Two Successful 1031 Exchange Transactions

Due to strong demand for the purchase of industrial buildings in Southern California, Wabash Property Company, LLC was able to sell its 90,000 square foot industrial building in the heart of the Inland Empire for its target price.  Selling the asset had been a priority ever since the municipality in which it is located was converted into a for-profit city run by professional managers.  Additionally, Wabash was concerned about the amount of deferred maintenance in this aging building.

The 1031 Exchange environment in the Fall of 2020 was very challenging, especially in Southern California where going-in cap rates continued to decline, and the potential passage of Proposition 15 loomed.   Based upon advice and analysis from JAAD Partners, the partners of Wabash decided to pursue out-of-state acquisitions.  In December 2020 JAAD represented Wabash in the purchase of two assets:  (i) a 15,000 square foot, recently-constructed building leased on an absolute NNN basis to a natural foods supermarket owned by a publicly-traded company, and situated on a 60,000 square foot parcel in the Kansas City area, and (ii) a 41,000 square foot industrial campus in Louisville, Kentucky leased on a NNN basis to a national large equipment leasing company owned by a global private equity firm, and situated on over 16 acres.  Both assets provide a significant yield premium to those located in Southern California, and both assets’ leases are long-term with rent increases and renewal options.