June 15, Dear Potential Provider:

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1 June 15, 2015 Dear Potential Provider: The Massachusetts Pension Reserves Investment Management ( PRIM ) Board is requesting responses from firms interested in providing Timberland Appraisal Services. The Procurement Officer for this Request for Qualifications (RFQ) is Mr. John F. La Cara. In order for responses to be considered for selection, each response and all attachments must be received by the Procurement Officer by 3:00 p.m. ET on June 30, Questions concerning the RFQ must be received by the Procurement Officer by 3:00 p.m. ET on June 19, Responses and questions should be sent via e mail to rfpresponses@mapension.com. We appreciate the time and effort required to respond to this RFQ. Each firm submitting a response to PRIM can be assured that the same time and effort will be expended in evaluating each response. We look forward to your submission. Sincerely, Michael G. Trotsky, CFA Executive Director and Chief Investment Officer 1

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3 REQUEST FOR QUALIFICATIONS (RFQ) TIMBERLAND APPRAISAL SERVICES June 15,

4 Table of Contents Description Page I. Scope of Services 5 II. General Information 5 III. Selection Process and Selection Criteria 7 IV. Minimum Qualifications 7 V. RFQ Specifications 7 VI. Time Table 10 VII. Questionnaire 11 VIII. Representations and Warranties 13 Exhibits Page A PRIM s Strategic Asset Allocation, Current Investment Managers and 14 Timberland Holdings B PRIM and PERAC Disclosure Forms 18 C Staff Biographical Information 23 D List of Clients 24 E PRIM Investment Policy 25 4

5 I. SCOPE OF SERVICES. The purpose of the RFQ is to select a number of qualified firms capable of performing timberland appraisal services for PRIM. Services include, but are not limited to, conducting full and update appraisals of PRIM s timberland assets. Appraisal reports will be prepared in conformity with the requirements of the Code of Ethics and Standards of Professional Practice of the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Standards Board of the Appraisal Foundation. Firms selected as a result of this RFQ will be eligible to perform timberland appraisal assignments for PRIM subsequent to a competitive bidding process. ll. GENERAL INFORMATION. 1. Legal Structure of PRIM. The Pension Reserves Investment Management ( PRIM ) Board was created in 1983 by the Commonwealth of Massachusetts to provide and manage the Pension Reserves Investment Trust ( PRIT ) Fund. The PRIT Fund was created to invest the assets of the State Employees and State Teachers Retirement Systems. Many local Massachusetts retirement systems also invest their pension assets in the PRIT Fund. The mission of PRIM is to ensure that assets to support current and future pension benefit obligations are adequately invested in a cost effective manner. PRIM seeks to maximize the total return on investments within acceptable levels of risk for a public pension fund. As of March 31, 2015, the PRIT Fund had net assets totaling approximately $62 billion. The current asset allocation targets, real estate and timber managers and timberland holdings are described in Exhibit A. PRIM is governed by a nine member board of trustees. The trustees include: (1) the Governor, ex officio, or his designee; (2) the State Treasurer, ex officio, or her designee, who shall serve as Chair of PRIM; (3) a private citizen, experienced in the field of financial management, appointed by the State Treasurer; (4) an employee or retiree, who is a member of the State Teachers Retirement System, elected by the members of such system, for a term of three years; (5) an employee or retiree, who is a member of the State Employees Retirement System, elected by the members of such system for a term of three years; (6) the elected member of the State Retirement Board; (7) one of the elected members of the Teachers Retirement Board chosen by the members of the Teachers Retirement Board; (8) a person who is not an employee or official of the Commonwealth appointed by the Governor; and (9) a representative of a public safety union appointed by the Governor. Appointed members serve for a term of four years. The nine member board of trustees has the authority to employ an Executive Director, outside investment managers, custodians, consultants and others as it deems necessary; to formulate policies and procedures; and to take such other actions as necessary and appropriate to manage the assets of the PRIT Fund. PRIM has established four advisory committees: Investment, Administration and Audit, Real Estate and Timber, and Compensation. These committees are generally comprised of several Board members and also private citizens with investment and/or relevant business expertise. Committee recommendations are presented to the Board for approval. The PRIM organizational chart along with a listing of the members of the PRIM Board, Investment Committee, Real Estate 5

