Securities Exchange Act of 1934
July 12, 2012
Response of the Office of Mergers and Acquisitions
Division of Corporation Finance
Dividend Capital Total Realty Trust Inc.
Incoming letter dated July 10, 2012
Via Facsimile & U.S. Mail
Robert H. Bergdolt, Esq.
DLA Piper LLP (US)
4141 Parklake Avenue, Suite 300
Raleigh, North Carolina 27612-2350
Re: Dividend Capital Total Realty Trust Inc.
Request for No-Action Relief Under Rule 13e-4
Dear Mr. Bergdolt:
We are responding to your letter dated July 10, 2012 addressed to Michele M. Anderson and David L. Orlic, as supplemented by telephone conversations with our staff, regarding your request for no-action relief. To avoid having to recite or summarize the facts set forth in your letter, a copy of that letter is attached to this response. Unless otherwise noted, capitalized terms in this response have the same meaning as in your letter.
Based on the facts and representations made in your letter, conversations with our staff, and your opinion that the proposed transaction does not constitute an issuer tender offer subject to Rule 13e-4 of the Exchange Act, the Division of Corporation Finance (the “Division”) will not recommend that the Securities and Exchange Commission (the “Commission”) take enforcement action under Rule 13e-4 if the Company redeems shares from its stockholders under the New Redemption Plan in the manner described in your letter. In issuing this no-action relief, we considered the following facts, among others:
- All material information relating to the New Redemption Plan will be fully and timely disclosed to all Class A, Class W, and Class I stockholders. The terms of the New Redemption Plan will be fully disclosed in the Offering prospectus, as well as any prospectuses used for subsequent offerings of Class A, Class W, and Class I stockholders, and the NAV per share for each class will always be available on the Company’s website and toll-free information line;
- The Company will not solicit redemptions under the New Redemption Plan other than through the prospectus for the Offering and prospectus supplements disclosing the NAV per share of each class of shares. The role of the Company in effectuating redemptions under the New Redemption Plan will be ministerial;
- The shares will be redeemed daily under the New Redemption Plan at the daily NAV per share of the class of shares being redeemed. The Company will provide each day the NAV per share of each class of shares on its website and toll-free information line and, subject to the terms of the New Redemption Plan, will be obligated to redeem shares at the published NAV per share for each class subject to the terms of the New Redemption Plan. The Company will file prospectus supplements with the Commission that will disclose the daily NAV per share of each class of shares since it was last reported in a prospectus supplement;
- Redemptions will be made on a daily basis. The redemption price normally will be paid in cash no later than three business days following a redemption request and be the same for all shares of the same class redeemed on a given day;
- Net redemptions or gross redemptions (depending on which option the Company’s board of directors has chosen) of each of the Class A, Class W and Class I share classes under the New Redemption Plan will be limited in any calendar quarter to the amount of shares of such class with an aggregate value (based on the redemption price per share on the day the redemption is effected) of up to 5% of the NAV of such class of shares as of the last day of the previous calendar quarter;
- Redemptions under the New Redemption Plan will be on a first-come, first-served basis during each calendar quarter given that stockholder redemptions will be paid promptly; all redemption requests received on a day the quarterly cap is reached, however, will be redeemed pro rata;
- Stockholders may cancel any redemption request submitted before 4:00 p.m. (Eastern time) on a business day before 4:00 p.m. (Eastern time) on the same day by notifying a customer service representative at the Company’s toll-free information line;
- Material modifications, including any reduction to the quarterly limitation on redemptions, and suspensions or termination of the New Redemption Plan will be disclosed promptly in a prospectus supplement (or post-effective amendment if required by the Securities Act), or special or periodic report filed by the Company, as well as in a press release or on the Company’s website;
- There will be no established regular trading market for the Company’s Class A, Class W, and Class I share classes. The New Redemption Plan will be terminated in the event the Class A, Class W, and Class I share classes are listed on a national securities exchange or included for quotation on a national securities market, or in the event a secondary market for the Class A, Class W, and Class I share classes develops;
- The New Redemption Plan is intended to remain indefinitely open for the life of the Company unless modified, suspended or terminated by the board of directors;
- The New Redemption Plan is open to all Class A, Class W, and Class I stockholders that purchased their shares from the Company, although those who have held their shares for less than 365 days will be subject to a 2% short-term trading fee, which is intended to offset the cost to the Company of short-term trading in shares and discourage market timing, so as to align the interests of all stockholders of the Company; and
- The Company understands that the no-action relief granted pursuant to this letter will terminate upon the occurrence of a liquidity event.
The foregoing no-action position is based solely on the facts presented and the representations made in your letter dated July 10, 2012, as supplemented by telephone conversations with our staff. The relief is strictly limited to the application of the rules listed above to this transaction. You should discontinue this transaction pending further consultations with the staff if any of the facts or representations set forth in your letter change.
Finally, we direct your attention to the anti-fraud and anti-manipulation provision of the federal securities laws, particularly Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Responsibility for compliance with these and any other applicable provisions of the federal securities laws rests with the Company. The Division expresses no view with respect to any other questions that the proposed transaction may raise, including but not limited to, the adequacy of disclosure concerning, and the applicability of any other federal or state laws to, the proposed transaction.
Michele M. Anderson
Office of Mergers and Acquisitions
Division of Corporation Finance
The Incoming Letter is in Acrobat format.