As the list of financial meltdowns in Corporate America continues to grow, Thomas Wratten thinks the timing is perfect for the commercial real estate industry's first-ever certification program for debt and equity investors. After three years of planning, the Chartered Realty Investor Society is ready to begin its first round of certification tests in September, says Wratten, founding chairman of the society and president of Principal Commercial Acceptance LLC.
Modeled on the Certified Financial Analyst program, Wratten says CRI was created to make sure that as more real estate investment shifts to publicly held entities such as REITs and CMBS debt, the investors placing that money have the analytical skills to do the job right.
“Real estate, a former cottage industry, has become a national industry just at the time when corporations are under scrutiny unlike at any time that we've known in the past century,” says Wratten. “We are trying to do our best to establish a standard that will give the public confidence in our emerging capital market participation.”
Investors must pass two tests to receive certification. CRI 1 will test investors on skills needed to close transactions, while CRI 2 will focus on the knowledge needed to manage real estate investments, including expertise in the capital markets. The first CRI 1 exams will be given in September, while CRI 2 testing is expected to begin in June 2003. Wratten expects the first CRI certifications to be awarded in February 2004 by the National Commission for Certifying Agencies.
Of course, Wratten couldn't have predicted the recent wave of finance scandals when he and the other volunteers on CRI's Board of Governors began planning the program in 1999. But Wratten, a 32-year industry veteran, says he knew there was a greater need for a standardized program as the industry grew more sophisticated in the 1990s, entering the capital and conduit markets. “This market is no longer a market of good old boys negotiating with each other, often withholding information from the marketplace,” says Wratten.
Four associations helped develop the content for the program — the Mortgage Bankers Association of America, the Appraisal Institute, the Commercial Mortgage Securities Association (CMSA) and the Life Mortgage and Real Estate Officers Council (LMREOC). Handbooks are available online at www.crisociety.org. The examination — which costs $300 — will be offered at more than 100 sites, mainly H&R Block offices.