1031 UPREIT Overview

A 1031 UPREIT Program combines the concepts of a 1031 Exchange, a DST, a 721 Exchange and an UPREIT into one cohesive product.

How a 1031 UPREIT Program Works

In a 1031 UPREIT program, an investor first exchanges an appreciated investment property (the relinquished property) for an interest in a DST that owns real estate through a 1031 exchange, moving the investor from an active real estate investment to a passive one.

If the REIT elects to exercise its fair market value purchase option, the investor contributes their DST interest to the REIT’s operating partnership in exchange for interests in the operating partnership known as OP Units. This is known as a 721 exchange and provides the investor exposure to the operating partnership’s portfolio of high-quality, institutionally managed real estate properties.

Since both the 1031 exchange and the 721 exchange are tax-deferred transactions, this allows the investor to maintain a passive investment in real estate without incurring taxes.

Benefits of a 1031 UPREIT Program1

1031 Investor Benefits

REIT Benefits

Distribution Partner Benefits

1 Assumes REIT has elected to exercise its purchase option in exchange for OP Units.

Learn how Osage structures its 1031 UPREIT Programs.