DST capital raise held steady in Q1. Here's what sponsors are actually raising for.

First-quarter 2026 data from the Mountain Dell Consulting DST Market Equity report and similar industry tracking suggests the DST industry raised roughly $2.3B in Q1 — essentially flat year-over-year after a soft 2024 and a partial recovery in 2025. That's the headline. The mix shift underneath is the story worth watching.

Net lease is pulling share

Single-tenant net lease DST offerings — backed by credit tenants on long-term absolute-NNN leases (Walgreens, CVS, dollar stores, industrial distribution, drive-through QSR) — are capturing a growing share of new offerings. Two things are driving this:

• Investor demand for stable, bond-like cash flow. 1031 exchangers in 2026 are more rate-aware than they were in 2021. Net lease distribution yields of 5.5–6.5% with monthly distribution feel competitive next to Treasuries at 4.4%.
• Sponsor underwriting discipline. Net lease DSTs have cleaner underwriting — the rent is contractual, the tenant credit is rated, the projected NOI has less variance. Sponsors are willing to sell these.

Industrial is pulling share

Institutional-grade industrial DSTs — single-tenant distribution to credit tenants, small portfolios of industrial product — have been among the strongest Q1 categories. The category is benefiting from (a) real underlying industrial demand in the right submarkets, and (b) a perception among investors that industrial is lower-risk than multifamily in a high-rate environment.

Multifamily is cooling

Multifamily DST raises are down meaningfully. This mirrors the broader multifamily capital market — cap rates widened, refinance stress is real, and sponsors are having a harder time offering the 6%+ investor yields that used to be table stakes for multifamily DSTs.

Some sponsors have pulled multifamily offerings mid-raise when projected distribution yields no longer cleared investor committee thresholds. That's a data point.

What this means for 1031 buyers using DSTs

If you're a 1031 buyer considering DSTs for replacement or backup identification:

1. Read the PPM, not the cover page. Distribution yield on the cover is usually after fees to the investor. What cap rate is the underlying property running at? What's the financing structure? What's the exit assumption?
2. Compare to what you'd underwrite directly. If the DST is offering a 5.75% yield on a Class A multifamily property, and you could directly buy a similar property at a 6.25% cap rate, you're paying 50 bps in structural fees for passivity. Fine if you want passive — not fine if you didn't realize.
3. Sponsor quality still matters most. In a softer environment, weaker sponsors get exposed first. Use established sponsors with multi-vintage track records unless you're specifically underwriting a first-time sponsor with compensating factors.
4. Consider net lease over multifamily in the current mix. Net lease DSTs with credit tenants on 15+ year absolute NNN leases are closer to bond risk than equity risk. Multifamily DSTs carry real operating risk that's elevated right now.

What to watch in Q2

Three threads we're tracking:

• Whether any major sponsors launch offerings priced to capture distressed multifamily — this would be interesting capital for investors willing to underwrite distress.
• How DST fee loads respond to investor pressure. Several newer sponsors are differentiating on lower total load — watching whether that pulls share from the higher-load incumbents.
• UPREIT exit activity. Several DSTs from the 2017–2019 vintage are exiting via 721 UPREIT conversions this year. Outcomes — actual realized returns to investors — will reset DST exit expectations.

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