69W-700.014. Real Estate Investment Trusts (REIT)

A Real Estate Investment Trust (“Trust”) required to register its securities pursuant to Section 517.081, F.S., must have provisions in its Declaration of Trust, other organizational instruments or prospectus that satisfy the following conditions:

(1) The Trust must have net assets equal to fifteen percent (15%) of the aggregate dollar amount of the securities to be offered to the public, or have $200,000 of net assets prior to the public offering, whichever is less. Net assets shall mean total invested assets at cost after deducting depreciation reserves, less total liabilities.

(2)(a) Any property or asset purchased or sold on behalf of the Trust in which the trustees or allied parties have an interest, directly or indirectly, must be so purchased or sold on the basis of independent appraisals of said property or asset; or

(b) Such transaction must be fully described and set out in a registration statement and prospectus filed with the Office of Financial Regulation prior to the transaction.

(3) The aggregate annual expenses of every character paid or incurred by the Trust, excluding interest, taxes, expenses in connection with the issuance of securities, shareholder relations, and acquisition, operation, maintenance, protection and disposition of Trust properties, but including advisory fees and mortgage servicing fees and all other expenses, shall not exceed the greater of:

(a) One and one-half percent (1 1/2%) of the average net assets of the Trust, net assets being defined as total invested assets at cost before deducting depreciation reserves, less total liabilities, calculated at least quarterly on a basis consistently applied; or

(b) Twenty-five percent (25%) of the net income of the Trust excluding provision for depreciation and realized capital gains and losses and extraordinary items, and before deducting advisory and servicing fees and expenses, calculated at least quarterly on a basis consistently applied; but in no event shall aggregate annual expenses exceed one and one-half percent (1 1/2%) of the total invested assets of the Trust.

(4) The adviser shall reimburse the Trust at least annually for the amount by which aggregate annual expenses paid or incurred by the Trust as defined herein exceed the amounts provided for in subsection (3), above.

(5) The aggregate borrowings of the Trust, secured and unsecured, shall not be unreasonable in relation to the net assets of the Trust and the maximum amount of such borrowings in relation to the net assets shall be stated in the prospectus.

(6) A Trust shall not issue debt securities to the public unless the historical cash flow of the Trust or the substantiated future cash flow of the Trust, excluding extraordinary items, is sufficient to cover fixed charges, including interest.

(7) Any advisory contract entered into by the Trust prior to the initial public offering shall be for a period not longer than three (3) years and such contract entered into thereafter shall be for a period not longer than one (1) year. Any such advisory contract shall provide that it may be terminated at any time without penalty, by the trustees or majority of the holders of outstanding shares of beneficial interest, upon not less than sixty (60) days written notice to the adviser.

(8) Nothing contained in the Declaration of Trust shall relieve a trustee or agent or representative of the Trust against liability to the Trust or to the beneficiaries for willful misfeasance, gross negligence or bad faith in the conduct of his duties, or for failure to exercise that degree of care which ordinarily prudent men would exercise under the same or similar circumstances in like employment, having regard to the business of the Trust and the circumstances of each case.

(9) Not less than a majority vote of the beneficiaries or shareholders present in person or by proxy at a special or annual meeting shall be required to:

(a) Elect successor trustees.

(b) Remove any trustee.

(c) Approve termination of the Trust.

(d) Approve amendment of the Declaration of Trust.

(10) The foregoing listed terms and conditions shall apply unless such term or condition is directly contradictory to the intent of Sections 856, 857 and 858 of the Internal Revenue Code of 1954 (26 U.S.C. §§856, 857, 858), which are incorporated by reference in Rule 69W-200.002, F.A.C., and applicable rules of the Treasury Department.

Rulemaking Authority 517.03 FS. Law Implemented 517.081(7) FS. History–New 9-20-82, Formerly 3E-20.13, 3E-700.14, 3E-700.014, Amended 9-22-14, 3-21-24.