TIC Group Gets New Look for Changing Times

In the past few years, the young tenant-in-common industry has taken a major hit from the credit squeeze and the virtual disappearance of the commercial real estate securitization market. In recognition of changing times, the industry’s professional organization is adopting a new name and mission. Starting June 1, the six-year-old Tenant-in-Common Association will have a new name: the Real Estate Investment Securities Association. The re-branding reflects changing strategies among those who sponsor and sell tenant-in-common securities. “Right now, with the contraction in the tenant-in-common market, most of our members are moving into other products,” explained Bill Winn, president of Passco Cos. L.L.C. and president of TICA. The organization’s annual survey revealed that 90 percent of its members are also selling other categories of real estate securities, Winn explained. The newly re-branded organization will aim to fill a gap among commercial real estate finance organizations. For example, REISA will offer educational and networking programs for professionals working in a wide variety of securitized real estate specialties beyond tenant-in-common offerings and 1031 exchanges. Investment categories covered under REISA’s expanded mission will range from non-traded REITs and real estate mutual funds to real estate-linked energy offerings, Winn said. TICA’s repositioning reflects the dramatically changed trajectory of the tenant-in-common industry during this decade. Funds raised by TIC sponsors grew from just $166 million in 2001 to $3.7 billion by 2006, according to Omni Brokerage Inc. But the virtual drying up of the securitization market has helped to reduce the total value of tenant-in-common transactions by an estimated 50 percent to 70 percent nationwide since 2006, Winn said. Meanwhile, the number of transactions has plummeted by as much as 80 percent, he added. A few TIC sponsors have also encountered hot water of late. DBSI Inc. filed for bankruptcy last December, and the Idaho Department of Finance is investigating the firm for $2 billion in allegedly fraudulent transactions. Sunwest Management Inc. is also under investigation for fraud and is restructuring after filing for bankruptcy in December.