Correspondence 0001140361-24-013047 from Fortress Net Lease REIT (CIK 0001966394)
Fortress Net Lease REIT (CIK 0001966394)
Date: March 13, 2024 · CIK: 0001966394 · Accession: 0001140361-24-013047
AI Filing Summary & Sentiment
File numbers found in text: 000-56632
Referenced dates: April 26, 2017, December 21, 2016, February 29, 2024, September 1, 2017, September 12, 2016
Letter
601 Lexington Avenue
New York, NY 10022
United States
Facsimile:
+1 212 446 4900
+1 212 446 4800
www.kirkland.com
March 13, 2024
VIA EDGAR
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
100 F Street, NE
Washington, D.C. 20549
Attn:
Frank Knapp
Kristina Marrone
Isabel Rivera
David Link
Re:
Fortress Net Lease REIT
Registration Statement on Form 10-12G
Filed February 1, 2024
File No. 000-56632
Ladies and Gentlemen:
This letter sets forth the responses of Fortress Net Lease REIT (the “Company”) to the comments of the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) set forth in your letter dated February 29, 2024, with respect to the above referenced Registration Statement on Form 10-12G filed on February 1, 2024 (the “Registration Statement”).
The text of the Staff’s comments has been included in this letter for your convenience, and we have numbered the paragraphs below to correspond to the numbers in the Staff’s letter. For your convenience, we have also set forth the Company’s response immediately below the numbered comments.
In addition, the Company has revised the Registration Statement and the Company is concurrently filing an amendment to the Registration Statement (the “Amended
Registration Statement”) with this letter.
Austin Bay Area Beijing Boston Brussels Chicago Dallas Hong Kong Houston London Los Angeles Miami Munich Paris Riyadh Salt Lake City Shanghai Washington, D.C.
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
March 13, 2024
Page 2
Registration Statement on Form 10-12G Filed February 1, 2024
Item 1. Business
Temporary Strategies, page 12
1.
Please state whether the Adviser may change your investment strategy without shareholder notice or consent. If true, please also provide risk factor disclosure.
Response: In response to the Staff’s comment, the Company has revised the disclosure on page 12 of the Amended Registration Statement to add the bold text below to disclose that the Adviser may change the Company’s investment strategy without shareholder notice or consent.
During periods in which the Adviser determines that economic or market conditions are unfavorable to investors and a defensive strategy would benefit us, we may temporarily depart from our investment strategy without providing advance notice to, or obtaining the consent of, our shareholders.
In addition, the Company has revised the disclosure on page 84 of the Amended Registration Statement to add the bold text below to provide new risk factor disclosure relating to the risk that its investment strategy may be changed without shareholder notice or consent.
Pursuant to our Declaration of Trust, our board of trustees may, from time to time, change our investment strategy, including our related operational policies, without providing advance notice to, or obtaining the consent of, our shareholders.
Pursuant to our Declaration of Trust, our board of trustees may, from time to time, change our investment strategy, including our related operational policies with respect to investments, indebtedness, capitalization and distributions, at any time without providing advance notice to, or obtaining the consent of, our shareholders, which could result in us making investments that are different from, or that provide a lower yield compared to, the types of investments described in this Registration Statement and in our investment guidelines. We may also determine to pay down certain of our indebtedness and have indebtedness below our target leverage or we may borrow more to provide for additional liquidity causing us to exceed our target leverage. A change in our investment strategy may, among other things, increase our exposure to real estate market fluctuations, default risk and interest rate risk, all of which could have a material adverse effect on our business, financial condition, results of operations, cash flows, the NAV of our shares and our ability to satisfy our debt obligations and to make distributions to our shareholders.
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
March 13, 2024
Page 3
Fortress Net Lease REIT Structure, page 14
2.
Please revise your structure chart to reflect the ownership percentages of the entities listed, as applicable.
Response: In response to the Staff’s comment, the Company has revised the diagram of its organizational structure on page 15 of the Amended Registration Statement to include the percentage of ownership of the entities listed, as applicable, of the Company, FIG LLC, the Adviser, and their respective affiliates.
Share Repurchase Plan, page 27
3.
