721 Exchange (UPREIT): Which REITs Still Let You Out in 2026

Updated October 9, 2026 — what a 721 exchange (UPREIT) is, and what the filings since June 30 add. We rechecked EDGAR for all fourteen REITs on October 9: none has filed a third-quarter 10-Q yet, so the repurchase table below is still the June 30, 2026 quarter. New on this page: the text of Section 721 of the tax code and how an UPREIT uses it; Cantor Fitzgerald Income Trust's OP unit issuances for DST interests (3,730,153 units on February 1 and 4,036,275 on June 1, 2026) and its OP units held by outside investors, up from 3,033,518 to 10,626,035 in six months; Starwood REIT's August 3 joint venture with Apollo ($1.02 billion for 41.5%); and ExchangeRight's October 5 creation of two unit series to buy DST portfolios.

What is a 721 exchange, and what is an UPREIT?

A 721 exchange is a contribution to a partnership, and the partnership is the REIT's operating partnership. Section 721(a) of the Internal Revenue Code (26 U.S. Code § 721, as published by the U.S. Government Publishing Office) reads: “No gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership.” Subsection (b) says that rule does not apply to a partnership “which would be treated as an investment company” if it were incorporated. The statute does not mention REITs or DSTs; it is the general rule the structure rests on.

An UPREIT is the structure that uses it: the REIT holds its assets through an operating partnership instead of directly. Ares Real Estate Income Trust's June 2026 10-Q says “We utilize an UPREIT organizational structure to hold all or substantially all of our assets through the Operating Partnership.” When DST holders are rolled in, the same filing records units “issued in exchange for DST Interests” “in accordance with our UPREIT structure”: 47.1 million OP units in the first half of 2026. In plain terms, you give up a share of one building and receive units in the partnership that owns the REIT's whole portfolio.

What a 721 roll actually hands you

The path is familiar to anyone who has sold an investment property: sell, run the proceeds through a 1031 exchange into a Delaware statutory trust, collect the income, and at some point the sponsor's affiliated REIT may absorb the DST under Section 721 of the tax code. You stop owning a fractional interest in a named building and start owning operating partnership units in a diversified, non-traded REIT.

The contracts are written from the REIT's side. Starwood's 10-Q describes an "FMV Option" that is "exercisable any time after two years from the closing of the applicable DST Offering", for "Operating Partnership units or cash, at the Operating Partnership's discretion." Invesco uses nearly identical wording. Hines gives itself "a 12-month period commencing two years after the closing." Brookfield's window is "a one-year option period, beginning two years following the sale of the last DST Interest." Inland's IPC Alternative REIT can act in "three, three-month periods" starting at the 24th, 36th and 48th month.

Two things follow. First, the timing is the REIT's: the option is "the right, but not the obligation." Second, once you hold OP units, the exit you care about is no longer the DST's eventual sale of the building. It is the REIT's own liquidity, which in a non-traded REIT means its repurchase plan and whatever the partnership agreement says about redeeming units. ExchangeRight's 10-Q states the unit version plainly: holders of its Class A 721 Common Units "have the right to cause their OP Units to be redeemed by the Operating Partnership for cash, unless the Company, in its sole discretion, elects to purchase such OP Units in exchange for Class I Common Shares." We did not read the partnership agreements for this table, so the repurchase plan is the exit we can measure.

The fourteen REITs and their exits, June 2026

Every row carries its accession in the dataset above. "As stated" matters: some REITs report gross proceeds, some net, some only the first half of 2026, and Blue Owl books its program as a financing obligation at fair value. The figures are not comparable with each other as sizes, only as evidence that each program is real and active.

The two that are rationing the exit

Cantor Fitzgerald Income Trust is the case that fits the 721 question most directly. Its filings describe fair-market-value options "which provide us with the right, but not the obligation, to require the DST investors to exchange their interests for OP Units", and its June 10-Q says the REIT "received repurchase requests that exceeded both its monthly 2% of NAV and quarterly 5% of NAV limits." It honoured 43.1% of requests in April, 49.1% in May and 38.4% in June. A DST investor rolled into Cantor's operating partnership today joins a structure whose existing shareholders are being paid back in part. The same 10-Q shows how fast the OP is absorbing DSTs: on February 1, 2026 it issued $74,970,355 of OP equity for 3,730,153 OP units, including the exercise of its fair market value option on the Pearland DST (917,018 units plus $1.7 million in cash), and on June 1, 2026 it issued $82,087,912 for 4,036,275 OP units, including the option on the Archer DST (2,270,421 units plus $2.5 million in cash). OP units held by third-party investors went from 3,033,518 at the start of 2026 to 10,626,035 on June 30.

