What are my operating partnership units worth after a 721 exchange?

Your unit count is fixed at the contribution, and NAV per share is the price that sets it

A 721 roll-up is priced in one direction. The operating partnership values your trust interest under its purchase option, divides by the REIT's NAV per unit, and issues that many units. A quarterly report and prospectus supplement filed with the SEC in August 2026 by a non-traded REIT with a DST program records units issued to an affiliate 'at the NAV per unit' as of the prior month end, and states that the purchase price of its shares 'will generally equal our prior month's net asset value ("NAV") per share for such class, as determined monthly'.

How your trust interest is valued fixes your unit count for good. A form of DST trust agreement that another non-traded REIT filed as an exhibit in 2019 gives each investor units 'with an aggregate value equal to the then fair market value' of the interest, takes that value from an appraisal of the property by an independent firm the manager selects, completed within one year of exercise, and allows 'no discounts for lack of liquidity or minority interests'. Your program's clause may differ, so ask for it in writing before the window opens; it belongs with the questions to settle before you elect.

After that, the units are worth what the REIT says NAV is, monthly, and there is no market to disagree

The filing explains the calculation: 'We calculate NAV in accordance with the valuation guidelines approved by our board of directors', starting from the net asset values of the investments plus other assets such as cash, less liabilities 'including mortgages, other indebtedness', accrued performance participation and stockholder servicing fees. GAAP impairment and straight-line rent are excluded, so NAV is not the balance-sheet equity figure.

That is a reasoned estimate, published once a month, and it is the only price you have. Non-traded shares are not listed, units have no exchange, and the only regular buyer is the REIT itself through a repurchase plan that caps repurchases at 2% of aggregate NAV a month and may fill all, some or none of the requests; whether the REIT can decline to redeem units is its own question. NAV moves with interest rates, appraisals and leasing, so a unit can be worth less next year than the day it was issued. Illiquidity and loss of principal are both real risks of holding units.

The tax value is a different number: basis carries over under section 722 and the deferred gain rides inside the units

Section 722 sets the basis of a partnership interest acquired by contributing property at the contributor's adjusted basis in the property, increased by any gain recognized under section 721(b). Section 723 gives the partnership that same basis in the building. Because section 721(a) recognizes no gain on the contribution, the low basis you carried from your original rental through every exchange arrives in the units intact.

Two adjustments follow. Section 752 treats an increase in your share of partnership liabilities as a cash contribution and a decrease as a cash distribution, so outside basis moves with the debt allocated to you, and a large decrease can produce gain at the roll-up itself (the debt arithmetic). And section 1223(1) adds the period you held the trust interest to your holding period for the units, so a redemption a month later is still long-term.

The difference between NAV and basis is the deferred gain, taxed when units are redeemed, sold or exchanged for shares, and erased only by the basis reset at death under section 1014. The one-way nature of that door is why the value question and the basis question belong together.

Hypothetical: $500,000 at a $10 NAV becomes 50,000 units; a 10% drop in NAV takes $50,000 off the value and $50,000 off the gain

Round numbers, hypothetical only. Your trust interest is valued at $500,000 under the option, NAV per unit is $10, and you receive 50,000 units. Your carried basis is $150,000, so the deferred gain inside the units is $350,000 on day one.

Twelve months later NAV is $9. The units are worth $450,000; the gain if you redeemed everything is $300,000, of which the depreciation layer carried from the trust is taxed at up to 25% under section 1(h) and the rest at 15% or 20%, plus the 3.8% tax under section 1411 above its income thresholds. If the REIT answers a redemption in shares and those shares are repurchased inside their first year, the filed plan pays 95% of the transaction price, or $427,500 on these figures.

If NAV instead rises to $11, the value is $550,000 and the gain $400,000. Either way the deferral is unchanged; what changes is how much is left to defer. Lay your own basis schedule beside the REIT's last twelve NAVs and have your CPA check the result before you elect.

What to ask before you accept units in place of a trust interest

Ask for the valuation procedure the operating partnership will apply to your trust interest, the NAV per unit that will be used and the date it is measured. Ask for the REIT's valuation guidelines and its published NAV history, without treating any past figure as a forecast, and for the fees accrued against NAV every month, because stockholder servicing fees and performance participation reduce it before you see it.

Then the harder question: would you rather hold a slice of one building whose value you can only estimate until it sells, or a slice of a portfolio valued for you monthly that you cannot sell on demand? Your DST is going full cycle sets that choice against the cash and re-exchange routes, and DST vs REIT vs syndication compares the holdings side by side.