A 1031 seller who cannot find a replacement property usually gets pointed at a Delaware Statutory Trust. It is a legitimate answer and sometimes the right one. But it is being recommended into a rate environment that makes the comparison very different from what it was two years ago, and almost nobody is doing that comparison out loud.
| 10-year Treasury (Oct 2, 2026) | 5.28% |
| Change over the prior year | +1.16 points |
| 10-year high quality corporate (HQM, Aug 2026) | 5.47% |
Why a seller should care: the payment schedule on a structured installment sale is priced off the carrier's investment portfolio, which is predominantly investment grade corporate bonds. When that curve moves up, the payments a given amount of deferred principal will support move up with it.
The part that matters more than the level is this: a schedule locked today holds for its entire term. Twenty years of payments priced off a 2026 curve do not reprice when the curve falls. That is the opposite of nearly everything else a seller could do with the money.
This cuts both ways and you should hear it from us rather than find out later. If yields keep climbing, a schedule locked now will look less impressive against one locked in two years. Nobody knows which way the curve goes. What is knowable is that the current level is a two decade high, and that locking removes the question entirely for the seller who does not want to be guessing about rates in their seventies.
Both get recommended to the same seller, the one who cannot find a replacement property in 45 days. They are not substitutes for each other and the differences are structural.
| Delaware Statutory Trust | Structured installment sale | |
|---|---|---|
| Tax effect | Continues 1031 deferral | Spreads gain as payments arrive |
| Access to capital | Locked until the sponsor sells, typically 7 to 10 years, sometimes longer | Locked to the schedule, but the schedule is chosen by the seller up front |
| Secondary market | Generally none. Some sponsors allow redemption at a discount, many do not | None, and it is not marketed as liquid |
| Income | Projected, not promised. Office and hospitality DSTs have cut or suspended distributions in downturns | Fixed schedule set at issue, subject to the carrier's claims paying ability |
| Upside | Yes. Real estate appreciation and the possibility of a future exchange | No. The schedule is the schedule |
| Downside | Yes. Property level risk, leverage, sponsor execution | Carrier credit risk |
A DST keeps the deferral intact and keeps the seller in real estate, with the return and the risk that come with it. A structured sale gives up the upside in exchange for knowing the number and the date.
Two years ago, giving up the upside cost a lot, because the fixed alternative paid very little. At a two decade high in the underlying curve, that trade prices very differently. That is the whole thesis, and it is a pricing argument, not a product argument.
If every answer we gave was our own product it would not be worth much. These are the situations where a DST wins and we would say so.
The DST gets chosen in a hurry, on day 43, because it was the only thing available that closed in time. A 7 to 10 year lockup with no secondary market is a serious commitment to make under deadline pressure, and the seller frequently does not understand that the distribution figure in the offering is a projection rather than a promise.
The fix is not a different product. It is deciding earlier. See how to keep the decision open until five days before closing.
Most of this gets argued as a tax problem. For a lot of sellers it is not. They have owned the building for twenty five years, they are done with tenants and roofs and the 2 a.m. call, and the only reason they are looking at replacement property at all is to avoid writing a check to the IRS.
That is the tax tail wagging the dog, and it is how people end up owning a worse building than the one they sold, or locked into a trust for a decade because day 45 was coming.
If the honest answer is “I do not want to be a landlord anymore,” then the question is not which replacement property to buy. It is how to convert the asset into income without taking the entire tax bill in one year. That is a different question and it has a different answer.
The rate environment matters here because it determines what that income is worth. At a two decade high in the underlying curve, converting a building into a known payment stream costs less in foregone return than it has in a very long time.
The only way to compare a DST projection against a fixed schedule is with real numbers on a real sale price, basis and timeline. Run it free, or call and we will price a schedule against the current curve and put it next to whatever DST is on the table.
Run the numbers (free) →Or call 213-414-2808 · book 15 minutes
Rate figures: US 10 year Treasury yield as of October 2, 2026, and the Treasury HQM 10 year high quality corporate yield as of August 2026. Yields move daily and past levels do not predict future ones. Annuity payments are subject to the issuing carrier's claims paying ability. Nothing here is tax, legal or investment advice.
Related: the 1031 backup plan · not a deferred sales trust · the full math on a $4M sale · is this legitimate?
