TIMBER MANAGER - SEARCHPresented y:
John Griffith, - Senior Investment Consultant
Eric Bailey, CFA - Managing Principal
102 Whiting Street, Suite 400, Tampa, FL 33602-5140 Tel: 813/218-5000
Wells Fargo Advisors Financial Network, LLC (WFAFN), Member NASD & SIPC. CapTrust Financial Advisors is a separate entity from F N.
Correlation 'fable
Comparative Performance
Futid Comparison Tables
Forest Investment Associates
Hancock i ber
lvdolp us Woodlands Group
N Timber
Timbervest
Appe-ndIx
6
2
Correlation x: Returns ass. Barclays Capital Intermediate U.S. Government/Credit
July 2000 - June 2010
(1) (2) (3) (4) (5) (6) (7) (3)
1) NCREIF- fi erland Returns 1.00
2} S& 500 -0.06 1.00
3) Russell 1000 -0.06 1.00 1.00
4} Russell 2000 -0.13 0.94 0.94 1.00
5) Wilshire 5000 -0.06 1.00 1.00 0.95 1.00
6} SE iVareit Real Estate 50 -0.14 0.71 0.71 0.77 0.71 1.00
7) NCREIF-OEDC Realestate Index 0.32 0.13 0.12 0.13 0.12 0.24 1.00
S) Barclays Capital U.S. Aggregate 0.05 -0.37 -0.36 -0.39 -0.39 -0.02 -0.11 1.00
9) Barclays Capital Intermediate U.S. Govern n-ent!Cred 0.05 -0.39 -0.39 -0.41 -0.40 -0.06 -0.11 0.96
Please refer to important disclosures on the final two pages of this presentation
(9)
1.00
3
5
4
3
2
x
1
1
I
1 year 3 years 5 years
NCREIF - Tin-berl and Returns
0 S&P 500
Russell 1000
0 Russell 2000
7 years 10 years 15 years
0 FTSE Nareit Real Estate 50
NCREIF-OEDC Realestate Index
• Barclays Caotal U.S. Aggregate
4 Marla Benchnark
Barclays Capital Internediate U.S. GmrnnenNCredit
20 years
1 year 3 years 5 years 7 years 10 years 15 years 20 years
NCREIF - Timberland Retums -3.60 6.09 9.85 10.22 7.13 8.39 11.48
S&P Soo 14.43 -9.81 -0.79 2.84 -1.59 6.24 7.67
Russell 1000 15.24 -9.54 -0.56 3.29 -1.22 6.47 7.93
Russell 2000 21.48 -8.60 0.37 5.83 3.00 6.63 8.15
Wilshire 5000 15.68 -9.36 -0.28 3.75 -0.78 6.43 7.87
FTSE Nareit Real Estate 50 52.27 -8.87 -0.07 8.05 9.51 N/A N/A
NCREIF-CEDCRealestate Index -5.98 -10.98 -0.21 3.68 4.87 7.53 5.47
Barclays Capital U.S. Agregate 9.50 7.55 5.54 4.96 6.47 6.39 7.14
Barclays Capital Interned iie F --. Go-ent/Credit 8.28 6.98 5.26 4.42 6.06 5.98 6.67
Please refer to important disclosures on the final two pages of this presentation
4
501
30-
20-
10-
0- ::
10-
20-
30-
40-
2009 2008 2007 2006
® NCREIF- Timberland Returns
® S&P 500
® Russel 1000
2005 2004
O FTSE Naret Real Estate 50
NCREIF-OEDC Realestate Index
• Barclays Capital U.S. Aggregate
2003 2002 2001 2000
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
NCREIF - TfrnberlmdRetums -4.76% 9.52% 18.43% 13.68% 19.35% 11.20% 7.66% 1.88% -5.25% 4.41%
S&P Soo 26.46% -37.00% 5.49% 15.79% 4.91% 10.88% 28.68% -22.10% -11.88% -9.11%
Russell 1000 28.43% -37.60% 5.77% 15.46% 6.27% 11.40% 29.89% -21.65% -12.45% -7.79%
Russell 2000 27.17% -33.79% -1.57% 18.37% 4.55% 18.33% 47.25% -20.48% 2.49% -3.02%
Wilshire 5000 28.30% -37.23% 5.62% 15.77% 6.38% 12.48% 31.64% -20.86% -10.97% -10.89%
FTSE Nareit Real Estate 50 27.62% -37.31% -16.34% 35.64% 11.44% 34.98% 35.51% 1.87% 12.08% 28.67%
NCREIF-CEDC Realestate Index -29.76% -10.00% 15.96% 16.32% 21.40% 13.07% 9.28% 5.54% 5.63% 14.28%
Barclays Capital U.S. Aggregate 5.93% 5.24% 6.96% 4.33% 2.43% 4.34% 4.11% 10.27% 8.42% 11.63%
Barclays Capital Inte=edi.ne F --. Government/Credit 5.24% 5.08% 7.40% 4.07% 1.57% 3.04% 4.30% 9.82% 8.98% 10.10%
Please refer to important disclosures on the final two pages of this presentation
5
- b - 6 • ®° • ®
Forest Investment Associates 50 Million 3.2 Billion 1986
Hancock Timber -500 Million 8.4 Billion 1985
Molpus Woodlands Group 400 Million 929 Million 1905 67
RMK Timber 375 Million 2 Billion 1981 41
Timbervest 350 Million 1.6 Billion 1995 43
M
ost Investment Associates
l - Dec 2010 10 Years 3 Years
Timber
Hancock - March 2011 15 Years 3 Years
Molpus Woodlands Group Oct 2010 April 2012 10 Years 2 Years
RMK Timber Sep 2010 June 2011 12 Years 3 Years
Timbervest - Dec 2010 10 Years 3 Years
Forest Investment Associates 5 Million 3-4% 6-10% 0-25%*
Hancock Timber 5 Million 3-5% 6-10% 0-35%
Molpus Woodlands Group 2 Million 2-4% 8-12% 0-10%**
RMK Timber*** 5 Million 3-5%/7-12% 8-12% /10-15%
-
Timbervest 1 Million 2-4% 8% -
* Forest Investment Associates has indicated that the will not use leverage, however, the offering documents allow for 25% leverage
**Molpus Woodlands Group has indicated that their use of leverage is a temporary facility used to close transactions or cover overhead cost
***RMK Timber detail show A shares- U.S. Fund detail first followed by B-shares Non-U.S. Fund
1, y! 2111 11
0
mentAssociates
7 X 7
Hancock
ber x X X - -
Molpus Woodlands Group X - - - -
RMK Timber* X X X X X
Timbervest X - - - -
Forest Investment Associates 100 bps 20% over 7% Accounting / Legal / Initial Research
Hancock Timber 95 bps 20% over 7% -
Molpus Woodlands Group 100 bps 15% over 7% Admin / Accounting / Acquisition / Disposition/ Legal /
Harvest Supervision
RMK Timber 100 bps / 125 bps 20% over 6% / 20% over 10% Accounting / Legal
Timbervest 100 bps 20% over 8% Accounting / Legal
*RMK Timber has two share classes offered by the fund, A shares are the U.S. Investments, B-shares are the Non-U.S. investments. Investors
designate the percentage allocation to either share class.
Firm Name Forest Investment
Associates
Forest Investment Associates (FIA) was formed in 1986 after the firm's
als
rinci
Year Founded 1986 p
p
pioneered institutional timberland investments in the early 1980s while at the First
