TICA Covers Property Fundamentals

San Diego—The Tenant-in-Common Association’s symposium last month was, like its conference last fall, another sold-out event with 875 registrants, meeting room capacity maxed out and more potential attendees turned away. With an official theme of Knowledge is Power, the conference offered attendees insight into a broad range of topics that included real estate market fundamentals and underwriting at both a macro and micro level, thanks to presentations by Richard Brace Jr. and Ray Torto of Torto Wheaton Research and Joshua Kahr of Kahr Real Estate.

If Torto, principal and chief strategist of the Boston-based firm, had one piece of broad reaching advice for the crowd, it was to be cognizant of the fact that cap rates, and not income growth, accounted for the appreciation of real estate values in recent years. “The last two years, it’s all been cap rate compression,” he said. “Any dummy could have made money in real estate the last two years.” But for investments being made now, he said, the opposite will be true as cap rate movement stalls or reverses direction and rents rise. “You want to be aware of that going forward,” he said.

Another highlight from the conference’s agenda included a TIC industry overview presented by Trent Broderick of Omni Brokerage Inc. and Shanon Ford of Pacific West Financial Group. Among the industry stats they shared with the audience: securitized TIC/DST sponsors totaled 72 at the end of 2005, and, based on past growth, are expected to number 100 this year; out of a total of 728 offerings since 2001, 335 were completed in 2005 alone and while 8,900 investors were placed in deals between 2001 and 2004, that figure was 8,500 in 2005.