1031 Exchange
Oil & Gas Portfolios
Diversify your real estate portfolio with Oil & Gas properties. Invest your 1031 Exchange proceeds alongside leading institutions in oil and gas portfolios designed for income generation and value appreciation.
Portfolio Diversification: Royalties & minerals provide an opportunity for investors to step away from traditional real estate and diversify into a different asset class with exposure to different economics.
Current Cash Flow: Low distributions based on compressed capitalization rates have left many traditional real estate investors hungry for higher rates of return. Minerals & Royalties have the potential to experience an acceleration in cash flow caused by the drilling of additional wells by oil & gas operators.
Investor Independence: Owners of undivided interests in royalty properties are not locked into an ownership structure that links them to other investors in the same property. Each owner is free to exercise control over holding period and exit strategy to suit individual investment objectives.
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OVERVIEW
Oil & Gas Portfolios
A royalty is a percentage of revenue paid to a land owner (aka mineral owners) from the production of oil and gas on his or her property. Investors are not participating in the drilling.
Royalties & mineral rights are considered real property and are deemed to be “like-kind” to traditional real estate, qualifying them to be used in a 1031 exchange. Individuals engaging in a 1031-Exchange can use royalties and minerals as an exchange solution. Subsequently, if they are looking to “exchange out of” minerals/royalties, they are able to purchase any other “like-kind” asset.
Mineral Owners own interest in the sub-surface real estate—everything from the crust to the core—and are entitled to compensation for everything that is produced from their land.
As energy companies drill wells and produce hydrocarbons, they are required to pay a royalty to the mineral owners. The energy company, known as the operator, pays all drilling and operating expenses and assumes all drilling risks and liabilities.
Mineral Owners receive monthly royalty checks from the companies operating on their properties. This payment is generally 15-25% of the gross revenue produced from the property and is free and clear of any operational costs and drilling risks.
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The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Such offers are only made through the Sponsor’s Private Placement Memorandum (PPM) which is solely available to accredited investors and accredited entities. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million dollars exclusive of primary residence) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney.
There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potentially adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. Because investor situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation.
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