
[Federal Register Volume 80, Number 178 (Tuesday, September 15, 2015)]
[Notices]
[Pages 55399-55405]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23093]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31807; 812-13995]


TIAA-CREF Funds, et al.; Notice of Application

September 8, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under sections 6(c) and 
17(b) of the Investment Company Act of 1940 (``Act'') for exemptions 
from section 17(a) of the Act, and under section 17(d) of the Act and 
rule 17d-1 thereunder to permit certain joint transactions.

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Summary of Application: Applicants requests an order that would permit 
certain registered management investment companies or series thereof 
that are advised by Teachers Advisors, Inc. (``Advisors'') to invest in 
a private investment vehicle established by Advisors to invest directly 
in real estate.

Applicants: TIAA-CREF Funds (the ``Trust''), Advisors, TIAA-CREF Real 
Property Fund LP (``TCLP''), TIAA-CREF Real Property Fund GP LLC 
(``TCGP''), and TIAA-CREF Real Property Fund REIT LLC (``TC REIT'').

Filing Dates: The application was filed on January 4, 2012, and amended 
on June 25, 2012, December 3, 2012, October 16, 2013, June 26, 2014, 
May 8, 2015, and September 4, 2015.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving Applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on October 5, 2015, and should be accompanied by proof of 
service on Applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 of the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish

[[Page 55400]]

to be notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549. Applicants: TIAA-CREF, Attn: Rachael 
Zufall, 8500 Andrew Carnegie Boulevard, Charlotte, NC, 28262.

FOR FURTHER INFORMATION CONTACT: Mark N. Zaruba, Senior Counsel, at 
(202) 551-6878, or David Bartels, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. The Trust is organized as a Delaware statutory trust and is an 
open-end management investment company registered under the Act. The 
Trust currently consists of multiple Funds (as defined below).
    2. TCLP is organized as a limited partnership, and applicants state 
that it will rely on an exception from the definition of ``investment 
company'' such as Section 3(c)(1) or Section 3(c)(7) of the Act (or any 
other applicable exclusion). TCGP, the sole general partner of TCLP, is 
organized as a limited liability company and will be a direct or 
indirect wholly owned subsidiary of Teachers Insurance and Annuity 
Association of America (``TIAA''). As general partner of TCLP, TCGP 
will be responsible for the operational and administrative maintenance 
of TCLP, but it will not exercise any responsibilities for the 
management of TCLP's assets.
    3. TC REIT is organized as a limited liability company, and 
Applicants anticipate that it will be excluded from the definition of 
``investment company'' under Section 3(a)(1) of the Act by reason of 
its real estate investments. Applicants state that TC REIT will elect 
to be taxed as a real estate investment trust (``REIT'') under the 
Internal Revenue Code of 1986, as amended (the ``Code'') and will not 
incur separate, entity level tax under the current provisions of the 
Code.
    4. Advisors, a Delaware corporation, is an investment adviser that 
is registered with the Commission under the Investment Advisers Act of 
1940, as amended (the ``Advisers Act''). Advisors is an indirect, 
wholly owned subsidiary of TIAA. Advisors will be the investment 
adviser to each of the Funds (as defined below), TCLP and TC REIT.\1\
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    \1\ Only Advisors or a successor entity will serve as investment 
adviser to TCLP or TC REIT, and any other investment adviser to TCLP 
or TC REIT will serve only as investment sub-adviser.
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    5. TIAA and Advisors believe that exposure to direct real estate 
investments is an important element of diversified retirement 
investing. Advisors seeks to provide shareholders who invest for 
retirement and other long-term purposes through the Funds (as defined 
below) with exposure to direct real estate. Applicants argue that 
direct exposure to real estate offers advantages over investment in 
conventional real estate mutual funds that invest primarily in publicly 
traded REITs. In addition, Applicants note that, while the Act does not 
preclude a registered management investment company from investing 
directly in real estate (provided that the fund is not subject to a 
fundamental policy precluding such investment and, in the case of an 
