Mall Landlords Feel Earnings Pinch From Lease Accounting Change

Some mall owners, such as Washington Prime Group Inc., might take about a 4 percent earnings hit from a change in lease accounting, according to a SunTrust Banks Inc. analysis.

The new leasing standard, which takes effect in January for public companies, generally requires both landlords and tenants to fully expense property or equipment as an asset.

Until the new rule, long-term leases were left off balance sheets, although companies generally disclosed those costs in notes to their financial reports.

As a result of the changes, real estate investment trusts that operate shopping malls will have to expense the salaries ...