[Federal Register Volume 73, Number 73 (Tuesday, April 15, 2008)]
[Rules and Regulations]
[Pages 20512-20518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-7967]



[[Page 20511]]

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Part IV





Securities and Exchange Commission





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17 CFR Part 239



Revisions to Form S-11 To Permit Historical Incorporation by Reference; 
Final Rule

  Federal Register / Vol. 73, No. 73 / Tuesday, April 15, 2008 / Rules 
and Regulations  

[[Page 20512]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 239

[Release No. 33-8909; File No. S7-30-07]
RIN 3235-AK02


Revisions to Form S-11 To Permit Historical Incorporation by 
Reference

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: We are adopting amendments to Form S-11, a registration 
statement used by real estate entities to register offerings under the 
Securities Act of 1933. The amendments permit an entity that has filed 
an annual report for its most recently completed fiscal year and that 
is current in its reporting obligations under the Securities Exchange 
Act of 1934 to incorporate by reference into Form S-11 information from 
its previously filed Exchange Act reports and documents. The amendments 
are identical to amendments to Form S-1 and Form F-1 previously adopted 
by the Commission and effective as of December 1, 2005.

DATES: Effective Date: April 15, 2008.

FOR FURTHER INFORMATION CONTACT: Michael McTiernan at (202) 551-3852, 
Division of Corporation Finance, U.S. Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-3010.

SUPPLEMENTARY INFORMATION: We are amending Form S-11 \1\ under the 
Securities Act of 1933.\2\
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    \1\ 17 CFR 239.18.
    \2\ 15 U.S.C. 77a et seq.
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 I. Discussion

A. Background

    Form S-11 is the form that real estate entities generally must use 
to register offerings under the Securities Act.\3\ The form is used for 
the registration of securities issued by real estate investment trusts 
and securities issued by other issuers whose business is primarily that 
of acquiring and holding for investment real estate, interests in real 
estate, or interests in other issuers whose business is primarily that 
of acquiring and holding real estate or interests in real estate for 
investment.\4\ Prior to these amendments, Form S-11 did not permit an 
issuer to satisfy the disclosure requirements of the form through 
incorporation by reference to the reports and other documents that the 
issuer previously had filed under the Securities Exchange Act of 
1934.\5\
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    \3\ Real estate entities may also use Form S-3 [17 CFR 239.13] 
and Form S-4 [17 CFR 239.25] if they meet the applicable eligibility 
requirements of those forms. When no other form is available, these 
entities are required to file on Form S-11 rather than Form S-1.
    \4\ See General Instruction A of Form S-11.
    \5\ 15 U.S.C. 78a et seq.
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    On June 29, 2005, we adopted amendments to Form S-1 \6\ and Form F-
1 \7\ to permit companies filing those forms to incorporate by 
reference information from their previously filed Exchange Act reports 
and documents.\8\ The purpose of the amendments was to integrate 
further the Exchange Act and the Securities Act.\9\ The ability to 
incorporate by reference is conditioned, among other things, on the 
company having filed its annual report for the most recent fiscal year, 
being current in its reporting obligations under the Exchange Act, and 
making the incorporated Exchange Act reports and documents available 
and accessible on a Web site maintained by or for the registrant.\10\ 
Blank check companies, shell companies and penny stock registrants are 
not permitted to use incorporation by reference. Successor registrants 
may incorporate by reference if their predecessors were eligible.\11\
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    \6\ 17 CFR 239.11.
    \7\ 17 CFR 239.31.
    \8\ See Securities Offering Reform, Release No. 33-8591 (Jul. 
19, 2005) [70 FR 44722].
    \9\ Id. at 237.
    \10\ See General Instruction VII of Form S-1 and General 
Instruction VI of Form F-1.
    \11\ Id.
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    In 2005, we did not adopt similar amendments to Form S-11. However, 
we believe that Form S-11 should be consistent with Form S-1 with 
respect to incorporation by reference. Both Form S-11 and Form S-1 are 
long-form registration statements intended for new and unseasoned 
issuers. The only substantive difference between the two forms is that 
Form S-11 contains certain additional disclosure requirements specific 
to real estate entities. We believe that integrating disclosure under 
the Exchange Act and Securities Act should extend equally to the 
disclosure obligations of real estate entities.
    On December 10, 2007, we proposed amendments to Form S-11 to permit 
a reporting issuer that has filed an annual report for its most 
recently completed fiscal year and that is current in its reporting 
obligations under the Exchange Act to incorporate by reference into its 
Form S-11 information from its previously filed Exchange Act reports 
and documents.\12\ We received six comment letters in response to the 
proposed amendments.\13\ We are adopting amendments to Form S-11 
substantially as proposed with certain modifications to reflect 
comments received.
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    \12\ Revisions to Form S-11 to Permit Historical Incorporation 
by Reference, Release No. 33-8871 (Dec. 14, 2007) [72 FR 72274] (the 
``Proposing Release'').
    \13\ All comment letters are publicly available at http://www.sec.gov/comments/s7-30-07/s73007.shtml or at our Public 
Reference Room at 100 F Street, NE, Washington, DC 20549.
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B. Amendments to Form S-11

