AMB Property Corporation: Financial Reporting in the REIT Industry Harvard Case Solution & Analysis

AMB Property Corporation set out to be a leader in corporate governance and financial reporting. The company, a publicly traded real estate investment trust (REIT), which acquires, develops, owns and industrial property, believes that his management and reporting practices were among the best in the industry. Implementation of good disclosure practices in the industry REIT was not easy. Historically, the real estate market dominated by private partnerships and institutional investors who have used tax accounting and partnership, and not generally accepted accounting principles (GAAP). As a result, there was a need for new financial conditions that were designed to overcome the differences between GAAP and private partnership accounting, in particular, funds from operations. However, since these sectoral indices were not always calculated, it was difficult for users of REIT financial statements to compare the performance of the company. Public REITs, which used non-GAAP results were needed to reconcile the figures for the standard GAAP, a process that added significantly to the length of REIT financial statements. In addition, the company had to apply accounting standards GAAP, which are mainly designed for industries other than real estate and was an unintended consequence of making it difficult to assess the operating activities of REITs and compare these results across periods. Explores the issue of financial reporting in the industry REIT, including important standards FASB, which potentially distort REIT financial results, the use of funds from operations as a measure of financial performance, as well as different approaches to assessing REITs. "Hide
by Maureen McNichols, Brian Tayan Source: Stanford Graduate School of Business 29 pages. Publication Date: April 27, 2007. Prod. #: A194-PDF-ENG

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