Audit Specialist Views Fair Value Accounting as Major Change in Financial Reporting

Greg Ross, audit partner at Grant Thornton LLP, joined REIT.com for a video interview during REITWise 2015: NAREIT’s Law, Accounting and Finance Conference held in Phoenix.

According to Ross, one of the biggest changes in financial reporting that he has witnessed is the change related to fair value accounting.

“Investors want it, so there are a lot more items on the balance sheet today with fair value implications,” Ross said.

Acquisition and purchase accounting have also changed. “It wasn’t too long ago that all acquisitions were either recorded to buildings or land, and now there’s a lot of effort that goes into the assets that are recorded at fair value or broken out for balance sheet recording,” he said.

Turning to initial public offering (IPO) developments, Ross highlighted the proliferation of non-traditional property types such as timber, solar power and cell phone towers.

“The non-traditional product types are what the trend is now,” Ross said. Larger REITs, meanwhile, are buying up some of the smaller companies in the industry, he added.

Ross also said the market for real estate capital looks particularly favorable at this time, supported by low interest rates, rising consumer spending  and falling unemployment.  

“All of those are really good indicators that real estate investments are pretty hot right now. We feel pretty strongly about the next few years. There’s a lot of optimism as it relates to REIT investments,” he said.