introduction to tic’s

Introduction To TIC’s

Alex Kowalski*

Alta Exchange Group

alex@altaexchangegroup.com

920-540-1072

Joe Wagner

The Geneva Organization

joe@genevawealth.com

608-825-4551

*Registered Representative of and securities offered through Berthel Fisher and Company Financial Services, Inc. (BFCFS). Member FINRA/SIPC. Alta Exchange Group and The Geneva Organization are independent of BFCFS.

DISCLOSURE

This material does not constitute an offer to sell or a solicitation to buy any security. Such offers can be made only by a Private Placement Memorandum to accredited investors. These investments involve a high degree of risk and are not suitable for all investors. Please refer to the Risk Factors section of any specific Private Placement Memorandum.

The ABC’s of TIC’s

• Undivided Fractional Interest

• Everything Is Pro-Rata

• Non-Recourse Debt

• Entity Selection Is Critical

• No Day to Day Management

The ABC’s of TIC’s

• Free From “Partners” After Disposition

• Low Leverage: 50%-66% LTV

• Guarantee of Close – Sponsor Owns

• All 1031 Exchange Requirements Apply

• Not Limited to 1031 Exchange Money

Risk Factors

• TIC Interests are Illiquid

• Use of Significant Leverage May Increase Risk of Loss

• Future Tax Code Changes

• Costs Associated With 1031 Investments May Offset the Benefits

Definitions• Sponsor – A company who provides

institutional properties for co-ownership.

• Registered Rep – A securities licensed person who assists investors in finding replacement property.

• Tenant-In-Common (TIC) Interest – Fractional ownership interest in a property.

Total Annual Equity Invested

$0$500,000,000

$1,000,000,000$1,500,000,000$2,000,000,000$2,500,000,000$3,000,000,000$3,500,000,000$4,000,000,000$4,500,000,000$5,000,000,000

2001 2002 2003 2004 2005 2006 2007(proj.)

*Source: OMNI Brokerage

Key Drivers• Guidance From IRS In 2002

• Revenue Procedure 2002-22

• Highly Appreciated Assets• Baby Boomer’s – Assets To Income• Inability To Find Replacement

Property• Desire For Stability/Cash Flow• Little Management Responsibility

Who’s Investing• Must be an Accredited Investor

An accredited investor is an individual with a net worth, or joint net worth with their spouse that exceeds $1MM at the time of purchase; or an individual with income exceeding $200,000 in the last two years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same in the current year; or a trust with assets in excess of $5MM, not formed to acquire the securities offered, whose purchase a sophisticated person makes.

Who’s Investing• Farmers –

• Large Tax Hit, Looking to Retire

• Mr. Fix It – • Capital Gains Tax and Recapture Tax,

Wants Income

• Business Owners – • Tax Deferral and Income

• Developers –• Hard to Match an Exchange

What Are They Buying

• Office – Single Tenant and Multi• Retail – Single Tenant and Multi• Multifamily – With Good

Demographics• Hospitality/Senior Housing -

Increasing• Industrial – In Key Areas• Oil + Gas – Higher Cash Flows/Alpha

Questions?