721-Exchange Program
Oak's 721 Exchange Program lets owners of appreciated industrial real estate defer capital gains taxes, simplify their estate, and earn passive income, without the deadlines of a 1031 exchange.
What Is a 721 Exchange?
Section 721 of the Internal Revenue Code allows a property owner to contribute real estate directly into an operating partnership in exchange for ownership units in that partnership without triggering an immediate taxable event. Instead of selling your building, paying capital gains and depreciation recapture taxes, and starting over, you exchange it for a proportionate stake in Oak Industrial Holdings LLC — the partnership that owns Oak's full portfolio of industrial properties. You keep your wealth invested in real estate, but now across a diversified, professionally managed portfolio that pays regular cash distributions
Contribute your property to Oak Industrial Holdings LLC
Receive partnership units equal to your property's fair market value
Collect regular distributions from the full portfolio
Key Benefits
Tax Deferral:
A conventional sale can surrender 20%+ of your gains to capital gains tax, depreciation recapture, and net investment income tax. A 721 contribution is generally treated as a non-recognition transaction — no immediate federal tax is triggered, and your full equity keeps working for you inside the portfolio. Taxes come due only upon a future taxable event, such as redeeming units for cash.
Estate Planning:
Partnership units are far easier to divide, gift, and inherit than a building. Units can be transferred during your lifetime or passed through your estate, and under current law, heirs typically receive a step-up in basis at death which may eliminate the deferred gain entirely. Your family inherits income-producing real estate exposure without inheriting a landlord's job.
Diversification:
Trade concentration in a single asset for a pro-rata interest in Oak's entire portfolio diversified across geography, tenants, and lease rollover. Your income no longer depends on one roof, one tenant, or one market.
Passive Quarterly Income:
Unit holders receive quarterly cash distributions from the partnership's operating cash flow. You keep the income stream of real estate ownership without the leasing calls, maintenance decisions, capital expenditures, or compliance work.
No 1031 Time Pressure:
Unlike a 1031 exchange, a 721 contribution has no 45-day identification window and no replacement property to find. There's no race against the clock and no settling for a mediocre asset to meet a deadline..
Flexible Structure:
Every owner's situation is different. Oak offers a straight 721 contribution, a conventional cash sale, or a hybrid of the two, or any combination of cash and partnership units tailored to your tax position and liquidity needs
Who Should Consider a 721 Exchange?
This approach tends to fit owners of appreciated industrial property who:
Want to defer significant capital gains without the timing constraints of a 1031 exchange
Are planning for retirement, succession, or a transition to passive income
Value estate planning simplicity over direct control of a specific building
Want to stay invested in industrial real estate without operating it
Start a Conversation:
If a 721 exchange might fit your objectives, we'll provide a confidential review of your property including a valuation analysis and the structural details specific to Oak's holding company. No obligation, no pressure, and your information stays private.
Disclaimer:
The information on this page is provided for general informational purposes only and does not constitute tax, legal, or investment advice. Tax treatment depends on individual circumstances and is subject to change in law. Prospective contributors should consult their own tax, legal, and financial advisors before entering into any transaction.