Mid Atlantic Real Estate Journal (MAREJ) is a leading source for commercial real estate news, insights, and industry coverage across the Mid-Atlantic region.
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ISSUE HIGHLIGHTS Volume 38, Issue 3 March 2026 KENNEDY FUNDING CLOSES $1.12M LOAN FOR FOREIGN NATIONAL BUYER
JLL Capital Markets secures sale and financing from QuadReal PCCP acquires 1.2M s/f distribution center in PA’s logistics corridor for $141.6M
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The location delivers cost- effective access to major met- ropolitan markets including Harrisburg at 25 miles, Balti- more at 90 miles, Washington D.C. at 100 miles and Phila- delphia at 120 miles. The sur- rounding 30-minute drive area encompasses a population of 164,003 with a workforce of 81,128 and an average house- hold income of $102,066. The JLL Capital Markets team was led by senior manag- ing director John Plower and senior director Ryan Cottone . “The size and scale of this transaction demonstrates the strength of Pennsylvania’s in- dustrial market fundamentals, and the premium investors place on assets with direct Inter- state access,” said Plower. “The market’s exceptional trans- portation infrastructure and business-friendly environment make it a magnet for large-scale institutional capital.” MAREJ
EWVILLE, PA — JLL Capital Mar - kets announced the
$141.6 million sale of a premier class A industrial facility at 3419 Ritner Hwy. in Newville. JLL represented the seller in the sale to PCCP LLC . Working on behalf of the new owner, JLL also secured an $82 million acquisition loan through QuadReal Property Group , a global real estate investment, development and operating company. The state-of-the-art distri- bution center encompasses 1,215,240 s/f on a 93.17-acre site and maintains 100% oc- cupancy under a long-term lease with Newell Brands, a Fortune 500 manufacturer and distributor of consumer and commercial products. The company operates a di- verse portfolio of more than 50 brands across learning and development, home and
4A
3419 Ritner Highway
INDUSTRIAL INVESTMENTS SECURES 113,085 S/F IN LEASES
commercial and outdoor and recreation segments. The 2020-constructed fa- cility showcases superior functionality with 36-foot clear heights, 120 dock-high doors expandable to 241, 437 trailer stalls, 265 car parking spaces and a 200-foot truck court depth. The property’s strategic positioning along Interstate 81 provides efficient distri- bution access throughout
Pennsylvania, Maryland, and Virginia, while maintaining connectivity to critical logis- tics hubs including the Port of New York/New Jersey, Port of Philadelphia, Newark Liberty International Airport and Philadelphia Interna- tional Airport. Located within the Northeast Distribution Corridor, the facility enables same-day delivery to over 100 million consumers across the Mid-Atlantic region.
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Rubenstein and Waterfall announce $127M refi. of Chesterbrook Office Campus in Suburban Phila.
Section B
has invested more than $50 million in capital, which in- cluded the creation of “The Circuit,” a centrally located, best-in-class amenity center that serves as a vibrant con- nector to the Chesterbrook campus community and pro- motes productivity and col- laboration. The amenity center features a food hall, outdoor gathering spaces with fire pits, high-tech meeting rooms, and a state-of-the-art fitness cen- ter along with a 20,000 s/f full service co-working suite. They have also upgraded the lob- bies, façades, and landscaping across most of the portfolio to create a modern and inviting tenant experience. Waterfall worked with Ru- benstein Partners to provide a flexible financing structure tai- lored to Rubenstein’s creative business plan. “We are excited to support a first-class operator in their core competency and market,” said Ezra Zucker , associate on Waterfall’s CRE lending team. MAREJ
KING OF PRUSSIA/ WAYNE PA — Rubenstein Partners, L.P. (including its affiliates, Rubenstein) secured a $127 million refinancing of Chesterbrook, the 1.1 million s/f, 14-building office campus in the King of Prussia/Wayne PA submarket, part of the greater Philadelphia region. The new loan, provided by funds managed by Water- fall Asset Management ’s
New Jersey Apartment & Multifamily Conference April 16, 2026 For speaking & sponsorship info., please contact: Lea at 781-740-2900 or lea@marejournal.com
Chesterbrook Amenity Center
(Waterfall) commercial real estate lending platform, in conjunction with a significant investment of new equity from Rubenstein along with some third parties, recapital- izes the property to drive the company’s long-term business plans for the class A office campus. The loan is comprised of upfront proceeds as well as funding to support future leas- ing and capital improvements. The loan will also support Rubenstein’s continued stra- tegic leasing efforts and allow the company to reinvest in the
property in ways that will fur- ther boost the asset’s reputa- tion as a leading office campus in suburban Philadelphia. The CBRE Capital Mar- kets team of Shawn Rosen- thal, Jason Gaccione, Jake Salkovitz and Justin Helbling worked in partner- ship with CBRE’s National Office Partners - Philadelphia team of Doug Rodio, Jerry Kranzel and Bruer Kersh- ner to secure the financing on behalf of Rubenstein. Since acquiring the office portfolio in 2019, Rubenstein
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Inside Cover A — March 2026 — M id A tlantic Real Estate Journal
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*Potential returns and appreciation are never guaranteed and loss of principal is possible. Please speak with your CPA and attorney for tax and legal advice.*The There is a risk Investors may not receive distributions, along with a risk of loss of principal invested. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. This material is not to be construed as tax or legal advice. There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Securities offered through FNEX Capital.
