Comments to SEC Proposed Regulations Regarding Form PF

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Private investors and private equity owners play a critical role in New York City real estate as owners of both commercial and multifamily assets. The industry’s economic contributions to the local economy are substantial, supporting thousands of high-quality jobs and providing the largest source of revenue for the City government. REBNY is concerned that the proposed rules would hamper that investment without meaningfully addressing concerns about systemic risk and financial stability.

In particular, it is important to recognize that real estate private equity funds and private equity sponsors are different from other types of financial market participants. Specifically, those real estate funds are not meaningfully interconnected with other financial system participants and have very limited counterparty exposure. Real estate private equity sponsors and their funds do not guarantee or pledge assets to secure each other’s obligations, and portfolio companies owned by a private equity fund typically do not guarantee or pledge assets to secure each other’s obligations. Further, there is no demonstrated or meaningful financial interconnection among a private equity sponsor, its funds, or its portfolio companies. Moreover, investors in real estate private equity funds have limited or no redemption rights during the life of the fund, which is often a period of 10 years or more, making a sudden “run” on the fund highly unlikely.