Question
September 18, 2007
MichaelJ. Verne, Esq.
FederalTrade Commission
RoomH-314
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
DearMr. Verne:
I am writing to confirm our telephone conversation ofSeptember 12 involving you, me, and my partners (redacted).
As we discussed, we represent a client that investsin and manages affordable housing projects expected to generate federallow-income housing credits. These properties are typically held by limitedpartnerships or limited liability companies that have a general partner ormanaging member and limited partners or investor members. These limitedpartnerships or limited liability companies are often, in turn, held by otherlimited partnerships or limited liability companies which are syndicated intofunds. Our client invests in and manages these various partnerships and LLCs.
Our client is now interested in disposing of itsinterests in and related to certain of these partnerships and LLCs.Specifically, through a number of similarly structuredtransactions, our client contemplates selling the following types ofpartnership, LLC and related assets to various purchasers: (i) generalpartners or general partnership interests in syndicated partnerships or LLCs,(ii) partner or member interests in lower tier limited partnerships or limitedliability companies, (iii) rights under agreements providing asset managementservices to the partnerships and LLCs, (iv) rights under other agreementsrelated to management of or investment in the partnerships and LLCs (e.g.,loans, accounts receivables, etc.), and (v) files and records.
While these transactions would initially appear tosatisfy the Hart-Scott-Rodino premergernotification jurisdictional, size of persons, and size of transaction tests,we have concluded that the transactions areexempt from the HSR reporting requirements pursuant to 16 C.F.R. 802.2(d)(1) ("An acquisition of office or residential propertyshall be exempt from the requirements of the act."), 16 C.F.R 802.5(a) ("Acquisitions of investment rental properties shall be exemptfrom the requirements of the act."), and 16 C.F.R. 802.4 (exempting, in certain circumstances, an acquisition of non-corporateinterests in an unincorporated entity whose assets consist of assets whoseacquisition is exempt from the requirements of the act). This conclusion coversboth the partnership or member interests in the funds and the limitedpartnerships and limited liability companies and the other rights undermanagement services and other agreements and files and records, which areancillary to the management of the funds or the underlying housing projects.See Informal Staff Opinion 0305012, dated May 29, 2003.If you think that this conclusion is incorrect, we would appreciate notice tothat effect from you or your staff. We also very much appreciate your takingthe time to discuss this issue with us.