F inancial D igest F eaturing 1031 E xchange

Real Estate Journal — March 11 - 24, 2016 — 15A


M id A tlantic

FEA is the voice for the 1031 exchange industry About The Federation of Exchange Accommodators

U pcoming E vents : FEA 2016 Midyear Meeting March 15 - 16, 2016 Melrose Georgetown Hotel Washington, DC www.melrosehoteldc.com FEA 2016 Annual Conference

he Federation of Exchange Accom- modators (FEA) is the only national trade asso- ciation organized to represent professionals who conduct like-kind exchanges under Internal Revenue Code §1031. Members include Qualified Intermediaries (QIs), their primary tax and legal counsel, and affiliated industries (TIC sponsors, banks, real estate brokers, title companies, set- tlement/escrow agents, etc.). FEA is the voice for the 1031 exchange industry and works diligently to: • Provide tools, resources and legislative updates to T

member companies • Educate consumers on ef- fectively using 1031 exchang- es to defer capital gains tax • Drive legislation to en- sure appropriate consumer and industry protection • Work closely with profes- sions affiliated with the 1031 industry including realtor es- tate professionals, attorneys, CPAs, DST and NNN Broker/ Dealers, escrow agents, and financial institutions MEMBER BENEFITS Leadership, Education, and Advocacy: FEA Members are the Voice of 1031 FEAmembers provide lead- ership for the industry, set livestock. This tax strategy is invaluable for business owners and investors. A 2015 Ernst &Youngmacro- economic study on the economic impact of repealing section 1031 concluded a repeal would slow economic growth, reduce GDP and hurt owners of real property and many small busi- nesses even if new tax revenue is used to lower corporate taxes. A repeal of section 1031 is at cross-purposes with the goals of tax reform. Some of the major findings of the study note that a repeal of 1031 would lead to: •Longer holding periods of real estate; •Greater reliance on debt financing; •Less productive employ- ment of capital in the economy; and •Increased cost of capital. A second 2015 study conduct- ed by academics David C. Ling and Milena Petrova focused only on the impact on the real estate sector. They analyzed 1.6 million commercial real estate transactions between 1997 and 2014 and their findings include: •1031 is widespread; •1031 encourage investment and promote real estate sales activity; •Exchanges contribute sig- nificant federal tax revenue because many replacement properties are eventually sold

standards for best practices, educate consumers and ad- vocate for Section 1031 at the Federal and State levels. Membership in the FEA ben- efits both the QI as an entity and the individual exchange professional. WHAT DO QIS GET OUT OF MEMBERSHIP?

September 14 - 16, 2016 Monte Carlo Las Vegas Resort and Casino Las Vegas, NV www.montecarlo.com/

FEA membership shows a QIs commitment to pro- fessionalism, ethical and technical knowledge, compli- ance, and active participa- tion in the effort to preserve the industry. The Certified Exchange Specialist is the mark for expertise for the industry. n The FEA President’s message

Hodges Ward Elliott represents owner in $69 million refinancing

and taxes paid; •Exchanges lead to job cre- ation; and •Exchange lead to property improvements. The study found a repeal of section 1031 would lead to: •Decrease in real estate prices; •Higher long-term rents in all sectors; •Decrease in real estate in- vestment; and •A contracted economy. Dozens of potentially im- pacted industries and trade associations have formed a coalition to raise awareness of the benefits of section 1031 for investors and business own- ers as well as the economy as a whole. You are encouraged to let Congress know how you and your clients have benefited from section 1031. Please visit www.1031taxreform.com and send a letter to your elected members of Congress. The pro- cess is easy and it is important that they hear the voices of the taxpayers that would be nega- tively impacted. Kind Regards, Margo McDonnell, CES Margo McDonnell, CES, has spent over a decade on the Board of Directors for the FEA and formerly served as Vice President and President Elect as well as a variety of committee posts . n

Margo McDonnell, CES, President, FEA

I am sure most of you would agree that this country needs tax reform but not everyone agrees where changes are needed. Unfortunately, over the past few years, a repeal or limitations of section 1031 have become synonymous with tax reform proposals by Congress as well as the President’s bud- get proposals. Internal Revenue Code Sec- tion 1031 allows property own- ers to defer capital gains and depreciation recapture when selling and reinvesting in quali- fying business use or invest- ment replacement property. Like-kind or 1031 exchanges work on the “exchange” of real property such as office buildings, shopping centers, farms and rental real estate as well as tangible and intan- gible personal property such as equipment, vehicle fleets and

31 West 27th St.

new funding that HWE helped secure will allow the owner to complete its strategic busi- ness plan for 31 West 27th St. and continue to capture the substantial demand for ten- ants in the area. The loan was provided by TD Bank, N.A. “31 West 27th Street has been positioned to take advan- tage of the continued demand for well-located, improved of- fice assets in Midtown South,” said Will Silverman , man- aging director of HWE. “Our knowledge of the asset and the Midtown South market enabled us to help the owner maximize the value of its in- vestment.” n

NEW YORK, NY — The New York office for Hodges Ward Elliott (“HWE”) , a leading independent hotel brokerage which expanded last year into commercial property sectors, announced they have arranged a $69 million loan on behalf of an institutional real estate in- vestment firm. The funding will be used to refinance 31 West 27th St., a 144,000 s/f, 12-story, loft-style office build- ing in Manhattan’s Midtown South neighborhood. Having completed an ex- tensive repositioning and sig- nificantly grown income since first purchasing the asset, the

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