Alliance Improves CRE Portfolio Risk Reviews

Some commercial real estate niche firms are following in the footsteps of their residential real estate counterparts that are keeping up with changing loss risk mitigation needs through partnerships.

Marcus & Millichap Real Estate Investment Services of San Francisco formed a strategic alliance with Property Sciences, a national real estate appraisal and consulting company based in Pleasant Hill, Calif., in an effort to expand the range of portfolio valuation services it provides to lenders and servicers.

"The recent alliance gives lenders the opportunity to analyze and evaluate their commercial real estate portfolios using a new suite of hybrid valuation tools," says Property Sciences vice president Andrew Mekjavich.

The Property Sciences Asset Watch Suite of commercial valuation products combines the professional perspectives of a real estate broker and a licensed appraiser into one unique report.

Products address "regulatory concerns related to examination compliance, impairment calculations, risk monitoring, asset and loan restructuring, and asset disposition," says Mekjavich. The platform was developed responding to market demand and input form lenders.

In a together-we-stand fashion the two firms integrated Marcus & Millichap's national investment sales expertise and platform with Property Sciences' lender-consulting business model and technology.

According to executives, Marcus & Millichap has adjusted its business focus to include servicing and special servicing options for which demand continues to grow from banks, appraisers and borrowers.

Marcus & Millichap regional manager of the Los Angeles office, Stephen Stein, recalled that the strategy change started in 2006 when the firm expanded its Special Assets Services division.

It also began offering "more tools for lending institutions and investors facing loan delinquencies, REOs and other distressed situations."

Portfolios of properties are reviewed by geographic market and asset type. The goal is to enable lenders "to pinpoint underperforming properties and analyze risk associated with these assets," Mekjavich says.

"Using local, regional and national asset performance statistics, portfolio-level stress tests are used to quantify the impact of changing economic conditions on commercial real estate portfolios."