Most real estate in the United States is held in fee simple and the IRS has concluded that fee simple and TIC interests in real property are of “like kind.” In 1984, Congress amended Section 1031 to exclude an exchange of “interests in a partnership.” TIC arrangements among property owners which are deemed partnerships for tax purposes would not be eligible to make use of Section 1031. Properly structured TIC programs, however, are designed as tenancy in common or co-ownership arrangements to avoid partnership classification. In 2002, the IRS issued guidance reflecting its approval of properly structured TIC arrangements.

In recent years there has been a move by many investors to invest in TIC programs, as these programs provide an opportunity of owning institutional-quality real estate. Most investors do not have sufficient funds from their relinquished property sale to acquire a large institutional quality property on their own. Without a TIC program, these investors would be forced to acquire another similarly sized replacement property in order to qualify for the deferred tax benefits of Section 1031. For investors with substantial funds, TIC programs also allow them to diversify their portfolio by acquiring multiple TIC interests, thereby decreasing investment risk.

TIC transactions have gained popularity significantly since 2001, when securitized TIC programs raised approximately $166.6 million, according to Omni Brokerage, Inc. In 2002, 2003, 2004, 2005 and 2006 securitized TIC programs raised approximately $356.6 million, $756.0 million, $1.7 billion, $3.2 billion and $3.7 billion of equity, respectively, according to Omni Brokerage, Inc.

According to The Stanger Report, in 2004, 2005 and 2006 active public non-traded REIT programs raised approximately $6.3 billion, $5.8 billon and $6.7 billion in equity, respectively, and approximately $2.9 billion in the first quarter of 2007. The 29 active public non-traded REITs that raised $6.7 billion of equity in 2006 were focused on asset classes including office, healthcare, industrial, retail, multi-family and hotels. Capital raising volumes are, in part, driven by the number of programs active in any given year.

As of December 31, 2006, the Company provided management services for a diverse portfolio of 152 properties, encompassing over 32 million square feet of office, healthcare office, multi-family and retail properties in 28 states that were purchased for more than $4.3 billion in the aggregate.

The Company’s TIC programs are structured in reliance on Section 1031 of the Internal Revenue Code, which allows for the deferral of gain recognition on the sale of investment or business property if a number of conditions are satisfied.

The Company divides its services into three business segments, transaction services, management services and dealer-manager services. The Company’s transaction services consist of providing acquisition, financing and disposition services to its programs.

The Company’s management services operations consist of managing the properties owned by the programs it sponsors. The Company also assists its programs in entity-level management services. The Company facilitates capital raising transactions for its programs through Capital Corp., its NASD-registered broker-dealer.

The Company’s wholesale dealer-manager services are carried out through a diverse selling group of third-party broker-dealers and their registered representatives that service the clients who invest in the Company’s products.

Total expense increased $23.1 million, or 31.2%, to $97.3 million for the year ended December 31, 2006, compared to $74.2 million for the same period in 2005.

Operating income for the year ended December 31, 2006 of $11.0 million was 10.1% of total revenue, compared to $18.6 million, or 20.1% of total revenue, for the year ended December 31, 2005.

Net income decreased $2.0 million to $16.1 million for the year ended December 31, 2006, compared to net income of $18.1 million for the same period in 2005.