TIMBERLAND INVESTMENTS - MOLPUS WOODLANDS GROUPTIMBERLAND INVESTMENTS
OCTOBER 2010
Overview
Experienced timber manager with unique approach and organizational structure
Firm & Team
●Invested $2 billion across 1.8 million acres since inception (1996) on behalf of 2 funds and 9 separate accounts (1)
●Formed in 1905, developed into a timber manufacturer and later evolved into leading Timber Investment Management
Organization (“TIMO”)
●Independent, privately-held investment adviser registered with SEC since 2004
●Strong and diverse team of 67, of which 48 are timber professionals or forestry experts with deep industry expertise
●Differentiation: fully vertically integrated, sophisticated proprietary resources, true alignment of incentives,
disciplined at acquisition
Track Record
●Molpus-managed properties achieved a 10.9% gross return since inception vs. NCREIF’s 7.9% gross return (1)(2)
●Molpus’srealized investments have generated 16.8% gross returns (1)(2)
Opportunity & Strategy
●Due to market re-pricing, attractive buying opportunities exist with timber REITs, other TIMOs and manufacturers
●Acquire and actively manage a diverse portfolio of timberland properties primarily in the United States
●Balanced portfolio of properties with an emphasis on diversification by geography, species and age class
●Seek properties with opportunities to create value through active timber management leveraging firm strengths
Fund
●$400 million closed-end fund to make long duration investments in sustainably managed timberland
●Targeting a nominal, unlevered internal rate of return (“IRR”) of 8% -12% (net of all fees and expenses), inclusive of an
annualized, distributable net cash yield of 2% -4%
(1)
ReturnsexcludeoneformerpropertywhereMolpusperformedonlycertainforestryfunctionsandwasnotresponsibleforthefinancialrecords.ThispropertywasneitheraholdingofthePriorFundsnoraninstitutional
separateaccountclient,andrepresentedonly1.8%oftheacreagemanagedin2004,thefinalyearofMolpus’srole.(2)
ThehistoricalreturnsforbothMolpusandNCREIFTimberlandIndex(Total)are(a)time-weighted,(b)at
thepropertylevel,(c)unlevered,and(d)presentedbeforefees(asof6/30/10).TheNCREIFTimberlandIndexemploystime-weightedreturnsusingapropertylevelformulathatusesaccrualincomeaccountingand
capitalizedinvestmentstocalculateaquarter-to-quarterreturn,whichisthengeometricallylinkedtocreateaholdingperiodreturn.Inaddition,Molpus’sreturnsareauditedthroughDecember2008.Auditedreturnsthrough
December2009areexpectedtobeavailableinSeptember2010.
Experienced timber manager with differentiated approach and investment strategy
1
Molpus –Differentiation
●In-house capabilitiesdriven by connection to clients’ success
●Superior market intelligencefor acquisitions and timber sales
●Ability to capitalize on short-term opportunitiesdue to proprietary resources
●Genetic controlof seedling stock at Molpus managed nursery
●Team of expertsin various fields such as soil science and biometrics
●Proprietary GIS systemthat uses satellite and infrared imaging to capture, store, and analyze properties under management
or being acquired
●STEAM–Stand Treatment Economic Assessment Model financially assesses silvicultural inputs, economic parameters and
timber outputs
●TIMMS–Timberland Information Management System allows foresters and other employees to access information about
acquisitions, forest planning, timber inventory, timber accounting and legal services
●Molpus employees’ compensation is financially bound to our investors’ successful results
●Staff members understand each client’s metrics and have the tools to improve performance
●Within every role of the organization, people are motivated to “go the extra mile”
●Employees have participated in 40% of the net management fee and carry
●Integrated teamcontributes to success at acquisition
●In-depth due diligencethat is not outsourced to firms with less expertise (subcontractors are less aligned with client success)
●Risk analysisfor host of possible constraints
●Each team member is inherently vested in the assumptions and successof each opportunity
Why Choose Molpus?
Fully Independent and Vertically-Integrated Firm
Sophisticated Proprietary Resources
True Alignment of Incentives
Disciplined Acquisition and Disposition Processes
2
Molpus –Performance
Differentiated approach drives attractive and compelling returns
•Molpus Returns Outperform Major Indices –Molpus outperformed the S&P 500, the Russell 2000,
and the NCREIF Timberland Index since inception.
•Top Performer in Peer Group–as evidenced by comparison to NCREIF Timberland Index (“NTI”)
benchmark: Molpus has outperformed the NTI by 300 basis points since Oct-1997 (10.9% vs. 7.9%).
•Track Record of Success –for sophisticated clients which include endowments, pension funds and
family offices.
Periodic Returns –Oct-1997 through Q2-2010 (1)(2)
(Unlevered, Gross Return)1 year3 year5 year7 year10 year Since
Oct-97
Molpus Composite (3)
4.3%6.7%11.9%15.1%8.1%10.9%
NCREIF Timberland Index (Total)-3.6%6.1%9.9%10.2%7.1%7.9%
Source: Molpus and NCREIF. (1)
In considering performance of investments referred to in these materials, prospective timberland investors should keep in mind that prior performance of Molpus investments is not indicative of future results and
there can be no assurance that Molpus will achieve comparable results in the future. (2)
The stated returns are presented on a pre-tax “gross” basis which does not reflect the deduction for management fees or incentive fees that would be
applicable to an investment in the Fund, and which would reduce the amount received by investors. Molpus’saverage gross to net fee spread is 1.79% as of its first investment in 1997. (3)
The historical returns for both Molpus and NCREIF are
(a) time-weighted, (b) at the property level, (c) unlevered, and (d) presented before fees. Molpus’sreturns are calculated consistent with NCREIF Timberland Index, which is a property level formula that uses accrual income accounting and
capitalized investments to calculate a quarter-to-quarter return, which then is geometrically linked to compute a holding periodreturn. For further information, please see NCREIF’s “Data Collection and Reporting Procedures Manual.”
3
Income
Appreciation
10.9% (1)
Composite Return Comparison Since Inception
NCREIFMolpus
•Timber sales
•Recreation
•Value Added
•Appreciation moderately lower due to
Molpus’s focus on early recognition of
income through active management
3.8%3.2%
7.5%
3.9%
Returns Driven by Proprietary Management System
October 1997 –Q2 2010
Molpus –Superior Returns
Active management approach and vertical integration drives superior returns
(1)
Rounding exists between components and composite, so components may not add exactly to the total return. Returns are unlevered, gross of management fees and audited through 12/31/08.
Sources:MolpusWoodlandsGroupandNCREIF.
•Bare land
•Biological
7.9%
•Lower cost
•Results-oriented incentives
•Dedicated value-add team
•Peak market timber sales
•Conservative investment rationale
(based on)
–Biological growth
–Income
•Acquisition discipline (better
coverage ratio)
•Longer-term focus
Results Driven By:
4
Growth
Molpus –Organization
Dick Molpus
President
Bob Lyle
Executive Vice President
Terrell Winstead
Chief Financial Officer
Michael Cooper
General Counsel
Charlie Manogue
Vice President -
Acquisitions
Keith Williams
Director of
Value Added
Edgar Marshall
Vice President -
Business Development
Land
Management Investment
Modeling
Biometrics Geographic
Information
Systems
Finance/
Accounting Legal Admin.
