western timberland market update wwotf8
DESCRIPTION
Update on timberland markets in the Western U.S., presented at the Who Will Own The Forest 8 Conference in Portland in SeptemberTRANSCRIPT
Natural Resource Consultants Since 1921 Natural Resource Consultants Since 1921
Western Timber & Timberland Market Update
Roger Lord Mason, Bruce & Girard
www.MasonBruce.com
Presented at Who Will Own the Forest
Sept. 19, 2012 Portland, Oregon
Natural Resource Consultants Since 1921
Outline
• Log Markets • Timberland Markets
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Natural Resource Consultants Since 1921 Natural Resource Consultants Since 1921
Log Markets
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Natural Resource Consultants Since 1921
Log Markets
• Harvest volume back above 2008 levels • Log prices drifting downward with slack export
demand from China • Slowdown in chip wood demand redirects
small logs back to sawmills
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Natural Resource Consultants Since 1921
Harvest Volume Back Region 2011 Harvest
(Bbf) % Change from 2010
% Change from 2008
Western Oregon 3.42 +15% +5%
Western Washington 2.65 +4% +14%
Westside Total 5.90 +10% +9%
Eastern Oregon 0.41 +2% +12%
Eastern Washington 0.44 +20% +2%
California 1.29 +11% -6%
Idaho 1.07 +13% +12%
Montana 0.35 0% -23%
Eastside/CA Total 3.55 +10% -1%
Total 9.44 +10% +5%
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Natural Resource Consultants Since 1921
Log Prices Stabilizing
6
0
100
200
300
400
500
600
700
800
1/1/
2005
4/1/
2005
7/1/
2005
10/1
/200
5
1/1/
2006
4/1/
2006
7/1/
2006
10/1
/200
6
1/1/
2007
4/1/
2007
7/1/
2007
10/1
/200
7
1/1/
2008
4/1/
2008
7/1/
2008
10/1
/200
8
1/1/
2009
4/1/
2009
7/1/
2009
10/1
/200
9
1/1/
2010
4/1/
2010
7/1/
2010
10/1
/201
0
1/1/
2011
4/1/
2011
7/1/
2011
10/1
/201
1
1/1/
2012
4/1/
2012
7/1/
2012
$/M
bf
Westside Domestic Log Price Trends, 2005 - July 2012Doug-fir #2 Sawmill Whitewoods #2 Sawmill
Doug-fir: 2012 is 74% above low and 98% of 2007 prices Whitewoods: 2012 is 79% above low and 113% of 2007 prices
Log Lines Columbia River
Natural Resource Consultants Since 1921
Softwood Log Export Trends
• 1H2012 export volume from WA, OR, CA, AK of 736 MMBF, down 25% from 1H2011
• Value off by 32% • 1st half log exports to
China off 38% y-o-y • Somewhat offset by
increases to Japan
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-
200
400
600
800
1,000
1,200
1,400
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
1H20
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Total Log Exports: From Columbia-Snake & Seattle Customs Districts (MMBf)
China South Korea Japan
Sources: PNW Res. Sta., USITC
Natural Resource Consultants Since 1921
Declining Chipwood Prices
8
0
10
20
30
40
50
60
70
80
$/To
n
Northwest Tonwood PricesConifer Pulpwood Doug Fir Chip and Saw Hardwood Pulpwood Whitewood Chip and Saw
Forest2Market Northwest Averages
Natural Resource Consultants Since 1921 Natural Resource Consultants Since 1921
Timberland Markets
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Natural Resource Consultants Since 1921
Timberland Markets
• A few more regional sales, but expected rush has not materialized
• One mega-sale • Plenty of competition in auctions • Many buyers waiting on opportunities
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Natural Resource Consultants Since 1921
Westside Timberland Sales
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-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$/Ac
re
Timberland Sales in Westside Oregon & Washington, 1996 - 2012Sales > 5,000 acres, size of bubble is proportional to sale acreage
70 transactions: Source RISI, MB&G files. Excludes 2012 Forest Capital Sale
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Recent Westside Sales
Eden Ridge
Olympic Tree Farm
Olympic Tree Farm
Davidson Tree Farm
Forest Capital Partners
Date Nov-11 May-12 Jun-12 Jun-12 Jul-12
Seller Plum Creek GMO RR GMO RR Davidson Industries Forest Capital
Buyer Campbell Campbell Makah Tribe Forest Investment Associates Hancock
Location OR-Coast WA-Olympic Peninsula
WA-Olympic Peninsula OR-Coast OR-Will. Valley &
Southwest
Acreage 18,200 50,400 3,000 12,800 270,000
Price (Million $’s) $59.9 $149.6 $12.5 $59.9 ??
