An office DST is a bet on which tenants renew, at what rent, and how much the landlord pays to keep them. The building does not generate cash by existing. It generates cash when a specific company decides its lease is still worth signing, on terms the sponsor underwrote years earlier.
Office differs from most other DST property types in one respect: the tenant's decision to stay is no longer automatic. Remote and hybrid work changed how much space a renewing tenant wants, and that change shows up at rollover, not at closing.
Read an office offering from the rent roll forward to the lease expiration schedule, not the other way around. The distribution rate on page one describes today. The expiration schedule describes what has to go right for that rate to survive.
List every suite by tenant, square footage, starting rent, current rent, term, renewal options, and termination rights. Note which leases predate recent hybrid-work adoption and which were signed after tenants had already tested reduced space needs.
Investment-grade anchor tenants carry different risk than a roster of small professional-service firms. A single large tenant concentrates default risk; a diffuse roster concentrates leasing and turnover cost across many small suites at once.
Check for early termination or contraction rights buried in amendments. A tenant that can give back a floor on notice is not committed for the full stated term, regardless of what the lease abstract summary implies.
Confirm whether rent steps are contractual and current, or whether the underwriting assumes an increase that has not yet occurred. A projected step is not the same fact as a signed escalation clause already in force.
Build a year-by-year schedule of expiring square footage against the hold period. A building that is 95 percent leased today with 40 percent of that space expiring in year three carries far more risk than the headline occupancy number suggests.
Ask what percentage of tenants at recent renewal took less space than their prior lease. Right-sizing at renewal, not vacancy at lease end, has been the more common pattern in office since 2020, and it erodes rent roll income even when a tenant technically stays.
Compare the sponsor's renewal-probability assumption with the building's own recent history. A projection built on pre-2020 renewal rates should be treated skeptically regardless of submarket.
Every new lease and most renewals require tenant improvement allowances and leasing commissions, often funded from operating cash or a capital reserve rather than from the incoming tenant's rent. Confirm how the sponsor's pro forma treats this cost in years with heavy rollover.
A distribution that looks stable can mask a reserve draw-down that funds concessions today and leaves less cushion for the next round of expirations. Ask for the reserve balance and its planned use over the projected hold, not just its balance at closing.
Second-generation space with an unusual floor plate, low ceiling heights, or outdated systems commands higher TI cost per square foot to re-lease than a comparable building built to current tenant expectations.
Office demand has bifurcated by building quality more than by market. Amenitized, well-located, recently renovated buildings have captured a disproportionate share of new leasing activity, while dated buildings in the same submarket have absorbed most of the vacancy increase.
Review the property's amenities, parking ratio, floor plate efficiency, HVAC and elevator systems, and recent capital investment relative to nearby competitive buildings. A building that has not been repositioned since acquisition is competing against buildings that have.
Ask whether the sponsor's leasing comps come from buildings genuinely comparable in class and condition, or from a broader submarket average that includes stronger assets pulling the number up.
Match the loan maturity against the tenant expiration schedule. A refinance that comes due during or immediately after a heavy rollover year forces the sponsor to refinance a building with uncertain near-term income, at whatever rate and proceeds the market offers then.
Review debt-service coverage under a stressed vacancy and rent scenario, not only at current occupancy. Lenders have tightened office underwriting broadly, and a loan sized against 2019-era assumptions may not be replaceable on similar terms today.
Ask what recourse the trust has if a refinance produces materially lower proceeds than the original loan, and how that shortfall is funded without treating it as an ordinary capital call.
Also confirm whether the loan carries an interest-rate cap or hedge that expires before the projected sale date. A cap that must be replaced mid-hold at a higher premium is a real cost the original pro forma may not have priced.