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Thursday, November 17, 2011

Mainstream Media Begins to Report on New Accounting Rules

By Michael Fonda - Chicago

Rand Stephens blogged about the forthcoming accounting rule changes here on May 2nd of this year. As Rand pointed out, the impact on the real estate industry would be significant. Companies will be forced to treat their leases as a new kind of asset that they would then have to place on their balance sheet, offset by a corresponding liability.

In yesterday's Wall Street Journal, this accounting overhaul (which is being coordinated between the U.S. Financial Accounting Board Standards FASB and the International Accounting Standards Board IASB) is finally getting traction in the mainstream media. That being the case, maybe this overhaul, which has been going on for years, is close to implementation. If so, get ready for short term leases with multiple renewals. In non-core markets where cap rates are penalized by leases with a short fuse, companies may be forced to purchase their real estate.

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