Thursday, July 10, 2008

TIC Article
Here is an article on a failed TIC program from today's Wall Street Journal. I thought the article was evenhanded. (I think the author got some of her figures wrong by confusing investor equity with the total price (debt plus equity) of the transaction.) The deal seemed doomed from the start, and it signified the type of deal that is going to get in trouble - i.e. deals to weak credits or deals that should not have been in a TIC structure. I had heard of this deal before today's article, and it has become the poster child of a deal gone bad in the TIC industry. It seems to me that the sponsor did a stand-up job in trying to help investors. One thing the article drives home, and at least the investor interviewed for the article seemed to understand, was that the TIC investment was real estate, not a bond, and in real estate when a tenant goes bankrupt it's not good, and when the property only has one tenant, it's bad.

Here is one part of a sentence that stood out to me:
All but one of the investors was over age 65
I don't this this is unique to the deal in the article.

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