For our clients who are growing planted stands of pine, thinning the stands is a very important tool for maximizing returns.

In a pre-commercial thinning (see Managing Forest Growth) the trees are too small to have commercial value, and cut trees are usually left in the stand to decay. In a commercial thinning, the trees being cut are big enough to be sold, and are removed from the stand and sent to market.

The primary reason to thin pine plantations is to remove the smallest and poorest-formed trees in the stand. This will …

Concentrate growth on the most valuable crop trees: An acre of land is capable of only producing so much wood. If the acre is fully stocked with trees, thinning the stand does not increase the amount of volume that that acre will produce. What thinning can do is increase the growth rate for individual trees by decreasing competition and increasing water, nutrients and sunlight available to each. Thinning then should be used to concentrate the growth of that acre of land on the biggest and best crop trees available by removing the poorest performers. Since these best sawtimber trees will be worth two to three times as much as the pulpwood trees they are replacing, it is obvious that a proper thinning can increase returns dramatically.

Reduce the risk from insects: The biggest risk to planted pine is from insects, most damaging being the Southern Pine Beetle. These insects are always present in the forest, and pine trees have natural ways to defend themselves. The insects only become a problem when trees become stressed (drought for example) and can no longer ward off attack. The first trees to succumb are the weakest, the smallest, the poorest formed, and the diseased. Only after the insects have built their populations in these breeding trees can they overwhelm the healthier trees in the stand. The obvious way to lower the risk? Remove the poorest and weakest trees in the stand when you thin.

With judicious thinning, the investment returns will be significantly greater at final harvest.

Many of our clients own land for their personal recreation and/or hunting.  For these clients we design and implement plans that realize the land’s potential for those activities.  Some of the things that can be considered are:

• road layout and construction to emphasize aesthetics and function
• green field location for maximum effect
• planting composition for targeted wildlife
• strategic timber harvests to maximize edge effect and aesthetics
• pond and lake location and construction

It is surprising to people not associated with timber or wildlife that managing the land for one is not exclusive of the other: wildlife populations are typically vigorous and strong in actively-managed timber stands.

The key to managing any investment is making good decisions, and the key to good decisions is having complete, accurate, and updated information at hand.  That is why we developed our Growing Assets Information Management System (IMS).
IMS was developed in response to the need to organize the thousands of bits of information that are pertinent to any one single property. This information is essential to guiding decisions that minimize costs, maximize returns, protect the investment, reduce tax burdens, and facilitate sales and inheritance. If you have command of the information, you have command of the investment.
All of our clients are entered into IMS.  Any activity or information that affects the investment is recorded.  It is the single most important tool we use to keep track of thousands of acres of land and their cash flows, investment performance, tax bills, hunting leases, and basis information.  It allows us to keep a record of history.  It allows us to instantly identify which stands, out of thousands of acres, could benefit when a timber market moves. It is quite simply the reason we are able to maximize asset value for our clients.
All this information is not just valuable for us as managers.  Periodic IMS reports can be produced that allow landowners, family members, and managers the same detailed view of the history, current status and future activities for the investment.  Clients such as partnerships, corporations, and trusts, find these  reports an ideal way to provide updates to nonactive partners and stockholders.  For clients who fund their IRAs and 401ks with timberland, the IMS report is an excellent way to keep up with the activity of the investment and help ensure the investment remains qualified by the IRS.

Most of our clients’ primary goal is the sale of their mature timber, and over the last fifty years we have found four things that are crucial to maximizing returns and having a successful sale:

Knowledge  This seems obvious, but knowing what you have for sale is essential for targeting markets, and deciding on a minimum acceptable price. Yet, we see timber selling everyday by landowners who have no idea of how much or what they are selling. One thing for certain, the professional buyer definitely knows, and timber buyers are under no obligation to tell the seller. Their only duty is to buy timber as cheaply as they can. Our duty is to sell as high as we can. Knowledge lets you know which is which.

Exposure  The more people know that timber is for sale, the more likely the landowner will get the top market price on a particular day. Negotiate with one or two buyers and chances are you will sell below what the market will bear. Make the sale available to more and competition drives the price up. There are typically over one hundred potential buyers in a market area. We make sure they all know about upcoming sales. Growing Assets also gets added exposure to the market because of the sheer volume of wood we manage. Mills and production facilities are keenly interested in what we have for sale.