Please be advised that you are responsible for analyzing 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. To the extent you are relying on Blackstone Real Estate Income Trust, Inc. (Letter dated September 12, 2016), Rich Uncles NNN REIT, Inc. (Letter dated December 21, 2016), Hines Global REIT II, Inc. (Letter dated April 26, 2017), or Black Creek Diversified Property Fund Inc. (Letter dated September 1, 2017) please provide us with an analysis as to how your program is consistent with such relief. 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 at 202-551-3440.
Response: The Company acknowledges the Staff’s comment and respectfully advises the Staff that it has analyzed the applicability of the tender offer rules, including Rule 13e-4 and Regulation 14E, and has also considered the Staff’s no-action letters referenced above, in each case, with respect to its share repurchase plan (the “Share Repurchase Plan”).
The Company respectfully advises the Staff that the Company believes its Share Repurchase Plan is consistent with the relief granted by the Staff in prior no-action letters, in particular, the relief granted to Blackstone Real Estate Income Trust, Inc. in the Staff’s letter dated September 12, 2016 (the “Blackstone Relief Letter”). By way of illustration, set forth below is a table comparing the key features underlying the relief granted in the Blackstone Relief Letter compared to the Company’s Share Repurchase Plan. As shown below, the Company’s Share Repurchase Plan contains each of the key features specified by the Staff in the Blackstone Relief Letter, subject to certain deviations that the Company believes are immaterial to an investor and appropriate in light of its status as a privately placed, non-listed real estate investment trust.
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
March 13, 2024
Page 4
Key Features of Share Repurchase Plan
Blackstone Real Estate Income Trust, Inc.
Fortress Net Lease REIT
All material information relating to the repurchase plan will be fully and timely disclosed to all shareholders. The terms of the repurchase plan will be fully disclosed in the Company’s offering documents, and the most recently determined NAV per share for each class of the Company’s shares will always be available on the Company’s website and toll-free information line.
Yes
Yes (except that the Company intends to provide information relating to its NAV per share directly to financial intermediaries that represent existing and potential investors, instead of through a website and toll-free information line).
The Company will not solicit repurchases under the repurchase plan other than through the Company’s offering materials and supplements thereto disclosing the transaction price and NAV per share of each class of the Company’s shares. Shareholders desiring to request repurchase of all or a portion of their shares will do so of their own volition and not at the behest, invitation or encouragement of the Company. The role of the Company in effectuating repurchases under the repurchase plan will be ministerial.
Yes
Yes
Shares will be repurchased monthly under the repurchase plan at a price which will generally be equal to the NAV per share for the applicable class of shares for the prior month, and the Company will provide shareholders information by supplement, disclosing the historical NAV per share of each class of shares and also provide each month the transaction price and the NAV per share for each class of shares on the Company’s website and toll-free information line. Subject to the terms of the repurchase plan, the Company will repurchase shares at the transaction price per share for the applicable class of the Company’s shares.
Yes
Yes (except that the Company intends to provide information relating to its NAV per share and monthly transaction prices directly to financial intermediaries that represent existing and potential investors, instead of through a website and toll-free information line).
Repurchases will be made on a monthly basis. The repurchase price normally will be paid in cash within three business days following the last calendar day of the applicable month and will be the same for all shares of the same class repurchased in a given month.
Yes
Yes
Repurchases under the repurchase plan will be limited in any calendar month to shares whose aggregate value is 2% of the combined NAV of all classes of the Company’s shares as of the last calendar day of the previous month and will be limited in any calendar quarter to shares whose aggregate value is 5% of the combined NAV of all classes of the Company’s shares as of the last calendar day of the previous calendar quarter.
Yes
Yes
If the monthly or quarterly volume limitation is reached in any given month or the Company determines to repurchase fewer shares than have been requested to be repurchased in any particular month, repurchases under the repurchase plan for such month will generally be made on a pro rata basis.
Yes
Yes
Shareholders may withdraw any repurchase request by notifying the Company’s transfer agent on the Company’s toll-free information line before 4:00 p.m. Eastern time on the last business day of the applicable month.
Yes
Yes
Material modifications, including any reduction to the monthly or quarterly limitations on repurchases, and suspensions of the repurchase plan will be promptly disclosed in a supplement to the Company’s offering documents, or periodic or current reports filed by the Company, as well as on the Company’s website.
