Appraisal Institute Annual Meeting Valuation for Financial Reporting August 2014

Panelists Louis Yorey, MAI, AM, MRICS – Managing Director, PwC – New York, NY Randi S. Rosen, MAI, MRICS – Principal, KPMG – San Diego, CA David Swanson, MAI – Senior Manager, Deloitte – Los Angeles, CA Kyle Redfearn, MAI – Managing Director, CBRE – Dallas, TX Eric B. Garfield, MAI, CCIM – Managing Director, WTAS LLC – Los Angeles, CA Moderator

Format for 2014 Presentation 1.Review 2013 Presentation Key Concepts 2.Overview/Key Issues – Louis Yorey, MAI 3.USPAP Standards in VFR (Purpose, Intended Use, Client) – David Swanson, MAI 4.Impact of Obsolescence in VFR – Randi S. Rosen, MAI 5.Report Formats and Audit Review Survival – Kyle Redfearn, MAI 6.Questions & Answers for the Panel a. How do I get this work? b. How do I increase my competency for VFR? c. Is State Licensing required for VFR? d. Does an Audit Reviewer perform a USPAP Std. 3 Review of my work? e. What is AI doing to prepare us for “The Avalanche” --- work in VFR? f. What’s in it for SRAs?

Review from 2013 Presentation VFR as it pertains to Real Estate, Tangible Assets, Goodwill, Combinations and Long-Lived Assets is covered under the Financial Accounting Standards Board (FASB) Standards (SFAS) 141R, 157, 142 and 144. Definition of Fair Value: “The Price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participant at the measurement date.” (ASC 820 formerly known as SFAS 157) “The amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.” (ASC 350)

Overview of Fair Value/Key Issues Louis Yorey, MAI (PwC, Managing Director) Overview of Fair Value Key Issues: – Value in Use/Exchange – In Combination/Stand Alone – Leases – Customer Relationships – Materiality

USPAP Standards in VFR David Swanson, MAI (Deloitte, Sr. Mgr.) Appraisal Process Introduction 1. What is the Purpose? 2. What is the Intended Use? 3. Who is the Intended User? 4. Who is the Client? What Report Format is appropriate for VFR? Discussion on Appraisal Review Process

Impact of Obsolescence in VFR Randi Rosen, MAI (KPMG, Principal) Obsolescence in VFR 1.When is Obsolescence “Functional” in VFR? 2.When is Obsolescence “External” in VFR? 3.Does “In Combination” address Obsolescence? 4.What to do when Value-In-Use > Value-In-Exchange. 5.What is expected by the reviewer when presented with an RCNLD calculation?

Report Formats and Audit Review Kyle Redfearn, MAI (CBRE, Managing Dir.) 1.What is the “appropriate” report format for VFR work? 2.Is there a “Hybrid” report format for VFR? 3.How does Scope of Work factor into the report format? 4.How do we report on intangibles (i.e. above/below market leases)? 5.How do you deal with Exposure Time in VFR reports? 6.How do you survive an Audit Review?

Audit Review Checklist Dave Swanson’s least favorite chart on VFR  Reviewers --- What do you expect from the Appraiser when reviewing their work?

Q&A