Case Study: Doubling Cash Flow with a Strategic 1031 Exchange in New York City

How RPS Capital Management helped a client sell an underperforming Upper East Side property and reinvest in a high-performing West Village asset, doubling annual cash flow.

CHALLENGE

Our client was marketing a corner property on the Upper East Side that was underperforming. There was substantial deferred maintenance. The highest and best use of the property was to incorporate the property with a local developer’s assemblage that would take advantage of the air rights. Because interest rates were rising and land values were sinking, the client was faced with a dilemma: revive the property and hope for better times, or sell to the developer.

ACTION

The client called in the RPS team to create a menu of strategies. We presented options that revealed that the client could come out ahead financially by trading this asset now and reinvesting in an asset with much stronger growth potential. Ultimately, we guided the client through the sale of the existing asset and reinvestment of his sale proceeds into a core New York City asset.

RESULT

The newly acquired asset is a fully renovated mixed-use building in a trophy West Village location with heavy foot traffic. The asset contains four free-market units with no Division of Housing and Community Renewal (DHCR) obligations and is fully leased in a protected tax class. Ultimately, as a result of implementing our guidance, the client doubled their annual cash flow and eliminated their exposure to the renovation cost of the original property.

TESTIMONIAL

“Rob Sharfstein and his team were invaluable to me and my family as we worked through our 1031 exchange. They not only provided options for us to consider but also analyzed the strengths and weaknesses of each opportunity. In the end, we worked closely with them to reposition our capital into an asset that met our investment objectives. I highly recommend the RPS team for family office transactions.” - James Rogers-Gahan