Ask the Expert: Dean Saunders

Eye on the Market: Dean Saunders has chaired the Florida Real Estate Commission, is certified as an Accredited Land Consultant (ALC), and was awarded the Certified Commercial Investment Member (CCIM) designation in 2010. The Land Report asked one of the country’s leading land brokers for his take on current market conditions.

You’ve got a long history on the land. You’re a sixth-generation Floridian with deep roots in agriculture. What keeps you going?
I love what I do. I love the people I work with. I love getting outside and looking at land. Every day I wake up, I can’t wait to get going. It’s fun, and I get paid to do it.

When you were in the Florida Legislature, you helped craft key conservation legislation. Can that work as an investment angle?
Definitely. I’ve got one client, a rancher, whose primary investment has been land over the last 15 years, he’s tripled his acreage by skillful use of conservation easements.

What’s the strategy?
He buys a piece of land for farming, hay, sod, and cattle. Then he sells a conservation easement. With the proceeds, he buys another piece of property and starts the whole process over again.

Who are your foreign investors?
It wasn’t too long ago that we had a bunch of Venezuelans trying to get their money out ahead of Chavez. Today’s market is primarily influenced by Canadians, Brits, some Germans, as well as South Americans.

Are they all about farmland?
Seems like everyone is, right? I’m a member of the realtors land institute, and a lot of my buddies in the Midwest and the Delta have seen land prices triple these past few years. A big part of that is commodity pricing, but there’s also the market. Investors are also looking for a safe haven for their money. You can’t earn anything from banks. The stock market is so volatile. But if you buy the right piece of land at the right price, you can generate a 5 percent return from cash rents. Rising commodity prices mean farmers can pay higher cash rents. This increases the value of the land. So people are buying farmland as fast as they can find it.

Sold! 80,000 Acres of Wisconsin Timberland

Update 1/2012

Late last year, a deal was struck to sell the 80,200 acres of timberland in northern Wisconsin for $42.9 million dollars to two companies that manage timberland throughout the U.S.

According to LandVest, Inc. broker David Speirs, the Lyme Timber Company, which is based in Hanover, New Hampshire, has an agreement to purchase 72,800 acres. The Forestland Group, headquartered in Chapel Hill, North Carolina, is set to purchase the remaining 7,400 acres.

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The Wausau Paper Timberlands offer approximately 80,000 acres of prime timberland located throughout the northern half of the state of Wisconsin. A leading producer of fine printing and writing papers, towel and tissue products, and specialty papers, Wausau has been divesting non-strategic timber holdings since 2005. Most of these 80,000 acres have been sustainably managed by Wausau since the 1940s for the production of wood fiber.

The acreage consists primarily of natural and planted northern pine species. In addition to timber value, the acreage offers an extensive number of land uses, including recreational and conservation opportunities.

This property is available through LandVest . For more information, contact David Speirs at (207) 874-4982 or dspeirs@landvest.com.

$5 Million Hilton Head Easement Acquisition

Several funding entities, including Beaufort County and the U.S. Department of Agriculture, have pooled resources to acquire several key conservation easements on St. Helena Island as well as outright ownership of 19 acres on Hilton Head. According to news releases, these acquisitions will keep these lands from being turned into developments that would include some 300+ homes. In addition, the three easements allow the current property owners to continue farming the historic Beaufort County lands. More details of the transaction are available HERE.

Market Watch: Tejon Ranch Sells Easements for $15.8M

Tejon Ranch (TRC) will sell five conservation easements covering some 62,000 acres of the 270,000-acre property to the California Wildlife Conservation Board for $15.8 million. The transaction is yet another step by California’s largest private landowner to monetize remote areas of the ranch with little near-term development potential.

The following, more complete account of the transaction was posted at Tejon Ranch’s website:

Tejon Ranch Co. (NYSE: TRC) announced today the California Wildlife Conservation Board (WCB), has approved the purchase, for $15.8 million, of five conservation easements covering approximately 62,000 acres of land located on various portions of the 270,000 acre Tejon Ranch. This furthers the implementation of the historic Tejon Ranch Conservation and Land Use Agreement signed in 2008. The 62,000 acres is a component of the 240,000 acres designated for protection under the 2008 agreement.

The $15.8 million purchase price represents the conservation easement value for the acreage as determined by an independent appraisal directed by the WCB. The WCB, at its November 18, 2010 Board Meeting, accepted the appraisal and authorized the use of existing bond funds approved by California voters in 2006 under Proposition 84 to acquire the conservation easements. Tejon Ranch Co. will retain fee ownership of the 62,000 acres and continue to operate current revenue generating activities including farming, cattle grazing, filming, oil and gas and other mineral exploration and production on portions of the acreage. The conservation easements will preclude the Company from pursuing any long term development on the 62,000 acres. This transaction allows the Company to realize an immediate value, as opposed to what possibly could have been realized through development of those areas sometime in the distant future.

