American Appraisal’s real-estate-related services focus on larger scale unique properties, or portfolios of investment real estate as well as individual complex real property holdings, some of which are operated as going concerns. These holdings tend to be marketed regionally, nationally or internationally.
Who We Serve
American Appraisal serves owner/operators, attorneys, accountants, financiers, investors, developers and government jurisdictions across a wide range of market sectors, with consultants specializing in the following industries:
What We Do
American Appraisal’s consultants assist clients for various purposes including:
We provide many of our investment real estate clients with periodic valuations or valuation reviews. This may include individual trophy properties or portfolios of properties. In doing so, we estimate the value of the property for various purposes considering its highest and best use and likely timing of a transaction. In this process, we also consider the property’s likely pool of buyers as well as their purchasing power.
With regard to complex real property holdings, some of which may be operated as going concerns (such as hotels, racetracks, nursing homes and the like), we typically estimate the value of the assembled group of assets as a single economic unit. The valuation of tangible-asset-intensive going concerns, which can include elements of real, personal and intangible assets, often includes the application and reconciliation of all three basic appraisal approaches (income, sales comparison and cost). Our consultants routinely provide the contributory values and, if appropriate, remaining useful lives of the various assets and liabilities that make up a specific property. This may include providing values for:
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Land (underlying, excess and/or expansion) |
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Easements |
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Air rights |
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Various land improvements |
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Buildings and building components |
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Leasehold improvements |
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Various personal property assets |
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Excess assets |
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Working capital |
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Intangibles including leases in place, leasing origination costs, tenant relationships, management agreements and advanced bookings |
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Debt |
Experience
American Appraisal’s recent experience across a variety of sectors involves:
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Large-scale or portfolios of investment holdings
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Valuations for major insurance companies, real estate investment funds, and private firms for financial reporting, as well as for management compensation purposes
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Valuations for major REITs regarding portfolios for bulk sale transfers or purchase price allocations
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Healthcare
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Analysis of numerous medical offices in Illinois to determine market rents
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Valuations involving various hospitals for financial reporting purposes
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Estimation of fair market rent for two rehabilitation hospitals to assist in lease negotiations
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Valuation analysis for a healthcare provider for a potential lease swap
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Valuation of a hospital in Nashville for acquisition purposes
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Hospitality & Gaming
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Valuation of two major resorts in the Maldives for financing purposes
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Insurance valuations for Caesars Entertainment
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Valuation of a major hotel in Kosovo for financing purposes
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Valuation of an operating horse racetrack in the southern US for possible sale
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Technology
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Valuations for a semiconductor manufacturer regarding a purchase price allocation in which certain assets (such as various in Japan) are being held for sale
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Valuation of a major US company’s R&D facility in the northeastern United States for possible donation
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Valuation of a semiconductor fabrication facility for property tax purposes
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Transportation (automotive/aviation)
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Valuation of an airport under construction in the Maldives for financing purposes
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Valuation of several General Motors facilities for property tax purposes
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Utilities & Power Generation
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Valuation of power plants in Indiana, Texas, Wisconsin, Michigan, New Jersey, Connecticut, New York, Rhode Island, Massachusetts and Oklahoma for property tax purposes
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Oil & Gas and Chemicals
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Valuation of the Alaskan pipeline for property tax purposes
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Valuation of various major terminal facilities in the Midwest and oil refineries and chemical plants in Montana, Illinois and Texas for property tax purposes
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Agribusiness, Food & Beverage
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Purchase price allocations for Pilgrim’s Pride and Michael Foods
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Property tax valuation work associated with poultry plants
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Paper & Forest Products
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Paper mill valuations in the southeastern and midwestern United States for property tax purposes
Industry Conditions/Outlook
The nature of the current real estate market is location specific. Markets in Detroit, Michigan or Atlantic City, New Jersey, are substantially down from their prerecession peaks, whereas Washington DC remains relatively strong.
