Timber giant Weyerhaeuser's purchase agreement to sell 630,000 acres in northwest Montana is with Southern Pine Plantations, a timberland investment company, legal counsel for the proposed buyer confirmed Saturday.
"In light of fast-developing speculation across the state, Southern Pine Plantations can confirm that we have entered into a purchase and sale agreement with Weyerhaeuser for its existing Montana timberlands," wrote James Bowditch, president of the Boone Karlberg legal firm, in an email.
Speculation was rampant last week over the identity of the “private timberland investment company” that planned to purchase the acres in northwest Montana, with concerns mainly focused on whether the long-standing public access will be retained.
Regardless of who the buyer is, locals raised concerns about ongoing access to what’s one of the largest private parcels that’s under an annual block management agreement with Montana Fish, Wildlife and Parks for about 590,000 acres.
In his email, Bowditch said Southern Pine Plantations will preserve public access and other historic practices on that land.
"While we can’t provide specifics before the deal closes, SPP has no plan to change the long-standing practices of the prior owners related to public access, forest management, grazing, existing outfitting agreements and conservation easements, and other programs," Bowditch wrote.
Last week, Lincoln County Commissioner Mark Peck had said he was “99% sure” the buyer was Southern Pines Plantation in Macon, Georgia. The company is known for buying timber lands and selling it to private parties; it most recently was in the news in the West for a 2016 sale of 172,000 acres in Idaho to Dan and Farris Wilks.
“They bought almost 200,000 acres from Potlatch and three months later sold it to the Wilks brothers for substantially more than they paid for it. That’s Southern Pines Plantation’s business model,” Peck said. “There’s this big secrecy thing by Weyerhaeuser, and I don’t trust them. If that’s the model, then to me that’s our biggest nightmare.”
A Montana-based spokesman for the Wilks family didn’t have information immediately available about a possible purchase of that land when reached for comment last week by the Missoulian.
The Wilks brothers are one of Montana’s largest landowners, and according to the New York Times, they own about 700,000 acres across several western states. In Idaho, the family closed trails and hired armed guards to patrol the former Potlatch property, ending in some cases what historically had been accessible to the public, including national forest lands.
According to news reports, the Wilks said they shut off access to their land in Idaho because of abuse of the land from campers leaving trash and cutting trees. Some of those closures have been lifted.
Dillon Tabish, the FWP Region 1 spokesperson, said last week the agency was curious about the buyer's intentions. The Missoulian spoke with Tabish while the identity of the buyer had not been confirmed.
“If they’re not interested in maintaining public access that’s been there for generations, that would be a major blow for hunting, fishing, trapping and recreating in that area. It would be a huge loss, but we’re keeping our fingers crossed that will not happen,” Tabish said.
Nick Gevock with the Montana Wildlife Federation added that with the intermixed public lands, the footprint is a lot larger than 630,000 acres.
“That’s been open to the public for decades, and there’s a genuine fear that the buyer will cut off access,” Gevock said, adding that a 7,200-acre portion of the property known as Dredger Ridge was in the process of having a conservation easement placed upon it to protect wildlife. Gevock also spoke with the Missoulian prior to buyer's identity being revealed.
"From a conservation standpoint, it’s unfortunate because there could be some missed opportunities. But we are optimistic we could protect some key wildlife habitats and have them open permanently.”
Tabish said the Dredger Ridge easement on the 630,000-acre parcel near the Lost Trail National Wildlife Area in Flathead County was being coordinated through FWP and the Trust for Public Lands, and they had hoped to close on it this summer. He’s not sure how that will move forward.
“Those are critical lands for wildlife habitat,” Tabish said, adding that the larger parcel is part of an anticipated corridor for grizzly bear migration from the Northern Continental Divide Ecosystem to the Cabinet-Yaak Ecosystem. “We’re hoping the new owners will honor the agreement, because we’ve been working on it for multiple years.”
Southern Pine Plantations' legal counsel Bowditch said he could not comment further other than to confirm the company had no plans to change "the long-standing practices of the prior owner."
"We can’t comment further at this time, but we felt it was in the public interest to provide this assurance to concerned Montanans. At this time, as agreed to between my client and Weyerhaeuser, my ability to further comment is limited," Bowditch said.
The Weyerhaeuser sale isn’t expected to be completed until the company’s second quarter, which would be sometime in the summer of 2020, and the news release said the sale wouldn’t affect the three mills Weyerhaeuser owns in Flathead County.
Jim Vashro, president of Flathead Wildlife Inc., which had been working on the Dredger Ridge easement, said he was shocked by news of the sale but is cautiously optimistic they can still work out a deal to protect the parcel from development.
“It’s absolutely prime subdivision material,” Vashro said. “There’s still an option to move forward, depending on what the new owner wants to do.”
UNEASE WITH SECRECY
It was too soon to know whether the unease over the pending sale would dissipate with the identity of the buyer confirmed, but many business and political leaders expressed disgust and disappointment over the way Weyerhaeuser announced news of the sale.
Misgivings started with Weyerhaeuser's cryptic announcement that it had the agreement to sell 630,000 acres of timberland in Lincoln and Flathead counties for $145 million in cash, which includes an existing 110,000-acre conservation easement that preserves public access forever.
It’s prime real estate in the Flathead, with large 10-to-15-square-mile swathes adjacent to the northern boundary of the Confederated Salish and Kootenai Tribes reservation and other sections intermixed with public lands in a checkerboard fashion.
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The parcel stretches at least nine sections west from the east shore of Flathead Lake, and includes private lands west of Whitefish and Kalispell all the way down to south of Plains. Generally, the parcel is intersected by Highway 2.
