The balance sheet and valuation treatment of retirement living and aged care assets

Abstract

Accounting standards, legislative framework and industry conventions govern how investment vehicles report their financial position. The aim is for transparent and timely reporting, enabling investors to make decisions. Australian real estate investment vehicles follow these standards, framework and conventions. Retirement Living and Aged Care (RLAC) investment vehicles are an emerging asset sector, particularly on the institutional investment market. While entities in the sector are required to follow accounting standards and legislative framework they are in a position to adopt conventions more in line with their asset sector. The RLAC sector comprises disparate property sectors, each with their own selection of asset classification and accounting treatment. Analysis of balance sheet treatment and valuations in the financial reports of Australian listed RLAC entities shows a greater reliance on directors’ (non-independent) valuations compared to listed real estate investment vehicles in conventi...