SEC Company Response from Global Net Lease, Inc. (GNL, GNL-PA, GNL-PB, GNL-PD, GNL-PE) (CIK 0001526113) (GNL) — Dec 7, 2011
Global Net Lease, Inc. (GNL, GNL-PA, GNL-PB, GNL-PD, GNL-PE) (CIK 0001526113)
Date: Dec. 7, 2011 · CIK: 0001526113 · Accession: 0001144204-11-068883
AI Filing Summary & Sentiment
File numbers found in text: 333-177563
Referenced dates: December 3, 2003, June 4, 2001, November 23, 2011
Letter
Re: American Realty Capital Global Daily Net Asset Value Trust, Inc. Registration Statement on Form S-11 Filed October 27, 2011 File No. 333-177563
Dear Mr. McTiernan:
As counsel to American Realty Capital Global Daily Net Asset Value Trust, Inc., a Maryland corporation organized to qualify as a real estate investment trust (the “Company”), we are transmitting for filing pursuant to the Securities Act of 1933, as amended (the “Securities Act”), Pre-Effective Amendment No. 1 (“Amendment No. 1”) to the Company’s Registration Statement on Form S-11 (File No. 333- 177563) (the “Registration Statement”) and the Company’s responses to the comments of the Staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) contained in your letter dated November 23, 2011.
For convenience of reference, each Staff comment in your November 23, 2011 comment letter is reprinted below in italics, numbered to correspond with the paragraph numbers assigned in your letter, and is followed by the corresponding response of the Company.
We are providing to each of you and Stacie Gorman a courtesy copy of this letter and two courtesy copies of Amendment No. 1 filed by the Company on the date hereof, one copy of which has been marked to reflect changes made to the Registration Statement filed with the Commission on October 27, 2011 (the “Blackline”). The changes reflected in Amendment No. 1 have been made in response to the Staff’s comments and for the purpose of updating and revising certain information in the Registration Statement. All page references in our responses are to the pages of the Blackline. Capitalized terms used and not otherwise defined in this response letter that are defined in the Registration Statement shall have the meanings set forth in the Registration Statement.
General
Comment 1. We note your disclosure on page 181 regarding the share redemption program. Please provide us with a detailed legal analysis of the applicability of the tender offer rules, including Rule 13e-4 and Regulation 14E, to your share repurchase program. We urge you to consider all the elements of your share repurchase program in determining whether the program is consistent with relief granted by the Division of Corporation Finance in prior no action letters. See, for example, T REIT Inc. (Letter dated June 4, 2001) and Well Real Estate Investment Trust II, Inc. (Letter dated December 3, 2003). To the extent you have questions as to whether the program is entirely consistent with the relief previously granted by the Division of Corporation Finance, you may contact the Division’s Office of Mergers and Acquisitions. Please note that we will refer your response to the Office of Mergers and Acquisitions for further review.
December 7, 2011
Page 2
Response 1. The Company’s share redemption program is not a tender offer and not subject to the tender offer rules, including Rule 13e-4 and Regulation 14E. The share redemption program is consistent with the share redemption program of American Realty Capital Daily Net Asset Value Trust, Inc. (“ARC-NAV”), which was granted no action relief on July 21, 2011.
In granting no action relief to ARC-NAV, the SEC relied on the following facts: (i) all material information and modifications related to the redemption program will be fully and timely disclosed to stockholders in the prospectus and the NAV per share will be available on the company’s web site and toll-free information line; (ii) the company will not solicit redemptions other than through the prospectus and prospectus supplements disclosing the NAV per share; (iii) the shares will be redeemed daily at the published NAV per share for each class of shares being redeemed; (iv) the redemption price will be paid no later than three business days following a redemption request and will be the same for all shares of the same class being redeemed on a given day; (v) redemptions will be limited in any calendar quarter to shares whose aggregate value is 5% of the combined NAV of both classes of shares as of the last calendar quarter and or an aggregate limit of approximately 20% of the company’s total NAV for a 12-month period; (vi) redemptions on a first-come, first-served basis during each calendar quarter; (vii) stockholders may cancel redemption requests by notifying a customer service representative at the company’s toll-free information line; (viii) there will be no established trading market for the company’s common stock and the redemption program will be terminated if the company’s shares 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 company’s shares develops; (ix) the redemption program is intended to remain open for the life of the company unless modified or suspended by the board of directors; and (x) the redemption program is open to all stockholders on the same terms, subject to a short-term trading fee if stockholders have held their shares for less than four months. As disclosed in the prospectus, the Company’s share redemption program is consistent with the foregoing qualifications; therefore, we believe that the tender offer rules do not apply.