Price/Acre $3,300 $2,968 $4,171 $4,688 ??
Seller Type REIT TIMO TIMO Private Co. TIMO
Buyer Type TIMO TIMO Tribe TIMO TIMO
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Sources: RISI, public records
Natural Resource Consultants Since 1921
Recent Inland/California Sales
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Forest Capital Partners Kahn Jeld-Wen Green Diamond
Date Jul-12 4Q-11 4Q-11 Apr-11
Seller Forest Capital Kahn Private Co. Green Diamond
Buyer Hancock/Molpus FGF, Sierra Pacific & family member Private Co. Yukor Tribe
Location NE Oregon, NE Washington, N Idaho N California S Oregon N California
Acreage 840,000 11,300 50,000 22,200
Price (MM $’s) ?? ?? $23.5 MM $18.8 MM
Price/Acre ?? ?? $470 $843
Seller Type TIMO Private Co. Private Co. Forest Industry
Buyer Type TIMO(s) European fund, forest ind., family Private Co. Tribe
Sources: RISI, public records
Natural Resource Consultants Since 1921 14
Olympic Tree Farm
Forest Cap
Forest Cap
Eden Ridge
Davidson
Forest Cap
Forest Cap
Forest Cap
Jeld-Wen
Kahn
Westside Inland/CA
Green Diam.
Natural Resource Consultants Since 1921
2013 Outlook
• Log prices have largely recovered thanks to log export growth
• Expect continued improvements as domestic housing market regains strength
• Expect land sales pace to accelerate as closed-end funds reach expiration dates
• Economic uncertainty abounds
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Natural Resource Consultants Since 1921
About Mason, Bruce & Girard
• Full service natural resource consulting firm – Forestry Services
• Forest management responsibility on 300,000 acres • Inventory & Biometrics • Planning & Economics • Appraisal & Valuation Services
– Environmental Services – Geospatial Services
• Appraisal & Valuation – Over the last five years, MB&G has appraised 5.0 million acres of
timberland valued at nearly $15 billion – Other valuation services include:
• Acquisition/Divestiture Due diligence • Conservation easements • Litigation Support & Expert Witness
www.MasonBruce.com
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Natural Resource Consultants Since 1921
About Mason, Bruce & Girard
David Mason
MB&G began as a forestry consulting business in 1921 under David Mason. Mason began his first forestry consulting firm soon after the 1920 publication of his research on the timber industry and lumber production in the Pacific Northwest. As a result of his efforts to move the timber industry toward a more professional and sustainable approach to forestry, he became widely known as one of the nation’s first leading advocates of sustained yield forest management. In 1936, Mason created a partnership with Donald Bruce — Mason & Bruce. Not long thereafter, James Girard joined the group, and in 1948 the firm adopted its present name — Mason, Bruce & Girard. By the middle of the 20th Century, David Mason’s and MB&G’s influence on the forestry industry was second to none. In fact, in 1952 F.K. Weyerhaeuser said of David Mason: “No single person has been more influential in promoting sound forest management on private forest lands than he.” Over the years, MB&G has expanded its range of services, and today has diversified into a full-service natural resources consulting firm, with expertise in environmental services, forestry and geographic information systems (GIS).
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