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PPF appoints seven farmland and timberland managers

PPF appoints seven farmland and timberland managers | Timberland Investment | Scoop.it

The Pension Protection fund (PPF) has appointed seven farmland and timberland fund managers. Some managers will be funded immediately, while others are appointed for deferred investment.


The selected managers are Brookfield Asset Management, Dasos Capital Oy, GMO Renewable Resources, Hancock Timber Resource Group, Macquarie, New Forests Pty, and Stafford Timberland.

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PPF executive director for financial risk Martin Clarke said: “We now have an investment portfolio worth more than £12bn and the size of our assets means that we can take advantage of a broader range of investment opportunities.

“Investing in farm and timberland will complement our existing alternative investment portfolio, allow us to diversify our investments more widely and make our portfolio more resilient.


“But we do need to be aware that there are some risks in these asset classes, for instance land price risk. Therefore, our approach will be to invest conservatively – which is consistent with our overall low-risk strategy.”


The proportion of PPF assets allocated to farm and timberland will vary over time and depend on the opportunities available now and in the future, the fund said. All managers are appointed for four years, with the flexibility for two extensions of up to two years.

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Sponsored by...

Sponsored by... | Timberland Investment | Scoop.it

Prentiss & Carlisle  is one of the largest timberland asset managers in North America. P&C provides ongoing management services on approximately 1.75 million acres of timberland located in Maine, Michigan, New York, Vermont, Wisconsin, Ontario and Quebec. Nearly every acre under management is certified by the Forest Stewardship Council through either our clients or through P&C itself, which holds FSC certificates for both Forest Management and Chain-of-Custody.

 

P&C provides turnkey land management from long-range forest planning through on-ground forestry, marketing of forest products, harvesting, transportation, road construction and maintenance, stump-to-mill accounting and reporting, client cash management, administration of third-party relationships, public advocacy/representation and strategic asset planning. P&C also provides specialized consulting services in related areas of expertise:

  • Timber inventory design, execution and analysis
  • G&Y modeling and timber harvest scheduling
  • GIS mapping and data management services
  • Timberland valuations and appraisals
  • Acquisition and disposition due diligence
  • Market studies
  • Timber supply modeling

 

About this magazine

Our aim is to provide a gathering place for news and opinion about timberland investing. We cover both publicly traded issues including listed timber companies, real estate investment trusts (REIT's), and exchange traded funds (ETF's), and the more private world of institutional investing in timberland. Our focus is on: the rationale for investing in timberland; performance of publicly traded timber investments; timberland deals and transactions; timber supply, demand and prices, and; public policy issues that impact timberland investing. Not interested in all of these topics? You can easily filter the stories by using the Tags button above.

 

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These links take you to customized Google Finance pages for timber REITS, indexes and other publicly traded companies of interest:

 

Prentiss & Carlisle newsletters

Quarterly updates on conditions in our operating regions

 

Timber Mart North 

Lake States price reporting service published by P&C

 

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Harvard Endowment Chief: 8% Return Is ‘Disappointing’

Harvard Endowment Chief: 8% Return Is ‘Disappointing’ | Timberland Investment | Scoop.it

Harvard University’s endowment delivered an 8.1% return in the latest year, marking another disappointing year for the world’s richest school. While the performance was better than a loss of 2% in fiscal 2016, it trailed results announced thus far by other schools.

 

“Our performance is disappointing and not where it needs to be,” wrote N.P. “Narv” Narvekar, Harvard Management Co.’s new chief, in the endowment’s 2017 annual report Tuesday. The returns are a “symptom of deep structural problems” that are likely to continue to depress the $37.1 billion endowment’s returns going forward, he wrote.

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A driver of Harvard’s underperformance stemmed from losses in its natural resource portfolio, Mr. Narvekar wrote. That global portfolio, which includes timberland and vineyards, was long a meaningful contributor to the endowment’s returns and was valued at roughly $4 billion a year ago.

 

The markdown follows a 10% write down in natural resources in the prior fiscal year and represents a dramatic change of view by the new leadership on the investments. That portfolio will take “multiple years” to overhaul, Mr. Narvekar said.

 
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N.C. Treasurer assesses likely impact of Harvey, Irma on investments

N.C. Treasurer assesses likely impact of Harvey, Irma on investments | Timberland Investment | Scoop.it

Insurance companies will take a big hit from Hurricanes Harvey and Irma, but that shouldn’t hurt North Carolina’s retirement system investments.

