721 Exchange Program

Compound’s 721 Exchange Program refers to a transaction structure that is widely used in the REIT industry and has been since 1992 (commonly called an "UPREIT.") The 721 Exchange allows property owners to convert their real estate holdings into an interest in a publicly traded REIT. This structure offers an attractive tax-deferred exit to owners facing a significant taxable gain on sale due to a low tax basis. This offers similar tax-deferral benefits to a 1031 exchange, but with the added bonus of liquidity. Owners receive units convertible into shares and then can sell the shares individually over time.

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Benefits of the 721 Program

Tax Benefits

Provides a viable tax deferral/avoidance exit strategy to property owners facing significant capital gains tax liabilities on the sale of appreciated property.

Diversification

Diversification of real estate holdings. Own a portfolio of assets instead of only one.

Liquidity

Potential to convert liquid‚ long-term assets into more saleable securities and provides a great option for estate planning.

How does it work?

  • Property Owner contributes property to the Operating Partnership (OP)

    Contribution of property is similar to a sale but is done in a way so that the seller may defer a taxable gain.
  • Property Owner receives OP Units

    In enchange for the Property, the Property Owner receives operating partnership units (OP Units). The Property Owner may receive a combination of cash and OP Units. Only the portion of taxable gain received in OP Units can be deferred.
  • The Operating Partnership owns Properties

    The Operating Partnership is a subsidiary of the Cityfund that holds the portfolio of properties.
  • OP Units convert to Cityfund shares

    The OP Units that the Property Owner received from the contribution can be converted into Cityfund shares and sold, in whole, or in part.

This program is available in the following cities:

  • Manhattan
  • Miami
  • San Francisco
  • Austin
  • Boston
  • Los Angeles
  • Seattle
  • Honolulu
  • Columbus

Contact us so we can
help you get started.

Jesse Stein

Jesse Stein

Chief Investment Officer

[email protected]