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2A — March 2026 — M id A tlantic Real Estate Journal
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M id A tlantic R eal E state J ournal Publisher, Conference Producer ..............Linda Christman VP, Conference Producer .............................Lea Christman Editor/Graphic Artist ......................................Karen Vachon Contributing Columnist .... Cushman & Wakefield; Christopher Moore & Joe Latina, LMT Commercial Realty, LLC/CORFAC International; Dwight Kay, Kay Properties; Ben Roper Mid Atlantic R eal E state J ournal ~ Published Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal 117 HMS Halsted Dr., Hingham, MA 02043 USPS #22-358 | Vol. 38, Issue 3 Subscription rates: 1 year $99.00, 2 years $148.50, 3 years $247.50 & $4.00 single issue - plus postage
John McWilliams
Americas Data Center Market Shifts to “Managed Growth” D ata center markets in the Americas are en- tering a new phase de- fined by more structured, policy- driven site selection and devel - opment, according to Cushman & Wakefield’s H2 2025 Data Center Update. While demand for capacity remains intense, growth is increasingly shaped by regulatory frameworks, resource availability and infrastructure readiness. “The next chapter of the Americas data center market will be defined less by the scale of demand and more by how ef - fectively markets can stream - line the development of new infrastructure to support it,” said John McWilliams, Head of Data Center Insights, Cush - man & Wakefield. “Govern - ments and utilities are play - ing a growing role in guiding development through power planning, zoning and resource management. Even with these guardrails, demand remains exceptionally strong, reinforc - ing the long-term expansion
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outlook for both established hubs and emerging markets.” Across several jurisdictions, local and regional govern - ments are increasing scrutiny around large-scale data center development. New and evolv - ing policies focused on grid strain, natural resource use and broader infrastructure impacts are affecting approval timelines. In some cases, this has led to project delays, can - celled developments, or the removal of by-right zoning. As a result, market expansion is increasingly shaped by policy frameworks and infrastruc - ture capacity rather than demand alone. Despite these headwinds, the development pipeline con - tinues to expand. By the end of H2 2025, the Americas reached 25.3 gigawatts (GW)
of data center capacity under construction, with the majori - ty located in the United States. At the same time, availabil - ity remains extremely tight. Regional vacancy held steady at 4.2%, even after approxi - mately 3.9 GW of new coloca - tion capacity was delivered in the second half of the year. In the U.S., vacancy remained unchanged at 3.5%. Industry expectations suggest that meaningful easing in avail - ability is unlikely before 2030. Preleasing activity remains strong, underscoring contin - ued competition for capacity. Colocation preleasing across the Americas increased to 78.8%, with U.S. colocation prelease rates even higher at 81.5%, reflecting sustained de - mand from hyperscalers, cloud continued on page 24A
Firmly Rooted in the Law and in the Community We are well grounded in every facet of real estate law, from acquisition to construction. We are committed to serving the needs of our clients and our communities.
