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GLOBAL FOREST INVESTMENT VALUATION AND ANALYSIS

Appraising Timberland Investments: Mature versus

Developing Markets

Jeff Wikle, MAI

TerraSource Valuation, LLC

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May 16, 2013

About TerraSource Valuation

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Mature Markets

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Targeted Precise Value Mature Market Regions: • US South, Northwest and Northeast • New Zealand • Canada

Three Approaches: • Cost (CA) • Sales (SCA) • Income (IA)

Cost Approach

Sales Comparison

Approach

Income Approach

Developing Markets

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Imprecise Value - One or Two Approaches Developing Markets: • Brazil • Uruguay • Chile • Australia

Emerging Markets: • SE Asia • Africa

Income Approach

Cost Approach

Mature Markets

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Forest

• Silvics - Trees

• Mgmt. Costs

Timber Markets

• Harvest & Hauling Costs

• Retail Timber Pricing

Timberland Markets

• Timber and Land Value Allocation

Data Sources

Mature Markets

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Timber Value

Discount or

Premium

Land Value

Cost Approach

Value Estimate

$

Timber Markets

Timberland Markets

Cost Approach Procedure

Mature Markets

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Subject Land Units $/ha

Subject Timber Units $/m3

Sales Comparison

Approach Value

Estimate

$

Comparable Sales (Land & Timber)

Allocated Land Units

Allocated Timber Units

Sales Comparison Procedure

Mature Markets

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Forest

Timber Markets

Timberland Markets

Discounted Cash Flow Analysis (DCF) $

Income Approach Procedure Silvics

and Costs

Retail Timber Prices

Land Allocation

(Reversion)

Mature Markets

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Reconciliation

Cost Approach

Sales Comparison

Approach

Income Approach

Developing Markets

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Forest

• Silvics ? • Mgmt. Costs

Timber Markets

• Harvesting & Hauling Costs ?

• Retail Timber Pricing ?

• Export residual analytics ?

Timberland Markets

• Agricultural Land Value

• Land Value Allocation ?

Developing Markets

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Cost Approach Value Estimate $

Cost Approach Procedure

Timber Markets

Land Markets

!?!

Ag. Bare Land/Sales or Leases

Land Value

Retail Timber Value

Developing Markets

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Sales Comparison Procedure

Few or No Sales

No Land Value Allocations

No Timber Value Allocations

!?! ?

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? Little Transparency and Little or No Market Verification

Timberland Markets Values

Sales Comparison Approach $

Developing Markets

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Forest !?!

Retail Timber Pricing

Timber Markets

Silvics & Costs

Ag. Land Markets

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No Verification Timberland

Markets

Too high values? !?! Discount

Rate

Reversion

Income Approach Procedure

Income Approach $

Developing Markets

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Little market verification of components

Income Approach

Cost Approach

Reconciliation

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? Auditors

Thank you!!

Clients

Questions

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