Carrie S. Holstead, President and CEO of Carrie S. Holstead Real Estate Consultants, Inc. / ITRA Global, recently provided a presentation for the global real estate practice group of Reed Smith about the impact of sweeping rule changes about to hit the domestic and international commercial real estate markets.
“The rule changes by the Financial Accounting Standards Board and International Accounting Standards Board will bring corporate real estate leases onto company balance sheets for the first time ever,” explains Holstead. “This is being done to provide transparency to stakeholders in the company and will impact every organization currently following the Generally Accepted Accounting Principles or International Financial Reporting Standards, with leases longer than twelve months.”
Despite the rules going into effect in 2019 for public companies and 2020 for private companies, with a lookback reporting period required two years prior the effective date, a recent study by ITRA Global reveals that most companies are not prepared for these changes. One way or another, changes in accounting rules will dramatically impact the bottom line of almost every company throughout the world leasing office, retail, or industrial space.
“After her Insider’s View To Corporate Real Estate assisted us with a major pharmaceutical firm lease in the U.K, we asked Carrie to brief our global real estate practice group on the corporate real estate insights our clients need to know about the new accounting rules. Carrie mapped out eight different ways we can help clients minimize the impact on profits and manage the change,” said Jack Reidy, Supervisor for Global Real Estate Business Development at Reed Smith.
“The majority of leases today are classified as ‘operating leases’ under the domestic and international standards, but the new rule will classify all international leases as ‘finance leases’. For companies with large real estate portfolios of leased properties, this reclassification alone will be a very costly surprise. I am already aware of two companies for whom this reclassification will reduce the company revenue by more than one hundred million dollars,” she adds.
Carrie S. Holstead is the Founder, President, and CEO of the longest established tenant representation firm in Pittsburgh, Pennsylvania, and Chairman Emeritus of ITRA Global. Carrie is a pioneer in corporate real estate and a recognized leader in the field of tenant representation. A results-driven entrepreneur, she leveraged the lessons learned from her successful career at the Soffer Organization and Cushman & Wakefield to build a world-class firm dedicated exclusively to representing users of corporate space, with clients ranging from entrepreneurial entities to Fortune 500 companies with real estate requirements in Pittsburgh and around the world. Carrie was honored as a Woman of Influence by Real Estate Forum Magazine in 2015, and is the acclaimed author of the monthly Insider’s View To Corporate Real Estate.
ITRA Global is an organization of commercial realtors specializing in the representation of tenants and buyers of office, industrial and retail facilities. It is one of the largest commercial real estate organizations devoted to representing corporate tenants and buyers. With coverage in major markets around the world, ITRA Global consists of seasoned professionals with an average of 20 years of experience and is differentiated by its focus on advocacy for the corporate tenant and buyer.
For more information, contact Carrie Holstead at +1 (412) 255-3737 or carrie@carrieholstead.com. To learn more about ITRA Global, you may visit the ITRA Global website or contact Beth Wade, Executive Director, at +1.706.654.3201.
