A. Overview
RERC, LLC (“RERC”) provides advisory services, investment research advice, and information
management systems to pension funds and investment advisors to pension plans, as further noted
below. RERC, LLC is a limited liability company under Iowa state law.
Situs Group, LLC, a Delaware limited liability company owns 100% of RERC . Situs Group LLC
is 100% owned by Situs Group Holdings Corporation, a Delaware corporation. Situs Group
Holdings Corporation is wholly owned by SitusAMC Holdings Corporation, a Delaware
corporation. SitusAMC Holdings Corporation is wholly owned by SitusAMC Group Holdings,
LP, a Delaware limited partnership (formerly Situs Group Holdings, LP).
The two largest owners of Situs Group Holdings, LP are groups of funds managed by Stone Point
Capital LLC as follows: Trident Capital VI, L.P., a Cayman Islands investment fund, together with
related funds owns 41.75% of SitusAMC Group Holdings, LP, and Trident Capital VII, L.P., a
Cayman Islands investment fund, together with related funds, owns 36,93% of SitusAMC Group
Holdings, LP.
RERC’s advisory information is based primarily on the firm’s quarterly investment research and
analysis. RERC routinely issues a series of investment surveys to a variety of commercial real
estate professionals, primarily to institutional investors. The information obtained from these
surveys is then analyzed, reviewed, and interpreted by RERC’s research professionals, and shared
with the industry through the quarterly
Situs RERC Real Estate Report. Clients and subscribers
use the independent information provided in these publications to help make their investment and
valuation decisions.
RERC also develops and customizes information management systems for their clients to help
track, monitor, and report commercial real estate portfolio values and trends. RERC makes routine
investment recommendations when they are hired for investment consulting.
RERC’s commitment to the commercial real estate industry began 85 years ago, and that
commitment has been intensifying over the past 25 years under the watch of its president, Kenneth
P. Riggs, Jr. RERC’s real estate services integrate traditional principles such as integrity, work
ethic, and experience with commercial real estate investment analysis and technological expertise,
RERC offers clients a comprehensive set of value-added real estate services.
Kenneth P. Riggs, Jr. graduated from Kent State University in 1981, with a bachelor’s degree in
business administration and majors in finance and real estate. In 1994, he graduated from the
University of Chicago Graduate School of Business with a master’s degree in business
administration and a concentration in finance and statistics. He holds the following designations:
CFA, MAI, CRE, FRICS, and CCIM.
B. Fiduciary & Advisory Services
RERC’s total commitment to commercial real estate makes it unique among providers of fiduciary
and advisory services. By applying our property expertise, market intelligence, and investment
knowledge to the opportunities and challenges presented by commercial real estate, RERC is able
to ensure that the best interests of our clients are being served. Serving as an independent fiduciary,
RERC has worked with several major investment management firms on both a one-off and
ongoing basis, all of which have relied upon RERC to provide valuation management and other
value-added services for the benefit of their fund participants. For example, RERC provides
independent fiduciary services to a collective fund of ERISA plans, including review, approval
and monitoring of investment guidelines, valuation procedures, property valuations and account
values, and appointment of independent appraisers.
C. Management Information Services
RERC’s state-of-the-art Valuation Management System has been designed to efficiently organize
and integrate valuations, feasibility reports, and other key documentation associated with the
property portfolios of our major clients. Recent enhancements to this system include real-time
value analytics and property and portfolio benchmarking which is useful to pension plans and
investment advisors who work for pension plans.
D. Research, Analytics & Reports
Research was the foundation upon which RERC’s commercial real estate services were built, and
it remains a critical component in serving the real estate industry today. RERC conducts quarterly
quantitative and qualitative investment research surveys among the nation’s leading institutional
investors, and publishes much of this research and analysis each quarter in our flagship publication,
the
Situs RERC Real Estate Report. This report, along with the RERC DataCenter™, puts RERC’s
research in the hands of institutional commercial real estate practitioners each quarter.
E. Purchase Price Allocation Services
RERC estimates the fair value of identifiable assets and liabilities relating to the properties
purchased by a client. Purchase price allocation engagements are prepared for financial reporting
purposes in accordance with RERC’s understanding and interpretation of Accounting Standards
Codification (“ASC”) 805,
Business Combinations.
F. Appraisal Services
RERC, on an assignment basis, evaluates and provides estimates as to the value of an underlying
asset. Appraisal work may be filed with foreign or domestic regulators in connection with a
securities offering.
G. Loan Administration Services
RERC provides commercial real estate loan administration services, which includes soliciting
proposals for master credit facilities from lending institutions, assisting with documentation and
administration of the loans, and providing financial reporting on a monthly, quarterly and annual
basis. RERC acts as an independent advisor/administrator to perform loan administration
procedures, which includes oversight of borrowings and repayments on the Master Credit Facility,
and the preparation of financial statements.
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Investment research fees are based upon the nature of the purchase. Fees for investment research
range from $200 to $10,000. Investment management systems, consulting/advisory and appraisal
fees are quoted on a case-by-case basis, depending on the client’s specific needs. Fees for specific
projects are driven by market parameters, which are competitive fixed fees. In regards to loan
administration services, RERC’s fees are based on an agreed upon rate in basis points of the total
loan commitments. Clients and subscribers to ongoing research are generally billed on a monthly
or quarterly basis.