Client
Information
& Reports
Number of team members in each functional area (parentheses)
(29)(3)(4)(5)(5)(10)(1)(2)
67 executive, management, and support personnel
Ken Sewell
Chief Operating
Officer
Active Management (1)
Risk ManagementBusiness Operations
(1)
Refer to next slide for detailed
breakdown of Active Management
All core business and forestry functions executed by in-house experts
**
**
*
5
*Investment Committee member
30-70% Compensation
Bonus Opportunity
Molpus –Organization
Ken Sewell
Chief Operating Officer
Claire
Bain
Information
System
Director/GIS
Manager
Robin Sowell
Office Manager
Don Sanford
Property Manager
SWF-Birmingham
Clay Holder
Division Forester
Lands & Harvesting
Stewart Craig
Division Forester
Lands & Harvesting
Lisa Underwood
Office Administrator
Brice Young
GIS Analyst
Jeff Strickland
GIS Analyst
Deland Miller
GIS Analyst
Bryan Turnbull
Division Forester
Wesley Selecman
Forest Manager
Ataya
Phil Brown
Division Forester
Joshua I -Lands
Reagan Kent
Lands & Harvesting
Manager -Joshua II
Mike Thorn
Division Forester
Joshua I -Lands
Keith Boyles
Division Forester
Joshua I -Harvesting
Keith Hilpp
Director of
Inventory
Management
and Planning
Tom Tomlinson
Managing Director
SWF-Ouachita,
Joshua II &
Oklahoma
Ruth Cook
Director of
Client Information
And Reports
David Kinsey
Nursery Foreman
Chad McElvany
Division Forester
OKT & Caney Creek
Jim DeWit
Director of
Land Management
Property Manager-
Joshua I
Mark James
Property Manager
IMA
Thomas Carr
Division Forester
Boone Parklands
Timothy Burpoe
Division Forester
Moshannon & Tug Hill
Sam Campbell
Nursery Manager
Perry Willis
Property Manager
Pickwick Region
Lisa Lykins
Office Administrator
Mark Korkko
Property Manager
Lake Superior
Timberlands
Robb Oldt
Forest Manager
Lake Superior
Timberlands, LLC
Lisa Johnson
Office Administrator
Shane Lee
Forest
Biometrician
Jerry Mahon
Inventory
Manager
David Lehman
Lands & Harvesting
Manager
Steve Marietta
Property Manager
Red River
John Morgan
Division Forester
Dedicated active management professionals: land management, biometrics, GIS and client reporting
6
Jamie Vermillion
Lands & Harvesting
Manager
20-50% Compensation
Bonus Opportunity
15-30% Compensation
Bonus Opportunity
Molpus –Investment Locations
Molpusand its investments are strategically located in industrial timber growing regions
Proportion of Land That is Timberland
7
Sources: USDA Forest Service, 2002 RPA data, the National Atlas of the United States and The Molpus Woodlands Group.
Molpus -Theoretical Investment Locations
Future investments will be strategically located in industrial timber growing regions
8Sources: USDA Forest Service, 2002 RPA data, the National Atlas of the United States, Canadian Forest Service and The Molpus Woodlands Group.
Proportion of Land That is Timberland
LEGEND
Theoretical targeted
investments
Canada
$100
$300
$500
$700
$900
$1,100
$1,300
$1,500
$1,700
$1,900
199920002001200220032004200520062007200820092010
Average Price per Acre
U.S. South
U.S. Northeast
Total US - excluding
Pacific Northwest
4.5
5
5.5
6
6.5
7
'01'02'03'04'05'06'07'08'09'10
Source: Timberland Market Report.
(% real)
Market Opportunity –Why Now
•Stressed owners and operators require liquidity
-Timber REIT’s need cash to continue paying dividends
-Manufacturers need to improve efficiency or pay debt
-Some investors are over-levered
•Raw materials prices are 30% below the 1.2%(1)
price growth trend line
•Significant demand for timber products and diverse end uses
INDICATED DISCOUNT RATES FOR
U.S. TIMBERLANDS
Market has shifted presenting new opportunities at discounted values
AVERAGE TIMBERLAND PRICES
1999 –2010 (1)
9
(1)
Excluding the Pacific Northwest
Sources: RISI Timberland Database, October 2009. RISI Timberland Market Report, April 2010.
1Q
Source: Timberland Market Report 2010
(1)
RISI
1.Multiple Layers of Portfolio Diversification –Emphasis on diversification within the asset base by
geography, species and age class, with an additional emphasis on current income
2.Value Creation Potential –Seeking specific properties where the Firm can leverage its strengths
and unique structure to create value at the property level
3.Distressed Sellers –Where possible, use extensive sourcing network to create acquisition
opportunities with sellers that are motivated to sell in the short-run because of economic challenges
Strategy –Overview
Investment themes: focus driven by opportunistic strategies
Allocation: creating a return profile diversified by a number of unique drivers
50% Emerging Growth50% Income Potential
30%
30%
30%
10%30%
30%
30%
10%Transitional
Stands
Young
Merchantable
Young
Pre-merchantable
Other
Products
Shifting
Classes
Young
Merchantable
Mature
Near
Harvest
Other
•Higher growth through appreciation
•Moderate income potential
•Strategy: Silvicultural additions
•Higher income potential
•Less growth through appreciation
•Strategy: Peak market timber sales
Diversified by:
•Geography
•Species
•End Product
•Topography
•Mill customer
•Seasonal logging
•Non-timber revenue
10
-
200,000
400,000
600,000
800,000
1,000,000
19971998199920002001200220032004200520062007200820092Q10
SouthNortheast, Appalachia, Lake States
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
20062007200820092010
Red River
Transaction
(90,770 Acres)
$1047
Estimated BLV
Weighted Average Bare Land Value from 2007-2009
$Median
(7 Transactions)
(5 Transactions)
Strategy –Acquisition Discipline
Foresight as net seller has led to discounted opportunities
Comparable Transactions (TX, LA, AR)
13 transactions -$6 billion
Bare Land Value (per acre)
11
Evolution of Acres Under Management
Source: Molpus Woodlands GroupSource: Molpus internal interpretation of transaction data.
Acres Under Management
Strategy –Emerging Income
Potential return improvement can range from 100 –300 basis points
12
•Not embedded in base acquisition methodology
•Dedicated value added team
•Possible return improvement of 100 –300 basis points
•Wood pellets, biomass, biofuels
•Recreation and Higher-Better-Use (HBU)
•Conservation Easements (CE)
•Wind Energy
•Oil, gas, seismic
•Carbon sequestration (not too distant)
•2009 –Forever Wild, AL -$6mm
•2009 –Trust for Public Land, TN
•2010 –Development of wind tower lease
•2010 –Early discussion, UK power company
•2010 -2011 –Pellet Supply Contracts
•2010 -2011 –Mitigation bank sales/partnerships
•Future –Carbon/cellulosic ethanol
Approach
Demonstrated
Success
Incremental
Income
Streams
13Confidential –not for distribution
50%
91%
46%
100%
Timber
Harvests
(including
final sale)
HBU Land
Sales (2%)
Total
Revenue
Marketing/
Merchandising
Cost1
Regen-
eration2
Prop.
Taxes
Forestry
Expenses3
Admin.
Cost
Closing
Cost
Appraisals
Inventory
(including
acquisition)
Margin
Net
Margin
Total Cost
9%
Lease
Sales (2%)
Revenue and Expense Breakdown -$10 Million Acquisition
Vertical integration lowers operating costs and drives higher income
Total Revenue & Expenses (including Capitalized) as a Percentage of Total Revenue
Expense Items paid to Molpus
1
Includestheprocessingandhandlingofbids,negotiatingandadministeringtimbersalecontractsandcuttingagreements,markingtreesforharvestandsupervisingloggingoperations.
2
Includesthecostofsitepreparationandplantingoftreesafteraregenerationharvest.
3
ForestryExpensesarerelatedtoin-forestactivities.Incertaincases,Molpuswillperformactivitiesinlieuofacontractorgeneratingeithersavings,accuracy,orefficiencyfortheclient.(Illustrative
purposesonly.)13
Land
Component of
final sale,
including
discounted
value of future
timber growth
$28.8M
$367,804$247,134$858,105$171,621$224,498$154,384$378,785
($2.4M)
$26.4M
$14.4M
$13.3M
1%1%<1%3%<1%<1%<1%
$453,080
$673,940
11.19%
Gross
Return
14Confidential –not for distribution
Return Components
“IRR”
Annual
Revenue
(excluding
exit)
Land
Appreciation,
including
discounted
value of future
timber growth
(nominal)
Gross IRR Net IRRTimber
Growth
(realized
at sale)
Fee Items paid to Molpus
Cash Basis Returns -$10 Million Acquisition
Total return = annual income events + timber growth + land appreciation
14Illustrative purposes only
4.04%
2.85%
1%
.31%
11.19%9.88%
4.04%
4.30%
Management Fee
Incentive Fee
Fund Target
8 -12%
Net IRR
In this example, Molpus acquired a property from another timberland manager. Active management of
this tree (and ultimately the stand) at age 18 created significant growth shown by the exponential size
of the growth rings after 2004.
