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The commercial real estate market has been stagnant since the last quarter of 2007, creating a void of comparable sales, particularly in secondary and tertiary markets and for properties valued at less than $10 million. Yet, nearly all valuation methodologies still rely on an active marketplace providing robust comparable sales to approximate current value. Because investors, brokers, lenders, appraisers, servicers, receivers, lawyers, and the courts consistently need to understand the current value of an asset, it is important to know how to provide valuations that do not completely rely on historical data to determine value.

This three-session online workshop will guide students through the process of establishing a reliable value for an income-producing commercial real estate asset in a market where the basic data evaluators—comparable sales and cap rates—are absent. Through examples and case studies, the class will explain eight methodologies for establishing value in light of current market conditions. Each methodology will be discussed conceptually then demonstrated. The methodology will then be tested for its viability in a market void of relevant comparable sales and other historical data.

Upon successful completion of this course, the student will be able to create more reliable valuations, better interpret appraisal methodologies and their results, and readily create alternative methodologies for determining value without requiring access to comparable sales data.

Each session of the workshop is designed to build on the previous one. Participants are expected to use their learned skills to independently value properties in their own market/portfolio. The instructor will provide blank spreadsheets for students to use outside class, or students can use whatever spreadsheet/financial calculator they prefer.

The program is designed to be interactive. The instructor will be available by e-mail between sessions to assist participants.

Course Outline

Session 1: February 16, 2012        2:30–4:30 p.m. ET

This class will begin with an overview of the current domestic space and capital markets and the effect of current conditions on established methodologies for determining the value of income-producing properties.

Session Highlights

• Understanding the investment marketplace in light of changes over the past four years
• Understanding real estate cycles
• Understanding the importance of historical data in the process of establishing value
• Understanding the dangers of using “down market” data to determine value
• The use of comparable sales data to establish value
• The use of capitalization rates to establish value

Session 2: February 21, 2012        2:30–4:30 p.m. ET

Students will review and practice additional methodologies for determining value not substantially tied to historical data. Each measure will be presented conceptually then demonstrated through examples and a case study

Session Highlights

Each of the performance measures below will be reviewed, with special attention given to their validity in a marketplace with limited or no useful historical data.

• Discount rates
• Discounted cash flow process
• Cash-on-cash return
  
• Return on investment
• Band of investment
• Real-time supply and demand data

Session 3: February 23, 2012        2:30–4:30 p.m. ET

This session will focus on two case studies, each used to identify and explain the best-practice valuation methodologies for that specific property type. All previously discussed methodologies will be reviewed in light of each of the property types. Finally, a grid of best methodologies for the four primary property types will be presented.


Instructor

Mark Polon
President
RIISnet
Fairhope, Alabama

Mark Polon, CCIM, CDEI, has more than 25 years of experience in the field of real estate.  Over these years he has owned private real estate companies and has served as a corporate officer of corporations that ran franchise systems.  Independently, he has purchased, managed, appraised, and negotiated the sale of real estate assets for both buyers and sellers.

Polon is currently President of RIISnet, a web based transaction platform that facilitates large real estate transactions including the sale of stable assets, REO, and performing and non-performing loans in bulk.  His duties include overseeing all company activities, including REIT, private equity, and broker relationships.

Prior to joining RIISnet, Mark Polon served at the corporate level as Senior Executive Vice President for Prudential CRES and Vice President of Coldwell Banker Commercial Real Estate, both national commercial real estate franchise systems.

Mark is also President and founder of Polon Ventures, a real estate consulting firm specializing in training commercial and residential companies and individual professionals in the hard and soft skills necessary for a successful and profitable business and career. He is available throughout the country to create company specific training programs.

Mark Polon holds the designation of CCIM, as well as the Certified Distance Education Instructor designation.  Over his career, he has provided expertise and training to the United States government, commercial banks, savings and loans, for and not for profit corporations, residential and commercial real estate companies, and private individuals.