Search within this section
Select a section below and enter your search term, or to search all click Financial Reporting Manual
Favorited Content
2330 Real Estate Operations - Required Financial Statements
us SEC - Financial Reporting Manual
S-X 3-14 financial statements may exclude items (such as historical mortgage interest and depreciation) which are not comparable to the proposed future operations of the property. (Where items are excluded, auditors ordinarily will issue a report such as that at AU 623.15 and 623.18). Registrants may request relief from the audit requirement for financial statements of properties with a rental history of less than one year.
2330.2 Periods to be Presented — Properties Acquired from Related Parties
Audited three years (two years for acquisitions by certain issuers, such as smaller reporting companies), plus the latest unaudited interim period based on the property's fiscal periods are required for properties acquired from a related party. For properties held by the related party for less than three years, financial statements are required for the greater of the period held by the related party or one year. See Section 2330.4 "Periods to be Presented Implementation — Pre-Acquisition Using Fiscal Year-End." (Last updated: 6/30/2013)
2330.3 Periods to be Presented — Properties Acquired from Third Parties
Only the most recent year and most recent interim period are required if the property was acquired from a third party. See Section 2330.4 "Periods to be Presented Implementation —Pre-Acquisition Using Fiscal Year-End."
2330.4 Periods to be Presented - Implementation - Pre-Acquisition Using Fiscal Year-End
It is not appropriate to provide audited financial statements for a rolling 12-month period prior to the acquisition in lieu of audited financial statements for the latest fiscal year end of the property. Also, pre- and post-acquisition periods should not be combined to produce a year's financial statements. Only pre-acquisition financial statements satisfy S-X 3-14.
2330.5 Periods to Be Presented - Implementation - Application of S-X 3-06(b)
S-X 3-06(b) does not apply to financial statements of real estate properties. (Last updated: 10/20/2014)
2330.6 Updating Requirements
The same rules for updating S-X 3-05 financial statements apply to S-X 3-14 financial statements. See Section 2045.
2330.7 Other Required Disclosure
The registrant should describe any material factors which would cause the reported financial information not to be indicative of future operating results, such as a change in how the property will be used, an expected material modification to the property or a material change in property tax assessment.
If a registrant acquires an operating property with a rental history of more than three months but less than nine months, the financial statements may be presented on an unaudited basis.
If a registrant acquires an operating property which it will demolish and build a new rental property, the staff would not object to the omission of the S-X 3-14 financial statements of the acquired property if the prior rental revenues and operating costs of the property are not representative of the new property to be built. The registrant should explain the basis for omission of the financial statements in the filing. In other cases where the registrant believes the leasing history is not representative, it may request relief from CF-OCA in writing.
Where a registrant acquires a property that does not have a leasing history, such as a previously owner-occupied or newly constructed property, financial statements of the property are not required. Where the leasing history is less than three months, financial statements of the property are not required. See Section 2340 with respect to triple net leased properties.
This is a work of the U.S. Government
Link copied