Strategy –Active Management
Impact of active management –rings of truth
15
Fund Size:$400 million
Target Return:8% -12% nominal, unlevered IRR (net of fees and expenses), inclusive of an
average, annualized distributable net cash yield of 2 -4%
Investment Period:36 months
Term:10 years (plus two optional 2-year extensions)
Fund Profile:•Diversified by species, geography, products, markets, and age class
•Focus on distressed sellers or unique circumstances
•Regional diversity
Region:All U.S. and Canadian industrial timber growing regions, except for Pacific
Northwest of both countries
Management Fee:1.0% (on called/invested capital; no fee on committed capital)
Incentive Fee:15% over a 7% annual return (cash on cash)
Preferred Return7%
Carried Interest15%
DistributionsAfter all capital contributions plus Preferred Return is returned, 85% / 15%
LeverageUp to 10% of total Fund assets
NothinghereinconstitutesanoffertosellorasolicitationofanoffertobuyanysecuritywithrespecttothereferencedproposedFund.Nosuchoffertosellorsolicitationofanoffertobuyanysecuritywithrespectto
theFundwillbemadeexceptpursuanttoappropriateofferingdocumentstobeprovidedtopotentialinvestorswhoaredulyqualifiedtoinvestinsuchsecurities.
Molpus –Summary of Terms
Favorable alignment of GP and LP interests
16
Appendix
Detailed Performance
Prior funds and separate accounts have generated strong performance
18
InvestedCashRealizedUnrealizedTotal Gross Net Gross Net
Investment Vehicle (Vintage)CapitalYield (5)
Value(6)
ValueValueReturnReturnReturnReturn
Aggregation of Separate Accounts(4)
Realized Investments$458.5 5.4%$ 777.1 $-$ 777.1 22.5%18.8%16.8%12.9%
Partially Realized Investments1,160.4 6.5%793.2 486.4 1,279.6 3.7%2.6%8.6%7.6%
Unrealized Investments91.3 --94.5 94.5 2.1%1.3%2.2%1.5%
Total Separate Accounts$1,710.2 5.8%$ 1,570.3 $ 580.9 $ 2,151.2 8.7%6.8%11.0%9.1%
Sustainable Woodlands Fund I (2005)
Realized Investments---------
Partially Realized Investments138.2 2.7%19.2 176.0 195.2 8.9%8.0%9.9%8.7%
Unrealized Investments---------
Total Sustainable Woodlands Fund I$ 138.2 2.7%$ 19.2 $ 176.0 $ 195.2 8.9%8.0%9.9%8.7%
Sustainable Woodlands Fund II (2009) (12)
Realized Investments---------
Partially Realized Investments---------
Unrealized Investments177.1 1.3%1.5 178.3 179.8 3.2%2.4%3.8%3.3%
Total Sustainable Woodlands Fund II$ 177.1 1.3%$ 1.5 $ 178.3 $ 179.8 3.2% (12)
2.4% (12)
3.8% (12)
3.3% (12)
All Vehicles
Realized Investments$ 458.5 5.4%$ 777.1 -$ 777.1 22.5%18.8%16.8%12.9%
Partially Realized Investments1,298.6 6.1%812.4 662.4 1,474.9 4.3%3.3%8.7%7.7%
Unrealized Investments268.4 0.9%1.5 272.8 274.3 2.5%1.7%2.3%1.5%
Total All Vehicles$ 2,025.5 5.2%$ 1,591.0 $ 935.2 $2,526.3 8.7%6.9%10.9%9.1%
Molpus Woodlands Group: Summary Investment Performance
Unlevered, Gross and Net Performance (1) (2) (3)
As of June 30, 2010 ($ millions)
Internal Rate
of Return (7)(8)(9)
Molpus’sReturns
Based on NCREIF’s Time
Weighted Methodology (7)(10)(11)
Detailed Investment Performance
Footnotes to investment performance
19
1.In considering performance of investments referred to in this analysis, prospective investors are reminded that prior performance of Molpus’sinvestments is not indicative
of future results and there can be no assurance that Molpus will achieve comparable results in the future.
2.The stated returns are presented on a pre-tax basis. All properties are appraised by third parties on a regular basis. Appraisalintervals are not the same for all clients.
3.Returns exclude one former property where Molpus performed only certain forestry functions and was not responsible for the financial records. This property was neither a
holding of the Prior Funds nor an institutional separate account client, and represented only 1.8% of the acreage managed in 2004, the final year of Molpus’srole.
4.Molpus has managed separate accounts since inception and currently has five separate account relationships as of June 30, 2010.
5.Cash Yield reflects average annual, distributable cash yields that are net of all costs, fees and operating expenses.
6.Realized Value reflects partial exits, land dispositions, timber harvests and other liquidity events.
7.Unlevered returns are based on total invested capital. For informational purposes, the Prior Funds have not employed leverageatthe fund or property level. Certain
separate accounts do employ leverage based upon the specific direction of the client. In addition, “gross” returns are gross of any management fees but net of other costs,
fees and operating expenses.
8.The internal rate of return on an investment is the annualized effective compounded return rate that is earned on invested capital. The term “internal” refers to the fact that
its calculation does not incorporate environmental factors (e.g., an interest rate or inflation).
9.An XIRR calculation was used to account for the timing of cash flow returns. The estimate of value used for unrealized and partially realized investments as of June 30,
2010 is based on current discount rates and market conditions, not on pro forma estimates of exit values. In addition, IRR calculations have not been audited but the
underlying cash flows and financial statements relating to 97.5% of invested capital have been audited as of December 31, 2008 (certain Molpus clients do not require
audits). Audited returns through December 31, 2009 are expected to be available in September 2010.
10.Time-weighted returns are calculated consistent with the NCREIF Timberland Index, which is a property level formula that uses accrual income accounting and capitalized
investments to calculate a quarter-to-quarter return, which then is geometrically linked to compute a holding period return. NCREIF returns are always calculated as “gross”
(i.e., not net of all costs, fees and operating expenses). For further information, please see NCREIF’s “Data Collection and Reporting Procedures Manual.” In addition,
time-weighted return calculations have been audited through December 31, 2008 by MengelMetzger Barr & Co., LLP of Rochester, NY. Underlying cash flows and
financial statements relating to 97.5% of invested capital have been audited (certain Molpus clients do not require audits). Audited returns through December 31, 2009 are
expected to be available in September 2010.
11.All dollar values represent total capitalization -both debt and equity. These returns have been calculated on an unlevered basis, consistent with NCREIF methodology. As
such, any debt has been treated as equity for the purposes of these calculations. For informational purposes, the Prior Fundshave not employed leverage at the fund nor
property level. Certain separate accounts do employ leverage based upon the specific direction of the client.
12.The Sustainable Woodlands Fund II closed in November 2009. Fund II’s stated performance figures are based on results of less than one year. In addition, the properties
included in this transaction have not yet had their first annual third-party appraisal.
Importance of Biological Growth
In 2009, Molpus closed a transaction involving 91,000 acres of mature natural pinelands in Texas, Louisiana, and Arkansas for$173 million. This property mostly
consisted of very large-diameter and high-volume per acre naturally regenerated upland pine stands; a small component of young, well-managed pine plantations
was pre-established as well. Although scattered across three states, a well-developed road system provides easy access to tracts, reducing logging cost.
Investment Thesis•Highqualityandstableproduction
•Significantlevelsofmaturetimber
•Richsoilandwaterresources
•Locatednearmultiplelarge-scalepulpandlumbermanufacturers
•Highsitequalitycharacteristics
Highlights•SFI®certifiedtimberlandsconvertibletopineplantations
•Opportunitytointroduceintensivesilviculturetoincreaseharvestlevels
•Strongcashflow
•Superiorsawtimberproduct(diameterandlogquality)
•SituatedinoneofthepremierwoodbasketsinthesoutheasternU.S.
•3-yearexecutableplantoinventoryentireproperty
Silviculture•HistoricestablishmentofCellForclonalpineplantations,whichreducesharvesthorizon
•Internalproprietaryvolumetricandgrowthandyieldstudytobetterunderstandtheresource
Timber Marketing Strategy•Opportunityforopenmarkettimbersalesinadditiontowoodsupplyagreement
Value-Added Opportunities •Establishedalong-termtimbersupplyagreementwithpreviousownerofthetimberlands
•Extensiveroadsystemreducesharvestingcostsandhauldistance
•High-volumetrafficcorridors,includingplannedI-69,increaserealestatevalue
•Unrealizeddemandforrecreational/huntingproperty
•Potentialpinepolingenterprise
Deal Source•Private/network
Red River
20
Representative Transaction
Importance of Biological Growth
From2005to2006,Molpusacquired210,000acresoftimberlandinLouisiana,Arkansas,Mississippi,andAlabamafor$138million.Thetimberlandsacquired
consistedofhigh-productionpineplantations,aswellasbothuplandandbottomlandhardwoods.Thisdiversityinspeciesandtimbertypesmitigatestimbermarket
risks.TheBirminghamportionoftheinvestment(165,000acres)provestobeviablewinter/wetseasonlogginggroundwithanextensiveroadinfrastructurealready
inplacefromhistoricgasandcoalminingoperations.OuachitahashighHBUpotentialandhuntingleaserightsduetoitswateraccessibility.NatchezTrace,
acquiredfromadistressedsellerandcontainingmostlyyoungpineplantations,wasboughtatareducedpriceandwillyieldhigher-valuetimberinafewyears.
