broker. “Frankly, it’s a competitive world
and whoever can provide the better service
to the investor deserves to do the business.
“Then, and this is more difficult to deal
with, there are the regulatory compliance
and liability issues,” he continues. “The securities firms are concerned that activities will
be undertaken by real estate licensees, or
JAMES SHAW
CAPHARBOR LLC
“Frankly, it’s a
competitive
world and
whoever can
provide the
better service
to the investor
deserves to do
the business.”
non-securities licensees, that will lead to liability, and that the securities licensees will be
smack in the middle of it but won’t have the
ability to control or manage that liability.”
But while details and practical implementation have yet to be worked out as far
as how these two industries will play
together in the same sandbox as well as
share fees, many believe that an exemption
will ultimately result in new investment dollars being directed to the TIC market. And
that could be good news for an industry that,
after several years of tremendous investor
interest, is experiencing a slowdown. Some
experts have suggested the exemption could
result in as much as 400% growth in the TIC
market over the next few years.
“I look at this as an opportunity for the
tenant-in-common business to gain greater
visibility,” observes Scott D. Peters, president and CEO of Santa Ana, CA-based
Grubb & Ellis Co., which is not only a large
real estate brokerage firm but, through its
recent acquisition of the former NNN
Realty Advisors Inc., is perhaps the largest
sponsor of TIC investments. “This is a win-win, but it will involve compromise.
Hopefully, however the exemption turns
out, it increases the amount of equity we
raise in the sector and the number of individuals who want to get into a securitized
tenant-in-common deal.”
Other sponsors are equally hopeful that
the exemption will lead to an increase in
business. Richard R. Previdi, Short Hills,
NJ-based CEO of NPV/Direct Invest LLC,
says it will be a positive development for
growth—at least among relatively small
investors. (The average TIC investment
currently involves about $400,000 of
equity.) “There will definitely be an increase
in market demand, especially as investors
learn more about the TIC business and the
quality of the sponsors,” he says.
In the short term, Previdi believes the
more moderate-sized brokerages will be
very interested in TICs, but they’ll be oriented toward local properties where they
“Hopefully,
however the
exemption turns
out, it increases
the amount of
equity we raise
in the sector.”
SCOTT D. PETERS
GRUBB & ELLIS CO.
understand the real estate and the sponsor.
“Over time, they may be willing to diversify
geographically with a sponsor they’re comfortable with,” he relates. “The exemption
will definitely be a boost at a time when the
overall TIC market is shrinking a bit. This
could easily take it back to where it was. I
think demand will start slowly but will build
Under the NAR exemption proposal, commercial professionals will be limited to advising clients on the real estate aspects of a transaction, including such things as
tenant history and the property’s position in the marketplace. The 155,153-sf River Place Shopping Center, anchored by Belk and TJ Maxx, is located in Sevierville,
TN, which, according to sponsor SCI Real Estate Investments LLC, is one of the fastest growing tourist destinations in the South, with eight million visitors annually.