Contact: NEIL A. STEIN • nstein@kaplaw.com 910 Harvest Drive, Blue Bell, PA 19422-0765 • 610-941-2469 • kaplaw.com Other Offices: • Cherry Hill, NJ 856-675-1550 • Philadelphia, PA 215-567-3120 Kaplin Stewart Attorneys at Law
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any sectors of com - mercial real estate have recovered sub - By Christopher Moore & Joe Latina, LMT Commercial Realty, LLC/CORFAC International Changes to Commercial Real Estate – Rising Costs for Industrial Real Estate M values back in alignment with market values. Rising Insurance Premiums Insurance
replacement and repair costs for commercial properties have reportedly increased about 44% since the pandemic. Mul - tifamily premium rates have doubled in many cases in the last five years, with some carri - ers abandoning entire markets, resulting in less competition. Increased Maintenance Expenses Roof repairs, HVAC systems, lighting and parking lot main - tenance (including snow plow - ing) have experienced notable cost increases since 2021. While the days of year long deliveries for industrial electrical equip -
ment and HVAC have improved substantially, the costs owners are required to pay have never recovered and remain high. Utilities and Energy Costs Energy costs have risen sig - nificantly since COVID, driven by greater power demand from automated warehouses and cold storage, as well as infra - structure upgrades for modern logistics facilities. While many states have allowed consumers to choose who provides their power, the local utilities have greatly increased their deliv - ery charges for gas and elec - tric. Since 2015 gas delivery
charges have increased 46% and electric delivery charges have doubled. These increas - ing charges have far outpaced inflation. Volatility in natural gas prices, changing fuel use for electricity generation (coal being replaced by gas peak - ing), rising grid infrastruc - ture costs (70% of transmis - sion lines in the US are over 25 years old), and extreme weather have all contributed to higher utility costs. While the industrial sector of commercial real estate has re - mained one of the most resilient continued on page 17A
stantially since CO - VID, with rising base rental rates in industrial, increased rents in mul - tifamily and positive retail
premiums have expe- rienced in- creases up - wards of 45% in recent years due to several fac - tors includ -
Christopher Moore
Joe Latina
absorption. Downtown office, especially class B and C have faced challenges, while class A suburban office has been very active. Unfortunately, all the classes of commercial real estate have faced chal - lenges with rapidly increasing operating expenses. The lion share of rising operating costs come from rising insurance premiums, property taxes (specifically school taxes in Delaware), maintenance, labor costs, higher construction and systems costs, and rising util - ity costs. We are anticipating that the growing operating costs will begin to put down - ward pressure on base rent prices if these costs continue to rise unchecked. Historically, industrial prop - erties have benefitted from operating expenses much lower than other commercial real es - tate genres such as retail and office. Just a few years ago, total operating costs for indus - trial buildings rarely eclipsed $2 psf /annually. However, ris - ing costs are now driving these traditionally lower operating costs much higher, in some cases in excess of $3 psf and beyond. These increase costs are hitting from a variety of different sources; Rising Property Taxes Property Taxes are most often the largest operating expense for an industrial build - ing typically accounting for as much as 60% of the total oper - ating costs. A recent state-wide property tax reassessment for the State of Delaware was very poorly managed and resulted in a secondary round of school tax assessments levied directly against commercial properties resulting in increases in some cases of 300%. All commercial designated properties were impacted with widely ranging assessed values, generated by computer algorithms, and higher tax mileage rates. Com - mercial property owners will now have to pay to appeal in order to bring the assessed
ing a recent surge in climate- related disasters such as floods, hurricanes, wildfires, and the large amount of claims payouts that followed. Historically high
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4A — March 2026 — Financial — M id A tlantic Real Estate Journal
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F inancial
ALTIMORE, MD — Kennedy Funding has closed a $1.12 mil - Ethiopian borrower overcomes challenges of sourcing financing for real estate investment Kennedy Funding closes $1.12M loan to foreign national for purchase of 19-unit apt. building B
borrowers frequently face ad - ditional scrutiny and delays. We were able to focus on the strength of the asset, the occu - pancy level, and the borrower’s equity contribution to structure a solution that worked.” Recognized as one of the lead - ing private land loan lenders in the world, Kennedy Funding specializes in closing complex loans quickly — often in as little as five days. As a direct lender, the firm lends its own capital without delays from loan committee bureaucratic red tape. Loans range from $1 million ($3 million inter - nationally) up to $50 million. Kennedy Funding presi - dent and CEO Kevin Wolfer added that the firm’s lending decisions are driven by the strength of the real estate rath - er than the borrower’s profile. “We look at the complete pic - ture,” said Wolfer. “In this case,
the property was 95% occupied, and the borrower brought sub - stantial cash equity. Our role is to recognize opportunity and provide capital when the oppor - tunity works — even if the bor - rower doesn’t fit a conventional banking model.” About Kennedy Funding Kennedy Funding is a global direct private lender specializ - ing in bridge loans for commer - cial property and land acquisi - tion, development, workouts, bankruptcies, and foreclosures. Kennedy Funding has closed more than $4 billion in loans to date. Their creative financing expertise provides funding up to 75% loan-to-value, from $1 mil - lion ($3 million internationally) to more than $50 million in as little as five days. The company has closed loans throughout the United States, the Caribbean, Europe, Canada, and Central and South America. MAREJ
lion loan to finance the acquisition of a 19-unit apartment building in Baltimore, Maryland, for a foreign national investor.
