LandVest is pleased to announce the opening of a new Timberland office in the Pacific Northwest.  The office, located in Eugene, Oregon will service LandVest’s timberland transaction and consulting work in the western U.S.

The office will be headed by Dr. David Walters.  David comes to LandVest with over 25 years of experience in forest industry, academia, and consulting.   As Director of LandVest’s Institutional Timberlands Management (ITM) Group, David will oversee LandVest’s timberland marketing and consulting work throughout the western states.  As an accomplished and highly regarded biometrician and statistician, David will also contribute to inventory design, analysis and modeling work on ITM projects throughout the U.S.

Walters has worked in various levels of increasing responsibility for industry and private forest management, consulting and academia since 1987.  He holds an undergraduate degree in Forest Management from Oregon State University, a Masters in Forest Biometrics from Virginia Tech and a PhD in Forest Biometrics from the University of Minnesota.  David has authored or co-authored dozens of professional and academic publications.

“We are extremely fortunate to have the opportunity to work with someone of Dave’s caliber” noted Stephen Mongan, President of LandVest, Inc.  “His experience in all aspects of timberland acquisitions, divestitures and management, coupled with his integrity and commitment makes him an ideal team leader for this important western expansion.”

The Oregon office will be overseen by Joe Taggart, Managing Director of LandVest’s ITM Group.

“I could not be more pleased with the fit – both professionally and personally”, says Taggart. “The Institutional Timberlands transaction business has evolved to a highly technical process, focusing on transparency in data and professionalism in presentation.  As a highly regarded Biometrician, Dave offers our clients superior data management and analytical capabilities.  At the same time, his ability to understand and clearly explain the financial impacts of key property attributes will make him a valuable resource to our customers.”

The addition of the Oregon office will allow LandVest to service its growing timberland marketing and consulting practice in the west, which includes recent projects in Washington, California and Hawaii.  Over the past five years, the ITM Group has marketed 700,000 acres with a total value of over $1 billion in the Southeast and West.

For more information, contact:

David Walters

LandVest, Inc.
The Heron Building, Suite 202
576 Olive Street
Eugene, OR 97401
dwalters@landvest.com
541-790-2105   •    541-430-8605 cell

It is all about the Green Mountains, snow and New England tradition. Here are 6 keys to a great year-round property for the winter months:

1. 1.  Keep it close. Vermont is within driving distance
2. 2.  Give me the mountains. The Green Mountains stretch the length of the state
3. 3.  Out my back door: snowshoeing, x-country skiing, downhill skiing and skating
4. 4.  Escape for Dinner one night: Sophisticated local foods – Downtown Grocery
5. 5.  Private, not remote: Slopes, shops and village amenities
6. 6.  Room for the family and friends: Bringing together the people we love

Living room of Highlands Reserve
with exposed post and beam

Vermont barn in the winter
- a New England winter snowscape

LandVest’s great Vermont escape for sale:

Highlands Reserve: Set in the Southern foothills of the Green Mountains, bordering state and national forest, this 627± acre tract provides complete mountain privacy within six miles of the white clapboard village of Weston and ten miles of Okemo Mountain Resort. A summer trout pond becomes winter’s ideal spot for pond hockey at the center of this 20-acre± compound. The main residence is an exposed hemlock Post & Beam with 3,000± s.f. and three bedrooms. The New England Post & Beam barn with attached camp, and a 3,000± s.f. two-suite guest house overlook each end of the pond. A stone turret folly in a hillside field above the residence provides a perfect go to place at sunset. South of the pond is a glade with a stream at its border and the “Kids Camp” fitted with a wood stove and bunk beds and a well-framed mountain view. A short distance by snow shoe there is a series of ten connecting natural ponds in a beautiful woodland setting. A larger trail leads off towards the center of the property to an area of an old settlement identifiable by a series of stone walls. From here, there is a trail to “Tabletop” hill, a great site for a cabin with views of the valley and mountains. A five-mile network of trails, great for skiing, snow shoeing or snow machine, provide sightings of moose, beaver, grouse, woodcock and turkey. The 600 acre managed timberland provides additional value. Offered for $2,100,000.

