Optionality Capital
Optionality Capital
Liquidity Provisioning Opportunity for 1031 Exchange Platform
Confidential
April 2026
CONFIDENTIAL — FOR QUALIFIED INVESTORS ONLY
OPTIONALITY CAPITAL
The 1031 Exchange Problem — $2M California Property
Current options destroy wealth, lock capital, or both
A
Keep the Property
Cost
~2.3% cap rate*
on $2M asset value
Below OC NNN yield even after fees
Liquidity
Medium
Can sell, but subject to market timing and transaction costs
Risk
✕
Anti-investor regulatory risks (Trump Admin Investor Home Ban, LA Mansion Tax)
✕
Active mgmt, bad tenant risk
B
Sell & Pay Taxes
Cost
$555K+
37% on $1.5M gain (Fed + CA)
Wealth permanently destroyed
Liquidity
High
Fully liquid — but wealth permanently destroyed on Day 1
Risk
✕
No tax deferral or step-up at death
✕
Leaves RE ecosystem entirely
C
1031 → NNN Direct
Cost
$240K
6% buy + 6% sell = 12% total on $2M
Liquidity
Medium
Illiquid single asset. Still need time + commission to sell.
Risk
✕
Single-tenant concentration risk
✕
45-day ID deadline pressure
D
Traditional DST
Cost
$200–400K
10–20% stacked fees on $2M
Liquidity
None
60–80¢ on the dollar in secondary. Some convert to 721 UpREITs, permanently removing ability to 1031 in the future.
Risk
✕
Sponsor controls all exit decisions
✕
Opaque, misaligned incentives
★
Optionality Capital
Cost
$120K
6% all-in — lowest in market
Liquidity
High
Investor redemption option available after 2nd year
Advantages
✓
Fully passive, diversified NNN
✓
Optionality for future 1031 preserved
*Cap rate assumes: $8K/mo rent ($96K/yr), $24K property tax, $6K insurance, $5K maintenance, 5% vacancy, 10% management fee. Net income ~$46,600 on $2M value.
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OPTIONALITY CAPITAL
Our Solution
The first DST designed to be liquid
Available Quarterly
New DSTs launched every quarter. Always a place to park 1031 proceeds within the 180-day deadline. No scrambling for replacement property.
Liquid by Design
A constant stream of new investors trading in redeems existing investors out. No 7–10 year lockup. No waiting for a sponsor decision. The investor controls the exit.
1031 Out of the DST
Investor sells DST interest and rolls proceeds into the next 1031 exchange. Continuous tax deferral — gain eliminated at death via stepped-up basis.
Low Fees
6% all-in vs. 10–20% industry standard. No selling commissions, no dealer manager fees. Enabled by in-house BD and tech-enabled online distribution.
How it works: Investors enter via 1031 exchange into a diversified NNN portfolio. After ~2 years, they exit via secondary sale to the next incoming investor — who is also completing a 1031 exchange. The cycle repeats. The properties are undisturbed.
~2yr
Hold Period
2–3%
Annualized Yield
$0
Taxes Due
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OPTIONALITY CAPITAL
The Recycling Chain
Each exit is the next investor's entry
Time →
DST Pool
NNN Property Portfolio — $100M — Stable Throughout All Generations ALWAYS FULL →
Phase 1 — Year 0
A
Investor A enters via 1031
$2M proceeds → DST. Immediately passive. Earns quarterly NNN distributions.
Hold ~2 Years
8 quarterly distributions → ~2–3% annualized yield
→
Yr 2
Handoff
Phase 2 — The Handoff
A
A exits via secondary market
Sells interest. Begins new 1031 into next deal.
Interest transfers
B
B enters via 1031
Same DST, same properties. B takes A's position.
→
Yr 4
Handoff
Phase 3 — Cycle Repeats
B
B exits, 1031s into next deal
Same story as A. No taxes due.
C
C enters — and so on
Cycle continues indefinitely.
∞
Perpetual mechanism
Affiliated
Liquidity Provider
Market Maker
Guarantees liquidity
PropCo
If no organic buyer is available, PropCo acquires the interest and holds until the next investor enters.
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OPTIONALITY CAPITAL
Competitive Advantages
Five structural moats that compound over time
In-House Broker-Dealer
Owned FINRA-registered BD eliminates third-party selling commissions. 12–18 month formation creates a barrier to entry. Full margin retention vs. 30–50% shared with selling groups.
Direct Distribution Network
Registered rep network and 1031 investor relationships deepen over time and cannot be replicated quickly.
Technology-First Operations
Automated DST formation, investor matching, compliance workflows, and capital recycling. Tech-enabled online marketing replaces expensive wirehouse distribution channels.
Quantitative Inventory Management
Systematic acquisition criteria — cap rate, lease term, tenant credit, geography — with data-driven pricing. Optimizes deployment velocity and portfolio risk across all active DSTs.
Portfolio Construction with Liquidity in Mind
10–15+ year NNN credit-tenant assets. Diversified across tenants, geographies, and lease expirations. Low-volatility portfolio minimizes secondary market discount risk.
12–18mo
BD formation barrier
100%
Margin retention
10–20yr
NNN lease terms
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OPTIONALITY CAPITAL
Affiliated Liquidity Provider — PropCo
Capital provider for the market-making business
LP Yield Ramp — Quarterly Cohorts Over 2 Years
5%
Q1
Yr 1
4%
Q2
6%
Q3
8%
Q4
10%
Q1
Yr 2
12%
Q2
14%
Q3
16%
Q4
16%
Yr 3+
Each quarterly cohort contributes ~2%. Yield stabilizes at 16% after Year 2.
Steady-State Returns
16%
IRR target
10–16%
Cash yield (net of fees)
$800M
AUM at steady state
How It Works
  • $100M working capital facility deployed into NNN properties
  • ~90-day deployment cycles — 4x annual capital velocity
  • Each cycle: acquire real estate → form DST → sell interests → return capital → repeat
  • $100M compounds to $800M AUM over 2 years
  • 2% AUM fee on entire DST portfolio
  • Capital returned and redeployed each cycle — no long-term lockup
  • Backed by real property: NNN assets with top-tier tenants (McDonald’s, Chick-fil-A, Chipotle, Starbucks, health systems)
  • Potential to take additional market-maker spread upside
Cash yield ramp
10–16% net cash yield after Year 2, depending on portfolio maturity. Deployment velocity may vary — the 2-year ramp reflects target timing, not a guarantee of 4x deployment in every quarter.
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OPTIONALITY CAPITAL
Founding Team
Mark Zhang
Chief Investment Officer

