Avison Young’s Net Lease Group executes $75M 1031 Exchange

WASHINGTON, DC — Avison Young’s Net Lease Group has completed a 1031 exchange following the sale of a data center development site, allowing the seller to defer capital gains taxes and reinvest a portion of the proceeds into a diversified 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 accelerating demand for AI-driven digital infrastructure. Following 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 million was reinvested into non-income-producing land.

Rising demand for data center sites has sharply increased land values, creating major gains—and often unexpected tax exposure—for long-time landowners.

“For many landowners, these sales represent once-in-a-generation 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 the 1031 exchange was a team led by Hipp and Richard Murphy, senior VP in Avison Young’s Capital Markets Group.

The 11 replacement properties were selected based on tenant credit strength, long lease terms and geographic diversification. The tenants include 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 varying 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 markets 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 Carolina, Texas and Virginia.

“We’re seeing many more conversations happen well before a property is listed,” Hipp said. “Once a transaction closes, the opportunity to use 1031 strategies is gone, so you have to be proactive about planning ahead.

“These are not simple transactions,” Hipp said. “Large exchanges require early planning, close coordination with tax and legal advisors and the ability to execute across multiple properties at once. That’s where our experience and success executing 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.