Contact Story Jenks: sjenks@landvest.com, 802-238-1332

With 3,375± acres of well-stocked timberlands and two pristine lakes, Hamilton Lake represents a rare opportunity in the heart of the Adirondack Park

In the Adirondack High Peaks, The Uplands is a significant Adirondack Great Camp with 26± acres, several buildings, numerous bedrooms, a heated pool and the site of many happy family and friend gatherings.

The Week magazine’s latest “Best Real Estate on the Market” feature was Adirondack Retreats.  Vincent “Vinny” McClelland of LandVest – Keene Valley NY, had two of the five featured high-end listings (see article).

With his  background in land use planning, environmental analysis, site planning and project development, Vinny McClelland has been a valuable resource to owners and buyers of significant properties in the Adirondacks.  If you are interested in buying or selling Adirondack real estate, you can reach Vinny at vmcclelland@landvest.com.  Click for here for additional contact info and click on the property name beneath the photos for more property details.

Northbrook Lodge

58 North Brook Rd, Paul Smiths, NY   12970

$3,800,000

REF #: NY0212 – Under Agreement

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The Uplands

35 Thorne Way, Keen Valley, NY   12943

1,950,000

REF:  NY0279

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Mays Pond

Judson Road, Long Lake, NY   13331

$1,500,000

REF#:  NY0287

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Pinewood

1745 Nys Route 73 Keene Valley, NY   12943

$975,000

REF#:   NY0275

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Bark Eater Inn

124 Alstead Hill Rd, Keene Valley NY   12942

$795,000

REF#: NY0217

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Private sale of over 1,000,000 acres supports trend of increases in high-net worth individuals making significant purchases of Timberland.

As traditional forest product companies continue to divest themselves of their land, institutional investors, TIMO’s, REIT’s and a handful of wealthy individuals have filled the void and picked up much of this acreage. More recently, there has been a significant increase in the number of family forest ownerships (e.g. high net worth families and individuals, trusts, estates, family partnerships and other unincorporated groups).  For example, family forestland ownerships increased by 500,000 acres between 1993 to 2006 across the northern United States alone (as broadly defined by USFS).  These high net worth individuals and families have many reasons for purchasing timberland, including aesthetic and recreational amenities, family legacy, and timber production – but increasingly, the importance of land as an investment in and of itself is one of those reasons.  See the Northern Journal of Applied Forestry, Family Forest Owner Trends in the Northern United States; North. J. Appl. For. 28(1) 2011. Available to SAF members or for purchase at: http://saf.publisher.ingentaconnect.com/content/saf/njaf/2011/00000028/00000001/art00003

LandVest has seen exceptional momentum rolling into 2011 along this trend.  The timberland asset class has continued to gain favor amongst the high net worth family segment – including some of the smartest and most wealthy Americans (see The Land Report, Malone’s Million, Spring 2011 available by subscription at: http://www.landreport.com/2011/03/the-land-report-spring-2011/  Their reasons for investing in timberland include diversification, capital preservation, generational wealth transfer, legacy and hard asset allocation. In addition, it is widely known that significant capital has been raised for timberland investment placements by institutional buyers – much of which will begin working its way into the marketplace later in 2011. LandVest is well acquainted with the high net worth families and their advisors as well as the institutional buyers. We know the asset class and have access to most of the important participants. LandVest stands poised to represent the best interests of our clients at a time of exciting timberland investment opportunities and rapidly changing ownership patterns.
Sources:
1. http://moneymorning.com/2011/02/25/timber-investing-inflation-hedge-pays-off. 
2. Brett J. Butler & Zhao Ma; Family Forest Owner Trends in the Northern United States; Society of American Foresters, Northern Journal of Applied Forestry;  North. J. Appl. For. 28(1) 2011
3. http://www.investmentu.com/2005/January/20050107.html
4. http://blogs.forbes.com/monteburke/2011/03/10/john-malone-largest-private-landowner-in-the-u-s-speaks/
5. http://www.landreport.com/2011/03/the-land-report-spring-2011/