Comment 2. Please submit all written sales materials proposed to be transmitted to prospective investors, orally or in writing, including that intended for broker-dealer use only. Please be aware that we will need time to review these materials. In addition, note that sales materials must set forth a balanced presentation of the risks and rewards to investors and should not contain any information or disclosure that is not contained in or derived from the prospectus. For guidance, refer to Item 19.D of Industry Guide 5.
Response 2. Currently no drafts of written sales materials proposed to be transmitted to prospective investors exist. In response to the Staff’s comment, the Company undertakes to provide to the Staff all written sales materials proposed to be transmitted to prospective investors, orally or in writing, including that intended for broker-dealer use only.
Comment 3. Please provide us with copies of any graphics, maps, photographs, and related captions or other artwork including logos that you intend to use in the prospectus. Such graphics and pictorial representations should not be included in any preliminary prospectus distributed to prospective investors prior to our review.
Response 3. In response to the Staff’s comment, prior to effectiveness, the Company undertakes to provide copies of any graphics, maps, photographs, and related captions or other artwork, that it intends to use in the prospectus.
Comment 4. We note that you may conduct the share repurchase program during the offering period of the shares being registered under this registration statement. Please be advised that you are responsible for analyzing the applicability of Regulation M to your share repurchase program. We urge you to consider all the elements of your share repurchase program in determining whether the program is consistent with the class relief granted by the Division of Market Regulation in the class exemptive letter granted Alston & Bird LLP dated October 22, 2007. To the extent you have questions as to whether the program is entirely consistent with that class exemption you may contact the Division of Market Regulation.
December 7, 2011
Page 3
Response 4. The Company’s share repurchase program is consistent with the class relief previously granted by the Division of Market Regulation in the class exemptive letter granted Alston & Bird LLP dated October 22, 2007. With respect to the Company’s share repurchase program during the offering period, we respectfully note the following: there is no trading market for the Company’s common stock; the Company will terminate its share repurchase program during the distribution of its common stock in the event that a secondary market for the Company’s common stock develops; the Company purchases shares of its common stock under its share repurchase program at a price based on the NAV per share, which is the same metric used to set the price for the Company’s common stock; the terms of the share repurchase program are fully disclosed in the Company’s prospectus; and except as otherwise exempted therein, the Company shall comply with Regulation M.
Comment 5. Please advise us whether the independent valuer will file a Rule 436 consent with respect to the disclosure of the property portfolio and liability values. We note that you have identified the valuer as an “expert” on page 211.
Response 5. The independent valuer will not qualify as an “expert” and therefore will not file a Rule 436 consent.
Comment 6. Please add disclosure in the summary section that the NAV calculation is an estimate and that organizational and offering costs are amortized over five years.
Response 6. In response to the Staff’s comment, the Company has added disclosure in the summary section on page 6 that the NAV calculation is an estimate and that organizational and offering costs are amortized over five years.
Cover Page
Comment 7. Please ensure that your cover page does not exceed one page in length as required by Item 501(b) of Regulation S-K. The cover page should be limited to information required by Item 501 and other information that is key to an investment decision. Some of the details of the offering may be more appropriate for the prospectus summary or the body of the prospectus.
Response 7. The Company has limited its cover page to one page in length as required by the applicable rules.
Comment 8. Please add a cover page and summary risk factor relating to the competing time demands imposed on the sponsor by all the other public programs it is currently managing.
Response 8. In response to the Staff’s comment, the Company has added the requested disclosure.
Comment 9. Please clarify that the shares sold pursuant to the dividend reinvestment plan will also be based on your net asset value.
