0802005 Informal Interpretation

Date

February 13, 2008

Rule

802.4

Staff

Michael Verne

Response/Comments

Yes - I concur with one caveat. The mortgages held by the REIT would be exempt under 7A(c)(2) if acquired directly. If the REIT does not hold other non-exempt assets valued in excess of $59.8 million (not $63.1 million, because the transaction is closing before the effective date of the $63.1 million limitation in 802.4), then the acquisition would be exempt.

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Question

From: (redacted)

Sent: Wednesday, February 13, 2008 12:03 PM

To: Verne, B. Michael

Subject: HSR Exemption

DearMr. Verne:

I wouldappreciate your confirming or correcting the following analysis of a filingissue:

Institutional Investor I is already a shareholder inan REIT and wishes to purchase additional shares. The total value of theinvestment following the purchase of the additional shares (which would closebefore the effective date of the new amended thresholds) would exceed theexisting $59.8 million threshold but not the soon-to-be-effective $63.1 millionthreshold. The investment would also exceed the limitations in 802.64(b)(4).

The REIT has been formed solely to purchaseresidential mortgages, the direct acquisition of which would be exempt undersection 7A (c)(2) of the HSR Act. Under section 802.4(a) of the regulations, aslong as the REIT and all entities it controls do not collectively holdnon-exempt assets with an aggregate fair market value of more than $63.1million.

Accordingly, the purchase of additional shares in theREIT should be exempt as long as the REIT and the entities it controls do not hold more than $63.1 million of non-exemptassets. Please advise if you concur. Thank you.

0802005 Informal Interpretation

Question

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