FASB Issues Standard on Recognition of Credit Losses

06/24/2016

A final Financial Instruments – Credit Losses Standard issued by the Financial Accounting Standards Board (FASB) on June 16 will require more timely recognition of credit losses associated with financial assets.

The scope of the standard is asset based and will be of particular interest to Mortgage REITs.

The new standard reflects some of the recommendations made by NAREIT in a 2013 submission to the board.

(Contact: Chris Drula at cdrula@nareit.com)

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What's a REIT?

REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of property sectors. These real estate companies have to meet a number of requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors.

Why Invest in REITs

REITs historically have delivered competitive total returns, based on high, steady dividend income and long-term capital appreciation. Their comparatively low correlation with other assets also makes them an excellent portfolio diversifier that can help reduce overall portfolio risk and increase returns. These are the characteristics of real estate investment.

About Nareit

Nareit serves as the worldwide representative voice for REITs and real estate companies with an interest in U.S. real estate. Nareit’s members are REITs and other real estate companies throughout the world that own, operate, and finance income-producing real estate, as well as those firms and individuals who advise, study, and service those businesses.