AEI Healthcare Portfolio VII DST Overview
AEI Healthcare Portfolio VII DST is a Delaware statutory trust offering, sponsored by AEI (AEI Capital Corporation and its affiliates of Saint Paul, Minnesota), that gives accredited investors fractional beneficial ownership of a three-property, net-leased healthcare real estate portfolio structured for Section 1031 exchange eligibility. The Trust is offering up to 50,500 Class A Beneficial Interests at $1,000 per Interest, for a maximum equity raise of $50,500,000, with a minimum investment of 100 Interests ($100,000). The Offering is conducted under Rule 506(c) of Regulation D and is available only to accredited investors. The portfolio consists of three modern, single-tenant medical office buildings, each 100% occupied: a HonorHealth medical office in Surprise, Arizona (Phoenix MSA, roughly 12,026 square feet, completed in 2022); a Texas Children's medical office in Austin, Texas (Williamson County, roughly 12,642 square feet, completed in 2024); and a ProHealth medical office in Bristol, Connecticut (Hartford County, roughly 26,547 square feet, completed in 2024). The aggregate purchase price of the Projects is $45,299,110. The properties are leased to an AEI-affiliated Master Tenant under a master lease, and the underlying subtenants operate the medical offices, producing scheduled rent that begins at approximately $2,532,028 in Year 1 and steps up over the anticipated ten-year hold. Notably, the Trust acquired the portfolio on an all-cash, debt-free basis, with no permanent mortgage financing encumbering the Projects. The strategy is to hold the healthcare portfolio for approximately ten years, distribute cash flow to investors, and ultimately sell or otherwise dispose of the Projects. The offering suits 1031 exchange investors and other accredited investors seeking passive, professionally managed healthcare net-lease real estate, current income with built-in rent escalations, and the potential for tax-deferred continuation of an exchange, who can accept illiquidity and the structural constraints of a DST.
Highlights
The portfolio is geographically diversified across three distinct, growth-oriented healthcare markets. The Surprise, Arizona asset sits in the Phoenix MSA, one of the fastest-growing large metros in the country, where the appraisal cites a metro population above 5.0 million, strong in-migration, and above-average household incomes in the immediate trade area. The Austin, Texas asset is in Williamson County, roughly 15 miles north of downtown Austin in the northwestern suburbs, a submarket the appraisal describes with an area population of about 2.6 million and roughly 2-3% annual population growth and average household income above $140,000. The Bristol, Connecticut asset lies in Hartford County with direct access to CT Route 9 and Interstate 84. Spreading the Projects across the Southwest, Texas, and the Northeast reduces exposure to any single regional economy or healthcare system, while each site is positioned in an established medical-office corridor.
All three buildings are modern, purpose-built medical office facilities that are 100% leased. The Surprise, Arizona property is a roughly 12,026-square-foot HonorHealth medical office completed in 2022 on about 1.62 acres; the Austin, Texas property is a roughly 12,642-square-foot Texas Children's medical office completed in 2024 on about 2.00 acres with 63 parking spaces; and the Bristol, Connecticut property is a roughly 26,547-square-foot ProHealth medical office completed in 2024 on about 6.40 acres with 120 parking spaces. Each is a single-story, purpose-built healthcare facility occupied by an operator affiliated with an established regional health system, and each subtenant is responsible under its sublease for operating costs, insurance, and maintenance obligations. The recent construction dates (2022 and 2024) mean limited near-term capital expenditure exposure, and the healthcare/medical-office use is a needs-based, demographically supported property type.
A defining feature of this offering is its conservative, debt-free capital structure. The Trust acquired the Projects on an all-cash basis and did not utilize any permanent mortgage financing, so the portfolio is unleveraged and carries no loan-to-value risk, no balloon maturity, and no lender refinancing or foreclosure exposure. The only financing-related line item is a modest $150,000 bridge-financing allocation (0.30% of the offering) plus $371,000 (0.73%) of reserves funded from offering proceeds. Of the $50,500,000 maximum equity, approximately $45,371,352 (89.84%) is allocated to real estate acquisition. Because there is no debt service ahead of investors, the entire net rent stream after Trust expenses supports distributions, and investors are insulated from interest-rate and refinancing shocks that can impair leveraged DSTs. The rent schedule steps up from roughly $2,532,028 in Year 1 to roughly $3,135,732 by Year 10, supporting a targeted return that rises over the hold.