Product Name Timber Partners II National Bank of Atlanta (later Wachovia Bank). FIA's long history and
i
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l
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h
i
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h
f
City,
Atlanta ,Georgia exper
ence
n t
mber
and
nvestment management
oned t
irm as a
ave pos
t
e
leading timberland investment organization. Each member of our firm contributes
Website forestinvest.com to all client accounts. Of FIA's 48 employees, nearly half hold undergraduate or
Employees
48 graduate degrees in forestry, including the majority of the senior management
team
The five members of FIA's senior management team have over 100 years of
Firm Assets 3.24 Billion
Fund Size ($Mill) 250 .
collective forestry experience and an average tenure with FIA of more than 16
years. FIA principals pioneered timberland as an institutional asset class and this
experience level gives us an advantage over other timberland investment managers
with less exposure to different market situations.
Commitments 108
Minimum Investment
5 Million FIA is organized as a limited partnership, Forest Investment Associates L.P., with
a corporate general partner
Forest Investment Associates
LLC
which owns 70%
Investment Period 10 years ,
,
,
of the partnership interests. The remaining 30% is owned by limited partners who
Extension Period 3 years provided the firm's start-up capital in 1986. The general partner is owned 100% by
F
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First Close
Oct 2009 ores
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men
nc. an
orpora
on w
s owne
ssoc
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es,
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y
s
employees distributed broadly among 36 employee shareholders. FIA is not an
Final Close (before) Dec 2010 affiliate or a subsidiary of a larger organization.
Capital Call 0-30%
Leverage (per PPM) 0-25%
Anticipated Yield 34%
Tar
et Return 6-10%
g
Properties 5-8
8
Harvest 35-40%
Leasing 5%
Resale of Land 15-25%
Mitigation banks 0-5%
Biological growth 50-65%
Other- -
The Fund's goal is to build a timberland portfolio that is geographically diverse, acquiring quality timberland
properties at attractive prices throughout the U. S. as opportunities arise. Timberland ownership patterns and
disposition trends may result in acquisition opportunities that are disproportionately concentrated in one or more
regions of the U. S. The General Partner believes that a diverse portfolio can be achieved by investing in one or
more, but less than all, of the significant timber-producing regions of the U.S., and will also focus on other
diversification factors such as age profiles and species. Building a portfolio diversified by age and species will
allow the Fund to consistently have a supply of timber that is commercially mature, ready to be sold into strong
markets, and positioned to respond to changes in product demand.
When considering a potential investment opportunity, our Real Estate Transaction Team first collects timber
inventories, mapping data, and environmental site assessments. We then review this information for overall
quality of the property. Specifically, we review a property's geographic location relative to timber markets, quality
of the timber and soils, topography, amount of operable land, quality of the road system, and drainage networks.
This information is then used to determine a preliminary value for the property and to assess the suitability of the
property for our clients' portfolios in terms of geographic, age-class, and species diversification.
FIA foresters make on-site visits to assess the quality of the information compiled in the initial review. Based on
assessments from the field review, FIA conducts a detailed property income analysis. FIA creates models that
examine operational and cost constraints and uses realistic timber prices for the subject area to ensure operational
feasibility of FIA management. This assessment is compiled into a presentation for FIA's Investment
Committee.A range of values is determined under multiple scenarios (management and timber pricing) and
presented to the Investment Committee as part of the detailed report, which also addresses the properties'
attributes, location and markets. FIA's investment decision process is handled through the Investment Committee,
which has overall responsibility for all client investments. Members of the Investment Committee include all
senior managers of the firm, who meet once a month and on an as needed basis. If, in the judgment of the
Investment Committee, the property has a logical fit within a client's portfolio and meets the return objectives
established for cash flow and total return, then the Investment Committee establishes pricing conditions and term
parameters within which the Real Estate Transaction Team negotiates an agreement with the seller. The
Transaction Team keeps the Investment Committee informed of its progress as the negotiations proceed, and the
Investment Committee may meet subsequent times to consider new developments, if required. Third-party
assistance - FIA uses various third-parties to conduct due diligence. Our due diligence includes Phase I
environmental assessments, endangered species assessments, complete title work (including mineral ownership),
timber inventorv verification cruises and full. third-barty narrative abbraisals.
