[Federal Register Volume 67, Number 117 (Tuesday, June 18, 2002)]
[Notices]
[Pages 41521-41525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15319]


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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Application No. D-11038]


Notice of Proposed Individual Exemption To Amend and Replace 
Prohibited Transaction Exemption (PTE) 90-15, Involving the Watkins 
Master Trust (the Trust), Located in Atlanta, GA

AGENCY: Pension and Welfare Benefits Administration, Department of 
Labor.

ACTION: Notice of proposed individual exemption to modify and replace 
PTE 90-15.

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SUMMARY: This document contains a notice of pendency before the 
Department of Labor (the Department) of a proposed exemption which, if 
granted, would amend and replace PTE 90-15 (55 FR 12967, April 6, 
1990). PTE 90-15 is an individual exemption providing relief, since 
September 20, 1989, for (1) the leasing of office space in a commercial 
office building (the Building) by the Trust to Wilwat Properties, Inc. 
(Wilwat), a party in interest with respect to the plans (the Plans) 
participating in the Trust under the provisions of a written lease (the 
New Lease); and (2) the possible cash purchase of the Trust's interest 
in the property by Wilwat.
    If granted, the proposed exemption would modify an option to 
purchase provision in the New Lease by allowing Wilwat to acquire the 
Trust's leasehold interests in the Building, including the improvements 
constructed thereon (the Improvements), and the Trust's interest in a 
ground lease (the Ground Lease) on May 8, 2002, instead of at any time 
during the final six months of the New Lease renewal term ending on 
December 31, 2008. In addition, the proposed exemption would replace 
PTE 90-15, which expired by operation of law upon the consummation of 
the sale. If granted, the proposed exemption would affect participants 
and beneficiaries of, and fiduciaries with respect to the Trust.

DATES: Written comments and requests for a public hearing should be 
received by the Department on or before August 2, 2002.

EFFECTIVE DATE: If granted, this proposed exemption will be effective 
as of May 8, 2002.

ADDRESSES: All written comments and requests for a public hearing 
(preferably, three copies) should be sent to the Office of Exemption 
Determinations, Pension and Welfare Benefits Administration, Room N-
5649, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington 
DC 20210, (Attention: Notice of Proposed Individual Exemption to Amend 
and Replace Prohibited Transaction Exemption 90-15, Involving the 
Watkins Master Trust; Application No. D-11038).
    Interested persons are also invited to submit comments and/or 
hearing request to the Department by facsimile to (202) 219-0204 or by 
electronic mail to [email protected] by the end of the scheduled 
comment period. The application pertaining to the proposed exemption 
and the comments received will be available for public inspection in 
the Public Disclosure Room of the Pension and Welfare Benefits 
Administration, U.S. Department of Labor, Room N-1513, 200 Constitution 
Avenue, NW, Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady, Office of Exemption 
Determinations, Pension and Welfare Benefits Administration, U.S. 
Department of Labor, telephone (202) 693-8556. (This is not a toll-free 
number.)

SUPPLEMENTARY INFORMATION: Notice is hereby given of the pendency 
before the Department of a proposed exemption that will amend and 
replace PTE 90-15. PTE 90-15 provides an exemption from certain 
prohibited transaction restrictions of section 406 of the Employee 
Retirement Income Security Act of 1974 (the Act) and from the sanctions 
resulting from the application of section 4975 of the Internal Revenue 
Code of 1986 (the Code), as amended, by reason of section 4975(c)(1) of 
the Code.
    The proposed exemption has been requested in an application filed 
on behalf of the Trust and Wilwat,\1\ pursuant to section 408(a) of the 
Act and section 4975(c)(2) of the Code, and in accordance with the 
procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 
August 10, 1990). Effective December 31, 1978, section 102 of 
Reorganization Plan No. 4 of 1978 (43 FR 47713, October 17, 1978) 
transferred the authority of the Secretary of the Treasury to issue 
exemptions of the type requested to the Secretary of Labor. 
Accordingly, this proposed exemption is being issued solely by the 
Department.
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    \1\ The Department is also considering an exemption request (D-
11036) that has been filed on behalf of Watkins Associated 
Industries, Inc. (Watkins), the sponsor of the Trust. In their 
request, Watkins and the Trust are seeking exemptive relief which is 
similar to that contemplated herein.
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I. Background