“We have not seen any remarkable changes in our portfolio values associated with this,” Treasurer Dale Folwell said Tuesday during his monthly “Ask Me Anything” teleconference with reporters.

“As far as investments are concerned, it’s generally rumor followed by news,” Folwell said. “We’re staying the course as far as the investment portfolio is, and nothing big to report.”
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North Carolina owns about $800 million in timber from Washington, D.C., to Ponte Vedra Beach, Florida, “that’s been in the doldrums for about 12 years,” Folwell said. “The pension plan of North Carolina has the wood if anyone might need any.”

The Federal Reserve Board might back off anticipated interest rate changes at its meeting next week while affected states continue to assess hurricane damage and conduct relief efforts, Folwell said.

A rise in interest rates would reduce the value of the retirement system’s investment portfolio, Folwell said.
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State pension fund assets hit a record $93.9 billion at the end of the second quarter this year and earned 10.6 percent for the fiscal year ending June 30. But Folwell said that return wasn’t as good as other pension plans of equivalent size, so his Investment Management Division will be turning its focus to asset allocation over the next six months.

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Barnett under fire over plantations sale

Barnett under fire over plantations sale | Timberland Investment | Scoop.it
RESOURCES Minister Guy Barnett has faced a barrage of questions in State Parliament after announcing the sale of 29,000 hectares of hardwood forest plantations for $60.7 million via a Facebook post.

Labor and the Greens both directed questions at Mr Barnett, with Labor leader Rebecca White accusing him of making a “fire sale” at a loss to taxpayers.

Ms White said it cost taxpayers $90 million to put the trees in the ground, and called the sale a “dud deal”.

Greens Leader Cassy O’Connor cited a 2012 letter in which the Auditor-General accepted figures estimating the cost of establishing the plantations was in excess of $100 million.

Ms O’Connor also said the purchaser, Reliance Forest Fibre, had a parent company listed in the Cayman Islands.

She said Reliance Forest Fibre was established just two months ago.

Mr Barnett said the MPs “should be saying congratulations and well done”.

“Our plan is one that is delivering for Tasmanians,” he said.

Mr Barnett said the sale would add to Sustainable Timber Tasmania’s bottom line, with an estimated $15 million of the proceeds slated to be used to boost health funding.

The Government has sold the rights to the plantations and not the land itself, Mr Barnett said.

However, Ms O’Connor said the 99-year lease provided to the company amounted to selling the land.
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Hurricane Investment Prep: Timber ETFs (NYSE: CUT) (NASDAQ: WOOD)

Hurricane Investment Prep: Timber ETFs (NYSE: CUT) (NASDAQ: WOOD) | Timberland Investment | Scoop.it

In the wake of Hurricane Harvey and in anticipation of Hurricane Irma, some investors have been paying renewed attention to timber and forestry exchange-traded funds. The dominant names in that group are the Guggenheim MSCI Global Timber ETF CUT and the iShares Global Timber & Forestry ETF WOOD.

 

Last week, CUT and WOOD rose 4.1 percent and 4.8 percent, respectively, with CUT, the Guggenheim offering, hitting an all-time high on Friday. WOOD, the iShares ETF, is up nearly 21 percent year-to-date while CUT is higher by 19 percent.

 

WOOD “is the larger of the two funds, having debuted in June of 2008 and the ETF traded at a new 52-week high just yesterday [Sept. 7] before tailing off a bit. The fund only averages about 16,000 shares traded daily on a one-month trailing basis, so it is not exactly a popular or heavily trafficked fund,” said Street One Financial vice president Paul Weisbruch in a note out Friday.

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WOOD, which recently turned 9 years old, has $286.1 million in assets under management. The ETF tracks the S&P Global Timber & Forestry Index and holds 26 stocks. WOOD is a global ETF with U.S. timber names accounting for 40.3 percent of the fund's weight. Canada, Brazil and Japan combine for over a third of the ETF's geographic exposure.

 

CUT follows the MSCI ACWI IMI Timber Select Capped Index. That benchmark “is designed to measure the performance of securities that are engaged in the ownership and management of forests and timberlands and production of finished products which use timber as raw material. The index captures large, mid and small-cap stocks across 23 developed markets countries and 23 emerging markets countries,” according to Guggenheim.

 

CUT holds 77 stocks, or nearly triple the size of WOOD's roster. U.S. stocks account for almost 44 percent of the ETF's weight with Finland and the U.K. combining for 18 percent.

