SEC Flags Commercial Real Estate Risks as Ripe for Disclosure

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Empty office space, high interest rates, and inflation have plagued the commercial real estate market in the past year, and companies need to flag these risks in their financial statements, an SEC staff accountant said Tuesday.

Banks with large portfolios of commercial real estate loans on their books, for example, should consider breaking down details about the composition of their loan portfolios by borrower type—such as by office, hotel, or multifamily—and by owner-occupied or non-owner-occupied real estate, said Robert Klein, accounting branch chief in the Securities and Exchange Commission’s Division of Corporation Finance’s Office of Finance.

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