Broken O Ranch Sale Named 2012 Land Report Deal of the Year

Page through each issue of The Land Report in 2012, and three trends stand out:

1) Legacy properties continue to command a premium. Witness Larry Ellison’s mega-million-dollar purchase of the island of Lanai.

2) The market continues to crave income-producing properties, especially productive farmland.

3) America’s leading landowners view stewardship as a critical element of their trust. Witness Louis Moore Bacon’s remarkable conservation gift, which led to the creation of the Sangre de Cristo Conservation Area.

One transaction encompassed all three of these elements: the sale of Montana’s historic Broken O Ranch. The history of the Broken O predates statehood. Its legacy is peerless. And its capacity to produce cattle and prodigious amounts of grain is matchless. When these 124,000 acres changed hands in November, one passionate, innovative business- man assumed an imposing mantle that had been meticulously crafted by a peer from an earlier era. For these and so many other reasons, the Magazine of the American Landowner is proud to designate the sale of the Broken O as the 2012 Deal of the Year.

Located along a 20-mile stretch of the Sun River, the roots of the Broken O reach deep — to the days of the Montana Territory. Its current incarnation was masterminded by Bill Moore, founder of the country’s largest privately owned paint company, Kelly-Moore. What began in the 1980s with Moore’s acquisition of a single ranch property along the Sun River evolved into what Forbes described as “one of the largest agricultural operations in the Rocky Mountain West.”

The Broken O’s new owner — Stan Kroenke — is no stranger to the land either. Kroenke ranked No. 10 on the 2012 Land Report 100; among his other ranch holdings is the largest contiguous ranch in the Rocky Mountains, the 540,000-acre Q Creek Ranch.

“Stan looks for quality,” says Kroenke’s broker, Joel Leadbetter of Hall and Hall. “The Broken O is so diversified with agricultural and recreational opportunities, and it’s such a large continuous landscape. That’s rare these days. The Broken O also complements and enhances the attributes of Stan’s other ranches and their operations.”

The rich and alluring history of the Broken O Ranch dates back to the 1800s, a time when cattlemen of the Lonesome Dove era ventured west to tame vast sprawling landscapes. One of those intrepid hopefuls was Daniel Flowerree, a Missourian who made his fortune in Montana’s gold fields. After settling in the Sun River Valley, his Flowerree and Lowry Cattle Company boomed, running as many as 40,000 head. Then a series of brutal winters took a bitter toll.

Shortly after the turn of the twentieth century, Flowerree’s ranch was acquired by the Teton Land Company. In the decades that followed, the operation eventually grew into one of the largest cattle operations in the West. In 1945, John Hamilton of Hamilton Beach appliances purchased it.

Bill and Desiree Moore bought the Hamilton Ranch in 1988. One of Moore’s next acquisitions was a neighboring tract, the Freeman Ranch. He would forge a deep, long-lasting bond with the family. Dan Freeman became a close friend and Bill’s right-hand man.

Over the ensuing two-decade span, Bill Moore and Dan Freeman worked in concert, assembling more than 20 blocks of land and building the enormously successful ranching and agricultural enterprise that is in place today.

“As his ranch manager for more than 20 years, Dan brought Bill’s dreams and his passions to fruition. It was a rare combination,” says Mike Swan, the seller’s broker. Swan, who was affiliated with the leading firm of Bates Sanders Swan Land Company throughout the marketing and sale of the Broken O, announced the formation of Swan Land Company in February 2013.

The Broken O is its own hedge fund,” Swan says. “Production is at such a massive scale that any one of the individual entities could make a tremendous agricultural operation independently.”

In addition, the Broken O features a matchless recreational component. Twenty miles of Sun River create an immense resource not only for fish but also for waterfowl, upland birds, mule deer, and elk. Thanks to the Sun River and other historic rights that date back more than a century, the Broken O is the largest private water rights owner in the State of Montana.

The ranch also enjoys close proximity to “the Bob.” At more than 1.5 million acres, the renowned Bob Marshall Wilderness is one of the largest wilderness areas in the Lower 48.

