Owned Australian corporate real estate reporting ahead of IFRS 16
Author/s: Christopher Heywood
Date Published: 01/09/2020
Published in: Volume 26 - 2020 Issue 3 (pages 187 - 205)
Abstract
aims to improve transparency in reporting Corporate Real Estate (CRE) commitments. Aimed at leasehold issues, its introduction may affect CRE ownership as leasing’s off-balance sheet benefits disappear. Ownership results from a large Australian CREstudy are reported. 2016 Annual Reports were analysed, as this predates the standard’s implementation. Results report two owned CRE-related quanta – Property, Plant and Equipment (PP&E) and real estate, in aggregate and by industry sector. Other parameters, like a Corporate Real Estate Ratio (CRER), the real estate to PP&E ratio, and valuation practices are also reported. A total of $5.14 trillion of PP&E was reported ($57.10 billion per firm) and $71.50 billion in real estate ($717.5 million). Financial, Energy, Materials and Consumer Staples sectors had the highest averages. A CRER of 30.4% continued a long-term trend, though individual firms’ ratios within sectors varied markedly. The RE to PP&E ratio, expected to change post- , was an average of 25.4%, also with wide variance for individual firms. Preferred valuation methods matched previous studies with depreciated acquisition cost dominating (72.3%). This is a pre- baseline to evaluate postimplementation ownership changes and updates previous CRE ownership studies.
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Keywords
Assets - Balance Sheet - Corporate Real Estate - Ifrs 16 - International Financial Reporting Standard - OwnershipReferences
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