Pacific Northwest 10-40%
Northeast and Lake 10-30%
States
South 40-70%
Dougl;ts Fir and 10-40%
Western Hemlock
Black Cherry, 10-30%
Maple, Red oak,
Yellow Birch
Loblolly Pine 40-70% 1
10
The Fee Brief illustrated above is intended as a summary of the fees disclosed by the manager and should not be considered as a full disclosure of all potential
fees or cost associated with the investment fund. Please refer to the offering documents and term sheets prior to investment for a full disclosure of the fees and
cost associated with the investment fund.
11
Firm Name
Year Founded
Product Name
City, State
Website
Employees
Firm Assets
Fund Size ($Mill)
Commitments
Hancock Timber Group
Forest Investment Associates (FIA) was formed in 1986 after the firm's principals Hancock
1985 Timber Resource Group was established in 1985. We are a division of Hancock Natural
Resource Group, Inc., a registered investment adviser and wholly owned subsidiary of
Hancock Timberland XI Manulife Financial Corporation.
Boston, MA
1985 Hancock Timber Resource Group established in Boston as business unit of John
htrg.com Hancock Mutual Life Insurance Co.; developed first commingled timberland fund with
373 investments in the US South and US Pacific Northwest
1986 Began managing separate accounts for institutional investors
8.4 Billion 1993 Completed first non-US investment (Canada)
Minimum Investment
Investment Period
Extension Period
First Close
Final Close
Capital Call
Leverage (per PPM)
Anticipated Yield
Target Return
Properties
7500 1995 Hancock Natural Resource Group formed as independent subsidiary of John
Hancock-Hancock Timber Resource Group and Hancock Agricultural Investment Group
1998 Completed first investment in Australia; formed Hancock Victorian Plantations
1999 Established Hancock Natural Resource Group Australia Pty
5 Million 2002 All North American timberland holdings independently certified according to the
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t
® St
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15 years na
ores
ry
n
an
ar
us
a
e
a
ve
2004 Completed first investment in New Zealand; established Hancock Forest Management
3 years NZ; all Australian holdings certified under Forest Stewardship Council requirements;
Manulife Financial Corp. purchases John Hancock Financial Services
2005 Certified New Zealand holdings under FSC requirements; acquired Prudential Timber
March 2011 Investments, Inc.; completed largest institutional investor acquisition of timberland (376,000
5-35% hectares in 3 US regions and New Zealand)
2006 Ac
uired 494
000 acres in New Zealand makin
HTRG the lar
rivate timberland
est
0-35% ,
g
g
q
p
owner in that country
3-5% 2007 North American forests are recertified as being managed according to the Sustainable
i
i
i
6-10% Forestry In
ve(g) Standard
t
at
5-7
12
Harvest 95+%
Leasing 2%
Resale of Land -
Mitigation banks 1%
Easements /Energy/ 5%
Materials
We focus our acquisition efforts on purchasing large properties to obtain "wholesale discount
pricing," avoiding auctions if possible, and favoring complex deals. Through a regular,
rigorous portfolio review process (including a formal hold-sell analysis of every property), we
actively manage the portfolios we have constructed. We manage each individual property to
maximize investor returns. We then exit properties by parceling them into smaller units to
obtain higher market value. We believe that geographic diversification within the timberland
portfolio is particularly important. Good empirical evidence demonstrates that returns from
timberland in the different investable regions of the world are only poorly correlated. Even
though wood products are transported long distances, logs for domestic consumption are not.
The high cost of transporting logs means that regional timber markets respond to fairly local
supply and demand conditions. For example, a timberland investment in Australia will respond
to domestic demand in Australia and export demand to Asia. There is no reason to believe,
however, that either factor will be strongly correlated with timber or timberland prices in the
US South, for example. This lack of interregional correlation structure suggests that a risk-
efficient portfolio consists of investments in multiple
regions.
Hancock Timber Resource Group investment strategy begins with diligent portfolio design. We
do not ascribe to a single approach to timberland investment. Instead, we seek to understand
the investor's risk/return objectives and design a portfolio that is likely to meet or exceed those
objectives. Once we are clear on portfolio objectives, we implement our investment strategy.
For acquisitions, we focus on large opportunities. In total, we have completed more than $9.4
billion in acquisitions. Our experience and research indicate that each 1 percent increase in
deal size results in about a 0.15 percent reduction in the per-acre cost.
13
U.S. 50%
Canada 0-50%
Australia 0-50%
New Zealand 0-50%
Brazil 0-50%
Chili 0-50%
Canada 0-50%
Uruguay 0-50%
IIE o uglas Fir -
oblolly Pine -
Eucalyptus -
Western Hemlock -
Hoop pine -
14
The Fee Brief illustrated above is intended as a summary of the fees disclosed by the manager and should not be considered as a full disclosure of all potential
fees or cost associated with the investment fund. Please refer to the offering documents and term sheets prior to investment for a full disclosure of the fees and
cost associated with the investment fund.
