DST Fundraising Hits $6.48 Billion Through August 2026: The Data Behind the 1031 Exchange Boom

DST Fundraising Hits $6.48 Billion Through August 2026: The Data Behind the 1031 Exchange Boom

By Jeff Barnes, MBA

TL;DR: Delaware statutory trust (DST) equity fundraising reached approximately $6.48 billion through August 2026, a more than 33% increase from the $4.86 billion raised in the same period of 2025, according to Mountain Dell Consulting as reported by AltsWire on September 8, 2026. The market is on pace to exceed $10 billion for the full year, which would shatter the 2025 annual record of $8.41 billion. This article works through the data on sponsor concentration, property-type dominance, and the four macro forces driving 1031 exchange volume higher — and gives you an honest framework for evaluating whether a DST or TIC offering's fee structure and sponsor track record justify putting your exchange proceeds there.

The Numbers in Full

Mountain Dell Consulting, a Salt Lake City research firm that has tracked the securitized 1031 exchange market since 2003, published August 2026 month-end data that shows the DST market running well ahead of its prior-year pace at every measuring point. The $6.48 billion raised through August is the strongest eight-month total the market has ever recorded. For context, put those figures in sequence. Full-year 2024 DST equity raised was $5.66 billion. 2025 came in at $8.41 billion, a 49% year-over-year increase that exceeded Mountain Dell's own $7.5 billion forecast. The 2026 market surpassed the full-year 2024 total before September started.

Mountain Dell president Taylor Garrett projected $10 billion to $11 billion for 2026 at the start of the year. January 2026 alone brought in $714.8 million, a 13.3% increase from January 2025's $630.8 million, with 55 active sponsors and 92 programs in the market. By August, the cumulative total confirmed the forecast was tracking. August itself clocked $881.1 million, a 10.6% dip from July's $985.1 million. Month-to-month variation is normal. Mountain Dell told AltsWire the market was "linearly on track for $9.8 billion" and anticipated a Q4 acceleration that typically pushes the annual total past mid-year projections.

One structural data point stands out beyond the headline dollars. In 2026, the number of Regulation 506(c) offerings surpassed Regulation 506(b) offerings for the first time in this market's history. Dollars raised still lean toward 506(b), but the shift toward general-solicitation deals signals that sponsors are broadening distribution to more registered investment advisers and wealth managers who verify accredited-investor status before marketing these placements. The practical result: more investors will see DST offerings on their brokerage platforms in the next 12-24 months than at any prior point.

Four Forces Accelerating 1031 Exchange Volume

The 33% year-over-year gain does not happen in isolation. Four forces are pulling capital into DSTs simultaneously.

The aging ownership cohort. The investors who acquired rental properties and commercial buildings in the 1980s, 1990s, and early 2000s are now in their 60s and 70s. They hold highly appreciated assets, face federal capital gains rates as high as 23.8% (including the 3.8% net investment income surtax) on an outright sale, and no longer want active management obligations. A 1031 exchange into a DST converts direct ownership into a passive beneficial interest in institutional-grade real estate with no lease negotiation and no maintenance calls. Mountain Dell's Garrett put it directly: "We are seeing more demand from wealth managers and from an aging investor demographic with highly appreciated real estate assets." This demographic tailwind does not reverse soon.

Transaction volume recovery. Rate shock from 2022 through mid-2024 froze property sales as potential sellers held assets rather than crystallize gains in a thin buyer pool. As the Federal Reserve cut rates in late 2024 and cap rates gradually adjusted, transaction activity recovered. More property sales mean more capital gains events. Every capital gains event creates a potential DST investor facing the 45-day identification clock under Section 1031 of the Internal Revenue Code, and a pre-packaged DST is the most practical way to meet that deadline.

Bonus depreciation restoration. The One Big Beautiful Bill Act reinstated 100% bonus depreciation for qualified property placed in service. Sponsors have begun structuring DST offerings to pass accelerated depreciation benefits through to investors. A DST investor who holds other real estate income can use a large first-year paper loss from bonus depreciation to offset taxable gains. That incentive stacks on top of the exchange deferral, making DSTs attractive not just for exchange reinvestment but as a tax-efficient income component in a broader portfolio.

