Concise Explanatory Statement Regarding Proposed Amendment of WAC 460-16A-205(1)(e)

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State of Washington
DEPARTMENT OF FINANCIAL INSTITUTIONS
DIVISION OF SECURITIES
P.O. Box 41200 ⚫ Olympia, Washington 98504-1200 Telephone (360) 902-8760 ⚫ TDD (360) 664-8126 ⚫ FAX (360) 902-0524 ⚫ http://www.dfi.wa.gov March 12, 2026 Concise Explanatory Statement Pursuant to RCW 34.05.325(6) This Concise Explanatory Statement is prepared regarding the proposed amendment of WAC 460- 16A-205(1)(e) to adopt the most recent version of the NASAA Statement of Policy Regarding Real Estate Investment Trusts amended on September 7, 2025. Agency reasons for adopting the rules. (RCW 34.05.325(6)(a)(i)) The reasons stated in the Form CR-102 filed on January 23, 2026 in connection with this rulemaking are hereby incorporated by reference. Describe differences between the text of the proposed rules as published in the Washington State Register and the text of the rules as adopted, other than editing changes, stating the reasons for differences. (RCW 34.05.325(6)(a) (ii)) None. Summary of comments received by DFI during the rulemaking process, and DFI’s responses to the comments. (RCW 34.05.325(6)(a) (iii))
I. Written Comments
The Securities Division received one written comment in response to the CR-101, and one written comment in response to the CR-102. Both comment letters were submitted by the Institute for Portfolio Alternatives (“IPA”).
Section III.D.3 of the Statement of Policy amended September 7, 2025 states that an investor’s
aggregate investment in non-traded direct participation programs shall not exceed 10% of the investor’s liquid net worth. However, Section III.D.4 of the amended Statement of Policy states that this concentration limit shall not apply to investors who are accredited investors as defined under Rule 501(a) of Regulation D.

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In its comment letter on the CR-101, IPA noted its general opposition to concentration limits. However, IPA urged the Securities Division to include the carve-out for accredited investors under
Section III.D.4 of the Statement of Policy if the Securities Division elects to adopt the Statement
of Policy and incorporate a concentration limit. The commenter appeared to be concerned that the Securities Division would modify the Policy to exclude the carve-out provision. After the Securities Division filed the CR-102 in which it proposed to adopt the Statement of Policy amended September 7, 2025 without modification, IPA submitted a second comment letter. In this second comment letter, IPA expressed its appreciation that the Securities Division’s proposed rule would include the carve-out from the concentration limit for accredited investors. The Securities Division confirms that it intends to adopt the Statement of Policy as amended September 7, 2025 with no adjustments to the concentration limit in Section III.D.3 and with the inclusion of the carve out for accredited investors in Section III.D.4. Accordingly, no change to the proposed rule is necessary to address the comment letters.
II. Oral Comments:
The Securities Division held a public hearing on the proposed rules at 2:00 p.m. on March 11, 2026 at the Department of Financial Institutions office at 150 Israel Rd. SW, Tumwater, WA 98501. No members of the public attended the hearing. Consequently, the Securities Division received no oral comments or written testimony at the hearing. CONCLUSION The final proposed rule is the product of an open, deliberative process with stakeholder input with respect to both the immediate rulemaking, and the process undertaken by NASAA to amend its Statement of Policy. NASAA members voted to adopt amendments to the NASAA Statement of Policy Regarding Real Estate Investment Trusts on September 7, 2025. This represented the culmination to a deliberative process that had extended for 13 years. During that time, the NASAA Corporation Finance Section and the NASAA Direct Participation Programs Project Group considered and drafted potential revisions to the Statement of Policy, and made three public proposals to amend the Statement of Policy. Each proposal was subject to a public comment period in which stakeholders and other interested members of public could participate. The amended Statement of Policy as adopted by NASAA included revisions made to address concerns raised in prior public comment periods. On September 24, 2025, the Securities Division filed a Form CR-101 and began accepting comments on the possible adoption of the amended Statement of Policy. Between November 17, 2025 and December 10, 2025, the Securities Division conducted a small business economic impact survey of all real estate investment trusts registered or pending registration in Washington to collect information regarding the anticipated costs of the potential rule amendment. As described

3 in the Small Business Economic Impact Statement filed with the Form CR-102, the Securities Division responded to feedback from the survey by agreeing to delay the effectiveness date of the amended Statement of Policy in Washington until July 1, 2026 or later. On January 23, 2026, the Securities Division filed the proposed rule on Form CR-102 with the Code Reviser. The Securities Division distributed a link to the Form CR-102 and the proposed rules to its rulemaking interested persons list via GovDelivery. The Securities Division also emailed a link to the Form CR-102 and proposed rules to all real estate investment trusts registered or pending registration in Washington, and to additional persons known to have an advocacy interest in non-traded REITs. In addition, the Securities Division posted the proposed rules on the Securities Division’s website. The Securities Division accepted written comments on the rulemaking until March 10, 2026. The Securities Division held a public hearing on the proposed rules on March 11, 2026. As described in this Concise Explanatory Statement, the Securities Division considered the written comments received on the proposed rule and determined that no change to the proposed rule was necessary.