1214 Walker Ave. in northeast Baltimore, MD
borrower contributing 45% cash equity, while the firm provided the remaining 55% of the capi - tal to complete the purchase. The property consists of a 19- unit garden-style apartment complex, including 12 two- bedroom/one-bath units and six one-bedroom/one-bath units, and was approximately 95% occupied at closing. Located in the Idlewood area of Baltimore, within the Idlewood/Glen Oaks/ Lake Walker submarket, the asset benefits from strong resi - dential demand in a stabilized
neighborhood setting. Foreign national borrowers often encounter addition - al documentation require - ments, reserve mandates, and extended approval time - lines when dealing with traditional lenders. “This deal reflects what we do every day — finance trans - actions that conventional lend - ers are not equipped to handle,” said Edwin Urrego , execu - tive loan officer at Kennedy Funding, who originated the transaction. “Foreign national
Edwin Urrego
The Ethiopian borrower, Cityana International Business, LLC , led by Sisay Menji Assena, is acquiring the property at 1214 Walker Ave. in northeast Baltimore. Because the borrower is a foreign national, securing con - ventional financing presented significant challenges, par - ticularly within the required acquisition timeline. Kennedy Funding struc - tured the transaction with the
G.S. Wilcox & Co. arranges $25.5M across two transactions
ACRE Capital funds $37 Million PA multifamily deal Berkadia Lands financing for Luxor Bala Cynwyd and Virginia asset
secured by a $10.5 million ac - quisition loan on a 16-year self- liquidating term at a highly at -
HATFIELD, PA / WAYNE, NJ — G.S. Wilcox & Co. has completed $25.5 million
in combined financing for a 125,000 s/f industrial property in Hatfield, PA, and a 70,000 s/f industrial property in Wayne, NJ.
tractive rate. The building was fully oc - cupied by two tenants with long-term leases. In Wayne, the property is a single ten -
PENNSYLVANIA & VIR- GINIA — Berkadia arranged an acquisition loan on behalf of a joint venture for the acquisi - tion of Luxor Bala Cynwyd, a 173-unit, luxury multifamily community located in Bala Cynwyd, PA. Senior managing director Patrick McGlohn , managing director Brian Gould , senior director Hunter Wood ,VP Patrick Cunningham and as- sociate director Natalie Her- shey of Berkadia DC Metro secured a $37 million acquisi - tion loan from ACRE Capital on behalf of the buyer – a joint venture between Alliance Residential of Scottsdale, AZ and PCCP of Los Angeles. Completed in 2021 and lo - cated at 9 Presidential Blvd., Luxor Bala Cynwyd features a mix of studio, one- and two- bedroom residences ranging from 497 to 1,157 s/f. In a second transaction, Berkadia arranged the sale and financing of Compass at City Center, a 396-unit, garden-style multifamily com - munity located in Newport News, VA. Senior managing director Drew White , managing direc - tor Carter Wood , and direc - tor Cole Carns of Berkadia’s
Bridget Wilcox
Al Raymond
Both financings were arranged by Bridget Wilcox , partner, and Al Raymond , principal, and were funded by two of the firm’s correspondent life insurance company relationships. The Hatfield property was MARLTON, NJ — Nation- al Integrity Title Agency (NITA) , a full-service title insurance and settlement agency serving the commer - cial and residential real es - tate markets, announced the launch of Robin 2.0, the next evolution of its digital assis - tant designed to strengthen communication, security and transparency throughout the closing process. Powered by CloseSimple, Robin 2.0 reflects NITA’s continued investment in forward-looking technology that supports its clients and stakeholders while reinforc - ing the company’s people-first
ant class A industrial warehouse. The $15 million loan was deliv - ered with a 3-year interest only loan at a highly competitive rate. G.S. Wilcox & Co. also originally arranged construction financing for the property. MAREJ approach. The enhanced plat - form consolidates transac - tion updates, documents and communication into a single, secure, company-branded web- based portal, providing real- time visibility from contract through closing. Robin 2.0 was developed to support realtors, lenders, and homeowners alike. Automated updates help realtors stay informed and manage expecta - tions, centralized dashboards streamline lender communica - tion, and homeowners benefit from a clear, easy-to-follow view of progress and next steps. MAREJ
Luxor Bala Cynwyd
NITA debuts Robin 2.0 closing platform
Compass at City Center
Richmond office represented the seller, C-III Capital Part- ners , along with Drucker & Falk . A joint venture between Penzance – a fully integrated real estate owner, operator, developer, and fund manager – and Kettler acquired the prop - erty on December 16, 2025. McGlohn, Gould, Wood, Cun - ningham and Hershey secured
an acquisition loan on behalf of Penzance and Kettler. Located at 501-A Waters Edge Dr., Compass at City Center was built in 1985 and comprises 33 three-story buildings situated on a 25- acre site. The community offers a mix of one-, two-, and three-bedroom floor plans av - eraging 995 s/f. MAREJ
M id A tlantic Real Estate Journal — Financial — March 2026 — 5A
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F inancial
EVEN WITH FOREIGN NATIONALS, WE’RE FLUENT IN FUNDING.
