Canadian securities regulators outline disclosure expectations for real estate reporting issuers

2018/22
April 12, 2018

Toronto - The Canadian Securities Administrators (CSA) today published CSA Staff Notice 52-329 Distribution Disclosures and Non-GAAP Financial Measures in the Real Estate Industry. The notice details findings of a recent review and provides additional guidance on disclosure expectations relating to distributions and non-GAAP financial measures for real estate reporting issuers.

"We continue to closely monitor non-GAAP financial measures in the real estate sector," said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. "Investors need sufficient information to understand what these measures represent and how they are calculated. Real estate reporting issuers are expected to provide transparent disclosures regarding distributions and non-GAAP financial measures."

The CSA reviewed distribution disclosures relative to National Policy 41-201 Income Trusts and Other Indirect Offerings and non-GAAP financial measure disclosures relative to CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures. The findings of the review indicate that the quality of disclosure pertaining to distributions and non-GAAP financial measures in the real estate industry needs improvement. 

Key findings from the review included the following items. For distributions, staff found opportunities for better disclosure when distributions exceed operating cash flows. For non-GAAP financial measures, staff identified a lack of transparency about various adjustments made in arriving at non-GAAP financial measures, particularly those relating to maintenance capital expenditures and working capital. Staff also noted instances where non-GAAP financial measures were presented with greater prominence than the most directly comparable measure specified under the issuer's GAAP.

Non-GAAP financial measures and distribution disclosures continue to remain areas of focus for the CSA, and real estate reporting issuers are encouraged to refer to the guidance published.

The notice can be found on CSA members' websites.

The CSA, the council of the securities regulators of Canada's provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

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For more information: 
   
Kristen Rose
Ontario Securities Commission
416-593-2336 
 
Hilary McMeekin
Alberta Securities Commission
403-592-8186

Alison Walker
British Columbia Securities Commission
604-899-6713

Sylvain Théberge
Autorité des marchés financiers
514-940-2176 
 

Jason (Jay) Booth
Manitoba Securities Commission
204-945-1660


Erin King
Financial and Consumer Services 
Commission, New Brunswick
506-643-7045

David Harrison
Nova Scotia Securities Commission 
902-424-8586

 
Steve Dowling
Government of Prince Edward Island, 
Superintendent of Securities
902-368-4550
 
Craig Whelan
Office of the Superintendent of Securities 
Newfoundland and Labrador
709-729-5661

Rhonda Horte
Office of the Yukon Superintendent of 
Securities
867-667-5466


Jeff Mason
Nunavut Securities Office
867-975-6591

 
Tom Hall
Office of the Superintendent of Securities
Northwest Territories
867-767-9305

Shannon McMillan
Financial and Consumer Affairs
Authority of Saskatchewan
306-798-4160


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