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Preqin: Real estate managers sitting on record pile of cash, lowering return targets

Preqin: Real estate managers sitting on record pile of cash, lowering return targets | Timberland Investment | Scoop.it

Real estate funds worldwide have amassed a record $255 billion in unspent capital commitments as of July 30, up from $237 billion as of Dec. 31, according to a Preqin report released Friday.

At the same time, 68% of real estate managers surveyed by Preqin in June indicated that real estate is more expensive than it was 12 months ago, with 20% seeing no change and 12% saying its cheaper than a year ago. As a result of managers' view of market conditions, Preqin reported that 55% of managers aiming to raise a $5 billion or more real estate fund are lowering their fund's return targets, compared to 38% of managers targeting funds of $1 billion to $4.9 billion and 43% for funds with targets ranging between $500 million and $999 million.

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US Housing Starts Drop Unexpectedly in July

US Housing Starts Drop Unexpectedly in July | Timberland Investment | Scoop.it

US housing starts dropped unexpectedly in July as new construction of single- and multi-family homes declined. The recent report from the US Census Bureau also showed a decline in building permits, which suggests that residential construction might continue its struggle after tightening in the second quarter. As the peak building season comes to a close, this latest data could temper expectations of a rebound in housing market activity in 3Q and 4Q2017.
 
US housing starts dropped 4.8 percent to a seasonally adjusted annual rate (SAAR) of 1,155,000 units in July. Single-family starts accounted for 856,000 units, which is 0.5 percent below the revised June figure of 860,000. Starts for the volatile multi-family housing segment dropped 15.9 percent to a 299,000 unit-pace.

Privately-owned housing completions were 6.2 percent below June’s estimate of 1,252,000 units. Single-family permits were unchanged at a rate of 811,000 units, while multi-family permits plunged 11.2 percent. Regional performance in July was similar to June’s numbers with the exception of a notable drop in the US West, as confirmed by the US Census Bureau report. Seasonally-adjusted, single-family housing starts by region included: 

Northeast: +9.8 percent (+9.3 percent last month)
South: +2.0 percent (+7.2 percent last month)
Midwest: -7.4 percent (-3.6 percent last month)
West: -4.3 percent (+10.6 percent last month)

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Kamehameha Schools finalizing timber lease

Kamehameha Schools finalizing timber lease | Timberland Investment | Scoop.it
Kamehameha Schools says it is finalizing a lease with Hawaii Forest for 10,000 acres of timber land on the Hamakua Coast.

The company is a partnership between Paauilo-based Forest Solutions Hawaii and Edwin De Luz Trucking and Gravel, said Albert Nahale-a, KS senior director of community engagement and resources. A phone call to Forest Solutions wasn’t returned by deadline.

KS planted 12,700 acres of eucalyptus trees after acquiring about 30,000 acres of former sugar lands in the 1990s.

The previous lease was held by LHF Lopiawa, which did not seek an extension to the lease that expired Dec. 31, 2016.

About 2,800 acres were harvested under the previous lease, which went into effect in 1996, Marissa Harman, KS’ Hawaii Island asset management director, said in December.

Harman said Monday the acres already harvested may be used for other types of agriculture. She said the new lease is being structured so additional harvested lands also can be repurposed.

“They will be responsible for harvesting, remediating the conditions of the land, and working with us on long-term planning for using that land beyond timber,” Harman said. “Some of that may be transferring acreage into other diversified agriculture or community use.”

Nahale-a said KS is taking a more “holistic” approach to its landholdings.

“It’s not just an asset in isolation but part of a larger system,” he said.

Harman said between eight and 10 companies responded to a request for qualifications regarding the new lease. About half submitted proposals.

The new lease could take effect in September or October, she said.
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Montreal-based forestry company wants to send lumber to help Texas rebuild

Montreal-based forestry company wants to send lumber to help Texas rebuild | Timberland Investment | Scoop.it

Texans forced from their flooded homes by unprecedented water levels may get help rebuilding from a Canadian forestry company.

Seth Kursman, a vice president with Resolute Forest Products, has committed to sending a rail car full of lumber to Houston once the storm-battered city begins to recover from the devastation wrought by Hurricane Harvey.

Watching footage from the storm-drenched city hit close to home for Kursman, who moved to Canada from Houston 15 years ago.

"I just can't imagine the devastation," he said, noting he saw images of his old neighbourhood, flooded, on the news. "I was really personally moved."

Wanting to help, he called the Montreal-based company's CEO, Richard Garneau, and suggested they prepare to send a truck filled with lumber to the beleaguered city once the flood waters subside. Resolute's main products are paper and pulp, Kursman said, but he thought lumber would be of more use to the struggling communities.