Along with building an agricultural empire, Moore also built a reputation as a steward of the land. He improved the ranch’s extensive pastures by planting native grasses. Moore placed three conservation easements on approximately 9,700 acres along the Sun River corridor. The Moores eventually became a mainstay of the community, employing a large number of locals, funding a community center in nearby Augusta, and donating to local schools and charities.

Kroenke is also no stranger to land stewardship. “Stan bought his first ranch in 1997, and balance has always been important to him,” Leadbetter says. “He looks at everything: the business, ecosystem, fishery, wildlife, and landscape. He always strives to be a very good steward while running sustainable ag operations.”

A deal of this size requires a tremendous amount of preparation. Swan spent months working with Freeman and the seller’s legal team to prepare volumes of due diligence material, including inventory lists, equipment and cattle documentation, background information on 27 houses, soil reports, land title commitments in three counties, information about water rights, state and federal land leases, grazing permits, gravel permits, DEQ permits, conservation easements, and hunting leases, to name a few.

“The preparation was instrumental to the successful transaction,” Swan says. “Our goal was to package the ranch to the point that when the buyer came through the door, everything they needed to know about the Broken O was at their fingertips.”

And interested buyers did come knocking, including private investors and investment funds as well as corporate entities.

As luck would have it, Leadbetter and Swan are both based out of Bozeman; the two know each other quite well. “We both grew up on ranches in Southwest Montana and have ag backgrounds,” Swan says. “We were working with a buyer and a team that understood the materials we provided and spoke the same language. That was paramount to the transaction.”

Of equal importance was that Leadbetter’s client instantly recognized the sterling qualities of the Broken O. “Stan looked it over, and he knew he wanted it,” Leadbetter says. “He’s that kind of guy — very bright — and wants to continue that legacy of innovative agriculture and enjoy the wildlife and fishing and all that the Broken O has to offer.”

An especially rewarding aspect only became apparent after the closing. The central character was not present, but his legacy continues. “It is a blessing we were able to sell the ranch to an individual of Stan Kroenke’s commitment to agriculture and land stewardship. My sense is that this transition will not only see a continued commitment to the current agricultural operation that William Moore established, but a continual enhancement and improvement of the ranch overall. I’m sure if Bill Moore were alive today, he would be pleased.” Swan says.

Enjoy the entire issue HERE.

The Land Report Winter 2012

Ring in the holidays with the latest edition of the Land Report!

Travel to Sonoma County and enjoy a rare and revealing portrait of John Jordan and his family’s renowned vineyard and winery. Learn the latest about the white hot market for Midwest farmland. Or follow the twists and turns of the Yellowstone River as it winds its way onto your iPad courtesy of the new documentary Where the Yellowstone Goes, sponsored by Trout Headwaters.

All these and many more stories So be our guest and enjoy our latest issue HERE.

For more up to the minute reports on listings, auctions, sales, and breaking news pertaining to land and landowners, be sure to follow The Magazine of the American Landowner on Facebook, Twitter, and Pinterest.

Land Report October 2012 Newsletter

A conservation easement leads to our country’s newest conservation area.

Productive ag land sets a new auction high.

A major bump in U.S. hunting and fishing numbers.

These are a few of the featured items in our October 2012 newsletter, which is now available HERE.

From coast to coast, interest in land and land-based assets continues to rise. See so for yourself as we present new listings, new sales data, and auction updates.

For up-to-the minute reports on listings, auctions, sales, and breaking news pertaining to land and landowners, be sure to follow us on Facebook, Twitter, and Pinterest.

Insider Insight: Patience Is Key

The value of patience was clearly evident in a recent transaction involving the sale of a 5,200-acre ranch near Hall, Montana. Fay Ranches represented the seller; a buyer came directly to us and we quickly had an offer on the table the first week of December for a cash closing before the end of the year.

It needs to be mentioned that our seller grew up on this ranch. It was his father’s place, and there was a strong emotional tie intact. As the reality of the looming sale set in, it turned out that our seller was not quite ready to let go.

