All I wanted for Christmas was a topic to write about, and I did. On Dec. 17, Weyerhaeuser (stock ticker WY) announced, as “part of our ongoing effort to strategically optimize our timberland portfolio,” it will sell 630,000 acres of its Montana forestlands to an unknown “private timberland investment company” for $145 million cash, to close in the second quarter of 2020.
Wow – at the time of the merger with Weyerhaeuser, Plum Creek (PCL) still owned 770,000 acres, which was down from about 1.2 million.
The company “anticipates minimal tax liability in conjunction with the transaction,” and Montana’s three holdout mills “are not affected by this announcement.” That was all.
I wasn’t surprised that stock values hardly moved, up a penny the next day to $29.65. Annual revenues for WY are north of $7.5 billion, and the company now owns 12 million acres of working forests all across America, plus a bunch more harvesting franchise rights in Canada.
As for any specifics, all the company would say is, the “transaction includes a diverse mix of softwood species and an existing 110,000-acre conservation easement which preserves public access in perpetuity.”
Good deal? For Weyerhaeuser shareowners, of course. For the mystery buyer, I guess they hope so. As for Montanans (and everyone else) the short straw is all ours.
Kids, let’s do some comparison shopping, just for fun, using numbers from my files on other Plum Creek/PCL deals struck on these old Northern Pacific Railway land grants since things really got going in about 2000.
First, a sample of multiple sales to other ownerships in the Blackfoot over the years: In 2003, “88,000 acres of cutover forestland above the Blackfoot Valley” for $32 million ($363/acre).
Second, there’s the Montana Legacy Project, originally 320,000 acres for $510 million, or $1,593 per acre. It ended up being a bit smaller and cheaper, but the first chunk, paid for by a line-item tax break (taxpayers) written by former Sen. Max Baucus that only Plum Creek and the Nature Conservancy qualified for (wink, wink) went for $2,250 per acre. The Nature Conservancy bought and resold much of the rest to various government entities, such as 26,700 additional acres going to the Forest Service for $26 million (just under $973 per acre) but still retains – and really hopes to sell – quite a bit.
Third, there’s something called the Checkerboard Project, in Montana and Washington: The package was bought by an LLC controlled by the Nature Conservancy. $134 million, 165,000 acres, $812 an acre, with Montana’s share being 117,152 acres for $85 million ($725 an acre). Some has flipped, some will soon, like Belmont to Bureau of Land Management: 13,000 acres at “no more than the approved appraised value” of $4.99 million, or $313 an acre.
As for conservation easements, PCL sold 142,000 acres in three phases back when Judy Martz was governor, ending in 2003. The first two phases combined set aside 66,000 acres from development sale for $12 million (mostly from the federal government and Montana Fish and Wildlife, plus Avista), $181 per acre. The last phase, for about 74,000 acres, took another $34 million or so, $25 million from the Feds, $6 million from Montana Fish, Wildlife and Parks, plus contributions from Plum Creek and Bonneville mitigation funding. Average per acre: $460. Across the whole thing? $47 million into 142,000 acres is about $330 an acre.
Notice anything? Sure – few if any of these transactions are in the ballpark of this new sale’s $230 per acre for outright ownership. Why the heck not? Could it be because the mystery private buyer knows what WY’s remaining lands in Montana are really, truly worth, their true market value, or as Plum Creek used to be so fond of reminding investors: “Net Present Value?” Ah, you’re getting warmer.
But now we all know how grossly, disgustingly negligent state and federal politicians (Republicans and Democrats) have been, wasting untold millions overpaying Plum Creek and now Weyerhaeuser as both “strategically optimize” the end game of a two-decade exit strategy, mowing off first the trees and now the cash.
So what should Montana want next Christmas? How about 640,000 acres?
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