See part one of this three part series by clicking on this link: Investing in Timberland: Part 1 of 3: Why Invest in Timberland

See part two of this three part series by clicking on this link: Investing in Timberland: Part 2 of 3: Why the time is right to invest in Timberland

Click to view public  Timberland Investment Opportunities  or view contacts below for private offerings. 

Contact Gary Bahlkow (gbalkow@landvest.com) if you are interested in selling your timberland properties or if you are interested in buying  timberland properties for sale in New England, NY, Mid-Atlantic, Great Lakes  and Canadian Maritimes.   

Contact Joe Taggart (jtaggart@landvest.com) if you are interested in buying or selling timberland investment properties in the southern or western states.

Why NOW is the time for Timberland Investment:
In addition to the general appeal of investing in timberland (timber beats inflation, outperforms the stock market, and offers true diversification), there are several reasons why timberland remains an excellent investment at this point in time. First, as housing markets recover and a middle class emerges across the developing world (e.g. China) demand for wood products will rise – and in fact demand is expected to double in the next thirty years.

1. 1. Timber is a renewable resource, but supply is limited by available acreage and biological growth. 
2. 2. Second, timberland is currently cheaper than many other investment options including stocks, bonds, real estate and other commodities. 
3. 3. Third, interest rates are extremely low right now, providing a window of opportunity to finance long term investment with low-cost money.
4. 4. Finally, the continuing devaluation of the US dollar is likely to inflate the value of commodity-producing assets (e.g. timberland).

These last two points were taken directly from a recent Forbes Magazine interview with the Nation’s largest private landowner – available at: http://blogs.forbes.com/monteburke/2011/03/10/john-malone-largest-private-landowner-in-the-u-s-speaks/. The interview not only touches upon the current appeal of timberland investment, but also serves to illustrate the changing patterns of forestland ownership.

See part one of this three part series by clicking on this link: Investing in Timberland: Part 1 of 3: Why Invest in Timberland

Click to view public  Timberland Investment Opportunities  or view contacts below for private offerings. 

Contact Gary Bahlkow (gbalkow@landvest.com) for current timberland properties for sale in MD, ME, MI, NY, PA, or VT.   Also contact Gary Bahlkow if you are interested in buying or selling timberland investment properties in the mid atlantic, northern or midwestern states.

Contact Joe Taggart (jtaggart@landvest.com) if you are interested in buying or selling timberland investment properties in the southern or western states.

Why Invest In Timberland? Timberland is an increasingly popular investment tool – attracting broad interest from institutional investors and high net worth individuals alike.  There are several reasons that make timberland an appealing investment.  First, timberland prices have risen above inflation by approximately 3% for much of the past 100 years – making timberland investment a solid hedge against inflation and a low-risk method of capital preservation.1  Second, timberland investment offers much greater stability and faster appreciation than the stock market as a whole. Over the past two decades, NCREIF’s Timberland Index has risen an average of 15% a year, versus roughly 10% annualized return for the S&P 500.1 Third, timberland has a very low correlation to other asset class investments, which means timberland offers meaningful diversification.1 In essence, the advantage of timberland investment is that trees continue to grow on the stump and appreciate in value notwithstanding world events with otherwise negative financial consequences.

