Member profile: Dennis Webb, ASA, MAI, FRICS, Principal, Primus Valuations

05/15/2009 21:49

Dennis Webb, ASA, MAI, FRICS Principal, Primus Valuations 6601 Center Drive West, Suite 500 Los Angeles, CA 90045 Contact Dennis Webb Dennis Webb is a business and real property appraiser with an unusual specialization in the valuation of real estate-related holding companies, including partnerships/joint ventures and property-related businesses. His 20-year valuation career includes speaking at US and international forums, teaching, and writing the definitive textbook on valuing asset holding companies. He is working on another book addressing the potential role of asset appraisers and valuers in avoiding future asset bubbles. More can be found at www.primusval.com Q. What are your current job roles and what do they involve? Primus Valuations is an independent valuation firm, and I am generally involved with and responsible for all aspects of the business. Valuation work is the most important, of course, but it is also important to pursue business and professional development on an ongoing basis. I try to contribute as much as I can to the profession with respect to writing and teaching, advancing the body of knowledge primarily in the much-neglected domain of fractional interest valuation. I feel that it is important to participate in professional societies whenever possible; over the years I have held task force and chapter board positions with the Appraisal Institute (AI) and was president of the Los Angeles chapter of the ASA. I have organized local and national events involving AI, ASA, IRS, and of course, RICS. I find the challenge and diversity of these various roles highly motivating and interesting. Q. Why did you opt to pursue a career in this industry? I have had several careers, beginning with engineering, and am pursuing valuation because it brings together many of my earlier skills and experience. Engineering is a discipline that draws on and applies tools from all the sciences to solve practical problems. The next step from engineering was to get more involved with business development. After that, I left engineering and started a small broker/dealer firm. My partner and I did a lot of work in wind energy and syndication, but tax law changes pretty much ended that industry. Real estate appraisal was the next step, and a logical one, since I had done a lot of due diligence for syndications. It got really interesting when I was first asked to value some partnerships that held real estate. This was a logical step since I also had legal and accounting experience from having structured partnerships. I soon discovered that the valuation professions were largely ignoring asset holding companies. I next became qualified in business valuation (with the ASA), and have focused most of my professional writing and teaching since on filling in this “discipline gap” in the development of valuation knowledge. This career is very satisfying, as it appeals to my desire, as an engineer at heart, to draw on the knowledge of several disciplines to solve practical problems. Q. What do you think should be done to address the “discipline gap” you describe? The professional associations really have not dealt very effectively with crossover applications in valuation. For example, the ASA has five disciplines that should communicate much more effectively with each other: residential appraisers would benefit greatly from understanding more about art that is part of the building or site, and business appraisers valuing holding companies would benefit from a deeper awareness of real property facts, just to name two. RICS includes many property-related disciplines, and I suspect that there are lots of opportunities to improve professional practice in areas where disciplines overlap. One way to facilitate this would be to offer more overview courses for “non-majors.” One example in valuation would be the ASA’s new review & management courses; also, multidisciplinary conferences focused on specific practice issues can be effective. These sorts of conferences have been much of the focus of my association involvement over the years. Q. What has been a career or project highlight? Some of the most interesting assignments involve large holdings, multiple positions within the company or partnership, and a contentions history. In one case, a well-known foundation held a 94 percent limited partnership interest, and had become disillusioned with the general partner. The GP had been taking a large property management fee for many years, leaving very little for distributions. Values had still not recovered to their pre-1990 levels, projections were not being met, and tension was growing. They came to us initially to determine what values would be likely outcomes under several different deal and litigation scenarios versus the GP. The assignment involved valuing the large apartment portfolio, the management contract, and both limited and GP positions under multiple premises of value. As the assignment proceeded, opportunities arose to sell some of the apartment projects for condominium conversion, so we opined on a range of prices that would be reasonable in what was suddenly a very hot market. This was critical, since the board of the limited partner/client had to approve any such sale. In this type of case, the management role is taken by the client or counsel for the client. Our role is to be consultants and valuation experts. We are brought in once the client determines that they have a problem which is tied to values, and their ability to negotiate solutions is limited by not only the value itself, but by the applicability of a list of value premises that might be negotiated or imposed by a court. The outcome was that the client got past many years of bickering with the general partner, was able to approve sales of some properties and recover a lot of cash, and the GP got to keep its management fees. This sort of project is exciting because of the interaction of personalities, potential for real adversarial action, the need for the client to have a clear understanding of market conditions and risks, the need for counsel to understand the different ways rights and fairness might be viewed in court (premise of value), and, of course, it helps if lots of $$ are on the line. Q. Has being a member of RICS helped your professional career? Yes, and it is becoming more valuable. I hold the MAI and the ASA designations, so my FRICS is not specifically required for domestic work. Once outside the US, though, the picture changes: I went on a cruise to Antarctica last year, and one evening at dinner ended up sitting next to a woman from Vancouver. She was talking about all her property development partnerships, which seemed like potential business. I explained what I did, and mentioned my association with the Appraisal Institute (she politely nodded) and the ASA (another nod)—I continued with “oh by the way I’m a Chartered Surveyor.” She interrupted loudly “Oh, Chartered Surveyor!” and the recognition was gratifying. I have very positive expectations for my involvement with RICS. Q. Do you attend networking or industry events that RICS Americas participates in? Yes, as many as possible. I have attended Annual General Meetings in California, Jamaica and London, and numerous chapter events in Los Angeles. Such meetings are technically interesting, and create an opportunity to build relationships with peers. Knowing those who will take your phone call can help with a wide range of issues; it has been an important resource throughout my career, and is even more important with expanding geography. Besides, the events are fun, the RICS membership is an interesting group, and I find RICS Americas leadership to be enthusiastic and progressive. All in all, a very worthwhile professional venture!