TIAA-CREF Funds, et al.; Notice of Application, 55399-55405 [2015-23093]
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Federal Register / Vol. 80, No. 178 / Tuesday, September 15, 2015 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange’s proposal to impose the new
$0.15 fee on executions other than
Customer executions does not misalign
the fees related to Customer as
compared to Non-Customer orders.
Today, Customers have lower fees
because Customer liquidity benefits all
market participants by providing more
trading opportunities, which attracts
Specialists and Market Makers. An
increase in the activity of these market
participants in turn facilitates tighter
spreads, which may cause an additional
corresponding increase in order flow
from other market participants. The new
fee does not impose any undue burden
on competition as all market
participants, except Customers will be
assessed the same fee.
The Exchange operates in a highly
competitive market, comprised of
twelve options exchanges, in which
market participants can easily and
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
rebates to be inadequate. Accordingly,
the fees that are assessed and the rebates
paid by the Exchange, as described in
the proposal, are influenced by these
robust market forces and therefore must
remain competitive with fees charged
and rebates paid by other venues and
therefore must continue to be reasonable
and equitably allocated to those
members that opt to direct orders to the
Exchange rather than competing venues.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.15
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
15 15
U.S.C. 78s(b)(3)(A)(ii).
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If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
Phlx–2015–75 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–Phlx–2015–75. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
All submissions should refer to File
Number SR–Phlx–2015–75 and should
be submitted on or before October 6,
2015.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–23094 Filed 9–14–15; 8:45 am]
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31807; 812–13995]
TIAA–CREF Funds, et al.; Notice of
Application
September 8, 2015.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under sections 6(c) and 17(b) of
the Investment Company Act of 1940
(‘‘Act’’) for exemptions from section
17(a) of the Act, and under section 17(d)
of the Act and rule 17d–1 thereunder to
permit certain joint transactions.
AGENCY:
Applicants
requests an order that would permit
certain registered management
investment companies or series thereof
that are advised by Teachers Advisors,
Inc. (‘‘Advisors’’) to invest in a private
investment vehicle established by
Advisors to invest directly in real estate.
APPLICANTS: TIAA–CREF Funds (the
‘‘Trust’’), Advisors, TIAA–CREF Real
Property Fund LP (‘‘TCLP’’), TIAA–
CREF Real Property Fund GP LLC
(‘‘TCGP’’), and TIAA–CREF Real
Property Fund REIT LLC (‘‘TC REIT’’).
FILING DATES: The application was filed
on January 4, 2012, and amended on
June 25, 2012, December 3, 2012,
October 16, 2013, June 26, 2014, May 8,
2015, and September 4, 2015.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
Applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on October 5, 2015, and
should be accompanied by proof of
service on Applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 of the Act,
hearing requests should state the nature
of the writer’s interest, any facts bearing
upon the desirability of a hearing on the
matter, the reason for the request, and
the issues contested. Persons who wish
SUMMARY OF APPLICATION:
16 17
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to be notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549. Applicants:
TIAA–CREF, Attn: Rachael Zufall, 8500
Andrew Carnegie Boulevard, Charlotte,
NC, 28262.
FOR FURTHER INFORMATION CONTACT:
Mark N. Zaruba, Senior Counsel, at
(202) 551–6878, or David Bartels,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
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Applicants’ Representations
1. The Trust is organized as a
Delaware statutory trust and is an openend management investment company
registered under the Act. The Trust
currently consists of multiple Funds (as
defined below).
2. TCLP is organized as a limited
partnership, and applicants state that it
will rely on an exception from the
definition of ‘‘investment company’’
such as Section 3(c)(1) or Section 3(c)(7)
of the Act (or any other applicable
exclusion). TCGP, the sole general
partner of TCLP, is organized as a
limited liability company and will be a
direct or indirect wholly owned
subsidiary of Teachers Insurance and
Annuity Association of America
(‘‘TIAA’’). As general partner of TCLP,
TCGP will be responsible for the
operational and administrative
maintenance of TCLP, but it will not
exercise any responsibilities for the
management of TCLP’s assets.
3. TC REIT is organized as a limited
liability company, and Applicants
anticipate that it will be excluded from
the definition of ‘‘investment company’’
under Section 3(a)(1) of the Act by
reason of its real estate investments.
Applicants state that TC REIT will elect
to be taxed as a real estate investment
trust (‘‘REIT’’) under the Internal
Revenue Code of 1986, as amended (the
‘‘Code’’) and will not incur separate,
entity level tax under the current
provisions of the Code.
4. Advisors, a Delaware corporation,
is an investment adviser that is
registered with the Commission under
the Investment Advisers Act of 1940, as
amended (the ‘‘Advisers Act’’). Advisors
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is an indirect, wholly owned subsidiary
of TIAA. Advisors will be the
investment adviser to each of the Funds
(as defined below), TCLP and TC REIT.1
5. TIAA and Advisors believe that
exposure to direct real estate
investments is an important element of
diversified retirement investing.
Advisors seeks to provide shareholders
who invest for retirement and other
long-term purposes through the Funds
(as defined below) with exposure to
direct real estate. Applicants argue that
direct exposure to real estate offers
advantages over investment in
conventional real estate mutual funds
that invest primarily in publicly traded
REITs. In addition, Applicants note that,
while the Act does not preclude a
registered management investment
company from investing directly in real
estate (provided that the fund is not
subject to a fundamental policy
precluding such investment and, in the
case of an open-end fund, has sufficient
liquidity to comply with applicable
Commission and Commission staff
positions), direct investment in real
estate would be impractical due to the
typical size of such investments and for
tax reasons. Accordingly, applicants
propose to allow each Fund (solely to
the extent consistent with its investment
policies, objectives, strategies and
restrictions) to obtain exposure to real
estate through TCLP, which will be
dedicated to investing indirectly in real
estate through TC REIT.
6. For this reason, Applicants request
an order under sections 6(c) and 17(b)
of the Act for exemptions from section
17(a) of the Act, and under section 17(d)
of the Act and rule 17d-1 thereunder, to
permit: (i) One or more Funds (as
defined below) to purchase, hold and
redeem units of limited partnership
interests of TCLP (‘‘Units’’); (ii) TCLP to
sell Units to one or more Funds and
redeem such Units following demand of
such Funds; (iii) to the extent it could
be deemed an element of a ‘‘joint
transaction,’’ as defined below, TCLP to
purchase, hold and redeem interests in
TC REIT; and (iv) the Funds and Other
Accounts (as defined below) to engage
in certain purchase or sale cross
transactions in securities, all as
described and subject to the conditions
set forth in the application.2
7. Applicants request that the relief
extend to each existing or future
1 Only Advisors or a successor entity will serve
as investment adviser to TCLP or TC REIT, and any
other investment adviser to TCLP or TC REIT will
serve only as investment sub-adviser.
2 Applicants acknowledge that they are not
seeking, and the Commission is not granting, relief
from any disclosure requirements that are
applicable to Applicants.
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registered management investment
company or series thereof that is
advised by Advisors or any successor
entity or any entity controlling,
controlled by, or under common control
with Advisors (each, a ‘‘Fund’’).3
Applicants further request that the relief
extend to any future limited partnership
(‘‘Future LP’’), general partner thereof
(‘‘Future GP’’), and underlying real
estate investment vehicle (‘‘Future Real
Estate Fund’’) in which such Future LP
invests that has elected to be taxed as a
REIT pursuant to the Code that operate
in a manner that is identical to TCLP,
TCGP and TC REIT except for the types
of real estate investments held by a
Future Real Estate Fund.4
8. Applicants state that TC REIT will
invest in direct real estate holdings and,
to maintain some liquidity, may invest
a portion of its assets in liquid
investments. To finance its investments
in real estate holdings, TC REIT plans to
borrow from banks, as well as from
insurance companies, pension/
retirement systems, state and federal
government related entities (e.g.,
Freddie Mac), investment banks, and
other commercial lenders (e.g., GE
Capital Corporation (or its successor),
Ally Financial) (lenders other than
banks are referred to as ‘‘Non-bank
Commercial Lenders’’). Applicants
represent that TC REIT plans to incur
loans from Non-bank Commercial
Lenders because such lenders have been
longstanding capital resources to the
commercial real estate market and often
are able to offer more favorable lending
terms to borrowers.5 TC REIT will not
incur any loans that are callable at the
option of the lender.
9. Applicants state that TCLP will
invest a substantial portion of its assets
in TC REIT and, if deemed appropriate
by Advisors, may, for purposes of
maintaining some liquidity, invest a
portion of its assets in liquid
investments. TCLP will incur expenses
relating to the management of any liquid
investments held by TCLP, as well as for
3 Each entity that currently intends to rely on the
requested relief has been named as an applicant.
For purposes of the requested order, ‘‘successor’’ is
limited to an entity that results from reorganization
into another jurisdiction or a change in the type of
business organization.
4 Any entity that relies in the future on the
requested relief will comply with the terms and
conditions of the Application as they apply to the
corresponding current party.
5 Applicants submit that, in light of the presence
of a bona fide business purpose for TCLP and TC
REIT and the difficulty a Fund would have in
directly investing in real estate, the structure
proposed by this Application can be distinguished
from a structure intended primarily to evade
leverage restrictions applicable to open-end funds.
