DebtX Adds CRE Valuation Tool
DebtX, a company that helps banks trade their commercial real estate loan portfolios, has taken its product a step forward.
The company, which functions as an online loan trading center (www.debtx.com) and also conducts online loan auctions, has added on a commercial real estate loan portfolio valuation tool, DXMark. This is being touted as a valuation based on actual secondary market loan sales.
Kingsley Greenland, CEO, DebtX, says that it is "a unique measure of a portfolio's value because it is the only
valuation based on a multitude of trades that buyers and sellers have completed under competitive conditions."
According to DebtX, "DXMark puts DebtX in the exclusive position of helping financial institutions identify hidden value and hidden risk to enhance performance and overall balance sheet management."
The loan data input for DXMark is based on transactions executed by the sellers and buyers participating at debtx.com. This includes input on all the major commercial real estate categories - industrial, retail, office and multifamily.
Among the uses that DebtX sees for the tool are risk analysis, validation of origination pricing, identification of consolidation opportunities related to mergers and acquisitions, and estimation of the financial impact of loan sales in the secondary market.
By providing a second opinion on a portfolio's market value, DXMark seeks to complement internal valuations.
To derive the discount rate on a loan, a bank's loan data is run through DebtX's valuation model to estimate the yield that the market requires. The model uses data collected from loan bid data from DebtX's loan sale transactions. The data is regressed to find a discount rate for the loan, which is then used to calculate the loan's net present value.
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