Insight

Cresa Releases White Paper on Proposed Accounting Rule Changes Affecting Leases

July 30, 2013

Cresa, North America’s leading tenant representation firm, today issued a white paper which analyzes the US and International Accounting Board’s (FASB and IASB) proposed changes in accounting standards affecting commercial real estate.  This Revised Exposure Draft, issued in the second quarter of this year, will significantly change how lessees and lessors account for and report leases in their financial statements. FASB and IASB are seeking greater transparency from lessees regarding the financial commitments they make, and also want more information from lessors about the nature of their financing agreements and the residual value of their assets.  The comment period for the proposed changes runs until September 2013, and standards are expected to be issued in 2014 with implementation no earlier than 2017.

Cresa’s white paper, which can be accessed by clicking here, focuses on explaining how the changes affect tenants currently leasing or owning space, and provides a list of steps tenants will need to take in order to be prepared for the rule changes.  As explained in the paper, the rules affect both large and small tenants, and depending on the nature of a company’s portfolio, may result in changes in occupancy strategy, particularly for companies that utilize long-term leases. 

Brant Bryan, Managing Principal and head of Cresa’s Capital Markets group commented that “the proposed rule changes are significant, and implementation will need to be a joint effort involving the real estate, information technology, finance, and accounting groups.  Understanding the proposed changes and the implications for the company’s particular portfolio will be critical for both complying with new regulations and for effective decision-making.”

CEO Jim Leslie said, “As a client advocate, it is our job to help our clients understand every issue related to the acquisition, management, and operation of their real estate portfolio, whether it is one location or hundreds.  This white paper is focused on what tenants need to do to make the best decisions for their companies.”