Recent changes in accounting standards have had an influence onthe evolution of asset and portfolio valuation. Most notable ofthem was the Financial Accounting Standards Board's issuance in2006 of the Statement of Financial Accounting Standards No. 157,"Fair Value Measurements." This generally accepted accountingprinciple sought to increase transparency by calling for quarterly,rather than annual, real estate portfolio valuations.

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Has the subsequent quadrupling in the number of propertyvaluations for acquisitions, sales or SFAS 157 compliance purposesmade these calculations more difficult to formulate? Do they takean inordinate amount of time? No. Fortunately, the process ofprecisely calculating current and future real estate portfoliovalues is not unduly burdensome for owners and managers equippedwith top-level valuation model software which is currently on themarket. These powerful tools automatically combine market leasingassumptions, variable discount rates, and variable income andresale price calculations to compute long-term discounted cash flowfor commercial and residential portfolios.

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Today's leading-edge asset valuation tools combine all portfolioassets, along with operating and forecast budgets and analysis,into one database, enabling managers and owners to generatequarterly workflows themselves. Underlying data is readilyavailable, and the analysis can be refreshed with any number ofactual quarterly financial performance factors. Such integratedsolutions reduce the time required to create valuations, promotethorough due diligence, and limit opportunities for errorassociated with drawing input from various databases.

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Contained within a consolidated database, these software suitescan perform customized analysis for a portfolio that includesnumerous "what if" assumptions such as capitalization rate, costsand discount rate changes, from groundbreaking and construction allthe way through project completion. These calculations reduce riskby pinpointing the optimum holding time and best estimated valuebefore selling. The solutions can also provide quarter-by-quarterperformance comparisons, enhancing their utility as an assetmanagement tool.

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By projecting a real estate portfolio's revenues and cash flow,project leaders can also use the asset valuation tools tostrengthen their outreach to investors by providing reasonableestimates of their returns. Since we don't have a crystal ball topredict future cash flows, internal rates of return, propertyvalues, and other factors influencing real estate investmentactions, these advanced valuation products are the most reliabletools we have to see into the future of our assets. In a fast-pacedand increasingly regulated market, they are a necessity for makingconfident forecasts and good competitive buy/hold/sell decisions intoday's marketplace.

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