"He said 'Forget a truck! Send a rail car,'" Kursman said. "I mean, that's a lot of money worth of lumber."

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Tree-eating beetles march north as winters warm

Tree-eating beetles march north as winters warm | Timberland Investment | Scoop.it
For lovers of the stately pine forests of the Northeast, sightings of a destructive tree-eating beetle in recent years have been nothing short of alarming.

Now, new research from climatologists at Columbia University confirms what ecologists feared: Warmer winters mean the southern pine beetle is here to stay, and is set to march ever northward as temperatures rise.

Historically, the tiny beetles, which starve evergreens to death, were largely unheard-of north of Delaware. The Northeast’s cold winters killed off any intruders.

The winters are no longer cold enough.

Over the last 50 years, average annual temperatures in the northeastern United States have warmed by about 1 degree Fahrenheit. But crucially for the beetles, the year’s coldest nights — which determine whether they survive the winter — have warmed by as much as 7 degrees Fahrenheit.

Southern pine beetles are now frequently spotted in New Jersey, New York and parts of New England. And their range will only grow farther as the planet continues to warm, according to a study published today in the journal Nature Climate Change.

By 2020, swaths of previously unaffected forests along the Atlantic Coast up to Nova Scotia will become vulnerable to a southern pine beetle infestation, the study says.
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Tougher than steel: Japan looks to wood pulp to make lighter auto parts

Tougher than steel: Japan looks to wood pulp to make lighter auto parts | Timberland Investment | Scoop.it
The global push among carmakers to make ever lighter vehicles is leading some auto suppliers in Japan to turn to what seems like an unlikely substitute for steel - wood.

Japanese researchers and auto component makers say a material made from wood pulp weighs just one fifth of steel and can be five times stronger.

The material - cellulose nanofibres - could become a viable alternative to steel in the decades ahead, they say, although it faces competition from carbon-based materials, and remains a long way from being commercially viable.

Reducing the weight of a vehicle will be critical as manufacturers move to bring electric cars into the mainstream. Batteries are an expensive but vital component, so a reduction in car weight will mean fewer batteries will be needed to power the vehicle, saving on costs.

“Lightweighting is a constant issue for us,” said Masanori Matsushiro, a project manager overseeing body design at Toyota Motor Corp.

“But we also have to resolve the issue of high manufacturing costs before we see an increased use of new, lighter-weight materials in mass-volume cars.”

Researchers at Kyoto University and major parts suppliers such as Denso Corp, Toyota’s biggest supplier, and DaikyoNishikawa Corp, are working with plastics incorporated with cellulose nanofibres - made by breaking down wood pulp fibres into several hundredths of a micron (one thousandth of a millimetre).

Cellulose nanofibres have been used in a variety of products ranging from ink to transparent displays, but their potential use in cars has been enabled by the “Kyoto Process”, under which chemically treated wood fibres are kneaded into plastics while simultaneously being broken down into nanofibres, slashing the cost of production to roughly one-fifth that of other processes.
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The Softwood Imports to U.S. from Europe flourish thanks to U.S. Duties on Canadian Industry

The Softwood Imports to U.S. from Europe flourish thanks to U.S. Duties on Canadian Industry | Timberland Investment | Scoop.it

RBC Capital Markets analyst Paul Quinn estimates Canadian lumber producers have plunked down $500 million so far in countervailing and antidumping duties since the spring.

The U.S. alleges Canada unfairly subsidizes its softwood industry and has slapped on import taxes averaging 26.75 per cent as punishment.

Jerry Howard, CEO of the National Home Builders Association in the U.S., said: “When Canadian lumber is more reasonably priced it’s not that viable of an option. The Germans this time were poised to take advantage of it and I think that they have.”

In the first six months of this year, German softwood imports into the U.S. soared more than 900 per cent over the same period last year.

Germany’s share of imports rose from 0.35 per cent in the first six months of 2016, to 3.6 per cent this year.

It seems that Germany wasn’t the only beneficiary. Austrian softwood imports were up 178 per cent, Romania was up 141 per cent, Russia 42 per cent and Sweden 41 per cent.

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Hancock Timber Resource Group Acquires Approximately 79,000 Acres of Timberlands in Wisconsin

Hancock Timber Resource Group Acquires Approximately 79,000 Acres of Timberlands in Wisconsin | Timberland Investment | Scoop.it
The Hancock Timber Resource Group has completed the acquisition of 78,986 acres of timberlands in northwestern Wisconsin, Hancock Timber Resource Group President Brent Keefer said today.