Investment Thesis
•Attractivelocationtometropolitanareas
•Highmilldensityregion
•Opportunityforelevatedrealestatesales
•3geographiclocationswithexposureto3distincttimbermarkets
Highlights•Landdevelopment/HBUopportunitiesonOuachitaandNatchezTraceparcels
•Extensiveroadsystemforreducedharvestingcostsandwetweathertimbersales
Silviculture
•Initiatedpineplantationfertilizationprogramin2007
•Pre-commercialthinningtoimprovestandquality
•Selectiveharvestinginhardwoodstands
Timber Marketing Strategy•Localteamwithyearsofexperienceintheareauseextensivenetworkofcontractors
Value-Added Opportunities
•TheStateofAlabamathroughTheForeverWildProgram
•Wetlandconservation/mitigationopportunities
•Existingrecreationalleaseprograms
•NicherecreationalmarketslocatedintheMississippiAlluvialPlain
•PortofBirminghamforbarginglogsandchipstoothermarketsincludingexportationtooff-shoremarketsinneedof
supply
•Bioenergycontracts
•Highpotentialforwetlandmitigation
Deal Source•Private/Network
Representative Transaction
Birmingham, Ouachita, and Natchez Trace
21
Importance of Biological Growth
In 2008 Molpus acquired, on behalf of a client, 72,000 acres of Lake States hardwood, located in the Upper Peninsula of Michigan, and southern pine
plantations, located in Tennessee, for $83 million. The acquisition of the Michigan portion benefited from a distressed seller,and was bought under-valued.
This tract had been historically well managed and consisted of high-value hardwoods, including hard and soft maples. The property was aligned with a state
tax structure that reduced property taxes four-fold. The Hiwassee tract is located just north of Chattanooga, a major metropolitan area in Tennessee, and is
situated for exceptional HBU opportunities.
Investment Thesis•Madeupofdiversehigh-valuespecies
•Competitivetimbermarkets
•100+yearsofinvestment-grademanagement
•Potentialeconomiesofscale
•Expertlyimprovedtimberstands
Highlights•Bestinclasssilviculture
•Flexibleharvestperiod
•Favorablespotmarkets
•Highrecreationarea
•5-yearexecutableplantoinventoryentireproperty
Silviculture•Sustainablestand-levelselectiveharvestinginnorthernhardwoods
•Internalproprietaryinventoryandgrowth-and-yieldstudytobettermarkettimber
Timber Marketing Strategy•Operationalflexibilitytostoreproduct,reachouttonichemarkets
Value-Added Opportunities•Winddevelopmententerprise
•Opportunitywithlocalconservationgroups
•Amplecarboncreditopportunities
•Uniquerecreationalpotentials
•Multipleusesforvaluegeneration
•Scenicvalue
•Conservationeasementsmarket
Deal Source•Private/network
Representative Transaction
Michigan and Hiwassee
22
SWF Fund Highlights
–Initial Close –5/05 ($90M)
–Final Close –3/31/06 ($149M)
–Invested Capital -$138M
–Appraised Value -$167.4M
Current Summary
•Long term timber lease
•Returned 13% of investor capital in cash
distributions.
•Development of unique $6 MM opportunity –
Forever Wild
Product Mix
Character of
Returns1
12 Month
Return
3 Year Return
Annualized
Since
Inception
Annualized
(8/2005-
2Q 10)
Distributions7.90%3.93%2.76%
Estimated
Appreciation /
(Depreciation)
5.51%9.97%5.83%
Estimated Gross
Total Return 12.26%13.50%9.86%
Estimated Net
Total Return 11.14%12.37%8.73%
Premerch
6%
Pine
Sawtimber
21%
Hardwood
Sawtimber
26%
Hardwood
Pulp
22%
Pine Pulp
15%
Pine
Chip/Saw
10%
Returnsauditedthrough12/31/2008.Inconsideringperformanceofinvestmentsreferredtointhesematerials,prospectivetimberlandinvestorsshouldkeepinmindthatpriorperformanceofMolpus
investmentsisnotindicativeoffutureresultsandtherecanbenoassurancethatMolpuswillachievecomparableresultsinthefuture.
Source: Molpus Woodlands Group
Sustainable Woodlands Fund I –Profile
SWF I: Characteristics
23
SWF II Fund Highlights
–Initial Close –5/1/08 ($130M)
–Final Close –11/30/09 ($178M)
–Invested Capital -$178M
–Projected return
-Base case –8.8%
-Possible case –11.5%
Current Summary
•40% discount in bare-land value versus recent
comparable sales ($6 billion)
•Developed unique structure with the seller for
ultimate savings of 20%
•Preliminary findings demonstrate 14% of
additional sawtimber not accounted for in
acquisition value.
Character of
Returns1
12 Month
Return
3 Year
Return
Annualized
Since
Inception
(11/09 -
2Q 10)
DistributionsNANA1.36%
Estimated
Appreciation /
(Depreciation)
NANA1.17%
Estimated Gross
Total Return NANA3.77%
Estimated Net
Total Return NANA3.26%
Pine Pulp
7%
Pine
Chip/Saw
2%
Pine
Sawtimber
59%
Pine Poles
(est.)
5%
Hardwood
Pulp
4%
Hardwood
Sawtimber
9%
Premerch
14%
Product Mix
Returnsauditedthrough12/31/2008.Inconsideringperformanceofinvestmentsreferredtointhesematerials,prospectivetimberlandinvestorsshouldkeepinmindthatpriorperformanceofMolpus
investmentsisnotindicativeoffutureresultsandtherecanbenoassurancethatMolpuswillachievecomparableresultsinthefuture.
Source: Molpus Woodlands Group
Sustainable Woodlands Fund II –Profile
SWF II: Characteristics
24
Molpus –History & Evolution
1910192019501990199519972000
Founding
1905 -Founding of
Henderson-Molpus
Mercantile, predecessor to
Molpus Lumber Co.
19401970
1969 -Molpus Hardwood Co.
formed to utilize the existing
timber mix
Molpus Hardwood Formed
First Sawmill
Company opened first
sawmill and contracted with
US military to construct
ammunition boxes for
troops overseas
Largest Sawmill
1974 -In Morton, MS,
opened one of the
nation’s largest and most
technologically advanced
sawmills.
1980
1980-1984 –Molpus
sold all manufacturing
businesses to IP &
Louisiana Pacific
respectively
Manufacturing
Sale
TIMO Formed
1996 –Molpus
Woodlands Group
formed as a TIMO
1911 –First Molpus
lumberyard with a dry kiln
and planer mill.
Molpus Lumberyard
Formed
19961998 1999 200120022003200520061960200420082007 2009
S.W. Fund I
Final Close -
$138 MM
Fund I
1997 –First
acquisition
First Acquisition
Kimberly Clark
Acquisition
Acquired $397 MM
(411 M acres) from
Kimberly Clark
Alabama &
Mississippi
Acquired $127 MM
(181 M acres) from
International Paper
East Texas
TX Acquisition
Louisiana Pacific
Acquisition
Acquired $290 MM (463
M acres) from
Louisiana Pacific
East Texas
Northeast
Acquisition
Acquired $168
MM (273 M acres)
in Appalachia , NY,
and PA.
