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NNN & DST Investments

Passive Replacement Options After a Sale

Owners who have spent decades running buildings often want to stay invested without staying on call. Triple-net leases and Delaware Statutory Trusts are the two structures most often used to do that, and both can qualify as replacement property in a 1031 exchange.

Income Without Active Management

Owners seeking income without the day-to-day responsibilities of active property management have two routes: a triple-net (NNN) commercial property, where a single tenant carries most of the operating obligations, or a fractional interest in a Delaware Statutory Trust (DST). The Jordan Group works with owners on which route matches the income they need and the control they are prepared to give up.

Neither structure suits every owner, and both trade control for simplicity. That trade is worth examining before a building goes to market rather than after it closes, because an exchange runs on identification and closing windows that leave little room to change direction. The questions worth settling early:

How much income the replacement has to produce, and how dependable it needs to be
Whether you want a single asset you own outright or a diversified fractional interest
How long you intend to hold, and what you expect to happen at the end of that hold
Which advisors (CPA, attorney, qualified intermediary) need to be at the table before the sale closes

NNN and DST, Side by Side

Two structures, two different trades.

Triple-Net (NNN) Properties

A single commercial tenant occupies the building and covers most of the property’s expenses. The owner holds the asset outright and keeps control of it, with far less to manage than an apartment building demands.

Delaware Statutory Trusts

A DST holds fractional interests in professionally managed property, and an interest in one can qualify as replacement property in a 1031 exchange. It is the route owners take when they are finished managing tenants but not finished being invested.

The Trade-Offs

A DST is a securities product with real trade-offs: no operational control, limited liquidity, sponsor fees. Those belong in a conversation with your tax and investment advisors alongside the sale, not in a decision made at the end of an identification window.

Case Study

Transforming Income with a 1031 Exchange

Deal facts: Transforming Income with a 1031 Exchange
Location	7 Units, West Hollywood, CA
Sold For	$2,050,000
Exchanged Into	Double Net, DaVita Kidney Care, Manitowoc, WI
Acquired For	$1,780,000
Net Operating Income Growth	$53,806 → $113,391 (111% Increase!)

Challenge

The seller owned a rent-controlled property for over 30 years and wanted to exit rent control without paying capital gains taxes all while increasing their cash flow.

Solution

We facilitated a seamless 1031 Exchange into an NNN medical office property, doubling the client’s Net Operating Income (NOI). Our strategy ensured maximum value and minimized tax liability, providing a highly profitable investment alternative.

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