Over the last 14 years, American Tower as a leasor of wireless infrastructure has seen annual total returns of 16.3 percent while the S&P 500 averages a 6.8 percent return, said Fool.com. So what’s scary about that?
A proposed rule change from the Financial Accounting Standards Board (FASB) has a chance of impacting balance sheets across the board in the tower industry as it stipulates “a
lessee will be required to recognize assets and liabilities for leases
with lease terms of more than 12 months.” The ruling fundamentally
negates off-balance sheet financing…. a big reason investors choose
companies with operating leases, Fool.com said.
American Tower’s latest quarterly report recognized pending changes:
February 2016, the FASB issued new guidance on the accounting for
leases. The guidance amends the existing accounting standards for lease
accounting, including the requirement that lessees recognize assets and
liabilities for leases with terms greater than twelve months in the
statement of financial position. Under the new guidance, lessor
accounting is largely unchanged.This guidance is effective for fiscal
years, and for interim periods within those fiscal years, beginning
after December 15, 2018. The standard is required to be applied using a
modified retrospective approach for all leases existing at, or entered
into after, the beginning of the earliest comparative period presented.
The Company is evaluating the impact this standard will have on its
financial statements,” the ATC report said. Continue Reading