Sale of Checker’s Drive-In

For Oregon-based real estate developer Michael Pearson, it was the perfect storm.

For nine years, he’d owned an investment property in Augusta, GA—a Checker’s Drive-in restaurant with about $415,000 of 1031-exchange deferred taxes on it.

The tenant, Star Chain, was a longtime 27-unit Checkers franchisee that had recently declared bankruptcy because its overseas assets had been frozen in a dispute. The bankruptcy trustee awarded the portfolio to an operator from Atlanta—not unusual. But this operator promptly told Mr. Pearson it would vacate if Mr. Pearson did not agree to sell the properties at about 30% of fair market value.

Obviously this was a crisis.

Without the luxury of time or proximity to the property, Mr. Pearson contacted our team—which was already advising multiple other owners of Star Chain Checkers—to guide him through this financial tangle and assist in redirecting his assets into a tax-friendly new investment.

Because the new operator would have had to relocate within a mile of the original Checkers location, we called its bluff by placing under contract all available competing sites. Then, we helped Mr. Pearson negotiate the price on the contract. When the storm was over, he did close successfully, and at a reasonable profit.

Completion of 1031 and acquisition of Fast Pace Prompt Care

While the successful sale of the Checkers was a win, now our team had to execute the 1031 exchange to secure a profitable investment vehicle for Mr. Pearson.

We scanned all of the major platforms, hunted off-market deals and presented the client with many suitable candidates for review. We performed detailed underwriting on 6 properties and moved forward on 3 of them, putting all of them under contract to start due diligence. It soon became clear that the Tennessee-based Fast Pace Prompt Care was the best fit. After multiple loan proposals, we secured a lender with unbelievable loan terms, closing on schedule by the end of the year.

Results

  • Saved our client from paying $415K in taxes
  • Protected first deal from falling apart
  • Evaluated dozens of potential investments
  • Underwrote multiple deals
  • Helped to apply for multiple financing options
  • Closed by the end of the year

TESTIMONIAL

“Jonathan and the team at Meybohm Commercial were paramount in my Checkers 1031 Exchange. Not only did they help me close the sale of my Checkers—which was not easy!—but they helped me underwrite and evaluate multiple options for my 1031 exchange, and ultimately closed on a great property. Great work!”  — Michael Pearson, Client