Start with the objective
Cash flow, liquidity, an exchange, partnership needs or long-term ownership: the client’s priorities guide the search for a property and the design of the transaction.
Areas of expertise
Knowledge creates possibilities.
Customized transactions begin with a deeper understanding of the investor’s objectives, the property, and the tax and accounting issues that shape the outcome.
Understand the details
Tax and accounting considerations, lease provisions, financing terms and ownership interests can materially change an investment’s economics. Robert brings these disciplines together when evaluating alternatives.
Create a tailored structure
Use that knowledge to identify and evaluate alternatives in financing, lease negotiations, exchanges and new sources of property income. The aim is a structure that serves the particular investor’s objectives.
“I have found him to have a high level understanding of tax, accounting and finance theory, and to be able to make effective use of it in structuring transactions.”
Knowledge in practice
Different objectives. Customized solutions.
A solution can depend on seeing how ownership, tax and accounting considerations, financing and property income fit together. These historical transactions show how Robert applies that perspective to individual circumstances.
Finding a property solution to an UPREIT liquidation
A client had contributed property to an UPREIT, a real estate investment trust structure in which property is held through an operating partnership. The UPREIT was liquidating, which would have resulted in an immediate reallocation of gain back to the client.
Robert arranged for the UPREIT to acquire a replacement property and distribute that property to the client in liquidation of his interest. This returned the client to his original position as a property owner. After closing, the client was also able to increase the loan to obtain cash.
The solution came from looking beyond the proposed liquidation to the relationship between the client’s ownership interest, the replacement property and the financing.
Moving from a distressed condominium to a credit net lease
A client defaulted on an investment condominium loan after hearing that default was the only way to get the lender to renegotiate. Instead, the lender moved to foreclose, and the default damaged the client’s credit.
Robert arranged a deed in lieu of foreclosure and a Section 1031 exchange into a credit net leased property. The client was able to assume the financing on the replacement property despite the credit damage from the condominium loan default.
The transaction addressed the threatened foreclosure, the client’s need for a replacement investment and the financing obstacle as parts of the same problem.
Financing for cash distributions and after-tax cash flow
Robert arranged three fully accruing financings: Black & Veatch, Anthem Insurance and the First Bank Building in St. Paul, Minnesota.
For both Black & Veatch and Anthem Insurance, the subordinate financing accrued interest for the entire term. Combined with the in-place senior debt, which fully amortized over that same term, this created a blended financing structure with partial accrual overall.
In these transactions, the combined structure resulted in a substantial cash distribution and more favorable after-tax cash flows.
For Black & Veatch in Overland Park, Kansas, Robert acted as broker/advisor for a $7 million zero coupon subordinate loan made by Zurich Insurance to borrower Sam Zell, representing the lender. The $7 million figure is the loan amount. For Anthem Insurance in Louisville, Kentucky, Robert acted as broker/advisor representing borrower Mesirow Net Lease on a $3.5 million zero coupon subordinate loan. The $3.5 million figure is the loan amount.
Historical transaction outcomes; results depended on each transaction’s circumstances.
View the transaction entries ↗Letter-of-credit-backed lower floater financing
Robert has arranged lower floater financing backed by a letter of credit, with experience in structures both with and without collars. His assignments include the Aetna Building in Plano, Texas, where he represented an individual investor as borrower.
This experience adds another financing approach to the alternatives he can evaluate around a client’s investment objectives.
View the Aetna Building transaction ↗Implementing and unwinding Section 467 leases
Robert has structured investments through the implementation and unwinding of Section 467 leases, applying his understanding of tax and accounting issues to develop structures around the investor’s objectives.
Recognizing the implications of air rights
Robert sold a Walgreen store from an individual seller to an individual buyer at a high capitalization rate because it was situated on air rights. The transaction illustrates the importance of understanding the ownership interest when evaluating a property’s price and income.
Creating property value through solar income
Robert created millions of dollars in property value by increasing net operating income through solar electric sales to building tenants. This work applied knowledge of property operations and energy to create an additional source of building income.
These accounts describe completed transactions with particular facts and circumstances. They are not general tax, legal or financing guidance, and outcomes will vary.
Historical case studies
Further examples:
zero cash flow properties.
The following accounts illustrate Robert’s past work with “zeros,” drawing on his own transaction case studies.
These are summaries of historical transactions, not current offerings or tax, legal or investment advice. Results depended on the facts and rules applicable to each transaction and are not a promise of future outcomes.
01Basis replacement
A partnership had repaid a $5.5 million non-recourse loan. Robert identified a property requiring less than $1 million of equity and the assumption of $5.9 million of fully amortizing, non-recourse debt. The account reports that the structure replaced the deemed distribution with a deemed contribution, avoiding income recognition in that transaction.
02Exchange cash out
An investor selling a property for approximately $6 million acquired a zero cash flow property with a revolver loan. The account describes an investment of approximately $2.5 million of equity, followed after closing by a loan increase of nearly $2 million, providing funds for another property.
03Low-equity property trade
Following the sale of a $20 million apartment building, Robert identified a replacement property priced just above $26 million with 12% down. The account reports deferral of the gain from the relinquished property and a subsequent request by the tenant to expand the building.
04Value recognition
An NYSE-listed company sought to demonstrate real estate value above book value. The account describes using zero cash flow properties with a re-advance revolver feature to defer gain for tax purposes while recognizing gain for book purposes. Robert later sold the acquired asset for the company.
05Debt replacement with a companion property
An investor selling approximately $17 million of property with $11 million of debt wanted self-amortizing financing. Robert identified zero cash flow properties with leverage above 85% to address debt replacement, then located a companion property for the investor’s cash flow objectives.
06Estate building
A client acquired zero cash flow properties with less than 15% equity for the benefit of his children. The account describes an approach intended to build a property portfolio while reducing day-to-day real estate management demands on the family.
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