6A — March 2024 — 1031 Exchange — Financial Digest — M id A tlantic Real Estate Journal
www.marej.com
1031 E xchange
EagleBank provides $18M in financing to DT Global
t’s both an exciting time and a very trying time when an investor sells By Dwight Kay, Kay Properties and Investments Three 1031 Exchange Investment Options I
Industrial (C&I) and Govern - ment Contractor underwrit - ing, back office and risk teams. ”We look forward to our partnership with EagleBank and its talented staff to sup - port our financing needs as we manage through contin - ued periods of growth,“ said Torge Gerlach, Chief Execu - tive Officer at DT Global. “It is important for a large government contractor with global operations spanning 90 countries to have found a partner that is not only will - ing, but eager, to support our needs and work with us as effectively and efficiently as the team at EagleBank has already proven to do.” DT Global is shaping a future where sustainable develop - ment and innovation empower individuals, communities, and nations. We work in partner - ship with local stakeholders to foster inclusive prosperity, so - cial equity, and environmental stewardship. Our global team of 2,500 staff and experts work in over 90 countries to solve complex problems in the peace - building, governance, economic development, environment, and human development sec - tors. With a track record of technical excellence and more than 60 years of international development experience and relationships, we deliver inno - vative solutions that transform lives. MAREJ
BETHESDA, MD — Eagle - Bank, one of the largest com - munity banks in the Washing -
ton, DC area, announced it has success - fully closed $18 million in credit fa- cilities to DT Global, LLC and Subsidiaries. The facilities
property. NNN Properties often are priced from $1.5 Mil - lion to over $10 Million so it may be hard to diversify and investors could end up being over concentrated in one asset class, with one tenant, and one location. During the Covid 19 crisis, many tenants asked for rent relief including even Starbucks, an investment grade tenant. This means NNN owners might have to hire an attorney to negotiate with a massive company over terms and payments which would be tricky for most 1031 investors to say the least. There are also other manage - ment issues that many own - ers don’t think about such as making sure insurance is up to date, that any common area maintenance fees are prorated and collected, that the tenant is indeed paying property taxes in a timely manner and how to re-tenant the build - ing if the property becomes vacant. If there is a loan on the property, the monthly mortgage payment has to be made by the owner even if there is no tenant paying rent. It can get burdensome and be incredibly more risky than 1031 exchangers are often led to believe. 1031 Exchange Investment Opportunity Number 3: Another way to invest in a 1031 Exchange is into DST 1031 Properties. The DST Delaware Statutory Trust property is where the inves - tors own a piece of the prop - erty instead of owning the whole property. By dividing up their investment funds into multiple properties, an investor can own properties in different geographic locations, with different asset classes and different tenants and even different property man - agers. With a DST, investors are usually investing in high quality properties that they might not be able to afford on their own. These proper - ties are professionally man - aged and so they are passive investments where the DST sponsor companies (the asset managers) are the ones re - sponsible with the day-to-day issues involving real estate ownership. Tenants, toilets, and trash are no longer a con - cern for the investors. If the 1031 investor needs to replace debt in their 1031 Exchange, the loans in the DSTs are
non-recourse to the investors which means that the investor doesn’t have to sign person - ally for the loans. For those investors not wanting the risk of lender foreclosure and not needing debt replacement in their 1031 exchange, due to the fact that they already paid off their mortgages and own their property free and clear, debt free DSTs are available with no long-term mortgages encumbering the assets. DSTs feature properties in most of the major asset classes in - cluding multi-family, medical office, NNN retail, industrial, and even self-storage. Dwight Kay is founder & CEO of Kay Properties and Investments. About Kay Properties and www.kpi1031.com Kay Properties and Investments is a national Delaware Statutory Trust (DST) investment firm. The www. kpi1031.com platform provides ac - cess to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, and real estate research and analysis on each DST (typically 20-40 DSTs). Kay Properties team members collectively have over 200 years of real estate experience and have participated in over 30 billion of DST 1031 investments. Past perfor - mance does not guarantee or indicate the likelihood of future results. Diver - sification does not guarantee profits or protect against losses. All real estate investments provide no guarantees for cash flow, distributions or ap - preciation as well as could result in a full loss of invested principal. Please read the entire Private Placement Memorandum (PPM) prior to making an investment. This case study may not be representative of the outcome of past or future offerings. Please speak with your attorney and CPA before considering an investment. