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Western Timberland Market Update Wwotf8
- 1. 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 Natural Resource Consultants Since 1921
- 2. Outline • Log Markets •Timberland Markets Natural Resource Consultants Since 1921 2
- 3. Log Markets 3 Natural Resource Consultants Since 1921 Natural Resource Consultants Since 1921
- 4. Log Markets • Harvestvolume 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 Natural Resource Consultants Since 1921 4
- 5. Harvest Volume Back 2011 Harvest % Change % Change Region (Bbf) from 2010 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% Natural Resource Consultants Since 1921 5
- 6. Log Prices Stabilizing Westside Domestic Log Price Trends, 2005 - July 2012 Doug-fir #2 Sawmill Whitewoods #2 Sawmill 800 700 600 500 $/Mbf 400 300 200 Doug-fir: 2012 is 74% above low and 98% of 2007 prices 100 Whitewoods: 2012 is 79% above low and 113% of 2007 prices 0 1/1/2005 4/1/2005 7/1/2005 1/1/2006 4/1/2006 7/1/2006 1/1/2007 4/1/2007 7/1/2007 1/1/2008 4/1/2008 7/1/2008 1/1/2009 4/1/2009 7/1/2009 1/1/2010 4/1/2010 7/1/2010 1/1/2011 4/1/2011 7/1/2011 1/1/2012 4/1/2012 7/1/2012 10/1/2005 10/1/2006 10/1/2007 10/1/2008 10/1/2009 10/1/2010 10/1/2011 Log Lines Columbia River Natural Resource Consultants Since 1921 6
- 7. Softwood Log ExportTrends Total Log Exports: From Columbia-Snake & Seattle Customs Districts (MMBf) • 1H2012 export volume 1,400 from WA, OR, CA, AK of China South Korea Japan 1,200 736 MMBF, down 25% 1,000 from 1H2011 800 • Value off by 32% 600 • 1st half log exports to 400 China off 38% y-o-y 200 • Somewhat offset by - increases to Japan 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012 Sources: PNW Res. Sta., USITC Natural Resource Consultants Since 1921 7
- 8. Declining Chipwood Prices Northwest Tonwood Prices Conifer Pulpwood Doug Fir Chip and Saw Hardwood Pulpwood Whitewood Chip and Saw 80 70 60 50 $/Ton 40 30 20 10 0 Forest2Market Northwest Averages Natural Resource Consultants Since 1921 8
- 9. Timberland Markets 9 Natural Resource Consultants Since 1921 Natural Resource Consultants Since 1921
- 10. Timberland Markets • Afew more regional sales, but expected rush has not materialized • One mega-sale • Plenty of competition in auctions • Many buyers waiting on opportunities Natural Resource Consultants Since 1921 10
- 11. Westside Timberland Sales Timberland Sales in Westside Oregon & Washington, 1996 - 2012 Sales > 5,000 acres, size of bubble is proportional to sale acreage 5,500 5,000 4,500 4,000 3,500 $/Acre 3,000 2,500 2,000 1,500 1,000 500 - 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 70 transactions: Source RISI, MB&G files. Excludes 2012 Forest Capital Sale Natural Resource Consultants Since 1921 11
- 12. Recent Westside Sales Eden Olympic Olympic Davidson Tree Forest Capital Ridge Tree Farm Tree Farm Farm Partners Date Nov-11 May-12 Jun-12 Jun-12 Jul-12 Davidson Seller Plum Creek GMO RR GMO RR Forest Capital Industries Forest Investment Buyer Campbell Campbell Makah Tribe Hancock Associates WA-Olympic WA-Olympic OR-Will. Valley & Location OR-Coast OR-Coast Peninsula Peninsula 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 Sources: RISI, public records Natural Resource Consultants Since 1921 12
- 13. Recent Inland/California Sales Forest Capital Kahn Jeld-Wen Green Diamond Partners Date Jul-12 4Q-11 4Q-11 Apr-11 Seller Forest Capital Kahn Private Co. Green Diamond FGF, Sierra Pacific & Buyer Hancock/Molpus Private Co. Yukor Tribe family member NE Oregon, NE Location N California S Oregon N California Washington, N Idaho 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 European fund, Buyer Type TIMO(s) Private Co. Tribe forest ind., family Sources: RISI, public records Natural Resource Consultants Since 1921 13
- 14. Forest Cap Olympic Tree Farm Forest Cap Forest Cap Forest Cap Davidson Eden Ridge Forest Cap Jeld-Wen Green Diam. Westside Kahn Inland/CA Natural Resource Consultants Since 1921 14
- 15. 2013 Outlook • Logprices 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 Natural Resource Consultants Since 1921 15
- 16. 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 Natural Resource Consultants Since 1921 16
- 17. About Mason, Bruce& Girard 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 David Mason 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). Natural Resource Consultants Since 1921 17