FAE Symposium and Sotheby's Back Into Guarantees

Just back from the Foundation for Appraisal Educations (the International Society of Appraisers educational foundation) symposium at Quinn's Auction Gallery in Falls Church, VA.  The crowd was strong with ISA, AAA and ASA appraisers as well as private individuals for the evening reception. There was a good buzz to the room with many anticipating a very good program, speakers and networking opportunities.  Funds raised from the symposium support educational programs and scholarships for appraisers.

Comments I was receiving from both ISA members and  non ISA members who are now seeing the potential, strength and growth of ISA and were impressed with the Foundations programs and ISAs outreach.  Several non ISA appraisers inquired about joining ISA and the new and accessible bridging policy into the ISA AM level.

It was also nice to hear positive feedback about the AW Blog. Readership is strong with a wide group of appraisers and allied professionals.

The above editorial of course has nothing to do with Sotheby's and the news they are again guaranteeing millions of dollars in art sales, well, actually $166 million with additional loans secured to back guarantees up to a potential of $300 million. Bloomberg is reporting that after backing away from guarantees in 2007/2008 they are back into the less than accepted practice in an aggressive manner.

Bloomberg reports

Sotheby’s (BID) said it entered into auction guarantees totaling $166.4 million, according to a filing, in a move aimed at winning consignments ahead of major New York sales in November.

Sotheby’s recently increased borrowing capacity to provide as much as “$300 million of net outstanding guarantee exposure,” Chairman and Chief Executive William Ruprecht said in an Aug. 6 conference call.

“We did this to enhance our flexibility as we negotiate deal opportunities and hopefully provide us with an opportunity to improve margins and profitability by taking prudent balance sheet risk,” he said.

The New York auction house said today that it’s reducing its exposure by “irrevocable bids” of $23.5 million, which are from undisclosed third-party guarantors. It may further reduce risk by additional “irrevocable bids” ahead of auctions in the fourth quarter, it said in the filing with the U.S. Securities and Exchange Commission.

Sotheby’s reduced guarantees as it lost $60 million from them in 2008, as artworks sold for less than the minimum guaranteed price or didn’t sell at all.

The auction house is being targeted by Daniel Loeb’s Third Point LLC hedge-fund firm, which amassed a 5.7 percent stake. It intends to engage Sotheby’s board and management in talks, according to an Aug. 26 regulatory filing.

Source: Bloomberg