Zero Coupon DSTs are highly leveraged and, by design, will produce no cash flow. An investment in the Trust may be appropriate for those seeking to acquire a large amount of property, with a small amount of equity, in order to complete a 1031 exchange. To meet IRS rules and accomplish a successful 1031 exchange, the exchanger must purchase an equal amount or greater amount of replacement property to avoid taxes on their original sale.
Through an investment in the highly leveraged Property, investors have the opportunity to purchase a large amount of real estate through the in-place loan and benefit from the self-amortizing structure over the ownership of this investment. As the loan amortizes, investors are afforded the opportunity to grow their equity positions though the life of the investment.
* An investment in the interests of the Zero Coupon 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.