The offering is sponsored by AEI, one of the longest-tenured names in the net-lease securitized real estate business. According to the Memorandum, AEI Capital Corporation and its affiliates have sponsored real estate programs since 1975, and as of December 31, 2025 AEI-sponsored programs had involved on the order of 848 net-leased properties and roughly $639 million of investor equity across public and private TIC and DST offerings, with hundreds of properties acquired and sold on behalf of investors over that history. AEI serves in multiple integrated roles here: AEI Trust Manager, LLC as Trust Manager, AEI Healthcare Portfolio VII Depositor, LLC as Depositor, an AEI affiliate as Master Tenant, and AEI Securities, Inc. as Managing Broker-Dealer. This vertically integrated platform brings long operating experience in single-tenant net-lease and 1031/DST programs, though investors should note the Memorandum cautions that prior program performance is not a guarantee of comparable future results.
The offering is designed as replacement property for investors completing a Section 1031 like-kind exchange. Because a properly structured Delaware statutory trust interest is treated as a direct interest in real estate for federal tax purposes, investors can defer capital gains by exchanging relinquished property into the Trust, while gaining passive fractional ownership of institutional healthcare real estate. The debt-free structure also lets exchangers satisfy their equity requirement without needing to replace leverage. In addition, the Memorandum provides an FMV Option: beginning two years after the Offering Termination Date, the Trust Manager or its affiliate may acquire Holders' Interests at fair market value (determined by independent appraisals) in exchange for a Section 721 contribution, offering a potential tax-efficient path to convert into an operating-partnership/REIT interest at disposition. The Trust is targeted to be held for roughly ten years, with the goal of a further 1031-eligible sale.
Analysis of AEI Healthcare Portfolio VII DST
Insights
For a 1031 exchanger, AEI Healthcare Portfolio VII DST reads as a relatively conservative, income-oriented replacement property rather than a growth play. The all-cash, debt-free structure is the single most distinguishing attribute: it removes the leverage, balloon, and refinancing risks that have hurt many leveraged DSTs in a higher-rate environment, and it means an exchanger with no debt to replace can satisfy the equity side of the exchange cleanly. The trade-off is that unleveraged deals produce lower headline yields, which is consistent with the modest targeted return of roughly 5.00% in Year 1 stepping up to about 6.14% by Year 10 on the back of contractual rent escalations rather than financial engineering. On the risk/return profile, the portfolio's strengths are stabilized, 100% occupancy, three recently built (2022-2024) medical office assets, needs-based healthcare demand, and geographic spread across Phoenix, Austin, and Hartford County markets. The offsetting concerns are concentration (only three single-tenant buildings), and, more importantly, the master-lease/subtenant credit structure. Rent to the Trust depends on the AEI-affiliated Master Tenant, which is capitalized only with a $500,000 demand note and whose parent has limited net worth and no obligation to cover shortfalls; the durability of distributions therefore rests heavily on the underlying subtenants continuing to perform. Investors should verify the actual subtenant lease terms, remaining lease duration, renewal options, and the strength of each operator's affiliation with its named health system, since the Memorandum leases to subtenants rather than directly to the health systems themselves. What to watch: whether actual occupancy and rent collections track the Projections (any subtenant non-renewal materially changes the math); the load spread, since only about 89.84% of equity is invested in real estate while roughly 10% covers commissions, fees, reserves, and the Depositor markup, meaning the assets must appreciate to overcome that gap at exit; the exit cap-rate assumption embedded in the ten-year sale, given healthcare development cap rates cited in the 7-8% range; and the purchase price relative to independent appraised value. The FMV Option / Section 721 pathway is a useful potential exit but is exercised at the Trust Manager's discretion using manager-selected appraisers, so investors give up control over timing and valuation. Compared with leveraged net-lease DSTs, this offering trades yield for balance-sheet safety, making it best suited to exchangers who prioritize capital preservation, predictable escalating income, and sponsor tenure over maximizing cash-on-cash return.
