Seven-Property Apartment Exchange Totals $15M

SAN DIEGO-A 1031 exchange has closed involving seven apartment properties and 10 ownership interests in North San Diego County. Marcus & Millichap’s John E. Garner, the broker on the deal, says it involved five different clients, each with separate escrows, lenders, title companies and other variables in an “unprecedented super-exchange” valued at more than $15 million.

“Each of the principals almost doubled their return on equity, acquired better-located or newer properties, and improved their depreciation to offset their taxable cash flow,” says Garner, whose J.E. Garner Group is under the M&M umbrella. Low interest rates, rent increases and stock market instability has made good investments extremely difficult to locate and secure, says Garner. However, investors are trying to hedge some of the risk through property exchanges.

The seven-leg transaction began with two owners and two buildings, both of whom wanted to trade into larger and/or higher-quality properties. Brooke Development, with a 48-unit building and Charles and Erin Dimry of C&E Ventures LLC with a six-unit building. Dimry, a 12-year veteran of the NFL and his wife Erin, an attorney, have been a client of Garner’s for the past two years.