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Ask the Expert: Scott Jones

Eric OKeefe — Mon, 22 Feb 2010 23:49:05 +0000

The second session of the 111th Congress is already under way, and landowners have a lot at stake. With that in mind, The Land Report turns to Scott Jones to get the inside scoop on Washington’s next steps. Since 2003, Jones has been the CEO of the Forest Landowners Association (FLA), whose members own and operate some 40 million acres of forestland in 48 states. Founded in 1941, FLA offers education, information, and national grassroots advocacy with the goal of sustaining forestlands from one generation to the next.

With so many bold initiatives taken on by the Obama administration, what are the chances of a climate bill passing this year? Would it benefit forest landowners?

American voters believe that a climate/cap-and-trade bill may cost jobs; as a result, I would not be surprised to see the climate portion of the energy bill removed. If crafted properly, an energy bill could benefit private forest landowners by creating new markets for wood. However, the definition of “woody biomass” still needs to be fixed for landowners to truly benefit from the stripped down version of the bill.

The federal estate tax dropped to zero this year. Do you expect it to return to 55 percent with a $1 million exemption as scheduled in 2011?

There do not appear to be enough votes to bring the death tax back to life in 2010. Sen. Scott Brown’s (R-MA) recent election created a political barrier to retroactive death tax reinstatement. Unless legislative action is taken, the tax is scheduled to permanently return at a rate as high as 55 percent in 2011. But this is an election year, so anything is possible. Polls indicate 65 to 70 percent of Americans want the tax repealed.

Name one other issue landowners should follow closely.

The Clean Water Restoration Act is definitely legislation every landowner should keep an eye on. It seeks to expand the jurisdiction of the Clean Water Act by redefining “navigable waters” as “waters of the United States.” The consequences of this bill are enormous, and it has already created a firestorm in the Senate. Strong opposition convinced Rep. James Oberstar (D-MN) to delay introducing the bill on the House side. Oberstar now intends to move the bill through the House by the end of 2010.

Ten Million Americans Own Timberland

Land Report Editors — Sat, 30 Jan 2010 00:18:07 +0000

Which asset class offers growth, a hedge against inflation, and has great tax benefits? Timber.

That’s one of the many interesting points brought out by this in-depth article that ran in Forbes last month. One of the other interesting elements the story touches on is that of the 500 million acres of timberland that exists in the U.S., government entities own 27 percent; wood and paper companies own 17 percent; and institutional investors such as funds and endowments own 4 percent.

The remaining 54 percent? It belongs to private citizens, and that number is up from 45 percent two decades ago.

6th Timberland Investment World Summit October 26-28

Eddie Lee — Fri, 18 Sep 2009 17:03:23 +0000

Come join The Land Report at the 6th Timberland Investment World Summit at the Millennium Broadway Hotel in New York City on October 26-28. This conference is absolutely essential for anyone who follows or invests in timberland, which is why The Land Report signed on as a sponsor.

Online (”Timberland Outperforms the S&P 500?”) and in print (Land Report Spring 2009), the Magazine of the American Landowner has extolled the virtues of timberland as a long-term investment opportunity.

The Timberland Investment World conference brings many major players together, including pension funds, hedge funds, endowments, family offices, TIMOs, REITs, forestry management companies, paper and forest products companies, law firms, and banks.

Among the many topics to be covered at the conference are:

- International prospects for timberland investments, including Brazil, China, Russia, Australia and New Zealand

- Macroeconomic perspectives on the future of global demand for wood products

- Cashflow generation opportunities represented by ecosystem services, carbon schemes, easements, and the market in woody biomass

-The impact of information technology on timberland investment returns

- Preparing for the implementation of a nationwide cap and trade system

- Principles for selecting between Timber Investment Management Organizations (TIMOs)

- The valuation process: appraisal, discount rates, and future lumber prices

- The impact of biotechnology on future timber yields and growth rates

For more complete details, click HERE.

