Loans on TIC-owned properties account for much of the wave of
“The CMBS market is making an aggressive comeback, and non-recourse loans are again becoming available, even on complex deals,” said
“Netpark’s refinancing is a welcome signal for thousands of retirees and other individuals nationwide who face the loss of tax advantages or losing their entire investment if maturing TIC loans are not refinanced,” she added. “Owners of some foreclosed TIC properties find they’re responsible for taxes on ‘phantom income’ that they’ve never received.”
Netpark’s new loan, which closed in July, spotlights the complexity of TIC refinancing – and a clear path to help owners and lenders streamline the process. Netpark is 85 percent leased, with a highly amenitized campus that has drawn tenants including
Despite strong equity, excellent credit and a reasonable 65 percent loan-to-value refinancing goal, Netpark’s owners faced financial crisis this spring. The former lender had decided not to renew TIC loans of this size, and the loan was maturing in 60 days. Under Netpark’s former operator
With the clock ticking and a 60-day deadline, Bluett tapped her deep lender network to link the owners with a
Every Netpark investor had to agree to the loan to comply with tax codes, and the
“With billions of dollars in TIC loans maturing throughout U.S. markets in the next three years, it’s crucial for TIC investors to come together,” said Bluett. “Typically the owners do not know of each other, although decisions about the properties require all owners to agree. They rely on a third-party operator to manage the asset, but in many cases, operator agreements incentivize selling a property at loan maturity, even if it’s overleveraged.”
In addition to those challenges, there have been numerous reports of many TICs burdened by absentee or self-interested operators. Before 2008, thousands of individual investors gained tax benefits through TIC securities, which gave a maximum of 35 tenants in common equal interests in a commercial property. Many TIC-owned properties have been foreclosed. Others are rolled into single-owner limited liability corporations (LLC) or Delaware Statutory Trusts (DST), which changes the investment’s tax benefits and flexibility.
As more lenders begin reentering the TIC refinancing market, Bluett heads one of the nation’s few firms that has procured and coordinated a TIC refinancing transaction of this size.
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