Closed ETHIOPIAN FOREIGN NATIONAL Acquisition 19-Unit Apartment Building Baltimore, MD
No translator needed. This $1.12 million loan financed the acquisition of a 19-unit, 95% occupied Baltimore apartment building for a foreign national investor. Instead of focusing on the borrower’s profile, we structured the loan around the strength of the asset. For us, the language of opportunity is always universal. With over $4 Billion in closed loans, why would you go anywhere else?
Call 201-342-8500 or visit KennedyFunding.com
land, development and acquisitions, bankruptcies, discounted payoffs, note purchases, workouts and foreclosures
6A — March 2026 — 1031 Exchange — Financial — M id A tlantic Real Estate Journal
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1031 E xchange
Author of the First Book Ever Written on 721 Exchange UPREITs Q&A with Dwight Kay, Founder and CEO of Kay Properties
I
TPA—ideally with a duration of 20 years or more—investors could face an unexpected capi - tal gains tax bill years down the line, triggered by a deci - sion of the REIT sponsor over which they have no control. 2. Diversification & Sys - temic REIT Risk: Yes, moving from one property to a portfolio offers potential diversification**. However, it also exchanges property-specific risk for spon - sor-level or systemic REIT risk. A single REIT, even with diverse assets, can be exposed to portfolio-wide risks. These include blanket loans or credit facilities, often with adjustable rates, where rising interest costs can pressure cash flows across every asset simultaneously. Furthermore, poor strategic decisions at the REIT level—such as overpay - ing for acquisitions, taking on excessive leverage, or misman - aging properties—can impair value regardless of the qual - ity of the original DST asset. Investors also must consider the “perpetual life” nature of many REITs where they can be sold to new sponsors with different strategies and risk profiles, fundamentally alter - ing the investment an investor originally entered. 3. Income Potential & Sus - tainability of Distributions: The promise of ongoing in - come is attractive, but inves - tors must scrutinize the source of the distributions. Is the REIT paying dividends from genuine property operating cash flow, or is it subsidizing payouts through borrowings, new investor capital, or even a return of capital? Some per - petual life REITs may promote attractive yields by drawing on credit lines, a practice that can mask underlying weakness and jeopardize long-term sta - bility. The key metric to ana - lyze is the dividend coverage ratio, specifically as measured by Adjusted Funds From Op - erations (AFFO). A distribu - tion not fully covered by AFFO may not be sustainable. Q: Is the 721 UPREIT conversion mandatory, or do investors have a choice? A: This is one of the most im - portant and often overlooked questions. The structure of the exit option is paramount. In many DST offerings with a 721 UPREIT provision, the conversion is forced or auto - matic upon maturity. Investors
are funneled into the UPREIT regardless of their individual circumstances, current per - formance of the REIT, or market conditions. This loss of optionality means ceding con - trol of a significant financial decision and in many cases, a vast majority of an investor’s net worth. At Kay Properties, we advocate strongly for inves - tors to seek DST offerings that provide a fully optional 721 UPREIT path. True optionali - ty means that at the DST’s ma - turity, the investor has a clear choice among typically three paths: participate in the 721 UPREIT exchange, execute a new 1031 exchange into an - other property, or cash out and pay the applicable taxes. This control allows the investor to make a decision aligned with their current financial goals, tax situation, and assessment of the UPREIT opportunity at that future date. Choosing a sponsor that provides this optionality is a fundamental aspect of investor protection and strategic flexibility. Conclusion & How to Get the Book The 721 Exchange UPREIT is a powerful, complex tool in the sophisticated investor’s toolkit. Like any powerful tool, it requires proper knowledge and caution to use effectively. Dwight Kay’s book is designed to provide that essential un - derstanding, arming investors with the questions to ask and the pitfalls to avoid. Investors, advisors, and real estate professionals can receive a complimentary copy of “721 Exchange UPREITs – What Investors Need to Know BEFORE Investing” by visiting https://721exchangeupreit.com. * https://altswire.com/dst- sales-up-40-year-over-year- 2025-on-pace-for-best-year- since-2022/ **Diversification does not guarantee profits or protects against losses. Disclaimer: This material is for informational purposes only and is not to be construed as tax, legal, or investment advice. All real estate and DST investments involve risk, including the potential loss of principal. Investors must consult with their own quali- fied tax and legal advisors prior to making any investment decision. Securities offered through FNEX Capital, member FINRA, SIPC. MAREJ
