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GLOSSARY OF TERMS A – C

Accredited Investor
An investor who is financially qualified to experience the consequences from investing in private investment offerings. It is the duty of the registered securities Broker/Representative and Broker Dealer to determine the accredited status of a client before offering TIC investments. An individual is accredited if his or her annual income is greater than $200,000, $300,000 for joint status, or, a joint net worth that is equal to or greater than $1 million.

Agency
An agency is considered a fiduciary relationship, where the agent represents the principal and acts only with the principal's consent and is subject to direction and control.

Anchor Tenant
Any major tenant, such as a large department or discount store or supermarket, which forms the nucleus of a modern shopping center. The anchor tenant is the mainstay that draws the public and stabilizes the center by assuring a profitable operation for all the other tenants. Anchor tenants are usually sought out first by developers, and they are usually given favorable leases.

Appraisal
A fair market value of real property determined by a third party when considering implications from market, income and replacement costs of the property.

Basis
Method of measuring investment in property for tax purposes. Calculation: Original cost plus improvements minus depreciation taken.

Boot
Fair Market Value of non-qualified (not like-kind) property received in an exchange. (Examples: cash, notes, seller financing, furniture, supplies, reduction in debt obligations.)

Broker Dealer
A firm that recommends, offers or sells investments to the public which is required to be registered with the SEC, the FINRA, and the state securities divisions in every state in which the firm operates or the customer resides.

Broker Dealer Supervision
A Broker Dealer firm that employs registered securities Brokers/Representatives has an obligation to supervise its Representatives. The SEC has stated that this duty of supervision "is a critical component of the federal investor protection scheme regulating securities markets." Broker Dealers must document, through stringent record keeping requirements, the supervision of registered Representatives.

Building Classifications
Class "A": Building has excellent location and access to attract the highest quality tenants. Building is well managed. Structure is of high quality finish, usually new or competitive with new buildings.
Class "B": Building with good location, management, construction, land and tenancy. Can compete at low end of Class A.
Class "C": Generally an older building with growing functional land/or economic obsolescence.

Capitalization Rate (Cap Rate)
1) Net Operating Income / Property Value. 2) The pre-tax return on investment of a property before deducting debt service. Net Income divided by the Price. 3) The rate that is considered a reasonable rate of return on and of investment. Rate used to determine the capital value of a property's annual net operating income. 4) The rate of interest which is considered a reasonable return on the investment and used in the process of determining value based upon net income. As the rated risk of the project rises, the Cap Rate also rises, resulting in a lowered final valuation of the project.

Cash-On-Cash Return
Rate of return realized on actual cash invested in the project. Differs from Cap Rate in that it refers to the percentage rate of return realized on actual cash invested in the project. For example, if $500,000 were to be invested and the actual cash flow is $50,000 per annum, net of all expenses and loan payments, then the project is referred to as showing 10% cash-on-cash return.

Compensation
The compensation a Broker Dealer receives for a client making an investment. Anyone who receives compensation of any kind associated with offers and sales of TIC interests by a Broker Dealer must be a licensed registered securities Broker/Representative.

Conflicts of Interest
A person recommending, offering or selling a security to an investor must disclose all material facts affecting the recommended investment. If circumstances affect the objectivity of the recommendation, a conflict of interest may exist. The failure to disclose the financial interest of all parties to the transaction deprives the customer of the knowledge necessary to make a decision based upon investment value. Misrepresenting or omitting to disclose material facts with respect to the investment is a violation of federal and state securities laws.

Constructive Receipt
Control of proceeds by an Exchanger (even though funds may not directly be in their possession).

Credit Tenant
Tenants not subject to a credit loss factor because of their exceptional ability to pay their rent obligations on time.

 

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PRESIDIO IS A BRANCH OFFICE OF OMNI BROKERAGE, INC.
SECURITIES OFFERED THROUGH OMNI BROKERAGE, INC. - MEMBER FINRA/SiPC