Keyser Family Trust Case Study

The Kidder Mathews team were contacted by the Keyser Family Trust to help place sale proceeds from a three property sale pending in Beverly Hills California. The Beverly Hills sale value totaled approximately $60 million, of which $30 million needed to be placed in a qualified 1031 exchange. The Kidder Mathews team  laid out a carefully organized and strategic approach to solving the 1031 exchange requirement and sheltering millions of dollars of capital gains tax potentially due the Keyser Family Trust. Shortly thereafter, the Kidder Mathews team  was hired to exclusively represent the Keyser Family Trust in sourcing, analyzing and negotiating the purchase of assets that fit the stringent requirements of location, quality and diversification.

The Keyser Family Trust had owned the Beverly Hills assets for a number of years with two other partners. The partnership decided it was time to liquidate and the Keyser’s sought to acquire assets closer to home in the Seattle marketplace, with qualities that ensure successful cash flow and in a long-term hold.

The challenges surrounding this assignment were numerous. The market had very little product available to the general buying pool. The majority of product that was available, was overpriced and seemed to have quality or location issues. In addition, due to the tight marketplace, many properties were not exposed to the general brokerage community and were sold prior to ever going to market. Another challenge in this assignment included finding core locations with quality assets and reasonable returns in a frothy market. Finally, timing the purchase of more than one asset while needing to trigger the Beverly Hills’ sale all at once to conform to the IRS 1031 exchange requirement timeline.

The Kidder Mathews team worked tremendously hard to uncover off-market transactions in core locations with quality tenants and construction. They did this through networking with investors, brokers and the entire real estate community to turn over opportunities. The Kidder Mathews team  sifted through every on market and off market opportunity with a close eye on the stringent requirements of this assignment. After vetting numerous possibilities, the Kidder Mathews Team presented the Keyser Family Trust with the Kolstrand Building. The Kolstrand Building is a newly renovated, off-market, office & retail building located in Ballard, a core Seattle location. However, this diamond in the rough only fulfilled approximately two thirds of the overall proceeds needing to needing to be placed. Without confidence that a like-kind Seattle asset existed in the value range needed to successfully complete the exchange, the The Kidder Mathews team presented Portland, Oregon as an additional location to add to the search. In working with the Kidder Mathews Portland office, and Kidder Mathews’s extensive database research team, Jason and Rob identified a newer, Class-A, multifamily apartment building that fit perfectly for this requirement. The Kidder Mathews team  negotiated favorable terms and conducted extensive due diligence verifying the Keyser Family Trust’s ability to close, without concern.

Both assets are performing as expected and the 1031 exchange was successfully completed. More importantly, a strong, personal and ongoing friendship remains in place with the Keyser family.