LandAmerica is struggling to figure out its next steps now that Fidelity National Financial has decided to call off its offer to acquire LandAmerica--a $128-million deal that was first proposed two weeks ago. After the due diligence period, Fidelity decided to pull out of the deal.
LandAmerica's 1031 exchange problems are a reflection of the greater liquidity issues it has--but they are also reflective of the dearth of 1031 exchange transactions in general, says Ari Firoozabadi, director of the National Multifamily Housing Group and associate vice president of Investments at Marcus & Millichap in DC.
"We haven't had a 1031 deal in more than a year now because of the credit market and more lately, economy," he tells GlobeSt.com. 1031 exchange activity in DC in general "is down dramatically."
This may change in the next few months if the Obama Administration carries out some of its tax proposals. "In that case clients will decide it is more advantageous to cash out now and pay taxes under the current regime."
Even if there is a flurry of activity, it is unlikely to help LandAmerica, which needs a new buyer immediately. "I just don't see that happening--the title insurance business is suffering along with other aspects of commercial real estate," Firoozabadi says.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