Timing  Even if you get the top dollar that the market will bear at a particular time, it is no guarantee that on another day the market could not pay more. Timber markets have seasonal and economic cycles. They also respond to local weather, politics and economics that on the surface seem innocuous. The key is timing sales to hit market peaks.

SALES PROVISIONS  Selling the timber is only half the job. Special care has to be given to the timber sale agreement so that the landowner, his land and the environment are all protected during the harvest.

For many of our larger or absentee clients who do not use their land for personal hunting, we lease their hunting rights to local hunting clubs.  This provides several advantages:

• The lease generates revenue for the landowners. These payments typically pay property taxes each year, sometimes more.
• A good hunting club becomes our eyes and ears on the ground, and alerts us when issues arise that we need to know about (wildfires or illegal dumping for example).
• Hunting clubs commonly spend additional money to maintain roads, post boundaries, maintain green fields, and enhance wildlife.
• Growing Assets carries a hunting liability insurance policy that protects both the landowner and the hunting clubs from accidents.

Steps always need to be taken to protect land and timber value. The biggest threats are to the land from erosion, to the timber from mortality, and to the investment from theft, regulations, and encroachment. Here are some of the steps we take to reduce risk:

Erosion   Roads provide the biggest opportunity for erosion, but a well designed road system provides the best opportunity to permanently solve the problem. We excel at road design and work with some of the best contractors in the business to get them put in.

Mortality  Timber dies, and when it does it takes its value with it. Mortality usually comes from insects, fire and natural causes.
Insects can be controlled by planting good quality trees and keeping the stand healthy. Thinning stands to take out the weakest trees is one of the best tools available.
Surprisingly, fire in the southeast does not pose a large risk, although there are certain areas that are in more jeopardy than others. In high risk zones, permanent fire breaks can be established and maintained to reduce the threat. Good relations with neighbors and a good hunting club help as well.
Finally, trees are like every other living organism. They have life cycles; they can get sick, get a disease or simply get old. The key is to identify the trees and stands at greatest risk and adjust harvesting schedules accordingly.
Mortality can not always be avoided, and occasionally there may come a time when the precautions aren’t enough and trees do die before their time . In such cases we move fast to salvage the timber before it can lose value.

Theft, Regulations and Encroachments  If you have something of value, it is not long before someone tries to take it.
Timber theft can occur by either someone harvesting timber without the landowner s knowledge, or by the landowner selling timber but not being compensated for all that is cut. Regular inspections of property and good relations with neighbors and hunting clubs goes a long way toward reducing outright theft. So does regular maintenance of boundary lines. If you are selling by the ton, knowing timber volumes, having a comprehensive contract, having regular inspections, and knowing the players in the market goes a long way to insure full compensation for timber being cut.
Land theft is a little more subtle, but the threat is just as real. The most common tools used are legal challenges, backed by suspect affidavits, appraisals and depositions. This is not to be confused with true land disputes in which the court is asked to resolve real conflicts. These are opportunistic and orchestrated attempts to use legal avenues to create conflict and obtain land. Most properties are not at risk, but identifying those that are, researching their history and keeping good records is an excellent way to lower the threat.
Encroachments occur when someone s use of a piece of property creates a claim against the ownership. Regular inspections, both from the ground and the air, and proper boundary maintenance are usually sufficient to identifying encroachments. Once they have been found, they have to be challenged and resolved or risk the land being possessed adversely.

Sooner or later most clients have to face the task of moving assets out of their estate. Planning the disposition of an estate often requires input not just from timberland consultants, but also from attorneys, tax advisors, CPAs and other asset-class managers.  We  often act as coordinator among all the specialists because of our knowledge and experience with all the issues involved, to ensure the estate plan is crafted efficiently.

We have found over the years that the families who are able to transition to the next generation without strife are the exception, not the rule. Competing interests, emotions and desires are to be expected and need to be addressed from the very start. They never simply go away, but patient resolution with the aid of an impartial party is the best way to arrive at a solution that is amenable to all.