Accordingly, companies with material off-balance sheet lease
commitments will encounter significant changes in their key financial metrics such as the leverage ratio, return on invested capital (Roic) and valuation multiples.
US Securities and Exchange Commission data estimates that Fortune 500 companies currently have more than USD 700 billion in off-balance sheet lease
obligations that will be affected by the new standards, while the IASB projects new balance sheet additions worldwide may be in excess of USD 3 trillion.
Sandler, Gil (2000), "Off-Balance Sheet Lease
Financing: An Overview," The Real Estate Finance Journal Spring: 66-71.
Eighteen facilities were sold June 30 for $73.5 million, and the funds were used to pay facility-related debt and to purchase remaining assets under Beverly's off-balance sheet lease
arrangement, according to a news release.
There are two primary types of off-balance sheet lease
structures that exist that provide a good fit for these firms Credit Tenant and Synthetic Leases.
It is likely to be most pronounced in those business sectors - such as transportation, real estate, mining and construction - where it is common for companies to have a significant number of material off-balance sheet leases
. Companies with significant leased premises - such as retailers - will be similarly affected.
Companies are currently required to disclose details of their off-balance sheet leases
and analysts use this information to adjust published financial statements.
On an undiscounted basis, off-balance sheet leases
reached their peak in 2007, when companies collectively had almost $1.3 trillion of operating lease commitments.
Either compensation committees do not adjust for off-balance sheet leases
, or the adjustments are too small to be detected with their research design.
Her practice includes large-scale development projects; headquarters relocation projects; sales and purchases of office buildings, hotels and other commercial properties; construction and permanent financing; ground and office leases, and off-balance sheet leases
; partnership and joint venture agreements; and design and construction-related agreements.