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the general operation and
administration of the entity.6
10. TCLP will conduct a non-public
offering of its Units, and will not be
publicly traded. Applicants state that
TCLP is currently expected to be made
available solely to the Funds, although
it is possible that it will be made
available in the future to: (i) Unaffiliated
registered investment companies,
pension plans, other institutional
investors or high-net-worth individuals
(‘‘Outside Investors’’); as well as to (ii)
pension plans, or other institutional
investors or high-net-worth individuals
for which Advisors or an affiliate of
Advisors serves as investment adviser
(‘‘Other Accounts’’).7
11. Applicants state that the Funds (as
well as any Other Accounts or Outside
Investors) that invest in TCLP will be
able to purchase and redeem Units on
a daily basis at the next determined net
asset value (‘‘NAV’’) per Unit. In the
event that TCLP is unable to
accommodate investment demand from
the Funds, Other Accounts and/or
Outside Investors, opportunities for
investment will be allocated in
accordance with allocation policies and
procedures drafted and maintained by
Advisors.8 Applicants represent that,
while such allocation policies and
procedures may be subject to revision
over time, the allocation policies and
procedures generally will allocate
opportunities on a pro rata basis based
on orders received, with normal
exceptions for rounding and de minimis
amounts, although applicants state that
other allocation methodologies may be
employed as appropriate. Any such
methodology will be applied in a
manner that is objective and verifiable
and will be consistent with Advisors’
fiduciary obligation to treat client
accounts in a manner that is fair and
provides for equality of opportunity
6 Applicants anticipate that TCLP will be able to
efficiently deploy assets invested by the Funds in
light of the ability of TCLP to invest in liquid
investments in addition to interests in TC REIT, so
that any Fund assets invested in TCLP that are not
currently invested in real estate will be effectively
deployed pending completion of real estate
investments. The performance of TCLP, the costs of
investing in TCLP, and the related expenses, will
be considered by the Funds’ Board during the
course of its oversight of the Funds’ investments in
TCLP, including its annual determinations as
required by condition 1 below.
7 No Applicant, or an affiliated person thereof,
will have a proprietary interest in any Outside
Investor or Other Account, except that an Applicant
or an affiliated person thereof may be a shareholder
of an Outside Investor that is a registered
investment company.
8 Applicants are not seeking any comfort and
acknowledge that the Commission is providing no
opinion on whether these allocation policies and
procedures meet the standards applicable under
either the Act or the Advisers Act.
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over time. However, TCLP will reserve
the right to give the Funds preferential
access to opportunities to invest in
TCLP as compared to Outside Investors
and (to the extent permitted under the
allocation policies and procedures)
Other Accounts, and the Funds will
always have opportunities to invest in
TCLP that are at least as favorable as the
opportunities to invest in TCLP made
available to Other Accounts or Outside
Investors. The policies and procedures
will require the documentation of the
basis of allocation, as well as the basis
for any exception to the general
principles set forth in the policies and
procedures, which exception will be
subject to review by legal or compliance
personnel.
12. Applicants anticipate that TCLP
will be managed to maintain sufficient
liquidity to satisfy the daily liquidity
needs of its limited partners under
ordinary market conditions. However,
any investment in TCLP will be subject
to terms permitting TCLP, under
circumstances described in the
application, to (a) cease offering new
Units; (b) limit or postpone redemptions
in the event that TC REIT has
insufficient liquidity to satisfy
redemption requests; or (c) utilize a
‘‘gate’’ pursuant to which the amount of
redemptions from TCLP by any limited
partner on any business day may be
limited to a percentage of the limited
partner’s investment in TCLP.9
Accordingly, each Fund that is an openend investment company will treat its
investments in TCLP and any Future
LPs as investments that are not liquid
for purposes of any applicable rules or
guidance of the Commission or its staff
regarding the management of liquidity.
Similarly, each Fund that is a closedend investment company will, at all
times, limit its holdings in TCLP
(together with any Future LPs) to no
more than 15% of its net assets.10
13. Redemption requests will be
considered on a first in basis based
upon the business day of receipt, unless
a limited partner (other than a registered
investment company or Other Account)
has agreed to a lower priority of
9 TCLP expects that the ability to limit or
postpone redemption will help to minimize
transaction costs and any dilutive effects on nonredeeming limited partners. TCLP’s ability to limit
or postpone redemption and the circumstances
under which TCLP may waive an established
redemption gate, in whole or in part, are discussed
in greater detail in the application.
10 Applicants submit that, although closed-end
Funds do not present the same concerns with
respect to liquidity as open-end Funds, it is
nonetheless appropriate to limit the investments of
these Funds in TCLP (and Future LPs) to address
concerns that may arise regarding complex
structures and the use of leverage, among other
things.
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55401
redemption. Except as a limited partner
(other than a registered investment
company or Other Account) has
otherwise agreed, redemption requests
of all investors will be treated equally,
and TCLP will allocate redemption
proceeds on a pro rata basis in the event
that there are insufficient liquid assets
to satisfy fully all redemption requests.
The rules on redemption and TCLP’s
policy regarding the allocation of
redemption proceeds, and any changes
to either of these, will be disclosed to
all prospective investors in TCLP. TCLP
will have a written policy regarding the
allocation of redemption proceeds that
will be applied in a manner that is
objective and verifiable and will be
consistent with Advisors’ fiduciary
obligation to treat client accounts in a
manner that is fair.
14. Each Fund and Other Account
limited partner of TCLP will have
identical rights, duties and obligations
under the limited partnership agreement
as each other Fund and Other Account
limited partner. If Outside Investors are
permitted to invest in TCLP, the Funds
and Other Accounts will be entitled to
purchase, hold and redeem Units on
terms that are at least as favorable,
including (without limitation) the
expenses associated with an investment
in TCLP, as the terms on which any
Outside Investor purchases, holds or
redeems Units. Limited partners other
than the Funds and Other Accounts will
have substantially similar rights, duties
and obligations as the Funds and Other
Accounts, but Applicants currently
contemplate that they may distinguish
among Outside Investors with respect to
rights, duties and obligations pursuant
to the terms of the limited partnership
agreement, or otherwise, with respect to
the following issues (without
limitation): (a) Utilization of redemption
gates; (b) limitation of rights of
redemption; or (c) the level of expenses
charged to limited partners other than
the Funds and Other Accounts in
connection with an investment in TCLP,
which may be higher than the level of
expenses borne by the Funds and Other
Accounts.
15. TCLP will be able to purchase and
redeem limited liability company
interests in TC REIT on a daily basis at
the next determined NAV. Applicants
represent that TCLP will be the sole
investor in TC REIT, other than the
ninety-nine or more additional investors
necessary or appropriate to allow TC
REIT to qualify as a REIT under section
856(a)(5) of the Code (the ‘‘Tax
Holders’’). The Tax Holders’ interests in
TC REIT will be preferred to TCLP’s
interests in TC REIT. However, (a) the
Tax Holders will have only limited
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voting rights, (b) the Tax Holders’
aggregate interests in TC REIT will be de
minimis in relation to that of TCLP,11
and (c) TC REIT will not issue
additional interests to the Tax Holders
after the initial organization of TC REIT
(clause (a), (b), and (c), collectively, the
‘‘Tax Holder Limitations’’).12
Accordingly, it is anticipated that TCLP
will own substantially all of the total
outstanding securities of TC REIT at all
times during the operation of TC REIT.
16. Applicants represent that TC REIT
will not participate in any joint
enterprise or other joint arrangement,
within the meaning of rule 17d–1 under
the Act, with the Future Real Estate
Funds or other TIAA related accounts,
and the Applicants are not asking for an
order pursuant to rule 17d–1 with
respect to any such transaction. Further,
Applicants state that TIAA has adopted
policies and procedures applicable to
any purchasing conflicts between TC
REIT and any other TIAA related
accounts, which are designed to allocate
opportunities consistent with Advisors’
fiduciary obligations to its clients and
will be applied in a manner that is
objective and verifiable.
Applicants’ Legal Analysis
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Section 17(a)—Purchase and Sale of
Units
1. Section 17(a) of the Act generally
prohibits an ‘‘affiliated person’’ as
defined by section 2(a)(3) of the Act, or
an affiliated person of an affiliated
person, of a registered investment
company, acting as principal, from
purchasing securities or other property
from the registered investment company
or selling securities or other property to
the registered investment company.
Section 2(a)(3) of the Act defines an
‘‘affiliated person’’ of another person to
include, among others, (a) any person
directly or indirectly owning,
controlling, or holding with power to
vote, 5% or more of the outstanding
voting securities of the other person; (b)
any person 5% or more of whose
outstanding voting securities are
directly or indirectly owned, controlled,
or held with the power to vote by the
other person; and (c) any person directly
or indirectly controlling, controlled by,
or under common control with the other
person. Section 2(a)(9) defines ‘‘control’’
to mean ‘‘the power to exercise a
controlling influence over the
11 Applicants anticipate that the Tax Holders will
invest, in aggregate, approximately $125,000 and
will represent much less than 1% of the expected
aggregate net assets of TC REIT.
12 The Tax Holders’ interests in TC REIT and the
Tax Holder Limitations are discussed in greater
detail in the application.
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management or policies of a company,
unless such power is solely the result of
an official position with such
company.’’
2. Section 17(b) of the Act authorizes
the Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if the terms
of the proposed transaction, including
the consideration to be paid or received,
are fair and reasonable and do not
involve overreaching on the part of any
person concerned, and the proposed
transaction is consistent with the
policies of each registered investment
company involved and with the general
purposes of the Act. Section 6(c) of the
Act permits the Commission to exempt
any person or transactions from any
provisions of the Act if such exemption
is necessary or appropriate in the public
interest and consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Act.
3. Applicants state that the sale by
TCLP of its Units to a Fund or the
repurchase by TCLP of its Units from a
Fund may be deemed to be prohibited
by section 17(a) of the Act, as TCLP and
each Fund may be deemed to be
affiliated persons, or affiliated persons
of affiliated persons, of each other under
multiple theories. For example, the
Fund may be deemed to be an affiliated
person of TCLP in the event that it owns
5% or more of the Units in TCLP. In
addition, TCLP could be deemed to be
an affiliated person of an affiliated
person of the Fund, if it is deemed to
be under the control of or under
common control with Advisors.