Duke Energy Makes Major Investment in GreenTrees

Eddie Lee — Tue, 23 Jun 2009 16:10:58 +0000

Duke Energy has become the lead investor in GreenTrees, a privately managed forest restoration program created and managed by C2I for landowners in the Lower Mississippi Alluvial Valley: Illinois, Missouri, Kentucky, Tennessee, Arkansas, Mississippi, and Louisiana.

This enormous valley once held 24.7 million acres of forest and emergent wetlands. Today more than 18 million acres – or 80 percent – has been cleared, resulting in the loss of critical natural habitat.

The program is expected to generate high-quality, verifiable carbon offsets that Duke believes will help reduce the overall cost of compliance with federal climate change legislation. Duke’s initial investment will result in the planting of more than 1 million trees on approximately 1,700 acres in Arkansas.

GreenTrees is designed to create, enhance, and sustain conservation and wildlife benefits from afforestation. GreenTrees provides landowners the most economic and environmental value for each acre of trees planted. The program utilizes a specific inter-planting of 302 cottonwoods plus 302 mixed hardwoods per acre. The specific design of 302/302 delivers more conservation value, more carbon, and better sustainable hardwood revenues than a previous design of 302 cottonwood and 151 hardwoods.

In exchange for the landowners’ long-term lease to prevent reversibility, GreenTrees offers a variety of short and long-term income opportunities. Landowners can simultaneously enroll the same qualified acres into GreenTrees, CRP, and other conservation practices, thus receiving multiple financial incentives and incomes together.

GreenTrees was founded by Izaak Walton League of America board member Carey Crane and Texaco Chevron Conservation Award recipient Chandler Van Voorhis. Both men have received great inspiration from Crane’s mother, Maggie Bryant. Bryant is a past-two term Chairperson of the National Fish and Wildlife Foundation and retired from her board position in 2001. She has been awarded the prestigious Chevron Conservation Award as well as the Governor’s Award for Conservation in Mississippi, and she continues to be active in conservation measures around the world.

Landowners are enthusiastic about GreenTrees. Arkansas landowner Brandon Stafford is a recent enrollee. Stafford found himself with 210 acres of un-irrigated farmland that he had to do something with. He enrolled it in CRP and GreenTrees. After the initial planting and subsequent sprayings Brandon says, “It’s amazing what the trees are doing.” The CRP and GreenTrees programs work in concert for him. Currently over 2,500 acres from 20 landowners are enrolled in the program.

To learn more about GreenTrees, visit their website: www.green-trees.com.

Foreign Investors Own Major Stake in Maine

Eric OKeefe — Thu, 28 May 2009 13:00:09 +0000

Foreign investors own an interest in 21.2 million acres of U.S. forest and farmland, an amount that equates to just under 1 percent of all the land in the U.S. Every one of the 50 states as well as Puerto Rico has foreign ownership, but far and away the largest concentration was in Maine with 3,323,846 acres (16 percent of the national total). Forest and timberland accounted for more than 3 million of those acres with Canadian companies the leading landowners.

The figures were compiled by the Farm Service Agency from filings required by the Agricultural Foreign Investment Disclosure Act of 1978 and are available in this handy 178-page report.

Sold! Montana’s Yellowstone Club Goes for $115 Million

Eric OKeefe — Tue, 19 May 2009 07:00:04 +0000

CrossHarbor Capital Partners LLC paid $115 million to buy Montana’s Yellowstone Club out of bankruptcy court yesterday. The Boston-based private-equity firm agreed to pay $35 million in cash and assume $80 million in debt owed to Credit Suisse. CrossHarbor will also infuse up to $75 million in working capital.

CrossHarbor’s principal, Sam Byrne, is a Yellowstone Club member, and has been closely following its fortunes. In 2008, CrossHarbor attempted to acquire the club for $450 million.

According to the Bozeman Daily Chronicle, the sale capped a week of non-stop negotations in the court of federal bankruptcy Judge Ralph Kirscher. The only other bidder was Credit Suisse, which in 2005 loaned $375 million to Tim and Edra Blixseth, the now divorced couple who jointly founded the club.

