A proposed revision of the Financial Accounting Standards Board (FASB) rules affecting accounting leases, a section earlier called FAS 13, will profoundly affect the way both landlords and tenants treat leases, and it could affect property values, according to a report by the CCIM Institute. FASB is a basis for the generally accepted accounting principles, or GAAP, in the United States.
The proposed draft standard has drawn heated debate for its potential to change the leasing market, likely shortening lease terms and reducing the apparent value of properties with traditionally long lease terms, such as office buildings, according to the CCIM analysis.
The proposed rules to a large degree would treat all leases with a term over one year as capital leases, the report says.