Thomas Wilkin, partner with PwC, joined REIT.com for a video interview at REITWise 2013: NAREIT’s Law, Accounting and Finance Conference in La Quinta, Calif.
Wilkin discussed the issues and views surrounding the convergence of global accounting standards, as well as the impact of other financial proposals on REITs.
“I think at this point there’s a fair amount of dissatisfaction and just tiredness of dealing with the whole convergence project in general. It’s been going on many years longer than it was supposed to, and there doesn't seem to be any light at the end of the tunnel,” he said. “Even the major box car projects, many of which will very significantly affect real estate, will clearly have major implications to our clients. Many of them at this point are almost taking the position of ‘tell me when it’s done and I’ll focus on it, because I’ve been hearing about it for so long.’ ”
He also spoke about how the Financial Accounting Standards Board’s (FASB) new revenue recognition proposal will impact companies. Wilkin indicated that some companies are questioning the need for change at all.
“I think from a practical perspective, in the real estate space in the United States, it’s unclear to many whether it’s really broken,” he said.
In terms of the impact that the new leases proposal will have on REITs, Wilkin said it will affect both the business and accounting departments.
“Certainly from a business perspective, any real estate company is affected by something that will affect how their customers and tenants change their business practices as a result,” he said. “It's likely going to vary by the different property types that are out there.”
Wilkin said that while there will be little or no impact on customer behavior in the apartment or hotel sector, it will impact others. That would include companies that own and operate single-tenant properties with long-term leases.
“This is where they’ll actually have to change the types of terms they negotiate for and the types of transactions that they engage in. That can have a significant impact on their business,” he said.