A new accounting standard that may be enacted in 2013 may have a significant impact on how office and store leases are written.

The standard, which will be completed next year, according to an article in today's edition of The New York Times by Julie Satow, "will require companies to book leases as assets and liabilities on their balance sheets" rather than as "footnotes in their financial statements."

"As a result of the change," the article continued, "public companies will have to put some $1.3 trillion in leases on their balance sheets, according to estimates by the Securities and Exchange Commission. Because many private companies also follow GAAP accounting, the number could be closer to $2 trillion, experts said. 'It is going to get ugly,' said Mindy Berman, a managing director of corporate capital markets at the real estate services company Jones Lang LaSalle. 'On the day the standard gets implemented, all these companies will suddenly have to record much higher rent, and they are going to have to record this as a significant liability on their balance sheet.' There will be no grandfathering clause when the rule takes effect, so any active lease will have to be recorded on the balance sheet. Companies will record as a liability the cost of rent over the remaining term of the lease and record as an asset their right to use the space."

The accounting change could weaken some companies from an investor's viewpoint and also effect some credit ratings.

Barry M. Gosin, chief executive at Newmark Knight Frank, told The Times that his company is "busy preparing clients to make them aware of the changes and help them analyze how it might impact them," adding that "There are so many complicating factors that will make this an administrative nightmare."

Some experts told The Times that the change "may cause more companies to buy their offices and drive down demand for leased space," and that "there may also be an impetus to shrink the length of a lease."

Another complication is lease renewals. "Under the new rules," the article said, "if it is likely that the company will execute the renewal option, they must account for the lease as if it were actually 15 years. Because this will mean adding more debt to the balance sheets, renewal options could become less popular."

The Financial Accounting Standards Board, which sets American standards, has been working with the International Accounting Standards Board to merge its generally accepted accounting principles, or GAAP, with international standards and according to Russell G. Golden, the technical director of FASB, the board expects to issue a new draft document outlining the changes this summer, the article said.

The article maintained that "Among those most heavily affected by the changes will be companies that are already struggling under heavy debt loads, as well as large retailers that have hundreds, if not thousands, of leases. Commercial banks with multiple branches may also be severely hit in 2013, especially if that industry is still recovering from the recession. In addition, some industries, including most retailers, sign leases with so-called contingent rents, which are based on a percentage of sales. Under the new standard, companies with these agreements will have to estimate their sales numbers over the entire term of the lease to book it on their balance sheet."

Brant Bryan, a managing principal at Cresa Partners, a real estate advisory firm, was quoted in the article as stating that "Retailers are going nuts right now," adding that "They have the daunting task of having to estimate their sales way into the future, and to make it worse, they will have to reassess these estimates over and over at every reporting period."