WASHINGTON, DC--(Marketwire - December 2, 2010) - The Building Owners and Managers Association (BOMA) International is asking the commercial real estate industry to oppose the new lease accounting standards proposed by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB).

This past August, FASB and IASB issued a joint exposure draft on the proposed accounting standards that, if implemented, will completely revamp the way leases are accounted for by both lessees and lessors. The proposed changes would move the cost of operating leases from a disclosure in the footnotes onto the balance sheet. Ramifications of the proposed changes could prove harmful to the commercial real estate industry.

Since the release of the draft, BOMA has voiced its concern over any changes to the lease accounting standard, which would affect both landlords and tenants at a time when lending is already difficult to secure. The proposed new standard capitalizes all leases and will require the lessee and lessor to make projections on lease extensions and apply these projections in a complex calculation to determine the assets and liabilities to be recorded.

Both landlords and tenants holding leases greater than 12 months will be required to apply the standard to their leases, whether they are new or existing Consequently, tenants may no longer want a typical ten-year lease with a five-year extension option due to the debt that will need to be recorded on their balance sheets. Tenants will also find it more difficult to negotiate tenant improvements.

"The proposed changes to the lease accounting standard would have a detrimental impact on landlords and tenants, making future lease terms more complicated and costly at a time when commercial real estate is struggling to recover from one of the worst recessions in decades," said BOMA International Chair Ray H. Mackey, Jr., RPA, CPM, CCIM, partner and chief operating officer, Stream Realty Partners, L.P. "We encourage parties affected by this proposed change to send comments to FASB by December 15."

BOMA International has supplied resources to assist in the development of comments. BOMA International, along with others, believes FASB/IASB need to take more time to ensure the final standard is sound and thoroughly vetted. BOMA International is asking the commercial real estate industry to provide comments on the draft by Wednesday, December 15, to director@fasb.org.  

About BOMA International:
Founded in 1907, the Building Owners and Managers Association (BOMA) International is an international federation of more than 100 local associations and affiliated organizations. The 16,500-plus members of BOMA International own or manage more than nine billion square feet of commercial properties in North America and abroad. BOMA's mission is to enhance the human, intellectual and physical assets of the commercial real estate industry through advocacy, education, research, standards and information. On the Web at www.boma.org.