    As stated above, PTE 90-15 provides exemptive relief from the 
restrictions of sections 406(a), 406(b)(1) and (b)(2) of the Act and 
the sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) through (E) of the Code, with 
respect to (1) the leasing, by the Trust to Wilwat, of office space in 
a building located in Atlanta, Georgia and (2) the potential cash 
purchase of the Trust's interest in the property by Wilwat. PTE 90-15 
is effective from September 20, 1989 until May 8, 2002, the date of the 
sale transaction described herein.
    According to the Summary of Facts and Representations (55 FR 2900, 
January 29, 1990) underlying PTE 90-15, the Trust is a master trust 
which was originally established in 1984 to hold, manage and administer 
the assets of five defined contribution pension plans sponsored by 
Watkins, its affiliates and subsidiaries. Watkins, a Florida 
corporation engaged in diverse service and manufacturing enterprises, 
maintains its principal place of business in Atlanta, Georgia. At 
present, only three Plans participate in the Trust. They are the 
Watkins Associated Industries, Inc. Profit Sharing Plan, the LandSpan, 
Inc. Profit Sharing Plan, and the Southern Concrete Construction 
Company Profit Sharing Plan. Each of the participating Plans owns an 
undivided, pro rata interest in the assets of the Trust. As of December 
31, 2000, the Trust held total assets of $39,752,458. The current 
trustee (the Trustee) of the Trust is SunTrust Bank, N.A. (SunTrust) of 
Atlanta, Georgia.
    Formerly included among the assets of the Trust was a leasehold 
interest in a commercial office building containing

[[Page 41522]]