Acquired $75 MM
(68 M acres) in the
Upper Pen. Of
Michigan
MI Acquisition
Southeast
Acquisition
Acquired $173 MM
(91 M acres)
TX. LA, AR
1930
Timberland Investment ManagementTimber Merchandizing & Manufacturing
Molpus Forest
Products
Mid-80’s to mid-
90’s –wood dealer
S.W. Fund II
Final Close -
$173MM
Fund II
Rich heritage of innovation and expertise
25
Name/TitleIndustry Experience
Yrs in
Industry
Yrs with
MolpusFunctional Roles & Focus
Dick Molpus
Founder and President
•Founder;history in family business
•3 terms as Secretary of State MS
•VP Manufacturing, network of sawmills
4432•Firm management and direction
•Investment strategy
•Industry relationships
•Client relationships
Bob Lyle
Executive VP
•Director of Operations for 13 years
•Assistant Secretary of State MS
•Real estate brokerage, timber valuations
3114•Deal sourcing and execution
•Development of value-added opportunities
•Executive direction for all forestry operations
•Dispositions
Terrell Winstead
VP -Finance andCFO
•VP Finance, for timber brokerage company
•Participation in family timber business2523•Financial policy and direction
•Direction of all client accounting and reporting functions
•Deal team
•Development and improvement of investment models
•Risk management, controls and compliance
Charlie Manogue
VP -Acquisitions
•Significant acquisitions experience
•Previous COO for Molpus–1.3M acres
•Kimberly Clark –operations & technical analysis
•Scott Paper Co. –technical analysis
3111•Deal sourcing and execution
•Creative structuring
•Acquisition and due diligence
•Coordination of cross-functional acquisition team
•Drive value with biometrics and inventory team
Ken Sewell
COO
•Managing Director of Molpus–465,000 acres
•(previous) Director of Acquisitions –900,000 acres
•Packaging Corp –Region Manager
•Champion Int’l –operations and technical analysis
2011•Regeneration and forest planning
•Harvesting and thinning operations
•Inventory Management
•Information Systems
•Client Reporting
Edgar Marshall
VP -Business
Development
•VP, Europe Transformation –industrial shipping
container business
•VP, Timberlands for industrial manufacturing
112•Client development
•Transaction team
•Creative opportunities
•Financial products and structuring
Michael Cooper
General Counsel
•Chief Risk Manager, SEC Compliance Officer since
2007
•Corporate and real estate law practice
•Commercial real estate and banking law experience
1111•Risk management, controls and compliance
•Legal policies, procedures and commercial transactions
•Sales, procurement and vendor contracts
Keith Williams
Director of Value Added
•Significant timber sales experience
•Previous property manager for 60,000 acres
•International Paper –Unit Manager
•Champion Paper –operational & technical
208•Property disposition
•Renewable energy development
•Recreational leasing
•Conservation development
•Acquisition due diligence
Team –Key Executives
Experienced professionals with complimentary and tenured backgrounds in timber
26
CatalystRelationships Nature of Deal
Flow
Typical Annual
Acquisitions
Pipeline
Key Executives
Local Office
Professionals
•Manufacturers
•Entrepreneurs
•Brokers
•Corporate Lenders
•REITS/TIMOS
•Forestry Consultants
•Private Landowners
•Investment Banking
Proprietary
or Reverse Inquiry
100%
Auction
Less than 1%
Strategy –Sourcing & Relationships
Proprietary sourcing and well-cultivated relationships have led to superior deal flow
Historical Deal
Flow
Typical deal size:
$25M -$200M
27
Market Opportunity –Outlook
•Sawlog market
oImprovement in demand
oIncreased pricing due to supply constraints
oContinue to preserve long-term value through harvest deferrals
•Pulpwood market
oContinued steady demand
oNew entrants
oIncreased prices in several regions due to wet weather conditions
•U.S. dominance (steady currency, superior logistics/infrastructure)
•Increasing scarcity of timberland
•Return to underlying demand (housing recovery); repairs / remodeling
•Emerging income streams: pellets, biofuels, biomass
•Diminishing Russian log exports
•British Columbia pine beetle epidemic
Optimism exists due to improving demand and long-term fundamentals
Current and near term drivers
Mid-to long-term drivers
28
Data Quality
Integrated
Systems
Stand Measurement
Inventory
Legal
Accounting
Valid Timber Inventory
Accessibility
Enterprise
System
•All aspects of property management are tied together in a secure relational database.
•Information is readily available for querying, viewing and printing.
•Decisions are made using a current, consistent database.
•Secure users may obtain information from any location with Internet access.
•Readily available data enhances the decision process and makes more productive use of time.
Quality
Control
•Data is consistently entered and edited by trained GIS professionals with forestry experience.
•Information is collected electronically, reducing the risk of error.
•Attribute data is routinely checked for accuracy.
•Properly placed stand boundaries and accurate acreage are the basis for
calculating what a timberland investment is worth.
•A true representation of timber volume is crucial for determining the
asset base value, making timber sales, and predicting future income.
•As spatial changes occur or as new tree measurements are imported,
timber volumes by-product class are recalculated “on the fly.” The
GIS/Inventory database provides up-to-date information for timber
sales and the tools for running “what if” scenarios for maximizing value.
•Timber and land sales are concurrently tracked through the Accounting
and GIS Departments. These integrated databases allow the means to
determine what the timberland investment is worth at all times.
•Scanned deeds, timber sales, land sales, recreational leases, rights-of-
way, etc., are easily accessible in electronic format (contracts and maps).
Precise ownership information and access rights to the property
are clearly documented.
Strategy –Proprietary Tools
Proprietary GIS allows managers to make effective, informed decisions
29
•What are the haul distances from specific mill locations?•What are the soil types and are they conducive to growing timber?•Which tracts do not have adequate road access?•How do the seller’s stand acreages and timber volumes differ from our analysis?
Pairing Quality Information with Analytical Tools
Acquisitions
Dimension Sample Queries
•Which timber stands are potential thinning candidates and what are their volumes by product class?•How did the negotiated volumes compare to the actual removal?•Which stands have sugar maple volumes in excess of 1000 board feet per acre?•Which stands can be harvested during wet weather conditions?
•Which soils are phosphorous-deficient and how many of these acres should be budgeted for fertilization?•Where are the recent thins and how many of these acres should be budgeted for herbaceous weed control?•Where are the completed clear cuts and how many acres should be budgeted for reforestation?•How many miles of ownership boundary need fresh paint?
•What effect does urban gravity have on this property and where are pockets of high income?•How many miles from the new Nissan plant is our clients property?•Where are the suitable wind corridors for energy production?•Where are the navigable waterways and railroads in relationship to this property?
•Which deed descriptions do not match the spatial data provided by the seller?•Which timber deeds are ready to be released?•How many tons of each product class does the GIS show for this property?•What are the release volumes by-product class for this timber sale?
Acquisitions
Legal/
Accounting
Inventory
Land
Management
Marketing /
Harvesting
Value Added
•Which stands have either old or no inventory numbers so they may be included in the upcoming cruise?•Which stands are currently being thinned?•What are the acres, ages, species and timber types of these stands?•How will slope and aspect affect growth and yield for this land base?
Pairing Quality Information with Analytical Tools
Vertical integration & cross-functional information provides significant knowledge and insight
30
Systematic
Modeling
•Conservative pricing fundamentals
•Inclusion of value-added revenue only when known and predictable
–stretch targets held in “possible model”
•Steam Growth Model –proprietary model used to “fine tune” final targets
•“All in” philosophy
•Results-oriented, by incenting those directly responsible for results (tied to client
performance)
•This vested interest results in involvement in acquisitions –modeling
fundamentals and assumptions at all levels within the organization
Transparency
Sensitivities
•Clarity in fee structure
•Timely and detailed reporting –quarterly, annual, conf. call, acquisition
updates, audits, etc.
•Field forester involved in investor communications
•Open-door policy
•Investors become engaged in process with appropriate discretions delegated
•Public sharing of composite return and report to NCREIF
Critical Financial Aspects –Modeling, Transparency & Sensitivities
•Focused variables built around client strategies and constraints
•Important to share the full spectrum of sensitivities -major drivers are
product pricing, value added, volume and growth assumptions
Critical Financial Aspects
Modeling transparency & sensitivities
31
Price RiskRisk of Loss
Operating ConstraintsValue
•Mill density
•Production capacity
•Operating capacity
•Price / demand volatility
•Existing agreements
•Demographics
•Cost creep
•Yield predictability
•Exit alternatives
•Reliance on non-
traditional revenue
•Political environment
•Debt load
•Access quality
•Topography / hydrology
•Logging economics
•Infrastructure
•Easements / encumbrances
•Supply Agreements
•Weather
•Insect / disease propensity
•Fire
•Survival rates
•1/10 of 1%
Risk
Required Return
Risk Adjusted Expectation
Strategy –Risk Analysis
Molpus analyzes each acquisition’s risk profile –only about 3% are above the line
32
Value of “In-House” Expertise
1
Amountofcapitalassociatedwiththecalculatederrorconsideringa100,000acrepropertywiththefollowingassumptions:20tons/acofpinepulpwood($9/T),15tons/ac.of
pinechip-n-saw($20/T),15tons/acofpinesawtimber($40T).
Source:VariationsderivedfromactualmerchantableweightsoftreesfelledandweighedbyMolpusinCentralAlabama.
