Valuation concerns have been top of mind for most property investors for nearly two years. Infrastructure investors would do well to consider the valuation challenges plaguing the commercial real estate industry.

Property appraisals typically are based on a blend of three different valuation methodologies — discounted cash flow analysis, comparable sales and replacement value.

Inflation of materials and labor costs drove up replacement values as occupancy and rental rates were falling — and while carrying costs, particularly interest rates, were rising. Meanwhile, a corresponding decline in transaction volume undermined the ability of valuers to obtain sufficient data to derive meaningful comparable values.

While many managers employ the same few national valuation management companies to manage their appraisal processes, there is little consistency of approach between different investment managers’ valuation stances. Some have been marking their portfolio