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 MAI-designated member of the Appraisal Institute
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, 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, The Altus Group, to verify the accuracy of the appraisal process
by thoroughly reviewing appraisal reports to determine regulatory and professional
standards (USPAP) compliance, completeness of documentation, appropriateness
of methodology, accuracy of calculations, and reasonableness of conclusions.
The independent review firm engaged must concur with the appraisal before it
is finalized and recommended for acceptance by NewTower on behalf of MEPT. The
Altus Group, which recently acquired PricewaterhouseCoopers' (PwC) real estate
valuation practice, is comprised of a team of professionals that provided appraisal
review services to MEPT for many years at PwC.
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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