Private Forests Up for Sale in Large Quantities

By Patti Bond, The Atlanta Journal-Constitution

Dec. 18–TIMBER TRACT 430, TWIGGS COUNTY — Except for the occasional logging truck rattling across a bumpy dirt road, this stretch of woods is as quiet as you might expect so far from the city. Loblolly pines, planted about 20 years ago, have formed a wall of wood in every direction, blocking out noise from the highway. On most days, there are more whitetail deer and black bears than humans.

It is remote and serene — deceptively so.

Beneath the pines, there’s a world of wheeling and dealing that could give metro Atlanta real estate players a run for their money.

Georgia’s private forests are up for sale as never before, unlocking vast acres for investment groups, land speculators and urbanites who want a slice of the country. The land is being sold and resold in ranch- and trailer-size parcels.

Enormous opportunities have opened up for the small fraternity who understand timber as real estate, among them a big deal maker, a forest consultant, a salesman and a former pro football player fulfilling a lifelong desire to own a spread of land.

These days the money’s not in the trees. It’s in the dirt.

“We’re in one of the hottest land markets that I can remember,” said Dan Brundige, the Middle Georgia land seller who puts together multimillion-dollar deals from a pickup truck.

The heat cranked up considerably after last year’s megasale of timberland by forest giant Weyerhaeuser Co. of Federal Way, Wash.

Nearly 300,000 acres in Middle Georgia was snapped up overnight, sold and resold to hundreds of individual buyers. Some tracts changed hands three times within a few months.

The land grab comes courtesy of big changes in strategy by major forest products companies. And it could lead to a big shift in Georgia agriculture, which lists timber as its leading cash crop.

Weyerhaeuser, like its competitors, spent decades accumulating timberland to feed its paper mills and sawmills. But in the last 10 years, foreign competition and mounting debt from acquisition sprees have put a drag on operations, forcing the companies to close mills.

Low on cash but flush with trees, these corporations realized they’re sitting on a gold mine in real estate. So they’re selling.

Weyerhaeuser sold its 270,000 acres in Georgia for $400 million — the largest single real estate deal ever done in the state. It soon will be dwarfed when International Paper unloads its holdings in Georgia: more than a half-million acres.

Forestry insiders wonder whether this major shift in ownership — from two large industrial holders to hundreds of individuals — also will bring a major shift in motives. Housing developments are already popping up where tree farms used to be.

The Weyerhaeuser sale offers a glimpse of Georgia’s spiking land prices. The timberland, spread across 35 counties in Middle Georgia, initially sold at an average of $1,500 an acre. Some buyers flipped the land for more than twice what they paid.

“A lot of the buyers have never owned timberland. They don’t really understand the economics of timber, but they know the history of real estate, and they know land is a good investment,” said Macon forest consultant Billy Humphries Jr.

Would-be forester to tycoon Holland Ware learned that lesson early in life.

At 15, when other kids were dreaming about cars, Ware scraped together $1,000 to buy 100 acres of land. Some 50 years later, the Hogansville native is one of the biggest tree traders in the Southeast.

Individually and with partners, he has purchased more than a million acres of timberland in 15 states in the past five years alone. He typically is the first link in a chain of transactions. His firm, St. Regis Paper Co. LLC, buys a huge chunk, then Ware sells off smaller pieces to individuals or other land dealers, who then divide the land into even smaller parcels for resale.

He worked his way to the head of a pack of bidders for the Weyerhaeuser land last year. Ware’s company, along with two other large land investment groups, snagged nearly 200,000 acres of timberland in more than 20 counties.

Ware, 68, kept roughly half his portion, 35,000 acres, for his expanding portfolio and sold the rest.

“I sell the smaller, higher-valued tracts that are near interstates or subdivisions or towns, and I keep the larger tracts to grow timber on,” Ware said.

He’s one of the more recognizable tree farmers around. It’s hard to miss Ware tooling around Hogansville in his black Rolls Royce-ish Zimmer. His work truck? A cream-colored Hummer.

For Ware, who rarely takes a walk in the woods, the thrill of the forest isn’t found in hunting or fishing, but in the pursuit of a deed.

He went to Auburn University on a forestry scholarship but lasted only four quarters.

“As soon as they told me what I was going to earn as a forester, I left,” Ware said.

The seasoned land trader is chasing what could be his biggest deal.

International Paper is putting roughly 571,000 acres up for sale, primarily in southeast Georgia, and is lining up bids now.

“I told them to go ahead and put my name on the paperwork,” Ware said.

He knows the math of trees Part forest consultant, part real estate appraiser, Billy Humphries Jr. makes his living on the math of trees.