approximately 9,700 net square feet of space, together with parking 
facilities. The Building is located at 1940 Monroe Drive, Atlanta, 
Georgia, and is situated on a parcel of commercially-zoned real land 
(the Land). The Building is not located in close proximity to other 
real property that is owned by Watkins, Wilwat or their principals.
    The Land is owned by William L. Monroe, Sr., an unrelated party, 
and was being leased to the Trust under the provisions of the Ground 
Lease. As lessee under the Ground Lease, the Trust had an estate for 
years under Georgia law. The unrelated lessor had a reversion in the 
demised premises upon the termination of such lease.
    As initially executed in 1958, the Ground Lease was due to expire 
in 2019 but that term was extended until 2058. The Ground Lease was a 
net lease requiring the lessee to incur such expenses as utilities, 
real estate taxes, assessments and maintenance. Before the sale 
transaction that is described in this proposal was consummated, the 
annual rental paid by the Trust under the Ground Lease to the lessor 
was $1,425.
    The Building was constructed on the Land after the execution of the 
Ground Lease by a predecessor lessee to Wilwat. The Ground Lease 
provided that the Building and all subsequent Improvements placed on 
the Land would revert to the unrelated lessor upon the termination of 
such lease.
    Commencing in 1981, three subsidiaries of Watkins (i.e., Wilwat, 
Provident Security Life Insurance Company, and Waco Fire and Casualty 
Insurance Company) (collectively, the Subsidiaries) commenced leasing 
and occupying space in the Building. These leases were the subject of 
PTE 83-27 (48 FR 8613, March 1, 1983). Although the leases expired 
during June 1989, in response to proposals made by Wilwat, Trust 
Company Bank of Atlanta, Georgia (TCB), the former trustee of the 
Trust, approved the holding over of the Subsidiaries in the Building 
beyond the expiration of the initial leases in expectation of new 
leasing arrangements. Therefore, Wilwat and TCB executed a new lease, 
effective June 14, 1989, which provided for the continued leasing of 
the Building by the Subsidiaries to the Trust. For purposes of 
administrative convenience, the lessee interests of the Subsidiaries in 
the Building were consolidated and were represented by Wilwat as the 
sole named lessee under the New Lease.
    PTE 90-15 also provided that the Trust's interests would be 
represented for all purposes by the Trustee. At the time the exemption 
was issued, TCB served in this capacity.
    The New Lease was a triple net lease under which Wilwat was 
obligated to pay for all expenses of utilities, maintenance and repair, 
and for taxes relating to the Building. The New Lease commenced with an 
initial term of four years and six months, effective June 15, 1989, and 
it was renewable for up to three additional terms, each of five years' 
duration, upon the approval of the Trustee. The New Lease was renewed 
for all three of the possible additional terms and was due to expire on 
December 31, 2008.
    The New Lease required monthly rental payments of no less than the 
Building's fair market rental value.\2\ The rent was adjusted on July 1 
every three years for the duration of the New Lease to reflect the 
current fair market rental value of the Building as determined by a 
qualified, independent appraiser approved by the Trustee. In no event, 
however, could the rent as so adjusted, be less than the initial rental 
under the New Lease. Prior to the sale transaction, the contractual 
rental amount paid by Wilwat to the Trust under the New Lease was 
$6,050 per month or $72,600 per year.
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    \2\ The initial rent through June 30, 1991 was set at $51,000 
per year. The rental amount was payable in monthly installments of 
$4,250, which represented the fair market rental value of the 
Building as determined by John Booth, MAI, a qualified, independent 
appraiser from Atlanta, Georgia. Mr. Booth's calculation of the 
Building's fair market rental value included a vacancy and 
collection allowance of five percent, constituting a deduction of 
$5,789 from the Building's potential gross income on which the 
appraiser based his fair market value analysis. Wilwat represented 
that this allowance deduction would be disregarded for purposes of 
rental determinations under the New Lease and that the initial 
rental amount would be recalculated.
    As a result, the initial rental under the New Lease was 
readjusted to $56,835 per year or $4,736 per month. On September 20, 
1989, the effective date of PTE 90-15, Wilwat agreed to pay the 
Trust the difference between the rental actually paid since June 15, 
1989, pursuant to Mr. Booth's appraisal, and the recalculated 
initial rent, including the payment of reasonable interest at a rate 
determined by the Trustee. In addition, Wilwat represented that 
within sixty days of the issuance of PTE 90-15, it would pay 
appropriate excise taxes to the Internal Revenue Service resulting 
from the rental payment deficiencies.
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    The New Lease required Wilwat to indemnify and hold harmless the 
Trust against any and all claims arising from the use of the Building 
and to obtain and maintain in force a policy of full public liability 
coverage for personal injury and property damage. Wilwat was also 
required to obtain and maintain a policy of all risk casualty 
replacement loss insurance in an amount of no less than the Building's 
full insurable value.
    Wilwat was required under the New Lease to obtain the Trustee's 
approval for any Improvements to or alterations of the Building. The 
New Lease further provided that any Improvements constructed thereon 
were to remain the property of Wilwat at the conclusion of such 
lease.\3\
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    \3\ It should be noted that despite the New Lease provision 
granting title to the Improvements constructed in the Building to 
Wilwat, the Trust and Wilwat agreed to include the value of the 
Improvements in the determination of the sales price for the Trust's 
leasehold interests in the Building and the Ground Lease.
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    The New Lease also contained a provision (the Option) granting 
Wilwat a limited right to purchase the Building and the Improvements 
from the Trust. The Option provided that Wilwat could propose a 
purchase of the Building and the Improvements from the Trust at any 
time during the final six months of the initial term of the New Lease 
or of any renewal term. Any purchase of the Building and the 
Improvements by Wilwat under the Option required the approval of the 
Trustee and the payment of a cash purchase price equal to the greater 
of the fair market value of such property as of the date of the sale or 
the Trust's total investment return with respect to such property. In 
the event of sale under the Option provision, Wilwat would be required 
to pay all costs and expenses associated with the transaction.
    The transactions described in PTE 90-15 were monitored by the 
Trustee, as independent fiduciary for the Trust. Formerly, TCB served 
in this capacity until it was merged with SunBank to form SunTrust. 
During the entire period of Trustee/independent fiduciary succession, 
the Trust was, at all times, represented by an independent fiduciary.
    As Trustee and independent fiduciary, TCB determined that the New 
Lease was in the best interests of the participants and beneficiaries 
of the Plans participating in the Trust because it believed such 
investment would provide the Trust with a high annual yield that would 
be competitive with any other investments made on behalf of the Trust. 
TCB agreed to continue monitoring lease arrangements made on behalf of 
the Trust, to inspect the Building annually, ensure that the Building 
was adequately insured, and to determine that taxes and rents would be 
collected in a timely manner. Further, TCB represented that it would 
pursue appropriate enforcement measures on behalf of the Trust with 
respect to the Trust's rights under the New Lease.

