$83MM of the $100MM

Looks like I was beat to the punch on this topic.  Here is the same question in the comments thread on the SA earnings release report.


For example, the Trust has redeployed approximately $83 million of the $100 million of the sale proceeds in a tax-free 1031 Exchange, creating 53,000 contiguous acres in the core of the Delaware Basin1, including highly strategic acreage on the Texas-New Mexico border. This position is leased by blue chip E&P operators with large capital development budgets and best-in-class safety and environmental implementation.

If $83MM has already been spent under 1031, does the reported gain get backed out of EPS next quarter?  If so, shouldn’t that have been reported in the press release?   There probably is a regulatory/accounting reason for reporting it in the manner that it was.  Can anyone help clear this up?



6 thoughts on “$83MM of the $100MM

  1. My guess is that the $100M should be reduced by the 1031 reinvestment value in the same quarter that the transactions take place. You can’t claim the total revenue when you’ve already spent the biggest portion of it.
    Where does the 83M show up on the expense side?

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  2. In my eyes there should be an offsetting capital expense turned into an asset. The way it has been presented seems at least misleading or an accounting violation.

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  3. From my experience (and I have done a half a dozen of these 1031 exchanges) you have 90 days to find and identify the properties you want to buy and a total of 180 days from the date they closed the 100 million dollar deal to complete all of their purchases.

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  4. There is no taxes due on the purchases under a 1031 exchange except for any money not spent is taxable. The latest report says they have 17 million left to spend (100 – 83= 17). The 90 day mark is around April 6 and the 180 day mark is around the 4th of July.

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