Comments by:
Tim Egan
Executive Director
Tenant in Common Association
Sacramento

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Opinions about the future of TICs were evenly split inGlobeSt.com's Feedback Poll last week. Tim Egan admits that whileevery sector has its growing pains, TICs suffer from a generalmisunderstanding that, he feels, blinds potential investors totheir importance and long-term viability. He explains his positionquite emphatically, as you will read:

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"The question assumes that we will face possible extinction atsome point. It sends the wrong signal to the ultimate investors whoare currently involved in TIC syndications when there is nodocumented evidence that this industry is in any danger now or willbe in the future. If anything, the growth of the industry documentsthat the industry is growing and will be a significant player inthe real estate marketplace.

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"Even in the real estate marketplace, not a lot of people areaware of TICs as they are structured under the revenue procedures.We're finding a significant amount of difference in interpretation.Tenancies in common have been around forever, where family membershave gotten together and bought property. If they structured thatthrough revenue procedure then obviously they would meet a higherstandard of disclosure and due diligence. Depending on how youstructure the question, some people might think they are respondingto the old-fashion tenancy in common as opposed to the new conceptof a tenant in common. The new concept gives an average tax payerwith some wealth the ability to go into an investment opportunitywith up to 34 other investors to buy some great properties thatthey could never be involved individually.

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"There have been some articles written that assume we're aproblem industry and some will write these without checking withthe industry. But give us the evidence of problems. No one ever canprovide the empirical evidence. We're a real estate product and notany different than what goes on in the general marketplace. Whenthe marketplace is good our industry is going to be good. When themarket starts to flatten, like it is right now, you won't see asmany transactions. But even though the market will slow down, someof our people are predicting that we'll see a modest growth.

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"I'm not saying that we may not have problems in the future. Idon't know of any concept in the industry that does not haveissues, but we are trying our darnedest to make sure that we setethical standards of practice for the industry."

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John Salustri

John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.