The Delaware Statutory Trust (DST) is a legally recognized trust created for business purposes, but not necessarily in the US state of Delaware. It can also be referred to as an unincorporated business trust or a UBO.
Delaware statutory funds are created as private management arrangements in which property (real, tangible, and intangible) is owned, managed, administered, invested and/or maintained; or the business or professional activity for profit is carried out by one or more trustees for the benefit of a trustee entitled to a beneficial interest in the trust property.
DST investments are offered as replacement property for accredited investors looking to defer capital gains tax by utilizing the 1031 deferred tax exchange and as purely cash investments for those looking to diversify their property ownership. The ownership structure of DST allows the smallest investor to have a partial interest in large, professionally managed institutional-grade commercial real estate with other investors, not as limited partners but as sole owners within the trust. Each owner receives their percentage share of the cash income, tax credits and possible value of all assets. DSTs offer investors the opportunity to appreciate and depreciate annually (tax protection) and most have a minimum investment of $ 100,000, which allows some investors to benefit from multi-property diversification.
The DST ownership option offers essentially the same benefits and risks that an investor would receive as an owner of a large-scale investment property, but without the responsibility of management. All DST real estate assets are managed by professional investment asset managers and property managers. Previously, only large institutional investors such as life insurance companies, pension funds, real estate investment funds (REITS), university grants and foundations could invest in these properties. Now, as a viable option to exchange 1031 properties for exchange through DST, retail investors have the option of investing in a wide variety of institutional-grade investment property types that they would not otherwise be able to buy individually. DST investments are located throughout the United States. Property types can include multi-family housing estates, office buildings, industrial properties, multi-tenant retail, student housing, assisted housing, self-service warehouses, doctor's offices, single-tenant commercial properties, and more.
Legal and tax implications
Federal Scholarship / 1031
On August 16, 2004, tax bulletin 2004-33 was published with reference to p. Rule. 2004-86. This included the Delaware Statutory Trust which appeared before the Internal Revenue Service (IRS) and the Treasury Department which issued a ruling on the following two issues:  
"[How] is the Delaware Statutory Trust Fund described in Title 12, §§ 3801-3824 classified for federal tax purposes?"  
"The Delaware statutory trust described above is a 301.7701-4(c) investment corporation that will be classified as a trust for federal tax purposes."  
"Can a taxpayer exchange property for shares of a Delaware trust without recognizing a gain or loss under section 1031 of the tax code?"  
"A taxpayer may exchange property for an interest in the Delaware trust described above without recognition of a gain or loss under section 1031 if the other requirements of section 1031 are met."   
These federal government holdings have given a clearer idea that Delaware's statutory trusts are legal entities, independent of their trustees, providing them with limited liability. Additionally, Delaware statutory trusts have been shown to qualify as a trust for federal tax purposes, making them an entity that mitigates the taxation of their trustees.  The second holding company is of the view that the property held by the Delaware Statutory Trust is entitled to use the 1031 exchange without recognizing any gain or loss, provided the following seven restrictions are met: [8 ] 
After the offer closes, existing or new beneficiaries cannot make future DST contributions.
The trustee cannot renegotiate the terms of existing loans or borrow new funds from a party unless the failure to pay the loan results from the bankruptcy or insolvency of the tenant.
The trustee cannot reinvest the proceeds from the sale of his building.
The trustee is limited to making capital expenditures on the property for normal repairs and maintenance, minor non-capital improvements and those required by law.
Reserves or cash held between payment dates may only be invested in short-term debt securities.
All cash, other than necessary reserves, must be allocated on an ongoing basis.
The trustee cannot enter into new leases or renegotiate existing leases, unless there is a need to do so because of the bankruptcy or insolvency of the tenant.