1. Historical Incorporation by Reference
    (a) Eligibility
    We are amending Form S-11 to permit a reporting issuer that has 
filed an annual report for its most recently completed fiscal year and 
that is current in its reporting obligations under the Exchange Act to 
incorporate by reference into its Form S-11 information from previously 
filed Exchange Act reports and documents. A successor registrant will 
be able to incorporate information by reference on the same terms if 
its predecessor was eligible to do so.\14\ Consistent with Form S-1 and 
the provisions outlined in the Proposing Release, the following issuers 
will not be able to incorporate by reference into a Form S-11:
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    \14\ The succession would have to be either primarily for the 
purpose of changing the state or jurisdiction of incorporation of 
the issuer or forming a holding company and the assets and 
liabilities of the successor would have to be substantially the same 
as the predecessor at the time of the succession, or all of the 
predecessor issuers would have to be eligible at the time of the 
succession and the issuer must continue to be eligible.
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     Reporting issuers who are not current in their Exchange 
Act reports; \15\
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    \15\ As with Forms S-1, F-1 and S-3, to be current, at the time 
of filing the registration statement, the issuer must have filed all 
materials required to be filed pursuant to Exchange Act Section 13, 
14 or 15(d) [15 U.S.C. 78m, 78n, or 78o(d)] during the preceding 12 
calendar months (or for such shorter period that the issuer was 
required to file such materials).
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     Issuers who are or were, or any of whose predecessors were 
during the past three years:
    [cir] Blank check issuers;
    [cir] Shell companies (other than business combination related 
shell companies); or
    [cir] Issuers for offerings of penny stock.\16\
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    \16\ See Securities Act Rule 419(a)(2) [17 CFR 230.419(a)(2)], 
Exchange Act Rule 3a51-1 [17 CFR 240.3a51-1] and Securities Act Rule 
405 [17 CFR 230.405] for definitions of ``blank check company,'' 
``penny stock'' and ``shell company,'' respectively.
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    In addition, to enhance the availability to investors of 
incorporated information, the ability to incorporate by reference is 
conditioned on the issuer making its incorporated Exchange Act reports 
and other materials readily accessible on a Web site maintained by or 
for the issuer. By conditioning the

[[Page 20513]]

ability to incorporate by reference on the ready accessibility of an 
issuer's incorporated Exchange Act reports and other materials on its 
Web site, we are providing investors the ability to obtain the 
information from those reports and materials at the same time that they 
would have been able to obtain the information if it was set forth 
directly in the registration statement. Issuers may satisfy this 
condition by including hyperlinks directly to the reports or other 
materials filed on EDGAR or on another third-party Web site where the 
reports or other materials are made available in the appropriate 
timeframe and access to the reports or other materials is free of 
charge to the user.
    (b) Procedural Requirements
    Under the amendments we are adopting today, the prospectus in the 
registration statement at effectiveness must identify all previously 
filed Exchange Act reports and materials, such as proxy and information 
statements, that are incorporated by reference. There will be no 
permitted incorporation by reference of Exchange Act reports and 
materials filed after the registration statement is effective--known as 
``forward incorporation by reference.'' \17\ Under the amendments, an 
issuer eligible to incorporate by reference its Exchange Act reports 
and other materials into its Form S-11 must include the following in 
the prospectus that is part of the registration statement:
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    \17\ As discussed below, incorporation by reference of 
historical Exchange Act reports and documents will be permitted in 
post-effective amendments to the registration statement, provided 
the issuer otherwise satisfies the eligibility and procedural 
requirements set forth in Form S-11.
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     A list of the incorporated reports and materials;
     A statement that it will provide copies of any 
incorporated reports or materials on request;
     An indication that the reports and materials are available 
through the Securities and Exchange Commission's EDGAR system or public 
reference room;
     Identification of the issuer's Web site address where such 
incorporated reports and other materials can be accessed; and
     Required disclosures regarding material changes in, or 
updates to, the information that is incorporated by reference from an 
Exchange Act report or other material required to be filed.
2. Form S-11 and Rule 415 Under the Securities Act
    We have historically permitted registrants offering securities on a 
continuous basis pursuant to Rule 415 \18\ under the Securities Act to 
use Form S-11. However, unlike the cover page of Form S-1, the cover 
page of Form S-11 does not require a registrant to reflect whether it 
is relying on Rule 415 under the Securities Act. In response to the 
suggestion of a commenter, as described below, we have amended the 
cover page of Form S-11 to conform to the cover page of Form S-1 so as 
to require a registrant to reflect whether it has relied on Rule 415 
under the Securities Act.\19\ This amendment also will assist the staff 
in assessing compliance with the requirements for incorporation by 
reference, particularly as they apply in the continuous offering 
context.
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    \18\ 17 CFR 230.415.
    \19\ See letter from Bimini Capital Management, Inc. 
(``Bimini'').
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C. Comments on Form S-11 Amendments

