On July 29, Nareit submitted a comment to the SEC responding to its May 3, 2019, proposal to amend the financial disclosure requirements related to the acquisition and disposition of businesses, including acquisitions of real estate which are subject to Rule 3-14 (Proposal). The Proposal is part of the SEC’s ongoing initiative to update disclosure requirements and is intended to reduce the cost and complexity of preparing the financial disclosures.
Nareit was pleased that the Proposal included recommendations that Nareit had offered in previous comments to the SEC in recent years, including Nareit’s recommendation that the significance thresholds for reportable acquisitions set forth in Rules 3-14 with Rule 3-05 be aligned and increased. Accordingly, the Nareit member task force formed to develop Nareit’s comment endorsed the Proposal and offered two suggestions to further clarify disclosures made to investors:
- Conform the Significance Guidance for the Investment and Asset Tests Proposed in Rule 3-14 for Blind Pool Real Estate Offerings in Rule 3-05 and permit the exclusion of the Income Test during the distribution period; and
- Clarify the Definition of “Real Estate Operations.”