MEPT maintains a valuation process that is one of the most thorough and objective of any open-end fund. Each asset in the MEPT portfolio is appraised annually by an independent MAI-designated member of the Appraisal Institute who must be selected and engaged by NewTower Trust Company, MEPT’s trustee. The appraisal process is staggered throughout the calendar year so that independent appraisers value approximately 25% of the total portfolio each quarter. Inherent in this appraisal scheduling program is a concerted effort to obtain ongoing valuation analysis and market data to assist the Trustee’s valuation team who continuously monitor all relevant factors affecting the performance of each asset as well as the entire portfolio.

Each property in the MEPT portfolio not being independently appraised during any quarter is “marked-to-market" under the direction of NewTower Valuation Services. This extensive quarterly valuation process not only addresses material changes in the physical or financial condition of each asset and associated market environment, it further utilizes information from recent MAI appraisals and MEPT asset managers as well as numerous market data sources including Kennedy Associates Real Estate Counsel, LP’s proprietary portfolio database, local appraisers, brokers, property managers, and published comparative market and property information.

NewTower engages multiple national valuation firms to provide independent appraisals for MEPT assets. Conflicts are avoided through the use of a comprehensive bid and review process prior to engagement of an appraisal firm. NewTower also has a detailed list of requirements that must be met by every appraiser submitting a bid. In addition, it is the general practice of NewTower to engage an appraiser for no more than three consecutive years on the same MEPT asset.

Once the appraisal is received, NewTower Valuation Services (staffed with MAI-designated appraisers) and MEPT asset managers thoroughly review each report and accompanying discounted cash flow analysis to evaluate the valuation methodologies employed and ensure the accuracy of property descriptive and financial information (total building and net rentable areas, rent roll, expenses, occupancy, etc.) as well as critical market data (appropriateness of concluded market rental rates, tenant improvement allowances, leasing concessions, supply and demand characteristics, etc.)

As an additional safeguard, MEPT retains an independent appraisal review firm, PricewaterhouseCoopers, to assist in verifying the accuracy of the appraisal process by reviewing each report to determine compliance, completeness, appropriateness of methodology, accuracy of calculations, and reasonableness of conclusions. The independent review firm engaged must concur with each MAI appraisal before it is finalized and recommended for acceptance by the Trustee on behalf of MEPT.

The methodology of the appraisal and review process is also examined annually by MEPT’s external auditor, KPMG, and by the Maryland Division of Financial Regulation every 12 to 18 months.