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Dividend Capital Re-enters the 1031 Exchange Market

Dividend Capital, a sponsor of non-traded real estate investment trusts, is re-entering the 1031 real estate exchange market with the launch of Dividend Capital Exchange.

Dividend Capital Exchange will offer a series of private placements through the sale of beneficial interests in Delaware statutory trust holding real properties, including properties sourced by Dividend Capital Diversified Property Fund Inc., the company’s daily net asset value REIT.

The program offers accredited investors who own highly appreciated real estate the opportunity to exchange their real estate on a tax-deferred basis under IRC Section 1031 for a beneficial interest in a DST that owns a property sourced by Dividend Capital Diversified Property Fund.

According to the company, each exchange property is subject to an unconditionally guaranteed 20 – 29-year triple net master lease with a subsidiary of the REIT as master tenant, providing investors the credit of a REIT during the term of the master lease.

An affiliate of the REIT holds a purchase option to acquire the property back from the beneficial interest owners, and if this purchase option is exercised, investors would receive partnership units in DPF Operating Partnership in exchange for their interest in the DST.

This transaction is intended to be a tax-deferred partnership contribution under IRC Section 721. OP Units are economically equivalent to a certain class of DPF stock. In the event that the purchase option be exercised, the end result is that through the 1031 and 721 exchange processes, investors would have (on a tax-deferred basis) converted their ownership of highly appreciated real estate into ownership of the OP Units of the REIT.

Dividend Capital Diversified Property Fund owns a portfolio of 60 properties in 21 geographic markets totaling approximately 10.1 million square feet. The REIT launched in 2006, and has raised nearly $2 billion in investor equity, according to the most recent Stanger Market Pulse.

For more Dividend Capital news, visit their directory sponsor page here.