Partner Wayne Heicklen Speaks to The New York Times About Steiner NYC and 1031 Exchanges
Partner Wayne Heicklen, Co-Chair of Pryor Cashman’s Real Estate Group, recently spoke with The New York Times for its July 3, 2012 article, “A Developer Makes a Shift From Offices in the Suburbs to City Housing,” which discusses the growing presence of Steiner NYC in the residential real estate market.
Originally focused on industrial real estate, Steiner NYC has in recent years become a large holder of commercial office parks and retail properties. Douglas Steiner, the company’s chairman, now hopes to shift the focus again, this time toward residential real estate.
Recently, Steiner NYC closed on a $38 million purchase of 142 North Sixth Street in Williamsburg, Brooklyn – the developer’s latest residential acquisition in the borough, and part of its larger strategy to reposition its portfolio into multifamily properties in Manhattan and Brooklyn. In addition to several other purchases, it is also in the midst of closing on its first Manhattan site, land south of 23rd Street where it will build a 100-unit luxury rental building.
In many cases, the company has often flexed the usage of 1031 exchanges to finance the bulk of their recent purchases. According to the article, in a 1031 exchange, a seller can defer paying capital gains taxes on a sale by reinvesting the money directly into a new real estate purchase. It is possible to continue investing proceeds from sales into new acquisitions, and in that way defer the taxes indefinitely.
Despite the potential tax savings, Heicklen told The New York Times that “there are several hurdles to completing these transactions, such as a tight timeline.” To complete a 1030 exchange, a seller must identify new properties within 45 days of the sale and close on the acquisitions in 180 days.
The article also notes that the use of a 1031 exchange to acquire the Hub is unusual because it is a development site. Heicklen noted that sellers usually use proceeds from a sale to invest in something safe, like a chain or drugstores or a rental property that produces income.
To read the article from The New York Times in its entirety, please click here.
