Question
VIA HAND DELIVERY
Mr. Patrick Sharpe
Premerger Notification Office
Bureau of Competition
Â鶹´«Ã½ Trade Commission
600 Pennsylvania Avenue, NW, Room 303
Washing ton, D.C. 20580
Dear Patrick:
This is to confirm our telephone conversation earlier today in which you agreed that the following transaction would not be reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, codified at 15 U.S.C. § 18a:
Purchaser, a company subject to the requirements of the Real Estate Investment Trust Act of 1960, as amended, proposes acquiring from Seller, an insurance company, a shopping center and office complex for approximately $22 million 1 . The Purchaser may desire to conduct the transaction as a tax deferred exchange under § 1031 of the Internal Revenue Code. If the transaction is a § 1031 exchange, then, prior to the transfer of a fee simple interest in the real property to Purchaser, the asset purchase agreement would be assigned by Purchaser to an unrelated Intermediary (e.g., a title company or lawyer). At closing, however, the deed for the real property will be transferred directly by Seller to Purchaser. Even though the size of the parties and size of the transaction tests are met here, it is my understanding that this transaction will be exempt under 15 U.S.C. § 18a(c)(1) since it would be considered an acquisition in the ordinary course of business for a REIT to purchase an income producing office complex and shopping center. The involvement of Intermediary for purposes of § 1031 of the Internal Revenue Code does not render the transaction reportable since the Intermediary will be merely serving as a conduit, with title to the property being conveyed from Seller to Purchaser and not to Intermediary.
Please let me know immediately if I have in any way misunderstood the FTC’s position on this issue. As usual, I appreciate your assistance in this matter.
Sincerely,
(redacted)
cc: (redacted)
The size of the parties test will be met in this transaction.