    Commenters strongly supported the proposed amendments to allow 
issuers to incorporate by reference historical Exchange Act filings 
into Form S-11.\20\ One commenter suggested that Form S-11 should also 
permit forward incorporation by reference for filings made after 
effectiveness of a registration statement.\21\ We are not adopting this 
suggestion. The purpose of these amendments is to revise Form S-11 to 
conform to Form S-1 and Form F-1 with respect to incorporation by 
reference and those forms do not permit forward incorporation by 
reference.
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    \20\ See, for example, letters from Bimini, The Investment 
Program Association (``IPA''), Corporate Property Associates 17--
Global Incorporated (``CPA''), Hines Real Estate Investment Trust, 
Inc. (``Hines'') and Grubb & Ellis Company (``Grubb'').
    \21\ See letter from Bimini.
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    Another commenter suggested that we revise the eligibility 
requirement that the registrant must have filed an annual report 
required under Section 13(a) or 15(d) of the Exchange Act for its most 
recently completed fiscal year.\22\ Again, since Form S-1 and Form F-1 
include this eligibility requirement, we have not adopted the 
commenter's suggestion to provide an alternative requirement in Form S-
11. We do not believe that this eligibility requirement will prevent 
the use of incorporation by reference in the multi-year continuous 
offerings commonly registered on Form S-11 by non-traded real estate 
investment trusts (``REITs''). These registrants regularly file post-
effective amendments to reflect property acquisitions. A post-effective 
amendment to a Form S-11 may be filed after the end of a registrant's 
fiscal year but prior to the filing of its Form 10-K, raising the 
question of whether the registrant may continue to incorporate by 
reference historical Exchange Act reports in such post-effective 
amendment. In the continuous offering context, we believe that 
eligibility to incorporate by reference should be measured immediately 
prior to the time of filing a Form S-11 registration statement, as 
specified in Instruction H of the form, and thereafter, each time that 
a post-effective amendment is filed for purposes of updating the 
information contained in the prospectus pursuant to Section 10(a)(3) of 
the Securities Act.\23\ Thus a post-effective amendment filed for 
purposes other than a Section 10(a)(3) update, such as a post-effective 
amendment to reflect property acquisitions, could continue to 
incorporate by reference historical Exchange Act reports to the extent 
the previous post-effective amendment filed for purposes of Section 
10(a)(3) or, if not applicable, the original registration statement, 
was eligible to do so.
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    \22\ See letter from IPA.
    \23\ 15 U.S.C. 77j(a). Section 10(a)(3) of the Securities Act 
requires that when a prospectus is used more than nine months after 
the effective date of the registration statement, the information 
contained therein shall be as of a date not more than sixteen months 
prior to such use, so far as such information is known to the user 
of such prospectus or can be furnished by such user without 
unreasonable effort or expense.
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    Two commenters requested guidance on whether a prospectus 
supplement may be used to update the information incorporated by 
reference into the prospectus included in a Form S-11 registration 
statement.\24\ Rule 411 \25\ under the Securities Act prohibits 
incorporation by reference of information into a prospectus except as 
specifically permitted in the registration statement form. If the 
registrant meets the requirements set forth in Instruction H of Form S-
11, as we are adopting Instruction H in this release, then the 
registrant may elect to incorporate by reference ``into the prospectus 
contained in the registration statement'' the information in the 
documents set forth in Item 29 of Form S-11, as we are adopting Item 29 
in this release. For purposes of these form instructions, a revised or 
supplemented prospectus is ``contained in the registration statement'' 
when it is part of a post-effective amendment to the registration 
statement. This is consistent with our earlier statement that there 
will be no permitted incorporation by reference of Exchange Act reports 
and documents filed after the effective date of the registration 
statement.
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    \24\ See letters from IPA and Hines.
    \25\ 17 CFR 230.411.
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    Two commenters \26\ requested guidance on whether a new non-traded

[[Page 20514]]

REIT \27\ would be a shell company and thus ineligible to incorporate 
by reference for at least three years. The determination of whether a 
particular registrant is a shell company depends on the facts and 
circumstances of that company as considered against the definition of 
the term ``shell company'' in Rule 405 and the principles underlying 
that definition as described in the release adopting that 
definition.\28\ Under appropriate circumstances a non-traded REIT may 
not be deemed a shell company; however, the determination of whether 
certain registrants such as non-traded REITs are shell companies is 
outside the scope of these amendments. Furthermore, in adopting the 
definition of ``shell company'' in 2005, we declined to provide more 
specific or quantitative measurements, as we believed the definition in 
Rule 405 reflected the traditional understanding of the term ``shell 
company'' in the area of corporate finance.\29\
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    \26\ See letters from IPA and Grubb.
    \27\ Typically a non-traded REIT has only cash assets at the 
time of effectiveness of its initial Form S-11 registration 
statement. The initial public offering generally is a best-efforts 
continuous offering and the proceeds of the offering are used to 
purchase real estate or real estate related assets that are not 
identified in the registration statement at the time of 
effectiveness.
    \28\ Use of Form S-8, Form 8-K, and Form 20-F by Shell 
Companies, Release No. 33-8587 (Jul. 15, 2005) [70 FR 42234] 
(adopting 17 CFR 230.405 and other rules). The shell company rules 
adopted in that release were intended to protect investors by 
deterring fraud and abuse through the use of reporting shell 
companies, including through ``pump-and-dump'' schemes and schemes 
to avoid Securities Act registration and prospectus delivery 
requirements.
    \29\ See id. The term ``shell company'' means a registrant, 
other than an asset-backed issuer as defined in Item 1101(b) of 
Regulation AB, that has
    No or nominal operations; and
    --Either:
    --no or nominal assets;
    --assets consisting solely of cash and cash equivalents; or
    --assets consisting of any amount of cash and cash equivalents 
and nominal other assets.
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    One commenter \30\ suggested that we amend the disclosure 
requirements of Form S-11 to conform to the recent amendments to 
Regulation S-K \31\ with respect to the disclosure requirements of 
smaller reporting companies.\32\ Form S-11 includes some substantive 
disclosure requirements that are not contained in Regulation S-K.\33\ 
Thus the recent amendments to Regulation S-K made in connection with 
the elimination of the small business registration forms do not impact 
these Form S-11 disclosure requirements. Since the purpose of these 
amendments is only to revise Form S-11 to conform to Form S-1 and Form 
F-1 with respect to incorporation by reference, we have not adopted the 
suggestion at this time. We may consider future amendments to Form S-11 
to address any differences between Form S-11 disclosures and Regulation 
S-K disclosures.
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    \30\ See letter from Bimini.
    \31\ 17 CFR 229.10 to 17 CFR 229.915.
    \32\ See Smaller Reporting Company Regulatory Relief and 
Simplification, Release No. 33-8876 (Dec. 19, 2007) [73 FR 934]. The 
final rules were effective as of February 4, 2008.
    \33\ For example, Items 11-15 of Form S-11 include specific 
disclosure requirements regarding general information about the 
registrant, its investment policies and its properties that are not 
contained in Regulation S-K.
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    One commenter \34\ suggested that we amend an undertaking in 
Industry Guide 5 \35\ related to disclosures made in connection with 
property acquisitions. Since the purpose of these amendments is only to 
revise Form S-11 to conform to Form S-1 and Form F-1 with respect to 
incorporation by reference, we have not adopted the suggestion at this 
time. We may consider future revisions to Industry Guide 5.
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    \34\ See letter from Grubb.
    \35\ 17 CFR 229.801.
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    Finally, one commenter \36\ requested we amend the cover page of 
Form S-11 to conform to Form S-1 and require a registrant to reflect 
its reliance on Rule 415 under the Securities Act. Registrants required 
to register offerings on Form S-11 are permitted to rely on Rule 415 to 
the extent permitted by the terms of the rule to the same extent as 
registrants registering on Form S-1. Accordingly, we have adopted the 
suggestion to revise the cover page of Form S-11 to require a 
registrant to reflect its reliance on Rule 415 under the Securities 
Act.
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    \36\ See letter from Bimini.
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D. Effective Date

