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Chapter 2 — Identifying the Required Financial Statements for the Registration Statement

2.6 Financial Statements of Real Estate Operations Acquired or to Be Acquired (Rule 3-14)

2.6 Financial Statements of Real Estate Operations Acquired or to Be Acquired (Rule 3-14)

When a registrant consummates, or it is probable that it will consummate, a significant acquisition of real estate operations, the registrant may be required to file abbreviated income statements for the acquired or to be acquired real estate operations (acquiree) in accordance with Regulation S-X, Rule 3-14. Because the information requirements under Rule 3-14 are different from those under Regulation S-X, Rule 3-05 (discussed above), it is critical to identify whether an actual or planned acquisition is a real estate operation. In contrast to Rule 3-05, Rule 3-14 only requires inclusion of preacquisition financial statements for a significant real estate operation for the most recent year and applicable interim period, regardless of significance. While existing registrants are subject to periodic reporting requirements for significant acquisitions, an entity is not subject to such requirements before an IPO. Therefore, in the context of an initial registration statement, a company must evaluate certain acquisitions of real estate operations.