For every acre, he has a checklist of questions: How many trees? How old? How fast will they grow? How much can be cut? Which gets to the point of this whole exercise: How much are they worth?

Humphries’ Macon-based firm, Forest Resource Consultants, analyzes an acre of timber like a piece of rental property, projecting the income stream over 25 to 40 years, the typical growth period for a stand of pines.

“Timber growers are in it for the long haul,” Humphries noted. “You’ve got to be patient in this business. It’s not a get-rich-quick kind of thing.”

Historically, people could count on timber as a low-risk, steady investment. Things aren’t adding up lately, though, for most timberland owners in Georgia.

For one thing, so-called stumpage prices, what landowners get for a load of logs, have dropped for most of the past five years. A glut of trees on the market, caused partly by a government reforestation program in the 1980s and 1990s, hasn’t helped either. Add in soaring property taxes and the expense of replanting and maintaining a stand of timber, and it’s hard to keep people focused on future returns when present ones don’t look so hot, Humphries said.

“With the low prices we’re getting, there’s less motivation for people to grow timber now,” he said.

Still, as he sees it, there’s no better way to mix business and pleasure.

Pines have always been part of his scenery, a backdrop for his childhood in Jeffersonville, where his grandfather had about 3,000 acres of timberland. Humphries, 63, has 1,800 acres of his own, near the old family place in Twiggs County. It’s working timberland, but it’s also a play forest for friends and the grandkids.

His Chevy Suburban, no matter which direction he’s headed on his land, is flanked by pines. The older ones form a canopy that blocks the view of the sky, and the young ones push up from below.

If this is just a few thousand acres, imagine the 24 million spread across Georgia.

Land a safe investment There’s more than enough timberland, in Dan Brundige’s view, to go around.

Brundige belongs to a tightly packed cluster of Macon-area dealers who gobble up pieces of timberland and farmland from bigger fish like Ware, then resell them — often in smaller but pricier pieces.

In khaki shorts and Reeboks, Brundige, 48, looks as if he’s just come in from a fishing trip, not another big sale. This time the buyer was an investor from Florida.

“I made out OK,” Brundige said with a wink. Except for the casual, rumpled outfit, he’s everything you’d expect in a salesman. Lots of grins. Lots of jokes. “If I didn’t sell land, I probably would’ve been a preacher. Character-wise, though, they wouldn’t let me in,” he said.

As he tells it, a funny and wonderful thing has happened on the way to the closing table: The huge, pricey parcels are selling like crazy.

“There’s a lot of pent-up demand, and if you’ve got large, desirable tracts in the $2 million to $10 million range, it’s a seller’s market,” he said. “There’s money out there like I’ve never seen before.”

Demand is up, Brundige said, partly because people have gotten burned on the stock market, so they’re turning to land as a safe and steady place to put cash. Plus, there’s a lot of money flowing from so-called Section 1031 transactions, referring to a provision of the federal tax code that has become popular with real estate speculators and investors.

In a 1031 exchange, a person who sells commercial or investment property may defer taxes by rolling the gains into a similar piece of property. Middle Georgia’s piney countryside has become very attractive to this type of buyer, as well as professionals from Atlanta and Florida who are looking for a nearby getaway.

“There are a lot of successful businessmen who grew up in small towns, and they want to get out of traffic jams for a weekend and just get away from civilization,” Brundige said. “They’ve got children they want to introduce to the outdoors. They want to teach them how to fish or shoot a gun or maybe go horseback riding.”

And they can’t go wrong investing in land, he notes. “Seven years ago, timberland was going for $400 to $700 an acre, and now $1,000 to $1,200 is pretty much the standard.”

Brundige tries to stand out from his many competitors by catering to higher-end buyers who want a big spread. Much like a residential investor who buys fixer-uppers, he’ll purchase a tract of land and dress it up with roads and ponds, in effect taming the forest and making it ready to move onto and enjoy.

On the other end of the spectrum, some dealers are buying 100-acre parcels, then carving them up into 1- to 10-acre lots for mobile home developments.

Either type of residential buyer could throw off the rhythm of Georgia’s timber industry. By breaking up 270,000 acres of commercial timberland into hundreds of chunks, there’s the possibility the land will fall out of steady timber production.

Once industrial land is broken up, it likely will never be put back together again. And Georgia’s tax structure, forestry insiders say, is accelerating the pace of the breakup. Weyerhaeuser cited taxes as one motivator in its big land sale.

Unlike surrounding states, Georgia taxes a tract of corporate-owned timberland at fair market value rather than on the basis of its actual use. That means, if it’s near an interstate or fast-growing area, the land is taxed at its potential use as a subdivision or shopping mall — even if it’s only occupied by trees.

