Provides our opinion of the quality of a sponsor and its ability to carry out its property, asset management, and financial reporting responsibilities.
Definitions and History
A TIC investment vehicle is a form of private real estate asset ownership in which two or more investors own an undivided interest in (generally) one commercial real estate property. Each co-owner receives an individual deed at closing for his or her undivided fractional interest in the entire property.
The TIC market experienced dramatic growth when the Internal Revenue Service issued Revenue Procedure 2002-22 in 2002. The Revenue Procedure guidelines are commonly used in TIC transactions so that such transactions will more likely qualify as a like-kind exchange rather than a partnership under IRS Code Section 1031. Provided that the applicable tax requirements of a like-kind exchange are met, TIC transactions allow federal capital gains tax to be deferred.
A TIC sponsor is typically a real estate company that structures a TIC offering that may be sold simply as real estate through a real estate broker, or sold as a security through broker/dealers and registered representatives. The IRS generally views TICs as real estate. The Securities and Exchange Commission generally considers TICs as investment contracts because they usually include contracts concerning leasing, management, and financing of a property.
The TIC Sponsor Evaluation
Our TIC Sponsor Evaluation provides our opinion of the quality of a TIC sponsor and its ability to carry out its property and asset management and financial reporting responsibilities. Sponsors are evaluated and ranked on a myriad of quantitative and qualitative performance factors including:
Staffing depth and experience
Technology and data management capabilities
Property-level asset management
Third-party property manager oversight
Strength of policies and procedures
Property and portfolio-level performance
Investor remitting, reporting, and communications practices.
Features & Benefits
The TIC Sponsor Evaluation provides the following features and benefits:
Enhances the transparency of this specialized commercial real estate market segment, and particularly of the securitized market
Helps TIC sponsors highlight their commercial real estate strengths and capabilities to maximize a property's cash flow, and manage unexpected events at a property
Helps mortgage lenders become familiar with a sponsor's performance
Provides useful information to the broker/dealers and registered representatives regarding the attributes of a sponsor
Provides investors with an added tool to make more informed investment decisions.
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