People - MARCH 6, 2013

FSBA hires two new firms for appraisal management administration

by Sara Kassabian

The $161.7 billion Florida State Board of Administration (FSBA) has chosen Canada-based Altus Group and Real Estate Research Corp. (RERC) as the firms responsible for appraisal management administration, according to John Kucwanski, the communications manager at FSBA.

It has not yet been determined which firm will be responsible for managing real estate and which will be responsible for managing alternative investments. One of the firms will replace Duff & Phelps, the previous real estate appraisal management administrator for real estate and alternatives at FSBA. The firm was hired for an initial three-year period, and FSBA had the option to renew the contract for two additional one-year periods. Kucwanski says the search for a new appraisal management administrator is part of a routine rebid schedule.

The search conducted to explore the possibility of expanding duties of the appraisal management administrator to include overseeing the appraisal process for FSBA’s alternative investments.

According to the FSBA Invitation to Negotiation, the real estate appraiser will be in charge of administering the third-party appraiser selection and making sure industry standards are upheld and deadlines are met. Duties also include preparing third-party appraisal reviews, preparing appraisals for associated mortgage debt, and preparing reports that communication between the external appraisal and SBA valuation.

The alternative investments appraisal administration managers provide three key services: managing the third-party appraisal selection and engagement process, supervising appraisals to ensure industry standards are upheld and deadlines are met, and communicating between the external appraisal and FSBA valuation. According to the Invitation to Negotiate, alternative investments requiring external valuations include timberland, mezzanine debt, preferred equity, general partner ownership interests and debt held in private equity funds.

The FSBA oversees $162.3 billion in assets, including the $132.1 billion Florida Retirement System defined benefit plan, which had $10 billion in real estate and almost $13 billion in alternative investments, consisting of $6.6 billion in private equity and $6.3 billion in hedge funds and other opportunistic strategies

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