Reports are beginning to spread that the 1031 exchange, long-rumored to be under fire, could be eliminated if Congress passes even a moderate version of tax reform. Using the 1031 structure results in a like-kind exchange that does not leave investors facing tax burden following property transactions. But it could be eliminated in order to fund the rate hike, according to lobbyists and Capital Hill officials working on tax reform. Doing away with the popular tool could reduce CRE transaction volume, which is already down this year. Between 10% and 20% of CRE transactions utilize 1031, according to Green Street Advisors. The structure is also a popular tool among private and smaller investors. (Via The Real Deal)
All ears will be tuned to HBC’s annual shareholder meeting Tuesday, as investors listen in on the global retail operator’s cost-savings initiatives. Last week, HBC announced 2000 job cuts across North America as part of restructuring efforts, after failing to stem losses at its retail banners. (HBC’s leading North American brands include Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, Saks OFF 5TH.) HBC is sitting on a treasure trove of retail real estate, and could face pressure to improve its balance sheet by monetizing those assets. The Saks Fifth Avenue flagship HBC owns in New York was valued at $3.7B in 2014, and its Lord & Taylor flagship was valued at $655M in 2016. “I think there will be more pressure to extract value from the real estate,” said Joshua Varghese, portfolio manager at CI Investment. (Via CNBC)
Plans for the country’s tallest tower of timber construction have been approved! Dubbed “Framework,” the Portland, Oregon-based structure will stand 146,000 ft. tall, taking the title of tallest wooden high-rise in the U.S. Within its 900,000 sq. ft. will reside 60 affordable housing units, as well as retail and office space. Construction is slated for completion by winter 2018. (Via Curbed)
More News to Note:
Utilizing the Deferred Sales Trust for Real Estate Exits
More “Going Concern” Qualms, This Time For Sears Canada