Institutional sponsorship at scale. DST sponsorship was once dominated by boutique regional firms. Ares Real Estate Exchange, Hines Real Estate Exchange, Blue Owl Real Estate Exchange, and Blackstone Real Estate Exchange now compete directly for investor capital. Institutional balance sheets allow deal sizes that boutique sponsors cannot reach. In August, Blackstone launched BXREX Portfolio II DST seeking $187.3 million for two industrial properties in New Jersey and Pennsylvania. In December 2025, Hines launched HREX 9 DST at $618.4 million, which Mountain Dell called "the largest deal to ever hit the market." Brand recognition also matters in this distribution channel: a wealth manager recommending a $500,000 alternative placement to an accredited client is more comfortable with an Ares or Hines name than a regional firm with ten years of history and no full-cycle exits.

Where Sponsor Capital Is Flowing

As of August 31, 2026, 52 active sponsors offered 97 DST programs, up 11.5% from the 87 programs available a year earlier. Industrial real estate and multifamily dominate: industrial at 33% of all syndicated offerings, multifamily at 23%.

Industrial's lead position reflects what institutional sponsors know about net-lease credit tenants. Industrial buildings leased to investment-grade logistics, fulfillment, and manufacturing operators generate predictable, management-free cash flow that aligns well with the DST's structural constraints. The IRS Revenue Ruling 2004-86, which established the DST as qualified replacement property for 1031 purposes, imposes seven trustee prohibitions that bar the trustee from renegotiating leases, accepting new capital, or refinancing debt mid-hold. A long-term net lease with a single investment-grade tenant reduces the probability that any of those restrictions create a problem during the hold period. Industrial leases routinely run 10-15 years, which can outlast the typical DST hold.

Multifamily holds the second position at 23% because apartment demand in Sun Belt and gateway markets remains structurally strong and because DST investors who want residential exposure without direct landlord responsibility find the structure practical. The honest risk in leveraged multifamily DSTs is exit timing: if cap rates move adversely between acquisition and sale, disposition price may compress below sponsor return projections, particularly when the fixed-rate debt was originated at a different rate environment than the exit market.

The top five sponsors controlled approximately 51% of market share through August: Ares Real Estate Exchange ($1.3 billion, 20.3%), Hines Real Estate Exchange ($590.6 million, 9.1%), Blue Owl Real Estate Exchange ($522.1 million, 8.1%), ExchangeRight Real Estate ($495.5 million, 7.6%), and Inland Private Capital Corporation ($369.7 million, 5.7%). Ares's 20.3% share is notable. The second-place sponsor holds less than half that position, meaning a single firm's underwriting approach and asset management quality shapes more than one-fifth of the entire market's risk profile this year.

Two September Deals That Illustrate the Pace

The aggregate numbers become tangible when you look at what sponsors brought to market this week. On September 9, ExchangeRight Real Estate launched its Essential Income 9 DST, raising $52.85 million. Two days later, on September 11, Time Equities launched a $95.3 million tenant-in-common offering for OCTAVIA, a 465-unit Class A multifamily project under construction in downtown Boynton Beach, Florida, targeting a 5.75% initial annual current return and structured to qualify as replacement property for both Section 1031 and Section 1033 exchanges, as reported by AltsWire on September 11. A TIC offering differs from a DST in that each investor holds a direct fractional deed interest in the underlying property rather than a beneficial interest in a trust. TIC structures qualify for 1031 exchange treatment under IRS Revenue Procedure 2002-22, which limits co-ownership to 35 investors. Other articles in this batch cover each deal in depth. These two transactions in three days total more than $148 million of 1031-eligible equity and are representative of the current deal pace, not exceptional outliers.

What to Evaluate Before You Commit Exchange Proceeds

This could go wrong in specific ways. Rising fundraising volume means more offerings, and more offerings create more room for fee structures and underwriting assumptions that do not serve your interests. Here is the checklist I would run before writing a check.

Total fee load before the first dollar of return. DST offerings typically include an acquisition fee (1-3%), selling commissions paid to the broker-dealer (5-7%), a dealer-manager fee (1-2%), and organizational and offering expenses (1-2%). The combined front-end total can reach 10-13% of invested equity. A 4.5% projected annual distribution looks materially different after a 12% fee drag reduces your effective real estate basis on day one. The Private Placement Memorandum discloses the actual fee schedule. the marketing summary will not include every line item. Read the PPM before you identify the offering within your 45-day window.

