Question
July 17, 1992
VIA HAND DELIVERY
Mr. Patrick Sharpe
Compliance Specialist
Federal Trade Commission
Pre-Merger Notification Office
6th and Pennsylvania Avenues, N.W.
Room 301
Washington, D.C. 20580
Dear Patrick:
This is in follow up to my July 9, 1992 letter to you concerning the reportability of various real property related transactions under the Hart-Scott-Rodino Antitrust Improvements Act (Hart-Scott-Rodino Requirements) (copy of letter attached) and our subsequent conversation on July 15, 1992 discussing that letter.
As you indicated on the telephone on July 15, the Pre-Merger Notification Office Staff of the Federal Trade Commission concurs with my analysis that the transactions described in situations 1-4 would not be subject to the Hart-Scott-Rodino Requirements. I have confirmed with my client that with regards to situation 5, the qualified intermediary acts as an agent both when holding the cash proceeds and when purchasing the replacement property in a 1031 exchange. [Preceding sentence underlined and marked OK by PMN staff.] You indicated to me on July 15 that so long as the intermediary functions as an agent, the Pre-Merger Notification Office Staff would not view the intermediarys purchase as a separately reportable event. Instead, the PreMerger Notification Office would analyze whether the principal in the transaction, Company A, would have a reporting requirement. Since the REIT exemption only applies when the REIT is purchasing rather than selling the real property [word purchasing underlined by PMN staff and marked correct], the first transaction described in situation 5 (i.e., the sale of property owned by Company A) would not be automatically exempt from Hart-Scott Requirements and, if the filing thresholds were satisfied by this portion of the 1031 transfer, a filing may be required. However, the second portion of the 1031 transfer (i.e., the purchase of the replacement property and ultimate transfer to Company A) would be exempt from Hart-Scott Requirements since Company A is a REIT. [Marked correct by PMN staff.]
Please let me know immediately if I have in any way misunderstood the Pre-Merger Notification Offices position on these transactions. Thank you for your assistance in this matter.
Sincerely,
(redacted)
cc:(redacted)
Enclosures