Soreide Law Group has been contacted by investors who may have experienced losses in the following DSTs (Delaware Statutory Trusts) through Four Springs Capital Trust as part of Section 1031 tax-deferred exchanges.
Four Springs TEN31 Xchange
Four Springs Capital Trust is a real estate investment trust (REIT) that acquires and manages single-tenant, net-leased properties for retail, industrial, medical, and office. It owns the subsidiary, Four Springs Capital, the sponsors of the DSTs as part of Section 1031 tax-deferred exchanges.
According to Kiplinger, DST is a legal entity created under the statutes of Delaware trust law. DST investors, also called beneficiaries, own fractional (beneficial) interests in the trust, the legal owner of the trust’s underlying properties. Since the IRS treats each investor’s beneficial interests as direct property ownership, DSTs are eligible for 1031 exchanges both upfront and upon exit. DSTs are usually formed by real estate companies called sponsors.
However, there are risks which make DSTs unsuitable for certain investors. Broker/dealers have an obligation to inform investors of those risks. DSTs typically have a hold time between five and 10 years, making them illiquid investments best suited for individuals with long-term investment strategies. High broker commissions and upfront fees can reduce returns. Properties may decline due to economic downturns and could face possible foreclosure. There are tax risks due to possible changes in IRS rules or in the structure of DST offerings which in turn may affect the 1031 exchange eligibility.
These investments are not recommended for conservative or elderly investors. Despite these risks, broker/dealers may have recommended Four Springs Capital DSTs to investors without alerting them of the risks involved with DSTs.
If you or a loved one have experienced investment losses in Four Springs Capital DSTs recommended by your broker/dealer or financial advisor, contact Soreide Law Group and speak to an experienced securities lawyer at no cost at: 888-760-6552.
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