introduction to tic’s
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Introduction To TIC’s. Alex Kowalski* Alta Exchange Group [email protected] 920-540-1072. Joe Wagner The Geneva Organization [email protected] 608-825-4551. - PowerPoint PPT PresentationTRANSCRIPT
Introduction To TIC’s
Alex Kowalski*
Alta Exchange Group
920-540-1072
Joe Wagner
The Geneva Organization
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?