ntroduction: Dwight Kay, founder and CEO of Kay Prop -
erties & In - vestments, recently au - thored a piv - otal book on the increas- ingly popu - lar 721 Ex - change UP - REIT strat -
Inside: • 721 Exchange UPREIT due diligence • Risks of dividend payments from borrowings • Understanding tax protection agreements • Accessing DST 721 Exchange UPREIT opportunities • And more
Dwight Kay
egy. This important guide, titled “721 Exchange UPRE - ITs – What Investors Need to Know BEFORE Investing,” sheds critical light on impor - tant caveats investors must understand before commit - ting capital to these complex structures. As the Delaware Statutory Trust (DST) market matures, the 721 UPREIT exit has become a focal point for thousands of investors seek - ing a path forward. To provide clarity on this essential topic, we sat down with Dwight Kay for an in-depth Q&A on the motivations behind the book and the crucial insights every investor should possess. Q: What inspired you to write this book? A: The decision stemmed from a glaring gap I saw in in - vestor education. Despite the 721 Exchange UPREIT becom - ing an increasingly popular and often recommended exit strategy within the DST and 1031 exchange landscape, there has never been a pub - lished volume solely dedicated to educating investors on its intricacies and potential pit - falls. This lack of a definitive resource left many investors navigating a sophisticated tax and investment strategy without a comprehensive map. I view this book as that es - sential map—the definitive guide for investors. It pro - vides the critical knowledge, from foundational concepts to advanced due diligence, that is necessary before com - mitting capital. My goal is to empower readers with educa - tion, real-world insights, and a structured framework for evaluation. At Kay Proper - ties, we have always believed that education is the bedrock of intelligent investing as it builds trust and enables informed decisions. This phi - losophy has been central to our firm’s growth. Consequently, I wrote the book to be accessible and non-technical, ensuring investors at all experience
Dwight Kay, Founder & CEO of Kay Properties & Investments, authored “721 Exchange UPREITs – What Investors Need to Know BEFORE Investing,” a guide to the 721 UPREIT investment strategy.
levels can grasp the potential benefits, inherent risks, and subtle nuances of 721 Ex - change UPREITs. Q: Can you explain what a 721 Exchange UPREIT is & why it attracts investors? A: Certainly. Let’s break it down. “UPREIT” stands for Umbrella Partnership Real Estate Investment Trust. It is an operating partner - ship, subsidiary to a REIT, that holds and manages real property assets. Section 721 of the Internal Revenue Code allows an owner of real estate to contribute that property to a partnership in a tax-deferred exchange, receiving partner - ship interests in return. In the context we’re discussing, this allows an investor holding interests in a DST property to contribute those interests to the UPREIT partnership. In exchange, they receive Operating Partnership Units (OP Units), which represent an economic interest in the broader REIT portfolio. Investors are drawn to this strategy for several compelling reasons. Primarily, it offers a solution to defer capital gains taxes that would otherwise be triggered upon the sale of their DST asset. Simultane - ously, it provides a pathway to potentially achieve greater diversification, moving from a single-asset DST into a multi- asset REIT. Other perceived benefits include ongoing in - come potential through dis - tributions on the OP Units, the potential for increased liquidity, and potential estate
planning advantages. The relevance of this strat - egy has skyrocketed alongside the historic growth of the DST market. Equity placed into DSTs expanded from ap - proximately $2 billion in 2015 to an estimated $7.5 billion in 2025*. This growth means a significant wave of DST investments are now nearing the end of their lifecycle. For tens of thousands of investors, the 721 exchange has shifted from a peripheral option to a critical strategy they must understand as they evaluate their exit paths. Q: That all sounds straight- forwards. What are some of the potential downsides or risks investors might overlook? A: This is precisely why the book was necessary. The ben - efits are often highlighted, but the complexities and dangers are frequently buried in fine print or not fully appreciated. Let’s unpack a few key areas: 1. Tax Advantages & The Crucial Role of Tax Protec- tion Agreements (TPAs): While the exchange itself is tax-deferred, the long-term tax protection is not automatic. A critical due diligence item is whether the DST’s Private Placement Memorandum in - cludes a robust Tax Protec - tion Agreement. A TPA is a contractual safeguard that protects investors from fu - ture tax liability if the REIT later sells the contributed property without completing a subsequent, internal 1031 exchange. Without a strong
