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Signs of Tough Times Ahead?

What was already a trend among TIC sponsors diversifying their operations with non-TIC products and business lines seems to be gaining ground in anticipation of potentially challenging months ahead.

By Michelle Napoli | Updated on September 19, 2007

Michelle Napoli is editor of Net Lease forum, from which this article is excerpted.

New York City—What was already a trend among some TIC sponsors diversifying their operations with non-TIC products and business lines seems to be gaining even more ground in anticipation of potentially challenging months ahead. Some sponsors–Triple Net Properties LLC of Santa Ana, CA and Evergreen Realty Group LLC of Pasadena, CA, for instance–have pursued business platforms beyond TICs for years. For many, diversity simply makes good business sense.

But the scare the TIC market suffered from the Congressional budget reconciliation process last year–and the fear of being legislated out of business, sparked new appreciation for diversification. Now, the debt market turmoil is causing a slowdown in commercial property transactions in general, and the TIC market is no exception. Compound that with what was already a slowdown in the rate of annual growth for TIC market equity raise and investment, and the need to find additional sources of revenue appears to be taking on even more urgency.

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