The
Asian-based owners of substantial timberland in Deschutes and Klamath counties have put up for sale a 33,000 acres portion of their holdings for a whopping $127
million, twice what they paid for that and other land acquired in a bulk sale
of about 200,000 acres less than five years ago.
The
potential sale is listed on the website of ranch and land broker Mason &
Morse of Colorado, which said the offering includes timberland, “providing high
quality timber for harvest, great for logging industry development and
liquidation.”
Also
noted is the possibility of large homebuilding sites, “private hunting and
fishing, private parks and campgrounds,” as conditional uses on the property
which is zoned F1 forestland. The minimum lot size is 240 acres as a
conditional use, which would require county approval.
“The
property has significant long-term appreciation potential, with opportunity for
sustainable timber management, conservation, abundant recreation, in
combination with residential and mixed-use development,” the broker website
noted.
The
listing information: https://www.ranchland.com/bull-springs-skyline-forest-bend-oregon-3431
The
announcement apparently caught the Deschutes Basin Land Trust by surprise, with
the group quickly issuing a news release explaining its 15 year quest to have the
property, which it has called Skyline Forest, preserved mostly for public
recreational use and low impact sustainable timber harvest.
In
a news release Land Trust executive director Brad Chalfant said, “We remain
fully committed to the permanent conservation of Skyline Forest for its
wildlife, scenic views, and its recreational and educational potential,” adding
that the group seeks to continue its efforts with the current owners.
Although
the name Skyline Forest took hold in the past decade, the property was
originally known as the Bull Springs Tree Farm, an expansive intact acreage of
numerous parcels stretching from Bend’s northwest border to the fringes of
Sisters. The broker listing refers to the property as Bull Springs Skyline
Forest.
In
the early 2000s Crown Pacific Timberland owned the land before losing it in bankruptcy
to a subsidiary of John Hancock Insurance, which in turn sold it to Fidelity
National Timberlands, then a subsidiary of publicly-traded Fidelity National
Financial, which controls several of the nation’s largest title insurance
companies..
The
Asian investment group, Shanda Asset Management, that now owns the property
initially acquired it in 2015 through Whitefish Cascade Forest Resources LLC from the Fidelity
timberland company. The Whitefish name apparently has its origin in the
Whitefish, MT business base of Bill Foley,
chairman of Fidelity National Financial.
A
Securities and Exchange filing in 2015 by Fidelity noted the sale of the timberland to
the Asian investors for $63 million. It is not clear from company annual
reports and other documents how much Fidelity paid for the property. However,
the 2013 annual report notes it recorded a "$6 million impairment" in
2012 related to “Cascade Timberlands.”
 |
| 1: Boundary of Bull Springs Skyline - Mason & Morse |
The
Shanda Asset principals at one time had addresses in Singapore, although online
information indicates the bulk of the investors' wealth was derived from interactive
internet and online gaming in the Chinese market. Other information shows that Shanda
Group had a Hong Kong base.
According
to the broker’s estimate in the listing, the 33,000 acres is more than 93%
Ponderosa pine, or 71,905 thousand board feet, with remaining stands of mostly White
Fir. Ponderosa is a lower value species than others such as Douglas Fir and
White Pine typically found in less arid locations of Oregon, Washington Idaho and
Montana.
Information
posted online for the fall of 2019 by the University of Montana shows that the
mill-delivered price of Ponderosa for
the western part of that state averaged $333 per board foot. Another online
chart from an Idaho private broker estimated prices of $325 to $380 depending
on the tree diameter.
Assuming
a higher price of $400 per thousand board foot, the 71,905 thousand board feet of
Ponderosa estimated by the broker would currently be worth $28.774 million, or
approximately $871 per acre.
Current
Deschutes County tax records list one of Skyline Forest/Bull Springs larger
parcels of 12,543 acres at a “real market value of $7,379,870, or $588 per acre. For the
2015-2016 year at the time it was purchased by the current owners the county
estimated the real market value of that parcel at $4,865,730, or $387 per acre.
 |
| 2:Deschutes Co. Destination Resort Map (dark) |
By
most measures, the $3,848 per acre price for the 33,000 acres listed at $127
million is a staggering jump when considering the current price of standing timber, or "stumpage." It’s
reasonable to consider much of the non-timber residual value in the listing
price could be based on potential “highest and best use,” an appraisal term, which might include residential single family homes or cluster development as noted in the
listing package, with additional value in long-term forestland growth.
A more complex discounted cash flow calculation would factor in a laddered future value of long-term timberland management, including such points as periodic harvest thinning and reforestration as well as related expenses.
A more complex discounted cash flow calculation would factor in a laddered future value of long-term timberland management, including such points as periodic harvest thinning and reforestration as well as related expenses.
Another more elusive value might be assigned to the potential of carbon sequestration, the process in which timberland absorbs atmospheric carbon and releases oxygen. With climate change has emerged a "cap and trade" market whereby business and industry can obtain credits created by timberland to offset operations that contribute to greenhouse gases. Or they might trade a permit that allows a defined amount of emissions.
There had been discussions with previous owners that portions of the land might be developed as a destination resort. But current zoning and a 2017 state law requiring that destination resorts be more than 24 miles from an urban growth boundary of cities of more than 100,000 population could be impediments. The state law also requires counties to develop a wildfire protection that “demonstrates the site can be developed without being at a high overall risk of fire."
There had been discussions with previous owners that portions of the land might be developed as a destination resort. But current zoning and a 2017 state law requiring that destination resorts be more than 24 miles from an urban growth boundary of cities of more than 100,000 population could be impediments. The state law also requires counties to develop a wildfire protection that “demonstrates the site can be developed without being at a high overall risk of fire."
Two wildfires, the Two Bulls in 2014 and
Rooster Rock in 2011, have burned more than 10,000 acres of the property before
the 2015 acquisition by Shanda Asset Group.
Bend’s growth is fast approaching the population threshold related to resorts. And
the property is not currently designated on Deschutes County’s comprehensive plan
for a potential destination resort. (See map 2 - resort map area is south of Skyline).
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