When Don Heath is asked whether he’s a banker with forestry expertise, or a forester in the banking business, he pauses to mull the answer, rubbing his chin.
“Well, I spent about 24 years in the forest industry before I came to work for the bank, but that was 10 years ago,” said Heath, manager of AmSouth Bancorp’s Natural Resources and Real Estate Department. “Wearing both hats causes you to look at them differently, and hopefully do a better job at both.”
Heath, who seems just as comfortable rolling down dirt roads in a pickup truck pointing out loblolly and slash pine trees as sitting behind an executive desk, has grown the department, part of the bank’s Wealth Management Group, into one of the top natural resource management outfits in the country, which has approximately 700,000 acres of timberland under management.
“We usually fall around fifth or sixth in the country concerning acres managed,” said Heath, senior bank vice president and an occasional guest lecturer at Auburn University. “All of the big guys — Bank of America, Wells Fargo, etc. — almost exclusively manage farm acreage, but most of ours is forest.”
The bank’s portfolio has been building since the 1930s, and includes property managed by AmSouth’s predecessor banks, but investor interest in timberland assets really began gaining momentum in the late 1980s.
“That’s when large pension funds discovered timber, and they became large holders of timberland assets in the 1990s,” said Health. “Today, there’s in excess of 13 billion acres of timberland under management, primarily by large pension funds invested in institutional quality timberland. In 1985, there were none, because the forestry industry, private individuals or the government owned nearly everything. There were no real pure timberland investors at that point.”
Typical clients have inherited land from relatives, migrated to cities, and now realize that real estate assets can be managed for competitive returns on investment with very low risk, said Heath.
“We primarily manage trust assets, but not always strictly for return on investment, but rather a dual focus for current income beneficiaries and for remainder beneficiaries,” he said. “We manage the rest of the assets on an agency basis to meet the individual goals of clients, many of which are pure return numbers. We’re a little more aggressive in our management and are generating higher current yield than a typical trust asset.”
With oil and gas prices up, and investors still feeling bruised from crashing tech stocks and the stock market adjustment several years ago, Heath is fielding an uptick in inquiries — more than double — from landowners asking about options and opportunities for mineral management. AmSouth’s mineral land management division oversees nearly two million acres of minerals, which includes oil, gas and coal and other hard minerals such as stone, clay, sand and gravel.
“There’s a tremendous amount of exploration activity going on, and lease activity like we haven’t seen in 10 years, because minerals have become more economical to mine and extract,” he said.
The department, which has an office in Jackson, has 35 property managers throughout its footprint, which covers most of Alabama, Florida, Louisiana, Mississippi and Tennessee, and includes a dozen property managers in the bank’s Mobile office alone, with an average tenure of nearly 20 years of banking and/or forestry experience.
“Twice as many people want to get into these asset classes than in the ‘90s,” said Heath. “Most of the time back then, no one was interested. When the stock market was still crashing, we still didn’t see the interest in minerals and timber and farmland real estate that we do today. The interest is ever increasing.”
Contact MBJ contributing writer Lynne W. Jeter at firstname.lastname@example.org.