Some experts see the new exemption as an opportunity for the TIC business to gain greater visibility. Townley Business Park, a three-building, 176,000-sf office
asset in Phoenix, was purchased for TIC investors by the former Triple Net Properties LLC, now Grubb & Ellis Realty Investors LLC.
momentum over time. It will also help to
develop credibility among people, like
those in the eastern part of the country, who
have not done a lot of TICs.”
Edward J. Finn, Washington, DC-based
EVP and general counsel of NAI Global,
supports the exemption and says it will be
a positive development for the brokerage
firms within the NAI network as well as the
TIC industry itself. “It seems to me that the
“There will
definitely be an
increase in market
demand, especially
as investors learn
more about the
TIC business and
the quality of the
sponsors.”
RICHARD PREVIDI
NPV/DIRECT INVEST LLC
uncertainty as to whether TIC interests
were to be regulated by real estate regulators, the SEC or both has stifled the development of the market. Clarity in that area
can only benefit all parties. I think there’s a
significant amount of growth that can be
expected as the SEC establishes a clear set
of ground rules, so that real estate brokers,
who are really the most expert in analyzing
the economics and risks of real estate
investments including TICs, are allowed to
participate in the field.”
It is still unclear exactly how many
commercial real estate agents will make
use of the exemption. The SEC estimates
that about 800 brokers will rely on it, yet
NAR has about 90,000 commercial agents
among its membership of 1. 3 million and
there are plenty of other brokers around
the country who may take advantage of
the new rules. In fact, many are already
taking a proactive stance and formulating
new business models.
“When the SEC ruling comes down, presumably approving the NAR exemption,
we’re prepared to move forward to make
sure that TIC products are available to real
estate investors through NAI and appropriate securities brokers,” says Finn. As to
specifics, he adds: “I think we need to see
what the SEC does first. We do have relationships with a couple of sponsors and with
broker-dealers, and as soon as the regulatory path is clarified, we will go forward and
finalize an approach.”
While Grubb & Ellis recently announced
a program to help select brokers get their
securities licenses, Peters says exactly how
the company plans to make use of the
exemption has not yet been determined.
“How the TIC industry responds will
depend on what the exemption is as well as
the parameters in which you are allowed to
operate,” he says.
Disagreements between real estate
licensees and securities brokers could easily
be viewed as a battle over fees. But those
who are more focused on the bigger picture
say that ultimately, what they hope for from
the exemption is growth for the still-young
TIC market, which raised roughly $3 billion
of equity in closed securitized deals in 2007,
according to Omni Consulting & Research
of Salt Lake City.
“We want to see the industry grow to $10
billion,” asserts Peters. “If the market stays
“When the SEC
ruling comes
down, we’re
prepared to
move forward to
make sure that
TIC products are
available to real
estate investors.”
EDWARD J. FINN
NAI GLOBAL
at $3 billion, then there’s limited growth for
everyone. We want a bigger pie, and we
want that pie to continue to expand.” ◆
Contributing editor Michelle Napoli is the editor
of Real Estate Media’s Net Lease Forum and TIC
Monthly. For more information, go to
www.REMnewsletters.com.
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