Tax reform and awards presented at Commercial Real Estate Summit
Two of the biggest impacts of federal tax reform — details still being worked out a year later by the Treasury Department and Internal Revenue Service — hit commercial property investment and development:
• Like-kind property exchanges survived.
• Opportunity zones were created, 117 in Oklahoma.
Those were among numerous changes outlined by Evan Liddiard, senior policy representative for federal taxation at the National Association of Realtors, Thursday at the Commercial Real Estate Summit at Cox Convention Center.
Tax-deferred exchanges
Section 1031 of the Internal Revenue Code allows exchanges of certain types of investment property with deferred capital gains taxation under certain conditions.
Such trades are hailed for unlocking profits for reinvestment, creating demand and sustaining property value. Tax can be deferred in a series of transactions until a sale without reinvestment.
Oklahoma had 27 properties for sale marketed as 1031 exchanges as of Thursday, according to LoopNet.com, an online commercial real estate marketplace.
They ranged from 20 acres of industrial zoned land in Durant, to apartment complexes in Stillwater and Enid, to retail and office properties in Oklahoma City and Tulsa, to the building leased to Ted’s Cafe Escondido in Edmond.
Lawmakers whacked at 1031, but retained it for real property. Liddiard said they were convinced that eliminating a provision that encourages investment and sustains or creates jobs made sense in legislation meant to stimulate the economy.
Opportunity zones
Opportunity Zone investing is still unfolding, but Liddiard said an estimated $6 trillion in new “patient capital” could go into such investments, which target low-income areas.
The zones are intended for people and companies already invested in commercial real estate development, who can defer and reduce capital gains taxes by plunging gains back into development, via an Opportunity Fund, within 180 days.
Opportunity investors can defer capital gains taxes until Dec. 31, 2026, reduce the tax payment up to 15 percent, and could pay zero taxes on profits for investments held for 10 years.
Liddiard said 8,700 Opportunity Zones have been created so far, 117 in Oklahoma. At least one investment is in the works in Oklahoma City.
Pivot Awards
Central Oklahoma Commercial Association of Realtors, host of the summit with the University of Central Oklahoma Real Estate Program, Institute of Real Estate Management Tulsa Chapter, and the CCIM Institute Oklahoma Chapter (Certified Commercial Investment Member), presented its Pivot Awards during a luncheon.
Summit registrants nominated candidates, which were selected by summit directors in five categories. The 2018 Pivot Award winners were:
• Contractor: Stan Lingo, Lingo Construction Services, 123 NW 8.
Stan and Renee Lingo started Lingo Construction in 1998. Projects range from 500-squarefoot interior remodels to whole-block revitalization and development. Steve Lingo is now in charge of the company’s projects.
• Developer: Blair Humphreys, Wheeler District.
The mixed-use Wheeler District, envisioned as an urban village on the old Downtown Airpark property just south of the Oklahoma River, includes Wheeler Riverfront Plaza, with event venues and the historic former Santa Monica Pier Ferris wheel.
• Financing: Bryan Geiger, Bank SNB, a Simmons Bank.
As the senior vice president in commercial real estate, Geiger has 23 years of experience in commercial real estate finance, including real estate banking and securitized commercial mortgage lending.
• Real Estate Brokerage: Jim Parrack, Price Edwards & Co.
Parrack joined Price Edwards in 2007 and heads the firm’s retail division, which encompasses management and brokerage activities for 50 shopping centers in Oklahoma and North Texas. He also has extensive experience acting as receiver for distressed properties of all product types.
• Industry Advocate: Darin Dalbom, Jones Lang LaSalle Valuation & Advisory Services, Oklahoma City.
Dalbom, an executive vice president, has worked in real estate valuation and consulting since 1990. He has been instrumental in transforming commercial appraisal, especially in automation, and has significant experience in the appraisal of broadband communication towers and tower portfolios throughout the U.S.
In addition, the summit named Andrea Frymire as 2018 Commercial Real Estate Broker of the Year. She is executive vice president at Midwest Housing Equity Group Inc.