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Chicago Research Firm Provides Tools to Help with Valuation

Chicago Research Firm Provides Tools to Help with Valuation

Real Estate Research Corp. (RERC) based in Chicago, was founded in 1931 to specialize in both real estate research and analysis. Today, the independent firm’s services have grown to include property valuation, portfolio management, litigation support, technology solutions and consulting. RERC, which also has offices in Texas, Georgia, Alabama, Florida and Iowa, also produces a widely read quarterly report on investment trends in addition to several other specialty reports and real estate studies.

RERC prides itself on its six-year-old, Web-based Commercial Real Estate Management Information System (MIS), a collection of tools designed to improve the operational efficiency, reporting, management and analytical capabilities for real estate owners. CEO Kenneth Riggs talked with NREI about the system and its “mark-to-market” valuation tools.

NREI: Why was the RERC Commercial Real Estate MIS product created?

RIGGS: It was designed primarily to provide valuation managers of real estate portfolios the tools necessary to efficiently mark-to-market, (or account for the most current value), of portfolio assets. This valuation is often the most challenging and most important aspect of real estate portfolio management and it enhances the ability of the process. This is a critical issue faced by the industry today and will become increasingly important as we move to a valuation of assets on a quarterly and monthly basis to comply with the Global Investment Performance Standards established and administered by the Chartered Financial Analyst Institute. Our MIS was designed as a solution to bring together a diverse variety of data, reports, and research information into a single user-friendly platform.

NREI: Why is it useful in these challenging economic times?

RIGGS: While the system is not designed to (directly) value assets, it greatly increases the transparency and enhances the overall valuation process. The increased transparency, reporting, and administration capabilities provided by our system gives all the parties involved with a real estate portfolio equal real-time access to this critical asset information.

NREI: Who uses it?

RIGGS: The MIS is used by multiple institutional pension fund clients controlling upward of $75 billion in real estate assets, more than 30 national commercial real estate valuation firms and hundreds of investors and their consultants.

NREI: How does it work for users?

RIGGS: It integrates information and data from the property level up to the ultimate valuation of assets to ‘mark them to market.’ This gives such people as commercial real estate executives, managers, administrators, investors, consultants and appraisers a single platform for the delivery, tracking, and management of the various parts of their real estate portfolios. In effect, it maximizes their efficiency in valuing the assets. While the system has a number of useful tools for different aspects of a portfolio such as asset management and property management, its primary emphasis is the mark-to-market valuation perspective. Ultimately, the system provides confidence to investors that their asset values are timely and appropriately represented.

NREI: What are the costs of the service?

RIGGS: The costs of the system and MIS support and administration vary greatly depending on the complexity of the system needed to meet an individual client’s needs. RERC’s MIS goes hand-in-hand with RERC’s independent fiduciary, appraisal management, and consulting services. Annual fees for the system range from as low as $25,000 to upwards of $300,000, depending on what services are included.

NREI: Who can benefit from it?

RIGGS: Every real estate portfolio that has a mark-to-market valuation process done at least on a quarterly basis can benefit. It provides straightforward access to commercial real estate data and files related to the real estate portfolio and also serves as an offsite disaster recovery system, where all historical appraisals, leases, performance reports and acquisition packages, as well as asset-specific data, can be accessed quickly and easily. A major benefit is the system’s web-based architecture, allowing users to access the details of their real estate portfolio from any location.

NREI: How can investors benefit from it specifically?

RIGGS: The greatly increased transparency and reporting capabilities provided by this system allow investors to be much more confident that the values of their assets are fairly presented. In addition, RERC has established an investor-relations portal, which provides investors and their consultants the ability to log into the system and access information ranging from account statements to performance characteristics.

NREI: What kind of custom reports can be gleaned from it?

RIGGS: Since every installation is completely customized to meet the specific needs of the individual client, every report generated by the system is a custom effort. Reports are limited only by access to the kinds of base data needed to generate them. Rather than a client having to change their procedures and the way they do business to match the system, our system changes to match the client.

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