15
68
Firm Name The Molpus
Woodlands Group
Year Founded 1905
Product Name Molpus Woodlands
Fund III, L.P.
City, State Jackson, Mississippi
Website Molpus.com
Employees 67
Firm Assets ($Mill) 929
7Fuind Size ($Mill) 400
itme nts ($Mill) 80
Minimum Investment 2 Million
Investment Period 10 years
Extension Period 2 years
First Close Oct 2010
Final Close (before) April 2012
Capital Call 0-100%
Leverage (bridge loan) 10%
Anticipated Yield 24%
Target Return 8-12%
Properties 5-10
The Molpus legacy dates to 1905 when two mercantile clerks (one of whom was Richard H.
Molpus, the grandfather of Dick Molpus) formed a partnership to create the Henderson-Molpus
Mercantile Store, the predecessor to Molpus Lumber Company ("MLC"). Under the leadership of
Richard H. Molpus, the son of the original founder, MLC continued its growth and eventually
became the 10th largest independently owned lumber manufacturer in the United States. In 1911,
the company opened a small lumberyard consisting of a dry kiln and planer mill. By the start of
World War II, the company had its first sawmill and contracted with the U.S. government to
construct ammunition boxes. The company then expanded to create the Molpus Hardwood
Company ("MHC"), formed in 1969 to utilize hardwood timber in the area.
In 1974, MHC opened a facility in Morton, Mississippi, which became one of the nation's largest
and most technologically advanced sawmills of its time. In the 1980s, Molpus ended an era of
manufacturing when it sold its lumber-producing assets to large, integrated forest products
companies. However, Molpus continued to operate as Molpus Forest Products, which functioned
as a wood dealer operating multiple wood yards where timber was merchandized and sold to
manufacturers throughout the world.
In 1996, Molpus was established by Dick Molpus as a TIMO with its executive office in Jackson,
Mississippi. Molpus' operational headquarters is in Hattiesburg, Mississippi. Molpus serves the
timber management needs of its clients, which include endowments, pension funds and family
offices, from 11 additional offices throughout the United States, each staffed with foresters and
forestry technicians. The Firm also manages a tree nursery in Elberta, Alabama, and the Wild Fork
Tree Orchard in Monroe County, Alabama, where tree seeds are harvested.
16
Molpus believes that it is fully differentiated from its peers given the following characteristics:
• Fully Independent and Fully Vertically Integrated Team: Molpus is an independent, privately held
firm that focuses solely on timberland. The Firm has no activity or focus on any other areas of the timber
value chain, like logging or milling. The Firm is not affiliated with a larger asset manager and does not
manage funds in other asset classes. The Firm is represented by a strong and diverse team of 48
investment and forestry experts with unique and deep timberland backgrounds and regional knowledge.
All functional areas of forestry management are handled "in-house," including forestry, biometrics, soil
analysis, geographic information systems, seedling production and other functional areas that add
significant value to the investment as opposed to hiring contractors that are paid by the service hour or
on an acre basis. Molpus believes that it employs more foresters per acre than any TIMO in its peer
group.
• Disciplined Acquisition and Disposition Processes: The Team is highly disciplined and creates value
by utilizing cross-functional acquisition teams who not only have the resources to know more about the
asset (in many cases, more than the seller) but are also ultimately tied to the long-term outcome of the
investment via the underwriting assumptions and performance of each acquisition. The use of leverage
has been limited and utilized only in cases of direction by separate account clients. In addition, apart
from a standard timber harvesting and disposition analysis, Molpus employs an extensive proprietary
analysis of the and component of every timberland investment. The purpose of this analysis is to
determine the existing and forecasted land uses that are suitable for each property and estimate the
current and future value associated with those uses.
• Sophisticated Proprietary Resources: The Firm has developed a full scope of proprietary resources
(e.g., systems and software to economically assess silviculture inputs) to evaluate opportunities and
improve overall timberland investment performance. The Firm has also developed a cross-platform
diagnostic system, supplemented with hand-held devices, that allows foresters and forestry technicians
to nimbly access real-time information about the forest and take advantage of short-term opportunities
such as increased mill demand or new product markets. Additionally, Molpus's technology allows for
exacting standards of tree analysis and tree counting, which provide better quality information and
improve decision-makincr.
17
South 70%
Northeast 10%
Appalachian 10%
Great Lakes 10%
Loblolly Pine F '
34%
Slash Pine 2%
So. Yellow Pines 3%
Northern Conifers 1%
Red Oaks 13%
White Oaks 8%
Sweetgum 8%
Hard Maple 7%
Birches 3%
18
Management Fees: 1.00% per annum based on called capital through 36 months after Final Closing and 1% of Fair Market Value thereafter.
Incentive fees: 15% over a 7% annual preferred return (cash-on-cash)
Auditing/ accounting Fees: The Fund will be responsible for all auditing/accounting fees.
Administrative fees: $2.50 per acre per year, which pays for the forestry planning employees and support staff employed by Molpus, such as
accountants and computer support.
Other Fees: * See below for Forestry Costs which Molpus provides as part of fully vertically-integrated management structure.
