Reviewing a Timberland Appraisal for Accuracy and Credibility

Agenda
Start Date: May 29, 2019
Location: Wilsonville, OR

Wednesday – May 29, 2019

1:00 pmIntroduction: Course Overview and Objectives

  • Welcome
  • Facilities
  • Introductions – speakers and attendees
  • Course Outline
  • Handouts/Background Reading

1:20Overview of Forest Management Concepts & Terminology

  • What are the major timber producing regions of the U.S.?
  • What are the major timber types within each region?
  • Site productivity: the potential of an area to grow trees
  • Timber stands: the basic units of management
  • Management strategies: even-aged and uneven-aged management
  • When to harvest: rotation length & financial vs. biological maturity
  • Logging methods for timber harvest: ground vs. cable and types of equipment
  • Where do logs go? Timber products, relative values, and their end-use markets
  • Land Expectation Value
  • Stumpage value

2:00Drivers of Timberland Value

  • Biological factors
  • Physical factors
  • Location
  • Access
  • Management history
  • Regulatory & environmental issues
  • Discount rate

3:00   Break

3:15Key Concepts & Principals of Valuation

  • Market and other types of value
  • Elements of market value
  • The concept of Highest & Best Use
  • Contributory value
  • Economic principles underlying valuation
  • Appraisal standards
  • Scope of work

4:00The Three Approaches to Value & Their Use in Timberland Appraisal

  • Income Capitalization Approach
  • Sales Comparison Approach
  • Cost Approach

5:00 Adjourn day 1

Thursday – May 30, 2019

8:00 amApplication of the Income Approach to Small Properties

  • Conversion Return method for merchantable timber
  • Valuation pre-merchantable timber
  • Contributory value of land
  • Sources of data

8:30Income Approach Exercise

  • Split into groups for 60 minute exercise and compare group results for last 30 minutes.

10:00   Break

10:15Application of the Income Approach to Large Properties

  • Modeling discounted cash flow for large properties
  • Key factors affecting discounted cash flow valuations
  • Projecting log prices
  • Determining the market discount rate
  • Determining the growth & yield of the forest
  • Calculating production & management costs
  • Reversion value

11:15Selection of Sales & Adjustments Under the Sales Comparison Approach

  • Sources of sale data
  • Selecting “comparable” sales
  • Elements & units of comparison
  • Sale adjustments and analysis

Noon   Lunch (included with registration)

1:00Sales Comparison Approach Exercise

  • Split into groups for 60 minute exercise and compare group results for last 30 minutes.

2:15Reconciling to a Final Value Opinion

  • Strengths and weaknesses of each approach – discussion
  • Final reconciliation of the group exercise results

2:45   Break

3:00Effective Appraisal Review & Interaction with the Appraiser

  • How to select the right appraiser
  • Providing the right data to the appraiser
  • Appraisal review checklist

4:00   Wrap up, Q and A and adjourn

An appraisal review checklist will be provided with the course materials. Use this checklist for a structured and systematic approach to reviewing an appraisal for USPAP compliance as well as evaluating key components of the analysis.

About the Conference
Timberland appraisals are integral part of many business transactions. Consumers of timberland appraisal services need to have confidence in the reports they receive to make sound business and investment decisions. Through this seminar, you will gain an understanding of basic valuation principals as they relate to the timberland asset class and become a more informed consumer of appraisal services in the timberland market. While this session will not teach you how to conduct an appraisal, it will provide you with the knowledge and tools to understand the valuation process, interact effectively with the appraiser, and evaluate the accuracy and credibility of any forest appraisal.

The seminar instructors will provide you with the background and criteria to evaluate appraisals as well as a checklist to ensure a systematic and consistent method for reviewing and providing comments on future appraisals.

Target Audience
  • Timberland investment portfolio managers
  • Timberland investors
  • Financial auditors
  • Lenders
  • Foresters
Meeting Location:
The seminar will be held at the Holiday Inn Portland South at 25425 SW 95th Ave. in Wilsonville, OR. The hotel can be reached at: 503-682-2211 or https://hiportlandsouth.com/.

Attendee Laptops:
Attendees are encouraged to bring a laptop with Excel. The session will involve class exercises using Excel.

About the Speakers:

Roger Lord, ACF is the President of Mason, Bruce & Girard and leads the company’s timberland and natural resources valuation services. He has more than 30 years of experience in the areas of timberland appraisal, acquisition and divestiture due diligence, forest economics, and planning.

Roger is a state certified appraiser in Oregon, Washington, and Idaho and specializes in the appraisal of investment grade timberlands throughout the Northwest. In the last five years, the MB&G Appraisal Services Group has completed assignments on 10.8 million acres with an aggregate value of $26 billion.

Roger received a B.S. in Forest Science and M.S. in Forest Resources and Operations Research from Penn State Univ. He is a Member of the Association of Consulting Foresters, member of the Society of American Foresters, and a Practicing Affiliate of the Appraisal Institute.

Zach Dewees is an appraiser in Mason Bruce & Girard’s
Appraisal Services Group. He is a State Certified General Appraiser and an SAF Certified Forester with 14 years of experience in timberland appraisal, forest management and planning, economic analysis, growth and yield modeling, inventory, and GIS. Zach specializes in the appraisal of investment grade timberlands and conservation easements as well as non-industrial timberland and recreational properties. He also focuses on stumpage valuations, acquisition and divestiture due diligence, and timber supply studies. Zach received his B.S. in Forest Management from Washington State University. He is a member of the Society of American Foresters and a Candidate for Designation of the Appraisal Institute.

Upcoming Conferences and Workshops
Eighth Western Native Plant Conference
Start Date: November 12, 2019
End Date: November 14, 2019
Conference Location: Olympia, WA
3rd Annual Pacific Northwest Forest Vegetation Management Conference
Start Date: December 4, 2019
End Date: December 5, 2019
Conference Location: Wilsonville, OR
2020 Western Region COFE Seminar – Improving Forest Harvesting Operations
Start Date: January 9, 2020
Conference Location: Lebanon, Oregon
Mapping The Course: Timberland, Forest Products Processing, And Fiber Issues For 2020
Start Date: January 23, 2020
Conference Location: Vancouver, WA