What happens to the debt from the DST when it UPREITS (721 Exchange)?

The DST interests have been exchanged for OP units ownership in the REIT so it is important to evaluate the debt levels of the REIT when choosing a DST to REIT program. Any non-recourse debt assumed when you purchased the initial DST, is extinguished when you go into the OP units of the REIT phase. Many clients find this feature very attractive as you may have increased your basis and resulting depreciation benefit to the cash flow by acquiring the initial debt in the DST phase but are no longer responsible for any of the debt in the REIT phase.