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Timber REITs and the “Dividend Tax” Cliff, Part II

Timber REITs and the “Dividend Tax” Cliff, Part II | Timberland Investment | Scoop.it

Part I of Timber REITs and the “Dividend Tax” Cliff summarized, in words, the implications to shareholders of publicly-traded timberland-owning REITs if the current dividend tax rate expires on December 31, 2012. This post quantifies the implications and puts into context the impact of changing tax rates on timber REIT shareholders relative to shareholders of non-timber REITS or other dividend-paying stocks in the United States. The bottom line: timber REIT equities retain a tax-advantaged status in a post-tax cliff environment.

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Timberland Investment
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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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Some useful links


Stock quotes, news and financial metrics

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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NCREIF Timberland Index updated for Q1 2015

NCREIF Timberland Index updated for Q1 2015 | Timberland Investment | Scoop.it

The first quarter 2015 rate of return for all properties was 1.75%, higher than any first quarter since 2008.

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Timberland Investment Regions and Considerations in the U.S. North

Timberland Investment Regions and Considerations in the U.S. North | Timberland Investment | Scoop.it

Unlike the simple set of core pine products – sawtimber, chip-n-saw and pulpwood – that drive most timber markets across the South, the hardwood markets of the North feature varying species and grades across clumpy, seasonal markets that use different log scales that complicate comparisons across space and time.
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These markets, in total, have at least 421 open hardwood lumber mills that average less than 5 million board feet in annual production each. That means lots of small, lower volume markets dot the landscape, and each has particular preferences and priorities for the types, grades and volumes of logs they buy. This helps explain why the three markets discussed here have distinct profiles with respect to core species, pricing and mills. For example:

  • The Lake States region has the largest number of mills, and the highest percent of cottonwood and aspen hardwood forest inventories. In 2014, red oak, maple and yellow birch logs traded at five-year highs.
  • In comparison, the Middle Atlantic region has the most hardwood sawmill capacity (and a larger average mill size). Soft maple, red oak and hard maple account for nearly half of the total hardwood forest inventory on timberland. In 2014, hard maple traded near its five-year high.
  • New England, on the other hand, has the smallest hardwood sawmill market and largest wood bioenergy market of the three. Soft maple, red oak and hard maple account for more than half of the hardwood inventory. In 2014, red oak, hard maple and ash traded near five-year highs.

For timberland investors interested in hardwoods, these realities and differences simply highlight the importance of understanding (1) the exact species and grades of logs growing on the candidate properties relative to (2) the specific preferences and health of the hardwood mills operating within an economically feasible distance for doing business.

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The Sustainable Forestry Initiative welcomes four new board members representing environmental, social and economic interests

The Sustainable Forestry Initiative welcomes four new board members representing environmental, social and economic interests | Timberland Investment | Scoop.it
The Sustainable Forestry Initiative Inc. (SFI) is pleased to announce that four leaders have been elected to the independent Board of Directors. Joining the board are Mary Klein, President and CEO, NatureServe; Guy Gleysteen, Senior VP, Time Inc.; Bettina Ring, State Forester, Virginia; and Steve Bullard, Dean, Arthur Temple College of Forestry and Agriculture, Stephen F. Austin State University.
“We are so pleased to welcome Mary, Guy, Bettina, and Steve. As a conservationist, a brand manager, a state forester and an academic, their respective experience in the environmental, public and private sectors will be an important asset to our diverse SFI Board,” said Kathy Abusow, President and CEO of SFI Inc. “They will help SFI further enhance the vital link between healthy forests, responsible purchasing, and sustainable communities.”
SFI’s 18-member, multi-stakeholder Board of Directors comprises three chambers, representing environmental, economic and social interests equally. In addition to the appointment of four new members, Craig Blair, President and CEO of Resources Management Service, LLC, has been elected as Chair and Greg Siekaniec, CEO of Ducks Unlimited Canada, as Vice-Chair of the Board. The SFI Board’s diversity and independence allows it to play a meaningful role at the intersection of sustainable forests and thriving communities
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Timbervest provides insight on pellet production, export activity

Timbervest provides insight on pellet production, export activity | Timberland Investment | Scoop.it
Timbervest LLC, an Atlanta-based company that manages timberland assets and investments, has been actively selling and purchasing timberland acreage in a variety of states.