    The amendments to Form S-11 shall take effect upon publication in 
the Federal Register. The Commission finds good cause to make the 
amendments effective prior to 30 days after publication to enable 
calendar fiscal year registrants eligible to incorporate by reference 
to satisfy their obligations to update the financial information 
contained in current prospectuses as required by Section 10(a)(3) of 
the Securities Act by incorporating their most recently filed Form 10-
K. Calendar fiscal year registrants are required to satisfy these 
updating requirements by April 30, 2008. These registrants would need 
to make any incorporated reports or materials readily accessible on 
their Web site; investors, therefore, should be able to obtain the 
information from those reports or materials at the same time that they 
would have been able to obtain the information if it was set forth 
directly in the registration statement. In addition, because the 
amendments to Form S-11 relieve restrictions on companies to include 
information already on file with the Commission, we believe that it is 
appropriate that the effective date of the release be upon publication 
in the Federal Register.

II. Paperwork Reduction Act

A. Background

    The amendments to Form S-11 contain ``collection of information'' 
requirements within the meaning of the Paperwork Reduction Act of 
1995.\37\ As discussed in the Proposing Release, we submitted a request 
for approval of these to the Office of Management and Budget in 
accordance with the Paperwork Reduction Act.\38\ The title for this 
information is ``Form S-11'' (OMB Control No. 3235-0067).
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    \37\ 44 U.S.C. 3501 et seq.
    \38\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
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    Form S-11 was adopted pursuant to the Securities Act. This form 
sets forth the disclosure requirements for registration statements 
prepared by real estate entities to provide investors with the 
information they need to make informed investment decisions in 
registered offerings.
    Our amendments to Form S-11 are intended to allow issuers that are 
required to use Form S-11 to incorporate by reference previously filed 
Exchange Act reports and documents. The amendments revise Form S-11 to 
conform to Form S-1 and Form F-1 with respect to incorporation by 
reference.
    The hours and costs associated with preparing disclosure, filing 
forms, and retaining records constitute reporting and cost burdens 
imposed by the collection of information. An agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information requirement unless it displays a currently valid control 
number. The information collection requirements related to registration 
statements on Form S-11 are mandatory. There is no mandatory retention 
period for the information disclosed, and the information disclosed 
will be made publicly available on the EDGAR filing system.

B. Summary of Information Collection

    The amendments will decrease existing disclosure requirements for 
eligible issuers by eliminating the need to repeat information in a 
Form S-11 when that information was previously disclosed in Exchange 
Act filings. Any reporting issuer that has filed an annual report for 
its most recently completed fiscal year and that is current in its

[[Page 20515]]

reporting obligation will be permitted to incorporate information by 
reference into its registration statement on Form S-11.

