Real estate investment strategies should be shaped by investor objectives. The exchange marketplace is evolving quickly, and 721 DSTs have become a prominent part of the conversation around tax-advantaged real estate investing. That prominence raises an important question: Are investors being given the opportunity to consider both strategies?
Mountain Dell Consulting counts 53 active sponsors across the marketplace as of September 30, 2026. Twelve of them offer 721 DSTs as the only option for investors, and several of the largest sponsors appear to be focused exclusively on that structure. 721 DST-only programs account for approximately $3.9 billion, or 52 percent, of the $7.5 billion in equity raised through that date.1
A 721 DST offers unique benefits and is a valuable addition to a wealth planning toolkit. It may provide access to a larger, more diversified real estate platform, a passive ownership structure, and the potential for future liquidity.2 It also comes with an important tradeoff. The operating partnership of a real estate investment trust (REIT) holds the option to acquire the DST's properties. If it exercises that option, investors can no longer use their original 1031 capital in a future 1031 exchange.
The traditional 1031 DST plays an important role in the exchange landscape. It offers investors the benefits of property ownership, including visibility into the underlying asset, without day-to-day responsibilities. A key distinction of the traditional 1031 DST is the ability to pursue another 1031 exchange at the end of the DST’s hold period. This flexibility can be valuable for investors focused on long-term tax-deferral, estate planning, and generational wealth planning.
Investors should have the opportunity to decide whether a 721 DST or a 1031 DST is the right strategy for them. Financial professionals and investors deserve the chance to evaluate both traditional 1031 DSTs and 721 DSTs against each investor’s goals.
Inland has shaped its investment solutions around investor objectives for nearly six decades, and offering choice is a natural extension of that commitment. That is why Inland plans to continue offering both traditional 1031 DSTs and 721 DSTs while encouraging balanced evaluation practices across the industry.
My op-ed A Call for Choice in Real Estate Exchange Strategies examines the evolving exchange landscape and the factors financial professionals and investors should consider before choosing either structure.
Read A Call for Choice in Real Estate Exchange Strategies on SQXAlts.
1. Mountain Dell Consulting Report. September 30, 2026. Additional information not contained in the report is provided by Mountain Dell Consulting.
2. Liquidity is not guaranteed, and any redemption program offered by a REIT or its operating partnership is subject to the terms, limitations, and discretion of the entity.
Opinions expressed reflect the current opinions of Inland Real Estate Investment Corporation (Inland Investments) as of the date appearing in the materials only and are based on Inland Investment’s opinions of the current market environment, which is subject to change. The views expressed herein are subject to change based upon economic, real estate and other market conditions. These views should not be relied upon for investment advice. Any forward-looking statements are based on information currently available to us and are subject to a number of known and unknown risks, uncertainties and factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Past performance is not a guarantee of future results. Investors, financial professionals and prospective investors should not rely solely upon the information presented when making an investment decision and should review the most recent offering materials for the applicable investment program. Certain information contained in the materials discusses general market activity, industry or sector trends, or other broadbased economic, market or political conditions and should not be construed as research or investment advice. An investment in a 1031 DST and/or a 721 DST involves significant risk and is suitable only for investors who have adequate financial means, desire a relatively long-term investment and who will not need immediate liquidity for their investment and can afford to lose their entire investment. This communication is not intended as tax advice.
