Reading a DST PPM and Form D: Where the Fees, Conflicts and Risks Hide

Reduce the Estimated Use of Proceeds table to one figure: property equity per dollar raised

The table lists gross offering proceeds, the loan, the property purchase price, each fee and the reserves. Subtract every line except the purchase price and reserves from the equity raised, divide by the equity raised, and you have the share of each dollar that becomes ownership of the building; reserves are your money held back rather than a fee, but they are not earning either.

Then check the purchase price itself. Ares Industrial REIT's 2025 10-K says its DST investors fund program costs partly by paying a marked-up price over the properties' estimated fair value, so if the PPM shows the sponsor or an affiliate acquired the asset first, find the price it paid in the conflicts section and count the difference as load.

Worked example, hypothetical: $10,000,000 of equity and a $10,000,000 loan buy a property priced at $18,000,000; commissions, fees and closing costs total $1,600,000 and reserves $400,000. Equity actually in the building is $8,000,000, or 80 cents per dollar, before any mark-up embedded in the $18,000,000.

The Compensation of the Sponsor and Affiliates section lists fees by stage; match each one to the document that creates it

Upfront items are the selling commission, dealer-manager and wholesaling fees, organization and offering expenses, an acquisition fee and a financing or loan fee. Ongoing items are the trust's manager or asset-management fee, property management paid to an affiliate, and any class-based servicing fee; JLL Income Property Trust's S-11 describes its manager fee as a percentage of each trust's NAV and its disposition fee as a percentage of the gross sales price.

Two economics live outside this section. The master-lease spread sits in the lease summary and the projections, where you compare base rent with projected net operating income; any fair-market-value purchase option, which lets a sponsor's operating partnership buy your interests for units or cash, sits in the trust agreement summary, and Hines Global Income Trust's 10-K shows one such option exercisable in a 12-month window that opens two years after closing.

• Upfront: selling commission, dealer-manager fee, wholesaling or marketing allowance, organization and offering, acquisition fee, loan fee.
• Annual: manager or asset-management fee, affiliated property management, class servicing fee, master-lease spread.
• Exit: disposition fee, any subordinated promote, the master-lease termination payment or FMV option terms.

Conflicts of Interest and Risk Factors are where related-party economics and the limits of the guaranty are admitted

Look for four admissions. First, that the master tenant and property manager are sponsor affiliates and that their fees were not set at arm's length. Second, the strength of the master-lease guaranty: Ares's filing says its operating partnership guarantees the leases while conceding there is no assurance the guarantor can or will perform, and that is the sentence to find in yours.

Third, control: one PPM excerpt states that beneficial owners may neither approve nor disapprove a sale and have no part in any aspect of operation or management. Fourth, tax reliance: the same document warns that the IRS could modify or revoke Rev. Rul. 2004-86, and the tax opinion is where counsel reconciles the offering's rent structure with the ruling's facts, which describe a fixed rent adjusted only by an objective index.

FINRA Regulatory Notice 23-08 directs a selling broker to examine transactions or payments between an issuer and its affiliates involving offering proceeds and to treat past-performance claims exclusively selected for positive results as misleading; read the Prior Performance section with the same suspicion and ask for the programs it leaves out.

Form D Items 12 to 16 on EDGAR give you the commission and promoter payments in dollars, filed within 15 days of the first sale

Go to EDGAR full-text search, restrict the form type to D and search the trust's exact name; the primary document is a short XML form. Item 6 shows whether the offering relies on Rule 506(b), which allows up to 35 non-accredited purchasers and bars general solicitation, or 506(c), which allows advertising but requires every purchaser to be a verified accredited investor.

Item 12 names every person receiving sales compensation with a CRD number and broker-dealer, which you can run through BrokerCheck. Item 13 gives the total offering amount, amount sold and remaining; Item 14 the number of investors; Item 15 the sales commissions and finders' fees paid or to be paid; Item 16 the gross proceeds used for payments to executive officers, directors and promoters.

Verified example: CF James Multifamily DST's March 2024 Form D reported a $51,875,000 offering with a $250,000 minimum, $2,593,750 of commissions (5.00%) with Cantor Fitzgerald & Co. named in Item 12, and $6,290,392 (12.13%) to officers, directors and promoters. ExchangeRight Net-Leased Portfolio 44 DST reported 5.00% commissions and $0 in Item 16, so the item is a floor that depends on how narrowly each sponsor reads it; the full set of filings is tabulated at DST fees and loads.

The PPM itself is not public: the selling broker files it with FINRA under Rule 5123, so ask for it early

FINRA Rule 5123 requires a member firm to file the private placement memorandum, term sheet or other offering document with FINRA within 15 calendar days of the first sale, but that filing is for regulators. The only public record is Form D, which is why the PPM should be in your hands well before the 45-day identification deadline forces a decision.

Breakwater Exchange provides the PPM and every supplement for each offering it presents from vetted national sponsors, and reads them within a regulated broker-dealer framework; your CPA or attorney should still review the tax opinion and fee sections before you subscribe.

Eight numbers to pull from each PPM so three offerings compare on one page

Put the eight figures for each offering side by side before you read any marketing deck. If a number is missing from a PPM, that absence is itself an answer.

• Property equity per dollar raised, from the use-of-proceeds table after any mark-up.
• Loan-to-value and the loan maturity date measured against the projected hold.
• Year-one distribution rate and whether it is quoted before or after the manager fee.
• Master-lease base rent divided by projected net operating income.
• Reserves as a percentage of equity and who may release them.
• Disposition fee and any promote, and what return investors must reach first.
• FMV option or 721 terms: when the sponsor may exercise, and whether cash is offered.
• Guarantor of the master lease and whether its financial statements are in the PPM.