9 years in institutional multifamily real estate private equity.

GID: AVP at one of the largest vertically-integrated RE firms in the U.S. with $32.1B AUM and 57,000+ units.

TriBridge Residential: Director of Acquisitions for a $1.4B portfolio with 21%+ IRR since inception. Led sourcing, equity and debt capital markets across the Southeast.

15+ transactions totaling 3,700+ units across multifamily, mixed-use, adaptive reuse, and condo conversion. Direct 1031/TIC structuring experience.

Yuan Wang
Chief Technology Officer

Tower Research Capital: Quantitative Trader developing systematic strategies on interest rate futures.

Previously Investment Associate at Bridgewater Associates ($150B+ AUM); first engineer at HG Vora Capital ($7B+ event-driven hedge fund).

Startup contributor: Employee #5 at $1.5B AI defense unicorn. $150K+ from SaaS side projects and government contracts. 5 patents. Co-investor with Khosla, 8VC, Eric Schmidt.

Deep expertise in profitable systematic market-making, operationalizing AI in asset management, and decades of family SFR management and estate planning.

Long-time best friends from college. Mark brings institutional deal flow, underwriting discipline, and capital markets relationships across 3,700+ units and $32B+ in managed assets. Yuan brings systematic market-making expertise from Tower Research and a family background in SFR management and estate planning. Have been tinkering together on side projects since 2018. Both Princeton 2017.
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OPTIONALITY CAPITAL
Capital Raise
PropCo Equity — Affiliated Liquidity Provider
$100M
PropCo equity raise — working capital facility
16%
Target IRR at stabilization
10–16%
Net cash yield after Year 2
$800M
Steady-state AUM
$16M/yr
Annual AM fee income
Right of First Refusal
PropCo investors receive a right of first refusal on OpCo equity raise — direct exposure to the DST sponsor’s acquisition, asset management, and disposition fee income stream.
Key Terms
  • Raise: $100M in PropCo equity
  • Collateral: Backed by NNN real property assets at all times
  • Lock-up: 6 year term
  • Wind-down: 24 months notice to orderly liquidate
  • Fee multiplier: ~90-day cycles, capital returned and redeployed 4x/year
  • RFR on OpCo: Right of first refusal on future OpCo equity raise
Capital Protection
• Security interest in NNN properties during acquisition
• Top-tier tenants (Chipotle, Chick-fil-A, McDonald’s)
• No long-term capital lock-up — returned every ~90 days
• Investment committee approval on every acquisition
• Monthly reporting, annual independent audit
Optionality Capital
Mark Zhang, CIO & Yuan Wang, CTO
info@optionalitycapital.com
This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Investment involves risk and possible loss of principal. Past performance is not indicative of future results.
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