For more detail on this topic click to read the Money Morning article Timber Investing: The Inflation Hedge That Pays Off in Every Type of Market

Click to view Timberland Investment Opportunities

Click to view Gary Bahlkow’s contact information

Mike Hart, Senior Appraisor, LandVest

His argument is that a timberland appraisal is most credible and most reliable when both professionals work together in partnership and that real estate appraisers should not try to take on timberland appraisals alone unless they fully understand both the value of the specific composition of timber found on the property and, more importantly, how that timber value contributes to the underlying value of the land. 

A forester is best qualified to opine on the value of timber, but may not be qualified to opine on the value of the timber as it contributes to the real property as a whole (i.e., land and timber combined), which may not be the same thing as the value of the timber.  An experienced appraiser knows how to analyze real property transactions to derive an opinion of the value of the entire bundle of rights included in a parcel of real property but is typically not qualified to value standing timber.

Hart discusses these issues in the context of the rules of evidence for expert real estate witnesses, the ethics and standards of practice for both appraisers and foresters, and the accepted principles of highest and best use analysis.  He notes that the highest and best use for timber is not necessarily the same as the highest and best use of the timberland of which the timber is a component.  One must consider the underlying land use that supports the highest total property value, as well as the extent to which that land use will accommodate complete or partial removal of the timber.  This analysis can become quite complex for properties with high amenity value and/or where development pressure is driving up the value of the underlying land.  In order to properly undertake this analysis the forester and the appraiser must work together as a team “in which both members have equally important roles.”
Click to read the full Consultant Magazine article. 
Click to learn more about Mike Hart
Contact Mike Hart via email at mhart@landvest.com

LandVest Senior Advisor Keith Ross is a leader in the effort towards collaborative land conservation.  In a recent article that appears in the fall edition of Northern Woodlands magazine, Conserve More Land Today through Parcel Aggregation, he promotes this concept of collaborative “aggregation” of woodlands; combining or “bundling” preserved land from separate owners into one larger project.  This process conserves large landscapes and attracts interest from motivated landowners and investors alike. 

The strategy may seem like a difficult feat, but recent examples in New England prove this is feasible and beneficial.  In Western Massachusetts, seven land trusts are working together to obtain funding to buy conservation easements for more than 10,000 acres of timberland owned by 71 landowners, and have raised over seven million dollars to-date.  Several other areas throughout New England have been replicating this land aggregation concept and have been successful lowering costs related to conservation easement monitoring, and appraisals.

Why is land aggregation beneficial for land owners? 

Not all forest conservation projects are significant enough to be completed as stand-alone individual projects.  Most are smaller acreages that have significant ecological values to maintain large forest blocks or protect lakes, ponds, streams, wildlife habitat, etc.  By grouping these projects together they can attract funders that don’t normally focus on small individual projects and the costs of the transactions can be reduced by grouping together the appraisals, negotiations, baseline documentation, etc.

 Why is land aggregation beneficial for the land? 

Most forest land conservation projects are not the highly visible road frontage pieces people drive by every day, nor are they the large mega acreage tracts that are conserved up north.  Most are much smaller tracts that are important to knit together to ensure we have large blocks of forest necessary to ensure the production of clean air and clean water that support all of us.

For more information on Collaborative Land Conservation Contact Keith Ross

This blog post was brought to you by Terry Boyle who assists buyers and sellers of distinctive and complex real estate transactions on the South Shore and South Coast/Buzzards Bay real estate markets of Massachusetts.  

As fall turned into winter in 2010, there were the usual year end jitters for retailers, travelers, and college football fans, but this year, there was another group not typically included in those biting their nails when the New Year approached: large land owners, land conservation groups, open space advocates, and real estate advisory firms like LandVest. This last group was taking its turn looking into the great unknown of the New Year due to the United States Congress debate on whether it was still appropriate to offer federal tax incentives to private land owners in return for their permanent voluntary donation of land development rights. 

Further, even if Congress did decide to continue the program and offer incentives, it was unknown at what rate. 