“The Wildlife Conservation Board’s action gives the Company an opportunity to monetize, in the near term, potential long-term value associated with these remote areas of the Ranch that have little, if any, near-term development potential,” said Michael H. Winer, Portfolio Manager for Third Avenue Management LLC, the Company’s largest shareholder, and member of the Tejon Ranch Co. Board of Directors. “Further, it will preserve in perpetuity the environmentally important values of these lands through the imposition of conservation easements, administered by the independent Tejon Ranch Conservancy.”

The 62,000 acres represents the total acreage of five separate acquisition areas negotiated as part of the 2008 Conservation and Land Use Agreement. In that Agreement, the Resource Groups: Audubon California, Endangered Habitats League, Natural Resources Defense Council, Planning and Conservation League, and the Sierra Club, were given an option to acquire conservation easements over those areas. This action today by the WCB fulfills that option. The remaining balance of the property protected by conservation easements as defined within the landmark Agreement, approximately 178,000 acres, will be dedicated by Tejon Ranch Co. to the Conservancy over the next several decades as the Company achieves entitlement and ultimately develops the communities of Tejon Mountain Village, Centennial and the future 12,400 acre planning area at the base of the Grapevine.

Robert A. Stine, President and CEO of Tejon Ranch Company, stated, “today’s action by the WCB is the culmination of a long process involving many entities who came to the table with a vision and desire to create a new way to resolve the competing interests of land development and environmental preservation. In that regard, I am grateful for the role our partner in Tejon Mountain Village, DMB Associates, and its CEO, Eneas Kane, played in assisting Tejon Ranch in achieving the landmark agreement, which today’s action by the WCB fully embraces. This action is a major positive step forward for our company and its shareholders. It allows us to continue current revenue generating operations; to realize current revenue from the sale of easements on longer term potential land development opportunities; and proceed with Tejon Mountain Village, Centennial and the 12,400 acre development opportunities at the base of the Grapevine. All of these actions will result in greater shareholder value. Further, this is a major milestone in preserving in perpetuity environmentally important property for future generations of Californians to enjoy.” Additional steps are required before the sale of the easements will close, including the filing of various public notices, the completion of title review and the execution of the Grant Agreement between the WCB and the Tejon Ranch Conservancy.

Landmark Sale of 310,000 Acres Completed

In one of the largest conservation purchases to date, Plum Creek (PCL) completed the sale of a huge swath of Western Montana to the U.S. Forest Service and Montana’s Fish, Wildlife and Parks Department. Swiss philanthropist Hansjorg Wyss jump-started the deal with a $25 million donation that he subsequently upped to $35 million. Other funding sources included the State of Montana, which contributed $65 million, and the Department of Agriculture, whose $250 million expenditure was arranged by Sen. Max Baucus.

Tour the Flying D With Ted Turner

Want an opportunity to meet the top gun on The Land Report 100 on one of his many ranches? Now you can, thanks to a Montana fundraiser. Tickets to tour Ted Turner’s 119,000-acre Flying D Ranch are still available, and they’re going for $1,500. Proceeds go to the Greater Yellowstone Coalition; Turner is a board member.

Your $1,500 fee gets you a driving tour of the ranch from the nation’s largest landowner, cocktails on his back porch, and a dinner featuring ranch-raised bison. Turner has the world’s largest private herd of bison, which he raises on the Flying D and markets through his restaurant concept, Ted’s Montana Grill, with over 50 locations in 18 states.

At last report 10 of the 60 tickets remained.

Read more at:
“Enviro Group Plans Fundraiser at Turner Ranch,” Billings Gazette, June 5, 2009.

For Sale: Val Kilmer’s New Mexico Ranch for $33 Million

Val Kilmer, star of Top Gun, Tombstone and Willow, has put his 5,970-acre Pecos River Ranch on the market for $33 million. John Watson of Orvis/Cushman & Wakefield has the listing.

The Pecos River Ranch features more than five miles of frontage on its namesake river. Kilmer’s 5,550-square-foot adobe home as well as an 1,800-square-foot caretaker’s home, additional guest homes, barns, garages, and outbuildings are included in the sale.

The ranch is located 8 miles from Pecos, 22 miles from Santa Fe, and 90 miles from Albuquerque.

Kilmer, who is rumored to be considering a run for governor of New Mexico, has owned the property for nearly 15 years. He previously listed portions of the ranch for sale in 2006, but found no buyers.