AMP Performance Measures and Targets

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AMP Performance Measures and Targets

• Measure a numeric value derived from a
  repeatable method (e.g. the of sit ups I will
  do each morning)
• Target the idealized measure (e.g. the number of
  sit ups I want to do each morning)
• Result a comparison of measure to target
• Action what is needed to meet/exceed the target

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Special Note

• The Measures and Targets in this presentation
  apply to lands currently owned by the CSF
• For lands, etc acquired as investments of CSF, a
  specific rate of return target and schedule will
  be established at the time of acquisition

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Why Measure Performance and Set Targets?

• Identify non-performing assets
• Take Action
• Make adjustments to land management
• Enhance revenue
• Evaluate disposal options

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Options for Measures for Financial Performance

• Return on Asset Value (ROAV)
• Net Operating Income (NOI)
• Total Annual Revenue (AR)
• Annual Revenue by Land Class (ARC)
• Land Value Appreciation (LVA)

5
Return on Asset Value

• Expressed as (e.g. 5)
• Requires land value, annual expenditure, annual
  revenue info
• Measures return compared to land value
• Allows for comparison with similar business
  returns and financial instruments

6
Net Operating Income

• Expressed as (either or -) could be a ratio
• Requires revenue and expenditure info by parcel
  or land class
• Gross revenue minus expenditures
• Measures income compared to expenses
• Comparison more difficult no universal targets
• Target would be needed

7
Change in Total Annual Revenue

• Expressed in or
• Easy to calibrate
• Measures only income
• No universal target
• Could establish target based on year to year
  increase/decrease or simple incr/decr

8
Change in Annual Revenue by Land Class

• Expressed as or
• Requires info by land class
• Easy to calibrate
• Measures only
• income No universal target
• Could establish target based on year to year
  increase/decrease or simple incr/decr

9
Change on Land Value Appreciation

• Expressed in
• Requires periodic re-appraisal or calc of land
  value could use trending and BPJ
• Measures only land value
• No universal target
• Could establish target based on change in land
  value between time periods (e.g. 5 year
  intervals)

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AMP Strategy

• Increase revenue from land mgmt
• Hold and manage core ownerships (e.g Elliott,
  blocked rangelands, DSL Bldg)
• Evaluate certain lands for disposal or income
  improvement opportunities
• Focus management on lands designated for Active
  management
• Recognize lands as long term investments
• Recognize lands as essential part of overall
  portfolio of CSF (diversification)

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Factors to Consider

• Annual income is very important
• Managing costs is very important
• Increasing the value of the land is important
• All of the land was granted to the state no
  state funds were expended to buy it
• Our largest expenditure over time is for day to
  day management

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Use a Multiple Measure Approach!

• ROAV by land class or tract calculated every 5
  years with targets based on current best
  available info plus 2.
• NOI by land class or tract calculated each year
  with targets set for each land class representing
  a positive ratio of revenue to expenses
• Change in AR by land class or tract with targets
  set requiring positive change
• Change in LA by land class or tract calculated
  every 5 years with target of 2 or greater annual
  appreciation

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Why?

• Meets strategic needs of AMP
• Recognizes unique character of CSF lands
• Provides prudent measures for judging financial
  performance
• Offers flexibility for management