I got my lease estimate last week with a $1000 increase which I explained in another thread on here. Today I get this e-mail saying that its going up because my property is of a higher quality. Im a little confused if Im getting another estimate with a further increase soon or not, I hope not. I am in no way bashing Weyerhauser, just giving a little heads up to some of you who lease from them.
Here is the e-mail:
Dear Leaseholder:
You are receiving this message because we are updating our pricing programs. This will affect your lease costs, and we want to provide you with an explanation.
Within the last 5 years, Weyerhaeuser has made several land acquisitions. With each acquisition came a portfolio of hunting leases, often priced considerably differently than Weyerhaeuser’s. Additionally, as we examined our properties, we found that higher quality tracts were often priced the same as lower quality tracts. We have developed an evaluation and pricing approach which will price tracts according to their quality, while eliminating the pricing variability caused by previous ownership. We call this approach value-based pricing.
Value Based Pricing
All properties are not equal when it comes to hunting. Some leases may have a diversity of different aged pine stands, modest amounts of hardwood, streams, beaver swamps, a power/gas line ROW, or other features hunters highly value. Other leases may contain a single age class of pine, with little hardwood and no water features. The value of a tract for hunting depends on the tract attributes, and our approach to evaluating properties is called Value Based Pricing (VBP). Less diverse tracts are assigned a lower score; more diverse tracts are assigned a higher score. Lease price will be correlated to the tract score. This concept is no different than when shopping for a vehicle. A vehicle with many options/features is valued higher than a base model with few features. For examples of properties on the low to high end of the diversity scale see page 2 of this letter.
As we implement VBP, we aim to do the following:
Here is the e-mail:
Dear Leaseholder:
You are receiving this message because we are updating our pricing programs. This will affect your lease costs, and we want to provide you with an explanation.
Within the last 5 years, Weyerhaeuser has made several land acquisitions. With each acquisition came a portfolio of hunting leases, often priced considerably differently than Weyerhaeuser’s. Additionally, as we examined our properties, we found that higher quality tracts were often priced the same as lower quality tracts. We have developed an evaluation and pricing approach which will price tracts according to their quality, while eliminating the pricing variability caused by previous ownership. We call this approach value-based pricing.
Value Based Pricing
All properties are not equal when it comes to hunting. Some leases may have a diversity of different aged pine stands, modest amounts of hardwood, streams, beaver swamps, a power/gas line ROW, or other features hunters highly value. Other leases may contain a single age class of pine, with little hardwood and no water features. The value of a tract for hunting depends on the tract attributes, and our approach to evaluating properties is called Value Based Pricing (VBP). Less diverse tracts are assigned a lower score; more diverse tracts are assigned a higher score. Lease price will be correlated to the tract score. This concept is no different than when shopping for a vehicle. A vehicle with many options/features is valued higher than a base model with few features. For examples of properties on the low to high end of the diversity scale see page 2 of this letter.
As we implement VBP, we aim to do the following:
- To align lease pricing with local or regional differences in quality. For example, within each state in the Southeast, certain regions/counties are recognized for having better hunting. Our approach considers these differences.
- Within every county of our ownership, to better align lease price with the quality of a property. Even within a given county, the quality of hunting can vary widely based on tract conditions. Higher quality tracts command a higher price than lower quality tracts; we will price them accordingly.
- To eliminate the variability in prices for tracts of similar quality. In some areas, pricing variability in a county is largely due to pricing differences between long-held Weyerhaeuser properties versus lands we have recently acquired from other others. We will move swiftly to reduce/eliminate this form of pricing variability.
What does this mean for me?
Your lease was identified as being lower in price than other tracts in the county of similar quality. Your lease price is being raised to “catch up” in price to similar quality properties. With the current price increase, your lease price effectively matches other tracts of similar quality in the county.
We realize no club wants to hear their lease price is escalating more than historical averages. However, we believe VBP is the right way to manage our leasing program. We also believe it is important to be as transparent as possible and provide leaseholders forward looking guidance through such times of change. As always, we thank you for your patronage of Weyerhaeuser recreational leases and we hope to continue our relationship for many years to come.
Sincerely,
Weyerhaeuser Company
Recreation Lease Management
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