[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR802.5]

[Page 605-606]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 802_EXEMPTION RULES--Table of Contents
 
Sec. 802.5  Acquisitions of investment rental property assets.

    (a) Acquisitions of investment rental property assets shall be 
exempt from the requirements of the act.
    (b) Investment rental property assets. ``Investment rental property 
assets'' means real property that will not be rented to entities 
included within the acquiring person except for the sole purpose of 
maintaining, managing or supervising the operation of the real property, 
and will be held solely for rental or investment purposes. In an 
acquisition that includes investment rental property assets, the 
transfer of any property or assets that are not investment rental 
property assets shall be subject to the requirements of the act and 
these rules as if they were being acquired in a separate transaction. 
Investment rental property assets include:
    (1) Property currently rented,
    (2) Property held for rent but not currently rented,
    (3) Common areas on the property, and
    (4) Assets incidental to the ownership of property, which may 
include cash, prepaid taxes or insurance, rental receivables and the 
like.
    Example: 1. ``X'', a corporation, proposes to purchase a sports/
entertainment complex which it will rent to professional sports teams 
and promoters of special events for concerts, ice shows, sporting events 
and

[[Page 606]]

other entertainment activities. ``X'' will provide office space in the 
complex for ``Y'', a management company which will maintain and manage 
the facility for ``X.'' This acquisition is an exempt acquisition of 
investment rental property assets since ``X'' intends to rent the 
facility to third parties and is providing space within the facility to 
a management company solely to maintain, manage or supervise the 
operation of the facility on its behalf. If, however, ``X'' controls Z, 
a concert promoter to whom it also intends to rent the complex, the 
acquisition would not be exempt under Sec. 802.5, since the property 
would not meet the requirements of Sec. 802.5(b)(1).
    2. ``X'' intends to buy from ``Y'' a development commonly referred 
to as an industrial park. The industrial park contains a warehouse/
distribution center, a retail tire and automobile parts store, an office 
building, and a small factory. The industrial park also contains several 
parcels of vacant land. If ``X'' intends to acquire this industrial park 
as investment rental property, the acquisition will be exempt pursuant 
to Sec. 802.5. If, however, ``X'' intends to use the factory for its 
own manufacturing operations, this exemption would be unavailable. The 
exemptions in Sec. 802.2 for warehouses, rental retail space, office 
buildings, and undeveloped land may still apply and, if the value of the 
factory is $50 million or less, the entire transaction may be exempted 
by that section.

[61 FR 13688, Mar. 28, 1996, as amended at 66 FR 8693, Feb. 1, 2001]