open-end fund, has sufficient liquidity to comply with applicable 
Commission and Commission staff positions), direct investment in real 
estate would be impractical due to the typical size of such investments 
and for tax reasons. Accordingly, applicants propose to allow each Fund 
(solely to the extent consistent with its investment policies, 
objectives, strategies and restrictions) to obtain exposure to real 
estate through TCLP, which will be dedicated to investing indirectly in 
real estate through TC REIT.
    6. For this reason, Applicants request an order under sections 6(c) 
and 17(b) of the Act for exemptions from section 17(a) of the Act, and 
under section 17(d) of the Act and rule 17d-1 thereunder, to permit: 
(i) One or more Funds (as defined below) to purchase, hold and redeem 
units of limited partnership interests of TCLP (``Units''); (ii) TCLP 
to sell Units to one or more Funds and redeem such Units following 
demand of such Funds; (iii) to the extent it could be deemed an element 
of a ``joint transaction,'' as defined below, TCLP to purchase, hold 
and redeem interests in TC REIT; and (iv) the Funds and Other Accounts 
(as defined below) to engage in certain purchase or sale cross 
transactions in securities, all as described and subject to the 
conditions set forth in the application.\2\
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    \2\ Applicants acknowledge that they are not seeking, and the 
Commission is not granting, relief from any disclosure requirements 
that are applicable to Applicants.
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    7. Applicants request that the relief extend to each existing or 
future registered management investment company or series thereof that 
is advised by Advisors or any successor entity or any entity 
controlling, controlled by, or under common control with Advisors 
(each, a ``Fund'').\3\ Applicants further request that the relief 
extend to any future limited partnership (``Future LP''), general 
partner thereof (``Future GP''), and underlying real estate investment 
vehicle (``Future Real Estate Fund'') in which such Future LP invests 
that has elected to be taxed as a REIT pursuant to the Code that 
operate in a manner that is identical to TCLP, TCGP and TC REIT except 
for the types of real estate investments held by a Future Real Estate 
Fund.\4\
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    \3\ Each entity that currently intends to rely on the requested 
relief has been named as an applicant. For purposes of the requested 
order, ``successor'' is limited to an entity that results from 
reorganization into another jurisdiction or a change in the type of 
business organization.
    \4\ Any entity that relies in the future on the requested relief 
will comply with the terms and conditions of the Application as they 
apply to the corresponding current party.
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    8. Applicants state that TC REIT will invest in direct real estate 
holdings and, to maintain some liquidity, may invest a portion of its 
assets in liquid investments. To finance its investments in real estate 
holdings, TC REIT plans to borrow from banks, as well as from insurance 
companies, pension/retirement systems, state and federal government 
related entities (e.g., Freddie Mac), investment banks, and other 
commercial lenders (e.g., GE Capital Corporation (or its successor), 
Ally Financial) (lenders other than banks are referred to as ``Non-bank 
Commercial Lenders''). Applicants represent that TC REIT plans to incur 
loans from Non-bank Commercial Lenders because such lenders have been 
longstanding capital resources to the commercial real estate market and 
often are able to offer more favorable lending terms to borrowers.\5\ 
TC REIT will not incur any loans that are callable at the option of the 
lender.
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    \5\ Applicants submit that, in light of the presence of a bona 
fide business purpose for TCLP and TC REIT and the difficulty a Fund 
would have in directly investing in real estate, the structure 
proposed by this Application can be distinguished from a structure 
intended primarily to evade leverage restrictions applicable to 
open-end funds.
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    9. Applicants state that TCLP will invest a substantial portion of 
its assets in TC REIT and, if deemed appropriate by Advisors, may, for 
purposes of maintaining some liquidity, invest a portion of its assets 
in liquid investments. TCLP will incur expenses relating to the 
management of any liquid investments held by TCLP, as well as for