Yes
Yes (except that the Company intends to provide updates regarding material modifications to its repurchase plan directly to financial intermediaries that represent existing and potential investors, instead of through a website).
There will be no established regular trading market for the Company’s shares. The repurchase plan will be terminated if the Company’s shares are listed on a national securities exchange or included for quotation in a national securities market, or in the event a secondary market for the Company’s shares develops.
Yes
Yes
The repurchase plan is intended to remain open indefinitely for the life of the Company unless modified or suspended by the Company’s board of directors. The Company is structured as a perpetual-life entity and has no intention to list its shares for trading on an exchange or other trading market.
Yes
Yes
The repurchase plan is open to all shareholders with respect to shares issued in the offering.
Yes
Yes
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
March 13, 2024
Page 5
Item 1A. Risk Factors, page 52
4.
As you are a perpetual life REIT, please provide risk factor disclosure noting that you are not required to ever provide liquidity under your Declaration of Trust or otherwise.
Response: In response to the Staff’s comment, the Company has revised the disclosure on page 91 of the Amended Registration Statement to add the bolded text below to disclose that the Company is not required to provide liquidity under its Declaration of Trust or otherwise.
There is no current public trading market for our shares, and we do not expect that such a market will ever develop in the future. In our perpetual-life structure, the investor may request that we repurchase their shares on a monthly basis, but we are not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any particular month in our discretion. While we may consider a liquidity event at any time in the future, we are not obligated by the Declaration of Trust or otherwise to effect a liquidity event at any time. Therefore, repurchase of shares by us will likely be the only way for you to dispose of your shares. An investment in the Company should be viewed as an illiquid investment. We expect to repurchase shares at a price equal to the transaction price of the class of shares being repurchased on the date of repurchase (which will generally be equal to our prior month’s NAV per share) and not based on the price at which you initially purchased your shares, except that, subject to limited exceptions, (i) Class F-S Shares, Class F-D Shares, Class F-I Shares, Class B Shares and Class E Shares that have not been outstanding for at least one year will be repurchased at 98% of the transaction price and (ii) in the case of Class C Shares and Class D Shares, such shares may only be repurchased to the extent they have been outstanding for at least two years. As a result, you may receive less than the price you paid for your shares when you sell them to us pursuant to our share repurchase plan. See “Item 1(c). Description of Business—Share Repurchase Plan.”
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of R
Show Raw Text
CORRESP
1
filename1.htm
601 Lexington Avenue
New York, NY 10022
United States
Facsimile:
+1 212 446 4900
+1 212 446 4800
www.kirkland.com
March 13, 2024
VIA EDGAR
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
100 F Street, NE
Washington, D.C. 20549
Attn:
Frank Knapp
Kristina Marrone
Isabel Rivera
David Link
Re:
Fortress Net Lease REIT
Registration Statement on Form 10-12G
Filed February 1, 2024
File No. 000-56632
Ladies and Gentlemen:
This letter sets forth the responses of Fortress Net Lease REIT (the “Company”) to the comments of the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) set forth in your letter dated February 29, 2024, with respect to
the above referenced Registration Statement on Form 10-12G filed on February 1, 2024 (the “Registration Statement”).
The text of the Staff’s comments has been included in this letter for your convenience, and we have numbered the paragraphs below to correspond to the numbers in the Staff’s letter. For your convenience, we have also set
forth the Company’s response immediately below the numbered comments.
In addition, the Company has revised the Registration Statement and the Company is concurrently filing an amendment to the Registration Statement (the “Amended
Registration Statement”) with this letter.
Austin Bay Area Beijing Boston Brussels Chicago Dallas Hong Kong Houston London Los Angeles Miami Munich Paris Riyadh Salt Lake City Shanghai Washington, D.C.
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
March 13, 2024
Page 2
Registration Statement on Form 10-12G Filed February 1, 2024
Item 1. Business
Temporary Strategies, page 12
1.
Please state whether the Adviser may change your investment strategy without shareholder notice or consent. If true, please also provide risk factor disclosure.
Response: In response to the Staff’s comment, the Company has revised the disclosure on page 12 of the Amended Registration Statement to add the bold text below to disclose that the Adviser may change the Company’s investment strategy without shareholder notice or consent.