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST)properties and real estate securities, including il - liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating com - mercial and multifamily properties, short-term leases associated with mul - tifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. All offer - ings discussed are Regulation D, Rule 506c offerings. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential distribu - tions, potential returns, and potential appreciation are not guaranteed. For an investor to qualify for any type of investment, there are both financial requirements and suitability require - ments that must match specific objec - tives, goals, and risk tolerances. Secu - rities offered through FNEX Capital, member FINRA, SIPC. MAREJ
a property and wants to defer taxes in a 1031 Exchange. A 1031 Ex - change is when an in - vestor sells a property that was held for
Eric Pietras
refinanced existing debt and increases DT Global’s work - ing capital to support their growth-driven needs. This transaction highlights Eagle - Bank’s significant presence in supporting federal defense and government services contrac - tors, including those operating in the USAID space. “We are thrilled to work with DT Global, LLC amidst their growing USAID portfolio,” said Lindsey Rheaume , executive vice president and chief lend - ing officer for C&I. “EagleBank is the right financial partner for contractors within this segment of the market, and we look forward to supporting DT Global, LLC in their mission to transform lives.” The transaction was origi - nated, structured and handled by Eric Pietras , senior vice president and relationship manager, with support from many others in EagleBank’s experienced Commercial &
Dwight Kay
business or investment use and then exchanges into an - other property of equal or greater value in an effort to defer taxes. There are three basic choices that investors can make in 1031 Exchange investment opportunities. Before reading on, make sure you visit the Kay Properties resource page and learn more about 1031 exchange basics so you invest like a professional. 1031 Exchange Investment Opportunity Number 1: An investor can purchase a property that they own and manage on their own. This is what most investors think about and at first blush, seems like the easiest choice. How - ever, when an investor tries to find a property, do their due diligence, and then close on the property within the timeframe of a 1031 Exchange, it’s often not as easy as it looks. If the purchase can be accomplished in time, the investor then has the burden of property man - agement with the dreaded ten - ants, toilets, and trash that go along with management. Of - ten, when purchasing a prop - erty to manage, investors find they must put all their money into one property which, to the investor’s detriment, negates any form of diversification * . The investor may even have to go to a bank to borrow funds to complete the purchase. Adding financing to a prop - erty adds potential recourse against the investors other assets, potential cash flow sweeps, and the potential to lose the property to the lender in foreclosure. 1031 Exchange Investment Opportunity Number 2: A second option is when the investor purchases a Triple Net Leased NNN property where the commercial tenant is responsible for rent, taxes, insurance, and some or all of the maintenance on the
Kennedy Funding Closes $2.75 Million land loan for Kansas City multi-family
is one of the prime reasons it’s poised for future success," said Kevin Wolfer , Kennedy Funding’s CEO/president. “By doing our due diligence we followed through with the deal, which showcases Ken - nedy’s commitment to stepping in when traditional funding sources cannot meet the needs of developers.” "Where traditional lend - ers see obstacles, we see op - portunities,” said executive loan officer Mark Falzone . “Our expertise in delivering funding solutions for land ac- quisition and development is unmatched, and we're proud to add the Kansas City project to our portfolio of success stories." As a direct lender, Kennedy Funding's streamlined process does not depend on bureau- cratic red tape and onerous loan provisions and large loan committees that borrowers face with traditional lenders, allowing for a quick turn - around on loan closings. MAREJ
ENGLEWOOD, NJ — Ken- nedy Funding announced the closing of a $2.75 million land loan for a 420-unit multifamily project in Kansas City, MO. LOF GP, LLC, the borrower, acquired the 31.51-acre prop - erty, called Kimpton Falls, in April 2023 for $4.5 million and secured the loan from Kennedy Funding for working capital and cash-out. Steven Wilson , president of Barefoot Mortgage , the bro - ker on the transaction, said the loan demonstrates Kennedy Funding's ability to provide competitive funding solutions where other lenders fall short. "We’d been through the ringer with another lender that was supposed to close,” said Wilson. “Kennedy's interest rates were superior, with lower prices than others, and a fee structure that was far more competitive. They were pro - fessional, direct, up-front, and responsive,” he added. "The location of this property
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