Choosing a real estate exchange strategy involves more than evaluating its potential tax benefits. Investors’ income needs, liquidity expectations, investment timelines, and desire for future flexibility also shape the decision.
In “A Call for Choice in Real Estate Exchange Strategies,” Matthew Fries, CEO & President of Inland Real Estate Investment Corporation, examines traditional 1031 Delaware statutory trust (DST) investments alongside DSTs structured with a potential future 721 exchange into a real estate investment trust’s operating partnership.
Fries argues that the conversation should begin with investor objectives and include an evaluation of both approaches. His perspective recognizes potential benefits of 721 exchange strategies while explaining why traditional 1031 DSTs remain relevant to investors seeking continued exchange flexibility and visibility into specific real estate investments.
Matching the Structure to the Investor
The piece discusses differences in ownership structure, future exchange options, liquidity limitations, tax reporting, and investment decision-making. Fries also emphasizes that a potential future 721 exchange is not assured and that redemption features should not be treated as guaranteed access to capital.
Read Inland’s full perspective for its comparison of the strategies, investor considerations, and accompanying disclosures.
Read Matthew Fries’s Full Perspective (PDF) →
Source: Matthew Fries, Inland Real Estate Investment Corporation, “A Call for Choice in Real Estate Exchange Strategies.” This contributed perspective reflects the views of Inland Investments and does not constitute a Blue Vault recommendation. The introductory summary is provided by Blue Vault; the linked document contains the contributor’s full discussion and disclosures. This content is informational and educational and does not constitute investment, tax, or legal advice or an offer to buy or sell securities. Investments in DSTs involve significant risk, including illiquidity and potential loss of the entire investment. Past performance does not guarantee future results.
