INVESTOR'S GUIDE
How DSTs May Help Diversify Your Real Estate Holdings
A free guide to Delaware Statutory Trusts (DSTs): how they let you split one 1031 exchange across multiple property types and regions, plus an updated look at how five real estate sectors are performing right now.
THE DIVERSIFICATION GUIDE
One exchange, spread across multiple properties
Most real estate investors build their portfolio one property at a time, often in the same market and the same asset type. Over time, that pattern can quietly turn into concentration risk: a portfolio that rises and falls with a single sector or a single region. This guide walks through a tool that lets investors correct for that concentration without giving up the tax deferral that made real estate attractive in the first place: the Delaware Statutory Trust, used inside a 1031 exchange.
- Why single asset type portfolios quietly build up concentration risk
- How a DST's typical $100,000 minimum and the IRS's three-property and 200% rules make diversification structural
- An updated look at how multifamily, office, industrial, retail, and hospitality are performing
- Five reasons investors consider identifying a DST, and the trade-offs worth weighing first
- A six-step roadmap for the exchange process, from preparation to reporting
A 2026 SECTOR SNAPSHOT
No single sector wins every cycle.
Five major commercial sectors, five different stories right now: a snapshot pulled from inside the guide.
INDUSTRIAL
~250M sf
Q1 leasing activity, up roughly 14% year over year, with a full-year forecast approaching 1 billion square feet.
COMMERCIAL RETAIL
4.9%
Q1 availability, the tightest of the five sectors, with asking rents up about 2.4% year over year.
MULTIFAMILY
Absorbing
A wave of 2024 to 2025 supply is still being worked through as construction starts slow sharply, though some Sun Belt and Midwest metros remain oversupplied.
COMMERCIAL OFFICE
18.6%
Overall Q1 vacancy, easing from recent highs, though prime buildings tighten further to roughly 12.7% while older stock lags.
HOSPITALITY
Moderating
RevPAR (revenue per available room) growth has cooled from post-pandemic highs as travel patterns normalize and short-term rental supply competes for guests.
Yesterday's underperformer is often tomorrow's leader. Sector rotation is notoriously difficult to predict.
Figures cited are drawn from CBRE and other third-party sources referenced inside the guide and reflect conditions as of the first quarter, unless noted otherwise. They are historical or forecast data points, not guarantees of future performance. Sources and full context are in the guide.
INSIDE THE GUIDE
What's covered, in five sections
Written to be read start to finish or used as a reference while you're deciding how to diversify your exchange.
The Diversification Problem
Why single asset type portfolios carry more cyclical risk than most investors realize, and how that risk shows up across market downturns.
How DSTs Make Diversification Structural
The typical $100,000 minimum, the IRS's three-property and 200% rules, and how they let one exchange fund several DSTs.
A 2026 Sector Snapshot
A current look at how multifamily, office, industrial, retail, and hospitality are each performing, and why they rarely move together.
Five Reasons to Consider a DST, and What to Weigh
The compelling reasons investors identify a DST for their exchange, alongside the trade-offs worth reviewing with your CPA and attorney.
The KNPRE Roadmap
The same six steps apply either way: prepare, engage a QI, sell, identify, close or invest, and report.
FREE DOWNLOAD
Get the guide before your next decision
Whether a sale is already on the table or you're planning years out, this is the reference to read before you decide how to reinvest your exchange proceeds.
+1 (212) 575-2152 · invest@knpre.com · New York | Los Angeles
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1031 Risk Disclosure:
• There is no guarantee that any strategy will be successful or achieve investment objectives;
• Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
• Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
• Potential for foreclosure – All financed real estate investments have potential for foreclosure;
• Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.
• Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
• Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits.
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