6 and Timber Committee, Administration and Audit Committee, and Compensation Committee can be found on the PRIM website at 2. Legislative Mandate. PRIM is governed by Massachusetts General Laws ( MGL ), Chapter 32, Sections 22 and 23 (web link: MGL Chapter 32, Sections 22 and 23) and oversees the PRIT Fund under the terms of PRIM s Operating Trust dated July 15, 1988 and amended on September 22, 1998 (see The members of the Board, in conjunction with the Executive Director determine significant policies and decisions concerning the administrative and investment operations of PRIM and the PRIT Fund. 3. MGL Chapter 268A. The Massachusetts Conflict of Interest Law (web link: MGL 268A) applies to PRIM and can have application to persons performing services to PRIM. 4. Chapter 30A, Sections The Massachusetts Open Meeting Law MGL Chapter 30A, Sections 18 25, (web link: MGL Chapter 30A, Sections 18 25) is designed to ensure transparency in public policy deliberations. The Open Meeting Law requires, with some exceptions, that meetings of public bodies such as PRIM be open to the public. 5. Tobacco, Sudan and Iran Divestiture. On October 7, 1997, the Massachusetts legislature enacted, and the Governor signed into law, Chapter 199 of the Acts of 1997, which forbids the PRIT Fund from purchasing securities of any company which derives more than 15 percent of its revenues from the sale of tobacco products. The legislation also required that the PRIT Fund divest itself of all such securities within three years. PRIM provides investment managers with a quarterly listing of these restricted securities. On November 2, 2007, the Massachusetts legislature enacted, and the Governor signed into law, Chapter 151 of the Acts of 2007, which forbids the PRIT Fund from purchasing the securities of companies determined to be doing business in the Sudan. The legislation required that the PRIT Fund divest itself of all such securities within 12 months. PRIM provides investment managers with a quarterly listing of these restricted securities. On August 4, 2010, the Massachusetts legislature enacted, and the Governor signed into law, Chapter 232 of the Acts of 2010, which forbids the PRIT Fund from purchasing the securities of companies determined to be doing business in Iran. The legislation required the PRIT Fund to divest itself of all such securities within 12 months. PRIM provides investment managers with a quarterly listing of these restricted securities. 6. PRIM s Advisors. Outside advisors are engaged for their particular expertise and retained to assist PRIM in areas such as general portfolio strategy and investments, real estate, and private markets. Callan is PRIM's public markets consultant, NEPC is PRIM s asset allocation consultant, Arden Asset Management is PRIM s hedge fund consultant, Hamilton Lane is the private equity consultant, and The Townsend Group is the real estate and timber consultant. KPMG is PRIM s auditor. Deloitte provides general tax services. BNY Mellon is the PRIT Fund's custodian and is responsible for providing record keeping and analytic performance valuations for the PRIT Fund. 6

7 III. SELECTION PROCESS AND SELECTION CRITERIA. Responses will be evaluated by an evaluation committee (the Evaluation Committee ) which may include members of the PRIM Board, its advisory committees, and staff. Respondents may be invited to interview with the Evaluation Committee. The Evaluation Committee will present its results to the Real Estate and Timber Committee. The Real Estate and Timber Committee will present a final recommendation to the PRIM Board for approval. The Evaluation Committee will evaluate the respondent s qualifications based on the following criteria: 1. Relevant qualifications and experience with similar clients. 2. Knowledge of subject matter. 3. Quality of response to the RFQ (both in terms of content and presentation). 4. Proposed team. 5. Client references. IV. MINIMUM QUALIFICATIONS. All responses must demonstrate that the respondent meets the following minimum qualifications. Failure of a response to demonstrate that the respondent meets these minimum qualifications will result in disqualification. 1. The firm must demonstrate that it has provided timberland appraisal services in the past three years for entities similar to PRIM, Timber Investment Management Organizations or other investment managers. 2. The firm s proposed team members must have experience providing timberland appraisal services to clients similar to PRIM, Timber Investment Management Organizations or other investment managers. 3. The proposing firm must be willing to include the attached Representations and Warranties. V. RFQ SPECIFICATIONS. 1. Response Deadline. Responses, including all attachments, must be delivered electronically via e mail to Mr. John F. La Cara at rfpresponses@mapension.com, by 3:00 p.m. ET on June 30, 2015 (see TIME TABLE in Section VI). The subject header should be in the following format: PRIM Timberland Appraisal Services Name of Responding Firm. In addition, please your response to to the following representative of PRIM s Real Estate and Timber consultant. Mr. Dan Stenger, Principal The Townsend Group dstenger@townsendgroup.com 7

