| There are various legal entities that have been set into | | | | borrower. Under the TIC: Delaware Statutory Trust |
| place over the years, one in particular being the TIC: | | | | (DST), the creditors of any beneficial holder will not |
| Delaware Statutory Trust (DST). This is a separate | | | | have any rights to property that comprises the corpus |
| legal entity which was created as a trust under | | | | of the trust. |
| Delaware statutory law. | | | | Risks |
| There are a few guidelines that the TIC: Delaware | | | | Just as there are advantages, there are also certain |
| Statutory Trust (DST) holds, and for one it permits a | | | | possible risks, including the inability of the DST to |
| very flexible approach to the design and operation of | | | | actively manage the property, inability to refinance at |
| these entities. | | | | the end of a loan term, and the risk that the IRS |
| There are also a few restrictions held by the TIC: | | | | challenges or denies the 1031 tax treatment for this |
| Delaware Statutory Trust (DST), including that the | | | | structure. |
| trustee cannot renegotiate the terms of the existing | | | | These risks need to be addressed properly, and there |
| loans and cannot borrow any new funds from any | | | | are ways to get around every risk, but any lender will |
| party. They are also limited to making capital | | | | need to be very careful here and make sure that they |
| expenditures with respect to the property. | | | | are going about it properly. It is also important that the |
| Structure | | | | lender keep in mind the fact that these requirements |
| One of the most important aspects to the TIC: | | | | are really only basic guidelines and centerline must |
| Delaware Statutory Trust (DST) is its structure. Some | | | | review in detail the structure of each loan to a DST |
| people at first considered that the structure was only | | | | prior to accepting such loan into any of its pools, not |
| going to be appropriate with single tenant, leased | | | | only to ensure their own safety but the safety of the |
| properties, but now its use has been expanded to | | | | lender as well. |
| include a great deal more. It now includes offerings that | | | | For more information on this, you can use the Internet |
| involve a portfolio of multi-tenant properties. | | | | or you can speak to a tax preparer or other |
| Advantages | | | | experienced tax consultant, who will be able to discuss |
| There are certain advantages that the lender of this | | | | the details with you and help you become clearer on |
| trust would receive, including that they have only one | | | | the issue at hand. |