Management and Corporate Governance The SEC pays special attention to externally managed REITs and frequently issues comments to ensure investors are given all relevant information about potential conflicts of interests and that there are adequate policies in place to align the external manager or advisor with stockholders. Areas of frequent comment are: ■ management’s compensation and fees; ■ management and affiliates’ prior experience and involvement in other programs; and ■ allocation of investment opportunities. Sample Comments ■ Please describe any termination fees that may be payable to your adviser, dealer manager or any of their affiliates. ■ Please provide a hypothetical example as to how you will calculate the performance participation allocation. ■ Please balance the discussion of the competitive strengths of your advisor with equally prominent disclosure of the challenges you face and the risks and limitations that could harm your business or inhibit your strategic plans. For example, but without limitation, provide a discussion of any losses or adverse business developments for your advisor. Further, in the prior performance section, please ensure that you provide all of the disclosure requirement by Item 8 of Industrial Guide 5. ■ We note your disclosure in the prospectus that there may be overlap of investment opportunities with other programs. Please expand your disclosure to provide insight into these competing funds, such as the size and type of funds. Also describe in greater detail how opportunities are allocated and conflicts of interest resolved. Offering Information The Staff often asks clarifying questions regarding the mechanics of the REIT offering. Comments received in this category are often focused on: ■ whether an offering qualifies as delayed or must comply with requirements applicable to blind pools; and ■ requests for supplemental information. Sample Comments ■ We note that you have issued Class A preferred shares. Please revise your summary section to disclose the rights that the individuals holding these preferred shares have, describe the impact of these shares on investors in this offering, and add risk factor disclosure as appropriate. ■ Please note that pursuant to Rule 415(a)(2), you may only register that amount of securities that you reasonably expect to offer and sell within two years of the effective date of the registration statement, and that the offering must terminate within three years from the date of effectiveness. Please revise your disclosure to state the date that the offering will end and clarify that you may engage in future offerings. See Item 501(b) (8)(iii) of Regulation S-K. Please also note Rule 415(a)(5) and (a)(6), which would permit you to file a new offering to continue to sell, but that this offering would terminate upon effectiveness of the new offering. ■ Please supplementally provide us with copies of all written communications, as defined in Rule 405 under the Securities Act, that you, or anyone authorized to do so on your behalf, present to potential investors in reliance on Section 5(d) of the Securities Act, whether or not they retain copies of the communications. A Comparative Analysis of 2022 and 2023 SEC Comments Issued to REITs | 10
RkJQdWJsaXNoZXIy NTU5OTQ5