4. Applicants believe that the
proposed transactions among the Funds
and TCLP satisfy the requirements for
relief from section 17(a) of the Act
under both sections 17(b) and 6(c) of the
Act.
5. Applicants submit that the
proposed transactions are reasonable
and fair and would not involve
overreaching on the part of any person
concerned. Before investment by a Fund
in TCLP, the Fund’s board of trustees
(the ‘‘Board’’), including a majority of
the Independent Trustees, would have
made the determinations required under
condition 1 below.13 The Board,
including the Independent Trustees,
will review these determinations on at
least an annual basis. Applicants
represent that, currently, the Board is
made up of ten trustees, all of whom are
Independent Trustees. Further,
Applicants notes that Advisors’ ability
13 The ‘‘Independent Trustees’’ are the trustees
who are not interested persons of the Trust within
the meaning of section 2(a)(19) of the Act.
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to allocate a Fund’s assets to
investments in TCLP would be limited
to address any potential for
overreaching because (a) the allocation
would be determined either by the
Fund’s glide path or would be within a
range of permissible allocations
approved in advance by the Board and
(b) the Fund’s investment would be
limited under condition 3 below.
6. In addition, Applicants state that
each Fund would purchase and sell
Units on the same terms as each other
Fund and any Other Account, and on
terms that are at least as favorable as the
terms on which Outside Investors
would purchase and sell Units. TCLP
also would sell its shares to or purchase
its shares from a Fund at the nextcalculated NAV per Unit. This value,
which would be provided to the Funds
on a daily basis, would be determined
based on the valuations of the assets of
TC REIT, which would be determined
by using valuation methodologies that
are consistent with section 2(a)(41) of
the Act except that the TCLP Committee
will, in reliance on independent
appraisals obtained at least quarterly,
make determinations that would
otherwise be made by a board of
directors.14
7. Applicants further submit that the
proposed transactions would be
consistent with the policies of each
Fund. Applicants represent that the
investment by a Fund in TCLP would be
effected in accordance with the
investment policies, objective, strategies
and restrictions contained in the
registration statement of the Fund.
8. Finally, Applicants submit that, for
these reasons, as well as the benefits
shareholders in the Funds would
14 Applicants note that, in accordance with
condition 9, TCLP will consolidate TC REIT for
reporting purposes and the consolidated financial
statements of TCLP will be prepared in accordance
with Regulation S–X, will be audited by an
independent auditor, and, if practicable, will be
prepared as of the same date and for the same
periods as the investing Funds. Applicants state
that the Public Company Accounting Oversight
Board auditing standards applicable to the audit of
TCLP would be the same standards as those
applicable to a registered investment company.
Further, Applicants state that the U.S. Generally
Accepted Accounting Principles and Regulation S–
X would apply to the financial statements of both
TCLP and a registered investment company. Thus,
Applicants assert that critical accounting policies
governing security valuation, accounting for
investment transactions, recognition of investment
income and of expenses, and accrual of expenses,
which are often the critical policies applicable to
investment companies, would apply in
substantially the same manner for the financial
statements of TCLP. Valuation of the assets of TCLP
and TC REIT for which market quotations are not
readily available will be overseen by a committee
consisting of the employees and agents of TCLP,
TIAA and/or its subsidiaries (the ‘‘TCLP
Committee’’).
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experience by reason of the Funds’
investments in TCLP, the proposed
transactions are appropriate in the
public interest and consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Act.
Section 17(d)
9. Section 17(d) of the Act and rule
17d–1 under the Act generally prohibit
joint transactions involving registered
investment companies and their
affiliates unless the Commission has
approved the transaction. In considering
whether to approve a joint transaction
under rule 17d–1, the Commission
considers whether the proposed
transaction is consistent with the
provisions, policies, and purposes of the
Act, and the extent to which the
participation of the investment
companies is on a basis different from
or less advantageous than that of the
other participants.
10. Applicants state that the sale of
Units to a Fund, the Fund’s holding of
Units, the redemption of Units held by
the Fund, an Other Account’s purchase,
holding and redemption of Units
alongside a Fund, TCLP’s purchase,
holding and redemptions of interest in
the TC REIT, and Advisors’ management
of the Funds, Other Accounts, TCLP and
TC REIT at the same time that the Funds
are investing in TCLP (directly) and TC
REIT (indirectly) could be deemed to
constitute a joint enterprise or joint
arrangement among the Funds, Other
Accounts, TCLP, TCGP, TC REIT, and
Advisors because the Funds may be
presumed to be affiliated persons, or
affiliated persons of affiliated persons,
of Advisors, Other Accounts, TCLP or
TC REIT.
11. For the reasons discussed above,
Applicants submit that the proposed
transactions are consistent with the
provisions, policies and purposes of the
Act. Applicants further believe that,
based on the terms of the proposed
transactions and the conditions set forth
below, the participation by the Funds in
the proposed transactions would be on
a basis no different from that of other
Funds or Other Accounts or less
advantageous than that of other Funds,
Outside Investors or Other Accounts. A
Fund will hold Units of TCLP only if it
will at all times have identical rights,
duties and obligations under the limited
partnership agreement as each other
Fund limited partner and Other
Account limited partner. If Outside
Investors or Other Accounts are
permitted to invest in TCLP, the Funds
will be entitled to purchase, hold and
redeem Units on terms that are at least
as favorable, including (without
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limitation) the expenses associated with
an investment in TCLP, as the terms on
which any Outside Investor purchases,
holds or redeem Units and on terms that
are the same as the terms on which any
Other Account purchases, holds or
redeems Units. TCLP and the Tax
Holders will be the only investors in TC
REIT, and the Tax Holders’ interests
will be subject to the Tax Holder
Limitations. All transactions in Units
would be priced in the same manner
and would be redeemable under the
terms discussed herein and disclosed to
investors. In addition, any investment
by a Fund in TCLP would be subject to
oversight by the Fund’s Board.
Section 17(a)—Cross Transactions
12. Applicants also propose that the
Funds and Other Accounts be permitted
to engage in certain purchase and sale
cross transactions in securities (‘‘Cross
Transactions’’). Applicants expect that
these transactions will be between a
Fund seeking to implement a portfolio
strategy and an Other Account seeking
to raise or invest cash, or vice versa.
Applicants represent that the Funds
currently are able rely on rule 17a–7 to
engage in such Cross Transactions.
However, if a Fund and an Other
Account were deemed to be affiliated
persons of an affiliated person of each
other by virtue of their ownership or
control affiliations with TCLP, the
Funds may not be entitled to rely on
rule 17a–7 because they would no
longer be affiliated solely for the reasons
permitted by the rule. Applicants
represent that Funds and Other
Accounts will not engage in Cross
Transactions involving Units, and to the
extent any Future LPs are created, TCLP
and the Future LPs (and their respective
subsidiaries) will not engage in crosstrades with each other.
13. Applicants represent that, when
engaging in Cross Transactions, the
Funds and Other Accounts will comply
with the requirements set forth in rule
17a–(7)(a) through (g), as interpreted by
the Commission staff. Applicants assert
that the potential affiliations created by
the TCLP structure do not affect the
other protections provided by the rule,
including the integrity of the pricing
mechanism employed and oversight by
each Fund’s Board. Applicants also note
that no brokerage commission, fee or
other remuneration will be paid in
connection with the transactions.
Applicants, therefore, believe that Cross
Transactions will be reasonable and fair,
will not involve overreaching, and will
be consistent with the purposes of the
Act and the investment policy of each
Fund.
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55403
Applicants’ Conditions
Applicants agree that any order
granting the requested relief shall be
subject to the following conditions:
1. Advisors will not implement an
initial decision to invest the assets of a
Fund in TCLP unless prior to the Fund’s
initial investment in TCLP, the Board,
including a majority of the Independent
Trustees, has determined that: (a)
Investment in TCLP (and indirectly in
TC REIT) is an appropriate means to
implement an investment decision
made by Advisors for the Fund to seek
real estate exposure; (b) investment in
TCLP (and indirectly in TC REIT) is in
the best interests of the Fund and its
shareholders, taking into account,
among other things, the management
and administration fees of TCLP and TC
REIT; (c) the management and
administration fees to be charged by
TCLP and TC REIT are for services in
addition to, rather than duplicative of,
services rendered to the Fund directly;
and (d) the management and
administration fees to be charged by
TCLP and TC REIT are fair and
reasonable in light of the usual and
customary fees charged by others for
services of the same nature and quality.
The Board, including the Independent
Trustees, will review these
determinations on at least an annual
basis. The basis for each of the Board’s
determinations required by this
condition will be recorded in its
minutes. If the Board does not make the
determinations in clauses (c) and (d) in
a review subsequent to the initial
investment, Advisors will reimburse the
Fund the amount of any management
and administrative fee borne by the
Fund as a direct investor in TCLP and
an indirect investor in TC REIT charged
since the most recent date on which the
Board did make these determinations.
2. Prior to any initial or additional
investments in Units, Advisors will
determine that each Fund’s investment
in TCLP will be consistent with the
Fund’s investment policies, objective,
strategies and restrictions, and
purchases of Units will be determined
either by the Fund’s glide path or be
limited such that total holdings remain
within a range of permissible allocations
approved in advance by the Board. For
purposes of determining consistency
with a Fund’s investment policies,
objective, strategies and restrictions, a
Fund will look through its investment
in TCLP (and indirectly in TC REIT) and
apply its investment policies, objective,
strategies and restrictions (except for
any restriction relevant to the direct
ownership of real estate assets) in such
a manner that the Fund will not do
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indirectly through TCLP and TC REIT
that which it cannot do directly. For
purposes of applying its investment
policies, objective, strategies and
restrictions, a Fund will be considered
as owning its pro rata portion of the
portfolio holdings of TCLP and TC
REIT.
