Frequently Asked Questions.
SECTION 1: DST BASICS
What is a DST?
A Delaware Statutory Trust (DST) is a legal entity that holds title to real estate, allowing multiple investors to own fractional "beneficial interests" in institutional-grade properties. DSTs qualify as replacement property for 1031 exchanges, enabling investors to defer capital gains taxes while transitioning from active property ownership to passive real estate investment.
How does a DST qualify for 1031 exchange?
DSTs are structured to comply with IRS Revenue Ruling 2004-86, which establishes requirements for DST interests to be treated as direct property ownership for 1031 exchange purposes. Medalist DSTs are designed to meet all IRS requirements for 1031 qualification.
What types of properties do Medalist DSTs hold?
We focus exclusively on single-tenant, net-leased properties with investment-grade tenants rated BBB+ or better by S&P. Examples include automotive service centers, healthcare facilities, essential retail, and other necessity-based businesses with long-term leases.
What does "net lease" mean?
In a net lease (often called NNN or triple-net), the tenant pays most or all property expenses including real estate taxes, insurance, and maintenance. This structure provides predictable income for investors with minimal landlord responsibilities.
Is a DST the same as owning property directly?
For tax purposes, yes. The IRS treats DST beneficial interests as direct ownership of real estate. However, DST investors are passive — you receive income without management responsibilities, but you also cannot make decisions about the property.
SECTION 2: 1031 EXCHANGE PROCESS
What are the 1031 exchange deadlines?
You have 45 days from your property sale closing to identify replacement property in writing. You must complete your exchange within 180 days of your sale closing. These deadlines are strict and cannot be extended for any reason.
Do I need a Qualified Intermediary?
Yes. A Qualified Intermediary (QI) must hold your sale proceeds. You cannot touch the funds directly or deposit them in your own account, or your 1031 exchange will be disqualified. Engage your QI before your property sale closes.
Can I invest only part of my proceeds in a DST?
Yes. You can invest a portion of your proceeds in a DST and use the remainder for another replacement property, another DST, or take cash (with taxes due on the cash portion).
Can I invest in multiple DSTs with one exchange?
Yes. Many investors split their proceeds across multiple DST offerings for diversification across properties, tenants, and geographic locations.
What if I can't find a replacement property in time?
This is exactly why many investors choose DSTs. Unlike direct property purchases, DST interests are readily available and can be identified and closed within your 1031 deadlines without the complications of property negotiations, inspections, and financing.
I already have a Qualified Intermediary. Can I still invest?
Yes. Your existing QI can transfer funds directly to the DST at closing. We work with all qualified intermediaries.
SECTION 3: INVESTMENT DETAILS
Who can invest in a Medalist DST?
Accredited investors only, per SEC requirements. Generally this means $200,000 annual income ($300,000 joint with spouse) for the past two years, OR $1 million net worth excluding your primary residence. A suitability review is required before investment.
What is the minimum investment?
Minimum investment details are provided in the offering materials upon qualification. Contact us to request current offering information.
How do I receive income from my DST investment?
Distributions are deposited directly to your bank account, typically on a monthly basis. The amount depends on property income after expenses and debt service.
Are distributions guaranteed?
No. Distributions depend on the tenant paying rent and are not guaranteed. However, Medalist focuses on investment-grade tenants with strong credit ratings to minimize this risk.
What fees are involved?
All fees are fully disclosed in the Private Placement Memorandum (PPM). Typical fees include acquisition fees, ongoing asset management fees, and disposition fees at sale. There are no hidden costs — review the PPM for complete fee disclosure.
Do I have any responsibilities as a DST investor?
No. DST investment is completely passive. Medalist handles all property management, tenant relations, accounting, and reporting. Your only responsibility is receiving distributions and annual tax documents.
Will I receive tax documents?
Yes. You will receive a Schedule K-1 annually for your tax reporting. DST ownership may create tax filing requirements in the state where the property is located.
SECTION 4: EXIT OPTIONS
What happens when the DST property sells?
When the property sells, typically after 5-7 years, you have several options for your proceeds. You can take cash, complete another 1031 exchange, hold for estate transfer, or potentially pursue a 721 UPREIT conversion.
What are my exit options?
Option 1 — Cash Out: Receive your proportionate share of sale proceeds. Capital gains taxes deferred from your original exchange become due.
Option 2 — 1031 Exchange Again: Roll proceeds into another DST or direct property to continue tax deferral indefinitely.
Option 3 — Estate Transfer: Hold your interests until death. Your heirs may receive a step-up in cost basis, potentially eliminating all deferred capital gains.
Option 4 — 721 UPREIT: Potential future opportunity to convert DST interests into REIT operating partnership units, continuing tax deferral with added diversification and liquidity options.*
*721 UPREIT is not guaranteed and is subject to REIT structure, approval, and offering terms.
How long is the typical hold period?