The Fund will contract with Molpus to oversee the forestry activities of the Fund and to provide support in evaluating acquisitions, including, but
without limitation to, conducting due diligence reviews, evaluating land sales for higher and better uses, and providing silvicultural management,
maintenance and harvesting activities. Molpus' management fee shall be paid through the Management Fee paid to the General Partner by the Fund,
and Molpus' incentive fee shall be paid through the General Partner's carried interest allocation, in each case unless and until the General Partner is
removed as general partner of the Fund. In the event of the General Partner's removal, the Fund shall be responsible for payment of Molpus'
management fee and incentive fee. The costs associated with these forestry services will be Fund expenses to be paid by the Fund from cash flow or
from capital contributions made by Limited Partners. Forestry services costs included the following:
Harvesting Supervision: 7% of harvesting revenues.
Acquisition Fee - 1% of acquisition value.
Disposition Fees - 3% of gross sales price on higher and better use "BU) transactions.
Other costs: Other direct expenses are billed at cost with no markup. These are typically services that the Fund contracts, such as bulldozer work on
roads, and fire lanes, painting landlines, spraying and helicopter fertilizing operations. Also, forestry employees of Molpus or its affiliates may
supervise these activities. Such supervisory services are billed to the Fund at cost. The General Partner believes these direct expenses have historically
cost about $10.00 per acre per year.
The Fee Brief illustrated above is intended as a summary of the fees disclosed by the manager and should not be considered as a full disclosure of all potential
fees or cost associated with the investment fund. Please refer to the offering documents and term sheets prior to investment for a full disclosure of the fees and
cost associated with the investment fund.
19
68
Firm Name RMK Timberland
Group
Year Founded 1981
Product Name RMK Global
Timberland Fund
City, State Salem, NC
Website rmktimberland.com
Employees 41
Firm Assets ($Bill) 2 Billion
Fund Size ($Mill) M
375
Commitments ($Mill) 135
Minimum Investment 5 Million
Investment Period 12 years
Extension Period 3 years
First Close Oct 2010
Final Close (before) June 2011
Capital Call 0-30%
Leverage 0
Anticipated Yield 3-5%/7-12%
Target Return 8-12% / 10-15%
Properties 8-12
RMK Timberland Group operates as a business unit of Regions Morgan Keegan
Trust, the trust and asset management arm of Regions Bank, an Alabama
chartered commercial bank. Based in Atlanta, Georgia, the group was created
in 1981 and was a pioneer in timberland investing when it started one of the first
commingled timberland funds for institutional investors.
Initially the group was formed at the First National Bank of Atlanta. This
became Wachovia, which later named the group Evergreen Timberland
Investment Management. In May 2004 the group was purchased by Regions
Financial Corporation from Wachovia Corporation and renamed the RMK
Timberland Group. Regions Financial merged with AmSouth Bancorporation
in 2006, and continues to be known as Regions Financial Corporation.
20
RMK Timberland Group is a portfolio driven organization, not a deal driven organization. Our approach
begins by understanding the objectives of the fund. Many of our portfolios use a balanced growth
strategy designed to invest in a timberland portfolio that balances the investment goals of competitive
returns, liquidity and reduced risks.
Once the objectives are understood by our Portfolio Manager, we then create an overall acquisition
strategy based on investment return-risk characteristics of individual timberland investment regions, and
the age class distribution of the forests acquired within those regions.
Timber product prices differ across geographic market areas and tend to have a low correlation with one
another. Properly diversifying a portfolio mitigates portfolio volatility.
Depending on market conditions at any given time, some age classes may be emphasized. For example,
under current market conditions, our portfolios are more heavily weighted to younger trees in the
emerging and established age classes to take full advantage of the benefits of biological growth.
On acquisitions we work locally, establishing strategic partnerships for the sale of timber products and
for the acquisition of timberlands for our client's portfolio. We only occasionally participate in a bid sale
preferring to use our networks and local relationships to locate buying opportunities which we can
negotiate on a private basis.
Once acquired we actively manage our clients' timberlands. We conduct regular analyses of whether to
hold or sell assets and are positioned with our HBU (higher and better use) staff and third party
arrangements to sell at the greatest value for our client.
21
®p s $ b
US- Appalachian 7
7
US-Lake States 4%/
,
US-Southeast 7%
Brazil 25%
Uruguay 8%
Other South Amer. 23%
Europe 12%
South Africa 12%
H.irdwood 60%
Softwood 40%
22
Management Fee: A Shares - annual management fee of 1.00% of the fair market value
of the Fund's assets, charged quarterly in arrears. B Shares - annual management fee of
1.25% of the fair market value of the Fund's assets, charged quarterly in arrears.
Incentive Fee: A Shares - 20% of the Funds' earnings, net of expenses, in excess of an
annualized 6% real rate of return. B Shares - 20% of the Funds' earnings, net of
expenses, in excess of an annualized 10% real rate of return.
Administrative Fees: None.
Auditing/ accounting Fees: We have an internal accounting group, and all of those
accounting expenses are covered by our management fees. Audit expenses are paid out
of the Fund.
Legal Fees: Legal expenses are paid out of the Fund.
Other Fees: N/A.
Acquisition/Disposition Fees: there are no transaction fees
The Fee Brief illustrated above is intended as a summary of the fees disclosed by the manager and should not be considered as a full disclosure of all potential
fees or cost associated with the investment fund. Please refer to the offering documents and term sheets prior to investment for a full disclosure of the fees and
cost associated with the investment fund.
23
@@@
Firm Name Timbervest
Year Founded 1995
Product Name Timbervest
Partners III, L.P.