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8A — March 2026 — 1031 Exchange — Financial — M id A tlantic Real Estate Journal
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By Ben Roper — Smart planning for property owners UPREITs: A smarter exit for multifamily owners
Avison Young’s Net Lease Group executes $75M 1031 Exchange
the 1031 exchange was a team led by Hipp and Rich- ard Murphy , senior VP in Avison Young’s Capital Markets Group. The 11 replacement proper - ties were selected based on tenant credit strength, long lease terms and geographic diversification. The tenants in - clude well-known, investment- grade national brands such as Chick-fil-A, 7-Eleven, Wawa and Caliber Collision. Together they create a balanced portfolio that replaces a non-income- producing land asset with vary - ing lease terms and cash flow increasing over the long term. “It’s similar to how investors diversify in the stock market,” Hipp said. “Instead of relying on one asset, we spread the investment across multiple properties, tenants and mar - kets while still maintaining direct ownership and the tax benefits of real estate.” The 11 replacement assets include net lease properties located in Florida, Georgia, North Carolina, South Caro - lina, Texas and Virginia. “We’re seeing many more con - versations happen well before a property is listed,” Hipp said. “Once a transaction closes, the opportunity to use 1031 strate - gies is gone, so you have to be proactive about planning ahead. “These are not simple trans - actions,” Hipp said. “Large ex - changes require early planning, close coordination with tax and legal advisors and the ability to execute across multiple proper - ties at once. That’s where our experience and success execut - ing 1031 exchange deals make a real difference.” As demand for data center land continues, Avison Young expects more sellers and their advisors to explore tax-deferred strategies earlier in the sale process. MAREJ
WASHINGTON, DC — Avison Young’s Net Lease Group has completed a 1031
exchange fol - lowing the sale of a data center devel - opment site, allowing the seller to defer capital gains taxes and re- invest a por -
R
tax-efficient transitions aligned with long-term goals. “These aren’t theoretical structures anymore,” Roper said. “We’re seeing owners actively choose UPREITs be - cause they solve real problems — taxes, concentration risk, estate planning, and timing.” That activity coincides with a broader increase in UPREIT adoption. In 2025, Capital Square — where Roper focuses on strategic REIT growth ini - tiatives — completed its most active year in firm history, sur - passing $1 billion in dispositions and executing a record number of UPREIT transactions. During the year, Capital Square Housing Trust nearly doubled its gross asset value and completed five UP - REIT acquisitions, including multiple third-party, whole- property contributions from unaffiliated owners. Why UPREITs Appeal to Multifamily Owners Roper notes that many mul - tifamily owners face similar challenges as their assets mature: large embedded capi - tal gains, rising operational complexity, and uncertainty around reinvestment timing. An UPREIT transaction al - lows an owner to contribute property to a REIT in ex - change for OP units, offering several potential benefits: - Tax deferral under Internal Revenue Code Section 721 - Continued participation in real estate upside through REIT ownership - Portfolio diversification be - yond a single asset or market - Potential liquidity over time, rather than a single exit event - Estate and succession plan - ning flexibility new investments. The property, a fully op - erational Greyhound/FlixBus terminal, represents a rare covered-land investment that blends stable current cash flow with long-term residential re - development potential. The site is currently leased to FlixBus, Greyhound’s parent company. Located in Pie Town, one of Nashville’s fastest-growing mixed-use districts, Sixth & Division is near downtown, SoBro, the Gulch, and major transit routes. Zoned Down - town Code, the site allows 12 stories by right, up to 18–20 with the Bonus Height Pro -
“For owners who have spent years building value, the question becomes how to tran - sition intelligently,” Roper said. “UPREITs allow them to step back operationally while staying invested economically.” Execution Over Theory Roper emphasizes that UP - REIT transactions require patience, education, and align - ment — and are not appropri - ate for every situation. “These conversations take time,” he said. “You have to un - derstand an owner’s tax profile, timeline, and priorities before even discussing structure.” His role often involves en - gaging owners months in advance, helping them eval - uate whether an UPREIT aligns with their long-term objectives and guiding them through the process with clarity and discipline. “Trust matters,” Roper said. “People aren’t looking for a pitch. They’re looking for someone who understands the trade-offs and can execute when the time is right.” Positioning UPREITs as a Long-Term Planning Tool As interest rates, market