Response 9. In response to the Staff’s comment, the Company has clarified on the cover page that the shares sold pursuant to the dividend reinvestment plan will also be based on the net asset value of the common stock.
December 7, 2011
Page 4
Investment Objectives, page 2
Comment 10. We note your disclosure in this section that you will seek to invest 25% of your capital in Europe. However, on page 62 and elsewhere, you indicate that you may invest up to 40% of your capital in Europe. Further, you indicate that up to 10% of your investments may be made elsewhere internationally. Please revise your disclosure as appropriate.
Response 10. In response to the Staff’s comment, the Company has revised its disclosure to more clearly indicate the respective percentages of assets to be invested in the United States, Europe and elsewhere internationally.
How is an investment in shares of your common stock different from listed REITs? , page 2
Comment 11. Please provide a more balanced comparison with listed REITs. For example, please disclose that common stock in a listed REIT is more liquid than your common stock.
Response 11. In response to the Staff’s comment, the Company has provided additional disclosure regarding an investment in shares of the Company’s common stock and that of a listed REIT.
Who are your advisor and service providers and what will they do?, page 3
Comment 12. Please revise to identify the European service provider you intend to use.
Response 12. The Company respectfully submits that it has not yet contracted with a European service provider. Further, as disclosed in the prospectus, the Company, through its advisor, may engage more than one service provider for its international investments.
How will your advisor calculate NAV per share?, page 6
Comment 13. Please revise to clarify that the independent valuer will also value the liabilities. Please also provide more detailed disclosure of any adjustments the advisor might make to the values calculated by the independent valuer.
Response 13. In response to the Staff’s comment, the Company has revised its disclosure on page 6.
Who should buy shares?, page 9
Comment 14. We note that you refer to yourself as a finite-life entity. However, we note that you are not required to liquidate by a specific date and that your board may determine when you should commence a liquidity event. Please revise your disclosure to clarify this point.
Response 14. In response to the Staff’s comment, the Company has revised its disclosure on pages i and 9 to clarify this point.
Will you use debt borrowing to finance your investments?, page 11
Comment 15. Please revise to disclose the amount of leverage you are permitted to incur under your charter.
Response 15. In response to the Staff’s comment, the Company has included the requested disclosure on page 11.
What are your exit strategies?, page 11
Comment 16. We note your disclosure that you intend to begin a liquidity event in three to six years after the offering. However, on page 114 and elsewhere, you state that you intend to begin a liquidity event in six to eight years. Further, on page 130, you state that you intend to begin a liquidity event in three to five years. Please revise your disclosure as appropriate to clarify this discrepancy.
December 7, 2011
Page 5
Response 16. It is the Company’s intention to begin a liquidity event three to six years after the termination of the offering period. In response to the Staff’s comment, the Company has revised its disclosure throughout the prospectus to clarify its intended timeframe for a liquidity event.
Comment 17. Please revise to disclose that your intended liquidity events are subject to the board determining it is appropriate to commence a liquidity event and that shareholders must approve a proposed liquidity event. Please revise to clarify, if true, that you may continue indefinitely if your shareholders do not approve your proposed liquidity transactions.
Response 17. In response to the Staff’s comment, the Company has revised its disclosure beginning on page 118.
What conflicts of interest will your advisor . . . ? ., page 12
Comment 18. Please disclose the respective interest held in your sponsor by Messrs. Schorsch and Kahane.
Response 18. In response to the Staff’s comment, the Company has included the requested disclosure on page 13.
What are the fees that you will pay . . .?, page 14
Comment 19. Please clarify how your advisors and sub-advisors will be compensated if you enter into a joint venture with an affiliate.