City, State Atlanta, Georgia
Website timbervest.net
Employees 43
Firm Assets ($Bill) 1.6
@ @ e@B
Fund Size ($Mill)
350
Commitments ($Mill) 142
Minimum Investment 1 Million
Investment Period 10 years
Extension Period 3 years
First Close May 2010
Final Close Dec 2010
Capital Call 20-25%
Leverage 0
Anticipated Yield 24%
Target Return 8%
Properties 20-25
Timbervest was established in 1995 as a limited liability company and is headquartered
in Atlanta, Georgia. The firm is a registered investment adviser under the Investment
Advisers Act of 1940. Timbervest provides professional timberland and timberland
related investment and management services for investors. As of June 30, 2010, the firm
manages approximately $1.6 billion in assets with timberland investments totaling
approximately 825,000 acres across 21 states.
Timbervest was previously known as Timberland Investment Services, prior to a name
change in 2000, but does not have any predecessor organizations or subsidiary
relationships with any other organizations. The Managing Partners commenced
employment with Timbervest from 2002 through 2004 and previously owned a minority
equity position in the firm. On January 1, 2005, the Managing Partners acquired 100%
ownership of the firm and continue to own 100% of the firm today.
Since the current Managing Partners took control in 2005, the firm has grown from two
clients to hundreds of clients, increased assets under management by approximately $1.2
billion, increased staff from approximately 11 to 43, opened several regional offices, and
successfully launched and currently manages five commingled funds.
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Harvest 10-40%
Leasing 1-5%
Resale of Land 15-30%
Mitigation Banks -
Land Enhancements 0-10%
Other- Active 5-25%
Management
Other-Biological Growth 40-70%
Other-Value Increase 10-25%
Other- Acquisition 10-20%
/Disposition
Timbervest's timberland investment strategy materially differs from most other
TIMOs and has always been focused on relatively smaller investments and a diverse
portfolio. As a result of this constant focus, Timbervest has established what we
believe to be one of the broadest and deepest pools of relationships in the industry.
Timbervest's relationships range from industry, corporate, finance, consultant,
brokerage, professional, conservation, federal, state, and family to individual, and
Timbervest sources prospective investments from all of these relationships.
Timbervest is not reliant, nor focused on, large industry deals being run by the large
investment banking firms. Instead, Timbervest uses its significant network to source
deals that are "off the radar" of most, if not all, institutional timberland investors.
Timbervest's typical competition for deals is from local mill operators, local loggers,
and occasionally other TIMOs and high net worth individuals.
Timbervest's investment philosophy is to (i) capitalize on the sectors of the
timberland markets that present the least efficiency and the most opportunity, (ii)
generate attractive risk-adjusted returns with low correlations to the equity and debt
markets, (iii) maintain a portfolio with a strong value proposition, and (iv) generally
provide a superior timberland investment vehicle.
Timbervest's investment strategy is focused on timberland properties (i) located only
in the United States, (ii) non-contiguous in structure and generally within the 3,000 to
30,000 acre size range, with the average size being approximately 8,000 acres, (iii)
with significant biological growth and income potential, (iv) diverse in geographic
locale, botanical species, and age classification, (v) in locations where the Fund
perceives value from changing micro-market conditions, (vi) with characteristics
which allow for value creation from an active management regime, and (vii) in
locations with strong or growing demand for property.
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Great Lakes 0-15%
Northeast 15-25%
Appalachian 15-20%
West Gulf 15-25%
Hardwood !50%
Softwood 50%
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Timbervest charges a quarterly management fee as compensation for its services as manager equal to twenty-five basis points (25%) of:
(i) for the period from the first closing to the expiration of the investment period, the aggregate commitments; and
(ii) for the period from and after the expiration of the investment period, the then fair market value of assets.
The management fee is payable quarterly in arrears.
In addition, the General Partner receives 20% of the return after the investors have received a return of all contributions and an 8% net annualized
return. There is no catch-up and due to the incentive fee structure, no need for a claw back right for the investors.
Auditing/ accounting Fees: Normal outside audit and accounting fees are charged to the Fund
Legal Fees: Normal outside legal fees are charged to the Fund. However, Timbervest uses in-house counsel as much as possible to reduce legal costs
to the Fund..
The Fee Brief illustrated above is intended as a summary of the fees disclosed by the manager and should not be considered as a full disclosure of all potential
fees or cost associated with the investment fund. Please refer to the offering documents and term sheets prior to investment for a full disclosure of the fees and
cost associated with the investment fund.
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The NCREIF Timberland Index: is a quarterly time series composite return measure of investment performance of a large pool of
individual timber properties acquired in the private market for investment purposes only. All properties in the Timberland Index have
been acquired, at least in part, on behalf of tax-exempt institutional investors - the great majority being pension funds. As such, all
properties are held in a fiduciary environment.
The FTSE NAREIT Real Estate 50: Is an Index comprised of the 50 largest U.S. REITs.
S&P 500: A broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held
common stocks. This index does not contain the 500 largest companies or the most expensive stocks traded in the US. While many of
the stocks are among the largest, this index also includes many relatively small companies. This index consists of approximately 380
industrial, 40 utility, 10 transportation, and 70 financial companies listed on the US market exchanges. It is a capitalization-weighted
index (stock price times number of shares outstanding), calculated on a total return basis with dividend reinvested.
Russell 1000: The 1000 largest companies in the Russell 3000 index, based on market capitalization.
Russell 1000 Growth: A segment of the Russell 1000 with a greater-than-average growth orientation. Companies in this index have
higher price-to-book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values than the Russell 1000
Growth index.
Russell 1000 Value: Represents a segment of the Russell 1000 with a less-than-average growth orientation. Companies in this index
have low price-to book and price-to-earnings ratios, higher dividend yields and lower forecasted growth values than the Russell 1000
Growth index.
