Close X
Attorney Spotlight

How did Brianna Powell's work as a law clerk prepare her for practicing law? Read more>

Search

Close X

Experience

Search our Experience

Experience Spotlight

The M&A Advisor Winner 2017The M&A Advisor announced the winners of the 16th Annual M&A Advisor Awards on Monday, November 13 at the 2017 M&A Advisor Awards. Bass, Berry & Sims was named a winner in the two categories related to the following deals:

M&A Deal of the Year (from $1B-$5B) – Acquisition of CLARCOR Inc. by Parker Hannifin Corporation

Corporate/Strategic Deal of the Year (over $1B) – Acquisition of BNC Bancorp by Pinnacle Financial Partners

Close X

Thought Leadership

Enter your search terms in the relevant box(es) below to search for specific Thought Leadership.
To see a recent listing of Thought Leadership, click the blue Search button below.

Thought Leadership Spotlight

Regulation A+

It seems that lately there has been a noticeable uptick in Regulation A+ activity, including several recent Reg A+ securities offerings where the stock now successfully trades on national exchanges. In light of this activity, we have published a set of FAQs about Regulation A+ securities offerings to help companies better understand this "mini-IPO" offering process, as well as pros and cons compared to a traditional underwritten IPO.

Read now

SEC Staff Issues Interpretive Disclosure Guidance Affecting Non-Traded REITs

Publications

August 29, 2013

The SEC's Division of Corporation Finance (the "Division") recently published "CF Disclosure Guidance: Topic No. 6" ("Topic No. 6") which contains disclosure guidance from the Staff regarding public, non-listed REITs (also known as "non-traded REITs"). In Topic No. 6, the Staff includes disclosures about guidance related to distributions, dilution, redemption programs, NAV estimates, as well as new guidance on current Staff interpretations of Industry Guide 5, particularly with respect to prior performance disclosure. While this new guidance is aimed at the disclosures of non-traded REITs, the Staff notes that it also may apply to disclosures in connection with offerings by traded REITs or other companies (including IPOs by issuers of the type historically viewed by the Division as "blind pool" IPOs) that have features to which Industry Guide 5 applies. Set forth below are some of the key disclosure topics addressed in Topic No. 6.

  • Distributions: The Staff's new guidance provides that if a newly-formed non-traded REIT discloses to investors an estimated distribution yield but has yet to pay any distributions, the Staff will ask the REIT to demonstrate that it has a reasonable basis for the estimate. If no operating assets have been acquired, the Staff typically will object to an estimated distribution yield, as they do not believe that there is a reasonable basis for the estimate. The Staff also will object when a non-traded REIT discloses an annualized distribution yield based on a single distribution. However, the Staff typically will not object to an annualized yield if the non-traded REIT has paid distributions at the disclosed annual distribution yield for two or more quarters.
  • Dilution: With respect to dilution, the Staff's new guidance provides that if distributions paid are in excess of earnings, non-traded REITs are likely to be required to disclose cumulative earnings since inception and cumulative distributions paid since inception.
  • Redemptions: To enhance the transparency surrounding a REIT's redemption program, Topic No. 6 notes that the Staff often will ask non-traded REITs to summarize in the prospectus their redemption program history for both the current and last fiscal year by disclosing the number of redemption requests received, the number of redemption requests honored, the number of redemption requests deferred or rejected, the source of funds used to honor redemption requests and the average price per share for these redemptions.
  • NAV: Concerning non-traded REITs that provide shareholders with a periodic estimate of the value per share based on a valuation of the REIT's investment portfolio, the Staff requests in Topic No. 6 that companies supplement this disclosure with additional information to facilitate investor understanding of the basis for the estimate. Examples of such additional disclosure include the process by which the value estimate was determined, a breakdown of the value assigned to each major asset type and the key assumptions used in the primary valuation method.
  • Website Posting of Supplemental Information: The Staff's guidance provides that certain supplemental information that companies undertake to provide to investors on a regular basis may be made available to investors via a publicly-accessible website in lieu of physical delivery.
  • Industry Guide 5 Disclosures: Topic No. 6 sets forth the Staff's current interpretive positions on Industry Guide 5 disclosures, including permitting non-traded REITs to use targeted leverage amounts instead of maximum leverage amounts when disclosing certain fee estimates and relaxing certain disclosures concerning the sponsor's prior performance.
  • Updating Disclosure and Readability: Topic No. 6 notes that the Staff often will ask non-traded REITs to consolidate their prospectus supplements quarterly into one or two supplements to enhance readability and to update the base prospectus annually to include information from the prospectus supplements.

If you have any questions regarding the issues addressed in this Corporate and Securities Law Alert, please contact the author listed.


Related Professionals

Related Services

Notice

Visiting, or interacting with, this website does not constitute an attorney-client relationship. Although we are always interested in hearing from visitors to our website, we cannot accept representation on a new matter from either existing clients or new clients until we know that we do not have a conflict of interest that would prevent us from doing so. Therefore, please do not send us any information about any new matter that may involve a potential legal representation until we have confirmed that a conflict of interest does not exist and we have expressly agreed in writing to the representation. Until there is such an agreement, we will not be deemed to have given you any advice, any information you send may not be deemed privileged and confidential, and we may be able to represent adverse parties.