As in most transactions these days, price was the biggest hurdle. The buyer was “all in” and pushing for a deal. The seller was not. We asked the buyer to give the seller the time needed to come to terms with the sale of his family’s ranch. We also encouraged both buyer and seller to stay engaged, and each obliged, taking small steps toward common ground. After six months of negotiations, they finally agreed to a price in May. During that time, we reached a stalemate on several occasions. At one point, there was no correspondence between the two parties for nearly a month. Even though it sometimes felt like this transaction would never come together, our team at Fay never gave up. Perseverance prevailed, and we successfully closed the deal in July.

“The strongest of all warriors are these two — time and patience.” - Leo Tolstoy, War and Peace

The buyer is now looking forward to autumn on his new ranch, especially the prospect of elk hunting in Montana. The seller is actively searching for a 1031 exchange property in Texas where he will spend more time with family. Each is now ready to start new chapters of their lives.

ABOUT THE BROKER:
Montana ranch broker Michael DeShore can be contacted through the Fay Ranches office in Missoula.

On the Block: Wyoming’s Y Cross Ranch

Ron Morris of Ranch Marketing Associates reports that the Y Cross Ranch has come on the market for the first time since it was assembled by Courtenay Davis in 1941. Located northwest of Cheyenne, the 60,000+ acre swath of Wyoming cattle country will be sold via sealed bid. The ranch totals 60,782 acres and consists of 50,333 deeded acres, a 3,949-acre State of Wyoming lease, and a 6,500-acre Forest Service lease acres for a total of 60,782 acres.

The Y Cross Ranch has traditionally operated as a cow/calf ranch and averages 650 to 850 pairs along with 650 to 800 yearling cattle. The ranch’s water rights, some of which date back to the days of the Wyoming Territory, support the production of more than 1,000 tons of grass hay. In addition to its cattle operation, the ranch supports a significant big game population, including elk, mule deer, antelope, black bear, and the occasional moose or mountain lion. Yearly hunting revenues range from $40,000 to $60,000.

In 1997, the ranch was donated by the Courtenay Davis Foundation to the Colorado State University Research Foundation and the University of Wyoming Foundation as joint beneficiaries. Since then, the Y Cross has served as a working laboratory for observation and study of plant and animal systems in a natural environment along with scholarship and/or internship support for Colorado State University and University of Wyoming students majoring in agriculture and natural resources.

The Y Cross Ranch is being offered for sale in its entirety and includes all real estate, improvements and water rights, through a sealed bid process. Broker cooperation is invited. Contact Ron Morris of Ranch Marketing Associates for details at (970) 535-0881 or ron@rmabrokers.com.

Read more HERE.

Online Exclusive: Western Wildfires – Past Present & Future

This is the second in a series of posts by Field Reporter Joe Nick Patoski that looks at the wildfires currently raging out West.

With the Waldo Canyon and the House Park fires raging for weeks, the month of June goes down as the most destructive for wildfires since Colorado became a state.

It wasn’t always this way.

Early accounts of wildfires in the American West by European settlers were spotty, at best, mainly because the West is so big and there were so few settlers, at least at first.

When forests burned, there was very little anyone could to do in response to protect property but let the fire burn, which is precisely what Native American tribes did when a big burn ignited.

Fire-fighting techniques have improved considerably over time, especially in the past 25 years. But even with the development of fire-retardants, employment of aircraft, smarter strategies, and constantly better technology, wildfires persist. If anything, man appears to be losing ground to nature on flame front.

Fire is part of a forest’s life cycle, taking down dead and sickly timber, clearing out brush and understory, and scarifying seedlings that require intense heat in order to germinate. It works the same way on prairie grasslands and the plains. Without fire, the vegetation wouldn’t thrive.

Even severe fires caused by heavy fuel loads are normal cyclical occurrences; the big differences are how the cycles have become more frequent, and how more than a century of fire suppression as sound land management, a philosophy spurred largely by the establishment of cattle and other livestock operations, has created an unprecedented heavy fuel load.

