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Continued: Newcomer Talon Real Estate Corp. builds up its portfolio

  • Article by: JANET MOORE , Star Tribune
  • Last update: August 2, 2014 - 2:00 PM

A: Both acquisitions were accomplished utilizing a 721 exchange tax deferral method or an “UPREIT.” This strategy is advantageous for real estate owners who want to mitigate their immediate tax obligations, stay invested in real estate, diversify their holdings and defer their tax liability by taking Talon operating partnership units. Then, after 12 or 18 months, investors can convert these partnership units for Talon common stock and their capital gains tax obligations are deferred until the common stock is sold in the public market.

Q: And your strategy for the real estate you buy?

A: We wanted to keep it simple. One of the things that causes early-stage companies to suffer is they become too complex. We just do office, industrial and retail. We concentrate our efforts on the central part of the United States, where there’s less volatility. People in Des Moines pay rent.

Q: And people in St. Paul, too.

A: St. Paul is, to me, the next growth story. The new LRT train goes right by our building, Union Depot is kitty corner, and then there’s the Lowertown ballpark. The city of St. Paul is putting some dollars into downtown. Look what Target Field has done to the Warehouse District. I think you’ll see the same thing with the new [Vikings] stadium on the east side of Minneapolis and the same thing in St. Paul.

Q: Do you have other deals in the works?

A: Our pipeline is continuing to grow. Real estate owners that have called us said, “I own some real estate, and I have a tax problem and I need to sit down with someone to talk about it.”

Q: Are there a lot of people out there with this problem?

A: More people than you’d think.

Q: Office, industrial and retail?

A: We like office. A lot of people don’t, because it’s not senior living or apartments. Well, if you’re buying stocks and you’re trying to create a return for the investor, you kind of want to buy something overlooked by others. Because you can find inherent value there. We continue to believe industrial is going to be strong. There’s a multitude of research on that from Wall Street. Retail is going to change a little. Everyone wanted to be in malls for a long time, then places like Arbor Lakes in Maple Grove. You’re seeing that dynamic changing.

Q: Anything else?

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  • Greg Pfleider said the secret to growth is simplicity: “Early-stage companies suffer [because] they become too complex.”

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