A 1031 Exchange of an Agricultural Ranch for $20M Triple Net Properties

Jun 23, 2022

4 NNN Lease Properties
Closing date: Spring 2022
Price: $20 million
NOI: Approx. $1M annually

New Triple Net Investor Uses 1031 Exchange to Defer Capital Gains Taxes on Sale of Ranch, Collects $1,000,000 Annual NOI for 15–20 Years

Exiting the agricultural business, Westwood Net Lease Advisor’s client entered the triple net (NNN) market by using the 1031 exchange to trade out of one costly real estate asset into four income-producing NNN investment properties.

The 1031 exchange allowed the investor to defer millions of dollars in federal capital gains taxes and purchase the following high-quality properties throughout the country, earning roughly $1,000,000 a year in net operating income (NOI) for the next 15–20 years.

  • 2 Taco Bell fast-food restaurants, Chattanooga and Knoxville, Tennessee
  • 1 DaVita dialysis center, Oceanside, California
  • 1 Car Wash, Weatherford, Texas

Most triple net properties continue to sell at record pace, putting buyers in bidding wars and driving the price up. However, with no-cost buyer representation that provided pre-market and off-market opportunities, this investor was able to secure purchase contracts without the stress of the seller’s market.

Man stamping a contract with a "sold" stamp

The Challenge: Purchase Multiple NNNs in a Highly Competitive Market Within the 1031 Exchange Timeframe

Westwood Net Lease Advisor, Jon Wilsonholme, was determined to help his client locate and contract $20 million of NNN lease properties rapidly to meet the 1031 timeline and defer millions in capital gains taxes. The challenge was finding multiple available NNNs in a highly competitive market.

“Since listed properties are selling faster than we can find them, I contacted my network of sellers and brokers to not only locate high-quality pre-market and off-market properties but also to give the client a buying advantage,” said Wilsonholme.

Experience and network played a large role in overcoming these challenges and securing triple net lease investments that fit the client’s financial and lifestyle goals.

Graphics of a telephone, smartphone, email, internet symbol, GPS symbol, and talk bubbles

The Process: Educate, Represent & Manage Risk with NNN Diversification

This buyer’s original intent was to purchase another farm. However, after Wilsonholme educated him on the benefits of triple net lease investing, he realized the value of consistent monthly income without hands-on responsibility, possible tax opportunities, and decades of investment stability.

“When we started working together, we evaluated different types of properties, asset classes, and industries within the triple net market and the pros and cons of each. I shared why it would be in the buyer’s best interest to diversify and manage risk, and showed him how he could do so within the NNN lease market,” Wilsonholme said.

Wilsonholme applied an advisory approach, performed a risk tolerance assessment, and provided 1031 exchange and NNN edification. He located properties that fit the client’s goals, helped him secure contracts on his chosen properties, performed due diligence on each property, and worked with the 1031 exchange intermediary and the sellers’ teams throughout the process and at the closing table, making the transactions straightforward for the client.

1031 exchange timeline graphic

The Result: Ownership of 4 Triple Net Lease Investments, Guaranteed Monthly Income & Deferral of Millions of Dollars in Capital Gains Tax

This former agricultural investor is now a triple net lease investor, putting his tax-deferred cash into worry-free essential retail and medical properties that diversify by location, industry, tenant type, asset class, and lease type, and provide responsibility-free monthly income.

The client’s NNN property investments:

  • Two 20-year, absolute NNN lease Taco Bell fast-food restaurants in Tennessee (a no income tax state).
  • One 12-year modified triple net lease DaVita dialysis center in California.
  • One 15-year, absolute NNN lease Car Wash in Texas (a no income tax state).

The buyer proceeded to close on all four investments well ahead of the 180-day requirement of the 1031 exchange. He deferred millions of dollars in federal capital gains taxes and received cash flow as soon as each property closed.

Furthermore, because of his newfound income and freedom, this agricultural farmer has referred other ranchers and farmers exiting the agricultural industry who have wanted to sell their land but were not sure what to do with the profits to Westwood Net Lease Advisors.

New 100 dollar bills covering a table

To Wrap it Up – Agricultural Farmer Sold Farm & Deferred Millions of Dollars in Capital Gains Taxes by Purchasing Income-producing Triple Nets

Westwood Net Lease Advisors Jon WilsonholmeWilsonholme’s 1031 and triple net expertise helped this new NNN investor successfully trade agricultural land in a 1031 exchange for four triple net lease properties worth $20M. He deferred millions of dollars in federal capital gains tax and acquired a diverse portfolio that provides reliable monthly income with $1M in annual NOI.

If you’d like to learn more about the 1031 exchange and all the benefits of triple net investing, call or email Jon Wilsonholme at Westwood Net Lease Advisors for a no-obligation conversation and free buyer’s representation, 314.495.4195.


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