[[Page 55401]]

the general operation and administration of the entity.\6\
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    \6\ Applicants anticipate that TCLP will be able to efficiently 
deploy assets invested by the Funds in light of the ability of TCLP 
to invest in liquid investments in addition to interests in TC REIT, 
so that any Fund assets invested in TCLP that are not currently 
invested in real estate will be effectively deployed pending 
completion of real estate investments. The performance of TCLP, the 
costs of investing in TCLP, and the related expenses, will be 
considered by the Funds' Board during the course of its oversight of 
the Funds' investments in TCLP, including its annual determinations 
as required by condition 1 below.
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    10. TCLP will conduct a non-public offering of its Units, and will 
not be publicly traded. Applicants state that TCLP is currently 
expected to be made available solely to the Funds, although it is 
possible that it will be made available in the future to: (i) 
Unaffiliated registered investment companies, pension plans, other 
institutional investors or high-net-worth individuals (``Outside 
Investors''); as well as to (ii) pension plans, or other institutional 
investors or high-net-worth individuals for which Advisors or an 
affiliate of Advisors serves as investment adviser (``Other 
Accounts'').\7\
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    \7\ No Applicant, or an affiliated person thereof, will have a 
proprietary interest in any Outside Investor or Other Account, 
except that an Applicant or an affiliated person thereof may be a 
shareholder of an Outside Investor that is a registered investment 
company.
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    11. Applicants state that the Funds (as well as any Other Accounts 
or Outside Investors) that invest in TCLP will be able to purchase and 
redeem Units on a daily basis at the next determined net asset value 
(``NAV'') per Unit. In the event that TCLP is unable to accommodate 
investment demand from the Funds, Other Accounts and/or Outside 
Investors, opportunities for investment will be allocated in accordance 
with allocation policies and procedures drafted and maintained by 
Advisors.\8\ Applicants represent that, while such allocation policies 
and procedures may be subject to revision over time, the allocation 
policies and procedures generally will allocate opportunities on a pro 
rata basis based on orders received, with normal exceptions for 
rounding and de minimis amounts, although applicants state that other 
allocation methodologies may be employed as appropriate. Any such 
methodology will be applied in a manner that is objective and 
verifiable and will be consistent with Advisors' fiduciary obligation 
to treat client accounts in a manner that is fair and provides for 
equality of opportunity over time. However, TCLP will reserve the right 
to give the Funds preferential access to opportunities to invest in 
TCLP as compared to Outside Investors and (to the extent permitted 
under the allocation policies and procedures) Other Accounts, and the 
Funds will always have opportunities to invest in TCLP that are at 
least as favorable as the opportunities to invest in TCLP made 
available to Other Accounts or Outside Investors. The policies and 
procedures will require the documentation of the basis of allocation, 
as well as the basis for any exception to the general principles set 
forth in the policies and procedures, which exception will be subject 
to review by legal or compliance personnel.
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    \8\ Applicants are not seeking any comfort and acknowledge that 
the Commission is providing no opinion on whether these allocation 
policies and procedures meet the standards applicable under either 
the Act or the Advisers Act.
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    12. Applicants anticipate that TCLP will be managed to maintain 
sufficient liquidity to satisfy the daily liquidity needs of its 
limited partners under ordinary market conditions. However, any 
investment in TCLP will be subject to terms permitting TCLP, under 
circumstances described in the application, to (a) cease offering new 
Units; (b) limit or postpone redemptions in the event that TC REIT has 
insufficient liquidity to satisfy redemption requests; or (c) utilize a 
``gate'' pursuant to which the amount of redemptions from TCLP by any 
limited partner on any business day may be limited to a percentage of 
the limited partner's investment in TCLP.\9\ Accordingly, each Fund 
that is an open-end investment company will treat its investments in 
TCLP and any Future LPs as investments that are not liquid for purposes 
of any applicable rules or guidance of the Commission or its staff 
regarding the management of liquidity. Similarly, each Fund that is a 
closed-end investment company will, at all times, limit its holdings in 
TCLP (together with any Future LPs) to no more than 15% of its net 
assets.\10\
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    \9\ TCLP expects that the ability to limit or postpone 
redemption will help to minimize transaction costs and any dilutive 
effects on non-redeeming limited partners. TCLP's ability to limit 
or postpone redemption and the circumstances under which TCLP may 
waive an established redemption gate, in whole or in part, are 
discussed in greater detail in the application.
    \10\ Applicants submit that, although closed-end Funds do not 
present the same concerns with respect to liquidity as open-end 
Funds, it is nonetheless appropriate to limit the investments of 
these Funds in TCLP (and Future LPs) to address concerns that may 
arise regarding complex structures and the use of leverage, among 
other things.
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    13. Redemption requests will be considered on a first in basis 
based upon the business day of receipt, unless a limited partner (other 
than a registered investment company or Other Account) has agreed to a 
lower priority of redemption. Except as a limited partner (other than a 
registered investment company or Other Account) has otherwise agreed, 
redemption requests of all investors will be treated equally, and TCLP 
will allocate redemption proceeds on a pro rata basis in the event that 
there are insufficient liquid assets to satisfy fully all redemption 
requests. The rules on redemption and TCLP's policy regarding the 
allocation of redemption proceeds, and any changes to either of these, 
will be disclosed to all prospective investors in TCLP. TCLP will have 
a written policy regarding the allocation of redemption proceeds that 
will be applied in a manner that is objective and verifiable and will 
be consistent with Advisors' fiduciary obligation to treat client 
accounts in a manner that is fair.
    14. Each Fund and Other Account limited partner of TCLP will have 
identical rights, duties and obligations under the limited partnership 
agreement as each other Fund and Other Account limited partner. If 
Outside Investors are permitted to invest in TCLP, the Funds and Other 
Accounts will be entitled to purchase, hold and redeem Units on terms 
that are at least as favorable, including (without limitation) the 
expenses associated with an investment in TCLP, as the terms on which 
any Outside Investor purchases, holds or redeems Units. Limited 
partners other than the Funds and Other Accounts will have 
substantially similar rights, duties and obligations as the Funds and 
Other Accounts, but Applicants currently contemplate that they may 
distinguish among Outside Investors with respect to rights, duties and 
obligations pursuant to the terms of the limited partnership agreement, 
or otherwise, with respect to the following issues (without 
limitation): (a) Utilization of redemption gates; (b) limitation of 
rights of redemption; or (c) the level of expenses charged to limited 
partners other than the Funds and Other Accounts in connection with an 
investment in TCLP, which may be higher than the level of expenses 
borne by the Funds and Other Accounts.
    15. TCLP will be able to purchase and redeem limited liability 
company interests in TC REIT on a daily basis at the next determined 
NAV. Applicants represent that TCLP will be the sole investor in TC 
REIT, other than the ninety-nine or more additional investors necessary 
or appropriate to allow TC REIT to qualify as a REIT under section 
856(a)(5) of the Code (the ``Tax Holders''). The Tax Holders' interests 
in TC REIT will be preferred to TCLP's interests in TC REIT. However, 
(a) the Tax Holders will have only limited

