Miller says new job buying condos no conflict

By Candace Taylor | December 24, 2009 11:56AM

Following the news that Jonathan Miller is involved in a new venture to convert $1 billion in distressed condos, The Real Deal asked the city’s best-known appraiser whether this could impact the credibility of his widely read reports.

After all, quarterly market reports prepared by Miller — the president and CEO of the real estate appraisal firm Miller Samuel — for Prudential Douglas Elliman, have become industry gospel in recent years. Now that he has an additional economic interest in the ups and downs of the market, does that amount to a conflict of interest?

No, says Miller. Though he will have an equity stake in the venture, known as Condominium Recovery LLC, he will not be involved in the development end of the business. His job in the new company will be conducting appraisals of properties — his current bread and butter.

“I’m still doing the same thing,” he said. “I’m not a developer — I’m on a team with a developer.”

Miller said he has given the issue some serious thought.

“This is something that I reviewed very carefully in the beginning,” he said. “Essentially, I’m brought in for valuation expertise. I’m not an operator. It’s no different than consulting with a developer.”

Not everyone in the industry is so sure.

“My opinion is that it’s a conflict,” said Reba Miller, the president of brokerage RPMiller & Associates, who has no relation to Jonathan Miller.

“The industry relies on him for solid information that has moved and not moved property,” she said. He might now be tempted to interpret data in a way that would benefit his business, she said, especially since as an appraiser, he has access to information that isn’t yet available to the public.

“Would he omit something because it might hurt him?” she questioned. “I don’t know how his partners would feel if he issued a report that would spin [data] in a way that they would not have success. Now he’s going to be responsible to his partners more than to the community.”

She said she doesn’t blame the appraiser for wanting to invest in real estate, but suggested that the industry should consider looking elsewhere for statistical information. “It looks like there’s room for someone else to be that guru,” she said.

The appraiser said that when he first started doing market reports for Prudential Douglas Elliman, critics speculated that the arrangement would impugn his credibility. That hasn’t come to pass, and if anything, he is more respected than ever.  
“The same thing was said: you’re doing it for a broker — are you influenced by them?” Miller recalled. “History has proven me out.”

Miller said he was approached a few months ago by boutique investment bank Westwood Capital and Gerald Guterman, the apartment building owner and manager, to take part in the new venture.