Do Real Estate Fund Managers Need To Register With The Sec

Later on vi months baking in the oven, the new Form ADV is set. (To exist more precise, the new Office 1 is prepare. Function 2 has been sitting on the table for virtually a twelvemonth.) Form ADV nonetheless calls for existent manor fund managers to register as investment advisers

Earlier I had pointed out how a existent estate fund managing director could exist considered an investment adviser and have to register with the SEC under the Investment Directorate Deed. In the Proposed Changes to Class ADV the SEC included "real estate fund". They as well changed the manner yous calculate avails under direction, taking in the value of the fund assets, not merely securities held by the fund.

While waiting for Form ADV to terminate baking, I wondered if at that place might exist some description or changes to pull real estate funds out of the registration requirement. It didn't happen.

As you can see from the image above, "existent estate fund" is nevertheless one of the choices when information technology comes to designating the type of fund. That gives it equal status with hedge fund, venture capital letter fund, and private equity fund. The definition of real manor fund is unchanged in the instructions for Part 1A of Form ADV:

"Existent estate fund" means whatsoever individual fund that is not a hedge fund, that does non provide investors with redemption rights in the ordinary course, and that invests primarily in real estate and existent manor related assets.

Maybe there is room nether the definition of "private fund"? In the Glossary it'southward defined as "An issuer that would be an investment visitor every bit defined in department 3 of the Investment Company Act of 1940 simply for department 3(c)(i) or 3(c)(7) of that Human action." That does leave open up the position that the fund could be exempt under section 3(c)(five). That's a murkier exemption than the one provided past 3(c)(one) or 3(c)(7).

The other confusion over how to value the avails under management is gone. The quondam version of Form ADV had a 50% exam for assets under management. If less than 50% of the value was non securities, then yous didn't have a securities portfolio and the value was zero.

The new way of calculating avails under management for a individual fund from the Instructions for Function 1A:

For purposes of this definition, treat all of the assets of a private fund as a securities portfolio, regardless of the nature of such assets. For accounts of individual funds, moreover, include in the securities portfolio any uncalled delivery pursuant to which a person is obligated to acquire an interest in, or brand a upper-case letter contribution to, the individual fund.

It yet gets back to existence a "private fund" and relying on a iii(c)(i) or 3(c)(7), instead of a three(c)(5) definition. One thing to realize is that the definition of "individual fund" actually comes from Section 402 of Dodd-Frank, non from the wishes of the SEC. The intent of the SEC is clear, even if at that place may be some wiggle room.

Sources:

• IA-3221Rules Implementing Amendments to the Investment Advisers Act of 1940
• Appendix B: Form ADV: Instructions for Part 1A
• Appendix C: Form ADV: Glossary of Terms
• Appendix D: Grade ADV, Office 1A
• Aye, the SEC Wants Existent Manor Fund Managers to Annals – prior mail service on Compliance Building
• Real Estate Funds and the Investment Company Act – prior post on Compliance Building
• Dodd-Frank Wall Street Reform and Consumer Protection Act (.pdf 1.74MB)

Do Real Estate Fund Managers Need To Register With The Sec,

Source: https://www.compliancebuilding.com/2011/07/07/yes-the-sec-wants-real-estate-fund-managers-to-register/

Posted by: harrisanningues.blogspot.com

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