Newsletter - Hilco Valuation Services

/23
Newsletter
Vol. 1: Issue 4 2012
Business Asset Valuation Services
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“Liquidity Surplus…?”
Given the current
economic environment,
it is counter-intuitive
to think that there is
a liquidity surplus of
both debt and equity
capital. Not only are
there plenty of funds
available, interest is
strong from all lender/
investor constituencies.
Companies with solid
operational profiles
and sound financial
reporting are being well
received by all funding
sources.
The Senior Debt
Market has eased
post-recession, with
aggressive competition
from banks and
non-bank lenders.
Traditional LP Funds,
Credit Opportunity
Funds, Captive Bank
Funds, Hedge Funds,
Commercial Finance
Companies, and
Insurance Companies
have all created pricing
pressure on traditional
lenders. This significant
cross section of
investors are competing
for a limited number
of quality transactions
whose credit standards
remain basically
unchanged for firms of
all sizes. Risk aversion
has relaxed considerably
in the last 6 months,
opening the market to
non-sponsor private
Hilco Real Estate
Appraisal, LLC
adds teams in
New York and Boston
Chris L. Harland, MAI has joined Hilco
Real Estate Appraisal, LLC as of June 2012
as Northeast Region Manager, and will
be located in the Capital District (Albany
area) of upstate New York. Chris is joined
by a team including Mark Grant, Andrea
Nazarian, Jay Buhr and Robin Hynes.
equity companies,
challenged credits and
traditionally avoided
industries.
There is also excess
capital in the private
equity market as the
window will soon be
closing for various
general partners to
invest a significant
portion of their “dry
powder” that accounts
for the approximate
$425 billion capital
overhang in 2011. As
these groups work
through this buildup
of capital, investment
activity is expected to
increase. Valuations
are expected to
climb as a result of
improving general
economic conditions,
increased availability
of attractively priced
debt, and increased
competition for quality
deal flow.
Chris has been engaged in the appraisal,
underwriting and analysis of real estate
throughout the northeast for 22 years.
Before joining Hilco, Chris was the
President of Capstone Appraisal Group, a
commercial appraisal company based in
New York’s Capital District, for 13 years.
Charles L. Clark, Ph.D., MAI joined
Hilco in our Boston, MA office in May
2012 as New England Region Manager
for Hilco Real Estate Appraisal, LLC.
Charles is joined by Matt Dostoomian
and will work alongside Hilco’s Debt
Management Services group headed by
Ron Lubin.
Mr. Clark has over 20 years of experience
in the valuation of real property and
market studies on a variety of property
types. He has experience in the valuation
of commercial, industrial and special
use real estate throughout the Boston
metropolitan area and New England.
Since its inception in 1999, Hilco’s real
estate appraisal group has delivered
thousands of valuations for private and
institution clients.
www.hilcoappraisal.com • 847.509.1100
/23
Newsletter
Vol. 1: Issue 4 2012
Business Asset Valuation Services
Recent Volatility in the Metals Sector
For the last few years metal market
prices have been relatively stable;
producers had closed mills in
conjunction with reduced demand
and service centers have kept
inventory levels at historically low
levels given fears of a repeat in
the significant market price drops
experienced in 2008. Going into
June this year we have begun to see
some significant volatility of prices in
some key metals segments.
First, scrap which has had
strong market values the last
few years due to decreased
industrial outputs and a
strong foreign export market
is now experiencing a $50
(or greater) drop per ton
in market prices going into
June 2012. The drop in scrap
market prices is primarily
due to weak demand from
Asia, the abundance of
industrial scrap from recent increased
production levels and macroeconomic
concerns driven by
the financial distress
in Europe. Scrap
industry experts are
predicting the softness
in scrap market prices
could extend into July
and possibly August as
well.
Another sector within the metals
space that is experiencing recent
price volatility is
copper. Copper
prices are currently at
6-month lows based
on new fears that
growth in China is
slowing. China is the
largest consumer and
importer of copper
and it is believed
China’s current
copper inventory
levels are very high.
Unless manufacturing levels in
China rebound it is expected further
softness in copper pricing could
be experienced over the next few
months.
Hilco Profiles
Ed Zimmerlin, Jr.