Response 19. The Company does not currently intend to enter into a joint venture with affiliates. The Company respectfully submits that it is unable to provide the exact terms of compensation in the unlikely event that the advisor or any service provider enters into a joint venture with an affiliate because these terms will be dependent upon the assets of the joint venture under the criteria described in the prospectus, as well as the financial condition and operating capabilities of the prospective partner at the given time. Such factors will be unknown until such a joint venture is formed, if at all. As disclosed in the prospectus, joint ventures with affiliates must be approved by a majority of the Company’s independent directors as being fair and reasonable and upon substantially the same terms and conditions as those received by the ot
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The Tower at Peabody Place
John A. Good
100 Peabody Place, Suite 900
phone: (901) 543-5901
Memphis, TN 38103-3672
fax: (888) 543-4644
(901) 543-5900
e-mail: jgood@bassberry.com
December 7, 2011
Michael McTiernan
Assistant Director
U.S. Securities and Exchange Commission
Washington, DC 20549
Re: American Realty Capital Global Daily Net Asset Value Trust, Inc.
Registration Statement on Form S-11
Filed October 27, 2011
File No. 333-177563
Dear Mr. McTiernan:
As counsel to American Realty Capital Global Daily Net Asset Value Trust, Inc., a Maryland corporation organized to qualify as a real estate investment trust (the “Company”), we are transmitting for filing pursuant to the Securities Act of 1933, as amended (the “Securities Act”), Pre-Effective Amendment No. 1 (“Amendment No. 1”) to the Company’s Registration Statement on Form S-11 (File No. 333- 177563) (the “Registration Statement”) and the Company’s responses to the comments of the Staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) contained in your letter dated November 23, 2011.
For convenience of reference, each Staff comment in your November 23, 2011 comment letter is reprinted below in italics, numbered to correspond with the paragraph numbers assigned in your letter, and is followed by the corresponding response of the Company.
We are providing to each of you and Stacie Gorman a courtesy copy of this letter and two courtesy copies of Amendment No. 1 filed by the Company on the date hereof, one copy of which has been marked to reflect changes made to the Registration Statement filed with the Commission on October 27, 2011 (the “Blackline”). The changes reflected in Amendment No. 1 have been made in response to the Staff’s comments and for the purpose of updating and revising certain information in the Registration Statement. All page references in our responses are to the pages of the Blackline. Capitalized terms used and not otherwise defined in this response letter that are defined in the Registration Statement shall have the meanings set forth in the Registration Statement.
General
Comment 1. We note your disclosure on page 181 regarding the share redemption program. Please provide us with a detailed legal analysis of the applicability of the tender offer rules, including Rule 13e-4 and Regulation 14E, to your share repurchase program. We urge you to consider all the elements of your share repurchase program in determining whether the program is consistent with relief granted by the Division of Corporation Finance in prior no action letters. See, for example, T REIT Inc. (Letter dated June 4, 2001) and Well Real Estate Investment Trust II, Inc. (Letter dated December 3, 2003). To the extent you have questions as to whether the program is entirely consistent with the relief previously granted by the Division of Corporation Finance, you may contact the Division’s Office of Mergers and Acquisitions. Please note that we will refer your response to the Office of Mergers and Acquisitions for further review.
December 7, 2011
Page 2
Response 1. The Company’s share redemption program is not a tender offer and not subject to the tender offer rules, including Rule 13e-4 and Regulation 14E. The share redemption program is consistent with the share redemption program of American Realty Capital Daily Net Asset Value Trust, Inc. (“ARC-NAV”), which was granted no action relief on July 21, 2011.
In granting no action relief to ARC-NAV, the SEC relied on the following facts: (i) all material information and modifications related to the redemption program will be fully and timely disclosed to stockholders in the prospectus and the NAV per share will be available on the company’s web site and toll-free information line; (ii) the company will not solicit redemptions other than through the prospectus and prospectus supplements disclosing the NAV per share; (iii) the shares will be redeemed daily at the published NAV per share for each class of shares being redeemed; (iv) the redemption price will be paid no later than three business days following a redemption request and will be the same for all shares of the same class being redeemed on a given day; (v) redemptions will be limited in any calendar quarter to shares whose aggregate value is 5% of the combined NAV of both classes of shares as of the last calendar quarter and or an aggregate limit of approximately 20% of the company’s total NAV for a 12-month period; (vi) redemptions on a first-come, first-served basis during each calendar quarter; (vii) stockholders may cancel redemption requests by notifying a customer service representative at the company’s toll-free information line; (viii) there will be no established trading market for the company’s common stock and the redemption program will be terminated if the company’s shares 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 company’s shares develops; (ix) the redemption program is intended to remain open for the life of the company unless modified or suspended by the board of directors; and (x) the redemption program is open to all stockholders on the same terms, subject to a short-term trading fee if stockholders have held their shares for less than four months. As disclosed in the prospectus, the Company’s share redemption program is consistent with the foregoing qualifications; therefore, we believe that the tender offer rules do not apply.
