Helicopter Investor London 2020 – Appraising appraisers
Valuing helicopters can be difficult. With a wide variety of missions, configurations and helicopter types – not to mention big price fluctuations – providing useful and accurate data for investors is harder than ever before.
But lessors and lenders alike think that improving the available data and quality of appraisals could help bring new lenders into the helicopter market, according to the speakers taking part in the Finding Debt and Investors forum at Helicopter Investor London 2020 conference.
“You need something to hang your hat on if you are investing in a market,” said Jaspal Jandu, chief financial officer of LCI and former aviation investor at Morgan Stanley. “You need something to tell you what will happen in five or 10 years and, for many, these are appraisers.”
“In other markets like shipping, there is a lot of data out there. You can go to Bloomberg and see shipping values right now. We are a niche and it’s hard to find good data.”
The conference delegates appeared to agree. An audience poll revealed 83% of respondents believed there is a lack of value data for people looking to invest in helicopters. Additionally, in a separate poll, 74% of respondents thought that current appraisals did not reflect the reality of helicopter values.
But current values can be useful for lessors when they are looking to remarket aircraft – providing approximate prices that models in certain configurations might fetch when it comes to remarketing.
Mirika Nakayama, President and CEO of ITC Aeroleasing said: “When we are remarketing aircraft at a lease exit, we might convert it and change the lease. I think the appraisal data is useful for helping decide this.”
Olivier Piot, founder of lessor Nova Capital agreed: “I think it is too easy for us, as lessors, to critique appraisers and say: ‘We aren’t seeing the value that you told us a model was three of four years ago.’ But I am interested in what value models will generate for my customers and predictions of what that aircraft will be worth when we find a new home for it.”
A claim that investors want exact figures on returns above all else, was made by Ed Washecka, RACE Aviation Partners founder, and former CEO of Waypoint
“Having been out in the market for new equity, I don’t think equity investors care about appraisals at all, especially if they have experience in the asset class,” said Washecka. “They will be focused on what exactly they could sell the asset for and that’s it.”
After the panelists had had their say, an audience poll questioned how likely delegates were to use an independent appraiser for their next deal. Having heard the panel, 60% of respondents said they would use an appraiser.