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Date
Rule
7A (c) (1)
Staff
Melea Epps
Response/Comments
I called (redacted) and explained to him that, with respect to the first paragraph of his letter, non-income producing property is generally exempt, regardless of the nature of the acquiring person. The advice I gave is that a qualified REIT that acquires income-producing property is not required to report the acquisition, which is pursuant to the 7A (c) (1) exemption. [note 1- Outline of Proposed Transaction]

Question

May 4, 1993

Melea Epps
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
6th & Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580

Dear Ms. Epps:

This letter is to confirm our conversations last Wednesday. Attached is an outline of the transaction I described to you. You advised me that provided that the REIT is qualified under the Internal Revenue code (the I..R.C.) and the real property and improvements to be acquired are income producing, the proposed acquisition described in the outline is exempt from premerger notification, pursuant to 7A (c) (1), as an acquisition in the ordinary course of business of the REIT.

Please be advised that qualification as a real estate investment trust under the I..R.C. is dependent upon operating results for complete taxable years. The REIT has received legal advice that it qualified for taxation as a real estate investment trust during past taxable years. An accurate statement of the REITs status for its current taxable year (and any subsequent taxable year which has not ended) is (i) the REIT intends to be and to remain qualified as a real estate investment trust under the I.R.C., and (ii) the REIT believes that its current and anticipated investments and plan of operation will enable it to continue to meet the requirements for qualification and taxation as a real estate investment trust at any point in time, however, will depend upon the REIT meeting, through actual operating results for the corresponding taxable year, the various qualification tests imposed under the I.R.C.

My understanding is that , for purposes of the 7A(c) (1) exemption, qualification as a real estate investment trust under the I.R.C., in the sense your intended, means the status described in the preceding paragraph. Any other interpretation would mean the availability of the ordinary course of business exemption would only be determined with certainty in retrospect and, therefore, the exemption would be effectively unavailable. Accordingly, I believe the REIT is qualified under the I.R.C. in the sense you intended. It would be helpful if the definition of qualified in your rule-making proposal is clarified to encompass the interpretation in the preceding paragraph.

If I have misunderstood your advice or, in light of the foregoing, further clarification is necessary, please call me at (redacted)[note 1]

Very truly yours,

(Redacted)

(Redacted)

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