[[Page 55402]]

voting rights, (b) the Tax Holders' aggregate interests in TC REIT will 
be de minimis in relation to that of TCLP,\11\ and (c) TC REIT will not 
issue additional interests to the Tax Holders after the initial 
organization of TC REIT (clause (a), (b), and (c), collectively, the 
``Tax Holder Limitations'').\12\ Accordingly, it is anticipated that 
TCLP will own substantially all of the total outstanding securities of 
TC REIT at all times during the operation of TC REIT.
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    \11\ Applicants anticipate that the Tax Holders will invest, in 
aggregate, approximately $125,000 and will represent much less than 
1% of the expected aggregate net assets of TC REIT.
    \12\ The Tax Holders' interests in TC REIT and the Tax Holder 
Limitations are discussed in greater detail in the application.
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    16. Applicants represent that TC REIT will not participate in any 
joint enterprise or other joint arrangement, within the meaning of rule 
17d-1 under the Act, with the Future Real Estate Funds or other TIAA 
related accounts, and the Applicants are not asking for an order 
pursuant to rule 17d-1 with respect to any such transaction. Further, 
Applicants state that TIAA has adopted policies and procedures 
applicable to any purchasing conflicts between TC REIT and any other 
TIAA related accounts, which are designed to allocate opportunities 
consistent with Advisors' fiduciary obligations to its clients and will 
be applied in a manner that is objective and verifiable.

Applicants' Legal Analysis

Section 17(a)--Purchase and Sale of Units

    1. Section 17(a) of the Act generally prohibits an ``affiliated 
person'' as defined by section 2(a)(3) of the Act, or an affiliated 
person of an affiliated person, of a registered investment company, 
acting as principal, from purchasing securities or other property from 
the registered investment company or selling securities or other 
property to the registered investment company. Section 2(a)(3) of the 
Act defines an ``affiliated person'' of another person to include, 
among others, (a) any person directly or indirectly owning, 
controlling, or holding with power to vote, 5% or more of the 
outstanding voting securities of the other person; (b) any person 5% or 
more of whose outstanding voting securities are directly or indirectly 
owned, controlled, or held with the power to vote by the other person; 
and (c) any person directly or indirectly controlling, controlled by, 
or under common control with the other person. Section 2(a)(9) defines 
``control'' to mean ``the power to exercise a controlling influence 
over the management or policies of a company, unless such power is 
solely the result of an official position with such company.''
    2. Section 17(b) of the Act authorizes the Commission to grant an 
order permitting a transaction otherwise prohibited by section 17(a) if 
the terms of the proposed transaction, including the consideration to 
be paid or received, are fair and reasonable and do not involve 
overreaching on the part of any person concerned, and the proposed 
transaction is consistent with the policies of each registered 
investment company involved and with the general purposes of the Act. 
Section 6(c) of the Act permits the Commission to exempt any person or 
transactions from any provisions of the Act if such exemption is 
necessary or appropriate in the public interest and consistent with the 
protection of investors and the purposes fairly intended by the policy 
and provisions of the Act.
    3. Applicants state that the sale by TCLP of its Units to a Fund or 
the repurchase by TCLP of its Units from a Fund may be deemed to be 
prohibited by section 17(a) of the Act, as TCLP and each Fund may be 
deemed to be affiliated persons, or affiliated persons of affiliated 
persons, of each other under multiple theories. For example, the Fund 
may be deemed to be an affiliated person of TCLP in the event that it 
owns 5% or more of the Units in TCLP. In addition, TCLP could be deemed 
to be an affiliated person of an affiliated person of the Fund, if it 
is deemed to be under the control of or under common control with 
Advisors.
    4. Applicants believe that the proposed transactions among the 
Funds and TCLP satisfy the requirements for relief from section 17(a) 
of the Act under both sections 17(b) and 6(c) of the Act.
    5. Applicants submit that the proposed transactions are reasonable 
and fair and would not involve overreaching on the part of any person 
concerned. Before investment by a Fund in TCLP, the Fund's board of 
trustees (the ``Board''), including a majority of the Independent 
Trustees, would have made the determinations required under condition 1 
below.\13\ The Board, including the Independent Trustees, will review 
these determinations on at least an annual basis. Applicants represent 
that, currently, the Board is made up of ten trustees, all of whom are 
Independent Trustees. Further, Applicants notes that Advisors' ability 
to allocate a Fund's assets to investments in TCLP would be limited to 
address any potential for overreaching because (a) the allocation would 
be determined either by the Fund's glide path or would be within a 
range of permissible allocations approved in advance by the Board and 
(b) the Fund's investment would be limited under condition 3 below.
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    \13\ The ``Independent Trustees'' are the trustees who are not 
interested persons of the Trust within the meaning of section 
2(a)(19) of the Act.
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    6. In addition, Applicants state that each Fund would purchase and 
sell Units on the same terms as each other Fund and any Other Account, 
and on terms that are at least as favorable as the terms on which 
Outside Investors would purchase and sell Units. TCLP also would sell 
its shares to or purchase its shares from a Fund at the next-calculated 
NAV per Unit. This value, which would be provided to the Funds on a 
daily basis, would be determined based on the valuations of the assets 
of TC REIT, which would be determined by using valuation methodologies 
that are consistent with section 2(a)(41) of the Act except that the 
TCLP Committee will, in reliance on independent appraisals obtained at 
least quarterly, make determinations that would otherwise be made by a 
board of directors.\14\
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    \14\ Applicants note that, in accordance with condition 9, TCLP 
will consolidate TC REIT for reporting purposes and the consolidated 
financial statements of TCLP will be prepared in accordance with 
Regulation S-X, will be audited by an independent auditor, and, if 
practicable, will be prepared as of the same date and for the same 
periods as the investing Funds. Applicants state that the Public 
Company Accounting Oversight Board auditing standards applicable to 
the audit of TCLP would be the same standards as those applicable to 
a registered investment company. Further, Applicants state that the 
U.S. Generally Accepted Accounting Principles and Regulation S-X 
would apply to the financial statements of both TCLP and a 
registered investment company. Thus, Applicants assert that critical 
accounting policies governing security valuation, accounting for 
investment transactions, recognition of investment income and of 
expenses, and accrual of expenses, which are often the critical 
policies applicable to investment companies, would apply in 
substantially the same manner for the financial statements of TCLP. 
Valuation of the assets of TCLP and TC REIT for which market 
quotations are not readily available will be overseen by a committee 
consisting of the employees and agents of TCLP, TIAA and/or its 
subsidiaries (the ``TCLP Committee'').
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    7. Applicants further submit that the proposed transactions would 
be consistent with the policies of each Fund. Applicants represent that 
the investment by a Fund in TCLP would be effected in accordance with 
the investment policies, objective, strategies and restrictions 
contained in the registration statement of the Fund.
    8. Finally, Applicants submit that, for these reasons, as well as 
the benefits shareholders in the Funds would