Background:  Since 1891, when the first regional land trust in the US, The Trustees of Reservations, was founded, land trusts (or conservancies, or trusts) have been working to conserve or protect a variety of real estate that is seen as having inherent value, including, but certainly not limited to: land, natural resources, cultural resources, scenic corridors, archeological sites or battlefields, and marine resources. The Land Trust model now exists, in some form, throughout the world.  

Land trusts in the United States typically use a Conservation Easement (or Restriction) to memorialize an agreement between the owner of the land or resource and the organization. This easement or restriction exists in perpetuity and becomes appurtenant to the property.  In return for this restriction of property rights, an owner in the United States typically receives a federal and  in some cases a State tax credit. 

The Conservation Easement does not have to completely restrict the property. The Conservation Easement is a flexible document that can be crafted to ensure that the private landowner is allowed to continue to own and use the land. Land trusts can hold easements on protected property that allow for continued recreation in the form of hunting, hiking, camping, wildlife observation, or other responsible outdoor activities. It is also typical that easements can allow for continued agriculture, ranching or logging on the protected property if appropriate.  

The federal tax benefits to the private landowner expanded in 2006 when new legislation signed by President George W. Bush expanded the amount that conservation easement donors could deduct. With the passage of the Farm Bill in the summer of 2008 these expanded federal income tax incentives were extended such that they also applied to all conservation easements donated in 2008 and 2009.  

These expanded tax incentives expired at the end of 2009, and it became difficult to predict the future of this federal tax incentive program. By mid 2010, land owners, land conservation groups, agricultural and timber groups, and real estate advisors were all forced into “wait and see” mode. Ultimately, at the end of 2010 Congress renewed without change the enhanced tax incentive for private landowners who protect their lands with voluntary conservation restrictions. The enhanced incentive will now be effective through December 31, 2011, and it is retroactive to January 1, 2010.  

Conservation-minded landowners now have until the end of 2011 to take advantage of the enhanced incentive for donating voluntary conservation restrictions to permanently protect important natural resources on their lands. The continued enhanced incentive:  

• Raises the deduction a donor can take for donating a voluntary conservation restriction from 30% (pre 2006) of their income in any year, to the current rate of  50%; and
• Increases the number of years over which a donor can “spread” deductions from the gift from 6 years (pre 2006), to the current rate of 16 years.
• Landowners who can claim more than 50% of their income from farming or forestry can claim up to 100% of their annual gross income in charitable donations for conservation easements.

This continued tax incentive is an essential component in some real estate valuation scenarios and should be completely understood by land owners before making decisions concerning a real estate asset with some measurable “land component”. LandVest has extensive experience helping landowners understand and explore the options provided by the donation of property rights for charitable purposes. 

March 2011 will mark the 10th anniversary of the Pingree forest easement which was conceived and directed by LandVest Senior Advisor Keith Ross when he was the Vice President and Director of Land Protection for New England Forestry Foundation. At 762, 192 acres Pingree forest conservation is still the largest in the country.

If you would like more information please contact Terry Boyle  Tboyle@landvest.com.  

Click for more information regarding LandVest’s Conservation and Real Estate Consulting Services.  

SOFTWOOD LUMBER PRICE INCREASES SIGNAL INVENTORY SCARCITY

Since the beginning of the year, a broad range of softwood lumber products have shown substantial price gains. Since December 31st, 2009, the Random Lengths’ Framing Lumber Composite Price (a weighted price average of 15 key framing lumber items) has increased $57, or 23%. Each of the last four weeks has reported double digit gains, including a $21 increase in the February 5th report.

In annual terms, the gains are even more impressive. Since early February 2009, the Composite Index has increased from $190 to $305, a year over year increase of 61%.

Since most economists agree that there has been little increase in actual or perceived demand, the 1st quarter price spike in softwood lumber is being driven almost totally by supply-side issues.

Since housing starts began to retreat from their high of over 2 million units in 2005, lumber has followed suit with a steady and significant decline in volume and pricing. In addition to a number of production curtailments and temporary closures, there have been several permanent closures which have removed in excess of 10 billion board feet of softwood lumber capacity from the North American manufacturing complex.

