A long time S.A.R. associate and resident of Santa Cruz, California was in contract to sell a long held HUD regulated housing project located in Vallejo, California.  The original developer of the property, he had owned the asset since the mid 1970’s.  Although valued in excess of $9,000,000, the property had a very low tax basis and minimal remaining equity (approximately $1,500,000) due to previous cash out refinancing he had done on the property.  A conventional sale of the asset would have resulted in little, if any, after tax net proceeds.  A 1031 tax deferred exchange into a newer passive management triple-net leased income property was recommended.  

In 2003, a new 300,000 square foot shopping center (Outlook Shopping Center), anchored by Target, was developed on Main Street in Watsonville, California (Monterey Bay).  Several of the integrated lots were sold to individual retail owner/users (Target, Albertsons, Staples, etc).  At final subdivision map, a prime “mid-box” parcel site strategically located within the center was acquired by Longs Drug Stores for the purpose of building a new retail location for the specific trade area.  Shortly after the parcel acquisition, Longs acquired several in operation locations of one of its main competitors, Payless Drugs.  One of the locations was less than one mile from the new shopping center and subject to an existing long-term lease.