The 78,986 acres of timberlands, located in Bayfield, Burnett, Douglas and Washburn counties, were acquired from investment funds managed by The Lyme Timber Company, a private timberland investment management organization based in Hanover, New Hampshire.

"These assets are attractively stocked with primarily red pine, jack pine and hardwood forest types. They will supply a diverse customer base who manufacture utility poles, lumber, studs and pulp and paper products. We are very pleased to add these high quality productive timberlands to our clients' portfolios," Mr. Keefer said. "We also look forward to managing these timberlands which have been protected under conservation easements. This type of management is consistent with our long standing stewardship ethic."

More than 90% of the timberlands are managed under working forest conservation easements purchased from Lyme Timber by the Wisconsin Department of Natural Resources. These easements were acquired as part of the Brule-St. Croix Forest Legacy Project that ensured the lands will be available for forest management and timber production to serve the wood products industry, and will remain open to the public for nature-based recreational activities.
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Interior Secretary Wants 'Active Timber Management' in National Monument

Interior Secretary Wants 'Active Timber Management' in National Monument | Timberland Investment | Scoop.it

"There's still a lot of questions I think that it brings to the forefront."

That's the reaction from many folks in the Katahdin Region after a leaked memo brought to light some of the changes Interior Secretary Ryan Zinke will recommend for Katahdin Woods and Waters National Monument.

Lucas St. Clair, whose family donated the more than 87,000 acres for the monument, says the recommendations did not come as a surprise.

"When I did have conversations with the Secretary, it was three weeks ago and it was about essentially this, but he didn't outline specifically how the wording of the recommendation is. The White House has to decide how it's going to respond and then the Park Service has to decide how to implement. You know there's a long way to go."

Zinke says the executive order creating Katahdin Woods and Waters National Monument "should be amended, through the use of appropriate authority, including lawful exercise of the President's discretion...to promote a healthy forest through active timber management."

"Active timber management" typically refers to the cutting of trees for commercial use. Something that many loggers in the area are hopeful for.

"If we have a small family based logging operation that employs seven individuals, those seven individuals support seven families and the economic impact of that logging company and those seven families is about a million dollars to the local economy every single year," says Dana Doran, Executive Director of the Professional Logging Contractors of Maine.

Lisa Pohlmann, Executive Director for the Natural Resources Council of Maine, said in a press release that "without more details, we cannot yet judge whether these recommendations are acceptable or consistent with the overwhelming view of the Maine people."

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Arkansas teacher-fund investments reach $16.1B

Arkansas teacher-fund investments reach $16.1B | Timberland Investment | Scoop.it

The investments of the Arkansas Teacher Retirement System increased in value by $1.7 billion, totaling $16.1 billion, last fiscal year, as the system reaped the benefits of growing stock investments, according to its consultants.

The retirement system earned an investment return of 16.1 percent in fiscal 2017, and its performance ranked in the top 1 percent of public pension systems with more than $1 billion in assets, Aon Hewitt Investment Consulting of Chicago said in a written report. The median return for these public retirement systems was 12.3 percent last fiscal year, the consultant said.
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In fiscal 2017, the system's stock market investments earned a return of 22.1 percent to finish the fiscal year valued at $9.2 billion, and the system's bond investments earned a return of 5.2 percent to reach $2.5 billion, according to Aon Hewitt Investment Consulting.

The system's private equity investments gained a return of 16.7 percent to reach $1.6 billion at the end of fiscal 2017, Aon Hewitt reported.

Real estate investments earned a return of 6.9 percent to total $1.3 billion by the end of the fiscal year, and so-called opportunistic and alternative investments gained a return of 6.8 percent to reach $665 million, the investment consultant said.

Timber investments earned a return of 8 percent to total $281.4 million, and agricultural investments earned 4.3 percent to reach $170.7 million, Aon Hewitt reported.

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Canadian mining company eyes property near national monument

Canadian mining company eyes property near national monument | Timberland Investment | Scoop.it
Wolfden Resources Corp., a mineral exploration company based in Thunder Bay, Ontario, plans to buy and mine property in northern Penobscot County that's near Katahdin Woods and Waters National Monument.

The company announced in a Sept. 7 news release that is has entered into a purchase-and-sale agreement "with an arm's length third party to acquire a 100% interest in property located in Pickett Mountain, Penobscot County, northern Maine" for a cash price of $8.5 million.

