Growing interest & demand for merchantable timber and carbon credits..any experience?

Question

Howdy!

I’m a investor focused real estate broker on the OR & CA coasts but have recently seen a spike in interest and demand from investors, some with quite significant and prominent reputations, seeking merchantable timber lands and properties. Aside from conventional harvesting and land returns several have expressed interest on account of carbon capture and credits.

Additionally several recent $100M+ closed transactions have closed nationally led by institutional investors and hedge funds pointing to a growing area of investor interest.

I was hoping to connect with some brokers or investors with logging and investment experience in OR or beyond, as I would like to educate myself and build a network of brokers that can help facilitate larger and more complex transactions statewide. Also I think it’s such an interesting area of real estate that seemingly will be more critical and valuable over the near to long term.

As an example of future growth potential happening NOW, a large local lender recently sought my cooperation as they work closely with several active portfolio investors and requested help in identifying quality potential properties for investment.

For example: how do investors assess value? Is it mostly based on board feet and underlying value of cleared land?

How do carbon credits influence value and projections?

Some of this might be beyond this resource but I will update as my experience in the area evolves. We’re in tentative discussions on 200+ acres with 3-4M board feet of Douglas Fir, Alder and Redwood..

Anyone ever been party to a timber appraisal?

Oh and what’s the commission? Just kidding.

Thanks!

Courtney Buck · Answer

I just went through the appraisal process on 114 acres of timberland in Alabama I just purchased. The land has two values that are combined for one overall value: surface value and timber value if it were harvested at that time. I have timber on my land but it's only 8 years old and has no commercial value (yet). So my land was only appraised on the surface value. Whoever you hire to perform the appraisal...make sure they are certified by the state and have experience with land/timber...get a copy of the appraisal too. They might bring in a forester to assist for an extra fee but I found it was totally worth it.

Like you, I'm very interested in carbon credits as well. I want this land to cashflow as soon as possible. Let me know if you have any other questions, I'm learning as well:)

Jay Hinrichs · Answer

Timber and Timber land values change greatly by location.  With the PNW some of the most valuable timber land in the world.  So even 8 year old reprod would have a timber value out this way.  U simply need a forester who is known in the area and have them do a timber cruise.  they can do one via airial photos and sample plots or they can plot the entire property  ( which will cost more )  Not sure todays rates but from years past a 200 acre cruise depending on the method could be 2k to 7k pretty easy.. If it has Redwood ( Highly valuable) then your talking southern oregon coast.  There will be Foresters in Grants Pass or Medford that I  am sure service the area and maybe Coos Bay.  The value will depend on how much of each species is merch and or current age and the growing site IE how fast will the Timber grow in that specific location. As you know this VARIES hugely in the NW so its site specific..  then also will come down to how mountainous it is. Can it be ground logged or do you need to tower log or helicopter log the coast as you know can be some steep rough terrain.. Along with the road system if any and access to county roads.  Timber back east in most areas is on fairly level ground so they pretty much can feller bunch it and mow it down like grass.

Jill F. · Answer

I was only coming to this thread to @Jay Hinrichs because he has extensive knowledge on this topic but I see he has already been here. You found the expert.

AJ Wong · Answer

Thank you so much Courtney! This is what is so impressive about BP. Real people with real experience. Let’s connect for sure. We’re ahead of the curve!

Christopher D. · Answer

@AJ Wong A forester can write

up a forest management plan for the property then they'll determine the amount of carbon you can sequester/ store based off of tree size, health, projected growth rates, "leaking" and surface fuels too I believe. I do small logging jobs here in CA, primarily fire cleanup and wildfire prevention through vegetation management. I have land and have been looking into the steps to sell the potential carbon credits as well and if it's more lucrative than harvesting the timber to offset purchase costs. None of the information is concise and i've spend hours trying to research this topic. Let me know if you find anything out!

Growing interest & demand for merchantable timber and carbon credits..any experience?

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