Starwood Real Estate Income Trust moved further. Its plan was cut to 0.5% of NAV a month in June 2025 and to 1.5% a quarter from July 1, 2025. On April 29, 2026 it amended the plan so that "no repurchase requests will be accepted except" those on death or qualifying disability and from accounts under $5,000, each capped at $5.0 million a month. The same 10-Q discloses a DST program with $66.2 million raised by June 30. We have written separately about the $18.6 million SREIT paid its own adviser for shares outside the plan in the same quarter, and about its August annual meeting failing to reach a quorum.

After the quarter, on August 3, 2026, SREIT closed a joint venture with funds managed by Apollo Global Management: Apollo invested $1.02 billion for Class B units representing 41.5% of the venture that owns about 120 of SREIT's affordable housing properties, and the proceeds go to repay a significant portion of its credit facility. SREIT calls it a step in a plan “to improve liquidity, enhance stockholder returns and position the Company for long-term performance.” The 8-K mentions the repurchase plan only in its forward-looking statements, so nothing in it reopens ordinary repurchases. It does add an obligation: SREIT guarantees Apollo an annual minimum yield, and its call option on Apollo's interest is priced to cap Apollo's return at an IRR of 7% if exercised between the fifth and tenth anniversary.

Twelve clean quarters, and why that is a snapshot

The other twelve paid every request, and it would be wrong to read the table as a warning about the whole group. JLL Income Property Trust, with the largest program at about $2.53 billion, repurchased "all of the share repurchase requests received." Hines did the same, and on April 1, 2026 exercised its option on two DST properties, 200 Park Place and EMME, issuing 21.1 million OP units for a net $207.1 million.

But a quarter in which requests fit under the cap says nothing about the next one, and DST programs change the arithmetic. Paying in full is also not the same as having the cash for it: Cottonwood Communities, which paid every request, says in the same 10-Q that its liquidity is less than the $452.9 million of debt maturing within a year. Ares Real Estate Income Trust sold $676.5 million of DST interests in the first half of 2026 and issued 47.1 million OP units in exchange for DST interests, a net $383.2 million, in the same six months. It redeemed every eligible request in the second quarter. It is also the REIT whose annual meeting, reconvened on August 6, was "permanently adjourned" for want of a quorum (8-K filed August 7). Both facts are true at once, and the second is the kind a 721 investor should know before the first becomes theirs.

SREIT itself shows how fast the status can change inside eighteen months: 0.5% of NAV a month from June 2025, 1.5% a quarter from July 2025, and death, disability and small accounts only from April 2026.

Sponsors are also still building the plumbing. On October 5, 2026, ExchangeRight Income Fund created two new series of operating partnership units, NLP 51 and NLP 53 Common Units, “to facilitate the acquisition by the Operating Partnership of certain net-leased portfolios organized as Delaware statutory trusts” through the issuance of units as consideration (8-K filed October 7, 2026). That is a 721 roll in the making, and the distributions on those units are set by the general partner in its sole and absolute discretion.

What to read before your DST is rolled

If your DST sponsor has an affiliated REIT with an option on your interests, the destination REIT's latest 10-Q answers most of what matters. In order:

1. The share repurchase plan section, and the last three monthly outcomes. Not the plan's headline limits: whether the REIT met all requests, prorated them, or amended the plan. Cantor's proration and SREIT's amendment are both in plain sentences.
2. Any repurchase outside the plan. SREIT's payment to its adviser sat in a footnote forty pages from the plan description.
3. The DST program paragraph. How much has been raised and how many OP units were issued for DST interests in the period. A large inflow of OP units is future repurchase demand.
4. NAV per share over the last four quarters, leverage and distribution coverage. The same three numbers a sponsor presentation will round.
5. Governance. Whether the last annual meeting reached a quorum.

Doing that properly takes a few hours per filing, and the ones that matter are dense. If the decision is large enough, we do it as a Forensic Filing Read: the destination REIT's latest filing, line by line against the prior one, every figure tied to its section, in 72 hours.

How this list was built, and what it does not cover

We started from the non-traded REITs in our own coverage and from the sponsors that market DST programs, then read each REIT's Form 10-Q for the quarter ended June 30, 2026 on SEC EDGAR. A REIT is in the table if that 10-Q describes a DST program with an option or units that convert DST interests into its operating partnership. Apollo Realty Income Solutions was checked and left out: we found no DST program in its 10-Q. KKR Real Estate Select files as a registered fund, not with 10-Qs, and is outside the method.

Three limits. We did not read the operating partnership agreements, so OP unit redemption terms beyond what the 10-Qs say are not in the table. Option terms in the dataset come from the 10-Q wording except Cantor's, which is from its prospectus supplements. And every "paying in full" is one quarter's fact, dated June 30, 2026; the next 10-Qs arrive in November.