C. Summary of Comments and Revisions to Amendments

    Four of the commenters indicated that the amendments will increase 
the efficiency of the registration process and decrease costs borne by 
registrants.\39\ None of the commenters specifically addressed our 
request for comment on the Paperwork Reduction Act analysis contained 
in the Proposing Release. We are nevertheless revising our Paperwork 
Reduction Act estimates in light of certain rounding adjustments made 
in our submission to OMB.
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    \39\ See letters from IPA, CPA, Hines and Grubb.
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D. Revised Paperwork Reduction Act Burden Estimates

    As discussed in Section II.C. above, we are revising the Paperwork 
Reduction Act burden estimates in the Proposing Release to reflect the 
rounding of those calculations, as reflected in the submission made to 
OMB.
    For purposes of the Paperwork Reduction Act, we now expect the 
annual decrease in the paperwork burden for issuers eligible to 
incorporate by reference to comply with Form S-11 to be approximately 
37,950 hours of in-house company personnel time and approximately 
$45,540,000 for the services of outside professionals.\40\ These 
estimates include the time and the cost of preparing and reviewing 
disclosure, filing documents, and retaining records. These estimates 
were based on the following assumptions:
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    \40\ Consistent with recent rulemakings and based on discussions 
with several private law firms, we estimate that the cost of outside 
professionals retained by the issuer is an average of $400 per hour.
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     Each year, approximately 100 registration statements on 
Form S-11, including post-effective amendments, will incorporate 
information by reference.\41\
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    \41\ This estimate is based on prior filing history and future 
estimates. From September 1, 2006 to August 31, 2007, issuers that 
will be eligible to incorporate by reference under these amendments 
filed approximately 14 new registration statements on Form S-11 and 
68 post-effective amendments to registration statements on Form S-11 
(excluding post-effective amendments filed for the purpose of 
deregistering shares). A majority of these filings were made by non-
traded REITs. With the elimination of small business registration 
forms, we estimate that the number of registration statements filed 
on Form S-11 will increase by 15. See Release No. 33-8876.
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     The estimated paperwork burden for a Form S-11 that does 
not incorporate information by reference is 1,977 hours, which consists 
of 494.25 internal hours and 1,482.75 professional hours.\42\
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    \42\ Consistent with current OMB estimates, we assume that 25% 
of the total burden is borne by internal staff and 75% by 
professionals.
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     The estimated paperwork burden for a Form S-11 that 
incorporates information by reference will be the same as the burden 
currently imposed by Form S-3,\43\ which is 459 hours, which consists 
of 114.75 internal hours and 344.25 professional hours.
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    \43\ 17 CFR 239.13.
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     The amount of time eliminated for each Form S-11 that 
incorporates information by reference will be 1,518 hours per form 
(1,977 hours for a Form S-11 that does not incorporate information by 
reference minus 459 hours for a Form S-11 that incorporates information 
by reference).
     We estimate that the annual decrease in compliance burden 
after adoption of the amendments will be 151,800 hours (100 
registration statements multiplied by 1,518 hours per form).\44\ This 
would include 37,950 hours of issuer personnel time (100 registration 
statements times 379.5 \45\ hours of issuer personnel time per 
registration statement) and 113,850 hours of professional time (100 
registration statements times 1,138.5 \46\ hours of professional time 
per registration statement).
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    \44\ Generally, companies eligible to incorporate by reference 
on Form S-11 will have previously filed at least one Form S-11. The 
estimated decrease in the compliance burden discussed in this 
section reflects the reduced costs of preparing a subsequent Form S-
11 as well as the reduced costs from utilizing incorporation by 
reference.
    \45\ Reflects the difference between the amount of internal time 
required to prepare a Form S-11 without incorporation by reference 
(494.25 hours) and the amount of internal time required to prepare a 
Form S-11 with incorporation by reference (114.75 hours).
    \46\ Reflects the difference between the amount of professional 
time required to prepare a Form S-11 without incorporation by 
reference (1,483 hours) and the amount of professional time required 
to prepare a Form S-11 with incorporation by reference (344.25 
hours).
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     The annual cost savings will be approximately $45,540,000 
for the services of outside professionals.

III. Cost-Benefit Analysis

A. Summary of Amendments

    We are adopting revisions to Form S-11 that will allow real estate 
entities to take advantage of incorporation by reference for their 
previously filed Exchange Act reports and documents. Form S-1 and Form 
F-1, which are similar long-form registration statements, currently 
permit this type of incorporation by reference. The amendments revise 
Form S-11 to permit incorporation by reference on the same terms as 
currently provided in Form S-1 and Form F-1. The purpose of the 
amendments is to integrate further the disclosure obligations of the 
Exchange Act and the Securities Act for real estate entities.

B. Benefits

    We anticipate that the amendments will enable real estate entities 
to access the capital markets at a lower cost. The amendments will 
enable eligible issuers to use their Exchange Act filings to satisfy a 
portion of their Form S-11 disclosure requirements without having to 
incur costs to replicate information that they already have disclosed 
in previously filed Exchange Act reports and other documents. For 
purposes of our Paperwork Reduction Act analysis, we estimate that our 
amendments to Form S-11 will reduce the annual paperwork burden by 
approximately 37,950 hours for issuer personnel time at a cost of 
approximately $6,641,250 \47\ and by a cost of approximately 
$45,540,000 for the services of outside professionals. In addition, we 
believe that the reduction in the size of the prospectus as a result of 
incorporation by reference will also result in some cost savings and 
efficiencies in printing and delivering prospectuses.
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    \47\ Consistent with recent rulemaking releases, we estimate the 
value of work performed by the company internally at a cost of $175 
per hour.
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    The amendments are intended to result in regulatory simplification 
and efficiency by permitting incorporation by reference on Form S-11 
and conforming the requirements of Form S-11 to the requirements of 
Form S-1 and Form F-1 in that respect. Incorporation by reference will 
allow eligible issuers to avoid duplicating disclosure in Form S-11 
when the information has already been disclosed in Exchange Act 
reports. In addition, the revisions will simplify the disclosure regime 
for long-form registration statements by permitting incorporation by 
reference equally, regardless of industry. Although four of the 
commenters indicated that the amendments will increase the efficiency 
of the registration process and decrease costs borne by 
registrants,\48\ none of the commenters specifically addressed our 
request for comment on the Cost-Benefits Analysis contained in the 
Proposing Release.
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    \48\ See letters from IPA, CPA, Hines and Grubb.
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    Two commenters requested guidance on whether a prospectus 
supplement may be used to update the information incorporated in a 
prospectus included in a Form S-11 registration statement.\49\ As 
discussed above, we believe it is