Approximately 5-7 years, depending on the offering. Specific projections are provided in each offering's Private Placement Memorandum.
Can I sell my DST interest early?
DST interests are illiquid investments with no public trading market. You should plan to hold for the full projected hold period. Early exit options are extremely limited.
What is a 721 UPREIT?
A 721 UPREIT is a tax-deferred exchange of real estate (or DST interests) into operating partnership units of a REIT. This allows investors to continue deferring capital gains while gaining diversification across a REIT portfolio and potential access to liquidity. As a NASDAQ-listed REIT, Medalist's long-term strategy includes offering this option to DST investors, though it is not guaranteed.
SECTION 5: WHY MEDALIST
What makes Medalist different from other DST sponsors?
Most DST sponsors are private companies with limited transparency. Medalist Diversified REIT is a NASDAQ-listed public company (ticker: MDRR), which means SEC reporting requirements, audited financial statements, and independent board oversight. We bring institutional-grade transparency to the DST marketplace.
What is FactRight?
FactRight is an independent third-party firm that provides due diligence reports on DST sponsors and offerings. Their reports analyze sponsor financials, track record, offering terms, and property fundamentals. Every Medalist DST offering includes a FactRight report for investor and advisor review.
How can I verify Medalist's financials?
As a public company, our SEC filings are freely available. Visit sec.gov and search for "MDRR" to access our quarterly 10-Q reports, annual 10-K reports, and other public filings. Our financials are audited by Cherry Bekaert LLP.
What is Medalist's investment criteria?
We exclusively target single-tenant, net-leased properties with tenants rated BBB+ or better by S&P. We prioritize credit quality and lease security over yield chasing. Our focus is on essential businesses in strong demographic markets.
How long has Medalist been in business?
Medalist was founded in 2015 and listed on NASDAQ in 2018. We currently manage a portfolio of 10 properties totaling approximately 782,000 square feet at 94% occupancy.
SECTION 6: RISKS
What are the main risks of DST investing?
DST investments involve significant risks including: illiquidity (no public market to sell), reliance on a single tenant, potential loss of principal, real estate market fluctuations, and no guarantee of distributions or projected returns. DSTs are suitable only for accredited investors who do not need liquidity. Review the PPM for complete risk disclosures.
What happens if the tenant stops paying rent?
If the tenant defaults, distributions to investors would be affected. This is why Medalist focuses exclusively on investment-grade tenants with strong credit ratings and long-term leases. However, no investment is without risk.
Is my investment guaranteed?
No. All real estate investments carry risk, including potential loss of principal. Past performance does not guarantee future results. Projected returns are estimates, not guarantees.
Can I lose money?
Yes. Like any real estate investment, you can lose some or all of your investment. Property values can decline, tenants can default, and market conditions can change. Only invest capital you can afford to hold long-term.
SECTION 7: FOR FINANCIAL ADVISORS
How do advisors access Medalist DST offerings?
Through your broker-dealer or RIA. We work with Realta Wealth (Member FINRA/SIPC) as our broker-dealer of record. Your firm can also establish a selling agreement to access our offerings.
What due diligence materials are available?
FactRight due diligence reports, Private Placement Memorandum (PPM), audited sponsor financials (public SEC filings), property appraisals, environmental reports, and financial projections.
Can I speak directly with the Medalist team?
Yes. We welcome advisor calls to discuss offerings, answer client questions, and provide educational support. Contact us at Solutions@MedalistREIT.com or (949) 415-6633.
What educational resources do you provide?
We offer client-ready materials, presentation support, and educational content about DSTs, 1031 exchanges, and our offerings. Contact us to request advisor resources.
SECTION 8: GETTING STARTED
How do I learn more about current offerings?
Contact us to request offering materials. You'll need to complete an accreditation acknowledgment before receiving detailed offering information.
What documents will I receive?
Upon qualification, you'll receive access to the Private Placement Memorandum (PPM), subscription agreement, investor suitability questionnaire, property appraisal, environmental reports, and FactRight due diligence report.
How do I contact Medalist?
Email: Solutions@MedalistREIT.com Phone: (949) 415-6633 Website: www.medalistreit.com
I have more questions. Who can help?
Contact our team at Solutions@MedalistREIT.com or call (949) 415-6633. We're happy to answer questions and discuss whether a Medalist DST is appropriate for your situation.
DISCLAIMER TO ADD AT BOTTOM OF FAQ PAGE:
This information is for educational purposes only and does not constitute an offer to sell or solicitation to buy any security. Offers are made only through the Private Placement Memorandum to accredited investors. DST investments are illiquid, involve significant risk including potential loss of principal, and are suitable only for investors who do not require liquidity. Consult your tax and legal advisors before investing. Securities offered through Realta Wealth, Member FINRA/SIPC.
Medalist Diversified REIT (NASDAQ: MDRR) | P.O. Box 8436, Richmond, VA 23226
(949) 415-6633