It’s important to note that different types forests burn differently, depending on the dominant forest tree and elevation.  A century can pass between severe wildfires in high elevation forests dominated by lodgepole pine, aspen, spruce, and Douglas fir. Lower elevation forests with piñon pine, and junipers tend to be drier which leads to more frequent fire events – every decade or two. This keeps forests open and less dense.

The West used to be emptier too. Construction of homes in and around forests has skyrocketed since the 1970s, creating a precarious wildlands-urban interface (WUI) as Colorado State researchers David M. Theobald and William Romme label it. As civilization encroaches, management of forests becomes considerably more difficult. And what provides bucolic scenery most of the time to those arboreal interlopers also provides all the necessary tinder to leave nothing but ashes if flames reach a domicile.

Nationwide, the WUI encompasses an area about 14% larger than the state of California, with an estimated 89% of that wildlands-urban interface privately-owned. That means it is private landowners who will most likely shoulder the burden of wildfire management and prevention strategies such as managed thinning of forest and prescribed burns.  Federal and state government planning is limited to federally- and state-owned lands.

Still, sound management practices can only do so much.  Increased human population, construction in the wildlife-urban interface, a build-up of tinder in the understory due to more than a century of fire suppression are mere enablers compared to a warming climate. Increased temperatures leading to earlier spring thaws and less snow melt appears to be the biggest driver behind the increase of severe wildfires.

The West was considerably wetter when wildfires in the American West first began to be studied. The climate has turned drier over the past century and a half. Add to that a perfect storm of more immediate weather conditions: the interior West is in extreme drought and in late June, a record-breaking heat wave settled over the southern and central Rocky Mountains accompanied by dry humidity and winds.

Katharine Hayhoe is an atmospheric scientist at Texas Tech University. She is also the co-author of a study that appeared in the journal Ecosphere concluding the risk of wildfires in the American west will increase as a result of climate change.

“Climate change is shifting rainfall patterns around the world,” Hayhoe told the Living on Earth radio program. “We’re also seeing that climate change is increasing our average temperatures, which raises the risk of having those hot, dry conditions that we need for a wildfire to spread.”

Colorado is fortunate to have numerous experts at Colorado State University who are studying the past, present, and future of western wildfires.

“A great understanding has developed about historical fire stories in Colorado,” says Dan Binkley, Professor of Forest Ecology at Colorado State. “The first thing to emphasize is we have a grand variety of forests across the West, and the fire stories that go with the landscapes are very different for different types of forests.”

Depending on one’s location, property owners have tools to prepare and protect themselves and their property, says Binkley.

“For homeowners, the most effective options are to learn about ‘firewise’ treatments to reduce the flammability of the local area around a house; join with a community to develop a Community Wildlife Protection Plan; and work with the community and adjacent land managers, such as public land people, to reduce the most severe risks at landscape scales. “

Binkley recommends tapping into the Colorado State Forest Service for information on all the above options.  The statewide forestry staff visits and works with Colorado landowners.

All well, and good, but reality has yet to catch up to the knowledge. Since 2002, the contracted fleet of airborne fire-fighting tankers that the US Forest Service depends on has declined from 44 to nine while there have been six deadly crashes, all of them involving aircraft more than 50 years old.

Similarly, the US Fire Protection Program Analysis system, which was launched in 2002 in response to a history of all-out fire suppression, has yet to be implemented, although the computerized program that would coordinate fire-fighting agencies and responders to assess and reduce risk and control costs, was supposed to be online in 2007.

The failure to efficiently coordinate agencies and responders mattered not a whit to Dr. Bonnie Warnock, chair of Natural Resource Management at Sul Ross State University in Alpine, who got a call at the school last year that her ranch was burning.

“My heart said no but my head said it was OK,” she said.

Dr. Warnock rushed to her place.

“It was very stressful. The whole back pasture was burned, the boundary fence was on the ground. What do I do? I had not planned at all. How do I deal with this financially and emotionally? We have to sell one-third of our cows. We don’t have enough feed. That’s a capital investment for us that we are having to sell off and we’ll have to buy more back,” Warnock said.

