An Investor’s Perspective – What We Need to Know

Many retail investors have amassed real estate portfolios through decades of determination and hard work. These  assets are a financial blessing and a management challenge.  As investors reach retirement, they are often overwhelmed with the responsibility of managing their own properties.  Broker-dealers and advisors provide critical advice and exchange opportunities to preserve potential tax advantages, among other important considerations and benefits.

The syndicated DST/1031 market allows investors to exchange out of direct owned investments into multiple-owner institutionally managed, investment grade commercial real estate, previously accessible only to institutional investors.

As 2020 unfolded, advisors proactively responded to the concerns and needs of their investors through ongoing engagement and advocacy.  A panel of elite broker-dealer and advisory professionals share direct insights and challenges as they help their clients navigate what continues to be one of the most challenging times in recent history.

• Volatility across all sectors of commercial real estate poses challenges with identifying the most suitable investment opportunity. What clarity is needed to assist the financial professional to help them gain comfort around the investments they represent?
• What challenges has the financial community faced in communicating and managing investor expectations during these uncertain times?
• How are broker-dealers and advisors navigating the evolving market conditions and how can industry partners support their efforts?

Moderator
David M. Sengstock
President, Mick Law P.C. LLO

Mike O’Toole
Advisor,
DAI Securities

Fred Baerenz
President & Chief Executive Officer,
AOG Wealth Management

Rob Johnson
Head of Wealth Management,
Realized

Rick Murphy
Executive Vice President & Director,
Berthel Fisher & Company Financial Services, Inc.

Jason Kavanaugh
Founder, Concorde Investment Services, Founder, Concorde Holdings, Board Member, Concorde Holdings

Representative Suzan DelBene, a former Microsoft executive and business leader, discussed preserving the 1031 Exchange

We heard an engaging conversation with Representative Suzan DelBene on preserving the 1031 Exchange. Congresswoman Suzan DelBene represents Washington’s First Congressional District. First sworn into the House of Representatives in 2012, Suzan brings a unique voice to the nation’s capital, with more than two decades of experience as a successful Microsoft executive and business leader.

Suzan currently serves on the House Ways and Means Committee, which is at the forefront of the debate on taxes, healthcare and retirement security. She serves on the Select Revenue Measures, Trade, and Oversight Subcommittees. Suzan also serves as Chair of the New Democrat Coalition, a Congressional coalition made up of 95 forward-thinking Democrats who are committed to pro-economic growth, pro-innovation, and fiscally responsible policies, and co-chair of the Women’s High-Tech Caucus, Internet of Things Caucus, Dairy Caucus and Aluminum Caucus.

Attendees had the opportunity to engage directly with Congresswoman DelBene, who continues to be a strong advocate and a key influential legislator for the preservation of 1031 like-kind exchanges. Share your stories of the many positive benefits DST/1031 investments offer Main Street investors.

Acquiring and Managing DST Assets Through Uncertain Times

As market forces and the lingering pandemic puts pressure on all aspects of our economy, including commercial real estate, portfolio managers are actively engaged in maximizing the financial performance of existing assets and identifying emerging opportunities.

If you’re wondering what the next hot sector will be, we learned directly from leading portfolio professionals about what is on the horizon and where to invest now. Some believe the pandemic does not necessitate a strategic change.  We heard from the top portfolio managers on why it is more important than ever to be experts in the regions and sectors that are stronger and healthier given the inequities across the country created by Covid-19.

Leading portfolio managers shared what they have learned over the past year and how these lessons have better prepared them to build on their strong performance and continue to offer industry leading investment opportunities.

Moderator
Daniel Wolfe
Member, Snyder Kearney, LLC

Dallas Whitaker
Chief Executive Officer,
Carter Exchange

Michael T. Ezzell
President & Chief Executive Officer,
Inland Securities Corporation

Warren Thomas, CPA
Managing Partner,
ExchangeRight

John Good
Chief Executive Officer,
Nextpoint Storage Partners

Whitson Huffman
Chief Strategy & Investment Officer,
Capital Square

What Does an Impactful 1031 LKE Advocacy Initiative Look Like? An Engaged Community!

1031 Like-Kind Exchanges (LKE) have been an integral part of real estate’s recovery for a hundred years. Now the government may be looking to eliminate 1031 LKE programs to help fund other initiatives. We must unite and mobilize as an industry to advance a broader initiative around the critical benefits of 1031 LKE to Main Street investors.

