How Sponsors Can Scale Without New Equity Using DST and UPREIT Solutions

For mid-market real estate sponsors and operators, raising equity deal-by-deal can quickly become a bottleneck. Managing fragmented groups of limited partners (LPs) is time-consuming, resource-intensive, and limits your ability to focus on building a resilient, scalable portfolio. But you don’t have to stay on the fundraising treadmill, there’s a smarter path forward.

By leveraging Delaware Statutory Trusts (DSTs) and 721 UPREITs, sponsors gain access to new liquidity, long-term institutional capital, and powerful scale, without giving up operational control or chasing fresh equity for every transaction.

The Challenges of Traditional Capital Raising

Traditional, deal-specific capital stacks introduce persistent challenges:

• Fundraising Fatigue

  Constantly soliciting commitments from fragmented LPs pulls your attention away from operations and acquisitions.

• Limited Scalability

  Every new transaction requires rebuilding your capital base. This repetition slows momentum and diverts focus from strategic, long-term growth.

• Investor Misalignment

  Disparate investor objectives, some seeking cash flow, others wanting liquidity, add complexity, particularly as LPs age or your investor base diversifies.

• Liquidity Pressures

  Older LPs may request redemptions or distributions, forcing premature asset sales or urgent refinancings.

• Opportunity Cost

  Time spent raising equity and managing investor communications reduces capacity to pursue high-value acquisitions or nurture institutional partnerships.

The DST Advantage: Liquidity Without Forced Sale

A Delaware Statutory Trust provides a clear, elegant solution for recapitalizing stabilized properties. Instead of selling outright or pursuing the next LP syndication, sponsors can structure a tax-advantaged exit into a DST, unlocking liquidity, reducing complexity, and delivering targeted opportunities for passive investors.

Key DST Benefits for Sponsors:

• Liquidity Without Operational Disruption

  Transfer stabilized properties into DST offerings, create liquidity, and redeploy capital into acquisitions or balance sheet enhancements.

• Built-In Investor Demand

  DSTs align with 1031 exchange investors seeking reliable income and estate planning benefits, making stabilized assets highly attractive.

• Simplified Investor Experience

  Investors access fractional interests in managed assets, avoiding K-1s and active involvement, streamlining sponsor relationships.

• Tax-Deferred Capital Flow

  DSTs qualify for 1031 exchanges, providing incoming investors with capital gains deferral, and sponsors with consistent replacement capital.

By utilizing DSTs, you align stabilized assets with motivated buyers, generate liquidity for growth, and retain the freedom to focus on your next opportunity.

Scaling Further with the 721 UPREIT Strategy

For sponsors who want ongoing participation and institutional alignment, 721 UPREITs add an essential layer of long-term value and liquidity.

What is a 721 UPREIT?

A 721 exchange allows you to contribute property to a REIT’s Operating Partnership (OP) in exchange for OP units. This transaction is tax-deferred, and OP units represent a stake in the REIT’s broader portfolio—often with the potential for conversion into REIT shares.

Key 721 UPREIT Benefits:

• Tax-Deferred Equity Conversion

  Like a 1031, 721 structures avoid immediate capital gains taxes, while granting ongoing participation in a diversified REIT portfolio.

• Portfolio Diversification

  OP units provide exposure to a professionally managed, multi-asset REIT portfolio, reducing risk tied to single-property holdings.

• Future Liquidity Pathway

  Subject to REIT terms, OP units can often be converted into REIT shares, offering sponsors access to liquidity not present in most private partnerships.

• Sponsor Alignment

  Sponsors often retain asset management or co-management roles, maintaining operational continuity as they benefit from REIT-scale resources.

The Power of Dual Strategy: DST + 721

When combined, DST and 721 UPREIT solutions offer a scalable cycle for sponsors:

1. Stabilize an asset.

2. Sell to a DST, capturing liquidity and reducing complexity.

3. Reinvest or contribute assets to a REIT via a 721 exchange.

4. Benefit from diversified exposure, improved alignment, and institutional liquidity.

This approach eliminates the cycle of constant fundraising, enabling sponsors to participate in value creation, income, and future upside, without losing operational momentum.

Why Partner with Medalist?

Implementing DST and 721 strategies requires expert partnership. Medalist delivers the experience, access, and alignment that today’s sponsors need.

Why top sponsors choose Medalist:

• Tax-Advantaged Structuring

  Our team specializes in DST and 721 UPREIT execution, ensuring every transition is seamless, compliant, and value-driven.

• Institutional Capital Access

  Medalist opens the door to REIT-level stability and public-market liquidity, freeing you from the limitations of deal-by-deal fundraising.

• Sponsor-Centric Alignment

  Our platform empowers sponsors to stay active in their markets—maintaining management continuity while building wealth for the long term.

• Proven Success

  With decades of real estate success, consistent dividend history, and scalable solutions, Medalist delivers meaningful results for sponsors and investors alike.

• Tailored Solutions for Aging LPs

  We understand shifting investor demographics. Our DST options offer attractive, compliant exits for legacy LPs while preserving sponsor relationships.

Build Long-Term Scale Without Chasing Equity

You don't have to accept the constant pressure of raising capital deal after deal. DST and 721 UPREIT strategies empower you to unlock liquidity, attract stable capital, and align your growth with institutional partners—without giving up what makes your platform unique.

Ready to explore a more efficient path to scale? Connect with Medalist today and discover how DST and UPREIT solutions can help you achieve lasting growth, liquidity, and operational freedom.

Take the first step toward smarter scaling. Contact the Medalist team for a personalized consultation or more information on how we can help you reach your long-term goals.