Trading in $8M for Liquidity and Long-Term Upside

Background:
Tom owned a successful manufacturing business in the Midwest and operated out of a facility his company purchased 12 years earlier. The property had appreciated substantially and was now appraised at $8 million. However, Tom still carried a $4 million personal mortgage on the building—and the personal guarantee weighed heavily on him as he began thinking about retirement.

The Challenge:
Tom wanted to unlock equity, retire his personal debt, and avoid the tax liability that would come from selling the property outright. He also wanted to remain invested in real estate but didn’t want to manage it or expose himself to market timing risk.

The BasisBridge Solution:
Tom rolled the property into the BasisBridge Fund using our exchange. Here’s how the transaction worked:

  • Appraised Value: $8,000,000

  • Commission Paid (2%): $160,000

  • Effective Net Value Contributed: $7,840,000

  • Fund Loan (65% LTV): $5,200,000

  • Debt Payoff: $4,000,000 (personal guarantee released)

  • Cash Returned to Tom (Tax-Free): $1,200,000

Ongoing Benefits:

  • Received BasisBridge units valued at $7.84M, which earned quarterly distributions.

  • No capital gains tax triggered.

  • No management obligations, since the building was leased absolute triple-net to his tenant.

  • In Year 10, as part of a REIT conversion, the building was revalued at a 6.0% cap rate, increasing its value to $14 million due to rent growth and market compression—greatly enhancing Tom's stake.

Result:
Tom eliminated his personal liability, took home tax-free cash, and remains a passive owner in an institutional-grade real estate fund—without the stress.