Reviewing a Timberland Appraisal for Accuracy and Credibility

Agenda

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

Wednesday – May 29, 2019

1:00 pm Introduction: Course Overview and Objectives

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

1:20 Overview 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

2:00 Drivers of Timberland Value

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

3:00 Break

3:15 Key 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

4:00 The 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 am Application of the Income Approach to Small Properties

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

8:30 Income Approach Exercise

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

10:00 Break

10:15 Application 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

11:15 Selection 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)

1:00 Sales Comparison Approach Exercise

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

2:15 Reconciling to a Final Value Opinion

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

2:45 Break

3:00 Effective 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.