Capital Square 1031 Announces Formation of Turnaround Management and Restructuring Team for Challenged Real Estate
March 7, 2016
RICHMOND, Va. (March 7, 2016) ‐ Capital Square 1031, LLC, a leading sponsor of replacement property for Section 1031 exchanges, announced the formation of a new team to assist with the restructuring, management, refinancing and sale of challenged real estate, including real estate owned by tenant‐in‐common (TIC) programs.
Capital Square’s new Turnaround Management and Restructuring Team is led by Mike Waddell, Capital Square’s head of asset and property management. Waddell has more than 30 years of acquisition, management, disposition, and finance experience. Other team members include: Capital Square CEO Louis Rogers, a distinguished attorney with over 30 years of entity structuring and tax experience; Jeff Gregor, general counsel, who has structured hundreds of real estate transactions; and Doug Britton, independent manager and attorney, who specializes in satisfying lender requirements for special purpose entities.
Team members have worked together for more than a decade in the acquisition, management, finance disposition, and restructuring of more than $3 billion of real estate owned by TIC programs, Delaware statutory trusts (DSTs), real estate investment trusts and private real estate funds. Capital Square brings this high level of expertise to challenged properties.
According to Rogers, “TIC programs grew exponentially from 2002, when the IRS issued guidance on the TIC structure for purposes of Section 1031 exchanges, through 2007, when the CMBS debt markets collapsed. Billions of dollars of TIC‐owned real estate was acquired with 10‐year CMBS debt. Most TIC properties acquired from 2006 to 2007 are facing impending loan maturity, which means the property must be refinanced or sold. A number of these properties are challenged and need to be restructured and turned around before being refinanced or sold. In many cases, the TIC owners do not want to sell but would rather refinance and hold the property. However, the TIC structure has fallen out of favor with lenders, while the DST structure has become the entity of choice due to its many advantages.”
“Capital Square aids in the turnaround, management, restructure, refinance, and eventual sale of challenged or underperforming properties,” said Waddell. “We draw upon our in‐depth experience with complex structures to solve problems for challenged properties, including TIC‐owned properties.”
Capital Square has been approved by many lenders due to its strong balance sheet and successful track record as a sponsor of 30 DST programs. Also, in appropriate circumstances, Capital Square will sign “carve out” guarantees required by most lenders.
Waddell added that Capital Square satisfies new lender requirements by converting existing TIC structures into the more modern DST structure preferred by lenders. This can be accomplished without triggering any of the TIC owners’ tax liabilities from the original exchange. Also, by converting to a DST structure, each owner should retain the ability to exchange again on a tax‐deferred basis when the property is sold. By restructuring in this way, Capital Square is able to preserve all the past and future tax benefits of Section 1031 for investors.
About Capital Square 1031
Capital Square 1031 specializes in the creation and management of commercial real estate investment programs for Section 1031 exchange investors and cash (non‐1031) investors using the Delaware Statutory Trust structure. As of January 31, 2016, the company oversees a growing national portfolio of 39 real estate assets valued at approximately $370 million, based on investment cost. Louis J. Rogers, founder and chief executive officer of Capital Square, has been involved in the creation and management of more than 100 investment offerings totaling over $3 billion, including DST, tenant‐in‐common, numerous real estate funds, and multiple publicly registered non‐traded real estate investment trusts. To learn more, visit www.CapitalSquare1031.com.
