A California-based investor sought out CCIM-designated broker, Lowrey Burnett, after selling their family business and the related real estate for $14 million. Because they wanted to defer 100 percent of the capital gains taxes, they were interested in pursuing a 1031 Exchange transaction. The client enlisted Burnett's guidance and expertise to adhere to the IRS restrictions that make such a tax-deferral transaction possible.
The Situation
Though based in California, the client was interested in pursuing commercial properties nationwide. With a $14 million acquisition budget, Burnett presented the client with a variety of investment options, including investing in a single property or diversifying into several different properties, as well as numerous types of commercial real estate, such as single-tenant industrial, multi-tenant retail, single-tenant flex, multi-tenant office, or single tenant medical office building (MOB). The client consulted with their financial advisor and tax attorney to ensure they made a decision that supported not only their current cash flow needs but also their long-term goals.
The Challenges
The client opted to incorporate a number of highly-specific diversification strategies, including geographic, product-type, tenancy, lease expiration, yield diversification, and more. Because of this, as well as the strict deadlines required to comply with 1031 Exchange rules, Burnett set to work immediately to identify properties that met the client's requirements. Of all the options presented, the client decided to pursue the following:
- An industrial single-tenant asset in Houston, TX - international credit tenant
- A multi-tenant retail asset in Kansas City, KS - national and local credit tenants
- A multifamily DST in Atlanta, GA - institutionally managed Delaware Statutory Trust
- A single-tenant retail asset in Augusta, GA - national credit tenant
The next steps involved negotiating deal terms with each seller that afforded the client the investment returns they sought, completing the necessary due diligence for each investment in each market, and closing all transactions relatively quickly to adhere to the 1031 Exchange requirements.
The Results
Burnett, a leading buyer's representative, not only successfully negotiated mutually-agreeable deal terms for the purchase of multiple commercial properties but he also coordinated travel to each city while thoroughly reviewing all due diligence materials. The purchase price for several of the properties was negotiated down more because of due diligence findings. All investment properties were successfully acquired within the required 1031 Exchange timelines and 100 percent of the client's capital gains taxes were deferred, saving them $3.5 million.
The Stats
Burnett served as the buyer's representative during a successful 1031 Exchange of investment properties across the United States.
If you're looking for an experienced commercial real estate investment broker to help you navigate a 1031 Exchange transaction and defer 100 percent of your capital gains taxes, contact Fountainhead Commercial today.
The Testimonial
To Who It May Concern – 1031 Exchange Real Estate Investors:
Our family-owned and operated an award-winning dairy in California for 24 years. When we decided to sell the business and related 1,200 acres of land, we wanted to use the $14M in proceeds to acquire income-producing commercial real estate while deferring the payment of all capital gain taxes.
I engaged Lowrey Burnett, CCIM to provide his expertise and assist with the purchase of multiple investment properties in multiple out-of-state cities. Lowrey performed a very thorough nationwide search & identified numerous high-quality investments that aligned with my investment criteria. Before the 1031 Exchange deadline, I closed on 4 different income-producing properties in 4 different cities as part of our diversification strategy. We successfully deferred 100% of the capital gain taxes…estimated savings of $3.5M!
If you intend to invest in commercial real estate anywhere in the U.S., I recommend that you also take advantage of Lowrey’s experience, expertise, and professionalism. He worked very hard for me & I’m sure he will do the same for you.
