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FOR IMMEDIATE RELEASE 3 NOVEMBER 1999

NEW INTERNATIONAL ‘GUIDANCE ON THE VALUATION OF LEASE INTERESTS’ RELEASED FOR EXPOSURE

Exposure Draft “Guidance on the Valuation of Lease Interests” was released today by the International Valuation Standards Committee.

IVSC Board member and UK delegate, John Edge, led the development of the Guidance. He commented, “The valuation of lease interests can be complex, due to multi-legal interests in a single piece of real estate, and to rent provisions that increasingly are designed to allow a landowner a share in the success of the tenant's business conducted in that property. Leases also represent the bridge between the two parties – landlord and tenant – and different accounting rules apply to those distinct positions. The accounting rules also have to take account of the actual status of the lease - whether it is an ‘operating’ lease (i.e. conventional), or a ‘financial’ lease. A paper that sets out the current position, the various definitions, and clear advice to users, valuers, regulators and others is long overdue. This Exposure Draft seeks to remedy that need.”

Changes in respect of lease accounting, particularly the proposal that all property leases be treated as finance leases, are currently under debate. The IVSC is a participant in this debate and is working closely with the International Accounting Standards Committee to ensure that the standards and guidance issued by both organisations are mutually reinforcing.

Comments on the Exposure Draft must be received before 29 February 2000.

END

NOTES TO EDITORS

1. Copies of Exposure Draft 'Valuation of Lease Interests' can be obtained from
   IVSC Executive Director, 4 Lygon Place, London SW1W 0JR,
   Phone / Fax: 44 (0) 1442 879 306
   E-mail: mtissier@ivsc.org

2. Press Enquiries:
   John Edge, UK, IVSC representative
   Fax: +44 (171) 493 4114, Telephone: +44 (171) 629 8171
   E-mail: john.edge@knightfrank.com
   Marianne Tissier, IVSC Executive Director. Contact details as above.

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