Weyerhaeuser had declined to release any information on who was making the purchase, and company spokesman Tom Ray only returned a call to the Missoulian saying they’re “not making any comments at this time beyond what was in the press release.”
Keith Williams from Stimson Lumber Company, which bought about 90,000 acres from Weyerhaeuser in the past four years in Lincoln County, had told the Missoulian Stimson wasn’t buying the 630,000 acres, although it had wanted the opportunity to purchase additional acreage. At the time, he said rumors were swirling.
“I do know there is a certain amount of fear and anxiety that developed from the press release," Williams said.
The Idaho Forest Group, which has seven mills in Idaho and Montana, also had confirmed it wasn't the buyer, according to Erin Plue, the IFG community outreach director. And the CSKT, whose reservation is adjacent to the Weyerhaeuser parcel, also hadn't known the identity of its new neighbor, according to spokesperson Rob McDonald.
Commissioner Peck, who also had a lengthy career in forestry with the Montana Department of Natural Resources and Conservation, was bothered by the secrecy surrounding the sale. He readily acknowledges that private companies have the right to conduct business behind closed doors, but wondered aloud why Weyerhaeuser announced the sale if they weren’t going to share details about the purchase.
“What’s amazing to me is all those people who have professional relationships with Weyerhaeuser were caught completely off guard with this,” said Peck, who added that Lincoln County has a poor relationship with Weyerhaeuser, unlike other timber companies in the area. “To me, this just reeks of a bad, immoral business practices."
Weyerhaeuser spokesman Ray earlier directed the Missoulian to the company's news release for information; he did not respond to the commissioner's characterization of the company left in a voicemail Saturday by the Missoulian.
“To come out and give a half-a--ed press release that’s totally secret and not talk to anybody when they know it will have a major impact on the entire state and the state’s economy is ridiculous,” Peck said.
However, Todd Morgan, director of the Forest Industry Research program at the University of Montana, said they could have been keeping the buyer’s identity under wraps because they were afraid public disclosure might quash what’s a sensitive deal. He added that they also may have been wanting to stay away from allegations of insider trading.
BREAKING DOWN THE DEAL
Do the math, and it appears to be a sweet deal for the buyer at an average of $230 per acre. A random check of the Montana Department of Revenue’s valuations of scores of the Weyerhaeuser parcels puts value closer to $300 to $500 per acre.
But Morgan, whose research includes timber harvesting, noted that the low per-acre price, which is an average, needs to take into consideration the lowered value of the 110,000 acres in a conservation easement, which restricts their development.
The buyer also may have entered into a deal with Weyerhaeuser to continue to provide timber for the mills, resulting in the lower per-acre price.
“At first glance it looks a little low … but they may have some timber fiber supply agreement with the buyer; that’s not uncommon,” Morgan said. “That could impact the price of the land.”
Other parts of the deal also could impact the price of the land. Morgan said they have to look at the growth potential, the development rights, restrictions on development, conservation easements or hunting or grazing leases
Another question being raised is how the sale of the timber producing lands won’t negatively affect the three Flathead County-based mills where Weyerhaeuser employees about 580 people. In the statement announcing the sale, Devin Stockfish, Weyerhaeuser president and chief executive officer, said the company’s manufacturing facilities “are not affected by this announcement.”
“I find it interesting that they’re going to keep the mills running,” said Flathead County Commissioner Pamela Holmquist. “It makes you think there will still be an opportunity for harvesting, but I don’t know.”
Her Lincoln County counterpart was blunter about what he expects might happen.
“There’s only so many models mills work under,” Peck said. “The Kalispell situation doesn’t bode well for a long-term investment. In my opinion, those mills are on life support.”
In June 2016, Weyerhaeuser announced the permanent closure of its lumber and plywood mill in Columbia Falls due to an ongoing shortage of logs. About 200 jobs were lost. A new company, SmartLam, moved into the facility to manufacture cross-laminated timber in 2017.
It’s not unusual for mills to not own the land that supplies their timber, Morgan said. The different business models have different risks, he added.
“If they’re planning on getting timber from public lands, they may not get that much or the timber sale may get litigated, and you can’t buy as much timber as you expected,” Morgan said. “If it’s on private land, you could have fire, the trees don’t grow, and you have to manage that land to be sure its needs are managed over time. So there are tradeoffs.”
Weyerhaeuser’s website calls it “one of the largest private landholders in the United States,” with a goal to “maximize the value of every acre.”
“To do this, we continually assess the value of the trees growing on the land, the natural resources located beneath the surface and the long-term potential use of the land itself,” the website states. “Some of our lands are determined to have more value to other owners and are available for purchase through a network of local, independent real estate brokers.”
Since 2016, Weyerhaeuser has sold land and businesses totaling about $3 billion. That includes:
• The November 2019 sale of about 555,000 acres of northern Michigan timberlands to Lyme Great Lakes Holding LLC for $300 million in cash.
• The October 2017 sale of its 21% ownership in the Twin Creeks Timber joint venture for $107.5 million in cash. That deal also included selling 100,000 acres of timberland in Mississippi and Georgia for $202.5 million.
• The September 2017 sale of 300,000 acres of timberland in Uruguay to a consortium led by BTG Pactual’s Timberland Investment Group for $402.5 million in cash. The sale also included a plywood and veneer manufacturing facility, a cogeneration facility and a seedling nursery.
• The December 2016 sale of its cellulose fibers pulp mills to International Paper for $2.2 billion.