*POTENTIAL RISKS OF 1031 TENANCY IN COMMONS

As with any investment, 1031 exchanges and TICs have certain risks:

1. Real Estate Risks – TIC interests are direct investments in real estate and are subject to all risks of owning, operating and disposing of real estate; including the potential risk for loss of principal invested.

2. Economic Risks – Results from investing in real estate may vary both up and down depending upon economic cycles.

3. Illiquidity – A TIC interest is an investment in real estate, subject to a tenants-in-common agreement, and is an illiquid investment.  There is currently no established secondary market for the resale of TIC interests.

4. Loss of Control – TIC owners do not have direct control of the property.  An investor purchasing TIC interests relies upon the sponsor and property manager to make day-to-day decisions related to the property.  Other decisions may require unanimous approval from co-tenants.

5. Fees and Expenses – The cost to acquire a TIC interest may be more than purchasing a property outright. This is due to additional expenses of making the property available to multiple co-owners and marketing it in the form of a private security offering (including brokerage fees) which may outweigh the benefits of tax deferral.

6. Tax Status Risks – All current applicable laws may not remain in effect.

7. Suitability – TIC investments may not be suitable for all 1031 exchange investors.

8. Property Appreciation - Property appreciation is not guaranteed. 

9. Past Performance – Past performance does not ensure or indicate future earnings.  Principal reduction or loss may occur depending on the performance of the underlying real estate.

* It is not realistic to identify all of the potential advantages or risks that an individual investor may encounter in a particular 1031 TIC.