DEFINITION of SEC Form S-11
SEC Form S-11 is a filing with the Securities and Exchange Commission (SEC) that is used to register securities for real estate investment trusts (REITs). The business of REITs is to acquire, hold, and often manage real estate for the purpose of investment.
BREAKING DOWN SEC Form S-11
Form S-11 is also known as the Registration Statement under the Securities Exchange Act of 1933 for certain real estate companies. The Securities Exchange Act of 1933, often referred to as the "truth in securities" law, requires that these registration forms, which provide essential facts, are filed to disclose important information for a company's stakeholders. This helps the SEC achieve the objectives of the Act: to deliver investors all significant information regarding the issuer and their securities to be offered, and to prohibit any fraud in the sale.
In general, a company will file their completed Form S-11 online via the SEC’s electronic filing system, called EDGAR for the Electronic Data Gathering, Analysis and Retrieval). EDGAR’s purpose is not only to support with the registration of new securities, but the system also makes available critical public information to all potential investors in an easy-to-access format.
Form S-11 includes prospectus details, pricing of the deal, how the REIT plans to use the proceeds, selected financial data like trends in revenue and profits, operating data, its financing, and other data as specified in Regulation S-K.
SEC Form S-11 and REITs (Real Estate Investment Trusts)
An REIT is a company that owns, operates or finances income-producing real estate. Properties that are eligible to be included in REITs are generally commercial spaces like malls. For a company to qualify as a REIT, it must meet certain regulatory guidelines. For example, the company must invest at least 75% of its total assets in real estate, cash or U.S. Treasuries, pay 90% percent of its taxable income in the form of shareholder dividends each year, and be a taxable corporation with 100 or more shareholders.
Like other securities, REITs generally trade on major exchanges. For investors without the funds or capacity to invest in real estate properties individually or build their own portfolio of real estate properties, REITs provide them with a liquid stake.
Most REITs specialize in a specific sector such as office REITs or healthcare REITs. Regardless of specialization, in most cases, REITs operate by leasing space and passing on collected rent payments to its investors in the form of dividends.