3.1 Introduction
Rule
3-05 requires a registrant to provide full financial statements for
significant acquired or to be acquired businesses. However, for significant
real estate operations that are acquired or to be acquired, Rule 3-14 permits a
registrant to file only statements of revenues and expenses (known also as
“abbreviated income statements” or “abbreviated financial information”). Rule 3-14(c)(1) states that
such statements may exclude “expenses not comparable to the proposed future
operations such as mortgage interest, leasehold rental, depreciation, amortization,
corporate overhead and income taxes.” In addition to the statements of revenues and
expenses, pro forma financial information is also required.
Given the differences between these and other requirements in Rules
3-05 and 3-14, including the nature of the significance tests, it is important for a
registrant to determine whether it has or will acquire a real estate operation or a
business. See Section
3.6 for a summary of key differences between Rules 3-05 and 3-14.