Tenant which is party to direct lease with the property owner which subsequently sub-leases all or a portion of the property to other occupants.
In the context of a Delaware Statutory Trust (DST), the Master Tenant is a legal entity created and controlled by the sponsor of the DST for the sole purpose of leasing the DST’s property. IRS requirements state that a DST, as utilized as a 1031 exchange-eligible replacement property, must operate as a passive investment vehicle. The passivity requirement prohibits the DST’s Trustee from leasing the property. In order to provide operating ability, a separate entity, often referred to as a Lease Co., is created to lease the entire property from the DST. This master tenant, which is typically controlled by the sponsor, then operates the property through sub-leases with the property’s tenants.
For example, if a DST acquires a 200-unit multifamily property, the master tenant will lease the entire property from the DST and is responsible for operating the property. The master tenant makes lease payments to the DST and each investor in the DST receives a share of this rental payment, based on their percentage ownership in the DST.
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Any financial projections or pro-forma returns shown on the website are illustrative examples only, and there can be no assurance that any such projections or valuations provided are accurate or in agreement with market or industry valuations. Any investment representation or information contained herein has been secured from sources Realized believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefor. Offers to sell, or the solicitations of offers to buy, any security can only be made through official offering documents that contain important information about risks, fees and expenses. Investors should conduct their own due diligence, not rely on the financial assumptions or estimates displayed on this website, and are encouraged to consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity. Fluctuations in the value of the assets that are the subject of any investment are to be expected. Tenant vacancies, competition from similar properties, or potential environmental conditions at the property may negatively impact rents and cash flows. Additional risks exist due to a variety of factors, including, but not limited to, leverage, market risks, business risks, management, adverse tax consequences, and such other risks more particularly described in the related offering materials. There is a potential for loss of part or ALL of the investment capital, and each investor should understand that all capital invested may be lost. Investors should only consider these investments if they have no need for liquidity and can bear the risk of losing their entire investment. Check the background of this firm on FINRA's BrokerCheck.
*Past performance is not indicative of future performance.