Preserving the Western landscape

Special advertising section by Emily Wolfe Explore Big Sky Managing Editor

Tim Murphy turns his Suburban off Interstate 90 at Livingston, Montana, and heads south on Highway 89. Leaving the outskirts of town, the road enters a canyon between limestone cliffs carved by the Yellowstone River. DePuy Spring Creek is hidden by cottonwoods on the left.

Abruptly, the landscape opens into Paradise Valley, split and jack rail fences cordoning off fields of golden brown hay and vibrant green irrigated alfalfa. The August sun filters in through the windshield.

“That’s Bullis Creek Ranch on the right,” says Murphy, 46, noting that Hall and Hall, where he is a partner, holds the listing on the private 6,220-acre valley at $14.5 million.

To the east, the rugged 11,000-foot Absaroka Mountains rise 6,500 feet above the Yellowstone River.

Adjacent to Bullis Creek, he points out the O’Hair Ranch, with its large blue silos and legendary spring creek; further south is the several-thousand-acre spread owned by Austen Cargill II, an heir to Cargill Industries, one of the largest private companies in the country. Beyond this are ranches belonging to a former Goldman Sachs managing director and a senior partner in one of New York’s old line investment management companies.

While longtime local families still own ranches in this and other valleys around Montana, much of the state’s private land has remained open and in agricultural use because of non-resident landowners.

The first in Montana to sell working land as an investment asset, Hall and Hall is involved with the vast majority of these transactions in the West, and increasingly around other parts of the country and internationally.

Located in Chile’s southern Patagonia region, the 11,125-acre Estancia Valle Dorado Coyhaique has 13 miles of trout streams running through it, and a well-managed, low-overhead ranching operation.

When CNN founder and environmentalist Ted Turner purchased the Flying D Ranch south of Bozeman in 1989, it was a milestone in the real estate market, says Jim Taylor, 68, who helped broker the deal through Hall and Hall.

“[Turner] was the first guy who was prepared to write a check for $20 million,” Taylor says. “Before that, $5 or $6 million was a lot.”

Hall and Hall also sold Turner the Bar None Ranch, a fly fishing and elk hunting property north of Bozeman, as well as a number of large ranches managed for bison and wildlife in Nebraska and South Dakota, and an estancia in Patagonia, near Bariloche, Argentina.

“He didn’t buy [the Flying D] with the idea of making a lot of money,” Taylor says about Turner’s signature 113,613-acre property where he raises bison for his restaurant chain, Ted’s Montana Grill. Instead, Turner, who Taylor says “cares deeply about the land,” wanted to return natural balance there by removing fences and creating habitat for indigenous wildlife like bison and elk.

Until the late 1970s, ranch land was priced on the number of cow/calf pairs it could sustain. Today, while these “animal units” are still valued, buyers will pay even more for privacy, high quality fishing, hunting, wildlife habitat and scenery.

Although Turner brought attention to this market, he was not the first to make such a purchase. In Montana’s Madison Valley, for example, wealthy families have owned large operating ranches since the 1920s.

Many have donated conservation easements on their land, thereby giving up the development rights. Statewide, the Montana Land Reliance has helped landowners of all types establish easements on more than 2 million acres, keeping them available for agriculture and fish and wildlife habitat.

“The value of open space is really apparent,” said MLR managing director Jay Erickson. “It increases the value collectively for everybody.” He noted the aesthetic value of these easements, and the importance of maintaining agricultural land – “as basic as it sounds, we have to eat.”

The Nature Conservancy of Montana, which holds the conservation easement on Turner’s Flying D Ranch, has had similar success.

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Paradise Valley, Murphy says, has been on the map for non-resident buyers since the late 1960s, with celebrities like novelist Thomas McGuane, artist Russell Chatham and actor Peter Fonda owning property there and in some cases calling it home. The Suburban whizzes by the turnoff to Mountain Sky Guest Ranch – owned by Arthur Blank, cofounder of Home Depot and owner of the Atlanta Falcons.

Soon Murphy turns right onto the washboard of Tom Miner Creek Road, slowing to 25 miles an hour to cross the river on an old metal bridge. At the road’s end are the Gallatin Petrified Forest and the trailhead for 10,289-foot Ramshorn Peak; in their shadow is the B Bar Ranch, which produces organic grass-fed beef, maintains public Nordic ski trails, and is owned by General Motors heiress Maryanne Mott.

After five miles, Murphy pulls left at a simple log archway into Grizzly Creek Ranch, a high-end corporate retreat and working ranch. Beyond a set of 100-year-old homestead cabins refurbished as guest quarters, dark volcanic cliffs frame the verdant valley.

Visiting with the brokers, the facilities manager Dan Tompkins mentions he’s been seeing grizzly bears daily. The cow and calf elk will soon move down toward the Yellowstone River, he says, and the bull elk will remain on the ranch grounds in winter. “We had 60 or 70 bulls up here last year, and a herd of bighorn sheep.”

The ranch’s 1,945 deeded acres border the Gallatin National Forest, which runs into Yellowstone Park four miles beyond the jagged ridges.

Originally part of a larger ranch, Grizzly Creek was first sold by Hall and Hall in the early 1970s for the family that founded the Ward Baking Company of England.

