1031 Leasehold Improvement Program & Tax Innovation
Conceiving and securing IRS validation for a proprietary 1031 structure that unlocked $300M in annual disposition capacity.
The Opportunity
As a REIT, the firm faced significant structural limitations on asset dispositions. The tax implications of large-scale sales — particularly taxable gains recognition — effectively capped annual disposition capacity and constrained capital recycling into higher-returning opportunities.
The Innovation
Conceived an innovative 1031 Leasehold Improvement Program that paired asset dispositions with the company's new development pipeline investments. The structure required navigating complex tax law and ultimately securing an IRS Private Letter Ruling to validate the approach.
The Outcome
The breakthrough program boosted annual disposition potential by $300M and deferred over $150M in taxable gains. It created a repeatable, proprietary structure that continues to generate investable cash flow — sheltering gains while funding growth through the development pipeline.
Methodology: Disposition capacity and deferred gains measured against the program's structure as validated by an IRS Private Letter Ruling and its first full year of operation.
Different problem, same approach.
Most engagements look nothing like the case studies above — but the diagnostic and execution discipline carries across contexts. The first conversation is always to understand yours.