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Survey Finds Corporate America Shunning Synthetic Leases

ATLANTA-In the wake of accounting scandals, a survey by locally based CoreNet Global found that 30% of corporate real estate executives and asset managers will stop or reconsider using "synthetic" leases that take company property off the balance sheet.

By Marita Thomas | Updated on August 29, 2002

ATLANTA-In response to the current scrutiny of corporate accounting practices, Atlanta-based CoreNet Global finds that 30% of corporate real estate executives are either stopping the use of synthetic leases or reconsidering their use.

Synthetic leases are an accounting mechanism that allows a company to transfer ownership of real estate off the balance sheet even while it continues to occupy the space.

Synthetic leases gained favor during the 1990s. However, scandals at Enron, Worldcom and other companies have shed light on this mechanism among other generally accepted accounting practices, used by corporations to hide transactions from the balance sheet.

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