[[Page 55403]]

experience by reason of the Funds' investments in TCLP, the proposed 
transactions are appropriate in the public interest and consistent with 
the protection of investors and the purposes fairly intended by the 
policy and provisions of the Act.

Section 17(d)

    9. Section 17(d) of the Act and rule 17d-1 under the Act generally 
prohibit joint transactions involving registered investment companies 
and their affiliates unless the Commission has approved the 
transaction. In considering whether to approve a joint transaction 
under rule 17d-1, the Commission considers whether the proposed 
transaction is consistent with the provisions, policies, and purposes 
of the Act, and the extent to which the participation of the investment 
companies is on a basis different from or less advantageous than that 
of the other participants.
    10. Applicants state that the sale of Units to a Fund, the Fund's 
holding of Units, the redemption of Units held by the Fund, an Other 
Account's purchase, holding and redemption of Units alongside a Fund, 
TCLP's purchase, holding and redemptions of interest in the TC REIT, 
and Advisors' management of the Funds, Other Accounts, TCLP and TC REIT 
at the same time that the Funds are investing in TCLP (directly) and TC 
REIT (indirectly) could be deemed to constitute a joint enterprise or 
joint arrangement among the Funds, Other Accounts, TCLP, TCGP, TC REIT, 
and Advisors because the Funds may be presumed to be affiliated 
persons, or affiliated persons of affiliated persons, of Advisors, 
Other Accounts, TCLP or TC REIT.
    11. For the reasons discussed above, Applicants submit that the 
proposed transactions are consistent with the provisions, policies and 
purposes of the Act. Applicants further believe that, based on the 
terms of the proposed transactions and the conditions set forth below, 
the participation by the Funds in the proposed transactions would be on 
a basis no different from that of other Funds or Other Accounts or less 
advantageous than that of other Funds, Outside Investors or Other 
Accounts. A Fund will hold Units of TCLP only if it will at all times 
have identical rights, duties and obligations under the limited 
partnership agreement as each other Fund limited partner and Other 
Account limited partner. If Outside Investors or Other Accounts are 
permitted to invest in TCLP, the Funds will be entitled to purchase, 
hold and redeem Units on terms that are at least as favorable, 
including (without limitation) the expenses associated with an 
investment in TCLP, as the terms on which any Outside Investor 
purchases, holds or redeem Units and on terms that are the same as the 
terms on which any Other Account purchases, holds or redeems Units. 
TCLP and the Tax Holders will be the only investors in TC REIT, and the 
Tax Holders' interests will be subject to the Tax Holder Limitations. 
All transactions in Units would be priced in the same manner and would 
be redeemable under the terms discussed herein and disclosed to 
investors. In addition, any investment by a Fund in TCLP would be 
subject to oversight by the Fund's Board.