Senior Vice President,
Inventory Group Leader
Andy Dahlman
Senior Vice President,
M&E Group Leader
Andy Dahlman joined Hilco in
2000 and has been in the auction,
liquidation and appraisal industry
since 1994. Andy is a certified M&E
appraiser and holds membership
in numerous professional
organizations, including AMEA (Association of
Machinery and Equipment Appraisers) and the
Equipment Appraisers of North America. Andy has
served as a consultant to financial institutions on
asset-based lending and recovery, and has been called
upon as an expert witness in bankruptcy proceedings.
Ed Zimmerlin has worked with Hilco Appraisal
Services since 2001 and during the course of that
time re-located from Hilco’s Boston office to our
corporate headquarters in Chicago to help form
Hilco’s industrial inventory appraisal group. Over
his time with Hilco, Ed has worked directly on
or supervised over 5,000 inventory appraisals. Ed also works closely
with Hilco’s various liquidation groups especially when they involve
a company for which Hilco has performed the valuation work. Before
joining Hilco Ed worked with Staples Corporation, Fidelity Capital and
GE Lighting. Ed holds a bachelors degree in finance & accounting from
Babson College in Wellesley, MA and is an active member of the CFA
and TMA.
Contact Andy at 847-849-2936 or
Email [email protected]
Contact Ed at 847-313-4720 or
Email [email protected]
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/23
Newsletter
Vol. 1: Issue 4 2012
Business Asset Valuation Services
Postcards From Europe
and Beyond...
In the last 18 months, Hilco Appraisal Europe (HAE)
has assisted Lender and Insolvency clients on a huge
variety of appraisal projects in Countries including;
Angola
Algeria
Cameroon
Iraq
Ivory Coast
Mozambique
Tanzania
Zambia
Australia
Indonesia
New Zealand
Singapore
Belgium
France
Germany
Hungary
Italy
Netherlands
Poland
Spain
Sweden
Switzerland
Often, Hilco’s clients ask us to appraise properties where
complex issues are interwoven, providing opportunities
to engage with our clients and employ our unique skills
on their behalf. Recently an estate planning law firm
hired Hilco to appraise one of Seattle’s most notable
residences. Built in 1913, the Georgian-Revival styled
mansion contains nearly 8,000 square feet of living space.
On completion it was recognized as one of Seattle’s most
beautiful homes,
and was recently
the featured
home in Pacific
NW Magazines
home section.
One lot off Lake
Washington’s
shoreline, it has
expansive views of Mt.
Rainier, Cascades, and
Lake Washington, with
grounds designed by
the Olmstead brothers.
Its original beauty
however, is one of days
gone by.
Every completed appraisal adds to the Worldwide
experience that HAS draws upon to assist our clients
with respect to local laws and issues that they may
encounter, and this experience is an invaluable
resource in exit planning. Please do not hesitate to
contact your local Hilco contact if you feel that we
may be of assistance to you.
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Hilco Appraisal provides
counseling/advisory services
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Consequently, renovations will involve substantial costs.
In addition to providing an expert market value appraisal
for use in filing gift and estate tax returns, Hilco advised
the firm to assist the owner in placing the residence on
the National Register of Historic Places. The register is
administered by the National Park Service, and properties
on the register are eligible for consideration for federally
assisted preservation grants, investment tax credits,
and other benefits. Hilco’s objectives for the client was
to provide a means to facilitate adequate renovation
of this magnificent structure. Along with citizens in
the community, we will monitor the progress of this
wonderful piece of historic architecture in the hopes that
it is fully restored to its original grandeur.
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/23
Newsletter
Vol. 1: Issue 4 2012
Business Asset Valuation Services
Is a lumber super cycle
possible?
The words lumber and supercycle are
not two words that anyone in the U.S.
would expect to see paired together.
With the U.S. housing market mired
in the worst slump in its history, how
could a lumber supercycle possibly
occur anytime in the near future? It
seems unlikely, but a confluence of
factors may join together to create one
as early as 2014.
market is slowing, there is
no denying the demographic
trends that will continue to drive
Chinese demand for lumber.