SawtimberChip-n-SawPulpwood
% Error
Value of In-House Expertise
Published volume equations are error-prone
1.0%1.4%
-0.7%
-6.0%
-0.8%
6.8%
-4%
9%
13%
-10%
-5%
0%
5%
10%
15%
Published Equation 1 (Total Impact $0.2 MM)
Published Equation 2 (Total Impact $2.8 MM)
Published Equation 3 (Total Impact $10 MM)$1 MM1
$7.9 MM1
$2.7 MM1
33
To test modeled growth predictions, Molpus measured trees in 29
research plots (of all ages) and compared actual growth to modeled
results.
Importance of Biological Growth
1
Calculated $’s error per acre per year based on assumptions of: pulpwood ($8/T), chip-n-saw($20/T), sawtimber ($40T).
Source:MWGresearchbasedon29growthplotsinEastTexasonpropertiesmanagedbyMolpus.
Note: Average timber value per acre for the 29 plots was $1390. Average Growth/yr = $166.57/a/y.
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
0.00%0.50%1.00%1.50%2.00%2.50%3.00%3.50%
Molpus –AnGUS
Proprietary (0.2% error)
Research
Cooperative #1
Research
Cooperative #2
10-yr
NPV of
Error/Ac
Error
Extrapolated
to 100k ac.
$ 54/acre
$ 40 MM$ 349/acre
$ 205/acre$ 20 MM
$ 5 MM
$’s in Error per Acre per Year1
Value of In-House Expertise (cont’d)
Molpus’smodels provide significantly higher degree of accuracy
34
Foreign Investment in Real Property Tax Act (“FIRPTA”)
Molpus Woodlands Fund III: Proposed Blocker Structure
35
M.W.F. III
(Del LP)
Parallel Fund
(Cayman LP)
(Classify as
Partnership)
Offshore Blocker
(Cayman LP)
(Classify as Corp)
Investment 1
(Del LLC)
Debt
M.W.F. III-GP
(Del LLC)
Onshore Blocker
(Del LP)
(Classify as Corp)
GP
GP
GP
GP
LP (non voting)
LP (non voting)
StructureDescriptionProsConsRates
Base case -Non
US corporate
investor in Fund.
•Non US corporate investor
makes investment directly into
the US fund.
•None. We do not believe this is a
viable structure for investors, it is
presented as the base case against the
alternative described below.
•Subject to US corporate tax on US effectively
connected income (ECI), with most income
expected to be ECI.
•Subject to US branch profits tax on dividend
equivalent amount (after payment of US
corporate taxes). Treaty may reduce rates.
•US ECI withholding will apply to distributions by
the Fund to the investor.
•Disposition of interest in the Fund likely
generates US ECI and may be subject to FIRPTA
withholding.
•Investor required to file US tax returns (treated
as engaged in a US trade or business)
•Corporate level tax (at
35%, less benefit of
interest deductions).
•Branch profits tax (at
30% on after tax dividend
equivalent, subject to
lower treaty rates).
•FIRPTA and US ECI
withholding at fund level.
Alternative -
Domestic
leveraged
blocker
structure.
•Parallel fund invests into a
series of US corporations, each
of which invests in parallel with
the Fund in investment
opportunities.
•Use debt and equity. Interest
on debt is intended to be free
from withholding if portfolio debt.
•Interest payments reduce US
blocker’s corporate tax.
•Liquidation is free from FIRPTA
if corporation sells all assets prior
to liquidation.
•Portfolio interest reduces US tax with
no withholding tax.
•Gain on liquidation is not subject to
FIRPTA if all assets sold prior to
liquidation.
•Multiple blockers may be used to
permit frequent repatriation.
•Non-US investors do not file US
income tax returns or pay US taxes.
•No limitation on types of activities that
can be carried on by the entity –sale of
real estate, cutting contracts, etc.
•Portfolio debt characterization is not available if
more than 10% owner (however partnerships are
looked through and may also be able to use low
vote/no vote stock for corporate blockers).
•Earnings stripping rules may limit corporation’s
deduction for interest.
•Contingent interest does not qualify as portfolio
interest, but may use if payment is made to a
resident of a treaty country.
•Cannot sell interests in blocker prior to
liquidation without triggering FIRPTA.
•Blocker must sell all real estate and pay US
taxes to liquidate without FIRPTA taint.
•Estate tax concerns for US nonresident
individuals (can be mitigated by use of offshore
blocker above domestic blocker).
•No withholding tax on
portfolio interest.
•No FIRPTA withholding
if US blockers liquidate
after sale of assets.
•US corporate level tax
(at 35%, less the benefit
of interest deductions).
•Estate tax exposure for
non-resident individuals
(can be mitigated by use
of offshore blocker above
domestic blocker).
FIRPTA (cont’d)
Summary of Tax Structures
36
The material used in this presentation does not constitute or form part of an offer to sell or subscribe for, or the solicitation of an offer or invitation to purchase or
subscribe for, any security.
CIRCULAR 230 STATEMENT: The summary of tax matters contained herein has been prepared to support the marketing of the Interests. Nothing herein maybeused
by any taxpayer for the purpose of avoiding any penalties that may be imposed under the Code. Each taxpayer should seek advice based on the taxpayer’s particular
circumstances from an independent tax advisor.
-1-0.8-0.6-0.4-0.200.20.40.60.81
NCREIF Total
Property
Long Term Corp.
Bonds
Long Term Gov't
Bonds
Small Cap. Stocks
Large Cap.
Stocks
Inflation
U.S. Treasury
Bills
Perfect
Negative
Correlation
3%
4%
5%
6%
7%
8%
9%
10%
0%5%10%15%20%25%
Standard Deviation
Return
ML 3-Month T-Bills
NCREIF - Timberland Index
Barclays Aggregate Bond
Index
MSCI EAFE - Net
S&P 500 (TR)
Russell 2000 (DRI)
Source: Pertrac
Sharpe Ratio
Timberland1.00
Bond Index0.60
S&P 500TR 0.22
Russell 20000.16
0.07MSCI EAFE
The Capital Market Line 1994 -2009
FavorableRisk / Return ProfileTimber Prices Outpace Inflation
Uncorrelated to Traditional Investments
Correlation ofSelected Asset Classes to Timber (1987 –2009)
BiologicalGrowth Drives Returns
Sources of Timberland Returns
Market Opportunity –Why Timber
Timberland provides reduced volatility and offers superior risk-adjusted returns
Sources: LA Dept. of Agriculture, U.S. Dept. of Labor
Source: International Woodlands Company 2008
Sources:Molpusanalysis,withdatafromtheNCREIF,BarclaysLTGovernmentBondIndex,Russell2000(DRI),
BarclaysAggregateBondIndex,S&P500TR,ML3monthT-bills,U.S.Dept.ofLaborBureauofLaborStatistics.
Biological Growth
65% -75%
Timber Price
Change
25% -30%
Land Value
Changes
2% -5%
Source: Pertrac
The Capital Market Line (1994-2009)
$1
$10
$100
196519701975198019851990199520002005
Growth of a Dollar
Year
Unadjusted Consumer Price Index
Pine Sawtimber
Hardwood Sawtimber
37
Since 1965
10.89%
7.85%
6.30%
3.66%3.23%
2.43%
0%
2%
4%
6%
8%
10%
12%
Growth of $1,000 (1986 –Q2 2010)
(1)
Returnsaregrossofmanagementfeesandauditedthrough12/31/2008.(2)
Grossofmanagementfees.(3)
BarclaysAggregateBondIndex(allmaturities).(4)
Russell2000Index(DRI).((5)
MerrillLynch3MonthT-bills
Index.(6)
S&P500Index(TR).Inconsideringperformanceofinvestmentsreferredtointhesematerials,
prospectivetimberlandinvestorsshouldkeepinmindthatpriorperformanceofMolpusinvestmentsisnot
indicativeoffutureresultsandtherecanbenoassurancethatMolpuswillachievecomparableresultsinthe
future.
Sources:MolpusWoodlandsGroup,NCREIFandPerTrac
Annualized Total Return Comparison
Since Molpus’sInception
(Q4 1997 –Q2 2010)
Molpus
Woodlands
Group (1)
Bond Index (3)
Timberland
NCREIF (2)
T-Bills (5)
Large Cap (6)
Small Cap (4)
1 National Council of Real Estate Investment Fiduciaries
2 PerTracFinancial Platform; ML 3 month T-bills, Barclays Agg. Bond Index, S&P 500 TR, Russell 2000 (DRI)
Market Opportunity –Why Timber
Low volatility and steady returns provide significant impact over time
38
$0
$5,000
$10,000
$15,000
$20,000
$25,000
NCREIF -Timberland IndexML 3-month T-Bills
Barclays Aggregate Bond IndexS&P 500 TR
Russell 2000 Index (DRI)
Biographies of Key Executives
Experienced professionals with complimentary and tenured backgrounds in timber
Dick Molpus -President
DickMolpus,sixty,receivedabachelorofsciencedegreeinbusinessadministrationfromtheUniversityofMississippi.
