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Secretary of Labor Thomas E. Perez
Notice of Proposed Individual Exemption to Amend and Replace Prohibited Transaction Exemption (PTE) 85-131, Involving the Watkins Master Trust (the Trust), Located in Atlanta, GA [Notices] [06/18/2002]

EBSA (Formerly PWBA) Federal Register Notice

Notice of Proposed Individual Exemption to Amend and Replace Prohibited Transaction Exemption (PTE) 85-131, Involving the Watkins Master Trust (the Trust), Located in Atlanta, GA [06/18/2002]

[PDF Version]

Volume 67, Number 117, Page 41517-41521


[[Page 41517]]

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Application No. D-11036]

 
Notice of Proposed Individual Exemption to Amend and Replace 
Prohibited Transaction Exemption (PTE) 85-131, 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 85-131.

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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 85-131 (50 FR 32333, August 9, 
1985). PTE 85-131 is an individual exemption providing relief, since 
March 29, 1985, for (1) the leasing of certain improved real property 
by the Trust to Watkins Associated Industries, Inc. (Watkins), a party 
in interest with respect to the plans (the Plans) participating in the 
Trust under the terms of a written lease (the New Lease); and (2) the 
possible cash purchase of the Trust's interest in the property by 
Watkins.
    If granted, the proposed exemption would modify an option to 
purchase provision in the New Lease by allowing Watkins to acquire the 
Trust's leasehold interests in a building (the Building), the 
improvements (the Improvements) constructed thereon, and in a ground 
lease (the Ground Lease) on May 8, 2002, instead of at the end of New 
Lease renewal term on December 31, 2008. In addition, the proposed 
exemption would replace PTE 85-131, 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 85-131, Involving the 
Watkins Master Trust; Application No. D-11036).
    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 moffittb@pwba.dol.gov. 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 85-131. PTE 85-131 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 Watkins,\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-
11038) that has been filed on behalf of Wilwat Properties, Inc. 
(Wilwat), a party in interest with respect to the employee benefit 
plans participating in the Trust. In their request, Wilwat and the 
Trust are seeking exemptive relief which is similar to that 
contemplated herein.
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I. Background

    As stated above, PTE 85-131 provides exemptive relief from the 
restrictions of sections 406(a), 406(b)(1), 406(b)(2) and 407(a) 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 the leasing by the Trust to Watkins of certain real 
property and the potential cash purchase of the Trust's interest in the 
property by Watkins. PTE 85-131 is effective from March 29, 1985 until 
May 8, 2002, the date of the sale transaction described herein.
    According to the Summary of Facts and Representations (50 FR 24067, 
June 7, 1985) underlying PTE 85-131, 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 approximately 
20,860 net square feet of space, together with parking facilities. The 
Building is located at 1958 Monroe Drive, Atlanta, Georgia, and is 
situated on a 1.34 acre 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 Ground Lease, which was a net lease requiring the Trust to 
incur such expenses as utilities, real estate taxes, assessments and 
maintenance, was originally acquired by the McDonough Construction 
Company and Affiliated Companies Profit Sharing Plan (the McDonough 
Plan) in 1958. At the time of the acquisition, the Land had been 
improved with the Building which was

[[Page 41518]]

being leased to McDonough Construction Company (McDonough), the sponsor 
of the McDonough Plan. McDonough was subsequently purchased by the 
Atlantic States Construction Company (Atlantic States), a corporation 
wholly owned by Watkins. On January 1, 1971, McDonough assigned its 
lessee interest in the Building to Watkins. On December 31, 1981, the 
McDonough Plan was merged into the Atlantic States Profit Sharing Plan 
(the Atlantic States Plan), which became one of the Plans formerly 
participating in the Trust.
    As a result of these transactions, the Trust continued to lease the 
Building to Watkins in accordance with transitional rules set forth 
under section 414(c)(2) of the Act. Although the rental was increased 
on July 1, 1984 to $69,000 per annum to reflect the independently 
appraised fair market rental value of the Building, as determined by 
John W. Booth, M.A.I. of Atlanta, Georgia, the applicants acknowledged 
that Watkins's leasing arrangement with the Atlantic States Plan, and 
subsequently, the Trust, constituted a prohibited transaction after 
June 30, 1984 in violation of the Act. Accordingly, the applicants 
represented that they would pay excise taxes due under section 4975 of 
the Code within 60 days of the granting of the exemption.
    The Ground Lease initially had a termination date of December 31, 
1988. However, that term could be extended by the Trust for two, ten 
year terms through December 31, 2008, at which time the Trust would 
have the right to purchase its leasehold interest in the property, 
including the Improvements, for $16,000. Through December 31, 1993, 
annual rental under the Ground Lease was $3,600. Between January 1, 
1994 through December 31, 2003, the annual rental under the Ground 
Lease was $4,000. Finally, between January 1, 2004 and December 31, 
2008, the annual rental under the Ground Lease was set at $4,400.
    PTE 85-131 permitted the Trust to lease the Building to Watkins 
under the terms of a revised lease (i.e., the New Lease), executed on 
March 29, 1985. The subject property then represented 19.5 percent of 
the Trust's assets. Like the Ground Lease, the New Lease had an 
original termination date of December 31, 1988. However, Watkins was 
given permission to extend the lease for two, ten year periods, subject 
to approval by Citizens and Southern National Bank (CSNB), of Atlanta, 
Georgia, the former Trustee, acting in the capacity as the independent 
fiduciary for the Trust. As lessee, Watkins was responsible for the 
payment of real estate taxes, insurance, utilities and other expenses 
associated with the property, including those attributable to the 
Ground Lease.
    The initial annual rental under the New Lease was set at $79,700 
per annum. This amount was payable in monthly installments of 
$6,641.67. On January 1, 1987 and every three years thereafter, the 
monthly rental was readjusted to reflect the then current fair market 
rental value as determined by a qualified, independent appraiser. In no 
event could the rental rate under the New Lease be less than $79,700 
per annum. Upon termination of the New Lease, all Improvements 
constructed on the Building would belong to the Trust. Prior to the 
sale transaction that is described herein, Watkins paid the Trust a 
monthly rental of $11,613 or $139,345, annually.
    The New Lease also gave Watkins the option to purchase (the Option) 
the Trust's ``leasehold estate and improvements'' at the end of the 
initial lease term and each renewal term. The Option specified that 
Watkins was required to pay the fair market value for such property, as 
determined by a qualified, independent appraiser who had been selected 
by the Trustee. The Option was also subject to approval of the Trustee 
and the purchase price was required to be paid in cash.
    The transactions described in PTE 85-131 were monitored by CSNB, 
the Trustee of the Trust, which has also served as the independent 
fiduciary with respect to the New Lease. In such capacity, the Trustee 
reviewed the terms and conditions of the New Lease, including the 
Option and the condition and marketability of the property. The Trustee 
initially determined that the New Lease was protective of, appropriate 
for, and in the best interest of the Trust and the participants and 
beneficiaries of the Plans participating in the Trust. The Trustee also 
determined that the Trust was adequately diversified and had sufficient 
liquidity, and that the terms and conditions of the New Lease were 
favorable to the Trust. As the independent fiduciary, the Trustee 
stated that it would monitor Watkins's compliance with the terms and 
conditions of the New Lease, make a physical inspection of the 
Building, at least annually, determine whether any renewal or Option 
could be exercised, select independent appraisers, as required under 
the New Lease, and take any steps necessary to enforce and protect the 
rights of the Trust with respect to such property.
    Effective January 1, 1989, CSNB was acquired by Trust Company Bank 
of Atlanta, Georgia (TCB). TCB then became the successor Trustee and 
the independent fiduciary for the Trust with respect to the New Lease. 
TCB subsequently merged with SunBank to form SunTrust, the current 
Trustee and the independent fiduciary. During the entire period of 
Trustee/independent fiduciary succession, the Trust was, at all times, 
monitored by an independent fiduciary.

