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.
The Investor's Guidebook To DSTs
See if Delaware Statutory Trusts are right for you.
Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized”). Securities offered on this website are offered exclusively through Thornhill Securities, Inc., a registered broker/dealer and member of FINRA/SIPC("Thornhill"). Investment advisory services are offered through Thornhill Securities, Inc. a registered investment adviser. Thornhill Securities, Inc. is a subsidiary of Realized. Check the background of this firm on FINRA's BrokerCheck.
Realized does not provide tax or legal advice. Tax topics discussed are for educational purposes only and are not a substitute for professional tax advice. You should discuss your personal situation with a tax or legal professional.
Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.
Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested.
This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of the services referenced on this site are available in every state and through every representative listed. For additional information, please contact 877-797-1031 or firstname.lastname@example.org.