Sponsor track record through full disposition. You are committing to one management organization for five to ten years with no practical mechanism to change course short of a springing LLC conversion that terminates your 1031 eligibility. Ask specifically: How many prior DST programs has this sponsor taken from acquisition through full sale? What did investors actually receive at exit, net of all fees and expenses? A sponsor with 20 programs launched but no fully exited deals is a materially different risk than one with 12 completed programs and documented investor returns. Revenue Ruling 2004-86's trustee prohibition structure means your pre-commitment diligence is the primary risk management tool available after the offering closes.

Secondary liquidity does not exist in any meaningful form. DST beneficial interests are not publicly traded. A small number of broker-dealers occasionally facilitate transfers at significant discounts to net asset value. That is the entire secondary market. Size your DST position as capital you can afford to have illiquid for the full hold period. If your financial circumstances change before the sponsor executes an exit, your options are severely limited.

Loan maturity matched against projected hold. A leveraged DST whose fixed-rate mortgage matures before the sponsor is ready to sell creates a problem the trustee prohibition on refinancing cannot solve. The resolution is either a distressed sale or a springing LLC conversion, and both produce taxable events. Confirm the loan term extends past the projected exit date. Ask what happens if the exit is delayed by 12-18 months beyond the base case. That scenario is more common than sponsor projections imply.

The IRS guidance on like-kind exchanges documents the rules that make DSTs work. It does not protect you from fee-heavy offerings or sponsors whose underwriting assumptions prove too optimistic three years into a hold. That protection comes from reading the PPM, asking the right questions, and comparing sponsor track records before the 45-day clock runs.

For more on this, see our related coverage:

• DST to 721 Exchange: Convert Your Delaware Statutory Trust Into a UPREIT Without Capital Gains
• 1031 Exchange Guide 2026: Rules, Timelines, and What Accredited Investors Actually Need to Know
• DST Sponsor Comparison: Cove Capital vs. Inland vs. JLL Exchange for 1031 Exchange Investors

Frequently Asked Questions

What makes a DST eligible for Section 1031 exchange treatment?

The legal foundation is IRS Revenue Ruling 2004-86, which held that a properly structured DST's beneficial interests constitute a direct interest in the underlying real estate for Section 1031 purposes. "Properly structured" means the trust must qualify as a fixed investment trust under grantor-trust rules, which produces the seven trustee prohibitions (no new capital calls, no debt refinancing mid-hold, no new leases, no major capital improvements, and others). If the trust departs from those rules, the 1031 eligibility disappears, and investors face a taxable event they did not plan for.

How does the 45-day identification rule apply when using a DST as replacement property?

Once you close the sale of your relinquished property, you have exactly 45 calendar days to identify up to three potential replacement properties in writing, and 180 calendar days total to close the exchange. A qualified intermediary must hold your proceeds throughout. you cannot touch the funds without triggering the gain recognition. DSTs are popular precisely because sponsors keep offerings open and can process your investment within days of the identification deadline. You must identify the specific DST program by name and dollar amount, not just the property type or asset class.

What is the 721 UPREIT exchange and why does it matter for DST exit planning?

A 721 exchange allows a DST investor, at the end of the hold period, to contribute their beneficial interest into the operating partnership of a REIT on a tax-deferred basis rather than receiving a taxable cash distribution at sale. Combined with the stepped-up cost basis your heirs receive at death under current estate tax law, a 1031 exchange into a DST followed by a 721 contribution into a REIT operating partnership creates a potential multi-decade tax-deferral chain. Mountain Dell estimates approximately 60% of current DST activity involves 721-oriented programs. The estate planning benefit depends on current law holding. Congress can change the step-up rule.

Does rising DST fundraising volume mean you should act faster to lock in an offering?

No. Higher fundraising volume means more offerings and more sponsor competition for quality assets, which can compress cap rates and reduce the underwriting margin of safety on new deals. The right time to complete a 1031 exchange is when you find a specific offering whose asset quality, sponsor track record, loan structure, and projected return fit your tax situation and investment horizon. Complete a 1031 exchange because you found the right offering, not because the calendar says Q3 2026 or because fundraising totals are up 33%.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.