Commonwealth Equipment Leasing Funds to Disclose NAV in April
TAMPA, Fla. (March 14, 2016) – Commonwealth Capital Corp., through its general partner and manager, has engaged an accredited valuation firm to determine the net asset values for units in all public and private equipment leasing funds currently under management.
The valuations will be available to all broker-dealers with positions in early April, in accordance with FINRA Notice 15-02. The new valuations were used for year-end submission to Stanger, as well as custodial banks. Valuations are based upon the estimated market value of a Funds’ assets, and what value may reasonably be expected from both a willing buyer and seller under no compulsion to buy or sell equipment.
Various mathematical calculations were employed to determine value, including:
- existing Firm Term Lease Transactions Values on cash flow and equipment value;
- fixed term extensions;
- month-to-month leases of various lengths;
- orderly liquidation value for off-lease assets, which values the assets at current value, sold over an organized and reasonable timeframe.
Certain historical equity-applied transaction calculations were also employed based on actual transactions provided by Commonwealth to DMC Valuations. Although lease equipment and transaction information was supplied by Commonwealth and not physically audited by DMC Valuations, all Commonwealth funds are independently audited by BDO Seidman, LLP annually. Additionally, to determine accurate current portfolio values, each leased asset and transaction were further valued to determine reinvestment opportunities within the current year based on cash flow generated.
Commonwealth contracted with DMC Valuations Group in 2015 to establish, test and verify a methodology whereby each fund could be appraised to determine current market value. Peter Daley, president and owner of DMC Valuations, is an Accredited Senior Appraiser (ASA) for the discipline of machinery and equipment. He has appraised equipment from personal computers to forklifts and from medical equipment to test equipment. He has successfully participated in the American Society of Appraiser’s mandatory re-accreditation program and formal re-accreditation is granted until April 16, 2019. Mr. Daley has been valuing equipment since 1985 and developed a database of “Fair Market Value” equipment values from 1980 to the present, utilizing a variety of reports and publications along with the DMC and CEI Market Value Reports. This database has been successfully used in the valuation of computer equipment in the settlement of a number of Virginia tax cases, and he has been called to testify as an expert witness in the valuation of computer equipment in California, Minnesota, Michigan, New York and Virginia.
Commonwealth products, both institutional and retail, invest primarily in information technology, medical technology and material handling equipment leases for Fortune 1000 and investment-grade US companies. Commonwealth uses the proceeds of their offerings, operating revenues and debt to purchase business-essential capital equipment, with a focus on technology equipment. The equipment is acquired and leased primarily through operating leases.