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Gaap Filings And "true-nnn" Rent - Is This A Reliable Comp?

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Certified General Appraiser
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Three questions for real estate accountants/appraisers who have a command of GAAP:

I am looking at a REIT's Property Status Report (from a public filing) and see a column labeled "ABR per Leased SF" of several one year old properties that the REIT confirmed are "true-NNN" assets. The amounts look like reasonable lease rates per square foot.

First, is this a verified "true-NNN" year-1 lease rate, or has GAAP done something to it? If these are not necessarily "reality" what could GAAP have done to them? Can I discern "reality" from the report?

Second, IF this rate is supposed to be "reality" but the REIT has made a mistake and over/under-stated the "true-NNN" ABR, are penalties significant? I mean, is a REIT likely to make such a mistake?

Finally, what does "ABR" mean to you as a real estate accountant... ["Average" "Annual" or "Approximate"] Base ["Rent" or "Revenue"] or something else?

Thanks in advance!
 

Thomas Holding

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Jan 22, 2004
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North Carolina
I think ABR refers to Annualized Base Rent. As for current GAAP rules, it's been way too many years since my accounting courses in college. Try looking up the FASB rules for REIT accounting. It might show you what is and what is not left out.
 
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SpartanAG

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Feb 12, 2008
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Arkansas
It has been a few years since my advanced accounting classes, but I don’t think there is anything in GAAP reporting rules that would have an effect on the reported leases. Generally, they should report the actual data and then explain any adjustments much like we do with our reports.

If the document you are pulling your data from is a public filing, then you can reasonably assume that the data is reliable. The penalties for material mistakes or purposeful misstatements are significant enough.

ABR probably = Annualized Base Rent in order to report the average rent for the property vs breaking out the rent for each unit in the property.
 
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PL1957

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Jul 19, 2004
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Certified General Appraiser
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Illinois
IIRC, and I could be wrong, GAAP requires a certain smoothing of rents over the entire lease period, with varying treatments of things like amortized TIs. I don't ever recall seeing lease numbers that match GAAP numbers ...
 
Joined
Jun 2, 2007
Professional Status
Certified General Appraiser
State
Florida
IIRC, and I could be wrong, GAAP requires a certain smoothing of rents over the entire lease period, with varying treatments of things like amortized TIs. I don't ever recall seeing lease numbers that match GAAP numbers ...
Bingo- I think that's what I was looking for. I'm seeing slightly higher lease rate numbers per square foot, actually. I don't understand the soothing of rents or amortized TIs, so without a re-education in GAAP I think it's enough to know not to go there as far as using them as lease rates. Much thanks.
 
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