Russell Mid-Cap: This index consists of the bottom 800 securities in the Russell 1000 as ranked by total market capitalization, and
represents over 35% of the Russell 1000 total market cap.
Russell Mid-Cap Growth: The Russell Mid-cap Growth Index offers investors access to the mid-cap growth segment of the U.S.
equity universe. The Russell Midcap Growth Index is constructed to provide a comprehensive and unbiased barometer of the mid-cap
growth market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine growth
probability approximates the aggregate mid-cap growth manager's opportunity set.
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Russell Mid-Cap Value: Measures the performance of the Russell 3000 Index extended to include micro-cip securities of the Russell
Micro-cap Index. The index represents approximately 99% of the U.S. Equity Market. As of the latest reconstitution, the average
market capitalization was approximately $3.8 billion; the median market capitalization was approximately $612 million. The index had a
total market capitalization range of approximately $368.5 billion to $67.3 million.
Russell 2000: the 2000 smallest companies in the Russell 3000 index.
Russell 2000 Growth: A segment of the Russell 2000 with a greater-than-average growth orientation. Companies in this index have
higher price-to book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values than the Russell 2000
Value index.
Russell 2000 Value: A segment of the Russell 2000 with a less-than-average growth orientation. Companies in this index have low
price-to-book and price-to-earnings ratios, higher dividend yields and lower forecasted growth values than the Russell 2000 Growth
index.
Russell 2500: This index consists of the bottom 500 stocks in the Russell 1000 (as ranked by market capitalization) and all of the
stocks in the Russell 2000. This index is intended to be used as a measure of small to medium/small stock performance.
Russell 2500 Growth: A segment of the Russell 2500 with a greater-than-average growth orientation. Companies in this index have
higher price-to book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values than the Russell 2500
Value index.
Russell 2500 Value: A segment of the Russell 2500 with a less-than-average growth orientation. Companies in this index have low
price-to-book and price-to-earnings ratios, higher dividend yields and lower forecasted growth values than the Russell 2500 Growth
index.
Russell 3000: is composed of the 3,000 largest U.S. securities, as determined by total market capitalization.
Russell 3000 Growth: This index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios
and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000
Growth indexes.
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Russell 3000 Value: This index measures the performance of those Russell 3000 Index comp.inies with lower price-to-book ratios and
lower forecasted growth values. The stocks in this index are also members of either the Russell 1000Value or the Russell 2000 Value
indexes.
MSCI EAFE: A market capitalization-weighted index representing all of the MSCI developed markets outside North America. It
comprises 20 of the 22 countries in the MSCI World. These 20 countries include the 14 European countries in the MSCI Europe and the
6 Pacific countries in the MSCI Pacific. This index is created by aggregating the 20 different country indexes, all of which are created
separately.
MSCI World: A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of
developed markets. As of June 2007 the MSCI World Index consisted of the following 23 developed market country indices: Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand,
Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States.
MSCI World ex U.S.: The MSCI World index excluding the U.S. portion of the index.
MSCI All Country World Index: a free float-adjusted market capitalization weighted index that is designed to measure the equity market
performance of developed and emerging markets. As of January 2009 the MSCI ACWI consisted of 46 country indices comprising 23
developed and 23 emerging market country indices. The developed market country indices included are: Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The emerging market country indices included are:
Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco,
Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.
MSCI All Country World Index ex U.S.: The MSCI All Country World Index excluding the U.S. portion of the index.
MSCI Emerging Markets Free (EMF): A market capitalization-weighted index representing 2 of the emerging markets in the world.
Several factors are used to designate whether a country is considered to be emerging vs. developed, the most common of which is Gross
Domestic Product Per Capita. The "Free" aspect indicates that this index includes only securities that are allowed to be purchased by
global investors. This index is created by aggregating the 26 different country indexes, all of which are created separately.
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Barclays Capital U.S. Aggregate Bond: This index is made up of the Barclays Capital U.S. Government/ Credit, the Mortg.ige-Bricked
Securities, and the Asset-Backed Securities indices. All issues in the index are rated investment grade or higher, have at least on year
maturity, and have an outstanding par value of at least $100 million.
Barclays Capital U.S. Government/Credit: This index includes all bonds that are in the Barclays Capital U.S. Government Bond and
the Barclays Capital U.S. Credit Bond indices.
Barclays Capital U.S. Government/ Credit Intermediate: All bonds by the Barclays Capital U.S. Government/ Credit Bond index with
maturities of 1 to 10 years.
Barclays Capital Municipal Bond: This market capitalization-weighted index includes investment grade tax-exempt bonds and is
classified into four main sectors General Obligation, Revenue, Insured, and Pre-refunded. To be included in this index, the original
transaction size of a bond must have been greater than $50 million.
Barclays Capital U.S. Treasury Index: This index includes public obligations of the U.S. Treasury. Treasury bills are excluded by the
maturity constraint, but are part of a separate Short Treasury Index. In addition, certain special issues, such as state and local government
series bonds (SLGs), as well as U.S. Treasury TIPS, are excluded. STRIPS are excluded from the index because their inclusion would
result in double-counting. Securities in the Index roll up to the U.S. Aggregate, U.S. Universal and Global Aggregate Indices.
Barclays Capital U.S. TIPS: This index measures the performance of U.S. Treasury Inflation Protection Securities.
Merrill Lynch Convertibles: The convertible securities used in this index span all corporate sectors and must have a par amount
outstanding of $25 million or more. The maturity must be at least on year. The coupon range must be equal to or greater than zero and
all equity of bonds are included. Excluded from this index are preferred equity redemption stocks. When the component bonds of this
index convert into common stock, the converted securities are dropped from the index.
