Question
November 11, 2004
VIA FACSIMILE (202) 326-2624
Mr. Michael Verne
Premerger Notification Office
Federal Trade Commission
Room 303
6th and Pennsylvania Avenue, N.W.
Washington, D.C., 20580
Re: Premerger Notification under theHart-Scott-Rodino Antitrust
Improvements Act of 1976 as amended
Dear Mike:
Itwas a pleasure speaking with you yesterday. This letter will confirm our discussionwhereby you confirmed that the transaction described below should not besubject to the reporting requirements of the Hart-Scott-Rodino AntitrustImprovements Act of 1976, as amended (the "HSRAct").
Forpurposes of our discussion, we assumed that the so-called"size-of-person" and "size-of-transaction" tests were met.
Specifically,we discussed that "A" was selling one of its businesses (the"Business") pursuant to asset transactions. The sale would take placethrough two simultaneous transactions: in the first transaction, "A"would sell the realty associated with the Business to "B"; and in thesecond transaction, "A" would sell all of its other assets relatingto the Business to "C". In connection -with -these two saletransactions, "B" would enter into an agreement with "C" tolease to "C" the real property that "B" acquired from"A". "B" would not be operating the Business that"C" acquired from "A"; "A", "B" and"C" are all unrelated parties.
Wediscussed that a transaction of this nature should be exempt from the reportingrequirements of the HSR Act pursuant to 16 C.F.R. 802.5 -Acquisitions of Investment Rental Property Assets. 16 C.F.R. 802.5 -Acquisitions of Investment Rental Property Assets - provides as follows:
(a) Acquisitions of investment rentalproperty assets shall be exempt from the requirements of the act.
(b) Investment rental property assets."Investment rental property assets" means real property that will notbe rented to entities included within the acquiring person except for the solepurpose of maintaining, managing or supervising the operation of the realproperty, and will be held solely for rental or investment purposes. In anacquisition that includes investment rental property assets, the transfer ofany property or assets that are not investment rental property assets shall besubject to the requirements of the act and these rules as if they were beingacquired in a separate transaction. Investment rental property assets include:
(1) Property currently rented,
(2) Property held for rent but not currently rented,
(3) Common areas on the property, and
(4) Assets incidental to the ownership ofproperty, which may include cash, prepaid taxes or insurance, rentalreceivables and the like.
Wetrust that this letter accurately reflects our discussions. If this letter doesnot accurately reflect our discussions or should you have any questions orrequire any additional information, please contact us. As always, we appreciateyour assistance.