Oct 2018 News — Con Men

Oct 2018 News — Con Men

As most of you know, our industry went from the big vertically integrated companies where timberland was a closely held asset for the paper and saw mills, to a world where the timberland has now been acquired by timber investment firms. That occurred in large extent in the early 2000’s, although you could draw the line even earlier than that.

Most of those transactions occurred with the purchaser also signing a wood supply agreement for the next 15, 20 or 30 years, depending on the contract and the companies negotiating. These agreements specified how much timber from the land the mills wanted back over the specified period.

Now it’s been 15 plus years and many of the agreements are expiring and/or being renegotiated. This is leading to a mixed bag of investment and ownership types. The highest and best use land has been spun into real estate deals where it made the most sense, and now high net worth individuals are investing in the smaller block deals (5000-50000 acres) while larger deals are still made by the various timberland investment organizations.

These trends are furthering a business model where major forest products companies specialize in manufacturing and look to others who specialize in land ownership to provide their raw materials.

Obviously, any change in the industry provides opportunity for those who take advantage of the system for their own gain.

This month I’m sharing a story of some con men who have bilked investors with a phony industrial park. Then I’ve put together some recommendations for those looking to invest in land, whether you are a timber company looking to reinvest cash from a prior land sale or an investor or landowner looking to purchase more land as your own investment.

And don’t forget the Forest Resources Association is having their forest products security group meeting next week in Starkville, MS, October 31 – November 1st. It’s a great place to hear more theft and fraud case studies. Hope to see you there.   Oct 2018 — Con Men