New York – A 1031 Exchange should always be considered when selling commercial property. When performed properly, a 1031 Exchange allows the investor to avoid paying capital gains taxes on the commercial property that was sold. Some commercial real estate investors see a 1031 Exchange as a loan from Uncle Sam.
The two main rules for the 1031 exchange are that the commercial property which is being purchased, must be identified within 45 days after the sale of your first property. This is called the 1031 Exchange identification period. The other rule is that the commercial property investor must close on the new commercial property within 180 days after selling the old property. This is called the Exchange Period and can save investors large sums of money.
We saw a unique situation to acquire commercial real estate. A Commercial Property was obtained through a deed in lieu of foreclosure. This is some what of a simple procedure for as it can help relieve the borrower of a debt which they can not pay. A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (the commercial loan borrower) conveys all interest in a commercial property to the mortgagee (the commercial mortgage lender) to satisfy a commercial loan that is in default. This commercial property transaction will help to avoid foreclosure proceedings.
The reports of a deal like this are with a Commercial Real Estate Investment firm, Savanna. Savanna was able to acquire the commercial property at 5 Hanover Square. Savanna first went out and acquired the defaulted commercial mortgage on the commercial property, 5 Hanover Square. The Commercial Real Estate Investment firm has a history of buying up debt and then smoothly using that to position themselves to take control of the commercial property. Last year, 5 Hanover Square was owned by Kent Swig who was having problems with paying his commercial mortgage debt. Capital One Bank was marketing the commercial mortgage to sell, at that time it had a face value of approximately $55 million.
The Commercial Real Estate Investment firm, Savanna was able to pay approximately $46 million for the commercial loan that had a $55,000,000 million face value. The previous commercial property owner had paid $141 million for this New York Office Tower in 2007. Savanna was able pay all cash to Capital One Bank for the commercial mortgage which was in default. The Commercial Real Estate Investment firm, Savanna was then able to work out a Deed in lieu deal with the commercial loan borrower.
The New York Office Tower had a recent transaction with Commercial Mortgage Lenders arranging a commercial loan for $47 million, for Savanna. The investment firm, Savanna can use the capital from the commercial loan to help lease up the commercial property, and replace their cash from the purchase of the defaulted commercial mortgage. Also, Savanna will be able to complete a renovation to portions of the New York Office Tower. The Commercial Property was designed by architect Henry G. Greene. The property, 5 Hanover Square, first opened in 1962, in Manhattan’s Financial District. This area of Manhattan is highly desirable especially for a 1031 Exchange replacement property.
The New York Commercial Property, 5 Hanover Square, had underwent some building renovations already. To complete a few more renovations it will allow 5 Hanover Square to become a luxury boutique office building. This 25-story Office Building offers first class services, amenities and security to net leased Tenants. The capital improvement renovation that already occurred included a new and relocated building lobby; new core bathrooms and multi-tenant floor upgrades. Also a new two story glass retail store-front for a net leased property was positioned. The New York Office Tower is located on Hanover Square between Beaver and Pearl Streets. The New York commercial real estate has the 10004 zip code.
The lobby of this New York Office Tower, was a 1960’s era office style. The lobby situated in this lower Manhattan commercial property, was past its prime. The space was reconstructed in marble and wood, with stepped ceilings, to provide a beautiful, elegant entrance for the main lobby. The beautiful Architecture design was by William Savino Associates. Alexander Wolf & Son was the General Contractor.
Do you need 1031 Exchange Properties?
O’Reilly Commercial Realty LLC
Phone: (352) 237-2222
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