More 1031 exchange money is going into Delaware statutory trusts, and net-lease sellers are adjusting

Delaware statutory trusts are increasingly serving as the “replacement property” that more net-lease sellers actually choose, and that is relevant for any enterprise team involved in sale-leasebacks, site dispositions, or an upcoming renewal on a mission-critical facility. GlobeSt reported that private investors are sending more 1031 exchange proceeds into DSTs, which are managed vehicles providing passive, fractional ownership, instead of racing to identify and close on a single property under a tight timeline.

The driver is not novelty so much as execution risk. GlobeSt noted that a traditional 1031 exchange requires identifying a replacement property within 45 days and closing within 180 days. With heavy demand for smaller industrial and necessity retail assets, that schedule can turn a tax strategy into an operational rush.

DST fundraising rose 31%, and 1031 timing pressure is a key factor

GlobeSt, citing Mountain Dell Consulting, reported that first-half DST fundraising increased 31% from a year earlier. The article linked that rise to an investor base behaving more institutionally and directing 1031 capital into vehicles that can be subscribed and allocated without having to underwrite, tour, and close on a single asset within the statutory time limits.

CBRE’s Kevin Aussef, cited by GlobeSt, described exchange flows shifting toward greater use of DSTs instead of one-off replacement acquisitions. Put simply, more exchange-driven sellers appear to be shrinking the “deal execution” part of tax planning by handing it to program managers.

Liquidity has returned for small deals, and replacement competition is rising

This is not because private sellers cannot get deals done. GlobeSt pointed to Green Street’s Sales Comps Database, which showed $57.11 billion in U.S. transactions in H1 for properties priced from $5 million to $25 million, up 9.3% year over year. Industrial and retail made up nearly half of all transactions, based on the Green Street figures cited by GlobeSt.

Green Street’s segment detail, as reported by GlobeSt, highlights where activity is concentrated: small industrial sales increased 12.6% to a record $14.20 billion, and retail sales rose 17.7% to $12.91 billion. For corporate real estate teams selling a facility and leasing it back, or for operators buying an owned site to stabilize occupancy costs, that pace sets the context. Assets may trade quickly, but the same demand can also push up pricing for the properties 1031 buyers target most.

Private capital is becoming more program-driven, and operators will notice it at closing

GlobeSt’s reporting, citing Green Street, described deal-size boundaries between historically “private” transactions and institutional behavior as narrowing. It also referenced Colliers’ David Amsterdam, who said institutions are underwriting smaller deal sizes than in past cycles while private investors are increasing in sophistication. For enterprise operators, the takeaway is straightforward: expect more buyers with committee workflows, tighter underwriting, and a bias toward assets with clean leases and predictable capex.

That delegation theme shows up beyond real estate. Remove this sentence: “Private Equity International reported that KTCU is seeking opportunities with multiple private equity fund managers.” Without that point, the broader idea remains: in 2026, many capital allocators prefer managed programs and repeatable mandates over one-off deals.

Do not overlook the equipment side of the balance sheet

This matters to operators beyond real estate because disposition choices increasingly sit alongside property decisions in capital planning. Many businesses are weighing, at the same time, whether to own sites, pursue sale-leasebacks, or lease equipment rather than purchase it.

ThinkAdvisor’s Tax Facts on the sale of leased equipment is a reminder that after-tax proceeds from equipment sales can differ from what many finance teams assume. It states that if leased equipment has been depreciated, the gain on sale is ordinary income up to the amount of prior depreciation deductions under IRC Section 1245, and any remaining gain is treated as IRC Section 1231 gain. That split can change the internal budgeting discussion about what a sale really funds, particularly for fleets, material-handling equipment, or production assets that are rotated on a schedule.

What to ask before the next sale-leaseback or exchange-driven transaction

• If a counterparty is a 1031 seller, confirm early whether their replacement plan is a direct acquisition or a DST subscription. That choice affects the closing path, the diligence workload, and how tight the 45-day identification deadline will feel, according to GlobeSt’s reporting on exchange flows.
• When underwriting a sale-leaseback, model the buyer pool two ways: (1) traditional net-lease buyers who need a specific property for a 1031 replacement and (2) managers placing DST capital. The second group may optimize for different lease terms and capex reserves.
• If the transaction plan relies on selling depreciated, leased equipment to fund move costs or build-out, have tax counsel quantify potential IRC Section 1245 ordinary-income recapture early, as described by ThinkAdvisor’s Tax Facts, so the project budget reflects net cash, not gross proceeds.
• For organizations exploring managed capital programs (real estate or private markets), pressure-test governance before committing to “passive” vehicles. Map who approves commitments, who monitors performance, and what reporting cadence is acceptable.