Zero Coupon Office MI DST: Securities Investigation 

Investor Alert:  Zero Coupon Office MI DST 

The White Law Group is investigating potential securities claims involving broker dealers who may have improperly recommended Zero Coupon Office MI DST to investors.

What is a Zero Coupon DST?

Delaware Statutory Trusts, or DSTs, are an alternative for 1031 exchange investors seeking replacement properties, allegedly offering the potential for monthly income and diversification without any on-going landlord duties.  

In a Zero Coupon DST, the entirety of the cash flow is directed towards repaying the property’s debt to the lender. Typically, these DSTs involve properties leased to highly creditworthy tenants, like large industrial distribution facilities or the corporate headquarters of publicly traded companies with strong financial standings. The strong credit of these long-term tenants enables the property to secure substantial financing, often reaching loan-to-value (LTV) ratios of 80-90%. Essentially, the rental income received is channeled back to the lender to cover both the principal amount and interest on the mortgage. 

Zero Coupon DSTs are used as a 1031 Exchange investment alternative, specifically in scenarios that may require intricate tax planning strategies. 

Zero Coupon Office MI DST – Suitable for you? 

According to SEC filings, Zero Coupon Office MI DST, sponsored by Inland Private Capital Corp, filed a Form D to raise capital from investors in 2021. The total offering amount was purportedly $22,080,562, according to the Reg D filing. The sales commissions and fees were estimated at more than 9% of the total offering amount. 

While there is a time and place for most investments, DSTs are not appropriate for many investors as they come with a few disadvantages.  For example, 1031 DSTs cannot raise new capital once the investment is made leaving investors holding the bag if expensive repairs are needed or other issues arise – like a drop in occupancy or rental income. The investors also have limited control over the property.  While the sponsor may welcome feedback from the investors in the DST, they don’t allow any actions to be taken by any one investor. 

Further, 1031 DSTs are illiquid, and it can often be difficult to find a buyer if an investor wants to sell their interest before the property is sold. 

Investors may have Claims to Recover Investment Losses 

The White Law Group is investigating potential securities claims involving broker dealers who may have unsuitably invested clients in the following zero coupon DSTs among others:

• Zero Coupon Office MI DST 
• Zero Coupon Office UT DST 
• Zero Coupon Chicagoland Office DST 
• Zero Coupon Pharmacy VIII DST  

Despite?the risks of investing in DSTs, brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation.

Broker Due Diligence: Are your Investments Suitable for you? 

Broker due diligence is a process to ensure that brokerage firms are recommending and selling investment products that are appropriate for their clients. The purpose of this process is to protect the interests of the brokerage firm and its clients by ensuring that the investments being offered are suitable for the client’s investment objectives, risk tolerance, and financial situation.   

Fortunately, FINRA does provide an arbitration forum for investors to resolve disputes if a broker or brokerage firm makes an?unsuitable investment recommendation?or fails to adequately disclose the risks associated with an investment. It is possible that they could be found liable for investment losses in a FINRA arbitration claim.  

If you are concerned about your?investment in Zero Coupon Office MI DST, please call the securities attorneys at The White Law Group at 888-637-5510 for a free consultation.  

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.  

For more information on The White Law Group and its representation of investors in FINRA arbitration claims, visit http://whitesecuritieslaw.com.  

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