Two of three deals were sourced off-market in a successful 1031 exchange following the sale of a SOMA warehouse.
Max Rattner of NAI Northern California exclusively represented a private local investment partnership in a successful $15,729,000 1031 exchange following the sale of a SOMA warehouse purchased for office and residential development. The exchange targeted absolute-net-leased investments with credit tenants and long remaining lease terms.
“My clients had owned the asset since the nineties, and as a result, they had substantial proceeds to place in order to avoid a significant capital gains hit,” Rattner said. “Prioritizing stable and passive income for retirement, my clients wanted credit tenant deals with zero landlord responsibilities on high-quality real estate. I’m pleased we were able to acquire three properties in growing metros across the country while adhering to the Department of the Treasury’s strict 1031 timing and identification regulations.”
Rattner helped his clients acquire a 7-Eleven in Georgetown, Texas (Austin MSA), a Walgreens in Keizer, Oregon (Portland MSA), and a CVS in Universal City, Texas (San Antonio MSA). The 7-Eleven was newly constructed with a 15-year initial lease term. The Walgreens and CVS have both been successfully operating for over 20 years and recently extended for long firm terms (15 and 20 years, respectively). All three leases are absolute NNN and feature scheduled rent increases. Rattner sourced the Walgreens and CVS properties off-market.
While the three completed transactions went smoothly, Rattner said the biggest scare of the exchange came when a Chicago seller refused to go through the defeasance process to pay off his existing loan after getting new advice from his CPA. “Our identification deadline had already passed at that point, so that caused us some heartburn for sure. Thankfully we had a backup property under contract at a similar price point, so we were able to avoid the over $2 million tax liability which would have otherwise resulted.”