Sun Life Health Center

Overview

Our client was a private investor who had just sold a 60-unit apartment building. Their objective was to complete a tax-deferred 1031 exchange and acquire an asset with passive income and long-term stability near Phoenix, Arizona. Maintaining their cash flow was a priority.

Challenge

The client needed to identify a suitable replacement property with $5.6 million in equity. The goal was to transition from active to passive management while maintaining their existing cash flow. This had to be accomplished within the 45-day 1031 exchange identification period.

Action

Our team focused on single-tenant net-leased properties with long-term leases as prime candidates.

Criteria:

• Market-specific search: Phoenix (PHX)
• National or strong regional tenant
• Low maintenance / low management asset
• Long-term lease structure

We leveraged internal firm relationships and collaborated with the Kidder Mathews Phoenix office to identify opportunities aligned with the client’s criteria. This resulted in sourcing a pair of properties that met the exchange requirements.

Outcome

We successfully identified two assets that, together, satisfied the exchange criteria:

• A ground-leased single-tenant AutoZone property in Nogales, offering long-term stability
• Sun Life Family Health Center

Acquiring two assets allowed the client to diversify risk. Combined cash flow from the acquisitions exceeded that of the original apartment property sold at the start of the 1031 process.

Financial Summary

Downleg Property

• NOI: $336,000

Upleg Properties

• Combined NOI: $368,916

Client Testimonial

“Mike and Erik were able to tap into the local market with their connections in Phoenix. We appreciated having ‘boots on the ground’ during our due diligence period.”