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News Release

London

JLL responds to newly announced standard set to have huge implications on company balance sheets


​​The International Accounting Standards Board (IASB) which sets International Financial Reporting Standards has today issued its new Leases Standard which will require all IASB reporting companies to comply with the standard by 2019. 

Commenting on the news, Michael Evans, Director, Corporate Capital Markets, JLL, said: “The new standard has been in the pipeline for eight years and became something of an industry hot potato, subject to seemingly endless debate. As a result, many organisations have forgotten about its implications, which are potentially huge for those under IASB.

“Leases will now become a key feature on company balance sheets effectively inflating assets and liabilities. It is likely that occupiers will now move towards short term leases and property ownership as a result. We could also see investors creating more attractive leasing deals under the new standard, including turnover rents for example. Growth in serviced offices and co-working where the balance sheet impact is limited is also expected. ​.

“Some sectors will be specifically impacted by the new standard such as retail. It is expected that retailers will now have to undertake strategic reviews of retail store portfolio performance versus lease costs and identify the right portfolio profile for the future. We could also see a surge in property assets that are surplus to current retailer needs. However, although these changes pose something of a threat to retailers and the service sector in particular, behind the threat of administrative overhauls lies an opportunity. For anyone involved in the business of buying, selling or leasing real estate, this change signals a new world of asset management and will force almost every occupier to seriously consider whether they should own or rent.”

More information can be found here