Section 17(a)--Cross Transactions

    12. Applicants also propose that the Funds and Other Accounts be 
permitted to engage in certain purchase and sale cross transactions in 
securities (``Cross Transactions''). Applicants expect that these 
transactions will be between a Fund seeking to implement a portfolio 
strategy and an Other Account seeking to raise or invest cash, or vice 
versa. Applicants represent that the Funds currently are able rely on 
rule 17a-7 to engage in such Cross Transactions. However, if a Fund and 
an Other Account were deemed to be affiliated persons of an affiliated 
person of each other by virtue of their ownership or control 
affiliations with TCLP, the Funds may not be entitled to rely on rule 
17a-7 because they would no longer be affiliated solely for the reasons 
permitted by the rule. Applicants represent that Funds and Other 
Accounts will not engage in Cross Transactions involving Units, and to 
the extent any Future LPs are created, TCLP and the Future LPs (and 
their respective subsidiaries) will not engage in cross-trades with 
each other.
    13. Applicants represent that, when engaging in Cross Transactions, 
the Funds and Other Accounts will comply with the requirements set 
forth in rule 17a-(7)(a) through (g), as interpreted by the Commission 
staff. Applicants assert that the potential affiliations created by the 
TCLP structure do not affect the other protections provided by the 
rule, including the integrity of the pricing mechanism employed and 
oversight by each Fund's Board. Applicants also note that no brokerage 
commission, fee or other remuneration will be paid in connection with 
the transactions. Applicants, therefore, believe that Cross 
Transactions will be reasonable and fair, will not involve 
overreaching, and will be consistent with the purposes of the Act and 
the investment policy of each Fund.

Applicants' Conditions

    Applicants agree that any order granting the requested relief shall 
be subject to the following conditions:
    1. Advisors will not implement an initial decision to invest the 
assets of a Fund in TCLP unless prior to the Fund's initial investment 
in TCLP, the Board, including a majority of the Independent Trustees, 
has determined that: (a) Investment in TCLP (and indirectly in TC REIT) 
is an appropriate means to implement an investment decision made by 
Advisors for the Fund to seek real estate exposure; (b) investment in 
TCLP (and indirectly in TC REIT) is in the best interests of the Fund 
and its shareholders, taking into account, among other things, the 
management and administration fees of TCLP and TC REIT; (c) the 
management and administration fees to be charged by TCLP and TC REIT 
are for services in addition to, rather than duplicative of, services 
rendered to the Fund directly; and (d) the management and 
administration fees to be charged by TCLP and TC REIT are fair and 
reasonable in light of the usual and customary fees charged by others 
for services of the same nature and quality. The Board, including the 
Independent Trustees, will review these determinations on at least an 
annual basis. The basis for each of the Board's determinations required 
by this condition will be recorded in its minutes. If the Board does 
not make the determinations in clauses (c) and (d) in a review 
subsequent to the initial investment, Advisors will reimburse the Fund 
the amount of any management and administrative fee borne by the Fund 
as a direct investor in TCLP and an indirect investor in TC REIT 
charged since the most recent date on which the Board did make these 
determinations.
    2. Prior to any initial or additional investments in Units, 
Advisors will determine that each Fund's investment in TCLP will be 
consistent with the Fund's investment policies, objective, strategies 
and restrictions, and purchases of Units will be determined either by 
the Fund's glide path or be limited such that total holdings remain 
within a range of permissible allocations approved in advance by the 
Board. For purposes of determining consistency with a Fund's investment 
policies, objective, strategies and restrictions, a Fund will look 
through its investment in TCLP (and indirectly in TC REIT) and apply 
its investment policies, objective, strategies and restrictions (except 
for any restriction relevant to the direct ownership of real estate 
assets) in such a manner that the Fund will not do

[[Page 55404]]