“We just completed investing our last Timbervest Partners III fund, which was a $410 million fund,” said Bill Boden, chief investment officer with Timbervest. “We’re now back in acquisition mode, looking for different deals around the country that meet our investment criteria.”

This year, the company has also been selling assets from its TVP I investment fund. Over the last year, Timbervest sold over 40,000 acres of assets primarily in Florida, Georgia, New York, Pennsylvania, South Carolina and Vermont for a combined $65 million. “We’re excited to be able to take advantage of strengthening markets to sell certain properties and complete these high-value transactions,” Boden said. “Each property contained high-quality timberland, which provided consistent cash flow and excellent wood harvesting opportunities.”

According to Boden, Timbervest currently manages around $1.2 billion in assets in forested lands across roughly 16 U.S. states. Timbervest invests in the land, and makes it available to a variety of buyers, including purchasers of wood for pellets. Boden believes an increasing amount of woody material has been used for the pellet export market. “For the last couple of years we’ve made a fair amount of acquisitions on properties in the U.S. South, U.S. West Gulf, even mid-Atlantic states that were by design with some export-centric theme to them,” Boden said. “That has served us well because the pricing on that material has been very strong, particularly on the younger product—the pulpwood classes and even the small sawtimber classes—and I think that has been a direct response to the demand elements coming out of foreign markets, particularly Europe for pelletized wood.”
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Commissioner warns of forest fragmentation

Commissioner warns of forest fragmentation | Timberland Investment | Scoop.it
For the first time in a century, Vermont is losing forestland and the existing forests are being broken into smaller, fragmented parcels that threaten the state’s cherished relationship with those forests, Vermont’s top forestry official told lawmakers Thursday.

Michael Snyder, commissioner of forest parks and recreation, told members of five legislative committees that more than 80 percent of that land is owned privately, the landowners are getting older and 75 percent of Vermont is forested — making it the fourth most forested state in the country.

As forest parcels get smaller through development and the splitting up of family parcels, managing forestland for things like timber or animal habitat gets harder.

“Simply put, practicing forestry becomes operationally impractical, economically non-viable and, I would argue, culturally unacceptable in heavily fragmented forest landscapes,” Snyder said.
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Apple to invest in Maine timberland

Apple to invest in Maine timberland | Timberland Investment | Scoop.it

Technology giant Apple is partnering with The Conservation Fund to preserve more than 32,400 acres of timberland in Aroostook County.
The Arlington, Va.-based nonprofit announced Thursday that Apple's "precedent-setting" investment will help preserve Reed Forest as a working forest, ensuring that it will continue to produce a steady supply of sustainably harvested timber for paper and pulp mills. The forest, also known as Reed Plantation, is located in southern Aroostook County on the Mattawamkeag River, near the border of Penobscot and Washington counties.

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Apple's initiative with The Conservation Fund also includes the preservation of more than 3,600 acres of timberland in Brunswick County, N.C.


Apple's investment will allow The Conservation Fund to purchase both forests, place conservation easements on them and then sell both forests to buyers that will adhere to sustainable forestry practices, Robin Murphy, a spokesman for The Conservation Fund, told Mainebiz. The sale proceeds are then used to invest in preserving other forests, he added.

While Apple may not source its paper from either forests in the future, Murphy said, the technology company's investment will help neutralize the impact of its paper consumption by increasing the country's supply of sustainable wood fiber. He said the production capacity of the two forests is equivalent to about half of the wood fiber used last year in packaging for Apple's products, including the iPhone, iPad and over devices.

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Michigan Sells Treaty-Protected, Pristine Public Land for Limestone Mine

Michigan Sells Treaty-Protected, Pristine Public Land for Limestone Mine | Timberland Investment | Scoop.it
A group of American Indians in Michigan have lost their bid to block a land transfer of nearly 9,000 acres to a company proposing a limestone mine—the “largest single public land deal in Michigan history,” according to the Detroit Free Press.

