Understanding LTV

To invest in a Tenant in common you need to match the LTV of the property you are selling to the property that you are buying. Well that is not entirely true. You can always go up in LTV, as long as you are replacing all of the debt from the property you are selling.

So....


Example time:

Property Sells:

Debt $300,000
Equity $200,000


You need to replace both the debt and equity here, so you can invest in something with.

$200,000 in equity and a loan of $300,000 or greater.


Not a super example, but it gets to the point.

What Happened to TSG

TSG the Tenant in Common Sponsor has turned its back on it investors.

At the spring symposium of TICA it was discovered that TSG was attempting to cancel its Master Lease program and go directly to a property management style. What does this mean? It means TSG can stop paying out to its investors and use the money to fund there bad properties.

What are there bad properties? They own 3 student housing deals in a college town where the college has had a drop in enrollment from 30,000 to 24,000 in 3 years. First of more people are going to college today then ever, how in the world did TSG find a college that would shrink by 20% over 3 years?

It sounds like there acquisitions department and due diligence team need to answer some questions.



Visit TSG's website


http://tsgre.com/resources/tenant-in-common/