8 All electronic ( ) documents submitted must be 40 MB or smaller in size. If necessary, the respondent should separate the RFQ submission into multiple s to ensure that the 40 MB size limit is met. The respondent is responsible for ensuring that a complete electronic ( ) RFQ response is received prior to the Response Deadline. The questions and/or requests for information made in this RFQ should be duplicated in their entirety in the respondent s submission, with each question and/or request for information repeated before the respective answer or response. Copies of this RFQ can be obtained electronically on the PRIM website at 2. Required Enclosures and Attachments. A. Cover Letter. The response must include a cover letter which shall be signed by at least one individual who is authorized to bind the firm contractually. This cover letter must include: (a) the respondent s name, address, telephone number and address; (b) the name of the primary contact for PRIM; and (c) the title or position which the signer of the cover letter holds in the firm. B. Executive Summary. The response must include an executive summary not to exceed 3 pages of single space content. This summary, suitable for distribution to PRIM Board trustees and committee members and staff, should discuss your firm, its history, capabilities, competitive advantages, personnel, and understanding of the PRIM s needs. C. Responses to Minimum Qualifications (Section IV). The respondent must describe in sufficient detail how the firm meets the minimum qualifications. D. Responses to Questions (Section VII). The respondent must provide complete responses to the questions contained within this RFQ. E. Representations and Warranties. The Representations and Warranties contained in Section VIII hereof, must be signed by an authorized officer of the firm, and must be included as an attachment to the cover letter referenced in (A) above. F. Disclosure Statement. Attached to this RFQ as Exhibit B are the PRIM Board and Public Employee Retirement Administration Commission (PERAC) Disclosure Statements which each firm submitting a response must complete and submit as an attachment to the cover letter referenced in (A) above. YOU MUST COMPLETE BOTH PRIM AND PERAC DISCLOSURE FORMS OR YOUR SUBMISSION WILL NOT BE CONSIDERED. 3. Public Record. In accordance with Chapter 66, Section 10 and Chapter 4, Section 72(6)(h) of the General Laws 8

9 of Massachusetts, all responses to this RFQ may be deemed to be public records and subject to requests for public disclosure. 4. Waiver/Cure of Minor Informalities, Errors and Omissions. PRIM reserves the right to waive or permit cure of minor informalities, errors or omissions prior to the selection of finalists, and to conduct discussions with all respondents in any manner appropriate to serve the best interests of PRIM. 5. Communications with PRIM. The Procurement Officer for this RFQ is: Mr. John F. La Cara Senior Investment Officer Pension Reserves Investment Management Board 84 State Street Boston, Massachusetts As of June 15, 2015, firms that intend to submit a response should not contact PRIM staff, members of advisory committees of PRIM, members of the PRIM Board, or employees of the Massachusetts Treasury, other than the Procurement Officer. An exception to this rule applies to firms that currently conduct business with PRIM, but any contact made by such firms with persons other than the Procurement Officer must be limited to that business, and must not relate to this RFQ. In addition, firms that intend to submit a response should not discuss this RFQ with any employee of the existing custodian, investment managers, consultants, legal counsel or other advisors to PRIM. FAILURE TO OBSERVE THIS RULE IS GROUNDS FOR DISQUALIFICATION. 6. Questions Regarding this RFQ. All questions concerning this RFQ must be received via (rfpresponses@mapension.com) by the Procurement Officer by 3:00 p.m. ET on June 19, Questions received in accordance with this section will be answered and circulated via to all firms who have proposed a question or who request, via , a copy of the questions and the responses. Any questions or requests for copies of questions and responses that are received after the Question Deadline will not be considered. 7. Incurring Costs. PRIM will not be responsible for costs incurred by a respondent in responding to this RFQ. 8. Withdrawal/Irrevocability of Responses. Respondents may withdraw and resubmit proposals prior to the Response Deadline. withdrawals or resubmissions will be allowed after the Response Deadline. No 9. Rejection of Responses; Cancelation. PRIM reserves the right in its sole discretion to reject any non qualifying response, as well as the right to reject all responses submitted under this RFQ, and to cancel and rescind the procurement at any time, for any reason or for no reason. VI. TIME TABLE. 9

10 PRIM reserves the right to modify the following time table: Issuance of RFQ: June 15, 2015 RFQ Question Deadline: RFQ Response Deadline: June 19, 2015, 3:00 p.m. ET June 30, 2015, 3:00 p.m. ET Evaluation Committee Week of July 6, 2015 Interviews: (Tentative) Real Estate Committee Meeting: July 22, 2015 PRIM Board Meeting: August 11,