The attempted injunction was the last legal line of defense against the mine, which would cover as many as 13,000 acres, according to the Detroit Free Press. In the deal, which was approved in March, the state will sell 8,810 acres of “surface land or underground mineral rights” to Graymont, a Canadian mining company, for $4.53 million so it can build the limestone mine in the Upper Peninsula, the Detroit Free Press said.
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Lloyd's of London offers Oregon wildfire coverage with $50 million deductible

Lloyd's of London offers Oregon wildfire coverage with $50 million deductible | Timberland Investment | Scoop.it
The state of Oregon has a chance to continue its unique insurance policy that helps pay for fighting wildfires in big burning years — but at a higher premium and deductible.
Lloyd’s of London has offered to cover up to $25 million of wildfire costs this season, after the state pays a deductible of $50 million, The Bulletin newspaper of Bend reported Friday.
After last year’s tough season, the premium the Oregon Department of Forestry and private landowners would pay has nearly doubled: from $2 million to $3.75 million. The deductible is more than twice last year’s $20 million.
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Direct Investing with a Twist

Direct Investing with a Twist | Timberland Investment | Scoop.it

The institutional investment community has been captivated by “disintermediation” for the past five years. This is understandable, as insourcing does (we now know) improve investment performance. But while direct investing remains a hot topic among the Giants, there’s something new reverberating in the industry. The buzzword of the moment is now “platforms.” Everywhere I go, I seem to hear CIOs talking about launching platforms for infrastructure, real estate, agriculture, and a variety of other private (though normally real) assets.
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The direct investment trend began in the late 1990s with Canadian pensions, but the widespread appeal really only began after the global financial crisis (“GFC”). The GFC appeared to illustrate, in rather stark terms, that much of the asset management industry was not operating in the interest of their clients. So much so that some asset owners asked, “Hey, can’t we do at least some of this ourselves, for a fraction of the cost, and get better outcomes?”
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It’s in this context that I think platforms have become increasingly popular, as they offer a hybrid approach to insourcing and outsourcing — one that allows for many of the in-sourcing benefits without subjecting internal organizations to the high burdens of end-to-end in-house asset management.
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To the Giants, platforms generally refer to independent companies operating in attractive investment niches. They are particularly common in emerging markets, and in acquiring and maintaining real assets, such as ports, dams, airports, timberland, energy, toll roads, and sometimes even specialized industrial companies, among other things. The idea here is for a financial partner — the Giant — to take a meaningful position (ideally a control position) in a company and then use that company to make follow-on investments or acquisitions in other assets within a certain niche. The Giant provides capital to help roll up a variety of operating and development assets, while the company sources, screens, and invests in the assets while simultaneously managing them. The best platforms are those in which the Giant has an existing and trust-based corporate relationship and knows a team possesses appropriate expertise and experience. After solidifying this relationship, the idea is then to scale it, injecting additional capital in the platform and asking the team to seek out more assets.
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From the perspective of these investors, platforms offer a cheaper and more aligned access point to attractive assets. This is particularly true for long-duration investments, where the exit is not easily anticipated at the time of the deal closing. It also offers the investor valuable governance rights, as the Giant is often a big player in the company (rather than a small shareholder in a fund). This may include a right of first refusal on all deals, or oversight of internal budgets and compensation.
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Clearly, a platform is not simply a replacement to a fund manager that lets you allocate and close your eyes. You really do have to engage in the sector to identify the companies that could be platforms. Moreover, you have to be engaged in the companies themselves to make them work. So, ironically, adopting this hybrid approach to direct and external investing actually demands quite a lot of internal investment expertise. At the same time, platforms help to extend the reach of internal investment teams, bolstering capabilities in ways that no pension fund could have internally otherwise.

