We provide our clients with access to national and global real estate investments across all life cycle stages.
1031 DST Investments
What is a 1031 Exchange?
Any type of U.S. real property held by the client for productive use in a trade or business, or for investment purposes can be exchanged for more real property as long as the properties are of “like-kind”, regardless of grade or quality. A properly structured 1031 exchange allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes.
- Qualified Intermediary account should be opened prior to close.
- Sale proceeds must go to Qualified Intermediary.
- To qualify for 100% deferral:
- 100% of equity has to be re-invested.
- Assume equal or greater amount of debt in new property.
- Must be a like-kind exchange – i.e. investment property for investment property.
The DST Option
What is a DST - Delaware Statutory Trust?
- Trust created under Delaware Law – considered separate legal entity but does not have separate tax ID.
- Must comply with IRS Rev Ruling 2004-86.
- DST Real Estate Investment is Ownership of Beneficial Interests in the Trust – considered direct R.E. ownership by IRS and taxed accordingly and can therefore be used as replacement property.
- Owners receive proportionate share of income, tax deductions and appreciation.
- Tax reporting for a DST is done on a Schedule E utilizing property operating information provided by the Sponsor.
- The DST can have as many as 499 unrelated Investors
- A DST Owner’s share in the Trust and economic benefits and risks is equal to the percentage of their Trust Beneficial Ownership in the Trust.
Non-Traded REIT Investments
What is a REIT?
A Real Estate Investment Trust—or “REIT”—is a professionally managed company that mainly owns, and in most cases operates, income-producing real estate. REITs pool the money of numerous investors to purchase a portfolio of properties that the typical investor might not otherwise be able to purchase individually. The properties owned by a REIT create income that may be passed to investors as distributions. In fact, REITs are required by law to pass at least 90 percent of taxable income to stockholders.
What Are BDC Investments?
Business development companies (BDCs) were created by the U.S. Congress to stimulate investments in privately owned American companies. More specifically, BDCs are closed-end funds that invest in a company’s debt (loans) or equity with the goal of generating income, capital growth or both.
BDCs are registered with the U.S. Securities and Exchange Commission (SEC) and regulated under the Investment Company Act of 1940. These investments offer individual investors access to private debt, an asset class that typically has only been available to high-net-worth and institutional investors. By investing in a non-traded BDC, individuals are able to pool their capital to invest in private American companies.
Real Estate Opportunity Funds
Generally, the best time to acquire good quality commercial real estate is in the years following an economic recession. Our recent massive recession has provided savvy real estate investors with the opportunity to capitalize on the excesses of the prior cycle. Loose underwriting standards and excessive leverage have been the primary contributors to the overvaluation of various real estate assets during the peak years.
The unwinding of these assets has created a potential buying opportunity for the opportunistic buyer who has the capacity and experience to acquire these distressed assets at a discount to their intrinsic value, stabilize the property through lease up and capital improvements. Once stabilized, these assets can then be sold into a recovering market.
Real Estate Opportunity Funds typically make debt and equity investments in distressed assets that have upside potential and that can provide investors with potential cash flow during the holding period of the investment. While these types of investments do have upside potential, a significant amount of work and repositioning needs to take place with distressed assets prior to realizing any potential gain. Some of the risks involved with opportunistic funds include effective management, financing capabilities of the fund sponsor, property specific risks, market risk, loss of principal and a lack of liquidity among others. For more information pertaining to the benefits and risks associated with this type of investment, please contact us at 858-812-3148.
Real Estate Development Funds
What are Real Estate Development Funds?
Real Estate Development Funds provide investors with the opportunity to benefit from inventory shortages in various markets throughout the country. By partnering with proven developers, we help our clients diversify their portfolios while providing for potentially higher returns. Development funds typically provide higher return potential while carrying the highest level of risk.
Typically, developers purchase a tract of land, determine the marketing of the property, develop the building program and design, obtain the necessary public approval and financing, build the structure, and lease, manage, and ultimately sell it.
Real Estate Backed Lending
The real estate debt funds we offer our clients are Income Funds which make loans secured by commercial real estate and pay interest received from those loans to investors. These funds are primarily created to provide investors with income. The goal of the fund is to provide investors with interest payments net of costs and return the investor's principal once the loans mature.
Typically, our fund managers/sponsors originate and service their own mortgage loans. Loans can take the form of Mezzanine financing, senior loans and/or preferred equity. Each type of loan carries a different level of risk and security and should be clearly understood prior to making an investment.
Some of the risks associated with private real estate lending funds include:
- Lack of liquidity
- Effective underwriting and servicing practices
- Ability of the borrow to fulfill its obligation under the loan terms
- Real estate values
- Loss of principal
- Conflicts of interest
- Impact of fees on total returns
Investors should always read and understand the risks and benefits associated with this type of investment prior to investing.
A Mutual Fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.
Mutual Funds represent an effective means to accessing some of the worlds most experienced and successful money managers while gaining access to a truly diversified portfolio of assets. For more information pertaining to the Mutual Funds we offer our clients, please click below or call us at 858- 812-3148.