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2320 Real Estate Operations - Individually Insignificant Acquisitions
us SEC - Financial Reporting Manual
(Last updated: 3/31/2013)
2320.1 Individually Insignificant Acquisitions – Applicability
The requirement under S-X 3-14 to file financial statements of individually insignificant properties that are significant in the aggregate is applicable only to registration and proxy statements. Form 8-K does not require audited financial statements of insignificant properties unless they are "related properties" and significant on a combined basis. See Note 2 to Section 2310.1.
2320.2 Individually Insignificant Acquisitions - Measuring Significance
To compute significance, combine individually insignificant properties acquired subsequent to the end of the most recently completed fiscal year for which the registrant's financial statements have been filed and probable acquisitions. Property acquisitions which would not require S-X 3-14 financial statements even if individually significant, such as triple net leased properties covered by Section 2340 and newly constructed properties covered by Section 2330.10, should be excluded from this calculation. Compute significance based on the registrant's total assets as of the latest audited fiscal year balance sheet date preceding the acquisition except when Section 2315.4 is applicable.
2320.3 Individually Insignificant Acquisitions - Financial Statements Required
If the aggregate of all insignificant real estate properties described in Section 2320.2 exceeds 10% of the registrant's total assets, financial statements are required for certain of these properties. Determine what financial statements to provide as follows:
- The registrant should provide S-X 3-14 financial statements for each property acquisition that is 5% or more significant.
- Then it should assess whether it has provided financial statements for the majority (> 50%) of the aggregated property acquisitions based on the purchase price. If it has provided over 50% of the aggregate purchase price, it need not provide additional financial statements. If it has not provided financial statements for over 50% of the aggregate purchase price, it should provide the S-X 3-14 financial statements of other acquired properties below the 5% level in order to provide financial statements for over 50% of the aggregate purchase price.
- If the registrant is unable to obtain audited financial statements of a property that is 5% or more significant or of properties sufficient to provide financial statements for over 50% of the aggregate purchase price, it should request relief from CF-OCA in writing.
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