In fact, British Columbia (B.C.)
sawmills sent 24 percent of
their production to China in
2011. With regards to Japan, the
rebuilding efforts that will follow
the tsunami of 2011 are only
now beginning in earnest and will
provide another significant source
of demand.
four years. In the province of Quebec,
the sawmills' annual allowable cut
from government lands is being
On the supply side, the market simply
The U.S. housing market currently
reduced amid decades of over cutting.
can't count on its previous sources.
remains sluggish with new home starts Sawmills in B.C. and Alberta are dealing Furthermore, for all Canadian mills
expected to reach approximately
with the devastating effects of the pine that were shuttered during the Great
700,000 units in 2012. However, this
Recession, it will be difficult to reopen
beetle, which has ravaged the timber.
is a far cry from the approximately
because much of the labor has moved
The worst of the supply problems are
1.2 million homes needed annually to
onto higher paying jobs in the oil sands
expected to occur in the next two to
satisfy demand required
or precious metal and
by new household
diamond minds that are
Hilco Dedicates New employees in dedicating the
formation. The reason
running full tilt. None of
room by sharing warm stories
for the current shortfall
these problems are easily
Conference Facility
about Norm over coffee
is the overbuilding that
ameliorated; Canadian
and bagels…one of Norm’s
occurred between 2002
production simply won't
On June 14th, Hilco was
favorite pastimes. Norm
and 2007 and the excess
be what it once was.
pleased to honor the memory was a pillar of the valuation
inventory that currently
of Norman Adler, one of the
world having worked in the
remains. However, if
The combination of
founding members of the
industry for over 30 years
recent year over year
stronger demand from
Hilco’s appraisal business, by
and knowing all the key
gains of 25 percent can
the U.S and Asia as well
dedicating a conference room players. Very few days go by
be extrapolated for 2013
as a lack of supply from
and presentation center in
without one of our customers
and 2014 (a big if), new
Canadian mills may result
his name. The Norman Adler recounting a pleasant
home starts will be more
in sharp price increases
Presentation Center sits on
memory they had with
than 1 million units
for lumber starting as
the 3rd floor of Hilco’s home
Norm. Hilco looks forward to
in 2014, representing
early as 2014. Of course
office in Northbrook, Illinois
continuing to honor Norm’s
a significant boost in
there are many risks to
and includes state of the art
legacy to the company
demand for lumber.
this scenario, including a
technology that enables Hilco through it’s wonderful, new
weaker housing recovery
to conducts meetings and
presentation center.
This demand increase
in the U.S. and/or the
communicate
will not be enough by
continuing trend of new
with people
itself to drive lumber
home starts moving
across
prices significantly
towards multifamily
the world
higher, as sawmills
units. However, the case
seamlessly.
currently operating
for a lumber supercycle
Norm’s wife,
could expand capacity to
is not so farfetched
Elaine, and
meet demand. Demand
that it can simply be
daughters,
from China and Japan,
dismissed without
Laura and
however, will continue
careful consideration
Barbie,
to increase. Although
of the factors that may
joined Hilco
it appears that China's
drive one.
economy and housing
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Newsletter
Vol. 1: Issue 4 2012
Business Asset Valuation Services
Upcoming Sales & Auctions
/23
Eliminate Uncertainty
Machinery & Equipment Appraisals
Andy Dahlman 847.849.2936
CEO
Tom Greco 847.849.2961
Canada/National Executive
John Jefferson 416.587.6600
Inventory Appraisals
Ed Zimmerlin 847.313.4720
Marketing
Jim Glickman 847.849.2931
East Region
Fred Raccosta 215.307.7454
Retail Appraisals
Tim Anderson 781.471.1229
Litigation Support
Jeff Linstrom 847.849.2909
West Region
Joseph Tourouk 818.437.6439
Real Estate Appraisals
Todd Haney 847.504.2454
Chairman
Arnie Dratt 847.849.2903
Midwest Region
Adam Evans 847.849.2955
IP and Enterprise Valuations
Jason Frank 847.504.3263
Hilco Streambank
Gabe Fried 781.444.4940
South Region
John Tinnell 704.905.9559
UK/Europe
Chris Hall +44 (0)8453 130 140
Collateral Reviews
Elaine Odell 781.471.1234
Contents of this Newsletter were contributed by:
Jason Frank, Jim Glickman, Chris Hall, Todd Haney,
David Hunnicutt, Jesse Marzouk and Ed Zimmerlin, Jr.
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