Comment 2. Please submit all written sales materials proposed to be transmitted to prospective investors, orally or in writing, including that intended for broker-dealer use only. Please be aware that we will need time to review these materials. In addition, note that sales materials must set forth a balanced presentation of the risks and rewards to investors and should not contain any information or disclosure that is not contained in or derived from the prospectus. For guidance, refer to Item 19.D of Industry Guide 5.
Response 2. Currently no drafts of written sales materials proposed to be transmitted to prospective investors exist. In response to the Staff’s comment, the Company undertakes to provide to the Staff all written sales materials proposed to be transmitted to prospective investors, orally or in writing, including that intended for broker-dealer use only.
Comment 3. Please provide us with copies of any graphics, maps, photographs, and related captions or other artwork including logos that you intend to use in the prospectus. Such graphics and pictorial representations should not be included in any preliminary prospectus distributed to prospective investors prior to our review.
Response 3. In response to the Staff’s comment, prior to effectiveness, the Company undertakes to provide copies of any graphics, maps, photographs, and related captions or other artwork, that it intends to use in the prospectus.
Comment 4. We note that you may conduct the share repurchase program during the offering period of the shares being registered under this registration statement. Please be advised that you are responsible for analyzing the applicability of Regulation M to your share repurchase program. We urge you to consider all the elements of your share repurchase program in determining whether the program is consistent with the class relief granted by the Division of Market Regulation in the class exemptive letter granted Alston & Bird LLP dated October 22, 2007. To the extent you have questions as to whether the program is entirely consistent with that class exemption you may contact the Division of Market Regulation.
December 7, 2011
Page 3
Response 4. The Company’s share repurchase program is consistent with the class relief previously granted by the Division of Market Regulation in the class exemptive letter granted Alston & Bird LLP dated October 22, 2007. With respect to the Company’s share repurchase program during the offering period, we respectfully note the following: there is no trading market for the Company’s common stock; the Company will terminate its share repurchase program during the distribution of its common stock in the event that a secondary market for the Company’s common stock develops; the Company purchases shares of its common stock under its share repurchase program at a price based on the NAV per share, which is the same metric used to set the price for the Company’s common stock; the terms of the share repurchase program are fully disclosed in the Company’s prospectus; and except as otherwise exempted therein, the Company shall comply with Regulation M.
Comment 5. Please advise us whether the independent valuer will file a Rule 436 consent with respect to the disclosure of the property portfolio and liability values. We note that you have identified the valuer as an “expert” on page 211.
Response 5. The independent valuer will not qualify as an “expert” and therefore will not file a Rule 436 consent.
Comment 6. Please add disclosure in the summary section that the NAV calculation is an estimate and that organizational and offering costs are amortized over five years.
Response 6. In response to the Staff’s comment, the Company has added disclosure in the summary section on page 6 that the NAV calculation is an estimate and that organizational and offering costs are amortized over five years.
Cover Page
Comment 7. Please ensure that your cover page does not exceed one page in length as required by Item 501(b) of Regulation S-K. The cover page should be limited to information required by Item 501 and other information that is key to an investment decision. Some of the details of the offering may be more appropriate for the prospectus summary or the body of the prospectus.
Response 7. The Company has limited its cover page to one page in length as required by the applicable rules.
Comment 8. Please add a cover page and summary risk factor relating to the competing time demands imposed on the sponsor by all the other public programs it is currently managing.
Response 8. In response to the Staff’s comment, the Company has added the requested disclosure.
Comment 9. Please clarify that the shares sold pursuant to the dividend reinvestment plan will also be based on your net asset value.
Response 9. In response to the Staff’s comment, the Company has clarified on the cover page that the shares sold pursuant to the dividend reinvestment plan will also be based on the net asset value of the common stock.
