Received a proposal during the week to replace GSMAL with...

Received a proposal during the week to replace GSMAL with Primary Securities as the RE for the 2007 and 2008 forestry projects. These are my thoughts.

I'm against the 2008 proposal. The 2008 project came with the opportunity to own the land via a land trust, which I took up. The land trust now owns the land on an unencumbered basis. An "independent forestry consultant" then did an analysis of the 23 properties within the land trust and concluded -
"a commercial forestry business within the Land Trust is not an economically viable option for investors in the Trust". I'd rather leave the land unencumbered, which leaves it to be used for other potentially more attractive purposes than forestry, than have it encumbered for 10 years with the likelihood of no gain.

I'm slightly in favour of the 2007 proposal. Given the earlier project year the establishment procedures should have been largely complete. The increased size of the planting should help with the economies of scale. However the proposed upfront and ongoing fees will eat into the harvest proceeds. Being realistic, I would hope that the harvest proceeds would completely cover these fees and recover some (but not all) of the initial subscription money.

The good thing about the 2007 proposal is that it is independent of the 2008 project. This is unlike the Gunn's offer for each year of the projects, which was contingent on all the projects years being approved as well.