Role of TIC Sponsor
TIC sponsors are experienced real estate organizations that specialize in acquiring, syndicating and managing commercial property on behalf of TIC investors.
Property Acquisition
The TIC Sponsor's first job is to find a property suitable for TIC ownership and place it under purchase contract. Once this occurs, the TIC Sponsor initiates several activities that are required to bring a TIC offering to the marketplace. This includes conducting extensive due diligence, arranging financing, projecting financial performance, and preparing a Private Placement Memorandum (PPM). In structuring a TIC offering, it is important for the TIC Sponsor to adhere to IRS guidelines (IRP 2002-22) so that 1031 exchange investors can participate.
Obtaining TIC Investors
Prior to making a TIC offering available to investors, due diligence information is made available to Broker/Dealers (the selling group) for review and approval. Once a Broker/Dealer, such as Liberty Group, approves an offering, its Registered Representatives may present the offering to accredited investors. The goal of the TIC Sponsor is to raise the necessary equity capital from investors within the allotted number of TIC spaces (generally 35 or fewer). Throughout this process, the TIC Sponsor is available to answer questions about the property and to arrange on-site property tours for potential investors. Once the investor group is in place, the TIC Sponsor coordinates the escrow and closing process.
Managing The Property
After the property is purchased by the TIC Owners, the TIC Sponsor is responsible for managing it, paying the bills, making distributions to the TIC owners, and communicating with TIC Owners on an ongoing basis. Normally, distributions are paid monthly and performance reports are generated quarterly. At any time, the TIC Sponsor and your Liberty Group Registered Representative are available to provide information and answer any questions you might have.
When the TIC Sponsor believes the time is right to sell the property, it will make a recommendation to the TIC Owners. The TIC Owners will then decide whether or not to sell the property. Upon sale, the mortgage is repaid and the remaining equity is distributed pro-rata to each TIC Owner (in most cases, the TIC Owner will direct the funds to his or her Qualified Intermediary so another 1031 exchange can be completed).