For decades, real estate investors and business owners have used 1031 LKE to deliver institutional investment strategies for retail investors, strengthening and diversifying their investment portfolios and creating a strong retirement foundation. The key to preserving this critical wealth building tool is an effective advocacy platform. The IPA has built an impactful advocacy team keenly focused on the preservation of 1031 LKE.  Working with other coalition members, we have proactively defended the syndicated 1031 market through active education, industry leading data and research, and advocacy efforts. But there is more to do, and as the new administration settles in and seeks to advance new priorities, they may eliminate these investments with other wish-list initiatives. We must act now; we must come together as an industry and drive the conversation.  Our industry and the investors we serve are depending on it.

What is happening on Capitol Hill that may impact broader tax reform, the 1031 LKE market, as well as key players and policymakers that will affect these decisions. We learned from the IPA’s policy team about the key strategies and initiatives we are advancing on your behalf and how you can play a meaningful role in preserving this critical investment opportunity.

Moderator
Anya Coverman
SVP, Government Affairs & General Counsel, IPA

Greg Mesack
Senior Government Affairs Consultant,
GrayRobinson

Chris McCannell
Senior Government Affairs Consultant,
GrayRobinson

Taylor Garrett
Managing Director,
Mountain Dell Consulting

Dan Wagner
Senior Vice President, Government Relations,
The Inland Real Estate Group, LLC

Dave Fisher, CPA
Managing Partner,
ExchangeRight

Wealth Management Benefits of 721 Exchange/UPREIT Transactions

The 721 exchange/UPREIT is wealth management solution that benefits owners of real estate seeking an exit strategy and the opportunity to diversify their real estate holdings, while deferring capital gains.

Section 721 of the Internal Revenue Code allows real estate owners to convert, tax-deferred, their physical property into shares of a real estate investment trust (“REIT”) using an Umbrella Partnership Real Estate Investment Trust (UPREIT) structure. The 721 exchange/UPREIT is an alternative solution to a traditional 1031 exchange.

Using a 721 exchange/UPREIT may be a preferred tax mitigation strategy,  especially for property owners with a low tax basis where a sale could potentially trigger a substantial capital gain. It also can be used as an estate planning tool that disposes of real estate tax-free to provide equitable liquidity among heirs. Given the uncertain future of the 1031 exchange, a 721 exchange/UPREIT may be a timely wealth management tool to explore.

In this session, we learned from our panel which types of investors may find this transaction beneficial, how it is structured and different from a 1031 exchange, and why publicly registered non-traded REITs, as perpetual life vehicles, may beparticularly helpful to investors who may wish to defer the recognition of a capital gain in perpetuity.

Moderator
Gail Schneck
CEO, Factright

Kevin Shields
Chairman and CEO,
Griffin Capital Company

Aaron Wessner
Managing Director,
Cantor Fitzgerald Investment Management

BLUEROCK VALUE EXCHANGE: TARGETING 1031’S WITH THE VALUE CREATION

Bluerock Value Exchange, a top tier national sponsor of syndicated 1031 exchange offerings since 2005, will detail its primary investment strategy of targeting premier multifamily properties that deliver stable cash flow with embedded value creation opportunities. Bluerock described how its acquisition focus towards knowledge economy growth markets and properties designed to appeal to the “renter by choice” has proven resilient through the pandemic and subsequent event-driven recession.

Dustin Zachmeyer
Senior Vice President, Due Diligence Officer,
Bluerock

Lisa Bock
Senior Vice President, National Accounts,
Bluerock

Jeff LaFayette
Senior Vice President, Director of Securities Operations,
Bluerock

Aaron Wessner
Managing Director,
Cantor Fitzgerald Investment Management

Jeff Hertz
Senior Vice President,
Cantor Fitzgerald Capital

THE GOLDEN AGE OF MULTIFAMILY INVESTING & TAX-ADVANTAGED REAL ESTATE INVESTMENTS

Capital Square, one of the nation’s leading sponsors of tax-advantaged real estate investment opportunities, explored the benefits of multifamily real estate via multiple vehicles, including 1031 exchanges via Delaware statutory trusts and opportunity zone funds. They also discussed the unique advantages available in the manufactured housing sector. Since 2012, Capital Square has sponsored nearly 90 investment offerings and completed in excess of $2.7 billion in real estate transactions on behalf of more than 3,000 investors. Learn more about their firm at www.CapitalSquare1031.com.

