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Tight Markets Make 1031 Exchanges Difficult

By Stephanie Guzman / Albuquerque Business First Reporter, Thursday, September 29, 2016 at 1:58pm

ALBUQUERQUE – Part of the business plan for Allen Sigmon Real Estate Group has always been to invest in value-add properties.

“We’re constantly buying,” said Brad Allen, a principal at the company. “That’s at the core of what we do every day, and when we do sell an asset, the plan is to go out and acquire another property.”

Allen Sigmon does this by using 1031 exchanges, which allow real estate investors who recently sold a property to reinvest the money made from the sale into a new property without being taxed.

But 1031 exchanges can be difficult, especially in a market like New Mexico.

“There’s not enough product in New Mexico,” said Lance Sigmon, a principal. “Years ago, when we were on a buying spree, there was a lot of product due to foreclosures, distressed properties and banks unloading portfolios. You had a pool to choose from. Now that things are stabilized, [property owners] are in a hold phase, waiting for an uptick in rents and appreciation.”

In fact, the two couldn’t find a new property to invest in after the company sold a piece of real estate in the southern part of the state.

They had better luck after selling a 150,000-square-foot industrial complex in Rio Rancho. Allen Sigmon recently purchased Jefferson Business Center, located on the northeast corner of Jefferson Street and McLeod Road. The purchase price wasn’t disclosed, but the property was listed for $5.3 million.

“Industrial is pretty consistent, and we like this [property] because of the great location, and because it’s multitenant it spreads your risk,” Allen said.

The company said it plans to make small improvements to the property and continue leasing it. The property, which includes three buildings, is 81 percent leased.

Allen Sigmon owns and manages two other industrial properties, the Venture Commerce Center on the Westside and the High Street Industrial Complex in the north Interstate 25 corridor.

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