Aftergraduation,heservedforanumberofyearsasthevicepresidentofManufacturingforMolpusLumberCompany,
basedinPhiladelphia,Mississippi.
In1980,MolpuswasselectedasexecutivedirectoroftheGovernor'sOfficeofFederal-StateProgramsunderGovernor
WilliamWinter,andin1983wasnamedMississippi'sPublicAdministratoroftheYearbytheAmericanSocietyof
PublicAdministrators.Whileatthegovernor’sofficeMolpushelpedguidethehistoricEducationReformActof1982to
passage.
In1983,MolpuswaselectedsecretaryofstateofMississippi;hewasre-electedin1987and1991.Assecretaryof
stateMolpusservedaslandscommissionerofMississippiandsupervisedover600,000acresof16thSectionproperty
thathadbeensetasideforthepublicschools.Byforcingrenegotiationofsome5,000below-marketleases,heincreasedtheamountofpublic
schoolrevenueonthosepropertiesby$24million.
In1995,hewontheDemocraticnominationforgovernorofMississippibut,afterastronglycontestedrace,wasdefeatedinthegeneral
electionbytheincumbentgovernor.
In1996,MolpusdecidedtoformTheMolpusWoodlandsGroupandutilizehisuniquebackgroundinboththetimberlandindustryandasa
fiduciaryforpublicassets.
DickMolpusandhiswife,Sally,werethefoundersofParentsforPublicSchools,whichnowhaschaptersinfifteenstatesacrossthecountry.
In2004,hereceivedfromtheNationalEducationAssociationtheH.CouncilTrenholmMemorialAwardforhisworkonbehalfofpublic
schools.
In2005MolpuswasinductedintotheMississippiBusinessHallofFame,andin2008hewashonoredasaChampionofJusticebythe
MississippiCenterofJustice.HecurrentlyisamemberoftheBoardofDirectorsoftheWilsonResearchFoundation,thefundraisingarmof
theMethodistRehabilitationCenterinJackson,Mississippi.
From2007to2009heservedasthefoundingchairmanoftheUnitedStatesEndowmentforForestryandCommunities,a$200million
endowmentfundedbytheU.S./CanadaSoftwoodLumberAgreement.Theendowmentisfocusedonimprovingforesthealthandassisting
timber-reliantcommunitiesintheU.S.MolpusisalsoafoundingboardmemberoftheNationalAllianceofForestLandowners(NAFO),which
isdedicatedtoprotectingandenhancingtheeconomicandenvironmentalvaluesofprivatelyownedforeststhroughtargetedpolicyadvocacy
atthenationallevel.
39
Biographies of Key Executives
Experienced professionals with complimentary and tenured backgrounds in timber
Bob Lyle -Executive Vice President
Terrell Winstead -Vice President of Finance & Chief Financial Officer
Mr.Winstead,VicePresidentofFinanceandChiefFinancialOfficerofTheMolpusWoodlandsGroup,LLC,The
MolpusCompany,andMolpusTimberlandsManagement,LLC,grewupworkinginhisfather’sloggingbusiness.
AgraduateofMississippiStateUniversity,Mr.WinsteadbeganhiscareerwithMolpusin1987asVicePresident
ofFinancewithresponsibilityforalladministrativeandfinancialfunctionsofthecompany.Heisalsoresponsible
forthecomputerizedsystemsthatproducetimelycashflowinformationforallpropertiesmanagedbythe
company.Previously,hehasworkedinconsultationwiththeforestryschoolsatbothMississippiStateUniversity
andtheUniversityofGeorgia,aswellaswiththeMolpusforesterstorefineMolpus’stimberlandinvestment
model.Mr.WinsteadisamemberoftheAmericanInstituteofCertifiedPublicAccountantsandtheMississippi
SocietyofCertifiedPublicAccountantsandservesontheBoardofTheCitizensBankofPhiladelphia.
Mr.LyleisExecutiveVicePresidentofTheMolpusCompany,TheMolpusWoodlandsGroup,LLC,andMolpus
TimberlandsManagement,LLC.
HeisagraduateofMillsapsCollege(BBA1979)andMississippiCollegeSchoolofLaw,earninghisjurisdoctorate
degreein1988.Hehascontinuedhispostgraduateeducation,havingcompletedseveralexecutivebusiness
coursesattheUniversityofChicagoGraduateSchoolofBusinessandatDukeUniversity.Priortoattendinglaw
school,Mr.Lyleworkedextensivelyasarealestatebrokerandappraiseroftimberandagriculturalproperties,and
hehasconsiderableexperienceinnegotiatingthebuyingandsellingoflandandtimber.Mr.Lyleisalicensedreal
estatebrokerinnine(9)stateswheretheMolpusentitiescurrentlymanageproperties.
DickMolpusaskedMr.LyletoserveonstaffattheMississippiSecretaryofState’sofficein1989,wherehisduties
includedassistingsome90schooldistrictswithmanagementofmorethan600,000acresofpublictrustschoollands.Heservedas
AssistantSecretaryofStateuntil1995andthenjoinedMolpusin1996.Mr.LyleisamemberoftheBoardofDirectorsofPriorityOneBank,
whereheservesontheExecutive,Compensation,andLoanCommittees,andtheBoardofDirectorsofCrossgatesUnitedMethodist
Children’sCenter.HealsoisaTrusteeoftheMississippiAgriculturalandForestryMuseumandamemberoftheAmericanandMississippi
BarAssociations.
40
Biographies of Key Executives
Experienced professionals with complimentary and tenured backgrounds in timber
Charlie Manogue -Vice President -Acquisitions
Ken Sewell -Chief Operating Officer
Mr.Sewell,ChiefOperatingOfficerofMolpusTimberlandsManagement,LLC,receivedabachelorofscience
degreeinforestresourcesfromtheUniversityofGeorgiain1989.
In1999,Mr.SewelljoinedTheMolpusWoodlandsGroupasDirectorofAcquisitions,responsibleforthe
identificationandevaluationofforestinvestmentopportunities.Duringhistenure,heparticipatedinacquiringover
900,000acresoftimberlandforclientsofthecompany.In2003,Mr.SewellwaspromotedtoManagingDirector
withintheMolpusTimberlandsManagementorganization.AsManagingDirector,hisresponsibilitiesincludedthe
overallmanagementofforestryoperationsonapproximately465,000acreslocatedinSoutheastTexas.In2006,
herelocatedtoHattiesburg,Mississippi,andassumedthesameresponsibilitiesonapproximately230,000acres
locatedinAlabama,Mississippi,Louisiana,andOklahoma.In2007,heacceptedhiscurrentpositionasChief
OperatingOfficer.PriortohisemploymentwiththeMolpuscompanies,Mr.Sewellgainedtenyearsoftechnical,
operational,andmanagerialexperiencesintheforestindustrythroughhisemploymentwithChampionInternationalCorporationin
Cantonment,Florida,andPackagingCorporationofAmerica(formallyTennecoPackaging),inHaleyville,Alabama.
41
Mr.ManogueisVicePresident–AcquisitionsoftheMolpusWoodlandsGroupwithresponsibilityforcoordinating
timberlandacquisitionsforclientsinterestedintimberlandinvestmentsintheU.S.South,otherNorthAmerican
regions,andcertaininternationallocations.
HegraduatedfromPurdueUniversityin1977withabachelorofscienceinforestmanagementandreceiveda
masterofscienceinforestbiometricsfromPurduein1980.In1999,Mr.ManoguejoinedMolpusTimberlands
Managementandserveduntilearly2007asChiefOperatingOfficerwithresponsibilityforallforestmanagement
operationsonupto1.3millionacresduringhistenure.Previously,Mr.Manoguegainedalmost20yearsof
technical,operationalandmanagerialexperiencewithAmericanCanCompanyandKimberly-ClarkCorporation
(formerlyScottPaperCompany).Mr.ManogueisamemberoftheforestryassociationsinAlabama,Mississippi,
andLouisianaandisactiveintheMississippiForestryAssociationwherehehasservedontheBoardofDirectors
since1993andontheExecutiveCommitteein1998and1999.HealsohasservedontheBoardofDirectorsof
the Forest Resources Association since 2005.