indirectly through TCLP and TC REIT that which it cannot do directly. 
For purposes of applying its investment policies, objective, strategies 
and restrictions, a Fund will be considered as owning its pro rata 
portion of the portfolio holdings of TCLP and TC REIT.
    3. Each Fund that is an open-end investment company will treat its 
entire investments in TCLP and any Future LPs as investments that are 
not liquid for purposes of any applicable rules or guidance of the 
Commission or its staff regarding the management of liquidity. For 
example, under current guidelines, each such Fund must limit its 
aggregate holdings of illiquid assets, which for purposes of the 
requested relief include any investments in TCLP and any Future LPs, to 
15% of its net assets. In addition, each Fund, including any open- or 
closed-end investment company, will, at all times, limit its holdings 
in TCLP (together with any Future LPs) to no more than 15% of its net 
assets.\15\
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    \15\ Although closed-end Funds do not present the same concerns 
with respect to liquidity as open-end Funds, Applicants believe that 
it is nonetheless appropriate to limit the investments of these 
Funds in TCLP (and Future LPs) to address concerns that may arise 
regarding complex structures and the use of leverage, among other 
things.
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    4. At all times that any Fund or other registered investment 
company holds an interest in TCLP, each of TCLP and TC REIT: (a) Will 
determine its respective net asset value per Unit or membership 
interest, as applicable, each Business Day; and (b) will maintain and 
comply with policies and procedures for valuing its assets that are 
consistent with section 2(a)(41) of the Act except that the TCLP 
Committee will, in reliance on independent appraisals obtained at least 
quarterly, make determinations that would otherwise be made by a board 
of directors (as if TCLP and TC REIT were subject to section 2(a)(41)) 
and with applicable U.S. generally accepted accounting principles 
(``U.S. GAAP'') (or successor accounting standards). For these 
purposes, ``Business Day'' means each day on which the Funds or other 
registered investment company determine net asset value per share, as 
disclosed in the Funds' or other registered investment company's 
registration statement.
    5. A Fund will hold Units of TCLP only if it will at all times have 
identical rights, duties and obligations under the limited partnership 
agreement as each other Fund limited partner and Other Account limited 
partner. If Other Accounts or Outside Investors are permitted to invest 
in TCLP, the Funds will be entitled to purchase, hold and redeem Units 
on terms that are at least as favorable, including (without limitation) 
the expenses associated with an investment in TCLP, as the terms on 
which any Outside Investor purchases, holds or redeems Units and on 
terms that are the same as the terms on which any Other Account 
purchases, holds or redeems Units. Other than the Tax Holders' 
interests, which will be subject to the Tax Holder Limitations, TCLP 
will own at all times 100% of the voting and economic interests in TC 
REIT.
    6. TC REIT and TCLP will be managed by an investment adviser that 
is registered as an investment adviser with the Commission. Any 
investment sub-adviser to TC REIT or TCLP will be registered as an 
investment adviser with the Commission or, if not registered, will 
consent to examination by the Commission staff with respect to the 
services it would provide to TC REIT or TCLP as if it were registered 
as an investment adviser.
    7. The Funds' proposed investments in TCLP, and TCLP's investment 
in TC REIT, will not be subject to any sales load, redemption fee, 
distribution fee analogous to a 12b-1 fee, or service fee analogous to 
a FINRA Rule 2830 service fee imposed by TCLP or TC REIT.
    8. Advisors shall cause TCGP, TCLP and TC REIT to maintain books 
and records as is consistent with Internal Revenue Service guidance and 
U.S. GAAP, shall cause the books and records of TCGP, TCLP and TC REIT 
to be made available for inspection by the Commission staff as would be 
required by the Act if each of TCGP, TCLP and TC REIT was a registered 
investment company, and, if requested, shall furnish copies of the 
books and records to the Commission staff.
    9. TCLP will prepare consolidated annual and semi-annual financial 
reports and, for each quarter for which a semi-annual or annual report 
is not required to be prepared, a consolidated schedule of investments 
for TCLP. The financial statements of TCLP will be prepared in 
accordance with Regulation S-X and U.S. GAAP, will be audited by an 
independent auditor (for annual financial statements), and, if 
practicable, will be prepared as of the same date and for the same 
periods as the investing Funds. TCLP will consolidate TC REIT for 
financial reporting purposes. Any consolidated schedule of investments 
of TCLP will disclose each position that TCLP and TC REIT hold. The 
Trust, on behalf of each Fund that has invested 5% or more of its net 
assets in TCLP \16\ as of the end of a reporting period, will attach, 
as an exhibit to each of the Trust's shareholder reports with respect 
to such a Fund filed on Form N-CSR and each of the Trust's quarterly 
reports with respect to such a Fund filed on Form N-Q, TCLP's audited 
or unaudited financial statements (which will consist of financial 
statements, footnotes, thereto and a schedule of investments) or 
schedule of investments for the period most recently ended. TCLP will 
deliver such annual and semi-annual financial statements and schedules 
of investments to the Trust in time to allow the Trust to make such 
filings. The relevant Fund's shareholder reports and quarterly reports 
will cross-reference the TCLP financial statements (for annual and 
semi-annual reports) or schedule of investments (for other quarters) 
filed as an exhibit to the form. If a Fund is required to attach and 
cross-reference the financial statements of TCLP solely for purpose of 
complying with this condition 9, (a) the Fund may disclaim that (i) the 
TCLP financial statements or schedule of investments constitute part of 
the Fund's financial statements, shareholder report or quarterly 
report, and (ii) the TCLP financial statements or schedule of 
investments are incorporated therein by reference, and (b) the 
certifications for each principal executive and principal financial 
officer required by rule 30a-2(a) under the Act that accompany Form N-
CSR or Form N-Q filings with respect to such a Fund may make clear that 
the TCLP financial statements or schedule of investments that accompany 
the Form N-CSR or Form N-Q filings do not constitute part of the report 
to which the certificate relates.\17\
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    \16\ Investments in any Future LPs will be aggregated with 
investments in TCLP to determine whether a Fund has invested 5% or 
more of its net assets. If the aggregate investments are 5% or more, 
then the disclosure requirements under this condition will apply 
(for that Fund) with respect to information about TCLP and each 
Future LP in which that Fund is invested.
    \17\ As noted above, the requested order does not include relief 
from any existing disclosure requirements. Accordingly, the 
disclaimer and clarification contemplated in clauses (a) and (b) 
could not be included if the Fund is required to disclose 
information regarding the financial statements of TCLP for any 
purpose other than complying with this condition 9.
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    10. Neither TCLP nor TC REIT will acquire securities of any other 
investment company or company relying on section 3(c)(1) or 3(c)(7) of 
the Act in excess of the limits contained in section 12(d)(1)(A) of the 
Act, except to the extent that TCLP or TC REIT: (a) Receives securities 
of another investment company as a dividend or as a result of a plan of 
reorganization of a company (other than a plan devised for the purpose 
of evading section 12(d)(1) of the Act); or (b) acquires (or is deemed

