields need supporting records. A detailed-looking sheet built from assumptions can be less useful than a shorter sheet that clearly shows its gaps.

Use a notes column for disagreements. Suppose the public summary says a $100,000 minimum while the reviewed subscription package shows $150,000 for the relevant class. Keep both sources and ask for confirmation of the applicable term. Do not average them, and do not assume the lower amount is available because it appeared online.

Give the sheet a review date and a named owner for each unresolved item. This is a working record, not a scorecard. There is no need to turn missing information into a precise numerical penalty. The useful output is a clear next step: obtain the current schedule, verify the class, resolve the debt basis, or reconsider the allocation.

Resolve Changed Terms Before Committing Funds

A comparison can become stale even when it was accurate when prepared. Before the next commitment, check for supplements, changed capacity, revised minimums, and updated closing figures. Ask whether the facts behind the debt allocation are still the same. The person reviewing your file needs the current version, not just the first document received.

Keep a simple change log with old figure, new figure, source, date, and affected decision. A smaller allocation may alter the debt amount. A revised fee may change net cash. A different property or loan term may call for a fresh risk review. State the effect instead of merely replacing a cell and losing the history.

Recalculate only from supported inputs. If the sponsor confirms equity capacity but not the debt allocation for that amount, mark the second question open. One confirmed field does not validate the others. Ask for a complete updated statement that the relevant professionals can use together.

Explain the final comparison in plain language before you rely on it. How much cash will you commit? How much debt goes with the purchase under the documents? What does the loan require, and what remains unknown? If you need a percentage that no one has defined, return to the source and ask what it means.

Frequently Asked Questions

Does every offering from a DST sponsor have the same minimum?

Do not assume so. Check the exact offering, class, purchase route, and current terms. A broad guide may show a different floor from the one that applies to you. Confirm allowed amounts and remaining capacity too. Having enough money for the minimum does not prove that you qualify or that the purchase fits your needs.

Is a 50% loan-to-value ratio the same as one dollar of debt per equity dollar?

Only under a matching simplified funding relationship. If the value denominator equals debt plus equity, 50% debt implies equal debt and equity. Costs, reserves, a different value basis, or a different date can break that relationship. Use the actual debt and equity schedule rather than inferring it from the percentage alone.

Can a cash investor buy a financed DST?

A cash purchase outside an exchange and a debt-free property describe different things. A person using cash can buy an interest in a trust whose property has a loan, subject to the offering's terms. Confirm both the investor entry rules and the property financing instead of relying on the word cash.

Does nonrecourse debt protect all of my invested money?

No. Read the documents to learn who must repay the loan and what assets secure it. Limits on personal recourse do not stop a property from losing value or missing a payment. Your equity can shrink or be lost. Have your advisers explain the terms, exceptions, and risks.

Can Form D tell me how much capacity is available today?

It provides reported figures as of a filing, subject to its rules and definitions. It is not a live reservation system. Confirm current capacity with the responsible party and obtain the actual purchase terms. Keep the filing as a source record without treating its remaining amount as a promise to accept your subscription.

Should I choose the DST with the lowest debt ratio?

A lower ratio alone does not establish the better investment. First align the definitions and dates. Then review property income, costs, reserves, loan terms, exit assumptions, and your own needs. A debt-free property still has real estate and liquidity risks. A financed property requires careful review of its payment and payoff demands.

Can extra cash make up for lower replacement debt in an exchange?

Cash paid is one of the factors in the IRS rules for net liabilities. Whether a proposed contribution resolves your particular issue depends on the full exchange facts and the applicable tax treatment. Ask your tax adviser to calculate it from the closing and replacement documents. A general debt-ratio worksheet cannot decide the result.

What should I do when two sources show different debt figures?

Check the issuer's legal name, the properties covered, and the date. Then check the loan balance and the value used in the ratio. Ask the source to explain the difference in writing. Keep both records and the answer. Do not pick a figure just because it makes your plan work.

About Sequoia Research

Sequoia Research LLC provides independent research on DSTs and real estate investments. Our educational articles explain how to examine documents, compare claims, and ask informed questions. Examples and research methods do not replace the review of your own tax, legal, and investment circumstances.

Sources

All sources accessed October 16, 2026. Public company descriptions are attributed claims. All other dollar scenarios are fictional teaching examples, not actual offering terms, tax calculations, or forecasts.