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Real estate

Some of the suggested courses are set out below. If there is any particular area of interest that is not covered please contact us.

1. Understanding financial statements for real estate lawyers

Objectives

By the end of the course, participants will have a good understanding of how real estate is accounted for and presented in financial statements.

The course will be based around a case study set of IFRS accounts.

Content

  • Introduction
    • Overview of key principles
      • Accruals basis of accounting – to provide an understanding of the basis of income and expense recognition and why there is a difference between profits/earnings and cash
      • Going concern- what this means and what impact it has on disclosures
      • Consistency and where to look to establish how the accounts have been prepared and where there are changes in accounting policies
      • Different accounting regimes including IFRS, UK GAAP and US GAAP and why this matters
    • Typical content of published financial statements (accounts) – a brief overview and comment on each
      • Overview of basic structure and line items in key statements
      • Basic principles of group structures including treatment of associated and joint ventures
        • Parent company accounts conventions – basis of preparation, how investments are recognised
        • How are group or consolidated accounts prepared
        • Where to find the information
  • Applying the principles to property company accounts using case study accounts to illustrate key points including accounting policies
    • Identify structure and basis of accounting
    • Overview of balance sheet and identification of different assets and related policies
    • Property assets and how they are accounted for
      • Investment properties including revaluation requirements
      • Development properties – brief overview of inventory/WIP valuation
    • Property funding – how borrowings on property are accounted for, including dealing with capitalisation of finance costs
    • Overview of income statement and reference to accounting policies to understand principles applied for
      • Rental income recognition, including rent holidays and other incentives
      • Performance fees and clawbacks
  • Review of case study accounts to understand what they show about a business
    • Financial performance for the year and position at the year end
      • Showing how gains and losses may be recognised and the impact on the overall results
      • Showing effect of changes in value on balance sheet figures, including overall effect on net assets
      • Understanding the cash flow statement and what it can indicated about a business’s ability to service its debt
      • Relating the financial statements to borrowing covenants
    • Discussion of plans for strengthening the balance sheet
      • Internal measures – cost cutting and comment on which costs would have to be cut to make a difference and what they affect (profit and cash)
      • Divestment of assets – highlighting differences between selling assets recorded at cost and those at fair value in terms of profit shown and benefit in terms of converting physical assets to cash
      • Renegotiation of finance
      • Fundraising in the market

Course Types

In house courseIn house
Face to Face courseFace to Face
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2. IFRS 16 impact on real estate

Objectives

The new leasing standards (IFRS 16 and ASU 2016-02) will have a significant impact on real estate entities and in particular on lessees that are tenants. This may have major financial reporting and business implications.

The standards are effective from the end of 2018/beginning of 2019 but the planning for the changes needs to happen now and lawyers need to know what is happening, why and when so that they can help their clients with the changes.

By the end of the course, participants will have a good understanding of how the leasing standards may affect their clients’ businesses.

Content

  • What is the issue and why the need for new leasing rules
  • The current rules and how leases are accounted for
  • IFRS 16
    • Key dates
    • Definition of a lease
    • Identifying lease and non-lease components and how each will be accounted for
    • Dealing with tenant reimbursements
    • Leasing structures
    • Lease modifications
    • Landlord accounting including subleases
    • Tenants and how the changes affect them
    • Sale and leaseback transactions
    • Business considerations
    • Illustrative examples
  • Summary of key differences IFRS 16 v ASU 2016-02 (US GAAP)

Course Types

In house courseIn house
Face to Face courseFace to Face
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