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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
4
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
9
Forest
Timber Markets
Timberland Markets
Discounted Cash Flow Analysis (DCF) $
Income Approach Procedure Silvics
and Costs
Retail Timber Prices
Land Allocation
(Reversion)
Mature Markets
10
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
12
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
!?! ?
?
? 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
!?!
No Verification Timberland
Markets
Too high values? !?! Discount
Rate
Reversion
Income Approach Procedure
Income Approach $
Developing Markets
15
Little market verification of components
Income Approach
Cost Approach
Reconciliation
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? Auditors
Thank you!!
Clients
Questions
A
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