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Teruya may cancel the proposed purchase should the sale
of the Royal Towers apartment fail to proceed according
to present plans.
Early in 1995, the boards of directors of Times and Teruya
approved the sale and purchase of Kupuohi I for $8.9 million and
Kaahumanu for $3.73 million.
In August 1995, Teruya entered into an “exchange agreement”
with TGE, whereby TGE agreed to act as an “exchange party to
complete the exchange” of Royal Towers for replacement property
to be designated by Teruya, with the stated purpose of qualifying
the exchange under section 1031. TGE agreed to acquire the
replacement property with proceeds from the sale of Royal Towers
and additional funds from Teruya as necessary to effect the
acquisition. Paragraph 6 of the exchange agreement states:
Notwithstanding the foregoing, if * * * [Teruya] is
unable to locate suitable Replacement Property by the
date specified in the Acquisition Agreement [for Royal
Towers], then the Acquisition Agreement and this
Exchange Agreement shall be terminated and the parties
shall have no further obligations to each other * * *.
Teruya transferred Royal Towers to TGE, and on August 24,
1995, TGE sold Royal Towers to Savio for $11,932,000. At that
time, Teruya had a $670,506 basis in Royal Towers.
Also, on August 24, 1995, TGE applied the proceeds from the
sale of Royal Towers, as well as $724,554 in additional funds
from Teruya, to acquire Kupuohi I and Kaahumanu from Times for
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Last modified: May 25, 2011