Building  Owners  and  Managers  Association  International

Building Owners and Managers Association International

Proposed Lease Accounting Standards to Cost 190,000 American Jobs

February 16, 2012

Study shows the negative impact on job creation, the health of the U.S. real estate sector, and liabilities of U.S. publicly traded companies

(WASHINGTON D.C.—February 16, 2012) A coalition of several leading nonprofit and commercial organizations, including the Building Owners and Managers Association (BOMA) International and the U.S. Chamber of Commerce, released a report that examines the economic impact of the International Accounting Standards Board (IASB) and Financial Accounting Standards Board’s (FASB) proposed lease accounting standard today.  The study, The Economic Impact of the current IASB and FASB Exposure Draft on Leases, specifically looks at how the proposed standard would negatively impact job creation, the health of the U.S. real estate sector, and liabilities of U.S. publicly traded companies.

The report analyzes the current proposal and under a best case scenario estimated its economic impacts as:

  • Increasing liabilities for U.S. public companies by $1.5 trillion;
  • Increasing costs to U.S. public companies by $10.2 billion annually;
  • Potentially leading to job losses of over 190,000;
  • Reducing U.S. household earnings by $7.8 billion annually; and
  • Lowering U.S. GDP by $27.5 billion each year annually.

The coalition is calling on the Boards to conduct a comprehensive examination of the costs and benefits should be a part of that process.  

“A failure to fully understand the economic ramifications of these accounting changes or to address these issues may harm businesses that own, invest, or rent commercial real estate or use leases for other purposes from office equipment to construction machinery,” commented BOMA International Chair Boyd R. Zoccola, executive vice president, Hokanson Companies Inc. “Thoroughly vetted and sound accounting standards are needed to create certainty in the marketplace for investors and businesses alike. A comprehensive examination of the costs and benefits should be a part of that process.”

The report was commissioned by several of the leading nonprofit and commercial organizations concerned with economic growth in the United States and in the health of the real estate sector in particular. The members of the coalition include the U.S. Chamber of Commerce, the Real Estate Roundtable, NAIOP, Commercial Real Estate Development Association, NAIOP Inland Empire Chapter, NAIOP Southern California Chapter, the National Association of Realtors and the Building Owners and Managers Association International. The coalition's objective in sponsoring the study is to ensure that the analysis of costs and benefits of proposed new accounting standards for leases includes a thorough consideration of the economics of commercial and industrial real estate leasing and development, so that changes to financial reporting do not distort market behavior and cause damage to both the real estate market and the national economy.

About BOMA International
The Building Owners and Managers Association (BOMA) International is an international federation of more than 100 local associations and affiliated organizations. Founded in 1907, its 16,500-plus members own or manage more than nine billion square feet of commercial properties. BOMA International’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.

Contact
Laura Horsley
Director of Communications and Marketing, BOMA International
(202) 326-6365
lhorsley@boma.org