In the News: The Eckerian Perspective

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Conflicts of Interest Exposed by New FASB Lease Standards

CFOs are bracing for corporate real estate turmoil beyond their balance sheets when the new Financial Accounting Standards Board (FASB) lease standards are implemented in 2019 and 2020. The new rules will require CFOs to document all leases on their balance sheets as liabilities rather than expenses. This will put CFOs at greater risk with their tenant representatives, who will now serve in the same fiduciary role as investment managers.

What Are the Conflicts of Interest for Tenant Representatives?

CFOs have long held accountants, attorneys and bankers to the same standards when it comes to conflicts of interest. In fact, the American Bar Association prohibits a law firm from representing both landlord and tenant in lease negotiations; yet leasing brokers can act as designated agents, representing both landlords and tenants in the same transaction.

As I explained in my recent piece in the Huffington Post, “How FASB Real Estate Lease Standards Expose Conflicts of Interest,” this double standard is about to change. CFOs now, more than ever, will need tenant leasing representation they can trust rather than a conflicted brokerage representing both sides in a deal.

Pick the Right Partner

Howard Ecker + Company is here to help. For more than 40 years, Howard Ecker has helped tenants locate, negotiate and evaluate all office space opportunities while ensuring tenants are keenly aware of how the latest news or guidelines will impact their next lease. We have a thorough understanding of FASB and how disruptive it can be for unprepared CFOs and companies. Working exclusively with tenants, Howard Ecker has never had a conflict of interest Howard Ecker in any deal we’ve negotiated in virtually every U.S. Find out how we can work for you.