Located just off Route 11 north of Patten and along the border of Penobscot and Aroostook counties, the Pickett Mountain property was marketed by LandVest as an "exceptional investment opportunity located in the heart of Maine's north woods" with a "well-stocked and diverse timber resource, more than 12 miles of nearly undeveloped lake and river frontage, and prospective sub-surface mineral rights."

The acquisition involves 6,871 acres of timberland and is subject to a 45-day due diligence review by the company prior to closing, Wolfden stated.

In its news release, Wolfden stated that the property is considered "to be one of the highest-grade undeveloped volcanogenic massive sulfide deposits in North America," which was discovered by Getty Mines Ltd. in 1979 and had not been explored since 1989. It explicitly cites LD 820, "An Act To Protect Maine's Clean Water and Taxpayers from Mining Pollution," approved by lawmakers in June and slated to go into effect on Nov. 1, as a factor in its interest, stating that the law permits "mining of metallic minerals in Maine in certain prescribed situations."
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Asset owner appetite for illiquid assets drives co-investment interest – State Street survey

Asset owner appetite for illiquid assets drives co-investment interest – State Street survey | Timberland Investment | Scoop.it

Institutional investors plan to look to co-investments or joint ventures as a means of accessing new investment opportunities, particularly in illiquid assets, according to a survey issued by State Street Corp. (STT)

More than half — 54% — of asset owners surveyed see co-investment as a means of gaining expertise. Over the next 12 months, 68%, 65% and 48% of asset owners plan to co-invest in infrastructure, real estate and private equity, respectively.

State Street's survey also found that over the next 12 months, asset owners are planning to increase their exposure to these illiquid assets.

Other results of State Street's asset owner survey revealed 66% of institutional investors believe growth is more challenging to achieve in the current market environment than in the recent past.

In addition, over the past five years, nearly a third of asset owners surveyed — 30% — have brought some asset management activities in-house; and 23% plan to do so in the next 12 months.

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An "America First" policy on trade with Canada is going to hit Harvey victims hardest

An "America First" policy on trade with Canada is going to hit Harvey victims hardest | Timberland Investment | Scoop.it

Earlier this year, the US government charged Canada with giving its logging industry an unfair leg up and slapped steep tariffs on Canadian timber. This is bad news for Canada since, like most of its exports, around three-quarters of its softwood lumber goes to the US.

 

However, it’s also bad news for America homeowners and prospective homebuyers—particularly in the wake of Harvey. In fact, this trade kerfuffle illustrates how easily protectionism can backfire, hurting an economy more than it helps.
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Though the two sides have been trying to agree on a marketshare cap for Canadian lumber, negotiations haven’t gone anywhere. The countervailing duties of around 20% that the White House slapped on softwood in April expired last week, though the 7% anti-dumping duty remains in place. The Trump administration will decide in mid-November whether to keep both levies in place.

 

The thing is, by angling to protect US timber jobs from northern competition, Trump is hurting American consumers. Canada supplies about 30% of the wood used to make the floors and outer walls of American homes. The current tariffs make imported softwood about 30% pricier, on average, allowing US lumber companies to charge more at home, too. And of course, someone has to pay those extra costs. In this case, more expensive building materials means more expensive houses.
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While rapidly approaching Irma is likely to wipe out homes along the US southeast as well, it also is set to hit parlously close to major sources of homebuilding wood in Georgia and South Carolina. Meanwhile, forest fires that have raged in British Columbia for several months have already driven up lumber prices. Rebuilding in these storms’ wake will push timber prices even higher.

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Weyerhaeuser completes sale of Uruguay timberlands and manufacturing business to a consortium led by BTG Pactual's Timberland Investment Group

Weyerhaeuser completes sale of Uruguay timberlands and manufacturing business to a consortium led by BTG Pactual's Timberland Investment Group | Timberland Investment | Scoop.it

Weyerhaeuser Company (NYSE: WY) today announced the completion of the sale of its timberlands and manufacturing business in Uruguay to a consortium led by BTG Pactual's Timberland Investment Group (TIG) for $402.5 million in cash. The company expects it will incur minimal taxes in conjunction with the sale.

 

The transaction includes over 300,000 acres (120,000 hectares) of timberlands in northeastern and north central Uruguay, as well as a plywood and veneer manufacturing facility, a cogeneration facility, and a seedling nursery.