The result has been an historic contraction of total softwood lumber available to the United States. In 2009, total U.S. softwood lumber production was about half of that produced in 2005. Total softwood lumber imports to the U.S. in 2009 were about 1/3 of the 2005 level. At the same time, total softwood lumber exports increased by 7% from 2005 to 2009.

Softwood lumber markets are highly volatile, and have experienced a number of significant cycles over the past 35 years. The current cycle, however, is different in at least three key aspects: Duration, Availability of Capital, and Source of Raw Material.

The duration of the current event has lasted longer than most historic cycles, which has caused more attrition among manufacturers. At the same time, the current cycle has coincided with the collapse of global credit markets. The broad economic decline has cut-off the necessary debt capital for many manufacturers. While this has forced the closure of over 130 North American mills, it has also forced the remaining operators into more disciplined inventory management. Traditionally, many mills would continue to operate through market downturns, storing their finished inventories for better markets. The lack of credit to finance inventories, however, has caused manufacturers to work on just-in-time inventory positions.

Perhaps the least noted-phenomenon affecting the current cycle is the impact of institutional timberland ownership on manufacturing. Since 2000, forest products industry timberland ownership has declined from about 52 million acres to a current total of about 17 million acres (public & private industry). During past down-market cycles, integrated manufacturers could transfer company owned timber, at below market rates, to subsidize manufacturing facilities. Now that most of these timberlands are in the hands of institutional and private investors, owners have become more disciplined in holding their timber on the stump for better markets. With timberland owners holding their wood on the stump, lumber manufacturers are having a hard time sourcing the raw material for production.

The end result is that although lumber markets continue to struggle in the face of sluggish housing demand, there is still a baseline level of lumber that needs to be produced to meet current needs. The razor thin inventories maintained by manufacturers over the last several months do not allow for any elasticity in the supply/demand balance. Although we have not yet experienced any noticeable increase in demand, we do have a significant lack of supply, even for our current needs.

What does this mean for timberland owners?

Even at the current level of demand, producers are going to have to scramble over the next few months to rebuild lumber inventories along the distribution chain. This should translate to a noticeable increase in spot market stumpage rates over the next three months. The duration and amplitude of this spike will be driven in large part by regional weather (operating) conditions, and the level of builder interest in the spring. For now, timberland owners who have merchantable volumes of softwood timber, on good, operable ground, should anticipate a favorable late winter/early spring.

In the timberland transaction market, it will be interesting to note how buyers and sellers will respond to the market spike. Over the past year, investors have shown only modest interest toward properties that have higher components of merchantable timber, fearing that they were trading acquisition dollars for standing timber value in a down market cycle. As stumpage markets rebound, buyers may find unique arbitrage opportunities with properties like the Trinity Timberlands in Texas, or the Surry & Appomattox Timberlands in Virginia, which have high components of immediately harvestable softwood stumpage, yet are priced to reflect the weaker market conditions of 2009.

However long the current spike in softwood lumber prices lasts, we believe that it signals the start to a gradual improvement in lumber and stumpage values. Although it may be 2011 before markets return to more of a normal operating cycle, we anticipate that timberland unit pricing will have corrected itself by then, suggesting that the best investments of the next cycle will be made in 2010.

Select Timberland Investment Properties

Trinity Timberlands, Trinity Timberlands, Three tracts totaling 14,144± acres, East Texas

Click here for more information on Trinity Timberlands

The Surry Timberlands, 5,815± acres, Richmond and Petersburg, Virginia

Click here for more information on the Surry Timberlands

Appomattox Timberlands, 3,160± acres (7 Tracts 116± acres - 1,386± acres), Central Virginia

Click here for more information on the Appomattox Timberlands

To search for more Timberland Investment Properties click here