Alaska Administrative Code › Title 3 - Commerce, Community, and Economic Development › Part 1 - Banking, Securities, Small Loans and Corporations › Chapter 08 - Securities › Article 2 - Registration and Notice of Securities › 3 AAC 08.200 - Real estate investment trusts

Current through May 31, 2024
(a) The
				  administrator will, in the administrator's discretion, determine that an
				  offering or sale of securities in an issuer that qualifies as a real estate
				  investment trust under 26
				  U.S.C. 856 and
				  858 (Internal Revenue Code) does
				  not protect investors and is not in the public interest, unless that trust's
				  declaration of trust or other organizational instrument contains provisions
				  that satisfy the following minimum conditions:
(1) a majority of the trustees may not be
				  affiliated with the adviser of the trust or any organization affiliated with
				  the adviser of the trust; the trustees must be elected by the shareholders of
				  the trust annually;
(2) self
				  dealing must be restricted as follows:
(A) a
				  trustee, officer, or adviser of the trust, or any person affiliated with that
				  person may not, directly or indirectly, sell property or assets to the trust,
				  purchase property or assets from the trust, or receive a commission or other
				  remuneration in connection with the purchase or sale of trust assets, except
				  under transactions that are fair and reasonable to the shareholders of the
				  trust and that relate to the acquisition by the trust of
(i) property or assets at the formation of
				  the trust or shortly thereafter that is fully disclosed in the
				  prospectus;
(ii) federally insured
				  or guaranteed mortgages at prices not exceeding the currently quoted prices at
				  which the Federal National Mortgage Association purchases comparable
				  mortgages;
(iii) mortgages other
				  than those described in (ii) of this subparagraph, on terms not less favorable
				  to the trust than similar transactions involving unaffiliated parties;
				  or
(iv) property other than
				  property described in (i) - (iii) of this subparagraph, at prices not exceeding
				  the fair value of that property as determined by independent
				  appraisal;
(B)
				  transactions described in (A) of this paragraph and all other transactions in
				  which a trustee, officer, or adviser of the trust have a direct or indirect
				  interest must be approved by a majority of the trustees, including a majority
				  of the independent trustees; commissions or remuneration received by any of
				  those persons in connection with any of those transactions must be deducted
				  from the advisory fee;
(3) fees and expenses that the trust incurs
				  or pays must be restricted as follows:
(A)
				  the aggregate annual expenses of every character paid or incurred by the trust
				  may not exceed two and one-half percent of the total invested assets of the
				  trust, and may not exceed the greater of
(i)
				  two and one-half percent of the average net assets of the trust; net assets
				  must be calculated at least quarterly on a basis consistently
				  applied;
(ii) 25 percent of the net
				  income of the trust, before deducting advisory and servicing fees and expenses;
				  net income must be calculated at least quarterly on a basis consistently
				  applied;
(B) the adviser
				  must reimburse the trust at least annually for the amount by which aggregate
				  annual expenses paid or incurred by the trust exceed the amounts set out in (A)
				  of this paragraph;
(C) for purposes
				  of this paragraph, aggregate annual expenses
(i) include advisory fees and mortgage
				  servicing fees; and
(ii) do not
				  include interest, taxes, or expenses in connection with the issuance of
				  securities or shareholder relations, or the acquisition, operation,
				  maintenance, protection, or disposition of trust properties;
(D) for purposes of this
				  paragraph, net income does not include provision for depreciation, realized
				  capital gains or losses, or extraordinary items;
(4) leverage may not be unreasonable in
				  relation to the net assets of the trust, and the maximum amount of leverage in
				  relation to the net assets must be stated in the prospectus;
(5) minimum capital must be the lesser of
				  $200,000 or 10 percent of the net assets of the trust upon completion of the
				  public offering;
(6) a trust may
				  not
(A) invest more than 10 percent of its
				  total assets in unimproved real property or mortgages on unimproved real
				  property, except for property that is being developed or will be developed
				  within a reasonable period;
(B)
				  invest more than 10 percent of its total assets in junior mortgages, except for
				  wraparound type junior mortgages;
(C) engage in any material trading activities
				  with respect to its properties;
(D)
				  issue redeemable equity securities or equity securities of more than one
				  class;
(E) issue debt securities to
				  the public unless the historical cash flow of the trust or the substantiated
				  future cash flow of the trust, excluding extraordinary items, is sufficient to
				  cover the interest on the debt securities; or
(F) issue options or warrants to purchase its
				  securities to the adviser of the trust or any person affiliated with the
				  adviser, or to a person at exercise prices less than the fair market value of
				  those securities on the date of grant;
(7) an advisory contract entered into by the
				  trust
(A) before the initial public offering
				  may not exceed three years in length;
(B) after the initial public offering may not
				  exceed one year in length; and
(C)
				  must be terminable at any time without penalty, by the trustees or a majority
				  of the holders of outstanding shares of beneficial interest, upon not less than
				  60 days' written notice to the adviser;
(8) the trust must prepare reports and hold
				  meetings as follows:
(A) the trust must
				  prepare an annual report concerning its operations for each fiscal year ending
				  after the public offering of the trust's securities, including financial
				  statements certified by independent public accountants and prepared in
				  accordance with generally accepted accounting principles applied on a
				  consistent basis; the annual report must be delivered to each public
				  shareholder and debenture holder within 120 days after the end of the fiscal
				  year;
(B) the trust must hold an
				  annual meeting of the holders of outstanding shares of beneficial interest of
				  the trust, upon reasonable notice, following delivery of the annual report
				  prepared as required in (A) of this paragraph;
(C) the trust must file with the
				  administrator the annual report required under (A) of this paragraph and other
				  interim reports delivered to public shareholders.