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13,747 acres of Alabama land sells

13,747 acres of Alabama land sells | Timberland Investment | Scoop.it

An Alabama timberland owner has sold 13,747 acres of land to a Georgia timber investment company. The property is located in Cullman County, Alabama and five adjoining counties. HDJ Land & Timber, Ltd. based in Cullman, Alabama is the seller and SPP Land, LLC based in Macon, Georgia is the purchaser. 


Alabama-based Cyprus Partners is a land brokerage company who represented the seller in the transaction.


HDJ Land & Timber is a privately held company that began acquiring Alabama timberland in the 1920’s and has managed the land for the benefit of three generations of family members.
SPP Land is a 33-year old timberland investment and managem

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Canadian lumber producers get reprieve with end of 20% of preliminary duties

Canadian lumber producers get reprieve with end of 20% of preliminary duties | Timberland Investment | Scoop.it

Canadian softwood lumber producers are getting a temporary reprieve as a large portion of preliminary duties in place for four months have ended pending a final decision.

 

Most lumber companies will pay 6.87 per cent in anti-dumping tariffs after a 19.88 rate for countervailing duties formally ended as of Saturday.

 

Five producers singled out have paid duties between 9.89 and 30.88 per cent. All others paid 26.75 per cent.

 

U.S. Secretary of Commerce Wilbur Ross announced late Monday that the Department of Commerce postponed the final determinations in the anti-dumping duty and countervailing duty investigations of imports of softwood lumber from Canada until no later than Nov. 14

 

"I remain hopeful that we can reach a negotiated solution that satisfies the concerns of all parties," Ross said in a statement. "This extension could provide the time needed to address the complex issues at hand and to reach an equitable and durable suspension agreement."

 

Although countervailing duties formally came off in recent days, Canadian producers have been able to ship products south of the border without CVDs since Aug. 14 by delaying paperwork by up to 10 days, says lumber analyst Hamir Patel of CIBC World Markets.

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Carbon Offsets Really Do Help Lower Emissions

Carbon Offsets Really Do Help Lower Emissions | Timberland Investment | Scoop.it

A new study examining the efficacy of paying to preserve forests finds that carbon offsets do produce genuine emissions reductions.

 

The study, published in the journal Frontiers in Ecology and the Environment by three Stanford University researchers, examines California's carbon offset program. It allows businesses to fund forest preservation in lieu of turning in some of their allowances under the state's cap-and-trade system for greenhouse gases.

 

The market currently lets businesses use offsets for up to 8 percent of their total emissions under the cap, although that percentage is set to decrease after 2020 under the cap-and-trade extension bill, A.B. 398, signed by Gov. Jerry Brown (D) last month.

 

In California's program, offsets from forests totaled 1 percent of emissions under the cap in 2015, or roughly 4.7 million metric tons of carbon, according to the study. The credits were distributed among 39 forestry projects, 16 of them within California.

 

The study evaluates the “additionality” of the projects: whether their emissions reductions would have occurred without the financial incentives provided by the sale of offset credits.

It points out that most projects are owned by profit-seeking entities, rather than conservation-minded nonprofits that might be expected to have preserved the forests anyway. Nonprofits own 26 percent of forestry projects, while timber companies own 36 percent, investment firms 15 percent, individuals 13 percent and Native American tribes 10 percent.

 

The study says 64 percent of projects are on land that is or has been actively logged just prior to the project's start date, indicating that the projects would indeed not have happened without the financial incentive of offsets.

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Why Yale Owns a Forest

Why Yale Owns a Forest | Timberland Investment | Scoop.it

For at least two decades, Yale and its celebrated endowment manager, David Swensen, have led a land rush by the richest colleges. Funds snapped up forests as a way to hedge against inflation and the risks of stocks and bonds, and to take advantage of endowments’ unusual ability to make investments that might not be easy to sell quickly.

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It paid off handsomely until recently, when returns slumped and exposed more of the downsides of investments that literally grow. One is reputation risk: Some residents of Coos County and a Canadian First Nations tribe are angry that a company hired to manage Yale’s land, Wagner Forest Management Ltd., has signed a lease for a power line that will run through about 24 miles of the university’s forests.

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Some living near Yale’s land say the line is unnecessary and would destroy scenery. They asked the university to terminate its lease, which was set to expire. Yale said in a June statement it has limited control over such holdings because of partnership agreements, and its land manager couldn’t end the contract because the utility had already exercised an option to renew it until 2110.