Merrill Lynch Corp/Govt 1-3 Years A or Better: An unmanaged index of government and corporate fixed-rate debt issues with
maturities between one and 3 years.
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Merrill Lynch High Yield Master: Market c.ipit.ilizAon weighted index providing.i broad-based measure of bonds in the US domestic
bond market rated below investment grade, but not in default. Includes only issues with a credit rating of BB1 or below as rated by
Moody's and/or S&P, at least $100 million in face value outstanding and a remaining term to final maturity equal to or greater than one
year.
Dow Wilshire REIT: A measurement of equity REITs and Real Estate operating Companies. No special-purpose or health care REITs
are included. It is a market capitalization weighted index for which returns are calculated monthly using buy and hold methodology; it is
rebalanced monthly.
The NFI-ODCE: short for NCREIF Fund Index - Open End Diversified Core Equity, is the first of the NCREIF Fund Database
products and is an index of investment returns reporting on both a historical and current basis the results of 26 open-end commingled
funds pursuing a core investment strategy, some of which have performance histories dating back to the 1970s. The NFI-ODCE Index is
capitalization-weighted and is reported gross of fees. Measurement is time-weighted. NCREIF will calculate the overall aggregated Index
return.
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Alpha: A risk-adjusted measure of 'excess return' on an investment. That is, it measures an ;fictive manager's performance in excess of a benchmark
index or 'risk-free' investment. An alpha of 1.0 means the manager outperformed the market 1.0%. A positive alpha is the extra return awarded to
the investor for taking additional risk rather than accepting the market return.
Batting Average: The percent of periods the manager has beaten the benchmark. A high average for the fund (e.g. over 50) is desirable, indicating
the fund has beaten the policy frequently.
Beta: A measure of systematic risk, or the sensitivity of a manager to movements in the benchmark. A beta of 1 implies that you can expect the
movement of a manager's return series to match that of the benchmark used to measure beta.
Down Market Capture Ratio: A measure of a manager's performance in down markets. A down-market is defined as those periods (months or
quarters) in which market return is less than 0. It tells you what percentage of the down-market was captured by the manager.
Information Ratio: The Information Ratio measures the consistency with which a manager beats a benchmark.
Mgr: "Mgr" refers to a short-hand for "Managers" referenced in the universe comparison pages to note the number of managers comprising the
universe
R-squared: The R-Squared (R2) of a manager versus a benchmark is a measure of how closely related the variance of the manager returns and the
variance of the benchmark returns are.
Sharpe Ratio: The Sharpe Ratio is a risk-adjusted measure of return which uses standard deviation to represent risk. It is calculated by subtracting
the risk-free rate from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns.
Standard Deviation: Standard deviation of return measures the average deviations of a return series from its mean, and is often used as a measure
of risk. A large standard deviation implies that there have been large swings in the return series of the manager.
Tracking Error: A divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark.
Treynor Ratio: The Treynor Ratio is a risk-adjusted measure of return which uses beta to represent risk. It is calculated by subtracting the risk-free
rate from the rate of return for a portfolio and dividing the result by the portfolio's beta value.
Up Market Capture Ratio: A measure of a manager's performance in up markets. An up-market is defined as those periods (months or quarters)
in which market return is greater than 0. It tells you what percentage of the up-m.ieket was captured by the manager.
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This material is for information only and for the use of the recipient. It is not to be reproduced or copied or made available to others.
Any opinions expressed are our current opinions only. Assumptions, opinions and estimates constitute CapTrust's judgment as of the
date of this material and are subject to change without notice. While the information contained herein is from sources believed reliable,
we do not represent that it is accurate or complete and it should not be relied upon as such. CapTrust accepts no liability for loss arising
from the use of this material.
Separately managed account results represent historical gross performance with no gross deduction for investment management fees
and assume reinvestment of dividends and income and capital appreciation. Expenses that may include management fees will reduce
individual returns. Results may represent a composite of numerous accounts; you must refer to the disclosure document of a manager
to determine the composition of the numbers reported.
Mutual funds are offered by prospectus only. Please refer to a current mutual fund prospectus for further information about a specific
mutual fund. Mutual fund results represent historical net performance. As a result, the reader should be aware that the omission of
separate account managers' management fees in this report, all else being equal, may result in better performance returns relative to
comparable mutual funds that have presented net performance returns.
Separately managed account information is obtained from the Zephyr manager database.
Mutual fund information is obtained from the Morningstar mutual fund database.
Hedge fund information is obtained from the Barclays hedge fund database.
Dollar amounts are estimates and are provided by CapTrust Financial Advisors as examples. CapTrust cannot guarantee that the data is
free from errors as the dollar values are subject to financial market conditions and will change as the values of the shares of the
underlying funds/assets fluctuate in response to prevailing financial market conditions.
Past performance is no guarantee of future performance.
34
CapTrust Financial Advisors' registration as an investment adviser with the U.S. Securities and Exchange Commission became effective
on March 12, 2007. CapTrust Financial Advisors merged with Schott Group Investment Consulting on November 1, 2007.
Prior to March 12, 2007 for CapTrust and November 1, 2007, for the Schott Group Investment Consultants, the consultants of both
CapTrust and Schott Group Investment Consulting were investment advisors under the Wachovia Securities Financial Network, LLC
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Insight - Independence - Integrity
CapTrust Advisors, LLC is a registered investment advisor with the SEC.
CapTrust is not a legal or t.ix advisor.
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