11 VII. QUESTIONNAIRE. RESPONDENT: ADDRESS: TELEPHONE #: E MAIL ADDRESS: CLIENT CONTACT: SIGNED: Name (print): Title: Date: 11

12 1. Please describe the business history, location of offices, organizational structure, including number of employees and the make up of the employees, and ownership of the firm. 2. Over the past five years, has your organization or any officer or principal been involved in any business litigation or other legal proceedings related to your appraisal activities? If so, provide a brief explanation and indicate the current status. 3. Provide a list of all professional personnel as outlined in Exhibit C and provide the indicated biographical information. Highlight the people who would be responsible for the PRIM appraisal assignment, and include a brief narrative biography of each person. Include in each biography their years of experience appraising timber investments, experience in the product types and locations for which the firm proposes to provide services, and all appraisal affiliations and designations. 4. Have any senior personnel left the firm in the last three years? If so, please indicate when and why. (For personnel who have left, indicate job titles and years with the firm and indicate the person or persons who replaced them). 5. Provide a list of all appraisal services offered to clients and a narrative explanation of the types of various appraisal assignments or methodologies available and the range of cost. 6. Provide a list of clients for whom your firm has provided appraisal services in the last three (3) years, either directly or through investment managers as a fiduciary, in the format of Exhibit D. 7. Describe your firm s appraisal process, paying particular attention to quality control and review procedures. 8. Submit two (2) sample appraisal reports, preferably in the same markets and product types as the timberland properties listed in Exhibit A, 3, and for which you intend to submit a response. 9. Indicate if there are any constraints in your staffing or workload that would affect your firm s ability to complete an appraisal assignment in a timely manner. 10. Provide the name, address, phone number, contact name and title of three (3) clients for whom your firm has provided timber appraisal services. If available please include one which is a tax exempt institution and one for which your firm appraised a multiple asset portfolio of properties. 11. Include a statement describing your firm s current or prior relationships with Forest Investment Associates and Campbell Global. Specifically, list the number of appraisals or other services performed for each of these managers in the last 24 months, the aggregate appraised value of these properties and the total amount of fees received for those appraisal or other services. 12

13 VIII. REPRESENTATIONS AND WARRANTIES. All respondents are required to submit an executed copy of the following Representations and Warranties. A. The respondent warrants that, if engaged by PRIM, it will not delegate, without prior written approval by PRIM, its responsibilities to a third party. B. Respondent warrants that it has completed, obtained, and performed all registrations, filings, approvals, authorizations, consents or examinations required by any government or governmental authority for acts to be performed in providing to PRIM the services sought by this RFQ. C. Respondent warrants that it meets all of the Minimum Qualifications stated in Section IV of this RFQ. Signature Print Name Title 13

14 EXHIBIT A PRIM s Strategic Asset Allocation, Real Estate & Timber/Natural Resources Investment Managers and Timberland Holdings 14

15 1. PRIM s Strategic Asset Allocation ($62 billion as of March 31, 2015). Asset Class Long Term Target Allocation Global Equity 43% U.S. Equity 19% U.S. Large Cap 15% U.S. SMID Cap 4% Developed Non U.S. Equity 17% Emerging Markets Equity 7% Core Fixed Income 13% Value Added Fixed Income 10% High Yield 1.5% Bank Loans 1.5% Emerging Markets Debt USD 1% Emerging Markets Debt Local Currency 2% Distressed Debt 4% Private Equity 10% Real Estate 10% Timber/Natural Resources 4% Hedge Funds 10% 15

16 2. Real Estate & Timber/Natural Resources Investment Managers. PRIVATE REAL ESTATE (RE) & PUBLIC REITS AEW (Private RE) JP Morgan (Private RE) TA Realty Associates (Private RE) INVESCO Real Estate (Private RE) LaSalle Investment Management (Private RE) INVESCO (Public REIT) Center Square (Public REIT) New Boston Fund ETI (Private RE) Canyon Johnson Urban Funds ETI (Private RE) Intercontinental Real Estate ETI (Private RE) Carlyle Realty (Private RE) Divco West (Private RE) TIMBER/NATURAL RESOURCES (NR) Forest Investment Associates (Timber) Campbell Global (Timber) Jennison Associates (Public NR) T. Rowe Price (Public NR) Quantum Energy Partners (Private NR) Tenaska Capital Management (Private NR) Denham Capital (Private NR) 16