[[Page 41523]]

II. Amendment and Replacement of PTE 90-15

    Over the period of time that the Trust was a party to the Ground 
Lease and the New Lease, there were no defaults or delinquencies in 
rental payments made thereunder. The Trust did, however, expend $39,911 
in rental payments under the Ground Lease since the inception of such 
lease, whereas the cost of the Improvements, ranging from the 
installation of a new air conditioning system in the Building to the 
renovation of offices, was borne by Wilwat. The Trust also received 
rental income under the New Lease totaling $661,337. Since the Trust's 
cost basis in the Building was estimated at $422,735, its total 
investment return with respect to such property (net of acquisition and 
holding costs) was approximately $198,691 [$661,337-($422,735 + 
$39,911)].
    On behalf of the Trust, the Trustee and Wilwat seek to amend the 
New Lease, thereby permitting the retroactive sale, by the Trust, of 
its leasehold interests in the Building, the Improvements and the 
Ground Lease to Wilwat.\4\ Because the sale transaction effectively 
terminated the New Lease by operation of law, the parties wish to 
replace PTE 90-15 with a new exemption. Accordingly, administrative 
exemptive relief is requested from the Department. If granted, the 
exemption would be effective as of May 8, 2002.
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    \4\ It is represented that the Trust would seek a release from 
the owner of the Ground Lease from its obligations thereunder upon 
the completion of the proposed sale. However, regardless of whether 
the Trust could obtain such a release from the owner, it is 
represented that Wilwat would assume all of the Trust's liabilities 
under this lease and indemnify the Trust against any liability to 
the owner of the Ground Lease.
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    As consideration for the sale transaction, the Trust would receive 
(a) the greater of the fair market value of such property as of the 
date of the sale or (b) its total investment in such property. The 
consideration would be paid in cash and the Trust would not be required 
to pay any real estate fees or commissions in connection therewith.
    The Trust, the Trustee and Wilwat proposed to effect the sale 
transaction because it would allow the Trust to achieve greater 
diversification, liquidity, and the potential to obtain a higher rate 
of return on its investments. Since the Plans participating in the 
Trust would be merged into separate 401(k) plans providing for 
participant-directed investments, the parties did not deem the subject 
property to be a suitable investment option under the merger 
arrangement due to its illiquidity. Moreover, the parties noted that 
the Building had appreciated substantially in value at rates that were 
above historical averages which might not continue in the future. 
Finally, the parties believed that the Building was of limited use and, 
should Watkins decide to move its headquarters or otherwise decline to 
renew the New Lease, the Trust might have difficulty marketing its 
interest in the Building and realizing its full value.

III. The Appraisal

    The Building was appraised by Messrs. Quentin Ball, MAI, and Philip 
R. Thomas, Senior Appraiser, who are qualified, independent appraisers 
affiliated with the commercial real estate appraisal firm of Kirkland & 
Company, located in Atlanta, Georgia. In a appraisal report dated 
November 27, 2001, the appraisers, using the Income Approach to 
valuation, placed the fair market value of a fee simple interest in the 
Building and the Improvements (as if not encumbered by the Ground 
Lease) at $1,050,000 as of November 26, 2001.\5\
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    \5\ It is represented that the fee simple valuation of the 
Building and the Improvements was more beneficial to the Trust than 
a leased fee interest valuation because the latter valuation did not 
take into consideration the Trust's leasehold interest in the Ground 
Lease.
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    The appraisers updated their appraisal report prior to the closing 
of the sale transaction. By letter dated May 8, 2002, the appraisers, 
while noting new construction within the vicinity of the property which 
they believed to be indicative of a strong and improving economy, 
concluded that there had been no change in the value of the property as 
set forth in their original appraisal report.