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RERC provides investment research analysis through various methods and strategies. The primary
source of research is compiled by gathering survey data from institutional commercial real estate
professionals from across the country. The data is run through a model that takes into account
various economic metrics. The economic data is gathered through various government and
purchased research sources.
Investment management systems are developed to assist clients with their reporting requirements.
RERC provides tools to facilitate decision-making by investment managers, but RERC generally
does not exercise investment management discretion. Our clients retain the discretion to manage
risk and develop and implement investment strategies using RERC’s research and systems.
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Kenneth P. Riggs as respondent, entered into a Consent Agreement dated March 20, 2014, with
the Nebraska Real Property Appraisal Board (“NRPAB”) regarding allegations that an appraisal
report issued by Mr. Riggs did not meet the minimum requirements of the
Uniform Standards of
Professional Appraisal Practice, which would be a violation of the Neb. Rev. Stat. § 76-2201
et
seq. While Mr. Riggs disagreed with the allegations after an informal hearing, he agreed to, among
other things, complete certain courses, payment of $750 to cover the cost of the investigation
performed by the NRPAB and the submission of a log to the NRPAB of all appraisal assignments
of real property in Nebraska for 4 consecutive quarters.
In March 2015, the NRPAB sent a signed letter acknowledging the completion of the requirements
set forth in the Consent Agreement. It was only upon receipt of the letter that it was stated that the
Consent Agreement was to be considered disciplinary.
The following is directly related to the Nebraska grievance and the acceptance of that consent
agreement. Mr. Riggs was informed by the Virginia Real Estate Appraiser Board that he has a
disciplinary charge against his Virginia appraisal license. The board entered a Final Order in
August 2015, wherein the board found that he violated regulation 18 VAC 130-20-160, but voted
to impose no sanctions. The Final Order did not state it was a disciplinary action and no penalties
were imposed, but upon further review we found it was considered discipline.
The Pennsylvania State Board of Certified Real Estate Appraisers reviewed the Consent
Agreement between Mr. Riggs and the NRPAB and based upon the above facts issued a notice of
disciplinary action. In December 2016, the Pennsylvania State Board of Certified Real Estate
Appraisers fully executed a consent agreement with Mr. Riggs. The disciplinary action and
subsequent consent agreement is directly related to the grievance filed by the NRPAB.
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As noted in Item 4, SG is the owner of RERC. RERC is a part of a group of affiliated companies
owned by SG that engages in the financial services business. We refer to advisory affiliates and
any person or company that is under common control with RERC as “related persons.” In some
cases, RERC may have business arrangements with its related companies that are material to
RERC’s business or its clients. These arrangements may cause RERC or a related person’s
interests to diverge from the best interest of a client.
For example, from time to time, RERC may provide valuation services in connection with real
estate held by an entity acting as a pooled investment vehicle where Situs Holdings, LLC may act
as a special servicer to the entity. RERC’s relationship with the special servicer creates an
incentive for it to provide advice to clients that would encourage them to invest in entities where
a related person acts as the special servicer, which indirectly benefits RERC as the valuation
service provider to the pooled investment vehicle, but may not be in the best interest of RERC’s
clients. RERC may have an incentive to provide valuation services appraisals that would
encourage its clients to invest in such transactions, which would not necessarily be in the best
interests of such clients.
RERC addresses such conflicts by causing all transactions where a related person is in some way
involved in a transaction or advisory relationship to be reviewed by Counsel for the Situs Group.
Neither RERC nor any of our management persons are registered, or have any application pending
to register, (i) as a broker-dealer or a registered representative of a broker-dealer, or (ii) as a future
commission merchant, commodity pool operator, commodity trading advisor, or an associated
person of the foregoing entities.
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Personal Trading RERC has adopted a Code of Ethics and Standards of Professional Conduct (“Code”) pursuant to
the CFA Institute. The Adviser’s employees must act professionally, with integrity in an ethical
manner, and respectfully when dealing with the public, clients, prospects, employers, employees,
and any other individuals with whom they come in contact during the course of their work. The
Adviser’s employees must use good judgment when engaging in any professional activity, and
must abide by the rules established by the CFA’s Code, as well as maintain competency amongst
other professionals.
RERC does not participate in or hold any interest in client transactions or personal trading.
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RERC does not receive compensation for the services it provides from anyone other than its clients.
RERC does not compensate any person for client referrals.
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RERC provides information, recommendations and research to plan sponsors and investment
advisors, but generally does not accept discretionary authority to manage securities accounts or
make investment decisions on behalf of clients or subscribers; it is the responsibility of the plan
sponsor or investment advisor to make the final investment decision.
Although RERC does not accept or exercise what is typically known as “discretionary investment
management,” RERC, in its capacity as an independent fiduciary for pension assets, and in
accordance with a signed agreement, does have authority to exercise discretion with respect to
sales of client assets in certain circumstances.
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Neither RERC nor any of its management persons has any adverse financial condition that would
be reasonably likely to impair RERC’s ability to meet contractual commitments to clients. Neither
RERC nor any of its management persons has been the subject of a bankruptcy or financial
compromise. RERC does not collect advance fees for services to be performed six months or more
in advance.
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Open Brochure from SEC website