An Analysis of 2021 and 2022 SEC Comments Issued to REITs

Non-GAAP The use of non-GAAP measures frequently results in comments from the SEC regarding compliance with Regulation G and Item 10(e) of Regulation S-K. Areas of focus have included: ■ presenting the most directly comparable GAAP measure with equal or greater prominence; ■ reconciliation of the most comparable GAAP financial measure; and ■ disclosure of why the issuer believes the non-GAAP presentation provides information that will be useful to investors. Sample Comments ■ We note your reconciliation of Total NOI to Net loss attributable to common stockholders for the interim periods presented. In future periodic filings, please disclose the most directly comparable GAAP measure with equal or greater prominence to the non-GAAP measure by reconciling from Net loss attributable to common stockholders to calculate Total NOI. Refer to Question 102.10 of the Division’s Compliance and Disclosure Interpretations for Non-GAAP Financial Measures. ■ We note that you reconcile [Net Operating Income] attributable to common stockholders, a non-GAAP measure, from net income (loss) on your net leased and other real estate portfolios attributable to common stockholders, which also appears to represent a non-GAAP measure. Please reconcile your [Net Operating Income] measure to the most directly comparable financial measure calculated and presented in accordance with GAAP pursuant to Item 10(e)(1)(i)(B) of Regulation S-K. ■ Please tell us, and expand your disclosure to describe, how average yield on invested capital is used by management and why you believe this metric provides useful information to investors. Given you are a self managed REIT, explain to us how you considered the need to provide a metric that includes the cost of managing your portfolio. Regulation S-X When a REIT acquires or disposes of a business or a significant amount of assets, the transaction may trigger financial disclosure under Regulation S-X. The SEC has issued multiple comments to ensure potential investors are able to assess the financial impact of certain real estate acquisitions such that they are able to make an informed investment decision. Sample Comment ■ Please confirm for us whether you believe it is probable that you will acquire the property and tell us whether the property will have any rental operations prior to acquisition. If acquisition of the property is probable, and the property has a rental history, please tell us how you considered (i) including an audited Statement of Revenues and Certain Operating Expenses in accordance with Rule 8-06 of Regulation S-X and (2) giving pro forma effect to the probable acquisition in your pro forma financial statements in accordance with Rule 8-05 of Regulation S-X. 9 | An Analysis of 2021 and 2022 SEC Comments Issued to REITs