3. Each Fund that is an open-end
investment company will treat its entire
investments in TCLP and any Future
LPs as investments that are not liquid
for purposes of any applicable rules or
guidance of the Commission or its staff
regarding the management of liquidity.
For example, under current guidelines,
each such Fund must limit its aggregate
holdings of illiquid assets, which for
purposes of the requested relief include
any investments in TCLP and any
Future LPs, to 15% of its net assets. In
addition, each Fund, including any
open- or closed-end investment
company, will, at all times, limit its
holdings in TCLP (together with any
Future LPs) to no more than 15% of its
net assets.15
4. At all times that any Fund or other
registered investment company holds an
interest in TCLP, each of TCLP and TC
REIT: (a) Will determine its respective
net asset value per Unit or membership
interest, as applicable, each Business
Day; and (b) will maintain and comply
with policies and procedures for valuing
its assets that are consistent with section
2(a)(41) of the Act except that the TCLP
Committee will, in reliance on
independent appraisals obtained at least
quarterly, make determinations that
would otherwise be made by a board of
directors (as if TCLP and TC REIT were
subject to section 2(a)(41)) and with
applicable U.S. generally accepted
accounting principles (‘‘U.S. GAAP’’)
(or successor accounting standards). For
these purposes, ‘‘Business Day’’ means
each day on which the Funds or other
registered investment company
determine net asset value per share, as
disclosed in the Funds’ or other
registered investment company’s
registration statement.
5. A Fund will hold Units of TCLP
only if it will at all times have identical
rights, duties and obligations under the
limited partnership agreement as each
other Fund limited partner and Other
Account limited partner. If Other
Accounts or Outside Investors are
permitted to invest in TCLP, the Funds
will be entitled to purchase, hold and
15 Although closed-end Funds do not present the
same concerns with respect to liquidity as open-end
Funds, Applicants believe that it is nonetheless
appropriate to limit the investments of these Funds
in TCLP (and Future LPs) to address concerns that
may arise regarding complex structures and the use
of leverage, among other things.
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Jkt 235001
redeem Units on terms that are at least
as favorable, including (without
limitation) the expenses associated with
an investment in TCLP, as the terms on
which any Outside Investor purchases,
holds or redeems Units and on terms
that are the same as the terms on which
any Other Account purchases, holds or
redeems Units. Other than the Tax
Holders’ interests, which will be subject
to the Tax Holder Limitations, TCLP
will own at all times 100% of the voting
and economic interests in TC REIT.
6. TC REIT and TCLP will be managed
by an investment adviser that is
registered as an investment adviser with
the Commission. Any investment subadviser to TC REIT or TCLP will be
registered as an investment adviser with
the Commission or, if not registered,
will consent to examination by the
Commission staff with respect to the
services it would provide to TC REIT or
TCLP as if it were registered as an
investment adviser.
7. The Funds’ proposed investments
in TCLP, and TCLP’s investment in TC
REIT, will not be subject to any sales
load, redemption fee, distribution fee
analogous to a 12b–1 fee, or service fee
analogous to a FINRA Rule 2830 service
fee imposed by TCLP or TC REIT.
8. Advisors shall cause TCGP, TCLP
and TC REIT to maintain books and
records as is consistent with Internal
Revenue Service guidance and U.S.
GAAP, shall cause the books and
records of TCGP, TCLP and TC REIT to
be made available for inspection by the
Commission staff as would be required
by the Act if each of TCGP, TCLP and
TC REIT was a registered investment
company, and, if requested, shall
furnish copies of the books and records
to the Commission staff.
9. TCLP will prepare consolidated
annual and semi-annual financial
reports and, for each quarter for which
a semi-annual or annual report is not
required to be prepared, a consolidated
schedule of investments for TCLP. The
financial statements of TCLP will be
prepared in accordance with Regulation
S–X and U.S. GAAP, will be audited by
an independent auditor (for annual
financial statements), and, if practicable,
will be prepared as of the same date and
for the same periods as the investing
Funds. TCLP will consolidate TC REIT
for financial reporting purposes. Any
consolidated schedule of investments of
TCLP will disclose each position that
TCLP and TC REIT hold. The Trust, on
behalf of each Fund that has invested
5% or more of its net assets in TCLP 16
16 Investments in any Future LPs will be
aggregated with investments in TCLP to determine
whether a Fund has invested 5% or more of its net
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Fmt 4703
Sfmt 4703
as of the end of a reporting period, will
attach, as an exhibit to each of the
Trust’s shareholder reports with respect
to such a Fund filed on Form N–CSR
and each of the Trust’s quarterly reports
with respect to such a Fund filed on
Form N–Q, TCLP’s audited or unaudited
financial statements (which will consist
of financial statements, footnotes,
thereto and a schedule of investments)
or schedule of investments for the
period most recently ended. TCLP will
deliver such annual and semi-annual
financial statements and schedules of
investments to the Trust in time to
allow the Trust to make such filings.
The relevant Fund’s shareholder reports
and quarterly reports will crossreference the TCLP financial statements
(for annual and semi-annual reports) or
schedule of investments (for other
quarters) filed as an exhibit to the form.
If a Fund is required to attach and crossreference the financial statements of
TCLP solely for purpose of complying
with this condition 9, (a) the Fund may
disclaim that (i) the TCLP financial
statements or schedule of investments
constitute part of the Fund’s financial
statements, shareholder report or
quarterly report, and (ii) the TCLP
financial statements or schedule of
investments are incorporated therein by
reference, and (b) the certifications for
each principal executive and principal
financial officer required by rule 30a2(a) under the Act that accompany Form
N–CSR or Form N–Q filings with
respect to such a Fund may make clear
that the TCLP financial statements or
schedule of investments that accompany
the Form N–CSR or Form N–Q filings do
not constitute part of the report to
which the certificate relates.17
10. Neither TCLP nor TC REIT will
acquire securities of any other
investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
to the extent that TCLP or TC REIT: (a)
Receives securities of another
investment company as a dividend or as
a result of a plan of reorganization of a
company (other than a plan devised for
the purpose of evading section 12(d)(1)
of the Act); or (b) acquires (or is deemed
assets. If the aggregate investments are 5% or more,
then the disclosure requirements under this
condition will apply (for that Fund) with respect to
information about TCLP and each Future LP in
which that Fund is invested.
17 As noted above, the requested order does not
include relief from any existing disclosure
requirements. Accordingly, the disclaimer and
clarification contemplated in clauses (a) and (b)
could not be included if the Fund is required to
disclose information regarding the financial
statements of TCLP for any purpose other than
complying with this condition 9.
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to have acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting TCLP or TC REIT to (i)
acquire securities of one or more
investment companies for short-term
cash management purposes, or (ii)
engage in interfund borrowing and
lending transactions.
11. A Fund will treat any leverage that
TCLP or TC REIT incurs as though such
leverage were incurred by the Fund for
purposes of determining compliance
with applicable restrictions under the
Act relevant to the Fund’s use of
leverage. Under no circumstances will a
Fund guarantee, or otherwise be
responsible for the satisfaction of, any
loan or obligation incurred by TCLP or
TC REIT.
12. The TCLP and TC REIT will
comply with the following sections of
the Act as if the TCLP and TC REIT each
were an open-end management
investment company registered under
the Act, except as noted: Section 9;
section 12 (except that, to the extent
necessary to implement the
arrangements described herein, (i) the
Funds may invest in Units issued by
TCLP in accordance with condition 3,
(ii) TCLP may issue Units to the
investing Funds subject to the limits in
condition 3, and (iii) TCLP may invest
in TC REIT beyond the limits of sections
12(d)(1)(A) and (B)); section 13
(provided that section 13(a)(4) will
apply as though it read only ‘‘change the
nature of its business’’; the interests
issued by TCLP and TC REIT will be
regarded as voting securities under
section 2(a)(42) of the Act for purposes
of applying this condition; and the
offering memoranda utilized by TCLP
and TC REIT to offer and sell their
interests will be regarded as registration
statements for purposes of applying this
condition); section 17(a) (except insofar
as relief is provided by the order
requested herein); section 17(d) (except
insofar as relief is provided by the order
requested herein); section 17(e); section
17(f); section 17(h); section 18 (although
(a) the interests issued by TCLP and TC
REIT will be regarded as voting
securities under section 2(a)(42) of the
Act for purposes of applying this
condition, (b) TC REIT will be permitted
to incur loans from Non-bank
Commercial Lenders, subject to the asset
coverage limit, and (c) TC REIT will not
be required to restore 300% asset
coverage within three days, as required
under section 18(f), if such asset
coverage falls below 300% solely as a
result of a decline in the value of TC
REIT’s real estate holdings); section 21;
section 36; and sections 37–53. In
addition, the TCLP and TC REIT will
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Jkt 235001
comply with the rules under section
17(f) 18 and section 17(g) of the Act, as
well as rule 22c-1 under the Act as if
each of the TCLP and TC REIT were an
open-end management investment
company registered under the Act.
Advisors will cause TCGP, TCLP and
TC REIT to, and TCGP, TCLP and TC
REIT will, adopt policies and
procedures designed to ensure that each
of TCLP and TC REIT complies with the
aforementioned sections of the Act and
rules under the Act. Advisors will cause
TCGP, TCLP and TC REIT to, and TCGP,
TCLP and TC REIT will, periodically
review and periodically update as
appropriate such policies and
procedures, maintain books and records
describing such policies and
procedures, and maintain the records
required by rules 31a-1(b)(1), 31a1(b)(2)(ii) and 31a-1(b)(9) under the Act.
All books and records required to be
made pursuant to this condition will be
maintained and preserved for a period
of not less than six years from the end
of the fiscal year in which any
transaction occurs, the first two years in
an easily accessible place, and will be
subject to examination by the
Commission and its staff.
