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IRVINE, CA-The National Association of Realtors’ request for an exemption from securities broker/dealer registration has folks in the tenant-in-common industry buzzing–and many of them view the exemption as a much needed boost for the sector. That topic, along with the ever-present chatter surrounding the credit crunch, dominated the third annual RealShare TIC on Tuesday at the Hyatt Regency in Irvine.

The day was filled with presentations, panel discussions and networking by executives and professionals involved in the TIC industry. The event drew more than 160 attendees, according to organizers.

The conference comes at a time when the TIC industry, after years of rapid growth during the recent commercial real estate boom, is in a state of reexamination. The credit crunch has affected tenant-in-common deals about as much it has impacted other types of transactions industry, experts speaking at the event said.

Topics discussed and debated included master leases, how to find financing, what the effect of the SEC exemption for TICs is likely to be and how DSTs compare with TIC deals.

The first session of the conference began with a presentation titled “State of the TIC Industry Mid-Year 2008″ by Manny Nogales, director of business development for Omni Brokerage Inc. “It’s tough times out there,” Nogales said.<p.Nogales talked about the lack of deals going on, pointing out that in 2008 so far there were 41 closed transactions by 22 sponsors. His presentation, based on data from Omni Consulting & Research, assessed how the TIC market has fared thus far this year and how cash-on-cash returns are trending relative to interest rates."Over time, we're seeing that cash-on-cash is decreasing," he said.

In a town hall meeting, panelists from the sponsor, broker-dealer and registered representative communities explored market forces affecting TIC deals. Most of the panelists pointed to credit issues, but they were upbeat about a turnaround in the next year. “There’s a huge infrastructure waiting to move this market forward as some of this paperwork gets cleared up,” said Kevin Shields, president of Griffin Capital.

Barbara Halper, a principal with FactRight, said she believes the change in the debt markets will yield new strength in underwriting. “I think it will be stronger and back to building fundamentals,” she added.

Panelists also tackled the question of how the NAR exemption will play itself out in the industry. “I would assume there would be increased demand for the product,” said Bill Winn, president of Passco Cos. LLC.

Pete Johnson, vice president of DBSI Securities, said he’s heard a lot of interest from brokers in making a change in keeping with the passage of a possible exemption. “I’ve talked to several real estate brokers who are in fact getting a securities license,” Johnson said.

A panel on debt financing for TIC and DST deals examined how the industry is responding to the virtual disappearance of the CMBS loans that financed so many TIC deals. A concurrently running panel on the pending SEC exemption for TICs provided an update on the status of the NAR exemption and explored how the market is preparing to take advantage of it if the exemption is issued.

“I think it’s going to completely change the tenant-in-common industry over time, three to five years, and the TIC industry needs it,” said Marc Paul, president CEO and founder of SCI Real Estate Investments. “We’re a stagnant industry.”

Scott Lunine, EVP and managing director of T.R. Winston & Co. agreed, saying the exemption, if passed, is “going to be one of the best things that’s happened in the TIC industry.”

A session focused on whether DSTs are poised to gain momentum, while another offered a primer on the industry titled “TIC 101 for Real Estate Brokers.” President and chief executive officer Jeffrey Hanson of Grubb & Ellis Realty Investors delivered a keynote address. Hanson talked about the merger between Grubb & Ellis Co. and NNN Realty Advisors in which Triple Net Properties LLC and NNN Capital Corp. became subsidiaries of Grubb & Ellis. He also discussed his surprise about how hard the market was hit by the credit crunch.

“We knew that a shoe would drop, we just didn’t know it would be a lead boot,” he said. Hanson’s speech was followed by panelists Tim Snodgrass, president of Argus Realty Investors L.P., and Kevin Bradburn, president of Orchard Securities, in a one-on-one discussion called “TIC Fact or Fiction” that tackled myriad industry topics.

“We’ve had several sponsors exit; I think we’ll see more of that,” Bradburn said. Ringing in on the NAR exemption, Snodgrass said, “I think it will open up more equity into this business.”

Two concurrent sessions closed the day: “Alternative investment products for TIC sponsors and representatives, and “The Master Lease: Mounting Problems for TIC Industry?”

The RealShare TIC conference and other RealShare events are produced by Real Estate Media, the publisher of GlobeSt.com, Real Estate Forum magazine, Real Estate Southern California magazine and other publications devoted to commercial real estate.

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