Hines Real Estate Exchange

Intelligent financial planning with tax-deferred exchanges

Potential Benefits
  • Defer capital gains and other taxes
  • Build and preserve wealth
  • Own institutional-grade real estate managed by professional real estate operator
  • Diversify or consolidate real estate portfolio
  • Plan for the future with the opportunity to transfer wealth to heirs in tax-efficient manner
  • Increase liquidity with access to proceeds through investment vehicle’s share redemption program

Please see the Risk Fac­tors for addi­tion­al infor­ma­tion. There is no guar­an­tee these poten­tial ben­e­fits will be real­ized in whole or in part. Invest­ing in real estate involves sig­nif­i­cant risks, includ­ing the pos­si­bil­i­ty of fluc­tu­a­tions in val­ue and los­ing all invest­ed capital.

About Tax-Deferred Exchanges

What is a 1031 Exchange?

Internal Revenue Code Section 1031 can provide an immediate taxation exception and allow an exchanger to postpone paying tax on the gain from the sale of real property held for productive use or as an investment if the proceeds are reinvested in other real property as part of a qualifying “like-kind” exchange.

Securitized 1031 Exchanges (Delaware Statutory Trusts)

Delaware statutory trusts (“DSTs”) are business trusts created under Delaware law that may offer beneficial interest to investors and may own income-producing, professionally managed real estate. IRS Revenue Ruling 2004-86 allows an investor’s beneficial interest to be treated as replacement property for a 1031 exchange providing tax deferral treatment on gains from the sale.

Want to learn more? Check out Hines' Guide to Tax-Deferred Exchanges.

What is a 721 Transaction?

As an alternative, or complementary, solution to a 1031 Exchange (for which partnership interests cannot be received as replacement property), Internal Revenue Code Section 721 allows an investor to contribute property to a partnership in exchange for interests in such partnership. In a typical structure, an investor contributes property to an Operating Partnership (the “OP”) under a REIT (known as an “UPREIT” structure) in exchange for units in the OP (“OP Units”). At a later date (typically after a minimum one year hold period), the investor may sell its units to the REIT, or exchange its units for shares of the REIT, which it can then sell to a third party.

For more information, click here to view Optimizing Real Estate Dispositions Through Tax-Deferred 721 Exchanges.