MEPT maintains a valuation process that is one of the most
thorough and objective of any open-end fund. Each asset in the Fund's portfolio
is appraised quarterly by an independent MAI-designated member of the Appraisal
Institute who must be selected and engaged by MEPT's trustee, NewTower Trust
Company. In addition, the NewTower Valuation Services (NVS) team 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, NVS 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 an independent
valuation firm, PricewaterhouseCoopers, to verify the accuracy of the appraisal
process by thoroughly reviewing each report to determine regulatory and professional
standards compliance, completeness of documentation, appropriateness of methodology,
accuracy of calculations, and reasonableness of conclusions. The independent
review firm engaged must concur with each appraisal before it
is finalized and recommended for acceptance by NewTower on behalf of MEPT.
Real Estate Research Corporation (RERC) consults NewTower on
valuation best practices and reporting. 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 an annual review by its regulator,
the Maryland Division of Financial Regulation.
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