X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

 

The Synthetic Lease Dilemma

Synthetic leases have received a much higher profile in the last few months, but that profile has been far from positive thanks to the continuing fallout and concern about off-balance sheet accounting treatments resulting from the collapse of Houston-based Enron. In fact, many observers consider the synthetic lease vehicle dead for the foreseeable future because corporations are unlikely to embark on any strategy that will involve placing real estate assets into a Special Purpose Entity (SPE), and off the balance sheet, as is the case in a synthetic lease. The current climate on Wall Street and among the investing public just won’t allow it. In many markets, the underlying property value has dropped – exposing companies holding synthetic leases to additional financial liability. Add to this the fact that the Financial Accounting Standards Board (FASB) is now reviewing the rules regarding the accounting treatment of synthetic leases – FASB is due to make recommendations for public comment in May – and there is a great deal of uncertainty regarding this financing tool.

This premium content is locked for
GlobeSt subscribers only.

Already have an account?
Interested in customizing your subscription with Law.com All Access?
Contact our Sales Professionals at 1-855-808-4530 or send an email to groupsales@alm.com to learn more.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.