CFTC Staff Letter 94-23: No-Action Relief from CPO Registration for Real Estate Partnerships Hedging Interest Rate Risk

DIVISION OF
TRADING AND MARKETS
Dear
COMMODITY FUTURES TRADING COMMISSION
2033 K Street, NW, Washington, DC 20581
(202) 254-8955
(202) 254- 8010 Facsimile
February 15, 1994
Re: Request for Relief from Commodity Pool
Operator Regulation
This is in response to your letter dated October 11, 1993, to the Division of Trading and Markets (the "Division") of the Commodity Futures Trading Commission (the "Commission 11 ), as supplemented by telephone conversations with Division staff and by correspondence dated November 3, 1993, November 23, 1993 and December 13, 1993. By your letter, as supplemented, you request, on behalf of "X" that the Division not recommend that the Commis￾sion take any enforcement action against "X" for failure to register as a commodity pool operator ("CP0 11 ) in connection with the operation of two real estate partnerships, "Y" and 11 Z" (collectively the 11 Partnerships"). Based upon the representations made in your letter, as supp;Lemented, we understand that the facts are as follows. "Y" and 11 Z" are California limited partnerships formed in 1989 and 1984, respectively. They were formed for the purpose of, and are engaged in the business of, acquisition, development, improve￾ment, management and leasing of real estate rental properties and other real estate related activities. "Y",s real estate holdings consist of three apartment complexes, one valued at "F 11 million, one valued at "G"·million and one valued at "H" thousand. The outstanding loan amounts owing on such properties are approxi￾mately "I", "J" and "K", respectively. "Z" 's real estate hold￾ings consist of a unit apartment complex located in state valued at 11 L 11 million, with an outstanding loan balance of approximately "M". "X" is a California corporation incorporated in 1973, and is the general partner of the Partnerships. "X 11 has two sharehold￾ers, you 1 the president of the corporation, and 11 A11 , the vice president. Neither you or 11 A11 is subject to a statutory disqual-