“This is probably the most spectacular and unique piece of property in the state,” Taylor said. “You show somebody this, and you can’t really show them anything else.”

It is currently listed at $25 million.

The Great Western Ranch, near Quemado, New Mexico, has 176,805 deeded acres, and runs cows on around 292,000 total acres. Adjacent to the Ramah Navaho Indian Reservation and El Mal Pais National Conservation Area and set at around 6,000 feet, the ranch is home to 1,500-2,000 elk.

Founded by Henry Hall and his son Warren, the Hall and Hall Mortgage Company began as an agricultural lender in 1946, working with farmers and ranchers just home from World War II. In 1972, led by Taylor – who grew up on a ranch on the Crow Indian Reservation south of Billings, Montana and graduated from Yale – the company expanded to offer agricultural properties as an investment class asset to a national and international clientele.

Hall and Hall has grown significantly since its “humble beginnings” at $3 million in yearly revenue, Murphy says, and the last decade “has produced nearly $2.5 billion in sales, spanning 2 million acres of private landscape.”

The firm now has 11 offices throughout the West, the Great Plains and Texas, collectively holding brokers licenses in 21 states – from Florida to California. In addition to real estate, it offers farm and ranch management and consulting services, mortgage loans, appraisals and most recently built one of the country’s largest farm and ranch auction companies.

Hall and Hall’s 15 partners make it their business to know the lifestyle they sell.

“Most of us grew up farming and ranching, and also are passionate about hunting, fishing, skiing and horses,” Murphy said. “We can easily put on our fishing hat or our cowboy hat, and they fit us well. It’s what we do.”

In 2012, Hall and Hall did more than 50 percent of its business in Montana, where it is headquartered, selling approximately 189,500 deeded acres in the central and western part of the state – or about 66 percent of parcels larger than 2,500 acres, said Clark Wheeler, of the agricultural appraisal and consulting firm Norman C. Wheeler & Associates.

“They’re the industry leader, there’s no doubt about it,” Wheeler said.

While the bulk of its sales are in the West and the Great Plains, Hall and Hall also deals in the South and the Midwest, as well as Canada, New Zealand and Latin America, using joint venture partners for international deals.

“Land has to be the primary asset for us,” Murphy says. “We try to stick with what we know.”

This could mean executive estates like Grizzly Creek or the 160-acre Elk Horn Ranch in the Yellowstone Club, a private ski and golf resort in Big Sky, Montana; sporting retreats like the Big Mountain Ranch in Meeker, Colorado, which harbors trophy game animals; or large working ranches like the 44,688-acre Winding Stair Ranch in Daisy, Oklahoma, which recently sold.

Those large agricultural operations are in fact where Hall and Hall has focused in the last few years, because many of its buyers are using them to park money as a safe alternative to the stock market or low-yielding government securities, Murphy said.

Because the majority of transactions are cash, the ranch market is highly unleveraged, so instead of crashing in 2008, Murphy says, “it just paused.” This also means it’s stable – “The whole apple cart’s probably not going to topple.”

Although still in a trough, the market began to rebound in 2010 and 2011, when “the gap between the ask and the offer finally [narrowed] where people started to transact again,” said broker Randy Shelton, 52. Subsequently, Hall and Hall had successive record setting quarters in 2012.

Additionally, Shelton said, since cattle, wheat and corn have been profitable in the last decade, agricultural operations can now produce a modest annual cash return. “You can get a 1 percent or better return on a great ranch, compared to .05 percent on your savings account – farms do even better, though they are increasingly hard to find.”

Investment buyers don’t typically rely on a ranch’s income however, instead focusing on long-term real estate value, which Murphy says has historically been a viable asset.

Land is a tangible investment like art, Taylor says. “The price in dollars might go up and down, but the value is not going to go away… they’re not making any more land.”

The Elk Horn Ranch is a 160-acre parcel inside the private Yellowstone Club in Big Sky, Montana. Its well-appointed compound provides year round use.

Most of Hall and Hall’s business comes through referrals, and with many clients coming from cities, much of the brokers’ job is about education.

“Helping people understand [value in] the different markets is one of the biggest challenges,” Taylor said. “I help educate them, and the decision to buy becomes a logical extension of that process.”

Ultimately, it’s all about relationships.

Two of Hall and Hall’s biggest current clients, Texans Farris and Dan Wilks, sold their shares in their hydraulic fracturing company, FracTech, and are now the largest private landowners in Montana, excluding large corporations. Among the brothers’ more than 270,000-acre portfolio are the Pronghorn and Roosevelt ranches in the Snowy Mountains outside of Lewistown.

“Those properties were not on the market,” Murphy said, “but we had longstanding relationships with the previous owners, the late Earl Holding [of Sinclair Oil] and Ted Roosevelt, IV, so we were able to go directly to them and say, ‘We have someone who might want to buy your place. Would you be interested in selling it?’”

Approximately 30 percent of Hall and Hall’s sales are handled through private transactions such as this.

Certain properties are once in a lifetime opportunities, Murphy says, noting that although this term is often overplayed, it’s “very true in our market.” Ranches of this caliber often stay in families for generations.

This story was first published in the winter 2013/2014 issue of Mountain Outlaw magazine. Find more at hallandhall.com.