17 3. Timberland Holdings. # Property Name State Acres Manager 1 Anniston Al 80,304 FIA 2 Bear Creek FL 98,772 FIA 3 Clarion Headwaters PA 44,142 FIA 4 Longwood MS 41,455 FIA 5 Pisgah SC 28,140 FIA 6 Quitman MS 71,070 FIA 7 Silco GA 18,451 FIA 8 Tar Heel NC 31,915 FIA 9 Trinity TX 40,003 FIA 10 Waccamaw NC 37,010 FIA 11 Wateree SC 75,189 FIA 12 Fairview OR 26,822 Campbell Global 13 Naselle WA 6,775 Campbell Global 14 Olympic WA 61,396 Campbell Global 15 Siletz OR 7,731 Campbell Global 17

18 EXHIBIT B PRIM and PERAC Disclosure Forms 18

19 COMMONWEALTH OF MASSACHUSETTS PENSION RESERVES INVESTMENT MANAGEMENT BOARD DISCLOSURE STATEMENT FIRM: ADDRESS: Firms seeking to provide investment management, consulting services or other services (the engagement ) to the Commonwealth of Massachusetts Pension Reserves Investment Management Board ( PRIM ) must complete a disclosure statement providing complete and accurate responses to the questions below. Firms selected to provide investment management or consulting services to PRIM have a continuing obligation to update responses to these questions, in writing, immediately upon any change to such responses. The questions in this Disclosure Statement should be read broadly, and any perceived ambiguity should be resolved in favor of disclosure. Any questions concerning the disclosures required should be directed to PRIM s Executive Director. 1. Describe in detail the respondent s organization structure, and identify any controlling stockholders, parents, subsidiaries, affiliates, partners, general partners, or principals (all such individuals or entities hereinafter collectively referred to as the firm. ) 2. Identify any relationship of the firm, its joint ventures, consultants, lobbyists, subcontractors, agents, or placement agents that relate in any way to the engagement. 3. Aside from the engagement, describe any services provided by the firm to PRIM. 4. Aside from the services described in response to question no. 3, above, describe any services provided by the firm to the Office of the Treasurer or any trust, board, commission or authority of which the Treasurer is a member or trustee. (A list of such entities is attached.) 5. Aside from the services described in response to question nos. 3 and 4, above, describe any services provided by the firm to the Commonwealth of Massachusetts or any of its political subdivisions. 6. Did or will the firm provide or share, agree to provide or share, or arrange to provide or share any compensation or benefit, direct or indirect, to any individual or entity for assisting the firm in: a) obtaining the engagement; or, b) performing the services required by the engagement. If the answer to question no. 6 is yes, provide for each the individual or entity a) the name and address of such individual or entity; 19

20 b) a description of the assistance provided; and c) the compensation or benefit. 7. Does the firm have any ongoing relationship, arrangement or agreement with any individual or entity with respect to sharing compensation for services to: a) PRIM; b) any trust, board, commission, or authority of which the Treasurer is a member or trustee; or c) Massachusetts or its political subdivisions? If the answer to question no. 7 is yes, provide for each such individual or entity a) the name and address of such individual or entity; b) a description of the relationship, arrangement or agreement; and, c) the compensation shared. Signed under the pains and penalties of perjury on this day of, Name: Title: 20

21 Treasurer s Principal Boards, Commissions and Authorities 1) Finance Advisory Board M.G.L. c.6, s97 8 2) State Comptroller s Advisory Board M.G.L. c.5a, s2 3) Investment Advisory Council M.G.L. c.10, s5b 4) State Retirement Board M.G.L. c.10, s18 5) State Lottery Commission M.G.L. c.10, s23 6) Emergency Finance Board M.G.L. c.10, s47 7) Board of Bank Incorporation M.G.L. c.26, s5 8) Water Pollution Abatement Trust M.G.L. c.29, s2 9) Pension Reserves Investment Management M.G.L. c.32, s23(2a) 10) Massachusetts Convention Center Authority Chapter 190 of the Acts of 1982 ss

22 PERAC Disclosure Please obtain the PERAC disclosure form at the following website, fill it out, and submit together with the COMMONWEALTH OF MASSACHUSETTS PENSION RESERVES INVESTMENT MANAGEMENT BOARD disclosure form: (Wen Link: PERAC Disclosure Form ) 22

23 EXHIBIT C Staff Biographical Information Name Title Current Responsibilities Educational/ Professional Designations Years with Firm Years Prior Experience 23

24 EXHIBIT D List of Clients Client / Manager Appraisal Dates Dollar Value Appraised Location Appraisal Type Product Type(s) Appraised 24

25 EXHIBIT E PRIM Investment Policy Please go to the link below to see the Investment Policy: 25