II. Amendment and Replacement of PTE 85-131

    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 $68,000 
in rental payments under the Ground Lease, whereas the cost of the 
Improvements, ranging from the installation of a new air conditioning 
system in the Building to the renovation and construction of new 
offices, was borne by Watkins. The Trust also received rental income 
under the New Lease of $1,339,952. Since the Trust's cost basis in the 
Building was estimated at $797,000, its total investment return with 
respect to the property (net of acquisition and holding costs) was 
approximately $474,952 [$1,339,952-($797,000 + $68,000)].
    On behalf of the Trust, the Trustee and Watkins seek to amend the 
New Lease thereby permitting the retroactive sale, by the Trust, of its 
leasehold interest in the Building, the Improvements and the Ground 
Lease to Watkins,\2\ in accordance with the pricing terms specified in 
the Option. In this regard, the Trust would receive as consideration no 
less than the fair market value of such property as of the date of the 
sale.\3\ The consideration

[[Page 41519]]

would be paid in cash and the Trust would not be required to pay any 
real estate fees or commissions in connection therewith. Because the 
sale transaction effectively terminated the New Lease by operation of 
law, the parties also wish to replace PTE 85-131 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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    \2\ 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 obtains such a release from the owner, it is represented 
that Watkins would assume all liabilities under this lease and 
indemnify the Trust against any liability to the owner of the Ground 
Lease.
    \3\ The Trust would be conveying its entire leasehold interest 
in the Building, the Improvements and the Ground Lease. In this 
regard, a title search of the subject property during the first 
quarter of 2002 determined that on May 31, 1963 a predecessor to the 
Trust acquired a 15 percent interest in the property from an 
unrelated party who is presently deceased. Although the deed was 
never recorded, title records show that the Trust owned an 85 
percent leasehold interest in such property rather than a 100 
percent interest, as originally believed. Although real estate 
counsel for Watkins and Wilwat were in the process of taking 
remedial action, because the correction could not be accomplished 
prior to the date of the sale transaction, Watkins agreed to pay the 
Trust the full fair market value for the property, as valued by the 
independent appraisers in fee simple, in exchange for the Trust's 
agreement to cooperate with Watkins in obtaining an appropriate 
correction of the chain of title and, if necessary, conveying the 
remaining 15 percent leasehold interest in the property to Watkins 
after the closing of the sale.
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    The Trust, the Trustee and Watkins 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 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 $1,900,000 as of November 26, 2001.\4\
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    \4\ 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 Option for the Land underlying the 
Ground Lease. [4]:
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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 had relied upon the independent appraisers to identify and reconcile 
sales of comparable properties in their preparation of the 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 sale 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 proposed transaction complies 
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 Watkins for 
$1,900,000, 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 on the property of $474,952. Watkins 
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,

[[Page 41520]]

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, no less than 
the greater of the fair market value of its leasehold interests in the 
Building, the Improvements and the Ground Lease, 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, Watkins agreed to assume all liabilities under 
such lease and 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 statutory or 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 85-131 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 time frame 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 Watkins 
Associated Industries, Inc. (Watkins), 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 Watkins, 
as described in Prohibited Transaction Exemption 85-131 (50 FR 32333, 
August 9, 1985).
    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 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, no less than 
the greater of the fair market value of its leasehold interests in the 
Building, the Improvements and the Ground Lease, 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, Watkins agreed to assume all liabilities under 
such lease and 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

[[Page 41521]]

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 85-131, 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. 02-15318 Filed 6-17-02; 8:45 am]
BILLING CODE 4510-29-P