Reviewing a Timberland Appraisal for Accuracy and Credibility

Tuesday – June 30, 2015

1:00 pm Overview of Forest Management: Concepts and Terminology
o What are the major timber producing regions of the U.S?
     o What are the major timber types within each region?
     o Site productivity: The potential of an area to grow trees
     o Timber Stands: A management entity within forestry
     o Timber management strategies: Even-aged and uneven-aged         management
     o Improving the growth of timber through silvicultural practices
     o When to harvest timber: Rotation length and financial vs. biological maturity
     o Logging methods for timber harvest: ground vs. cable and types of equipment
     o Where do the logs go? Timber products, relative values, and their end-use markets

2:15 Counting Your Trees: An Overview of Timber Inventories
     o Measuring nature: Trees are not cans of beans
     o Sampling techniques and statistics used in forestry inventories
     o How do we measure trees? Units of measurement – cubic, board feet,   and weight measures
     o Field measurement techniques for counting trees in the field
     o Back at the office: Compilation of data into inventory programs
     o How often are trees measured? Setting inventory cycles
     o Growing trees between field measurements
     o Integrating inventory data with geographic information systems

2:45      Break

3:00 Counting Your Trees (Continued)

3:30 Drivers of Timberland Value
     o Timber type
     o Site productivity
     o Terrain
     o Age class distribution
     o Stocking of trees
     o Location
     o Road systems
     o Management history
     o Impact of regulatory and environmental issues on value
     o Other cost considerations

4:30      Adjourn

Wednesday – July 1, 2015

8:00 am Key Concepts and Principles of Valuation
     o Fundamental land rights: It is more than just the physical property
     o Different forms of land ownership
     o Value is an opinion as of a specific date
     o The concept of Highest and Best Use
     o Types of value
     o Elements of market value

8:30 ABCs of Uniform Standards of Professional Appraisal Practice (USPAP)
     o Applicability
     o USPAP Background
     o Components of USPAP
     o Ethics rule
     o Recordkeeping rule
     o Competency rule
     o Scope of work questions
     o Client and intended users
     o Intended use
     o USPAP Standards
     o Extraordinary assumptions & hypothetical conditions

9:30      Break

10:00 The Three Approaches to Valuation and Their Use in Timberland Appraisal: How does the Appraiser Decide Which Approaches to Use?
     o Income Approach
     o Sales Comparison Approach
     o Cost Approach

10:30 Key Drivers of Value Under the Income Approach
o Using a single stand as an example
o Applying income approach to the whole property
o Key factors affecting discounted cash flow valuations
o Projecting log prices
o Determining market discount rate
o Determining the growth and yield of the forest
o Calculating production and management costs
o Reversion

Noon      Lunch (included with registration)

1:00 Selection of Sales and Adjustments Under the Sales Comparison Approach
     o Selecting “comparable” sales
     o Sale adjustments and analysis

2:00 Is the Cost Approach Appropriate for Timberland Appraisals?
o Example of young stand valuation
     o Use of cost approach in other regions

2:30      Break

2:45 Effective Appraisal Review and Interaction with the Appraiser
     o How to select the right appraiser
     o Providing the right data to the appraiser
     o Complete appraisal review checklist

4:00      Session adjourns

4:15 Optional Session: Emerging International Standards: IFRS and IVS
     o What are International Valuation Standards?
     o Mark to market accounting – IFRS
     o IFRS vs. GAAP
     o IFRS valuation requirements
     o Appraisal standards under IVS: Land value, biological assets and improvements.

5:00      Optional session adjourns

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.