Therefore, it is important to keep the basics in mind when gauging a specific real estate market’s condition and potential. The basics always consider:
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The specific property’s highest and best use
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The makeup of the property’s probable buyer pool
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Whether the buyer pool has sufficient purchasing power to complete a deal within a reasonable time frame
In distressed markets, the purchasing power of the buyer pool and the necessary timing of a deal can be critical. Arriving at a specific value for a property should include consideration of a realistic cash flow analysis, in the context of comparable transactions that have occurred demonstrating the amounts at which similar holdings are being sold, as well as the property’s depreciated replacement cost to gauge the barrier to entry by future market competition.
Even within specific real estate markets with consistent physical and functional use attributes, there may be stratification of value levels due to a property’s income characteristics, which include:
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Occupancy/utilization levels
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The nature of the existing tenant(s)/operators
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The potential pool of tenants/operators
Financing remains relatively tight but available for most well-occupied/operated holdings. Financing is thin for second-tier assets, slow in the CMBS realm and almost nonexistent for land developments. With debt financing tight, equity players can be a factor; however, their capital structure will likely reflect a higher required rate of return when referencing capitalization and discount rates. This can be especially true when the property in question needs to be transacted quickly (i.e., distressed).
Capitalization rates demonstrated in the marketplace for a specific property type can vary widely . . . sometimes by as much as 400 basis points. Therefore, it is important to be able to reconcile the range of capitalization rates to the rate that is most appropriate for the risk inherent in the specific subject property’s projected cash flow.
Many characteristics impact the range of capitalization rates. With regard to a hotel, for instance, these characteristics include:
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The buyer pool and their purchasing power
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Neighborhood nuances within the specific market
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Whether the underlying land is owned or leased from others
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The nature of the property’s reserve for replacement policy
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The functional utility of the property
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Whether the likely property tax burden is considered in the cash flow projected or within the capitalization rate selected
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Whether there is additional competition in the pipeline or certain competition will be eliminated
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The nature of the property’s reputation, guest mix and management
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Whether the property has been renovated recently or will require renovation soon
These characteristics are gauged against the marketplace. Proper consideration of these characteristics allows American Appraisal to estimate an appropriate capitalization rate for each holding.
When considering foreclosure, it is important to recognize that specific holdings can be distressed for a variety of reasons. Therefore, financiers have reacted in a number of ways, including:
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Renegotiating the financing terms
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Foreclosing and holding the property through use of outside management
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Foreclosing and selling the property outright
Criteria considered by financiers in making their decisions include the quality of the borrower as well as:
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Feasibility of a possible selective foreclosure when a property is part of a portfolio that is otherwise performing
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Whether the borrower can pledge additional collateral
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Whether the financier wishes to have an equity position in the property
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Prospects for the market to improve or further deteriorate
American Appraisal’s valuations of distressed holdings carefully consider the facts and circumstances of each individual property, its highest and best use and its most probable buyer pool. Doing so helps ensure the property’s value is not understated or overstated, allowing potential buyers and sellers to make confident, logical decisions.
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Why American Appraisal?
Due to the large-scale, portfolio, or complex nature of the properties involved, our objective work efforts and reporting to clients are tailored, considering the purpose of each analysis. Clients have direct access to appropriate consultants worldwide with industry and service know-how, and our senior staff includes qualified expert witnesses.
Real estate consultants at American Appraisal have diverse educational backgrounds (including engineering, real estate and accounting/finance) and diverse professional backgrounds. Consultants hold various professional designations (MAI, ASA, CMI, P.E. and MRICS) as well as state- and country-specific licenses and certifications, and undergo frequent continuing education courses involving real property, personal property, intangible assets and going concerns.
Our consultants utilize major income, transaction and cost analysis software programs. We conduct extensive research and our proprietary databases are international in design and content. Our global footprint ensures that local insights and accurate market data are incorporated into our valuation analyses.
As a multiservice provider with a significant history of client service, American Appraisal provides clients an array of cost-effective, timely and efficient services for a variety of purposes for any specific holding throughout its entire life or ownership cycle.
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