cycles, and tax policy continue to evolve, Roper believes UP - REITs will play an increas - ingly important role in the multifamily exit landscape — particularly for owners seeking alternatives to taxable sales or 1031 exchanges. “UPREITs aren’t about timing the market,” he said. “They’re about aligning struc - ture with intent.” Roper encourages multi - family owners to begin learn - ing about structured exit options well before a sale becomes imminent. MAREJ “This investment reflects The Becker Organization’s continued focus on pairing current income with future growth in markets where we have long-term conviction,” added David Becker , senior managing director and head equity strategist at Time Eq - uities Inc. “Downtown Nash - ville remains one of the most compelling urban markets in the country, and we believe this asset is well positioned for long-term success.” MAREJ
ICHMOND, VA — Ben Roper , a real estate in - vestment professional
specializing in real estate investment trust (REIT) growth and Section 721 exchanges, is highlighting the increas- ing role of
Jonathan Hipp
tion of the proceeds into a di - versified portfolio of 11 income- producing net lease properties across the United States. The transaction replaced a single land holding with a multi- property portfolio designed to generate long-term cash flow. The land, comprising 84 acres in Loudoun County, VA, was sold to a data center developer for $100 million amid accel - erating demand for AI-driven digital infrastructure. Follow - ing the sale, Avison Young executed a $75 million 1031 exchange on behalf of the seller, acquiring 11 income-producing net lease assets across six states. The remaining $25 mil - lion was reinvested into non- income-producing land. Rising demand for data center sites has sharply in - creased land values, creating major gains—and often un - expected tax exposure—for long-time landowners. “For many landowners, these sales represent once-in-a-gen - eration opportunities, but they can also come with surprisingly large tax consequences,” said Jonathan Hipp , principal and head of Avison Young’s U.S. Net Lease Group. “By using a 1031 exchange, this client was able to defer those taxes and convert a single land sale into a diversified portfolio that generates steady income over the long term.” Securing and executing
Ben Roper
UPREIT transactions as a vi - able alternative to traditional multifamily property exits. Roper works closely with multifamily owners and devel - opers exploring long-term, tax- efficient transition strategies, including contributing property to a REIT in exchange for op - erating partnership (OP) units rather than selling outright. “For many owners, the tra - ditional sell-or-hold decision is too limiting,” Roper said. “UPREITs introduce a third op - tion — one that allows owners to maintain economic exposure, defer capital gains taxes, and diversify risk without stepping away entirely.” Driving Third-Party UPREIT Execution UPREIT structures have his - torically been associated with large institutional platforms. Roper says that is changing, particularly as private mul - tifamily owners seek more sophisticated solutions for succession planning, portfolio diversification, and long-term income generation. Over the course of his work in REIT growth and struc - tured transactions, Roper has supported multiple successful third-party UPREIT contribu - tions, working directly with unaffiliated owners to structure
NAI James E. Hanson negotiates $8.8M sale of cold storage facility in 1031 exchange
NEW YORK, NY — The Becker Organization announced the successful Becker Organization acquires Sixth & Division site in Nashville gram, and potentially 30 via Overall Height Modification, offering strong long-term re - development potential.
Corp. , in the transaction with the seller, CanTex Capital . NAI Robert Lynn principal Chase Miller, SIOR , assisted with the 1031 exchange. “The coordination across markets and firms was es - sential to meeting the strict timelines required for a 1031 exchange,” added Sil - verstein. “This transaction underscores the value of having experienced advisors who understand both the technical requirements of tax-deferred exchanges and the nuances of specialized industrial assets.” MAREJ
FAIRFIELD, NJ & DAL- LAS, TX — NAI James E. Hanson negotiated the $8.8 Million sale of a 20,000 s/f cold storage facility located at 4910 Joseph Hardin Dr. in Dallas, TX. The transaction was completed as part of a 1031 exchange following the recent sale of 8 Evans St. in Fairfield, NJ. NAI James E. Hanson’s Mi- chael Walters, SIOR , execu - tive managing director, Corpo - rate Services, and Cameron Silverstein , associate VP, represented the buyer, An- derson & Vreeland Realty
acquisition of Sixth & Division, a 1.74-acre covered land investment located in downtown Nashville’s Pie Town
David Becker
district. The transaction closed in December 2025, and the associated 1031 exchange and direct invest- ment offering was fully sub - scribed and is now closed to
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