2325.1 "Blind Pool" Offerings — Overview "Blind Pool" offerings subject to Industry Guide 5 have different 1933 and 1934 Act reporting requirements with respect to real estate acquisitions both during and after the distribution period.
NOTE to SECTION 2325.1
Distribution Period - The distribution period is the period during which the registrant is conducting a continuous 1933 Act registered offering through a registration statement subject to Industry Guide 5. (Last updated: 3/31/2013)
2325.2 "Blind Pool" Offerings — During the Distribution Period - Undertakings (Last updated: 6/30/2010)
Registration statements for "blind pool" offerings by real estate companies subject to Industry Guide 5 are required to include undertakings to:
a. file a sticker supplement during the distribution period describing each significant property that has not been identified in the prospectus whenever a reasonable probability arises that a property will be acquired (the disclosure should include the information required for significant properties in Items 14 and 15 of Form S-11), and
b. consolidate all stickers in a post-effective amendment filed at least once every 3 months during the distribution period. The post-effective amendment must include or incorporate by reference audited financial statements in the format described in S-X 3-14 that have been filed or should have been filed on Form 8-K for all significant property acquisitions that have been consummated. Pro forma information is also required. [Guide 5, Item 20.D. Undertakings]
A post-effective amendment filed to consolidate stickers or to update the financial statements under Section 10(a)(3) of the Exchange Act does not need to include financial statements for significant property acquisitions during the 71-day extension period allowed by Item 9.01 of Form 8-K. (Last updated: 6/30/2010)
A post-effective amendment filed for a fundamental change, pursuant to the registrant's undertakings under Item 512(a)(1) of Regulation S-K, should include financial statements for all significant acquisitions, including any financial statements not yet filed during the 71-day extension period provided by Item 9.01 of Form 8-K. (Last updated: 6/30/2010)
Post-effective amendments that consolidate supplements are not considered new filings for purposes of updating the registrant's financial statements if the duty to file a post-effective amendment is triggered solely by the Item 20.D undertakings.
The prospectus updating regime in the Item 20.D undertakings is intended solely for real estate companies and not for other types of companies that may be subject to other parts of Industry Guide 5. If a real estate company subject to the Item 20.D undertakings acquires a significant property that generates revenues from operations other than leasing rental property, such as a hotel, motel, nursing home or medical office facility, the company should follow the Item 20.D updating regime discussed in Section 2325, except that the significance tests and required financial statements should be those specified in S-X 3-05. If a real estate company subject to the Item 20.D undertakings acquires a triple net leased property, the company should follow the Item 20.D updating regime discussed in this Section 2325, except that the significance threshold applied and financial information provided should be those as described in Section 2340. (Last updated: 3/31/2013)
2325.3 "Blind Pool" Offerings — During the Distribution Period - Significance (Last updated: 3/31/2013)
An individual property is significant if it:
  1. exceeds the 10% significance level, or
  2. is one of a group of properties that together aggregate more than 10% and are either:
    • acquired from a single seller, or
    • are related.
See Note 2 to Section 2310.1 regarding related properties.
Significance for purposes of the Guide 5 distribution period is computed by comparing the registrant's investment in the property to the registrant's total assets as of the date of the acquisition plus the proceeds (net of commissions) in good faith expected to be raised in the registered offering over the next 12 months. The investment includes any debt secured by the property that is assumed by the purchaser. In estimating the offering proceeds, the registrant should consider the pace of fundraising as of the measurement date, the sponsor or dealer-manager's prior public fundraising experience and offerings by similar companies. This alternative measurement is only available during the distribution period.
2325.4 "Blind Pool" Offerings — During the Distribution Period — Form 8-K Reporting Requirement
Registrants are required to file a current report on Form 8-K that includes S-X 3-14 financial statements and the related pro forma information for each property acquired during the distribution period that exceeds the 10% significance level as measured in Section 2325.3.
2325.5 "Blind Pool" Offerings — After the Distribution Period (Last updated: 3/31/2013)
While companies do not undertake to file sticker supplements after the distribution period is completed, they undertake to file on Form 8-K audited financial statements of properties, in the format described in S-X 3-14, after this period is completed. Until a company files its first annual report after the distribution period ends, the company should file a Form 8-K with the required S-X 3-14 financial statements for every significant property it purchases that represents 10% or more of the company's total assets as of the acquisition date. The staff has not objected to the view that the undertaking to provide audited financial statements is not applicable to individually insignificant properties. S-X 3-14 financial statements may be omitted for individually insignificant properties.
A registrant may continue to use this modified method of measuring significance until it files its first annual report after the distribution period ends. After that, it would measure significance in the normal manner described in Section 2315.
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