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State buys 1,700 acres of forest on Olympic Peninsula

State buys 1,700 acres of forest on Olympic Peninsula | Timberland Investment | Scoop.it
The Washington state Department of Natural Resources (DNR) is buying more than 1,700 acres of forestland north of the Quinault Indian Reservation on the western Olympic Peninsula.

Purchased for $5.2 million from The Nature Conservancy, the land will add to both wildlife habitat and working forests.


The acreage will become part of the Olympic State Experimental Forest, which the DNR manages under its Habitat Conservation Plan for timber revenue to trust-land beneficiaries, including the Common School Trust.

The majority of the site’s standing timber will be ready to be logged in 10 to 20 years.
Sam Radcliffe's insight:

$3,023 per acre, with about $700 per acre allocated to bare land (based on other sources)

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560,000-Acre Swath of Florida Land Going on the Market

560,000-Acre Swath of Florida Land Going on the Market | Timberland Investment | Scoop.it
The largest contiguous parcel of undeveloped private land east of the Mississippi River, a vast swath of forest in northern Florida, is going on the market and is expected to bring $1 billion or more when it is sold this year.

The enormous tract of land, owned by the Foley Timber and Land Company, is about 560,000 acres, or nearly the size of Rhode Island.

The land is almost empty except for the cedar, oak and other hardwood trees that cover close to 900 square miles between Tallahassee and Gainesville along the gulf coast just south of the Florida Panhandle. Foley has modest timber operations on the land that generate about $50 million a year.

But for a potential buyer, the land represents an opportunity to develop or sell development rights to a largely uninhabited corner of the state.
Sam Radcliffe's insight:

NYT displays its ignorance here. Not mentioned is the significant portion of the property in productive southern pine plantations (ahem, see the accompanying photo). What the NYT calls "modest timber operations" equates to $89 per acre per year, which at 2014 prices roughly represents 8.6 tons of pine pulpwood or 3.5 tons of pine sawtimber, assuming the $89 is gross revenues. Even without knowing the Foley product mix, I would hardly call their operations modest.

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Pope Resources announces $4.9 million conservation sale

Pope Resources announces $4.9 million conservation sale | Timberland Investment | Scoop.it
Pope Resources announced on March 31 a $4.9 million conservation sale to The Trust for Public Land, consisting of a conservation easement covering 3,607 acres in Jefferson County.

Of the acreage, 215 acres were sold in fee, leaving 3,392 acres remaining under Pope Resources' ownership subject to the easement that precludes development but allows continuing timberland operations.

"We are pleased to enter into our second conservation transaction in the Hood Canal watershed involving the United States Navy and The Trust for Public Land," said Jon Rose, president of Olympic Property Group, a Pope Resources real estate subsidiary. "The easement and land sale will reduce potential future conflicts between Hood Canal naval operations and development of our property, while at the same time expanding public and riparian access to the Dosewallips River."
Sam Radcliffe's insight:

$1,358 per acre for mostly a conservation easement

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Latest Report from Forest Research Group

Sam Radcliffe's insight:

As usual, interesting stuff from Jack Lutz. His observations are essentially the rationale for price adjustments made in the comparable sales approach to valuation of timberlands.

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Potlatch Corporation's (PCH) CEO Mike Covey on Q1 2015 Results -- Earnings Call Transcript

Potlatch Corporation's (PCH) CEO Mike Covey on Q1 2015 Results -- Earnings Call Transcript | Timberland Investment | Scoop.it

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Collin Mings - Raymond James
Okay. I guess on that front, Mike, just curious, given some of your peers have highlighted the potential to sell off some assets, kind of prove out NAV and recognizing your portfolio's a little bit different but have you guys considered at all maybe unlocking value if you will, maybe some of the Idaho Timberland or maybe even some of the legacy Arkansas to maybe generate some cash to then buyback stocks at these levels, kind of serving the dual purpose of proving out asset value while also gaining a little bit more flexibility on the share repurchase front.


