GrayStreet Partners helps investors exiting real estate investments reallocate their capital into high-quality, producing oil and gas assets through a 1031 exchange.
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Unlevered Returns
Exchange Value
Debt Leverage Ratio
Scarcity of capital for oil & gas investments have made valuations of producing assets the lowest they’ve been in 20 years.
Target investment assets will be producing oil & gas wells with low decline curves in top basins throughout the lower 48.
This strategy works well in the current rate environment by taking advantage of producing oil & gas cash flow dynamics. Unlike real estate, these asset returns are solely based on cashflow.
Instead of immediately paying capital gains on the sale of a property (the “down leg”), many investors prefer to defer that payment by purchasing a new property (the “up leg”) with the proceeds. This is commonly referred to as a 1031 exchange, in reference to the section of U.S. tax code that defines it. There are specific rules and timelines related to a 1031 exchange, and it is important to have an experienced and knowledgeable specialist handling the process.
Pre-Sale Day 0
Down leg sales process commences
Lay the
Groundwork
Speak with your real estate, financial and tax advisors to understand the timelines and restrictions and enlist a qualified intermediary to facilitate the transaction.
Sell a Property
The specialists at GrayStreet have access to a unique pool of oil & gas assets and partners in the industry, and can facilitate an efficient real estate to oil and gas 1031 exchange.
Sale Date
Must Identify By Day 45
45 day period to identify properties
Identify Replacement
You have 45 days to identify properties up to 200% of your total exchange value, and 180 days to complete the exchange. GrayStreet has an extensive inventory of exclusive listings, giving you a range of excellent up leg options
Must Close By Day 180
Exchanger must close on replacement investment property(ies) within 180 days of the original sale's closing date
Purchase
As the market leader in real estate to oil and gas 1031 exchanges, GrayStreet has the experience and expertise to guide you through the closing process successfully and painlessly.
Report Exchange
Your tax advisor must report the exchange on your tax return for the year in which you sold your down leg property.
If you’re interested in increasing your returns, decreasing your management responsibility, or diversifying your holdings, a 1031 exchange may be the right choice for you. With the largest inventory of exclusive listings, the largest specialized sales force of experienced agents, and all of the expertise that comes with executing more transactions than any other brokerage, GrayStreet is uniquely positioned to help you maximize your options and your returns.
DOWN LEG
Original Purchase Price: $6,000,000
Seller Holds Property for 10 Years
Sale Price: 10,000,000
Cap Rate: 3.8%
Net Operating Income: $379,000
Capital Gains Tax Deferred
Upon
Sale That Could be Reinvested
Federal Gains Tax: $1,257,000
California State Tax: $650,000
1031
Exchange
UP LEG
Purchase Price: $10,000,000*
Deferred Taxes Reinvested: $1,907,000
Cap Rate: 14.5%**
Net Operating Income: $723,000**
Incremental Cash Flow
Or $17,739/month
*All Cash Transactions
**Average Through 10-Year Hold