Biographies of Key Executives
Experienced professionals with complimentary and tenured backgrounds in timber
Edgar Marshall -Vice President -Business Development
Mr.MarshallisVicePresident-BusinessDevelopmentwiththeresponsibilityofstrategicimprovementandgrowth
ofTheMolpusWoodlandsGroup,LLC.Healsoservesonthecompany’sExecutiveAcquisitionsTeam.
Mr.MarshallisaforestrygraduateofMississippiStateUniversityandreceivedhismastersofbusiness
administrationfromMississippiCollegewithforeignstudiesatTiasNimbus.Mr.Marshallhasbothinternationaland
multi-industryexperienceinstrategicgrowth,assetmanagementandvaluecreation.Priortohisemploymentwith
Molpus,heworkedasaVicePresidentwithGreif,anindustrialshippingcontainerscompany,inTheNetherlands.
HeledGreif’sperformanceimprovementinitiativefocusingonbuildinginternalcapabilitiesinbothstrategic
marketingandmanufacturingprocesses.Previoustothat,hewastheVicePresidentandGeneralManagerfor
SoterraLLC,atimberlandcompanyintheUnitedStatesandCanada.Mr.Marshallalsohasanextensive
backgroundinlargetimberlandtransactions.
Michael Cooper -General Counsel
MichaelR.CooperisGeneralCounsel,ChiefComplianceOfficerandRiskManagerforTheMolpusWoodlands
Group,LLCandMolpusTimberlandsManagement,LLC.
Heisresponsibleforthemanagementofthelegalmattersofeachcompany;andmaintainingalllegalinstruments
thatrelatetothepropertiesofMolpus’sclients.HeisalsoinvolvedinmanagingtherisksofMolpusanditsclients
byoverseeingMolpus’sriskmanagementstrategies.Additionally,Mr.CooperservesasMolpus’scontactforthe
LimitedPartnersofitsPriorFundsandisresponsibleforMolpus’smarketinginformation.
Mr.CooperearnedabachelorofbusinessadministrationinbankingandfinancefromMississippiStateUniversity
in1992andaJurisDoctoratefromtheUniversityofMississippiSchoolofLawin1995.PriortojoiningMolpus,Mr.
CooperwasengagedinadiversifiedcorporatelawpracticeinJackson,Mississippi.Hewasselectedasoneof
Mississippi’sTop40Under40for2009bytheMississippiBusinessJournalandisamemberofthefollowing:the
MississippiEthicsCommission,theMississippiCorporateCounselAssociation(whereheservedaspastPresident),theAmericanBar
Association’sAdvisoryCommitteefortheParalegalStudiesprogramfortheUniversityofSouthernMississippi,andtheMississippiBar
(whereheservesasChairmanoftheClients’SecurityFundsCommittee).
42
Biographies of Key Executives
Experienced professionals with complimentary and tenured backgrounds in timber
Keith Williams -Director of Value-Added
Mr.WilliamsistheDirectoroftheValue-AddedDivisionforTheMolpusWoodlandsGroup,LLC.Inthis
position,Mr.Williamsisresponsibleforevaluatingandimplementingopportunitiesfornon-timberrevenuefor
clientproperties.Theseopportunitiesincludehigherandbetteruselandsales,alternativeenergy
opportunities,conservationeasements,endangeredspecieshabitats,etc.Mr.Williamspreviouslyservedas
PropertyManagerfor63,000acresinSoutheastOklahomaundermanagementbyMolpusTimberlands
Management,LLC(MTM).HehasbeenanemployeewithMTMsince2002.Mr.Williamshasextensive
experiencemanagingtimberlandsinseveralstates.PriortojoiningMTM,Mr.WilliamsservedasaDistrict
ForestManagerforInternationalPaperCompanyandAreaForesterforChampionInternationalCorporation.
43
NOTHINGHEREINCONSTITUTESANOFFERTOSELLORASOLICITATIONOFANOFFERTOSUBSCRIBEFORORBUYANY
SECURITYWITHRESPECTTOANYFUND.NOSUCHOFFERTOSELLORSOLICITATIONOFANOFFERTOSUBSCRIBEFOROR
BUYANYSECURITYWITHRESPECTTOANYFUNDWILLBEMADEEXCEPTPURSUANTTOAPPROPRIATEOFFERING
DOCUMENTSTOBEPROVIDEDTOPOTENTIALINVESTORSWHOAREDULYQUALIFIEDTOINVESTINSUCHSECURITIES.
THISPRESENTATIONISNOTINTENDEDTOBERELIEDUPONASTHEBASISFORANINVESTMENTDECISION,ANDISNOT,AND
SHOULDNOTBEASSUMEDTOBE,COMPLETE.THECONTENTSHEREINARENOTTOBECONSTRUEDASLEGAL,BUSINESS
ORTAXADVICE,ANDEACHPROSPECTIVEINVESTORSHOULDCONSULTITSOWNATTORNEY,BUSINESSADVISORANDTAX
ADVISORASTOLEGAL,BUSINESSANDTAXADVICE.
THERECANBENOASSURANCETHATANYPOTENTIALTRANSACTIONDESCRIBEDHEREIN,INCLUDINGWITHOUTLIMITATION
THEFORMATIONOF,ANDOFFERINGOFSECURITIESWITHRESPECTTO,THEREFERENCEDPROPOSEDFUND,WILLBE
EXECUTED.
INCONSIDERINGPERFORMANCEOFINVESTMENTSREFERREDTOINTHESEMATERIALS,PROSPECTIVETIMBERLAND
INVESTORSSHOULDKEEPINMINDTHATPRIORPERFORMANCEOFMOLPUSINVESTMENTSISNOTINDICATIVEOFFUTURE
RESULTSANDTHERECANBENOASSURANCETHATMOLPUSWILLACHIEVECOMPARABLERESULTSINTHEFUTURE.
CERTAININFORMATIONCONTAINEDINTHESEMATERIALSCONSTITUTES“FORWARD-LOOKINGSTATEMENTS,”WHICHCANBE
IDENTIFIEDBYTHEUSEOFTERMINOLOGYSUCHAS“MAY,”“WILL,”“SHOULD,”“BELIEVE,”“EXPECT,”OR“ESTIMATE,”THE
NEGATIVESOFSUCHWORD,ORCOMPARABLETERMINOLOGY.DUETOVARIOUSRISKSANDUNCERTAINTIES,ACTUAL
EVENTSORRESULTSOFTHEACTUALPERFORMANCEOFATIMBERLANDINVESTMENTMAYDIFFERMATERIALLYFROM
THOSECONTEMPLATEDBYSUCHFORWARD-LOOKINGSTATEMENTS.
Disclaimer
EXECUTIVE OFFICE
654 North State Street
Jackson, MS 39202
Phone: 601-948-8733
Fax: 601-352-7463
mwg@molpus.com
FORESTRY MANAGEMENT OFFICE
178 Bonhomie Road
Hattiesburg, MS 39401
Phone: 601-545-3063
Toll-Free: 800-850-8947
Fax: 601-545-2888
mwg@molpus.com
ALABAMA
Birmingham
3580 Lorna Ridge Drive
Phone: 205-822-7130
Fax: 205-824-7898
Elberta
29650 Comstock Road
Phone: 251-986-5210
Fax: 251-986-5211
ARKANSAS
El Dorado
3320 West Hillsboro Street
Phone: 870-862-6700
Fax: 870-862-6704
KENTUCKY
Richmond
1232 Lancaster Road, Suite A
P.O. Box 1898
Phone: 859-623-3088
Fax: 859-623-3086
LOUISIANA
Monroe
3101 Armand, Suite 4
Phone: 318-324-9068
Fax: 318-324-9724
Oberlin
P.O. Box 1127
206 North 4th Street
Phone: 337-639-2333
Fax: 337-639-2444
MICHIGAN
Houghton
47040 Sheridan Place
Phone: 906-370-1375
Fax: 906-523-5535
MISSISSIPPI
Saltillo
111 East Town Creek Drive
Phone: 662-205-4650
Fax: 662-205-4652
Waynesboro
P.O. Box 869
3572 Highway 63 North
Phone: 601-735-5025
Fax: 601-735-0674
NEW YORK
Saranac Lake
92 Cherry Tree Lane
Phone: 518-891-2817
OKLAHOMA
Antlers
804 East Main Street, Suite 1
Phone: 918-470-0656
Fax: 580-298-9894
FORESTRY OFFICES