A Culp Elliott & Carpenter real-estate investment client hoped to sell residential apartment complexes as a tax-free exchange. The family had owned the apartment complexes for more than 20 years. Constant tenant turnover, along with upkeep and repair of these older structures, had become an increasing burden. Family members also believed that residential real estate values had peaked. They sought an opportunity for less management responsibility. Their plan: to reinvest the 1031 proceeds into investment property with a higher potential for appreciation.

Our firm helped them achieve their goals. We structured, negotiated, documented and closed the 1031 exchange of three large apartment complexes, located in two states, totaling over $30 million. The work included negotiating and implementing the assumption of the existing permanent financing with separate lenders on each of the apartment projects. The loans contained prepayment penalties, making the payoff of such loans uneconomical.

As the second phase of these transactions, we assisted our client in identifying, structuring, negotiating, contracting for and closing the purchase of $40 million in tenants-in-common interests in multiple multi-tenant commercial office buildings. The transactions were conducted in close compliance with revenue procedure, including the assumption of a prorata share of the existing permanent financing on the office buildings and structuring the management rights of the respective tenants-in-common.