FAQ

What is a 721 exchange (UPREIT)?

A contribution of property, or of DST interests, to a REIT's operating partnership in exchange for OP units under Section 721 of the Internal Revenue Code, which provides that “No gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership.” It continues tax deferral, but the OP units are not like-kind real estate, so a later 1031 exchange out of them is not available.

What is an UPREIT?

An Umbrella Partnership Real Estate Investment Trust: a REIT that holds all or substantially all of its assets through an operating partnership, which lets owners contribute property or DST interests to the partnership for OP units (a 721 exchange) instead of selling. Ares Real Estate Income Trust describes its own structure this way in its June 2026 10-Q.

Can I refuse a 721 roll of my DST?

It depends on the DST's documents. The 10-Qs describe the option as the REIT's "right, but not the obligation", and several give the REIT discretion to pay in OP units or cash. Whether the investor can decline is set in the DST offering, not in the REIT's 10-Q, so read the private placement memorandum.

Which REITs are limiting redemptions in 2026?

Of the fourteen with DST programs we checked, Cantor Fitzgerald Income Trust (43.1%, 49.1% and 38.4% of requests filled in April, May and June 2026) and Starwood Real Estate Income Trust (only death, disability and accounts under $5,000 since April 29, 2026). The other twelve paid every request in the second quarter.

Which REIT has the largest DST program?

By the figures stated in the June 2026 10-Qs, JLL Income Property Trust, at about $2.53 billion of aggregate gross proceeds, followed by Hines Global Income Trust at $1.7 billion net. Ares Real Estate Income Trust raised the most in 2026 so far: $676.5 million in the first half.

Is a 721 exchange a good idea?

It trades a single building for a diversified, professionally managed portfolio and simplifies estate planning, and it gives up the option of another 1031 exchange. Whether it is good depends on the REIT you land in, which is why its repurchase record is the first thing to check.

Sources

All from SEC EDGAR, Form 10-Q for the quarter ended June 30, 2026 unless stated. Retrieved September 10, 2026; Section 721 text, Cantor OP unit detail, and the Starwood and ExchangeRight 8-Ks retrieved October 9, 2026. Section 721: 26 U.S. Code § 721, U.S. Code 2024 edition, govinfo.gov.

• Starwood Real Estate Income Trust, Inc. (CIK 0001711929), accession 0001193125-26-346339, filed August 12, 2026; plan amendment in Form 8-K accession 0001193125-26-192168, April 29, 2026
• Cantor Fitzgerald Income Trust, Inc. (CIK 0001666244), accession 0001193125-26-349682, filed August 13, 2026; option wording from prospectus supplements on Form 424B3 (e.g. accession 0001193125-26-271555)
• JLL Income Property Trust, Inc. (CIK 0001314152), accession 0001314152-26-000149, filed August 11, 2026
• Hines Global Income Trust, Inc. (CIK 0001585101), accession 0001628280-26-057031, filed August 14, 2026
• Ares Real Estate Income Trust Inc. (CIK 0001327978), accession 0001628280-26-056330, filed August 12, 2026; annual meeting in Form 8-K accession 0001628280-26-054774
• Ares Industrial Real Estate Income Trust Inc. (CIK 0001625941), accession 0001628280-26-056338, filed August 12, 2026
• Invesco Real Estate Income Trust Inc. (CIK 0001756761), accession 0001756761-26-000110, filed August 10, 2026
• Brookfield Real Estate Income Trust Inc. (CIK 0001713407), accession 0001713407-26-000079, filed August 12, 2026
• Blackstone Real Estate Income Trust, Inc. (CIK 0001662972), accession 0001662972-26-000111, filed August 7, 2026
• Nuveen Global Cities REIT, Inc. (CIK 0001711799), accession 0001711799-26-000055, filed August 13, 2026
• Cottonwood Communities, Inc. (CIK 0001692951), accession 0001692951-26-000141, filed August 14, 2026
• IPC Alternative Real Estate Income Trust, Inc. (CIK 0001959961), accession 0001959961-26-000013, filed August 7, 2026
• Blue Owl Real Estate Net Lease Trust (CIK 0001944366), accession 0001944366-26-000066, filed August 12, 2026
• ExchangeRight Income Fund (CIK 0001771514), accession 0001193125-26-325370, filed July 30, 2026; NLP 51 and NLP 53 unit series in Form 8-K accession 0001193125-26-417006, filed October 7, 2026
• Starwood Real Estate Income Trust, Inc., Apollo joint venture in Form 8-K accession 0001193125-26-332741, filed August 4, 2026