Mike Covey - Chairman & CEO
Well I would agree it's an attractive arbitrage given where our stock price is today and what we think are still very high underlying values of our timberland. But you have to think about it on an after-tax basis as well. We are not in a position to get past the time period of built in gains tasks like some of the other timber REITs are. So the 10 year timeframe in our REIT conversion is up next year and until that time if we sell timberland out of the REIT we have a responsibility for a built in gain tax of 40% or to reinvest in timberland which is really not your point. So I think for those reasons, we don't find it as compelling at this point in time to pull the trigger on kind of an arbitrage option that you described.


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World's largest sovereign wealth fund takes stand against deforestation

World's largest sovereign wealth fund takes stand against deforestation | Timberland Investment | Scoop.it
Norway's Government Pension Fund Global — the world's largest sovereign wealth fund — is adopting standards to avoid investing in companies linked to tropical deforestation, sending a strong signal that forest destruction is not an acceptable...
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Three investment lessons from the trees

Three investment lessons from the trees | Timberland Investment | Scoop.it

...as winter retreats and spring takes hold, it's a good time to look at trees. And, while there aren't 13 investment themes to take from trees, there are three and they're good ones.


I. Lumber prices are a good predictor of stock market volatility.

This may sound farfetched, but it's the subject of an award-winning paper titled "Lumber: Worth Its Weight in Gold - Offense and Defense in Active Portfolio Management," by Michael Gayed and Charlie Bilello of Pension Partners. In a nutshell: When lumber outperforms gold over the previous 13 weeks, you should be more aggressive in the stock market, and when gold outperforms, you should be more defensive.


Why lumber? Lumber prices are a good indicator of the housing market which, in turn, is a good indicator of the economy as a whole.
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Gold, on the other hand, is a good measure of fear. People buy gold when they think bad things will happen. "In multiple cycles, when lumber outperforms gold, the stock market tends to be less volatile," Bilello says. "The economy is improving and in an expansionary phase. And it's the opposite when lumber is underperforming." What is timber telling us now? "From the end of last year, lumber has been underperforming gold," Bilello says. "It doesn't mean that stocks have to go down it simply means that there is a higher probability of volatility rising."

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II. Invest in timber for the long term.

GMO LLC, a respected Boston money manager, periodically issues a forecast for various types of investments over the next seven years, adjusted for inflation. Their most recent outlook is fairly gloomy: U.S. large-company stocks will lose 2% a year, and high-quality stocks will gain just 0.5% a year. The standout: Timber, which GMO forecasts will gain 4.8% a year, after inflation.


"The fundamental case is that the returns from timber for patient investors should be steady," says Eva Greger, head of GMO's renewable resources group. It doesn't mean that timber will be, well, growing rapidly. "The thing about timber is that it doesn't move around a lot," she says. Timber looks look better than stocks not because timber is soaring, but because stocks are expensive.
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III. You need a lot of patience and land to make money growing timber on your own.

Sam Radcliffe's insight:

Interesting thesis on lumber and gold, but like many on Wall Street (and Main Street), the author misses the distinction between lumber and timber.

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Hancock NZ upbeat on outlook for timber as local units post mixed results

Hancock NZ upbeat on outlook for timber as local units post mixed results | Timberland Investment | Scoop.it
Hancock Forest Management (NZ), the local division of the world's largest timberland investment manager, is confident about the outlook for New Zealand timber.
"The domestic market right now is on a pretty firm footing. There is some pretty solid construction activity in New Zealand right now," said Bill McCallum, general manager of Hancock's local unit, which sells 70 percent of its volume domestically. "We're very confident in the outlook for timber and New Zealand's ability to produce timber on a sustainable basis so our investors are confident about the outlook."
New Zealand residential building consents rose to a seven year high in 2014, led by the rebuilding of earthquake damaged Christchurch and a shortage of housing in the nation's largest city of Auckland, although residential consents have declined for the latest three months. Christchurch still appeared to be in the early phases of rebuilding with activity set to continue for some years, while building activity in Auckland would likely have to continue or strengthen to meet demand for housing, McCallum said.
Hancock, a unit of US based Hancock Natural Resource Group, is the largest owner or manager of planted forests in New Zealand, with more than 200,000 hectares of forest under management, according to industry figures published on the New Zealand Forest Owners Association website.
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Timber family buys 30,000 acres of forest near Gualala

Timber family buys 30,000 acres of forest near Gualala | Timberland Investment | Scoop.it
A swath of coveted timberland near the town of Gualala is being sold to a Northern California family whose existing forest product interests include the Redwood Empire sawmills in Philo and Cloverdale, where logs from the site have been processed for some 30 years.