As part of the final deal, Credit Suisse will be allowed to co-invest in the club with CrossHarbor. Credit Suisse also received additional assets, including Yellowstone Club real estate and a castle in France that the Blixseths had acquired. Unsecured creditors were recognized by the court as $19 million was set aside to pay local vendors, tradesmen, and others.

This marks the second major bankruptcy ruling in as many months involving Credit Suisse. In April the Promontory Club outside of Park City, Utah, sold to the Pivotal Group for $30 million. Credit Suisse had put together a $350 million loan package for Pivotal, which it used to develop the resort community before seeking bankruptcy protection.

According to the CrossHarbor website, the LLC “is an active investor in the distressed securities market. We invest in a wide variety of securities including real estate loans, corporate loans, and structured securities that are suffering from stress including monetary and/or technical defaults.”

Read more at:
“Cross Harbor Wins Yellowstone Auction,” Bozeman Daily Chronicle, May 18, 2009.

For Sale: Montana’s Sun Ranch

Grant Gannon — Tue, 28 Apr 2009 17:27:40 +0000

The jury is still out on my definition of dream property, but I’ll tell you this: Montana’s Sun Ranch is definitely in the running.

Nestled on 18,000 acres just outside of Yellowstone National Park in the Madison Valley, the Sun Ranch ranges from 5,700 feet to over 10,000 and is a sterling example of what a true steward of the land can do with a spectacular piece of property. Almost 100 percent of the ranch is protected by conservation easements.

Three creeks – Sun, Moose, and Wolf – nurture more than a mile of the Madison River, which weaves its way through the property. Needless to say the fishing is out of this world. Elk, deer, bear, antelope, and sheep cross this country going to and from Yellowstone. Throw in a beautiful main residence, and this prime parcel is for sale at $55 million. Fay Ranches has the listing.

According to New West,the owner, Roger Lang, is looking to unload the ranch and free up capital for other conservation projects. According to the article, it looks like he has in mind a development similar to what Russ Maytag has done in Colorado at Maytag Mountain Ranch.

Danish Pension Fund Buys 90,000+ Acres in New York

Eric OKeefe — Wed, 01 Apr 2009 19:00:12 +0000

Published reports indicate that the Adirondack Chapter of the Nature Conservancy has sold 90,593+ acres of the former Finch Paper holdings to a subsidiary of the Danish pension fund ATP. The sale to ATP was handled on a sealed bid basis by LandVest. The acreage will be managed by RMK Timberland Group, a business unit partner of Regions Morgan Keegan Trust and Morgan Asset Management, and is subject to both a fiber supply agreement with the current owners of the Finch Pruyn mill and a conservation easement.

The Land Report reported on the original sale in the August 2007 issue (see below) and the estimated sales price per acre in 2007 was $683 per acre. According to the Timberland Blog, the 2009 purchase price was 180 million Kroners, which comes to about $361 per acre or almost 50 percent less than The Nature Conservancy paid two years ago primarily because of the conservation easement.

IP to Divest 143,000 Acres in Southeast

Eric OKeefe — Mon, 09 Mar 2009 12:34:05 +0000

International Paper announced on March 2 that it plans to sell off 143,000 acres in the Southeastern U.S. in a transaction valued at approximately $275 million.

IP will sell 114,000 acres to American Timberlands Fund I, L.P., for $220 million in cash and contribute 29,000 acres with a value of $55 million for a 20 percent stake in the partnership. The transaction is expected to close in mid-June.

Read International Paper’s press release.

Forest Service Paving the Way for Plum Creek?

Eric OKeefe — Thu, 01 Jan 2009 19:00:51 +0000

The nation’s largest landowner may be getting a last-minute, going-away gift from the Bush Administration. The Forest Service may amend existing easements, a step that would allow Plum Creek Timber (NYSE:PCL) to pave roads through USFS land. Such a move would facilitate an important first step for the giant timber REIT as it converts forested acreage to residential developments. Read the complete story here.