Spotlight: KNPRE and Its Keystone 1031 Net Lease DST Programs

After two diversified retail portfolios, the Jericho, N.Y., sponsor moved its 1031 DST offerings to single office and industrial buildings, a shift it tied to rising borrowing costs.

November 12, 2026

Keystone National Properties, which does business as KNPRE, is a real estate sponsor based in Jericho, N.Y., founded by Mike Packman in 2016. Its Delaware statutory trust offerings run under the Keystone 1031 name. Between November 2021 and early 2023 it brought four DSTs to market for 1031 exchange investors, and the 16 single-tenant properties those trusts hold are listed on the firm's website. The first two offerings were diversified retail portfolios. The next two were single office and industrial buildings, and the firm's own commentary tied the change to rising borrowing costs.

As of February 2023, the firm reported about $130 million in assets under management and nearly $175 million raised since inception across all of its tax-advantaged and impact real estate offerings.

Two Net-Leased Retail Portfolios

Keystone 1031 Net Leased Portfolio launched in November 2021 with six retail properties in Florida, Texas, Kansas and Washington. According to the firm, 75% of the portfolio's income came from states with no state income tax. The tenants were Sherwin-Williams at two locations, Firestone, O'Reilly Auto Parts, 7-Eleven and Walgreens. KNPRE sought $15.375 million in equity, financed the purchase with 10-year fixed-rate non-recourse debt and planned a hold of about 10 years. It reported the offering fully subscribed in April 2022.

Keystone 1031 Net Leased Portfolio II followed in January 2022. It bought eight single-tenant properties across seven states for $35.65 million, with tenants including 7-Eleven in Las Vegas, Family Dollar in Fort Worth, Goodwill in St. Paul, Starbucks and Walgreens. The firm put the weighted average lease term at 11.29 years at acquisition. It reported raising $17.7 million from accredited investors and full subscription in August 2022. Trade coverage at the time reported 10-year interest-only financing on the second portfolio and initial distributions of 5% a year on both.

The Move to Office and Industrial DSTs

In December 2022 KNPRE bought a Walgreens pharmacy operations support center in Orlando for $32.5 million for Keystone 1031 Orlando Office. The building covers about 134,000 square feet and is one of four such facilities Walgreens operates nationwide. In February 2023 the firm bought a FedEx Ground distribution facility in Lansing, Mich., for $24 million for Keystone 1031 Lansing Industrial. FedEx Ground had signed a 10-year lease extension in November 2022 with two five-year renewal options, the first carrying a 10% rent increase and the second a 5% increase.

Form D notices filed with the SEC in April 2023 list a $22.15 million offering for Orlando Office and a $17.95 million offering for Lansing Industrial, each with a $50,000 minimum investment.

KNPRE explained the change in a February 2023 commentary on its site. Higher borrowing costs, the firm wrote, had moved its acquisitions away from retail portfolios toward higher-credit non-retail assets such as FedEx facilities. It also pointed to multifamily's 44% share of DST equity at the time and presented non-retail net lease as a way for exchange investors to diversify.

The firm's website names Emerson Equity as the managing broker-dealer for the two Net Leased Portfolios and American Alternative Capital for Orlando Office. Its offering announcements cited support from independent broker-dealers and RIAs.

Packman's Market Commentary

Packman writes a recurring column for the New York Real Estate Journal, and KNPRE republishes summaries of it on its site. In August 2022 he noted that retail, industrial and multifamily cap rates had barely moved despite the Federal Reserve's rate increases that year, and that credit tenants under net leases typically absorb rising operating costs. In a May 2024 column he argued that positive leverage, where the interest rate on debt sits below a property's cap rate, had become harder to achieve since the 10-year Treasury yield passed 4% in 2022. Non-distressed transaction volume, he wrote, would recover only once cap rates rose or interest rates fell.