U.S. investors so far this year have poured over a billion dollars more into shared commercial real estate ownership opportunities than they did during the same period last year.
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Equity raised for Delaware statutory trusts totaled $7.5B as of the end of September, marking a 27% increase from the $5.9B raised through September last year, according to data from Mountain Dell Consulting. AltsWire first reported the news.
The amount of equity raised for DSTs was lower this September, at $357M, than the same month last year, which totaled $461M, Mountain Dell found.
Over the past few years, DSTs have become an increasingly popular way for individuals, especially the aging baby boomer population, to passively invest funds while deferring capital gains taxes. The investment type allows individuals to pool funds into commercial real estate assets and own fractional interests while fund managers take care of the rest on their behalf.
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Because of the surge in popularity, more institutional investors are creating DST platforms to support the demand.
Ares Real Estate Exchange has been the most active sponsor this year, according to Mountain Dell’s September report. The firm has raised just under $1.5B for DSTs, equating to 19.3% of the overall investment activity. Blue Owl Capital and ExchangeRight Real Estate follow in the second and third spots, having raised $626M and $619M, respectively.
Hines Real Estate Exchange, which launched its DST platform in September 2022, has raised $590.6M this year.
The largest share of DST equity raised this year has been for industrial assets. That sector accounts for 39% of all investment. Multifamily makes up 22% of DST equity raised, while retail comes in third at 8%, according to Mountain Dell.
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