Forestry groups and environmentalists say the tax structure is at odds with green space conservation. Large landowners are motivated to sell, often to developers.

Those concerns peaked after a recent report from the University of Georgia and the U.S. Forest Service predicted that one-quarter of the state’s timberland might be converted to other uses, such as subdivisions, in the next five years.

But Brundige and others on the front lines say that’s a lot of land to be paved over. They don’t buy it.

“The reality is, yes, north of Macon in some of the major growth corridors ? the land will be sold to a developer,” Brundige said. “As far as my personal experience goes, buying tracts in Macon, Dooly, Sumter counties, south of Macon along I-75 and I-16, I haven’t seen any of that. And I don’t expect to see that anytime soon.”

Taking his uncle’s advice Yet every time a piece of land changes hands, there’s the potential that the use of the land will change, too.

Steve Putnal of Macon said he was keeping his land in trees, but it’s the scenery and the wildlife, not necessarily the pines, that get this hunting enthusiast worked up.

He has wanted his own piece of Georgia’s woods since he was a teenager. “I used to ride around with my mother and father, looking at land for sale,” Putnal said.

His Uncle Carl, though, really gave him the bug.

“He worked for a pulpwood company, and he always told me, ‘If you own 500 acres, you’re a millionaire.’” Putnal left Macon for Georgia Tech on a football scholarship, but he never forgot his uncle’s advice, even when he landed a pro contract with the Detroit Lions.

“By playing professional football, I thought I’d be able to afford my own land,” Putnal said.

He injured his neck in his rookie season, forcing him to look for other ways to bankroll his plan. He became a nuclear pharmacist, handling radioactive drugs that help diagnose cancer and other diseases. Along with his father, Putnal bought his first 971 acres in 1987. He kept adding: 29 acres, then 91, 934, 200 and 9.75, he notes, ticking off the chunks of his land like children’s names.

When he bought them, they held row crops and cow pastures. Putnal transformed the tracts into a hunter’s paradise. He planted 800,000 pines, 10,000 oaks, a couple of thousand persimmons and 300 cypress trees. And he put in ponds and bogs. Whitetail deer and turkey crisscross what he now calls Dixieland Plantation.

Then the Weyerhaeuser deal led to a bonanza of land already covered in trees: Putnal bought 3,500 acres last year, part of the huge swath that had been purchased by Holland Ware’s firm.

The Twiggs County property, which includes Timber Tract 430, is just a short ride from his other acres. Putnal said he bought it partially as a defensive move, to keep from having the land around his hunting lodge cut into trailer lots and other developments. Mostly, though, the land sold itself, he said.

High ridges drop 200 feet into deep ravines near the Ocmulgee River bottom. In the most scenic spots, you can see miles of trees in every direction. Deer and black bear are a common sight, too.

At 54, Putnal is twice as old as most of the pine trees, but you wouldn’t know it from his boyish face. The former linebacker would rather look at his land than watch football on TV. He spends most weekends riding around on his land, looking for tracks left by animals and trespassers.

Owning land comes with a host of problems, he notes, from taxes to wandering kids on four-wheelers.

And then there are all those trees to tend to. Putnal’s goal is to cut 300 acres of timber a year, generating enough money to cover expenses while keeping his forests thinned out.

Now is not the best time for a budding timber harvester, though.

He had planned to cut some pulpwood last year but couldn’t find any buyers because of the glut of wood on the market.

The situation has gotten so serious that the timber industry is looking into alternative uses for trees. Forestry trade advocates are promoting the sale of carbon credits to polluters, whereby landowners could be paid for the amount of carbon dioxide their trees cleanse from the air. They’re also floating the idea that trees might be turned into ethanol and other alternative fuel sources.

It all sounds rather far-fetched to Putnal.

Like most private owners, his primary income doesn’t come from the trees. That comes from his nine pharmacies.

Putnal has a grander plan for his pines. When he retires, he’s going to leave Macon and move right out in the middle of them.

He drives up to a remote, high point where his wife has picked a spot for the house. Just then, he homes in on a figure in the distance. A broad-chested, trophy-size buck, the first one he has seen all day, is foraging in a bushy section at the edge of a pine stand.

“When you first learn to hunt or fish, you want to catch just one. Then after you catch a few, you want to catch a lot. Then after you catch a lot, you want to catch a big one. Then after you catch a big one, you want the biggest one there is,” he said. “With deer, in order to have the big ones, you’ve got to have large tracts of timber.”

Thanks to the Weyerhaeuser sale, he was able to get just that.

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