One long-term trend in US real estate is the divestiture of real estate owned by non-real estate companies. While there are many advantages to owning—and therefore controlling—your own real estate, non-real estate businesses, particularly publicly held companies, must take into account the drag of those real estate assets on their financial reports, particularly on their return on assets.
In February of this year, though, the Financial Accounting Standards Board and its international counterpart issued a new accounting standards update for leases that may cause some companies to revisit the own vs. lease question. The new rules, effective for public companies with fiscal years starting after December 15, 2018, and for private companies a year later, significantly change how tenants account for leases on their balance sheets.
Read the article here.