Prior to 2002, investment real estate investors found themselves in a quandary when it came time to find a replacement property while doing a 1031 Exchange.  

The main problem was finding a suitable replacement property to match their equity and debt requirements in a competitive market. Because the IRS uses a restrictive 45 day identification rule and a 180 day close deadline, many investors were left scrambling and found themselves getting into sub par replacement properties or properties they had not done thorough due diligence on. Furthermore, they were denied like-kind treatment if they sought to buy a piece of real estate with other like-kind exchange investors using a limited partnership or multiple member limited liability company structure. 

All this changed, in 2002, when the IRS produced the Revenue Procedure 2002-22. This procedure provides the essential guidelines and framework for structuring like-kind real estate investments involving multiple investors. 

The IRS did not allow limited partnerships, but instead suggested an ancient ownership structure called Tenant-In-Common. Essentially, a Tenant-In-Common structure is where individuals, or individual entities, own a fractional interest in a piece of property as long as the structure is within the guidelines outlined in Revenue Procedure 2002-22. This rule created, literally overnight, an explosive industry giving exchange investors many more options previously had. 

Since 2002 several real estate groups have entered the TIC space with a variety of properties. Like the REIT industry, real estate groups saw this as an opportunity to use the Tenant-In-Common structure to bring forth a diversified line up of properties that many investors may otherwise not have the opportunity to invest in.

To date, investors have been exposed to TIC offerings involving the following:
·         high rise offices
·         multi family apartments
·         industrial properties
·         retail strip centers
·         malls
·         triple net lease properties
·         hotels
·         golf clubs
·         marinas

This has given investors the opportunity to invest in a diverse slate of properties both by asset class and geography.