Tax shareholders David Shechtman (left) and Matt Meltzer (right) recently advised on three major real estate transactions, with three closings over two days and for two different clients, in which more than $1.6 billion in value changed hands—making it a billion-dollar week for Flaster Greenberg.
The transactions involved complex “like kind exchanges” of real estate (under Section 1031 of the Internal Revenue Code) where the clients acquired property portfolios that had previously been “parked” with an exchange accommodation titleholder while the clients arranged the sales of their existing properties. Section 1031 allows sellers of real property to defer tax on gain realized on dispositions as long as they satisfy the varied (and intricate) requirements of the tax code, regulations, and IRS guidance governing exchanges. Since real estate investment trusts (REITs), investors, developers, and other real estate owners frequently need to buy before they are ready to sell, the IRS provides a Safe Harbor for an accommodation party to acquire and “park” the desired property for up to 180 days. The Safe Harbor provides taxpayers additional time and flexibility for their sale transactions while still qualifying for exchange treatment.
Shechtman and Meltzer routinely provide Section 1031 advice to clients who need advanced strategies to accomplish their business and tax goals. One of the clients Shechtman and Meltzer recently assisted is a REIT which owns continuing care facilities and medical office buildings nationwide. The REIT sold multiple portfolios of properties, in a series of tranches, which then were matched to a separate “parked” property portfolios and stand-alone assets to complete five separate exchanges. The second client is a well-known real estate owner and manager that “parked” with an accommodator three multi-family properties (two on the East Coast and one in Ohio) using a complex tenants-in-common structure with a non-1031 investor. Both transactions involved significant pre-closing planning, including internal entity reorganizations, negotiations with lenders, and crucial timing deadlines.
Although their recent 1031 transactions involved large real estate portfolios, Shechtman and Meltzer work just as frequently with individuals, property owners, and smaller partnerships whose exchanges often involve similar complexities. They also represent, and provide “trouble shooting” advice for, qualified intermediaries and exchange accommodators who facilitate exchanges and work with sponsors of Delaware statutory trust investments geared to 1031 investors.
Shechtman and Meltzer are shareholders in Flaster Greenberg’s Business & Corporate Department. Our department members represent companies at every stage of their business lifecycle, from formation and governance to complex transactions, financing, dispute resolution, and succession. In addition to advising on mergers and acquisitions, corporate structuring, and a wide array of commercial agreements, our team members regularly counsel clients on efficient tax strategies. Our tax attorneys help clients structure transactions to preserve value and align business goals with evolving tax requirements. Clients include entrepreneurs, start-ups, family-owned businesses and large private and public companies.
For assistance with your matter or for more information, please contact David Shechtman Matthew Meltzer or any member of our Corporate or Tax groups.
