Triple 1031 Exchange

BACKGROUND

A repeat client, that owned multiple investment properties, was looking to reallocate and

simplify their real estate portfolio. They were able to take advantage of the strong market

conditions and sold two net-lease properties, one of which we helped them acquire in

2013, and one farmland property they owned with 4 other partners. With the proceeds

from the three sales, they wanted to complete a 1031 exchange into 2 properties that had

longer lease term remaining, strong demographics and traffic counts, and they were the

sole owner and decision maker.

THE CHALLENGE

Disposition

Our client’s goal was to dissolve a 4-person partnership in order to simplify their affairs.

The farmland that was owned by the partnership was going to net our client around $500K.

They knew that would be a difficult price point to satisfy their 1031 exchange and provide a

strong, passive investment with long lease term, so they decided to sell 2 additional

properties. We helped coordinate the timing of the 3 separate sales, as well as ensure their

total net would allow them to end with an upgraded investment portfolio while also

satisfying their 1031 exchange.

Acquisition

Our client’s strategy for their 1031 exchange was to combine $4.2M in cash from their 3

sales and invest in 1-2 high quality properties. For tax purposes, they initially wanted to

purchase in states where they already owned properties. However, the strategy began to

change due to historically low cap rates and available inventory. We had to adjust and

expand our search efforts in order to find strong credit tenants, in a dense area, with long

lease term remaining that met our client's return expectations.

THE PROCESS

Disposition

We created “The Property Profiler” and conducted a thorough broadcast, leveraging our

current database of potential buyers and prospects. With pricing and marketing

aggressively, we were able to locate all-cash, quick close buyers at strong market rates for

their Dollar General and Advance Auto Parts properties.

Acquisition

We created “The Purchaser Profiler” and conducted an aggressive search leveraging our

database of developers and brokers on a national and regional level to uncover any “off”

and “on” market opportunities. We also leveraged our database of properties to create a

“Locate List” for our client to easily see what properties were currently available. This

helped us quickly confirm search criteria and zero in on the right properties. We

communicated and qualified effectively, while moving aggressively and persistently

towards finding three properties to identify on two back-to-back 1031 exchanges. One for

$2.4M and another for $1.8M.

THE RESULT

Disposition

After strategizing and confirming our client’s disposition and acquisition plans, we agreed

to implement a solution with a specialized team approach. We aggressively broadcasted

the Dollar General and Advance Auto Parts properties, and after a few months on the

market we found qualified and motivated purchasers. We navigated and managed the due

diligence process, third party consultants, and seller expectations while closing the Dollar

General property with 7.28 years of lease term remaining and 6.35 years remaining on the

Advance Auto Parts property.

Acquisition

Our client identified three 1031 properties within the first 45 day ID period and closed on

an O’Reilly Auto Parts property with 18.58 years of lease term remaining. Then, they

identified three additional properties and closed on a Dollar General property with 14.74

years of lease term. Both properties were closed in 37 to 85 days, which saved a potential

capital gain event and got their equity back to work as soon as possible.

Throughout these transactions we maintained a high touch relationship and stayed in tune

with the goals and concerns of our client. We helped them stay focused and confident to overcome hurdles during the disposition and acquisition which translated into a better long-term investment and piece of mind. By taking the time to listen, confirm goals, strategize, and utilize our process throughout each transaction, an extremely efficient and satisfying experience was had by all parties. Objectives were met, time was saved, and returns on investment were achieved.