NexPoint is an experienced sponsor of 1031 exchanges structured through Delaware Statutory Trusts (DSTs). These programs enable investors to defer capital-gains taxes on real estate sales by reinvesting the proceeds in “like-kind” properties.
As an experienced DST/1031 exchange sponsor, NexPoint channels our wide-ranging real estate capabilities into investment solutions that can offer tax advantages and other potential benefits.
1031 exchange programs enable real estate investors to defer the capital gains tax on the sale of real estate assets by reinvesting the proceeds in a “like-kind” property.
These transactions are named for Section 1031 of the Internal Revenue Code, which states that “[n]o gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.”
1031 exchanges can be structured through Delaware Statutory Trusts (DSTs), investment vehicles that are used to hold commercial real estate assets. DSTs can offer accredited investors an effective real estate investment solution with a number of potential benefits.
Contact the NexPoint Sales Desk to learn more about DST/1031 exchanges.
NexPoint Sales Desk
The Private Placement Memorandum contains more complete information regarding the investment including the following risk factors:
- There will be no public market for the interests.
- There is no specified time that the investment will be liquidated.
- Delaware Statutory Trusts are a relatively new vehicle for real estate investment and are inflexible vehicles to own real property.
- Investors will have no voting rights and will have no control over management of the trust or the Property.
- There is no guarantee that investors will receive any return.
- Distributions are not guaranteed and may be sourced from non-income items and constitute a return of capital.
- The Property will be subject to a Master Lease Agreement with an affiliate of NexPoint Real Estate Advisors IV, L.P.
- The Property will be subject to the risks generally associated with the acquisition, ownership and operation of real estate including, without limitation, environmental concerns, competition, occupancy, easements and restrictions and other real estate related risks.
- The Property will be leveraged.
- The manager of the trust, the master tenant and their affiliates will receive substantial compensation in connection with the offering and in connection with the ongoing management and operation of the Property.
- The Manager and its affiliates are subject to conflicts of interest between their activities, roles and duties for other entities and the activities, roles and duties they have assumed on behalf of the Trust. Conflicts exist in allocating management time, services and functions between their current and future activities and the Trust. None of the arrangements or agreements described, including those relating to the purchase price of the Properties or compensation, is the result of arm’s length negotiations. See “Conflicts of Interest.” An investment in the interests involves certain tax risks.
- Accredited investor use only.
There can be no assurance that the investment objectives described herein will be achieved. Investment in securities sponsored by NexPoint Real Estate Advisors IV, L.P. is subject to substantial risks and may result in the loss of principal invested. Refer to the applicable PPM for a more detailed discussion of risks and suitability standards.
The views and opinions expressed are for informational purposes only as of the date of this material and are subject to change at any time. This material is not a recommendation, offer or solicitation to buy or sell any securities or engage in any particular investment strategy and should not be considered specific legal, investment or tax advice.
These risks include:
- Absence of a public market for the securities;
- Limited operating history and lack of substantial assets of the advisor;
- Limited transferability and lack of liquidity;
- No assurance of when distributions will be made or that any particular rate of distribution will be maintained;
- No assurance that the disposition of property will allow for the repayment of outstanding indebtedness;
- Reliance on an advisor;
- Payment of significant fees to the advisor and its affiliates;
- Limited powers of the advisor with respect to the properties;
- Potential conflicts of interest;
- Risk that a prospective purchase may not be consummated;
- Risk typically associated with real estate and real-estate-related debt securities;
- Risk of inability of a tenant in a single-tenant property to pay rent or otherwise comply with its obligations;
- Risks related to retaining tenants and/or re-leasing properties;
- Risk that a program’s operating results will be adversely affected by economic and regulatory changes;
- Risk that program securities will not be treated as interests in real estate for federal income tax purposes;
- Risk that the closing of a purchase may be delayed and may not satisfy the timeliness requirements of Internal Revenue Code Section 1031; and
- Risk that a program will not achieve all of its objectives if it does not fully complete its securities offering.
- These risks may impact a sponsored investment program’s financial condition, operating results, returns to its investors and ability to make distributions as stated in the applicable
- CAUTION: Although significant due diligence may be performed by Sponsors, Lenders, Third Party Consultants, Appraisers, Broker Dealers and Securities Professionals, it does not ensure that the investment will perform as projected. There may be issues that are not discovered through due diligence prior to a purchasers acquisition of an investment, or after such acquisition, which may cause the purchaser to incur losses up to, and including, the entire investment.
- We do not provide tax advice. Please consult your tax professional.