SEC Official Discusses Steps REITs Can Take to Minimize Requests
04/08/2014 | by Allen Kenney

Cicely LaMothe, senior assistant chief accountant in the Securities and Exchange Commission (SEC) Division of Corporate Finance-Real Estate, joined for a video interview during REITWise 2014: NAREIT’s Law, Accounting and Finance Conference held in Boca Raton, Fla.

LaMothe discussed steps that REITs can take to minimize SEC requests regarding their financial reporting.

“We view our reviews as a dialogue,” LaMothe said. “We have a dialogue with the registrant in order to try to improve the disclosure that’s in the filings. We consider a couple of things in the comment process, both inside the filing and outside the filing. We consider things like earnings releases, analyst reports, information on the company’s website. We use this mix of information when we also consider the information in their filing to develop our comments.”

LaMothe said there are measures REITs can take to facilitate that process.

“One, is the information that they’re providing to the public something that should be included in the document? Does that provide the information investors are looking for? In addition, contemporaneously documenting the basis for their conclusions at the time of a transaction,” she said.

LaMothe advised companies to consider undergoing “pre-filing clearance” for unique reporting issues.

“Best to come talk to us first,” she said. “That facilitates the timing of the transaction. If you wait until you’re already in the comment process, we can’t necessarily guarantee the timing.”

LaMothe also encouraged REITs to review their responses to questions to make sure that they are directly addressing what they’ve been asked.

LaMothe elaborated on some of the comments that have been made recently with regard to REITs.

“We’re still struggling in some of the same areas,” she said. “When we talk to investors, we do get some feedback that people are people are pretty happy with a lot of the disclosures, but there are a couple of areas that people continue to have questions on.”
LaMothe noted that inconsistencies exist between companies in how they report.

“We trying to get some consistency there so that investors have the information that they need,” she said. “We do spend a lot of time on metrics, trying to figure out how management finds that information useful.”