[[Page 55405]]

to have acquired) securities of another investment company pursuant to 
exemptive relief from the Commission permitting TCLP or TC REIT to (i) 
acquire securities of one or more investment companies for short-term 
cash management purposes, or (ii) engage in interfund borrowing and 
lending transactions.
    11. A Fund will treat any leverage that TCLP or TC REIT incurs as 
though such leverage were incurred by the Fund for purposes of 
determining compliance with applicable restrictions under the Act 
relevant to the Fund's use of leverage. Under no circumstances will a 
Fund guarantee, or otherwise be responsible for the satisfaction of, 
any loan or obligation incurred by TCLP or TC REIT.
    12. The TCLP and TC REIT will comply with the following sections of 
the Act as if the TCLP and TC REIT each were an open-end management 
investment company registered under the Act, except as noted: Section 
9; section 12 (except that, to the extent necessary to implement the 
arrangements described herein, (i) the Funds may invest in Units issued 
by TCLP in accordance with condition 3, (ii) TCLP may issue Units to 
the investing Funds subject to the limits in condition 3, and (iii) 
TCLP may invest in TC REIT beyond the limits of sections 12(d)(1)(A) 
and (B)); section 13 (provided that section 13(a)(4) will apply as 
though it read only ``change the nature of its business''; the 
interests issued by TCLP and TC REIT will be regarded as voting 
securities under section 2(a)(42) of the Act for purposes of applying 
this condition; and the offering memoranda utilized by TCLP and TC REIT 
to offer and sell their interests will be regarded as registration 
statements for purposes of applying this condition); section 17(a) 
(except insofar as relief is provided by the order requested herein); 
section 17(d) (except insofar as relief is provided by the order 
requested herein); section 17(e); section 17(f); section 17(h); section 
18 (although (a) the interests issued by TCLP and TC REIT will be 
regarded as voting securities under section 2(a)(42) of the Act for 
purposes of applying this condition, (b) TC REIT will be permitted to 
incur loans from Non-bank Commercial Lenders, subject to the asset 
coverage limit, and (c) TC REIT will not be required to restore 300% 
asset coverage within three days, as required under section 18(f), if 
such asset coverage falls below 300% solely as a result of a decline in 
the value of TC REIT's real estate holdings); section 21; section 36; 
and sections 37-53. In addition, the TCLP and TC REIT will comply with 
the rules under section 17(f) \18\ and section 17(g) of the Act, as 
well as rule 22c-1 under the Act as if each of the TCLP and TC REIT 
were an open-end management investment company registered under the 
Act.
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    \18\ Applicants note that they will operate TCLP and TC REIT 
such that rules under section 17(f) will not be applicable to either 
entity.
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    Advisors will cause TCGP, TCLP and TC REIT to, and TCGP, TCLP and 
TC REIT will, adopt policies and procedures designed to ensure that 
each of TCLP and TC REIT complies with the aforementioned sections of 
the Act and rules under the Act. Advisors will cause TCGP, TCLP and TC 
REIT to, and TCGP, TCLP and TC REIT will, periodically review and 
periodically update as appropriate such policies and procedures, 
maintain books and records describing such policies and procedures, and 
maintain the records required by rules 31a-1(b)(1), 31a-1(b)(2)(ii) and 
31a-1(b)(9) under the Act. All books and records required to be made 
pursuant to this condition will be maintained and preserved for a 
period of not less than six years from the end of the fiscal year in 
which any transaction occurs, the first two years in an easily 
accessible place, and will be subject to examination by the Commission 
and its staff.
    For purposes of implementing condition 12, any action that the 
above-referenced statutory and regulatory provisions require to be 
taken or made by the directors, officers and/or employees of a 
registered investment company will be performed by TCGP with respect to 
TCLP, and by Advisors (or its successor),\19\ as managing member with 
respect to TC REIT. As noted in this Application, the TCLP Committee 
will oversee the valuation of the assets of TCLP and TC REIT for which 
market quotations are not readily available, which also will be 
relevant to the implementation of condition 12.
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    \19\ See supra, note 2.
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    13. To engage in Cross Transactions, the Funds will comply with 
rule 17a-7 under the Act in all respects other than the requirement 
that the parties to the transaction be affiliated persons (or 
affiliated persons of affiliated persons) of each other solely by 
reason of having a common investment adviser or investment advisers 
which are affiliated persons of each other, common officers, and/or 
common directors, solely because a Fund and Other Account might become 
affiliated persons within the meaning of section 2(a)(3)(A), (B) or (C) 
of the Act because of their investments in TCLP.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-23093 Filed 9-14-15; 8:45 am]
 BILLING CODE 8011-01-P


