Clifford Chance

Acquisition and Disposition Financials Under Regulation S-X 3-05 and 3-14: Spotlight on the New Analysis for REIT Registrants

November 18, 2020

On May 20, 2020, the Securities Exchange Commission formally adopted amendments to the Regulation S-X financial disclosure requirements for probable and completed acquisitions and dispositions of significant businesses under Rule 3-05 and real estate operations under Rule 3-14. Importantly, the amended rules largely harmonize Rule 3-14 to Rule 3-05 where no unique industry considerations warrant a different treatment. These rule changes will be effective on January 1, 2021. Earlier compliance is permitted.

This briefing focuses on the analysis an SEC REIT registrant will face in connection with an acquisition of a target, especially in the context of a securities offering.

Exhibit A provides a simplified flow chart to guide the acquiror's analysis for acquisitions in the context of a securities offering.

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