Starboard Realty Advisors: DSTs, Apartments, and Retail Review

By Jerry Baker

Starboard Realty Advisors is an Irvine real estate firm whose business includes apartments, shopping centers, and net lease properties. This guide explains how I would review its property plans, management roles, and exchange structures before considering a specific investment.[1]

The firm, the people, and the property are three separate reviews

Starboard’s website identifies William Winn as chief executive officer and co-founder, Stephen Carlton as partner and co-founder, and Daniel De Leon as president and chief operating officer. It describes a focus on both stabilized real estate and properties needing added work. Those are useful starting points, but the two plans can ask very different things of your money.[1]

Winn’s biography lists earlier work at Passco, ValueRock, and Charles Dunn. I would treat that as career history. It does not turn the results of those separate firms into the results of a new Starboard investment. I want to know what each person did, who made the key decisions, and which results belong to the team responsible for your property today.[2]

De Leon’s biography describes responsibility for daily operations, capital relationships, and financial strategy, along with service on the investment committee. My follow-up would be practical: Who approves the budget? Who signs off on a loan change? Who handles a material problem when the lead asset manager is away? A clear chain of responsibility is more useful than a long list of titles.[3]

This profile is a framework for asking those questions. It does not mean I have approved Starboard, reviewed every property it owns, or confirmed an offering is available through Baker 1031. The questions below are proposed review steps, not findings that the firm has mishandled any issue.

Separate a stabilized DST from a renovation plan

Starboard’s acquisition criteria distinguish apartment DSTs aimed at exchange buyers from value-add apartment purchases that may not fit an exchange. They also describe shopping centers and portfolios of single-tenant properties. The published criteria are sourcing goals. They are not the debt, rent, return, or exit terms of every investment the firm sponsors.[4]

I would start by writing the actual plan in one sentence. Are we buying occupied apartments and maintaining them? Are we fixing units to seek higher rents? Are we filling empty shops? Or are we collecting rent under long leases from a group of businesses? If the answer keeps changing as I read the package, we need a better explanation.

Then I would separate the work needed to keep the building running from the work needed to reach the projected return. Replacing a worn roof may protect current rent. Adding amenities may seek future rent growth. Both use cash, but they solve different problems. A budget should show which costs are required and which can wait.

For an exchange investor, I also want the legal structure matched to that work. IRS Revenue Ruling 2004-86 describes circumstances in which certain DST interests are treated as real property for exchange purposes. It does not approve every trust or every business plan. The trustee’s powers and the proposed activity still matter, and your tax team must review the actual documents.[5]

Apartment rent growth: start with the leases you already have

Starboard’s apartment focus makes the rent roll a central document in my review. I would compare three numbers for each unit type: rent under existing leases, rent achieved on recent new leases, and rent used in the forecast. A property can advertise a high asking rent while collecting less after discounts, bad debt, or free weeks.

My next step would be to group leases by their end dates. If many residents can leave during a slow season, the forecast should show that pressure. I would also want to see renewal offers, acceptance rates, average days empty, and the cost of preparing each vacant unit. A higher signed rent may not improve cash flow if it comes with a longer vacancy.

Here is a hypothetical example, not a Starboard property. A 200-unit building with monthly rent of $1,500 has $3.6 million of annual potential rent. At 95% collected occupancy, that becomes $3.42 million. At 90%, it becomes $3.24 million. The five-point change removes $180,000 before considering operating costs or loan payments.

Now suppose annual operating costs rise from $1.6 million to $1.68 million at the same time. Cash before debt and other excluded costs falls from $1.82 million to $1.56 million. That is a $260,000 drop, or about 14.3%. A modest change in collections can have a much larger effect on the dollars left for investors.

I would run that test using actual unit counts and costs. I would also compare renovated and unrenovated units without mixing their rents. Otherwise, a change in the types of units being leased can look like rent growth even when like-for-like rent has barely changed.