For purposes of implementing
condition 12, any action that the abovereferenced statutory and regulatory
provisions require to be taken or made
by the directors, officers and/or
employees of a registered investment
company will be performed by TCGP
with respect to TCLP, and by Advisors
(or its successor),19 as managing
member with respect to TC REIT. As
noted in this Application, the TCLP
Committee will oversee the valuation of
the assets of TCLP and TC REIT for
which market quotations are not readily
available, which also will be relevant to
the implementation of condition 12.
13. To engage in Cross Transactions,
the Funds will comply with rule 17a-7
under the Act in all respects other than
the requirement that the parties to the
transaction be affiliated persons (or
affiliated persons of affiliated persons)
of each other solely by reason of having
a common investment adviser or
investment advisers which are affiliated
persons of each other, common officers,
and/or common directors, solely
because a Fund and Other Account
might become affiliated persons within
the meaning of section 2(a)(3)(A), (B) or
(C) of the Act because of their
investments in TCLP.
18 Applicants note that they will operate TCLP
and TC REIT such that rules under section 17(f) will
not be applicable to either entity.
19 See supra, note 2.
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55405
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–23093 Filed 9–14–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Thursday, September 17, 2015 at 2
p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or her designee, has
certified that, in her opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matter at the Closed Meeting.
Commissioner Aguilar, as duty
officer, voted to consider the items
listed for the Closed Meeting in closed
session.
The subject matter of the Closed
Meeting will be:
Institution and settlement of
injunctive actions;
Institution and settlement of
administrative proceedings;
Opinion;
Post-Argument Discussion;
Resolution of litigation claims; and
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact the Office of the Secretary at
(202) 551–5400.
Dated: September 10, 2015.
Brent J. Fields,
Secretary.
[FR Doc. 2015–23221 Filed 9–11–15; 11:15 am]
BILLING CODE 8011–01–P
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[Federal Register Volume 80, Number 178 (Tuesday, September 15, 2015)]
[Notices]
[Pages 55399-55405]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23093]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31807; 812-13995]
TIAA-CREF Funds, et al.; Notice of Application
September 8, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order under sections 6(c) and
17(b) of the Investment Company Act of 1940 (``Act'') for exemptions
from section 17(a) of the Act, and under section 17(d) of the Act and
rule 17d-1 thereunder to permit certain joint transactions.
-----------------------------------------------------------------------
Summary of Application: Applicants requests an order that would permit
certain registered management investment companies or series thereof
that are advised by Teachers Advisors, Inc. (``Advisors'') to invest in
a private investment vehicle established by Advisors to invest directly
in real estate.
Applicants: TIAA-CREF Funds (the ``Trust''), Advisors, TIAA-CREF Real
Property Fund LP (``TCLP''), TIAA-CREF Real Property Fund GP LLC
(``TCGP''), and TIAA-CREF Real Property Fund REIT LLC (``TC REIT'').
Filing Dates: The application was filed on January 4, 2012, and amended
on June 25, 2012, December 3, 2012, October 16, 2013, June 26, 2014,
May 8, 2015, and September 4, 2015.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving Applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on October 5, 2015, and should be accompanied by proof of
service on Applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 of the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish
[[Page 55400]]
to be notified of a hearing may request notification by writing to the
Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549. Applicants: TIAA-CREF, Attn: Rachael
Zufall, 8500 Andrew Carnegie Boulevard, Charlotte, NC, 28262.
FOR FURTHER INFORMATION CONTACT: Mark N. Zaruba, Senior Counsel, at
(202) 551-6878, or David Bartels, Branch Chief, at (202) 551-6821
(Division of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Applicants' Representations
1. The Trust is organized as a Delaware statutory trust and is an
open-end management investment company registered under the Act. The
Trust currently consists of multiple Funds (as defined below).
2. TCLP is organized as a limited partnership, and applicants state
that it will rely on an exception from the definition of ``investment
company'' such as Section 3(c)(1) or Section 3(c)(7) of the Act (or any
other applicable exclusion). TCGP, the sole general partner of TCLP, is
organized as a limited liability company and will be a direct or
indirect wholly owned subsidiary of Teachers Insurance and Annuity
Association of America (``TIAA''). As general partner of TCLP, TCGP
will be responsible for the operational and administrative maintenance
of TCLP, but it will not exercise any responsibilities for the
management of TCLP's assets.
3. TC REIT is organized as a limited liability company, and
Applicants anticipate that it will be excluded from the definition of
``investment company'' under Section 3(a)(1) of the Act by reason of
its real estate investments. Applicants state that TC REIT will elect
to be taxed as a real estate investment trust (``REIT'') under the
Internal Revenue Code of 1986, as amended (the ``Code'') and will not
incur separate, entity level tax under the current provisions of the
Code.
4. Advisors, a Delaware corporation, is an investment adviser that
is registered with the Commission under the Investment Advisers Act of
1940, as amended (the ``Advisers Act''). Advisors is an indirect,
wholly owned subsidiary of TIAA. Advisors will be the investment
adviser to each of the Funds (as defined below), TCLP and TC REIT.\1\
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\1\ Only Advisors or a successor entity will serve as investment
adviser to TCLP or TC REIT, and any other investment adviser to TCLP
or TC REIT will serve only as investment sub-adviser.
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5. TIAA and Advisors believe that exposure to direct real estate
investments is an important element of diversified retirement
investing. Advisors seeks to provide shareholders who invest for
retirement and other long-term purposes through the Funds (as defined
below) with exposure to direct real estate. Applicants argue that
direct exposure to real estate offers advantages over investment in
conventional real estate mutual funds that invest primarily in publicly
traded REITs. In addition, Applicants note that, while the Act does not
preclude a registered management investment company from investing
directly in real estate (provided that the fund is not subject to a
fundamental policy precluding such investment and, in the case of an
open-end fund, has sufficient liquidity to comply with applicable
Commission and Commission staff positions), direct investment in real
estate would be impractical due to the typical size of such investments
and for tax reasons. Accordingly, applicants propose to allow each Fund
(solely to the extent consistent with its investment policies,
objectives, strategies and restrictions) to obtain exposure to real
estate through TCLP, which will be dedicated to investing indirectly in
real estate through TC REIT.
6. For this reason, Applicants request an order under sections 6(c)
and 17(b) of the Act for exemptions from section 17(a) of the Act, and
under section 17(d) of the Act and rule 17d-1 thereunder, to permit:
(i) One or more Funds (as defined below) to purchase, hold and redeem
units of limited partnership interests of TCLP (``Units''); (ii) TCLP
to sell Units to one or more Funds and redeem such Units following
demand of such Funds; (iii) to the extent it could be deemed an element
of a ``joint transaction,'' as defined below, TCLP to purchase, hold
and redeem interests in TC REIT; and (iv) the Funds and Other Accounts
(as defined below) to engage in certain purchase or sale cross
transactions in securities, all as described and subject to the
conditions set forth in the application.\2\
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\2\ Applicants acknowledge that they are not seeking, and the
Commission is not granting, relief from any disclosure requirements
that are applicable to Applicants.
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7. Applicants request that the relief extend to each existing or
future registered management investment company or series thereof that
is advised by Advisors or any successor entity or any entity
controlling, controlled by, or under common control with Advisors
(each, a ``Fund'').\3\ Applicants further request that the relief
extend to any future limited partnership (``Future LP''), general
partner thereof (``Future GP''), and underlying real estate investment
vehicle (``Future Real Estate Fund'') in which such Future LP invests
that has elected to be taxed as a REIT pursuant to the Code that
operate in a manner that is identical to TCLP, TCGP and TC REIT except
for the types of real estate investments held by a Future Real Estate
Fund.\4\
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\3\ Each entity that currently intends to rely on the requested
relief has been named as an applicant. For purposes of the requested
order, ``successor'' is limited to an entity that results from
reorganization into another jurisdiction or a change in the type of
business organization.
\4\ Any entity that relies in the future on the requested relief
will comply with the terms and conditions of the Application as they
apply to the corresponding current party.
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8. Applicants state that TC REIT will invest in direct real estate
holdings and, to maintain some liquidity, may invest a portion of its
assets in liquid investments. To finance its investments in real estate
holdings, TC REIT plans to borrow from banks, as well as from insurance
companies, pension/retirement systems, state and federal government
related entities (e.g., Freddie Mac), investment banks, and other
commercial lenders (e.g., GE Capital Corporation (or its successor),
Ally Financial) (lenders other than banks are referred to as ``Non-bank
Commercial Lenders''). Applicants represent that TC REIT plans to incur
loans from Non-bank Commercial Lenders because such lenders have been
longstanding capital resources to the commercial real estate market and
often are able to offer more favorable lending terms to borrowers.\5\
TC REIT will not incur any loans that are callable at the option of the
lender.
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\5\ Applicants submit that, in light of the presence of a bona
fide business purpose for TCLP and TC REIT and the difficulty a Fund
would have in directly investing in real estate, the structure
proposed by this Application can be distinguished from a structure
intended primarily to evade leverage restrictions applicable to
open-end funds.
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9. Applicants state that TCLP will invest a substantial portion of
its assets in TC REIT and, if deemed appropriate by Advisors, may, for
purposes of maintaining some liquidity, invest a portion of its assets
in liquid investments. TCLP will incur expenses relating to the
management of any liquid investments held by TCLP, as well as for
[[Page 55401]]
the general operation and administration of the entity.\6\
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\6\ Applicants anticipate that TCLP will be able to efficiently
deploy assets invested by the Funds in light of the ability of TCLP
to invest in liquid investments in addition to interests in TC REIT,
so that any Fund assets invested in TCLP that are not currently
invested in real estate will be effectively deployed pending
completion of real estate investments. The performance of TCLP, the
costs of investing in TCLP, and the related expenses, will be
considered by the Funds' Board during the course of its oversight of
the Funds' investments in TCLP, including its annual determinations
as required by condition 1 below.