During periods in which the Adviser determines that economic or market conditions are unfavorable to investors and a defensive strategy would benefit us, we may temporarily depart from our investment
strategy without providing advance notice to, or obtaining the consent of, our shareholders.
In addition, the Company has revised the disclosure on page 84 of the Amended Registration Statement to add the bold text below to provide new risk factor
disclosure relating to the risk that its investment strategy may be changed without shareholder notice or consent.
Pursuant to our Declaration of Trust, our board of trustees may, from time to time, change our investment strategy, including our related operational policies,
without providing advance notice to, or obtaining the consent of, our shareholders.
Pursuant to our Declaration of Trust, our board of trustees may, from time to time, change our investment strategy, including our related operational policies with respect to
investments, indebtedness, capitalization and distributions, at any time without providing advance notice to, or obtaining the consent of, our shareholders, which could result in us making investments that are different from, or that provide a lower
yield compared to, the types of investments described in this Registration Statement and in our investment guidelines. We may also determine to pay down certain of our indebtedness and have indebtedness below our target leverage or we may borrow more
to provide for additional liquidity causing us to exceed our target leverage. A change in our investment strategy may, among other things, increase our exposure to real estate market fluctuations, default risk and interest rate risk, all of which
could have a material adverse effect on our business, financial condition, results of operations, cash flows, the NAV of our shares and our ability to satisfy our debt obligations and to make distributions to our shareholders.
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
March 13, 2024
Page 3
Fortress Net Lease REIT Structure, page 14
2.
Please revise your structure chart to reflect the ownership percentages of the entities listed, as applicable.
Response: In response to the Staff’s comment, the Company has revised the diagram of its organizational structure on page 15 of
the Amended Registration Statement to include the percentage of ownership of the entities listed, as applicable, of the Company, FIG LLC, the Adviser, and their respective affiliates.
Share Repurchase Plan, page 27
3.
Please be advised that you are responsible for analyzing 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. To the extent you are relying on Blackstone Real Estate Income Trust, Inc. (Letter
dated September 12, 2016), Rich Uncles NNN REIT, Inc. (Letter dated December 21, 2016), Hines Global REIT II, Inc. (Letter dated April 26, 2017), or Black Creek Diversified Property Fund Inc. (Letter dated September 1, 2017) please provide us
with an analysis as to how your program is consistent with such relief. 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 at 202-551-3440.
Response: The Company acknowledges the Staff’s comment and respectfully advises the Staff that it has analyzed the applicability of the tender offer rules,
including Rule 13e-4 and Regulation 14E, and has also considered the Staff’s no-action letters referenced above, in each case, with respect to its share repurchase plan (the “Share Repurchase Plan”).
The Company respectfully advises the Staff that the Company believes its Share Repurchase Plan is consistent with the relief granted by the Staff in prior no-action letters, in particular, the relief granted to Blackstone Real Estate Income Trust,
Inc. in the Staff’s letter dated September 12, 2016 (the “Blackstone Relief Letter”). By way of illustration, set forth below is a table comparing the key features underlying the relief
granted in the Blackstone Relief Letter compared to the Company’s Share Repurchase Plan. As shown below, the Company’s Share Repurchase Plan contains each of the key features specified by the Staff in the Blackstone Relief Letter, subject to certain
deviations that the Company believes are immaterial to an investor and appropriate in light of its status as a privately placed, non-listed real estate investment trust.
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
March 13, 2024
Page 4
Key Features of Share Repurchase Plan
Blackstone Real Estate Income Trust, Inc.
Fortress Net Lease REIT
All material information relating to the repurchase plan will be fully and timely disclosed to all shareholders. The terms of the repurchase plan will be fully disclosed in the Company’s offering documents, and the
most recently determined NAV per share for each class of the Company’s shares will always be available on the Company’s website and toll-free information line.
Yes
Yes (except that the Company intends to provide information relating to its NAV per share directly to financial intermediaries that represent existing and potential investors, instead of through a website
and toll-free information line).
The Company will not solicit repurchases under the repurchase plan other than through the Company’s offering materials and supplements thereto disclosing the transaction price and NAV per share of each class of the
Company’s shares. Shareholders desiring to request repurchase of all or a portion of their shares will do so of their own volition and not at the behest, invitation or encouragement of the Company. The role of the Company in effectuating
repurchases under the repurchase plan will be ministerial.