She knew too well the fire was part of the process.

“Historically, our landscape did evolve with fire. If you’re looking at it from a plant perspective, this is not a catastrophe. This is a natural occurrence for the semiarid ecosystem we live in. Typically, we have two or three wet years followed by a dry year during which lightning strikes cause wildfires. This process has maintained the grasslands and kept brush from encroaching.”

That is, until the pioneers arrived and established permanent communities. “When early European settlement of this region began in the late 1800s, there was a lack of understanding of this process and land was overstocked and overgrazed,” Dr. Warnock said. “Drought was something the settlers weren’t experienced with. The overstocking and overgrazing removed the grass and fires disappeared from the Trans-Pecos.”

Range science changed that practice. “Since the science of range management developed in the 1950s, our ranchers have done a good job,” Dr. Warnock pointed out, while adding the caveat that even sound practices can do only so much.

“Through this most recent wet period, they haven’t been overgrazing and overstocking, which has benefitted the ecosystem. But over the past three years, we’ve grown a huge amount of fuel in the Trans-Pecos, so the first fire in 100-150 years since the region had been settled was extremely large. It was so big we weren’t prepared to deal with it. This is unprecedented.”

As critical as the drought and wildfires have been, the next few months afterwards were even more critical. “If we get rain in the next month or so, the country will come back and look better.  If it doesn’t rain we will lose perennial grasses and see an increase of desertification,” Warnock said.

This awareness has led to the formation of a non-profit association in Far West Texas that uses prescribed fire as a management tool to reduce fuel loads. “Going forward, this is something we need if we are going to have green grass,” Dr. Warnock says, acknowledging a perception issue with prescribed burning from city and town dwellers and the new breed residing in the wildland-urban interface.”

“These people are at the highest risk if a prescribed burn gets away and at the greatest risk from wildfire. Most of these people come from cities and are not supportive of prescribed fire. That makes it difficult to employ this tool,” Dr. Warnock says. “There is a lot of support for prescribed fires by ranchers. We need to educate small landowners living on the edge of towns.”

“We need to work on finding mechanisms to reduce accidents. How do you keep people from welding or throwing out a cigarette when there’s 45 mile per hour winds and 2 percent humidity? “

Like the rest of us, even though she knows what she knows, Dr. Warnock has no interest in seeing it all happen again.

Read part one of this series here.

Photo Credit: Don Savage Photography

Land Report July 2012 Newsletter

WATER. Thanks to the ongoing drought and a spate of wildfires, it’s a top priority for landowners from coast to coast this summer.

Be sure to check out ways to improve your waters courtesy of the Summer issue of The Magazine of the American Landowner. Mike Sprague at Trout Headwaters shares a variety of different ways to use water to add beauty – and value – to your property, and many of the improvements he suggests are low cost or no cost. Read more HERE.

For up to the minute reports on listings, auctions, sales, and breaking news pertaining to land and landowners, be sure to follow us on Facebook, Twitter, and Pinterest.

The Land Report Summer 2012

Did you know that the Supreme Court just issued a landmark ruling? I’m not talking about health care. I’m talking about land. That’s right, the high court came down 9-0 for landowners in a suit that was brought against the EPA by Idaho’s Sackett family.

We’ve been following Sackett v. EPA for over a year. It’s one of the many eye-opening stories you’ll enjoy in the Summer 2012 issue of The Land Report, now on newsstands from coast to coast.

You can access the digital edition free of charge HERE.

Our summer issue also features the story of an innovative gift to the University of Wyoming, one that kicks in when Wyoming’s River Bend Ranch sells. It’s a great example of stewardship, one that Greg Fay brought to us and that we are proud to share. Learn five great ways to add value and beauty to your land by improving your waters. And be sure to have a look at our third annual roundup of the nation’s leading auction houses. No surprise here … farmland prices continue to best record highs.

So be our guest and enjoy our latest issue HERE.

