NAREIT Submission to SEC on Supplemental Financial Information


April 14, 2000


Mr. Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Re: File No. S7-03-00, Supplementary Financial Information

Dear Mr. Katz:

The National Association of Real Estate Investment Trusts© (NAREIT) is pleased to have the opportunity to respond to the Securities and Exchange Commission's (the Commission) proposed rule on Supplementary Financial Information. NAREIT is the national trade association for REITs and other publicly traded real estate companies. Members include real estate investment trusts (REITs) and other businesses that develop, own, operate, and finance income-producing real estate, as well as those firms and individuals who advise, study, and service these businesses.

As an association whose members are involved in the business of developing, owning and operating income-producing property, our comments are focused on Item 302(d) of the proposal as it relates to tangible long-lived assets. NAREIT applauds the Commission's efforts to enhance the transparency of financial reporting by providing investors more detailed information concerning long-lived assets.

Our members are companies in which a substantial portion of their business consists of acquiring and holding for investment, real estate or interests in real estate. Accordingly, pursuant to Regulation S-X, these companies continue to be required to file with each annual report a "Schedule of Real Estate and Accumulated Depreciation" (a/k/a Schedule III).

The Commission is proposing to reinstate rules that would require registrants, other than real estate companies, to provide detailed schedules of property, plant, and equipment, as well as related accumulated depreciation, depletion, and amortization in cases where the property, plant, and equipment account exceeds 25 percent of total assets. In addition, disclosures about salvage values would be required.

NAREIT strongly supports the Commission's proposal to reinstate these rules and to require information regarding salvage value.

NAREIT believes that these disclosures may highlight the need to evaluate the appropriateness of salvage values used to measure the depreciation expense for investment property.

NAREIT appreciates the opportunity to respond to the Commission's proposed rule on Supplementary Financial Information. If you should have any questions regarding this response, please contact George Yungmann, NAREIT's Vice President, Financial Standards, at (202) 739-9432, David Taube, NAREIT's Director, Financial Standards, at (202) 739-9442, or me at (484) 530-1888.


Timothy A. Peterson
Executive Vice President and Chief Financial Officer, Keystone Property Trust
Co-Chair, NAREIT Accounting Committee