The Leader - November/December 2008 - (Page 36)

C RE AT IN G R E A L E S T A T E VA LU E: R ESPON D S TR A TEGICALLY TO FI NANCI AL R E P O RTI NG CHANG E S successfully delay. Though there is no set J. Herring, Co-Director of the Wharton Moving Target deadline currently, most agree that global Financial Institutions Center, Denmark has Where are we headed? As the U.S. aims to companies will cease acceptance of US GAAP been using fair value accounting all along and mirror International Standards, those same standards between 2011 International Standards are and 2015. This would make potentially headed for greater   it difﬁcult for US compastringency. A recent initial       nies to raise foreign capital. international exposure draft Canada, India, Argentina, suggests that fair value and   and Brazil have all recently capital appreciation must be  announced a mandate to folcontinuously monitored for     low International Financial investment properties, includReporting Standards (IFRS). ing rentals. In such an enviIn 2005, listed companies on ronment, proactive planning     the EU Stock Exchange were would equate to ﬁnding and  required to follow IFRS and creating value. use fair value accounting. The good news is that this US companies might have change is universal. Many are fared better had they changed in the midst of planning for to fair value several years ago, the changes. The SEC’s advice as the current credit crunch remains ‘stay tuned for furmay amplify the volatility of ther developments.’ the fair value measurement About the of real estate assets. Many Author pose the question, “Is fair  Elizabeth value accounting appropriKing ate for illiquid assets such as  Forstneger is real estate?” In a bull market,   the Director as asset prices increase, bal of Grubb & ance sheets improve through  Ellis Consulting. She focuses increased values of the assets, on business location services and capital ﬂows more freely. and strategic corporate real The opposite is true in the estate planning and operacurrent bear market. Leverage tions and on asset-based conampliﬁes the impact. As sulting. Forstneger specializes prices correct amidst the in labor and distribution netcredit crunch, fair value   work analysis for corporations accounting will speed that cor    with manufacturing, distriburection or at times, exagger    tion, customer care centers, ate it. Cyclical markets will retail, and ofﬁce expansions affect ﬁnancial statements to and relocations. a far greater extent. This volatility creates one was the only Scandinavian nation to avoid a       more unattractive variable for investors in deciphering a company’s performance. As we look across the pond for insight, Denmark may stand testament to the fair value accounting as an overdue correction to a previously ﬂawed way of accounting for real estate. As illustrated by Richard banking bust in the wake of commercial real estate pricing changes. For more information on this topic, go to CoreNet Global’s Knowledge Center Online. Ready for Sarbanes-Oxley Certiﬁcation? It's Time to Be Prepared www2.corenetglobal.org/dotCMS/kcoAsset?assetInode=78981 2 0 0 8 TH E LE ADE R 36 NOVEMBER / DECEMBER http://www2.corenetglobal.org/dotCMS/kcoAsset?assetInode=78981

Table of Contents Feed for the Digital Edition of The Leader - November/December 2008

The Leader - November/December 2008 Leadership Contents Message from the CEO Real Estate in the News Leveraging Business Geography My Work @ Bank of America Blending the Old with the New A Tool for Growth Creating Real Estate Value Nokia-Siemens Networks’ Peter Doran DTZ’s James Maddock Annual Economic Development Directory The Georgia Report Location Profile: Magdeburg, Germany Linking Corporate Real Estate to the Enterprise 3rd Quarter 2008 Adding Value in Challenging Times Australia and New York Shell’s Paul Huston Economic Development in the News A Look Ahead In our Next Issue Calendar of Seminars Index of Advertisers Chapter Learning: The Global Perspective

The Leader - November/December 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.