[[Page 20516]]

appropriate to limit the use of incorporation by reference to revised 
or supplemented prospectuses included in post-effective amendments to 
the registration statement. We believe this limitation is consistent 
with our prior statements that forward incorporation by reference is 
not appropriate for long-form registration statements, such as Form S-
11, while still reducing the overall filing burden associated with the 
form.
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    \49\ See letters from IPA and Hines.
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C. Costs

    We expect that the amendments will result in some ongoing costs to 
issuers that elect to use incorporation by reference. These potential 
costs relate to the issuer's obligation to make the incorporated 
Exchange Act reports and documents available on its Web site and 
include creating and/or maintaining a Web site as well as actually 
posting the required filings on the Web site. However, we believe that 
a substantial majority of issuers eligible to use incorporation by 
reference already maintain Web sites and thus will not have to incur 
any additional costs to establish a new Web site for this purpose. In 
addition, we believe that many issuers eligible to use incorporation by 
reference already post their Exchange Act reports on their Web sites. 
Those that do not will incur incremental costs to post the required 
filings. Given that the amendments will not mandate use of 
incorporation by reference, issuers that are unwilling to bear the cost 
of complying with the Web site requirement can simply elect not to 
incorporate information by reference.
    We also recognize that permitting incorporation by reference may 
impose an analytical burden on investors. For example, for offerings on 
Form S-11 today, much of the relevant information regarding an offering 
and the issuer is required to be contained in the registration 
statement. As a result of our amendments, offerings pursuant to Form S-
11 could require an investor to assemble and assimilate information 
from various Exchange Act reports and the registration statement in 
order to compile all of the relevant information regarding an offering. 
Investors will have to compile the information integrated into the 
registration statement or delivered by means outside of the prospectus. 
We note, however, that Securities Act Forms S-3 and F-3 have long 
permitted incorporation by reference from the issuer's Exchange Act 
reports, as have Form S-1 and Form F-1 since December 2005, and we know 
of no indications that investors are unduly burdened when investing in 
offerings registered on these forms.

IV. Consideration of Promotion on Efficiency, Competition and Capital 
Formation

    Section 2(b) of the Securities Act,\50\ requires us, when engaged 
in rulemaking where we are required to consider or determine whether an 
action is necessary or appropriate in the public interest, to consider, 
in addition to the protection of investors, whether the action will 
promote efficiency, competition and capital formation. In response to 
our request for comment in the Proposing Release on the impact of the 
proposed amendments on efficiency, competition and capital formation, 
four of the commenters indicated that the amendments will increase the 
efficiency of the registration process and decrease costs borne by 
registrants.\51\
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    \50\ 15 U.S.C. 77b(b).
    \51\ See letters from IPA, CPA, Hines and Grubb.
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    The amendments will amend Form S-11 to permit incorporation by 
reference on terms equivalent to that currently provided in Form S-1 
and Form F-1. We believe the amendments will provide benefits, as 
discussed in further detail above, by reducing the costs of complying 
with the Form S-11 disclosure requirements by enabling eligible issuers 
to incorporate their Exchange Act filings. Eased filing burdens 
resulting from the amendments will promote efficiency in capital 
formation for real estate entities and may provide a competitive 
benefit to entities filing on Form S-11 by allowing them to incorporate 
their periodic reports by reference to the same extent as registrants 
filing on Form S-1 and Form F-1.

V. Final Regulatory Flexibility Act Analysis

    This Final Regulatory Flexibility Analysis has been prepared in 
accordance with 5 U.S.C. 603. It relates to amendments to Form S-11.

A. Reasons for and Objectives of the Amendments

    In 2005, the Commission adopted revisions to Form S-1 and Form F-1 
to permit incorporation by reference from previously filed Exchange Act 
reports and other documents. Currently, real estate entities are not 
permitted to use Form S-1 to register offerings under the Securities 
Act. Consequently, these entities are unable to take advantage of the 
important benefit of incorporation by reference that is enjoyed by 
companies in all other industries that file registration statements on 
Form S-1. The ability to use a prospectus that does not need to include 
information provided in previous Exchange Act filings permits companies 
to streamline the preparation of registration statements and raise 
capital more efficiently. Companies that are not permitted to 
incorporate by reference have a greater burden in preparing 
registration statements in connection with their public offerings. We 
believe there is no reason to distinguish between real estate entities 
and other industries for purposes of incorporation by reference.
    The purpose of the amendments is to further integrate the Exchange 
Act and Securities Act by amending Form S-11 to permit incorporation by 
reference of Exchange Act filings on terms equivalent to that currently 
provided in Form S-1 and Form F-1. The amendments will extend an 
important benefit to real estate entities.

