The document summarizes an upcoming townhall luncheon on new lease accounting standards. It provides an overview of the changes being made by the FASB and IASB to bring lease accounting in line with the underlying economics of leases. Virtually all leases will now be required to be reported on company balance sheets. The new standards take effect in 2019 for public companies and 2020 for private companies. Companies will need to overhaul systems and processes to implement the changes, which will have significant impacts on financial reporting and real estate decision making.

1. Townhall Luncheon
Thursday, October 13, 2016 | 12:00pm to 1:30 pm | Birmingham Athletic Club, Bloomfield Hills

2. NEW LEASE ACCOUNTING
ASC Topic 842
Presented by:
Jeffrey W. Shell
EVP, Corporate Capital Markets

3. CCM LEASE ACCOUNTING CHANGES PROPRIETARY &
CONFIDENTIAL
ASC Topic 842
Who is doing it?
 Financial Accounting Standards Board (FASB)
 International Accounting Standards Board (IASB)
What are they doing?
 Main concept: Virtually all leases go on balance sheet
 Lease accounting for financial reporting (Note: will not effect tax or
cash)
Who is affected?
 Anyone who uses GAAP or IFRS
 All public companies
 Most large private companies

4. CCM LEASE ACCOUNTING CHANGES PROPRIETARY &
CONFIDENTIAL
ASC Topic 842
Why are they doing it?
 Financial statements don’t reflect the
underlying economics of leases
 Increase balance sheet transparency and
comparability
 Move from rules-based to principles-based
methodology
X Convergence
When does Topic 842 take effect?
 2019 for Public Companies
 2020 for Private Companies

5. CCM LEASE ACCOUNTING CHANGES PROPRIETARY &
CONFIDENTIAL
ASC Topic 842
Balance
Sheet
Income
Statement
Cash Flow Statement
Finance
Lease
Asset –
ROU
Liability –
Lease
Amortization
Expense
Interest
Expense
Cash Paid for Principal +
Interest
Operating
Lease
Asset –
ROU
Liability –
Lease
Straight-
Lined
Expense
Cash Paid for Lease
Payments
Once again, 2 types of leases

6. CCM LEASE ACCOUNTING CHANGES PROPRIETARY &
CONFIDENTIAL
ASC Topic 842
More departments will be involved in real estate
decisions:
Increased decision-making complexity within companies
Decisions will be much more like an internal
approval
process for a capital asset

7. CCM LEASE ACCOUNTING CHANGES PROPRIETARY &
CONFIDENTIAL
ASC Topic 842
Q. Is this a big Deal?
A. Yes, companies will likely need to:
• Overhaul legacy accounting systems, processes, procedures
and controls.
• Install new systems to integrate and automate into
enterprise systems.
• Incur cost for systems upgrades, and education/implementation of new
controls.
• Establish policies and practices for making decisions concerning renewals
and other options in leases.
• Size the impact on a company’s financial statements.
• Restate the effect of changes on financial statements.
• Manage impact on operating results, financial ratios,
and debt covenants.

8. CCM LEASE ACCOUNTING CHANGES PROPRIETARY &
CONFIDENTIAL
ASC Topic 842
How will this affect deals?
• A bias toward shorter leases off-set by higher rental costs.
• A bias towards ownership, but priority remains access to
capital, cost of capital, and needs of business.
• More options and analysis.
• More and less reasons to do sale/leasebacks.
• New priorities – on-balance sheet lease financing.
• Old structures rise – synthetic leases.
• Smart move: rationalize and right-size portfolios.

9. Executive Vice President
Corporate Capital Markets
T: 313.417.2100
C: 313.510.1891
jeffrey.shell@cbre.com
Mr. Shell is Executive Vice President and a national leader in CBRE’s Corporate Capital Markets. Corporate Capital Markets plays an integral role in
both the Capital Markets and Global Corporate Services divisions of the company, providing capital markets advisory and execution expertise for
planned and existing assets on behalf of corporate occupiers, developers and owners. Expertise resident within Corporate Capital Markets includes
finance, accounting, capital markets, and development and construction in order to solve for GAAP, tax, cash, regulatory, delivery, operations and other
client objectives. The group provides advisory and execution proficiency on a full range of real estate and credit-based capital structures for single-
tenant and corporate-owned properties, including sale/leasebacks, single-tenant investment sales, and credit-based financing using CTLs and synthetic
leases.
Mr. Shell heads a Michigan-based team that has closed transactions representing over $9 billion in value across North America. In 2015, Mr. Shell
completed assignments totaling approximately $1 billion in value.
For corporate occupiers, Mr. Shell and his team have structured and executed capital solutions for a wide range of corporate objectives on existing
assets or build-to-suit projects and have provided expertise on leasing teams for large lease transactions. Additionally, Mr. Shell has represented many
of the nations’ leading developers and institutional owners for investment sales or finance of existing single-tenant projects or build-to-suits nationwide.
Mr. Shell is a member of CBRE’s Global Task Force on Lease Accounting, is active in various industry organizations, and is a frequent speaker at
numerous industry forums on the topic of build-to-suit financing, lease accounting, single-tenant net-lease investment sales, and structured finance for
real estate.
Prior to joining CBRE, Mr. Shell was Executive Vice President and National Head of Corporate Finance for Grubb & Ellis from 2009 through 2011. Prior
to that Mr. Shell spent sixteen years at Cushman & Wakefield, most recently as Executive Director in the Investment Banking division of Cushman &
Wakefield’s Capital Markets Group. Additionally, Mr. Shell led Cushman & Wakefield’s Build-to-Suit Advisory Services practice and was a member of
their Global Supply Chain Solutions group. Mr. Shell began his career in Chicago with Rubloff, Inc., a large commercial developer.
JEFFREY W. SHELL
PROFESSIONAL AFFILIATIONS
 ULI
EDUCATION
 Michigan State University, BS combining Engineering and Business