December 7, 2011
Page 4
Investment Objectives, page 2
Comment 10. We note your disclosure in this section that you will seek to invest 25% of your capital in Europe. However, on page 62 and elsewhere, you indicate that you may invest up to 40% of your capital in Europe. Further, you indicate that up to 10% of your investments may be made elsewhere internationally. Please revise your disclosure as appropriate.
Response 10. In response to the Staff’s comment, the Company has revised its disclosure to more clearly indicate the respective percentages of assets to be invested in the United States, Europe and elsewhere internationally.
How is an investment in shares of your common stock different from listed REITs? , page 2
Comment 11. Please provide a more balanced comparison with listed REITs. For example, please disclose that common stock in a listed REIT is more liquid than your common stock.
Response 11. In response to the Staff’s comment, the Company has provided additional disclosure regarding an investment in shares of the Company’s common stock and that of a listed REIT.
Who are your advisor and service providers and what will they do?, page 3
Comment 12. Please revise to identify the European service provider you intend to use.
Response 12. The Company respectfully submits that it has not yet contracted with a European service provider. Further, as disclosed in the prospectus, the Company, through its advisor, may engage more than one service provider for its international investments.
How will your advisor calculate NAV per share?, page 6
Comment 13. Please revise to clarify that the independent valuer will also value the liabilities. Please also provide more detailed disclosure of any adjustments the advisor might make to the values calculated by the independent valuer.
Response 13. In response to the Staff’s comment, the Company has revised its disclosure on page 6.
Who should buy shares?, page 9
Comment 14. We note that you refer to yourself as a finite-life entity. However, we note that you are not required to liquidate by a specific date and that your board may determine when you should commence a liquidity event. Please revise your disclosure to clarify this point.
Response 14. In response to the Staff’s comment, the Company has revised its disclosure on pages i and 9 to clarify this point.
Will you use debt borrowing to finance your investments?, page 11
Comment 15. Please revise to disclose the amount of leverage you are permitted to incur under your charter.
Response 15. In response to the Staff’s comment, the Company has included the requested disclosure on page 11.
What are your exit strategies?, page 11
Comment 16. We note your disclosure that you intend to begin a liquidity event in three to six years after the offering. However, on page 114 and elsewhere, you state that you intend to begin a liquidity event in six to eight years. Further, on page 130, you state that you intend to begin a liquidity event in three to five years. Please revise your disclosure as appropriate to clarify this discrepancy.
December 7, 2011
Page 5
Response 16. It is the Company’s intention to begin a liquidity event three to six years after the termination of the offering period. In response to the Staff’s comment, the Company has revised its disclosure throughout the prospectus to clarify its intended timeframe for a liquidity event.
Comment 17. Please revise to disclose that your intended liquidity events are subject to the board determining it is appropriate to commence a liquidity event and that shareholders must approve a proposed liquidity event. Please revise to clarify, if true, that you may continue indefinitely if your shareholders do not approve your proposed liquidity transactions.
Response 17. In response to the Staff’s comment, the Company has revised its disclosure beginning on page 118.
What conflicts of interest will your advisor . . . ? ., page 12
Comment 18. Please disclose the respective interest held in your sponsor by Messrs. Schorsch and Kahane.
Response 18. In response to the Staff’s comment, the Company has included the requested disclosure on page 13.
What are the fees that you will pay . . .?, page 14
Comment 19. Please clarify how your advisors and sub-advisors will be compensated if you enter into a joint venture with an affiliate.
Response 19. The Company does not currently intend to enter into a joint venture with affiliates. The Company respectfully submits that it is unable to provide the exact terms of compensation in the unlikely event that the advisor or any service provider enters into a joint venture with an affiliate because these terms will be dependent upon the assets of the joint venture under the criteria described in the prospectus, as well as the financial condition and operating capabilities of the prospective partner at the given time. Such factors will be unknown until such a joint venture is formed, if at all. As disclosed in the prospectus, joint ventures with affiliates must be approved by a majority of the Company’s independent directors as being fair and reasonable and upon substantially the same terms and conditions as those received by the ot