VARDAMAN VIRTUAL FORESTRY COMPANY

The Most Direct Link to Knowledge Workers in the Southeast Forest Economy

WANTED: INDIVIDUAL OR ORGANIZATION TO PLACE PLANTATION INVESTMENTS WITH INSTITUTIONAL INVESTORS

Vardaman Pine Plantation Partners (VPPP), a limited partnership, needs help to exploit an unusual investment opportunity in pine plantations in southeastern United States. VPPP has nearly exhausted its $2,000,000 seed capital at the very time it sees evidence that at least $100,000,000 of similar plantations can be quickly acquired on suitable terms.

VPPP's plantation investments are unique. They include only the timber (but not the land) of the present crop of existing plantations or the right to grow from scratch one crop of timber on vacant land. VPPP usually makes annual payments to landowners, which stay the same regardless of inflation, for 50% to 100% interests in these plantations. The plantations range in size from 40 acres (the smallest tract that will allow a sealed-bid sale of the crop) to slightly over 500 acres. They are located only in superior timber markets from North Carolina to Mississippi south of the normal limit of ice storms and inland from the normal damage from hurricanes. All are pure loblolly pine with no waste space for hardwood stream bottoms, unfavorable logging conditions, or access roads. All are adjacent to public roads, so no additional rights of way are required.

As a general rule, a plantation's forest-management plan calls for planting a specific number of trees, thinning them at age 12, harvesting them at age 22, and holding the land for an additional year to allow the buyer to cut and remove his timber. When they are started from scratch, they call for initial investment of $120 to $250 per acre to establish the crop, annual payments to the landowner, small cash flows from the thinnings, large cash flows from the harvest, and very low management expenses each year. When VPPP buys an interest in an existing plantation, e.g., one that is nine years old, its annual payments to the landowner are much higher, but its cash flows come much sooner. Much information about how these plantations develop appears elsewhere in the 200 pages of this Web site.

VPPP treats each plantation as if it were an individual stock in a mutual fund. Its management plan is prepared with a computerized growth-and-yield model, so that unless there has been an unusual casualty loss, timber volume and value can be estimated with considerable accuracy at any time. "Marking to market" is an easy task. Its cash flow analysis is also computerized, and any number of plantations can be combined to meet an investor's needs for size or diversification or both.

Liquidity is a problem with VPPP plantations. It can come only from timber sales or, to a small extent, re-purchase of the plantations by the landowner according to a formula. VPPP knows of no other market for them.

VPPP provides first-rate on-the-ground management of the plantations at costs that are already incorporated in the cash-flow schedules. Its principals expect to maintain a substantial equity interest and can structure their main compensation so that it is proportional to and coincidental with the pay-off for institutional investors.

VPPP can now buy these plantations at prices to yield an estimated 10% to 12% real and, at the same time, pay modest fees for placement. If institutions or other investors that will accept lower real rates can be found, and if the placement agency will structure its major fees to match VPPP's structure for them, very large future incomes can be accumulated.

VPPP is anxious to get in touch with anyone who might be able to place its plantations with large, long-term investors. For further information or discussion, call Jim Vardaman at 1+800+455-4568.