NewTower, on behalf of MEPT, maintains a valuation process
that is thorough and objective. Each asset in the Fund's portfolio is appraised
quarterly by an independent designated Member of the Appraisal Institute (MAI)
who must be selected and engaged by NewTower. In addition, NewTower has a comprehensive
list of content and analytical requirements that must be included in every appraisal
submitted and it is the general practice of NewTower to engage an appraiser
for no more than three consecutive years on the same MEPT asset.
Once each appraisal is received, NewTower Valuation Services
(NVS), which is staffed by MAI-designated and other certified appraisal professionals,
reviews the report and accompanying discounted cash flow analysis to evaluate
the valuation methodologies employed, ensure the accuracy of property and financial
information (total building and net rentable areas, rent roll, expenses, occupancy,
etc.), and confirm the relevance as well as applicability of critical market
data conclusions (rental rates, tenant improvement allowances, leasing concessions,
supply and demand characteristics, etc.).
As an additional safeguard, NewTower retains two independent
valuation firms, The Altus Group and Real Estate Research Corporation (RERC),
to verify the accuracy of the appraisal process by thoroughly reviewing appraisal
reports to determine regulatory and professional standards (USPAP) compliance,
completeness of documentation, reasonableness of methodology, accuracy of calculations,
and adequacy, relevance, and appropriateness of conclusions. The independent
review firm then indicates whether each MAI appraisal is recommended, based
on the scope of their review, for acceptance by NewTower on behalf of MEPT.
In addition, both Altus and RERC provide ongoing advice that helps ensure the
internal and external appraisal and review procedures employed by NewTower reflect
professional best practices. The Altus Group real estate valuation practice,
formerly PricewaterhouseCoopers' (PwC), is comprised of a team of professionals
that provided appraisal review services to MEPT for many years at PwC. Similarly,
RERC has also been providing valuation consulting services to NewTower and MEPT
for the same time period.
Further, MEPT currently engages The Altus Group to independently
value both portfolio and property level debt quarterly. NewTower oversees the
Fund's valuation policies and procedures, including oversight of the leverage
valuation by The Altus Group.
As NewTower operates in a heavily regulated environment, independent
advisors and auditors are retained to perform a variety of services including
annual audits of financial statements and reviews of internal controls. Additionally,
NewTower undergoes a review every 12-18 months by its regulator, the Maryland
Commissioner of Financial Regulation.