LOS ANGELES-The increasing number of would-be commercial realestate investors is making available propertiesharder to find. Even in today’s market, smaller investors may needhelp finding properties in which to invest. As a result, more andmore are once again willing to consider looking at sponsoredproperties or fractional ownerships, in which a pool of investorsowns a single property.

While 1031 exchanges and tenant-in-commonownership entities were once popular, now the DelawareStatutory Trust is becoming the vehicle of choice,Evan Farahnik, president of ExchangePointProperties LLC, tells GlobeSt.com. Before the economicdownturn, fractional ownerships usually involved a tenant-in-commonstructure, whereby under the tax rule up to 35 LLCs could invest inone property and have it be valid for an exchange. Since then,weaknesses in the TIC structure that have caused issues for some ofthe properties that were struggling and for some lenders.

“But another vehicle for that is the Delaware Statutory Trust,which also allows for an exchange,” Farahnik says. “You can have upto 500 investors, and you don’t have separate LLCs anymore, buteveryone comes together into one LLC and takes advantage of the taxdeferral. The profile of the properties is different in a DST; thesponsors and the investors are a lot more restricted on what theycan do. Before, in the TIC structure, there was a lot offlexibility on what properties you can take to market and havesponsors invest in, but with the DST structure, the field ofproperties to pursue is limited to single-tenant assets ormultifamily properties.”