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timberland and other real property, which generally take a long
time to generate cash-flows.19
We recognize that our previously stated value range for the
specific Washington properties is significantly greater than the
asset value that one would arrive at through petitioner's
mathematical use of the trading price of the partnership units.
On the other hand, as indicated above, we believe that the market
price of the partnership units is relevant to our ultimate
determination. Taking this into consideration, we conclude that
figures in the lower range of our approximate valuations are a
better indication of true value. Based upon all the evidence, we
19The Washington properties were transferred to the
Partnership because petitioner's board believed that the market
value of the properties was not fully reflected in the trading
price of petitioner's stock. At trial, when petitioner's chief
executive officer was asked if he believed that the market value
of the properties had been fully reflected in the trading price
of petitioner's stock, he stated:
I think that the market value is reflected in the
price, just like Weyerhaeuser. You know it's like
saying, the timber value in Weyerhaeuser is reflected
in its market value. It is reflected in the market
value. But if you were to take the timber value of
Weyerhaeuser and appraise it, it would be greatly in
excess of the market value of Weyerhaeuser. And so why
is that the case? The cash-flows in timberland, you
know, take many, many years to turn out. And so that--
and the returns on timber are very low. They don't--
timber only grows about five percent a year. So the
values in this, in our industry, in any of our publicly
traded companies, if you appraise the timberland, it's
going to appraise higher than the market value of the
stock. So this is sort of a general statement that you
would make about any company in our industry.
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