The Roger Burch family, owner of Redwood Empire and its parent corporation, Pacific States Industries Inc. in San Jose, is expected to close escrow on the property in June, taking possession of nearly 30,000 acres of mixed redwood and Douglas fir at the mouth of the Gualala River currently owned by Gualala Redwoods Inc.

Burch, who has long had timber holdings in Sonoma and Mendocino counties as well as the Bay Area, said he intends to continue what he called GRI’s intelligent management of the site.

“We think that property has been managed as well as any property in California — better than any property that we’re aware of elsewhere — and it’s our intention to practice the same forestry that’s been practiced there,” he said.

Reaction to the sale has been mixed, however, with some expressing disappointment the land will remain in the hands of a commercial timber company rather than conservation interests that made an unsuccessful bid for the property.
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Video: popular misconceptions about the timber industry

Discover the truths to popular misconceptions about the timber industry.

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Ontario adopts cap-and-trade system to reduce greenhouse gases

Ontario adopts cap-and-trade system to reduce greenhouse gases | Timberland Investment | Scoop.it

Ontario will adopt a cap-and-trade system to reduce greenhouse gas emissions, Premier Kathleen Wynne said Monday before she travelled to Quebec to sign a deal with that province. Wynne offered scant details on how the system would work and said specifics will come later. "It would be irresponsible of us to speculate on exactly what the costs are going to be when we haven't worked to design the mechanism yet," she said in Toronto. That will come in the next six months, she added.


Her announcement comes seven years after Ontario first signed onto the Western Climate Initiative with Quebec and California.

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Under a cap-and-trade system, businesses will have a greenhouse gas quota and be able to sell credits to reward efficiency and innovation, Wynne said. Companies that want to burn more fossil fuels can buy carbon credits from those that burn less than they are allowed. Money raised through the system will be reinvested in green technology and green infrastructure, the premier said.

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Jerome Clave's curator insight, April 16, 5:33 AM

This is an interesting sign: despite all their shortcomings cap and trade systems provide a rationale for pricing the cost of limiting greenhouse gases emissions which is much lower than fossile energy producers often claims at least in comparison of these energy price swings.  The carbon right markets also demonstrate that it is far more economically efficient to save on energy consumption than to invest in very costly renewable energy projects. Last but not least these systems are economically counter cyclic, meaning that when economy is bad, prices go down hence pressure on industry is lower , and reversely when the economy is robust.

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How do you plant 1 billion trees a year? With drones, of course

How do you plant 1 billion trees a year? With drones, of course | Timberland Investment | Scoop.it

Instead of doing surveillance or carrying out military missions, the drones from BioCarbon Engineering are taking on a decidedly more progressive task: planting trees and reversing deforestation.


Drones, or unmanned aerial vehicles (UAVs), have taken off in popularity recently, with hobbyists and professionals alike using these small remotely-guided devices for everything from delivering packages to surveying wildlife populations, but one startup has a very ambitious plan for their drones, and one that could have a huge positive impact on global deforestation.


"We are going to counter industrial scale deforestation using industrial scale reforestation. Destruction of global forests from lumber, mining, agriculture, and urban expansion destroys 26 billion trees each year. We believe that this industrial scale deforestation is best combated using the latest automation technologies." - BioCarbon Engineering


BioCarbon Engineering, based in the UK, has developed a system of planting trees with drones, at just a fraction of the cost (15%) of traditional reforestation methods, and at a speed that manual planting can't match - up to 10s of thousands of trees planted per day - and aims to plant 1 billion trees per year using this technology.