B. Significant Issues Raised by Public Comment

    In the Proposing Release, we requested comment on any aspect of the 
Initial Regulatory Flexibility Act Analysis, including the number of 
small entities that would be affected by the proposals, and both the 
qualitative and quantitative nature of the impact. While several 
commenters supported the proposal because of the cost savings to real 
estate entities, they did not provide any specific comments on the 
Initial Regulatory Flexibility Act Analysis.

C. Small Entities Subject to the Amendments

    The Regulatory Flexibility Act defines ``small entity'' to mean 
``small business,'' ``small organization,'' or ``small governmental 
jurisdiction.'' \52\ The Commission's rules define ``small business'' 
and ``small organization'' for purposes of the Regulatory Flexibility 
Act for each of the types of entities regulated by the Commission.\53\ 
Roughly speaking, a ``small business'' and ``small organization,'' when 
used with reference to an issuer other than an investment company, 
means an issuer with total assets of $5 million or less on the last day 
of its most recent fiscal year. We estimate that there are 
approximately 1,100 issuers, other than investment companies, that may 
be considered reporting small entities.\54\ The amendments will apply 
to all

[[Page 20517]]

issuers required to file registration statements on Form S-11.
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    \52\ 5 U.S.C. 601(6).
    \53\ Rules 157 under the Securities Act [17 CFR 230.157], 0-10 
under the Exchange Act [17 CFR 240.0-10] and 0-10 under the 
Investment Company Act [17 CFR 270.0-10] contain the applicable 
definitions.
    \54\ The estimated number of reporting small entities is based 
on 2007 data, including the Commission's EDGAR database and Thomson 
Financial's Worldscope database.
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    As previously noted, in the 12 months ended August 31, 2007, 82 
registration statements on Form S-11 were filed, including new 
registration statements and post-effective amendments. We estimate that 
four of those were filed by small entities. We also estimate that 
approximately 15 registration statements were filed on Form SB-2 in the 
last fiscal year covering transactions by real estate entities that in 
the future will be required to register on Form S-11.\55\ Thus, we 
estimate that 19 registration statements by small entities will be 
subject to the amendments.
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    \55\ See Release No. 33-8876.
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D. Reporting, Recordkeeping and Other Compliance Requirements

    The amendments are expected to impact all capital raising and 
selling security holder transactions that are registered under the 
Securities Act on Form S-11. Small entities required to register on 
Form S-11 will be able to take advantage of the ability to incorporate 
by reference previously filed Exchange Act reports and documents. We 
expect that permitting the incorporation by reference of previously 
filed Exchange Act reports and documents will reduce the aggregate 
costs incurred by small entities of preparing registration statements 
on Form S-11 by $9,914,438.\56\
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    \56\ This estimate is based on our estimate that 19 registration 
statements by small entities will be subject to the amendments.
---------------------------------------------------------------------------

    We expect that small entities eligible to register on Form S-11 may 
need to incur some insignificant additional costs related to complying 
with the Web site requirements related to incorporation by reference, 
although issuers could avoid such costs by electing not to incorporate 
information by reference. They may also have already incurred this cost 
for other business reasons.

E. Agency Action To Minimize Effect on Small Entities

    The Regulatory Flexibility Act directs us to consider significant 
alternatives that would accomplish the stated objective, while 
minimizing any significant adverse impact on small entities. In 
connection with the amendments, the Regulatory Flexibility Act requires 
us to consider the following alternatives:
    1. Establishing different compliance or reporting requirements that 
take into account the resources of small entities;
    2. The clarification, consolidation, or simplification of 
disclosure for small entities;
    3. Use of performance standards rather than design standards; and
    4. Exempting smaller entities from coverage of the disclosure 
requirements or any part thereof.
    Our amendments will extend the benefit of incorporation by 
reference to small entities that are required to file registration 
statements on Form S-11. Establishing a different standard for small 
business entities would impose a greater compliance burden on small 
entities and would be inconsistent with the benefits provided for small 
entities that register on Form S-1 and Form F-1.

VI. Statutory Authority and Text of the Amendments

    The amendments described in this release are adopted under the 
authority set forth in Sections 6, 7, 8, 10 and 19(a) of the Securities 
Act, as amended.

List of Subjects in 17 CFR Part 239

    Reporting and recordkeeping requirements, Securities.

0
For the reasons set out in the preamble, the Commission amends title 
17, chapter II, of the Code of Federal Regulations as follows:

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

0
1. The authority citation for part 239 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 
77sss, 78c, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll, 77mm, 80a-
2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 
80a-30, and 80a-37, unless otherwise noted.
* * * * *

0
2. Amend Form S-11 (referenced in Sec.  239.18) as follows:
0
a. Add General Instruction H;
0
b. Add to the cover page, above the check box related to ``Rule 462(b) 
under the Securities Act,'' a check box requiring the registrant to 
indicate whether it is relying on Rule 415 under the Securities Act;
0
c. In Part I, add Item 28A;
0
d. Redesignate Item 29 as Item 29A; and
0
e. Add new Item 29.
    The additions read as follows:

    Note-- The text of Form S-11 does not, and this amendment will 
not, appear in the Code of Federal Regulations.

