New generally accepted accounting procedures (GAAP) intended to reconcile American and international standards have been put forward that will require all real estate leases to appear on the liability side of a corporate financial statement. Previously, many leases could simply be "footnoted" to avoid a balance sheet impact. The expected results will include lower debt to equity ratios for corporations as well as potential violations in other borrowing arrangements with lenders. This may lead many 'users' of real estate to buy instead of lease. If real estate owners out there are considering a "sale leaseback," they need to consider the impact on their financial statements with these new guidelines! The NYT story.
Via W. Clements
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