THE STRUCTURE OF THE EXIT OPTION IS PARAMOUNT.
Is the 721 UPREIT conversion mandatory, or do investors have a choice? Q: A: This is one of the most important and often overlooked questions. The structure of the exit option is paramount. In many DST offerings with a 721 UPREIT provision, the conversion is forced or automatic upon maturity. Investors are funneled into the UPREIT regardless of their individual circumstances, current performance of the REIT, or market conditions. This loss of optionality means ceding control of a significant financial decision and in many cases, a vast majority of an investor’s net worth. At Kay Properties, we advocate strongly for investors to seek DST offerings that provide a fully optional 721 UPREIT path. True optionality means that at the DST’s maturity, the investor has a clear choice among typically three paths: participate in the 721 UPREIT exchange, execute a new 1031 exchange into another property, or cash out and pay the applicable taxes. This control allows the investor to make a decision aligned with their current financial goals, tax situation, and assessment of the UPREIT opportunity at that future date. Choosing a sponsor that provides this optionality is a fundamental aspect of investor protection and strategic flexibility. CONCLUSION & HOW TO GET THE BOOK The 721 Exchange UPREIT is a powerful, complex tool in the sophisticated investor’s toolkit. Like any powerful tool, it requires proper knowledge and caution to use effectively. Dwight Kay’s book is designed to provide that essential understanding, arming investors with the questions to ask and the pitfalls to avoid. Investors, advisors, and real estate professionals can receive a complimentary copy of “721 Exchange UPREITs – What Investors Need to Know BEFORE Investing” by visiting https://721exchangeupreit.com.
* https://altswire.com/dst-sales-up-40-year-over-year-2025-on-pace-for-best-year-since-2022/ **Diversification does not guarantee profits or protects against losses.
Disclaimer: This material is for informational purposes only and is not to be construed as tax, legal, or investment advice. All real estate and DST investments involve risk, including the potential loss of principal. Investors must consult with their own qualified tax and legal advisors prior to making any investment decision. Securities offered through FNEX Capital, member FINRA, SIPC.
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