FORM S-11

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF 
CERTAIN REAL ESTATE COMPANIES

General Instructions

* * * * *
    H. Eligibility To Use Incorporation by Reference
    If a registrant meets the following requirements immediately prior 
to the time of filing a registration statement on this Form, it may 
elect to provide information required by Items 3 through 28 of this 
Form in accordance with Item 28A and Item 29 of this Form:
    1. The registrant is subject to the requirement to file reports 
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act 
of 1934.
    2. The registrant has filed all reports and other materials 
required to be filed by Section 13(a), 14, or 15(d) of the Exchange Act 
during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports and materials).
    3. The registrant has filed an annual report required under Section 
13(a) or Section 15(d) of the Exchange Act for its most recently 
completed fiscal year.
    4. The registrant is not:
    (a) And during the past three years neither the registrant nor any 
of its predecessors was:
    (i) A blank check company as defined in Rule 419(a)(2) (Sec.  
230.419(a)(2) of this chapter);
    (ii) A shell company, other than a business combination related 
shell company, each as defined in Rule 405 (Sec.  230.405 of this 
chapter); or
    (iii) A registrant for an offering of penny stock as defined in 
Rule 3a51-1 of the Exchange Act (Sec.  240.3a51-1 of this chapter).
    (b) Registering an offering that effectuates a business combination 
transaction as defined in Rule 165(f)(1) (Sec.  230.165(f)(1) of this 
chapter).
    5. If a registrant is a successor registrant it shall be deemed to 
have satisfied conditions 1, 2, 3, and 4(b) above if:
    (a) Its predecessor and it, taken together, do so, provided that 
the succession was primarily for the purpose of changing the state of 
incorporation of the predecessor or forming a holding company and that 
the assets and liabilities of the successor at the time of succession 
were substantially the same as those of the predecessor; or
    (b) All predecessors met the conditions at the time of succession 
and the registrant has continued to do so since the succession.

[[Page 20518]]

    6. The registrant makes its periodic and current reports filed 
pursuant to Section 13 or Section 15(d) of the Exchange Act that are 
incorporated by reference pursuant to Item 28A or Item 29 of this Form 
readily available and accessible on a Web site maintained by or for the 
registrant and containing information about the registrant.
* * * * *

FORM S-11

* * * * *
    If any of the Securities being registered on this Form are to be 
offered on a delayed or continuous basis pursuant to Rule 415 under the 
Securities Act, check the following box: [ ]
* * * * *

PART I--INFORMATION REQUIRED IN PROSPECTUS

* * * * *

Item 28A. Material Changes

    If the registrant elects to incorporate information by reference 
pursuant to General Instruction H, describe any and all material 
changes in the registrant's affairs which have occurred since the end 
of the latest fiscal year for which audited financial statements were 
included in the latest Form 10-K and which have not been described in a 
Form 10-Q or Form 8-K filed under the Exchange Act.

Item 29. Incorporation of Certain Information by Reference

    If the registrant elects to incorporate information by reference 
pursuant to General Instruction H:
    (a) It must specifically incorporate by reference into the 
prospectus contained in the registration statement the following 
documents by means of a statement to that effect in the prospectus 
listing all such documents:
    (1) The registrant's latest annual report on Form 10-K filed 
pursuant to Section 13(a) or Section 15(d) of the Exchange Act which 
contains financial statements for the registrant's latest fiscal year 
for which a Form 10-K was required to have been filed; and
    (2) All other reports filed pursuant to Section 13(a) or Section 
15(d) of the Exchange Act or proxy or information statements filed 
pursuant to Section 14 of the Exchange Act since the end of the fiscal 
year covered by the annual report referred to in paragraph (a)(1) of 
this Item.

    Note to Item 29(a). Attention is directed to Rule 439 (Sec.  
230.439 of this chapter) regarding consent to use of material 
incorporated by reference.

    (b)(1) The registrant must state:
    (i) That it will provide to each person, including any beneficial 
owner, to whom a prospectus is delivered, a copy of any or all of the 
reports or documents that have been incorporated by reference in the 
prospectus contained in the registration statement but not delivered 
with the prospectus;
    (ii) That it will provide these reports or documents upon written 
or oral request;
    (iii) That it will provide these reports or documents at no cost to 
the requester;
    (iv) The name, address, telephone number, and e-mail address, if 
any, to which the request for these reports or documents must be made; 
and
    (v) The registrant's Web site address, including the uniform 
resource locator (URL) where the incorporated reports and other 
documents may be accessed.

    Note to Item 29(b)(1). If the registrant sends any of the 
information that is incorporated by reference in the prospectus 
contained in the registration statement to security holders, it also 
must send any exhibits that are specifically incorporated by 
reference in that information.

    (2) The registrant must:
    (i) Identify the reports and other information that it files with 
the SEC; and
    (ii) State that the public may read and copy any materials it files 
with the SEC at the SEC's Public Reference Room at 100 F Street, NE, 
Washington, DC 20549. State that the public may obtain information on 
the operation of the Public Reference Room by calling the SEC at 1-800-
SEC-0330. If the registrant is an electronic filer, state that the SEC 
maintains an Internet site that contains reports, proxy and information 
statements, and other information regarding issuers that file 
electronically with the SEC and state the address of that site (http://www.sec.gov).
* * * * *

    Dated: April 10, 2008.

    By the Commission.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-7967 Filed 4-14-08; 8:45 am]
BILLING CODE 8010-01-P