A shopping center needs more than a familiar anchor

The firm’s retail criteria include shadow-anchored centers. That term usually describes smaller shops near an anchor business whose real estate may be owned separately. Starboard’s criteria also discuss properties with open space to lease and rents it believes can grow. Those features make the exact ownership map and lease files especially useful.[4]

I would ask whether the investment owns the anchor space, owns only the nearby shops, or shares parts of the site through recorded agreements. A well-known store on the site plan may bring customers without paying any rent to the investment. That can still be useful, but the cash flow should not imply rent the trust never receives.

The site agreements deserve a plain-English summary. Who repairs shared parking? Who may change an entrance? Is a sign visible from the main road? Who controls delivery routes? Could another owner rebuild its parcel in a way that blocks access or changes customer traffic? These questions can matter as much as the color of the storefronts.

I would then check for co-tenancy provisions. Depending on the lease, a shop may gain rent relief or another right if a named anchor closes or occupancy falls. I would not assume such a clause exists. I would ask counsel to identify any that do and calculate what they could do to collected rent.

A retail vacancy also comes with a time and cost budget. Releasing space can require broker fees, tenant work, permits, free rent, and carrying costs. If the forecast assumes a quick replacement, I want comparable signed leases and a realistic construction schedule. A map of nearby shops alone does not answer those questions.

A net lease portfolio needs two concentration checks

For a group of single-tenant properties, I would count both the buildings and the businesses paying the rent. Ten addresses do not create ten separate sources of credit when one operator or guarantor supports all ten. A list of different store signs can also hide common ownership behind those stores.

I would build a schedule showing the named tenant, any guarantor, lease end date, renewal options, rent increases, and rent share for each location. Then I would sort the same schedule by parent company and by geography. This helps reveal risks that a property-by-property list can make hard to see.

The lease itself must answer who pays for roofs, structure, parking, insurance, and tax increases. The label “NNN” is not enough. I would also examine any cap on expense recovery and whether a tenant can challenge shared costs. Money that looks reimbursable in a spreadsheet may be disputed when the invoice arrives.

A final question is whether each site has a practical second use. A restaurant with a costly custom layout may need major work before another business can use it. I would review local rents for the empty building, without the current lease attached. That is a downside test, not a prediction that the tenant will leave.

Below replacement cost is a claim to test

Starboard says it seeks locations with rent growth potential and purchases below replacement cost. That is a strategy description, not a floor under the resale value. I would ask for the date, location, building type, and assumptions behind the cost estimate before giving the comparison much weight.[1]

For example, a building may cost less than new construction because it has older systems, smaller units, awkward loading, or deferred repairs. I would add the cost of correcting those limits to the purchase price. I would also allow for lost rent during the work. The result is a more useful comparison with the price of a working new building.

Replacement cost says little about what tenants can afford. If local demand supports only a certain rent, a developer’s higher cost does not force the market to pay more. My review would therefore pair the cost estimate with actual signed leases, competing supply, household or business demand, and the cost of owning the property.

The same logic applies to “below-market” rents. I would ask whether the comparison uses buildings with similar age, location, finish, parking, and lease terms. A nicer property across town may prove that some people pay more. It does not prove that this property can collect the same rent without added cost.

Who does the work, and who checks it?

Starboard describes Starboard Management Services as a wholly owned subsidiary providing asset management and oversight of property management and leasing. Its public description says asset managers select service providers for the property and the local assignment. That leaves a useful review question: Which tasks are performed by affiliates, and which are assigned to outside firms?[6]

I would request a responsibility chart for the actual investment. It should name the property manager, leasing broker, construction manager, accountant, and asset manager. Each role should have a scope of work, fee schedule, and reporting line. A person should be able to point to who owns a missed task.

For outside vendors, I would ask how bids are compared and who approves changes. For affiliates, I would ask the same questions plus how the fee was set. Related work can provide useful control and continuity, but the investor still needs to understand its cost. The review should focus on the agreement rather than assume either benefit or abuse.

