Zeros

Zero
DST

Zeros DST

What is a "Zero" DST?

A Zero DST is a triple-net leased, institutional-quality property structured with high leverage—typically 80–90% loan-to-value. This level of leverage is made possible by securing a very high-credit, investment-grade tenant under a long-term lease. Examples include Amazon Distribution Centers and United States Federal Offices.

Because of the high leverage, all operating cash flow is used to service and amortize the debt, resulting in no current distributions to investors—hence the term “Zero.”

Investor returns are realized upon the sale of the property and the amortization of the loan.

Key Characteristics:

  • Triple-net leased property
  • Long-term, investment-grade tenant
  • High leverage with non-recourse debt
  • No current income; return realized at disposition

Strategic Uses of Zero DSTs

Efficient De-Leveraging of a 1031 Exchange

A Zero DST allows investors to replace required exchange debt with a small amount of equity, freeing remaining proceeds to be reinvested into properties without additional leverage or bank financing. This can be especially valuable in today’s high-rate lending environment and for investors seeking reduced risk.

Post-Exchange Liquidity

Through a tax-deferred refinance, investors can access approximately 80–90% of their exchange proceeds in cash, creating liquidity that can be used for other investments or personal planning needs—without triggering immediate taxes.

Flexibility Around 1031 Timelines

If a replacement property is not immediately available, a Zero DST can serve as a temporary solution, allowing investors to complete the sale, access liquidity, and reinvest later when the right opportunity arises—effectively deferring IRS timelines.

Furthermore, the debt obtained through the Zero is non-recourse, meaning the only investor capital at risk is what is left in the property, not the leveraged amount

Pros and Cons of "Zero" DSTs

Efficient Debt Replacement

Potential Liquidity Options

High-Quality Property & Tenant

Investment Certainty

Quick Close / No Lender

Long-Term Hold

No Distribution

Case Studies

Strategic Results in Action

We don’t just offer advice; we architect solutions. Explore our real-world case studies to see how we navigate complex tax laws and market volatility to protect and grow our clients’ wealth.