The Dirt Lawyer's Blog Archive

If the capital gains tax goes up -- a possibility under McCain and a virtual certainly under Obama -- the 1031 market is going to go through the roof as people will try to defer their capital gains. While in some sectors 1031s are still very popular, I don't see many of them in my practice -- maybe two a year these days. I expect that number to rise, and I am starting to bone up on current events in the field and various rulings and nuances of the law to make sure I am ready for that boom. If you too are interested in thinking about 1031s, one website I stumbled across was this blog from the 1031 Alternatives Group. It is (as it ought to be) an ad for their services (which includes TIC deals), but I also found their information interesting, and I learned a ting or two about some recent developments. There are also some very basic concepts discussed for neophytes.

Here's a short list in Crain's . The story features Congress Center in the West Loop area, a building with which I have more than a passing familiarity. Triple Net Properties (now known as Grubb & Ellis after they bought G&E last year and took the name) bought the building in a highly-leveraged tenant-in-common (TIC) deal. It seemed like a good move because of the leases in place. But now vacancies have risen and more buildings are on tap in that sub-market, so experts think the profit may be only 10% above the purchase price of ~five years ago. Now, the deal is levered so that makes the cash-on-cash return a little better, but this might be a bloop single, not a home run. Stuff happens. At least the TIC investors are not losing their investment, which is a topic I will have to discuss one of these days.