What do we really want to
do with this timberland?
David Foil, Forest Resource Consultants, Inc.
Forest Landowners Association -National Conference
June 3, 2015
Timberland Ownership:
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People
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Property
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Purpose
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Process
The People
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Who is involved?
What is the legal ownership structure? Who
controls? How are decisions made? How are
disputes resolved?
Are there outside advisors - accountants, attorneys,
wealth advisors, (even neighbors and family
friends)? If so, how do they serve? If not, should
there be?
How do the parties communicate?
The Property
! Know
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what you own…
What rights do you own? Are there legal considerations,
deed restrictions, or other encumbrances?
Location, acres, property boundaries
Property attributes – timber, agriculture, recreational,
development or conservation
Improvements – structures, fences, roads, ponds, etc.
Special places or unique environmental characteristics or
challenges
Current and possible future uses
! Know
what your property is worth…
The Purpose
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How (or why) did you acquire it?
Why do you still own it?
What are your objectives for it?
How and/or when do you plan to sell or divest
ownership?
Do you have objectives for the property beyond your
lifetime?
Do you have objectives for the next owners beyond
your lifetime?
The Process
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Legal description, deeds, surveys, history of
activities
Timber Inventory: Mapping, measuring,
modeling, and maintenance
Long-term harvest schedule and management
plan
Annual budgeting, activities review, and reporting
Periodic valuations or appraisals
Periodic review and rerun of the long-term plan
Regular, structured communication with everyone
involved
Case Study #1
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Private Family – Decision to replant Longleaf vs. Loblolly.
Dad (and Mom) bought the property 30+ years ago. Planted
trees, built pond, home and have retired to the property.
Three children – varying financial condition and interest in
the property. All indicate they want to keep the property at
inheritance. Multiple grandchildren.
Land is in a FLP, and shares are being gifted to children
annually. Parents have retained life estate and ownership of
existing mature timber. As timber is harvested, children are
expected to pay for reforestation thru contributions to FLP.
600 Acres – 95% timbered – various ages – mostly mature
Loblolly plantations with some hardwood.
Case 1a – Loblolly
• DCF Information: Case #1a
• Loblolly, SI 72, TPA 605
Case 1b – Longleaf w/o Straw or Cost Share
• DCF Information: Case #1b
• Longleaf, SI 64, TPA 605, Without Establishment Cost Share or Straw Raking
Case 1c – Longleaf with Straw and No Cost Share
• DCF Information: Case #1c
• Longleaf, SI 64, TPA 605, Straw Raking without Establishment Cost Share
Case 1d – Longleaf with Straw and Cost Share
• DCF Information: Case #1d
• Longleaf, SI 64, TPA 605, Straw Raking with Establishment Cost Share
Case Study #1 - Summary
Case Study #2
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New property buyer – Purchasing land for hunting, but
wants to know when he can/should harvest the young
plantation on this tract.
He will own with his spouse (who is against this
“investment,” but is going along.) Borrowing 50% of
purchase price. Can pay the note from other sources of
income.
Objective is primarily for recreation and secondarily for
long term investment.
Property is 175 acres – 70% 6 yr planted loblolly, 30%
hardwood branch/bottomland.
Case Study #2
Case 2 - Harvest Projection Using IRR
Internal Rate of Return for Selected Harvest Regimes
6-year old Loblolly Plantation, SQ 70, 525 TPA
Max IRR 6.50%
6.00%
2nd Thin Internal Rate of Return
5.50%
5.00%
1st Thin CC Only
One-Thin
4.50%
Two-Thin
4.00%
3.50%
3.00%
2.50%
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13
14
15
16
17
18
19
20
21
22 23 24 25
Harvest Age
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27
28
29
30
31
32
33
34
35
Case Study #2
Case 2 - Harvest Projection using NPV (BLV)
Present Value of Infinite Series – 6% real discount rate
6-year old Loblolly Plantation, SQ 70, 525 TPA
$1,200
2nd Thin = $434/ac Present Value (Dollars/Acre)
$1,000
CC harvest = $3,115/ac $800
$600
1st Thin = $237/ac CC Only
One-Thin
$400
Two-Thin
$200
$0
11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Harvest Age
Case Study #3
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Large private owner – Evaluating the decision to
implement a comprehensive inventory and optimized
harvest schedule.
Multi-generational family owned. Well organized. Has
board of directors, but controlled by single G2 patriarch.
Significant timberland holdings and manufacturing
facilities.
Has staff foresters – professionally managed.
Have long-term perspective and desire to maximize
returns, protect wealth, and grow asset value.
Case Study #3
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Project Scope:
Authorized a 19,500 acre pilot project to determine the value of:
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A comprehensive timber inventory
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FRC’s stand/operating area evaluation modeling system
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Harvest optimization using COM*TRAC linear programming
for long-term management planning purposes
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Schedule 0 – Current harvest plan based on existing inventory data
Schedule 1 – Staff Foresters revised schedule using new inventory
information
Schedule 2 – Staff Foresters further revised schedule using FRC’s
stand/operating area evaluation system
Schedule 3 – Schedule using FRC’s COM*TRAC LP optimizer
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Case Study #3
Case 3 - Value of Inventory and Harvest Scheduling
30 Year Harvest Schedule Comparisons
NPV using 5% Discount Rate - Timber Only, Constant Dollar Analysis
Current (Base)
Schedule
1 - Schedule w
New Inventory
Information
2 - Schedule
with Stand/OA
Evaluation
3 - Schedule w
COM*TRAC LP
Optimization
Total Value (NPV)
$17.06M
$17.71M
$18.12M
$19.01M
Per Acre Value
Per Acre Gain
(Incremental)
Percent Increase
(Incremental)
Per Acre Gain
(Cumulative)
Percent Increase
(Cumulative)
$875
$908
$929
$975
--
$33
$21
$46
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3.8%
2.3%
4.9%
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$33
$54
$100
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3.8%
6.2%
11.4%
Note: Values are estimates based on 2015 pricing, percentages are actual.
Case Study #3
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Results Summary
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Better information for every stand in the forest = Better
management decisions
More accurate annual budgeting, reporting and long-term
planning
Indicated a cumulative value increase of 11.4% or $100 per
acre
The client implemented the program on all ownership.
What do we really want to do with this
Timberland?
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IT DEPENDS!
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People, Property, Purpose – All are unique
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Process – Similar components, but flexible and
client specific – Unique as well…
717 North Avenue, Macon, GA 31211
Phone: (478) 745-4910 Fax: (478) 745-4961
www.frc.us.com
•  Forest Management Services
•  Appraisal Services
•  Technical Forestry Services
•  Real Estate Services
Thank You!
dfoil@frcemail.com
Arkadelphia, AR : Tel. (870) 836-5150 / Fax (870) 836-5156
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Tel. (601) 749-9969 / Fax (601) 749-9469
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Tel. (601) 776-6772 / Fax (601) 776-6773
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Lumpkin, GA: Tel. (229) 515-8926 / Fax (229) 838-4735