THE
ORGANIZATION
• One of the world’s largest life insurance and pension
companies, and a leading provider of investment products
• Total assets on consolidated balance sheet of AEGON Group as
of 12/31/12 was approximately $483 billion
• Approximately 25,000 employees worldwide
• Three key global investment centers: AEGON USA, AEGON NL
and AEGON UK
• Other investment operations in the United States, Europe,
Asia and Latin America
AEGON USA — A SUBSIDIARY OF AEGON N.V.
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Accredited Management Organization
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An SEC-registered investment adviser
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Subsidiary of AEGON USA
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Subsidiary of AEGON USA
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Employs approximately 200 professionals
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Employs approximately 400 professionals including 60
investment professionals
•
Total assets under management of $16.3 billion as of
6/30/12
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Total assets under management of
$114.3 billion as of 6/30/12
•
Advises clients on debt and equity
investments across a wide spectrum of real estate asset
classes
•
Experience managing a broad range of fixed income
assets
•
Collaboration with global counterparts on investment
strategy
•
AUIM claims compliance with the Global Investment
Performance Standards (GIPS®)
•
Offices in:
Cedar Rapids, Iowa
Chicago, Illinois
Louisville, Kentucky
Baltimore, Maryland
•
Offices in:
Cedar Rapids, Iowa
Fresno, California
Irvine, California
Louisville, Kentucky
Baltimore, Maryland
New York, New York
San Francisco, California
THE APPRAISAL GROUP AT AEGON
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•
•
•
4 MAI’s
5 MORTGAGE LOAN ANALYST
3 APPLIED RESEARCH ANALYST
PRIMARY OBJECTIVES ARE:


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COMPLIANCE REVIEW
PORTOLIO VALUATION
PORTFOLIO REPORTING
RISK MANAGEMENT
OBSERVATIONS FROM THE TRENCHES
• CLIENT IS PROVIDING QUALITY
CONTROL FOR 3RD PARTY APPRAISER
How do we fix it?
Senior appraisers need
to inspect and provide
more oversight
OBSERVATIONS FROM THE TRENCHES (Cont.)
• POOR MARKET ANALYSIS
How
do
we
fix
it?
Better communication of
appraisal assignment
requirements and
engaging only locals with
specific property
expertise.
WHAT YOUR CLIENTS BELIEVE
• Value is not a “point estimate” but rather a
range of possible outcomes
• USPAP does not prohibit an appraiser to
conclude to a value range
WHAT YOUR CLIENTS WANT TO KNOW
• QUANTITY, QUALITY, AND DURABILITY OF
INCOME.
How does an appraiser address this?
This one isn’t easy…
If this area of valuation doesn’t improve,
clients may eventually need fewer appraisal
services.
WHAT YOUR CLIENTS WANT TO KNOW (Cont.)
This is how the rating agencies address quantity, quality,
and durability of income for the public bond markets
Appraisal Reductions in CMBS (LBUB 2001-C2)
%
Deal
Property
Name
City
State
Property Type
Old
Appraisal
New
Appraisal
% Change
5.23
Aberdeen Commons
Fairview Park
OH
Multifamily
$9,150,000
$6,575,000
-28%
2.86
Galloway Crossing Shopping
Center
Mesquite
TX
Retail
$5,250,000
$3,500,000
-33%
7.51
Metroplex Tech Center I
Carrolton
TX
Office
$15,200,000
$9,600,000
-37%
2.02
University Commons
Apartments
Cleveland
OH
Multifamily
$3,700,000
$1,300,000
-65%
4.26
Willow Ridge
Avondale Estates
GA
Multifamily
$7,625,000
$4,500,000
-41%
0.06
802 Cleveland Street
Elyria
OH
Retail
$1,070,000
$450,000
-58%
0.94
Metroplex Tech Center I
Carrolton
TX
Office
$15,200,000
$8,600,000
-43%
1.41
Shadowood Office Park
Atlanta
GA
Office
$20,100,000
$11,500,000
-43%
1.88
Atlanta Portfolio
Atlanta
GA
Hotel
$35,700,000
$21,100,000
-41%
2.11
Pointe Chase Apartment
Atlanta
GA
Multifamily
$30,650,00
$13,450,000
-56%
0.05
3591 North Milwaukee Avenue
Chicago
IL
Retail
$870,000
$270,000
-69%
0.17
Penn’s Market
Buckingham
PA
Retail
$2,775,000
$975,000
-65%
28% of this bond’s principal had an appraisal reduction
WHAT YOUR CLIENTS WANT TO KNOW (Cont.)
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Guarino’s proposal to address quantity, quality and durability of
income…
Principal risk scale from 1 to 10
1 being a high risk of income and value volatility, 10 signaling the
property has a lower risk over the estimated holding period
If the appraiser envisions trouble on the horizon from lease expirations,
overbuilding, disruption in the capital markets or degrading credit
quality of the occupying tenants, then comments around the selected
score and perhaps the timing of the concerns in the ownership period
are warranted