More risk may result in an increase in a lenders LTV requirement (potential increase in down-payment), interest rate and/or points (prepaid interest) which will materially affect a buyer’s return on cash, thus reducing the price a potential buyer will be willing to pay for a property. A lender’s requirement of, say, a personal guarantee from a borrower will result in less buyers being willing to purchase and this will affect marketability and, ultimately, price.

What is disingenuous and intellectual dishonest about all of this is that the US accounting community and in particular the large players in accounting and CRE have been downplaying IFRS as something that will take years to happen while those of us who do international work recognized that it was going to come and the first hit would be on leases.

Now like a thief in the night, this shows up and under the cover of a change in GAAP and consistently no mention of IFRS. But this is it, and you are reporting – First Blood

We do not live in a cocoon and everything is no longer invented in America. These changes are huge and will alter the balance sheet of thousands of companies overnight and fundamentally affect financial forecasts and projected ratios of real estate ventures on the drawing board and in process, the resultant impact on credit decisions will also be a major challenge.

KBA is on the money with this and should be engaged be every sane business whose auditors are in denial but will show up one morning to tell a previously sound client that they are no longer viable with excuses about congress, quality control and the UN while not admitting they were asleep at the wheel.

Great work and a warning !