For more up to the minute reports on listings, auctions, sales, and breaking news pertaining to land and landowners, be sure to follow The Magazine of the American Landowner on Facebook, Twitter, and Pinterest.

P.S. Our award-winning quarterly magazine is available in a print version via subscription.

Online Exclusive: Western Wildfires

The Magazine of the American Landowner presents the first in a series by Field Reporter Joe Nick Patoski as he takes a closer look at the wildfires raging out West.

The American West is on fire again, with wildfires breaking out across the Gila Wilderness in southwest New Mexico, around Ruidoso in southeastern New Mexico, and throughout Colorado. The Gila fire now ranks as the worst in New Mexico’s recorded history. Colorado’s High Park fire (pictured above) west of Fort Collins has destroyed more homes in state history. And all that was before summer even officially started.

Most western states have been experiencing drier-than-normal range conditions, and many regions are officially in drought. Conditions have been ripe for a major outbreak quite awhile. Maybe it’s an old writer’s faded memory, but it seems like massive wildfires used to happen every three or four years. Lately, it’s pretty much an annual occurrence, a seasonal rite, if you will.

Last year, Texas burned. Four million acres were scorched and it took 16,000 emergency responders from all 50 states and Puerto Rico to tamp it down. Wildfires near Fort Davis in Far West Texas and around Bastrop in Central Texas were the two worst in state history.

Other states will have their turn soon enough. What’s going on here?

Is this normal or an aberration? Where do wildfires fit into the big picture, beyond the considerable destruction and property damage in their wake? Who’s paying to fight the fires and to mitigate property damage? The largest mountain pine-beetle epidemic in recorded history, which has ravaged western forests with 3.3 million acres of ponderosa, piñon, whitebark, lodgepole, and eight other pine species destroyed in Colorado alone, has created ideal conditions for fire. The pine beetle’s success is tied to rising temperature, suggesting climate change is another enabling factor for increased wildfire. Forest management practices are being scrutinized, as is the impact of humans. Before European pioneers arrived to establish permanent settlements, the natives let fires burn. Are we tilting against windmills trying to stop them? Most important, what can communities and individuals do to protect their land and to lower the risk?

We can argue about what it all means until we’re gone, but the good news is there are answers to these questions. Accumulated data, good science, history, facts, truths, and verities all tell stories worth telling that inform and expand our knowledge about western wildfires.

Over the next few weeks, while the western forests and rangeland burns, we’ll visit with some folks whose perspectives on fire, ecosystems, biology, prescribed burns, economics, erosion, range science, meteorology, and, of course, land ownership have the potential to inform and enlighten if we’re willing to read, listen, and ponder. That won’t stop the fires from breaking out, but it can certainly make our responses smarter.

Read part two of this series here.

Land Report May 2012 Newsletter

Many items to consider from our May newsletter, but let’s stick to page one material. The Land Report Top Ten has a brand-new look with Montana’s Broken O Ranch now crowning the list. The 124,000-acre Bates Sanders Swan listing features more than 20 miles of the Sun River, carries 3,500 mother cows, and produces about 25,000 tons of alfalfa hay and 700,000 bushels of small grain crops annually. At $132.5 million, it’s not a ranch. It’s a hedge fund, one built on a rock-solid agricultural asset.

Two properties have joined the Top Ten: Hawaii’s Dillingham Ranch, our new No. 5 at $65 million, which is listed by Zackary Wright with Christie’s; and Swain’s Neck on Nantucket Island, the new No. 7 at $59 million, courtesy of Gary Winn at Maury People Sotheby’s International Realty. There has been a $5 million reduction on No. 4 California’s Rancho Dos Pueblos, which Kerry Mormann & Associates now has listed for $79 million.

For more up to the minute reports on listings, auctions, sales, and breaking news pertaining to land and landowners, be sure to follow The Magazine of the American Landowner on Facebook and Twitter. The Land Report is now on Pinterest.

P.S. Our award-winning quarterly magazine is available in a print version via subscription.

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