This approach, using an industrial-scale reforestation method, isn't quite ready for prime-time, but its prototype, which won £20k in funding from the Skoll Centre for Social Entrepreneurship last year, is expected to be built into a fully functioning platform by the end of the year.


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Russia looking to double lease terms of forest areas to attract investors

Russia looking to double lease terms of forest areas to attract investors | Timberland Investment | Scoop.it
The head of the Federal Forestry Agency of the Russian Federation, Ivan Valentik, would like to have lease terms with tenants increased from 49 to 98 years, as a way to increase investment in Russia’s forestry sector, according to an article published by Lesnaya Industriya, a Russian trade magazine for forestry sector professionals and businesses working in logging, woodworking, furniture production and wooden home construction.
Alexei Bogatyrev, CEO and founder of the Lesprom Network, says that the move to increase the leasing agreements is a good long-term measure that could create a positive effect for the industry in Russia, which is needed to increase investment in areas such as new resource roads and updated equipment for logging and sawmilling operations. However, in the short-term he doesn’t expect this to generate any major shifts on the international market.
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Wood Supply Chronicles, Part 2: The Unintended Consequences of Timberland Divestments

Wood Supply Chronicles, Part 2: The Unintended Consequences of Timberland Divestments | Timberland Investment | Scoop.it

In the first part of this series, Wood Supply Chronicles, I highlighted three events that have changed wood supply in the US South: timberland divestment, the timing and intensity of the housing bust and inattention to—and an inability to react to—global policy changes.

In this post, I would like to focus more closely on the unintended consequences of timberland divestments from a perspective that few have considered and that might not seem apparent on the surface. It is, however, a viewpoint that is ultimately very important to maintaining the health of both individual forests and the larger forest products industry.


Demand from the forest is out of balance from an historical perspective. Why? Because demand for pine sawtimber has declined, while the demand for pine pulpwood has grown.


We all know why the demand for sawtimber has declined. What we cannot do, however, is predict its return or the scope of its growth when it does. The demand for pine pulpwood, on the other hand, increased significantly during this same time period. The result of these events is a tenuous market situation in which:

  • Pine pulpwood prices are high and pine sawtimber prices are low
  • An excess of pine sawtimber is available now and will be for years to come

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This is where the unintended consequences of timberland divestment are most demonstrable. We are dealing with two dissimilar groups of owners with conflicting agendas: one group owns property and trees, the other owns mills. Timberland owners are trying to maximize their forest yields and profits by relying on past pricing norms and mill demands to set their harvest regimes. Not surprisingly, this data has historically been used in a very local context.


The mill owners, by contrast, are usually large multinational corporations operating numerous facilities. Not only are they maximizing profits across entire systems, but they are modifying mill outputs based on fluctuating consumer preferences. When the mills owned timberland, this data was quickly transferred back to the timberlands to close the information loop. This nimble operating structure and ability to rapidly respond to market demands has all but vanished, resulting in a gaping inefficiency in the supply chain.


Forest2Market believes that this knowledge gap will only expand as pulp mill owners continue to consolidate both nationally and internationally and as new consumers enter the market and the pace of changing consumer preferences increases. As this knowledge gap widens, supply chain inefficiencies will continue to intensify and the entire industry will suffer lower returns.

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Institutions raise exposure to renewables

Institutions raise exposure to renewables | Timberland Investment | Scoop.it
The proportion of European institutional investors with exposure to renewable energy assets has almost doubled over the last year, according to research by alternative asset manager, Aquila Capital.

The survey carried out in February this year found 39% of European institutional investors now have some exposure to renewable energy assets or infrastructure, up from 21% last year. The proportion investing in farmland has also risen sharply, to 14% from only 3% last year.

In general, of the 61 institutional investors surveyed across Europe, 73% said they were optimistic about real assets, compared to 41% a year ago. Furthermore, the proportion that were “very positive” nearly doubled.

Aquila Capital’s research says real estate is the most popular type of real asset, with 86% of investors in the survey holding some exposure to it.
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