3440.1 Statements of estimated taxable operating results and cash to be made available by operations are required in pro forma statements for real estate and leasing operations. These should be pro forma statements of the registrant, rather than of the property, giving effect to the acquisition.
a. If the property is to be operated by the registrant, the presentation should be based on the most recent 12 month period and include only those adjustments which are factually supportable. Annualized results for a period less than twelve months is not appropriate.
b. If the property to be acquired is subject to one or more leases, the presentation should be based on the rents to be paid in the first year of those leases. Material changes in the terms that will occur pursuant to the terms of the leases subsequent to the first year should be prominently disclosed.
c. Registrants that are partnerships or REITs may present in tabular form for a limited number of years, typically one year, the estimated cash distribution per unit showing the portion thereof reportable as taxable income and the portion thereof that is a return of capital. If taxable net income will be greater than the cash available for distribution per unit, this should be disclosed.
3440.2 To the extent applicable, pro forma information required by S-X Article 11 is also required.
3440.3 Pro forma presentations should not include the effects of real estate properties for periods prior to actual construction since that type of adjustment would be a forecast or projection.
3440.4 The provision of S-X 3-14 which permits estimated taxable operating results of real estate companies to include annualization of existing lease contracts is not applicable to equipment leasing companies or other businesses that generate income through leases.
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