"THE FINEST TIMBERLANDS IN THE WORLD" vs. PPICs®
Kimberly-Clark is soliciting bids for its 520,000 acres of land and timber
assets located primarily in Alabama and Mississippi. The brochure offering the
first batch describes them as "among the finest timberlands in the
world." It states that "these lands have been intensively managed by
Scott Paper Company and Kimberly-Clark since the 1940's. On-going swaps, trades
and purchases during the past fifty-nine years have resulted in a land base which
is not only highly productive, but readily loggable and highly accessible.
[Their] advanced silvicultural practices have resulted in improved growth and
yield rates that have increased yield by over 60% in the last ten years." We
think that these statements are accurate.
The brochure contains detailed data on important features of the first three
geographic units. To contrast these assets with PPICs, we have summarized the
main investment features of both below:
| Asset Type |
Unit A |
Unit B |
Unit C |
PPIC's |
| Pine Plantation L&T % |
64.5 |
71.9 |
64.5 |
0.0 |
| Pine Plantation Timber-only % |
0.0 |
0.0 |
0.0 |
100.0 |
| Transition to PP L&T % |
1.6 |
3.3 |
5.7 |
0.0 |
| Convertible Natural L&T % |
13.8 |
2.3 |
21.8 |
0.0 |
| Agricultural Leases Land % |
0.2 |
0.0 |
0.0 |
0.0 |
| Pine L&T Subtotal % |
80.1 |
77.5 |
92.0 |
0.0 |
| Pine Plantation Timber-only Subtotal |
0.0 |
0.0 |
0.0 |
100.0 |
| |
| Creeks & Drains L&T % |
12.5 |
19.2 |
5.7 |
0.0 |
| River Bottoms/Delta L&T % |
3.0 |
1.1 |
0.4 |
0.0 |
| Hardwood Plantation L&T % |
0.6 |
0.2 |
0.0 |
0.0 |
| Hardwood L&T Subtotal % |
16.1 |
20.5 |
6.1 |
0.0 |
| |
| Non-forested Land % |
3.8 |
2.0 |
1.9 |
0.0 |
| |
| Other Characteristics |
| |
| Inherent SI-25 of Land under PP |
67 |
61 |
68 |
72 |
| Potential SI-25 of Land under PP |
74 |
69 |
68 |
80+ |
| Trees/acre in Plantations |
570 |
576 |
608 |
340 |
| Ages of Plantations, years |
0-26 |
0-27 |
0-28 |
1-12 |
These figures clearly show why PPICs are quite different from other timber and
land investments, even those that are "world-class." Another difference
doesn't show. Since the tracts are offered only on a sealed-bid basis, K-C did
not present any financial analyses. Preparing these for an investment with so
many different components will be a major task for the bidders. Comparatively
speaking, preparing one for a PPIC is a cinch. After a brief inspection on the
ground, you can do it with a computer in about 15 minutes. That's why we have
posted them on www.se-timbersales.com.
Which of these is best suited for your investment portfolio? It depends on
your situation and objectives, but if some of your income is taxable, PPICs are
even more profitable.
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