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10. TCLP will conduct a non-public offering of its Units, and will
not be publicly traded. Applicants state that TCLP is currently
expected to be made available solely to the Funds, although it is
possible that it will be made available in the future to: (i)
Unaffiliated registered investment companies, pension plans, other
institutional investors or high-net-worth individuals (``Outside
Investors''); as well as to (ii) pension plans, or other institutional
investors or high-net-worth individuals for which Advisors or an
affiliate of Advisors serves as investment adviser (``Other
Accounts'').\7\
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\7\ No Applicant, or an affiliated person thereof, will have a
proprietary interest in any Outside Investor or Other Account,
except that an Applicant or an affiliated person thereof may be a
shareholder of an Outside Investor that is a registered investment
company.
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11. Applicants state that the Funds (as well as any Other Accounts
or Outside Investors) that invest in TCLP will be able to purchase and
redeem Units on a daily basis at the next determined net asset value
(``NAV'') per Unit. In the event that TCLP is unable to accommodate
investment demand from the Funds, Other Accounts and/or Outside
Investors, opportunities for investment will be allocated in accordance
with allocation policies and procedures drafted and maintained by
Advisors.\8\ Applicants represent that, while such allocation policies
and procedures may be subject to revision over time, the allocation
policies and procedures generally will allocate opportunities on a pro
rata basis based on orders received, with normal exceptions for
rounding and de minimis amounts, although applicants state that other
allocation methodologies may be employed as appropriate. Any such
methodology will be applied in a manner that is objective and
verifiable and will be consistent with Advisors' fiduciary obligation
to treat client accounts in a manner that is fair and provides for
equality of opportunity over time. However, TCLP will reserve the right
to give the Funds preferential access to opportunities to invest in
TCLP as compared to Outside Investors and (to the extent permitted
under the allocation policies and procedures) Other Accounts, and the
Funds will always have opportunities to invest in TCLP that are at
least as favorable as the opportunities to invest in TCLP made
available to Other Accounts or Outside Investors. The policies and
procedures will require the documentation of the basis of allocation,
as well as the basis for any exception to the general principles set
forth in the policies and procedures, which exception will be subject
to review by legal or compliance personnel.
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\8\ Applicants are not seeking any comfort and acknowledge that
the Commission is providing no opinion on whether these allocation
policies and procedures meet the standards applicable under either
the Act or the Advisers Act.
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12. Applicants anticipate that TCLP will be managed to maintain
sufficient liquidity to satisfy the daily liquidity needs of its
limited partners under ordinary market conditions. However, any
investment in TCLP will be subject to terms permitting TCLP, under
circumstances described in the application, to (a) cease offering new
Units; (b) limit or postpone redemptions in the event that TC REIT has
insufficient liquidity to satisfy redemption requests; or (c) utilize a
``gate'' pursuant to which the amount of redemptions from TCLP by any
limited partner on any business day may be limited to a percentage of
the limited partner's investment in TCLP.\9\ Accordingly, each Fund
that is an open-end investment company will treat its investments in
TCLP and any Future LPs as investments that are not liquid for purposes
of any applicable rules or guidance of the Commission or its staff
regarding the management of liquidity. Similarly, each Fund that is a
closed-end investment company will, at all times, limit its holdings in
TCLP (together with any Future LPs) to no more than 15% of its net
assets.\10\
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\9\ TCLP expects that the ability to limit or postpone
redemption will help to minimize transaction costs and any dilutive
effects on non-redeeming limited partners. TCLP's ability to limit
or postpone redemption and the circumstances under which TCLP may
waive an established redemption gate, in whole or in part, are
discussed in greater detail in the application.
\10\ Applicants submit that, although closed-end Funds do not
present the same concerns with respect to liquidity as open-end
Funds, it is nonetheless appropriate to limit the investments of
these Funds in TCLP (and Future LPs) to address concerns that may
arise regarding complex structures and the use of leverage, among
other things.
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13. Redemption requests will be considered on a first in basis
based upon the business day of receipt, unless a limited partner (other
than a registered investment company or Other Account) has agreed to a
lower priority of redemption. Except as a limited partner (other than a
registered investment company or Other Account) has otherwise agreed,
redemption requests of all investors will be treated equally, and TCLP
will allocate redemption proceeds on a pro rata basis in the event that
there are insufficient liquid assets to satisfy fully all redemption
requests. The rules on redemption and TCLP's policy regarding the
allocation of redemption proceeds, and any changes to either of these,
will be disclosed to all prospective investors in TCLP. TCLP will have
a written policy regarding the allocation of redemption proceeds that
will be applied in a manner that is objective and verifiable and will
be consistent with Advisors' fiduciary obligation to treat client
accounts in a manner that is fair.
14. Each Fund and Other Account limited partner of TCLP will have
identical rights, duties and obligations under the limited partnership
agreement as each other Fund and Other Account limited partner. If
Outside Investors are permitted to invest in TCLP, the Funds and Other
Accounts will be entitled to purchase, hold and redeem Units on terms
that are at least as favorable, including (without limitation) the
expenses associated with an investment in TCLP, as the terms on which
any Outside Investor purchases, holds or redeems Units. Limited
partners other than the Funds and Other Accounts will have
substantially similar rights, duties and obligations as the Funds and
Other Accounts, but Applicants currently contemplate that they may
distinguish among Outside Investors with respect to rights, duties and
obligations pursuant to the terms of the limited partnership agreement,
or otherwise, with respect to the following issues (without
limitation): (a) Utilization of redemption gates; (b) limitation of
rights of redemption; or (c) the level of expenses charged to limited
partners other than the Funds and Other Accounts in connection with an
investment in TCLP, which may be higher than the level of expenses
borne by the Funds and Other Accounts.
15. TCLP will be able to purchase and redeem limited liability
company interests in TC REIT on a daily basis at the next determined
NAV. Applicants represent that TCLP will be the sole investor in TC
REIT, other than the ninety-nine or more additional investors necessary
or appropriate to allow TC REIT to qualify as a REIT under section
856(a)(5) of the Code (the ``Tax Holders''). The Tax Holders' interests
in TC REIT will be preferred to TCLP's interests in TC REIT. However,
(a) the Tax Holders will have only limited
[[Page 55402]]
voting rights, (b) the Tax Holders' aggregate interests in TC REIT will
be de minimis in relation to that of TCLP,\11\ and (c) TC REIT will not
issue additional interests to the Tax Holders after the initial
organization of TC REIT (clause (a), (b), and (c), collectively, the
``Tax Holder Limitations'').\12\ Accordingly, it is anticipated that
TCLP will own substantially all of the total outstanding securities of
TC REIT at all times during the operation of TC REIT.
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\11\ Applicants anticipate that the Tax Holders will invest, in
aggregate, approximately $125,000 and will represent much less than
1% of the expected aggregate net assets of TC REIT.
\12\ The Tax Holders' interests in TC REIT and the Tax Holder
Limitations are discussed in greater detail in the application.
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16. Applicants represent that TC REIT will not participate in any
joint enterprise or other joint arrangement, within the meaning of rule
17d-1 under the Act, with the Future Real Estate Funds or other TIAA
related accounts, and the Applicants are not asking for an order
pursuant to rule 17d-1 with respect to any such transaction. Further,
Applicants state that TIAA has adopted policies and procedures
applicable to any purchasing conflicts between TC REIT and any other
TIAA related accounts, which are designed to allocate opportunities
consistent with Advisors' fiduciary obligations to its clients and will
be applied in a manner that is objective and verifiable.
Applicants' Legal Analysis
Section 17(a)--Purchase and Sale of Units
1. Section 17(a) of the Act generally prohibits an ``affiliated
person'' as defined by section 2(a)(3) of the Act, or an affiliated
person of an affiliated person, of a registered investment company,
acting as principal, from purchasing securities or other property from
the registered investment company or selling securities or other
property to the registered investment company. Section 2(a)(3) of the
Act defines an ``affiliated person'' of another person to include,
among others, (a) any person directly or indirectly owning,
controlling, or holding with power to vote, 5% or more of the
outstanding voting securities of the other person; (b) any person 5% or
more of whose outstanding voting securities are directly or indirectly
owned, controlled, or held with the power to vote by the other person;
and (c) any person directly or indirectly controlling, controlled by,
or under common control with the other person. Section 2(a)(9) defines
``control'' to mean ``the power to exercise a controlling influence
over the management or policies of a company, unless such power is
solely the result of an official position with such company.''
2. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
the terms of the proposed transaction, including the consideration to
be paid or received, are fair and reasonable and do not involve
overreaching on the part of any person concerned, and the proposed
transaction is consistent with the policies of each registered
investment company involved and with the general purposes of the Act.
Section 6(c) of the Act permits the Commission to exempt any person or
transactions from any provisions of the Act if such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act.
3. Applicants state that the sale by TCLP of its Units to a Fund or
the repurchase by TCLP of its Units from a Fund may be deemed to be
prohibited by section 17(a) of the Act, as TCLP and each Fund may be
deemed to be affiliated persons, or affiliated persons of affiliated
persons, of each other under multiple theories. For example, the Fund
may be deemed to be an affiliated person of TCLP in the event that it
owns 5% or more of the Units in TCLP. In addition, TCLP could be deemed
to be an affiliated person of an affiliated person of the Fund, if it
is deemed to be under the control of or under common control with
Advisors.
4. Applicants believe that the proposed transactions among the
Funds and TCLP satisfy the requirements for relief from section 17(a)
of the Act under both sections 17(b) and 6(c) of the Act.