Monthly reports should connect leasing activity to cash. If reported occupancy rises while collections fall, the report should explain the difference. If repairs run above budget, it should identify whether the cost is one-time, recurring, or likely to spread to other buildings. A short explanation of a problem is more useful than a polished chart with no context.

Line up the loan, the lease, and the planned exit

Starboard’s published criteria describe different financing plans for stabilized and value-add purchases. I would not copy those target terms into a client’s exchange plan. I need the signed loan documents and the investor-level debt allocation for the exact trust or entity.[4]

My timeline would show the loan maturity beside lease expirations and the intended sale window. If a major retail tenant decides on renewal just before the loan is due, the lender may make a different judgment from the one in today’s forecast. The analysis should allow for a less convenient sequence of events.

For floating-rate borrowing, I would examine the index, spread, any rate cap, and the cost of replacing that cap. For fixed debt, I would examine prepayment costs and any limits on an early sale. A fixed payment can help planning while still making an early exit costly.

I would also test resale value with a higher capitalization rate. In a simple example, $1 million of annual net operating income divided by a 5% cap rate gives $20 million of value. At 6%, the same income gives about $16.67 million. That is roughly a 16.7% value decline before selling costs. It is not a forecast for Starboard; it shows why stable rent alone does not fix an exit price.

Keep exchange advice separate from sponsor marketing

A firm can offer helpful exchange coordination without replacing your qualified intermediary, CPA, or attorney. IRS guidance makes clear that Section 1031 applies to qualifying real property held for investment or business use, subject to its rules. The ownership form and your transaction both need to fit.[7]

I would want the tax opinion, trust agreement, closing schedule, and final sources and uses available early. I would also confirm how a property sale will be handled later. The fact that an investment accepted exchange proceeds on entry does not answer every question about your next exchange, the timing of a sale, or the tax effect of a changed structure.

The fee review should follow the money from your subscription through the eventual sale. I would identify acquisition costs, financing charges, recurring management costs, reserves, leasing costs, and any share of profits paid to the sponsor. I would distinguish fees already included in projected cash flow from those still deducted afterward.

My decision would depend on how those terms work for you. A plan requiring several years of patience may fit one family and be wrong for another with near-term spending needs. The sponsor review helps define the questions. It does not choose your allocation without your own goals, cash needs, and exchange figures.

Frequently asked questions about Starboard Realty Advisors

What type of real estate does Starboard focus on?

The firm describes apartment, shopping-center, and single-tenant net lease strategies. Each property needs its own review of rent, expenses, debt, and resale assumptions. A broad sector label does not tell you which of those risks a particular investment carries.

Does every Starboard investment qualify for a 1031 exchange?

No blanket conclusion is appropriate. Its public criteria distinguish exchange-oriented DSTs from other strategies. Your tax advisers should review the specific entity and transaction. A sponsor’s name or a picture of real estate is not proof of exchange qualification.

Is a shadow anchor part of the investment?

Not necessarily. Check the title documents and site agreements to learn whether the investment owns the anchor parcel or just nearby shops. Then review how shared access, costs, and tenant rights work if the anchor changes.

Does a purchase below replacement cost protect my principal?

No. The building can still lose value, need repairs, or collect less rent than expected. I would test the cost comparison against the property’s actual condition and earning ability. The phrase is a reason to investigate, not a guarantee.

What would you request before reviewing a Starboard DST?

I would request the offering memorandum, trust documents, tax opinion, rent roll, operating history, property reports, loan terms, fee schedule, and reserves. I would also ask for the team’s relevant realized results, including weaker outcomes, with a clear explanation of each person’s role.

Can I assume a projected hold period is a promised sale date?

No. I would treat it as a planning assumption and check the manager’s authority to extend the hold. Lease decisions, financing, and buyer demand may change the timing. You should be able to hold the investment longer if the documents and circumstances require it.

Educational information, not an offer or a personal tax, legal, or investment recommendation. Examples are hypothetical and omit stated adjustments. Tax treatment depends on your facts and current law. Review your transaction with your CPA, attorney, and qualified intermediary. Real estate investments can lose value and may be illiquid.