SERVICES

 1031 Exchanges

A 1031 tax deferred exchange makes it possible for investors to sell and buy property of like kind while deferring tax consequences. This transaction is authorized by section 1031 of the IRS code and offers investors a reliable strategy for the protection of their real estate assets. A successful 1031 exchange allows the investor to reinvest 100% of the equity from the sale of a property into the purchase of a preferred replacement property without recognizing any gain. This type of property sale and reinvestment can either be done through a simultaneous or delayed 1031 exchange. In most cases a 1031 exchange is done as three-party delayed exchange also known as a "Starker Exchange" in which an intermediary ensures a reciprocal transfer of the properties and provides a "safe harbor" against the actual receipt of exchange funds.

Investment Options

Once the decision to invest in real estate has been made, there are a number of options available to the investment plan. If the plan is of sufficient size, it may rely on its own expertise to oversee the management of the real estate it acquires. Alternatively, as is most often the case, it may employ the services of a third-party advisor to manage the real estate portfolio either in whole or in part. What follows are brief descriptions of the investment options available.

Direct Real Estate Ownership
As indicated by the description, you (individually, through your trust, or other various forms of co-ownership) own the investment real estate. You can choose to manage it yourself, hire a 3rd party manager to do it for you. Given the sophistication of the manager, you may also need to hire an accountant and/or tax attorney to help maximize on the benefits provided to you under direct ownership. This would include depreciation and mortgage interest deductions if you put a loan on the investment property. You also have the ability to make all decisions regarding your property including when to refinance or sell the asset not to mention the day to day decisions you chose not to authorize others to do for you.

  • Master Leased Investment Properties
    The Master Lease structure comes into play when an investor works with the Seller of a property whereby the Seller agrees to lease back the property from the Buyer and provides the Buyer a schedule of lease payments over the length of the Master Lease which is typically 10 yrs. In most cases, the Master Lease allows the Master Lessee to keep any cash flow generated by the property which is in excess of what is required to be paid the Master Lessor. And additionally, if the cash flow generated by the property is less than the cash generated at the property, the Master Lessee is obligated to fund the shortfall from its own sources.
  • Ground Lease Investments
    A ground lease is more typical when it comes to acquiring raw land that is intended to be developed. And for investors who have existing real estate without any debt associated with it, doing a 1031 exchange to acquire a piece of land and then make arrangements with the developer to lease back the ground from you for up to 99 yrs. (most ground leases are initially between 59 and 99 yrs. in length.) The Ground Lease will call for monthly payments to be made by the developer and/or operator of the property once it is constructed and typically has annual increases in lease payments by either a set amount, a CPI or adjustment to market value mechanisms to help grow the lease payment income stream to the investor.

Tenants In Common

The Tenant In Common ("TIC") structure has been widely used over the past years when more than one investor wanted to own a piece or fraction of an investment property with other investors rather than owning it outright. Each fractional owner retains certain rights in how the property is operated, refinanced or ultimately sold. A Tenant In Common Agreement is the governing document which spells out certain rights of each TIC owner and the terms must agree with the terms and conditions outlined in the IRS guideline Revenue Procedure 2002-22. One of the advantages of utilizing this form of ownership was that an owner could sell an existing property utilizing a 1031 Tax Deferred Exchange and take a portion of a much larger asset and engage professional management rather than dealing directly with tenants in a wholly owned property. This structure was widely used from 2004 through 2015 when larger investment properties were being offered to investors. However, after 2015 the lending community for the most part stop making loans to TIC ownership structured properties given the challenge of consensus building with the TIC ownership group when it came to unanimous consent requirements needed for a change in management, refinance or sale of a property.

Lease Representation

  • New Space Needs
    When your business requires space to start up or expand your business, it is imperative you seek professional representation. Nagle Real Estate & Investment Advisors is where you should go to ensure your personal and business interests in the new space leasing process are properly communicated, tailored to your current needs as wells as into the future. NRE&IA has the in depth, hands on expertise to provide the proper representation given the company has represented both Landlords and Tenants over the past 40 years.
  • Expansion Space Requirement
    Many Tenants feel they can negotiate additional space needs for expansion purposes directly with their Landlord given their relationship established with the Landlord on their Initial lease. This is exactly what the Landlord wants their Tenants to do. It is imperative a tenant engages professional representation, especially when it comes to expansion needs. The dynamics created for expansion provides the tenant's representative the opportunity to not only look at the terms and conditions for the expansion space, but also provides a unique opportunity to look at the existing lease to modify terms more favorable to the tenant simultaneously with the expansion process.
  • Lease Renewal Representation
    Once again, it is imperative a tenant engages representation to handle the lease renewal process with the tenant's existing Landlord. A leasing professional will not only deal with the existing Landlord but will also canvass the surrounding markets to find suitable alternative locations for their tenant/client. Even though the tenant may not want to move, other leasing options bring Into play additional market information which helps strengthen the negotiations with the current Landlord.
  • Space Contraction/Lease Break Needs
    During a business cycle down turn or given a tenant's unique situation may trigger the need for a tenant to downsize or get out of their current lease obligation. A professional lease negotiator can help determine the best options for the tenant to downsize or negotiate a lease break with the Landlord. A professional can bring into play many more dynamics than a tenant can given the market knowledge and proven expertise in minimizing the costs to downsize or vacate a space no longer needed.

Acquisitions/ Disposition

"Nagle Real Estate and Investment Advisors advise clients on a regular basis in complex real property purchase and sale transactions. The representation of purchasers and sellers of all types of real property is a key component of our Real Estate practice. Among the many clients represented by the firm's Real Estate attorneys are purchasers and sellers of property used for"

  • Shopping centers
  • Office buildings
  • Hotels and resorts
  • Apartment and condominiums
  • Retail malls
  • Industrial and R&D projects
  • Mixed use projects

Nagle Real Estate and Investment Advisors negotiate and document real property acquisitions and dispositions, as well as assist clients in conducting due diligence investigations in connection with these transactions. This work also includes investigations and reviews regarding title, land use, zoning and other entitlement issues, leasing and other contractual obligations and the environmental and physical condition of real property and improvements. We also are experienced in structuring and documenting sales to merchant builders in master planned communities and other master developer projects where it is important that the merchant builders comply with project standards, applicable laws and governmental requirements.