Mid Atlantic Real Estate Journal — September 28 - October 11, 2012 — 41A
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O UTSIDE T HE R EGION
Panczykowski handles transaction Binswanger brokers 328,000 s/f ind. sale
Urban Outfitters West Coast Internet Fulfillment Ctr. Dermody Properties, United Construction finalize project
R
ENO, NV — Dermo- dy Properties and United Construction
Company have completed the Urban Outfitters, Inc. West Coast Internet Fulfillment Center. URBN began opera- tions in the new facility during the first week in September. The team of Dermody Proper- ties and United Construction was selected in early 2011 to develop and design/build the 462,720 s/f facility for URBN; the project is the largest private building completed in the state of Nevada since early 2009. The total investment in the region by Urban Outfitters, Inc. for the development, improve- ments and construction was approximately $55 million. The facility, which is US- GBC LEED Silver Certified, is located at 12055 Moya Blvd. on 38.34 acres of development- ready land in the Dermody Properties LogistiCourt at Silver Lake. The Phase 1 building has more than 450,000 s/f of ware- house space, over 10,000 s/f of office space, an automated state Section 1031 permits a tax- payer to sell appreciated prop- erty and to acquire replacement property in a deferred exchange that extends from one tax year to the next. A taxpayer gener- ally has 180 days to complete the exchange. For example, if qualifying investment property is sold in October, 2012, the tax- payer must acquire like-kind replacement property by March of 2013. If no replacement prop- erty is acquired by the 180th calendar day in 2013, then the taxpayer generally recognizes some or all of the gain in 2013, when sale proceeds are received from the qualified intermediary. By default, the “installment sale” feature of Section 1031 effectively pushes the taxable gain into the following tax year (in this case, 2013). This could be good or bad. If tax rates do not increase, the incomplete 1031 exchange pushes the tax- able event forward allowing for some tax-deferral – a net benefit. If rates increase, the higher 2013 tax may wipe out the benefit of the short tax- deferral. As it turns out, how- Internal Revenue Code Sec- tion 1031? For some well positioned taxpayers, such a strategy is possible.
1989 Transit Way
BROCKPORT, NY — On behalf of PetSmart, Inc. , Binswanger announced the sale of a 328,000 s/f industrial building on 32 acres. The property is located at 1989 Transit Way. Silagi Development &
Management, Inc. pur- chased the property as an investment. The transaction was han- dled by Jim Panczykows- ki , senior vice president in Binswanger’s NewHaven, CT office. ■
Marcus &Millichap closes on $11.6 million apt. complex
Urban Outfitters, Inc. West Coast Internet Fulfillment Center
of the art Material Handling System (MHS) and a 24/7/365 data center. A future Phase 2 expansion can increase the facility to 895,360 s/f. United Construction began the pre-construction planning and building design immediate- ly. Construction began in May 2011, the building envelope was complete by November 2011, and installation of the very so- phisticated and complex Mate- ever, the taxpayer has a choice whether to pay the tax in 2012 or 2013, at the then applicable rates. In other words, there is no requirement that the tax- payer pay the tax at the higher 2013 rate if rates actually do increase. Tr e a s u r y R e g u l a t i o n 1.1031(k)-1(j) provides that the installment sale rules apply to the obligation of a qualified intermediary to pay over sales proceeds held by the intermedi- ary under an exchange agree- ment. The installment sale rules are contained in Internal Revenue Code Section 453 and 453A. Those provisions gener- ally provide that a taxpayer rec- ognizes gain on a sale of prop- erty in the year the payments are received. Under the install- ment method, taxable gain is reported ratably over the term of the installment payments, as payments are received. Accord- ingly, if an exchanger sells an investment property in October 2012 for $1,000,0000 with a basis of $500,000, and the 180- day exchange period elapses without the exchanger finding a replacement property, the taxpayer would recognize the $500,000 gain in 2013 provided that no replacement property was acquired at the end of the
rial Handling System began in December 2011. Construction was complete in February of 2012. Also instrumental in as- sisting Urban Outfitters were EDAWN (the Economic Devel- opment Authority of Western Nevada), the Nevada Gov- ernor’s Office of Economic Development (GOED) and Nevada Governor Brian Sandoval . ■ exchange. This would be the “default” treatment under Sec- tion 453. Section 453, however, permits the taxpayer to elect out of the installment method by timely filing a tax return (including extensions) for the year in which the relinquished property sale was closed. This is true even if the exchanger initi- ated a tax-deferred exchange with a qualified intermediary. See e.g., PLR 200813019. Going back to our example above, the taxpayer could elect to report the gain in 2012 if rates were higher in 2013, or could take advantage of deferral into 2013 if capital gains rates remain the same or decline in 2013. Lastly, the taxpayer might simply complete the exchange and defer the capital gains tax indefinitely. A taxpayer engaging in a tax- deferred exchange must have the intent to acquire like-kind property at the inception of the exchange. Thus, the above discussion is not intended to encourage a taxpayer to initiate a tax-deferred exchange just to hedge against the potential for higher capital gains tax rates in 2013. Jonathan Christianson, Esq., JD, LLM Tax is a tax attorney. ■
continued from page 2 By Jonathan Christianson . . .
Cambridge Apartments
Millichap Research Services. And the retail component of this property is currently 100 percent occupied. The property’s proximity to the (University of California) Berkeley campus, a mere block away, further bolsters its investment value,” adds Geraldo. “Demand was strong for this building, and it ulti- mately resulted in a sale that exceeded our initial listing price,” says Davidson. “Well-located, urban infill multifamily assets in urban infill areas will remain one of the safest classes of invest- ment, especially as investors continue to flee to the safety of real estate in major U.S. markets,” he notes. The multi-tenant retail component of the property is fully occupied by Smart Alec’s, Amplify Barber Shop and Pappy’s Grill & Sports Bar, which committed well over $700,000 in tenant im- provements to its space since March 2010. ■
BERKELEY, CA — Mar- cus & Millichap Real Es- tate Investment Services has closed on the sale of Cambridge Apartments, a landmark 43-unit apartment complex with ground-floor retail space at 2500 Du- rant Ave. in Berkeley. The sales price is $11.6 million, which represents a price of $269,767 per unit. Brandon Geraldo and Eli Davidson , associates in the firm’s San Francisco and Oakland offices, respectfully, represented the seller, John Lineweaver of Berkeley Associates LLC . The buyer was a joint venture of Prado Group and JonathanRose Cos . “The new ownership has acquired a prime property in an irreplaceable location that will continue to ap- preciate in value over the near and long term,” says Geraldo. “Apartment rents in Berkeley and other select East Bay submarkets are among the highest in the na- tion, according to Marcus &
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