Advantages
Debt-free ownership: the portfolio was acquired all-cash with no permanent mortgage, eliminating loan-to-value, balloon-maturity, and refinancing risk and allowing net rent to flow to investors ahead of any lender. Stabilized, 100%-leased healthcare real estate: three modern, purpose-built medical office buildings (completed 2022-2024) occupied by operators tied to established health systems (HonorHealth, Texas Children's, and ProHealth), a needs-based, recession-resilient property type. Geographic diversification across three markets and three regions (Phoenix/Surprise AZ, Austin TX, and Bristol CT), reducing single-market concentration. Built-in rent growth: scheduled rent rises from about $2,532,028 in Year 1 toward $3,135,732 by Year 10, supporting a targeted return that increases from roughly 5.00% in Year 1 to roughly 6.14% by Year 10. Passive, professionally managed structure under a master lease, with subtenants responsible for operating expenses, insurance, and maintenance, so investors are relieved of day-to-day landlord duties. 1031 exchange eligibility with a low $100,000 minimum, letting exchangers place equity precisely and diversify across a portfolio rather than a single building. Experienced sponsor: AEI has sponsored net-lease programs since 1975 with a long track record of acquisitions and dispositions. Potential tax-efficient exit via the FMV Option / Section 721 contribution beginning two years after the Offering Termination Date.
Concerns
Illiquidity: there is no public market for the Interests, transfer is restricted, and investors must be prepared to hold for an indefinite period across the roughly ten-year business plan. No control: Holders have no voting rights over day-to-day operations; the Trust Manager and Master Tenant control decisions, and the rigid DST structure prohibits renegotiating leases, refinancing, raising new capital, or reinvesting sale proceeds. Limited diversification: the Trust owns only three properties, all single-tenant medical office assets, so vacancy, non-renewal, or default at any one site would materially affect returns. Reliance on newly formed entities with limited capital: the Trust, Trust Manager, and Master Tenant are newly formed with no operating history; the Master Tenant is capitalized only with a $500,000 demand promissory note, and AEI has limited net worth and no obligation to fund shortfalls, so a Master Tenant default could impair rent and distributions. Fees and load: selling commissions and expenses of $72.50 per Interest (about 7.25%), total offering and organization expenses of roughly $3.85 million (7.62%), plus a 1.50% Depositor fee, mean only about 89.84% of equity funds real estate acquisition. Targeted distributions are projections only, are not guaranteed, and could be supported in part by reserves; if Trust expenses or capital expenditures rise, returns to Holders will decrease. Springing LLC risk: if the Trust cannot meet obligations, the Projects may be transferred or the Trust converted to a Springing LLC, which would end 1031 eligibility on a future disposition. Tax risk: the 1031/DST treatment relies on counsel's opinion (no IRS ruling), and changes in law or a failure of the structure could jeopardize deferral. Environmental and 'as-is' risk: properties were acquired as-is with limited seller environmental representations and warranties. Conflicts of interest are pervasive because AEI affiliates serve as Trust Manager, Depositor, Master Tenant, and Managing Broker-Dealer.
AEI Healthcare Portfolio VII DST — Complete Offering Data
Offering & Structure
Investment NameAEI Healthcare Portfolio VII DST
SponsorAEI Capital Corporation
StructureDelaware Statutory Trust (DST)
Offering Type506(c)
StatusClosed
Last Updated2026-07-31
Size & Availability
Total Offering$50,500,000
Equity$50,500,000
DebtAll-Cash
Available Equity$0 (0% of equity)
Minimum Investment$100,000
Total Load9.12%
Initial Reserves0.73%
Property
Property TypeHealthcare
StrategyCore
LocationAZ, CT, TX
Market TierTier 3
Income & Projections
Average Yield5.54%
Projected Yields (Y1–Y10)Y1 5.00% · Y2 5.04% · Y3 5.07% · Y4 5.35% · Y5 5.47% · Y6 5.63% · Y7 5.76% · Y8 5.90% · Y9 6.03% · Y10 6.14%
Tax-Adjusted Yield11.84%
Cap Rate Equivalent7.60%
Year 1 NOI$2,525,500
Y1 Payout Ratio1
Financing
In-Place LTV0.00% LTV
Exit
Estimated Hold Period10 years
721 Exchange ExitOptional
Benchmarks (vs sector median)
Avg. Income5.54% vs 6.41% market — Below Average
Growth22.80% vs 15.43% market — Above Average
Peak6.14% vs 7.03% market — Below Average
Every data point Baker 1031 tracks for this offering, in one place. Figures are drawn from the offering’s private placement memorandum and sponsor materials unless noted, are summaries for convenience only, and are qualified in their entirety by the PPM. Tap the ⓘ icon next to any label for what it means and how it is calculated.