Whit Huffman
Chief Strategy & Investment Officer,
Capital Square

Margo Steahly
Senior Vice President,National Accounts,
Capital Square

Nick Headley
Senior Regional Vice President, Central Sales,
Capital Square

INVESTING IN HIGH-GROWTH REAL ESTATE: CREATING VALUE THROUGH ANY MARKET CYCLE

Dallas Whitaker of Carter Exchange explored investment opportunities in the 1031/DST space focused on value creation in high-growth markets with good economic demand drivers. We learned how Carter Exchange is capitalizing on today’s investment trends and how its strategy positions investment real estate for growth, not just today, but through any phase of the market cycle.

Dallas Whitaker
Chief Executive Officer,
Carter Exchange

Ryan Gray
SVP Investments,
Carter Exchange

PROTECTING INVESTORS THROUGH ECONOMIC UNCERTAINTY WITH ESSENTIAL BUSINESSES

ExchangeRight explained their strategy for protecting investor capital and providing stable income by providing diversified REIT and 1031 DST portfolios of long-term, net-leased assets backed by investment-grade corporations that successfully operate essential businesses in the necessity-based retail and healthcare industries. ExchangeRight’s presentation showed how the company has achieved 100% rent collections since its inception and about its plan to leverage its fully scalable platform to grow and aggregate its $3.2 billion in assets under management to provide investors with increased yield, enhanced liquidity, and long-term strategic exits.

Warren Thomas
CPA, Managing Partner,
ExchangeRight

Ryan Gray
SVP Investments,
Carter Exchange

FOUR SPRINGS TEN31 XCHANGE 

Four Springs TEN31 Xchange is a sponsor of institutional-quality replacement properties for 1031 exchange investors. The company is a subsidiary of Four Springs Capital Trust, a Real Estate Investment Trust, and focuses on industrial and medical properties net leased to creditworthy tenants.

Eric Paul
President,
Four Springs Capital Markets

William Dioguardi
Chief Executive Officer,
Four Springs Capital Trust

OPPORTUNITIES WITHIN COMMERCIAL REAL ESTATE: A CONVERSATION WITH INLAND

Delivering value to investors for more than 50 years, Inland explored the flexibility needed to structure distinctive real estate investments that are appropriate in the current market. Inland’s deep institutional knowledge and experience, range of investment strategies, performance of real estate sectors and the importance of asset management.

Michael T. Ezzell
President and Chief Executive Officer,
Inland Securities Corporation

Phil Graham
Executive Vice President, Strategic Relations,
Inland Securities Corporation

Drew Dedelow
Senior Vice President, Strategic Relations,
Inland Securities Corporation

HOW NEXPOINT IS CAPITALIZING ON THE TOP REAL ESTATE SECTORS IN 2021

NexPoint is a leader in real estate alternative investments with over $12.5 billion in real estate acquisitions across multifamily, single family rental, industrial, self-storage and others. We learned more about their diversified alternatives platform and how their capital markets expertise has set us up for a record-breaking year in 2021. NexPoint discussed their pipeline of self-storage DSTs after their recent $900 million acquisition of a top self-storage operator and previewed other offerings coming soon.

John Good
Chief Executive Officer,
NexPoint Storage

Brian Mitts
Chief Financial Officer,
NexPoint Real Estate Advisors

Angela Barbera
Managing Director,
NexPoint

INNOVATIVE OPPORTUNITIES IN CONSERVATION AND ENERGY

Sandy Bay Partners is a forward-thinking alternative investment sponsor that provides unique and dynamic real estate programs to accredited investors. We design and manage opportunistic offerings that include energy development and conservation easement options. Our strategies are environmentally, socially, and economically impactful. By working with best-in-class landowners, legal and industry partners, our goal is to deliver market-leading, innovative, tax-advantaged investment opportunities to our investors.

David Johnson
Managing Partner,
Sandy Bay Partners

Eric Pueschel
EVP – Western Region,
Sandy Bay Partners

Nick Dolya
Consultant,
Sandy Bay Partners

OPPORTUNITY ZONES: ADVANCE PLANNING STRATEGIES NO ONE IS TALKING ABOUT

If your firm isn’t looking at direct energy investments, you may be missing out on growth opportunities by the way of offering unique HNW case planning tools. Often, we think of OZs as a way to defer capital gains but overlook the other ways we can help clients utilize OZ structures to build long-term, tax free wealth. As the largest capital raise company in the direct energy space, U.S. Energy provides access to institutional style investments which capitalize on current markets, lower fees, and access to projects alongside some of the world’s largest oil companies in core areas.

Matthew Iak
Executive Vice President and Director

Michael Haven
Vice President – Broker Dealer Relations