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Other colleges have run into trouble with forestry investments, and some are pulling back. Harvard’s $35.7 billion endowment sold its Romanian timberland in 2014 after paying inflated prices through an agent it hired who was then convicted of taking bribes from sellers and laundering money. It has been exploring the sale of some natural resources assets and has sold at least one timber plantation this year. A portion of its portfolio has been subject to complaints from environmentalists, who criticized some forestry practices on a plantation in Argentina in 2014.

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Wake Forest University is also reducing its timber investments, slashing its commitment to 1 percent of its $1.1 billion portfolio, down from 5 percent about a decade ago, says Jim Dunn, who oversees the school’s fund. He cited concern about investment returns. Annual returns for U.S. timberland soared as high as 37 percent in the late 1980s, according to the National Council of Real Estate Investment Fiduciaries. Those outsize profits laid the groundwork for the sluggish appreciation today. A flood of institutional money inflated the price of available forests, depressing potential returns, as slower economic growth reduced demand for wood, according to Jon Caulfield, a University of Georgia professor of forest finance. In the recent fiscal year ended in June, timber returned only 3.6 percent, compared with 15 percent for the S&P 500.

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In 2009, Bayroot LLC, the Yale-controlled company that owns the woods, entered into an agreement with the Maine Forest Service to resolve alleged violations involving clear-cuts that the state said had inadequate buffers of trees around them and lacked plans prepared by a licensed forester.

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In a June statement, Yale said Wagner, the land manager, meets strict standards for sustainability and “works closely with major conservation organizations.” The university said in 2009 that 99 percent of its acreage was certified by two of the most prominent forest certification organizations in the U.S.

Sam Radcliffe's insight:

Thanks to Jack Bridges for bringing this story to our attention!

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Smaller Endowments Should Consider ETFs

Smaller Endowments Should Consider ETFs | Timberland Investment | Scoop.it

 

Hossein Kazemi, Ph.D., CFA, is the senior advisor to the Chartered Alternative Investment Analyst Association’s program. In a recent study he co-authored with Kathryn Wilkens, Ph.D., CAIA, titled "A Simple Approach to the Management of Endowments," they present evidence that mid- and small-sized endowments should use ETFs to implement their strategies rather than opting for expensive and illiquid alternative investments. ETF.com discussed Kazemi’s recent work with him as well as his views on the role of ETFs in institutional investing.

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ETF.com: You don’t seem as enamored with the liquidity premium that a lot of people had associated with institutional investments.

Kazemi: Like anything else, the law of demand and supply worked, and with so much money going into illiquid assets, chasing the idea of capturing that liquidity premium, that premium was bound to shrink over time.

The supply of these illiquid assets is not unlimited. A few years, ago timber became basically the investment any endowment had to have. Well, there’s only so much timber around that’s investable. The price of timber ran up, and whatever liquidity premium was there just sort of disappeared, and then you had a major collapse in the timber prices.

There is a liquidity premium when things are being priced correctly, but when you have a bit of a herd mentality, and investments are being made in areas that are just not large enough to accommodate these large allocations—not only by endowments but pension funds and so on—the illiquidity premium could easily disappear.

The fact that you’re investing in a liquid asset or the private placement doesn’t mean automatically you’re going to get the premium. There needs to be some degree of due diligence to see if prices are in line with that premium. So, one could argue that perhaps in some areas of private equity and venture capital that whatever premium was there was long gone.

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Maine company seeks to produce innovative wood-fiber insulating boards

Maine company seeks to produce innovative wood-fiber insulating boards | Timberland Investment | Scoop.it
Maine’s glut of softwood fiber created by closed paper mills makes the state an ideal location for a factory that can produce insulation board from wood, a Belfast architectural and construction firm says, and it’s trying to find a European manufacturer that shares that vision.

GO Logic, which specializes in energy-efficient buildings, says it’s negotiating with undisclosed companies that make wood-based insulation board in Europe, where the product already is in commercial use. The goal is to have a plant operating here within two years.

Two of GO Logic’s executives also attended an affordable housing conference Aug. 3 and 4 in Philadelphia. One of them, GO Logic co-founder Matt O’Malia, was an invited speaker and discussed the company’s efforts. They also planned to line up commitments from a retailer in the New York City area to carry the product, as well as some contractors and a prefab builder. That’s crucial to attracting financing.

GO Logic also has been in discussions with a Maine lumber company that could be a source of sawmill waste, as well as a family-owned lumber yard with nine stores in Maine’s midcoast.

Taken together, these actions are another example of how businesses are looking at Maine’s abandoned paper mill sites and surplus capacity in wood harvesting to create new opportunities. Other efforts involve biofuels, agriculture and electricity generation.
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