5. Applicants submit that the proposed transactions are reasonable
and fair and would not involve overreaching on the part of any person
concerned. Before investment by a Fund in TCLP, the Fund's board of
trustees (the ``Board''), including a majority of the Independent
Trustees, would have made the determinations required under condition 1
below.\13\ The Board, including the Independent Trustees, will review
these determinations on at least an annual basis. Applicants represent
that, currently, the Board is made up of ten trustees, all of whom are
Independent Trustees. Further, Applicants notes that Advisors' ability
to allocate a Fund's assets to investments in TCLP would be limited to
address any potential for overreaching because (a) the allocation would
be determined either by the Fund's glide path or would be within a
range of permissible allocations approved in advance by the Board and
(b) the Fund's investment would be limited under condition 3 below.
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\13\ The ``Independent Trustees'' are the trustees who are not
interested persons of the Trust within the meaning of section
2(a)(19) of the Act.
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6. In addition, Applicants state that each Fund would purchase and
sell Units on the same terms as each other Fund and any Other Account,
and on terms that are at least as favorable as the terms on which
Outside Investors would purchase and sell Units. TCLP also would sell
its shares to or purchase its shares from a Fund at the next-calculated
NAV per Unit. This value, which would be provided to the Funds on a
daily basis, would be determined based on the valuations of the assets
of TC REIT, which would be determined by using valuation methodologies
that are consistent with section 2(a)(41) of the Act except that the
TCLP Committee will, in reliance on independent appraisals obtained at
least quarterly, make determinations that would otherwise be made by a
board of directors.\14\
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\14\ Applicants note that, in accordance with condition 9, TCLP
will consolidate TC REIT for reporting purposes and the consolidated
financial statements of TCLP will be prepared in accordance with
Regulation S-X, will be audited by an independent auditor, and, if
practicable, will be prepared as of the same date and for the same
periods as the investing Funds. Applicants state that the Public
Company Accounting Oversight Board auditing standards applicable to
the audit of TCLP would be the same standards as those applicable to
a registered investment company. Further, Applicants state that the
U.S. Generally Accepted Accounting Principles and Regulation S-X
would apply to the financial statements of both TCLP and a
registered investment company. Thus, Applicants assert that critical
accounting policies governing security valuation, accounting for
investment transactions, recognition of investment income and of
expenses, and accrual of expenses, which are often the critical
policies applicable to investment companies, would apply in
substantially the same manner for the financial statements of TCLP.
Valuation of the assets of TCLP and TC REIT for which market
quotations are not readily available will be overseen by a committee
consisting of the employees and agents of TCLP, TIAA and/or its
subsidiaries (the ``TCLP Committee'').
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7. Applicants further submit that the proposed transactions would
be consistent with the policies of each Fund. Applicants represent that
the investment by a Fund in TCLP would be effected in accordance with
the investment policies, objective, strategies and restrictions
contained in the registration statement of the Fund.
8. Finally, Applicants submit that, for these reasons, as well as
the benefits shareholders in the Funds would
[[Page 55403]]
experience by reason of the Funds' investments in TCLP, the proposed
transactions are appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the Act.
Section 17(d)
9. Section 17(d) of the Act and rule 17d-1 under the Act generally
prohibit joint transactions involving registered investment companies
and their affiliates unless the Commission has approved the
transaction. In considering whether to approve a joint transaction
under rule 17d-1, the Commission considers whether the proposed
transaction is consistent with the provisions, policies, and purposes
of the Act, and the extent to which the participation of the investment
companies is on a basis different from or less advantageous than that
of the other participants.
10. Applicants state that the sale of Units to a Fund, the Fund's
holding of Units, the redemption of Units held by the Fund, an Other
Account's purchase, holding and redemption of Units alongside a Fund,
TCLP's purchase, holding and redemptions of interest in the TC REIT,
and Advisors' management of the Funds, Other Accounts, TCLP and TC REIT
at the same time that the Funds are investing in TCLP (directly) and TC
REIT (indirectly) could be deemed to constitute a joint enterprise or
joint arrangement among the Funds, Other Accounts, TCLP, TCGP, TC REIT,
and Advisors because the Funds may be presumed to be affiliated
persons, or affiliated persons of affiliated persons, of Advisors,
Other Accounts, TCLP or TC REIT.
11. For the reasons discussed above, Applicants submit that the
proposed transactions are consistent with the provisions, policies and
purposes of the Act. Applicants further believe that, based on the
terms of the proposed transactions and the conditions set forth below,
the participation by the Funds in the proposed transactions would be on
a basis no different from that of other Funds or Other Accounts or less
advantageous than that of other Funds, Outside Investors or Other
Accounts. A Fund will hold Units of TCLP only if it will at all times
have identical rights, duties and obligations under the limited
partnership agreement as each other Fund limited partner and Other
Account limited partner. If Outside Investors or Other Accounts are
permitted to invest in TCLP, the Funds will be entitled to purchase,
hold and redeem Units on terms that are at least as favorable,
including (without limitation) the expenses associated with an
investment in TCLP, as the terms on which any Outside Investor
purchases, holds or redeem Units and on terms that are the same as the
terms on which any Other Account purchases, holds or redeems Units.
TCLP and the Tax Holders will be the only investors in TC REIT, and the
Tax Holders' interests will be subject to the Tax Holder Limitations.
All transactions in Units would be priced in the same manner and would
be redeemable under the terms discussed herein and disclosed to
investors. In addition, any investment by a Fund in TCLP would be
subject to oversight by the Fund's Board.
Section 17(a)--Cross Transactions
12. Applicants also propose that the Funds and Other Accounts be
permitted to engage in certain purchase and sale cross transactions in
securities (``Cross Transactions''). Applicants expect that these
transactions will be between a Fund seeking to implement a portfolio
strategy and an Other Account seeking to raise or invest cash, or vice
versa. Applicants represent that the Funds currently are able rely on
rule 17a-7 to engage in such Cross Transactions. However, if a Fund and
an Other Account were deemed to be affiliated persons of an affiliated
person of each other by virtue of their ownership or control
affiliations with TCLP, the Funds may not be entitled to rely on rule
17a-7 because they would no longer be affiliated solely for the reasons
permitted by the rule. Applicants represent that Funds and Other
Accounts will not engage in Cross Transactions involving Units, and to
the extent any Future LPs are created, TCLP and the Future LPs (and
their respective subsidiaries) will not engage in cross-trades with
each other.
13. Applicants represent that, when engaging in Cross Transactions,
the Funds and Other Accounts will comply with the requirements set
forth in rule 17a-(7)(a) through (g), as interpreted by the Commission
staff. Applicants assert that the potential affiliations created by the
TCLP structure do not affect the other protections provided by the
rule, including the integrity of the pricing mechanism employed and
oversight by each Fund's Board. Applicants also note that no brokerage
commission, fee or other remuneration will be paid in connection with
the transactions. Applicants, therefore, believe that Cross
Transactions will be reasonable and fair, will not involve
overreaching, and will be consistent with the purposes of the Act and
the investment policy of each Fund.
Applicants' Conditions
Applicants agree that any order granting the requested relief shall
be subject to the following conditions:
1. Advisors will not implement an initial decision to invest the
assets of a Fund in TCLP unless prior to the Fund's initial investment
in TCLP, the Board, including a majority of the Independent Trustees,
has determined that: (a) Investment in TCLP (and indirectly in TC REIT)
is an appropriate means to implement an investment decision made by
Advisors for the Fund to seek real estate exposure; (b) investment in
TCLP (and indirectly in TC REIT) is in the best interests of the Fund
and its shareholders, taking into account, among other things, the
management and administration fees of TCLP and TC REIT; (c) the
management and administration fees to be charged by TCLP and TC REIT
are for services in addition to, rather than duplicative of, services
rendered to the Fund directly; and (d) the management and
administration fees to be charged by TCLP and TC REIT are fair and
reasonable in light of the usual and customary fees charged by others
for services of the same nature and quality. The Board, including the
Independent Trustees, will review these determinations on at least an
annual basis. The basis for each of the Board's determinations required
by this condition will be recorded in its minutes. If the Board does
not make the determinations in clauses (c) and (d) in a review
subsequent to the initial investment, Advisors will reimburse the Fund
the amount of any management and administrative fee borne by the Fund
as a direct investor in TCLP and an indirect investor in TC REIT
charged since the most recent date on which the Board did make these
determinations.
2. Prior to any initial or additional investments in Units,
Advisors will determine that each Fund's investment in TCLP will be
consistent with the Fund's investment policies, objective, strategies
and restrictions, and purchases of Units will be determined either by
the Fund's glide path or be limited such that total holdings remain
within a range of permissible allocations approved in advance by the
Board. For purposes of determining consistency with a Fund's investment
policies, objective, strategies and restrictions, a Fund will look
through its investment in TCLP (and indirectly in TC REIT) and apply
its investment policies, objective, strategies and restrictions (except
for any restriction relevant to the direct ownership of real estate
assets) in such a manner that the Fund will not do
[[Page 55404]]
indirectly through TCLP and TC REIT that which it cannot do directly.
For purposes of applying its investment policies, objective, strategies
and restrictions, a Fund will be considered as owning its pro rata
portion of the portfolio holdings of TCLP and TC REIT.
3. Each Fund that is an open-end investment company will treat its
entire investments in TCLP and any Future LPs as investments that are
not liquid for purposes of any applicable rules or guidance of the
Commission or its staff regarding the management of liquidity. For
example, under current guidelines, each such Fund must limit its
aggregate holdings of illiquid assets, which for purposes of the
requested relief include any investments in TCLP and any Future LPs, to
15% of its net assets. In addition, each Fund, including any open- or
closed-end investment company, will, at all times, limit its holdings
in TCLP (together with any Future LPs) to no more than 15% of its net
assets.\15\
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\15\ Although closed-end Funds do not present the same concerns
with respect to liquidity as open-end Funds, Applicants believe that
it is nonetheless appropriate to limit the investments of these
Funds in TCLP (and Future LPs) to address concerns that may arise
regarding complex structures and the use of leverage, among other
things.
