Spotlight: AEI Capital and Its Debt-Free Healthcare DSTs
AEI Capital has bought real estate without mortgage debt for decades, and it now applies that rule mostly to medical facilities leased to hospital systems.
October 28, 2026
AEI Capital Corporation is a St. Paul, Minnesota, sponsor of net-leased commercial real estate that buys every property for cash and carries no mortgage debt on it. The firm offers Delaware statutory trusts for 1031 exchange investors, private funds and joint ventures. Its recent acquisitions and offerings center on outpatient medical facilities leased to health systems, with essential retail as a second sector.
The firm reports 152 real estate offerings, 518 properties acquired, $1.61 billion of investor equity raised since inception and roughly 6,800 investors. Those figures appear on its homepage without an as-of date.
A Founder’s No-Debt Rule
Robert P. Johnson founded AEI in 1970 with his wife, Trish. He had been selling real estate investments sponsored by other firms. According to AEI, he started his own company to control the quality of what he sold. He later adopted the no-debt rule so his funds’ investors could hold through economic downturns without financing pressure. AEI describes the rule as both its main differentiator and its founding philosophy. Johnson worked at the firm until his death in May 2021 at 76.
How AEI Buys
AEI’s published acquisition criteria target free-standing, single-tenant properties leased to national and regional corporate tenants. Deals run $1.5 million to $15 million, closed in cash with no financing contingencies. AEI prefers double- or triple-net leases of at least 10 years with periodic rent increases. It also does build-to-suits: it buys the land, funds construction and converts that construction loan into a purchase when the building is finished.
Recent purchases follow the healthcare focus. In December 2024 AEI bought a 25,000-square-foot Advocate Medical Group clinic in Chicago for $7.51 million. In February 2025 it bought a 44,645-square-foot Mercy Health clinic in O’Fallon, Missouri, for $11.345 million.
Healthcare DSTs and Other Programs
AEI says it was one of the first firms to obtain a favorable IRS private letter ruling on 1031 exchanges. It has sponsored more than 110 1031 exchange offerings. AEI Healthcare Portfolio V DST was filed in June 2024 and fully subscribed in January 2025 at $27.82 million. It holds three properties in Indiana and Florida leased to Community Health Network and Orlando Health, and it was AEI’s 114th 1031 program.
AEI’s private funds invest in properties leased to health systems, some life sciences tenants and essential retail operators. Its joint venture program buys healthcare and life sciences real estate alongside institutions, family offices and high-net-worth investors. AEI leads the investment work and day-to-day management and tailors reporting to each partner.
Passive Income and Passive Losses
AEI publishes a strategy it calls PIG/PAL, aimed at investors carrying suspended passive activity losses. Since the Tax Reform Act of 1986, passive losses can offset only passive income. AEI says income from its funds and DSTs is passive, so investors with losses carried forward on IRS Form 8582 can use it to absorb them.
The Public Partnerships
Several of AEI’s older public limited partnerships, the AEI Income & Growth funds, still file quarterly reports with the SEC. AEI Income & Growth Fund XXI was organized in 1994 and raised its $24 million maximum. In March 2026 its managing general partner began selling the fund’s remaining properties as part of a final liquidation.
Leadership and the Current Offering
Marni Nygard and Paula Tillett lead AEI as co-presidents. Nygard joined in 2005 as an attorney with a real estate transaction background. She has worked on more than $1 billion of acquisitions since 2008 and also oversees compliance. Tillett joined in 2002 and runs capital raising, distribution and marketing for the fund and 1031 offerings.
The firm has added several senior people since 2025. Garrett Stephens joined as vice president of acquisitions after a career in healthcare real estate that AEI says includes more than $2.5 billion of closed transactions. Erin Ward joined to lead investor operations. Kristin Waddell, AEI’s controller from 2013 to 2015, returned as chief financial officer in May 2026. Lauren Behrns joined in 2026 to manage broker-dealer and RIA relationships.
The firm’s current healthcare offering is AEI Healthcare Portfolio VII DST. Its Form D filing sets a $50.5 million ceiling and dates the first sale March 6, 2026.