Yes
Yes
Shares will be repurchased monthly under the repurchase plan at a price which will generally be equal to the NAV per share for the applicable class of shares for the prior month, and the Company will provide
shareholders information by supplement, disclosing the historical NAV per share of each class of shares and also provide each month the transaction price and the NAV per share for each class of shares on the Company’s website and toll-free
information line. Subject to the terms of the repurchase plan, the Company will repurchase shares at the transaction price per share for the applicable class of the Company’s shares.
Yes
Yes (except that the Company intends to provide information relating to its NAV per share and monthly transaction prices directly to financial intermediaries that represent existing and potential
investors, instead of through a website and toll-free information line).
Repurchases will be made on a monthly basis. The repurchase price normally will be paid in cash within three business days following the last calendar day of the applicable month and will be the same for all shares
of the same class repurchased in a given month.
Yes
Yes
Repurchases under the repurchase plan will be limited in any calendar month to shares whose aggregate value is 2% of the combined NAV of all classes of the Company’s shares as of the last calendar day of the
previous month and will be limited in any calendar quarter to shares whose aggregate value is 5% of the combined NAV of all classes of the Company’s shares as of the last calendar day of the previous calendar quarter.
Yes
Yes
If the monthly or quarterly volume limitation is reached in any given month or the Company determines to repurchase fewer shares than have been requested to be repurchased in any particular month, repurchases under
the repurchase plan for such month will generally be made on a pro rata basis.
Yes
Yes
Shareholders may withdraw any repurchase request by notifying the Company’s transfer agent on the Company’s toll-free information line before 4:00 p.m. Eastern time on the last business day of the applicable month.
Yes
Yes
Material modifications, including any reduction to the monthly or quarterly limitations on repurchases, and suspensions of the repurchase plan will be promptly disclosed in a supplement to the Company’s offering documents, or periodic or
current reports filed by the Company, as well as on the Company’s website.
Yes
Yes (except that the Company intends to provide updates regarding material modifications to its repurchase plan directly to financial intermediaries that represent existing and potential investors, instead
of through a website).
There will be no established regular trading market for the Company’s shares. The repurchase plan will be terminated if the Company’s shares are listed on a national securities exchange or included for quotation in a national securities
market, or in the event a secondary market for the Company’s shares develops.
Yes
Yes
The repurchase plan is intended to remain open indefinitely for the life of the Company unless modified or suspended by the Company’s board of directors. The Company is structured as a perpetual-life entity and has no intention to list its
shares for trading on an exchange or other trading market.
Yes
Yes
The repurchase plan is open to all shareholders with respect to shares issued in the offering.
Yes
Yes
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
March 13, 2024
Page 5
Item 1A. Risk Factors, page 52
4.
As you are a perpetual life REIT, please provide risk factor disclosure noting that you are not required to ever provide liquidity under your Declaration of Trust or otherwise.
Response: In response to the Staff’s comment, the Company has revised the disclosure on page 91 of the Amended Registration
Statement to add the bolded text below to disclose that the Company is not required to provide liquidity under its Declaration of Trust or otherwise.
There is no current public trading market for our shares, and we do not expect that such a market will ever develop in the future. In our perpetual-life structure, the
investor may request that we repurchase their shares on a monthly basis, but we are not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any
particular month in our discretion. While we may consider a liquidity event at any time in the future, we are not obligated by the Declaration of Trust or otherwise to effect a liquidity event at any time. Therefore, repurchase of shares by
us will likely be the only way for you to dispose of your shares. An investment in the Company should be viewed as an illiquid investment. We expect to repurchase shares at a price equal to the transaction price of the class of shares being
repurchased on the date of repurchase (which will generally be equal to our prior month’s NAV per share) and not based on the price at which you initially purchased your shares, except that, subject to limited exceptions, (i) Class F-S Shares, Class
F-D Shares, Class F-I Shares, Class B Shares and Class E Shares that have not been outstanding for at least one year will be repurchased at 98% of the transaction price and (ii) in the case of Class C Shares and Class D Shares, such shares may only
be repurchased to the extent they have been outstanding for at least two years. As a result, you may receive less than the price you paid for your shares when you sell them to us pursuant to our share repurchase plan. See “Item 1(c). Description of Business—Share Repurchase Plan.”
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of R