California Code of Regulations
Title 10 - Investment
Chapter 3 - Commissioner of Financial Protection and Innovation
Subchapter 2 - Corporate Securities
Article 4 - Standards for the Exercise of the Commissioner's Authority
Subarticle 9 - Real Estate Investment Trusts
Section 260.140.93 - Investments and Activities

(a) Invest in commodities or commodity future contracts.

(b) Invest more than 10% of its total assets in unimproved real property or indebtedness secured by a deed of trust or mortgage loans on unimproved real property.

(c) Invest in indebtedness (herein called "junior debt") secured by a mortgage on real property which is subordinate to the lien of other indebtedness (herein called "senior debt"), except where the amount of such junior debt, plus the outstanding amount of the senior debt, does not exceed 90% of the appraised value of such property, if after giving effect thereto, the value of all such investments of the trust (as shown on the books of the trust in accordance with generally accepted accounting principles after all reasonable reserves but before provision for depreciation) would not then exceed 25% of trust tangible assets. The value of all investments in junior debt of the trust which does not meet the aforementioned requirements would be limited to 10% of the trust's tangible assets (which would be included within the 25% limitation).

(d) Invest in contracts for the sale of real estate.

(e) Engage in any short sale, or borrow, on an unsecured basis, if such borrowing will result in an asset coverage of less than 300%, except that such borrowing limitation shall not apply to a first mortgage trust. "Asset coverage," for the purpose of this section, means the ratio which the value of the total assets of an issuer, less all liabilities and indebtedness except indebtedness for unsecured borrowings, bears to the aggregate amount of all unsecured borrowings of such issuer.

(f) Engage in trading, as compared with investment activities.

(g) Acquire securities in any company holding investments or engaging in activities prohibited by this section.

(h) Engage in underwriting or the agency distribution of securities issued by others.