IV. Views of the Trustee/Independent Fiduciary

    As stated above, the Trustee had been acting on behalf of the Trust 
as the independent fiduciary for the New Lease. Serving in this 
capacity was SunTrust, a banking subsidiary of SunTrust Banks, Inc., 
the tenth largest financial services holding company in the United 
States. In its independent fiduciary statement, the Trustee represented 
that it had been acting as a corporate fiduciary for more than 100 
years, had approximately $130 million in fiduciary assets in its 
custody, and served as a fiduciary or custodian to more than 1,700 
qualified retirement plans. The Trustee also asserted that although it 
conducted an ongoing deposit and lending business with Watkins and its 
affiliates, such deposits and loans represented less than one percent 
of its total deposits and loans. Further, the Trustee stated that it 
understood and acknowledged its duties, responsibilities and 
liabilities under the Act in serving as an independent fiduciary for 
the Trust.
    The Trustee represented that the sale transaction compared 
favorably with the terms of similar transactions between unrelated 
parties because the Trust's leasehold interests in the Building, the 
Improvements and the Ground Lease would be sold at the appraised value 
of a fee simple interest and without the payment of any real estate 
fees or commissions by the Trust. Moreover, the Trustee explained that 
it relied upon the independent appraisers to identify and reconcile 
sales of comparable properties in their preparation of their initial 
appraisal report. On the basis of such information, the Trustee 
concluded that the appraisal had been conducted by the appraisers in a 
reasonable manner.
    The Trustee also believed the sale transaction would be in the best 
interests of the Trust and its participants and beneficiaries for the 
following reasons:
     The proposed modification of the Trust into participant-
directed accounts would make accounting and participant direction 
virtually impossible due to the indivisible nature of the subject 
property.
     The transaction would compare favorably with other sales 
of property which might be achieved in the market place.
     The sale transaction would permit the conversion of an 
illiquid investment with material maintenance costs (i.e., the 
underlying New Lease payments and associated Trustee monitoring) into 
cash which could be invested in lower-maintenance assets.
     The sale transaction would eliminate the conflict of 
interest and associated administrative burdens of ongoing special 
supervision implicit in the Trust's holding of employer real property.
     The sale transaction would enable the Trust to realize 
appreciation in the property, the continuation of which could not be 
assured in the current economic climate.
     The sale transaction would eliminate a 6 percent 
concentration of the Trust's assets in two adjacent parcels of real 
estate.
    Before forming its opinion, the Trustee stated that it had examined 
the Trust's overall investment portfolio, considered the liquidity 
requirements of the Plans participating therein, examined the 
diversification of each Plan's assets in light of the proposed 
transaction, and considered whether the

[[Page 41524]]

transaction would comply with the Trust's investment objectives and 
policies. The Trustee explained that it would monitor the transaction 
and take all appropriate actions, if required, to safeguard the 
interests of the Trust.

V. The Sale

    On May 8, 2002, the Trust sold its leasehold interests in the 
Building, the Improvements and the Ground Lease to Wilwat for 
$1,050,000, which reflected the independently appraised value of such 
property, as determined by the independent appraisers in their initial 
and updated appraisal reports. The sales price was greater than the 
Trust's total investment return with respect to the property of 
$198,691. Wilwat paid the consideration in cash and the Trust did not 
pay any real estate fees or commissions in connection with the sale 
transaction. In addition, the Trustee monitored the transaction on 
behalf of the Trust.

VI. General Conditions

    If granted, this proposed exemption will be subject to the 
following general conditions:
    (a) All terms and conditions of the sale were at least as favorable 
to the Trust as those obtainable in an arm's length transaction with an 
unrelated party;
    (b) The sale was a one-time transaction for cash;
    (c) The fair market value of the Trust's leasehold interests in the 
Building, the Improvements and the Ground Lease was determined by 
qualified, independent appraisers in initial and updated appraisal 
reports;
    (d) The Trust did not pay any real estate fees, commissions, costs 
or other expenses in connection with the sale;
    (e) The Trust received, as consideration for the sale, an amount 
that was no less than the greater of (1) the fair market value of the 
Trust's leasehold interests in the Building, the Improvements and the 
Ground Lease; or (2) the Trust's total investment in such property, as 
of the date of the sale;
    (f) In the event the Trust could not obtain a release from the 
owner of the Ground Lease from its obligations thereunder upon the 
completion of the proposed sale, Wilwat agreed to assume all 
liabilities under such lease and would indemnify the Trust against any 
liability to the owner of the Ground Lease; and
    (g) The Trustee, as the independent fiduciary for the Trust with 
respect to the sale, determined that such transaction was in the best 
interest of the Trust and was protective of the participants and 
beneficiaries of the Trust, and monitored such transaction on behalf of 
the Trust.

Notice to Interested Persons

    Notice of the proposed exemption will be sent by first-class mail 
to each participant of the Plans participating in the Trust within 15 
days of the publication of the proposed exemption in the Federal 
Register. The notification will contain a copy of the proposed 
exemption as published in the Federal Register, and a copy of the 
supplemental statement, as required pursuant to 29 CFR 2570.43(b)(2). 
The supplemental statement, will inform interested persons of their 
right to comment on and/or to request a hearing with respect to the 
pending exemption. Comments and hearing requests are due within 45 days 
of the publication of the notice in the Federal Register.

