In 2011 and 2012, Greenfield Advisors assisted our founder Bill Mundy, PhD, MAI, CRE (retired), in analyzing the Lenga Patagonia property in Tierra del Fuego, Argentina. Tierra del Fuego is the island province that lies at the southern tip of Argentine Patagonia—hence its nickname of Fin del Mundo, or End of the World.
The Lenga Patagonia holdings consist of approximately 260,000 acres of stunning vistas and dramatic landscapes. It spans a linear area longer than the state of Delaware, over 145 kilometers (90 miles) stretching across Tierra del Fuego from the Chilean border to the Atlantic Ocean. Covered mostly by old-growth lenga forests (a species of beech), the landscape transitions from remote mountains and river valleys in the west to rolling hills and world-class trout streams as the property approaches the Atlantic coast.
The owner of the Lenga Patagonia holdings was considering disposition of the property and contacted us for assistance. At the request of our client and to help with his decision-making process, we explored the feasibility of a variety of potential land uses, conservation measures, and enterprise ventures possible on this vast property. One of the first steps in our analysis was to determine the highest and best use for the property. This task becomes significantly more complex when the subject property is roughly the size of Hong Kong. The possible uses for Lenga Patagonia were staggering, so to view this project on a workable scale, we began by considering large land use categories that could later be refined in detail.
A timber enterprise is an obvious use for a property covered in a billion board feet of high-quality timber. At the time of our analysis, the property was already being managed for some timber operations, although these operations had barely scratched the surface of potential yields.
On the other hand, Lenga Patagonia is rich with conservation/preservation potential. In addition to being covered by ancient old-growth forests, the property is used by an enormous diversity of local and migratory birds. Lakes, rivers, and streams throughout the property provide water for wildlife and habitat for fish. Lenga Patagonia includes some of the last pristine trout streams in the world, which anglers would be eager to preserve.
Of course, an area with so much rugged beauty, untouched natural lands, and ample amenities will be highly sought after for residential and recreational development. Potential recreation uses include golf, equestrian, fishing, mountaineering, hiking, and skiing. At the time of our analysis, plans were underway to construct an ocean-to-ocean trail system that would traverse Lenga Patagonia and a portion of Chile, thus making it possible to hike across Patagonia from the Atlantic to the Pacific. All of these recreation uses would serve a broad range of residential development, including estancias (ranches), secluded second homes, and ranch preservation communities.
We anticipated interest in a combination of all those uses and more from potential buyers both within Argentina and internationally. However, in December 2011, the Argentine government passed the Rural Lands Act (Law 26,737), which created considerable uncertainty for potential buyers of the property who were not Argentine citizens. Consequently, this legislation adversely affected the marketability of the property.
Last we heard, after considering the potential uses of the property still valid under the Rural Lands Act, the owner of the Lenga Patagonia holdings was continuing its existing forestry operations.