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4. At all times that any Fund or other registered investment
company holds an interest in TCLP, each of TCLP and TC REIT: (a) Will
determine its respective net asset value per Unit or membership
interest, as applicable, each Business Day; and (b) will maintain and
comply with policies and procedures for valuing its assets that are
consistent with section 2(a)(41) of the Act except that the TCLP
Committee will, in reliance on independent appraisals obtained at least
quarterly, make determinations that would otherwise be made by a board
of directors (as if TCLP and TC REIT were subject to section 2(a)(41))
and with applicable U.S. generally accepted accounting principles
(``U.S. GAAP'') (or successor accounting standards). For these
purposes, ``Business Day'' means each day on which the Funds or other
registered investment company determine net asset value per share, as
disclosed in the Funds' or other registered investment company's
registration statement.
5. A Fund will hold Units of TCLP only if it will at all times have
identical rights, duties and obligations under the limited partnership
agreement as each other Fund limited partner and Other Account limited
partner. If Other Accounts or Outside Investors are permitted to invest
in TCLP, the Funds will be entitled to purchase, hold and redeem Units
on terms that are at least as favorable, including (without limitation)
the expenses associated with an investment in TCLP, as the terms on
which any Outside Investor purchases, holds or redeems Units and on
terms that are the same as the terms on which any Other Account
purchases, holds or redeems Units. Other than the Tax Holders'
interests, which will be subject to the Tax Holder Limitations, TCLP
will own at all times 100% of the voting and economic interests in TC
REIT.
6. TC REIT and TCLP will be managed by an investment adviser that
is registered as an investment adviser with the Commission. Any
investment sub-adviser to TC REIT or TCLP will be registered as an
investment adviser with the Commission or, if not registered, will
consent to examination by the Commission staff with respect to the
services it would provide to TC REIT or TCLP as if it were registered
as an investment adviser.
7. The Funds' proposed investments in TCLP, and TCLP's investment
in TC REIT, will not be subject to any sales load, redemption fee,
distribution fee analogous to a 12b-1 fee, or service fee analogous to
a FINRA Rule 2830 service fee imposed by TCLP or TC REIT.
8. Advisors shall cause TCGP, TCLP and TC REIT to maintain books
and records as is consistent with Internal Revenue Service guidance and
U.S. GAAP, shall cause the books and records of TCGP, TCLP and TC REIT
to be made available for inspection by the Commission staff as would be
required by the Act if each of TCGP, TCLP and TC REIT was a registered
investment company, and, if requested, shall furnish copies of the
books and records to the Commission staff.
9. TCLP will prepare consolidated annual and semi-annual financial
reports and, for each quarter for which a semi-annual or annual report
is not required to be prepared, a consolidated schedule of investments
for TCLP. The financial statements of TCLP will be prepared in
accordance with Regulation S-X and U.S. GAAP, will be audited by an
independent auditor (for annual financial statements), and, if
practicable, will be prepared as of the same date and for the same
periods as the investing Funds. TCLP will consolidate TC REIT for
financial reporting purposes. Any consolidated schedule of investments
of TCLP will disclose each position that TCLP and TC REIT hold. The
Trust, on behalf of each Fund that has invested 5% or more of its net
assets in TCLP \16\ as of the end of a reporting period, will attach,
as an exhibit to each of the Trust's shareholder reports with respect
to such a Fund filed on Form N-CSR and each of the Trust's quarterly
reports with respect to such a Fund filed on Form N-Q, TCLP's audited
or unaudited financial statements (which will consist of financial
statements, footnotes, thereto and a schedule of investments) or
schedule of investments for the period most recently ended. TCLP will
deliver such annual and semi-annual financial statements and schedules
of investments to the Trust in time to allow the Trust to make such
filings. The relevant Fund's shareholder reports and quarterly reports
will cross-reference the TCLP financial statements (for annual and
semi-annual reports) or schedule of investments (for other quarters)
filed as an exhibit to the form. If a Fund is required to attach and
cross-reference the financial statements of TCLP solely for purpose of
complying with this condition 9, (a) the Fund may disclaim that (i) the
TCLP financial statements or schedule of investments constitute part of
the Fund's financial statements, shareholder report or quarterly
report, and (ii) the TCLP financial statements or schedule of
investments are incorporated therein by reference, and (b) the
certifications for each principal executive and principal financial
officer required by rule 30a-2(a) under the Act that accompany Form N-
CSR or Form N-Q filings with respect to such a Fund may make clear that
the TCLP financial statements or schedule of investments that accompany
the Form N-CSR or Form N-Q filings do not constitute part of the report
to which the certificate relates.\17\
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\16\ Investments in any Future LPs will be aggregated with
investments in TCLP to determine whether a Fund has invested 5% or
more of its net assets. If the aggregate investments are 5% or more,
then the disclosure requirements under this condition will apply
(for that Fund) with respect to information about TCLP and each
Future LP in which that Fund is invested.
\17\ As noted above, the requested order does not include relief
from any existing disclosure requirements. Accordingly, the
disclaimer and clarification contemplated in clauses (a) and (b)
could not be included if the Fund is required to disclose
information regarding the financial statements of TCLP for any
purpose other than complying with this condition 9.
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10. Neither TCLP nor TC REIT will acquire securities of any other
investment company or company relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained in section 12(d)(1)(A) of the
Act, except to the extent that TCLP or TC REIT: (a) Receives securities
of another investment company as a dividend or as a result of a plan of
reorganization of a company (other than a plan devised for the purpose
of evading section 12(d)(1) of the Act); or (b) acquires (or is deemed
[[Page 55405]]
to have acquired) securities of another investment company pursuant to
exemptive relief from the Commission permitting TCLP or TC REIT to (i)
acquire securities of one or more investment companies for short-term
cash management purposes, or (ii) engage in interfund borrowing and
lending transactions.
11. A Fund will treat any leverage that TCLP or TC REIT incurs as
though such leverage were incurred by the Fund for purposes of
determining compliance with applicable restrictions under the Act
relevant to the Fund's use of leverage. Under no circumstances will a
Fund guarantee, or otherwise be responsible for the satisfaction of,
any loan or obligation incurred by TCLP or TC REIT.
12. The TCLP and TC REIT will comply with the following sections of
the Act as if the TCLP and TC REIT each were an open-end management
investment company registered under the Act, except as noted: Section
9; section 12 (except that, to the extent necessary to implement the
arrangements described herein, (i) the Funds may invest in Units issued
by TCLP in accordance with condition 3, (ii) TCLP may issue Units to
the investing Funds subject to the limits in condition 3, and (iii)
TCLP may invest in TC REIT beyond the limits of sections 12(d)(1)(A)
and (B)); section 13 (provided that section 13(a)(4) will apply as
though it read only ``change the nature of its business''; the
interests issued by TCLP and TC REIT will be regarded as voting
securities under section 2(a)(42) of the Act for purposes of applying
this condition; and the offering memoranda utilized by TCLP and TC REIT
to offer and sell their interests will be regarded as registration
statements for purposes of applying this condition); section 17(a)
(except insofar as relief is provided by the order requested herein);
section 17(d) (except insofar as relief is provided by the order
requested herein); section 17(e); section 17(f); section 17(h); section
18 (although (a) the interests issued by TCLP and TC REIT will be
regarded as voting securities under section 2(a)(42) of the Act for
purposes of applying this condition, (b) TC REIT will be permitted to
incur loans from Non-bank Commercial Lenders, subject to the asset
coverage limit, and (c) TC REIT will not be required to restore 300%
asset coverage within three days, as required under section 18(f), if
such asset coverage falls below 300% solely as a result of a decline in
the value of TC REIT's real estate holdings); section 21; section 36;
and sections 37-53. In addition, the TCLP and TC REIT will comply with
the rules under section 17(f) \18\ and section 17(g) of the Act, as
well as rule 22c-1 under the Act as if each of the TCLP and TC REIT
were an open-end management investment company registered under the
Act.
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\18\ Applicants note that they will operate TCLP and TC REIT
such that rules under section 17(f) will not be applicable to either
entity.
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Advisors will cause TCGP, TCLP and TC REIT to, and TCGP, TCLP and
TC REIT will, adopt policies and procedures designed to ensure that
each of TCLP and TC REIT complies with the aforementioned sections of
the Act and rules under the Act. Advisors will cause TCGP, TCLP and TC
REIT to, and TCGP, TCLP and TC REIT will, periodically review and
periodically update as appropriate such policies and procedures,
maintain books and records describing such policies and procedures, and
maintain the records required by rules 31a-1(b)(1), 31a-1(b)(2)(ii) and
31a-1(b)(9) under the Act. All books and records required to be made
pursuant to this condition will be maintained and preserved for a
period of not less than six years from the end of the fiscal year in
which any transaction occurs, the first two years in an easily
accessible place, and will be subject to examination by the Commission
and its staff.
For purposes of implementing condition 12, any action that the
above-referenced statutory and regulatory provisions require to be
taken or made by the directors, officers and/or employees of a
registered investment company will be performed by TCGP with respect to
TCLP, and by Advisors (or its successor),\19\ as managing member with
respect to TC REIT. As noted in this Application, the TCLP Committee
will oversee the valuation of the assets of TCLP and TC REIT for which
market quotations are not readily available, which also will be
relevant to the implementation of condition 12.
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\19\ See supra, note 2.
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13. To engage in Cross Transactions, the Funds will comply with
rule 17a-7 under the Act in all respects other than the requirement
that the parties to the transaction be affiliated persons (or
affiliated persons of affiliated persons) of each other solely by
reason of having a common investment adviser or investment advisers
which are affiliated persons of each other, common officers, and/or
common directors, solely because a Fund and Other Account might become
affiliated persons within the meaning of section 2(a)(3)(A), (B) or (C)
of the Act because of their investments in TCLP.
For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-23093 Filed 9-14-15; 8:45 am]
BILLING CODE 8011-01-P