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and section 4975(c)(2) of the Code does 
not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions of the Act and Code, including any 
prohibited transaction provisions to which the exemption does not apply 
and the general fiduciary responsibility provisions of section 404 of 
the Act, which require, among other things, a fiduciary to discharge 
his or her duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirements of section 401(a) of the Code that the plan operate for 
the exclusive benefit of the employees of the employer maintaining the 
plan and their beneficiaries;
    (2) The proposed exemption, if granted, will not extend to 
transactions prohibited under section 406(b)(3) of the Act and section 
4975(c)(1)(F) of the Code;
    (3) Before an exemption can be granted under section 408(a) of the 
Act and section 4975(c)(2) of the Code, the Department must find that 
the exemption is administratively feasible, in the interest of the plan 
and of its participants and beneficiaries and protective of the rights 
of participants and beneficiaries of the plan;
    (4) This proposed exemption, if granted will be supplemental to, 
and not in derogation of, any other provisions of the Act and the Code, 
including administrative exemptions. Furthermore, the fact that a 
transaction is subject to an administrative exemption is not 
dispositive of whether the transaction is in fact a prohibited 
transaction; and
    (5) This proposed exemption, if granted, is subject to the express 
condition that the facts and representations set forth in the notice of 
proposed exemption relating to PTE 90-15 and this notice, accurately 
describe, where relevant, the material terms of the transactions to be 
consummated pursuant to this exemption.

Written Comments and Hearing Requests

    All interested persons are invited to submit written comments or 
requests for a hearing on the pending exemption by regular mail, 
electronic mail or facsimile to the addresses or facsimile number noted 
above, within the timeframe set forth above, after the publication of 
this proposed exemption in the Federal Register. All comments will be 
made a part of the record. Comments received will be available for 
public inspection with the referenced applications at the address set 
forth above.

Proposed Exemption

    Based on the facts and representations set forth in the 
application, the Department is considering granting the requested 
exemption under the authority of section 408(a) of the Act and section 
4975(c)(2) of the Code and in accordance with the procedures set forth 
in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990).
    If the proposed exemption is granted, the restrictions of sections 
406(a), 406 (b)(1) and (b)(2) of the Act and the sanctions resulting 
from the application of section 4975 of the Code, by reason of section 
4975(c)(1) (A) through (E) of the Code, shall not apply, effective May 
8, 2002, to the sale by the Watkins Master Trust (the Trust) of its 
leasehold interests in certain improved real property, consisting of a 
building (the Building), the improvements constructed thereon (the 
Improvements), and ground lease (the Ground Lease), to Wilwat 
Properties, Inc. (Wilwat), a party in interest with respect to the 
Trust, in connection with an amendment to an option to purchase 
provision contained in a written lease between the Trust and Wilwat, as 
described in Prohibited Transaction Exemption 90-15 (55 FR 12967, April 
6, 1990).
    This proposed exemption is subject to the following conditions:
    (a) All terms and conditions of the sale were at least as favorable 
to the Trust as those obtainable in an arm's

[[Page 41525]]

length transaction with an unrelated party;
    (b) The sale was a one-time transaction for cash;
    (c) The fair market value of the Trust's leasehold interests in the 
Building, the Improvements and the Ground Lease was determined by 
qualified, independent appraisers in initial and updated appraisal 
reports;
    (d) The Trust did not pay any real estate fees, commissions, costs 
or other expenses in connection with the sale;
    (e) The Trust received, as consideration for the sale, an amount 
that was no less than the greater of (1) the fair market value of the 
Trust's leasehold interests in the Building, the Improvements and the 
Ground Lease; or (2) the Trust's total investment in such property, as 
of the date of the sale;
    (f) In the event the Trust could not obtain a release from the 
owner of the Ground Lease from its obligations thereunder upon the 
completion of the sale, Wilwat agreed to assume all liabilities under 
such lease and would indemnify the Trust against any liability to the 
owner of the Ground Lease; and
    (g) The Trustee, as the independent fiduciary for the Trust with 
respect to the sale, determined that such transaction was in the best 
interest of the Trust and was protective of the participants and 
beneficiaries of the Trust, and monitored such transaction on behalf of 
the Trust.

EFFECTIVE DATE: If granted, this proposed exemption will be effective 
as of May 8, 2002.
    The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application for exemption are true and complete and accurately describe 
all material terms of the transactions. In the case of continuing 
transactions, if any of the material facts or representations described 
in the applications change, the exemption will cease to apply as of the 
date of such change. In the event of any such change, an application 
for a new exemption must be made to the Department.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant PTE 90-15, refer to the 
proposed exemption and the grant notice which are cited above.

    Signed at Washington, DC, this 13th day of June 2002.
Ivan L. Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 02-15319 Filed 6-17-02; 8:45 am]
BILLING CODE 4510-29-P