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A Delaware Statutory Trust's private placement memorandum lists every fee the sponsor and its affiliates are entitled to collect, but the figures are scattered across sections with different headings and different measuring sticks. This guide shows where DST private placement memorandum fees are disclosed in a PPM, which document holds the terms that never make it into the summary table, and what each fee is actually calculated against.
Why the fee section resists side-by-side comparison
A PPM is a securities disclosure document drafted to satisfy federal and state requirements, not a marketing brochure and not a comparison tool. Two Trusts can quote what looks like the same acquisition fee percentage while calculating it against different bases, which produces materially different dollar costs once the capital stack is built out. The denominator, not the headline percentage, does most of the work in any fee comparison.
Fee terms also have no effect on exchange deadlines. The 45-day identification period and the 180-day exchange period both run from the transfer of the relinquished property, and the 180-day clock can end sooner, on the due date of that year's tax return, if the return is not extended. Those mechanics are covered in more depth on Learn. The practical consequence is that the fee section is worth reading before the identification deadline rather than after it, since identification is the point at which a specific Trust is on the list.
What you'll need
- The current private placement memorandum for the specific offering, not a summary sheet
- The Trust's Form D, which states the Regulation D exemption claimed, the total offering amount, and the amount sold as of the filing date. A Rule 506(b) or 506(c) offering is exempt from registration under the Securities Act, not registered with the SEC
- The trust agreement referenced in the PPM, since some fee and subordination terms live there rather than in the compensation table
- The sources and uses of funds table, isolated so it can be checked against the stated fees
- A CPA or securities attorney, if a fee structure needs to be modeled against a specific tax position
Where the numbers sit
1. Start with the compensation table
Locate the section usually titled "Compensation to be Paid to the Sponsor and its Affiliates," or folded into "Estimated Use of Proceeds." This table is the PPM's authoritative fee reference. Executive summaries routinely abbreviate line items or drop them entirely, so any fee figure quoted outside the table is provisional until it is confirmed against it.
2. Identify the acquisition fee and its denominator
An acquisition fee is often calculated against gross offering proceeds rather than the property's purchase price, and the PPM states the exact base in a footnote next to the fee line. A percentage without a stated denominator is incomplete disclosure. Because gross proceeds include amounts allocated to reserves and offering costs, the base chosen can move the dollar figure well away from what a purchase-price assumption would suggest. This is the most common source of confusion when investors compare offerings.
3. Separate one-time costs from recurring costs
Organizational and offering expenses are paid once, at closing of the offering. An asset management fee accrues for as long as the Trust holds the property. Collapsing the two understates the ongoing cost of holding the interest, because a one-time expense stops affecting distributions and a recurring fee does not. Most PPMs separate them into different subsections even when they share a table.
4. Locate the asset management fee and its accrual basis
Check whether the fee is a percentage of gross revenue, a percentage of the Trust's equity, or a fixed annual amount, because each basis behaves differently as the property performs. A revenue-based fee moves with occupancy and rent; an equity-based fee does not. Capital structure matters here for the same reason: an offering that carries debt has a different equity base than an all-cash one. The Top1031 directory tags each offering's leverage as a category — all-cash, leveraged, or zero-coupon (or unknown where the filings don't say) — rather than a numeric ratio, so the specific loan terms and equity figures still have to come from the PPM itself.
5. Check for a disposition fee and subordination language
A disposition fee is paid when the Trust sells the property, and many offerings subordinate it to the return of investor capital, meaning the sponsor collects only after investors receive their principal back. That subordination clause usually sits in the trust agreement rather than the compensation table, which is why it is easy to miss on a single read-through.
6. Cross-reference the sources and uses of funds table
Sources and uses shows what fraction of the capital raised reaches the property versus what is allocated to fees, reserves, and offering costs. Read against the compensation section, it expresses the fee structure in dollars rather than isolated percentages — the form in which it affects an investor's basis in the replacement property.
7. Read the fee disclosure against the distribution terms
Fees only mean something next to what the Trust distributes. The distribution schedule and any waterfall language show whether disclosed fees come out before or after investors receive a stated distribution rate. Some structures pay fees off the top of gross revenue; others subordinate certain fees to a minimum investor return. Any distribution rate a sponsor states is a sponsor-stated figure, and PPMs disclose it alongside risk factors explaining that distributions may be reduced or suspended.
Troubleshooting
- A fee percentage has no stated denominator. Check the footnotes and the sources and uses table for the gross proceeds figure, then work the dollar amount directly instead of relying on the percentage.
- An asset management fee and a property management fee both appear. Read the trust agreement to confirm whether the same affiliate collects both; the labels sound similar but often compensate different services.
- The disposition fee is not in the main compensation table. Search the full PPM text for "disposition fee" and "subordinated." Sponsors frequently disclose the terms in the trust agreement instead of the summary table.
- A fee waiver is disclosed without a stated duration. Check whether it applies only during the offering period or continues into the operating phase, and read the trust agreement's amendment provisions for how a waiver could be revoked.
- The offering used 506(c) and it is unclear how that differs from 506(b). Under Rule 506(c) the issuer must take reasonable steps to verify that every purchaser is accredited. Under Rule 506(b) there is no general solicitation, and sales are permitted to accredited investors plus up to 35 non-accredited purchasers who are sophisticated, alone or with a purchaser representative. The exemption governs how the offering could be marketed and to whom it could be sold, not the fee terms disclosed inside it.
Documents worth having open
- The current PPM, requested from the sponsor or the broker-dealer distributing the offering
- The Trust's Form D on record with the SEC
- The trust agreement, for subordination and amendment provisions
- The sources and uses table and the distribution terms, read together with the compensation table
- A CPA or securities attorney, for questions about how a fee structure interacts with a specific tax position
Compare fee structures across the market
Search active and historical DST offerings and sponsors in the Top1031 directory.
What the fee section does not cover
Fee disclosure answers one narrow question about one Trust. A Top1031 Sponsor Grade is a separate, sponsor-level measure — A through F, or NR where there is not enough tracked record — built on a sponsor's programs as a whole. It is not a rating of any individual offering, not a read on a Trust's compensation table, and not a suitability judgment.
That gap is worth keeping in view: two Trusts from the same sponsor can carry different acquisition fee percentages and different denominators. The PPM is the only place the terms of a specific Trust are actually set out.
FAQ
Which fees does a DST private placement memorandum typically disclose?
Organizational and offering expenses, an acquisition fee, an ongoing asset management fee, and a disposition fee, each with its own calculation basis. Property management, financing, and loan assumption fees appear in many offerings as well, and the document shows how the total affects the capital that reaches the property.
Can a sponsor change fees after the PPM is issued?
The offering document and trust agreement fix the compensation structure for that Trust, and changes to disclosed terms are communicated through a supplement to the offering materials, with the Form D amended where required. Read any supplement alongside the original PPM rather than in place of it.
Does a Top1031 Sponsor Grade reflect a DST's fee structure?
No. The grade sits at the sponsor level and reflects the tracked record across that sponsor's programs. Fee terms differ from Trust to Trust and come only from each Trust's own PPM.